A Blockchain Business Proposal
HOW TO USE BLOCKCHAIN AND CRYPTOCURRENCY TO RULE THE NIGERIA RICE AND TOMATO MARKETS IN THE FACE OF GOVERNMENT REGULATIONS
SECTION 1: INTRODUCTION
Many areas in Nigeria are importing Rice and Tomatoes because of the blockage of Nigerian Farmers from exporting directly to foreign countries. This is one place where utilizing Blockchain technology can be used for predictive maintenance repair. By actively using cryptocurrencies at the beginning of the purchasing chain, as well as making direct purchases to African farmers on a regular basis, we are able to generate an alternative trading platform that will truly have minimal fees, and will reduce the costs of profits taken by third parties that control the import/export.
As a crypto enthusiast and I have discovered an
opportunity in the Nigerian Rice and Tomato markets. This is aimed at helping
farmers to distribute their products easily, as we all know that in Nigeria
today, there are no ready markets for rice and tomatoes because of the current
economic situation in the country. I have therefore decided to undertake on
this venture to put such farmers into touch with buyers from all over the
Rice is the most consumed product in Nigeria.
Blockchain holds the key to finally solve the lack of trust and inefficiency in
moving rice across the country from its producers to consumers. By moving rice
using cryptocurrencies like bitcoin on the blockchain, we can potentially cut out
80% of the cost and allow for any individual on earth to buy rice as easily as they
can make an online bitcoin payment through any smartphone. This would
revolutionize the Nigerian food industry, increase international trade, reduce
inflation and allow Nigerians to save
When we say 'cryptocurrency' or 'digital
currency' we mean Bitcoin or any other similar open-source distributed
peer-to-peer system. In Nigeria, cryptocurrencies have become very popular
recently. We consider them as an important tool for achieving business
objectives and sustainability while reducing risks and costs. We plan to
include cryptocurrencies in the Nigerian rice farming business, making Nigeria
the leading country in rice production on the world market.
The objective is to describe and explain the
ideas we need to dominate the Nigerian rice and tomato industries with my
SECTION 2: THE RICE PRODUCTION BUSINESS
Rice is the world’s number one staple food.
About 60% of the world’s population consumes rice as part of their daily diet.
China, India, and Indonesia are the largest producers of rice whilst Thailand is
the largest exporter. However, 94% of rice produced is consumed locally that
is, in the producing countries.
Annually, Nigeria consumes well over 6 million
metric tonnes of rice but produces only 2.4 million metric tonnes. The
shortfall is bridged by importation. Despite having 4.9 million hectares of
land suitable for rice cultivation with a meager 37% currently in use, Nigeria
spends N350 billion on rice importation annually. This production potential if harnessed will translate not just into
food security for the nation but Will also make Nigeria a net exporter of rice.
The government of Thailand has promised to
increase the price paid to its rice farmers for paddy. This Will result in an
increase in the price of imported rice thereby making local rice production
more competitive compared to importation and bagging.
In a bid to achieve food security, the federal government has put in place programs to boost rice production in Nigeria. The government at various levels currently offers incentives to investors interested in large-scale rice production. This includes land for production, credit facilities, tax exemption e.t.c. The federal government earlier banned rice importation by the year 2020 and later lifted the ban.
large-scale rice production represents a major economic opportunity for
investors and other parties interested in rice cultivation and milling.
XYZ Limited is an operating division of the parent company focused on cultivating, milling, and packaging rice. XYZ Limited is conceived to be a leading indigenous rice brand that will provide Nigerian households with high-quality long grain rice that is completely stone-free at a competitive price. XYZ Limited will partner with major rice retailers in major cities in Nigeria to ensure that XYZ Limited rice gets to all Nigerian households. The company XYZ will also sell to businesses (Fast food outlets, Hotels, Caterers e.t.c.) and institutions (NYSC, Nigerian prison service, Hospitals e.t.c.).
XYZ Limited will be produced in a hygienic environment and XYZ will conform to the standards of food production in Nigeria. It will be of high quality and affordable at 120 per kg which is well below the market price for other rice brands. XYZ Limited will be packaged in 50kg, 25kg, 10kg, 5kg and 2kg bags which will make it ideal for a wide range of consumers in the Nigerian rice market. Its value proposition includes affordability, high product quality, and convenience.
Global Rice Market will be a USD 274 Billion
opportunity by the end of the year 2027. Rice is mostly consumed in the Asian
regions from Japan in the east to Pakistan in the west and is the 2nd most
vital crop cereal after maize or corn.
