Kaisa Farm Business Plan

KAISA FARM BUSINESS PLAN

BUSINESS PLAN

KAISA BAMULANGEYO AND SONS LTD.

Date:

December, 2009

Author:

Joseph Kaisa

Address:

P. O. Box 16 Jinja Uganda

Tel E-mail

: +256(0)-755-489171 : [email protected]

Confidential & Copyrights © 2009 ± Request permission to share or copy from the author

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CONTENTS 0. Executive Summary ........................................................................................... ........................................................................................... 3 1. THE BUSINESS BUSINESS ........................................................................................... ................................................................................................ ....... 4 2. THE ENTREPRENEUR ENTREPRENEUR ...................................................................................... ........................................................................................37 ..37 3. THE FINANCIAL PLAN ..................................................................................... ..................................................................................... 399 4. THE DEVELOPMENT DEVELOPMENT IMPACT ........................................................... ............................................................................ ................. 455


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CONTENTS 0. Executive Summary ........................................................................................... ........................................................................................... 3 1. THE BUSINESS BUSINESS ........................................................................................... ................................................................................................ ....... 4 2. THE ENTREPRENEUR ENTREPRENEUR ...................................................................................... ........................................................................................37 ..37 3. THE FINANCIAL PLAN ..................................................................................... ..................................................................................... 399 4. THE DEVELOPMENT DEVELOPMENT IMPACT ........................................................... ............................................................................ ................. 455


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0. Executive Summary Concept The Dairy industry in Uganda has to date in general, not adopted the improved managerial and technological technological advances available available world wide, wide, which would have resulted in improved, efficient and profitable production of milk and other dairy products for the majority of Ugandans. Through this this business plan, Kaisa Bamulangeyo and and Sons Ltd., a Ugandan Company and part of a breeders association will use leading dairy management and technology to improve milk production levels, efficiency and profitability. Promoter Kaisa Bamulangeyo and Sons Ltd. is a Ugandan company with over 25 years experience in dairy farming. The company is a family family business with eleven eleven shareholders. The Market The national milk market is estimated to be 660 million litres per annum, valued at Ug. Shs. 330 billion. billion. The current supply, supply, as estimated by the annual annual report on Development Development of Animal Production and Marketing by the Ministry of Agriculture, Animal Industry and Fisheries, is 625 million litres. The market t herefore is not not satisfied by the current supply. Management Kaisa Bamulangeyo and Sons management has long and substantial experience in dairy farming. The company has in addition addition to its experience established a strategic alliance with a dairy production and reproduction expert. Operations The operations will centre around the goals of achieving the production milk per day and the starting of production production of cream and butter. production, high yielding yielding cows will be be purchased to add to the existing also be improved nutrition nutrition and improved farm operations. Appropriate work processes will be adopted to achieve these objectives.

of 3,295 litres of To achieve this stock. There will technologies and technologies

Financials The projected sales revenue is in USD 512,816 for the first year; 725,699 for the second year; and 1,054,417 for the third year. The net profit is projected in USD to be 143,076 for the first year; 154,244 for the second year; and 291,597 for the third year. Overall, therefore, the financial basis for the concept to produce and sell dairy products in Uganda is promising. Investment The total investment in plant and equipment is estimated at USD 662,170. Kaisa Bamulangeyo and Sons. Ltd. expects to raise this through a combination of debt, equity, retained earnings and own contribution contribution.. Conclusion The final conclusion to be drawn is that the promoters and partners have the required technical capacity and are committed to running an efficient and profitable dairy enterprise, the business concept and ideas are realistic, the macro economic and political conditions are acceptable, the market potential is there, the human resource situation at Kaisa Bamulangeyo and sons Ltd. can be improved adequately, the risks and negative environmental impacts can be remedied, the financial viability of the project is commendable and the farm¶s impact on Uganda¶s society overall will be positive. The business plan is therefore technically and economically viable.


