USAID-NEXTT PROJECT

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FEASIBILITY REPORT
AND

BUSINESS PLAN
FOR THE PRODUCTION OF

INSTANT POUNDED YAM

AND

YAM FLOUR

June, 2017
This publication is prepared by Yinka Ogunseyinde & Co. and produced for review by the
USAID-NEXTT Project. This is an assignment commissioned by Carana Corporation under the
USAID-NEXTT Project.
 USAID-NEXTT PROJECT

FEASIBILITY REPORT/BUSINESS PLAN

FOR THE PRODUCTION OF
INSTANT POUNDED YAM
AND
YAM FLOUR

3
Disclaimer

The author‟s views expressed in this publication do not necessarily reflect the views of the
United States Agency for International Development and the Nigeria Expanded Trade and
Transport or Carana Corporation.

DATA PAGE

Contract Number: 215006-FPC-YO&Co-01

Contractor Name: Carana Corporation

Name of the Component: Feasibility Report / Business Plan

Date of Report: June, 2017

Document Title: Production of Instant Pounded Yam and Yam Flour

Author‟s Name: Yinka Ogunseyinde & Co.

4
ABSTRACT:

This project aims to promote investments in the production of Instant Pounded Yam and Yam
Flour in Nigeria. In an effort to achieve these, feasibility studies have been carried out and a
Business Plan prepared to highlight the profitability inherent in this investment and market
opportunities available. This project is recommended for both domestic and international
investors.

Information used in the preparation of this report was gathered from various reliable sources
which includes statistics taken from the office of Food and Agriculture Organisation and the
National Bureau of Statistics in Nigeria. Competitors‟ data and industry averages have also been

used as a basis for the preparation of the financial projections included in this report.

This report provides a financial and economic analysis of the opportunities available in the
sector and identifies the potential technical strengths and challenges that may be encountered
by the investor(s) in undertaking the identified project. The report however, helps the reader to
develop an understanding of the operational aspects (equipment, human resource,
infrastructure, etc.) in the sector and its growth potential in the country.

5
ACRONYMS

USAID United States Agency for International Development

NEXTT Nigeria Expanded Trade and Transport

FAO Food and Agriculture Organization

IITA International Institute for Tropical Agriculture

NBS National Bureau of Statistics

IPYF Instant Pounded Yam Flour

BMGF Bill and Melinda Gates Foundation

FMARD Federal Ministry of Agriculture and Rural Development

LCCI Lagos Chamber of Commerce and Industry

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Table of Contents

ABSTRACT ………………………..………........................................................................................4
ACRONYMS …………..………………………………………………………………………………………. 5
TABLE OF CONTENTS …………………………………………………………………………………………………… 6
EXECUTIVE SUMMARY ……………………………………………………………………………………………………8

1. 0 PROJECT BACKGROUND AND RATIONALE ................................................16 - 38

1.1 INTRODUCTION
1.2 OVERVIEW OF THE YAM TUBER SUB-SECTOR IN NIGERIA
1.2.1 YAM STORAGE
1.2.2 YAM VALUE CHAIN OVERVIEW
1.3 METHODS OF YAM PROCESSING

2. MARKETING FEASIBILITY ………………………………………………………….. 39- 46

2.1 ENVIRONMENT
2.2 RAW MATERIAL
2.3 ACTORS IN THE YAM VALUE CHAIN
2.3.1 FARMERS
2.3.2 MIDDLEMEN
2.3.3 PROCESSOR
2.3.4 CONSUMERS
2.3.5 EXPORTERS
2.4 COMPETITION/COMPETITORS
2.5 MARKETING STRATEGY
2.6 DEMANDS FOR INSTANT POUNDEDYAM AND YAM FLOUR

3. PROPOSED PROJECT LOCATION ……………………………………………………..47-49

3.1 PROPOSED REGION
3.2 SITE LAYOUT PLAN

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4. YAM PROCESSING DESCRIPTION, MACHINERY AND EQUIPMENT …………..50-59
4.1 YAM FLOUR PROCESSING DESCRIPTION
4.2 INSTANT POUNDED YAM PROCESSING DESCRIPTION
4.3 PROCESSING MACHINES

5. HUMAN RESOURCES ………………………………………………………………..60-68

5.1 MANPOWER
5.2 ORGANOGRAM
5.3 PROFILE, JOB DESCRIPTION AND REMUNERATION OF KEY PERSONNEL
5.4 STAFF TRAINING AND DEVELOPMENT POLICY

6. FINANCIAL …….….......................................................................69-83
6.1 PROJECT DESIGN AND ASSUMPTIONS TO FINANCIAL POJECTIONS
6.1.1 PROJECT SET UP COSTS
6.1.2 MACHINES AND EQUIPMENT CAPACITY
6.1.3 PRODUCTION PROGRAMME
6.1.4 CAPACITY UTILIZATION
6.1.5 MATERIAL AND OPERATING COSTS
6.1.6 OPERATING REVENUE
6.1.7 OTHER ASSUMPTIONS
6.2 LOAN AND REPAYMENT SCHEDULE
6.3 PROJECTED BALANCE SHEET
6.4 PROJECTED REVENUE AND EXPENDITURE ACCOUNTS
6.5 PROJECTED CASHFLOW
6.6 PROJECT RETURNS AND SENSITIVITY ANALYSIS

7. RISKS AND MITIGATIONS .........................................................................84-86

8. BUSINESS IMPLEMENTATION PLAN ………………………………………………………87- 89

9.0 CONCLUSION ……………………………………………………….90

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EXECUTIVE SUMMARY
This summary should be read in conjunction with the full text of the feasibility report
and business plan from which it was derived.

PROJECT OVERVIEW
Proposed Business Legal Status
The legal status of business tends to play an important role in any setup; the proposed yam
flour production is assumed to operate on as a private limited company.

Project Summary
Processing of yam into instant pounded yam and yam flour

Industry
Food Processing

Proposed Location

The Project is proposed to be sited in the Middle Belt region of Nigeria, due to
abundance of yams in the region.

Product Overview
Product Description Price
High quality Instant pounded yam with
Instant Pounded Yam natural taste N1,350/1.8kg

Yam Flour More nutritious undiluted yam flour N1,000/2kg

Market Overview: Yam Processing Value Chain

Target market

Upper and Middle class Nigerians who desire high quality and easy to prepare Pounded
yam and quality yam flour.

Demand Function

National demand for pounded yam consumption is 750 tons per day

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 Proposed Company‟s share of market is as follows;
Year 1 Year 2 Year 3 Year 4 Year 5
0.19% 0.21% 0.24% 0.26% 0.26%

Competition: Direct Competitors

Packed Size Brand Price (N) Location

900gm Ayoola 800 Lagos

900gm Ola-Ola 1,500 Lagos
2kg Endy 1,680 Lagos
1kg Niyi 800 Ibadan
1kg Olabisi 820 Lagos
2kg Iyan 1,500 Ibadan
1kg Mc Sure 1,040 Jos
900gm Ayoola 850 Port Harcourt

Human Resources:

Direct Personnel Year 1 Year 2 Year 3 Year 4 Year 5

Number of Production Personnel 69 75 81 87 93
Number of Admin & other Personnel 36 36 36 36 36
Total Personnel 105 111 117 123 129

Management

POSITION/STATUS QUALIFICATION RESPONSIBILITIES

REQUIRED

1 MD/CEO MSC, BSC i. Implementation of Board decisions and policies

Plus minimum of 8 years ii. Provide administrative and direction guidelines
industry experience iii. Ensure achievement of set objectives
iv. Management of resources to ensure achievement
of goals.
v. Liaise with government institutions and other
relevant agencies.

PRODUCTION
2 MANAGER MSC, BSC i. Coordinate the entire production processes
Plus minimum of 5 years ii. Ensure adherence to production standards
industry experience iii. Supervise processing and production staff
iv. Ensure timely and efficient production

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 v. Ensure achievement of production targets
vi. Keep proper records of factory maintenance
vi. Handle stock order and re-order

ADMIN.
3 MANAGER MSC, BSC in Admin. i. Responsible for personnel issues
Plus minimum of 5 years ii. Handle staff recruitment, transfers, disengagement
Administrative experience and other related matters.
iii. Handle staff performance appraisal and promotions
iv. Handle staff welfares and liaise with labour union

ACCOUNT BSC Accounting with

4 MANAGER ICAN/ACCA i. Incharge of finance and accounts
Plus minimum of 5 years ii. Prepare weekly, monthly, and yearly accounting
accounting experience reports.
iii. Responsible for general accounting and book keeping.
iv. Handle income and expenditure reconciliation

Production Programme

Production programme based on the capacity of the proposed Machinery & Equipment is
shown below:

At full capacity (100%) Pounded yam Yam Flour

Production line 1 1
Shift per day 2 2
Hours per shift 8 8
Production days per annum 250 250
Raw Yam quantity produced per shift(tons) 4 4
Raw Yam quantity produced per day (tons) 8 8
Conversion rate of raw-yam to finished product 30.00% 28.00%
Finished Product Volume per annum (tons) 600 560

Machine Production Capacity Utilization

Products Year 1 Year 2 Year 3 Year 4 Year 5

% % % % %
Instant pounded Yam 60 65 75 80 80
Yam Flour 70 75 80 85 85

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Financials

Project Cost N’000

Land and Building 99,400

Plant & Equipment 30,000
Generators 15,000
Other Depreciable Assets 30,000
Other Facility 8,000
Pre-operational 4,000
Working Capital 33,600
Total 220,000

Financed By:
Equity Capital: N60m

Loan or Venture Capital N160m

The loan is projected to be repaid in 5 years with an interest rate of 9% per annum.

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Projected Operating Activities
Year 1 Year 2 Year 3 Year 4 Year 5
N'000 N'000 N'000 N'000 N'000
Turnover 467,040 503,620 562,740 599,320 599,320

Profit before tax 23,640 28,711 47,027 57,222 57,512

Kobo Kobo Kobo Kobo Kobo

Earnings per share 39 48 78 95 96
Return on Capital employed 29 27 32 29 23

Other Projected Returns

Internal Rate of Return (IRR) 16.78%
Returns On Investments (in 5th year) 123.1%

The project discounted payback period is 3 years and 10 months

Sensitivity Analysis
Selling Price > 9.52%
Raw-Material > 13.72%
Unit cost > 11.69%
Sales Volume > 51.33%
It is therefore concluded that the project is most sensitive to sales volume

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SWOT Analysis

Strengths

Availability and easy accessibility to raw-materials

Access to cheap labour
Thorough knowledge of target market and their peculiar needs
The organization structure shall be function-based and each employee shall have a clearly
defined strategy and goal plan.

Weakness
The business is a startup and the future is always uncertain for most startup companies
The initial stages of the business requires an enormous amount of investment

Opportunities
The yam processing food production industry is still untapped
Fast growing middle class population within Nigeria
Huge population of Nigerians living abroad.