It is expected that the rice market's growth will surge during the forecast period since it's also been cultivated among the non-consuming region such as North America. Across the globe, Rice species and its varieties have a name given by its origin name say Oryza sativa also called Asian rice and Oryza glaberrima or African rice, Japonica rice, Indica rice varieties.
Besides, rice is a staple diet in various
developed and developing countries. Thus it is considered a strategic commodity
and remains subject to a wide range of government controls and interventions.
On this contrary, Rice also plays a pivotal role as a wage commodity for the
workers in the non-agriculture sectors and cash crops.
Despite the current pandemic, COVID - 19 has not
much impacted the rice market globally than other industries as its demand has
been increasing. The driving factors that boost the global rice market are
support from Government and other Associations in developing nations like
Nigeria, advancement in technology, and demand for higher quality rice from
gulf countries during festive seasons.
Global production of rice was 495.78 million
tons in 2020 with 94% of production consumed locally. The Food and Agricultural
Organization has said that to assure food security in the rice consuming
countries of the world, rice production will have to be increased by 50% by
2025. Increasing world population and continual
dependence on rice will raise the level of rice consumption in coming years, especially in the oriental countries. This could result in a reduction in the global rice trade if production is not increased.
According to the International Rice Research Institute
(IRRI), the price of rice increased 7.2?tween March and September 2011. This
can be attributed to the new rice policy of the Government of Thailand to buy
rice from farmers at a price that is 40?ove the current market price and the
harvest loss of 1.5 million metric tonnes of rice due to the nuclear disaster
on March 11, 2011, in Japan.
The Nigerian rice market is highly concentrated
with 36% of the market controlled by the three leading firms in the industry.
Stallion Group the industry leader has 19% of the market share with Caprice as
their major brand. Other players include: Dangote Group (10%) and Olam Nigeria
(7%). Stallion Group and Dangote Group import and bag their rice while Olam
Imports and also buys rice paddy from local rice farmers for milling.
a. <!--[endif]-->Rice Demand Dynamics in Nigeria
Rice has become an
essential part of the Nigerian population’s
diet. Its ease of preparation and the fact that a relatively small quantity can
serve more people has increased its importance not only to the more urbanized
population but also for large families with low income.
According to the Food and Agricultural
Organization, an average Nigerian consumes 24.8kg of rice annually. Average
rice consumption in major cities is:
Lagos (72kg), Abuja (64kg), and Markurdi (74kg). Total consumption is
estimated at 6 million metric tonnes. This figure is on the increase and is
expected to double before 2025.
The average Nigerian rice consumer has
continually shown a preference for imported brands. This can be attributed to
the perception that imported rice is of a higher quality and completely stone
free, unlike the Nigerian rice that is sometimes referred to as “Oh God!”
because of its stone content.
<!--[if !supportLists]-->b. <!--[endif]-->Rice Value Chain
The rice value chain consists of:
In Nigeria, primary production is usually
undertaken by smallholder farmers who produce for subsistence and sell excess
paddy output to paddy traders who sell to small and medium rice mills. A lot of farmers now enter into agreements to
sell their rice paddy to large industrial mills. This is usually structured in
the form of an out-growers scheme. To ensure a constant supply of rice paddy and
protection against an increase in the price of paddy for their production, some
industrial size mills have integrated backward into rice cultivation.
Rice processing in Nigeria is undertaken by
artisans, small and medium-size mills, and large industrial mills. The artisans
engage in parboiling, destoning, and milling using locally fabricated equipment.
Processing by artisans may not involve destoning hence the unpleasant presence
of tiny stones which makes it unattractive to consumers. The small and medium-size mills engage in parboiling, destoning, milling, and polishing. The quality
of the rice produced by this group is usually comparable to that of imported
rice. However, it is not completely stone-free. Large industrial mills engage
in rice processing on a large scale. Their finished product is usually of the
same quality as imported rice. Marketing at this level is carried out by the
large distributors, wholesalers, supermarket and stores, and the low-end
The value chain is divided into several
channels that serve different markets characterized by location, taste and
traditional channel serves the rural village market and is supplied by
servicing mill serves rural market towns and is a highly disaggregated channel
that accounts for the majority of all domestic markets.
commercial milling serves the middle-end urban market and includes medium-sized
processing is targeted at import substitution with high quality locally grown
and processed rice. This is where Merit Exports Will play. However, unlike
other players in this channel, Merit Exports Will engage in both cultivation
rice serves the high-end urban market.
The Nigerian rice value chain is complicated
because of the size of the country, the prevalence of different production
systems and ranges of processing clusters. The difference in processing
clusters is significant because of the flow of rice from states without
developed processing to states that have developed processing capabilities.
