Feasibility Study On Vegetable Farm
Feasibility Study On Vegetable Farm
Feasibility Study On Vegetable Farm
January, 2022
Funote-selam Ethiopia
1
1. Please define Entrepreneur from the economist, psychologist and capitalist
philosopher’s point of view. So the Definitions are the following:-
A. To an economist an entrepreneur is one who brings resource, labor, materials, and other assets into
combination that makes their value greater than before and also one who introduces changes
innovations.
B. To a psychologist an entrepreneur is a person typically driven by certain forces need to obtain or
attain something, to experiment, to accomplish or perhaps to escape the authority of others.
C. For the capitalist philosopher an entrepreneur is one who creates wealth for others as well, who
finds better way to utilize resources and reduce waste and who produce job others are glad to get.
D. A sociologist defines entrepreneur as a person whose actions would determine his social status and who
contributes to the development of the society.
E. Management experts define entrepreneur as a person who has a vision and generates an action plan
to achieve it. An entrepreneur is a person who creates a business or products, manage his/her
resources and takes risks to gain profit.
1. Executive Summary
Introduction
This Business plan is prepared for the purpose of providing an understanding of vegetable farming development. A
brief analysis on vegetable farming is thus conducted to identify the current market trend and to share the shortage
and unsatisfied market in Gondar, Bahir Dar and the nearby small towns.
The Promoter
Ato Getachiew Yohannes is the business promoter of this business who engaged in different business activities.
Some of the business activities he engaged include: Selite production in Humera and Metema area, Exporter and
importer of agricultural products and in the hotel industry.
3
The business team is led by Mr. Kassahun Bogale as a Business Manager, who has extensive knowledge of the
industry. The business expects to employ five temporary employees during the equipment re-location phase, four
employees on a permanent basis, and three part-time employees.
The Business
Ato Getachew has planed to engage on vegetable farming development. This includes growing carrots, potato,
tomato, red onions, and cabbage, white onion, Key sir. The Company’s farm will have a capacity sufficient to
produce in excess of 200,000 lbs. of vegetables per year.
The owner has the capacity to utilize traditional and more advanced farming technologies to produce new cultivars
of vegetables with locally-adapted superior characteristics for the Gulf-South growing area.
This strategy will allow Farmers Group to produce crops during most of the year and will allow double cultivation
of the greenhouses with almost no additional heating necessary in the winter months.
To realize this plan, he has secured a large plot of land near Gondar city. The land is used for growing vegetables
namely growing carrots, potato, tomato, red onions, and cabbage, white onion, Key sir and it also builds office and
ware house to keep the products.
Over the past decade the market for vegetable food has grown by 15% to 20% and every year 40% of Ethiopian
customers occasionally reach for something labeled organic. People in Gondar as well as Bahir Dar and the nearby
small towns like Woreta, Addis Zemen and Debre Tabor have faced a problem to get a fresh vegetable. Because of
this problem vegetables are transported a long distance which make the price higher due to the transportation cost
and have supplied low quality in fact which is not fresh.
In order to meet the demand for fresh vegetable the promoter has planned to engage in vegetable farming. Hence,
Gondar and Bahir Dar has among the destinations of tourists and there is a great demand of vegetables in those
city hotels.
Technical aspect
4
The envisaged business is located in near Gondar city 30 KM far from the city of Gondar. It is situated3 KM far
from the main road of the town. Therefore, there should be a road that connects to the main road. Here, it is
possible to construct a road that connects the business area with the main road.
The business premises cover an area of 6000 m2 out of which the 5000m2 for cultivating vegetables and the
remaining 1000m2 to build offices and warehouses. So far all the structural skeleton works off the offices and
warehouses are completed. The total cost of the business is estimated to be Birr 1, 830,000(one million and eight
hundred thirty thousand).
It is believed that the business addressed different socio and Economic benefits. As the government policy towards
agriculture is at least self sustaining in food, investing in agriculture has many benefits towards the economy and
the society. The business has the following socio economic benefits:
The total investment cost of the business is calculated to be Br.1, 830, 000 in both short-term and long-term loans
to finance.