Threats
This being a new entity there is a threat from new business entrants
Cheap imitation instant pounded yam flooding the market
Non-compliance with strict NAFDAC regulations on production
There is a threat of other more established companies starting this line of business thus leading
to stiff competition that the company might not be able to cope with.

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 Business Implementation Plan

The planning, execution and commissioning of the project is estimated to last 12

months from the inauguration of the Board of Directors.
ACTIVITY SCHEDULE

ACTIVITIES MONTHS
1 2 3 4 5 6 7 8 9 10 11 12
1 Organising a formidable Board of Directors

2 Raising of Initial Equity Capital/ Sourcing for Loan

Commissioning of Architect and other Engineering

4 Consultants

5 Commencement of Building Construction

6 Deposit for the Purchase of Machinery and Equipment

7 Recruitment of Key Personnel

8 Arrival and installation of Machinery and Equipment

9 Purchase of Initial Raw-materials & Plant Test-Run

10 Plant Commissioning

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 CHAPTER ONE

PROJECT BACKGROUND AND RATIONALE

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1.1 Introduction

Nigeria occupies 923,768 km2, located on the Gulf of Guinea in West Africa. Only 40% of
Nigeria‟s 84 million hectares of arable land is presently cultivated. The country is endowed with
good natural supply of water with about 263 billion cubic metres from two of the largest rivers

in Africa (FMARD, 2016).

Food quality in yam can be defined as those quality attributes such as physico-chemical
composition (granule morphology, pasting properties, swelling, water binding capacity of yam
starch), nutrient composition (proximate, minerals, vitamins), and anti-nutritional factors
(phytates, tannins, saponins and oxalates) in the yam tuber. These parameters are significant in
determining utilization and acceptability of yam food products by all stakeholders (Farmers,
Processors and Consumers) to ensure sustainable food security. These qualities are directly
proportional to the type of yam varieties being processed and to what products.

Yam Varieties:

1. White Yam {eight-month yam) has white or cream flesh, stores well and produces high
yields. It matures 8 months after planting.

2. Yellow Yam {twelve-month yam) has yellow flesh and matures only 12 months after
planting. It does not store well nor does it produce high yields. If continually tapped it
grows for as long as 3 years.

3. Water yam (ten-month yam) has white, red, or purple flesh which is very soft because of
its high water content. Its storage qualities are poor.

4. Three-Leaved Yam (bitter yam) has yellow, white or pink flesh of poor quality, but it
produces high yields. Its leaves are prickly with three little leaves and the stem climbs
clockwise.

5. Aerial Yam {potato yam or air potato) does not develop tubers but bulbils that grow in
the axils of the leaves or underground. It is of relatively poor quality and is not widely
grown, but it stores well.

6. Chinese Yam (lesser yam) produces very small tubers with pale-yellow smooth skin that
resemble sweet potatoes. It does not store well and matures in 12 months. Its stem is
prickly and climbs clockwise. It grows best in dry, open areas.

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Nigeria has not been able to exploit its abundant yam tubers population to become a major
player in the international processed yam sub-sector. The major reasons include; non-availability
of appropriate yam storage, lack of low cost processing equipment and absence of modernized

form of yam processing.

1.2 OVERVIEW OF THE YAM TUBER SUB-SECTOR IN NIGERIA

Fig 1.1: White Yam Tubers

Yam, a tropical perennial crop cultivated mainly for its edible tubers is a staple food consumed
majorly in the Tropics and provides much economic benefit to the producers. It is primarily an
agricultural commodity classified as the third most important tropical root crop after cassava
and potatoes. Yam is an important source of carbohydrate for many people of the Sub Saharan
region especially in the yam zones of West Africa. It‟s the second most important tuber crop in
Africa, after cassava root, with production reaching above one third of the level of cassava (FAO,
2002). Yam tuber is essentially a starchy food, its principal nutritional function being the supply
of calories to the body (Onwueme, 2001). This characteristic contributes to the sustaining of
food supply, especially in the scarcity periods at the start of the wet season. Naturally, yam is
rich in starch and produces energy. Yam tubers grow up to 2.5m (8.2ft) in length and weigh up
to 70kg (154lb) it has a tough stem which softens after heating.

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Yams (Dioscorea spp.) are annual or perennial tuber-bearing and climbing plants with over 600
species out of which six are economically important in terms of food and medicine (IITA, 2009).
Yam belongs to the genus “Dioscorea” and family “Dioscoreaceae”. It is an important tuber crop
of the tropics. Yam is a tropical crop with many species, which originated in South East Asia and
was brought to West Africa in the 16th century. It is one of the principal tuber crops in the
Nigeria economy, in terms of land under cultivation and in the volume and value of production
(Bamire and Amujoyegbe, 2005). Yams are grown on 5 million hectares in about 47 countries of
the world with Nigeria as the leading world producer (FAO 2005 and IITA 2009). Most of the
yam produced comes from Nigeria, which is by far the „highest producer and exporter
worldwide (about 70% of global production) followed by Ghana and then Cote d‟Ivoire,‟
according to the FAO statistics (2010).

Source: FAO, Statistics 2011

These qualities are directly proportional to the type of yam varieties being processed and to
what products. In our survey conducted at Irepodun Local Government and environs in Oyo
North between 6th and 10th of March, 2017 to validate same conducted between years 2003-

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2006 under the World Bank funded Root and Tuber Crops Expansion Programme where over

123 varieties of yam were collected from farmers‟ field for evaluations and conservation.

Oyo North which is the major and highest yam producing zone of Oyo state, Nigeria as well as
in the whole South West of Nigeria where the common species are Dioscorea rotundata (White
Yam) and Dioscorea alat (water yam). In these areas, the variety of yam cultivated depend on the
yield, commercial value as well as excellent food products. Yam production in this area is on
commercial production that can sustain any yam processing venture resulting in high profits.
However, there are specific varieties of the two yam species (Dioscorea rotundata and Dioscorea

alata) which are best suited for particular yam products as stated on the tables hereunder.

Varieties of Dioscorea rotundata (White Yam)

SN Varieties Food Ranking Production Other characteristics

products
(local

language)

1 Lasinrin Instant Excellent Produced in very high Yellow tubers, one of

Pounded Commercial quantity the best for processed
Yam Flour products. Forms Stiffer

and heavy dough

2 Agbawobe Instant Excellent Produced in very high Excellent food quality

Pounded Commercial quantity and good and long

Yam Flour storability

3 Amula Instant Excellent Produced in very high Shining white tubers,

Pounded Commercial quantity High and long
Yam Flour storability
and Yam

flour

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4 Ehuru Instant Very Good High Commercial Value White Tubers are very
Pounded and high yielding. good for pounded yam

Yam Flour Farmers loved to and very popular in all

produced it in the South western
commercial quantity States of Nigeria

5 Danacha Instant Excellent Very big tubers, high It is also produced in

Pounded commercial yield and commercial quantity in
Yam Flour production are Niger states, Benue
enormously high.. state as well as FCT
areas. It is common

Abuja Yam

6 Zaria, Gbogi, Instant Very Good The three varieties are Very good for pounded
Agunmoga Pounded of Good commercial yam
Yam Flour value and high
storability

7 Jibo Instant Very Good Good and high White tubers and store
Pounded commercial production, very well.
Yam Flour but produced slim and
long tubers

8 Aro Instant Very Good High commercial value Highly reference in Ekiti
Pounded and production. and Ondo states. White
Yam Flour Excellent for Pounded tubers.

yam.

9 Yangbende Instant Excellent Early maturing variety. Hard tubers with very
Pounded Excellent Pounded yam low moisture content.

Yam Flour with swell during

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 preparation

10 Konga, Yam Flour Excellent High commercial value Small size and very
Monrin, for Yam and production. hard tubers with high
Korondo and Flour Production of multiple storability.

Gbinra (Elubo) tubers

11 Omi-efun Yam flour Very good Commercial production Cream coloured tubers
and value which a good
characteristics of yam
tubers for Yam flour

12 Ajelanwa Frozen Yam Good Produced in Excellent among the

Chips commercial quantity people as fried yam

13 Kokumo Frozen Yam Good High Commercial Value

Chips and quantity

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Dioscorea alata (water yam))

SN Varieties Food Ranking Production Other

products characteristics

1 Ogun awatan Yam flour Good High yielding and high commercial Cream coloured
value. Late maturing but production tubers

in commercial quantity.

2 Emi Yam Flour Good Very hard tubers and good Good storability
commercial value

3 Olesunle Yam flour Good Of good commercial production and Sweet mealy

value cream coloured

tubers

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1.2.1 YAM STORAGE

Roots and tubers such as yams are living organisms. When stored, they continue to respire,
which results in the oxidation of the starch (a polymer of glucose) contained in the cells of the
tuber, which converts it into water, carbon dioxide, and heat energy. During this transformation

of the starch, the dry matter of the tuber is reduced.

The following rules should be applied when storing yams

Do not store directly on the floor. This then allows air to pass freely and prevents
moisture from damaging the tubers.
Tubers should not touch each other so as to reduce the risk of mutual infection.
Do not expose tubers directly to light, or else they might start sprouting too early.

Methods in keeping with these rules are:

• Packing tubers in ashes and covering them with soil,

• covering them with soil and a grass mulch,
• suspending yam tubers from branches which shade them,
• tying them to a framework of poles,
• putting them on rafters in a barn.

Pests and Diseases:

The yam beetle attacks the tubers. No other serious pest is known.

Method of Storage

A number of storage methods are used by farmers in West Africa. A simple method mixes the
tubers with wood ash, heaping them and covering them with soil, possibly topped with dry grass
as a form of mulch. Even more simply they may be stored on the floor or on shelves in shed or

huts sometimes built for the purpose.

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A Typical Yam Barn

The commonest type of yam store in West Africa is the yam barn (figure above) The barn is built
on open ground but is usually, at least partially, shaded. There are many variations in the type of
structure but basically it consists of walls of vertical timbers, each 5-10 cm in diameter, 2 to 3
metres high and set about one meter apart. The vertical timbers are often made of sawn trees
which, if left unbarked, will take root when set in the ground (Bencini 1991, Ezeike 1995). It is
considered this will reduce the risk of attack by termite or rotting of the timber at ground level.
(The grown timbers will also help to provide shade.) In between the vertical timber are cross
members of lighter section timber, bamboo or similar material. The barns are covered with a
straw roof and enclosed within a fence or a wall for security. Inside the barn the tubers may be
tied individually to the vertical timbers or otherwise arranged to allow maximum air circulation.

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The maximum storage life of yams in the barn is six months. Losses are reported to be 10% to

15% during the first three months and up to 30% to 50% after six months.

