1 HECTARE TOMATO BUSINESS

OLAYIMIKA FARMS LIMITED

olayimikafarms@gmail.com
Executive Summary
● Olayimika Farms Limited formerly operates as a sole proprietorship business
incorporated on 30th day of October, 2020 but later upgraded into a Limited on 19th day
of July, 2023. And has been into farming of leafy and fruity vegetables like Kale, Lettuce,
Bell peppers, Habanero, Tomatoes since july 4th, 2019.

● Olayimika Farms Limited has resolved to establish a staggered one (1) hectare tomato
production to take advantage of our growing consistent demand for fresh tomato.

● With my experience helping Good House farm at Port Harcourt, MAO Farms at Ekiti
setting up and managing similar crops on an expanse of Hectares of land, I am certain I
can successfully manage 1 hectare of my own with good productivity.

● With an experienced management team, we use manual operations tasks.

● By working with qualified consultants or workers, we provide quality control. We

effectively manage both organic and inorganic waste.

● The business is profitable, as shown in our projection.

● Risk associated with this venture has been identified and will be managed.
Introduction
Company Background and Management
Olayimika Farms Limited was established to operate in the business of farming, marketing and
trading of vegetables, spray service provider, training and consultancy service and other
agricultural related services.
She has been in the trading of tomato, habanero pepper and bell pepper, which has
commanded market acceptability through fresh consistent supply of these produce. The
business has also involved in the cultivation of vegetables crops.

Ownership and Management

Olayimika Farms Limited is Limited company owned by Onaolapo Farouq and Wife with the
support of business drivers managing other various part of the business.

Assessment of Business Operations

Olayimika Farms Limited trades tomato, habanero and bell pepper. Olayimika Farms Limited
also engages in vegetable production; it has a land in Awowo village, Ewekoro LGA of Ogun
State.
The business need, having convinced about market acceptability of the products, have now
resolved to establish a one (1) hectare staggered tomato production to meet our growing
demand.

Business Case
Opportunities For Tomato Production In Nigeria
Nigeria produces 1.5 million tons of tomato per annum, with 0.7 million metric tons post-
harvest loss. Tomato demand in Nigeria is put at 2.2 million metric tons per annum, leaving a
gap of 700,000 metric tons also equivalent to 700 million kg.

The popular tomato producers in Ogun are as follows:

 1. Obasanjo Farms Ltd – Conglomerate (Agriculture, Aquaculture, Poultry)
2. Soiless Farm Lab – Vegetable production and Agro trading
3. BIC Farms – Vegetable production
4. FruityVeggies – Vegetable production and Agro trading.

Market Features And Strategies

Demand-Supply Dynamics and the Business Strategies
As of 2022, farmers and other suppliers are unable to consistently meet Olayimika Farms
Limited need for 800 kg of fresh tomatoes each week.
Olayimika Farms Limited plans to start a project in response to the aforementioned issues. This
project will produce 20 tons of tomatoes annually with the goal of satisfying the current
demand of 800 kg of tomatoes each week.

Business Production Process

Sowing of seeds: Cocopeat is soaked and washed, the washed cocopeat is mixed with a potting
mix in ratio 1:2. Fill the mix into the seed trays by creating depth, sowing of seeds, covering and
applying water sparingly. Keep trays in dark room till first sprout.
Transplanting: Prepare field and continue to water seedlings sparingly to keep substrate moist
and not wet. Start micro feeding after the first true leaf until 4 true leaves appear. Sterilize your
soil and transplant 3 weeks after germination.
Germination and Growth: Transplant and establish by planning your supply-in. Establish Good
Agricultural Practices (GAP) and fertigation program. Harvest should start 90 days after
transplant.
Sales: Fresh harvested tomatoes are temporary kept in crates and supplied in either crates or
cartons. Partnership with transportation business owner are in place to convey harvested
produce without delay.

