Sitau

Association

Cattle Pen
Fattening
Business
Plan
Towards Economic
Sustainability for Beef
Farmers
 SITAU ASSOCIATION

Cattle Pen Fattening Business

Plan
Submitted to

Absa Bank, Ngong Branch

Sitau Association Feedlot Farm

Contract Person
David Rimpa Parsitau
Association Chairman

P. O Box 170-02006, Kiserian,

Kajiado Country
Kenya

Telephone: 0721350157/ 0720707149

Email: sitauassociation@gmail.com

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Table of Contents
Executive Summary ........................................................................................................................ 4
1. About Sitau Association .......................................................................................................... 5
1.1. Mission, Objectives and Keys to success ......................................................................... 5
Mission ........................................................................................................................................ 5
Vision .......................................................................................................................................... 5
Core Values ................................................................................................................................. 5
Slogan........................................................................................................................................... 5
2. Cattle Fattening Business Model ............................................................................................. 6
3. Industry Analysis ..................................................................................................................... 9
Competition and Buying Patterns ............................................................................................. 10
4. Association’s PESTEL Analysis ........................................................................................... 10
5. Niche Market Analysis .......................................................................................................... 12
Demand ..................................................................................................................................... 12
Market Segmentation ................................................................................................................ 12
6. Production and Operational Strategy ..................................................................................... 13
7. Business and Project Management ........................................................................................ 15
Board of Directors (Management Committee).......................................................................... 15
Directors’ Names and Residential Addresses ....................................................................... 15
Investment Committee .............................................................................................................. 15
The Disciplinary Committee ..................................................................................................... 16
Project Management and Other Staff ........................................................................................ 16
Farm Staff.................................................................................................................................. 16
8. Marketing Strategy................................................................................................................ 18
Assumptions .............................................................................................................................. 19
9. Proforma Financial Statements ............................................................................................. 20
Funding Request ........................................................................................................................ 20
Financing & Bank Loan Amortization ...................................................................................... 21
Collateral / Security................................................................................................................... 21
Inputs Costs per Cycle............................................................................................................... 22
Pro Forma Income Statement .................................................................................................... 23
Revenue Projections .................................................................................................................. 24

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 Pro Forma Annual Cash FlowSatement .................................................................................... 25
Monthly Cash Flow Statement .................................................................................................. 26
Pro Forma Balance Sheet .......................................................................................................... 31
Break-even Analysis ................................................................................................................. 31
Payback Period .......................................................................................................................... 32
10. Risk and Mitigatory Measures ........................................................................................... 33
11. Appendices ......................................................................................................................... 35
12.1. Registration Certificate ............................................................................................... 35
12.2. 2020 Audited Financial Statements ............................................................................ 36
a) Income Statement ........................................................................................................... 36
b) Balance Sheet ................................................................................................................. 36
12.3. Association Shareholding ........................................................................................... 37

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Executive Summary

Sitau Association business idea is to sell super grade beef for profit from cattle fattened at its
farm. The Association will purchase low weight and cheaper but healthy animals from beef
animals’ producers, and increase their weight, and quality to super grade through the feedlot
model.

The targeted cattle will be purchased from the farmers’ livestock markets, and homes and
transported to our farm which is located about 60km from Nairobi City. The association will
then feed the cattle in circles of 90 days. During this period, we expect the cattle to increase in
weight by about xx %, and beef quality to super grade. We will then sell the cattle, and make a
profit from the difference of purchase and fattening costs. We will continuously do this
throughout the year.

The inputs for the fattening/feed lotting process include; hay, animal feeds, salts, Acharizides
sprays, animal care labour, and occasional animal health monitoring veterinary services. Our
estimations show that both the cost of buying low weight animal and total fattening cost will be
well catered by the sale price leaving a healthy profit.

Most important to us is our financial success and we believe this will be achieved by offering
high-quality fattened cattle while minimizing costs. We have created financial projections based
on our experience and knowledge of livestock trade and the fattening area. With a start-up
expenditure of $46,710 we can generate $169,400 in sales by the end of the first year, and
produce good net profits.

We are seeking a loan of $30 000 to fund some of our start-up costs.

We look forward to discussing this proposal with Absa Kenya Ltd

Sincerely,

David Rimpa

Chairman
Sitau Association

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 1. About Sitau Association
Sitau Association based in Kajiado County, Kenya was founded by six members meeting on 6th
March 2018 at Greengos, Kiserian town who started off by 6 members contributing Kshs 6,000
with the vision of mobilizing savings and provide an economic development forum for members.
The association was registered as society number 77743 in September the same year under the
Societies Act of the Laws of Kenya. The Association progressively developed as a constitution
was put in place, registration of more members was done and new investment projects were
initiated. The Association initially proposed to set a target of Kshs 400,000 in year 1 which was
attained way before the end of 2018. This encouraged members to match forward since to
higher achievements and looks forward to greater success investing and trading in agri-based
and natural resources businesses.

1.1. Mission, Objectives and Keys to success

Mission
The mission of the Association is to social-economically empower members through pooling of
savings, and prudent investment in agri-based and natural resources income generating, and
social impact projects including: 1) beef cattle fattening, 2) hay and dairy production, 3) bee
keeping production, 4) conservation for carbon trading.

Vision
Economically empowered member households with access to; food security, clean water,
tertiary education, health insurance and basic housing needs.

Core Values
i. Integrity
ii. Professionalism
iii. Teamwork
iv. Self-reliance & Sustainability
v. Transparency & Accountability

Slogan
We are better together

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2. Cattle Fattening Business Model

Feedlotting (also called pen fattening) involves the feeding of beef cattle with a protein balanced,
high-energy diet for a period of 70 to 100 days under confinement to increase live weights and
improve degree of finish and thus obtain better grades at the abattoir. Pen fattening enables the
animals to express fully their genetic potential for growth. It also enables the profitability of beef
production to be maximized, provided the beef price to feed cost ratio is favorable.
The aim of pen feeding is to transform feed into meat of a required quality as efficiently as
possible. The best measure we have of this in the live animal is food conversion efficiency/ratio
(FCE/FCR) i.e. kg of feed per kg live weight gain e.g. if 8Kg of feed leads to 1 Kg live weight
gain of the cattle, then the FCR is 8:1. The lower the FCR, the more profitable you become.
It is important to emphasize the efficiency of feed use as if you subtract the induction cost of the
animal; food constitutes some 90% of the remaining variable costs. So together with the
slaughter price of the animal, feed has the major influence on the profitability of your feedlot
operation.

