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CIP • SOCIAL SCIENCES WORKING PAPER 2010-1
4. Potentially adequate and sustainable supply of the raw material
Since ECA countries are potentially high producers of potatoes, there can be adequate and
sustainable supply of the raw material, as far as the required attributes for quality of potatoes
for chips making are maintained. The area under potato is also indicating a tremendous
increase over time. For instance, in Ethiopia, the area under potato increased by about 400%
in the early 2000s as compared to the 1980s (Agajie et al, 2002). Some evidence in Africa such
as FAO statistics of 2002, also support that the area under potato in SSA has increased by
about 250% in 2001 as compared to the area coverage in 1993. Among the SSA sub-region,
the share of area under potato in the ASARECA region accounted for 71%. According to
FAOSTAT database, potato production is also estimated to be growing at a rate of 10% per
annum in the ASARECA region and this ensures availability of adequate supply for the raw
material. The statistics also indicate that the growth in area under potato in SSA is highest as
compared to the area under other crops, such as wheat, rice, maize, sweet potato, cassava
and yams. The fast growth for the area of potato was because commercially oriented farmers
are responding to increased demand from growing urban centers. Moreover, subsistence
oriented farmers are responding to ever shrinking farm sizes. This is because, revenue from
potatoes is generally 10 times greater than grains, and energy per hectare per month from
potatoes is five times that of grains. Policy makers have also noticed and believed potato
exports as a potential source of foreign exchange. In the ASARECA member countries, this
quantity of raw material means that about 900,000 tons of chips can be produced in the
whole of ASARECA member countries. All the evidence supports that there is a reliable and
adequate potential of potato supplies for processing industries.
5. Economic feasibility of investments in chips processing
Economic profitability analyses of chips processing in ECA countries indicate that chips
processing is a rewarding, lucrative and remunerative investment. For instance, an economic
profit ranging from USD 11.00 to 126.00 per 100 kg of potatoes was obtained from chips
processing in different ECA countries.
These opportunities suggest the potential trade in frozen chips that can be created between
ECA countries. In the short run, there is a possibility for Njoro Canning to penetrate markets
of neighboring countries, such as Ethiopia, Uganda, Tanzania, Rwanda and others.
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