Sourcing of Raw Materials

Over 20 farmers with whom the business already has commercial ties will be contacted in the
short-term. Olayimika Farms Limited will continue to buy from them on mutually-agreed terms
and conditions.
As a long-term Strategy, the business plans to carry-out backward integration by cultivating
tomato on 10 hectares land at Awowo, Ewekoro LGA of Ogun state. This strategy for sourcing of
tomato (about 400 tonnes per annum) will enable the business to take direct control of its own
supplies.

Competition And Trends

Olayimika Farms Limited has competitors in each of the two markets it intersects.

Tomato farmers
There are farmers who cultivates vegetables and sell them directly to businesses. Also they sell
at a very lower price point given the reduction in the chain of distribution process. Beyond that,
one of the biggest competitive forces in the vegetable market for Olayimika Farms Limited
Enterprise is the convenience factor. Buyers may decide too late that they’d need vegetables,
and opt for the open vegetable market (Mile 12) if supply fails.
Tomato suppliers
The supply chain also includes larger companies (Freshly Yours, Celplass Farms Limited, Foodco
Mall, Shoprite mall in lagos) that pay more for the crops that the farmers are ready to sell.
These farmers sell to the highest bidders, which results in small business owners (Olayimika
Farms Limited) failing to meet supply requirements.
Differentiation
Olayimika Farms Limited will primarily rely on budget friendliness to stand out in the market,
with quality and consistency as a secondary strategy. While there are multiple categories of
competitors and substitutes for vegetables, Olayimika Farms Limited has a much more
convenient and unique offer for businesses.

Conveying Inventory
Olayimika Farms Limited has an existing partnership with transportation business owner that
are in place to convey harvested produce and inputs without delay.
Human Capital
For effective and efficient running of the business, following staff members are required:

S/N Position Number

1. Farm Manager 1

2. Agronomist 1

3. Farm Hands 6

It is important to note that the filling of vacancies would be done on a need-to-have basis,
implying that, for reasons of prudence and effective cost control, not all staff will report from
the start. This strategy is meant to ensure that persons do not continue to receive salaries while
they are not sufficiently engaged.

Analysis of Financial and Commercial Viability

This component of the feasibility plan illustrates the predicted costs, operational expenses, and
revenues from the business, together with the underlying fundamentals supporting the
forecasts, to show the extent to which this firm is financially and commercially viable.
Additionally, it displays the funding sources and the picture painted by the predicted cashflows.

Revenue and Costs of Production

The production of tomato is based on yield per hectare (i.e. 40 tons per annum) with good
agronomist practices. Therefore, the figures in the table below are based on the following:

Revenue and Cost of

Production

Qty Factor Price per Total

Unit
Finished Product

Fresh Tomato 40,000 800 32,000,000

Fixed Cost

Land Clearing and 1 750,000 750,000

Preparation
Comprehensive Drip Irrigation 1 1,750,000 1,750,000
System

Surface Pumps (5.5HP) 1 200,000 200,000

2000L Tank 2 250,000 500,000
Fertigation (Venturi) System 1 250,000 250,000
pH Meter 2 20,000 40,000
EC Meter 2 80,000 160,000
Scales 2 20,000 40,000
Manual Knapsack Sprayer 5 18,000 90,000
Plastic Mulch Film 18 100,000 1,800,000
Bamboo (6m length) 2000 500 1,000,000
Horticultural Twine 15 25,000 375,000
Weighing Scales 2 100,000 200,000
Crates^ 30 4,500 135,000
Generator 2 250,000 500,000

Variable Cost

Tomato Seeds 75 sachets 22,000 1,650,000

Neodine 80 litres 4,000 320,000

NPK 20:10:10 40 19,000 760,000
NPK 15:15:15 10 35,000 350,000
NPK 12:12:17 15 20,000 300,000
Calcium Nitrate 20 37,000 740,000
Potassium Nitrate 10 40,000 400,000
Magnesium Sulphate 10 50,000 500,000