Reasons for Pen fattening

Reasons for pen fattening can be summarized as:
 To add extra weight to stock at a younger age and thus increase turnover and maximize
output from the beef enterprise
 To improve the degree of fatness and fleshiness (finish) of the carcass in order to achieve
higher grades and better prices
 To take advantage of seasonal beef price fluctuations at the abattoirs. Prices are generally
favorable from October to February.

The basic principles of pen fattening

A beef carcass comprises muscle, fat and bone. At birth, there is very little fat in a carcass and
initial development is mainly bone and muscle growth. As the animal matures and gains mass, a
stage is reached when fat deposition accelerates. Once an acceptable level of carcass fat is
reached, an animal is said to be finished and can be slaughtered. The live mass and fat content
considered acceptable for slaughter should be decided by market demand.
Feeding energy is the pacesetter for meat production and performance in the feedlot exercise.
Energy consumed in excess of maintenance requirements is used for muscle tissue synthesis
(beef production), and the efficiency of energy use above maintenance remains constant. Hence
the greater the energy intake by an animal above maintenance the smaller the maintenance cost
per unit of gain and the cheaper the gain becomes.
Generally, as the digestibility of feed increases, so does the voluntary feed intake up to certain
limits. The combined effects of high digestibility and high intake, together with higher net
efficiency, means the efficiency of use of energy will be greater if cattle are fed ad lib with diets
of high digestibility or a high level of metabolisable energy (ME). Total feed consumed, net
digestive efficiency, cost per unit of feed and return per kilogram of meat sold, other
management costs and the optimum length of the feeding period determines margins realized.
Feeding cattle in order to obtain the right amount of fat on and in the muscle, and a higher
carcass mass, can be done in many ways. The most common practices include:

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1. Grazing on veld. Usually steers have to remain on the veld until they are two years or older
before a suitable carcass fat content is reached. Cows are frequently fattened on good
summer veld and achieve good finish in a reasonably short period of time.
2. Planted pastures can be used for fattening and growing out animals and the growth rates
achieved are better than on veld. The most common practice is the use of annual ryegrass,
where weaners go on to the pasture at weaning in autumn and are ready for market by
Christmas. Although summer pasture can be used, this practice is often not successful
because feeding starts in spring when the price of feeders is relatively high and finished
animals are only ready in autumn, when beef prices are relatively low.

3. The majority of cattle marketed through abattoirs come from feedlots. These include:

 On-farm feedlots. Many farmers fatten animals in pens or large paddocks, using
bought-in or home-grown feeds. The livestock can be home produced or purchased
animals.
 Commercial feedlots are probably the major method of finishing livestock. The
feed lotter, often a speculator, buys animals for the feedlot. Ownership of the
animal, and therefore the risk associated with feeding, are the responsibility of the
feedlot owner. There are also custom feedlots, where the feedlot operator does not
buy animals, but the owner of the animal sends them to be fattened e.g. to Montana
Meats. In the latter case, risk usually remains with the owner of the animal.

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Products
Our end products will consist of many species of high grade fattened to produce super grade
beef. We will manage our cattle systematically, in feedlots, feeding them with quality, nutritious
feeds, till they reach the target weight.

Keys to Success

 Commitment to Innovation, achievement of quality results and profitability

 Purchasing good breeds of cattle at a low price
 Giving the cattle high quality feed
 Providing the required medication and vaccination to cattle
 Minimizing operating costs
 Integrity and accountability

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3. Industry Analysis

Type of Cattle Producers

The producers of cattle within our country can be divided into the following segments:
Commercial Farming Areas
These include large scale commercial farms and small scale commercial areas. Large-scale
commercial farming is well organized and financed and has large herds of cattle. An individual
farmer/Association will a farm to undertake crop and livestock production. Commercial farms
have large sized herds of cattle.
Commercial farms are aimed at profit maximization and specific production goals (e.g. meat or
milk). Cattle are kept in paddocks; grazing is controlled and improved forage species are
sometimes introduced. Rotational grazing is mostly practiced in commercial farms. Cattle are
the main livestock type, supplying draught, milk, manure and meat to their owners. The farmers
in commercial farming areas supply their cattle to abattoirs and butcheries.
Rural Areas
Farmers live in villages and have areas for cropping and common grazing lands. They have small
sized herds of cattle. Cattle management systems and production in rural farming systems differ
significantly with commercial systems. The reasons for keeping livestock are very diverse in
rural systems. Herding of cattle is the most common method of cattle rearing in the rural areas.
Cattle are herded during the day and penned at night. In cases where there is limited grazing
land, all the cattle from the entire village may be considered as a single interbreeding flock with
no attempts of controlling mating. Herds from different households of the same village, however,
may graze separately where there are vast tracts of grazing land. Following crop harvesting,
cattle herds are let loose to feed on crop residues until the beginning of the rainy season, when
the cattle have to be herded. The low intake of poor quality feed often limits production.
Indigenous cattle are valuable reservoirs of genes for adaptive and economic traits, in providing
diversified genetic pool, which can help in meeting future challenges resulting from possible
changes in climatic conditions, production dynamics and consumer requirements.
Communal cattle are rarely supplemented with commercial feeds or improved legume fodder
resulting in low intake of poor quality feed, which often limits livestock productivity. Since
feeding is restricted, cattle have little choice of feed, resulting in poor body condition and low
weight gains and a higher predisposition of the animals to endoparasites during the dry season.
Animals move much further away from the homesteads during exceptionally dry seasons
depending on spatial distribution of forage patches and availability of water. Communal cattle
fulfil multiple roles that include milk, manure, draught power, serve as an indication of one’s
wealth status and provision of meat and hides as terminal products. Cattle hides are used to make
drums, tents and mats. Cattle, thus, generate income among communal households through sales
of the animals and their products.
Diseases and parasites are major constraints to rural cattle production and are endemic in most
rural areas. The impact of endo-parasites is mainly high mortalities, dry season weight loss
which reduce fertility through nutrition induced stress. Poor control of diseases has negative
financial and productivity implications as 70% of calves are born during the dry season. The
most common diseases reported by farmers are blackleg, heart-water, babesiosis, anthrax and

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anaplasmolis. The situation is worsened by the unavailability and high cost of drugs and
inadequate veterinary officials. Cattle are also susceptible to external parasites causing
heartwater and massive economic loss to the country

