CASSAVA PRODUCTION AND MARKETING IN THE CHINYANJA TRIANGLE

CASSAVAPRODUCTIONAND MARKETINGIN THE CHINYANJATRIANGTE (MALAWT, & ZAMBTA), MOZAMBTQUE

ANGOLA AND SOUTHAFRICA

Kombewq E. qnd Mohungu N.M.

ocToBER 2007

OF TROPICAIAGRICUTTURE/ INTERNATIONAIT-INSTITUTE NETWORK AFRICAROOTCROPSRESEARCH SOUTHERN (lITA/SARRNET)

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CASSAVA PRODUCTION AND MARKETING IN THE CHINYANIA TRIANGLE (MALAWI, MOZAMBIQUE, ZAMBIA, ANGOLA) AND SOUTH AFRICA

Kambewa E. And Mahungu N.M. INTERNATIONAL INSTITUTE OF TROPICAL AGRICTTURE/ SOUTHERNAFRICA ROOT CROPSRESEARCHNETWORK IITA/SARRNET

OCTOBER2OO7

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Acknowledgements A number of people and organizationshave contributedto the successfulcompletionof this study. While it may not be feasible to mention them all, we wish to acknowledgethe contributionsof all farmers,traders,processors,and manufactureswho took their time off their busy schedulesto respondto our questionswith passionandunderstanding.

We also wish to acknowledgethe contributions of the senior officers from Ministry of Agriculture, particularly the Planning Division for kindly providing the data upon request.The sameappliesto staff of the National StatisticalOffrce (NSO) for also providing data especially on consumerprice indices(CPD that were neededto facilitatethe analysis.Discussionheld with the Director of Industryin the Ministry of Industryand Trade,The ExecutiveDirector of MEDI, and all otherswerevery insightful.

ManagingDirector of PIM, PlantManagerof Rab Processors We are gratefulto the Malawi Bureauof Standardsand all companieswe talked to in personor throughtelephoneconversation.

We thank the enumeratorsand field supervisorsrn Zambia, Malawi, and Mozambique and IITA/SARNNET staff for their excellent researchsupport. Financial support for this study was providedby USAID andthis is gratefullyacknowledged.

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Abbreviation AGO

Africa growth OPPortunitYAct

CMRTE

Chinangwandi MbatataRootsandTubersEnterprise

COMESA

CommonMarket for Eastand SouthemAfrica

CPI

ConsumerPrice Index

ESARRN

Easternand SouthernAfrica Root cropsResearchNetwork

FAO

Food andAgriculturalOrganization

FAOstat

STAT-Food and Agricultural OrganizationStatistics

IDEA

Initiativefor Developmentand Equity in African Agriculture

MACE

Malawi Agriculture Commo<iityExchange

IDRC

InternationalDevelopmentResearchCenter

IMF

InternationalMonetaryFund

IITA

InternationalInstitutefor TropicalAgriculture

MEDI

DevelopmentInstitute Malawi Entrepreneur

MK

MalawianKwacha New PartnershipforAfrica's Development

NEPAD NGO

Non GovernmentOrganization NowergianAgency for Development

NORAD NSO

National StatisticsOffrce

PIM

PackagingIndustriesMalawi Ltd

SADC

SouthemAfrican DevelopmentCommunity

SARRNET

SouthernAfrica Root Crops ResearchNetwork

TTA USAID

TotalTransformationAgribusiness(PVT)Ltd United StatesAgency for InternationalDevelopment

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EXECUTIVE SUMMARY This study was undertakento analyzethe value chain for cassavaand cassavaproductsin Southem Africa, including Malawi, Zambia,Mozambique,Angola, and SouthAfrica. The study includedan examinationof the policy and institutionalenvironmentfor cassavaproductionand trade.This report targetsthe cassavavalue chain in Malawi, Mozambiqueand Zambia.The other reportsare submitted separately.

In Malawi, the study was done in five districtsnamely Kasungu,Lilongwe, Nkhotakota,Mulanje and Blantyre. In Zambia, the study coveredChipata,Lundazi and Katete districts. In Mozambique,the study coveredAng6nia,Macanga,Tsanganoand Moatizedistricts.The studywas conductedfrom June to September,2007 using primary and secondarydata. Primary data was collected through key and informantand surveytargetingcassavafarmers,traders(both wholesalersand retailers),processors industrialusersof cassavaproducts.The surveylastedfor 14 days in Malawi, l0days eachin Zambta and Mozambique.Secondarydata and literaturewere usedto establishvolumesof trade,value adding activities,constraintsand opportunitiesamongothersthings.Use of secondarydata was crucial given that the currentstudy was done when therewas very little cassavaand cassavavalue addingactivities wereusedfor dataanalysis. on the market.Descriptivestatistics policy and institutionalsupportsincethe pasttwo decades.

The cassavavalue chain enjoysa reasonable However, this support has largely been in responseto unfavorableclimatic conditions as well as structuraladjustmentprogramsthat led to faltering maizeproduction.As a result,cassavaproduction, consumptionand marketvalue havebeenincreasingin tandemwith increasinginstitutionalsupport.

The resultsshow that the structureof cassavavalue chainis differentin the threepartsof the Chinyanja of the chain in the threepartsof the triangleis that the chain triangle.One common characteristic largelytargetsthe informal sectorespeciallyfor food security.In Malawi, the chainis relativelylong involving about 2-4 middlemenwhereasin Zambia and Mozambique,the chain is relativelyshort mainly comprisingfarmers,retailersand consumers.There are more value adding activitiesbeing processingfor industrialproductssuchas starchand alsofood undertakenin Malawi suchas-cassava sectorsuchas flour, bread,juice amongothers.None of suchactivitieswerereportedin manufacturing the Zambtaand Mozambiquepartsof the Triangle.

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The market margin analysisshowsthat farm gateprices are slightly lower in Malawi relative to Zambia and Mozambique.Middlemenboth wholesalersas well as retailersget relativelyhigher net marketing marginsin Malawi comparedto their counterpartsin Zambia and Mozambique.The high marketing costs especially transport costs reduce their net margins. In fact, wholesalersrn Zambia and Mozambiqueget negativenet marketingmargins.This explainsthe middlemen'slow participationin the cassavatradingwhich may not be profitablefor them.

Although the cassavavalue chain has high potential for value addition, the extent to which this is achievedcould not be ascertainedduring the current study becausethere was very low or no value addingactivitiestaking placedue to limited amountof cassavaat the time of the study.Although value addingactivitiesare steadilypicking up in Malawi, they still remainrelativelylow. This is evidencedin the limited initiativesreportedin literature.Cassavais predominantlysold in fresh form targetingthe informal marketsfor food security.The most importantvalue addedcassavaproductsis comit'ronly starchthat is mainly sold to the packagingindustryfollowed by cassavaflour and chipsthat targetthe food manufacturingsector.

The resultsfurther show that largescaleinvestorsare emergingboth in the food and non-foodsectorof the cassavavalue chain. Demand for cassavabasedproducts is far from being satisfiedfrom the processing existinglocalcassava initiatives.For example,the PackagingIndustriesMalawi Limitedhas an annualdemandof about 400 metric tons of starchbut can only get less than 20 tons from local cassavaprocessorsand import the rest.A total of over 3220 metrictons of cassavaflour and chipsand over 1522metric tons of starchare neededto meetcurrentdemandfor the same.Someof the potential industrialusersof cassavaproductsrely on imported ingredients.As such quantifuingtheir potential demandhasnot beeneasyas in somecasesit requiredthe potentialusersto declaretheir importswhich becomesa sensitiveissue. The other potentialvalue addingprocessingfor cassavais in the bio-fuel industrywherequantificationof the volume of cassavaneededhasnot beenmadein this study.

The value chain howeverfacesa lot of challengesincludinglack of coordinationand effectivelinkages betweenpredominantlysmall-scalefarmersand high value markets,informality of the productionand marketing activities, lack of accessto improved technologiesespeciallyfor processing.One of the critical issuesto improve the cfiannelperformanceis coordinationamong channelplayersespecially farmers and buyers in the industrial sector.This would minimize searchcosts for both producers (searchingfor markets)and buyers (searchingfor suppliers).Establishingsuch links might require

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mechanismsthat may enhancelong termsrelationshipsin the channel.As high value marketsrequire quality, quantity and timeliness,achievingthesemay require sustainedinvestmentand technological support for the small scale farmers.This may be achievedthrough public or private partnershipswith farmers or bilateral supportto farmers.Farmersmay be better linked to marketsif they were organized into groups. Group action may also enhancefarmers bargaining advantagein negotiating prices and other terms of transactions.Extemal help would have to be sourcedto effectivelyorganizeand link farmersto high value markets.

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INTRODUCTION This stuclywas commissionedby the IntemationalInstitute for Tropical Agriculture/SouthernAfrica Root Clops ResearchNetwork (IITfuSARRNET) with funding fiorn the United SratesAgency for InternationalDevelopment(USAID). The main objectiveof rhe stuclywas to undertakea value chain analysisfor cassavacommoditiesand processed productsin SouthernAfrica targetilg Malawi, Zambia, Mozambique,Angola and SouthAfrica. The study included:(l) a generalcassavavalue chain 4nalysis and(2) a cassava-based ethanolchain analysis.Ethanol was targetedbecausethis is a high growth industrythat offers especiallyimportantopportunitiesfor expanclingresource-poor smallholderfarmers accesto high value niche marketwith significantpotentialfor expandingincones, therebystirnulating widespreadadoptionof improvedtechnologiesand practicesand reducingpoverty.To date few studies have been undertakento assessthe feasibility and competitivenessof using cassavasupplied by smallholderfanners for ethanolproductionin the region. Hence,an in depth analysisof the cassava basedethanolproductionwas deemednecessary.The study also examinedthe policy and institutional fbctorsaffecting cassavaproductionand trade. Specifically,the generulcassavavalue chain analysis soughtto: Map flre cassavavalue chains,networksand systemsin Malawi, Zambia,Mozambique,Angola and SouthAfrica.

Assessthe structure.conductandperformanceof the cassavavaluechain Analyzethe cassavacommodity and cassavaproduct trade flows, temporal and spatial price variationsand marketingrnargins.

Identify opportunitiesand constraintsand potential leveragepoints for upgradingthe chainsand redistributing valuesin favourof poor smallholderhouseholds.

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OVERVIEWoFCASSAVAPRODUCTIONANDCONSUMPTIONINMALAWI' MOZAMBIQUE AND ZAMBIA introduction has remainedtightly intertwined since their The historical evolution of maize and cassava zulu,2003)' The Brazil in the late 1500s (Haggbladeand into centrar and southern Africa from seasonswas during production shortfa's in poor rainfall importanceof cassavain supplementingmaize agricultural 1gg1). But colonial and early post-Independence recognizedas early as 1g36(Sautiet ar., Haggbladeand cassava(f'lweke' Spencerand Lynam' 2002; policies favored maizeto the exclusion of Banda and et al,2006,IITA/SARRNET' 2006; Mahungu' Nyembe, 2007;Barratt,et a:2006;chitundu

Matayaeds,200l)..consequently,6nnualcassavaplantings'averageyieldandproductionremained insignificantthroughoutmuch of this period'

Duringthelasttwodecades,however,nationalannuarcassavaprantings,yieldandproductionhave Six factors explain Nyembe, 2007' IITA'SARRNET' 2003)' increaseddramatically(Haggbladeand commodity prices production.The first factor is realignmentof this dramaticincreasein area,yield and on maizeand wheat a resurt of removal of consumersubsidies in favor of cassavarelative ro maizeas Secondthere and fertilizers under structuraradjustment. and producer subsidieson hybrid maizeseed includingnew technorogies by farmersof science-based was deveropment,disseminationand adoption planting materials practices,supply and availability of crean varieties,agronomicand pest management extensionand and extensioncampaignsby the government of disease-tolerant,high-yielding varieties a collapseof agricultural input supply,credit organizations(NGos). Third there was non_governmentar to cassavaproduction' reducedprofitability of maize rerative and organizedmaize grain marketswhich maize and which increasedrisk-return tradeoffsbetween The fourth factor is high rainfall variability, rural labor supply HIV/AID' may have contributedby reducing cassavaproduction.Fifth, the spreadof low input crops suchas crops such as maize with labor saving, and substitutionof high-labor intensive and processedcassavain urban-basedfast food marketsfor fresh deveroped also there Finally, cassava. and bread (Moyo et substitutingcassavafor higher cost maize consumers from resulting Malawi central on cassavafor food governmentsare now placing emphasis Consequently, 2001).

Phiri, 1998; al, and consumption' section briefly reviews cassavaproduction This generation. income and security market prices and price seasonality

2.1

CassavaProductionand Consumption

The increasingrecognitionof the importanceof cassavaand enablingpolicy and institutionalsupport has led to an increasedadoption of cassavaproduction and processingtechnologies.Consequently, cassavaarea, production and consumption(Fig. 2.1) have correspondinglyincreasedover the years especiallyfrom the 1990s. The increasein cassavaproductionis attributedto a number of factors including expansionof area under cassavaas well as developmentand adoption of high yielding varieties.The increasein cassavaconsumptioncan be attributedto the fact that an increasingnumber of peopleare now consumingcassava,partly as a substitutefor maizeespeciallyinmaize deficit areas and years.In addition,as more and more productsare producedfrom cassava,more peopleare eating cassavain differentforms.

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One major difficulty in assessing trendsin small-scaleagricultureproductionis the unavailability of data.There are often many and uncoordinateddata sourcesthat give very different statistics for the sameperiod.For example,FAOstatdataseemto be consistentlydifferent in all countries with datacollectedby local institutions.Figure2.2 comparesestimatesfor areaunder cassavain zambiaand Malawi using locally collecteddatawith the FAo data.

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It is thereforelargely amatterof faith that the datasourceone accessand usesis reliableto make meaningful guessesabout trends in small-scaleagricultureproduction.Although both locally collectedand exter-nally(FAO) estimateddata sourcesmight have different inherenterrors,the worst casescenariois when one only accessone data source often the FAOstatdata without comparativedatasetsas was the casewith datafor Mozambique.Even wherea few datasources are available,the true production trends may lie somewherein betweenthe extremesof the different data sourcesthereforesubjectingthe reportedcassavaarea and productionto wide marsinsof error.

