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Minister of Tourism Hon. Edmund Bartlett It is an honour for the Ministry of Tourism, through our dynamic Tourism Linkages Network, to share viable investment opportunities in locally produced fresh produce, which are in high demand. Like many other initiatives of the Network, the findings in these crop profiles, create a unique opportunity to bring us another step closer to bridging the gap between our hospitality and agriculture sectors. We have long since recognized that tourism and agriculture are intimately linked and are of the firm belief that our farmers have the ability and the potential to supply our tourism sector. If a linkages approach is not explicitly encouraged, it is too easy for our hotels, restaurants and attractions to purchase only the basics locally while continuing to source goods and services from already-familiar overseas suppliers. Therefore, as part of our ongoing efforts to bridge this gap, the Network has been actively researching and creating opportunities for our local suppliers to Hon Edmund Bartlett, Minister of Tourism better meet the increased demands of our sector. It is this belief, coupled with the knowledge of potential earnings from supplying the sector that my Ministry I am very proud of this new initiative, which highlights has been on a drive to build capacity for our suppliers findings of six key crops in high demand within the tourism sector. Some of these produce include to capitalize on these earnings. strawberries, onions, tomatoes, pineapples, sweet In 2015, we completed the first Tourism Demand peppers and Irish potatoes. Study, which revealed that there was a high percentage of leakages, in products that we are either able to I must commend the entire team who worked tirelessly produce or are already producing. Buyers stated that to make these crop profiles a reality. I would like to the high imports of particular produce, that are specially praise the Linkages Network’s Technical grown locally, are because of the poor frequency of Working Group on Agriculture, which commissioned this initiative. I additionally want to thank our supply and the quality were deemed inconsistent. partnering Ministries and key stakeholders who will We have been working very closely with the Ministry be helping us to facilitate the build-out of this currently of Industry, Commerce, Agriculture and Fisheries to scarce commodity. combat this issue by providing renewed support to our farmers and by sharing the findings of our studies to guide the crop selection for the sector.

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Adam Stewart Chairman, Tourism Linkages Network

With arrivals to Jamaica at an all-time high, the tourism industry’s ability to continue being the pipeline for the growth and advancement of other sectors is tremendous. One such mutually beneficial and exemplary relationship exists with the agricultural sector; even more so as we continue to work assiduously to further reduce the country’s import gap by contracting the marketing space between local demand and supply. Over the years, the Tourism Linkages Council has developed strategies and implemented tactical reform aimed at contracting said marketing space, bringing together tourism stakeholders and local farmers. This interconnectivity is critical to the long-term viability and sustainability of not just Jamaica’s tourism industry but the country’s economic Adam Stewart, Chairman, Tourism Linkages Network development as a whole. Today’s opportunities were unheard of yesterday and the tourism platform is now set for even greater explosion, taking other The six investment crop profiles being presented – sectors along with it. onions, strawberries, irish potatoes, tomatoes, When the Tourism Demand Study in 2015 highlighted pineapples and sweet peppers - are essential to the the loss of revenue due to an import bill which could growth of agriculture in our country as it will open be offset by local production, the Tourism Linkages doors to increasing opportunities for these crops. We Council accelerated its efforts to foster new strategies therefore encourage our stakeholders to embrace for agricultural expansion to plug this gap. Compared these opportunities as there are huge potential for all to many other countries in the region, Jamaica’s parties. climate and soil is rich for multi-crop cultivation and with the right support, cohesive relations and This is an awesome initiative for Jamaica! Our Island alignment, we now find ourselves at a crucial juncture never ceases to amaze me; we are truly the land of opportunities. Let us re-commit, keep the focus and with the impetus to charge full-speed ahead. get it done!

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CONTENTS INTRODUCTION....................................................................................................................................... WHY INVEST IN PINEAPPLES................................................................................................................. INVESTMENT ANALYSIS......................................................................................................................... FINANCIAL VIABILITY AND BANKABILITY............................................................................................ ANNEXES................................................................................................................................................

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INTRODUCTION 8

introduction

Background Pineapple (Ananas comosus. L Merrill) is cultivated in all the tropical and subtropical countries. The qualities of pineapple fruits in the diet, its exquisite flavor, high digestibility and incomparable beauty has given it a premier place among the world’s fruits. It is one of the best known of all tropical fruits. Pineapple is cultivated in commercial quantities in a great number of countries, including Thailand, The Philippines, Brazil, China, and India. In recent years Costa Rica, Ecuador and Colombia have been highlighted.