Competition and Buying Patterns

Customers (abattoirs, butcheries etc.) consider the quality of beef when buying. Beef is graded
into different grades. There are usually 6 grades used at abattoirs, which are Manufacturing,
which is the lowest quality beef, followed by Economy, Commercial, Choice and Super beef,
which is the highest quality grade. There is also a grade called Condemned, which is for the
cattle which would have been condemned because of sickness in the body. This grade fetches an
extremely low price, and you may end up in a loss if one of your beasts is condemned. After
cattle fattening, it is expected that your cattle will have the highest quality of beef, which is the
super grade. Some large butcheries only purchase beef from registered abattoirs, thus it will not
be possible for a producer to sell beef directly to them.
Most butcheries buy beef directly from the producers, but they require that the cattle be
slaughtered at registered abattoirs. It is usually a requirement that cattle should be slaughtered in
registered abattoirs. Butcheries are concerned about quality, and price. They want a low price so
that they can have high profits. The price is usually determined by market forces (supply and
demand) and at any point in time, there will be a generally accepted supplier price of beef. The
customers are willing to establish relationships and enter into long term supply agreements with
suppliers who can reliably deliver beef to them when they need it.

4. Association’s PESTEL Analysis

We understand that our business is affected by Political, Economic, Social and Technological
Environmental and Legal factors. Below we look at how those external factors may affect our
business and the assumptions we have made in making this business plan.
PESTEL Analysis Assumptions
Political We expect political stability to continue
Change in regulations which affect the agriculture in the country, and we do not expect any
sector especially cattle farming will affect us. New significant changes in the regulations by
legislation may create risks of non-compliance the government.
with the law, or create new administrative
burdens. The tax policies of the Government will
affect the operations of our business. If the
government increases the taxes for companies, it
will affect the profitability of our business.
Political instability like wars, protests will affect
our business. Changes in employment laws, safety
regulations especially those targeted to the
agriculture industry will affect the operations of
our business. Changes in import tariffs of our

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 inputs or competing products will affect our
business.
Economic We expect continuous economic growth
Interest rates would affect the cost of capital; the and recovery from COVID-19 impacts
rate of interest being directly proportionate to the though at a slow speed. This will mean
cost of capital. Rate of inflation determines the more business for the industry as the
rate of remuneration for employees and directly economy becomes more active and more
affects the price of our products. Again, the people get higher disposable income.
proportion between the inflation rate and
wages/prices is direct. Economic trends act as an
indicator of the sustainability and profitability of
the business in our city, and help us in deciding
your marketing strategy.
Social We expect the population sure but slow
The complex interactions and relationships growth will continue in our country as we
between citizens and non-citizens, and between overcome the COVID-19 impacts and
businesses creates a complex web with particular opening up of borders for increased
purchasing and consumption Behaviour across the number of tourists. This will mean more
country. These trends tend to have seasonality potential customers and greater demand.
with some period of intense and others of low We expect that the current HIV-AIDS
consumptions. The last quarter of the year, and campaigns which are being carried out by
Christmas and end of year festivities tends to be a the government and Non-Government
high consumption season for all kinds of meats, Organizations, will make people more
beef among the top consumed. Increased health conscious, and will lead to a
population health also contributes to high levels of reduction in the cases of HIV-AIDS
consumption which will imply a healthier work force.
Technological
Agri-business, water, and farm and livestock
production technological improvements are
leading improvements in livestock and livestock
products production e.g. more efficient animal
feeds. A good technical infrastructure would lead
to better production, procurement and distribution
logistics, resulting in reduced wastage and lower
costs
Environmental

Legal

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5. Niche Market Analysis

Demand
There is huge demand of beef in our country and below we outline the potential market.

Market Segmentation
Potential customer groups for beef are:

Abattoirs & Auctions

There are many abattoirs in the city which slaughter cattle and buy beef. Note that the price of
beef varies throughout the year, as it is affected by factors such as demand and supply. The price
for beef depends on the grade i.e. quality of the meat. After cattle fattening, it is expected that
our cattle will have the highest quality of beef, which is the super grade. We can also sell our
cattle at Auctions, which are held throughout the country.

Hotels and restaurants and fast food outlets

We can supply our beef to hotels and restaurants. They buy beef in bulky to prepare meals for
their customers. By creating and maintaining good relationships with the hotels and restaurants,
we will end up having long term contracts with them. This will create predictable income and
stability for the Association. The price for our beef if you are supplying to hotels and restaurants
is usually higher than for abattoirs.

Butcheries
Butcheries are big customers for our beef. Many butcheries buy beef from small scale and
medium scale producers. We will have to negotiate for good payment terms, preferably cash. By
creating and maintaining good relationships with the butcheries, we will end up having long term
contracts with them. This will create predictable income and stability for the Association. The
price for our beef if you are supplying to butcheries is usually the same as for abattoirs. When
supplying beef to butcheries, we are required to slaughter the cattle at registered abattoirs,
according to the laws of the country.

Organizations
We can supply your cattle to various organizations like boarding schools, hospitals, prisons and
churches. Selling direct to consumers allows producers to set a price that covers costs and
provides a larger profit.

Individuals
Individuals buy beef in bulky for various reasons including for parties, weddings and family
functions. Selling direct to consumers allows producers to set a price that covers costs and
provides a larger profit.

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6. Production and Operational Strategy
Each production cycle is going to be 90 days long. This means we will have 4 production cycles
every year per feedlot. We are going to have 3 feedlots. We will not fill all the 3 feedlots at once.
This is because we are want to distribute our revenue evenly throughout the year to manage price
and demand risk. We don’t want a situation whereby all our cattle go to the market at once and
then there is low price or low demand. So we will fill the first feedlot in Month 1, second feedlot
in Month 2, and the third feedlot in Month 3. This implies that the cattle from Feedlot 1 will be
sold in Month 3, cattle from Feedlot 2 will be sold in Month 4, and cattle from Feedlot 3 will be
sold in Month 5. We will immediately fill the feedlot with new cattle soon after a cycle ends.
This implies that we will have a continuous source of income every month from the feedlots.
We will buy cattle from the farmers where it is cheap. Each feedlot will be filled with 50 beef
cattle. We will buy 50 cattle at a time, and transport them to our farm which is located close to
the city. The cattle we buy will be approximately 250 Kg each, and because of our good
negotiation skills, will buy each cattle for at $1.2/Kg live weight, meaning cattle weighing
250Kg will be bought for $300.
We will then buy complete feeds from stock feeds Association. The cost for complete feeds is
$0.25/Kg, meaning a 50Kg bag costs $12.50. We will assume that the feed conversion ratio is
8:1, meaning that each cattle will need 8Kg of feed for it to gain 1 Kg live weight. Data shows
that this is a very realistic assumption. Our target is for the cattle to gain 135Kg during their stay
in the feedlots. Thus after the 90 days, they should have a live weight of 250Kg + 135 Kg =
385Kg.
Since our target is for each cattle to gain 135 Kg during the 90 days, it means that:
Average daily weight gain = 135/90 = 1.5Kg.
Since we are assuming a FCR of 8:1, it means that:
Total Feed for each cattle = Total Gain * FCR = 135Kg*8 = 1080Kgs.
Feed costs = Total feed * feed cost/Kg = 1080 * 0.25 = $270
We will assume a dressed percentage of 55% dressed weight. This means that after slaughtering
the cattle, its dressed weight will be 55% of its live weight, meaning
Dressed Weight = 0.55 * 385 Kg = 211.75 Kgs.
After 90 days, the cattle will be supplied to an abattoir in the city. We will assume that the grade
of the beef after 90 days is super grade (that’s the purpose of feedlotting, with the right feed it
will attain this grade), and we will assume that the abattoir will buy super grade beef at $4/Kg.
Thus each cattle will fetch 211.75Kg*4 = $847

