Project: Business Plan

Business Type: Organic Farm

Course Title: Introduction to Business
Course No: BUS 101

Business Plan

Submitted To: Mr. Omar Nasif Abdullah

Submitted By: UNIT 1

Members:

Quazi Ishraq Jamil - 1420569630

Naimun Nahar - 1420937030

Mohua Islam Aurpa - 1420672030

Gazi Shaila Shafi Tisa - 1421548030

Md. Irfan Bin Alam - 1421703630

NORTH SOUTH UNIVERSITY

 I. Summary

Organic Farming is a system of ecological farming practices which is different from traditional

farming. Ecological or organic farming systems have the potentials to reduce some of the negative

impacts of traditional agriculture on the environment.

Commonly, Organic products are grown under a system of agriculture without the use of

chemical fertilizers and pesticides with an environmentally and socially responsible approach. This is a

method of farming that works at grass root level preserving the reproductive and regenerative capacity of

the soil, good plant nutrition, and sound soil management, produces nutritious food rich in vitality which

has resistance to diseases. Bangladesh is bestowed with lot of potential to produce all varieties of organic

products due to its various agro climatic regions. In several parts of the country, the inherited tradition of

organic farming is an added advantage. This holds promise for the organic producers to tap the market

which is growing steadily in the domestic market related to the export market.

Organic farming is all about growing crops or grain with the help of nature with the use of green

inputs or compost, plants residues, integrated pest management avoiding the traditional farming based on

chemical and synthetic fertilizers.

This is a proposed business plan, with a financial management and marketing model, for setting

up and operating an organic farm at Chittagong in Bangladesh. The business industry is still at a

beginning stage which has not yet been spread all over the country. We have named it Green Fingers

Agro Ltd. We will produce wheat, maize, bananas, tomatoes, brinjals, papayas, potatoes, leafy

vegetables etc. We will set up our own processing zone to process our produced grains, fruits and

vegetables and we shall set up our own outlets that will be located at Kazir Dewri, Karnafully Market,

Bahaddarhat and in all the prime locations basically where people go for green shopping. Financial

performance is projected for a three years period. To market organic products at premium price, Green
Fingers will obtain organic accreditation from the Organic Crop Improvement Association (OCIA)

Bangladesh .

The mission statement of Green Fingers would be:

“To provide customers with pure natural (organic) food that will ensure healthy life and

above all a healthy generation”

The proposal is for the establishment of a new organic grain production business at Sitakundu and

Rangamati in Chittagong. The proposed business will be a joint-stock company that obtains financing

from two sources: the owner putting BDT. 20000000 and a loan of BDT. 20000000. The land will be

purchased at Sitakundu and Rangamati in Chittagong, land will be prepared and buildings and storage

facilities will be constructed. Farm machinery will be purchased as used through tender or auction. We

will hire seasonal help at peak times of the year. The farm will run a three part rotation on a total of 25

seeded acres. In the first three years the business will sell produce on the conventional market. In the

fourth year, the farm will sell under the Organic Crop Improvement International Association (OCIA) as

well as Bangladesh Organic Products Manufacturers Association (BOPMA) certification in the organic

market. Buyers of the grain will be grain processors as well as the organic handlers.
 II. Business Description Model

Introduction:

The name of our business would be Green Fingers Agro Farm. And our business tagline would

be “Grow Organic! Save Environment” Without few exceptions, organic farming in Bangladesh is still

on experimental basis. Our business will be a Private Limited Company business with the registration of

Bangladesh Company Act 1995.

The principles of organic farming:

Organic farming is underpinned by a set of guiding principles, drawn up by the International

Federation of Organic Agricultural Movements (IFOAM). These are:

The principle of health: Organic agriculture should sustain and enhance the health of soil, plant, animal

and human as one and indivisible whole;

The principle of ecology: Organic agriculture should be based on living ecological systems and cycles,

work with them and help sustain them. Food production is itself a component of the local ecology. The

more in tune the production process is with that ecology, the smaller the chance of serious problems

arising;

The principle of fairness: Organic agriculture should be built upon relationships that ensure fairness

with regard to the common environment and life opportunities. This principle recognizes human and

social issues as well as environmental concerns;

The principle of care: Agriculture should be managed in a precautionary and responsible manner to

protect the health and well-being of current and future generations and the environment.