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1. THE BUSINESS 1.1 Business model and value proposition Kaisa Bamulangeyo and Sons Ltd., hereinafter referred to as the Kaisa Farm, is a Ugandan company whose principle business and subject of this business plan is milk production and processing. processing. Milk produced produced by the farm is sold both both as raw and processed processed milk. The farm is a member and leading organiser of the Kamuli Breeders Association and the East East African Association of Dairy Stakeholders Stakeholders . The farm is also also currently mobilizing small milk producers into an association for purpose of collecting and selling milk. The raw milk is sold to price and quality conscious households with relatively lower incomes, in suburban towns / trading centres on the Kamuli ± Jinja highway; around Jinja town; on the Jinja Jinja ± Iganga highway highway and around Iganga town. The Kaisa Farm targets to increase its customer base in this market segment and gain loyalty from these customers, to whom the biggest milk suppliers in the country do not sale too, given that they are not in the main urban centres where the biggest milk suppliers target. To do this, the farm will offer: (1) High quality milk sold in permanently established farm outlets within the proximity of the customers residences, with refrigerators to keep the milk at 4 degrees centigrade that is not adulterated as per normal practice of raw milk vendors. (2) A relatively lower price for the milk, given that middlemen have been eliminated and that the farm enjoys economies of scale given its production facilities that are relatively larger than most of the competitors in this market segment. (3) Delivery of appropriate quantities very early in the morning, to ensure availability of milk throughout the entire day till late at night when customers stop purchasing. The processed milk is sold mainly to middle and high income class household consumers that prefer a richer taste of milk (i.e. no fat/cream fat/cream removed). These are mainly in urban centres. The processed milk milk is sold through primarily retail retail outlets (shops, kiosks, kiosks, and supermarkets/groceries), secondarily through institutions (universities, colleges, schools and eating places) and thirdly hotels (e.g. The Nile resort hotel in Jinja). Jinja). Like the raw milk, Kaisa Farm targets to increase its customer base in this market segment and to gain loyalty from these customers through through emphasis on: (1) The quality quality of the milk with a rich taste. In comparison, some processors adulterate their milk to get more revenue from increased increased volumes, or sale milk with reduced reduced fat. (2) Attractive packaging packaging (3) Delivery of appropriate quantities very early in the morning to ensure availability of milk at the retail outlets. The Kaisa Farm customers therefore should expect value for money with the knowledge and satisfaction that they have received their worth for the money they would have spent ± that is - high quality nutritious milk to enhance the health of their households. The Kaisa Farm production facilities are located 65km outside Jinja, the second largest town in Uganda. Uganda. The farm is comprised of four separate units (Namisambya(Namisambya- 95 acres; Naminage ± 185 acres; Namasagali-233.5 acres; and Nakavule-700 acres) with a total of 1,214 acres of land. The main unit, unit, Namisambya, holds the farm¶s dairy processing and milling equipment. equipment. The dairy processing plant plant can pasteurise, pasteurise, homogenise and package package up to 1,000 litres of milk per hour. hour. The cooling cooling storage facilities have a capacity of 5,000 5,000 litres. The distance between the four farming units are considerable. The distance measured from the main unit, Namisambya (95 acres) to other units are as follows: 4km to Naminage (185 acres); 30km to Namasagali (233.5 acres) and 15-20 km to Nakavule (700 acres). acres). The roads connecting the four farming units are mostly dust roads. Namisambya, Naminage and Namasagali have reasonable infrastructure in form of buildings, roads and fencing, whereas Nakavule, was acquired recently and is yet to be fully developed.


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To produce the milk, the farm breeds the cattle which are used for milk production. Breeding of the animals is mostly through Artificial Insemination (AI) an d over the next three years also through Multiple Ovary Embryo Transplant (MOET) for accelerated increase in high yielding animals. The farm has established a strategic alliance with a livestock production expert who has extensive experience in animal production and reproduction, to assist with this effort. He will be responsible for breeding of the animals on the farm and backstopping all farm activities. Within the three year timeframe of this business plan, Kaisa Farm envisages to achieve production, processing and sale of processed and raw milk as follows. At the end of the three year period the farm would process and sell 3,900 litres of milk per day and sell an average 1,000 litre of raw milk per day. Kaisa Farm will expand the current product range of raw and processed milk half-way through the first year to include cream and butter. To achieve the above production it is anticipated to cost the Kaisa Farm US $. 662,170 in extra investment in fixed assets over the three year period of this Business plan. The farm however hopes to make total sales of US $ 512,816 in the first year, US $ 725,699 in the second year and US $ 1,054,417 in the third year. With total operating costs of US $ 308,939; US $ 391,254 and US $ 472,649 for the first, second and third year respectively. The farm therefore hopes to realise a total income from operations (EBITDA) of US $ 203,877; US $ 334,445 and US $ 580,568 for the first second and third years respectively over the period of this business plan.

1.2 Products The Kaisa farm will sale both raw and processed whole milk. The whole milk has a higher fat content than the competitors¶ milk and a richer taste. The processed milk will be sold under the brand name ³Kaisa Fresh Milk´ and will be packaged in ¼, ½, and 1 litre plastic pouches bearing red and blue colours. The raw milk will be sold from established farm outlets established near the residences of the customers. It will be stored at 4 degrees centigrade to ensure that it maintains its quality at the point when bought by the customers. The Kaisa Farm focus is on quality ± both for the processed and the raw milk. In comparison, most vendors of raw milk and some processors adulterate their milk to get more revenue from increased volumes. The Kaisa milk selling slogan ³NO ADDITIONS NO SUBTRACTIONS ± WHOLE FARM MILK´ puts emphasis on the quality of the product sold by the Kaisa Farm.

