HOW TO START AMALA FLOUR PRODUCTION BUSINESS

  1. Introduction

Yam (Amala) flour is flour obtained from fermented yam tubers. The flour is creamy-brown in colour, and it is used in the preparation of a popular Nigerian dish called Amala. Amala is so popular that it is served in almost all restaurants across the country.

  1. Industry Analysis

The annual national demand for good quality amala flour is estimated to be  350,000 tonnes while the national supply estimate is just about 150,000.

With a population of about 200 million people and an estimated national population growth rate of 2.56% per annum, an average economic growth rate of 2.5% per annum in the past ten {10} years, Nigeria has a large and growing market for amala flour.

The growth of the middle class in Africa in general, and Nigeria to be specific, has led to a need for hygienically processed, easy to prepare and well packaged food products like, amala flour.

  1. Raw Materials Requirement

The basic raw material for the production of amala flour is yam tubers. Yam is the common name for some species in the genus Dioscorea (family Dioscoreaceae). These are perennial herbaceous vines cultivated for the consumption of their starchy tubers in Africa, Asia, Latin America and Oceania. 

Worldwide yam production in 2007 amounted to 52 million tons, of which Africa produced 96%. Most of the world’s production comes from West Africa representing 94%, with Nigeria alone producing 71%, equaling more than 37 million tons. Though yams can be stored up to six months without refrigeration most of the yearly production is lost through spoilage because of lack of post-harvest facility in the country.

Taraba is the top region by production of yam in Nigeria. As of 2005, production of yam in Taraba was 3,162 1000 metric tons that accounts for 12.89% of Nigeria’s production of yam. Other states that produce yam in large quantities are Benue, Niger, Enugu, and Kaduna.

Other raw materials that will be needed in an amala flour production business are water and packaging materials.

  1. Machinery & Equipment Requirements

The major equipment needed in a small-scale amala flour production plant are: Yam slicing machine, boiler, fermentation tanks, drying machine, hammer mill with cycle, Sifting machine, Weighing Scales, Sealing Machine, Knives, etc.

EquipmentFunctionPicturePrice
Yam Chipping MachineFor cutting the yam into smaller sizesN1,400,000
Fermentation Tanks6 UnitsFor Holding chipped yam for fermentation N450,000
BoilerFor Boiling WaterN1,600,000
Drying Machine2 unitsFor drying The fermented yam chipsN1,400,000 per unit
Sifter 2 UnitsFor siftingN200,000 per unit
Hammer Mill With CycloneFor grinding/crushingN600,000
Automatic Packaging Machine(This machine is optional because manual packaging is possible)For packagingN3,000,000
Weighing ScaleFor weighing productsN100,000
Sealing MachineFor sealing final products in bags.N50,000
Sealing MachineFor sealing final products in sachetsN70,000

Notes: The above prices are applicable as at the time of writing this report.

  1. Production Process

Typically, when yam comes into the factory, it is first washed and peeled, then it goes through the following steps:

A. Chipping

Peeled yam tubers are chipped into smaller sizes using the slicing machine. This allows for quicker drying time.

B. Fermentation

The chopped yams are transferred to the fermentation tanks. Boiled water is then poured into it upto the level that it covers the chipped yam in the tank. The chipped yam is then allowed to ferment for about 72hours.

C. Drying

The fermented chipped yam is transferred to the drying machine and allowed to dry. This process takes about 6 to 10 hours depending on humidity.

D. Milling

The dried yam chips are transferred to the hammer mill which grinds it into flour.

F. Sieving

The amala flour is sieved using the sifter machine to remove particles, fibre, etc and produce fine powder.

G. Packaging

The final product is then packaged into desired packs of 25Kg, 10Kg, 5Kg, 2Kg, 1kg, etc.

  1. Profitability

The profitability of amala flour production largely depends on the cost of the primary raw material, yam. The price fluctuates with season, demand and supply. As the price of yam changes, so also does the price of amala flour.

  • As of the time of writing this report, the average cost of yam is N220,000 per ton. Depending on the quality of yam, an average of 1,000Kg of amala flour is obtainable from processing 3 tons of yam. This implies that it will cost N660,000 to produce 1 ton of amala flour.
  • The average factory price for amala flour is seven hundred and fifty naira (N750) per kilogram.

This implies that a revenue of (N750 X 1000) = N750,000 is obtainable from processing 3 tons of yam to produce 1 ton of amala flour.

Gross Profit is calculated by subtracting the cost of production from the sales.

Gross Profit = N750,000 – N660,000 = N90,000

Assuming operating expenses (including cost of packaging) takes 20% of profits, profit realisable from producing 1 ton of amala flour will be seventy two thousand naira (N72,000).

The proposed setup will have the capacity of producing 4 tons of amala flour per day.This will translate to a profit of N72,000 X 4 = N288,000 per day.

If the factory works for 25 days per month and at 50% of the installed capacity, this will translate to a profit of N3,600,000 per month.

  1. Capital Requirements

The estimated total required capital for setting up a small scale amala flour production plant is put at eighteen million eight hundred and twenty thousand naira (N18,820,000). This includes the cost of factory rent, machinery procurement and installation, staff training, and working capital. 

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