FEASIBILITY STUDY OF A LARGE-SCALE PINEAPPLE PRODUCTION IN MEME DIVISION, SOUTH WEST REGION

Abstract

Feasibility study is used to determine the viability of an idea, such as ensuring that a project is technically and legally feasible as well as economically justifiable and profitable. It tells us whether a project is worth the investment. A feasibility study is based on the desire to “get it right” before committing resources, time, or budget.

The main objective of this study is to investigate the Feasibility of a Large-Scale Pineapple Production in Meme Division, South West Region of Cameroon. In addition to this main objective, the following three specific objectives are equally the aim of this study: to demonstrate that a large scale pineapple production can create wealth and generate employment; to provide information and data that can be used for a pineapple production start-up project; to generate information that will contribute to the effective implementation of the pineapple sub-sector of the Agricultural Value Chain Development Project (AVC-DP) in Meme Division in particular and the South West Region in general.

Primary and secondary data were used. The primary data was collected using a questionnaire. Expert knowledge from the main large-scale pineapple producer in Meme Division was part of our secondary data. The purposive sampling method was used to select the respondents. The Statistical Package for Social Sciences (SPSS) version 21.0 was used to analyze the primary data. Descriptive statistics were used to analyze the primary data and present the results. The profitability of the project was analyzed using the Net present value (NPV) technique with a 10% discount rate. The sensitivity analysis to determine the resilience of the basic project model to changes in the assumptions (variables) was conducted.  This study consists of biophysical, economic, socio-cultural, commercial, technical, managerial, financial, environmental, legal and other aspects feasibility.

The results of this study demonstrate that a large-scale pineapple production project in Meme Division is technically and legally feasible as well as economically and financially justifiable and profitable. For a one (01) hectare start-up pineapple production project, an initial investment of 8,043,500 FCFA will be needed. The cumulative net income, scrap value and the NPV with a 10% discount rate at the end of the three years project are respectively 11,749,333 FCFA, 550,000 FCFA and 9,067,018 CFA. The sensitivity analysis of the project model shows that in the worst-case scenario of changes in the project model variables, the initial investment cost, the cumulative net income, scrap value and the NPV at the end of the three years project are respectively 9,652,200FCFA, 2,651,200 FCFA, 660,000 FCFA and 221,102 FCFA.

Information and data presented in this project can be used for a pineapple production start-up project of at least one (01) hectare in Meme Division.

The five (05) main constraints identified namely: the limited knowledge on pineapple production itinerary; poor farm-to-market roads; lack of inputs; limited access to credit; and lack of quality planting materials; can be used by the AVC_DP to fine turn its implementation strategies especially in its pineapple sub-sector in Meme Division which is a pineapple production basin with great potentials.

CHAPTER ONE

INTRODUCTION

1.1 Cameroon National Context

The review of the national context will include the physical setting and population, the place of agriculture in Cameroon and the promotion of agriculture by the Cameroon government.

1.1.1 Physical setting and population

Located in Central Africa at the bottom of the Gulf of Guinea, Cameroon covers an area of ​​475 650 km2 with maritime opening of about 402 km on the Atlantic coast. The climate is tropical and dry in the North, equatorial and humid in the South. Interrupting a relief dominated by the plains and plateaus, volcanic events gave rise to some high mountains including Mount Cameroon, still active which, culminating at 4095 m, and is one of the most massive African highs. The hydrographic network is abundant. The country extends in latitude on 1200 km from the Sahelian banks of the Chad to the north, at the edge of the Congo Basin to the south. This constitutes five distinct biogeographically zones (zone Sudano – Sahelian, high Guinean savannas, western highlands, rain forest with single – mode rainfall and forest wet with bimodal rainfall). The country has a varied natural area, considerable hydroelectric potential and basement which are full of important mineral resources. The country is thus considered as Africa in miniature.

The country belongs to the Economic Commu­nity of Central Africa States (ECCAS) and share a border of 1 800 km with Nigeria. It gives access to a market of 300 million of consumers. See Appendix 01, map of Cameroon with neighboring countries.

Cameroon’s population is estimated at 24,994,885 and is ranked 53rd in the world. The population growth rate is 2.56% and ranked 16th in the world. The sex ratio is 1.01 male(s) / female. Cameroon has a large youth population, with more than 60% of the populace under the age of 25 with a median age of 18.5 years and a youth dependency rate of 80%. Life expectancy is 59 years and ranked 208th in the world. Despite economic growth in some regions, poverty is on the rise, and is most prevalent in rural areas, which are especially affected by a shortage of jobs, declining incomes, etc… (CIA,2018).

