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Messages

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 I must commend the entire team who worked tirelessly of leakages, in products that we are either able to 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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Messages

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 Adam Stewart, Chairman, Tourism Linkages Network tourism industry but the country’s economic development as a whole. Today’s opportunities were unheard of yesterday and the tourism platform is now The six investment crop profiles being presented – set for even greater explosion, taking other sectors onions, strawberries, irish potatoes, tomatoes, along with it. pineapples and sweet peppers - are essential to the When the Tourism Demand Study in 2015 highlighted growth of agriculture in our country as it will open the loss of revenue due to an import bill which could doors to increasing opportunities for these crops. We be offset by local production, the Tourism Linkages therefore encourage our stakeholders to embrace Council accelerated its efforts to foster new strategies these opportunities as there are huge potential for all for agricultural expansion to plug this gap. Compared parties. to many other countries in the region, Jamaica’s climate and soil is rich for multi-crop cultivation and with the right support, cohesive relations and alignment, we now find ourselves at a crucial juncture with the impetus to charge full-speed ahead.

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This is an awesome initiative for Jamaica! Our Island never ceases to amaze me; we are truly the land of opportunities. Let us re-commit, keep the focus and get it done!

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CONTENTS MESSAGES............................................................................................................................................. INTRODUCTION....................................................................................................................................... WHY INVEST IN STRAWBERRIES........................................................................................................... INVESTMENT ANALYSIS......................................................................................................................... FINANCIAL VIABILITY AND BANKABILITY.............................................................................................

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Messages

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Introduction

Background There are over 600 varieties of strawberries. They include the sweet, slightly tart berries are ranked among the top ten fruits and vegetables for antioxidant content. The list of antioxidants found in strawberries include; anthocyanins, ellagic acid, quercetin and kaempferol. Strawberries are available fresh, frozen, freeze-dried, and in jellies, syrups and jams or jellies. Strawberries are rich in the essential nutrients vitamin C, potassium, folic acid and fibre.

History of Growing Strawberries in Jamaica Strawberry is not widely grown in Jamaica, although over the years there have been attempts to grow the crop on a commercial scale. In recent years with the expansion in growing crops under protective structures, several farmers have taken interest in cultivating strawberries. The farmers involved are still on the learning curve where the agronomic practices are concerned, and the verdict is still out on the most suitable varieties for the agro-ecological zones in Jamaica. There is heightened interest in Jamaica for further investment in the cultivation of strawberry since there is a high demand for the fruit and the returns seem to be attractive. Investment in domestic production of strawberry production will auger well with the government’s policy of import substitution. According to a 2017 Ministry of Tourism Report, “The Development of the Strawberry Industry in Jamaica”, there was only two acres of strawberries cultivated by eight farmers in Jamaica. Each farmer was growing an average of 4,375 plants. The varieties that are currently grown locally include Albion, Seascape, Florida 90, and sweet Charlie. Farmers are now leaning towards cultivating a day-neutral variety. Unlike short-day varieties, day-neutral varieties essentially do not respond to day length and will continue to produce flowers and fruits all year long if temperatures do not get too high. Strawberry plant

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Introduction

Since Jamaica is in the tropics, this variety would provide a good alternative as there are no distinct seasons. This will also help in the consistency of supply at the local level. Some day-neutral varieties are, for example, Selva, Muir, Irvine, Fern-Yolo-Mrak and Hecker. Critical to the cultivation of strawberries is temperature. The ambient temperature for growing strawberries is between 16-27 degrees Celsius. In the case of Jamaica, this temperature can only be found consistently in elevations of 650 metres and above. These areas are usually not easily accessible, and the terrain can be challenging for commercial operations. Associated with high altitudes is increased moisture which facilitates the growth of fungus. The returns as indicated in the subsequent sections outweigh the risks if the proper management practices and scale of production are implemented.

