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Thursday, July 9, 2015

How to Start Commercial Pounded Yam Production for Exports

Nigerian Business Opportunity: Pounded Yam Production and Processing for Exports to Africans Abroad

Pounded Yam is one of Nigeria’s best loved staples and even Nigerians living abroad love to enjoy this meal with a variety of local soups. Nigerians abroad are not left out in fact they are the biggest fans of local Nigerian delicacies as they don’t mind spending more to enjoy our local delicacies even while abroad. Nigerians in the diaspora have a strong emotional attachment to their motherland and miss their country and all the memories they have. The main ingredient for making commercial pounded yam flour is yam which is abundant in Nigeria grown in most of the southern and middle belt states of Nigeria. Pounded Yam can be eaten with Egusi, Ogbonno, bitter leaf soup, vegetable soup, okra and many other local soups.

The Opportunity (Local and International demand)
According to the International Institute for Tropical Agriculture (IITA, Ibadan) in a 2001 food consumption survey among Nigerian households, Yam is one of the most widely consumed staple after maize, cassava and rice although one of the most expensive. It is a major source of energy in diet of Nigerian families, doesn’t spoil quickly and also occupies a very symbolic position socio-culturally among diverse ethnic groups in Nigeria with the New Yam festival serving as a standard for assessing farming seasons and crop yield. All this points to the fact that there is high demand for it locally, however the international market is where the opportunity seems even greater and there are various reasons for this such as;

·         Low competition (Only two companies as of 2014 are into this business and they haven’t adequately captured the market).
·         High demand (Over 17 million Nigerians live abroad in over 40 countries in Europe, Asia, North America and Africa). The highest demand is from Nigerians in Holland, China, India, US, UK, Spain and South Africa.
·         High profit Margin (Up to 100% profit margin from sales)

Target Market Analysis
Total Population of Nigerians in Main Market Regions 2014 estimates is put at 10,850,000. Sources for these figures are; the deputy Nigerian Ambassador to the United States at a conference for promoting investment in Nigeria mentioned that at least 5 million Nigerians live in the US in 2013. The Guardian Newspaper on 16th November 2014 reported the US, UK, South Africa, Europe and Asia as Nigeria’s leading overseas destinations with the US accounting for 31% followed by Europe at 21% and  South Africa with 5%. 
                                                                                                                                                   
Market Region
United States
United Kingdom
South Africa
China
Dubai
West Africa
Estimated Population
5,000,000+
3,000,000+
900,000+
850,000+
800,000+
300,000+
Sources: Nigerian Embassy in New York, Guardian Newspaper, Chinatravelguide.com, National Population Commission

·         With these figures we estimate the potential market size to be NB: I estimate 1$ = N200
Market
10,850,000
Total market Population
1,758,000
Monthly Spending Pool
$2,500
Average Household Monthly Income
$5,000
Disposable Income on Edibles
$250
Households
875,000
Estimated Potential Market Value
$32,200,000 (N6.44 billion) in sales

Startup Requirements
This business isn’t easy to start up because of the capital required to set it up which is N49,490,000 and would be used to acquire such things as machinery, rent warehouse, working capital, purchase delivery van and other expenses which are available in a detailed business plan.

Conclusion
This business is a cash cow and anyone looking to go into it should consider the challenges and threats which may cause the business to fail. The business is highly profitable but if you lack required marketing, operational and managerial knowledge you won’t be able to exploit this opportunity fully.


Need a comprehensive business plan on commercial pounded yam production or any other business plan for that matter? Give me a call: 0803 206 4106 and I’ll hook you up with a reliable business plan you can take to the bank. 

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