Value Chain Dynamics: Constraints to Reaching
End Market Opportunities
- Weak vertical and
horizontal linkage among players in the value chain;<!--[if !supportFootnotes]--><!--[endif]-->
- Poor infrastructural
base and supporting services;
- Access to input.
<!--[if !supportLists]-->c. <!--[endif]-->Industry Environment for Rice Milling in Nigeria
The Nigerian rice market is highly
concentrated; the three leading firms control 36% of the total market share.
Stallion Group is the industry leader with a 17% market share followed by Dangote
Group and Olam Nigeria with a respective market share of 10% and 7%. Only about
40% of rice consumed in Nigeria is produced in the country. Most of the firms
that operate in the Nigerian rice market do not produce their rice. They buy
semi-processed rice, mill, bag and then sell in the country.
However, in recent times, some of the major
players in the market have integrated backward to assure a steady supply of rice
paddy for their mills. Notable brands in the Nigerian rice market include:
Caprice, Dangote rice, Mama’s pride, Uncle Ben’s, and Royal Umbrella. The biggest rice market in southwest Nigeria is in Iddo, Lagos state.
19% (Market leader)
Caprice, Better Rice
The Nigerian rice market is dominated by
imported rice majority of which is smuggled into the country through the land
borders. The smuggled rice is used to flood the market and sold at a price
lower than that of the locally produced rice. The activities of the smugglers
have almost crippled local rice production. Some major local rice producers in
the country are on the verge of shutting down their operations.
Rice importation through the land borders was
banned earlier this year. Whether this measure will be effective in stemming
the tide of rice smuggling remains to be seen. The price of rice is expected to
increase in the coming months as a result of the announcement by the government of
Thailand to increase the price paid to its farmers for rice paddy.
SECTION 3: THE TOMATO PRODUCTION BUSINESS
Nigeria, although was
ranked the 14th world producer of tomatoes is also reckoned, the 8th
world largest importer of tomato paste. This is a country with over 170 million
populations with very large market size and varied opportunities in the agricultural sector, yet these opportunities have not been fully harnessed;
this anomaly is due to dysfunctional agricultural practices aggravated by poor
Crude oil is has been
the backbone of the Nigerian economy in the past 3 decades but the astronomical
decline in international oil prices has compelled the Nigerian Government to
look for alternative means of foreign earnings. The sector that is now the
focal point of the Nigerian Government, though with untapped opportunities in
the agricultural sector. This has also forced the government to look inward
strategies to conserve foreign exchange by engaging our agricultural resources
productively, while at the same time, placing an outright ban on imported goods
that Nigeria can produce. One of the imports that had been brought before the
table of the Federal government is imported tomato pastes.
Also, Nigeria, being
one of the world largest producers of tomatoes estimated at 1.7 million per
annum, yet over 50% of the produce is lost due to various problems in the value
chain of tomato fruit production. The need to salvage the produce from local
farmers, prevent capital flight through the import of tomato paste,
necessitates entrants into large scale production of tomato paste as well as
revitalization of the value chain. In this regard, XYZ Firm, aligning with the
Federal Government strategy of making Nigeria self-sufficient in tomato paste
production has the intent to set up 1200 metric tons per day tomato processing
plant in Jos.
Although, Dansa Food
has commenced operation of its 1200 metric tons per day tomato paste plant in
March 2016, its processing capacity is not sufficient to cater to the needs of
the teeming Nigerian Population. For this reason, XYZ Firm has decided to join
the league of large-scale producer of tomato paste and is poised to be one of
the leading producers of tomato paste in Africa.
Our entrant into this
agricultural segment will contribute towards solving some of the problems in
the tomato production value chain. We shall also assist farmers with hybrid
seeds that are disease resistant, through our research effort, assist them with
our equipment and also the technical know-how in modern farming methods for
tomatoes. Our plan will also include a social responsibility effort of
establishing a hospital as well as a school in the local community where the
project will be sited.
co-partnership with selected farmers based on some established criteria, will
also, provide a ready market for their farm produce thereby reducing spoilage of
fresh tomatoes produced from their farms. This partnership shall include the nucleus of over 5,000 local farmers.
Our target market shall
be first within the Nigerian market and thereafter, we shall target the export
market. Also, within the local market, we shall target large supermarkets such
as Shoprite, SPAR, and online grocery stores. We know that our bulk market shall
be targeted to reach importers whom we have been talking to and will also serve
as our distributors. This will help us reach the consumer end of the market without
incurring capital costs of setting up distribution centers. We shall reach this
market through targeted online advertising in collaboration with email
marketing, handbills as well as any business journals or periodicals that
endears to our target customers. Also, personal contacts and any forum related
to our industry shall be explored.
