How to Start Starch Processing Business in Nigeria
According to Wikipedia, starch production is an isolation of starch from plant sources. And this take place in start plants. It is a main constituent of cassava. Moreover, about 25% starch may be obtained from mature, good quality tubers of cassava and the starch extraction is relatively easy, because there are only small amounts of secondary substances, such as protein in the roots.
Furthermore, Cassava is the main crop used in starch processing in Africa, especially in Nigeria, because Nigeria is the country of cassava plantation and it’s also the best crop for producing starch. More and more investor are coming into starch production because of government encouragement of agricultural processing.
However, the demand for industrial starch is worldwide. Starch is highly demanded in Nigeria, even in foreign countries like United Kingdom, Germany, Asia and USA. And, in handling the implementation of starch processing business, you should embark upon a detailed and bankable feasibility studies (Market Research). And this can be carry out adequately by a professional consultants. For your well-researched Market Survey contact www.bullscapitalltd.com
Due to the wide uses of starch, it can be assumed that the total global demand for starch are over 18 billion metric tons per annum.
Needs for Market Research
You need to carry out a market survey for the cassava products you need to use for the starch processing. It is a very significant step for all business start-ups. Market research will help you to understand whether your starch process will generate high demand or not. Barely all major business owners around the world, invest hugely in market research due to the concrete data to analyze before making significant product, services or organizational decisions. Therefore, it is very vital you carry out a market survey before you commence your new business startup.
Need for Business Plan
After having a good market survey from a professional consultant, the next thing to do when going into this business is to do a very detailed business plan with cost-profit analysis. In this business plan you will learn about the cost of raw material you are going to use, your running cost, your labour cost, the market price of starch and as well knowing the cost of starch production machine you want use and so on.
Your business plan can attract reliable investor to your business. A well detailed business plan will help you to start your business with a clear mindset. It is a blueprint upon which the activities of your starch processing business will rest upon.
Meanwhile, you need to also know that the machinery select is the most important section in the business plan for starch processing plant, because a good technology and high quality machinery will determine the ends product from your starch processing.
Your business plan will have the following contents:-
- Executive Summary: – Here, all what is contain in your business plan will be summarized in such a way that, any investor that read it will be able to capture all what is in business in a glance. The reason for setting up your starch processing business will be laid emphasis on here. It is the duty of the professional consultant you hire to know to ensure that your executive summary appears more attractive and explanatory.
- Description of the Company:- Here your starch processing business will be described. It will explain the uses of starch in the market. Also, the industry that your business belongs to will be exposed here and when investors view this, they will have a good idea what is starch processing.
- Market Share:- Starch processing busing has a very large market share in Nigeria. Starch is used in so many companies. Moreover, the professional consultant you will hire will play a lot of significant role here. They will used their professional experience in projecting your business market share.
- Organizational Setup:- You can’t operate starch processing business alone. So you will need to employ staff to work with you. And this employee will be set up in such a way that will make running of your business easy and standardized.
- Products and Services:- Here, your starch products will be buttressed upon and in most cases, the raw materials used in ascertaining the products will also be explained here in such a way, anybody that see the business plan will know what your products is made up
- Sales and Marketing: – In selling your starch product, different strategies will be applied in marketing the products to ensure a huge sales and ensure that you run your business in a profitable manner. Your product will definitely not sell itself, so there will be a well- versed strategy to accomplish this. So, this is also a very important part in your business
- Funding: – Funding is also a vital part in running a business. This section will buttressed how you are going to fund your business. Funding your business can be through loan or through external investor funds. However, whatever will be suitable for your business will be explained here.
- Financial Projection:- This is a very import section of a business plan. In this section, how you are going to make some acquisitions and how much you will be expecting as profit for the next three years will be breakdown here. This section is one of the major reasons why you need to employ the service of professional consultant in preparing your business plan for you. For your well-prepared business plan, visit bullscapitalltd.com
- Appendix:– Every other information that you need but is not in the main business plan content will appear on this page.
Funding the Business
Funding a business has always been a problem for most business in Nigeria. Therefore, for you to start a starch processing business, you need enough funds. Moreover, if your personal funds is not enough, you can secure a bank loan or partner with other investors. And in getting bank loan and attracting investors of like-minds to your business, you need a solid and well prepared business plan. Banks don’t just give a startup business loan, without seeing your business plan. More so, prospective investors will be given detailed information on the foreign buyers of these products for further business relationships.
However, your funding should over machine cost, equipment cost, running cost, workshop cost etc.
Registration and Licensing of the Business
Any business that is to be commence newly must be duly registered. It is very vital so that you wont be sharing same name with another company. Apart from having a distinct name as a company, registering your company will give a better recognition when filing for tax and other things that your company will need to stay in business.
You will need to register your company with Corporate Affairs Commission (CAC). You will also need to acquire some permits and license for operating the business. Licensing your business is mandatory, if you don’t want government agency to keep fining your company.
Finally, you need to also make sure your starch product is been inspected by NAFDAC and proper approval is been issued to your company.
Processes involve in Starch processing Business
In processing of starch, you need to ensure that you have enough material supply. If you want your starch processing to be successful, then you need to solve the issue of raw material supplying because without this raw materials the starch processing machine cannot run and you can make profit if you don’t run the machine. The major raw material used in starch processing is Cassava and other raw materials. Moreover, the raw materials that will be used to process this starch can be from your own cassava farm and if you don’t have a farm, you can sign a contract agreement with local farmers for steady supply of raw materials. Moreover, starch is widely used in different industries like paper making factory, food factory etc.