Amongst the major roots and tuber crops, properly stored yam is considered to be the least

perishable. Successful storage of yams requires:

i. Initial selection of sound and healthy yams.

ii. Proper curing, if possible combined with fungicide treatment.
iii. Adequate ventilation to remove the heat generated by respiration of the tubers.
iv. Regular inspection during storage and removal of rotting tubers and sprouts that
develops.
v. Protection from direct sunlight and rain.
Storing yam at low temperature reduces the respiration rates. However, temperatures below
12 °C (54 °F) cause damage through chilling, resulting in a breakdown of internal tissues,
increasing water loss and susceptibility to decay. The symptoms of chilling injury are not always
obvious when the tubers are still in cold storage. The injury becomes noticeable as soon as the
tubers are restored to ambient temperatures. The best temperature to store yams is between 14
and 16 °C (57 and 61 °F), with high-technology-controlled humidity and climatic conditions,
after a process of curing.

1.2.2 YAM VALUE CHAIN OVERVIEW

Farmers in several regions are incorporated into value chains in various ways and for multiple
reasons. A lot of studies have been carried out on value chains and the impact with regards to
small-scale farmers. However, the yam value chain is domesticated, and it is important to note
that, Yams are deeply tied to the lives, livelihoods and cultures in West Africa and among

Africans in Diasporas. (IITA, 2012).

Relative to other crops such as cassava, there is limited yam processing in both the formal and
informal sectors (BMGF, 2014). There are about twenty five yam processing companies operating
in the Nigerian landscape whose products consist of yam flour and instant pounded yam
(otherwise known as Instant Pounded Yam Flour).However, apart from Ola-Ola brand, which is

26
produced by a Company incorporated in the USA and Ayoola brand, others are relatively small
scale producers concentrated in Lagos and part of southwest. Only a few have their presence in
other parts of Nigeria. The number of Companies in this industry is grossly inadequate for the

national demand for processed yam. The yam value chain comprises of the following:

1. Yam Flour (Elubo)

2. Instant Pounded Yam Flour (Instant Pounded Yam Flour)
3. Frozen Yam Chips

1.3 METHODS YAM PROCESSING

There are two methods of yam processing in Nigeria.

1. Informal Method
2. Formal Method

1.3.1 Informal Method of Yam Processing

Although the bulk of yam produced in Nigeria is consumed as fresh yam, informal yam
processing has formed an integral part of culture in Nigeria for decades. Informal processors are

linked to farm families and process yam into yam flour majorly.

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1.3.1.1 Yam Flakes

Figure 1.2: Yam Flakes Processing

Figure 1.3: Processed Yam Flakes

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In Southwest Nigeria, informal processing of yam is processed into yam flakes which are
subsequently milled into yam flour. Informal processors produce yam flakes from a particular
variety of yam called “Ikokoro yam”, and the production of yam flakes in this area aligns with the
peak period of yam harvesting during the dry season. Yams are peeled, parboiled and sun-dried.
The dried flakes are then pulverized by pounding in a mortar and then sieved. As a result,
production is limited by the availability of sunlight during rainy season, which makes yam flakes
and flour expensive in that season. The dried flakes can also be run through a motor-driven
milling machine. The resulting product is white, powdery flour. The flour can be stored for
several months, however, the storage environment must be dry to prevent the growth of
moulds, and must be well protected from weevils. Yam flakes are produced in bulk throughout
the dry periods and stored in sacks, to be sold during the rainy season. Buyers from different
parts of the Southwest visit Saki and other yam flakes producing areas in Oyo North to buy yam
chips throughout the year.

1.3.1.2 Pounded Yam

Informally, pounded yam is usually prepared from freshly boiled yam. The yam is boiled to
softness after which it is put in a large wooden mortar and pounded with a pestle until it forms a
thick paste of uniform consistency. The pounding process is however lengthy and noisy. More
recently, various mechanical contraptions have been devised to accomplish the „pounding‟.
Many of these devices operate on the same principles as household blenders and they pound by

maceration.

1.3.1.3 Yam Chips

Yam chips are relatively new form of processed yam. They are produced in the same way as
potato chips by frying the thin slices of tuber in fat, and then packaging them in bags.
Dehydrated yam tubers slices are produced by freeze-drying thick slices of yam tuber. The dried
slices can then be stored conveniently. When needed, they are boiled in water to produce boiled
yam. The quality of the resulting boiled yam depends on the cultivar of yam used, but is
generally poorer than boiled yam produced from the fresh tubers.

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1.3.2 Formal Method of Yam Processing:

In recent years, yam has begun to be processed formally using modernized methods of
processing along with improved technology. This has made the process more hygienic and of
higher quality. There are a bunch of Companies in Nigeria who are into the formal processing of
yam into various yam products. However, the major yam products being produced are yam flour
(elubo) and instant pounded yam (Instant Pounded Yam Flour) while the processing of yams

into frozen yam chips is relatively new.

Fig 1.4: Formal Processed Yam Products

1.4.2 Yam Flour (Elubo) Processing

Yam flour is brownish in colour, and is made from dried yam. Yam flour is often fortified with

vitamins (e.g. A, B, B2, B3) or minerals (e.g. iron), or occasionally blended with other flours.

With regard to the properties of the end-product, both yam flour and Instant Pounded Yam
Flour are expected to have a moisture content of around 10%, and should be free of moulds
(fungi), etc. It is estimated that dried yam products have a shelf-life of approximately one year.
Yam flour is used to make a very popular Nigerian meal called “Amala”. Yams used in the
production of amala are usually white in color but turn brown when dried and blended into flour
called “Elubo”in Yoruba language. This gives amala its brown colour. Amala is eaten mostly by
the Yorubas in Southwest and Tivs in middle belt of Nigeria.

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Machinery and Equipment

The major machinery and equipment for production of yam flour are:

a. Yam Slicer
b. Yam Parboiler
c. Cabinet Dryer
d. Hammer Mill with Cyclone
e. Weighing Scale
f. Packaging machine

Processing Technology

The process involved in yam flour production is:

i. Procurement of good quality tubers:

The first step to producing yam flour is getting the white variety of yam tubers (rotundata).

Sometimes, to avoid wastage, yam tubers which are about spoiling are used to make yam flour.

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 ii. Washing yam tubers:
Selected yam tubers are washed thoroughly to remove dirt and sand particles. This also ensures
that the yam flour is hygienically produced.

iii. Peeling of yam tubers:

This is the removal of the outer corky periderm. The method of peeling varies. The general
methods apply include:

a) Steam Peeling: This involves the exposure of the tubers to steam pressure for a
period of time. The process may be in batches or continuous. During this steam
pressure, the steam penetrates the pressure cortex, often the peel results in a
slight expansion of the space between the peel and the cortex. This makes it easy
for the peels to be removed when subject to minor abrasive or mechanical
processing.
b) Chemical Peeling: This involves the immersion of the yam tuber in some non-
toxic chemical such as caustic soda solution of low concentration which helps to
soften the peel. Usually, when this method is used, they are coupled with the use
of heat. The process is controlled by varying the concentration of the dye and its
temperature for effective peeling process. One major setbacks of this method is
the need to use a large volume of water to remove the effect of the chemical
during the post-peeling washing.
c) Mechanical peeling: The basic mechanical method includes the abrasive peelers,
rotary laid mounted rim peelers and use of belt conveyor. In the abrasive peeler,
the peeler consists of a vertical cylinder with a rotating disc in the bottom and a
hinge cover at the top. Abrasive grits may be applied to the inner walls of the
chambers or to rotating disc or both. A measured load of the root or tuber is put
into the cylinder and when the disc is rotated, the tuber spins or thimble so that
the peels are rubbed off when the tubers shall against the abrasive surface.

32
 iv. Soaking of yam tubers:
After peeling the yam tubers, they are cut into smaller sizes called flakes after which they are
parboiled at 50 oC in 2 minutes and allowed to cool in the water in which they were parboiled.

v. Drying :
Drying is done to reduce the moisture content in the yam flakes. The yam flakes are dried in the
drying chamber at a particular temperature. This helps reduce the growth of moulds and other
bacterial micro-organisms which may affect the quality of the yam flour. It also ensures

freshness and preservation of the quality of yam flour produced.

vi. Milling:

Dried yam flakes are milled in a miller until a uniform particle size is achieved.

vii. Bagging and packaging:

The yam flour produced are bagged and packaged in an air-tight bag to avoid the growth of

mould and other micro-organisms which may occur as result of moisture and air.

1.4.3 Instant Pounded Yam Flour (IPYF) Processing

In Nigeria, pounded yam is consumed by almost every tribe in the Country. Its consumption cuts
across all regions, age groups, economic and social classes. It is served in parties, ceremonies,
hotels, restaurants, and as a family menu. The traditional method of making pounded yam which
requires physical pounding with pestle and mortar by two or more strong men or women

depending on the quantity, is very laborious and mostly unhygienic.

Federal Institute of Industrial Research Oshodi (FIIRO) has developed and perfected a process
technology for production of Instant Pounded Yam Flour (IPYF), otherwise known as Instant
Pounded Yam Flour, to remove the drudgery associated with the traditional pounding method.
IPYF brings succor to pounded yam lovers as they can now obtain their menu of delight through
a process that is less time consuming and of course a more hygienic product with longer shelf
life.

33
Machinery and Equipment

The major machinery and equipment for production of instant pounded yam flour are:

i. Yam Slicer
ii. Yam dryer
iii. Yam Blancher
iv. Hammer mill with cyclone
v. Packaging machine
vi. Weighing Scale

Process Technology

Production of instant pounded yam flour includes the following simple unit operations:

i. Yam Selection:
Fresh harvested yams gotten from the farm are sorted to select whole-some tubers that are
suitable for the production of instant pounded yam flour. Usually the mature white varieties of
yam are most suitable for the production of instant pounded yam flour. During the selection
process, wholesome tubers are sorted out. While sorting, yam tubers that got disfigured during
the harvesting are rejected. It is important to carefully select otherwise internal deterioration
may have started especially if the yam tubers have been stored for a long period of time. This
may have caused the enzymes present in the tubers to bring about deterioration due to the
temperature of the storage area or facility (barn, store house, underground, etc). if the yam
tubers have been exposed to some light, this type of condition can also lead to spoilage which
may not be visible by mere looking at the yam tubers. A simple way of detecting spoilage is by
scalping off the back of the yam tuber and viewing it for some seconds. If there is internal
spoilage, it will show brown to black discoloration in few seconds; depending on the level of

spoilage. After selection and sorting of the yam tubers comes weighing.