1.1.2 Place of agriculture in Cameroon’s economy

Agriculture in Cameroon is the main activity of the rural world. Five agro-ecological zones with varied landscapes and climates are identifiable in the country and explain the great diversity of agricultural production. Agriculture is the main job provider in Cameroon since it employs about 60% of the active population, essentially within peasant farms. It also plays an irreplaceable role in the creation of income in the rural areas, for the two million or so identified farm households. This primary sector has improved at an average rate of 4.0 per cent per year, and represents an average of 21.3 per cent of the GDP between 2010 and 2014. Fruits and vegetables such as pineapple, watermelon, pepper, sweet banana, okra, tomatoes and onion gradually occupy the surfaces cultivable areas, their planted areas have grown from 190,831 ha in 2010 to 214,473 ha in 2011. As for production, it went from nearly 2.5 million tons in 2010 to more than 2.7 million tons in 2011 (Cameroon National Institute of Statistics, 2016).

1.1.3 Promotion of agriculture by the Cameroon government

Through its Ministry of Agriculture and Rural Development (MINADER), Cameroon has a strategy for the development of the rural sector with a political vision to:

strengthen its role of sub-regional agricultural power;

render the rural sector a driving force of the national economy;

ensure food and nutritional security of its population within a sustainable development which is respectful of the environment.

Its objective is to promote sustainable agriculture, modern and competitive based on recognized and secured peasant farms and on the development of average and large- scale farms to increase production and limit food deficiency, while creating a formal employment dynamic. One of the numerous projects that MINADER has put in place to attain this objective is the Agricultural Value Chain Development Project (AVC_DP) that aimed at contributing to the creation of wealth and employment, especially for the youths, as well as to boost food and nutrition security by enhancing the competitiveness of three agricultural value chains: pineapple, oil palm and plantains.

1.3 Importance of pineapple production in development

Pineapple has significant nutritional and health, employment, commercial and industrial potentials.

1.3.1 Nutritional value and health benefits of pineapple.

Mainly grown for its fruit, pineapple can be consumed fresh, dried or processed into juice, jam, drinks, etc…. See appendix 03 for project pictures.

According to the United States Department of Agriculture (USDA) National Nutrient data base (2018), 100 g of fresh pineapple fruits has the following nutrients values and percentage of Recommended Daily Allowance (RDA) respectively:

Principal nutrients

Energy: 50 Kcal, 2.5%, Carbohydrates: 13.52 g, 10%; Protein: 0.54 g, 1%; Total Fat: 0.12 g, <1%; Cholesterol: mg, 0%; Dietary Fiber: 1.40 g, 4%.

Vitamins

Folates 18 μg, 4.5%; Niacin: 0.500 mg, 4%; Pyridoxine: 0.112 mg, 9%; Riboflavin: 0.018 mg, 1.5%; Thiamine: 0.079 mg, 6.5%; Vitamin A: 58 IU, 2%; Vitamin C: 47.8 mg, 80%; Vitamin E:0.02 mg, <1% and Vitamin K: 0.07 μg ,0.5%.

Minerals

Calcium: 13 mg, 1.3%; Copper: 0.11 mg, 12%; Iron: 0.29 mg, 3.5%; Magnesium: 12 mg, 3%; Manganese: 0.927 mg, 40%; Phosphorus: 8 mg, 1%; Selenium: 0.1 ug, <1%; Zinc: 0.12 mg, 1%.

According to Nicola Shubrook (August 2017) and Cynthia Sass (June 2017), pineapples has numerous health benefits as it contains a good array of vitamins and minerals including calcium, manganese, plus vitamins A and C, as well as folic acid. One cup of pineapple provides more than 100% of the recommended daily amount of vitamin C and more than 75% of manganese recommended daily.  Vitamin C is involved in the growth and repair of tissues throughout the body; it also acts as an antioxidant, protecting cells against premature aging and illnesses such as cancer and heart disease. Manganese, along with vitamin C, is required for building collagen structural component of skin that prevents sagging and wrinkles. Manganese also functions as an antioxidant that protects skin cells from damage against ultra-violet light, making pineapple especially crucial during very hot weather.

One of the key phytonutrients found in pineapple is bromelain that has long been recognized for its anti-inflammatory and anti-microbial effects.  Bromelain, which breaks down the gelatin into its amino acid building blocks, preventing it from becoming or staying solid. If you eat pineapple along with a meal, bromelain may help you digest proteins, potentially reducing bloating, indigestion, and sluggishness. The dietary fiber in pineapple also helps maintain bowel regularity, and prevent constipation.