History of pineapple in Jamaica The pineapple plant is native to South America and was likely imported to the Caribbean by native tribes. The first ever record of pineapple in the Caribbean was by the Spanish explorers (Christopher Columbus) who found the fruit in the Caribbean in the 1493. It was so treasured that at one time, only royalty in Spain was allowed to eat the fruit. Different historical accounts reveal that planters at great risk and danger stole pineapples from Jamaica and took them to the Hawaiian Islands from which point pineapple production mushroomed. The appearance of the pineapple as part of the Court of Arms, a Jamaican national symbol, speaks volumes to the importance of this fruit nationally.

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WHY INVEST IN PINEAPPLEs

WHY INVEST IN PINEAPPLES

Local Investment Opportunity The Jamaican pineapple industry is still relatively small. According to Ministry of Agriculture & Lands’ Data Bank information, production totalled only 25,296 tonnes in 2016. The industry presents viable investment opportunity for both farmers and agro-processors. According to information on external trade from the Uncomtrade database, Jamaica imported over J$357.7 million (CIF value) (table 2) of processed pineapple and pineapple-based products in 2016.

TABLE 1 Annual Pineapple Production and Value (J$) 2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Crop prod (tonnes)

18,102

20,351

21,368

19,749

17,607

19757

19185

18374

18819

25296

Harvested (ha)

807

910

1,029

1,061

979

1075

1035

1043

1391

Avg. Farmgate Prices

52.16

61.99

76.73

99.74

101.98

99.59

104.8

102.44

121.82

141.36

Crop Value (J$'000)

944,200

1,261,558

1,639,567

1,969,765

1,795,562

1,967,600

2,010,588

1,882,233

2,292,531

3,575,843

TABLE 2 Estimate of Pineapple Production per Quarter Quarter

2012

2013

2014

2015

2016

Jan – Mar

1,785

1,946

2,424

4,026

4,078

Apr – Jun

8,700

7,121

8,169

6,032

9,648

Jul – Sept

6,764

7,078

5,178

6,293

7,884

Oct – Dec

2,507

3,041

2,603

2,068

3,687

Total Production

19,756

19,186

18,374

18,419

25,297

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WHY INVEST IN PINEAPPLEs While local production of fresh fruits was valued at J$3.58 billion as prices sky rocketed between 2014 and 2016. The amount of pineapple required to replace imports is estimated at approximately four million kilograms. Currently, most pineapples produced locally are sold as fresh with just a small quantity sold to agroprocessors producing tit bits for the local pizza restaurants. Increased demand in the fresh market is expected from the tourism industry as that industry expands, given projections for an increase in room count of approximately 25%, and tourist arrivals by more than 30%. Production trends in Jamaica have begun to show significant changes especially over the past year or so, with demand increasing steadily for processed pineapples although there was a dip in 2013 to 2015 moving from J$300m in 2012 to J$357m in 2016, an increase of 19% over the 5-year period. A significant portion of these imports are bulk concentrate and juice utilized by the agro-processing industry. Some of the major players in this industry have indicated their interest in utilizing local products as long as supplies are constant and of good quality and prices are reasonable. Thus, there is the opportunity for local farmers to produce for the local agro-processing industry; however, the varieties must be ideal for processing - e.g. MD2. In table 2 production trend as estimates are highest for each second quarter and lowest for the fourth quarters over the 2012-2016 period. Table 3 highlights the movements in farmgate prices over the same fiveyear period. The maximum price change occurred in 2016 where a 38% upward movement was recorded. The fourth quarter recorded the highest movement in farmgate prices registering a 47% increase.

Cost Of Production The cost of production to produce one acre of pineapples is a function of the price of the planting material and the variety of pineapples to be grown. The recommended variety and one that is considered quite suitable for both the local and overseas market is the MD2. Typically, farmers secure planting material from imports out of Costa Rica, either through local entrepreneurs, Govt imports or self-importation.

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WHY INVEST IN PINEAPPLEs TABLE 3 Estimate of Pineapple Farmgate Prices per Quarter Quarter