Characteristics of organic farming systems:

 Organic farming systems aim to put these principles into practice. They rely heavily on

farm generated, renewable resources and less on external inputs. They are driven by ecological

and biological processes to provide nutrition, and to protect against pests and diseases.

The main elements of an organic system are:

 Good soil management leading to good soil fertility, maintenance of high soil organic

matter, high levels of microbial activity and good soil structure;

 Well designed crop rotations for balancing fertility, controlling weeds, and minimizing

pest and disease problems;

 Preventative and non chemical approaches to weed, pest and disease problems;

 A profitable output of organic cash crops and/or livestock

The benefits of organic farming:

Organic systems reduce the impact of the farming system on the wider environment and

contribute to the conservation of wildlife and natural habitats. Specific benefits include:

increased biodiversity on farms and in the landscape at large; improved physical properties of

soil; lower levels of soil erosion; reduced nitrate pollution; restriction of pesticide use; reduced

emissions of ammonia, carbon dioxide and methane; reduced levels of controlled waste;

increased energy efficiency; improved animal welfare; and enhanced water efficiency and

improvements to water quality.

Background of the industry:

Based on International Federation of Organic Agricultural Movement (IFOAM, 2005)

statistics,
 “Total land area under organic cultivation in Bangladesh is 0.177 million hectares that is only 2

percent of the country’s total cultivable land and till 2005 only 100 of its traditional farms have

been converted into organic”(Sarkar Organic Farming Poster).

Actually, organic farming has been introduced in the country particularly by the NGOs. According to

IFOAM (1996),

“138 NGOs are the member of the Forum for Regenerative Agriculture Movement (FORAM), 47

of them are engaged in practicing organic agriculture, 87 are intending to practice sustainable

agriculture and 3 of them are engaged in advocacy, lobbying and campaign for sustainable

development in Bangladesh”(Sarkar Organic Farming Poster).

Among these NGOs, PROSHIKA is the pioneer of organic movement in

Bangladesh with their “Ecological Agriculture Program” (EAP).

“Since 1978 PROSHIKA began to spread ecological practices among its group members by

growing varieties of seasonal vegetables”.

PROSHIKA's EAP has involved successfully 759,831 farmers in organic cultivation in 226,597 acres of

land. Out of these, 222,425 farmers started to practice ecological agriculture in 78,696 acres of land in the

last five years. It has also introduced an organic vegetable marketing project to promote the consumption

of organic vegetables. Currently, one marketing channel of PROSHIKA is selling eco-friendly produce to

the public in Mirpur area of Dhaka city. Moreover, mobile vans are used to sale organic vegetables in

some areas, apartment complexes, mega shops and departmental stores” (PROSHIKA, 2004). It has also

received assistance from World Bank project in between July 1999 and March 2003 for producing

organic vegetables whilst at certification stage they could not progress further (The New Nation, 2006).

(Sarkar Organic Farming Poster)

 A few private companies have started to invest their capital in the field of organic. Among those

companies Kazi and Kazi ltd. is in the frontlines. They have been established an organic tea garden at

Tetulia of Panchagarh district. Kazi and Kazi organic tea is certified as organic by the SGS organic

production standard in accordance to the EU Regulation 2092/91(Tea International, 2005.). They also

produce fresh organic vegetables and herbals to sale in their super market ‘Meena Bazar’ in Dhaka city as

well as in Chittagong city (Sarkar Organic Farming Poster).