Start-up Requirements
Total Start-up Expenses
5
Legal……………………………………….Br19, 000
Facilities modification…………………….300, 000
Seed………………………………………….600
Organic Herbicides/Pesticides………………5,000
Consultants………………………………….25, 000
Insurance……………………………………10,000
Research and development…………………25,000
Expensed equipment………………………..250,000
Other………………………………………….50, 000
Start-up Expenses………………………………………………………..Br. 684,600
Start-up Assets
Cash Required …………………………….245, 400
Start-up Inventory………………………….150, 000
Other Current Assets………………………..250,000
Long-term Assets……………………………500,000
Total Assets…………………………………………………….Br.1, 145,400
Total Requirements ………………………………………………………Br.1, 830,000
The businesses profit and loss statement indicates that the business is profitable through its business life of 5 years.
At the initial years of operation, the business is expected to return a net loss of Br. 22,644 and the level of profit
shows increasing trend through the business life.
2. Business Background
The business promoter is Ato Getachiew Yohannes is the business promoter of this business who engaged in
different business activities. Some of the business activities he engaged include: Selite production in Humera and
Metema area, Exporter and importer of agricultural products and in the hotel industry.
The proprietor’s academic background and business experiences reveals as he has graduated from Haramaya
University as Bachelor of Science in Plant Science. He has worked for more than 10 years in this area. He takes
6
different short term and long term training in supply chain management, Agricultural farming management,
Agricultural marketing and Accounting.
Generally, all his business performs well and has shown improvement from time to time. The business promoter
home town is a country side, which is ten KM from Gondar city, he grown up in a farmer family and that is why
he sticks to farming. He has the knowledge of cultivating and digging a land since his child hood.
The business promoter has planned to engage in vegetable farming. To realize his plan, He has started to build
offices and warehouses and also prepare the land for farming. Some of the interested potential customers (super
market and groceries) have shown their willingness to be a wholesaler following the production of the vegetables
because of the location advantage and the expected quality product including its freshness.
The business is now ready to farm the vegetables and the irrigation system has already designed to pump from the
near by river called Angereb.
The promoter is planning to obtain both a long term as well as a short term loan for fully engaged in farming and
presents this business documents in order to substantiate the business viability and inform its current status. The
promoter believes that based on the viability and profitability of the business both the borrower and the lending
bank will forge fruitful and productive business relationship. The promoter also considers the vegetables farming
business towards socioeconomic development in general and expand food production and export potential in
particular is significant.
Any development business has a direct relation and interaction with natural condition and human activities of its
environment. The conditions are main determinant for the viability of the business and hence before implementing
a business natural and human factors should be studied thoroughly. Hence, as an organization, the business is
considered with existed in the larger environment. As an open system it takes inputs from the environment and
processes and finally dispatches the output to the larger environment. Therefore, the business has the following
impact in physical condition, socio-economic condition, marketing condition and technical conditions.
7
3.1. Physical Condition
3.1.1. Location
The envisaged business is located in Amhara regional state, Gondar city, 730 KM far from the capital City of
Ethiopia, Azezo sub city 30 km far from the main road.
It is assumed that this site is properly selected for the vegetable farming development as the site is near by river
Angereb in which irrigation system can easily be implemented. This vegetable farming development expected
mainly to contribute in attaining food self sufficiency in minimizing the problems of fresh vegetable supply in
Gondar and Bahir Dar city and the near by small towns to satisfy the demand.
The business premises cover 6000suare meter in which 1000 square meter is for office and warehouse building.
The initial cost of the business is estimated to be Br.1, 830,000 which is used in constructing the irrigation
structure, purchase of farm, machinery, hand tools, office furniture and to cover the operational cost.
3.1.2. Climate
The business area which is an average altitude of 2120m above sea level has a sub tropical type of climate. The
area in general has adequate rain fall. The major vegetables grown in the vegetables in the area include: growing
carrots, potato, tomato, red onions, and cabbage, white onion, Key sir and etc and the promoter plans to grow the
above mentioned vegetables as suitable for the climate.
3.1.3. Topography
The business site is situated on plain land without much problem for construction, drainage or running of the
intended business. The site is also suitable for future expansion of the business.