Calculation of the margins

Beef: Maize
If you are using concentrates, you will have to mix them with maize, and this ratio will directly
affect you. Even if you are using complete stock feeds, price of maize will matter, as stock feeds
are made from maize, thus increase in maize price will lead to increase in the price of stock
feeds. Maize is assumed to cost $0.3/Kg, which translates to $300/ton.
Beef: maize = price ratio of beef to maize = $4/Kg: $0.3/Kg = 13.3:1
This ratio is favorable.
Price Margin

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Since the dressing percentage is 55%, and the dressed beef price is $4/Kg, it means that the live
weight price at slaughter (sales price/Kg) is 0.55*4 = $2.20. The cost price/Kg has been assumed
to be $1/Kg.
Price margin = Initial live mass * (sale price/kg - cost price/kg)
= 250 * (2.20-1)
= $300/head
= $6 000 for 20 cattle
The ratio is positive and favorable.
Feed Margin
Cost/Kg gained refers to the cost of feed.
Feed margin = Live mass gain * (sale price/kg - cost/kg gained)
= 135Kg * ($2.2 – ($270/135))
= $27 /head
= $540 for 20 cattle
This ratio is positive and thus favorable.

Profit Margin
Assume other costs per cycle (3 months), are $1200. These costs include fixed and variable costs
(for one feedlot), but exclude feed costs and costs of buying the cattle.
Profit margin = Price Margin + Feed Margin – Other costs (Excluding feed costs)
= $6000 + $540 – $1200
= $5340
This profit margin is favorable. Thus it makes sense for us to go into the cattle fattening
business.

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7. Business and Project Management

Board of Directors (Management Committee)

The association is governed by a management committee of 9 members per its constitution. The
MC oversees the overall business and activities of the association, receives, review and approves
investment proposals from the investment committee and organizes AGMs for members. It
presents new business investment and business proposals for approval by the association
Directors’ Names and Residential Addresses
Executive Position Home/Residential
Committee Address
Executive member-Chairman Keekonyokie
1. David Rimpa South/Oltiyani
2. Christine Executive member-Vice Chairlady Keekonyokie South
Parkesian /Oloisho Oibor
Executive member-Secretary Keekonyokie South
3. Elijah Marona /Oloisho Oibor
Executive member-Treasurer Keekonyokie South
4. Samuel Kutit /Oloisho Oibor
Executive member-Patron Keekonyokie South
5. Philip Koitelel /Ilmasin
Investment Committee-Chair Investment Keekonyokie South
6. Musa Kaitei committee /Oloisho Oibor
7. Eliud Santaine Investment Committee-Youth Keekonyokie South
Kako Representative /Oloisho Oibor
Investment Committee-Women Keekonyokie South
8. Sarah Kilenyi Representative /Oloisho Oibor
Investment Committee-Diaspora
9. Elijah Metekai Representative Keekonyokie South /USA

All the board members live within Keenyokie South Ward, and radius of about 20km.

Investment Committee
The Investment committee is responsible for vetting and researching investment ideas from
members’ and presenting to the management committee for approval. They are also responsible
for ensuring proceeds from investment projects are accounted for and used appropriately for the
benefit of members/shareholders.

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The Disciplinary Committee
The DC is responsible for receiving, vetting, and managing disciplinary cases forwarded by
members and any other committee of the association. The DC will inform the MC of their
findings and receives its input before they make decisions on the optional causes of action for the
discipline of members in line with the constitution and AGM resolutions of the association.

Project Management and Other Staff

The Association MC and general manager are responsible for identifying and appointing project
managers and senior staff to ensure all investment projects are appropriately and optimally
staffed for profitability. The General Manager is responsible for the day to day running of the
Association’s Secretariat and overall staff performance and management, success of the
investment projects and Association profitability.
General Manager’s Profile
Mr. Timos Partaati is the Association’s General Manager.
Experience Overview: Mr. Partaati is a successful businessman who has been rearing cattle at a
small scale for over 10 years. He has over 15 years working experience as a supervisor and an
operations manager for different companies. He holds a Degree in Business Management and a
Diploma in Farming Methods
Working Experience: ProHaven Limited, Operations Manager, 2007-2019 and Synety Limited,
Supervisor, 2002-2007

Farm Staff
The association will recruit a project manager, accounts assistant and farm staff for this project.
The General Manager will be responsible for on boarding all the project staff and thereafter the
project manager will be responsible for the identification, purchase, transportation of the project
animals from farmers to the farm. The project manager will be responsible for the day to day
running and management of the farm activities assisted by the farm staff.
The farm manager, assisted by the farm staff will be responsible for identifying livestock traders
who will purchase the fattened animals at the farm, and occasionally for the transporting of the
fattened animals to the livestock market for sale. Farm Animals sales proceeds will be deposited
directly to the association Account by the buyer livestock trader, and banking slips received by
the farm manager as evidence of the sale.

Farm Manager

In conjunction with the general manager, the farm manager will be responsible for whole farm
strategic and business operations planning, business management including;

 Staff recruitment, supervision and performance management,

 Training new workers
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 Maintenance and repair of facilities and equipment, such as cattle pens
 Day-to-day operational decisions
 Responsible for ordering and purchasing farm tools and equipment
 Livestock sales and banking of proceeds.
 Farm monthly reports to the general manager.