34
 ii. Weighing:
The second unit operation after the sorting of the yam tubers is weighing and it involves using a
measuring balance to determine the weight of the yam tubers.

iii. Washing :
After weighing the yam tubers, they must be thoroughly washed to remove all dirts and dust
particles. This is to ensure that the end product is hygienically produced without germs.

iv. Peeling :
This is the removal of the outer corky periderm. The method of peeling varies. The general
methods apply include:

a. Steam Peeling: This involves the exposure of the tubers to steam pressure for a
period of time. The process may be in batches or continuous. During this steam
pressure, the steam penetrates the pressure cortex, often the peel results in a slight
expansion of the space between the peel and the cortex. This makes it easy for the
peels to be removed when subject to minor abrasive or mechanical processing.
b. Chemical Peeling: This involves the immersion of the yam tuber in some non-toxic
chemical such as caustic soda solution of low concentration which helps to soften the
peel. Usually, when this method is used, they are coupled with the use of heat. The
process is controlled by varying the concentration of the lye and its temperature for
effective peeling process. One major setbacks of this method is the need to use a
large volume of water to remove the effect of the chemical during the post-peeling
washing.
c. Mechanical peeling: The basic mechanical method includes the abrasive peelers,
rotary laid mounted rim peelers and use of belt conveyor. In the abrasive peeler, the
peeler consists of a vertical cylinder with a rotating disc in the bottom and a hinge
cover at the top. Abrasive grits may be applied to the inner walls of the chambers or
to rotating disc or both. A measured load of the root or tuber is put into the cylinder
and when the disc is rotated, the tuber spins or thimble so that the peels are rubbed
off when the tubers shall against the abrasive surface.

35
 v. Sulphiting:
Sulphiting serves a multifunctional role in foods. They possess microbial activity and inhibit both
enzymatic browning reactions. Bisulphate exerts competitive inhibitory effect on
polyhenoloxides by binding a sulphydrl group at the active site of the enzyme. On the other
hand, bisulphate inhibition is due to the reaction of sulphites with intermediate quinines
resulting in the formation of sulphurquinones which irreversibly inhibits polyhenol oxidase
causing complex inactivation.

Although sulphites are very effective in controlling browning, they are subject to regulatory
restrictions owing to their potentially adverse effect on health. Many reports have described
allergic reactions in humans, following the ingestion of sulphite-treated foods by hyper-sensitive
asthmatics. The use of sulphiting agents in food processing is based on sulfur-dioxide
equivalences. The Joint Expert Committee on Food Additives (JECFA) of the World Health
Organization (WHO) and the Food and Agriculture Organization (FAO) recommended an
acceptable sulphite intake of 0.07mg sulphur- dioxide per kg of body weight. Food and Drug
Administration (FDA) has proposed maximum residual sulphur-dioxide levels for certain foods.

vi. Slicing:
After washing and peeling, the yam tubers are sliced into desired thickness before the
blanching. The thicker the width, the longer the period required for blanching.

vii. Steam Blanching:

Blanching is a cooking process wherein the food substance, usually a vegetable or fruit, is
scalded in boiling water, removed after a brief, timed interval, and finally plunged into iced
water or placed under cold running water (shocking or refreshing) to halt the cooking process.
The meaning of blanch is "to whiten", but this is not always the purpose of blanching in cooking.

Food is blanched to soften it, or to partly or fully cook it

When the yam clips turn brown, the color of the yam flour after milling will also be brownish
due to the fact that the color of the dried yam chips must affect the color of the flour after
milling. The purpose of blanching operation is to reduce the browning or discoloration of the

36
yam chips when milled into flour and will have brighter color and a more acceptable look or
appearance to compare with unbalanced yam flour. The blanching temperature is the most
important parameter in the unit operation. This is because, if the temperature is not up to
achieved deactivation, the purpose of blanching is not achieved. Blanching preserves the flavour
of the yam tubers even after milling into flour.

viii. Drying:
Drying is defined as a process of simultaneous heat and moisture transfer in which heat is
required to evaporate the moisture that flows from the product into an external drying medium
usually; air. This prevents the growth of micro- organisms. Drying is important because not only
does it prevent microbial growth, it also preserves the colour, texture, flavour and nutritive value

of the product.

ix. Milling:
Milling is aimed at grinding the dried yam materials to the required particle size for fine flour.
Good milling quality gives good reliable fine flour. There are many types of milling machines
used in the milling of food products. However, the hammer mill machine is good for the instant

Pounded Yam Flour processing operations as it is efficient in obtaining the particle size.

x. Packaging and Storage:

After the production of the instant pounded yam flour, it is important to ensure that it is well
packaged. It is still prone to spoilage if not well packaged. The flour can re-absorb moisture
from the atmosphere and microbial activity can take place from this point. The packaging
material should be as such that there will be no interaction between the packaged product
(flour) and the external environment. For this reason, the product should be packaged in air-
tight and moisture proof polyethylene bags.

Yam, after packaging can be effectively stored for a long period of time of about 12months or
more. It should be stored in environments where rodents and insects are absent because
rodents and insects cause a great deal of damage to stored yam flour.

37
1.4.4 FROZEN YAM CHIPS PROCESSING

This is a product derived from yam tubers that are frozen to preserve them before actual
preparation or use. Frozen yam is a product that takes off the stress as it is easy to prepare.

Frozen yam chips when prepared are mostly called French fries.

French fries are batons of deep-fried yam. French fries are served hot either soft or crispy and
generally eaten as part of lunch or dinner or on their own as a snack and they continuously
appear on the menus of fast-food restaurants.

Machinery and Equipment

The basic machine and equipment for yam chips production are:

i. Yam peeling machine

ii. Yam chipping machine
iii. Stem-Blanching (Parboiler)
iv. Stainless Steel Tank (for washing)
v. Freezer
vi. Fryer
vii. Weighing machine and other accessories.

Process Technology:

The peeling, washing, chipping and blanching process technology for the production of frozen
yam chips is similar to that of the production of instant pounded yam flour. However, in the
production of frozen yam chips, the yam chips are frozen in the freezer before frying. This gives

the unique taste of the yam chips after production.

38
 CHAPTER TWO

MARKETING FEASIBILITY

39
2.1 Environment of Yam Value Chain

One major achievement of the present civilian administration in Nigeria in the past twelve (12)
years has been the revival of the growth of the middle class which has been witnessed in the

country.

These growths continues to drive the increasing social and health awareness of the need for
hygienically well packaged and prepared foods required for ease of preparation and good
quality living standard of people.

These coupled with the geometrically exploding population and the continued rural-urban drift
continues to fuel the demand for well packaged food stuffs especially instant pounded yam
flour, a staple food in the country.

It is one of the food items that defy socio-economic class, religious and ethnic boundaries, it is

eaten daily in one of every six families in the country (Ref: LCCI).

In recent times due to the numerous products {yam chips, pellets, starch} that can be processed
from yam tubers and the growing need for hygienically well packaged ready to use food
product by the growing middle class in Nigeria, there is a gap in the supply of instant pounded
yam flour in Nigeria thereby prompting a shift in the demand-supply equilibrium in favour of
instant pounded yam flour producers.

The Demand-supply gap has been identified to continue to expand as the population of the
country which is estimated to be 180 Million continues to grow at an average of 3.5% per

annum (Ref. Population Commission)

Also the rural – urban drift in Nigeria would help to deepen the market for instant pounded yam

flour.

2.1 Raw material

The raw material used for making yam flour or instant pounded Yam flour is undoubtedly yam.
However, for production of yam flour, sometimes the fresh yam is not used by some yam flour

40
producers; it is yams which are about spoiling. This will be obtained at cheaper prices and also
prevent complete wastage of the yam tubers. Processors of the instant pounded yam flour use
fresh yam as raw material. These are more expensive than those used for yam flour production.
This fresh yam is abundant in the middle belt of Nigeria particularly in Abuja, Benue and
Nassarawa States. It is estimated that a tuber of yam weighs between 8-10kg per piece. 500 kg
of relatively large tubers (rotundata) when processed is reported to yield 150kg of finished
product (yam flour and instant pounded yam flour).

2.3 Actors in the Yam Value Chain

After looking at the yam chain and the various production processes involved, it is important to
have some insight about the major actors involved in these processes and the reasons behind
the prices and how the yam chain operates as well as the markets. Thus, it is important to note
that every actor in the chain has a specific role in this commercial process.

2.3.2 Farmers

At the production level, we have mostly groups of small-scale farmers either informal
landowners who produce their crops or informal contract workers working for other big farmers
or processing industries. However there are farmers who function individually, or as a group.
Most farmers engage in different levels of reciprocity amongst themselves to boost production.
More also, the poorer farmers who have no yam seedlings become employees for the bigger
farmers.

In addition, some smaller farmers prefer to leave their yams on the farm and wait for someone
to come and buy, due to the cost of transportation as a result of geographical location as well as
poor road networks. However there are also other farmers who take their yam themselves to the
market and sell through the middlemen at the market. The farmers generally, communicate with
the middlemen and have very little relationships with other parties in the chain. Most farmers

sell their yams in wholesale of hundred tubers.

41
2.3.2 Middlemen

The middlemen belong to the wholesale stage, thereby playing a vital role in the markets as an
intermediary between the supplier and the buyer. At the national and local markets respectively,
they serve as intermediaries whereby the farmers are dependent on the middleman to link them
up with various buyers, but in this case, all negotiations are carried out between the buyer and
the middleman. Nevertheless, at peak seasons, the middlemen serve as informants to the
farmers through phone calls so that they can bring their product to the market. There are also
certain instances, where the middlemen go from one farm to the other buying yams from
farmers either on their farms or at the local market although most often on credit. These

middlemen sell to various customers as well as processors.

2.3.3 Processors

Most processors however, buy yam tubers directly from farmers or middlemen so that they can
get it at the cheapest possible rate before transporting it to their industries. Most of the
processors have informal contracts with the various farmers who work on their farms, however,
this is not sufficient enough to produce the required amount needed therefore the need to buy
more from the markets mostly through the middlemen. The processors mostly constitute skilled

workers from a range of machine operators to a group of management and business experts.

2.3.4 Consumers

The consumers are those who drive the various activities in the chain as well as the final
disposal. They are very important based on the prices that will be fixed on either the yam tubers
or the processed yam. In addition, they are relevant in terms of demand and supply, that is, if
the demand for yam is high then there will be an increase at the production and processing
level. In addition, More also, it is important to note that prices are fixed based on the readiness

of the consumer to pay. This is often determined by the location and product specification.

42
2.3.5 Exporters

Most yams exported from Nigeria go to neighboring African countries as well as across the
African borders. However, the major export market for yams from West Africa include Europe

(England in particular) and the United States of America‟ Ayemibo, (2010).

2.4 Competition/Competitors

A survey was carried out between March and April 2017 in Lagos, Ibadan, Port-Harcourt and Jos.
The survey was for yam flour and Instant Pounded Yam Flour to give an insight into the

following:

 The available brands in the market.

 The market shelf prices of the products per brand.
 The demand function of the products
 Opportunity for other brands entrance into the market, particularly new brands.
The survey selected organized open markets and major supermarkets randomly. The result of
the survey shows that, there are many brands in the market. Most of the brands are products of
manufacturers within their base region.

There are only two products that have a national spread. These are “Ola-Ola” and Ayoola.

