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Country comparison of efficiencies and profitability in the HQCF value chain
Helena Posthumus, Kola Adebayo, Francis Alacho, Nanam Dziedzoave, Grace Mahende, Vito Sandifolo, Lateef Sanni,
Andrew Sergeant, Andrew Westby
Partners:
Funded by the Bill and Melinda Gates Foundation
C:AVA project
HQCF value chain
Fresh cassava roots
Cultivating & harvesting
Peeling & washing
Grating & pressing
End use
Milling & sieving & packing
HQCF
Valu
e ch
ain
Drying
Cassava fresh roots
Cassava wet mash / cake
Cassava dried grits
High Quality Cassava Flour
Objectives
The objectives of the exercise were: – to allow comparison of production costs between
countries; – to identify areas for improvement of efficiency and
profitability; – to inform price negotiation; – to provide information for M&E purposes (e.g. return
per beneficiary)
Methodology
Based on typical costs of current practices and yields by country
Assume use of sun drying or upgraded flash dryers
Typical wage for unskilled labour used for labour costs: $1 to $4 per day (opportunity cost of labour)
Regular monitoring of prices (incl wheat flour)
Disclaimer: these are indicative figures!
HQCF value chain
Fresh cassava roots
Cultivating & harvesting
Peeling & washing
Grating & pressing
End use
Milling & sieving & packing
HQCF
Value addition: production costs + profit margins
Valu
e ch
ain
Drying
Production costs of roots (FCR)
Price of rootsProfit margin farmer
Processing costs
Diesel costs for drying
Other drying costsFixed costs
Price of HQCFProfit margin processor (transport costs)
Costs and profit margins Nigeria
Improvement flash driers
Costs and profit margins Ghana
Costs and profit margins Ghana
Costs and profit margins Malawi
Costs and profit margins Malawi
Costs and profit margins Tanzania
Costs and profit margins Uganda
Lessons learned
• Various (market) drivers influence prices offered for HQCF – different in each country– Price of alternative raw materials (wheat flour, corn starch, local
cassava flour) for targeted end use of HQCF determines HQCF price• Policies (import tariffs, tax, subsidies)• Foreign Exchange• Landlocked country vs sea port
– Price of alternative cassava products (at local markets) determines price of cassava roots
– Technology ↔ scale ↔ productivity ↔ efficiency ↔ profitability• Importance of profit margins across value chain• Need to create consistent and constant supply of raw material
(fresh cassava roots):– By improving productivity of cassava – Through contracts and price agreements– By involving large-scale commercial growers, linked with smallholders
(‘outgrower scheme’)
Thank you
Costs and profit margins Uganda