Accountant (Part time)

the part time farm Accountant will be responsible for farm Business strategic and operational
planning, business management, accounting and financial management reporting including:

 Review draft farm business plans and budgets

 Analyze business operations, trends, costs, revenues, financial commitments, and
obligations, to project future revenues and expenses or to provide advice.
 Prepare, examine, and analyses accounting records, financial statements, and other financial
reports to assess accuracy, completeness, and conformance to reporting and procedural
standards.
 Develop, maintain, and analyses budgets, preparing periodic reports that compare budgeted
costs to actual costs.
 Compute taxes owed and prepare tax returns, ensuring compliance with payment, reporting
and other tax requirements.

Farm Workers

The farm staff (4) will include; two feeding officers, two security officers. The farm workers will
be responsible for:

 Putting up and repairing and maintaining farm fences

 Removing shrubs and ensuring hay development is optimal
 mowing grass, hay baling and storage
 Feeding the cattle
 Miscellaneous chores which includes include; medicating, vaccinating, repairing equipment,
removing caked litter

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8. Marketing Strategy
Our Association will attempt to rapidly achieve awareness in the city about its business in the first
year. To be successful in this business, we should have many customers. Our marketing strategy is
based upon the marketing mix, which are the 4 p’s of marketing, which are product (service), price,
promotion and place (distribution).
Product
Our fattened cattle will be of high quality, with super grade beef, and also healthy. The cattle’s
appearance will be very attractive. Customers will be pleasantly surprised at how attentive we are in
regards to their needs. The business operates on the assumption that it will do whatever is reasonably
necessary to keep the customer happy. This reflects the notion that if the customer is kept happy;
long-term profits are ensured.
Value Proposition
We value our relationships with current and future customers and hope to communicate our
appreciation to them through our outstanding, guaranteed product quality, personal service, and
efficient delivery. Our commitment to our customers and our country will be reflected through
honest and responsible business. We will provide a safe, friendly working environment for our
employees.
Price
We will try and minimize our production costs so that we can offer a more competitive price on the
market. The price of the cattle will be determined by market forces. It will depend on the weight and
grade of the beef.

Promotion
i. Word of Mouth
Word of mouth advertising via quality products will be used to market our Association. We will give
incentives to customers who refer others to our farm. We will spread the word of our cattle in our
community. We will also use our personal networks to identify new customers. We will talk to
family and friends; inform the local church community; showcase products at community functions.
We will use word of mouth to advertise our cattle to the local butcheries and abattoirs.
ii. Fliers
Our marketing strategy will include the use of fliers which are going to be distributed to butcheries,
schools, churches, supermarkets, hotels and fast food outlets. These fliers will be well designed,
attractive and very informative, containing our prices, contact details and products which we sell. We
hope to get potential customers from the distribution of fliers. We will also offer monthly calendars
to our customers.
iii. Newspapers
We will place adverts in the daily and weekly newspapers so that more people can be aware of farm
products. Placing our advert in the weekly newspaper will ensure that our advert will be read the
whole week as it is a weekly newspaper. It will also ensure that we reach all age groups as it is a
family newspaper. Weekly newspapers have a wide coverage in the country and are read by many
people.

18
iv. Public Transport Advertising
We will advertise our farm products on commuter omnibuses which commute from the CBD to
different locations. This will make more people aware of our products.
v. Internet Marketing
The Association’s website will be a dynamic marketing tool for the Association. The website will
provide information about our products for target customers. As the Association grows, its recruiting
needs can be addressed by posting carrier opportunities and Frequently Asked Questions about the
Association.
Place/Distribution
Our farm will be located close to the city, which is our intended market. We will distribute our
products in all parts of the city.

Estimated Sales Projections

SA estimates that it shall be able to sell a batch of 20 fattened cattle per feedlot and 60 fattened cattle
in 3 feedlots every 3 months for a total of 180 cattle in the first year alone. It will scale up the
number of animals by 10 per feedlot in the second year and by 10 again in the 3rd year for the 3 years
of the project reaching 270 animals in year 2 and 360 animals in year 3. This translates to average
annual sales of more than US$200 000 as illustrated in the table below.

Assumptions
Item
Sales Calculation Factors Year 1 Year 2 Year 3
#
A Average Number of Cattle per feedlot 50 75 100
B Number of feedlots 3 4 4
C Total number of cattle per batch 150 225 300
Number of cattle batches /Year ( 1 every
D 3 3 3
3 months)
E Total number of cattle for sale in a year 450 675 900
F Average Initial Weight (KG)/ cattle 250 250 250
G Target Weight (KG)/Cattle in 3 months 385 385 385
H Net Gain 135 135 135
I Feed Conversion Ratio 8 8 8
J Dressed Weight percentage 55% 55% 55%
K Dressed Weight/Animal 212 212 212
M Super Beef Price IN $ /KG 4 4 4
N Total Sales per batch (C*K*M) 127,050 190,575 254,100

O Total Sales per Year(E*K*M) 381,150 571,725 762,300

19
9. Proforma Financial Statements

Funding Request
Start-up Costs in US $
Item No of Units Unit Cost Total Cost $
Staff (6) Salary Months 12 900 10,800
Hay production Land (300 acres) Leasing 300 100 30,000
Leased land Fencing 300 140 42,000
4 WD pickup for farm transport 1 45,000 45,000
Building: Feedlot Construction 300 animals
300 220 66,000
capacity
Feeding Equipment per feeding lot 3 600 1,800
Drinking Equipment per feeding lot 3 480 1,440
Veterinary & Salts Supplies 600 10 6,000
Water bills 600 27 16,200
Feeders (Cattle for fattening) purchase per
150 300 45,000
batch
Animal Feed 150 270 40,500
Transport To farm (After buying feeders) 150 10 1,500
Transport to market (To sell fattened cattle) 150 10 1,500
Repairs and Maintenance 1 1000 1,000
Marketing and Advertising 12 46 550
Farm Fuel/Transport 12 200 2,400
livestock Insurance 600 20 12,000
Association Registration 1 500 500
Other Expenses 12 100 1,200

Start-up Costs Grand Total $ 325,390

SA Equity Capital 25,390

Loan Requested 300,000
325,390

20
Financing & Bank Loan Amortization
Sources of Capital Amount
Bank Loan $300,000
Owner's Equity Cash Injection $25,390
Total Start-up Cash Capital $325,390.00
Existing Business Fixed Assets $0.00
Total Start-up Capital $325,390.00

The table above shows that the total cash capital required to do this project is $325,390.00. The
owners of the business will contribute $25,390 of their own funds into the business. We thus
require a loan of $300 000.