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Market prices

Therehasbeena correspondingincreasingtrend in the marketvalue for cassava(prices)over the years.Due to data limitation, this study was unableto obtain time seriesdata for cassavaprices in Mozambiqueand Zambia.ln Malawi, accordingto the marketdatacollectedfrom all markets in Malawi by the Ministry of Agriculture, real cassavamarket prices have sharply increased especiallysince2000(Figure2.3)

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The literaturearguesth:.rMalawiansare yet to diversifutheir food preference and do not value otherfbodsas highly as maize. A recentSARRNET study analyzedhouseholdexpenditureand consumptiondata for maize refined and whole flour and cassavaflour collected during the SecondIntegratedHouseholdSurvey(IH52) conductedby the NationalStatisticalOffice from March2004to April 20U5.In orderto testwhetheror not cassava is an inferiorgoodthe analysis dei'elopedpartial resid.ualplots of income versuscassavaconsumptionand price versus consumption usingthe lollowing log-lineardemandequationfor cassava: d u + ( / r 1 o gZ , + d t b g P i a l t l o g , 1 "-

where'l',isthe per capita cassavaflour consumption.Pi is the value of cassavaflour per kilogram,and

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refined, maize rvhole and cassavaflour from home production,income-in-kindreceipts,and o,,is the interceptcoefficient,i.e. committedquantityof cassavathat household expenditure), r,villpurchaseregardlessof f'amily income, a' and T arecoefficients and lt is the error term.

The partialresidualplot is a devicefor representing the final stepof a multivariateregression as a bivariate scatterplot (Koenker. 2007). lt is computedusing the Gauss-Frisch-Waugh regression by tirst runningthe fulI model(Model A) and observingthe coelficientand standard rJeviation of P . The shorlerversionof the model(Model B) excludingP ir estimatedto obtain the residualsof the partial regression.Another short model (Model C) includingthe omitted variableP on the sarrecovariatesis estimatedto obtainthe residuals.Finallythe residualsof the rnodelB are regressed on the residualsof rnodelC. Figures2.4A and2.48 displaythe plots for incomead price. The dor,vnward sloping cassavademandincome curve and upward sloping cassavaden,andprice cun,e slrpportthe view that cassavais an inferior good. Therefore behavioral changes in cdnsumption and feeding practices have not occurred to improve consumption and calorificdietaryintakeat scale.

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2.3

Price seasonality

Following the demandand supply curvesfor most agriculturalcommodities,marketpricestend to be as highly seasonalas the supply itself with lowest prices during harvestingtime when supplyis high. In Malawi, for the pastfew years,cassavapriceshave shownvarying degreesof seasonalityboth in magnitudeand time (months)when major price shifts occur (Figure.5). For example,in 2005, peak prices were observedin Decemberwhile in 2002 peak prices were observedin June with lowest prices in December.In the other years such as 2001 and 2003. priceswererelativelystable.

The varying time when peakpricesare observedcan be attributedto a numberof factors.1) The fact that cassavatends to be harvestedover a relatively long period acrossthe year thereby distributingsupply in time. 2) It could alsobe due to the differentfood securitysituationsfacing the nation or households.For example,in hungry yearssuchas 2002 and 2004,peoplerelied on cassavamuch earlier in the seasonthereby pushing price increasesin April and May when peoplecould otherwisehave beeneating maize.Normally, cassavapricestend to peak between Decemberand February-the hungrymonthsin Malawiwhen many householdsrun out of maize.

The argumentthat seasonalityof cassavaprices may be affectedby maizeproductioncan be deducedalso in 2006 when Malawi registereda relatively high maize productionand cassava priceswere relatively stablealbeit a slight peak in Februaryand August. August peak prices might be due to short supply as under normal food securityconditionsmany farmersharvest cassavafrom Octoberso that they immediatelyplant the stemsotherwisethey would loseto dry weather.This might imply that stable or increasing maizeproduction may lead to stable or decliningcassava productionaswell asmarketvalue.

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13

Similar seasonalityof cassavamarket prices are observedin Zambiawhere peak prices are generallyobservedin Februaryand lowest prices in July to October(see Fig.2.6; see also HaggbladeandNyembe,2007for a detaileddiscussionin price seasonalityinZambia).

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Figure2.6: Seasonalvariationsfor pricesof Dried CassavaChipsin Lusaka'sSowetoMarket Source:(HaggbladeandNyembe, 2007) In summary from the precedingoverview of the trend in cassavaarea,production, consumption and market value, one would envisagethat the increasingtrend would continue at least in the nearfuture. Whereasareaunder cassavamay be naturally limited by non-expandablefarm sizes whereland holding size is a major constraint,cassavaproduction may continue to increasewith continued improvementin the developmentof high yielding varieties.Cassavaconsumption may increasefor as long as more and more people start to eat or substitutecassavafor maize if realcassavaprices are brought down through improved productivity resulting from technological changeor if through researchand development,new and locally acceptablecassavabased productsare developed.Cassavamarket value is likely to remain high (or increaseeven further) in the near future especially if maize production remains uncertain or decline altogether.This wouldespeciallybe true for areasin which increasesin cassavaproductionrespondto decreases in or risks associatedwith maise production (Barrat et aL,2006)and also as long as more cassava findsalternativeusesin the industrial sector.

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POLICY AND INSTITUTIONAL ENVIRONMENT FOR CASSAVAPRODUCTION AND TRADE Existenceof an enablingpolicy and institutionalenvironmentis crucial for the developmentof any sector. To date, a number of national, regional and international policy and institutional frameworks broadly or specifically provide an enabling framework for the enhancementof cassavaproduction and trade. In this section, we briefly review some of the policy and institutional support.

3.1

Policy Framework In Malawi, the overall policy framework within which the cassavasubsectorcan be

promotedis the Growth and DevelopmentStrategy:From Povertyto Prosperity2006-2011.This frameworkencompasses all sectorsof the economywhich amongotherthings setsout to provide an environmentthat: (l) increasesagricultureproductivity(2) Increasesexportsof food staples, (3) increasesthe contribution of agro-processingto economic growth and (4) increases exportationof agro-processed products.Although the emphasisof the agro-processing sectoris on tobacco,tea, sugar,cottonand wheat,the frameworkrecognizesthe potentialthat cassavahas among other small-scale farmers crops. Specifically, the framework sets out to strengthen smallholder linkages to markets (inpuVoutput) and agro-processingthrough: 1) increasing smallholdercooperativessupplyingagro-processing industries,2) supportcommercializationof technologiesin key areasincluding cassava,3) increasethe contributionof agro-processing to Gross Domestic Product, 4) increasesvalue added to agricultural products, and 5) Orient smallholdersubsectorto greatercommercializationand internationalcompetitiveness.

Ln Zambia, the policy support for cassavafollowed the faltering maizeproduction arising from recurrent droughts andremoval of governmentsubsidies.For example, total area under maize fell from nearly 80% in 1982to around600/oin 1999and correspondingly,the sharefor roots and tubers(primarily cassavaand sweetpotato)rose from 20 to 30Yo.By 1991,crop diversification had become an offtcial government policy in Zambia. However a major shift in policy l5

intervention in cassavaproduction in Zambia followed the pests attack to cassavathat led to 100% yield lossesin someparts of the cassavazones.The seriousness of this threat forced the Zambian government,for the first time since independence,to take an active interest in cassava (see Haggblade and Zulu, 2003; Chitundu et al, 2006 for a detailed account of the policy intervention in the cassavaproduction in Zambia). This policy framework set a ground for wide institutionalsupportto cassavaproduction In Mozambique, a subsector strategic study on Cassava for 2008-2012 gives a comprehensiveoverview of the policy and institutional environmentfor cassavaproducti6n and marketing(Ministry of Industry and Commerce,2007).The study notesthat researchrelatedto small-scaleagriculturesectorincludingthe cassavasectordid not developmuch until 1992.This was attributedto the civil war and political instability that engulfedthe country.Following the end of civil war, some efforts to improve the cassavasectorare emerging.The Mozambique Agronomic ResearchInstitute(IIAM) is promoting cassavathrough introducingnew improved varietiesand disseminatingbest agronomicpracticesto producersin the different Provincesof Mozambique. However, as a country, Mozambique still has no central policy for cassava development.Consequently,the IIAM and similar institutionsdo not have a clear mandateon which to sourcerequiredresourcesto developthe cassavasub-sector.

For example,accordingto the subsectorstudy,IIAM doesnot have the budget for a specificnation-widecassavaprogram.

In the overall,the attentiongiven to cassavaproductionremainslow relativeto other high value crops such as cotton, cashew,sugaror even tobacco.Thesecfops are easily supportedthrough the specializedStateAgencieswhich havea clearmandateto designDevelopmentplansand also have an easieraccessto funds and to human resourcesallowing for the implementationof specificprograms.

Other regional and internationaltrade protocols also offer enabling policy arenaswithin which the cassavasubsectorcan be promoted.For example,the SADC and COMESA trade protocols and bilateral trade agteementsbetweencountries that seek to promote duty free trade within East and SouthemAfrica offer potential opportunitiesfor regional trade in agro-processed products. On the internatiorral front, such trade protocols as Africa Growth Opportunity Act (AGOA) and other trade agreementsfor example,with EuropeanUnion also offer opportunity to boost growth in the agro-processingsectorsincluding cassavaprocessing(Nyirenda,200l).

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However,exploiting opportunitiesofferedby the regionaland international tradeprotocolsmay requirethat local cassavasubsectorbecomecompetitiveat the global market trade.

3.2

Institutional Framework and Support

Having an enabling policy environment is one thing, an enabling institutional environment and support might be another thing. Whereas an instifutional environment encompasspolicy, institutionsand institutionalframeworksi.e. mechanisms to enforcechange, this section briefly highlights the institutionsand the support to the cassavasubsector.one major area of cassavathat has enjoyed substantialinstitutional support is the researchand extensionsupport.

Although formal cassavaimprovementresearchstartedin Malawi as early as 1935,significant investmentsonly began in 1978 when the governmentset up the Root and Tuber Crops CommodityTeam (Sauti et al, 1981;Sauti, 1986).The team'sactivitiesexpanded during the mid-1980sthrough the regional program - Easternand SouthernAfrica Root crops Research Network (ESARRN) - implementedby the InternationalInstituteof Tropical Agriculture with headquartersin Lilongwe (Teri et al 1999; Haggblade and zulu, 2003).

The program was subsequentlyexpandedin 1994 under the SouthernAfrica Root Crops Research Network (SARRNET) with renewedfunding from USAID. Researchon cassava in Zambrabeganon a small-scalein the mid-1980's through ESARRN. Although researchmainly respondedto the cassavamealy bug crisis,it pavedway to seriouscassavaplant selectionand breedingprograms.

In Malawi, researchefforts acceleratedeven further in responseto the lggllg2 drought that triggered the launch of an AcceleratedMultiplication and Distribution of Cassavaplanting Materials as a Drought Recovery Measurewith funding from USAID and SARRNET. To-date activities in cassava seed selection, multiplication and distribution to farmers are widely supportedby collaborative efforts among public, donor and bilateral institutions such as IITA, FAO, NORAD and various NGOs such as Plan International, Total land Care, among many others (see IITA/SARR\{EI 2006,2007). In Malawi researchin value addition , has targeted evaluationof cassavaclonesfor starchproduction,crispingqualities,leaf biomassproduction for

t7

cassavasilage, cassavaflour in bread making as well as adaptiveresearchtrials to formulate cassava-based animalfeedssuchaspigs and poultry GITA/SARRNET,2007).

Similar researchresponseto recurringdroughtand pestsand diseasescompelledthe Government of Zambiafor the first time to establishthe Root and TuberlmprovementProgramin late 1970s.

Due to limited resources,earnestresearchin cassavahowever began in late 1980s with a launchedof a seriesof trial on pest and diseasecontrol as well as improvedproductivity.These researchefforts led to the releaseof a number of improved varietiesboth in terms of yield potentialas well as pest and diseaseresistance(seeHaggbladeand Zulu,2003; Haggbladâ&#x201A;Źand Nyembe,2007; Barratt et a|2006). The potentialof the improvedcassavavarietiesto improve food security in drought prone areastriggered a wide responsefrom the private sector; for instance: l) a coalition of NGO's beganto distribute cassavacuttingsin central and southern Zambia,2) the private sector began to develop commercialcassava-based products,3) local livestockfarmersand feed companiesbeganexperimentingwith cassava-based feedrations,4) a few local bakeriesand cateringservicesbegandevelopingcassava-based biscuits,nshimarand composite-flourfritters; 5) Zambia's largestbrewery togetherwith a newly establishedfood processor,began to explore prospectsfor cassava-based malt beer as well as cassava-based sweeteners for soft drinks,juices and preparedfoods.A major breakthroughin the promotionof cassavawas the formation of the Accelerationof CassavalJtilization Task Force whose main objectiveis to realize the commercialpotential of cassavaand consolidateits contributionto householdfood securityinZambia (seeChitunduet al. 2006).

Institutional support has also included material support to enhance value adding processingthrough distribution of processingtechnologiesfor making flour, chips and starch, capacity building among local institutions, field assistants,farmers, processorsand other entrepreneursamong others. For example, IITA/SARRNET has so far conducteda number of haining activities, field tours and exchangevisits for key stakeholdersand chain actors within the country and also to other countries.Creating awarenessabout the potential use and products from cassavahas also been another institutional support to raising the profile of cassavain the mind set of potentialusers.Jn Malawi, IITA and other stakeholdershave previously mounted field dayswhereeventhe Headof Stateand othergovernmentdignitariesblessedthe activitiesto

' Nshima

is a thick ponidge made from cooked flour and it forms the main stapledish either from maizeor cassava

l8

raise the profile of cassavaand also pledge governmentcommitment to promote cassava production for food security and commercialpurposes(SeeIITA/SARRNET,2007).

In order to achievethe government'scommitment to promote the agro-processingsector in Malawi, the Ministry of Industry and Trade offers competitive incentives such as tax exemption and duty waivers2to potential investorsin the sector.Furthermore,the Ministry will also directly register investors in order to enhancecoordination of the sector activities and quality control. Previously, without registrationunder their control, monitoring the activities of the industry and helping potential investors with baseline information say on suppliers and/or marketswas not possible.In the endthis was a deterrentto potentialinvestors.

Another institutionalsupportcrucially importantfor commercializationof cassavahas beenthe developmentof standardsfor cassavaproducts. In Malawi, two standardshave been produced namely MS 704: 2004 for Cassavaand Maize starchfor textile industry and MS 349:2002for Edible Cassavaflour. Other prerequisitestandardsfor MS349:2002areMS 19: Generalstandard for labeling of pre-packedfoods and MS21, Code of Hygiene conditionsfor food and food processingunits are also in place.Another standardfor samplingmethodsfor starchesand starch products has been developed targeting processing factories in the industry. Similar efforts to develop standardsare underway in Zambia. According to Chitundu et al (2006), the Zambia Bureau of Standardswas expectedto issuefinal standardson cassavaflour and chips by the first quarter of 20073. The developmentof standardsis crucial for exports marketswhere there is no substitutefor quality control and assurance.

