Analysis of value addition in the processing of

cassava tubers to garri among cottage level

processors in southwestern Nigeria

Kehinde A.L. and K.O. Aboaba

Invited poster presented at the 5th International Conference of the African Association
of Agricultural Economists, September 23-26, 2016, Addis Ababa, Ethiopia

Copyright 2016 by [authors]. All rights reserved. Readers may make verbatim copies of
this document for non-commercial purposes by any means, provided that this copyright
notice appears on all such copies.
 Analysis of value addition in the processing of cassava tubers to garri among cottage
level processors in southwestern nigeria

*Kehinde A.L. and K.O. Aboaba

Department of Agricultural Economics and Extension
Osun State University, Nigeria
Email: kehindeal@uniosun.edu.ng
234-8037860000
*Corresponding author

Abstract
The agricultural economy in Nigeria is still largely rudimentary and its wealth creation potentials
have been hampered by inability of cottage level processors to add value to their produce among
others. The study investigated value addition to processed cassava tubers among cottage level
processors in Ogun state, Southwestern, Nigeria. Owode Local Government Area was
purposively selected and interview schedule was administered on one hundred and twenty five
(125) randomly selected processors. Data was analyzed using the descriptive statistics and the
multiple regression analysis. The study revealed that the most important constraints faced by
cassava processors are high perishability of cassava tubers, high transportation cost, and
inadequate capital among others. Also, the multiple linear regression analysis revealed that cost
of labour, cost on machine, and quantity of raw materials processed positively and statistically
influenced value added to cassava tuber at 1% significant level. It is recommended that processor
should organize themselves into cooperatives or associations that will help them mobilize funds
to take advantage of improved welfare that will result from increasing their scale of operation.
Keywords: Value addition, cottage industry, cassava processors.

Introduction

Agricultural economy in Nigeria is still largely characterized by production and direct sale of
agricultural outputs in its raw form with very little capacity for transformation of produce from
its raw form to other value added products. This is as a result of inadequate capacity of primary
producers to add value to their produce due to socio economic, economic, environmental and
technological constraints. This has manifested in the form of low production efficiency and

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limitation in the diversity of goods produced. This perhaps has been responsible for poor wealth
creation by farmers resulting in low farm and household incomes.

The rationale for value addition is predicated on the need to increase rural incomes, employment
and investment opportunities. Focusing on value addition by small scale operator is important.
This will permit investment on additional processing facilities so that marketable surpluses can
be pushed to processors and farmers can reduce post harvest losses thereby increasing farm
income. Value addition can help farmers to claim part of the unexploited profit going unclaimed
in the manufacture of food, fibre and industrial or other product from agricultural produce.

Value addition is important for the agricultural sector for Nigeria to be able to actualize the
economic agenda of different governments towards increasing agricultural Gross Domestic
Product and diversification of economic activities away from the oil sector. Suffice it to mention,
the NBS (2015) reported agriculture as a strategic component of the Nigerian economy
contributing between 19.65% and 26.63% to real GDP in 2014. Crop production constituted an
important activity in the agriculture sector and the main driver of growth in the agricultural
sector contributing between 85.39% and 90.13% to growth in this sector between quarter one and
three in 2014.

Cassava is a versatile crop and can be processed into a wide range of products such as garri,
starch, flour, tapioca, beverages and cassava chips for animal feed. According to Ofuya and
Akpoti, (1988); Ogiehor, (2002) cited in Adeola and Raji (2012:152) garri is the most popular
form in which cassava is consumed by several millions of people in Africa, especially in the
West Africa sub region. Garri is processed by peeling the cassava root, washing, grating,
followed by solid state fermentation, pulverizing and roasting (Oyewole and Sanni, 1995 cited in
Adeola and Raji 2012:152). Garri is a granulated, white or yellowish product, the colour depends
on production methods. It is a dehydrated staple food with a high swelling capability and can
absorb up to four times its volume in water.
Cassava is also gaining prominence as an important crop for the emerging biofuel industry and,
as opined by Ziska et al. (2009), it is a potential carbohydrate source for ethanol production. A
well planned strategy for the development and utilization of cassava and cassava products can
provide incentives for farmers, crop vendors and food processors to increase their incomes. It
can also provide food security for households producing and consuming cassava and cassava
products, Plucknett et al. (1998).