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Why Invest in Strawberries

Local Investment Opportunity The strawberry industry presents an opportunity for Jamaica to invest in a high value and high returns crop. To build the industry emphasis should be placed on varietal research and the agronomic practices that will provide levels of production that will make the per unit production cost competitive with countries such as the Unites States of America and Mexico. Local producers have an advantage since buyers prefer to purchase the fruit fresh from the farm. Purchasing the fruit fresh will allow for a longer shelf life and reduces secondary postharvest losses. The Ministry of Tourism 2017 “Study of The Berry Sector” has revealed that there were nine identifiable strawberry farmers in Jamaica located in the parishes of Manchester, Trelawny and St, Andrew. Only three of these farmers were supplying directly to the hotel industry. The others were supplying to local supermarkets and directly to households. Information from the Statistical Institute of Jamaica (Chart 1) indicates that fresh strawberry imported into Jamaica was valued at US$324,000. The USA was the top importing country, accounting for over 95%, followed by 3% from Peru and the remaining 2% split between Italy, Guatemala and Chile. Chart 2 shows that strawberry is imported in three basic forms with USA Peru Italy Guatemala

CHART 1 Value (US$) of Fresh Strawberries Exported to Jamaica (2017)

Chile 0

50000 100000 150000 200000 250000 300000

Source: Statistical Institute of Jamaica (STATIN)

their respective volumes as recorded in 2015 : fresh (66,552kgs/47%), frozen (70,871kgs/50%) and puree (3,497kgs/2%). The bulk of imports go to the hotel sector (70%) and remaining (30%) is absorbed by the supermarket chains across the island. The 2015 Demad Study suggests that there is a significant gap between

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Why Invest in Strawberries

80000 70000 60000

50000 40000 30000 20000 10000 0

Fresh

Frozen

Puree

CHART 2 Jamaica’s Strawberry Imports (Kgs) 2015

the local demand for strawberry and local production. Based on the local Source: MOT 2015 Demand Study

demand for strawberry is approximately 140,000kgs per annum. Chart 4 shows this comparison. In the chart Domestic production is 34,000 kgs (24%) presenting a shortfall of 106,920kgs (76%). To fill this gap an additional 6.3 acres are required to maintain consistency in the levels of domestic supply and prevent the movement of foreign exchange out of the island. Since approximately 140, 920 kilograms of strawberries are imported into the country annually, this presents an additional revenue potential of approximately US$600,000. Fresh Strawberries are sold to primarily to supermarkets (40%) and hotels (60%). Locally produced strawberries are preferred because they have a longer shelf life.

Local Production

Local Demand 30000 Source: MOT 2015 Demand Study

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60000

90000

120000

150000

CHART 3 Local Strawberry Production (Kgs) Gap 2015

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Why Invest in Strawberries Imports Domestic

CHART 4 Local Strawberry Production (Kgs) Gap 2015

Source: Statistical Institute of Jamaica

Market failure continues to be a going concern in the agricultural sector since historically production has not been properly planned. There have been cycles of gluts and scarcity owing as well to minimal systems of distribution. In order to build sustainability in the strawberry industry, formal arrangements between producer and buyer must be at the fore front to minimize conflicts and a dampening of the enthusiasm that currently exists on both sides.

Cost of Production Based on the cost of production estimates, approximately J$4.82 million is required to cultivate 1 acre of strawberry in plastic culture operation. As indicated in the table 1 below, labour costs account for 14% (655,500) material/equipment input 55% (J$2,645,272) and other costs including but not exclusive to transportation and utilities 31%. These costs include a fertigation system that will supply a combination of water and nutrients to the plants. The cost of production assumes that the planting material is from runner plants and not seeds. The strawberry plant can last for 5-6 years but productivity begins declining after three years. The detailed cost of production can be found in the sections below on profitability.

Export Investment Opportunity An average of 900 thousand tonnes of fresh strawberries is exported annually having an annual average value of US$2.5 billion.

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Why Invest in Strawberries TABLE 1

COP and Profit Margin Calculation based on Local Market

Type of Enterprise

Labour

Material Inputs & Other costs

Other costs

COP per kg

Planting Density per Acre

Estimated Mkt-Yield kgs/acre

Plastic Culture

655, 500 (14%)

2,645,272 (55%)

1,5167,54 (31%)

900.60

17,000 plants per acre

5,361

Farm Gate COP/Farmgate Price 2018 Margin - Kg 1,400

55.5%

The top six exporters of fresh strawberries according to the International Trade Centre (ITC) database are; Spain (12.3%), Thailand (9.7%), New Zealand (8.7%), Netherlands (8.3%), United States of America (7.7%) and Mexico (6.1%). The average price of strawberry on the international market is between US$1.80 and $2.80 per kilogram.