2012

2013

2014

2015

2016

Increase in Farmgate Price

Jan – Mar

106.97

109.88

109.98

120.13

151.99

41%

Apr – Jun

85.83

91.91

92.18

108.32

110.58

27%

Jul – Sept

108.87

104.9

100.51

125.98

130.83

21%

Oct – Dec

117.02

131.5

131.46

154.41

178.17

47%

Maximum Price changes during the year*

27%

30%

38%

Source: MICAF Annual Crop Estimates

TABLE 4 Imports of Processed Pineapple 2012 to 2016 Period

Total Value in Total Value in US$ J$

Total Weight in kgs

Total Weight in Lbs

300,460,875

1,029,471

2,292,632

1,890,985

236,373,125

909,198

2,024,784

World

2,116,390

264,548,750

952,632

2,121,511

Jamaica

World

2,369,441

296,180,125

906,638

2,019,083

Jamaica

World

2,862,291

357,786,375

1,168,798

2,602,913

Trade Flow

Reporter

Partner

2012

Import

Jamaica

World

2,403,687

2013

Import

Jamaica

World

2014

Import

Jamaica

2015

Import

2016

Import

Source: UNComtrade 2018

Export Investment Opportunity There is a very high demand in the local and export markets of the United Kingdom, the United States and Canada (see tables 6-8). Jamaica can and have export to all three countries in the past as part of various free trade agreements to which we are signatories. The export of fresh pineapple by value increased US$1.754 billion dollars in 2013 to US$2.091 billion dollars in 2017, an increase of 20% over 5 years. In terms of quantity, exports moved from 3,373,792 tons in 2013 to 3,787,865 tons in 2017, an increase of approximately 12% over the period. The fresh pineapple export market is dominated by Costa Rica, the Netherlands, Philippines and Belgium. Costa Rica dominates the export market by volume with approximately 57% market share. In 2017, Costa Rica exported 2,160,320 tonnes valued at US$981m, the Philippines exported 495,440 tonnes valued at US$172.4 million while the Netherlands exported 249,150 tonnes valued at US$230.9 million

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WHY INVEST IN PINEAPPLEs and Belgium exported 121,891 tonnes valued at US$110.4 million. Belgium is the only major exporting country that has seen significant decline in both quantity exported and earning from export of the fruit (Table 6). The major importing countries by value are the USA, Spain, Netherlands, the United Kingdom, Italy, Japan, China, Germany, Belgium and Canada. The quantity of imports by the top ten countries in 2017 was approximately 2.6 billion tonnes or 77% of world imports. The United States accounts for 33% of the import market (table 7).

TABLE 5 COP and Profit Margin Calculation based on local market Source Of Material

Cost Of Material Per Unit

COP Per Acre

COP Per Kg

Planting Density Per Acre

Local Importer

2,584,575

71.79

20,000

36,000

141.36

97%

Govt. Agency

1,774,575

49.29

20,000

36,000

141.36

187%

Self Import

1,369,575

38.04

20,000

36,000

141.36

272%

Market Share

Estimated Farm Gate Price COP/Farmgate Yield Kgs/Acre 2016 - Kg Margin

TABLE 6 Top 10 Fresh Pineapple Exporters Ranking

Exporters

2013

2014

2015

2016

2017

World

3,373,792

3,533,793

3,151,647

3,664,036

3,787,865

Costa Rica

1,961,491

2,126,929

1,902,031

2,019,401

2,160,320

57.03%

Philippines

489,955

461,856

267,789

566,928

495,440

13.08%

Netherlands

203,729

255,610

246,611

306,769

249,150

6.58%

Belgium

152,871

124,781

122,083

119,066

121,891

3.22%

United States of America

113,708

121,928

113,920

120,342

121,635

3.21%

Mexico

56,997

41,271

76,987

86,267

87,476

2.31%

Ecuador

51,789

55,545

66,076

73,990

84,691

2.24%

Honduras

79,086

51,258

60,031

58,817

59,013

1.56%

Guatemala

21,752

25,091

27,506

35,734

40,347

1.07%

Côte d'Ivoire

26,323

39,489

34,844

25,429

38,100

1.01% 91.29%

Source: UNComtrade 2018

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WHY INVEST IN PINEAPPLEs TABLE 7

Top 10 Fresh Pineapple Exporters 2013

2014

2015

2016

2017

Market Share

Ranking

World

3,035,845

3,233,609

3,032,535

No Quantity

3,430,320

United States of America

975,590

1,046,527

1,028,693

1,036,970

1,153,024

33.61%

Netherlands

295,184

339,670

266,971

281,585

284,454

8.29%

Spain

114,842

153,249

143,535

151,793

168,738

4.92%

United Kingdom

139,609

145,571

144,205

147,796

168,426

4.91%

Italy

142,020

159,246

139,475

141,971

163,547

4.77%

Japan

181,197

166,320

150,621

143,173

156,992

4.58%

China

39,458

70,216

84,401

101,932

146,003

4.26%

Germany

156,829

168,223

143,965

168,317

144,946

4.23%

Belgium

172,900

154,347

136,178

139,001

141,995

4.14%

Canada

122,630

126,289

109,504

118,543

127,584

3.72%

2,655,709

77.42%

Source: UNComtrade 2018

TABLE 8

Fresh Pineapple Exports to the United Kingdom

Period

Trade Flow

Reporter

Partner

Trade Value (US$)

Net Weight (kg)

2013

Import

United Kingdom

World

$137,862,938

139,609,220

2014

Import

United Kingdom

World

$140,906,296

145,570,979

2015

Import

United Kingdom

World

$138,064,061

144,205,433

2016

Import

United Kingdom

World

$131,863,723

147,795,671

2017

Import

United Kingdom

World

$148,035,911

168,425,851

Source: UNComtrade 2018

TABLE 9

Fresh Pineapple Exports to Canada

Period

Trade Flow

Reporter

Partner

Trade Value (US$)