Bank Loan Amortization $

Loan Amount 300,000.00
Repayment Term in Months 36
Interest Rate (percentage) 12%
Monthly Payment 9,964

The table above shows that we will be making a monthly repayment of $9964.3 for 36 months to
repay the loan.

Collateral / Security
Title Deeds to a residential property valued over $100 000.

21
Inputs Costs per Cycle
Feed Requirements Calculator Year 1 Year 2 Year 3
Total Feed Required(KG)/Cycle/head 1080 1080 1080
Price per KG 0.25 0.25 0.25
Feed Cost/head 270 270 270

Inputs Costs Forecasts per head per cycle Notes Year 1 Year 2 Year 3

Feed Cost per head 270 150 150

Veterinary & Salts Supplies Cost per head 10 10 10
Feeders (Cattle for fattening) Cost per head 300 300 300
Transport To farm (After buying feeders) Cost per head 10 10 10

Transport to market (To sell fattened cattle) Cost per head 10 10 10

Water bills ( 50 Litres /head /day * 90 days) Cost per head 27 14 14
livestock Insurance premium Cost per head 20 20 20
Other Inputs Costs 3 Cost per head 0 0 0
Total Inputs Costs/head 550 550 550

Number of cattle sold (batch started in current year) 450 675 900
Total Input Costs 247,500 371,250 495,000

22
Pro Forma Income Statement

Income Year 1 Year 2 Year 3

Sales 508,200 762,300 1,016,400

Total Income 508,200 762,300 1,016,400

Variable Direct Costs
livestock Feed 121,500 101,250 180,000
Water bills 16,200 9,450 16,800
Veterinary & Salts Supplies 4,500 6,750 12,000
Feeders (Cattle for fattening) 180,000 270,000 360,000
Transport To farm (After buying
6,000 9,000 12,000
feeders)
Transport to market (To sell fattened
4,500 9,000 12,000
cattle)
livestock Insurance 12,000 18,000 24,000
Total Cost of Sales 344,700 423,450 616,800
Gross Profit 163,500 338,850 399,600
Operating Expenses
Salaries 10,800 10,800 10,800
Fuel/Transport 2,400 2,400 2,400
Car maintence & servicing 450 600 750
Marketing and Advertising 550 550 550
Repairs and Maintenance 1,000 1,000 1,000
Association Registration 500
Other Expenses 1,200 1,800 2,400
Land leasing 30,000 30,000 30,000
Loan Repayment 99,643 119,572 119,572

Total Expenses Before Tax 146,543 166,722 167,472

Profit before Tax 16,957 172,128 232,128

Tax( 30% of net profit) 0 51,639 69,639
Net Profit 16,957 120,490 162,490

23
Revenue Projections
Item # Sales Calculation Factors Year 1 Year 2 Year 3
A Average Number of Cattle per feedlot 50 75 100
B Number of feedlots 3 4 4
C Total number of cattle per batch 150 225 300
D Number of cattle batches /Year ( 1 every 3 months) 3 3 3
E Total number of cattle for sale in a year 450 675 900
F Average Initial Weight (KG)/ cattle 250 250 250
G Target Weight (KG)/Cattle in 3 months 385 385 385
H Net Gain 135 135 135
I Feed Conversion Ratio 8 8 8
J Dressed Weight percentage 55% 55% 55%
K Dressed Weight/Animal 212 212 212
M Super Beef Price IN $ /KG
4 4 4
N Total Sales per batch (C*K*M)
127,050 190,575 254,100

O Total Sales per Year(E*K*M)

381,150 571,725 762,300

24
Pro Forma Annual Cash Flow Statement
Year 1 Year 2 Year 3
Opening Balance 0 188,267.07 274,331.31

Sales 508,200.00 762,300.00 1,016,400.00

Subtotal Cash from Operations 508,200.00 762,300.00 1,016,400.00

Additional Cash Received

Start-up Capital: Equity 25,390.00 - -
Bank Loan 300,000.00 - -
Subtotal Cash Received 325,390.00 0.00 0.00
Total Cash inflow 833,590 762,300 1,016,400
Cash Expenditures
Inputs (Direct Costs) 344,700.00 423,450.00 616,800.00
Operating Expenses 16,900.00 17,150.00 17,900.00
Subtotal Spent on Operations 361,600.00 440,600.00 634,700.00
Additional Cash Spent
Land Purchase/Leasing 72,000.00 30000 30000
Buildings 66,000.00 0 0
Purchase Motor Vehicles 45,000.00 0 0
Purchase Equipment 1,080.00 0 0
Loan Repayment 99,642.93 119,571.52 119,571.52
Taxes 0.00 51,638.55 69,638.55
Dividends 0.00 34,425.70 46,425.70
Subtotal Additional Cash Spent 283,722.93 235,635.76 265,635.76
Total Cash Outflow 645,322.93 676,235.76 900,335.76
Net Cash Flow 188,267.07 86,064.24 116,064.24
Cash Balance 188,267.07 86,064.24 116,064.24

25
Monthly Cash Flow Statement
Year 1
Month
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 TOTAL
12

CASH INFLOWS
Equity Capital 25,390 - - - - - - - - - - - 25,390
Loan Capital 300,000 - - - - - - - - - - - 300,000
Revenue - - 127,050 127,050 127,050 127,050 508,200

Total Receipts 325,390 0 127,050 0 0 127,050 0 0 127,050 0 0 127,050 833,590

CASH OUTFLOWS
Variable Direct
Costs
livestock Feed 10,125 10,125 10,125 10,125 10,125 10,125 10,125 10,125 10,125 10,125 10,125 10,125 121,500
Water bills 1350 1350 1350 1350 1350 1350 1350 1350 1350 1350 1350 1350 16,200
Veterinary & Salts
375 375 375 375 375 375 375 375 375 375 375 375 4,500
Supplies
Feeders (Cattle for
45,000 0 0 45,000 0 0 45,000 0 0 45,000 0 0 180,000
fattening)
Transport To farm
(After buying 1,500 0 0 1,500 0 0 1,500 0 0 1,500 0 0 6,000
feeders)
Transport to
market (To sell 0 0 1,500 0 1,500 1,500 0 4,500
fattened cattle)
livestock Insurance 3000 - - 3000 - - 3000 - - 3000 - - 12,000
61,350 11,850 11,850 62,850 11,850 11,850 62,850 11,850 11,850 62,850 11,850 11,850 344,700
Operating
Outflows
Salaries 900 900 900 900 900 900 900 900 900 900 900 900 10,800
Fuel/Transport 200 200 200 200 200 200 200 200 200 200 200 200 2,400
Care maintence &
0 0 0 150 0 0 150 0 0 150 0 0 450
servicing
Marketing and
46 46 46 46 46 46 46 46 46 46 46 46 550
Advertising
Repairs and
111 111 111 111 111 111 111 111 111 1,000
Maintenance
Association
500 - - - - - - - - - - - 500
Registration
Other Expenses 100 100 100 100 100 100 100 100 100 100 100 100 1,200