Water supply for the business is obtained from Angereb River which is near by the farm. Moreover, the business
may construct a deep well for the supply of water as required. It also use rain fall as the main source of water for
the business. The site is suitable to apply different technology to source water. Ground water also used as a source
of water by pumping using a generator.
8
3.1.5. Building and Civil works
The proposed business is planned to involve the following construction works before the actual farming has been
started:
Total 705,000
Infrastructure is the key elements for the development of the business. The business area is well accessible and is
not far from the city of Gondar and the port.
The area in general and the business in particular is favored by having an agricultural research from Woreta, Adet,
and recently in University of Gondar. Moreover, banking, telephone and postal offices provide essential services
in their field of specialty.
9
The Ethio-Sudan boarder is near to the business area and helps easily accessible of the product to the port through
the Port Sudan and other African country. This would be a great benefit for export oriented products as well as to
import materials and equipments for the business.
Looking the socio-economic situation is very essential. These issues with the capacity of individual institutions to
realize their inherent potential and capacity to cope with the changing circumstances of life style of the community
will help in attaining the intended objectives. In a physical sense the number of inhabitants, their demographic
characteristics, purchasing power of the inhabitants, work pattern and infrastructure development are fundamental
aspects in socioeconomic analysis. These aspects have a direct impact on the development of the business
particularly on agricultural business, as they perform in the complex human environments.
The Ethiopian economy remains heavily dependent on agriculture, which accounts for about 50% of GDP. An
estimated 85% of the population gains its livelihood directly or indirectly from agricultural production. The
Ethiopian government’s economic strategy is based on Agricultural-Development-Led Industrialization, supported
by an Economic Reform Programme developed in cooperation with the World Bank and the IMF in 1992, and on
the series of structural adjustment programmes since then.
Major gains have been made from the reform programme, particularly through the establishment of liberalization,
low inflation, fiscal discipline (and low government borrowing), infrastructure improvement and the growth of the
private sector.
The price of these products will be governed by market force supply and demand. The price will very depending
on the quality of the product, season and market location.
10
Currently, the demand for fresh vegetables in both local and foreign market is very high. Horticulture products are
very perishable products; hence, to overcome this problem, the business will install the necessary storage facilities
to ensure fresh supply of vegetables.
The government of Ethiopia is now subsidizing vegetable farmers to make competitive in the global market by
facilitating credits and by making tax redemption. Currently, there is high number of investors are investing on
agriculture because of the reason that the price of the agricultural products are increased on the world market and
the government of Ethiopia promotes those who are investing on Agriculture. These make the competition more
severe and sever.
Agricultural development is the top priority of the Government and the country has witnessed sizeable growth in
agricultural productivity over the last two to three years.
With increasing commercialization of the sector, there are growing demands for inputs of agricultural products by
manufacturing industries and for the provision of all-round support services such as the maintenance of tractors,
harvesters and other agricultural equipment such as grain silos, cold storage and transport. The Agricultural-
Development-Led Industrialization (ADLI) strategy adopted by the government facilitates the incentive. With
these trends in mind, the promoter will concentrate on:
3.3.1. Products
The promoter steadily used and experimented with compost and fertilized with manure of different kinds. The
most important things with manure usage is to eliminate the viable weed seed drawback by thoroughly composting
the manure, to add enough cellulose on product to bring it to the proper ratio and to bring its water content to
proper levels. A properly composted manure product has no seeds that will germinate and proliferate in it.
Additionally, a properly composted manure product has something a chemically formulated synthetic fertilizer
does not have: enzymes. Enzymes are critical for producing a truly nutritious and superior flavored product.
11
Research has shown that the superior flavor of a fruit or vegetable is closely related to vitamin content and folic
acid content in green vegetables.
The state-of-the-art vegetable equipment starting up in the new location utilizes revolutionary harvest designs that:
Therefore, using the above principles and strategy the company plans to produce quality vegetable products of
growing carrots, potato, tomato, red onions, and cabbage, white onion, and Key sir
In the meantime, the company would like to explore the possibilities of Banana, Mango, Avocado, and Banana
production. The promoter believes this to be a high revenue venture with retail prices running in excess of
Br.10.00 per kilo gram in most places of Ethiopia especially in Gondar city. The company also believes that
if fruit production is successful then it could become the number one endeavor of farming business.