Netweight (kg)

2013

Import

Canada

World

$107,970,597

122,629,942

2014

Import

Canada

World

$110,921,074

126,288,908

2015

Import

Canada

World

$99,052,175

109,504,212

2016

Import

Canada

World

$99,180,284

118,542,667

2017

Import

Canada

World

$100,091,074

127,583,645

Source: UNComtrade 2018

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WHY INVEST IN PINEAPPLEs In terms of Jamaica’s export performance, the figures are at best minimal as table 9 demonstrates. At the very least there has been a very small but growing export trade. Critical to exporting to the UK however, is the need for the farms to be global gap certified.

TABLE 10

Fresh Pineapple Exports to the United States

Period

Trade Flow

Reporter

Partner

Trade Value (US$)

Netweight (kg)

2013

Import

USA

World

$631,077,829

975,590,464

2014

Import

USA

World

$700,714,005

1,046,527,054

2015

Import

USA

World

$674,587,716

1,028,693,074

2016

Import

USA

World

$721,567,932

742,936,295

2017

Import

USA

World

$749,682,524

803,185,857

Source: UNComtrade 2018

TABLE 11 Fresh Pineapple Exports by Jamaica Exported value in 2013

Exported value in 2014

Exported value in 2015

Exported value in 2016

Exported value in 2017

World

United States of America

Canada

United Kingdom

Importers

Unit : US Dollar thousand

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INVESTMENT ANALYSIS

Investment Analysis

Technical Requirements Climate The pineapple is a tropical or near tropical plant limited to low elevations between 30°N and 25°S. A temperature range of 18.33-45°C is most favourable, though the plant can tolerate relatively cold nights for short periods. This allows the plant to be grown almost anywhere in Jamaica.

Soil Though the pineapple can be grown on a wide range of soil types, it does best on well-drained, sandy loams which are acidic (pH 4 – 6) and have a high organic matter content. Ideally the soil should be friable to a depth of at least 60 cm (2 ft). The pineapple plant is susceptible to water logging, so steps should be taken to improve drainage on soils that have poor drainage. Pure sand, red loam, clay loam and gravelly soils usually need some amount of organic enrichment in order to create ideal soil conditions.

Planting Material There are several types of planting material that can be used for propagating pineapples including, suckers, slips, crowns and stumps. The planting material should be stripped of excess dry, dead leaves and rotting tissue to expose young roots. The cut end of the base should be turned upwards and allowed to harden and dry a few days before planting. The MD2 variety has become the popular variety in Jamaica. Other varieties include Sugar Loaf, Red Spanish, Ripply and smooth Cayenne.

Image of man holding pineapple

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Investment Analysis

Land Preparation Pine apples are cultivated commercially in trenches. The land is ploughed well and made to a fine tilth. Solid clods, rocks, crop debris, and stones must be removed. The land is dug after ploughing and levelled. Trenches are dug subsequently. Each trench may be 15-30cm deep and 90cm wide. Image of growing onions

Planting Density Planting density will vary according to variety, soil type, fruit size and farmers preference. Pineapples are usually planted in rows using a triangular formation at a spacing of 45-60cm within and along rows. Double row planting will give 11,000 to 28,000 plants/acre.

Planting At planting the cut end of the base should be dipped in a fungicide (bravo/ mancozeb) and a preferred insecticide to reduce infection. Plants should be allowed to drain before planting. If planted when 5-6 months old, the suckers and slips produce flowers after 12 months. Crowns bear flowers after 12-19 months. It is best to plant so that harvesting does not coincide with the rainy season.

Irrigation MICAF suggests that pineapples require approximately 4,600m3/ha (500,000 gallons/acre) of water for growth and development per crop cycle (110 days). Irrigation systems include, sprinkler, drip and furrow and salinity of water should must be less than 0.75mmho/cm.

Fertilizers As a rule of thumb soil tests should be conducted to determine the most appropriate fertilizer regime that is most suited for the crop and the existing soil. Compost and or fertilizer can be worked into beds during land preparation. Pineapples require mostly nitrogen and potassium for optimum growth and yield. During land preparation NPK fertilizer can

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Investment Analysis

be applied according to soil and crop nutrient requirements. For synchronized flowering, synthetic flowering inducers can be applied.

Pest and Disease Management The pest and diseases of pineapple includes: rodents, birds, mealy bugs, scale insects, Stem rot, Fruitlet core rot, and Root rot are the most likely threat to the crop. As stated early dipping the end of the planting material in fungicide and/or insecticide to take care of stem rot and other fungal diseases is very effective in reducing the fungal load.

