Potato Farm and Processing in Nigeria – The Cros Agro Potato Farm

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Cros Agro (a merger of Matankadi and Gadol) is the leading diversified agro-allied firm in Nigeria. Founded in 2001, the company has established its footprint as a player in Potato farming and processing business in West Africa and a leader in Sub-Saharan Africa.

Leading the way in the production of the Irish potato value chain, Cros Agro is investing in the critical enabling components that ensure long time sustainability of the industry. We belive that agriculture is a great industry that can attract the right talent, investment and professionalism.

Cros Agro currently owns a 700 hectares of Oil Palm Plantation, 500 hectares of Ginger farm, 1,200 hectares of Potato field and a 10 hectares ready for Processing facility in Gurara. ,In addition to 3.2k plus hectares Cros Agro has reached and agreement with Rosenqvists Food Technologies to supply its 5,000Kg an hour French Fries and Potato Flakes processing plnt- plant to be completed in December 2017 and commissioned for operation in April 2018.

Key Facts

  • The Largest indigenous potato farm in Nigeria with a landmass of 2,600hectares
  • The first Frozen French fries company in Nigeria and West Africa Subregion
  • Currently employing close to 60 farmers and additional 3k jobs once processing plant resumes in 2017
  • Supporting socio-economic development of rural Nigeria whilst improving on quality of life

Cros Agro Potato Action Plan
·         Produce high quality potato that could be consumed fresh in the form of mashed potatoes, potato pancakes, potato soup, potato salad to name a few.

  • Production of high quality seedlings to meet local and international needs for the purpose of re- planting.
    · Potato peels and other zero value wastes from potato processing are rich in starch which is used by other industries as biodegradable substitutes. They can also be converted to animal feeds.
  • Our heavy equipment will be leased out to farmers in need of such services at a specific fee.

    · Our Storage facilities will also provide storage to other users.

    Consumption: Nigeria

The Investment Case: Nigeria
Nigeria is the fourth biggest producer of potato in Sub-Saharan Africa with a production yield of about 843.000 tonnes per year. Because of an inadequate supply of good quality seeds, inadequate storage facilities, poor diseases and pest management the average yield ( 3.1 ton / hectare) in Nigeria is the lowest in Sub-Saharan Africa. The usage of modern agriculture technics and equipment will boost the productivity of the Nigerian potato value chain. There are proven practical technics that potato yields of 25 ton / hectare and more are possible to harvest on the Plateau area.

Potato Data: Nigeria

  • Total produced : Average 843,000 ton
  • Over 200,000 ton sold in major cities.
  • About 100,000 ton informally sold across Nigerian borders.
  • More than 40,000 ton import mainly from Europe
  • 40% of stored seed potatoes are lost within 3 month of storage

Potato Data: Africa

Potato Sales Price Dynamics: Nigeria

  • Sales prices of ware potatoes in Nigeria show significant fluctuations depending on market location and type of distribution channel (either retail or wholesale). This fact suggests that the market is not very competitive.

 

  • The graphic below shows the sales prices per kg of locally grown potatoes (Nicola variety) for the major cities in Nigeria and for the most important collection markets in Plateau State. Furthermore the figure highlights the sales price per kg of potatoes imported by Shoprite. All amounts represent a four month average comprising the period from Mai to August 2014. (courtesy a report by Sylvanus Mahannan Ayuba, Michael Kitsche with support of : Folarin Ranson Oguntolu (Potato Initative Africa)

EU- The 2011/2012 season
Processing prices are at very high levels because the spring drought has delayed the likely arrival of new crops suitable for processing. The April 2012 processing contract on the Eurex futures p g market temporarily rose above €200/tonne last week, an unprecedented level for the time of year.

Cros Agro goal is to;

  • Produce 432,000 tons per annum of high quality Potato in the first year of operation.
  • Supply enough potatoes to individual consumers, fast food restaurants, hotels and industries in Nigeria and other African countries,
  • Produce 43,800 tons of French Fries in the first year of operations,
  • Be the largest suppliers of high quality seedlings to other farmers.