Some other products with local spread are;

Available Brands

Products Brand Name Name and Address of Manufacturer

i. Endy U-Best Industries (Isola Road, Mushin, Lagos)
ii. Goodlife Lagos
iii Delvotic Lagos
iv Ola-Bisi Lagos
v Niyi Foods Km1, Komu Road, Ilero, Oyo State
vi Fresh Serve Yam Ofi Food Industries Ltd (Oluyole Est. Ibadan)
Soldua Pounded Yam
vii Flour Ogadigbo LGA, Benue State
Mc Sure Foods (Yam 5IVE Foods International Venture Ltd, (Km 2, Markurdi-
viii Flour) Aliade Rd, Gwer East, Benue State

43
The shelf market prices per product vary with brand and locations. The average retail prices in
supermarkets are as follows;

Packed Size Brand Price (N) Location

900gm Ayoola 800 Lagos
900gm Ola-Ola 1,500 Lagos
2kg Endy 1,680 Lagos
1kg Niyi 800 Ibadan
1Kg Olabisi 820 Lagos
2kg Iyan 1500 Ibadan
1kg Mc Sure 1,040 Jos
900gm Ayoola 850 Porthacourt

Another striking observation from the result of the survey is that no brand manufactures a
mono product. The manufacturers produce various types of flour. This includes;

a. Instant pounded yam flour

b. Yam flour (Elubo)
c. Plantain Flour
d. Beans Flour
e. Rice Flour

In the course of the survey, we interviewed a chief executive officer of one of the manufacturers
on why they are multi-products and not mono-product manufacturers. He explained that all the
products have flour as their final output.

Secondly, all products are in demand in the market, and their manufacturing processes are same
(Dry the product, Hammer Mill and Package). The only difference is the basic raw-materials.

Thirdly, the gross margin on each product is not too attractive due to the seasonability of the
basic raw-materials. A combination of products gives a better result and ensures an all year
production.

Another observation from our survey is that all manufacturers that are regionally based have a
production capacity of between 1-3 tons per day. This shows that they are all in the group of
Small Scale Enterprises. The Chief executive officer interviewed, explained that most of them in
the industry are using locally fabricated machines. This gives rise to low machine efficiency and
yield.

2.5 Marketing Strategy

We observed that new entrants into the market usually employ one of the following strategies.

44
 a. The Product Range Strategy: The product should compete favourably well with the
existing brands that is well patronized by consumers. It should also be able to satisfy
customers‟ demands and also falls within the quality brands in the market. However, it is
important to create a niche for the brand even when the same technology is being used
in the processing.

b. The Pricing Strategy: Good pricing policy enables the product obtain the necessary
market share in terms of volume. The company must be focused in determining whether
the pricing policy be based on costs push, or market pull or combination of the two.

c. Promotional Strategy: Promote sales by various ways including granting of credit

facilities, bulk discount, product launching, and attractive packaging. In relation to sales
promotion, packaging would be designed to create a favourable product image and
establish corporate identity. Packaging also establishes the products‟ differences in case
of narrowly differentiated products. It also offers protection at all stages of distribution.

d. Distribution Strategy: This is a strategy to get the products to customers without much
inconvenience to customers and at a reasonable cost to the company.
The distribution channels could be any of the following:-

a) Directly to the ultimate consumers

b) Directly to the retailer who finally sells to the ultimate consumers.
c) Direct sales through the wholesaler or agent.
d) A combination of any of these alternatives.

2.6 Demand for Instant pounded Yam and Yam flour

There are no reliable statistics to help in determining the national Demand for instant pounded

yam and yam flour (Elubo).

Statistics obtained from Federal Ministry of Agriculture only gave the annual production of yam

in Nigeria. The Minister for State, Federal Ministry of Agriculture, Senator Heineken

Lokpobiri, said that “about 48 million tonnes of yam tubers are produced annually in
West African sub-region on 4 million hectares of land. Nigeria alone produces 36

45
million tonnes on 3 million hectares of land annually accounting for 68% of global

production and being the world‟s largest producer.”(Daily Trust-: Mar 23 2017)

However, the national demand for instant pounded yam can be derived, using some basic

assumptions.

The food processing group of Lagos chamber of Commerce and Industry (LCCI) in a seminar
held in 2015, opined that at least one person in every six families eat pounded yam daily in
Nigeria.

The population of Nigeria is estimated to be 180 million.

Assuming that a family consists of 6 persons (father, mother and four children) then there are

approximately 30million families in Nigeria.

It can be assumed therefore that about 5 million people eat pounded yam daily in Nigeria. An
average daily consumption per person is 150gm (FIIRO), this is why most packaging is 900gm

per pack for a family consumption.

The national demand could be estimated therefore, to be 750 tons per day, excluding
production meant for export.

46
 CHAPTER THREE

PROPOSED PROJECT LOCATION

47
 3. PROPOSED PROJECT LOCATION FOR PRODUCTION OF IPYF

3.1 The project is best sighted close to its major raw-materials due to perishability of the
material. Our proposed location for the project is Middle-Belt Nigeria (Abuja, Nasarrawa,
Benue or Kogi State).

The benefits of the proposed location are in terms of abundant availability of suitable
varieties of yam for the production of Instant pounded yam flour and relatively low
prices of the raw materials.

48
49
 CHAPTER FOUR

YAM PROCESSING DESCRIPTION, MACHINERY AND

EQUIPMENT

50
4. YAM PROCESS DESCRIPTION

4.1 Yam Flour (Elubo) Processing

Yam flour is brownish in colour, and is made from dried yam. Yam flour is often fortified with
vitamins (e.g. A, B, B2, B3) or minerals (e.g. iron), or occasionally blended with other flours.

With regard to the properties of the end-product, both yam flour and Instant Pounded Yam
Flour are expected to have a moisture content of around 10%, and should be free of moulds
(fungi), etc. It is estimated that dried yam products have a shelf-life of approximately one year.
Yam flour is used to make a very popular Nigerian meal called “Amala”. Yams used in the
production of amala are usually white in color but turn brown when dried and blended into flour
called “Elubo”in Yoruba language. This gives amala its brown colour. Amala is eaten mostly by
the Yorubas in Southwest and Tivs in middle belt of Nigeria.

Processing Technology

The process involved in yam flour production is:

a. Procurement of good quality tubers:

The first step to producing yam flour is getting the white variety of yam tubers (rotundata) .
Sometimes, to avoid wastage, yam tubers which are about spoiling are used to make yam flour.

51
 b. Washing yam tubers:
Selected yam tubers are washed thoroughly to remove dirt and sand particles. This also ensures
that the yam flour is hygienically produced.

c. Peeling of yam tubers:

This is the removal of the outer corky periderm. The method of peeling varies. The peeling
would be done manually by women in order to reduce wastages.

d. Soaking of yam tubers:

After peeling the yam tubers, they are cut into smaller sizes called flakes after which they are
parboiled at 50 oC in 2 minutes and allowed to cool in the water in which they were parboiled.

e. Drying :
Drying is done to reduce the moisture content in the yam flakes. The yam flakes are dried in the
drying chamber at a particular temperature. This helps reduce the growth of moulds and other
bacterial micro-organisms which may affect the quality of the yam flour. It also ensures
freshness and preservation of the quality of yam flour produced.

f. Milling:

Dried yam flakes are milled in a miller until a uniform particle size is achieved.

g. Bagging and packaging:

The yam flour produced are bagged and packaged in an air-tight bag to avoid the growth of
mould and other micro-organisms which may occur as result of moisture and air.

Machinery and Equipment

The major machinery and equipment for production of yam flour are:

a. Yam Slicer
b. Yam Parboiler
c. Cabinet Dryer
d. Hammer Mill with Cyclone
e. Weighing Scale

52
 f. Packaging machine

4.2 Instant Pounded Yam Flour (IPYF) Processing

In Nigeria, pounded yam is consumed by almost every tribe in the Country. Its consumption cuts
across all regions, age groups, economic and social classes. It is served in parties, ceremonies,
hotels, restaurants, and as a family menu. The traditional method of making pounded yam which
requires physical pounding with pestle and mortar by two or more strong men or women

depending on the quantity, is very laborious and mostly unhygienic.

Federal Institute of Industrial Research Oshodi (FIIRO) has developed and perfected a process
technology for production of Instant Pounded Yam Flour (IPYF), otherwise known as Instant
Pounded Yam Flour, to remove the drudgery associated with the traditional pounding method.
IPYF brings succor to pounded yam lovers as they can now obtain their menu of delight through
a process that is less time consuming and of course a more hygienic product with longer shelf
life.

Process Technology

Production of instant pounded yam flour includes the following simple unit operations:

a. Yam Selection:
Fresh harvested yams gotten from the farm are sorted to select whole-some tubers that are
suitable for the production of instant pounded yam flour. Usually the mature white varieties of
yam are most suitable for the production of instant pounded yam flour. During the selection
process, wholesome tubers are sorted out. While sorting, yam tubers that got disfigured during
the harvesting are rejected. It is important to carefully select otherwise internal deterioration
may have started especially if the yam tubers have been stored for a long period of time. This
may have caused the enzymes present in the tubers to bring about deterioration due to the
temperature of the storage area or facility (barn, store house, underground, etc). if the yam
tubers have been exposed to some light, this type of condition can also lead to spoilage which

53
may not be visible by mere looking at the yam tubers. A simple way of detecting spoilage is by
scalping off the back of the yam tuber and viewing it for some seconds. If there is internal
spoilage, it will show brown to black discoloration in few seconds; depending on the level of

spoilage. After selection and sorting of the yam tubers comes weighing.

b. Weighing:
The second unit operation after the sorting of the yam tubers is weighing and it involves using a

measuring balance to determine the weight of the yam tubers.

c. Washing :
After weighing the yam tubers, they must be thoroughly washed to remove all dirts and dust

particles. This is to ensure that the end product is hygienically produced without germs.

d. Peeling :
This is the removal of the outer corky periderm. The peeling would be done mannualy by

women in order to reduce wastages.

e. Slicing:
After washing and peeling, the yam tubers are sliced into desired thickness before the

blanching. The thicker the width, the longer the period required for blanching.

f. Steam Blanching:
Blanching is a cooking process wherein the food substance, usually a vegetable or fruit, is
scalded in boiling water, removed after a brief, timed interval, and finally plunged into iced
water or placed under cold running water (shocking or refreshing) to halt the cooking process.
The meaning of blanch is "to whiten", but this is not always the purpose of blanching in cooking.

Food is blanched to soften it, or to partly or fully cook it

When the yam clips turn brown, the color of the yam flour after milling will also be brownish
due to the fact that the color of the dried yam chips must affect the color of the flour after
milling. The purpose of blanching operation is to reduce the browning or discoloration of the
yam chips when milled into flour and will have brighter color and a more acceptable look or

54
appearance to compare with unbalanced yam flour. The blanching temperature is the most
important parameter in the unit operation. This is because, if the temperature is not up to
achieved deactivation, the purpose of blanching is not achieved. Blanching preserves the flavour

of the yam tubers even after milling into flour.

g. Drying:
Drying is defined as a process of simultaneous heat and moisture transfer in which heat is
required to evaporate the moisture that flows from the product into an external drying medium
usually; air. This prevents the growth of micro- organisms. Drying is important because not only
does it prevent microbial growth, it also preserves the colour, texture, flavour and nutritive value

of the product.

h. Milling:
Milling is aimed at grinding the dried yam materials to the required particle size for fine flour.
Good milling quality gives good reliable fine flour. There are many types of milling machines
used in the milling of food products. However, the hammer mill machine is good for the instant
Pounded Yam Flour processing operations as it is efficient in obtaining the particle size.

i. Packaging and Storage:

After the production of the instant pounded yam flour, it is important to ensure that it is well
packaged. It is still prone to spoilage if not well packaged. The flour can re-absorb moisture
from the atmosphere and microbial activity can take place from this point. The packaging
material should be as such that there will be no interaction between the packaged product
(flour) and the external environment. For this reason, the product should be packaged in air-

tight and moisture proof polyethylene bags.

