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Agricultural Value Chain Proposal
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Copyright © 2014 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture
Proposal for Value Chain Study on
Agricultural Commodities
2
CMK Consulting
Contents
1 Background/ Understanding of Your Needs
2 Engagement Approach
3 Deliverables & Timelines
4 Our Fee Estimate
Copyright © 2014 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture
1 Background/ Understanding of Your Needs
2 Engagement Approach
3 Deliverables & Timelines
4 Our Fee Estimate
4
CMK Consulting
Background & Understanding of Your Needs.The client approached Watermark consulting with a view to understanding the value
chain, cost drivers, risks and a recommendations on an implementation strategy to
guide investment in agricultural commodities. Sample commodities are:
RiceAn extremely important commodity, both from a policy and food security point of view
• Nigeria is one of Africa’s largest markets for rice, with an estimated population of 167 million people, growing at 3.2%
annually and predicted to reach 221 million by 2020
• Rice consumption in Nigeria is forecasted to reach 36 million metric tons by 2050
Oil Palm
Nigeria has an illustrious history as one of the focal points of the Oil Palm trade. Strategic importance of Oil Palm as a cash
crop was recognized as far back as the 19th Century.
Nigeria was the World’s largest Oil Palm exporter and impressive infrastructure / institutions were put in place to facilitate
production and trading. Unfortunately, in the wake of the “Oil Boom”, these gains were reversed
• Three dominant products are Special Oil Palm (SPO), Technical Oil Palm (TPO) and Palm Kernel Oil (PKO)
• The Nigerian Vegetable Oil Industry can process 900,000 metric tons of palm oil annually, but due to inadequate supply,
several oil palm refineries are operating at 25% of installed capacity
Poultry
Poultry is the most common source of animal protein in Nigeria.
• Commercial poultry population as at 2008 was put at 64 million birds (24 million layers and 40 million broilers)
• Commercial poultry is a fast growing sector driven largely by urban consumption patterns, population growth & growth of
the fast food sector/catering services.
Copyright © 2014 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture
1 Background/ Understanding of Your Needs
2 Engagement Approach
3 Deliverables & Timelines
4 Our Fee Estimate
6
CMK Consulting
Engagement Approach
4.0 Feedback &
Recommendations
3.0 Value Chain
Mapping &
Analysis
2.0 Data &
Information
Gathering
1.0 Project Team
Mobilization
5.0 Project Management
• Develop common
understanding of
mandate and
outputs
• Agree Work
Program and
Approach
• Data gathering planning
& readiness
• Conduct research and
interviews across
segments of each
commodities value chain
• Map & analyze value
chains (conduct value
chain analysis).
• Analyze market
opportunities and risks.
• Determine financing
needs and risks.
• Develop implementation
road map
• Finalize feedback and
recommendations.
• Plan and manage program delivery / Scope / timelines / resource
• Manage program status reporting; issues & risks; program and content quality
• Communicate project status/results to all stakeholders periodically
Our proposed work approach is as illustrated below. It is based on a careful analysis
of your needs. More detail is provided in subsequent slides.
7
CMK ConsultingWe will analyse interactions among key players
in the commodity value chains…………
Input
Supplier
Producer/
Supplier
Aggregator /
Primary or
Wholesale
Trader
Processor
Marketer /
Distributor
Fertilizer &
Veterinary Input
Supplier
Seed Dealer Government
Research
Institutes
Farm Equipment
Dealers / Fabricator
The relationships between key players in each of the value chains will be included as
part of the analysis.
