commercialisation of agriculture in africa

EXECUTIVE SUMMARY

Kenya Farm Investment consortium will consult with small scale farmer, Government, Private firms, Agri-business, large scale farmers, banks, agro-based industries. The consortium will help its client achieve or increase business by sizing of opportunities which are in agriculture.

Kenya as a country has potential in agriculture in which are yet to be explored thus the country has not been able to achieve its full potential because of inability to put into use its potential.

Small farmer have not been able to have profit from agricultural activities because of so many problem affecting them this include poor land tillage  lack of modern agricultural skills, lack of farm implement, land subdivision, lack of capital, lack of coordinated market ,poor coordination of supply chain among many other problem which affect farmers. Farm Kenya investment consortium ltd will do its best to solve this problem by creating distinction between farming business and the farmer this will be achieved by running the management of the farm owned by both large scale farmers small scale farmer and also government land and county council land. Also the consortium will stream line agricultural supply chain to avoid unscripted middlemen who exploit farmers and take away the benefit they could have accrued from the business of farming these will be achieved by supply the produce from farms through franchised stores.

Farm Kenya Investment consortium will provide business opportunity to the banks as the consortium through its agency to the farmer it will be able to guarantee credit facility provided to the farmer and by making deduction from farmer revenue and remitting to the bank

Farm Kenya Investment consortium will also play a major role in ensuring agricultural industries get the raw material for their production in large quantities to warrant economies of scale and also adequate supply

Consortium service also will provide business to insurance companies this is because to safeguard the farmers against uncertainty in production farmers production activities will need an insurance cover in which consortium will be able to meet the premium payment through guaranteed production.

Farm Kenya Investment Consortium service will be sold to the government which will be the largest consumer of our service this is because Farm Kenya Investment Ltd will deal in management of  forest in partnership with local community also environment conservation service these will be of great importance to the government and the country

Farm Kenya Investment Consortium is one of unique consortium companies as it will engage all the facet of economy and consolidate all pillars of economy towards one goal and to attain synergy through collaboration of all players of economy.

The potential market for Farm Kenya Investment Consortium is quite wide and the company will exploit them to the fullest.

Farm Kenya Investment Consortium will start its business in Nakuru starting with the founding Benard Bett. Five associates (to be recruited) and one secretary. Figure 1 forecast sales, gross margin and net profit for the three years covered in this business plan. Starting with an investment from outside investors the plan projects a modest profit over three year period and a healthy net worth at the end of year 3. At this point the firm should be well positioned to add consultant to grow the business.

• 1.1 Mission

Farm Kenya Investment Consortium will be a leading agricultural consulting firm in Kenya providing expertise in the technical and economic analysis of integrated agricultural projects and activities. We will provide this service while adhering to our economic social and environmental responsibilities for our clients, our industry and ourselves.

1.2 Objectives

We seek to establish the industry standard for technical and business excellence in the pursuit of visionary goal of improved agricultural production and satisfaction of consumers and industry.

To accomplish this objective the following elements are crucial

• - Unique consulting services that are clearly proven
• - Ability to manage confidentially and intellectual property issues among competitors.
• - Professional relevance (state of art awareness) and knowledge growth in rapidly expanding industry.
• - Demonstrate concern for clients well being leading to repeat business and a good reputation to our firm.
• - Retention of our employees and partners.

1.3 Keys to Success

• - Professional quality in all consulting
• - Ability to manage confidentiality and intellectual properly issue among competitors.
• - Professional relevance (state of the art awareness) and knowledge growth in rapidly expanding industry.
• - Retention.

2. Company Summary

Farm Kenya Investment Consortium is a new consulting venture that is planned to officially open for business on October 1, 2009. Headquarters in Nakuru there will be external offices around the country. We sell consulting services only in industries and activities associated to agricultural production, the integrated business systems that are revolutionizing the agricultural production in Kenya.