1.3 Market structure and analysis 1.3.1 Target market and customer base The Kaisa Farm operates in its home region with emphasis on the nearest big towns ± Jinja and Iganga. Sales in the greater Kampala area and Entebbe were suspended due to high overheads given the level o f production. The Kaisa Farm targets low income class households in suburban / trading centres for the raw milk and middle and high income class household consumers in urban centres for the processed milk. In the below tables (1, 2, 3 and 4) the Kaisa Farm has listed key characteristics of the buyers of the various products marketed by the Kaisa Farm.


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TABLE 1 ± 1 litre packs Sold where: Sold through: Person buying: Characteristics:

Reasons for buying: Consumer (end-user): Table 2 ± ½ litre packs Sold where:

Sold through: Person buying: Characteristics:

Reasons for buying: Consumer (end-user): Table 3 ± ¼ litre packs Sold where: Sold through: Person buying:

Characteristics:

Reasons for buying: Consumer (end-user):

Table 4 ± raw milk Sold where: Sold through: Person buying: Characteristics:

Reasons for buying: Consumer (end-user):

Urban areas. Mostly Jinja (centre) has been sold in Kampala (centre). Supermarkets and Hotels. Mostly men. Age 40+, mainly middle and high income bracket, Business persons, formal dressing (long sleeves and tie). (1) Convenience (one litre pack). (2) Quality. Probably not focused on price. Families.

Urban areas, with some few in suburban areas, Mainly in Jinja and Iganga. Has been sold in Kampala in the suburbs. Grocery stores and kiosks. Men and women. Younger people, mostly middle income bracket, small-scale business people. ³Individuals who take it directly.´ (1) Price (2) Taste and (3) Quality Families

Mostly University and secondary school canteens Universities and schools: Directly to canteens. Some Kiosks (small shops). Universities, Schools and students. Other: Mostly children, young adults and blue collar workers. Business people, ³the man on the street´, children, All age and social groups. ³They take it directly as a substitute to other products.´ (1) Price (2) its nutritious Universities and schools: Young people age group 12 ± 25. Other: See: person buying.

Suburban and small trading centres. Kaisa Farm outlets ± stored in containers in refrigerators. Men and women mainly of the lower income bracket. Mostly employed in the informal sector, or micro business owners. They purchase it for taking at home boiled as tea and/or as part of the children¶s nutrition. (1) Availability (2) Quality (3) Price Families


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It can be concluded from the above that the Kaisa Farm reaches quite different segments, in different areas, with different incomes and backgrounds. Likewise the reasons for buying the various milk products differ. The reasons why these segments are served by the Kaisa farm is to reach a wide range of segments with the various products, thus increasing its customer base. There is also a tendency, especially for the raw milk consumers to develop loyalty thus repeated sales o ver a long period of time.

1.3.2 Market size and potential According to the Dairy Development Authority (DDA) publication ± Dairy industry at a glance, the average per capita consumption of milk (raw and processed) in Uganda is 30 litres per year (0.08 litres/day). This is only 15% of the per capita consumption level recommended by World Health Organization equal to 200 litres per year (0.5 litres/day). Given the total population of 22 million people, the estimated consumption of milk in the country stands at 660 million litres per annum (22 million X 30 litres/capita). This equals to Ushs. 330 billion if based on t he lowest market cost of Ushs. 500/litre. When looking at the demand for / the consumption of milk in Uganda, certain patterns emerge, e.g.: Apart from direct consumption by children, most of the purchased milk is used for making beverages such as tea and coffee. There has lately, however, been a change in adult consumption, where direct taking of milk is increasing. y

y

y

y

Farm families consume 50 ± 70% of the production directly at home. Of the remaining 30 ± 50%, farmers and traders sell 90% in the informal market, and rest, 10%, is processed and sol d in the formal market. Consumption of unprocessed milk increases substantially during the wet season because of increased supplies and depressed prices, and likewise declines in the dry season when supply is low and prices are high (author¶s field survey/experience). There are clear differences between the low, middle and high -income groups¶ consumption patterns. E.g. a survey carried out by the International Livestock Research Institute revealed the following (see table 5 below)