This study investigated factors that influence value addition in the processing of cassava tubers
to garri one of the staples in Nigeria and some other African countries. Specifically, this study
will helps to provide information on the amount of value added to cassava during processing, the
cost incurred at each stage of processing, identify and quantify coefficients of factors that
influence value addition and also identified socioeconomic, economic and technological
constraints to value addition in the processing of Cassava tubers to garri.
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Conceptual and Theoretical framework

Value addition simply implies the process of increasing the economic worth or value of a
commodity by transforming it to another commodity termed as a value added commodity.
Coltrain, (2000) added that the process should contribute to changing the current place, time and
form characteristics of the commodity to characteristics more preferred in the market place. The
value of the changed commodity is thus referred to as its added value. Other definitions of value
added include that of the Bureau of Economic Analysis (BEA) that defines value added as the
difference in the value of goods and services produced and the cost of inputs used to produce
them. It also describes it as the industrys gross receipts and other incomes, commodities taxes
and inventory changes minus expenditure for goods and services purchased from other firms.

Theoretically, The Agricultural Marketing Resource Centre (AMRC) defines agricultural value
added in terms of factors that motivates value addition. It stated that value addition must involve
changes in the physical state or form of an agricultural product; changes in the production
process that enhances the value of the final product; marketing a product based on his special
physical characteristics through physical segregation. It opined that the two important ways of
improving (influencing) value added to include;

i. Improving production efficiency there by widening the gap between the gross value
of output and the cost of intermediate input, and

ii. Changing the form, function, quantity or other product or process characteristics that
increase the margin and cost of intermediate inputs

Therefore, the concept of improving value addition is intrinsically embedded in the concept of
improving technical, allocative and scale efficiencies. Thus, factors that increase the
aforementioned will optimize/maximize value addition to agricultural products. Studies have
shown that when firms are inefficient in the production of their core product, increasing value
addition can be addressed by correction of factors causing inefficiency.

Studies have shown that most of the discussion on value addition in agriculture focus on change
in form of agricultural product, changes in production process or change in marketing strategies.
The justification/assumption for focusing on value addition is that there are unexplioted profits
going unclaimed in the manufacture of food, fibre and industrial or other products from raw
agricultural output/produce. (Lambert et al., 2006)

Evidence exist that there are economies of scale in food manufacturing (Morrison and Siegel
1998). In many cases it does cost large firms less money per unit to produce a product than small
firms. Because of economies of scales in food manufacturing farms are large and there are
consequent few buyers of raw agricultural produce. Arising from this, buyers are able to dictate
the price of raw agricultural produce. The reasoning/argument therefore is that if farmers can
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invest in additional processing activities, they could bypass the monopoly power of large
agribusiness firms and retain more of the value of the raw agricultural product by selling directly
into the wholesale or retail markets.

In terms of theoretical analysis, Dodamani and Kunnal (2007: 521-524) in a study of value
addition to organically produced naturally-coloured cotton under contract farming in
Uppinabetageri village of the Dharwad district, Karnataka state India used the simple descriptive
statistics, means and percentages were used to generate estimates of value addition at the
different stages in the processing of Kapas (Coloured cotton) into cotton garments (shirts). The
study found that an additional value of Rs 5,875 was generated through processing kapas into
cotton garments (shirts). Its break-up at different levels of processing has been recorded as
follows: ginning, Rs 327 (5.57%); spinning, Rs 781 (13.30%); weaving, Rs 1626 (27.68%); and
garments manufacturing, Rs 3140 (53.45%).

Wanyama (2013:1) utilized the Propensity Score Method (PSM) to determine the gendered effect
of peanut value addition on household income among 310 randomly selected peanut farmers in
Rongo and Ndhiwa districts of Kenya. From the results, farmers were found to undertake only
one form of value addition, shelling. Although they appreciated the higher profitability
associated with other forms of value addition like processing, inadequate capital to purchase
processing equipment was a major constraint. The PSM results suggest that value addition raises
household per capita income by Kshs.88 per day. Male headed households recorded higher levels
of income compared to female headed households. This study suggests that potential exists in
using value addition opportunity in peanut processing to raise farmers household incomes.