2.1 Start up Summary

Total start up expenses is estimated in the table below. Some of these categories are largely unknown (e.g. insurance) reasonable estimates are made. Other item can be purchased as revenue is obtained and more resources are needed to keep up with the work.

The plan calls for some liquid assets at start up. This fund will pay expenses for the first few months as well as providing a cash reverse fund.

Start-up Funding

Start-up Expenses to Fund

700,000

Start-up Assets to Fund

2,800,000

Total Funding Required

3,500,000

Assets

Non-cash Assets from Start-up

$0

Cash Requirements from Start-up

2,800,000

Additional Cash Raised

$0

Cash Balance on Starting Date

2,800,000

Total Assets

2,800,000

Liabilities and Capital

Liabilities

Current Borrowing

$0

Long-term Liabilities

$0

Accounts Payable (Outstanding Bills)

$0

Other Current Liabilities (interest-free)

$0

Total Liabilities

$0

Capital

Planned Investment

Investors

$25,000

Total Planned Investment

$50,000

Loss at Start-up (Start-up Expenses)

($10,000)

Total Capital

$40,000

Total Capital and Liabilities

$40,000

Total Funding

$50,000

2.2 Company Ownership

The company will be organized as a limited-liability company (LLC), which will allow easy changes of ownership in the future, as well as certain tax advantages. Start-up investment is needed. The total valuation of the firm has been estimated to be modest, and a net worth to be realized during year 4 of the operation (according to the plan). As of this writing, 1 equity shares will be offered at17, 500 for 1% ownership each. In this way, 95% of the initial operation will be owned by outside investors. The remaining 5% of the venture is initially owned by the founder Benard kipkoech Bett, but the ownership will ultimately be shared among all future partners (to be recruited as the business grows).

As an option, 70% total return on investment might be paid after three years to the equity investors, whose ownership would be transferred to the firm partners. Thus each initial share would be returned 595,000 or 18% annualized ROI over three years. This plan presents an exit strategy but also offers the long-term upside of the business to any initial investors.

2.3 Company Locations and Facilities

Office space will be rented in the NAKURU town. this will present a central position to its customers at province level as business grow main office may be relocated to Nairobi so as to serve organization at national level. So as to take service nearer to customer's project offices will be located in rural areas and initial branches will be located in Kuresoi Molo this will tackle the first project at Mau complex. Other branches will be located in kedowa in Kipkelion district and kilgoris in Transmara all this offices will facilitate project to be undertaken in these areas.

3. Services

Farm Kenya Investment Consortium limited sell consulting service to help client at various stages of agricultural production as well as agricultural support services. The nature of the work we do is combination of technical engineering, economic forecasting and management strategy all on a strict confidential basis. Our basic we call be compensated with equity in the client's venture which will 20% of profit earned from the service offered.

3.1 Service Description

The management - consulting service of Farm Kenya Investment Consortium limited can be classified as follows.

 Service Farmer

(i) agri - Business management services

• - Land purchase
• - Feasibility assessment
• - Management information
• - Farm audit system
• - Total quality management

 (ii) Orchard Plantation development

• - Soil and water quality assessment
• - Production package
• - Infrastructure development
• - Land sourcing
• - Hydrological strides.

(iii) Nursery Technology

• - Plant material sourcing
• - Mother plant selection
• - Commercial nursery establishment

(iv) Vegetable cultivation

• - Off season production

(v) Floriculture

• - Horticulture
• - Ornamental gardening
• - Cut flower production
• - Essential all production
• - Mixed farming

(vi) Green house technology

• - Construction and election
• - Climate control
• - Semi automation
• - Computerization
• - Production packages.

(vii) Irrigation management

• - Water budgeting
• - Drip technology
• - Sprinkler technology
• - Water harvesting
• - Conservation technology

(viii) Cold storage

-Plant protection (pest and disease control)

-Measures in field crop and horticulture crops.

(ix) Seed production in field crop

(x) Animal husbandry dairy

(xi) Poultry

Other Service to farmers

Market research and business development

Confidential discussion with possible partners and vendors

R & D projects

Pilot and manufacturing facilities

Financial assessment (risk adjustment NPV) of capital investment options.