Table 5 - consumption patterns for low, Middle and High Income groups. HOUSE HOLD INCOME CATEGORY Type of milk consumed Low Income Middle Income High Income (%) (%) (%) Pasteurized Milk 23.4 83.4 73.3 Fresh whole milk 56.7 16.7 13.3 UHT milk 6.7 0.0 6.7 Any type 13.3 0.0 6.6 Total (%) 100 100 100 Avg. quantity of milk consumed per day 1.4 2.4 3.5 MAIN REASON FOR CHOICE OF MILK TYPE (%) Cheapest type 50.0 13.3 6.7 Most preferred 26.7 56.7 73.3 Only type available 3.3 13.3 13.3 Natural flavour 13.3 6.7 3.3 High quality 6.7 10.0 3.3 Total 100 100 100


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It can be concluded from the above that: Low-income households: -Mostly consume fresh whole milk (raw/loose milk), being very price sensitive. These two findings support each other, as the fresh whole milk usually is the cheapest type of milk. -The average consumption per day per household is 1.4 litres. Middle and High Income households: -Predominantly consume pasteurised milk and are not price sensitive. These income groups choose what they prefer the most, which is pasteurised milk. -The average consumption per day per household is 3.5 litres for the high ± income groups ± much higher than for the low and middle ± income groups. There are clear differences between the low, middle and high income groups consumption of milk in urban areas. (See table 6) Table 6 - consumption patterns for low, middle and high income groups. Urban population Low Income Middle Income Proportion of population 61% 29% Consumption 20% 43%

High Income 10% 37%

Furthermore it should be noted that urban consumption of milk per day per capita is estimated to be around 39 litres. This is considerably higher than the national average. This is estimated to be 30 litres. It can be concluded from the above that in urban centres, low income groups, in spite of their relatively bigger numbers, consume less than the high income groups. Of the above information, the following is relevant to the Kaisa Farm: The biggest household consumption of milk can be found in the middle and high -income households in urban areas. The Kaisa farm will target these promising markets with the pasteurized milk and will target low income households with the raw / loose milk. Given a choice and ability to pay, there exists a general preference for pasteurised milk. As Uganda is enjoying considerable economic growth the demand for pasteurised milk is likely to grow. This increases the Kaisa Farm¶s sales potential. 3 year out look It can be predicted that the demand for milk in Uganda, overall, will increase over the next three years for the following reasons: y

y

y

The Uganda economy is estimated to grow by approximately 6% per year in the next three years. Growth in the national economy will result in increased demand for milk. The steadily improving levels of education and spreading of health clinics are both seen as factors that are likely to increase the population¶s awareness of the benefits of milk. The Land O¶ Lakes, USAID sponsored program seeks to create a higher awareness about the values of milk. Through the yearly June dairy month celebration, extensive coverage of milk promotion is carried out in newspapers and television,


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y

y

Schools are visited and free milk provided and exhibitions are carried out in different towns all over Uganda. As a result, consumption of milk on the whole has increased especially in schools.

There are efforts to introduce school milk programmes, whereby every child in Primary schools drinks a quarter of a litre of milk per day. The same programme could be implemented in the army.

Market potential for Kaisa Milk in target Market. The predictions above for the national level are also seemingly valid for the geographical areas, which the Kaisa Farm serves:

The Uganda National Housing Survey estimates that the consumption in the Kaisa Farm¶s main markets Jinja/Iganga, Kampala and Entebbe will increase by 10%, 14% and 15% for 2010, 2011 and 201 2 respectively. Based on this survey¶s percentage estimates, a forecast has been made for the potential market for the coming years for the Kaisa Farm¶s main markets (and added a conservative 10% for 2013). ± (See table 7 below) Table 7 ± potential Kaisa Farm sales per day Area

Potential Sales per day (Litres) 2010 2011 2012 2013

Kampala Market Central zone Nakulabye-Kasubi-Kawala Bakuli ± Mengo-Rubaga-Kisenyi Kalerwe ±Bwaise-Kawempe-Bombo Bweyogerere-Banda-Nakawa-Luzira-Makindye-Gaba Ntinda-Bukoto-Kyebando-Bahai Mbalala-Lugazi-Mbiko-Nyenga Sub Total

450 120 130 310 410 150 110 1680

513 137 148 353 467 171 125 1915

590 157 170 406 538 197 144 2202

649 173 187 447 591 216 159 2423

Entebee Market Entebbe Town Kampala-Entebbe Sub Total

280 485 765

319 553 872

367 636 1003

404 699 1103

Jinja Market Central Suburbs Sub Total

650 83 733

741 95 836

852 109 961

937 120 1057

Iganga Market Central Suburbs Sub Total

390 61 451

445 70 514

511 80 591

562 88 650

Grand Total Kaisa Farm Planned Production

3629 1500

4137 2700

4758 3740

5233 4900

The above figures are encouraging as they indicate that the demand is likely to increase and faster than the growth in the Kaisa Farm production. This, however, is no guarantee


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that the Kaisa farm can sell its products. Whether the Kaisa Farm can sell it products will depend on a number of factors, the most important being the market strategy adopted by the Kaisa Farm and how it positions itself in the market to effectively compete with other processors/producers.