In Mozambique,much of the institutional supportto cassavaproductionhasbeenchampionedby IITA/SARRNET. Like in Malawi andZambia, IITA/SARRNET are undertakingand promoting research on

cassava production agtonomic practices), processing and marketing.

IITA/SARRNET works in collaboration with govemment institutions such as the Ministry of Agriculture and a number ol NGOs such as Total Land Care. Other NGOS such as the World Vision. Savethe Children and CARE are involved in extensionservices,helping smallholdersto adopt best agronomic, accessplanting material, processingand marketing practices.According to the subsector straEgic study (2007), public extension services are currently covering 90 2 Basedon discussionswith the Director of Industry- Ministry of Industry and Trade 3 This study could not establishifthe standardshave been issued.

19

l

-

t

districts out of 128 in the country; there are 496 extensionworkers and 83 supervisorswho can only supportaround192,000producers.Other entitiesworking with cassavaare the Facultiesof Agronomics and Chemistry. The Faculty of Medicine is involved in a CassavaDiseases Program.

Regional institutions such as NEPAD through the Pan African CassavaInitiative also offer tremendoussupport and frameworks for improving the cassavasubsectorboth at national and regionallevel. For instance,the initiative seeksto mobilize the largepotentialof cassavato contribute to food security and income generationamong African countries through technical and financial support to commodity chain institutions; support for technology developmentand disseminationand facilitation of accessto finance among other strategies(see NEPAD, 2003:

200s).

In summary,the precedingoverview of the policy and institutional supportto cassavaproduction is testimony of a conduciveenvironmentfor enhancingcassavaproduction and trade. The major limiting factors, if any, would be more of technicalissuessuch as technologicalinnovations, accessto competitive markets, market information, channel governanceand competitiveness rather than lack of enabling policy and institutional support. Realizing these would however primarily depend on whether existing policies and institutions are supportive of innovation development and adoption, greater market access,and trade in cassava.In addition, lack of harmonization of the policy and institutional frameworks may be counterproductivefor the developmentof cassavasubsector.Subsequently,we analyzethe strucfure and performanceof the cassavavalue chain in the Chinyanjatriangle.

20

METHODOLOGY 4.1

Study Sites

The study was conductedin the central and southernregionsof Malawi, EasternProvince of Zambia and Tete Province of Mozambique. In Malawi, the study covered - Kasungu, Nkhotakota, Lilongwe, Blantyre and Mulanje districts. In Zambia, the study covered.Chipata, Lundazi and Katete districts. In Mozambique, the study coveredAng6nia, Macanga,Tsangano and Moatize districts.Theseregionsand districts form part of the ChinyanjaTriangle - named after Chinyanja- a common languagealong the sharedbordersof thesecountries.Besidesthe language,the Triangle sharesa cornmonhistory of policy preferencefor maize and a recent upsurgeof cassavaproductionfor both food securityand commercialpurposes.The trianglealso experiencessimilar climatic and environmentaldisasterssuch as persistentand recurrent droughtsoften alternatingwith excessrains leadingto floods.Thesedisastershave significantly affected the agriculture production especially maize and thereby increasing the absolute necessityof drought tolerantfood securitycrops like cassava.It shouldbe notedthat while the Chinyanjalanguageis largelylimited to the borderareas,problemsare not limited to the triangle but spanacrossthe entirerespectivecountries.

4.2

Sample and Sampling Procedures

Primarydatawas collectedfrom cassavafarmers,wholesalers,processors, retailersand otherkey stakeholders.The respondentswere purposively selectedto ensurethat key chain actorsand stakeholders were not missedout. For example,only farmersthat had harvestedand sold cassava for at least a year were selected.This approachavoided farmers that had just started growing cassavaand had limited experiencewith cassavamarketingissues.In all marketsvisited, there were too few cassavatrg{ers such that every one found was being interviewed. Since visits to market places were unannouncedand that any trader found had a chanceto be interviewed, it was assumedthat the samplewas representativeof the tradersi.e. wholesalersand retailers operating in such markets at the time of the study. Respondentswere interviewed from their

2l

homes (farmers), market places and offices (governmentministries and companies).Telephone interviews were also conducted with companies with whom personal visits were difhcult to arrange.Table4.1 givesthe numberof respondents.

Table4.1 Respondents and Informantsinvolvedin the ChinyanjaTriangle Numberof respondents Farmer Wholesalers Processors manufactures Retailers

Country

Total

s

Malawi

r23

93

8

8

109

341

Mozambique

87

ll

0

0

38

136

Zambia

80

T9

0

0

45

144

Total

290

123

8

8

192

621

Whereasfarmerswere relativelyeasyto identify, it was very difficult to identifu wholesalersand retailersespeciallyin Mozambiqueand Zambiadue to their limited numbers.As the study was undertakenat the time when there was very little or no cassavaon the market, it was difficult to find respondentson the basis of asking if they sell cassavaor cassavaproduct when it is in season.There were very few cassavaprocessorsand manufacturesusing cassavaproducts in Malawi and none in Mozambiqueand Zambiaparts of the Triangle. In addition, interviews were conductedwith 2 governmentagenciesand 1 statutorycompanythat supportcassavaproduction astrade.

4.3

Data Collection Process

22

The study adopteda number of formal and informal approachesfor generatingqualitative and quantitativedata. Understandingcassavaproduction and marketingrequired data on existing policy and institutional environmentwithin which the activities take place, constraintsand opportunities,production,consumptionand areaunder cassavaamongother information.These were done through literaturereview.Assessingthe structure,conduct and performanceof the cassavavalue chain and quantiffing the demand for cassavaproductsrequired data on key players,productstraded,volumes of trade, quality standards,storagepractices,transportation, liquidity issues,prices and price information; market risks and constraints.This data was collected through qualitative and quantitative surveys using semi-structuredquestionnaires targetingkey players.

Enumerators(6 per country) and one supervisoradministeredthe questionnaires.

In order to ensureconsistencyin translatingthe questionnaire,enumeratorsunderwenttwo-day training to familiarize them with data collection tools. During the training, enumeratorstranslatedthe questionnaires from Englishto Chinyanja(i.e. languageusedfor interviewing)and pre-testedthe questionnairein real field conditions. Following field pre-testing, some questions were simplified to enhanceeasein asking as well as responding.In Mozambique,the questionnaires were translatedinto Chinyanja following difficulties in translatingdirectly from English to Chinyanja. In Zambia, questionnaireswere also in Chichewa to standardizetranslation.To enhancetriangulation of data, formal survey data were complementedby key informant discussionsconductedat eachmarket as well as in the villages.To rninimizeomissionerrors.a checklistwas used in the key informant discussions.Personalandior telephoneinterviewsand discussionswere alsoconductedwith currentandpotentialusersof cassavaand cassavaproducts to estimatecurrent and potential demand.Discussionwith regulatoryinstitutionsand service providers such as the Malawi Bureau of Standards,Ministry of Trade and Industry and Ministry of Agriculture enabled us to obtain information on institutional and policy opportunities and constraintsto the developmentof the cassavasub-sector.

Both primary and secondarydata were analyzedusing data triangulation processfor qualitative data and SPSSand Excel for quantitativedataa.Two competentdata entry clerks entereddata

I Primary data analysisfor Malawi, Mozambique and,Zambia reflect the situation in bordersof thesecountriesthat form the Chinyanja Triangle unlessotherwisestated.Secondarydata and literaturecited however refers to the countriesin their totality.

23

with direct responsibilityto and supervisionby the consultantwho finally cleanedthe data.

Descriptivestatisticscharacterizingthe channelkey playersand qualitative analysiswere used in the analysis.

24

I

STUDY FINDINGS

5.1

Profiles of Key CassavaValue Chain Players

Cassava is currently produced and marketed in traditional systems with low levels of organization and linkages to high value markets. Producersand traders,predominantly smallscale,continue to be isolated from high value marketsand market information systems.This sectionbriefly describesthe structureof the cassavavalue chain especiallyfocusingon main playersand their profiles.

5.1.1 Primary producers(Farmers) There are no concise statisticsto indicate the total number of farmers growing cassavain the Chinyanja Triangle. For example, Mataya et al. (2001) noted that over 670/ofarmers grow cassavain Malawi. An Integrated Household Survey for 2004-2005 by the Malawi National StatisticsOffice indicatesthat about 22o/oof agriculturalhouseholdscultivatedcassavabesides other crops in Malawi (NSO, 2005). ln Zambia, report suggestthat about 44o/oof farmers grew cassavain 2000, an increasefrom 38% in 1990s(Haggbladeand Nyembe,2007). In spite of lack of conciseestimatesof numberof farmersgrowing cassava,it is clearthat cassavais largely grown by small scale farmers.For example,IITA/SARNET (2006) estimatedthat about 379,057 farmersproducingcassavafor commercialpurposeshad lessthan 2 ha, about I 14 farmershad,2l0 ha and 12 farmershad over 10ha.Similarly, this study rarely came by large scalecassava (Table5.1). farmersas evidencedby the areaundercassavafor the respondents Table5.1. Farmersage,cassavafarming experience,and areaundercassava

Country

Age (SD)

(Yrs) Cassava

farming Area under cassava Production (t/yr) (ha) (SD) (SD) experience(Yrs) (SD) (15.26) ( 1 . r 2 ) 42.00 10.73(10.61) 4.46(6.07) Malawi 0.8e Mozambique 41.39(14.09) 7.36(8.5e) 1.02(0.86) 0.7s(0.56) Zambia 39.84(14.88)..s.4s(3.97) Source:Field Survev.2007

25

On average,cassavafarmers are of varying agesranging from relatively young (about 20 years) to relatively old (over 50 years).However no differences(p>0.10) in age were noted among farmers. However, farmers in Malawi have been growing cassavafor a longer period than farmersin Mozambique(p<0.05)andthosein Zambia(p<0.01). Thereis no difference(p>0.10) in the area under cassavabetween farmers in Malawi and Mozambique. Farmers in Malawi, however,have largerarea(p<0.01)under cassavathan thoseinZambia. Thereis only indicative difference(p<0.10)in period that farmerhavebeengrowing cassavain Mozambiqueand Zambia even though farmersin Mozambiquehave on averagelarger area(p<0.05)under cassavathan thosein Zambia. The relatively small areaunder cassavais probably due to a number of factors such as overall limited land holding per householdand limited large-scalefarmersinvestingin cassavaproduction.

Farmers in Malawi produce significantly more cassavabut at the same time sell proportionatelylesscassavathanthosein Mozambiqueand Zambia(p<0.01).FarmersinZambia produce more (p<0.01) cassavathan those in Mozambique. The differences in cassava production could be attributed to the historical differencesin emphasisand institutional support for cassavaproduction in the Triangle. Cassavaproductionis historically more establishedin Malawi than in Zambia(HaggbladeandZtlu,2003) and Mozambique.

In Tete Province cassava production and accompanyinginstitutional support is relatively new. The low averageproduction in the Mozambique part of the Triangle may be attributedto the fact that cassavaproduction is relatively new and farmershave commonly been growing cassavaas a hedgeor boundarycrop suggestiveof the possiblelimited attentiongiven to crop. However,the increasinginstitutionalsupportto cassavaproductionby IITA and other collaboratorsmay leadto steadyincreasesin cassavaproductionin the area.

)

5.1.2 Wholesalersand retailers Wholesalersand retailers are among the key players in the cassavavalue chain in the Chinyanja Triangle. Like in the case of farmers, there were no existing offrcial statisticsto indicate the number of traders involved and their scale of operation in the cassava trading activities.

However, some existing reports (e.g. IITA/SARRNET, 2006) estimate that about 456

26

retailers operate in the urban markets in intermediate traders (wholesalers) and about 4063 zambia and Mozambique' Due to the lean Malawi. No similar statistics could be sourced for only was finding traders diffrcult but also seasonduring which the study was undertaken,not particular markets and their volume of trade estimating the number of traders selling cassavain about 40 traderswere opefating in the five was almost impossible.At the time of the study only in Malawi). But previousstudies Lilongwe city marketsvisited (seeTabre5.2 for an illustration about 1456 bicycle loads (carrying (e.g. phiri,2001; IITA/SARRNET,3003) estimatedthat 204000Kgs) enterLilongwe city markets about 105,000kgs)and 99 truck loads (carryingabout per day during peakperiods(Octoberto December)'

27

Table 5.2: Cassavatraders (wholesalersand retailers) operatingat the time of the study in Malawi District

Kasungu

Markets visitelftital # of traders Nkhamenya

Amount (Kg/day)

Remarks

50-63

Tradersalternatewhen selline cassavain all the marketsvisited.

Kasungu,Jenda

Mulanje

20

Chitakale, Mulanje

Though outside Chinyanja Trinagle, Jenda is a major supplymarketto Kasungu 1 0 0 - 1 6 0 During off seasonmost cassavacomesfrom Mozambique. Traders alternate in selling cassava

Blantyre

Limbuli, Mloza Kachere,Limbe

19

30003560

Kachereand Lunzu are distributionpoint to townshipmarketin Blantyre

Lilongwe

Lunzu Area 25A,

42

20002s00

Bundaturn off is an entry point to Lilongwe township markets and Lilongwe central market also acts like a distributionpoint to smallertownshipmarkets.

40-50

Tradersalternatein sellingcassavaper day

Msungrvi Centralmarket Bunda turn off Nkhotakota Linga. Dwangwa 8

Source:Field Survey,2007(Field interviewswith key marketinformants).

The cassavaseasonwas similarly lean inZambia and Mozambique.For example,an early (6 am) to late mid day visit to 5 marketsin Chipatatown yielded only 5 people(farmersand retailers) sellingfreshcassava.Thesefarmersor traderssold out their cassavawithin an hour of arrival at the market. Such marketsoperatethroughout or a major part of the day, traderscome and leave anytime as soon as they selLtheir cassava.As a result, asking other farmers or tradersabout the numberof tradersoperatingat the marketsoften yielded inconsistentinformationbecauseactors do not alwavsmeeteachother.