Affiliates Network services

Search for project funding (network to include potential investors)

Client education (seminars training etc)

Service to Agricultural industry players.

• - Production of raw materials continuous

Service to Banks

• - Loan market
• - Check of payment of loan
• - Loan management to ensure put on the intended use

Service to Insurance

-insurance cover to customers

-Payment of premium

Service to Franchised store

-Supply of the produce to the stores

Service to Agricultural vendors

-Market for their farm implements.

-payment of the there supplies

Service to the donors and NGOs

-implementation of there project

Service to the government

 -Implementation of its project

3.1.1 Who will Buy, and Why?

There are many individual both large scale and small scale farmers who have land but have not been able to earn from this resource because of lack of resource such as time, money and skills. There are also companies that have the capacity to produce more but they lack the raw material for continuous production. Not to forget government which is mandate to protect forest but has not been to protect it, also food security is also of major concern to the government.

Many organization NGO, donors government are will to invest their money to improve the life hood of Kenyan people but most project have not been sustainable.

Banks insurance companies have been interest in providing their services to farmers but their have not been able to facilitate the agricultural activities because of uncertain management of their farms by small scale farmer. Thus Farm Kenya Investment Consortium will provide opportunity to strike more business.

Agricultural business is one of lucrative business with potential of generating billion of shillings annually. Farm Kenya Investment Consortium Limited wishes to share this fortune with the various stakeholders in the agricultural sector with aim of improving food security in the country as well as more expert and employment opportunity.

In general there are countless individual and companies that want their existing business to become more sustainable or to enter new markets based on the concept of sustainable business system. Many individual companies state they want to play the game but don't know the rules and don't know how to play and are not quite sure of the impact of their overall business.

Farm Kenya Investment Consortium Ltd will help these individual understand the rules for these particular industry lead the pack and make a real difference.

How much does it Cost

For farmers service cost will be 10% of gains from the business for funding organization will earn 5% of the fund provided to farmer will require for any outsourced service 5% will be deducted when payment are made .vendors 5% will be added to the cost being procurement charges.

3.1.3 What is the service, exactly?

Our goal is to increase agricultural production as well as streamlining the channel of distribution of our agricultural products.

Also Farm Kenya Investment Consortium Limited will bring together all the player needed to ensure improved agricultural production. This player will be brought together as partners this include transportation companies, bank, insurance government research organization agricultural vendors and other agricultural and environmental consultant.

Farm Kenya Investment Consortium services will be of prime importance to the government and one of the main areas will be reforestation.

Some of specific agricultural problems we can solve through our consulting service.

(1) Problem of land segmentation - has been of major concern because it reduces land available for agricultural activities but the organization will be able to solve this problem by contracting will individual farmers to take up their land in which our organization will put in agricultural project and farmers and family members will share profit from production ratio than subdivide the land.

(2) Agricultural input - Farm Kenya Investment Consortium Ltd will solve this problem by partnering with vendors in supplying farmer farm input we will guarantee payment for the inputs.

(3) Agricultural implements - Farm Kenya Investment Consortium will partner with firm willing to provide implement for hire e.g. tractors and investors will to investigate in buying implement to be used in production.

(4) Technology - The organization will partner up with farms doing research and design in provision of hi - technology production this includes Green house technology, irrigation technology and provision of high quality production.

(5) Processing (value addition) .Farm Kenya Investment Consortium will partner with existing industry as well as near investors will to set up industries to process both for local and expert market agricultural produce The organization will try as much as possible to ensure that local own this.

(6) Forest conservation - Farm Kenya Investment Consortium Ltd recognize the impact that have been caused by heavy deforestation of our forest and one of major plan will be to replant trees. This will be achieved by partnering with forestry department and other forest conservation agency also brought into this cause will be community around this forest when project will be undertook as agro forestry which will benefit local giving them employment thus also avoiding deforestation which is caused by poverty.