Product Life Cycle Of Tomato Paste
Every product passes
through the following different stages of the product life which are stated as
<!--[endif]-->Introduction Stage – At this stage, the
product is created and put into the market.
<!--[endif]-->Growth – The Product becomes
known in the market and patronage increases through our marketing and branding
<!--[if !supportLists]--> III.
<!--[endif]-->Maturity – Sales has reached
the peak for the products but growth rate starts to go down as new competitors
with the same scale of production enters the market and the market is saturated
with tomato paste
<!--[endif]-->Decline – at this stage, sales
begins to fall.
Given above life cycle
of a project, how can we deal with the factors that can affect our performance
when our product reaches the final stage?
Here are some
strategies we can employ to maintain sales:
<!--[endif]-->Product repackaging while still maintaining
brand name and quality.
<!--[endif]-->Research and development programs to develop
novelty products using tomato
<!--[if !supportLists]--> III.
<!--[endif]-->Improving the flavor of existing products.
Tomato paste production
requires the extraction of the juice from the tomato fruit which contains more
water than solid. Empirically, 100kg of tomatoes unloaded from trucks for
processing will produce about 93kg of juice to be concentrated before it is fed
to the evaporator which automatically regulates juice intake and finished
concentrate output; Following processing from the concentrate output, 4.46 tons
of fresh tomatoes is required to produce 1 ton of finished tomato paste (at 28%
Brix and making provision for losses). Although, the tomato concentrates can be
at its intermediate state, for industrial use, this is not factored in this
There are two ways to
produce tomato paste – The Hot Break
and The Cold Break. For the Hot
Break, fresh tomatoes are heated immediately after chopping, at high
temperature while Cold Break requires the tomatoes to be heated at lower
temperature. Also, Hot Break Pastes
are usually used for Ketchups and other tomato sauce while Cold break is mainly used for Triple Concentrate paste and packaged
for domestic use.
production operation will be scheduled in such a way that the production
machinery is used to the maximum capacity and that production goes on
interrupted. It follows therefore that, we shall schedule our production in
such a way that all processes are fed with constant supply of raw materials
while we also make a schedule for equipment maintenance.
The production Process
is as follows:
<!--[endif]-->Receiving: Tomatoes are received
from the trucks using a special tube/pipe with vast quantity of water into the
trucks. This allows for easy flow of the tomato fruits.
<!--[endif]-->Sorting: More water is pumped
into the collection channel which carries the tomatoes into a roller elevator,
rinses them and subsequently conveys them to a sorting station.
<!--[endif]-->Chopping: The tomatoes suitable
for processing are pumped to the chopping station where they are chopped.
<!--[endif]-->Breaking: The pulp is pre-heated
to 65-75°C for Cold Break processing or to 85-95°C for Hot Break processing.
<!--[endif]-->Juice Extraction: The pulp (consisting
of fiber, juice, skin, and seeds) is then pumped through an extraction unit
composed of a Pulper and a Refiner - these are essentially large sieves. Based
on customer requirements, these mesh screens will allow more or less solid
material to pass through, to make a coarser or smoother product, respectively.
Also during this process, the yield for the pulp is about 95% while 5%
comprises seeds, fibre, skin, and these are treated as waste and transported
to be sold as cattle feeds or processed as biomass for power generation.
Holding Tank: At this point the
refined juice is collected in a large holding tank, which constantly feeds the
<!--[endif]-->Evaporation: This is the most
energy-intensive step of the whole process – this is where the water is
extracted, and the juice that is still only 5% solid becomes 28% to 36%
concentrated tomato paste. The evaporator automatically regulates juice intake
and finished concentrate output; the operator only has to set the Brix value on
the evaporator’s control panel to determine the level of concentration.
<!--[if !supportLists]-->8. <!--[endif]-->Aseptic Filling: The concentrate is sent from the evaporator directly to an aseptic tank – it is then pumped at high pressure through the aseptic sterilizer-cooler (also called a flash cooler) to the aseptic filler, where it is filled into large, pre-sterilized aseptic bags. Once packaged, the concentrate can be kept up to 24 months.
SECTION 4: BLOCKCHAIN
AND CRYPTOCURRENCY TECHNOLOGY
What Is Blockchain?
Blockchain is a peer-to-peer distributed
database that is used to maintain a growing list of records called blocks. It
is "an open, distributed ledger that can record transactions between two
parties efficiently and in a verifiable and permanent way". It is the
technology that allows Bitcoin, Ethereum and others to
We must start giving market attention to the
FRCN Zocalo (movable digital currency) concept and introduce the currency as an
economic weapon, not only for the good of Nigeria but also for the good of
humanity. Financial experts suggest that under the right economic climate,
zocalo can deliver over $12 billion in fees and other exchanges, and in an
African context, the potential is even more. Zocalo is a platform that will
open up a range of useful services to customers as long as they are willing to
trade in the e-currency.