Starch can be produced in wet or dry forms; both the wet and dry form are always needed in the Europe because it has a lot industrial uses which include Bread, macaroni, sauce, textile, glue making, paperboard, cosmetics, paint, soap etc.
Moreover, in ensuring maximum yield for the major raw material (that is, Cassava), it is very vital you select the best variety of Cassava and this will help in increasing the quantity and quality of your starch.
You should know that, starch product is demanded in metric tons by end users. So, the product is expected to be package in metric tons while, ensuring that international market standard of 8 percent is been maintained. And the product can be packaged in 100kg jute bags for export purposes. Finally, you also need to ensure that starch product is been preserved to avoid the product from producing irritating odours.
However, if you want to have your own cassava farm; after getting the best variety of cassava, you have to select the best stem cuttings for planting. Then the next thing is to till the land with either manual or mechanical labour and immediately you can start planting your cassava stems. That means you have to wait for the cassava to grow and ready for harvesting before you can now move it to your factory for starch processing.
In a nutshell, the technology process of starch processing can outline thus:-
Fresh Cassava ——–> Cassava Cleaning——–> Cassava Crushing———-> Starch Slurry Seperating ———-> Desanding———–> Protein remove ———> Dewater———–> Drying.
Cassava starch has many beneficial properties which include paste clarity, high viscosity, and freeze-thaw stability which is generally needed for industrial purposes.
Equipment needed for starch processing
Some of the major plants and equipments you need to acquire for starch processing are:-
- Cassava Peeler
- Automatic or semi-automatic weighing
- Hammer mill/ disintegrator
- Pulveriser and dryer (in case, if dry starch is required) etc.
However, apart from Cassava Starch, there are other agricultural product that can be used in starch processing and this agricultural products are:-
- Pea Starch
- Wheat Starch
- Sweet Potato Starch
- Corn Starch
- Modified Starch
You need to also know that there are merit of using Cassava in processing your starch than using others. And this advantages are:-
- Cassava starch production brings about extraction rate of about 95% under same final starch capacity, saving the raw material cost.
- Using cassava starch has been certified by EU Certification, so the quality has been well tested and confirm.
- Cassava starch, if compared with others, will bring more advance economic benefit, high availability and high economic benefit, high availability and high working efficiency etc.
Comparing Cassava starch to its alternatives, cassava is a relatively cheap raw material containing a high concentration of starch. Moreover, cassava starch offers numerous advantages such as neutral taste, high level of purity and excellent thickening characteristics. It also has a high paste clarity, freeze-thaw stability and paste viscosity. Owing to this, cassava starch finds applications in diverse industries like food, beverage, fuel, textile, sweeteners and paper.
You need to promote and advertise your starch processing business. However, there are so many ways of marketing your business to masses. You can employ marketers to help you make personal contact with your potential clients. Apart from personal contact, other ways to market your starch processing business are:-
- Sharing of flyers
- Social media platforms
- Via Local newspaper
- Giving out freebies to those that purchase your starch product
- Advertising your products with Google etc.
- Website creation for your business
- Organizing an interactive forum with companies and industries that may be your prospective clients.
The global cassava starch market is segmented on the basis of end users such as animal feeds, food and textile industries, animal feed, cosmetic industries and so on.
The global cassava starch market reached a production volume of more than 8 Million Tons in 2017, registering a CAGR of 5.2% during 2010-2017. The market volume is further projected to cross 10 Million Tons by 2023, at a CAGR of 4.0% during 2018-2023. Cassava starch, or tapioca, is procured from cassava roots through the process of washing and pulping. It is rich in iron, folate, manganese, carbohydrates and calcium.
Selling your starch product is just as easy as selling every other normal product in the market. You will look for more potential buyers apart from those industries mention earlier on. And in most cases, your location can influence how much sales you will made.
However, if the recent polices of discouraging imports and encouraging exports are maintained, exports would continue to increase and this will in the long run enhance agricultural sector to generate income for this country.
Presently, the cassava starch sales price is $560 per ton of cassava starch and there is probability of you making about $105.
Meanwhile, cassava can be plant and harvest almost a whole year, therefore, cassava starch processing is continuous and the revenue is also continuous too. Therefore, the starch processing business economic benefit is very high.
Location of the Business
In locating the factory for your starch processing business, you need to put so many things into consideration. Therefore, in locating your factory, you must look at:-
- Nearness to your potential customers
- Easy access for prospective clients to get the factory
- Nearness to raw materials and so on.
Finally, Starch processing business is a very lucrative business you can start in Nigeria and it is one of the unexploited business opportunity in Nigeria and a business that small, medium and large production industry can delve into.
About the Writer
Olusipe Abiodun Yinka is an Audit Associate in Bulls Capital Limited. He has a National Diploma in Accounting from Abraham Adesanya Polytechnic, Ijebu-Igbo, Ogun State; as well as a Degree in Accounting from Alex Ekwueme Federal University, Ebonyi State. He is a creative writer and a Trendsetter. Apart from writing, Olusipe is also an entertainer.
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