Cassava Prices Soaring in Nigeria Due to Increased Demand from Ethanol Producers

July 03, 2024

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by Vivek Waghmode (ChiniMandi) The price of cassava is experiencing a rise due to increased competition from industries like ethanol production. This surge in industrial demand is creating a ripple effect, pushing up prices for everyday food items derived from cassava.

A staple food for millions, cassava is most commonly consumed in Nigeria as garri, a popular flour. The price of garri flakes has witnessed a staggering increase of over 50% in many parts of the country.

The price hikes extend beyond garri. Other cassava derivatives like flour, fufu (a dough-like staple), and starch are also becoming scarce and expensive due to the overall shortage of cassava. Experts attribute this scarcity to a significant rise in demand from both domestic consumers and industries like food processing and, most notably, ethanol production.

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While the increased demand provides a financial incentive for cassava farmers, who are expanding cultivation areas to meet the rising prices, it presents a challenge for everyday Nigerians. The soaring prices threaten to make this essential food source unaffordable for many households.

This situation highlights the complex interplay between industrial needs and food security. As Nigeria’s industries flourish, policymakers will need to find solutions to ensure that this growth doesn’t come at the expense of the nation’s food affordability. READ MORE

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Excerpt from Business Day: The price of garri, a popular staple food in Nigeria has surged by 108 percent in three months, hitting a record high as cassava production shrinks.

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Nigeria is the largest producer and consumer of cassava in the world and churns out 60.8 million metric tonnes of cassava in 2022, according to data from the Food and Agricultural Organisation (FAO).

The production of the tubers in 2023, according to farmers, was hampered by climate change impact, worsening insecurity and the uncertainty around last year’s elections.

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“The harmattan season, known for its extreme dryness, has severely impacted cassava cultivation across the country cutting production,” said Nike Tinubu, CEO of Eagleson Cassava.

“The dryness has hardened the ground, making harvesting extremely difficult and more labour-intensive. This not only increases labour costs but also leads to post-harvest losses as some cassava roots break during the strenuous extraction process,” she said.

She noted that this leads to output shortfall and a sharp increase in the price of the tubers.

Segun Adewumi, national president of Nigeria Cassava Growers Association (NCGA) said lots of farmers were discouraged from cultivating the tubers last year owing to uncertainty surrounding the 2023 elections.

“The uncertainty and potential disruption during the change in government discouraged farmers from cultivating cassava as extensively as usual. This is what led to the production shortfall,” Adewumi said.

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Cassava, the primary ingredient for garri, is also used to produce various industrial products like starch, ethanol, flour, glucose syrup, and sweeteners among others that are used as raw material by numerous industries with limitless domestic and export market potential.

Flour millers are now blending more volume of high-quality cassava flour into wheat amid acute dollar scarcity and surging input costs, according to experts.

“Millers are using more cassava flour and some industries have sprung up, using cassava, this has further increased the demand for the tubers,” the national president said.

The worsening rate of insecurity has also reduced the output of the tubers as farmers abandoned their farmlands for safety.

According to experts, Nigeria has lost about 60 percent of its food production in key-producing states owing to rising insecurity. The situation has led to a production shortfall in most crops in the country.

“There are lots of farmlands that have been abandoned by farmers owing to the escalating insecurity in the country,” AfricanFarmer Mogaji, chief executive officer of X-Ray Consulting.

Also, farmers are not expanding their production areas while some are shifting to the cultivation of other crops owing to some of the challenges in cassava production, Mogaji said.

Cassava requires considerable post-harvest labour because the roots are highly perishable and must be processed into a storable form soon after harvest, he noted.

He stated that owing to the high cost of labour, especially in the Southwest region, lots of farmers are growing less cassava and concentrating more on other crops. READ MORE

Excerpt from Business Day: Omawunmi Olomo. F. Ojukwu, a co-chairman of the Ebute Ero Garri Dealers Association, blamed the price of the once-affordable commodity on government policies, including the removal of petroleum subsidies, which has led to an increase in Premium Motor Spirit (PMS), otherwise known as petrol, and a general spike in prices.

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“The people that are producing this garri complained that the means of production are very expensive. Conveying the cassava from the farms to the places where it is processed into garri is also expensive. They further told us that they pay their workers a lot of money to process the grain before it gets to us, and then it reaches the final consumers.”

She added that transporting the garri to the cities has also become expensive, noting that since she is in the business to make a profit, the haulage cost is transferred to their customers.

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She said, “Before, we carried a bag for N400 from the farm to Lagos directly, but now it costs between N1,800 and N2,000 for each bag.”