Spain Mexico USA Netherlands New Zealand Thailand

CHART 5 Source: ITC Database

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Share in Value of the World’s Export of Fresh Strawberry (%)

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Investment Analysis

Technical Requirements Climate When growing strawberries the critical factors that must be considered are: temperature, water availability, solar radiation, wind, air pollution and carbon dioxide. Too much light and high temperature levels can lead to fruit bronzing which damages the berry surface and reduces quality. High levels of heat can also affect strawberry production. Weather patterns, such as moderate temperatures and extended hours of leaf wetness after daily rainfall, can create the ideal environment for the outbreak of susceptible diseases. Strawberries strive best in temperatures ranging from 15 to 27˚ C. These temperatures facilitate the growth of strong roots which are important to the plant to take up nutrients needed to produce lots of flowers and fruit.

Soil Prior to establishing strawberry farms it is advisable for soil tests to be conducted to determine the nutrients present in the soil as well those that are lacking and need to be added. In addition to fertility levels, soils should to also be tested for pH levels. Strawberries grow best with a soil pH of 5.8 to 6.2. Grounded limestone can be added to increase the pH of acidic soils. Strawberry will perform well in deep sandy loam, welldrained and rich in organic matter. These soils should be irrigated and fertilized for healthy plant growth. Heavy clay soils can also work if well-drained to avoid root rot.

Planting Material MOT’s 2017 Study of The Berry Industry had identified five varieties that are currently grown locally. They include day-neutral varieties such as Albion and Seascape and the short-day varieties Festival, Florida 90 and Sweet Charlie. Locally, the verdict is out on the most suitable varieties to grow in Jamaica. Strawberry farmers who are growing the Image of strawberry plants in pot

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Investment Analysis

aforementioned varieties have expressed success and are currently expanding production. More work needs to be done on the local seen to research and propagate varieties that can boost local production.

Land Preparation The selected area should be properly tilled by ploughing, harrowing and farrowing to ensure that the that roots of seedlings will have direct contact with the soil particles. A properly tilled soiled will allow the roots maneuver freely through the soil and root hairs will be able to absorb water and nutrients. Strawberries grow best in a location receiving at least 8 hours of direct sunlight per day. If a full sun location cannot be identified, choose a spot that is sunny during the morning and early afternoon. The soil should be well drained. Strawberry plants grown commercially are planted in double rows on soil that has been mounded into raised beds. Raised beds (as compared to flat beds) create a welldrained soil environment in which roots have sufficient oxygen for survival during periods of heavy rain. (University of Florida) L

Planting Density Seedlings can be planted based on the level of production that is envisaged. Generally rows are 36 to 40 inches apart. For day-neutral strawberries (also called everbearing strawberries), plants are set 8 to 12 inches apart in the row with 30 to 36 inches between rows. Locally planting density is approximately 17,000 strawberry plants per acre.

Planting Transplants are set through slits made in the polyethylene mulch situated over the established rows. Bareroot plants are the most common type of transplant available. These transplants may or may not have leaves on them. Those with leaves on them at the time of transplanting generally produce greater early season fruit yield than those without leaves on them at the time of transplanting. Another type of transplant is the plug or containerized transplant. This type of transplant may be available in plastic trays or in small plastic or fibre pots. Since the root system of this type of transplant typically stays intact when the plant is pulled from its container, very little sprinkler irrigation is needed after transplanting. Regardless of the type of transplant used. It is important not to set the transplant too deeply, covering the crown, or too shallowly, leaving

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Investment Analysis roots exposed.

Irrigation After the plants are established on the bed drip lines can be used to keep the beds moist. Watering at a low pressure (e.g., 10 psi) for 1/2 to 1 hour should thoroughly moisten the bed. Early in the season when the plants are small, one watering per week may be sufficient. Later in the season, when the plants are larger and weather is warmer, two or three waterings per week will be needed.