28

Among the respondents,there were no significant agevariationsamongwholesalersand retailers (Table 5.3). However, wholesalers in Malawi had on average been selling cassavafor significantly longer period (p<.01) than those in Mozambique and Zambia. Similarly, wholesalersin Zambiahavebeentradingfor a longerperiod (p<0.05)thanthosein Mozambique.

During peak cassavaseason,wholesalersin Malawi sale more (p<0.05) cassavathan those in Zambiaand but almost the samevolume with thosein Mozambique(p>0.10).

Table 5.3 Wholesalersand retailersage,cassavatrading experience,and volume of trade at peak season

Country

Actor

Age (Yrs)

Cassava trading Volumeof tradein peak season experience (Yrs) (Kg/month) (SD)

Malawr

(SD)

(SD)

3 3( e.5)

7.06(4.e\

Wholesalers Mozambique 34 (7.8s)

Retailers

2.4s( 1.44)

Zambia

3 2( 1 1 . 1 3 ) 4.42(3.s8)

Malawi

3 4( 1 1 . 0 8 )

s . 8 0( 3 . 1 )

3.26(z.ss) 34(10.4s) 4.7t(2.re)

386s52(rs27.24) (16s8.56) 262e.28 (4s8.12) r972.e6 r881.33) 8 s 1 7 . 0( 6

Mozambique 3 s( 1 3 . 1 2 )

( r 90.45) 1214.64

Zambia

( 2220.16) 6142.16

Retailersin Malawi have on averagebeen selling cassavafor longer period (p<0.05)than their counterparts in Mozambique (p<0.05) but almost the same period with those in Zambia.

Retailers in Zambia however have been selling cassavafor a marginally longer (p<0.10) period than those in Mozambique. Retailers in Malawi sale more cassavathan those in Zambia and' Mozambique(p<0.01) whereasretailersin Zambia sale more 0<0.01) cassavathan those in Mozambique. The differences in the period in cassava business might be attributed to differencesin the cassaVatrading experiencesamongthe threepartsof the Triangle.

Without any value adding processing that traders undertake, they easily shift from wholesalingto retailingor both dependingon marketconditions.Somewholesalerseasilysell in

29

retailif thereareno more tradersto buy in bulk. Similarly,retailerseasilysell in bulk if they find a buyer who can buy in bulk The dangerwith such easy shifts is the risk of double counting.

Phiri(2001)reportedsimilar behavioramongtradersdependingon the marketconditions.

Conspicuouslyabsentamongretailersare the large scalesupermarkets selling cassavaor cassavabasedproducts.Tlris is understandablyso due to lack of cassavabasedvalue added productsproducedin good quality and quantity to warrantinvolvementof rnajor supermarkets.

Mostof the documentedvalue addedcassava-based productsare often thoseproduceclon smallscaleand sold in the infonnal sectoror underresearchiexperirnental conditionsor meantto create awareness especiallyduring field showsor tradefares.However.thereis one notableexampleof a supermarketinvolved in the cassavavalue chain in Malawi. The SevenEleven - a food and t

non-foodretail supermarketsell or use cassavaflour from small-scaleprocessorsin its baked products(seeI ITA/SARRNET.2006).

5.1.3 Processors Although ther:eis growing interestin- and recognitionof the imporlanceof value addition in cassavasubsector,value adding processingactivitiesand investmentsremain very limited and predominantlysmall-scale.However, very few relatively large-scaleinvestmentinterestsare emergingin the sector (seeTable 5.4 for someexatrlples).

Table5.4, Someof the emergingindustrialinvestorsin the cassavavaluechain in Malawi5 Investor Natures Gift farm

'Note

Cunent (

Remarts o Investmentin cassava r Expectto processabout2 tonsof rarv productionandprocessing cassavaper day oncestartto operate starch o Wishesto securelargeprocessing r Currentlyhas 100ha of cassava machineto process2Otonsof raw cassava for initial starchproduction per hour to produceabout4 tonsofstarch o Seekrnorefundingto investin per hour largescaleprocessing . machine Potentialmarket for neighboringfarmers

that no cassavaprocessingactivitieswere found in Zarnbiaand Mozambique

30

Njewa farm

o

o For the pastyears,the farm hasbeen sellingcassavaseedbut culTentlywants to processinto starchtogetherwith NaturesGift Farm Seeksto supplycassavato the Natures Gift Farnrand alsofor livestockfeed.

40haof cassavawith potential to increasein subsequent season 5Ha of cassavafor seed rnultiplication

Kakuyu

Gada

Tukombo o

Katete

Has about65haofcassava

o

To increasehectaragefor cassavaonce adequateplantingmaterialbecome available

20 ha of cassava

o Intendto establisha small scale processing for flour andstarch

10 hasof Cassava

o For livestockfeed in form of silage

Source:Field interviews; IITA 2006, CassavaIndustry Promotion Project, Malawi Terminal Report

processingtinns and about Accordingto UTAiSARRNET (2006),thereare about 10 srnall-scale 8 groups of small-scalefarmers that have adoptedor are in the processof adopting cassava processingtechlologies in Malawi. These include Chinakanaka,Mbrvandirnbwandigardens, Alongelele enterprise, GTZiIFSP-group, Mrs Malindi, Old Maula and Malaza farmers association,Chinangrva ndi Mbatata- Roots and Tubers wotnetl's association(CMRTA), Tukombo Agroprocessingenterprise,Nankhakagroup). A numberof thesesmall-scalefarmers individually or in groups enjoy considerableexternal financial and material support from bilateral institutions such as IITA, donor organizations,statlltory corporationsand nongovernmentaloryanizations.Although initiatives and institutionalsupportpoint to the growing momentumto promotegrowth in the value additionactivities,they remainisolatedand largelyin their budding stage.Documentationof their (potential)existenceis only anecdotaland their road to developrnentis very rough at best. We briefly describethe experiencesof a few of theseto illustratetheir plight on ti. way to progress' The MwangaliraCassavaassociationcomprises71 small-scalefarmers.The associationowns a petro engineand a manualcassavachipperdonatedby ChancellorCollegeand IITA/SARNNET)

31

I

t

with which they can processesabout a-6 (50kg) bags of cassavachips per day that is further milled into flour. The group'smain suppliersof raw materialare the membersthemselvesaswell as sourcing from surroundingfarmers.At the time of the study, no processingwas taking place due to lack of readily availablemarketsfor cassavaflour.

The Mbavala CassavaAssociation(thoughoutsidethe Chinyanjatriangle)gives a good exampleof the bumpy road to developmentof the small-scalecassavaprocessingsector.This group obtaineda cassavagrater from IITA/SARNET to processcassavachips and flour. The main suppliersof raw materialare the club memberstogetherwith other farmersin the area.In 2006, the club processedand sold about 56 tons of cassavachips to Universalindustries.They were linked to this market through IDEA-MACE initiative. At the time of the study, no processingactivitieswere taking place becausefarmershad not yet startedharvestingcassava.

More importantly, the club however, had not renewed their market link with the Universal industriesreportedlybecauseIDEA-MACE or IITA/SARRNET had not helpedthem to do so.

Yet, the group expectedto producemore than doublecassavain 2007than what was producedin 2006. Further,the club used to bake bread,sconesand doughnutsfrom the cassavaflour. This activity also stoppedbecauseof lack of local demandas a result of low acceptabilityof the cassavabasedbakedproductsamonglocal communities.

The Masindacooperativesocietycomprising 16 small-scalefarmersis only group that produce starchestimatedat about 2Otonsper month. The co-operativehas since its inception enjoyed considerable technical, managerial and financial support from IITA/SARRNET (see IITA/SARRNET,2006).At the time of the study,the grouphoweverhad seriousoperationaland managementproblems that affected its processingactivities. Despite the limited production capacity,the group is well linked to a high value market for which it is failing to meet the demand- in the end frustratingthe buyers.

In short, however,it is evident that processorsalready operationaleither fail to establishor sustainlinks to high value markets.This could be due to a number of factors such as lack of initiative, skill, and limited technologicalcapacityto meet the demand.It is true to say that the dependenceon external supportto link processorsto markets(in the caseof Mbavala) may not be sustainableif processorsthemselveslack the ability and initiative to establishand/orsustain marketslinks on their own. However who can blame them for failing to establishand sustain

32

marketslinks. After-all, high value marketsrequiretimeliness,quantity and quality productsall of which are beyondwhat the small-scaleprocessorscan affbrd. On the one hand,it may be an issueof largecompaniesplaying their part to help small-scaleprocessorsto help themselves.On the other hand,it might and most likely it is the responsibilityof both small-scaleprocessorsto learn to take initiative and large scale companiesto support such initiatives.Ultimately both largecompaniesand small-scaleproducersstandto benefit.

5.1.4 Manufacturers Whereasprocessingcan lead to an end product, it may also produceraw materialsfor further value addition activities such as in the manufacturingindustry. The manufacturingsectoroffers the largestmarket potentialfor cassavadue to the wide potentialfor cassavaapplicationsin the food and non food sectors.However, the sectoris largely dependenton imports of substitute products(see ltaye,2001). Although the currentuse of cassavaproductsin the manufacturing sectoris limited, it has generatedmixed experiences(seeTable 5.5) questioningthe extentto which and when the sectorwould be ready to supportthe local manufacturingsector.

33

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The long list of manufacturersand their varying experiencesin the use of cassavais suggestiveof the bumpy road to develop the cassavasector to the point where it can support local manufacturing industry. There is wide admission or researchresults showing that cassavaproducts have wide glue manufacturing,general uses,beverages, applicationsin baby foodsmanufacturing,pharmaceutical purposefiller in domestic cooking, confectioneryuses, cereals,animal feed, battery manufacturing amongmany others.While the list of potentialusersand usesof cassavacan be endless(seeNweke, Spencerand Lynam,2002; IITA/SARRNET 2001, 2003; Gondwe et al 2001; Chitundu et aL,2006; Haggbladeand Zulu, 2003; Haggbladeand Nyembe, 2007 among others),the actual investmentin valueadditionactivitiesto optimizethe useof cassavais long overdue.

The immediatequantifiablebenefitsfrom suchuseof cassavain the manufacturingsectorwould be the immediatereduction in import of productssuch as starch.Two documentedcases(see Mataya et al 2001) of manufacturingcompaniesthat have drasticallyreducedon import costsas a result of using locally produced cassavaproducts testifo how local manufacturingsector stand to benefit from developmentin the local cassavaindustry: 1) In 2001,David White head(currentlyknown as Mapeto David Whiteheadand Sons)the biggesttextile manufacturerin Malawi reducedimport costsby 60% (i.e. US$300) per ton of modified corn starch imported from Zimbabwe as a result of using local processedcassavastarch.2) Raiply - one of the major plyr,voodthat usedto import about l5Otonsof wheat flour at an estimatedannual cost of US$ 135,000managedto reducetransportcostsby 40% (US$ 54000)after using locally processedcassavaflour. Suchreductionsin import costsfor imported of Malawian manufacturingsectorin the global markets raw materialwould boostthe competitiveness unlike the caseas at now. According to FAO estimates,Malawi spentabout US$ 239, 000, Zambia spentaboutUS$112000and MozambiquespentaboutUS$213000on imported(corn,wheat,potatoes, rice) starchin 2005. Existing reports(e.g. IITA/SARRNEI 2003) estimateabout9028 metric tons of corn and wheat flour, and about 1l14 metric tons of corn starchis usedin Malawi. This would easily be substitutedby cassavaflour and starchrespectivelytherebyreducingthe country'simport costs.

Other non-food manufacturingsectorsthat have not adequatelyutilized cassavaproductsinclude the animal feed manufacturingand bio-fuel industry.There is evidenceto the effect that cassavabased animal feeds such as silage*are emerging though still at researchlevel (IITA/SARRNEI 2006; Gondwe et al 2001). The use of cassavain ethanolproductionis growing inAsia, for example.With Africa producingcloseto 50o/oof world cassavaproduction,it standsto have an advantagein ethanol

a) l

.he

productionholding other things constant.This avenueneedsto be exploited further for the cassava

ng

producingAfrican countriesandparticularlyso for SouthernAfrica.

de ral "nog

5.2

The Key CassavaValue Chains and Trade Flows

Cassavais sold in different forms, in different places and by different or same players. Players undertakedifferent functions.For example,besidesfarming, farmerssell as well as processcassava.

6.

Playerssometimeshandlemore products.For instance,both farmersand traders(predominantly)sell

in

fresh cassavabut also processedcassavaproductssuch as flour or chips. While the tracing the trade flows would be much easierif we isolateone productat a time, doing so requiresadequatedataon each

1e al

product.Suchmeaningfuldatacan only be collectedif suchproductsare availableon the markets.This is not the casefor the currentstudy which could not obtain any dataon any other productexceptfresh cassava.Worsestill, this study could not obtain secondarydataon the particularproducts.As suchthe

10

m lo '/o

al rf '/o

discussionand quantification of the value chain is based on aggregateestimatesobtained from literatureand also following the main routesthroughwhich the variousproductspassfrom farmersto ultimate consumersor users. Cassavaand cassavaproducts from farmers scatteredall over the Chinyanjatriangle flow to village, districts,major city marketsas well as industrialmarketsthrough farmersthemselves,traders,processorsand manufacturingcompanies.Figure 5.0 gives an overviewof the key supplyand buying optionsand productsto ultimateconsumers.

d tS a

5.2.1 Key supply and buying optionsfor key players

( rf

v

Supply flows from farmers: Farmers have the option to sell their cassavaor cassavaproducts to wholesalers,retailers,processors/manufacturers or consumers.About 60ohof farmersin Malawi sell cassavaor cassavaproductsto wholesalersas their primary buyerscomparedto 27o/oin Mozambique and23o/oin Zambia.This meansmore farmersin Malawi sell to wholesalers.In contrast,only about 7% of farmersin Malawi sell to retailersasprimary buyerscomparedto )q" in Mozambique and 43o/o

d

in Zambia.Further comparativelyless (23%) farmersin Malawi sell to consumersas primary buyers

;

comparedto 48o/oand 35ohfarmersin Mozambiqueand Zambiarespectively.None of the farmersin

h

Zambiaand Mozambiquesell to processorsas they were not operatingin the areawhile about 8% of

)l

farmers in Malawi sell to processors.These results show that fewer farmers sell to retailers and consumersin Malawi than in MozambiqueandZambia. During datacollection,very few farmerswere

38

found in the marketsin Malawi comparedto those found in marketsin Mozambiqueand Zambia. In Malawi, farmersthat sell directly to the consumersare often thosethat sell within village marketsby putting boiled or freshcassavaby the roadsideneartheir homesor primary schools.