1.3.3 Competitor analysis Competition in the Uganda dairy industry exists in four different forms: Competition Competition Competition Competition

from from from from

milk processors ± formal sector raw/loose milk vendors/suppliers ± i nformal sector imported milk substitutes

The four forms of competition are analysed below. Milk processors characteristics By talking to six operating processors (although most were not willing to give much information) and by researching various published sources some characteristics that bear mentioning about processors are: y

y

y

y

y

y

y

y

A number of dairy plants have closed down operations. Another dairy plant (White Nile) was about to close, but was taken o ver by new management. Nearly all processors are producing below the installed capacities, with production ranging between 20% - 35% of the in stalled capacity. It was not possible to establish the exact profits or losses of each processor. It was, however, generally agreed that processors who are vertically integrated and/or having value added products are making a profit. There does not seem to be any particular correlation between performance and number of years in business. There does not seem to be any particular correlation between performance and the size (installed capacity) of the processors. The processors with a higher installed capacity however, have a bigger market share. Most of the processors purchase milk from Mbarara and sell it in Kampala. A difference in distance of about 320 kilometres, which implies high transport costs. The Kaisa Farm has three main competitors in its main markets Jinja and Iganga, Namely Dairy fresh, GBK and White Nile. Only White Nile purchases raw milk, in the same area as Kaisa Farm. This means that the competition on the Kaisa Farm¶s supply si de for raw milk is low.

Raw

/ loose milk vendors / suppliers Vendors / suppliers of raw / loose milk are predominantly operating in the informal sector. As such there are no recorded statistics of their operations as individuals. They, however, are the majority nationally and even in the urban areas which is the focus of the formal (processed) milk market. As mentioned earlier, they take about 90% of the milk market share and predominantly serve low ± income households.


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Raw Milk supply includes: 1. Direct raw milk sales to consumers by farm house holds. House holds with small herds often sell their surplus milk in surrounding local markets. 2. Milk collected by milking agents and then sold to individuals or to retailers. Large farms usually use marketing agents who collect milk from a number of farms and then sell in the urban centres to urban households, hotels, restaurants and other food outlets, institutions such as schools and army barracks, hospitals etc. 3. Milk collected by dairy associations, which is then sold either directly to individuals/institutions or to marketing agents. There are a number of dairy cooperatives, farmers¶ associations that are actively involved in supplying urban milk markets. From discussions with key informants it is estimated that in Kampala and Jinja alone these distribute approximately 50,000 litres of milk daily. The dominant associations/co-operatives include: Nakasongola co-operative union in Kampala; Equator Katwe Dairy in Luwero district; Kibuye Diary; Nabuka Diary co-operative society in Mukono district; and Kungu Dairy co-operative in Mpigi district. In Jinja, where the Kaisa Farm sells raw / loose milk, the biggest percentage of milk comes from milk agents, transporting milk from Kamuli district. There are some suppliers/farmers who bring in milk from in and around Jinja. The supply from these is, however, small and non-consequential. One major retailer ± Pevinta Fresh Dairy, has two outlets in Jinja. It is estimated Pevinta sells a total of about 600 litres of milk daily. It can be concluded that the competition in the raw / loose milk sector is strong. Large proportions of the consumers are highly price sensitive which will make them opt for the raw / loose milk. Moreover, there are many suppliers without significant barriers to enter the market. I mported

Milk According to the Master plan of the Dairy sector, imports of milk and other diary products is insignificant on the Uganda Market. This is further supported by the quantities imported as per data provided by the Department of statitistics in Entebbe. As indicated in the table 8 below, the volumes are too small to have any impact/effect on the market.

Table 8 ± Imports of Dairy products by year Milk and Cream of = <1% fat (Skimmed) ± (Kgs.) Milk and Cream of > 1% but < 6% fat ± (Kgs.) Milk and Cream of > 6% fat (Kgs.) Milk and Cream in solid forms = < 1.5% (Powder milk) (Kgs.) Source: Department of Statistics - Entebbe

2008 713

2007 7,984

2006 650

2005 17,907

355 7,644 877,720

865 10,082 319,218

1,700 267 625,994

86,069 1,495 159,784

Milk Substitutes Instead of taking milk 80% of consumers interviewed by Kaisa Farm mentioned that they would take the following products.