Currently, there is a defunct Fruit farming production facility with all the necessary capital equipment
approximately two miles from the current farm. Purchase of this facility would allow the promoter to begin
production and to capitalize on this higher margin product. What makes this most attractive is the two ventures
have significant joint cost potential, allowing for a reduction in marginal costs for all products and creation of real
economies of scale that would provide the promoter with a competitive advantage.
The target customers include oriental vegetable markets demanding green vegetables, vegetable processors, and
private individual buyers through direct selling and farmers markets. The company will continue to service the
existing customers of the purchased vegetable farms. In its greens production the company will target virtually all
main food outlets. The promoter plans to use the Internet as one of its marketing channels in the future.
12
The company's target customers will be as follows:
Vegetables:
Product-Bagged Manure:
The Promoter will also take over customers from other farm business owners. The promoter will have also
customers in the foreign market treated in a non segmented way as a large market.
The Market Analysis Pie shown below reflects the total number of potential customers for the vegetable farm. The
number of potential oriental markets and vegetable processors represent national estimates of industry participants,
whereas the number of individual buyers represents the estimated annual number of individuals that will be
driving by the farm.
13
Market analysis
The promoter’s strategy is to profitably and efficiently utilize present and future agricultural technology in the
production of vegetables. Additional application and utilization of horticultural technology in the production of
vegetable will allow double utilization of the climate controlled portion of the overhead. The promoter hopes to
consolidate considerable goodwill already created by exercising the option of not adding another high-production
facility to the present supply-demand scenario.
14
The company's long-term plan is to phase out whichever products are least lucrative and replace them with
products that are practical and cost efficient.
The company sets its pricing based on market rates as far as vegetable products are concerned.
The promoter’s pricing for vegetables will exceed the average market price for the following reasons:
3.4.1. Capital
Capital is here defined as money that will be used for the purchase of capital items, construct the structures
purchase other farm inputs, and cover other cost of the business. Since the business is medium scale modern farm,
specializing in cultivating vegetables will need initial capital investment, purchase/ lease of the land, tools and
other inputs.
According to the investment proclamation of the government of Ethiopia an investor should get certificate to be
eligible as an investor and to get other special benefits. To an investment certificate the investor should invest a
capital.
To develop 6000 square meter of land for cultivating vegetables, the business will invest an initial investment of
Birr 1,830,000.This capital is used for constructing the irrigation structure, purchase of farm machinery, hand
tools, vehicle, office furniture and to cover other operation costs.
15
The source of this capital will be from two sources. Out of the total initial capital cost of the business the owner of
the business will contribute 30% and 70% is expected from the development bank of Ethiopia (DBE) on long term
basis.
It is well known that facilities such as warehouses and offices are necessary for small scale irrigated agricultural
business. Besides, the business will invest for the construction of offices, guardhouses and stores using low cost
materials and corrugated iron sheet.
3.4.2. Land
Land is the basic resources, which supports the production of all agricultural commodities and hence, it is the
single most valuable asset in this sector. Land varies in qualities i.e. in terms of location fertility and type of soil.
Land can also be evaluated in terms of Physiography and climate as well as on its suitability for production
purpose, related with health, existence of infrastructure and market availability and ownership types.
Currently, there are two ways to acquire land for the purpose of investment. First, since farmers have got the right
to lease their land, the investors can get the land, on short term contractual basis in agreement with the holder.
Secondly, land under state holding as indicated on the investment proclamation can be obtained from government
through lease agreement. For the purpose of this specific business the land has already been secured from the
regional government by lease.
16
7 Key sir 0.12 0.5
Total land area 1.06 3.67
Out of the total 6000m2 of land 400m2 will be used for canals and other constructions. By considering the physical condition
of the business site that is soil type, climate, topography, water quality and availability, water table depth and crop type, the
business has selected surface (gravity) irrigation method for its planned developments. To irrigate each species of plant
effectively so as to grow them successfully, the soil surface of each block will be shaped in to a serious of furrows for
vegetables. To transfer water from ditches to each furrow, light weight portable siphons or short tubes will be inserted in to
the bank of ditches.
