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Proposal for Value Chain Study on

Agricultural Commodities

Copyright 2014 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture

CMK Consulting

Contents
1

Background/ Understanding of Your Needs

Engagement Approach

Deliverables & Timelines

Our Fee Estimate

Background/ Understanding of Your Needs

Engagement Approach

Deliverables & Timelines

Our Fee Estimate

Copyright 2014 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture

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:
Rice
An extremely important commodity, both from a policy and food security point of view
Nigeria is one of Africas 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 Worlds 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.
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Background/ Understanding of Your Needs

Engagement Approach

Deliverables & Timelines

Our Fee Estimate

Copyright 2014 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture

CMK Consulting

Engagement Approach
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.

1.0 Project Team


Mobilization

Develop common
understanding of
mandate and
outputs
Agree Work
Program and
Approach

2.0 Data &


Information
Gathering

3.0 Value Chain


Mapping &
Analysis

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.

4.0 Feedback &


Recommendations

Develop implementation
road map
Finalize feedback and
recommendations.

5.0 Project Management


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
6

We will analyse interactions among key players


in the commodity value chains

CMK Consulting

The relationships between key players in each of the value chains will be included as
part of the analysis.
Farm Equipment
Dealers / Fabricator

Input
Supplier

Producer/
Supplier

Wild Trees/ Back Yard


Poultry/ Smallholder
Farmer

Small Scale
Commercial
Farmer

Fertilizer &
Veterinary Input
Supplier

Seed Dealer

Government
Research
Institutes

Medium Scale Farmer


Contract Out Grower
Integrated Producers/
Processers

Aggregator /
Primary or
Wholesale
Trader

Processor

Small Scale
Commodity
Trader/Wholesaler

Artisanal
Processor

Small Scale
Processor

Medium Scale
Commodity
Trader/Wholesaler

Medium Scale
Processor

Traditional Rural/Urban Market


Retailer

Benin Border

Large Scale
Processor

Most large scale


farmers fall under
this category

Common to Poultry,
Oil Palm , Rice &
Horticulture

May have Out


Grower Scheme

Smuggler

Importer of Processed Products

Marketer /
Distributor

Intermediate Product
Importer (e.g. Oil Palm
& Brown Rice, Fruit
Juice Concentrate)

Medium Scale Finished Products


Trader/Wholesaler

Large Scale Finished


Products Trader/Wholesaler

Supermarket

The analysis will also include typical cash flows


of commodity farmers/ expected cash flows

CMK Consulting

Cash Flows For a Farmer

Thousands

Naira

Cash Outflows (B)

Cash Inflows (B)

Net Cashflows (A - B)

300.00

250.00

Seed purchase.
Soil preparation.
Nursery
preparation

Land preparation &


nursery operations

Field operations (Fertilizer


application, herbicide
application

Sales
revenue

200.00

212.59

150.00

Harvesting
costs

100.00

50.00

Weeks 0.00
(0.67)

(0.67)

(0.67)

(5.67)

(14.29)

(1.79)

(1.79)

(1.79)

(7.73)

(7.73)

(7.73)

10

11

12

-50.00

-100.00

(87.67)

-150.00
1

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8

We will also analyze production costs &


processing costs
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
Palm Kernels

XXX,000

139,050

232,200

349,650

403,650

531,900

XX,000

4,944

8,256

12,432

14,352

18,912

XX,000

XX,000

XX,000

XX,000

XX,000

2,496

2,496

2,496

2,496

2,496

XX,000

XX,000

XX,000

XX,000

XX,000

Total Revenue (A)


Direct Material Costs
Seedlingsa

XX,000

45,000

Fertilizerb

XX,000

5,500

Diesel (For Mill)c

XX,000

Labour Costs

137,500

137,500

137,500

XX,000

Nurseryd

XX,000

Land Preparatione

XX,000

150,000

Transplantingf

XX,000

37,500

Weeding + Fertilizer
Applicationg

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

15,000

XX,000

XX,000

XX,000

XX,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
9

Our recommendations will be based on an


analysis of risks and rewards
Golden
Quadrant

Low

High

100%

High

Rewards

Low

0%

Risks

100%

10

Background/ Understanding of Your Needs

Engagement Approach

Deliverables & Timelines

Our Fee Estimate

Copyright 2014 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture

Deliverable & Timelines

12

Background/ Understanding of Your Needs

Engagement Approach

Deliverables & Timelines

Our Fee Estimate

Copyright 2014 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture

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. Outof-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.

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