Table 9 ± Substitute Products Substitutes Price per Unit Quantity per day Soda (280ml) 500 1 Fruit Juice (300ml) 200 3 Porridge (500ml) 300 1 Dry Tea (500ml) 100 2 Mineral Water (500ml) 500 1 Source: Kaisa Farm field survey September 2009

Amount (Ushs.) 500 600 300 200 500


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Three out of five of the common substitutes mentioned above are priced between 100 ± 300 Ushs. Per Unit. This indicates that the majority of the interviewed are not ready to spend Ushs 500 or more on non-basic items. In response to these findings indicating that price is a key determining factor for consumers and that substitute products such as soft drinks are likely to become more competitive in price, it might be interesting for the Kaisa Farm to further test the new small ¼ package in all its markets.

1.3.4 Competitive advantage y

y

y

y

Competitive Forward ± Backward Linkage: The Kaisa Farm will have a competitive forward ± backward linkage (vertical integration). Whereas with the exception of Jesa Dairy Farm all processors depend on purchasing milk, the Kaisa Farm, through its vertical integration will be able to control the whole process from breeding, feeding, milking and delivery of the final products to the consumers. The vertical integration further will avoid the Kaisa Farm from having to buy most of the raw milk for its production, thereby making savings and so increasing its competitive strengths P lanned/Synchronised milk production: Given that the price of milk is high during the dry season and low during the wet season, the Kaisa Farm will synchronise its production to initially have a constant production during all seasons and at a later stage have the highest production during the dry season. This will enable the Kaisa Farm to maximise its profits by having its highest production when milk supply is low and prices are high thus competing favourably against other milk sellers / processors. H igh Quality: The Kaisa Farm will be in control of production of its milk, right from the stage of feeding the animals (vertical integration). Milking machines to be purchased will further guarantee that the milk received is of the best quality. In comparison most processors and vendors depend on purchasing of milk that is transported in unhygienic conditions. P ricing: The Kaisa Farm will offer more competitive prices to the retailers through a discount of Ushs. 20 for any purchase of 20 litres and above. This will be possible by taking advantage of the higher margins enjoyed due to the forward and backward linkages.

1.4 Marketing and distribution 1.4.1 Marketing & Communication The Kaisa Farm marketing strategy¶s sales objectives will be to attain the sale of Kaisa fresh milk of 4,900 litres per day (about 6% market share) within the period of this business plan. In the long run, the Kaisa Farm hopes to achieve a market share of about 15%. Overall

strategy The stated objective of the marketing strategy will be achieved through first and foremost ensuring that the existing customers of Kaisa Fresh Milk are retained and secondly through stimulation of selective demand by acquiring new customers who currently buy other brands.

In the target market, the majority of milk consumers have access to milk in one form or another ± either processed or raw, as such there will be little room for developing primary demand (development of new markets), as the demand already exists. The Kaisa Farm will therefore concentrate on:


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1. Retention of current consumers through: Maintaining satisfaction ± Due to the excellent feedback on its products as demonstrated in a survey the Kaisa Farm carried out, Kaisa Farm will maintain the quality of the Kaisa Fresh milk and advertise an image of quality for its milk. Simplifying and improving on the buying process ± Milk will be delivered to the customers premises and conveniently packaged in ¼, ½, and 1 litre pouches, to enable various customers purchase what suits their consumption. Kaisa Fresh milk will also be delivered very early in the morning preferably, before any other processor/supplier, as this increases the likely hood of the customers to stock Kaisa fresh milk when the milk stocks are low. Reducing attractiveness of or opportunities to switching ± This will be achieved mainly through a pricing strategy, where the retailers if they purchase more than 20 litres, will be given a discount, such that the money they derive from the sale of Kaisa fresh milk will be higher than other brands. y

y

y

2. Acquisition of new customers through clearly differentiating Kaisa Fresh Milk from other brands in areas such as packaging, price and customer service. In this regard the Kaisa Fresh Milk packaging will differentiate it from other brands, and sold at a competitive price. In addition the marketing manager and/or the Managing Director, will carry out routine visits to potential customers promoting the Kaisa Fresh Milk, open new outlets, listen to grievances/complaints etc.

Marketing Programs Various marketing programs will be put in place to achieve/implement the market strategies outlined above. The total cost of the various marketing programs outlined below will be covered by a special allocation in the budget equal to 1% of the total sales in the first year, 2% in the second year and 3% in the third year.

