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‘Government’s contradictory policies killing agro-industrial sectors in Nigeria’

By Femi Ibirogba,
06 June 2019   |   3:22 am
There are possibilities of glut and scarcity in Nigeria. Every two or three years, Nigeria experiences gluts because when the price goes up, all the farmers jump into its production.

Rajavelu Rajasekar<br />

• Plus why cassava root price is low between May, July
Mr Rajavelu Rajasekar is a Director (Agro), Allied-Atlantic Distilleries, Agbara, Ogun State, where 250 metric tonnes of raw cassava roots are processed into ethanol. He revealed, in this interview with Head, Agro-Economy Desk, FEMI IBIROGBA, why cassava production fluctuates between scarcity and gluts; why more processors fail to invest in the sector and why Nigeria is still a net importer of ethanol despite the potential to export such.

Most farmers now complain of their inability to sell their cassava roosts. What is the problem in the industry now?
There are possibilities of glut and scarcity in Nigeria. Every two or three years, Nigeria experiences gluts because when the price goes up, all the farmers jump into its production.

When every farmer produces cassava, ultimately it leads to overproduction. So, what happens this year is a glut. Two years ago, cassava was close to N40,000 per tonne. Having realised the farmers were selling roots for N40,000 per tonne, everyone jumped into its production, leading to excessive supply over demand. The effect of this is a lower price of N15,000 to N20,000 per tonne.

It is still not bad. However, farmers are always anticipating the highest price every year. That is the problem. The price of N15,000 to N20,000 per tonne is acceptable to processors to get adequate profit, but the anticipation of N40,000 every year by the farmers is difficult.However, if ethanol and starch-producing firms increase in number, the demand will be constant, but we have few industrial processors of cassava now.

How can the country attract more industrial processors into the sector to mop up the excess?
Actually, it is not overproduction alone. It is also a problem of the season. When the rainfalls start, the starch level of cassava roots goes down. Between April and June specifically, the starch level of cassava goes down to less than 20 per cent, precisely to 17 or 18 per cent. But the more the starch, the more the productivity whether it is ethanol, starch or any end product. What we basically need is starch.

So, whenever it comes to the rainy period in Nigeria, production of new leaves makes the starch and by extension the price to go down. So, when the farmers harvest in this period and supply to the mills, the processors check the starch level and if it is low, they reduce the price. It is a phenomenon every year.

Would you advise them to harvest the roots in dry seasons to get better prices?
Cassava is a root crop and you have to uproot it. Doing that is normally difficult in dry season. Because of the moisture, it is easy for them to uproot the crop in rainy seasons. So, the majority of them do not harvest in dry seasons because if the pull out, the roots remain underground and they will lose their yields.

Also, when the cassava stabilises for the rainy season after about six to eight weeks, it builds the starch level up again. This is a regular phenomenon. Whether you like it or not, it happens. So, what we advise farmers to do is to plant better varieties of cassava. If they plant varieties with 25 per cent starch content, it will not reduce more than 20 or 21 per cent. This is still acceptable, with a better price.

What are the varieties you would recommend the farmers should plant to get maximum value for their efforts and investments, and where can they get them?
Many high-yielding varieties are available now. They are propagated and distributed by the International Institute of Tropical Agriculture (IITA) in Ibadan. Generally, farmers prefer to go for TMS 30572. It is a common variety with a good starch level. And another one is TME 419 with good starch yields. Even with good varieties, there will be a reduction in starch level during the rainy seasons, but the level will still be profitable. The factories also downgrade the acceptable starch level up to 15 per cent, but with a lower price.

So, the price rises with the starch level?
What we do is, sometimes, we fix the price for 20 per cent starch, and any slight reduction or increase in the starch level does not necessarily affect the price. But in the rainy periods, we do not get close to 20 per cent.

So, when does the starch level stabilise? Is it usually in August or September?
There is no specific time. Generally speaking, after the outset of one good rainfall, it takes eight to 10 weeks for the cassava roots to lose its starch contents and again rebuild them. This is a critical period the farmers must master before harvesting. That is why it does not attract good price.

What is wrong with the cassava flour in wheat flour policy of the government? Is it working?
Actually, the policy was introduced to be 10 percent and later 20 per cent in wheat flour. Truly speaking, it is not properly implemented. It is not being strictly implemented by the Federal Government. I do not think any miller is using 20 percent of the cassava flour now.

But are they using it at all?
I think, to some certain level. But I do not think any miller is mixing up to 20 per cent because they feel that 20 per cent does not give good quality products, though the research says they can mix up to 20 per cent. So, they have reduced the cassava flour content to a little.

As a veteran in the cassava value chain, what is the best way you would suggest to utilize more of the crop industrially?
Cassava is a basic raw material for a lot of industries, starting from ethanol, starch, high quality cassava flour, and other products. So, if the starch is not up to 20 per cent, there are other end users. Another ethanol company is producing 1 million litres yearly, apart from ours. They are taking cassava in Kogi State. There is another starch company in Iseyin, Oyo State. And there are end users who are using the cassava starch. So, there are a lot of ways cassava can be used industrially.

What is the capacity of your company and what quantity do you process daily?
Our factory’s intake is 250 metric tonnes of fresh cassava roots daily. And we run throughout the year. We produce 9 million litres of ethanol by using 70,000 to 75000 metric tonnes yearly. We take our supplies from Oyo and Ogun states. They are our catchment areas.

What is the potential for ethanol market in Nigeria?
We do not have a problem with the market because Nigeria is a net importer of ethanol even till now. The first ethanol company is ours, and there is another one now. We produce 9 million litres, whereas, the import is between 300 and 350 million litres in a year.

So, we produce three to four per cent of the total demand. Now, Unichem is also producing ethanol, but altogether, we can only meet five to six percent of the demand.So, there is very huge demand for ethanol and it is being met my importation. So, marketing is not a problem. However, because of importation of ethanol from Britain and other countries in Europe, which are made from sugarcane and corns, sometimes, imported ethanol is cheaper than locally produced one from cassava. Sometimes, the users go back to importation. So, there is always imbalance and we often fight with the importers.

The government claims to be promoting import substitution. How can it come in here?
Exactly! If the government wants to support business in this country, it should actually come up with policies that will improve the agriculture-based import substitution in the country.

Nigeria is importing ethanol but we are producing it. Let them give us incentives by increasing the tariff on importation of ethanol. Unscrupulously, crude ethanol is imported to this country with a tariff of five per cent. That is why we are unable to compete with them and no investor wants to join in the production of ethanol.Actually, they should increase the tariff to boost home productivity. This will bring more factories up in the industry.

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