(7) Banking and insurance investors will know be able to participate in agricultural hence widen their client base because of organized farming.

(8) Food security problem will also be a thing of past as Farm agriculture will ensure off season production as well as irrigation in semi arid and arid land.

(9) Cattle rustling - Farm Kenya Investment Consortium do understand the problem pastoralist community have been experiencing in trying to rear their animal and one is insecurity organization will bring together are stakeholder who and bring together their fragmented efforts.

3.4 Fulfillment

The key fulfillment and delivery will be provided by the partners and associates of the firm. The real core value is professional expertise, provided by a combination of experience, education, and hard work. The service is mostly provided by directly employing professionals, including the firm's founding partner full-time. The remainder of the service is supplied through a network of professional affiliates, which will have agreed to such collaboration with farm Kenya investment consortium ltd and affiliates. We refer to these allies as our Affiliate Network throughout this plan (more information in Section 3.6). Every project will be led by a partner.

Of course we will use the latest electronic communications tools. Every consultant with farm Kenya investment consortium ltd will be equipped with an internet connection, dedicated fax line and cell phone, with internet and e-mail capabilities. We will also communicate with the clients through their own dedicated web page, linked through our internet site, as described in Section 3.6 below.

3.5 Proprietary Computer Model

We will build a proprietary computer model this will assist in running organization efficiently and effectively these software should be able to trace all operation from the production to distribution The following list highlights specific  technical challenges that can be addressed by the program, and how the client's bottom line will be positively impacted:

• Keeping data relating to farmer daily and periodical production as well as expenses this will ensure timely payment of farmers

3.6 Future Services

Every business is an evolving one. As we work with the industry, we might uncover issues which we did not intend to address as a consulting company but for which we can add value. Over time, some of our core activities could change, as we build reputation and experience in a particular area. If the industry really grows to ~$300 billion/yr in 2013 (see Section 4.4), then in order to keep up it would seem that farm Kenya investment consortium ltd needs to also grow by a few orders of magnitude. Thus a 10 -person firm in 2009would become several hundred employees in 2013, if we actually tracked industry growth. This is an exciting possibility to grow up with a new industry and emerge as the leading agricultural consulting company. Additional offices will be added as needed, eventually national.

3.7 Affiliate Network

The Affiliate Network will be very important for the success of Farm Kenya investment consortium ltd. We will network with experienced top engineering and construction companies that can build irrigation, processing plants, government laboratories and facilities, non-government organizations, intellectual-property lawyers, and potential investors in agriculture. In addition, the network includes several industry experts. Some of the potential members of the network include the farmchem, Kenya seed, Ergerton University. Kenya institute of management

A margin of 15% will usually be added to all work outsourced or sub-contracted by farm Kenya investment consortium ltd exception is for engineering and construction, for which only initial work requiring our cooperation has the 15% surcharge.

4.0 Market Analysis Summary

Farm Kenya investment consortium ltd will focus on consulting to existing agricultural product manufacturers seeking raw material, as well as new organizations that intend to develop and/or build processing plants. Small scale farmers who make large part of Kenya farmers will be  another market  whose  our service will benefit them a lot ,in future the organization target to cover 80% of this market, large scale farmer as well as companies doing agriculture are among the target client and the big issue will be to convince the benefits they will derive by surrendering there farm to be managed by farm Kenya investment consortium ltd among our clients will be companies providing inputs and services to farmers this includes banks ,insurances and agricultural vendor. Also our service of conservation of forest will mean that we are going to deal with government and NGOs

4.1 Market Segmentation

A

gricultural Manufacturers.
These are corporations that use agricultural produce as a raw material for there production, examples include KCC, BROOKESIDE, TUZO, MOLO MILK, UNGA LTD, DELMONTE, CORN PRODUCT COMPANY,

Government and non governmental organization

Government and NGOs and also community based organization will form one of the major target market these is because the do participate in agriculture as well as environmental conservation.