Following below are the programs to be implemented. Pricing program The price of the Kaisa Fr esh Milk will be set to achieve fou r main objectives: y y y y

Sales growth Earning an acceptable profit Gaining a competitive advantage Creating a positive consumer perception of quality and value for money

At the point of entry into the market, the Kaisa Farm adopted a penetration -pricing strategy, where the Kaisa Fresh Milk was sold at a lower price than the major competitors in order to stimulate an increase in demand. A lower price, however, can at times be interpreted as a reflection of lower quality. Such perceptions of low quality should not be promoted as customers of the Kaisa Farm products were found to focus on quality. The Kaisa Farm will therefore adopt parity pricing to the final consumer, where the consumer price shall be set at a level similar with Dairy Fresh Milk, the leading brand on the market. It is envisaged that this will send a message to the consumers that the Kaisa Farm Milk i s of the same quality as the leading brand. In order to gain a competitive advantage, however, a slightly lower price than Dairy Fresh Milk will be offered to the retailers who stock more than 20 litres a day. As such they would be encouraged to stock Kaisa Fresh Milk. It is anticipated that the above illustrated pricing will lead to increased sales growth, while at the same time increasing


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the product profitability and creating a positive consumer perception of the Kaisa Farm Products. The pricing of the individual products (¼, ½, and 1 litre pouches) will be set to reflect the cost of producing and marketing the products. This means that the smaller pouches will be priced higher per litre than the bigger pouches. On the open market (whole sale price), the ¼ litre pouch will be priced at Ushs. 700; the ½ litre pouch that is also relatively expensive to package and market will be priced at Ushs. 680 and the 1 litre pouch that is less expensive to package will be priced at Ushs. 650. Please note that Dairy Fresh Milk¶s current wholesale price is Ushs 700 per litre. By selling its 1 litre pouches at Ushs. 650 to the retailer, the retailer is likely to make a higher profit selling the Kaisa Farm Milk. The Kaisa Farm thereby creates a strong incentive to the retailer to stock and promote Kaisa Farm Milk. Advertising

program The objectives of the advertising program will initially be: y

y

To increase awareness and/or brand name recognition of the Kaisa Farm Products by targeting currently serviced segments as well as new segments. To project an image of the Kai sa Farm as a producer of quality products.

The survey carried out by Kaisa Farm revealed that the awareness level of the Kaisa Fresh Milk was 27%. During the time frame of this Business Plan the Kaisa Farm will aim to increase awareness and / or brand recognition of the Kaisa Farm Products from the current 27% to around 70 ± 80% in the target markets. In addition the Kaisa Farm must, to attract the consumers it wishes to target, create an image, which appeals to these consumers. As the consumers are focused on quality, taste and price, the Kaisa Farm will work to create an image which projects the Kaisa Farm as a producer of well tasting quality products giving value for money. Such an image could be built around or on the following statements about the Kaisa Farm. The Kaisa Farm: y

y

y

y y

Is committed and strives to produce competitively priced, high quality, fresh dairy products, which are highly appreciated by the co nsumer. Because of its vertically integrated mode of production, is able to promote and control high quality form the breeding of the cows¶ right up until the consumer opens the pouch. Has long and strong traditions and uses the latest technology with milk being produced on the farm. Can ensure that prices are kept low because of few middlemen. Cares for the environment in its production.

The Kaisa Farm next will create messages and slogans based on the above statements and select media to efficiently and effectively communicate these messages and slogans. Ideas for slogans, which could promote an image of quality and good price, might be: ³The whole milk from Kaisa Farm ± a whole lot more ± for the same price´ OR ³So much more for the same price´. This will be supported by information e.g.: ³The Kaisa Farm is Quality ± The farm you can trust. 30 years of dairy farming has taught us to use only our own milk from the best breeds ± processed with the best equipment, under the strictest hygienic condition.´


14


Provided there is room on the package the Kaisa Farm might include a short history of the farm, from when it was started up to today ± mentioning long experience, the farm¶s vast green lush pastures etc. Provided there is room on the package, the Kaisa Farm might include health tips ± targeted towards families and children -, as they are one of the main consumer groups. The promoted quality image will be supported by a guarantee for a refund of money to the consumer in case the product does not meet the stated quality. The image of a hygienic production and attention to detail will be promoted by having all staff wearing clean uniforms with the company logo. When creating slogans it should be taken into consider ation that the Kaisa Farm will also be selling cream and butter. The Kaisa Farm will therefore use slogans that do not refer to one particular product (e.g. Whole Milk). The above suggested image has been created to appeal to buyers of all the Kaisa Farm¶s products. It should be noted, however, that there exists some groups of consumers, which may not fall directly wi thin the above groups: y

y

y

The consumers of the ¼ pack pouches seem to buy this product not only because of the low price and stability. To them, the main reasons appear to be the low price and the possibility of taking the milk instantly ± as you go. These consumers also seem to have the lowest average age. The Kaisa Farm envisages targeting younger consumers directly ± in schools and universities. Though adults often buy milk, children mainly consume it. This and the previous observation indicate that children are involved in the purchasing processes. The importance of targeting children must therefore be emphasised. Moreover, children grow up to be adults and can as such become lifelong consumers. One marketing shilling spent on children may generate more income than if spent on an adult.