Harvesting and Yield Harvesting of pineapples will depend on the market that is targeted. Harvest only mature fruits tested for acceptable Brix levels and eating quality. Fruits should be harvested in early morning when temperatures are lower. High temperature will reduce the shelf life of fruits. Harvest fruit with a sharp knife leaving more than 2.5cm of stalk to the fruit. (Caribbean Pineapple Production-CARDI)

Post Harvest Management Pineapple fruit should be placed in foam-padded field crates to protect the fruits from bruising. Bruising or puncturing can provide an entrance for pathogens and expose the fruit to infection. The harvested fruit should be stored in a cool place, away from direct sunlight. To avoid chilling injury the green fruit should be stored at 8-10⁰C and 85-95% Relative Humidity. (Caribbean Pineapple Production-CARDI)

Marketing There is a growing domestic market for fresh pineapples. The common marketing channels for locally grown pineapples are roadside higglers, municipal markets, supermarkets, the hospitality industry, and pizza shops. As stated in previous sections of the document, there is also a huge export market to target. There is also sale for the suckers, heads and stumps.

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Financial Viability and Bankability

FINANCIAL VIABILITY AND BANKABILITY

Project Cost In the financial model, the unit cost of development of 5 acres of Irish potato has been prepared. This can be modified to fit other scale of operations taking into consideration the attendant changes to the variables used.

Working Capital Working capital represents the operational liquidity that is available to the business enterprise. For this 5-acre model the working capital was calculated as 30% of the total operational cost. This is the minimum amount of cash that the business should have at hand to cover at least 30% of the operational expenditure.

Bank Loan For this venture the cost of capital was estimated at 8%. Interest rates are retailed between 8-11%. 85% of the development cost of the invest will be funded from equity. The remaining 15% will be funded from a bank loan. The loan is required to purchase a 3-4years old pickup truck.

Rate of Interest For this venture the cost of capital was estimated at 8%. Interest rates for agricultural loans are retailed between 8-11%.

Security The project will be guided the financial stipulations laid out by Development Bank of Jamaica for agricultural loans. The tenets of Good Agricultural practices will be adhered, to ensure high productivity and produce that is safe for consumption. Proactive actions such as scouting will be implemented for early detection of pest and diseases. The irrigation system established will ensure that the plants are adequately irrigated to give the maximum yield.

Financial Analysis

Image of pineapple plant

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Financial analysis was carried out for five acres (2.5 hectares) of pineapple cultivation. For financial analysis, the income was assessed on a conservative basis.

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Financial Viability and Bankability

The detailed calculation of project’s income and expenditure and other financial details hve been indicated in Annexes attached. IRR and NPW for the enterprise model work out to be 61 %, J$6.1million respectively and the details are given in Annexure XII.

Repayment of Loan Based on the cash flow the detailed repayment schedule has been worked out and furnished in the Annexure IV. The repayment period works out to five years including 6 months grace period for repayment of principal.

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ANNEXES

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annex

TABLE 1 Cost of Production UNIT

NO OF UNITS

COST PER UNIT

TOTAL ACREAGE

Land Cleaning

1500

Ploughing

1500

27,000

Furrowing

1500

30,000

Maintain Trench

1500

9,000

Planting

1500

21,000

COST

Total Costs

Labour Operations 15,000

Pest Management

1500

27,000

Weeding

1500

30,000

Fertilising

1500

12,000

Harvesting

1500

75,000

164

300

49,200

Lunch

295,200

Material Inputs Planting Material

1,600,000

Fertiliser

14,500

Fungicide

15,000

Herbicide

5,000

1,634,500

Other Costs Transportation (10% of Material)

10,000

Contingencies (10% of labour and material)

80,000

** Tools discounted for 5 years

7,000

Land Charges per Crop Cycle

10,000

Supervision

50,000

157,000

Total Operating Expenditure per Copr Cycle

2,086,700

Cost of Production per Acre

2,086,700

** Projected Marketable Yield (kg per acre)

27,272.73

Total Yield Cost of Production $/kg

76.51

Revenue

2,400,000

Gross Profit

313,300

Gross Profit Margin

15%

Interest Charges per Crop Cycle Net Revenue Net Margin Source: MOAF (modified) * Planting material costs $80 per sucker with 20,000 needed per acre ** It is assumed that the plants will fruit with an average weight of 1.36kg