III. The Marketing Segment:

Segmenting, Targeting and Positioning:

A growing appetite for organic food in the educated and conscious society we have found that our

target customers would be the processors, organic handlers, supermarkets/superstores, and the educated

class. Organic handlers are those who buy organic products from farmers and other suppliers, process or

repack the goods, and then sell the value-added resulting products to retailers, institutions, and other

handlers, or directly to consumers or restaurants. As we have found information that

“Nearly all studies find that consumers with higher levels of education were the

most willing or most likely to purchase organic products (Dettmann and Dimitri,

2010; Zepeda and Li, 2007; Krystallis et al., 2006; O’Donovan and McCarthy,

2002; Cicia et al., 2002; Fotopoulos and Krystallis, 2002; Magnusson et al., 2001).

The impact of different levels of education varies among studies: households with

graduate degrees were less likely to buy organic products (Durham, 2007; Thompson,

1998), while households with postgraduate education (these households

attended graduate school but might not have earned a degree) were more likely to

buy organic vegetables (Dettmann and Dimitri, 2010)”. (Internet Source)

Our products will include wheat, maize, bananas, tomatoes, brinjals, papyas, potatoes, leafy vegetables

etc. We shall have our own processing zone to process our produced crops and we shall set our own

outlets that will be located at Kazir Dewri, Karnafully Market, Bahaddarhat and in all the prime locations

basically where people go for green shopping. The target market is situated all over Bangladesh starting

with the market at Chittagong. Our target markets are the processors, handlers and different superstores
like Agora Superstore, Welmart, Khulsi Mart, Outlets of Swapno Mega Shop located at Chittagong city.

Other target markets that will be focussed on include, marketing to the capital city of Dhaka which is the

living place of around 17.6 million people (Internet Source). The first three years of production will be

sold with traditional prices as convincing consumers is the ever difficult job in the world. We shall set

reasonable price and focus on different promotional offers like seasonal sale, discount, and price coupon

lottery, box schemes (Bundle package) to attract the customer. We shall go for direct marketing (sales

force and public relations), e-marketing (internet, phone-calling, mailing) and mobile-marketing (like

Grameenphone Cellbazar) to promote our products and market. We shall also arrange and attend different

agricultural fair, seminars, symposium, and workshops to promote our business as well as to have a

variety of customer groups. The Green Fingers Agro Farm will take the decision of when and to whom to

sell, but most of the product will be sold primarily to processors, organic handlers and superstores.

Organic handlers are firms that buy organic products from farmers and other suppliers, process or repack

the goods, and then sell the value-added resulting products to retailers, institutions, or directly to

consumers or restaurants. Because of the competition for organic ingredients, handlers in recent years

have relied on contracts versus spot-market sales to procure needed inputs. (Marketing U.S. Organic

Foods: Recent Trends from Farms to Consumers). There may be competition from other growers because

the organic market is yet at an early stage. The existing organic farms as well as non-organic farms are

our competitors. The majority of the sales revenue will come from the processors, organic handlers and

superstores who will tend to buy the products. The organic market is growing, but organic buyers have

problems sourcing sufficient product.

The marketing will be completed by contacting buyers or processors or organic handlers

and selling to the highest bidder. Crops that are grown on the farm will be sold straight from the

farmyard to the buyers or processors, which is our target market.

The Marketing plan budget consists of using the phone, Internet, occasional trips to

organic handlers, superstores and trade shows or conferences. Another way of marketing is
through the Internet and phone. The internet gives us the means of locating prices and buyers all

over the world. New buyers that are advertising on the Internet will be discovered and contacted

if need be. Occasional trips to clients will keep us in contact with the buyers, and this contact

will help us to remain aware of what is occurring with the business and also about market trend.

Target Market:
Organic Handlers/Processors-50%

Superstores-35%

Health Conscious General People-10%

Others-5%

Positioning Strategy:

In the case of organic products, current positioning is mainly based on some attributes of

the products, either positive (healthy, better tasting) or negative (produced without chemicals,

GMO free, with no added artificial flavoring, preservatives, etc.). Further, current positioning is
usually pursued with a general symbolic reference to the need/goal of maintaining health, which

appears one of the most relevant values in our long-living, aging Western society.

