AgroFood Solution

 

AgroFood Solution:



1.     Problems

·       Farmers from a remote part of the country with fewer consumers have difficulty selling their agricultural products due to a lack of a proper market, logistic defined supply chain.

·       The United Nations’ Food and Agriculture Organization (UN FAO) estimates that wasted food accounts for 1.3 billion of the 6 billion metric tons of edible food produced across the globe every year and Bhutan is no exception to this problem with almost 50% of food becoming waste.

 

2.     Solution

·       Defining market, supply chain, and logistics with the processed and packed agricultural product

·       Packaging here is a Solution.

 

3.     Core Benefits

 

Packaging plays an important role in preventing damage and spoilage at retail and at home in several ways:

·       Physical protection to prevent damage

·       Barrier protection to delay spoilage

·       Security features to prevent tampering

·       Properties to promote shelf stability

·       More efficient portion control

·       Marketing that encourages food sales

4.     Location of the Project

Given the ideal production volume, the factory could be established in Dagana. However, with a good sourcing strategy further, it can be branched to Tsirang. Due to the accessibility to the raw material sources.

5.     Land requirement

The facility can be developed in an area of 20 decimals, with dedicated storage of raw materials, a milling area, cold storage area, and a cookie production facility. The business proposal considers the land to be on the lease.

6.     Foreign exchange requirement (Capital and recurrent)

The business as such will not require foreign exchange for both capital and current expenditure,

as the equipment and packaging raw materials can both be competitively sourced from India. However, if the machinery and packaging materials are sourced from China, the firm can reduce its establishment and packaging costs.

7.     Means of Financing

A debt-equity model of 80% and 20% is proposed for the business. A term loan of Nu. 4.786 million is proposed as debt for 10 years, at a 12% interest rate. For Equity, the cost of capital is considered as 20%, resulting in a weighted average cost of capital of 14%.

8.     Market Research

 Target Market

The target market will be focused on the following categories as follows;

•       Households: All these food items are consumed as part of or in every dish in Bhutan. Especially large quantities consumed in almost every part of our country.

•       HORECA Markets: There are a total of 434 hotels (Star and Budget hotels) and 2,248 Food, Beverage, and Entertainment businesses in the country (Tourism Establishment Census of Bhutan, 2021). The products could be marketed in the HORECA industry.

•       Grocery stores/Supermarkets: The product would have its largest presence from the grocery shops. Furthermore, the CSI Market would be a must-display shop for the product. Several grocery stores have a dedicated department for Made-in-Bhutan products where it would be easier to display and trade the products

1.     Market Penetration Strategies




SWOT analysis of existing competitors:

1.     Financial analysis

Profit and loss A/c ( 5 years)



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