Farmers
both small scale and large scale farmer will be another category of our customers and they will stand to benefit from our farm management service.

consumers
agricultural production aim to meet the needs of thousand of consumers both local and international demand, though other produce pass through processing large percentage do not need processing and are supplied directly to consumers, consumers stand to benefit from our service which will see them own franchised store and cheap food.

Other
Reserved for businesses which don't fall into an obvious sector but which nevertheless agricultural aspiration this business include banks insurance companies

4.1.1 Agricultural Manufacturer

Agricultural manufactures are consumers of agricultural raw material which require processing thus major aim of the organization will be to link up with companies so as to  determine there demand in terms of there capacity .these will ensure that they maximize there potential in terms of meeting both there local demand as well as export

4.1.2 Government and non governmental organization

Government and non governmental organization participation in agriculture and environmental conservation is quite vital and through farm Kenya consortium they will be able to achieve there objective easy this is because of organized manpower at the implementation as well as local ownership of the project thus  organization will work in collaboration with this institution where by the organization will run the project and NGOs and government provide funding as well as monitoring the project thus promoting efficiency.

4.1.3 Farmers

The major objective of the organization is to improve farming in Kenya thus the organization will target both small scale farmers as well as large scale farmers who the organization will then enter into contract with them to manage there farmer and through efficiency and effectiveness in production the organization is foreseeing increased business of up 70% of farmer by 2015

4.1.4 Consumers

Consumers are the population which buys agricultural produce from farmers ,the organization has better understanding of the problems which consumers face in obtaining this basic commodity thus through franchised stores consumer will not only obtain commodity at lower price but also share in proceeds from this stores. Thus organization target to be leading distributor of food not only nationally but internationally.

 4.1.5 Other

Reserved for businesses which don't fall into an obvious sector but which nevertheless agricultural aspiration this business include banks insurance companies

Market Analysis

Year 1

Year 2

Year 3

Year 4

Year 5

Potential Customers

Growth

government

3%

100

103

106

109

112

farmers

50%

10

15

23

35

53

Consumers franchised stores

10%

50

55

61

67

74

Agricultural industries

3%

10

13

16

19

22

Other

10%

25

28

31

34

37

Total

8.02%

285

304

327

354

388

]

4.2 Target Market Segment Strategy

The lower agricultural production among small scale farmers and the difficulties in obtaining farmer implements as well as lack of capital to fund project will make easy for the organization to obtain contract among farmers.

Inability of government in protecting forest as well as difficulty which government face in providing sustainable assistance to farmer present an entry strategy of obtaining contract with government  and hence the organization will put priority of running a forestation programs

Bank, insurance and partner who offer there service to farmer find it difficult in offering there service to farmer this is because of lack of good will and trust that they will be able

4.3 Market Trends

There are many market trends which are speeding up the need of revolutionizing the agricultural industry in Kenya and around the continent and the need to improve agricultural production. Key concepts are sustainability and the "triple bottom line" - paying attention to not only the economic but also the environmental and social aspects in all business activities.

Most companies, organizations, and individuals would probably characterize the perceived benefits our organization using at least one of the following:

• To increase food security in our country and around the continent.
• To reduced cost of production of agric cultural produce.
• To provide favorable effects on conservation, public health, and the environment.
• To diversify markets for raw agricultural and forestry products.
• To create jobs and enhance the economic development of the rural economy.

4.4 Market Growth

4.5 Competition and Buying Patterns

Why would someone choose another consulting company over us?

• Previous experience with another consulting firm.
• Our rates perceived to be too high.
• They don't see the need to hire any consultants.
• They do not think we have appropriate experience to add value to their project(s).

In aggregate, the viability of consulting firms tracks overall economic conditions or specific industries, depending on the targeted clients. However, the success of individual firms varies widely, regardless of how an industry is doing. Word of mouth is an important device, and repeat business is crucial. Reputation is immensely important, and reputation building in fact already started with the past experiences of anyone associated with Farm Kenya consortium ltd

4.6 Main Competitors

Well-known management-consulting firms
Example: Bayer east Africa, agrisystem e.a ltd, farm chem.  Etc.