Primary producers ScaleFannersin the ChinyanjaTriangle

Farm Household consumptlon (pure or blended products e.g. nsima. boiled, roasted, peeled fresh cassava)

boiled cassava, roasted,fresh, driedcassava)

Cassavaprocessors (individuals, associations ''coopcratives)

Fresh or boilcd. roastcd /dried cassavaor cassavaflour

Food processing (fcrrnented and nonfermented flour, Chips)

Non-fbod p r o c e s s i n g( e . g . starch and other products)

Ultimate consumers and uscrs

Bread, rnandazi. cakes. biscuits, Puffs, jurce, winc, baby food s. buns. sconcs, breakfast ccreal

Animal fecd. p a c k a g i n gm a t e r i a l . papcr. tirnber. textiles pharrnaceuticals

Food and non fbod retailers

Exportrnarkets

Figurc 5. I : Generalovcrview of the cassavavalue chainsin the ChinyanjaTriangle

39

:3

Tradeflows to and from wholesalers: Wholesalershave two options of where to buy cassavaor cassavaproductsespeciallyfreshcassavaand/orcassavachipsand flour: from other tradersor farmers.

About 760/"of wholesalersinterviewedin Malawi considerfarmersas their primary suppliersof any cassavaproductsthey trade in while all wholesalersin Zambiaand Mozambiquereportedfarmersas their main suppliers.It shouldbe pointedout here that all the tradersinterviewedpredominantlytrade in fresh cassava.However that doesnot limit them to trade in other cassavaproductssuch as cassava chips should they be available.This makes isolatingtradersfor specific cassavaproduct almost impossiblein the informal markets.About 24oA of the wholesalersin Malawi consideredother wholesalers as theirprimarysuppliers.

On the supply side, wholesalershave four options where to sell: to other wholesalers,retailers, processorsand food manufacturingcompanies.About 38% of wholesalersinterviewed in Malawi consideredother wholesalersas the first most importantbuyers.All thesewere from Malawi. About 44% of the wholesalers considered retailersas theirprimarybuyerscomparedto 63yoin Mozambique and 84%oin Zambia implying that there are limited wholesaler to wholesaler transactionsrn Mozambiqueand Zambia. However some wholesalersthat easily changeto retailersdependingon marketconditionsreportedthey also sell to consumerswhen compelledto. Thesewere I 8oh in Malawi, 36Yoin Mozambiqueand 160/oin Zambia.This implies that there might not be a clear distinctionbetweenwholesalersand retailersin the informal marketsbecauseeach one can perform eitherfunctiondependingon marketconditions.

Supply flow to retailers: Retailers have three sourcing options: from farmers, wholesalers and processors.About 600/oretailers interviewed in Malawi source cassava from farmers as their most important suppliers compared to 90o/oretailers in Mozambique and 73o/o rctailers in Zambia. This shows that proportionally fewer retailers transact with farmers in Malawi than in Mozambique and Zambia. Further,about 38% of the retailers interviewed in Malawi consideredwholesalersas the most important suppliers compared to 10o/oin Mozambique and 27oh in Zambia.lt is important to note that none of the wholesalersandretailers indicated processorsas their suppliers.This is largely expected given that all traders primarily trading in fresh cassava.Even if retailers sell fresh cassavathat can as well be sold to processors,none of the retailersreportedprocessorsas buyers.

40

Tradelinks to the processorsand manufacturers Tradeflows to and from processorsand manufacturers: are generallyweak especiallybetweensmall-scaleprocessorsand the food and non-foodmanufacturers in the formal sector. The small-scalecassavaproc essorshave two possiblesourcingoptionsfor raw material,from farmersand traders.This assumesthat suchprocessorsare not backwardintegratedinto cassavaproduction.However,almostall small-scalecassavaproducersinterviewedin this study have their own cassavafarms and only supplementcassavafrom other farmers.Such farmers or processors are the main suppliersto the formal markets mainly through spot market transactionsand contractsin isolatedcasessuch as the Masindaand PIM case.The food and non-foodmanufacturersin the formal markets such as Rab processorsoften buy cassavaproducts on spot markets or by having supply tendersthat tend to be of limited time or amount.

In summary,the preceding overview of how key players sourcesand supply cassavaor cassava products shows that marketing channels for cassava products are very short in Zambia and Mozambiqueoften involving farmer,(retailer)and consumer.The chainsatehoweverrelativelylong in Malawi involving about2-4 middlemenbeforethe ultimateconsumer.This is also evidentgiven that a significantnumber of wholesalersbuy and sell yet to other wholesalersin Malawi. It also showsthat small-scalefarmers,wholesalersand retailersthat largely operatein the informal marketsare not well linked to processorsand food manufacturersin the formal markets as the latter were never ranked among the primary suppliers or buyers. This may be understandabledue to the few processors operatingin Malawi and none in the Zambiaand Mozambiqueparts of the Chinyanjatriangle.Such differencesin the chainsmay have implicationson the marketingmarginsfor the playersin the.chains.

We will discussthis later in the report..

5.2.2 The key value chains Whereas cassava offers a range of products that follow unique marketing channels, this section identifiesthe key chains,(l)The Farm householdconsumption,(2) The Freshcassavachannel;(3) The Dried cassavachanneland (4) The processedcassavachannel.

41

Farm householdconsumption Farm householdswho grow cassavaconsumethe bulk of their own production(Table5.6).

Table5.6: Householdlevel cassavaproductionandproportionsold in the ChinyanjaTriangle

Country

Cassavasold(%/yr) (SD)

Malawi

s6.22(28.0s)

Mozambique 66.06(23.00) Zambia

68.81(20.1s)

Source:Field Survey,2007 Note: The proportionof cassavasold by farm householdsreflect the sampleand may not necessarily reflectthe respectivecountriesin their totality.

Farmersin Malawi sell proportionatelylessthan thosein Mozambiqueand Zambia(p<0.01) while farmers in Zambia sell proportionately sell about sameamount with those in Mozambique.The higher proportion of cassavasold by farmers in the Zambian part of the Triangle may be consistent with Haggblade and Nyembe, (2007) who estimatedthat growth in fresh cassavamarkets would be high in maize eating areas.The Easternprovince is predominantlydependenton maize.In Malawi, Phiri (2001) estimatedthat farmersin the Central and SouthernMalawi sell about 90o/oand 600/oof their cassavaproductionrespectively.Thesefigures representthe predominantlymaizeeatingareas.At national level, howeverthere are no conciseestimatesabout the proportionof cassavaconsumedby farm households.However,anecdotalevidencepoint to the fact that about70% (2.5 million tons based on 2007productionestimates)of the nationalcassavaproductionis consumedfor food securityleaving about 30% (1.2 million tons) for the market (seeMataya et al, 2001). IITA/SARNET estimatesthat about 26.6% of national cassavaproductionin Malawi is sold (IITA/SARNET, 2006). ln Zambia, Haggbladeand Nyembe,(2007) estimatethat farm householdsconsumeabout 92% (920,000tons) of nationalcassavaproduction1ndsell about8% (about80000tons)ofcassavaper year.

The farm householdcassavaconsumptionhas witnessedthe most rapid growth among the channelsin absoluteterms in Zambia.The growth is attributed,amongother factors,to falteringmaize production.

42

that DSedto filt thegap areatedwhen maizeproductionfalters,it is envisaged of maize futuregrowthprospectsof this channelcouldbe limited and contingenton the prospects )s nildy AS Cassaya

production and existence of viable commercial markets'

The Fresh cassavachannel freshform to The freshcassavamarketchannelinvolvesfarm householdsselling surplusproductionin give a detailed nearby markets or tradersfor human consumption.Haggbladeand Nyembe (2007) have previously overview of this channel for Zambia.The authorsnote that thesefresh cassavasales dried cassava accountedfor about 3o/oof total production.This has been attributedto the fact that reports continuesto account for the majority of marketedcassavavolumes. In contrast,different et al' presentdifferentestimatesof freshcassavamarketedvolumesin Malawi. For example,Mataya marketsector marketis the mostboomingsegmentof the cassava (2001)estimatethat the freshcassava that taking up about 80% of the marketedcassava.But recent repofts by IITA/SARRNET estimate the previous about 109 000 metrictons of freshcassavais sold.The differencein the quantitiesfrom processed' reportscould be attributedto the fact that relativelymore andmore cassavais being is the predominantform of cassavasold it remainedclearin this studythat freshcassava Nonetheless, in the informal sector.About 75o/oof farmers in Malawi, 98% farmers in Mozambique and 95o/, farmersin Zambiaratedfreshcassavaas their first most importantproductthat they sell (Table5.7). productsto farmers Table5.7.Relativeimportanceof cassava Country of study

Products

First most Fresh cassava

Malawi

Mozambique

Zambia

( n: 123)

(n: 87)

(n : 80)

75 . 4

97.5

94.9

important

Dried cassava

19.5

1.3

2.5

product

Cassavaflour

A 1 a.L

0

0

l3.0

2.5

Other products (e.g. leaves, 0.8

maize productionfalters,it is envisagedthat As cassavais mainly used to fill the gap createdwhen and contingenton the prospectsof maize future growth prospectsof this channelcould be limited productionand existenceof viable commercialmarkets'

The Fresh cassavachannel selling surplusproductionin freshform to The freshcassavamarketchannelinvolvesfann households Haggbladeand Nyembe (2007) give a detailed nearby markets or tradersfor human consumption. that thesefresh cassavasaleshave previously overview of this channel for zambia.The authorsnote been attributedto the fact that dried cassava accountedfor about 3v:oof total production.This has cassavavolumes' In contrast'different reports continuesto account for the majority of marketed in Malawi. For example'Matayaet al' presentdifferentestimatesof freshcassavamarketedvolumes marketsector marketis themostboomingsegmentof the cassava (2001)estimatethatthe freshcassava recentreportsby IITA/SARRNETestimatethat taking up about 80% of the marketedcassava.But The differencein the quantitiesfrom the previous about 109 000 metrictons of freshcassavais sold. andmore cassavais beingprocessed' reportscould be attributedto the fact that relativelymore predominantform of cassavasold it remainedclear in this study that freshcassavais the Nonetheress, ggo/ofarmersin Mozambique and 950/o in the informal sector.About 7 50hof farmers in Malawi, importantproductthat they sell (Table5'7)' farmersin zambiaratedfreshcassavaas their first most productsto farmers Table5.7.Relativeimportanceof cassava Country of studY

Products

First most Fresh cassava

Malawi

Mozambique

Zambia

(n: 123)

(n: 87)

(n: 80)

/>.+

97.5

94.9

important

Dried cassava --

19.5

l .J

2.5

product

Cassavaflour

4.2

0

0

I3.0

2.5

Other products (e.g. leaves, 0.8

seed)

2nd most Freshcassava

34.8

20.0

22.2

important

Driedcassava

8.7

80.0

0

product

Cassavaflour

47.8

0

0

Otherproducts

8.7

0

77.8

Source:Field Survev.2007 Similarly, almost all (97%) of wholesalersand 85% of retailersinterviewedreportedfresh cassavaas the most marketableform of cassava.

Previousstudieshave notedthat due to perishabilityof the fresh cassavaroot, fresh cassavais mostly sold in nearbymarkets.In contrastwith HaggbladeandNyembe(2007)who foundthat freshcassavais sold within 50 kilometersfrom the farms in Zambia,this study finds that farmerson averagetravel shorterdistancesto the marketscomparedto traders(seeTable5.g).

Table 5.8; Averagedistances(Km) to the crosestand farthestmarkets Distanceto Closest

market

(Km) (SD)

Farthest

(Km)(sD)

market

Farmers

Traders

Malawi

6.63(6.35)

20.54(17.57)

Mozambique

II.8I(5.87)

32.63(2t.09)

Zambia

1s.02(s.t2)

t2.63(8.21)

Malawi

I 1.00(5.28)

28.88(17.85)

Mozarnbique

18.ll(9.74)

Zambia

21.00(5.66)

36.75(17.58)

Note: farmersdistanceto the marketreflect from hometo sellingmarketand for tradersthe distance rs reflectthe distancefrom buying to sellingmarkets.

44

In general, farmers reach markets within shorter distancesthan traders. Farmers in Malawr reach market within a shorter distance (about 7km) relative to their counterpartsin Zambia and Mozambiquewho travel almost dotrblethe distanceto their closestmarkets.In Mozambiquetraders travel the longest distancesto the markets comparedto their counterpartsin Malawt and Zambia.The distancesreflect the market characteristics.In Mozambique and Zambia, traders commonly buy cassavafrom farmerswho bring cassavafrom distanthomes to the market while in Malawi traders often go to farmers' fields to buy cassava.In addition,traderslong distancesto the marketscan be explainedby the fact that in all countriesboth retailersand wholesalersundertakecrossborder trade.

For instance,3 of the 11 wholesalersin Mozambiquealsoreportedto buy cassavafrom Malawi; l0 of the 19 wholesalersin Zambia also buy cassavafrom Malawi and 30 of the 93 wholesalersin Malawi also buy cassavafrom Mozambique.Further,5 of the 38 retailersin Mozambiquealso buy cassava from Malawi; 4 of the 45 retailersin Zambia also buy from Malawi and 16 of the 109 retailersin Malawi also buy cassavafrom Mozambique.None of farmersin Malawi reportedto sell cassavacross border while 5 farmers reportedto sell cassavain Malawi from Mozambique especiallythoseclose to Dedzaand 8 farmersin ChipataZambiaalsonotedthat they sell cassavain Mchinji closeto the border.

The Dried cassavachannel Dried cassavais a productof cassavaprocessing.Cassavaprocessingis doneat differentlevelsranging from householdlevel for consumptionto processingfor commercialpurposes.It is interestingto note that farm householdsundertakea reasonablyamountof processingof cassavafor their own household use as well as for sell (forward integration).Such farmersprocesssome cassavainto chips or flour which they sell to tradersor consumersby themselveson the informal markets.Somecompanies(e.g.

RAB processors,Universal Industries)buy on spot market basis from tradersor farmers.Cassava processinginto flour and chips is predominantin Nkhata-Bayand Mulanje - the cassavaconsumption hotspotsin Malawi. In thesedistrictscassavaprocessingis part of the traditionalway of preparingflour for home consumption.In Mulihje, cassavais mostly processedinto chips and flour after drying. In KhataBaydistrict,cassavais normally soakedand fermentedbeforedrying and grindinginto four. Due to commercializationof the cassavatrade, cassavaprocessingis spreadingto other districts such as

45

Mzimba and Zomba where small-scalecassavaprocessorsprocessand sell cassavachips and flour.