This study intends to utilize the Ordinary Least Square regression analysis to understand the
cause and effect relationship between value addition and factors that influence it among cassava
processors in the study area.

Methodology

Study Area

The study area is Obafemi Owode Local Government Area in Ogun State, Nigeria. Its located at
657N 330E/ 6.950N 3.500E. It has an area of 1,410 km and a human population of 228,851
(NPC, 2006). Obafemi Owode Local Government Area is endowed with vast fertile land suitable
for the cultivation of rice, kolanut, sugarcane, maize, cassava, tomatoes and a wide variety of
vegetables. The major food crops produced in the area are: cassava, rice, cocoyam, plantain,
maize and vegetable, while palm produced and cocoa form the major cash crops. Data used in
this study were obtained from primary sources with the aid of structured interview schedule. This
was designed to collect information on socio-economic characteristics of cassava processors,

4
cost incurred at each stage of cassava processing, technology available to processors and
constraints faced by processors in the study area.

Sampling Technique

A combination of purposive and simple random sampling techniques was used to select
representative samples. Obafemi Owode Local Government Area (LGA) was purposively
selected out of the 20 local governments in the state due to the prevalence of cassava growers
and processors in the area. Five villages were purposively selected from the LGA, the selected
villages were Bara, Adewolu, Abule tuntun, Owode and Adebiopon. Twenty-five (25)
respondents were randomly selected each from Bara from the five villages, making a total
sample size of 125 respondents. However, during the data clean up, the records for 103
respondents were fit for analysis.

Analytical Techniques and Model Specification

Data in this study were analyzed with both descriptive and inferential statistics. The descriptive
statistics employed include mean, minimum, maximum, frequency counts and percentages while
the inferential statistics used were the correlation analysis and the ordinary least square
regression technique. The ordinary least square regression technique was used to determine the
variables that influences total value addition in the processing of cassava tuber to garri in the
study area. The empirical model that was used in the study is specified as follows:
Y = f (X1 , X2 , X3 , X4 , X5 , X6 ,X7,X8,X9)

The explicit equation is;

Y=b0+ b1X1+ b2X2+ b3X3+ b4X4+ b5X5+ b6X6+ b7X7+ b8X8+b9X9+

Where Y is the total value addition in Naira; X1 is the total cost on labour in Naira; X2 is the total
cost on machine in Naira; X3 is the asset of the processors in Naira; X4 is the age of the
processors in Years; X5 is the sex of the processors; X6 is membership of cooperative society; X7
is the experience in cassava processing in years; X8 is the level of education; X9 is the quantity of
raw cassava processed in Kilogram; is the error term or disturbance term and b0, b1, b2, b3, b4, b5,
b6, b7, b8, b9 are parameters to be estimated. The equation was fitted using the linear, semi-log,
double-log and exponential models. The model with best fit, and which satisfied statistical as
well as econometric criteria was chosen as the lead equation.

Results and Discussion

5
Socioeconomic Characteristics of the Respondents

The selected socio-economic characteristics of interest in this study include age, sex, religion,
marital status, secondary occupation, level of formal education, membership of cooperative
society, acquisition of processing machine. The result (Table 1) shows that cottage level cassava
processing is dominated by the female sex. Majority of processor are of the processors are
between 41 60 years. Most (44.66%) cassava processor have no formal education which may
constitute resistance to quick economical and technological transformation of the industry.
Majority (70.87%) are non-members of cooperative societies and this may impede progress
associated with group action such as opportunity of group bargain and capital mobilization.
Majority ( of the processors acquired their processing equipment through personal purchase due
to low set-up cost for cottage processing. Perhaps better cooperative action can result in the
purchase of more sophisticated and expensive equipment.