1.3.2 Employment opportunities along the pineapple value chain.

Pineapple production has a wide range of employment opportunities in its value chain at the following levels:

Fruit production with labor force needed to handle the many agricultural operations;

Input providers for the sales of inputs such as fertilizers, fungicides, herbicides, etc…

Marketing with labor needed at farm gate, wholesale, retailing, shops and supermarkets;

Transportation with labor needed for land, air and sea transportation of pineapple;

Processing where labor is needed to process pineapple in its various forms (canned fruits, Juice, jam, etc…).

1.3.3 Economic importance of pineapple.

According to Daniel Workman (August 2018), global sales from pineapples exports by country totaled US$2.1 billion in 2017.Overall, the value of pineapples exports rose by an average 18.7% for all exporting countries since 2013 when pineapples shipments were valued at $1.8 billion. Year over year, the value of global pineapples exports appreciated in value by 5.7% from 2016 to 2017. Among the continents, Latin American (excluding Mexico) and Caribbean countries accounted for the highest dollar worth of pineapples exports in 2017 with shipments valued at $1.1 million or more than half (53.9%) of the global total. In second place were European exporters at 23% while 12% of worldwide shipments of the sweet fruit originated from Asia. Smaller percentages came from North America (6.7%), Africa (4.4%) then Oceania (0.01%) notably Australia, Tonga and New Zealand. The 15 countries that exported the highest dollar value worth of pineapples in 2017 are: Costa Rica: US$980.6 million (47.1%); Netherlands: $230.9 million (11.1%);Philippines: $172.4 million (8.3%); Belgium: $110.4 million (5.3%); United States: $97 million (4.7%); Ecuador: $44.2 million (2.1%); Honduras: $41.1 million (2%); Mexico: $41 million (2%); Taiwan: $37.3 million (1.8%); Ghana: $36.3 million (1.7%); Spain: $32.8 million (1.6%); Côte d’Ivoire: $32.2 million (1.5%); Portugal: $29million (1.4%); Panama: $18.9 million (0.9%); Italy: $18.7 million (0.9%). These 15 countries shipped 92.3% of global pineapples exports in 2017 by value. Among these countries, the fastest-growing pineapples exporters since 2013 were: Ghana (up 705.1%), Taiwan (up 655.1%), Ecuador (up 70.9%) and Mexico (up 67.5%).

In 2017, the main importers were USA (20%), Belgium (17%), France (9%), Italy (8%), Germany (7%), Canada (5%), UK (5%) and Netherlands (4%), (Shilpa Mathew, 2017).

1.4 Rational and Justification of the Study

Since its adoption in 2009, the Growth and Employment Strategic Paper (GESP) constitutes the reference framework of government policy and actions for the generation of wealth and employment. In view of implementing this reference policy framework, Cameroon has embraced the vision of expanding its role as the agricultural locomotive of the Central African sub-region. One of the mechanisms for realizing this vision is “The Agricultural Value Chain Development Project (AVC-DP)” put in place by the Ministry of Agriculture and Rural Development since 2017. The project which is co-financed by the Government of Cameroon and the African Development Bank is aimed at contributing to the realization of this vision by creating wealth and employment, especially for the youths, as well as to boost food and nutritional security by enhancing the competitiveness of three agricultural value chains, namely pineapple, oil palm and plantains. South West Region is amongst the five regions of Cameroon concerned by this Agricultural Value Chain development Project (AVC_DP); the other four (04) regions are Littoral, Center, South and East. Pineapple was chosen as one of the three crops of the AVC_DP due to its huge potential for wealth creation, employment, food and nutritional security.

How feasible is a large-scale pineapple production in Meme Division, South West Region of Cameroon? Can a large-scale pineapple production in Meme Division of the South West Region of Cameroon contribute to the creation of wealth, employment, food and nutritional security; and thus contribute to the realization of Cameroon’s vision of expanding its role as the agricultural locomotive of the Central African sub-region?

These key questions and the fact that Meme Division is one of the main agricultural production basins of the South West Region in particular and of Cameroon in general motivated this study.

1.5 Objectives of the study

The main objective of the study is to investigate the feasibility of a large-scale pineapple production in Meme Division, South West Region of Cameroon. In addition to this main objective, the following specific objectives are equally the aims of this study:

To demonstrate that a large-scale pineapple production can create wealth and generate employment.

To provide information and data that can be used for a large-scale pineapple production start-up project.

To generate information that will contribute to the effective implementation of the pineapple sub-sector of the AVC_DP in Meme Division in particular and the South West Region in general.EGION, CAMEROON