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annex

TABLE 2 Cost of Production UNIT

NO OF UNITS

COST PER UNIT

Labour Operations

1500

15,000

Land Cleaning

1500

17,000

Ploughing

1500

30,000

Maintain Trench

1500

9,000

Planting

1500

21,000

Pest Management

1500

27,000

Weeding

1500

30,000

Fertilising

1500

12,000

Harvesting

1500

75,000

164

300

49,200

Lunch

TOTAL ACREAGE

COST

Total Costs

295,200

Material Inputs Planting Material

1,600,000

Fertiliser

14,500

Fungicide

15,000

Herbicide

5,000

1,634,500

Other Costs Transportation of Material

30,000

Contingencies (5 percent of labour and material)

96,485

Land Charges per Crop Cycle

10,000

Equipment Maintenance Cost

18,000

Supervision (15 man days per acre)

60,000

214,485

Total Operating Expenditure per Copr Cycle

2,144,185

Cost of Production per Acre

2,144,185

** Projected Marketable Yield (kg per acre)

27,272.73

Total Yield Cost of Production $/kg

78.62

Revenue

2,400,000

Gross Profit

255,815

Gross Profit Margin

11.9%

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annex TABLE 3 Basic Assumptions PARAMETERS

VALUE

Exchange rate USD:JMD

132

Area Planted (acres)

Area Planted (hectares)

Time to maturity (9-23 months)

3-4 months

Marketable yields per acre (kg)

27273

Marketable yields per Hectare (kg)

67364.31

Number of crops per year - Crop cycle is indefinite

Number of plants per acre

19801

Sales distribution Local to processors via middlemen

60%

Local to higgglers for municipal markets

40%

Prices USD/kg: Local to exporters via middlemen

0.7

Local to higgglers for municipal markets

0.7

TABLE 4 Capital Costs CAPITAL COSTS

UNITS

NUMBER OF UNITS

Shed/storeroom

ft2

100

2,000

200,000

Fencing (barb wire)

acre

209,000

1,045,000

Pickup truck

each

3,000,000

Knapsack sprayer

each

10,000

20,000

Mist-blower

set

40,000

Irrigation Equipment

acre

100,000

500,000

Drip pipe fittings

Set

52,272

Venturi pump

Each

2,000.00

2,000

Water storage Tank (1000gal)

Each

90,000.00

180,000

Water pump

Each

45,000.00

45,000

Instruments (pH,EC&TDC Metres)

Set

60,000.00

Nutrient storage tank

Each

14,000.00

Miscellaneous equipment and tools

each

200,000

Total

TEF Crop Profile - Pineapple.indd 23

RATE/UNIT

TOTAL

5,284,272

5/3/2019 1:17:29 PM

annex

TABLE 5 Operating Costs UNIT

QTY

UNIT PRICE (J$)

YR1

Direct Expense Crop establishment Pineapple

acres

200,000.00

1,000,000

Marketing expenses

40,000.00

40,000

Contingency

52,000.00

Subtotal

1,092,000

Indirect expenses Land lease

acres/yr

5,000.00

50,000

Owner/manager

mth

100,000.00

1,200,000

Security

mth

60,000.00

720,000

Fuel

mth

50,000.00

600,000

Accounting and audit fees

mth

20,000.00

240,000

Equipment Maintenance

mth

10,000.00

120,000

Motor vehicle expense/ servicing

mth

20,000.00

240,000

Motor vehicle insurance

120,000.00

120,000

Water

mth

20,000.00

240,000

Telephone internet

mth

10,000.00

120,000

Salaries and wages:

Utilities:

Electricity

mth

10,001.00

120,012

Stationary &office supplies/printing

mth

10,000.00

120,000

Bank charges

mth

20,000.00

Contingencies

240,000 315,700.60

Sub-Total

4,445,713

Total Operating Costs

5,537,713

TEF Crop Profile - Pineapple.indd 24

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annex TABLE 6 Annual Operating Costs YR1

YR2

YR3

YR4

YR5

Direct Expense Crop establishment Pineapple

1,000,000

1,100,000

1,210,000

1,331,000

1,464,100

Marketing expenses

40,000

44,000

48,400

53,240

58,564

Contingency

52,000

57,200

62,920

69,212

76,133

Subtotal

1,092,000

1,201,200

1,321,320

1,453,452

1,598,797

50,000

55,000

60,500

66,550

73,205

1,200,000

1,320,000

1,452,000

1,597,200

1,756,920

Security

720,000

792,000

871,200

958,320

1,054,152

Fuel

600,000

660,000

726,000

798,600

878,460

Accounting and audit fees

240,000

264,000

290,400

319,440

351,384

Equipment Maintenance

120,000

132,000

145,200

159,720

175,692

Motor vehicle expense/servicing

240,000

264,000

290,400

319,440

351,384

Motor vehicle insurance

120,000

132,000

145,200

159,720

175,692

Utilities

Water

240,000

264,000

290,400

319,440

351,384

Telephone internet

120,000

132,000

145,200

159,720

175,692

Electricity

120,012

132,013

145,215

159,736

175,710

Stationary &office supplies/ printing

120,000

132,000

145,200

159,720

175,692

Bank charges

240,000

264,000

290,400

319,440

351,384

Contingencies

315,701

347,271

381,998

420,197

462,217

Sub-Total

4,445,713

4,890,284

5,379,312

5,917,243

6,508,968

Total Operating Costs

5,537,713

6,091,484

6,700,632

7,370,695

8,107,765

Indirect expenses Land lease Salaries and wages: Owner/manager

TEF Crop Profile - Pineapple.indd 25

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annex

TABLE 7 Annual Marketing Yield YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