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. A complete fertilizer with micronutrients (including boron) should be incorporated into the bed before planting. About onehalf of the nitrogen in the fertilizer should be in a slow release form, such as a sulfur- or resin-coated material. Incorporate one-fourth of the fertilizer evenly across the top of the bed with a steel rake. Apply the remainder of the fertilizer in a narrow band approximately 1 inch (2.5 cm) deep along the middle of the bed (above the drip line or soaker hose, if they have been placed in the bed). Organic compost can be incorporated into the land during land preparation or be placed into induvial holes two weeks prior to transplanting. Nutrients can be supplied in the liquid form by using a venturi pump to introduce nutrients into the irrigation lines. The current common practice is to supply the nutrients to the crop through existing irrigation systems/fertigation. (University of Florida)

Pest and Disease management The most common pest of tomatoes are spider mites, cluster caterpillar, heliothis, cutworm, aphids. Diseases affecting the crop include Lethal yellowing, Fusarium wilt, Grey mould, Powdery mildew, Phytophthora fruit rot, Black root rot and Root knot nematodes. These can be controlled by using the wide spectrum of insecticides available on the local market. The farmer should develop an integrated pest management programme which will include: conducting regular scouting of fields to identify the presence of insects or diseases and thereafter take the necessary precautionary measures, planting compatible barrier crops and using sticky traps.

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Investment Analysis

Harvesting and Yield A strawberry fruit is ready to harvest when three quarters of its entire surface area is red. The fruit starts to deteriorate soon after it has become totally red, so it is best to harvest the fruit regularly, generally, every two to four days. Ripe strawberries are delicate and bruise easily, so a gentle picking technique is recommended. Fruit that is held between the thumb and forefingers can be snapped Image of strawberry plants from the fruit stem (pedicel) by twisting the forearm and wrist. Strawberries that are not going to be consumed immediately after harvest should be frozen or placed in a refrigerator, preferably in a moisture proof container to keep them from drying out. Local yields are averaging .7lbs per plant or 11,900lbs(5, 360kgs) per acre.

Post Harvest Management Strawberries have a very short shelf life. The optimum storage temperature for strawberries 0-2⁰C, 90-95% humidity. These conditions will allow kthe strawberries to remain in storage for 3-7 days. Wetting of fruits should avoided unless they can be properly air dried after. Wetting of the fruit can predipose the fruit to fungal diseases.

Marketing Currently starwberries are either sold directly to buyers namely hotel chains, supermarkets, on the streets to prospective customers. The demand for the commodity is so high that farmers don’t have any significant challenges selling. Farmers are still encouraged to secure contractual arrangements before planting a crop which reduces the risk of losses if proper storage is not available. To get high prices and have a constant supply of the fruit, non-seasonal varieties should be planted since Jamaica experiences tropical climatic conditions.

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Financial Viability and Bankability

Project Cost In the financial model, the unit cost of development of 5 acres of strawberries 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 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 cost.

Bank Loan For this venture the cost of capital was estimated at 8%. Interest rates are retailed between 8-11%. 100% of the development cost of the invest will be funded from equity. 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 the 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 Financial analysis was carried out for five acres (2.5 hectares) of Irish potato cultivation. For financial analysis, the income was assessed Image of strawberries

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Financial Viability and Bankability

on a conservative basis. The detailed calculation of project’s income and expenditure has been indicated in Annexure II. IRR and NPW for the model work out to be 61 %, J$6.3million respectively and the details are given in Annexes.

Repayment of loan No loans will be taken.

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ANNEXES

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Annex TABLE 1 Cost of Production Estimates Per Acre of Strawberries (Plastic Culture) ITEM

UNIT

NO. OF UNITS

COST/UNIT

ACREAGE

COST

Land Cleaning

379

Ploughing

379

Manure incorporation

227

Plastic mulch laying

227

Bed formation

227

Planting

212

Lining Irrigation Hose

Plant maintenance

530

Weeding

455

Pest and disease mangement

227

Labelling

Harvesting & packaging

Each

2,254

Lunch

195

443

Labour Operations

Material/Equipment Inputs

Plastic mulch

Roll

417

833

Drip pipe fittings

Set

396

Ventri pump

Each

Water storage Tank (1000gal)

Each

682

Water pump

Each

341

Instruments (pH,EC&TDC Metres)