However, the volumes of cassavaflour sold or bought through informal spot market transactions or from organizedgroups of local processorsto industrial users could not be establishedfrom both literature or primary data exceptin few casesthat have beenreported. The cassavachips and flour sold to the industrial food manufacturersis processedfurther into ready to eat foods (such as bread)or ready to use flour throughblending with other ingredientssuchblendedbread flour that is sold in domestic formal marketssuch supermarketsor exportedto regional marketsespeciallySouthAfrica.

Dried cassavaoffers an attractive substitute for the wheat- and,maize-basedproducts that currently predominateamongthe food, feed and agro-processors.

According to Haggbladeand Nyembe (2007), the market of dried cassavafor human consumption accounts for about 90o/oof the dried cassava marketor 4 to 5o/"of total productionin Zambia.A numberof consumableproductsare (canbe) made from the dried cassavaincluding toastedsnacks,compositeflour for biscuits,breads,fritters. blended nsima and other conveniencefoods such as gari (Chitunduet al,2006; Mahungu,Banda and Mataya, 2001; IITA/SARRNET, 2006). No data was available for Mozambiqueto ascertainif and how much dried cassavais haded.

In Malawi, data availablefor dried cassavachannelis the flow to the industrial cassava users.For example,IITA/SARRNET (2003) estimatedthat this channeltook up about6400 tons of dried cassava in the form of cassavachips and flour translatinginto about 19200metric tons of fresh cassava.

Recent estimatesby IITA suggestthat about 8693 metric tons of cassavachips and about 74 metric tons of cassava flour pass through this channel both to industrial users as well as informal markets (IITA/SARRNEI 2006). This translatesto about 29,223 metric tons of fresh cassavaat 30o/o conversionrate.Although theseestimatesdo not speciff the major suppliersand their volumes, our discussionswith someof the cassavaprocessorsand the food manufacturers themselvesrevealthat the cassavachips and flour are suppliedby small-scaleprocessors who operatein groups(e.g.the Mbavala group) or individualprocessors.

The absenceof dried cassavafrom the local markets was clear from the relative importance that farmers put to dried cassavaand cassavaflour as their marketableproducts (ref Table g above).

Only one farmer in Mozambique and two farmers in Zambia considereddried cassavaas their first most important product. It could be that in Zambia and Mozambique, the dried cassavachannel does not exist in isolation from the farm householdconsumptioni.e. cassavais processedfrom own farm 46

householdconsumption.Being predominantlymaize eating areas,the dried cassavamay not be a preferredsubstitutefor maizebasedmain meals exceptduring hungry seasons.In Malawi, however, where fwo of the study sites (Mulanje and Nkhotakota)are main cassavaeating zones, about20o/o (n:23) farmers reporteddried cassavaas the most importantmarketableproduct; only 4o/oreported cassavaflour as the most important and 47o/oreportedcassavaflour as the secondmost marketable cassavaproduct. However, thesefarmersreportedthat cassavaflour is better sold during the hungry months when many people do not have maize or adequatecassavafrom own production.This may reflect the limited growth potential for dried cassavafor human consumptionespeciallywhen maize and/or cassavaare in abundance.Moreover,many peoplefrom main cassavaeatingareasmay likely processit themselvesthan buying dry cassavafrom the marketsunlessthey do not have their own Hencethe major prospectsfor dried cassavaand cassavaflour would be in the industrialsector.

The processingand manufacturingcassavachannel Both the informal and industrialsectorsstandto benefitfrom cassavaprocessingfor food and non-food purposes.The industrial use of cassavaproducts (such as starch) presentsa major value adding opportunity for the cassavasub-sector.

According to Haggbladeand Nyembe (2007), this channeloffers a third potential market for Zambian cassavafollowing the scaling down of a major parastatalcassavastarch company.The amount of cassavastarchin the packaging,paperproductsand wood processingindustry rn Zambrais lessthan 300 tons,or 1,000tons of freshroots,per year.In Malawi, it is estimatedthat the industrialmarketsfor cassavaproducts takes up less than lo/o of the national production (IITA/SARNNEI 2003). The common cassavaproduct used in the manufacturingindustry is cassavastarchthat standsat about 93 metric tons (see IITA/SARRNEI

2006). This starch is mainly from Masinda cooperativesociety -

probably the only cassavastarch processingplant in the country. Overall, IITdSARRNET (2006) estimates that about 29426 metric tons of fresh cassava is utilized in this channel. However, IITA/SARRNET (2003) estimated that the manufacturing sector had a potential demand of about 33660metric tons of fresh ca3sava.Given that the non-food industrial sectorheavily relies on imported products,there is as much potential for growth as it would take the country to meet local demandand

47

becomea net exporterof suchproductsthat can be producedfrom cassavanotably starch,animal feed, bio-fuels,babyfoodsamongmanyothers.

Animal f-eedrnanufacturingpresentsanotherarray of value adding innovationsin the cassavavalue chains. lncreasingly,innovative farmers and companiesexperimentwith cassava-based feed rations as a meansof lowering feed costs.Such efforts however remain largely at experimentallevei. This is anotherhigh potentialchannelconsideringthe diversity of animal feed industry that standto benefit.

For example,Haggbladeand Nyembe,(2007)estimatethat at the currentlivestockproduction and feed manufacturingfrom maize,Zambia'sfeed industrycould absorbin the rangeof 90,000to 150,000 tons of freshcassavaper year.Realizingthe upperlimits would thus representa 15oloincrease in national productionand a doublingof currentlymarketedvolumes.

In Malawi, data on animal feed manufacturingis scanty.The only study commissioned

by Universal industriesin 2001to assess the feedmarketin Malawi estimateda monthlyfeedrequirement of about 9944 metrictons for dairy poultry and piggery in the countrytranslatingto 119328metric tons of feed annualrequirements.

Furthergrowthpotentialin this channelis envisagedgiven the increasinguseof cassavaas a livestockfeedin westemeconomies and in Asia and also the low barriersto entryinto the cassavaand poultry industry.Consequently, any feedmanufacturing companies, millers,or individual livestockproducerscould potentiallyproducecassava-based livestockfeeds fbr both domesticor exporl markets.

The processingof cassavafor food is anotheravenuethat may boostvalue additionactivities in the subsector.Desprtethe high potentialfor diversifiedcassava-based products,there are less than 20 cassavabased products on the markets in Malawi including fermentedand non-fermented flour, biscuits, puffs, Mandazt, cassavajuice, cassavawine, energy shake, scones,buns, cassava roles, breakfastcereal,noddles/paster, bread, cakes (see IITA/SARRNEI 2007, see also appendix 1 for someexamples).

Howeveqthe actualavailabilityof theseproductsis highly seasonal andnoneof these productshasbeenfully quantified. ln Zambi4 Haggbladeand Nyembe(2007) estimatethat marketdevelopmentfor processed cassava basedfoods such as gari6afrclother cassava-based conveniencefoods will requiretime as well as resourcessufficient to finance investmentsin marketing,packagingancl processing technology. "

Gari is a pre-cooked,dried, granular lorrn o1'casq.rv.r

48

However,the channelhasthe potentialof accountingfor as much as 50o/oof total cassavaconsumptton, other or roughly 500,000 tons of fresh cassavaper year if the consumptionrates for gari and rates. conveniencefood similar to thoseachievedin WestAfrica were to be achievedas standards Limited diversity of cassavaproductsin the informal marketscould be attributedto low demandarising from, among other factors, low acceptabilityof the cassavabasedproductsrelative to competitor products.As Haggbladeand Nyembe,(2007)note,the uptakeof cassavabasedproductshasbeenslow and its improvementwill thereforerequire more new product development,capacitybuilding and marketing efforts to generateand gain consumeracceptance' ln short, although lack of national data of substituteproducts limits the extent to which one can extrapolatethe potentialdemandfor cassavabasedproducts,the potentialis certaingiven the diversity of sectorsto which cassavacan be used.

49

5.3

Performanceof the Value Chains

In order to analyzethe performanceof the cassavavalue chains,we estimatemarketing costs and marginsfor the actorsinvolved as well as an analysisof major constrainingfactors. It shouldbe noted that the analysisalso usespreviousestimateson marginanalysis.This arisesfrom four relatedreasons: l) very few farmersand traderswere selling cassavaat the time of the study,2)the few farmersand traderson the markets and their low trade volumes lower the competitivenessof the markets and may not adequatelyrepresentthe real marketingsituationfor cassava,3) absenceof other major players such as cassavatransportersmay alter the real cost structure,and 4) the costsand profit marginsfor the lean seasonmay not adequatelyreflect the reality during the peak cassavaseason.As such,relying on cost and price estimatesobtained during this study may undermine the real cost and profit structure facing channelplayersduring peak cassavaseason.Consistently,relying on farmersand tradersrecall memory of cost and price estimatesfrom previousseasonwas consideredno better,in fact, worse off, than using previousestimatesthat were basedon datacollectedduring peak cassavaseasonand likely from representative samples.

5.3.1 Marketingmargins Marketing margin analysisis one way of determiningthe efficiency with which a particularmarket systemfunctionswith respectto price distribution.To undertakemarketingmargin and grossanalysis, farm gateprices,variouscost componentsand consumerprice are collectedalong the chain.The price spreadmethod using traders'surplusas an indication of efficiency is used. Trader's surplusis the difference between the unit marketing cost and unit selling price. The higher the proportion of the trader's surplusto the trader's unit marketing costs,the more effrcient the tradersare in the marketing activities.The proportionof the agentssellingprice over the final consumerpricesis usedto assessthe distributionof rentsalons the chains.

In order to estimatemargins f5i the respondentsthat were selling cassavaat the time of study,farmers', wholesalers'and retailers'selling prices and marketingcostswere collectedfor fresh cassava.Table

50

-

5.9 gives the marketing margins for fresh cassavachain consisting of a farmer, wholesaler,and retailers.

Table5.9 Marketingcostsand marginsin freshcassavachannel Channelmember

Mk/Kg

Farmer Averagefarm gateprice

11.34

Wholesaler 15.48 Wholesalersellingprice 4.14 margin marketing Gross Costs Total marketingcosts(transport, 3.08 labor and marketfee) Net marketingmarsins Retailers Retailerssellingprice Grossmarketingmargin Costs Totalmarketingcosts(labor (transportand marketfee) Net marketingmargins

Margin aso/oof asent'ssellinsPrice

Agentsprice as o%of consumerprice 35.74

48.79 26.74

1.06

6.85

31.73 16.25

51.21

1.81

45.51

14.44

Source:Field survey2007

The figures in the table show that, on average,wholesalerssell at a bigger share(48.79%)of the final price comparedto farmerswho sell at about 35.74%of the final price. The wholesalers'grossand net marketing margins respectively constitute about 27o/oand 7oh of their selling prices while retailers grossand net marketingmarginsconstituteabout5lo/oand46 Yoof their sellingprice.This showsthat wholesalersand retailersput arcompetitiveprofit markup on their selling prices. However their markup price is takenup by the transactioncoststhat reducethe net marketingmarginsfor wholesalersto about 7%oof their selling price. The retailershoweverretain a higher proportionof the sellingprice in their net margins.Transportcosts constitutedthe major marketing costs.Other costs componentslabor,

5l

costswhereapplicable.Suchoperationalcosts(exceptmarket marketfeesand any other miscellaneous fees),were relativelylow becauseof the volume of tradeat the time of sfudy. in Mozambiqueput up a lower markup(i5.85%) on their selling As shownin Table5.10,wholesalers price comparedto wholesalersin Malawi (44.98%)and in Zambia (38.08%).However thesemarkup marginsare takenup by high transactioncosts. Retailersput up a higherprice mark up on their selling price wherea largeproportionof it remainsas their net gain.

52

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Furthermore,the resultsshow that farmersin Zambia and Mozambiquegot about 43o/oand44o/o of the final price which are relatively higher than those in Malawi (25%). This can be attributedto the fact that most farmers in Zambia and Mozambique sell directly to consumersunlike in Malawi where they sell to intermediatetraders.

Wholesalersin Malawi sell at a slightly lower share(45oh)of the final price than in Zambia (50%) and Mozambique (52%). An explanation to this would be that as wholesaling and retailing dependon market circumstances,wholesalersin Zambia and Mozambiquehave a high chanceto sell to consumersand henceat a higher price than those in Malawi who would still sell to retailers.However, with high transactioncostswholesalers'netgainsarevery low if anythingthey makelosses.In Zambia and Mozambique, markets are relatively far off than in Malawi and with limited amount of cassava, traderstravel long distancesin searchofcassavatherebyincurring high transactioncosts.The retailers however have high net margins becausethey do not incur high transactioncosts.Retailersmostly buy cassavafrom farmers and wholesalerswho travel to the markets.Sincemany farmersgo to the markets themselvesit is easierand more beneficial for retailersto buy from farmersthan wholesalerswho may ask for higher prices to cover their marketing costs. This limits the extent to which wholesalerscan increasetheir pricesor elsethey may not sell their cassava.

The negativenet margins for wholesalersmight explain why very few wholesalersoperatein Zambia and Mozambique otherwisethere are no gains. It should however be noted that thesemargins may not adequatelyreflect the real situation during peak cassavaseason.The situation during peak seasonmay be different given that many more farmers and traderscome into market therebyincreasing competitionand competitiveness of the markets.

Anyhow, the implications of theseresultsare that holding the costsconstant,farmersstandto benefit if they sell directly to consumersor to retailersthan through a number of intermediatetradersas is often the casein Malawi. This is consistentwith previous studies(e.g. IITA/SARRNEI February 2003) who estimatethat in Zambia farmers who sell directly to consumersmay get up to 88% of the final prices.It shouldalso be noted that the resultsreflect the Chinyanjapartof Malawi, Mozambiqueand Zambiaand not the countriesinJheir totality.

54

5.3.2 Constraintsand opportunities Even with the existenceof an enablingpolicy and institutionalenvironmentto the developmentof the cassavavalue chain,key playerscontinueto facea numberof constraints.This sectionhighlightssome of the major constraintsin the cassavavalue chain.First, the sectionhighlights generalconstraintsto the value chain and thenprofile specificconstraintsbeforehighlightingsomeof the opportunities.