Yam, after packaging can be effectively stored for a long period of time of about 12months or
more. It should be stored in environments where rodents and insects are absent because
rodents and insects cause a great deal of damage to stored yam flour.

55
The production process of instant pounded yam and yam flour is summarized in the flow

chart below:

Yam Selection

Washing

Peeling

Washing

Slicing

Parboiling (Blanching)

Drying

Milling

Packaging

56
PROCESSING MACHINES

YAM SLICER/ CUTTING MACHINE

US $2,000-3,000 / Set

Dimension:600X500X900mm

weight:70KG

capacity:200-1000KG/HR

Voltage:220V single

Hp:1HP

57
Yam Blanching Machine

58
Air Controlled Milling Machines

 US$ 3000 - 4500 / Unit

Product Details

Model Number: Q260-#4107

Brand Name: CMEC

59
 CHAPTER FIVE

HUMAN RESOURCES

60
5. HUMAN RESOURCES

5.1. Man Power

The project will require services of both skilled and unskilled personnel. Human
Resource (manpower) required for Production Process is as follows:

Production Manager

Production Supervisor

Quality Control officers

Production Assistant/Operators

Factory Hands

Women for Manual peeling

In order to reduce machine waste, women would be engaged for manual yam peeling process.

Human Resource (manpower) required for administration and marketing purpose are as
follows;

Account/Admin Manager

Marketing Manager

Internal Audit Manager

Accts, Audit and Admin officers

Marketers

Receptionist

Drivers and Security guards

61
5.2 ORGANOGRAM

BOARD OF DIRECTORS

MANAGING DIRECTOR/CEO

INTERNAL PRODUCTION ACCOUNT ADMIN MARKETING

AUDIT MANAGER MANAGER MANAGER MANAGER

AUDIT CLERKS QUALITY CONTROL/ ACCT CLERKS DRIVERS/CLEANERS MARKETERS

SUPERVISORS/PURCHASE RECEPTIONIST/SECURITY

62
5.3 PROFILE, JOB DESCRIPTION AND REMUNERATION OF KEY PERSONNEL
POSITION/STATUS QUALIFICATION
REQUIRED
1 MD/CEO MSC, BSC
Plus minimum of 8 years
industry experience
2 PRODUCTION MANAGER MSC, BSC
Plus minimum of 5 years
industry experience
3 ADMIN. MANAGER MSC, BSC in Admin.
Plus minimum of 5 years
Administrative experience
BSC Accounting with
4 ACCOUNT MANAGER ICAN/ACCA
Plus minimum of 5 years
63
RESPONSIBILITIES ANNUAL
REMUNERATION
N'000
i. Implementation of Board decisions and policies 4,800
ii. Provide administrative and direction guidelines
iii. Ensure achievement of set objectives
iv. Management of resources to ensure achievement
of goals.
v. Liaise with government institutions and other
relevant agencies.
i. Coordinate the entire production processes 1,800
ii. Ensure adherence to production standards
iii. Supervise processing and production staff
iv. Ensure timely and efficient production
v. Ensure achievement of production targets
vi. Keep proper records of factory maintenance
vi. Handle stock order and re-order
i. Responsible for personnel issues 1,800
ii. Handle staff recruitment, transfers, disengagement
and other related matters.
iii. Handle staff performance appraisal and promotions
iv. Handle staff welfares and liaise with labour union
i. In-charge of finance and accounts 1,800
ii. Prepare weekly, monthly, and yearly accounting
 accounting experience
BSC Accounting with
5 AUDIT MANAGER ICAN/ACCA
Plus minimum of 5 years
internal audit experience
6 MARKETING MANAGER Msc, Bsc in Marketing
Plus minimum of 5 years
marketing experience
64
reports.
iii. Responsible for general accounting and book
keeping.
iv. Handle income and expenditure reconciliation
i. Ensure compliance with company's controls and 1,800
policies.
ii. Provide independent assurance that an
organisation's risk management, governance
and internal control processes are operating
effectively.
iii. Provide regular evaluation and appraisals of
Internal control.
i. Develop new business relationship and enrich 1,800
existing ones.
ii. Drive and promote sales and marketing target.
iii. Supervise the marketing department.
iv. Products and Price survey
v. Monitor Sales
vi. Prepares daily and weekly sales report
vii. Follow up customers and ensure realization of
sales proceeds.
5.4 STAFF TRAINING AND DEVELOPMENT POLICY

STAFF PERFORMANCE DEVELOPMENT

1. Purpose

The company‟s Staff Performance Development Process is aimed at

 driving the company to become a high performance and commercially focused

organization

 aligning individual objectives with company‟s objectives and core values.

 encouraging employees to think about and communicate their performance

objectives/targets with their supervisors

 focusing on performance improvement

 helping staff to continue self value-adding

 tracking and rewarding high performers

2. Performance Development Process

 Performance Development is a systematic approach to maximizing both individual and

organizational performance.

 Performance is defined as a combination of Results (Achievement of Objectives) plus

Behaviours (Competency Development).

65
 2.1. Achievement of Objectives

o The company shall adopt a “cascading objectives” system. This system links
individual objectives to department objectives. In turn, department objectives

are linked to company‟s strategic objectives.

o By linking individual performance to company‟s strategic objectives, the

company ensures that:

i) Individuals at all levels of the organization will work towards achieving company‟s

objectives and financial success

ii) Managers effectively communicate division/department objectives to employees

iii) Employees learn how to set their performance objectives in direct support of

division/department objectives

iv) The performance development schedule is aligned with the company‟s strategic

planning and budgeting schedule

2.2. Competency Development

 Competencies are observable and applied knowledge, skills and behaviours important
for the success of the organization, personal performance and enhanced contribution.

 The company’s Competency Model is directly linked to its core values and vision/mission.

 By linking competencies to the company‟s core values, this ensures that employees are

focused on the “right” behaviours.

2.3. Key Phases of the Performance Development Process

 The company follows four phases to achieving performance development success:

i) Planning- Setting organization- wide, division/ department-specific and individual

objectives

66
 ii) Leading- On-going coaching and feedback to employees about their performance

iii) Reviewing- Determining rewards and incentives

iv) Rewarding. Assessing performance for the year with individual appraisal interviews

between employees and their appraisers

Through these phases, the company follows a systematic, scheduled approach, from setting overall
corporate objectives at the beginning of the year to rewarding employees at the end of the year.

TRAINING & DEVELOPMENT

1. Purpose

The main objective of training and development is to help develop key competencies which

enable individuals to perform current or future jobs successfully.

In this regard, all training and development programs organized by the Human Resources
Department will be geared towards the following objectives:

• strengthening the job skills/knowledge of employees;

• improving operational efficiency and productivity; and or

• developing the potential of employees for maximizing mutual benefit to individuals

and the company

2. Policy
The basic policy in administering and implementing any type of training or development is
in accordance with the strategic business objectives of the company. The Human Resources
Department will work closely with Heads of Division/Department in assessing areas that

need training and development support.

67
3 Types of Training/Development Activities
3.1. Staff training/development activities can be employer- or employee-initiated. In
either case, has to be approved by the manager in charge of the department or
above with additional endorsement from the Human Resources Department or the

Chief Executive.

3.2. Employee-initiated training/development activities may include external programs

that are organized by external training institutes or by the company.

3.3. Employer-initiated programs may take the form of offering sponsorship for
employees to attend external programs or organizing such programs in-house.

3.4. Depending on the nature of needs and operational requirements,

training/development programs may also be implemented as job induction, job
rotation, on-the-job coaching, counseling, individual or group projects, and
secondment.

68
CHAPTER SIX

FINANCIALS

69
6.0 FINANCIALS

6.1 Project Design Assumptions

The project is aims at promoting Yam Value Chain Development in Nigeria.

6.1.1 Project Set Up Costs

The total project outlay is estimated at N220million. Please refer table below for detailed of
project set up costs.

The project will be funded through both equity and debt in the ratio 3 : 8.

The debt will be repaid over a period of 5 years.

Project Set-up Cost
N'000 N'000
Land and Buildings
Land 10,000
Factory and Other Buildings 75,000
Interest during construction 14,400
99,400

Machines and Equipment 30,000

Generators
Generator (100kva) 10,000
Back-up Generator (50kva) 5,000
15,000
Other Depreciable Assets
Vehicles (4), Delivery Vans (3) and Trucks (2) 25,000
Forklift (1 ton) 3,000
Furniture & Fittings 2,000
30,000
Other Facility
Boreholes and Water tanks 1,500
Effluent Treatment Plant (15,000L) 3,000
Water Treatment Plant 3,500
8,000
Pre-operational Expenses (Registration with
Regulatory Authorities‟ and other expenses) 4,000

Working Capital 33,600

Total Project Cost 220,000

70
6.1.2 Machinery and Equipment Capacity

The machinery and equipment required for production of 4 tons per shift of instant Pounded Yam
flour and Yam flour is as shown below;

Machines and Equipment

Pounded
yam Yam Flour Total Total
Capacity Number of Number of Number of Cost/unit Cost
Units Units Units N'000 N'000
Yam Slicer 500kg/hr 1 1 2 750 1,500.00
Yam Dryer 5 tons/day 1 1 2 4500 9,000.00
Yam Parboiler 500kg/hr 1 1 2 850 1,700.00
Hammer mill with Cyclone 1 ton/hr 1 1 2 3000 6,000.00
Packaging and Sealing Machine 500kg/hr 1 1 2 4000 8,000.00
Weighing Scale - 1 1 2 250 500.00
26,700.00
Accessories & Installation Cost 3,300.00
30,000.00
The machinery would be a mixed of local and imported

6.1.3 Production Programme

Production programme based on the capacity of the proposed recommended M& E is

shown below:

At full capacity (100%) Pounded yam Yam Flour

Production line 1 1
Shift per day 2 2
Hours per shift 8 8
Production days per annum 250 250
Raw Yam quantity produced per shift (tons) 4 4
Raw Yam quantity produced per day (tons) 8 8
Conversion rate of raw-yam to finished product 30.00% 28.00%
Finished product volume per annum (tons) 600 560

6.1.4 Capacity Utilization

Products Year 1 Year 2 Year 3 Year 4 Year 5

Instant Pounded Yam 60 65 75 80 80
Yam Flour 70 75 80 85 85

Expected Annual Output (tons)

Instant Pounded Yam 360 390 450 480 480
Yam Flour 392 420 448 476 476

71
6.1.5 Material and Operating Costs

1) Raw Material Costs

Yam tubers are the only raw materials for the production of Instant Pounded yam Flour and
Yam flour. The production estimates has been based on the ratio of input to output which is
30% and 28% respectively.