A National Payment Mechanism (NPM) is in the
making, which will see the emergence of Fidelity e-Filing Service, Fidelity
e-Transfer Service, Fidelity e-Remittance Service, Fidelity e-Banking Service,
Fidelity e-Brokers Service, Fidelity e-Transactions Service and Fidelity
e-Investment Services. In addition, customers will be able to buy, sell, send,
receive and hold Zocalo. They will also be able to transfer, receive, and make
payments in Zocalo.
The payments which will be from Zocalo to
conventional currencies will be eligible for taxes, fees, and other levies and
duties such as social security and value-added tax. Using cryptocurrency, you
can have your cake and eat it. There are several benefits to crypto
transactions: they are fast and secure; they offer the most favorable rates;
it is globally accepted, and there are no risky hidden fees. Cryptocurrencies
are not regulated in Nigeria. They can therefore be more costly and risky to
transact, and will probably also involve some vulnerabilities. In Nigeria, the
National Information Technology Development Agency (NITDA) has put out some
FAQs and guides. A few tips to consider if you are considering Bitcoin are: you
cannot hold Bitcoin (digital currency) in Nigeria; you cannot convert money
into Bitcoin, and you cannot hold Nigerian Naira in Bitcoin. However, there are
‘safe’ ways to explore the concept of using digital currency in Nigeria, and it
is imperative that the country gets the lowdown.
Cryptocurrencies are the virtual version of traditional
money. They are ‘programmed’ with a combination of math and computer code.
Anyone with internet access can download a virtual wallet for digital
currency and use it to buy goods and services. Bitcoin, the original virtual
currency, was created in 2009 by someone called Satoshi Nakamoto, who described
it as a ‘peer-to-peer electronic cash system’ that would enable instant
payments and overcome any volatility that is present in actual physical cash.
It is the first digital currency in existence. Bitcoin is currently valued at
about N200,000 or $0.01. It is possible to purchase cryptocurrency in Nigeria
via one of a number of authorized websites such as Bitplace Nigeria,
BitcoinTruer, TeraExchange, BitX, Obalon, and BTCzone. A trading website where
you can buy and sell Bitcoin is Bitwise Exchange. Bitcoin exchange platforms
are not well regulated in Nigeria, although the Central Bank of Nigeria (CBN)
has said that it will soon introduce guidelines on bitcoin trading.
The usage of cryptocurrencies for trading and
investments is becoming popular in Nigeria. In 2017, the United States recorded
$300 million worth of Bitcoin trade, and in Nigeria, the e-payment space is
gaining traction with over N20 billion going through mobile money and PoS
machines per month.
Within the next five years, analysts say that
cryptocurrencies will be worth trillions of dollars. One of the issues in
Nigeria’s cryptocurrency market is the absence of tax relief for companies
using them to pay salaries and other obligations. The government also said that
crypto assets were not covered by the Companies Income Tax (CIT) regime. The
CBN has also warned Nigerians not to trade in bitcoin, saying it was too
volatile for its consumers and not endorsed by any country.
Trading digital currencies will require special
regulatory attention because, in theory, it exposes investors to great
financial risk. According to Jumoke Akinjide, a lawyer at Zenith Bank, digital
currencies have their pros and cons. “For instance, the cryptocurrency market
has grown astronomically in the last few years with Bitcoin as the most popular
digital currency,” she said. However, “Any company or individual trading in
digital currency can easily be scammed because the virtual currency does not
exist in a centralized regulatory environment,” Akinjide warned.
“Other risks associated with digital currency
trading, however, outweigh the potential benefit. For example, since the digital
currency is an emerging financial product, there is no regulatory framework in the place to govern digital currency trading or reporting, and market participants
are at risk of illegal manipulation and fraud,” she added.
According to CBN deputy governor, Dr. Joseph Nnanna, cryptocurrencies are not legal tender in Nigeria, and therefore cannot be treated as such. “In some jurisdictions like China, virtual currencies are banned,” he told The Punch newspaper. “Similarly, in Japan, digital currencies are prohibited.” Other cryptocurrencies include Ethereum, Ripple, Litecoin, Monero, Bitcoin Cash, Cardano, and EOS. Akinjide said that the caveat in Nigeria regarding trading Bitcoin is that the transaction must be done in dollars.
Takeaway: I think of blockchains as a technology that can be leveraged to make businesses or industries better. Like how they made the stock market better.
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