Promotion tools: Marketing communication mix:

Certification:

We will go for the Organic Production Certification was issued by the Swiss Societe

Generale de Surveillance (SGS) the world authority in verification, testing and certification.

As the BOPMA’s proud member HALAL & ORGANIC BANGLADESH LTD. (HOBL)

is only the Halal and Organic certification body in Bangladesh we will also get certified by it.

Advertizing Strategies:

Trade Show and Trade Fair Participation and Sponsorship: Every year we will

participate in the “International and National Trade Shows” with a view to

introducing our goods which is 100% natural and organic to the prospected buyers.

We will sponsor different environmental events and arrange workshops to convince

our prospect markets.

Electronic and Print Media: We shall go for extensive advertisements on electronic

media like television, radio, newspapers, magazines, websites, billboards etc. to

promote our products.

 Sales promotion and Public Relation: We will provide sales discounts & free delivery for

the large scale buyers. We will have a separate team for maintaining & building strong

relationship with the existing & prospective buying agents and customers respectively.

Personal Selling: We will hire some students as the promoter of the brand. Individually,

each target consumer will be knocked & known about the company and its offerings, also

making an opportunity to create good relationship with consumers. This campaign will run

quarterly. (For Bangladesh only).

Direct Marketing:

 Direct mail and brochure and phone calls: We will send mails to address of the

target buying agents where they will be given an offer of different packages. A

company brochure will also be sent as well to let them know them about our

company and product.

SWOT Analysis (Strengths, Weakness, Opportunities and Threats)

Strengths:

i. Hire experienced farm labor

ii. Diversified production

iii. Healthy and Eco-friendly products

iv. Superior location for climate, moisture

v. Lower labor cost

Weakness:

i. Market price taker not the setter

ii. Heavy investment needed than traditional farm

 iii. Limited information is available on production practices, outputs

iv. Convincing the customer would be the most challenging task

v. Limited land holdings

Opportunities:

i. Market may expand at 5%-10% rate per year, emerging markets throughout the country

ii. Organic products a growing trend – Creating higher demand

iii. Price is 10%-15% higher than conventional price leads to higher revenue

iv. Availability of agricultural labor

v. Healthy environment & green marketing

vi. Corporate social responsibility

Threats:

i. High competition in future by copying the idea

ii. Industry at an early stage

iii. Uncertainty of launching a new product

iv. Government regulation and legislation

v. Potential pollution from food adulteration and synthetic fertilizer used crops

vi. Mostly dependent on nature

IV. Research, Design, and Development Segment

Under this segment comes research and development strategy of the venture that will be

launched. Green Fingers Agro Farm will extensively research on potential customers to

understand the customers’ needs and wants and convert them into demands. It will also research
to ensure a premium price for the customers. As we think of setting up an R & D department to

conduct research, design; develop new crops, new processes, new marketing and financial

policies etc.

V. Manufacturing Segment

We shall take lease of 15 acres of land at Sithakundu, Chittagong and another 10 acres of

land at Ranghamati, Chittagong where our farm will be located. At farm we shall set up our all

necessary arrangement like crop fields, machineries, technology, compost plants and so on. As it

will be located at Chittagong wage rate would be lower. We shall collect the healthy seeds from

the local sources.

Necessary Tools and Equipments:

An organic vegetable farm will need a stock of basic machinery and equipment.

Mechanization will greatly reduce hand work and will save money in the long run. Buying

machinery and equipment can involve going to farm sales, dealers and advertisements in the

farming press.