The annual raw-material requirement and raw material cost estimate is as shown;

i Instant pounded Yam Year 1 Year 2 Year 3 Year 4 Year 5

Raw-Yam (tons) 1,200 1,300 1,500 1,600 1,600
Cost per ton (N'000) 140 140 140 140 140

Total Cost of Raw-Yam per annum (N'000) 168,000 182,000 210,000 224,000 224,000

ii Yam Flour Year 1 Year 2 Year 3 Year 4 Year 5

Raw-Yam (tons) 1,400 1,500 1,600 1,700 1,700
Cost per ton (N'000) 100 100 100 100 100

Total Cost of Raw-Yam per annum (N'000) 140,000 150,000 160,000 160,000 160,000

Please note that raw- yam required for instant pounded yam production is of higher grade than
that for yam flour production.

2) Packaging Costs
Polypropylene bags of 1.8kg and 2kg sizes will be used in packaging of the Instant pounded
yam flour and yam flour. The cost including labeling is as shown below;

Year 1 Year 2 Year 3 Year 4 Year 5

Instant pounded Yam
Units of 1.8kg polypropylene bags required 200,000 216,667 250,000 266,667 266,667
Cost per labeled polypropylene bags 40 40 40 40 40

Cost of packaging (N’000) 8,000 8,667 10,000 10,667 10,667

Provision for wastages at 5% 400 433 500 533 533
Cost of packaging per annum (N’000) 8,400 9,100 10,500 11,200 11,200

ii Yam Flour (Elubo)

Units of 2kg polypropylene bags required 196,000 210,000 224,000 238,000 238,000
Cost per labeled polypropylene bags 40 40 40 40 40

Cost of packaging (N’000) 7,840 8,400 8,960 8,960 8,960

72
 Provision for wastages at 5% 392 420 448 476 476
Cost of packaging per annum (N’000) 8,232 8,820 9,408 9,996 9,996

The cost per packaging bag is not expected to rise as there would be cost advantage of
increase in production.

3. Utilities Costs
The major items of utilities are electricity and diesel. The annual requirement and cost estimates is
shown below;
Year 1 Year 2 Year 3 Year 4 Year 5
Electricity in kwh per year (10,000/month) 120,000 120,000 120,000 120,000 120,000
Cost per Kwh (N) 40 40 40 40 40
Cost per annum (N'000) 4,800 4,800 4,800 4,800 4,800

Diesel for generator assuming 100litres/day 17,500 18,750 20,000 20,000 20,000
Cost per litre (N) 220 220 220 220 220
Cost per annum (N'000) 3,850 4,125 4,400 4,400 4,400

Total Costs of Utilities (N'000) 8,650 8,925 9,200 9,200 9,200

4. Manpower Costs
The services of both skilled and unskilled personnel are required. The cost is classified to direct
manpower production costs and other personnel costs. Salary and Wages increase of 2 % annually
is projected for years 2 to 4.

Year 1 Year 2 Year 3 Year 4 Year 5

Number of Production Personnel 69 75 81 87 93
Number of Admin & other Personnel 36 36 36 36 36
Total Personnel 105 111 117 123 129

Man power Requirement and Cost Year 1 Year 2 Year 3 Year 4 Year 5

Production Manager 1 1 1 1 1
Salary (N'000) 2,400 2,400 2,400 2,400 2,400

Production Supervisor 2 2 2 2 2
Salary (N'000) 2,400 2,400 2,400 2,400 2,400

Quality Control officers/Lab attendant 3 3 3 3 3

Salary (N'000) 2,700 2,700 2,700 2,700 2,700

73
Production Assistant / Operators 30 30 30 30 30
Salary (N'000) 14,400 14,400 14,400 14,400 14,400

Factory Hands 15 18 21 24 27
Salary (N'000) 4,500 5,400 6,300 7,200 8,100

Women for Manual Yam Peeling 18 21 24 27 30

Salary (N'000) 6,480 7,560 8,640 10,530 11,700

Total Production Manpower Costs 32,880 34,860 36,840 39,630 41,700

Number
Other Personnel Costs of Annual Total
Personnel Salary Salary
N'000 N'000
Managing Director 1 4,800 4,800
Account Manager 1 1,800 1,800
Internal Audit Manager 1 1,800 1,800
Admin. Manager 1 1,800 1,800
Marketing Manager 1 1,800 1,800
Account and Audit Clerks 5 1,200 6,000
Marketers 4 900 3,600
Drivers 7 480 3,360
Security guards 8 420 3,360
Receptionist 1 960 960
Cleaners/Office assistants 6 250 1,500
Industrial Nurse 1 960 960

26,940

5. ANNUAL DEPRECIATION YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

COST DEPRECIATION N'000 N'000 N'000 N'000 N'000
LAND 10,000 0.00% - - - - -
BUILDING 89,400 2.00% 1,788 1,788 1,788 1,788 1,788
MACHINE AND EQUIPMENT 30,000 12.50% 3,750 3,750 3,750 3,750 3,750
GENERATORS 15,000 20.00% 3,000 3,000 3,000 3,000 3,000
OTHER DEPRECIABLE ASSETS 30,000 20.00% 6,000 6,000 6,000 6,000 6,000
OTHER FACILITY 8,000 10.00% 800 800 800 800 800
182,400 15,338 15,338 15,338 15,338 15,338

74
FIXED ASSET SCHEDULE

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

LAND N'000 N'000 N'000 N'000 N'000
Cost 10,000 10,000 10,000 10,000 10,000
Less: Accumulated Depreciation - - - - -
Net Book value 10,000 10,000 10,000 10,000 10,000

BUILDING N'000 N'000 N'000 N'000 N'000

Cost 89,400 89,400 89,400 89,400 89,400
Less: Accumulated Depreciation 1,788 3,576 5,364 7,152 8,940
Net Book value 87,612 85,824 84,036 82,248 80,460

PLANT & MACHINERY N'000 N'000 N'000 N'000 N'000

Cost 30,000 30,000 30,000 30,000 30,000
Less: Accumulated Depreciation 3,750 7,500 11,250 15,000 18,750
Net Book value 26,250 22,500 18,750 15,000 11,250

GENERATORS N'000 N'000 N'000 N'000 N'000

Cost 15,000 15,000 15,000 15,000 15,000
Less: Accumulated Depreciation 3,000 6,000 9,000 12,000 15,000
Net Book value 12,000 9,000 6,000 3,000 -

OTHER DEPRECIABLE ASSETS N'000 N'000 N'000 N'000 N'000

Cost 30,000 30,000 30,000 30,000 30,000
Less: Accumulated Depreciation 6,000 12,000 18,000 24,000 30,000
Net Book value 24,000 18,000 12,000 6,000 -

OTHER FACILITY N'000 N'000 N'000 N'000 N'000

Cost 8,000 8,000 8,000 8,000 8,000
Less: Accumulated Depreciation 800 1,600 2,400 3,200 4,000
Net Book value 7,200 6,400 5,600 4,800 4,000

6.1.6 Operating Revenue

The operating revenue will be majorly from the Instant pounded yam flour and Yam flour while the
waste (peel) from the raw-yams would also generate additional revenue as shown below;

Projected Sales Revenue Year 1 Year 2 Year 3 Year 4 Year 5

Instant pounded Yam Yield in tonnes 360 390 450 480 480
Unit package of 1.8kg/bag 200,000 216,667 250,000 266,667 266,667
Price per 1.8kg package (N) 1,350 1,350 1,350 1,350 1,350

Revenue (N'000) 270,000 292,500 337,500 360,000 360,000

75
Revenue from Yam Peels Year 1 Year 2 Year 3 Year 4 Year 5
Percentage in yam tubers 2%
Tons of yam required per annum 1,200 1,300 1,500 1,600 1,600
Yam peels contents at 2% 24 26 30 32 32
Value @ N20,000 per ton (N'000) 480 520 600 640 640

Calculation of Contribution YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Instant pounded Yam N'000 N'000 N'000 N'000 N'000

Revenue from Instant pounded Yam 270,000 292,500 337,500 360,000 360,000
Revenue from Yam Peels 480 520 600 640 640

Total Revenue 270,480 293,020 338,100 360,640 360,640

less: Direct Material Costs

Cost of Raw-materials (Yam) 168,000 182,000 210,000 224,000 224,000
Cost of packaging per annum 8,400 9,100 10,500 11,200 11,200
176,400 191,100 220,500 235,200 235,200

Contribution (Instant Pounded Yam) 94,080 101,920 117,600 125,440 125,440

Projected Sales Revenue (Yam Flour) Year 1 Year 2 Year 3 Year 4 Year 5

Yam Flour (flour) Yield in tonnes 392 420 448 476 476
Unit package of 2kg/bag 196,000 210,000 224,000 238,000 238,000
Price per 2kg package (N) 1,000 1,000 1,000 1,000 1,000

Revenue (N'000) 196,000 210,000 224,000 238,000 238,000

Revenue from Yam Peels Year 1 Year 2 Year 3 Year 4 Year 5

Percentage in yam tubers 2%
Tons of yam required per annum 1,400 1,500 1,600 1,700 1,700
Yam peels contents at 2% 28 30 32 34 34
Value @ N20,000 per ton (N'000) 560 600 640 680 680

Calculation of Contribution YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

Yam Flour N'000 N'000 N'000 N'000 N'000
Revenue from Yam Flour (Elubo) 196,000 210,000 224,000 238,000 238,000
Revenue from Yam Peels 560 600 640 680 680

Total Revenue 196,560 210,600 224,640 238,680 238,680

76
 less: Direct Material Costs
Cost of Raw-materials (Yam) 140,000 150,000 160,000 170,000 170,000
Cost of packaging per annum 8,232 8,820 9,408 9,996 9,996
148,232 158,820 169,408 179,996 179,996

Contribution (Yam Flour) 48,328 51,780 55,232 58,684 58,684

6.1.7 Other Assumptions

1. Inventory

The annual inventory is based on 1 month of raw-yam required for production and 3 months for
packaging materials.

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

N'000 N'000 N'000 N'000 N'000 N'000
Raw-Yam 12,000 25,667 27,667 30,833 32,833 32,833
Packaging Materials 1,500 4,158 4,480 4,977 5,299 5,299
Total 13,500 29,825 32,147 35,810 38,132 38,132

2. Cost Prices
The average Cost prices of raw yam per ton are stated below:
Cost/ton
Products N
Instant Pounded Yam 140,000
Yam Flour 100,000

The specie and grade of raw yam for production of instant pounded yam is higher
in cost than that of yam flour.