Set

455

Nutrient storage tank

Each

106

Clam shells

Each

2,273

Labels

Each

545

2,294

Other Costs Transportation Utilities: Electricity

379

Water

75,000

Contingencies (10 percent of labour and material)

acre

765

Land Charges per annum per year

acre

114

Supervision (10% f total costs)

acre

13,477

TOTAL OPERATING EXPENDITURE PER CROP CYCLE

99,674

Cost of Production per acre

99,674

Projected Marketable Yield (Kg per acre)

11,900

Total Yield Cost of Production $/Kg

Revenue

140,095

Gross Profit

40,421

Gross profit Margin

41%

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ANNEX AnnexII

TABLE 2 Basic Assumptions PARAMETERS

VALUE

Exchange rate USD:JMD

132

Area Planted (acres)

Area Planted (hectares)

Time to maturity (months)

3-4 months

Marketable yields per acre (kg)

11900

Marketable yields per Hectare (kg)

29,393

Number of crops per year

Continuos after first bearing

Number of plants per acre

17,000

Sales distribution Local to Supermarkets

30%

Local to hotels

70%

Prices USD/kg: Local to exporters via middlemen

700

Local to higgglers for municipal markets

700

TABLE 3 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

Mistblower

set

40,000

Irrigation Equipment

acre

100,000

500,000

Drip pipe fittings

Set

52,272

Ventri 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

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RATE/UNIT

TOTAL

5,284,272

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III

Annex TABLE 4 Annual Operating Costs ITEMS

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

60,500

66,550

73,205

Indirect expenses Land lease Salaries and wages:

50,000 -

55,000 -

Owner/manager

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 Maitenance

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

Uilities:

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

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Annex

TABLE 5 Annual Marketing Yield YR1

YR2

YR3

YR4

YR5

Strawberry (kgs)

28,490

42,240

43,120

51,920

Total

28,490

42,240

43,120

51,920

YR1

YR2

YR3

YR4

YR5

Strawberry

550.00

600.00

650

800

850

Inflation factor

1.11

TABLE 6

Selling Price (/kg)

TABLE 7 Gross Revenue Schedule (J$) YR1

YR2

YR3

YR4

YR5

Strawberry sales

15,669,500

25,344,000

28,028,000

41,536,000

44,132,000

Total

15,669,500

25,344,000

28,028,000

41,536,000

44,132,000

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Annex

TABLE 8 Financing Plan TOTAL FINANCING

EQUITY

LOAN

GRANT

TOTAL

Capital Cost: Shed/storeroom

200,000

Fencing (barb wire)

1,045,000

200,000

1,045,000

Pickup truck

3,000,000

Knapsack sprayer

20,000

Mistblower

40,000

Irrigation Equipment

500,000

Drip pipe fittings

52,272

Ventri pump

2,000

Water storage Tank (1000gal)

180,000

Water pump

45,000

Instruments (pH,EC&TDC Metres)

60,000

Nutrient storage tank

14,000

Miscellaneous equipment and tools

200,000

Physical contingencies (10%) Sub-Total

5,358,272

Operating Costs Crop establishment

Planting Material

9,000,000

4,500,000

Strawberry (day neutral varietiey)

5,500,000

Marketing expenses

580,000

4,500,000

9,000,000

Contingency

754,000

Subtotal

15,834,000

11,334,000

50,000

Owner/manager

1,200,000

Security

720,000

Fuel

600,000

Accounting and audit fees

240,000

Equipment Maitenance

120,000

Motor vehicle expense/servicing

240,000

Motor vehicle insurance

Indirect expenses Land lease Salaries and wages:

754,000 4,500,000

15,834,000

120,000

Uilities:

Water

240,000

Telephone internet

120,000

Electricity

120,012

Stationary &office supplies/printing

120,000

Bank charges

240,000

Contingencies

1,789,901

Sub-Total

5,919,913

Total

27,112,185

17,253,913

9,858,272

27,112,185

Equity

64%

Leverage

36%

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Annex

TABLE 9 Depreciation Schedule ORGINAL COST

RESIDUAL VALUE

DEPRECIABLE COST

ESTIMATED LIFE (YRS)

DEPRECIATION PER YEAR

Shed/storeroom

200,000

20000

180,000

18,000

Fencing (barb wire)