Tractor: Choose a light weight machine and pay a bit more for reliability. A 35 - 65 horsepower

2 wheel drive is adequate for most needs, and a front loader is a useful addition

Plough: A two furrow plough is probably the best option, with a disc to cut the furrow and a

skimmer to make sure the entire slice is properly inverted. Avoid the temptation to plough too

deep which brings up inert subsoil, as well as wasting fuel. Heavy land can benefit from early

ploughing so frost can help develop the crumb. Lighter land can be ploughed and cultivated

straight away;

Manure spreader Manure is a very important source of nutrients in organic systems, so a muck

spreader is a correspondingly important piece of kit;

Harvesters can pick up crops like carrots, onions and potatoes. Choose a versatile machine in

good condition, such as the Faun harvester.

Hoes are basic, but very important pieces of machinery which can be linked into the planting and

drilling systems. Regular passes are best, so the weeds remain small and easily killed.

Pest, Disease and Weed Control

Regular crop monitoring is vital to identifying and managing diseases like scab, powdery

mildew and canker, whilst aphids, mites and caterpillars will attack fruit and leaves. Biological

control is especially important in orchard situations because natural predator and parasite

populations can build up over several seasons. Some problems may emerge that will require

permitted treatments, but you will need to think about their impact on the existing pest-predator

balance before you use them.

Manufacturing Process of Organic Crops

Collecting seeds

Selection
Selection of
of seeds
seeds

Preparing the seed-bed

Planting the best seeds

Weed,
Weed, pest,
pest, diseases
diseases control
control

Apply
Apply Integrated
Integrated Pest
Pest management
management

Harvesting the ready crops

Storing in a cool dry place

Packaging if needed

Marketing
VI. The Management Segment:

The Organo gram

Human Resources

Green Fingers Agro Farm will be run as a partnership concern. The partners will be the operator

with education, and management experience. The job description requires familiarity with farm

equipment and machinery, a proven interest in organic food production, decision-making skills,

bookkeeping, and the overseeing of the organic accreditation process. Compensation for partners’

management of BDT 60000 to the three partners per months will be paid in the fourth year of production

and increase at a rate of 2% per year. No compensation will be given in the first three years as the

partners will have to depend on additional income for personal use.

Green Fingers Agro Farm will require additional seasonal labor. Hired part-time help will consist

of one employee for approximately 200 hours in the spring and 200 hours in the fall. This person will be
from the agricultural or botanical background or farming experience. This person will carry out the

seeding duties; remove weeds from the fields if needed (rouging), summer fallowing, harvesting and any

other duties. The daily wage will be BDT. 500 and will work an average of 40-60 hours a week. The

part-time labor will be paid as custom labor. Therefore, no deductions will be paid and it is their

responsibility to cover their income tax calculations.

VII. Contingency & Exit Plan:

 To minimize the risk factors we will set some contingency or situational planning. We

will expand our farming areas all over the country to cope with the changing situation or

increasing demand.

 We will insure our company so that we can minimize the losses in case of natural

disasters.
VII. Financial Segment

Resource Requirements:
The initial start-up capital for Green Fingers Agro Ltd. will be BDT 40 million. The investment will be
taken from Premier Bank Ltd. as a 10 year term loan at 12 % interest. Loan will be repaid within next 10
years.

The following is a start-up summary of the resource required:

Particulars Amount (BDT)

Legal expenses 200,000
Marketing expenses 2,000,000
Office equipment & Rent 1,000,000
Factory equipments 500,000
Pick-up van(2) 2,800,000
Delivery Van(1) 1,500,000
Machineries & Building 26,500,000
Working capital 10,000,000
Total 40,000,000

Requirement Distribution

Means of Finance Amount in BDT Percent (%) Total

Debt 20,000,000 50%

□ Summarized Pro Forma income statement:

Particulars 2014 2015 2016

Sales 631,739 1,560,870 3,195,478

Cost of Goods Sold (293,826) (621,785) (1,365,508)

Gross Profit 337913 939085 1829970

Total Selling & Administrative expenses (167,584) (200,911) (274,599)

Earnings before Interest & Tax 170329 738174 1555371

Interest Expenses (20439) (88581) (186645)

Tax (56209) (243597) (164247)

Earnings After Tax 93681 405996 1204479

Detail income statement –Appendix 1.

