Costs of producing Seed yam Tuber in aeroponics: A case of Biocrops Biotechnology Limited Adebayo Akinola, Tahirou Abdoulaye, Djana Mignouna, Norbert Maroya and Joseph Odusanya World Congress on Root and Tuber Crops Nanning, Guangxi, China, January 18-22, 2016
Outline v Background v Producing in aeroponics v Cost effective attributes of aeroponics technology v Methodology ü Cost analysis ü Sensitivity analysis v Results v Summary
Background v The single most important constraints undermining efforts to improve productivity of roots and tubers is poor quality planting materials (Ezeta 2001; Gildermacher et al., 2009, Mignouna et al., 2012, Maroya et al., 2014) v Most farmers in West Africa do not use certified seed yam. The use of certified seed in roots and tubers is estimated to be less than 5 percent (Hidalgo et al., 2009, Mignouna et al., 2014, Maroya et al., 2014) v Relative to area planted using certified seed accounts for just a tiny fraction of total area planted. v Producing certified seed yams involves overcoming a complex combination of technical, ecological, institutional and economic constraints.
Background/2 Seed yam unlike cereals take time to produce The process is prohibitive Could results in most cases products in extremely limited supply and of dubious quality Main economic problem is their cost to end-users: Seed yam could take up to 50% of the total production costs (Correa et al., 2009; Mignouna et al., 2014) To relax these constraints, new technologies developed and employed in YIIFSWA projects include Temporary Immersion Bioreactor and Aeroponics Systems
Aeroponics System Aeroponics is the process of growing plants in an air or mist environment without the use of soil or an aggregate medium. The word "aeroponic" is derived from the Greek meanings of aero- (air) and ponos (labour) The basic principle of aeroponic growing is to grow plants suspended in a closed or semi-closed environment by spraying the Plant's dangling roots and lower stem with an atomized or sprayed, nutrient-rich water solution. The roots of the plant are separated by the plant support structure. Often, closed-cell foam is compressed around the lower stem and inserted into an opening in the aeroponics chamber, which decreases labor and expense; for larger plants, trellising is used to suspend the weight of vegetation and fruit.
Aeroponics system v Ideally, the environment is kept free from pests and disease so that the plants may grow healthier and more quickly than plants grown in a medium.
Cost effective attributes of aeroponics system Increased oxygen to plant the increased aeration of nutrient solution delivers more oxygen to plant roots, stimulating growth Disease-free cultivation limit disease transmission since plant-to-plant contact is reduced and each spray pulse can be sterile Greater control of plant environment allows more control of the environment around the root zone, as, unlike other plant growth systems Improved nutrient feeding A variety of different nutrient solutions can be administered to the root zone using aeroponics without needing to flush out any solution or matrix in which the roots had previously been immersed More user-friendly The design of an aeroponic system allows ease of working with the plants It is expected to be cost effective
Methodology Data gathering Fixed and variable costs elements were established with the manager and other experts Data were collected on cost elements from the Biocrops Nigeria Limited Supplementary data was collected from IITA-Oracle database Qualitative data were also collected on ease of technology, requirement for equipment and inputs, qualified personnel, possibility of staggered harvests, screenhouse area, effective planting area, etc
Cost analysis v A detailed cost analysis was conducted for the aeroponic technology based on all relevant indicators as described by Espinosa et al., (1996) and adapted by Mateus_Rodriguez et al., (2013), Mignouna et al., (2013). Total production cost (TPC, US $ per season) involves fixed costs and variable costs. ü Fixed costs include investment in infrastructure of screenhouse and production modules as well as materials and equipment ü These costs were considered for a variable lifetime (years) and amortized during agricultural season ü Variable costs included inputs of direct use, water, electricity, maintenance and other running costs.
Economic projections v The cost of the mini-tuber (C,US $ per unit) was calculated using the formula C=TPC/Q, where Q is the quantity of mini-tubers produced. v For an estimation of gross income (GI, US $), an estimate of sale value was used. This was varied for sensitivity analysis. The net profit (NP, US $) was calculated following Maldonado et al., (2007), NP =GI-TPC and the Profitability was obtained applying the formula, P =NP/TPC*100 v With the figure of TPC, and the estimates of GI and NP, the cashflows were established considering a productive activity of 5 years. v The projected cash flow of the productive activity were then used to define financial viability: Net present value (NPV, US $), internal rate of return (IRR, %), payback period (in years), and benefit-cost ratio.
