Linking potential supply and demand for soybean in West Africa: A location analysis of a developing industry in Nigeria

Optimal location and size of a processing plant provide direct benefits to consumers (lower prices) as well as to producers (higher incomes). Despite this potential, less attention has been devoted to the spatial organization of processing plants in West Africa. Soybean is an emerging industrial crop with high market potential. However, poor linkages between producers, processors, and consumers have hindered production, expansion, and utilization of soybean in Nigeria. An interregional trade model was formulated to determine how to efficiently link these major participants in the marketing chain. The study is based on simulation with two model years. In addition to conditions of model year A, model year B assumes that production will increase by 5% and 10% per annum. Also, additional processing plants at other locations are assumed to start processing. Results from the model show that during the initial stages of soybean development, large-scale processing plants are not profitable as capacity underutilization results in high unit processing costs. During this period, only two plants, each with a rated capacity of 36,000 tons, would be efficient.