The trader further noted that profit from the garri trade has been greatly impacted by “the cost of transportation.” She added, “This time last year, we used to make a profit of about N500 per bag, and the market was booming, but now we hardly make ends meet because people are not coming to buy our product. Now we cannot predict our profit margin. We only pray to God that we sell. For instance, this morning I have not sold anything, but I had to take breakfast, which cost me about N1,500. As of last year, before noon, I would have sold about 10 bags of 100 kg of garri.”

Corroborating his colleague’s words, Isiaq Olorunishola, a co-chairman of the Ebute Ero Garri Dealers Association, said that for about four months they have been living from hand to mouth.

He said, “We have been managing in the market space for the past four months because things have been very difficult. This time last year, this place would be filled with bags of garri, and customers would be trooping in, but everything has changed. I feel that it is the increase in the price of fuel that has drastically affected our business. We were meant to get some bags of garri today, but our boys are informing us that there is no vehicle to convey them because they don’t have fuel.”

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Dr. Olubunmi Olorunfemi, the chief executive officer of BOF AgriFood Industries, a food processing firm based in Ayedun, Ekiti State, said Nigerians are facing a surge in garri prices due to a combination of factors, including a dramatic increase in the cost of raw cassava and insecurity deterring farmers.

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The diesel that we were buying for N600 is now N1,250 in Ayedun-Ekiti. Those are the major issues.”

According to him, compounding the problem is the growing fear of insecurity among farmers, who are scared to go to their farms to either plant or harvest their products. The agriculturalist cited the recent kidnapping of monarchs in the Ikole Local Government Area of the state as a stark reminder of the dangers faced by farmers.

He said, “The farmers are afraid to go to the farm because of fear of being kidnapped, especially in Ikole Local Government. We can recall the incident of three monarchs that were kidnapped recently in the state, and that is not the first time it has happened in the past few years.

“It is because it involved the kings that it gained national prominence. While one escaped, two of them were murdered. Due to insecurity, these farmers do not feel safe going to their farms.”

Dr. Olorunfemi advised that the government should create a more secure environment for farmers. He noted the need for improved security measures to allow farmers to cultivate their crops without fear, adding that the issue of cattle herders destroying cassava farms must be addressed as well.

“The immediate thing that can be done is to provide security so the farmers can go to their farms safely. The farmers are afraid to go to their farms. People who want to farm in commercial quantities are afraid to invest. That is creating scarcity, and it is not just limited to Ekiti State but to the nation as a whole.

“The farmers are afraid to go to the farm, and the large-scale farmers are afraid because the herdsmen would trespass into their farm and their cattle would eat their cassava and destroy their cassava farm. That is another major factor that is driving the high cost of garri in the country,” he said.

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Shedding light on why the price of the staple food has risen astronomically, Aribisala (Pelumi Aribisala, a major player in Nigeria’s cassava industry, co-founder of Cato Foods and general manager (farms) for Crest Agro Product Limited) points a finger at some Nigerian farmers, accusing them of exploiting the dry season’s impact on cassava harvesting by jacking up cassava prices.

He noted that greed among Nigerian farmers, who are capitalising on high demand during the dry season, a time when harvesting is more difficult and labour costs rise, to arbitrarily inflate prices, is one of the factors behind the rise in garri prices.

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Since most of our cassava harvesting is done manually, as we have been unable to introduce mechanical methods or technology into the harvesting of cassava in Nigeria, there is a shortage of labour because the ground is hard.

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“There are also a number of cassava roots that would be lost into the ground because of breakage, so most farmers do not like to harvest their cassava during the dry season.

“There is also the fact that the harvested cassava can dry up and become waste since they cannot store it. There is a higher demand during the dry season and a lower supply; hence, that brings the price up. The greedy nature of people is to blame.”

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However, the brunt of Aribisala’s criticism falls on the government. The GM Farm for Crest Agro said that the government is not doing enough to empower cassava farmers, even though Nigeria is the largest exporter of the commodity.

He faulted Nigerian leaders for failing to adequately support cassava farmers with improved agronomic practices that could significantly increase yields and technical assistance that could provide farmers with the knowledge and resources to maximise production.

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“However, Nigeria is not earning enough foreign exchange from cassava, and that is because of the mentality that garri is a poor man’s food. So, about 75 percent of the cassava we produce is consumed locally as garri.