Wild Trees/ Back Yard
Poultry/ Smallholder
Farmer Contract Out Grower
Small Scale
Commercial
Farmer
Integrated Producers/
Processers
• Most large scale
farmers fall under
this category
• Common to Poultry,
Oil Palm , Rice &
Horticulture
• May have “Out
Grower Scheme”
Medium Scale Farmer
Small Scale
Commodity
Trader/Wholesaler
Medium Scale
Commodity
Trader/Wholesaler
Intermediate Product
Importer (e.g. Oil Palm
& Brown Rice, Fruit
Juice Concentrate)
Artisanal
Processor
Small Scale
Processor
Medium Scale
ProcessorLarge Scale
Processor
Traditional Rural/Urban Market
Retailer
Medium Scale Finished Products
Trader/WholesalerSupermarketLarge Scale Finished
Products Trader/Wholesaler
Importer of Processed Products Smuggler
Benin Border
8
CMK ConsultingThe analysis will also include typical cash flows
of commodity farmers/ expected cash flows
(87.67)
(0.67) (0.67) (0.67) (5.67)(14.29)
(1.79) (1.79) (1.79) (7.73) (7.73) (7.73)
212.59
-150.00
-100.00
-50.00
0.00
50.00
100.00
150.00
200.00
250.00
300.00
1 2 3 4 5 6 7 8 9 10 11 12 13
Th
ou
san
ds
Cash Outflows (B) Cash Inflows (B) Net Cashflows (A - B)
Harvesting
costs
Weeks
Naira
Seed purchase.
Soil preparation.
Nursery
preparation
Land preparation &
nursery operations
Field operations (Fertilizer
application, herbicide
application
Sales
revenue
Cash Flows For a Farmer
9
Cost Element Unit
Cost
(NGN)
Year 0
(NGN)
Year 1
(NGN)
Year 2
(NGN)
Year3
(NGN)
Year 4
(NGN)
Year 5
(NGN)
Year 6
(NGN)
Year 7
(NGN)
Year 8
(NGN)
Sales Revenue
Special Palm Oil XXX,000 139,050 232,200 349,650 403,650 531,900
Palm Kernels XX,000 4,944 8,256 12,432 14,352 18,912
Total Revenue (A) XX,000 XX,000 XX,000 XX,000 XX,000
Direct Material Costs
Seedlingsa XX,000 45,000
Fertilizerb XX,000 5,500 137,500 137,500 137,500
Diesel (For Mill)c XX,000 2,496 2,496 2,496 2,496 2,496
Labour Costs XX,000
Nurseryd XX,000 15,000
Land Preparatione XX,000 150,000
Transplantingf XX,000 37,500
Weeding + Fertilizer
Applicationg XX,000 XX,000 XX,000 XX,000 XX,000 XX,000 XX,000 XX,000 XX,000 XX,000
Pruning/
Harvestingh XX,000 3,600 3,600 3,600 3,600 3,600
Mill Operatorsj XX,000 6,000 6,000 6,000 6,000 6,000
Total Cost of
Production (B)XX,000 XX,000 XX,000 XX,000 XX,000 XX,000 XX,000 XX,000 XX,000
Contribution
(C = A – B)XX,000 XX,000 XX,000 XX,000 XX,000 XX,000 XX,000 XX,000 XX,000
We will also analyze production costs &
processing costs…………
10
Our recommendations will be based on an
analysis of risks and rewards …………
High
Low
Low High
0%
100%
100%
Rewards
Risks
“Golden
Quadrant”
Copyright © 2014 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture
1 Background/ Understanding of Your Needs
2 Engagement Approach
3 Deliverables & Timelines
4 Our Fee Estimate
Copyright © 2014 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture
1 Background/ Understanding of Your Needs
2 Engagement Approach
3 Deliverables & Timelines
4 Our Fee Estimate
14
Business Arrangements
Our professional fees for the arrangement described in this proposal are based on the level of
staff and time required to complete the assignment.
We estimate this assignment will take 4 months.
Based on our understanding of the required scope of the project, We estimate that our services
will cost a discounted fee of N 15.252 million, representing 50% discount on our fees in line
with our commitment to partner with you on this strategic initiative.
Our fees exclude VAT and out-of-pocket expenses which are incidental to the assignment. Out-
of-pocket expenses will be billed separately at actual costs incurred, if not provided directly by
you. Furthermore, Watermark will bill 60% of the contract sum as mobilisation billing prior to
commencement of the engagement.