Food processing and packaging business, by Chinedu Agbaji

Today’s Agribusiness

Nigeria is the largest market in sub-Saharan Africa with a population of over 200 million growing at three per cent annually. The economy recorded an impressive growth of 7.85 per cent in 2010 and 7.72 per cent as of the second quarter of 2011 compared to the 5.2 per cent forecast for sub-Sahara Africa and food inflation that has been on a downward trend from 14.1 per cent in October 2010 to 9.7 per cent October 2011. Petroleum powers the country‘s economy and petroleum exports account for 20 per cent of GDP, 95 per cent of total export earnings and close to 85 per cent of federal government revenue, according to the Global Agriculture Information Network.

With her population, Nigeria provides a large and attractive retail food sector. The major traditional foodstuffs consumed by a majority of the population including corn, cassava, rice, sorghum, beans, vegetables, tubers, seafood (fish) etc are predominantly unprocessed and/or semi-processed. However, changing demographics and lifestyles are resulting in increasing consumer preference for a wide range of convenience, processed and packaged as well as nutrition foods. These are assisting Nigeria‘s retail food sector to expand, as a result, food processing and packaging has become a good business venture for both local and export markets.

The food transformation result

Although the traditional open-air markets remain the dominant channel for Nigeria‘s retail food sales, the country‘s retail food sector has been undergoing change over the last decade with international supermarket brands entering the country; gradual improvement in the power sector, new malls being constructed according to international standard and the steady transformation of informal markets into more formal and modern facilities are setting new bars by providing a wide choice of shopping experiences in a modern, customer-oriented building. Any food that is consumed in Nigeria can be processed and packaged for local and international consumption, such as cassava, yam, plantain, rice (local & foreign), beans, soya beans (grains & powder), crayfish, pepper (Sokoto, Nsukka), potatoes (Irish/local), okpa, garri (Ijebu, Ngwa, Benue & Edo)etc. Some of the machines used can be fabricated locally.

Our focus is on healthy food with high demand both for local consumption and the international market. You can process them with little or no complex technicality, such as:

• Corn flour meal (white and yellow): Can be packaged using potatoes flour as a binder.
• Dawa Acha meal: Very healthy and organic meal that can also be used for weight loss.
• Potatoes Flour Meal: Very nutritional, full of fibre and good for all ages.

Food processing and packaging requirements

• Location of business area: you have to consider some factors while locating your business like power supply, raw materials, storage facilities, market etc and the land should be up to 1000 square meters.
• Factory building must be standard and in line with regulatory bodies’ specifications.
• Business registration (Cooperate Affairs Commission, Nigeria Export Promotion Council, Standard Organization of Nigeria/National Food, Drug Administration and Control, Local Government, etc).
• Equipment (Flash dryer, packaging machines, grinding machines, weight machines, etc).
• Motor vehicles for distribution of products.
• Storage facility.

Profitability

The return on this project is quite attractive and impressive that it would be difficult for any financial institution especially micro-finance banks with discerning credit officers to turn down any loan request for funding this project. Promoters of this venture will also feel comfortable releasing their hard-earned money to finance this project because the food processing business is a business with 100% return on investment in Nigeria today going by our population and improved standard of living. With less than N1,000,000 you can comfortably start this business anywhere in Nigeria, even in your house, all you need is a weighing machine, sealing machine and packaging material which will not cost you more than N200,000 depending on the scale you want to operate.

But you are advised to process or package only locally sourced foods to avoid the high overhead costs as the Dollar rate to Naira is becoming higher every day and the cost of agro-commodities is on the increase in the market. People are now patronising locally processed food. Food processing is all about adding value to raw food.

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