3.4.3. Labor
One of the major objectives of the business is to create job opportunity for unemployed people. Therefore, labor
can be used in most of farm operations. Farm operation such as seed and fertilizers broadcasting, chemical
spraying, harvesting, bagging, and handling are done through man power.
Because of prevailing weak performance of the overall national economy in the country, unemployment is
increasing at alarming rate in rural and urban area. The current daily wage rate of such labor in the business area
ranges between 20 and 30 birr per person per day. Skilled manpower, ranging from 10 grades complete to
university graduate with good experience also abundant in the market. Hence, there will not be labor problems for
the business.
The business will create employment opportunity for eight permanent workers and several seasonal daily laborers.
Manpower requirement and annual salary of the business is given in the following table.
education
1 MSc in
Farm
25,000 30,000 30,000 30,000 30,000
Manager Agriculture
2 BSc in
Horticulture 25,000 30,000 30,000 30,000 30,000
Agriculture
3 Manager Diploma
9,000 6,000 6,000 6,000 6,000
Trainee
17
4 Time keeper Diploma 4,000 6,000 6,000 6,000 6,000
5 Logistic Diploma
18,000 18,000 18,000 18,000 18,000
engineer
6 Accountant Diploma 18,000 18,000 18,000 18,000 18,000
7 Guards 10th complete 3,500 3,000 3,000 3,000 3,000
th
8 Contract 10 complete
15,000 0 0 0 0
workers
Total People 7 7 7 7 7
4. Financial Analysis
4.1. Sales Forecast
Sales Forecast:
18
The total investment cost of the business is calculated to be Birr 1, 830,000 and all the capital is covered by loan
from a bank. The funding requirement of the business is as follows:
Acquisition: In Birr
Property
1,300,000
Equipment System
400,000
Sub-total
1,700,000
Operating Expenses:
Salaries
80,000
Marketing and
promotion 10,000
Other operating
expenses 10,000
Sub-total
100,000
Total 1,800,000
Start-up Funding
Assets
Liabilities:
19
Current Borrowing 400,000
Long-term Liabilities 851,000
Accounts Payable (Outstanding Bills) 30,000
Other Current Liabilities (interest-free) 0
Total Liabilities 1,281,000
Total Planned Investment 549,000
Loss at Start-up (Start-up Expenses) (684,600)
Total Capital 315,400
Total Capital and Liabilities 1,145,400
Total Funding 1,830,000
This financial projection is based on sales volume at the levels described in the sales forecast section and presents,
to the best of management's knowledge, the company's expected assets, liabilities, capital, and revenues and
expenses. The projection reflect management's judgment of the expected conditions and its expected course of
action given the hypothetical assumptions.
Revenues:
The company's revenue is derived primarily from the sale of vegetables, strawberries, and bagged composted
manure products.
Expenses:
The company's expenses are primarily those of salaries, utilities, and insurance costs. Other expenses are based on
management's estimates and industry averages.
General Assumptions:
Break-even Analysis
20
The company's break-even analysis is given below.
Break-even Analysis:
Assumptions:
Depreciation:
Construction and civil works……………5%
Machinery………………………………..5%
Office furniture…………………………10%
The business decisions are made based on the following decision as:
Expected required return of the business 10%
Based on the above data of the business, the payback period, net present value, IRR, and Profitable index of the
business are as follows:
Therefore, based on the above criteria, the business will be financially viable and should be implemented. It has
high return in each of the criteria.
21
5. Business and its Management
Ato Getachew Wasie, the proprietor business will use technological innovation and operates with certain amount
of borrowed capital. Since the business in the world of limited resources, decision making how to use these
resources in their best possible way is an essential matter. To make these decisions skilled and competent
management body is required.
The business will follow efficient management procedures. The business will be run the day to day operation by
consisting of, skilled, semi-skilled and unskilled workers to be employed by the business with attractive monthly
salary.
Each operation of the business, therefore, will run under close supervision of the owners and the manager. The
team leader and the manager will carry decision making, administration, and technical matters of the business,
with answer ness of the owner.