Pineapple (kgs)

88,637

97,501

107,251

117,976

129,774

Total

88,637

97,501

107,251

117,976

129,774

TABLE 8 Selling Price (/kg) YR1 Pineapple

YR2 70

YR3 78

YR4 86

YR5 96

106

TABLE 9 Gross Revenue Schedule (J$) YR1

YR2

YR3

YR4

YR5

Pineapple sales

6,204,608

7,575,826

9,250,083

11,294,352

13,790,403

Total

6,204,608

7,575,826

9,250,083

11,294,352

13,790,403

TEF Crop Profile - Pineapple.indd 26

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annex TABLE 10 Financing Plan TOTAL FINANCING REQUIRED

EQUITY

LOAN

GRANT

TOTAL

Capital Costs Shed/storeroom

200,000

Fencing (barb wire)

1,045,000

200,000 1,045,000

1,045,000

200,000

Pickup truck

3,000,000

Knapsack sprayer

20,000

Mist-blower

40,000

Irrigation Equipment

500,000

Drip pipe fittings

52,272

Venturi pump

2,000

Water storage Tank (1000gal)

180,000

Water pump

45,000

Instruments (Ph/EC&TDC Metres)

Nutrient storage tank

200,000

Miscellaneous equipment and tools Physical contingencies (10%) Sub-Total

5,284,272

1,239,272

4,045,000

5,284,272

Operating Costs Crop establishment Pineapple

1,000,000

40,000

Marketing expenses Contingency

52,000

Subtotal

1,092,000

50,000

Indirect Expenses Land lease Salaries and wages:

Owner/manager

1,200,000

Fuel

600,000

Accounting and audit fees

240,000

Equipment Maintenance

120,000

Motor vehicle expense/servicing

240,000

Motor vehicle insurance

120,000

Water

240,000

Telephone internet

120,000

Electricity

120,012

Stationary &office supplies/printing

120,000

Bank charges

240,000

Contingencies

315,701

Utilities

Sub-Total

4,445,713

Total

10,821,985

6,776,985

4,045,000

10,821,985

Equity

63%

Leverage

37%

TEF Crop Profile - Pineapple.indd 27

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annex

TABLE 11 Loan Repayment Schedule MONTHS Months 1-3 = YR0 1

LOAN

PRINCIPAL

INTEREST

TOTAL DEBT

LOAN

Disbursement

Balance at SOY

Payment at EOY

Payment at EOY (8%)

Accrued but not paid (8%)

Serviceable Debt at EOY

Balance at EOY

4,045,000

809,000

323,600

1,132,600

3,236,000

809,000

258,880

1,067,880

2,427,000

809,000

194,160

1,003,160

1,618,000

809,000

129,440

938,440

809,000

64,720

873,720

4,045,000

970,800

2 3 4 5 Total

5,015,800

Moratorium - 6 mths Loan period - 5 Yrs (including moratorium) Interest rate:

= 10% per Annum

TEF Crop Profile - Pineapple.indd 28

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annex

TABLE 12 Depreciation Schedule ASSET Shed/storeroom Fencing (barb wire) Pickup truck Knapsack sprayer Mist-blower Irrigation Equipment Drip pipe fittings Venturi pump Water storage tank (1000gal) Water pump

ORIGINAL COST

RESIDUAL VALUE

200,000 1,045,000

18,000

30000

1,015,000

101,500

2,700,000

270,000

18,000

1,800

7,000

90,000

50,272

10,054

1,500

500

170,000

17,000

4,000

(5,000)

(500)

(3,000)

(300)

180,000

36,000

2,000

40,000

5,000

35,000

500,000

50,000

450,000

52,272

2,000

500

180,000

10,000

45,000

5,000

TEF Crop Profile - Pineapple.indd 29

20,000

Nutrient storage tank 200,000

DEPRECIATION PER YEAR

180,000

300,000

ESTIMATED LIFE (YRS)

20000

3,000,000

Instruments (pH/EC&TDC Metres)

Miscellaneous equipment and tools

DEPRECIABLE COST

5,000 3,000 20,000

40,000

5/3/2019 1:17:30 PM

annex

TABLE 13 Projected Net Income YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