Generalconstraints The cassavavalue chain facea numberof constraintsas hasbeenwidely documented(seefor example, Chitunduet aI,2006).The Nyirenda,200l;Phiri,200l, Matayaet aI,2001;IITA/SARRNET,2003; developmentof the cassavavalue chain especiallyfor industrial use is mainly constrainedby the seasonalityof cassavasupply and technologicallimitations for small-scaleproducersto meet markets investmentwill depend on the year round demand. The profitability of any cassava-dependent unintemrptedsupply of cassavaraw materialin the desiredquantityand quality (ltaye,2001; Salisbury, businessventure 2001).Evidently,thereis a long periodof supplylag suchthat any cassava-dependent would have to be out of production.Unfortunately,supply gap may not be solvedby regionaltrade within the Chinyanjatriangleas seasonalityof the cassavasupplyoccursat the sametime.

Another constraintin the value chain is the lack of coordinationamong various key players.The cassavavalue chain operateswith minimum organization.For example.producerspredominantly may be workingwith suchproducers Withoutcoordination, fragmented. aregeographically small-scale companiesbecause:1) quantitiesof processingand manufacturing difficult and risky for large-scale in quality, (2) supply can be haphazard,and 3) bulking-up of productsare small and heterogeneous volume into a steady stream of good quality product might be difficult and costly to realize, 4) perishabilityof the cassavaroot makesstorageessentialand yet no storagetechnologiesare available for the producers.These may be seriousproblems when serving modern (and distant) marketing channelsor industrialmarketswhere timeliness,quality and quantityof delivery arecritical issuesfor Furthermorelbrganizingsmall-scaleactorsmay be difficult, and companiesthat may competitiveness. be interestedin organizingsmall-scaleproductionand marketingsystemsmay face high transaction costs.

55

Lack of coordination also comes with failure to establishlong-term relationshipsbetween buyers and sellers. Only l8% of the farmers for example, indicated that they have long-term relationship with buyers w'ith whorn they agree on price or from whom they get credit either in kind or cash. However, U1% of all farmers that had no long term relationshipswith buyers were willing to establish such relationships preferably with processors(38%) and, wholesalers (42%). In contrast, about 37o/oof wholesalers interviewed reported to have long-term relationships with suppliers and 34oh of these reported to have credit ties with suppliers and about 37o/orepofted to have price guarantees.About 460/o of wholesalersthat did not have long term relationshipswith supplierswere willing to establishsuch relationshipsespecially with farrners (65%) and other traders (22%). Fufiher, about 54oh of retailers reportedto have long term relationshipswith suppliersand of theseabout 18% indicated to have credit tics u,ith the sLrpplierswhile about 55% reporled to have price guaranteeswith suppliers.

In all cascsthc rclatronshinsrri: largely infonnal (not bound by formal agreementssuch as contracts). !,.,rlrr'i'ci;liionii:irrcould iasi lol thc whole marketing seasonwith possibility of crossing over to r,iliriijr rriiiie othcr': lastjust for a whilc or for as long as credit is still outstanding.Credit 1r.iii:r!flLlerl; ,r,r.,iir\,.)ir: i:ir,'ilr:l'rirntcrial crcdit givcn to thc suppliers in rctum for cassavasupply and price ,fLiarantcc\jl'r'oii,.:lr{lr',,uri:i: rLgiccmcnlorr pricc beli;r,.:{irturcpurchases.

S p e c i f i cc o r t s t r a i r t { r Whereas a nurlbcr of str-idrcshave documentecinumerous constraints that farmers, traders and llroccss()r'stirce in thc ctrssavavalue chains, this sfudy intend not to repeat them in their entirety. lnsteadthis study highiights some of the problems that farmers (e.g. Table 5.11) and tradersrank as the most irnporlant in their cassava marketing activities. In short, some of the documented problems include poor accessto market information, lack of grades and standards,seasonality of the supply, lack of modern processing technologies, poor transport, lack of credit facilities among many other constraints(see Phiri, 2001, Mataya et al 2001; IITA/SARRNET, 2003).

56

Table5.1l; Farmersrank of mostimportantproblemin sellingcassava . Malawi First important problem ln

Mozambique

Zambia

% (n:113)

% (n:60)

% (n:61)

Inadequatecapital

1.8

8.3

6.6

Few buyers

3.5

6.7

a a J.J

Poor transport

3.5

5.0

9.8

Long distancesto markets

2.7

8.3

8.2

Low demand

8.0

38.3

32.8

Low prices

69.9

30.0

31.1

Demand for quality

2.7

t.7

8.2

Otherproblems

8.0

1.7

.0

selling cassava

Source:Field Survey,2007 Note n is the numberof farmerswho reportedto haveproblemsin sellingcassava.

Market prices- About 70o/oof the farmers interviewed in Malawi rated low price as the first most importantproblem comparedto 30o/oin Mozambiqueand 32o/orn Zambia. In contrast,about4lo/oof wholesalersin Malawi reported low prices as the most important problems when selling cassava comparedto IIYo from Mozambique and 50ohfromZambia. About 30% of the retailersinterviewedin Malawi, 14Yoin Mozambique and l5o/ointewiewed tn Zambia reportedlow market prices as the most important problems in selling cassava.Theseresultsare directly in contrastwith the increasingtrend in cassavamarket prices. from Mozambiquereportedlow demandas Market demand:About 32Yoof farmersin Zambia and,38o/o the most important problem c6mpared to Malawi where only 8% reported low demand as the most important problem. In contrast,low demandwas consideredas the most important problem by about 13% wholesalersin Malawi, 20oh from Mozambique and. l7o/o from Zambia. Low demand was

consideredas the most importantproblemby about22o/oretallersin Malawi,35o in Mozambiqueand 39o/oinZambia Capital investment:Inadequatecapitalinvestmentwas not consideredas an importantproblemamong of the retailersin farmersin all countries.Howeverabout30% wholesalersfrom Mozambiqueand 17o/o Zambianotedit as the most limiting factor in their business.Only 8% wholesalersin Malawi and6ohin Zambia andTo/oretailersin Malawi and3o/oretailersinZambia noted capital investmentas a limiting factor.

Accessto markets:Long distancesto the marketswas rated a most importantproblem by very few in Zambraand only 6oh farmersin all countrieswhile about20Yoof wholesalersin Mozambique,11o/o in Malawi reportedthat it was the most importantproblem.Distanceto the marketswas not rakedas an importantproblemamongretailersin all countries.

Accessto credit facilities: Ava ilability of credit facilities was anotherproblem. Of all farmers interviewed only 8 had accessto credit mainly from cassavabuyers. This may show that the institutionalsupportis weak as becausecredit is the key to the developmentfor exampleof small-scale cassavaprocessingas well as trade.Whereasthis may be seenas an institutionaloversight,one may wish to realize that the current scale of production for individual farmers may not warrant credit support. Credit may eventually render farmers indebted to the credit provider in the event that farm productionmay not be adequateto pay back the credit. Hencewhile other reports(e.g. Mataya et al 2001) arguethat lack of credit constrainsthe developmentof the cassavavalue chain especiallyfor farmers,it shouldbe clarified for which activitiesthe farmer may needcredit supportin consideration of the natureof the currentcassavaproductionsystems.

Accessto market information: Accessto market information is anotherconstraintin the cassava value chain. In this study, only about 28o/ofarmers interviewed had accessto market information mainly from fellow farmers (50%) and cassavabuyers (32%). In Malawi 38o/oof farmers reportedto farmers and buyers as the most reliable sources of market information. All the 15 farmers in Mozambiquewho reportedto accessmarket information considerfarmersas the most reliable sourceof information. About 47Yo andieN of farmers inZambia consideredfarmers and buyers as the most reliablesourceof marketinformationrespectively(seeTable5.12).

58

Table 5.12: Farmers rank of the most reliable sourceof market information

Mozambique

Zambia

Most reliable source of market Malawi information

(n-60)

( n: l 5 )

(n: 19)

Farmers

38.3

100.0

47.4

Buyers

38.3

.0

36.8

Radio

8.3

.0

5.3

Governmentoffices

1 a J.J

.0

5.3

othersources

11.7

.0

5.3

Source:Field Survey,20A7 Note:n is the nurnberof farmerswho repoftedto haveaccessto rnarketinionnatton

About 670/oof the wholesalersinterviewed reportcd to har,'eacccssto rnarket infbrrnation. Thesc arc composedof 68otoof wholesalersinterviewed in Malau,i. -55')'o rvholcsalcrsintervicn'eciin Mclzarnbicluc and 68% of wholesalersinter"vier,l,ed in Zarnbia. Abor-rt56'ii, of rvlrolcsalcrsu hi; acccss rrarker infonnation in Malawi reported f-armersas lnost rcliable sourcc of nrarltct inti;rllation cor-rrparcd to 33% in Mozarnbique and 23ni in Zanbitt. Furlher. about 389'f 1f' y,,|il,lgrolclsr.r.hoaccess markct information in Malawi reportcd other wholcsalcrs as most rcliablc sourcc of rrarkct infirritration comparedto 50% in Mozarnbiclueanti 77o/uin Zambia.

About 57%% of allretailersintervieu.edindicatedto have accessto rnarkctinfbrmation.On thc overall, 73oh of the retailers intcrviewed in Malawi had accessto markets information compared to 38% interviewed in Mozambique and 33o/ointewiewed in Zambia. Among the retailers that had access to market information in Malawi. 47o/o reported farmers as the most reliable source of market information. Among the retailers that had accessto market information in Mozambique, 50% reported farmers as the most reliable sqg-rceof market information. Among the retailers that had access to market information inZambia, 13o/oreported farmcrs as the most reliable source of market information.

Similarly about 40oh of those with accessto information in Malau,i. 50"/uin Mozambique and 86% in Zambia consideredother retailersas the most reliable sourceof information.

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Whereas farmers and traders seem to have access to some market information, the commonly shared information is about where the market for cassavawould be. This is true especially for mobile or makeshift markets such that traders as well as farmers commonly inform one another about where the market is and when. Pricc information is also shared regarding where prices are high. This knowledge may be of little consequence to farmers and even traders with respect to their competitivenessas price takers.Nonethelessthey decide when or where to sell their cassava.Of course given that there is currently no fonnal dissemination of market information, the high proportion of farmers and traders sharing infonnation amongst themselves may not be surprising. Other sources of information that did not feature as reliable among bother farmers and traders are government offices, radio. NGOs. ln the end fanncrs and traders remain isolated from high value markets such as rnanulacturingcompanies.

Storage technologies: None of the respondentsinterviewed indicated to store fresh cassava except very few farmers that tradc in dried cassava.Such fanners however reported to keep cassavanot necessarilyfor sell but nrostly fbr fbod security.The only way that fanners store fresh cassavawas to delay harvesting. Farmers do that for good reason to keep seed which would otherwise be wasted if they harvest cassavalong before the rains. Unfortunately, delay in harvesting createsa situation of onetime supply leading to excesssupply and in return causingdownward price movement. Another major aspect of lack of storage technologies is the perishability of the fresh cassavaroot. Depending on market conditions tradersas well as fatmers may be compelled to keep cassavaroots ovemight or even for a few days. As such, quality deterioration leads to loss in price or total loss where cassavais literally thrown away. This wastageof cassavabecomesevident during peak period when heapsof bad cassava becornes a colnmon scene in the markets. Unfortunately, cassava wastage has not been documenteclrn any of the literaturereviewed in this study.It may be likely that cassavawastagehas not been the tbctrsof anv of thc tnarketingstudies.If there has been any documentation.then it is not easily accessible'This study could not estitnatefresh cassavawastageeither, as there was very little cassava in the marketsand no wastasecould be observed.

Grades and Standards - All farmers, wholesalers and retailers reported that the common mode of grading was by size i.e. selling large size roots separately from small-size roots and by freshness.

That way prices vary with root size with bigger roots fetching higher prices than smaller ones.

However per unit price may not necessarily differ. Grading by freshness means that cassava that overstays without being sold is often sold at a lower price compared to fresh ones. This however only

happensif there is fresh cassavaat the market.Such gradingsystemsdo not help much when farmers or tradershave no meansto sustainthe shelf life of cassava.Somefarmersreportedthat when fresh cassavastayslong without being sold out, they peel and dry it or processit into chips that they may also sell. This explainswhy manufacturingcompaniesreportedto experienceseriousquality problems with raw materials(chips and dried cassava)sourcedfrom small-scalefarmersjustifying why they go for importedproductsthan local supply.

In summary,it shouldbe notedthat althoughthe list of problemsis not conclusive,it gives an ideaof which problemsout of the many that they chainplayersface,may needimmediateinterventions or how problemswith one key player affect the performanceof the whole value chains.For example, as is the casewith other perishableproducts,quality deteriorationat primary (farmer) stagesimplies low productivity in the downstreambecausequality lossesreduce amount of raw material passing through the chain from processing, manufacturing to distribution. Hence improvement at on stage particularly at primary stageswould certainly translateinto improvementsdownstream.

Opportunities A numberof reportshave acknowledgedthe opportunitiesthat cassavasectorenjoysincluding of cassavaas a crop that adaptswell to differentagro-ecologicalconditions'One uniquecharacteristics of the most important opportunitiesis the unprecedentedpolicy and institutional framework and supportin view of the unsupportedback groundof the chain.The growing momentumamongprivate and public sectorssets an opportuneenvironmentfor improved investmentin the processingand manufacturing sector.In Malawi, for example, with Governmentcommitment to changethe country sectoris one such example from consumingto exporting nation through promoting agro-processing where investment in cassavaproduction and processing may enjoy better incentives such as tax exemptionsand dutYwaivers.

Another opportunity that an improved cassavasubsectorcan tap on is the growing domestic market as well as export markets that are to date not fully utilized due to limited value addition investmentin the sector.It is not surprisingthat at the moment there is no indication of any significant export of cassavaproducts frim the Chinyanja kiangle. The little regional trade that is there faces untold quality problems. However, anecdotal evidence shows increasing cross border trade from Zambia(as a whole) to its neighbors.Haggbladeand Nyembe (2007) estimatedthat crossborder trade

6l

in dried cassavaftom Zambia through Chembeborder post to Angola or Congo increased g0% by between2001 to 2006.In Malawi, one of the food manufacturingcompaniesthat processcassava flour reportedthat it exportssome of it to SouthAfrica. IITA/SARRNET (2003) report about 100 tons of cassavachips being exportedannually by Chinakanakagarden.According to the estimates obtained from the tradersit showsthat about 10600metric tons of freshcassavaMalawi from Mozambique and Zambia during the peak season.At the sametime, about 6477 metric tons of fresh cassava leaves Malawi to Zambiaand about 5280 metric tons of fresh cassavaentersMozambiquefrom Malawi.