Table 1: Selected Socioeconomic characteristics of respondents

Variable Frequency Percentage (%)

Sex
Male 9 8.74
Female 94 91.26
Total 103 100.00
Age (Years)
> 40 7 6.80
41 60 56 54.36
61 80 40 38.84
Total 103 100.00
Level of formal
education
None 46 44.66
Primary 36 34.95
Secondary 21 20.93
Tertiary 0 0.00
Total 103 100.00
Secondary Occupation

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 None 12 11.65
Crop farming 25 24.70
Agricultural produce 19 18.45
processing
Artisan 12 11.65
Trading 35 33.98
Total 103 100.00
Membership of
cooperative society
Non member 73 70.87
Member 30 29.13
Total 103 100.00
Mode of acquiring
processing machine
Outright purchase 98 95.15
Inheritance 2 1.94
Lease 3 2.91
Total 103 100.00
Labour engaged
Own labour 1 0.97
Communual labour 1 0.97
Hired labour 101 98.06
Total 103 100.00
Source: Field survey, 2015.

Cost incurred at each stage of processing raw cassava tuber to garri

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The average weekly costs of purchasing raw cassava tuber; transportation; peeling; grating,
pressing, frying; sifting, sealing and stitching in the study area were 1,1677.18; 1,842.23;
1,631.85; 1,939.03; 371.26; 3,514.56; 829.61; and 290.68, respectively. Cost of raw
tuber was highest followed by frying, grating, transportation and peeling respectively. Cassava
processing to garri is largely carried out using manual labour thus activities such as frying,
grating and peeling which are highly labour demanding command high costs. Cassava processing
to garri can benefit from more automated activities if farmers have access to resources to acquire
labour saving equipment thereby increasing their scale of operation.

Table 2: Weekly cost incurred at each stage of processing cassava tuber to garri

Variables Mean Standard deviation Minimum Maximum

Cost of raw tuber 11677.18 5106.05 3000 30000

Cost of transportation 1842.23 925.34 0 5000

Cost of peeling 1631.85 552.23 840 3000

Cost of grating 1939.03 553.32 360 6000

Cost of pressing 371.26 274.27 0 1400

Cost of frying 3514.56 917.44 500 6000

Cost of sifting 829.61 489.24 0 2000

Cost of sealing& grating 290.68 488.96 0 2800

Source: Field survey, 2015.

Constraints Affecting Value Added to Cassava to Produce Garri.

Table 3 shows that the most significant constraints face by cassava processors are high
perishability of raw cassava tuber, high transportation cost of cassava tubers, inadequate capital,
long period of fermentation, poor electricity supply, high transport cost of transportation to point
of sale of garri, fluctuation in the price of garri. Concerted effort need to be put in place by
different stakeholders in the processing industry to minimize this constraint. This will go a long
way in increasing productivity.

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Table 3: Constraints faced by respondents

Constraints Most severe Very Severe Less severe Not at all Total
severe (n)
High perishability 101 0 1 1 0 103
of raw cassava (98.06%) (0%) (0.97%) (0.97%) (0%)
tuber
High transportation 65 28 6 4 0 103
cost of inputs (63.11%) (27.18%) (5.83%) (3.88%) (0%)
Inadequate capital 62 24 15 2 0 103
(60.19%) (23.30%) (14.56%) (1.94%) (0%)
Poor accessible 13 25 23 19 23 103
roads (12.62%) (24.27%) (22.33%) (18.45%) (22.33%)
Problem of water 21 11 18 30 23 103
supply (20.39%) (10.68%) (17.48%) (29.13%) (22.33%)
Long period of 69 16 6 7 5 103
fermentation (66.99%) (15.53%) (5.83%) (6.80%) (4.85%)
Poor electricity 55 12 12 11 13 103
(53.40%) (11.65%) (11.65%) (10.68%) (12.62%)
Labour scarcity 11 8 12 21 51 103
(10.68%) (7.77%) (11.65%) (20.39%) (49.51%)
Poor access to 8 24 18 23 30 103
information (7.77%) (23.30%) (17.48%) (22.33%) (29.13)
High transportation 54 39 6 4 0 103
cost to point of sale (52.43%) (37.86%) (5.83%) (3.88%) (0%)
of Garri
Fluctuation in price 95 8 0 0 0 103
of Garri (92.23%) (7.77%) (0%) (0%) (0%)
Source: Field survey, 2015.
Result of regression analysis

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Of the entire model fitted to the data, the multiple linear regression model was found to have the
best fit. The result of the regression analysis (Table 4) shows the relationship between the total
value added and factors that influence it namely; total cost on labour, total cost on machine,
assets, age, sex, membership of cooperative society, numbers of years spent in processing
(experience), level of formal education and quantity of cassava processed by the respondents.