Gross Revenue

6,204,608

7,575,826

9,250,083

11,294,352

13,790,403

Operating Cost

5,537,713

6,091,484

6,700,632

7,370,695

8,107,765

Operating Profit

666,895

1,484,342

2,549,451

3,923,656

5,682,638

Depreciation

537,054

Shed/storeroom

18,000

Fencing (barb wire)

101,500

Pickup truck

270,000

Knapsack sprayer

1,800

Mist blower

7,000

Irrigation Equipment

90,000

Drip pipe fittings

10,054

Venturi pump

500

Water storage tank (1000gal)

17,000

Water pump

4,000

Instruments (Ph/EC&TDC Metres)

(500)

Nutrient storage tank

(300)

36,000

Residual value

452,500.00

Interest Payment

323,600

258,880

194,160

129,440

64,720

Profit before Tax

(646,260)

235,907

1,365,737

2,804,662

4,628,364

Taxable Profit

(646,260)

235,907

1,365,737

2,804,662

4,628,364

Tax (33.3%)

(215,204)

78,557

454,790

933,952

1,541,245

Net Profit after Tax

(431,055)

157,350

910,946

1,870,709

3,087,119

(431,055)

(273,705)

637,242

2,507,951

5,595,070

Miscellaneous equipment and tools

(Profit before tax less tax) Cumulative Net Profit

TEF Crop Profile - Pineapple.indd 30

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YEAR

CAPITAL

WORKING CAPITAL

OPER. COST

TOTAL COST

SALES REVENUE

SALVAGE & RESIDUAL VALUE

WORKING CAPITAL (REC) TOTAL BENEFIT

NET BENEFIT

LOAN INFLOW

OUTFLOW

EQUITY

(1,252,477)

1,132,600

848,962

4,045,000

1,067,880

1,948,791

(4,164,877)

1,916,842

1,003,160

3,087,716

8,318,421

9,835,771

2,951,951

938,440

1,661,314

1,827,445

11,662,773

4,026,156

4,909,418

452,500

2,010,190

13,608,060

873,720

6,204,608

7,575,826

402,500

2,211,209

5,783,138

12,483,298

7,918,929

9,250,083

102,500

16,323,233

5,537,713

6,091,484

8,710,822

11,294,352

2,432,330

1,661,314

1,827,445

6,700,632

9,581,904

100,500

5,284,272

2,010,190

7,370,695

13,790,403

2,211,209

10,540,095

432,500

8,107,765

$6,184,476

2,432,330

61%

$6,356,552

NPV = Assuming a real discount rate of 10% Conclusion: Project is viable if NPV positive IRR =

5/3/2019 1:17:30 PM

TEF Crop Profile - Pineapple.indd 31

31 annex TABLE 14 Summary of Project Costs & Benefits

annex

TABLE 15 Annual Cash Flow Projection ($) YR 1

YR 2

YR 3

YR 4

YR 5

INFLOWS Loan

4,045,000

Equity

6,776,985

Grant

Sales

6,204,608

7,575,826

9,250,083

11,294,352

13,790,403

Total Inflows

17,026,592

7,575,826

9,250,083

11,294,352

13,790,403

OUTFLOWS Capital Cost

5,284,272

Operating Cost

5,537,713

6,091,484

6,700,632

7,370,695

8,107,765

Working Capital

1,661,314

1,827,445

2,010,190

2,211,209

2,432,330

Outflows before Debt & Tax

12,483,298

7,918,929

8,710,822

9,581,904

10,540,095

Cash Flow before Debt & Tax

4,543,294

(343,103)

539,261

1,712,448

3,250,309

Debt service

1,132,600

1,067,880

1,003,160

938,440

873,720

Tax

1,512,917

(114,253)

179,574

570,245

1,082,353

Net Cash Flow

1,897,777

(1,296,730)

(643,473)

203,763

1,294,236

Cumulative Net Cash Flow

1,897,777

601,047

(42,426)

161,337

1,455,573

Capital Replacement

Net Present Value

TEF Crop Profile - Pineapple.indd 32

J$1,112,914.86

5/3/2019 1:17:30 PM

REFERENCES 1. Cost of Production Estimates (2017), Ministry of Industry Commerce Agriculture and Fisheries, Databank Division 2. Crop Production Estimates (2016), Ministry of Industry Commerce Agriculture and Fisheries, Databank Division 3. International Trade Centre (ITC), https://www.trademap.org/Index.aspx 4. Gregory Robin, Ronald Pilgrim, Sharon Jones and Dorian Etienne (2011), Caribbean Pineapple Production and Post Harvest Manual : FAO/CARDI 5. https://www.agrifarming.in/pineapple-farming/

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