It should be noted that this figure are basedon tradersown estimatedand not registeredcross border trade' Efforts to get such data from relevantauthoritiesdid not yield any resultsreportedly because datais not available.

Both the export and domesticmarketsoffer tremendousopportunities.The high value markets within the local economiesoffer more opportunitiesthat may be easyto exploit than export markets that are surroundedby many technicalbarrierssuchas food safety,quality,quantity and delivery times.

Existing literatureshow that the estimateddemandof 2680 metric tons of dried cassavaand 1500tons of starchby the manufacturingand processingsectorsin Malawi are hardly met due to the technical and managerialconstraintslimiting the ability of the chain to meet domesticdemand.

The curent cassavaproductionlevel (about4 million metric tons of fresh cassava)Malawi would adequately and steadilysupportlocal processingand manufacturingsectorsonly if the chain was well coordinated and primary producerswell linked to downstreamchannelmembers.

The opportunityoffered by the local and domestichigh value marketswould exploitedif the diverseproductsboth food and non-foodthat can be producedfrom cassavaare achieved.This means that the value chain can serve a wider market and many market segmentsthan it is serving at the moment. Exploiting all these opportunitiesin food and non food products including bio-fuel may require significant growth in the value chain which in turn may also be an engine for sustainable growth in the sector.

Whereasthe opportunitiesmay be endless,tackling the numerousconstraintsthat the chain is currently facing is the prerequisite.

62

5.4

GeneralDiscussion This study aimedat establishingthe natureof value chain for cassavain the Chinyanjatriangle,

assessthe structure,conductand performanceof the cassavavalue chain,tracethe cassavaand cassava product trade flows, analyzeprice trends and trade margins,identiS opportunitiesand constraintsto the developmentof the cassavavalue chain includingpolicy and institutionalframeworks.It is evident from the study that the cassavavalue chain in the Chinyanjatriangle is largely informal but steadily making a breakthroughinto the formal market segments.Being in the informal market sector,the performanceof the value chain is relativelydifficult to assessdue to a numberof problemswith lack of dataas the most limiting factor.However,this study,just like previousstudies,showsthat key players in the cassavavalue chains can make steadygains especiallyfarmersand tradersif they were well linked to information systemsand high value markets.Transactionssuch as searchcosts may be reducedif key playersare well coordinatedtherebyreducingtime in searchof productsand at the same time help the formal marketsto sourceraw materiallocally and more timely.

The study also showsthat there are variationsin the characteristics of the key playersin the cassava value chain within the Chinyanjatriangle.Playersin Malawi seemto be well connectedto the informal marketsand have relativelymore experiencein the cassavavalue chains.Due to their improvedaccess to informal markets,their net margins are better of their counterpartsin Zambia and Mozambique where transactioncostsare high with limited choicesof marketingchannel.This may have something to do with the historicalbackgroundof cassavaproductionin the triangle.One would thuspresumethat with time as more and more institutional support is given to cassavatn Zambia and Mozambique, markets will more establishedand market participant may improve their benefit from market participation.

The study also shows that the demand for cassavabasedproducts in industrialmarkets is largely unsatisfied.Although assessments have only been made for Malawi, the mere absenceof any value addingactivitiesin the otherpart of the Chinyanjatriangleimplies that somethingmustbe done.It may not be assumedthat there is no demandfor value addedcassavabasedproductsbecausethere is no evidenceto suggestthat valueldding activitieshave collapseddue to limited marketsin the areas.

Nonethelessevenif theremight be limited demandfor valueaddedproductsdueto low acceptabilityas such products may be relatively new, fresh cassavamarkets that are largely booming in the maize eating zone may also suggestthat even in theseparts of the Triangle,cassavamay still have potential

63

marketsonly if it can be supportedthroughresearchand new product development,disseminationand marketingactivities.

Although cassavais predominantlysold in the informal markets, tracing its trading routesrevealthat cassavaand cassavaproductspassthrough a numberof routes dependingon the final product that in turn determinethe ultimate markets.More interestingis the intricate network of intermediatebuyers especiallyin Malawi wherea numberof tradersare involvedin sellingthe freshcassavaevenif they do not undertake any value adding processing activities. This however is important for creating employmenteven though increasingthe number of intermediate buyersmay reducethe marginsthat each trader gets' This study however could not establish the exact distribution of rents among intermediatetraderslargelybecauseof their absencein the market due to the lean season.However,on the basisof those found on the marketsat the time of the study, their marginsseemto be distributed suchthat farmersget lower rentsthan traders.This is largely due to the fact that tradersare often well informed about marketsthan farmersand hence farmerslose their bargainingpower in the process.

However in zambia and Mozambique,the situation is different in that some traders especially wholesalerswere the leastcompetitivedespiteputting up relative ly a fair shareof the price for their margins'Their situationbecomesuncompetitivebecausemany farmersalso sell their cassavaat the samemarketswherewholesalers see.

Analysis of the price and production trends revealsthat the market value

for cassavais increasing

steadilyover the past decade.This has been due to increasing uncertaintiesin maize productionfor food securityamongother factors.However,the growth in cassavamarketgoesbeyondmerereducing food security risks' This raisesoptimism that the market is growing especiallyfor industrialuse of cassavafor the foreseeablefuture' Even if maizeproductionincreases, the declinein cassavademand as a result of substitutioneffect by maize may not be felt in the short term as more and more alternativesusesof cassavaare developedand industrialuse of cassavagrows.It is the new alternative usesof cassavain the manufacturingand processingsectors that may sustaingrowth in the cassava productionand tradeevenwhen food securityneedfor cassava declines.

A review of the policy and instifutionalframeworkand support showsthat growth

in cassavasectors interest in the cassavaproouJtion and trading is bound to increasewith an enabling .nui.on-"nt providedby both the privateandpublic sector.

64

POLICY IMPLICATIONS AND RECOMMENDATIONS Undoubtedly,an enablingpolicy and institutional supportto the developmentof cassavasubsector would have hardly been envisagedbefore.However for any further meaningfuldevelopmentto take place,a number of challengesneedto be overcome.This sectionhighlightsthe policy implicationsfor improving cassavaproductionand trade.

At the moment, the cassavavalue chain is highly uncoordinatedand weakly integrated.The consequences of this scenarioare that eachactor works in isolationof the other.Yet for a channelto efficiently,effectivelyand equitablydeliver productsdesiredby the ultimateuserrequirescoordination of the production,processingand distributionactivitiesthroughoutthe value chain.Although vertical integrationwould be an option, it would isolatesmall-scaleactors- the bulk of producerseven more from modern high value markets.Therefore,the best approachto organizethe chain and enhanceits performance would be through contractual affangements.For instance, farmers may engage in contractualsupply with processingcompanies.In that way, farmerswould haveguaranteedlinks to the industrialmarketswhich minimize marketrisks and uncertaintiesand transactioncosts(e.g.searchand negotiationscosts).Alternatively, through contractualagreements,processorsor manufacturerscan help producerswith appropriateprocessingtechnologies.In turn, companieswould easily enforce quality control measureson their contractedfarmersthan would be casein spot marketpurchases.It is importantto note that a numberof farmersarewilling to engagein long-termrelationshipwith buyers.

No meaningfulbusinessventurecan be justified without assurances of a steadyflow of raw material.

For example,with Malawi currentlyproducingover 4 million metric tons of cassava,it certainlyhasa potentialto adequatelysustaina steadysupply to a medium industrialsector.There is needtherefore for researchand developmentto: 1) eitherdevelopstoragetechnologiesthat would enablefarmersand investorsto buy and keep freshcassavain bulk without quality losses.2) Developcassavavarietiesthat canbe harvestedany time without farmerslosing seed.

Although the resultsshow that the proportion of actorsaccessingmarketinformationincreases as one moves from farmersthrough to retailers,farmersare the leastinformed. This is consistentwith a number of studies that have-characterizedfarmers to be in the most disadvantageous position in the value chain i.e. being largely disconnectedfrom all forms of marketing information systems.

Consequently,without market information they lose their bargainingpower to the middlemenwho

have beenknown for long to be well informedaboutthe markets(Ellis, 1988).This problemmay not end overnight even if government may mount deliberate efforts to share market information. What would have to happenis to link farmersto high value marketswith which they can establishlong-term relations. This is in view of the fact that in the informal markets,farmersno matter how well informed they may be aboutwhere marketsare, the benefitsmay still be limited becauseof being price takers.

Linking to high value marketsmay be more effective is farmerswere organized, groups. in Group action would enhancetheir bargainingpower while also minimize transactioncosts for the companies becausemonitoring,quality control and bulking up of the supply may be easierwith groups than with individual farmers.

Although there are largely no credit facilities for cassavaproduction, the current scale of operationespeciallyfor small-scalefarmersas well as tradersmight not justifz the need for credit facilities. However, limited accessto credit facilities often limits the ability of farmers to take advantageof marketorientedproductionopportunities.Following from the results of this study,credit may essentiallybe neededfor farmersto ventureinto value addingprocessingactivities.

In that case, credit facilities would be essentialin the form of start-up capital to buy appropriate processing machines.Where groupsof farmersestablishlong-termlinks with companies,one possibility would oe for companiesto provide necessaryfinancial and/ material supporton credit arrangements to boost their production.Credit facilitiesmay also be providedthroughmicro-financeinstitutions that may be setup to give low interestloansto farmersventuringinto cassavavalueaddingprocessing activities.

Like previousstudies,this studyshowsthat farmersare largelyisolatedfrom high

value markets.

The few that are connectedto the formal high value marketsdid so through external help to establish the market linkages.Worsestill, sustainabilityof such links appearsto dependon externalhelp. This questionsthe extent to which externally initiated linkagesare sustainable after the extemal help is withdrawn. Whereasthere is no substituteto externalhelp when trying to link farmers to markets, effectiveweaningoff of farmersor their associations to look after themselvesbecomeseasierif clear exit strategieshave been worked out from the beginning.Thereforehelping farmers to ventureinto processingactivities or linking them to marketsshould come along with clear exit strategies.For example,how and when farmers would be weanedoff should be part of the initial understanding betweenfarmersand the sourceof externalhelp. Howevereven that may needflexibilify.

This would avoid the Mbavala situationwhere they seemto have lost the market link or the Masindagroup for which IITA/SARRNET preparesto wean them off at a time when the group probably needsextemal 66

help the most' In the end,it may be a problemfor both farmersto standaloneafter

externalhelp ceases or for the externalhelp to ceaserenderingfarmers more desperateand vulnerableto other business vultures who may prey on the farmersdesperation.

This may be a seriousdisincentivefor would be new entrantsand investorsinto the cassavavalue chain.

6.1

Technical and Managerial Challengesto Overcome

No meaningfulvalue chain analysiscan be donewithout data.This

sectionbriefly outlinesthe hurdles

that the consultanthad gone through to solicit data and information but not always succeedingon crucial issues'The sectionalso highlightssomeof the possible solutionsthat relevantinstitutions(IITA may wish to considerin order to improvefuturevalue chainsanalysesbe it for cassavaor othercrops).

This study could not effectively quantify potential demand for cassavaproductson the basisof the demandfor substituteproducts.Efforts to get statistics on import or productionof substifuteproducts such as starch, animal feed, from relevant authorities were futile. Internet searchfor the same on FAostat only yielded value of starch imports and not import volumes.contact with some relevant institutions that monitor imports and exports such as the Malawi revenue authority and National StatisticsOffice (NSo) yielded no resultsas they referred us to one another.The NSO websiteyielded data only on major import and export values aggregated at national level for the major sectorsand major crops'Unfortunatelycassavais not amongimportant exportcropsin Malawi. contact with someof the currentand potentialusersof cassava and cassavaproductsyieldedno results either as they could only say they would buy any amount of cassavaproductsthat we may provide to them that meet their demandin quantity or quality.Persuadingthem to give an estimateof their total importsof substituteproductssuchas corn, wheat,potatostarchyieldedno dividendbecause that was consideredas askingfor the company's"classified" information.probablythe businesssector and researchseem not well coordinated to share information for research.May be formal working relationshipand understandingwith some,if not all, crucialcompaniesneedto be establishedfor future research'This should involve assurancesfor confidentiality of companyinformation which might have beendoubtedby thosecompariesthat were not willing to give "classified,,informationon total imports into theircompanies.

67

Timing of the studiesalso mattered.This study was crucially mistimedby commissioningit to take place when there was very few or no cassavaon the markets in the Chinyanja triangle. The situation could have been different if this study was undertakenduring peak cassavaseason.

Quantificationand verificationof someof the productsmight havebeeneasilybackedby primary data.

To date,it seemsno systematicquantificationof market supply hasbeenundertakenin the Chinyanja triangle.Available data arebasedon crop estimatesby the ministry of agricultureand not verifiable market supply of cassava.A few sfudiesthat attemptedto do that managedto do so for one or two weeks only in very few markets.While such studiesstill give significantinsights,there is need to institutea marketstudyto fully coverthe whole cassavaseasonand in all major areasin the Triangleor beyondto the constituentcountriesin their totality to collaborateproductiondata generatedfrom crop estimateswith actual market supply.While such as exercisemay need a relatively longer period to cover both lean and stout seasons,there may be need to set up a marketing support unit within IITA/SARRNET chargedwith responsibilityto collect marketinformationin all major marketsin the Chinyanjatriangle.Among other things the unit may quantify numberof key marketparticipants,key marketproducts(not necessaryunderresearch),crossbordertradethroughmonitoringall major border posts,liaise with and establishworking relationshipswith relevantinstitutionsand companiesin order to improve sharingof information necessaryfor future marketinganalysessuch as quantificationof production,consumption,import and export of all major substituteproduct in the Triangle.The units may alsobe chargedwith identifying and linking farmersto markets,build capacityamongsmall-scale primary producersto meet market demand for quality, safety,delivery times; just to mention a few.

Although doing this may seemstartingfrom scratch,it might be necessaryto meaningfullyundertake future impact assessmentof commercializationof cassava.If all these could be taken care of, undertakingfuturemarketinganalysesmay be relativelyeasythanwas the casein this studv. , Centralizationof literatureat IITA/SARRNET would also enhanceliteraturesearch.At the moment different officers keep different reports electronically or through hardcopies.Such information is difficult to retrieve unless one knows who keepswhich documents.It may suffice if IITA/SARRNET keepsa library of some kind for all reportsand other literaturefor easy access.This might be done throughthe ICT office.

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s 7 8 - S S S 0 8 - 9 4-10- 1

ffilil[