3. Selling prices are estimated as follows;

Instant Pounded Yam package of 1.8kg is N1,350

Yam flour package of 2kg is N1,000

Sales is assumed to be on cash and carry basis while purchases to be paid for within
a month of purchase.

77
 4. Taxation
Taxation is provided at 32% of adjusted profit after consideration of capital
allowances.

6.2 Loan and Repayment Schedule

A loan of N160 million would be sourced for the acquisition of Plant and
Machinery, certain equipment and building construction as stated in the executive
summary.

The loan is assumed for a period of 5 years.

Loan repayment is to commence in the second year of operation with a yearly
repayment of N40, 000 thereafter.
Interest on loan is calculated at 9% per annum
LOAN SCHEDULE
LOAN REPAYMENT BALANCE INTEREST
YEAR 9%
N'000 N'000 N'000 N'000
0 160,000 - 160,000 14,400
1 160,000 - 160,000 14,400
2 160,000 40,000 120,000 14,400
3 120,000 40,000 80,000 10,800
4 80,000 40,000 40,000 7,200
5 40,000 40,000 - 3,600

160,000 64,800

78
6.3 PROJECTED BALANCE SHEET
YEAR 0 Year 1 Year 2 Year 3 Year 4 Year 5
ASSETS N'000 N'000 N'000 N'000 N'000 N'000
Fixed Assets
Land and Building 99,400 97,612 95,824 94,036 92,248 90,460
Plant & Equipment 30,000 26,250 22,500 18,750 15,000 11,250
Generators 15,000 12,000 9,000 6,000 3,000 -
Other Facility 8,000 7,200 6,400 5,600 4,800 4,000
182,400 167,062 151,724 136,386 121,048 105,710
Pre- Operational Expenses
Registration and other expenses 4,000 - - - - -
4,000 - - - - -
Current Assets
Inventory 13,500 29,825 32,147 35,810 38,132 38,132
Cash and Bank Balances 20,100 46,753 45,644 60,900 85,495 111,479
33,600 76,578 77,791 96,710 123,627 149,611

Total Assets 220,000 243,640 229,515 233,096 244,675 255,321

Financed By:

EQUITY CONTRIBUTION N'000 N'000 N'000 N'000 N'000 N'000

Share Capital 60,000 60,000 60,000 60,000 60,000 60,000
Accumulated Profit & Loss - 20,803 46,069 87,453 137,809 188,419
Total Equity Attributable to
Owners 60,000 80,803 106,069 147,453 197,809 248,419

LONG TERM LIABILITY

Term Loan - Project Financiers 160,000 160,000 120,000 80,000 40,000 -

CURRENT LIABILITY
Taxation 2,837 3,445 5,643 6,867 6,901
- 2,837 3,445 5,643 6,867 6,901

TOTAL CAPITAL 220,000 243,640 229,515 233,096 244,675 255,321

79
6.4
FIVE- YEAR FINANCIAL PROJECTION

Projected Revenue and Expenditure

Accounts
Year 1 Year 2 Year 3 Year 4 Year 5
N'000 N'000 N'000 N'000 N'000
Contribution from Instant pounded Yam 94,080 101,920 117,600 125,440 125,440
Less : Other Production Overheads
Utilities (Electricity, Diesel and Water) 8,650 8,925 9,200 9,475 9,475
Man power Cost 32,880 35,557 38,273 41,084 43,133
Insurance Cost 912 912 912 912 912
Maintenance 3,648 4,378 5,253 6,304 7,564
Depreciation 12,270 12,270 12,270 12,270 12,270
Cost of Production 58,360 62,042 65,909 70,045 73,355

Gross Profit/(Loss) 84,048 91,658 106,923 114,079 110,769

Less: Other Costs

Pre-operational expenses 4,000
Other Personnel Cost 26,940 27,479 28,028 28,589 28,589
Administrative and General Expenses 12,000 18,000 18,000 18,000 18,000
Other Depreciation 3,068 3,068 3,068 3,068 3,068
Financial Costs 14,400 14,400 10,800 7,200 3,600
Total Expenditure 60,408 62,946 59,896 56,857 53,257

Net Profit for the year before tax 23,640 28,711 47,027 57,222 57,512

Taxation 2,837 3,445 5,643 6,867 6,901

Net Profit for the year after tax 20,803 25,266 41,384 50,355 50,611
Retained Profit B/fwd - 20,803 46,069 87,453 137,809
Retained Profit C/fwd 20,803 46,069 87,453 137,809 188,419

80
PROJECTED CASHFLOW STATEMENT
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

N'000 N'000 N'000 N'000 N'000 N'000

INFLOWS
Revenue from Instant Pounded Yam Flour 270,480 293,020 338,100 360,640 360,640
Revenue from Yam Flour 196,560 210,600 224,640 238,680 238,680
Equity Capital 60,000 - - - - -
Loan 160,000 - - - - -

TOTAL INFLOWS 220,000 467,040 503,620 562,740 599,320 599,320

OUTFLOWS
Land & Building 99,400 - - - - -
Plant & Machinery 30,000 - - - - -
Generators 15,000 - - - - -
Other Depreciable Assets 30,000 - - - - -
Other Facility 8,000
Inventory Expenses 13,500 16,325 2,322 3,664 2,322 -
Pre-operational expense 4,000 - - - - -
Cost of Raw Yams 308,000 332,000 370,000 394,000 394,000
Other Production Overheads - 46,090 49,772 53,638 57,775 61,085
Cost of packaging 16,632 17,920 19,908 21,196 21,196
Administrative Expenses - 38,940 45,479 46,028 46,589 46,589
Financial Costs - 14,400 14,400 10,800 7,200 3,600
Loan Repayment - - 40,000 40,000 40,000 40,000
Taxation - - 2,837 3,445 5,643 6,867
Total out 199,900 440,387 504,729 547,484 574,725 573,336

Cash Flow Surplus/(Deficit) 20,100 26,653 (1,109) 15,256 24,595 25,984

Opening Cash Balance - 20,100 46,753 45,644 60,900 85,495
Closing Cash Balance 20,100 46,753 45,644 60,900 85,495 111,479

81
 600,000

500,000

400,000

300,000 Series1

200,000

100,000

-
1 2 3 4 5

ANNUAL TURNOVER

120,000

100,000

80,000
Series1
60,000
Series2
40,000

20,000

-
1 2 3 4 5

ANNUAL CONTRIBUTION PER PRODUCT > Series1 : Instant Pounded Yam Series 2: Yam Flour

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6.6 PROJECT RETURNS AND SENSITITY ANALYSIS

Based on cash flow projections prepared after taking into consideration project set up costs and
operating results;

Other Projected Returns

Internal Rate of Return (IRR) 16.78%
Returns On Investments (in 5th year) 123.1%

The project discounted payback period is 3 years and 10 months

Assumptions
For calculation of IRR and Net Present Value (NPV) of the project cost of equity has been assumed
at 0% whereas, cost of debt is assumed at 9% with a spread of 8%.

Sensitivity Analysis
Selling Price =9.52%
Raw-Material = 13.72%
Unit cost = 11.69%
Sales Volume = 51.33%
It is therefore concluded that the project is most sensitive to sales value.

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 CHAPTER SEVEN

RISKS AND MITIGATIONS

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7.0 RISKS AND MITIGATIONS

Category Risk Identified Mitigation

A Machine & Equipment Stop functioning due to breakdown The Machines & Equipment are Locally
available and adequate spare parts and
there will be Maintenance agreement for
imported machines and equipment.

Power Failure Having generators as standby power

supply

B Production Stoppage Lack of Raw-material Nigerian produced millions of yam tubers

which are never exhausted yearly. There is
assurance of abundant availability of yam
tubers for production.

C Economic Market Acceptability There is ready market for the products as

people preferred the easy to prepare products
to old method of pounding yam and also
the assurance of undiluted package yam flour
give it edge over those displays in open market.

Not likely envisaged as government is

D Political Negative Government Policy encouraging SME's growth to boost economy
development and for employment generation

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 Production Quality would be ensured
E Social Negative Customer attitude throughout the production process in
towards product quality order to create brand name for the
products' quality

F Legal Approval from government regulatory Ensure that all necessary approval is obtained
agencies such as NAFDAC, SON etc. before commencement of operation.

Adequate checks and balances in the

G Others Theft company‟s internal control and tight security
arrangement.

Staff will be well trained in the use of

Fire Firefighting equipment and the company
will be licensed by Nigeria fire fighting
Services.

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 CHAPTER EIGHT

BUSINESS IMPLEMENTATION PLAN

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8.0 BUSINESS IMPLEMENTATION PLAN (BUSINESS PLAN)

Yam Value Chain Development is a project aims to promote investments in the production of
Instant Pounded Yam and Yam Flour in Nigeria. In an effort to achieve these, feasibility studies
have been carried out to highlight the profitability inherent in this investment and market

opportunities available.

This Business Plan is prepared to highlight the activity required for the project implementation and
schedule of the activities to the commissioning of the project.

The implementation of this project can be divided into activities.

Activity I– The Promoters will raise a formidable Board of Directors to formulate policies and
manage the Pre-commencement activities.

Activity II– Raising of initial Equity Capital and sourcing for loan from reputable investors
(banks or Venture Capitalist)

Activity III– Commissioning Architects and other Engineering Consultants to draw the site plans

and prepare the BOQ for Government approvals.

Activity IV– Commencement of Administrative Building and Factory Construction.

Activity V– Deposit for the purchase of Machinery and Equipment.

Activity VI– Employment of key personnel

Activity VII– Arrival and Installation of Machinery and Equipment

Activity VIII– Purchase of initial raw materials and test-run of Equipment

Activity IX– Commissioning of the Plant

The execution of the activities is assumed to take a period of 12 months (One year). The period is
classified as year zero (0) in the financial forecast.

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 ACTIVITY SCHEDULE

ACTIVITIES MONTHS
1 2 3 4 5 6 7 8 9 10 11 12
1 Organising a formidable Board of Directors

2 Raising of Initial Equity Capital/ Sourcing for Loan

Commissioning of Architect and other Engineering

4 Consultants

5 Commencement of Building Construction

6 Deposit for the Purchase of Machinery and Equipment

7 Recruitment of Key Personnel

8 Arrival and installation of Machinery and Equipment

9 Purchase of Initial Raw-materials & Plant Test-Run

10 Plant Commissioning

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9.0. CONCLUSION
Yam Processing and packaging industry in Nigeria is in its infancy stage. Early entrants shall
leverage on the advantage of market shift from traditional method of processing to a more

hygienic and easy to prepare method.

The Business is highly sensitive to price determinants; hence packaging has been limited to

family sizes of 0.9kg, 1kg and 2kg.

With IRR of 16.78% and returns on investment at first five years of 123.1%, the project
compares favourable or better than other agricultural products that are being processed in
Nigeria.

We therefore recommend this project to a progressive investor

Thank you

Yinka Ogunseyinde & Co.

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