Pesticides 3 120,000 360,000

Herbicides

Top Star 20 (250ml) 5,000 100,000

Glyspring 10 litres 2000 20,000

Running Cost

Farm Manager 1 12 (months) 100,000 1,200,000

Agronomist 1 300,000 300,000
Farm hand 6 12 (months) 40,000 2,880,000
Fuel 30 20,000 600,000
Generator Maintenance 24 5,000 120,000

Total Fixed 7,290,000

Total Variable Cost 5,500,000

Total Running Cost 5,100,000

Cost per Unit 447.25

 Gross Profit 14,110,000

Sources of Financing
Being a major activity, implementing the tomato project will cost N17,890,000 which will come
from the following sources:
1. 2 year loan term of N12,00,000 from a financial institution
2. Owner’s equity of N5,890,000

Projected Cashflow
The following projection of the business’ cashflow for three years is derived from earlier
projections on output, revenues and expenses:
Using 20% interest on Loan
Cash Flow Forecast Year 1 Year 2 Year 3
Operating Activities

Net Earnings 11,710,000 11,710,000 11,710,000

Plus: Taxation - - -
Plus: Interest Expense 2,400,000 1,200,000 -
Net Operating Cash Flow 14,110,000 12,910,000 11,710,000

Investment Activities

Purchase of CAPEX (3,603,000) - -

Net Investing Cash flow (3,603,000) - -

Financing Activities

Equity Injection 5,890,000

Loan Taken 12,000,000 - -
Loan Repayment (6,000,000) (6,000,000) -
Loan Interest (2,400,000) (1,200,00) -
Net Financing Cash flow 8,400,000 (7,200,000) -

Risk Assessment
Supply- Related Risks
(a) Access to inputs for production: If there are interruptions in the availability of inputs,
then activities will probably stall. Olayimika Farms Limited would pick a dependable
provider who has been tried and true to reduce this danger.
(b) Issues with logistics during input supply could cause a delay in the timing of inputs for
production purposes. The goal is to partner with a reputable logistics provider.

Production- Related Risks

(a) Cases of agricultural laborers quitting their jobs without giving notice: If this were to
happen, farm operations would probably be placed on hold. The company would have a
culture of fostering positive working relationships with the employees in order to reduce
this danger.
(b) Breakdowns of equipment and machinery would delay the company's manufacturing
schedule. Machines and tools would undergo routine maintenance and cleaning in order
to reduce this risk.
(c) Natural disasters and disease outbreaks are uncontrollable, and their effects could
completely shut down the production line or, more frequently, the entire farm. The
company will investigate several insurance options, such as business loss insurance and
special peril insurance, to help reduce this.

Market- Related Risks

 Poor sales as a result of low awareness, the economic downturn, a decline in disposable
income, and other variables pose a risk. The following measures will be taken to reduce
these risk categories:
(a) . Olayimika Farms Limited will use two primary marketing techniques. This will give me
various chances to pursue partner promotions with well-established companies given
my expertise in the agricultural sector and current connections with some food-related
organizations. I can also reach my ideal clients by using my social media like twitter,
facebook and linkedIn.
(b) In order to boost the number of sales and sales revenue, the company will also
investigate sales strategies such special offers, discounts, and free delivery.

Collection- Related Risks

This risk relates to situations where accounts receivable do not arrive as expected, potentially
affecting the cash flow of the company. The usage of cash discounts on account receivables
would reduce this risk.

Concluding Remarks
The planned investment will allow the firm to explore the potential presented by the high
demand and significant supply gap present in Nigeria's tomato market, for which a loan of
N12,000,000 is required to enable the business to construct her own production method.
Sales and profitability indicators indicate a successful endeavor. We will be profitable at N800
price per unit from a 447.25 cost per unit..
All operational issues that can hinder the project's progress have been officially identified and
have been evaluated to determine whether they can be mitigated.
Based on the foregoing, the tomato project is recommended for funding.