Assumptions v Expectation of good yield that will attract higher price v This is prepared for 86.625 square meters. The size of aeroponics system at the Biocrops Biotechnology Limited v Aeroponics system will last for five years. This is because by the end of the fifth year, most capital equipment will reach their useful life span and will have to be replaced. v Seed yam generated is the same every year
Assumptions/2 v Land rent was not considered because it was done once and for all other components provided by nature v The moneteray unit used is US$ at an exchange rate of N160 to one US$ v Production cost vary in a given proportion in a certain period v Costs and revenue were discounted by 3.4% based on latest available lending rate of 12% for loans of 3 to 5 years minus inflation rate of 8.6%
Cost analysis/1 FIXED COST ITEM Amount Percent age Infrastructure: Screenhouse and watering system 6229.29 12.14 Electrical 4925.81 9.6 Aeroponic module 16036.35 31.25 Labour 24118.69 47.01 Total 51310.14 100.00
Cost analysis/2 Variable costs Planting Materials 250 2.78 Electrical energy 1547.25 17.23 Commercial nutrients 2728.75 30.39 Water/Miscellaneous 952.75 10.61 Maintenance of infractructure and equipment 800 8.91 Logistic and other operation 2700 30.07 8978.75 100.00
Cost analysis/4 Size of the Screenhouse 80.63 meter Square Effective area 36.00 meter square Total Fixed Cost 51,310.14 Total variable Costs 8978.75 Total Cost 60,288.89 Total cost (amortized) 12057.78 Minitubers produced 4032 Minitubers producing a minituber (amortized) 2.99 NPV $54,844.63 Cost of producing a minituber per season $2.72
Sensitivity analysis At Breakeven price ($3) Discounted Revenue 54769.09 Discounted costs 54769.09 Benefit- cost ratio 1.00 IRR 0.00 Net profit 0.00
Sensi'vity analysis/2 At a price of $3.5 Discounted Revenue 63897.27 Discounted costs 54844.63 Benefit- cost ratio 1.17 IRR 10% Net profit 9986.33
Sensitivity analysis If the cost of personel is half & at price ($3) Discounted Revenue 54769.09 Discounted costs 46339.67 Benefit- cost ratio 1.18 IRR 0.15 Net profit 11965.68 Cost of producing a minituber 2.30
Sensitivity analysis/2 If the cost of personel is half & at price ($3.5) Discounted Revenue 63897.27 Discounted costs 46339.67 Benefit- cost ratio 1.38 IRR 0.29 Net profit 22045.68 Cost of producing a minituber 2.30
Sensitivity analysis/3 If the cost of personel and materials are halved & at price ($3.0) Discounted Revenue 54769.09 Discounted costs 38585.15 Benefit- cost ratio 1.42 IRR 0.34 Net profit 19983.85 Cost of producing a minituber 1.91
Sensitivity analysis/4 If the cost of personel and materials are halved & at price ($3.5) Discounted Revenue 63897.27 Discounted costs 38585.15 Benefit- cost ratio 1.66 IRR 0.53 Net profit 30063.85 Cost of producing a minituber 1.91
Some qualitative results v The technology generates a great number of bulbils within a very short time. These bulbils if hardened provides another suitable platform for provision of clean seed yam. v Aeroponics technology does not have patents and could be adapted locally. But the degree of local adjustment could be limited v Its potential for replicability could be low because of requirement for equipment, external inputs and specialized personnel. v There is great opportunity for staggered harvests in the aeroponics v Many planting materials could also be generated from the plantlets in the aeroponics
Summary v Aeroponics technology provides great opportunity for ameliorating challenges of producing disease-free and high ratio propagated seed yam v However, at present, the cost of producing in the aeroponics is prohibitively high v Cost of labour and materials dominated the cost items. ü Attempts should be made to source for materials for aeroponics locally or local materials should be adapted to its development and operations) v Financial viability indicators are more sensitive to reduction in costs of production than increase in price of products v Attention therefore should be focused on reducing the costs of production in the aeroponics as a way of reducing the costs to the end-users ü Engagement by private entrepreneurs with pure business motives compare to public institution could be more cost-effective
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