Assumptions related to projection:

 Accounts receivable will be 10% of Sales & Accounts Payable be 7.5 % of Sales.
 Machineries will be depreciated in straight line method over 10 Years.
 Office equipment, Pick-up Van, Delivery Van & Factory equipment will be depreciated
in straight line method over 8 years.
 Cost will increase @ 10% per Year
 Tax rate is 37.5%
 Share Capital BDT 10,000,000 [10000 shares @ BDT 1000 Per]
 □ Summarized Pro Forma balance Sheet:
-[All figures are in BDT]
Particulars 2014 2015 2016

Assets

Total Current Assets 373,859 744,626 2,219,636

Total Fixed Assets 419,203 370,290 687,283

Total Other Assets 2,319 1,739 1,159

Total Assets 795391 1116655 2908078

Liabilities & Equity

Current Liabilities 50000 200000 1,312,241

Long-Term Liabilities 300000 365750 497,384

Owners’ Equity 445391 550905 1098453

Total Liabilities & Equity 795391 1116655 2908078

Conclusions
 Summing up, we have come to the conclusion that the organic sector could develop new

products, uses and situations that would add new values beyond the traditional farm products.

The successful organic certification for the fourth year of production, maintaining the industry average

growth for organic crops and receiving the premium prices expected are the major factors with regard to

the success of that business. The Green Fingers Agro Limited would be a successful venture if it could be

started up on its own. As organic farming ensures sustainable growth of products throughout the years

and enhances biodiversity, it would be a worthwhile venture to feed the upcoming generation.

VIII. Appended Part

Appendix1.
Income Statement:

Particulars 2014 2015 2016

Total Sales 631,739 1,560,870 3,195,478

Cost of Goods Sold (293,826) (621,785) (1,365,508)

Gross Profit 337913 939085 1829970

Operating & Selling

Expenses
Salaries 110000 450000
120000
Utility bills 11878 15911 25491

Repair & Maintenance 2060 3250 20000

Marketing expenditure 36400 50750 100000

Miscellaneous 7,246 11000 30000

Total Operating Expense 167584 200911 625491

Operating profit 170329 738174 1204479

Interest Expenses (20439) (88581) (186645)

Earnings Before Profit 149890 649593 1368726

Tax (56209) (243597) (164247)
Earnings After Profit 93681 405996 1204479

Appendix 2.
Balance Sheet: [USD]

Particulars 2014 2015 2016

ASSETS

Current Assets

Cash 310685 588539 1900088

Accounts receivable 63174 156087 319548

Total Current Assets 373,859 744,626 2,219,636

Fixed Assets

Delivery Van 19,022 16,304 32,609

Less: Accumulated depreciation

Pick-Up van 35,507 30,435 60,870

Less: Accumulated depreciation

Office Equipment 12,681 10,870 21,739

Less: Accumulated depreciation

Factory Equipment 6,341 5,435 4,529

Less: Accumulated depreciation

Machineries 345,652 307,246 567,536

Less: Accumulated depreciation

Total Fixed Assets 419,203 370,290 687,283

Total Other Assets 2,329 1,739 1,159

TOTAL ASSETS 795391 1116655 2908078

LIABILITIES AND EQUITY

Current Liabilities

Accounts payable 47380 117065 284661

Total Current Liabilities 47380 117065 284661

Total Liabilities

Investment capital 748011 999590 2623417

Total Capital

Total Liabilities & Stockholders’ Equity 795391 1116655 2908078

Assumptions related to projection:

 Accounts receivable will be 10% of Net Sales & Accounts Payable be 7.5 % of Net Sales.
 Machineries will be depreciated in straight line method over 10 Years.
 Office equipment, Pick-up Van, Delivery Van & Factory equipment will be depreciated
in straight line method over 8 years.
 Cost will increase @ 10% per Year
 Tax rate is 37.5%
 Share Capital BDT 10,000,000 [10000 shares @ BDT 1000 Per]