“The farmers have not been given the right support to increase their yield per hectare. We are the largest producers of cassava worldwide, but we have one of the lowest yields per hectare, which means the average yield per hectare is about 7.85 tonnes. Whereas 7.85 tonnes can be as high as 30-35 metric tonnes per hectare with good agronomic practices. You can see the shortage. Imagine if we were able to push our current yield per hectare to 20 tonnes per hectare by using the same size of land. We would still be able to double our annual production to 50 million metric tonnes per year, which would bridge the gap between demand and supply. The gap that we are having in cassava today is about 28 million metric tonnes annually.”

Furthermore, Aribisala cited the Maputo Declaration, an African Union agreement for member states to allocate 10 percent of their budgets to agriculture, suggesting Nigeria falls short of this commitment.

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“Officially, Nigeria is not importing garri. Unofficially, we have some business people who have been able to fill the gap in the market. There was a time when we were seeing some brands in supermarkets of garri coming into the country from China or India, and the prices were higher than what we sell locally. Off the books, we have some business people that import garri from neighbouring countries or Asia, despite the fact that we are the highest producers of garri in the world. Because it is not official, we might not be able to put a figure on the volume that is brought into the country,” he said.

Corroborating Aribisala’s opinion, Akinola Olalekan, the head of the marketing department for Psaltry International, an agro-processing company at Ado Awaye, Isehin, Oyo State that refines cassava into high-quality food-grade starch for consumer products, noted that the climate is a major factor in the price hike.

He said, “The cassava market is fine, and it is booming. However, what happened with the price of garri as regards its increase is that we have cassava, but it is the climate that changed the price.

“Cassava has its season, so when it is the dry season, it is not that we cannot harvest the cassava, but it always gives us an issue due to the climate because the soil would be hard and the tubers wasted to the soil would be much, way more than necessary. We cannot use machines because the harvesters can do it. The way the cassava was planted determines if there would be difficulty harvesting during this season.

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“Another factor that has made the price of garri increase is logistics. Manpower always reduces during the dry season. Due to the weather, the farmers cannot stay under the sun for a long period of time because they will complain. Also, transporting the cassava from the farm to the factory is another issue due to the price of petrol and diesel.”

Proffering a solution to the development, the agronomist opined, “If the government can reduce the cost of fuel and empower cassava farmers, I believe that the price will drop and Nigerians will not face hardship. There is nothing we can do about the climate. The reduction in petrol and diesel will make things better.”

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A spokesperson at the cassava section of the IITA, who does not want her name in print because she was not authorised to speak with the media, emphasised the effect of the prevailing economic situation in the country on the costs of producing garri.

According to her, a struggling economy directly impacts cassava production, the raw material for garri. She also notes that as cassava finds use in various products beyond garri, including flour, ethanol, and starch, the price increase ripples through the entire production chain.

She further added that garri prices typically rise during the dry season due to labour costs increasing as workers demand higher wages due to harsh working conditions.

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Another reason I have learned about the spike in the price of garri is the cost of transportation. Most people produce their garri in rural areas, and it is then transported to urban areas for sale.

“With the amount of petrol and diesel, it would affect the cost of garri in the market. In addition, the roads are bad, and vehicles get faulty sometimes when transporting goods because the movement from the rural areas to the urban areas on a bad road can be treacherous. With the cost of petroleum products, these farmers would increase the price at which they sell their produce.”

She also noted that greed is a factor, as when a wholesaler delivers the goods to the retailer, they want to make a profit, and it is the same thing with the retailers and the final consumers.

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Dismissing the insinuation that most of Nigeria’s cassava goes to waste due to the lack of storage, the spokesperson said there is an adequate storage system for the product, “especially for those who deal with IITA.”

She added, “There is storage for the product. For example, if you process your garri from IITA, you can store it for about two years. The storage of cassava has to do with its moisture content. If the moisture content is low in the range of 7-9 percent, you can store it for two years; however, it has to be in an airtight place, but if you have a high moisture content ranging from 10–15 percent, storage would be lower.”

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The source proposes solutions focused on government intervention. Reducing fuel prices, particularly for the agricultural sector, and prioritising road repairs to improve access to farmlands are seen as crucial steps. The source strongly advises against the import of garri, arguing that it would not only fail to lower prices but also worsen the situation due to insufficient domestic production.

She added that emphasis should be laid on the reduction of prices for petroleum products and road repairs, but advised against the importation of garri.

“I will advise that the government should find a way to reduce the price of petroleum products, especially those in the agricultural sector. More so, they should endeavour to repair roads, especially the ones that lead to farmlands, so that the farmers would have easy access to their property.

If garri is imported into the country, it would not crash the price of the product; rather, it would increase it and make matters worse because, with the demand we have on the ground, the product is not even sufficient for us. Instead of importation, there should be land to cultivate for production. Cassava is not sufficient. It is not enough,” the source said. READ MORE