Therefore, the management of the business will be competent enough and will not face problem. More
specifically, the duties and responsibilities of the farm manager will be:
To prepare rules and regulations that are practical for business administration
To check consistently if staffs are functionally employed
To prepare the monthly and annual budget, and present to the proprietor for approval
To check if the business is profitable, output quality is maintained and prices are with in a competitive
range
22
To check bank loans and other payments are affected on time
One aim of a manager should be to ensure that all staff understand the nature of the business and are active in
working towards its success. This is particularly important in relation to quality assurance which requires all staff
to agree quality management procedures and as individuals, to routinely monitor product quality.
If it is accepted that most people wish to have the following aspects in their job, the manager can arrange work to
meet these needs:
a reasonable wage
security of employment
a feeling of belonging to the company
respect for their skills and knowledge
good relationships with other staff
opportunity to develop new capabilities
Reasonable working conditions.
The majority of people wish to have their skills and knowledge recognized and to be able to develop these further
in their work. Again, it is in the managers' own interests to do this because each worker's skills can then be used
most effectively for the benefit of the enterprise. In practice, this may mean allocating specific areas of
responsibility, such as record keeping, labeling of products, raw material inspection etc. to those staff that have an
aptitude for that type of work. However, it is also necessary to train staff in every aspect of production, regardless
of their main area of expertise. When all staff knows how to do every job in a production unit, there are
opportunities for people to do different work during the day leading to greater job satisfaction and greater
flexibility in job allocation to cover for staff absences.
The owner or manager is responsible for providing reasonable working conditions for employees. As a minimum,
the requirements for hand washing and toilet facilities should be met for both workers' benefits and to maintain
hygienic production. Preparation tables should be high enough for staff to work comfortably and where repetitive
work is carried out for long periods, seats and good lighting should be provided. The owner may also consider
providing a rest area with cold water and seating, to prevent workers sitting on stocks of packaging or finished
23
product as the only comfortable place to take a break. These benefits are important to retain experienced staff and
contribute to the overall efficiency of production.
things that might prevent us coming in within the budget we are thinking to committing to
things that might cause us to fail to meet any dates we are thinking of committing to
things that might cause us to fail to meet any other commitments we are thinking of making
The safety of vegetable products can be assured by implementation of a management method known as the Hazard
Analysis Critical Control Point (HACCP) system. This is designed to prevent problems from arising, rather than
curing them. In essence, the process of implementing HACCP systems involves the following stages:
24
Potential risk Level of risk Control mechanism
Moldy vegetable, High risk: mould contamination could Control through adequate
contamination with affect flavor and shelf life of product. clearing of the soil, leaves
soil, leaves, etc Moderate risk: extraneous matter such as and the moldy.
insects could contaminate product if not
removed during inspection.
Contamination of High risk: shelf life depends on correct Adequate checking to
vegetable with dust, Ingredient weight should be checked. prevent the risk.
moulds, bacteria or Moderate risk: contamination of spices.
foreign bodies. Remove moldy items and other
contaminants during inspection and
washing.
High snow, flood, and High snow, flood, and rainfall may There is an agreed
rainfall destroy the whole or part of the vegetable insurance coverage at this
farm. This is the highest risk. time
Insects, pests, and Can be reduced using control Use insecticide, pesticides
other animals mechanisms to reduce the risk.
In general the business’s success factors planned to center around human relationships, which means that business
managers should master these skills no matter the business risk. High-risk business need more careful planning,
monitoring, and controlling than do low-risk business. Moreover, if there is any one or a combination of technical,
cost, or schedule risks, the business will plan to use the following guidelines:
1. Emphasize team support.
2. Giving the business manager appropriate authority.
3. Improving problem handling and communication.
4. Avoiding the pure-business structure.
5. Increasing the frequency of business monitoring.
6. Using WBS, PERT/CPM, and C/SCSC.
7. Establishing clear business goals for the team
8. Selecting an experienced business manager.
25
Table1: Plant water requirement and irrigation scheduling
Maturity Total water Total Total Water Total
No. Plant to time requirement interval watering required land Total water
be grown per interval area requirement per
(Days) (mm depth) (Days) Days/ irrigation
cycle (mm (m2) interval
depth)
Liter M2
Potato
1 90-120 400-600 5.7 18 33 1200 66,000 66
Tomato
2 120-150 500-700 7 17 41 1000 49,200 49.2
Red
3 Onion 100-140 350-550 5.7 20 28 800 33,600 33.6
Carrots
4 120-150 400-500 6 18 35 700 24,500 24.5
Cabbage
5 70-100 350-550 5.5 17 34 1000 34.000 34
White
6 onion 100-140 550-700 6.6 21 40 1200 48,000 48
Key sir
7 120-150 500-700 5.7 19 41 1100 45,100 45.1
26
Table 5: Production Forecast
No. Description 1 2 3 4 5
1 Potato
0.24 0.24 0.24 0.24 0.24
Area in (ha)
229
Production (Qut/ha) 250 270 291 313
55
Total production (Qut) 60 65 70 75
Tomato
2
0.78
Area in (ha) 0.78 0.78 0.78 0.78
372
Production (Qut/ha) 374 378 381 391
290
Total production (Qut) 292 295 297 305
Red Onion
3
0.36
Area in (ha) 0.36 0.36 0.36 0.36
4 Carrots
5 Cabbage
27
Production (Qut/ha) 340 346 350 370 380
6 White onion
7 Key sir
4 Carrots
5 Cabbage
28
Selling price (Br/ qt) 150 170 200 220 230
6 White onion
7 Key sir
As the income statement table shows, the owner expects a steady growth in profitability over the next few years.
Description 1 2 3 4 5
Gross Revenue 575,000 700,000 850,000 889,100 927,331
Direct Cost of Sales 391,000 478,100 578,850 601,032 627,803
Other 10,000 10,000 10,000 10,000 10,000
Total Cost of Sales 401,000 488,100 588,850 611,032 637,803
Expenses
Payroll 117,500 111,000 111,000 111,000 111,000
Sales and Marketing and Other Expenses 11,400 11,100 16,550 15,300 17,550
Depreciation 0 0 0 0 0
Gas and Oil 2,040 3,000 3,000 3,000 3,000
29
Utilities 6,000 6,000 6,000 6,000 6,000
Insurance 5,040 5,500 5,500 5,500 5,500
Payroll Taxes 0 0 0 0 0
Other 0 0 0 0 0
Total Operating Expenses 141,980 136,600 142,050 140,800 143,050
Profit Before Interest and Taxes 32,020 75,300 119,100 137,268 146,478
EBITDA 32,020 75,300 119,100 137,268 146,478
Interest Expense 54,664 47,845 39,095 32,095 26,495
Taxes Incurred 0 5,491 16,668 21,035 24,996
Net Profit (22,644) 21,964 63,337 84,139 94,987
Net Profit/Sales -3.94% 3.14% 7.45% 9.46% 10.24%
Description 1 2 3 4 5
Assets
Current Assets
Cash 239,980 180,177 202,250 201,210 182,106
Accounts Receivable 0 0 0 0 0
Inventory 55,760 24,586 29,767 31,136 32,475
Other Current Assets 250,000 250,000 250,000 250,000 270,000
Total Current Assets 545,740 454,763 482,017 482,346 484,581
Long-term Assets
30
Total Long-term Assets 500,000 500,000 500,000 500,000 500,000
Total Assets 1,045,740 954,763 982,017 982,346 984,581
Current Liabilities
Accounts Payable 6,984 44,043 55,960 57,150 59,399
Current Borrowing 346,000 246,000 146,000 121,000 86,000
Other Current Liabilities 0 0 0 0 0
Subtotal Current Liabilities 352,984 290,043 201,960 178,150 145,399
Long-term Liabilities 400,000 375,000 350,000 300,000 250,000
Total Liabilities 752,984 665,043 551,960 478,150 395,399
Paid-in Capital 1,000,000 1,000,000 1,097,000 1,097,000 1,097,000
Retained Earnings (684,600) (732,244) (730,280) (676,943) (602,804)
Earnings (22,644) 21,964 63,337 84,139 94,987
Total Capital 292,756 289,720 430,057 504,196 589,182
Total Liabilities and Capital 1,045,740 954,763 982,017 982,346 984,581
Net Worth 292,756 289,720 430,057 504,196 589,182
31
4 256,200 256,200 12,810
5 256,200 - -
32