The factory is expected to be fully operational within 12 months, with a total cost of $52M

  • Become a major player in the Agricultural/ Manufacturing Sector,
  • Create employment opportunity for almost 500 direct and over 10,000 indirect labour.
  • Generate additional revenue from the fees and interest from the facility granted.
  • Have the opportunity for converting debt to equity at a concessionary rate.
  • Have a great opportunity in investing in a highly viable venture.

We intend to achieve these objectives by

  • Production: Adopting internationally best mechanized Agricultural standards for cultivating our acquired 700 hectares of land in Plateau State and 6,500 in Kaduna. This is expected to yield 432,000 tons per annum for two sessions.
  • Storage: With our existing 1000 tons capacity standard storage facility and the development of additional 12,000 tons capacity, all located in Jos. The issues of storage of potato are greatly being addressed.
  • Processing: We are proposing a 5000kg/hr capacity factory for the production of high quality French fries.

Objectives of our Investment Strategy

  • Revenue maximization: With our marketing strategies earlier defined, we intend to capture 75% of the existing French fries market in the Nigerian fast food industry. This amount to about N12b per annum.
  • Profit maximization: the company’s measure of efficiency, success and sustainability to a large extent depends on the level of profitability.
  • Wealth maximization: We will create value for our shareholders/investors. This will be achieved by ensuring that all capital investment to be embarked on generate a positive internal rate of return (IRR).
  • Guaranteed stakeholders welfare: As a socially responsible corporate entity, we will strive to ensure all stakeholders interest are protected.

What You Need to Know About French Fries and Flakes Business in Nigeria

  • The local market consumption of French fries from fast food restaurant is put at over 40tons every normal weekend. However, during vacations, holidays, weekends and summer season, this number triples.
  • French fries are one famous snack enjoyed by many people in Nigeria. French fries are deep fried slices of potatoes which are served hot or often consumed as snacks. Potato flakes are becoming alternatives to staples like Gari and Pounded Yam
  • French fries are mostly served in fast food restaurants in Nigeria. The fast food sector in Nigeria contributes annual revenue of over N200billion to the economy. French fries have approximately 8% shares in fast food industry.
  • French fries market in Nigeria is national, with a population of about 170m people, with a predicted national population growth rate of 5.7% per annum, the French fries market in Nigeria is enormous

  • Produce 40,000 tons per annum of high quality Potato in the first year of operation.
  • Supply enough potatoes to individual consumers, fast food restaurants, hotels and industries in Nigeria and other African countries,
  • Produce 43,800 tons of French Fries in the first year of operations,
  • Be the largest suppliers of high quality seedlings to other farmers.

IRR derived by Cros Agro is estimated at 148%.

Facts & Figures 

Total estimated cost of entire project                                                                 $50+Millions

Total Capital costs for Processing Plant (French Fries and Flakes)              $35+millions

Debt to equity ratio is assumed at 70% debt and 30% equity

Average yearly cumulative turnover                                                                   $80+millions

Post Asset Portfolio cumulative valuation                                                        $110+millions

Required Debt for processsing plants and operations                                      $35+millions

Cros Agro Farm…  

  • Production: Adopting internationally best mechanized Agricultural standards for cultivating our acquired 2,500 hectares of land in Plateau State and 2,000 plus hectares in Kaduna. This is expected to yield 432,000 tons per annum for two sessions.
  • Storage: With our existing 1000 tons capacity standard storage facility and the development of additional 12,000 tons capacity, all located in Jos. The issues of storage of potato are greatly being addressed.
  • Processing: We are proposing a 5000kg/hr capacity factory for the production of high quality French fries.

Facts & Figures

Total investments required                                                                                  $50 + million

Total Debt required                                                                                                  $35 + million

Total Equity required                                                                                               $15 + million

Facts & Figures

Farm Estate Management                                                                                       4+

Total Asset value to the Group Post fund raise                                               $110+ Million

CROS AGRO Asset Management

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