Strengths: International locations managed by partners with a high level of understanding of general business; enviable reputations which make purchase of consulting an easy decision for a manager, despite the very high prices.

Weaknesses: General business knowledge does not substitute for specific (does not) expertise; fees are extremely high, and work is generally done by very junior-level consultants even though sold by high-level partners; focus on strategy but less emphasis on implementation, which is where many does not start-ups need the most help.

Non-profit organizations
Example: world vision,

Strengths: Modest fees for work performed; they have experience agricultural projects

Weaknesses: Although these org provide assistance to farmer they are not sustainable because they are donation driven and hence not sustainable

Strategic Value Proposition

Farm Kenya consortium ltd offers a relatively risk-free, variable-cost alternative to the normal way of agricultural production, for clients seeking long-term business sustainability and flexibility. In addition to many of the benefits already outlined in this plan, Farm Kenya consortium ltd can greatly enhance a clients reach and extend its position into conversations that might otherwise never have taken place. Also, we can approach alliances, vendors, and channels on a confidential basis, gathering information and making initial contacts in a manner that is not possible with the client managers directly.

In terms of net cost or NPV, the key value proposition of our services is that we pay for ourselves plus a healthy return on the client's investment. It is not unreasonable to suppose that in some projects the effective value we bring to the client is several-fold more than what we were paid in fees. From day one, our clients will be assured that our top-level people will do the actual work.

5.1 Marketing Strategy

We want to maintain a professional image, delivering high relative value while enjoying a comfortable, working relationship with clients. Although some confidential customers of ours will not promote us by word of mouth, it can be assumed that a client with a bad experience will freely communicate that message to other companies.

5.1.1 Pricing Strategy

Farm Kenya investment consortium ltd is priced lower than some prominent management-consulting firms. Billing rates can be negotiated somewhat at the early stages of the business, to generate sales. Generally, we need to avoid the temptation to drop fees to gain jobs, however. When a potential client questions the cost of a project, we need to be able to clearly explain the benefits of our high-level does not expertise. If their budget is reduced, then we must offer less service. Compensation by equity building will only be done after a thorough, careful evaluation of the client's business, and we might turn down jobs if it does not make sense to work on an equity-only basis.

5.1.2 Promotion Strategy

Our firm will be promoted through publishing articles in trade journals and business magazines, and presenting at relevant conferences attended by members of the potential client pool. Another form of reputation building, as a branding strategy, includes media opportunities at trade shows or other events. Direct mail, e-mail, and a strong internet presence will all play a part in the promotion strategy.

5.1.3 Marketing Programs

Marketing activities to be undertaken:

Novermber 2009--This is when feelers are sent out to see what potential clients might have interest in consulting services; discussions and network building to begin.

January 2010--Network building continues, with emphasis on building an initial Affiliate Network; attendance at industrial-biotechnology conferences and trade shows.

 April 2010--Brochures sent out by mail and e-mail (PDF) to top prospective clients, along with offer to come give a free seminar at their site may. 2010 attendance at all relevant conferences and trade shows.

June 2010--Seminars at clients; attendance at all relevant conferences and trade shows, with presentations/posters where possible; continue direct mailing of brochures.

July 2010--While most of time will be engaged in client work, there is still much marketing to be done, and time is available for it; continue with activities similar to previous 6 months.

5.1.4 Positioning Statement

For farmers, farm Kenya investment consortium offers very specialized professional expertise through an extensive network of expert and affiliates partners which will increase there agricultural production through modern  farm management technique and new production technology

5.2 Sales Strategy

We must always be aware of the general consulting phenomenon of the split between selling the job and fulfilling the job, which can lead to client dissatisfaction. The job should be developed and scoped, sold, and fulfilled by the same partner. Our clients should never buy a job from one partner and have it delivered by anybody other than that same partner.