Table 4: Result of regression analysis between Value added and factors that influence value
addition in the processing of cassava to garri

Variables Coefficient Standard T Value P Value

Error
Constant 494.3584 984.5446 0.50 0.617
X1 1.146127*** .1080013 10.61 0.000
X2 .9969249*** .158209 6.30 0.000
X3 -3.071199 2.236488 -1.37 0.173
X4 9.238559 16.9348 0.55 0.587
X5 -13.50918 484.1669 -0.03 0.978
X6 27.82481 280.1595 0.10 0.921
X7 -11.84317 13.92662 -0.85 0.397
X8 -14.42286 193.426 -0.07 0.941
X9 10.5281*** .3960907 26.58 0.000
R2 0.9737
Adjusted R 0.9711
Source: Field Survey, 2015.
*** Significant at 1% ; Probability > F = 0.0000
Breusch-pagan/Cook Weisberg test for heteroscedasticity Chi2= 0.04; Prob > Chi2= 0.8403;
Significant level = 5%
The estimated regression equation is Y= 494.3584+1.146127X1+0.9969249X2 3.071199X3 +
9.238559X4 13.50918X5 + 27.82481X6 11.84317X7 14.42286X8+10.5281X9+

The result shows that the coefficients of cost of labour (X1), cost of machine (X2) and cost of raw
materials (X9) are positively and statistically related to value added at 1% significance level. The

10
coefficient on labour indicates that if labour cost is increased by 1 value added to cassava tuber
increases by 1.15. Also, the coefficient of total cost on machine shows that if the cost expended
on machines increases by 1 value added to cassava increases by approximately 1.
Furthermore, if the quantity of cassava processed is increased by 1kg, value added to cassava
tuber is increased by N10.52. The R2 indicates that 97.4% change in total value added is jointly
explained by the explanatory variables while the remaining 2.6% was explained by variables not
included in the model. Furthermore the heteroskedasticity test to check for presence of non
constant variance of the error term indicated the absence of such at the 5% significance level and
a chi square of 0.04 thus confirming the appropriateness of the coefficients of the independent
variables in the estimated model. This result shows the pivotal roles of labour, equipment and
working capital in cassava processing at the cottage level. The positive relationship between cost
of labour and value added brings up two issues. Processors are open to opportunity to increase
value added to cassava by engaging available household labour so as to reduce labour cost or
hire more quality labour which will increase cost. However, the former option will place a limit
on achieving an increased scale of operation. The result shows the positive effect of investment
in machine, but indicates a constant relationship and suggests that labour will play a more
significant role. This is expected because the cassava tuber processing at the cottage level is a
labour intensive process. Finally, an opportunity for processor to increase their working capital
through loans from cooperative or any other organized credit granting intervention will help
processor to drastically increase the volume of cassava tubers processed. This has the potential of
increasing their scale of operation and ultimately income from their enterprise.

Conclusion

The study investigated the factors that influenced value addition to cassava tuber by cottage level
processors in Nigeria. The study came up with findings that can serve as useful inferences for
other cottage processing units in other African countries. The study showed that cost of labor,
cost on machines and quantity of raw cassava processed were major determinants of value added
to cassava tuber in its processing to garri. These suggest that a deliberate effort to focus on value
addition to cassava tubers can help increase incomes generated by processors, increase
employment and investment in machines. A way to achieve this can be through the use of
cooperative societies or group association to mobilize funds for purchase of better machines and
increasing working capital thereby creating a process for the transformation of present cottage
processing units into small scale units.

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