26
 1746 1246 1246 1507 1357 1357 1507 1357 1357 1507 1357 1357 16900
Other Outflows
Land leasing 30,000 - - - - - - - - - - - 30,000
Leased land
42,000 42,000
Fencing
Building 1: Feedlot
Construction/Exten 66,000 - - - - - - - - - - - 66,000
sion
4 WD pickup farm
45,000 45,000
transporter
Feeding Equipment 600 - - - - - - - - - - - 600
Drinking
480 - - - - - - - - - - - 480
Equipment
Loan Repayment 9964 9964 9964 9964 9964 9964 9964 9964 9964 9964 99,643
184,080 0 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 283,723
Total Payments 247,176 13,096 23,060 74,321 23,171 23,171 74,321 23,171 23,171 74,321 23,171 23,171 645,323
Tax( 30% of net
0 0 0 0 0 0 0 0 0 0 0 0 0
profit)
Dividend ( 20% of
0 0 0 0 0 0 0 0 0 0 0 0 0
Net Profit)
SURPLUS /
78,214 -13,096 103,990 -74,321 -23,171 103,879 -74,321 -23,171 103,879 -74,321 -23,171 103,879 188,267
(DEFICIT)
OPENING BANK
78,214 65,118 169,108 94,787 71,616 175,494 101,173 78,002 181,881 107,560 84,388
BALANCE
CLOSING BALANCE 78,214 65,118 169,108 94,787 71,616 175,494 101,173 78,002 181,881 107,560 84,388 188,267 188,267

Year 2
Month Month Month Month
Month 13 Month 14 Month 16 Month 17 Month 19 Month 20 Month 22 Month 23 TOTAL
15 18 21 24

CASH INFLOWS
Revenue 190,575 190,575 190,575 190,575 762,300

Total Receipts 0 0 190,575 0 0 190,575 0 0 190,575 0 0 190,575 762,300

CASH OUTFLOWS
Variable Direct
Costs
livestock Feed 8,438 8,438 8,438 8,438 8,438 8,438 8,438 8,438 8,438 8,438 8,438 8,438 101,250
Water bills 788 788 788 788 788 788 788 788 788 788 788 788 9,450
Veterinary & Salts
563 563 563 563 563 563 563 563 563 563 563 563 6,750
Supplies
Feeders (Cattle for
67,500 - - 67,500 - - 67,500 - - 67,500 - - 270,000
fattening)

27
Transport To farm
(After buying 2,250 - - 2,250 - - 2,250 - - 2,250 - - 9,000
feeders)
Transport to
market (To sell 2,250 - - 2,250 - - 2,250 - - 2,250 - - 9,000
fattened cattle)
livestock Insurance 4,500 - - 4,500 - - 4,500 - - 4,500 - - 18,000
86,288 9,788 9,788 86,288 9,788 9,788 86,288 9,788 9,788 86,288 9,788 9,788 423,450
Operating
Outflows
Salaries 900 900 900 900 900 900 900 900 900 900 900 900 10,800
Fuel/Transport 200 200 200 200 200 200 200 200 200 200 200 200 2,400
Care maintence &
200 200 200 600
servicing
Marketing and
46 46 46 46 46 46 46 46 46 46 46 46 550
Advertising
Repairs and
83 83 83 83 83 83 83 83 83 83 83 83 1,000
Maintenance
Other Expenses 150 150 150 150 150 150 150 150 150 150 150 150 1,800
1,379 1,379 1,379 1,579 1,379 1,379 1,579 1,379 1,379 1,379 1,579 1,379 17,150
Other Outflows
Land leasing 30,000 - - - - - - - - - - - 30,000
Leased land
- - - - - - - - - - - - -
Fencing
4 WD pickup farm
- - - - - - - - - - - - -
transporter
Building 1: Feedlot
Construction/Exten - - - - - - - - - - - - -
sion
Feeding Equipment - - - - - - - - - - - - -
Drinking
- - - - - - - - - - - - -
Equipment
Association
- - - - - - - - - - - - -
Registration
Loan Repayment 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 119,572
39,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 149,572
Total Payments 127,631 21,131 21,131 97,831 21,131 21,131 97,831 21,131 21,131 97,631 21,331 21,131 590,172
Tax( 30% of net
- - - - - - - - - - - 51,639 51,639
profit)
Dividend ( 20% of
- - - - - - - - - - - 34,426 34,426
Net Profit)
Total Costs 127,631 21,131 21,131 97,831 21,131 21,131 97,831 21,131 21,131 97,631 21,331 107,195 676,236
SURPLUS /
(127,631) (21,131) 169,444 (97,831) (21,131) 169,444 (97,831) (21,131) 169,444 (97,631) (21,331) 83,380 86,064
(DEFICIT)

28
OPENING BANK
188,267 60,636 39,505 208,949 111,118 89,987 259,431 161,600 140,469 309,913 212,282 190,952
BALANCE
CLOSING BALANCE 60,636 39,505 208,949 111,118 89,987 259,431 161,600 140,469 309,913 212,282 190,952 274,331 274,331

Year 3
Month Month Month Month
Month 13 Month 14 Month 16 Month 17 Month 19 Month 20 Month 22 Month 23 TOTAL
15 18 21 24