1,045,000

30000

1,015,000

101,500

Pickup truck

3,000,000

300,000

2,700,000

270,000

Knapsack sprayer

20,000

2,000

18,000

1,800

Mistblower

40,000

5,000

35,000

7,000

Irrigation Equipment

500,000

50,000

450,000

90,000

Drip pipe fittings

52,272

2,000

50,272

10,054

Ventri pump

2,000

500

1,500

500

Water storage Tank (1000gal)

180,000

10,000

170,000

17,000

Water pump

45,000

5,000

40,000

4,000

Instruments (pH,EC&TDC Metres)

5,000

(5,000)

(500)

Nutrient storage tank

3,000

(3,000)

(300)

200,000

20,000

180,000

36,000

ASSET

Miscellaneous equipment and tools

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VII

Annex TABLE 10

Projected Net Income YR1

YR2

YR3

YR4

YR5

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

Mistblower

7,000

Irrigation Equipment

90,000

Drip pipe fittings

10,054

Ventri pump

500

Water storage Tank (1000gal)

17,000

Water pump

4,000

Instruments (pH,EC&TDC Metres)

(500)

Nutrient storage tank

(300)

Miscellaneous equipment and tools

36,000

Residual value

452,500.00

Interest Payment

Profit before Tax

(322,660)

Taxable Profit

494,787

1,559,897

2,934,102

4,693,084

(322,660)

494,787

1,559,897

2,934,102

4,693,084

Tax (33.3%)

(107,446)

164,764

519,446

977,056

1,562,797

Net Profit after Tax

(215,214)

330,023

1,040,451

1,957,046

3,130,287

(215,214)

114,809

1,155,260

3,112,306

6,242,593

(Profit before tax less tax) Cumulative Net Profit

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Annex VIII

452,500.00

1,827,445

1,661,314

WORKING CAPITAL (REC)

11,662,773

9,835,771

8,318,421

TOTAL BENEFIT

4,026,156

2,951,951

1,916,842

(4,164,877)

NET BENEFIT

5,783,138

4,026,156

2,951,951

1,916,842

(4,164,877)

EQUITY

SALVAGE & RESIDUAL VALUE

TOTAL COST 6,204,608

432,500.00

2,010,190

13,608,060

5,783,138

SALES REVENUE

OPER. COST 12,483,298 7,575,826

402,500.00

2,211,209

16,323,233

WORKING CAPITAL 5,537,713 7,918,929 9,250,083

102,500.00

2,432,330

CAPITAL REPL.

6,091,484 8,710,822 11,294,352

100,500.00

YEAR

1,827,445 6,700,632 9,581,904

13,790,403

1,661,314

2 2,010,190 7,370,695 10,540,095

5,284,272

3 2,211,209 8,107,765

4 2,432,330

$6,356,552

61%

$6,356,552

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

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TEF Crop Profile - Strawberry.indd 8

Summary of Project Costs & Benefits

TABLE 11

Annex TABLE 12

Annual Cash Flow Projection ($) YR1

YR2

YR3

YR4

YR5

INFLOWS Loan

Equity

10,821,985

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

Tax

1,512,917

(114,253)

179,574

570,245

1,082,353

Net Cash Flow

3,030,377

(228,850)

359,687

1,142,203

2,167,956

Cumulative Net Cash Flow

3,030,377

2,801,527

3,161,214

4,303,417

6,471,373

Capital Replacement

Debt service

Net Present Value

TEF Crop Profile - Strawberry.indd 9

J$4,962,264.16

5/3/2019 1:15:36 PM

REFERENCES 1. Linkages Hubb (2015), Tourism Demand Study, A product of the Ministry of Tourism nad Entertainment 2. Ministry of Tourism (2017), Development of the Berry Industry, Derron Grant (Consultant) 3. IOWA Commercial Fruit Production (2008), Production Guide for Commercial Straberries, IOWA State University 4. Cost of Production Estimates (2017), Ministry of Industry Commerce Agriculture and Fisheries, Databank Division 5. Crop Production Estimates (2016), Ministry of Industry Commerce Agriculture and Fisheries, Databank Division 6. International Trade Centre (ITC), https://www.trademap.org/ Index.aspx

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Annex

TEF Crop Profile - Strawberry.indd 11

5/3/2019 1:15:39 PM