CASH INFLOWS
1,016,40
Revenue 254,100 254,100 254,100 254,100
0

1,016,40
Total Receipts 0 0 254,100 0 0 254,100 0 0 254,100 0 0 254,100
0

CASH OUTFLOWS
Variable Direct
Costs
livestock Feed 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 180,000
Water bills 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 1,400 16,800
Veterinary & Salts
1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Supplies
Feeders (Cattle for
90,000 - - 90,000 - - 90,000 - - 90,000 - - 360,000
fattening)
Transport To farm
(After buying 3,000 - - 3,000 - - 3,000 - - 3,000 - - 12,000
feeders)
Transport to
market (To sell 3,000 - - 3,000 - - 3,000 - - 3,000 - - 12,000
fattened cattle)
livestock Insurance 6,000 - - 6,000 - - 6,000 - - 6,000 - - 24,000
119,400 17,400 17,400 119,400 17,400 17,400 119,400 17,400 17,400 119,400 17,400 17,400 616,800
Operating
Outflows
Salaries 900 900 900 900 900 900 900 900 900 900 900 900 10,800
Fuel/Transport 200 200 200 200 200 200 200 200 200 200 200 200 2,400
Care maintence &
250 250 250 750
servicing
Marketing and
46 46 46 46 46 46 46 46 46 46 46 46 550
Advertising
Repairs and
83 83 83 83 83 83 83 83 83 83 83 83 1,000
Maintenance
Other Expenses 200 200 200 200 200 200 200 200 200 200 200 200 2,400
1,429 1,429 1,429 1,679 1,429 1,429 1,429 1,679 1,429 1,429 1,429 1,679 17,900
Other Outflows

29
Land leasing 30,000 - - - - - - - - - - - 30,000
Leased land
- - - - - - - - - - - - -
Fencing
4 WD pickup farm
- - - - - - - - - - - - -
transporter
Building 1: Feedlot
Construction/Exten - - - - - - - - - - - - -
sion
Feeding Equipment - - - - - - - - - - - - -
Drinking
- - - - - - - - - - - - -
Equipment
Association
- - - - - - - - - - - - -
Registration
Loan Repayment 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 119,572
39,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 9,964 149,572
Total Payments 160,793 28,793 28,793 131,043 28,793 28,793 130,793 29,043 28,793 130,793 28,793 29,043 784,272
Tax( 30% of net
- - - - - - - - - - - 69,639 69,639
profit)
Dividend ( 20% of
- - - - - - - - - - - 46,426 46,426
Net Profit)
Total Costs 160,793 28,793 28,793 131,043 28,793 28,793 130,793 29,043 28,793 130,793 28,793 145,108 900,336
SURPLUS / 225,306. 225,306. 225,306. 108,992. 116,064.
(160,793.4 (28,793.4 (131,043.4 (28,793.4 (130,793.4 (29,043.4 (130,793.4 (28,793.4
(DEFICIT) 54 54 54 30 24
6) 6) 6) 6) 6) 6) 6) 6)
OPENING BANK
86,064 (74,729) (103,523 121,784 (9,260) (38,053) 187,253 56,460 27,417 252,723 121,930 93,136
BALANCE
)
CLOSING BALANCE (74,729) 121,784 (9,260) (38,053) 187,253 56,460 27,417 252,723 121,930 93,136 202,128 116,064
(103,523)

30
Pro Forma Balance Sheet

Year 1 Year 2 Year 3

Long Term Assets
Land lease 72,000 102,000 132,000
Buildings 66,000 66,000 66,000
Motor Vehicles 45,000 45,000 45,000
Equipment 1,080 950 836
Accumulated Depreciation (13,450) (13,434) (13,420)
Total Long Term Assets 170,630.40 200,516.35 230,415.99
Current Assets
Cash 188,267.07 86,064.24 116,064.24
Inventory 0.00 0.00 0.00
Other Current Assets 0.00 0.00 0.00
Total Current Assets 188,267.07 86,064.24 116,064.24
TOTAL ASSETS 358,897.47 286,580.59 346,480.23

EQUITY AND LIABILITIES

Equity
Equity 89,861.47 167,008.59 346,480.23
Total Equity 89,861.47 167,008.59 346,480.23
Liabilities
Bank Loan 269,036.00 119,572.00 0
Other Liabilities - - -
Total Liabilities 269,036.00 119,572.00 0.00

TOTAL EQUITY AND LIABILITIES 358,897.47 286,580.59 346,480.23

Break-even Analysis

Breakeven Analysis Value

Selling Price/Unit 847.00
Variable Cost/Unit 560.00
Annual Fixed Costs 8,984.68
Breakeven point 31

Break Even point units is the number of cattle we need to sell per annum for us to cover all our
costs (fixed and variable costs) i.e. to break even. The breakeven point is reached when revenue
equals all business costs.

31
Payback Period

Initial Year 1 Year 2 Year 3

Investment
Cash Flow from financing Activities -325,390.00 0 0 0
(loan capital)
Cash Flow from operating 188,267.07 86,064.24 116,064.24
activities(excluding loan capital
repayment & dividends)
Cumulative Net Cash flow -137,122.93 -51,058.69 65,005.56
Positive Cash flow? FALSE FALSE TRUE
Payback Period (year 3) 0 0 1
Payback Period (Actual Number of 3
Years)

The payback period is the length of time required to recover the cost of an investment. The
payback period of a project is an important determinant of whether to undertake the project, as
longer payback periods are typically not desirable for investment positions.

32
10. Risk and Mitigatory Measures
To ensure farm business profitability and effective management of its financial responsibilities,
the association will implement the following effective risk management practices

Corporate Governance and Management Risks

 Promote Transparency, Integrity and Professionalism at the governance, management and
staff levels
 Management Board and functional Organogram
 Good planning – finance, marketing, operations
 Professionalism, everything must be above board
Operational Risks
 Checks and balances to curb deficiencies in internal control systems
 Set high standards
 Research
 Control and risk self-assessment to detect errors and acts of frauds
 Self-training and development
 Regular internal and independent audits
Financial Risks
 Sound Financial Management
 Credit Arrangements with Suppliers
 Good Debtors Management
 Effective Cost Controls
Business Risks
 Professional set up
 Action plans – updates, follow ups and feedback
 Adequate funding
 Effective and accurately aligned marketing strategies
 Networking with stakeholders – competitors and suppliers.
 Diversification
Security Risks
 Security controls – checks and balances on and off farm to minimize losses.

Market Risks
 Good marketing strategy
 Ensure Quality Products at all times
 Competitive pricing through continuous market prices Behaviour analysis

33
Liquidity Risk
 Operate under a well-defined budget
 Loan capital
 Arrange credit facilities with suppliers where necessary
Technology Risk
 Technological research and updating
 Staff training and development on ICT.
Legal / Compliance
 Comply with material rules, regulations and laws
 All agreements to be reviewed by the Association’s lawyers
 Ensure required taxation requirements are adhered to.

34
11. Appendices

12.1. Registration Certificate

35
12.2. 2020 Audited Financial Statements

a) Income Statement

b) Balance Sheet

36
12.3. Association Shareholding

37