The above points to the fact that the Kaisa Farm may wish to create special marketing initiatives, which target these important groups. The ¼ litre pouches could be designed specifically for these take-it-as-you-go customers. Special packages and posters will be created for children. The two objectives stated above are planned to be achieved as follows during the three years of this Business Plan: In the first year, by: 1. Liaising with a marketing agency to create slogans, marketing messages and design marketing materials, primarily posters and flyers. The posters will be placed in appropriate locations like supermarkets, grocery stores, kiosks and any outlet where the Kaisa Farm Milk is sold and stocked. Based on the potential market, it is estimated that 1,000 posters will be used. It is estimated that a considerable number of people will view these posters. 2. In addition during the first year, rain proof posters and/or paintings of Kaisa Fresh Milk will be put on the delivery truck and the delivery bicycles, to increase awareness in the areas that the trucks r each.


15


3. The Kaisa Farm will also have manufactured uniforms with the farm¶s logo printed on for use by its sales and delivery staff. During the second year, the Kaisa Farm wil l intensify its advertisement efforts by: 1. Maintaining the advertisement on the delivery trucks 2. Replacing torn posters at the supermarkets, grocery stores etc. 3. Carry out weekly classified advertisements in the New Vision, Monitor and Bukedde News papers. These newspapers have respectively 400,000, 220,000 and 200,000 number of readers per day. During the third year, besides the initial objective of increasing awareness and/or brand recognition, the Kaisa Farm will also have the objective of: y

Targeting consumers to change belief s about brands

A good number of consumers develop buying habits and/or loyalty to certain mil k brands. An advertising agency will therefore be hired to design appropriate messages and appropriate presentation on radio. During the third year, therefore, the Kaisa Farm will: 1. Maintain the advertisement on the delivery truck 2. Replace torn posters at supermarkets, grocery stores etc. 3. Carry out weekly classified advertisements in the New Vision, Monitor and Bukedde News papers. 4. Take up a monthly package for a total of four months (one month per quarter) with the Central Broadcasting Service Radio (CBS) which is most widely listened to radio in the target market. 4 daily 30 seconds spots during each of the four months. At the end of each year the Kaisa Farm will carry out an evaluation of the advertising program interviewing consumers randomly in the target markets of their knowledge / perceptions of the Kaisa Farm Products. The purpose of this evaluation will be to get feedback on the advertising program enabling the Kaisa Farm to constantly improve its advertising efforts. The evaluation will be carried out in a way that allows the Kaisa Farm to obtain results per geographical area. The evaluation results from the various geographical areas served will be compared to the sales statistics per geographical area. Promotion program The objective of the promotion program will be: To encourage customer trial of the Kaisa Fresh Milk. It is anticipated that trial will lead to satisfaction with the Kaisa Fresh Milk, leading to conversion from other milk brands or from product substitutes. To encourage inventory building by retailers within acceptable limits ± in order to reduce retailer stock-outs and thus maximise the availability of Kaisa Fresh Milk to consumers. Reducing stock-outs will enable retailers to avoid losing customers who otherwise would stick to Dairy Fresh Milk ± the market leader, but who might try an alternative in Kaisa Fresh Milk and find it acceptable if the leading brand is not available. Caution will, however be taken ± in encouraging inventory building ± r etailers will be chosen selectively among those who have enough facilities to store milk at 4 degrees centigrade in order to avoid sourage of milk. y

y

The Kaisa Farm during the time frame of this Business Plan will be involved in three types of sales promotion namely:


16


y

y

y

Exhibiting and carrying out promotional sales during the June Dairy month, National Agriculture and trade show and the Uganda Manufacturers International Trade Show. Offering free samples in targeted supermarkets, grocery stores and institutions (such as schools and universi ties) and big work places. Carrying out promotions among retailers where discounts will be given to encourage the retailers stock the Kaisa Fresh Milk.

During the first year, the Kaisa Farm will: 1. Exhibit during the June Dairy Month. This is a yearly event by Land O¶ Lakes aimed at creating awareness about the values of milk with a view to increasing milk and milk products consumption. During the exhibits, Land O¶ Lake Purchases processed milk like Kaisa Fresh Milk and distributes it for free to invited guests, school children etc. Schools are also visited and teachers and children are informed of the benefits of milk and free samples are given to the children. 2. Offer free samples once every month in selected shops, institutions and big work places and briefly interview the consumers what they currently consume and how often, if they have heard about Kaisa Farm before, solicit their opinion on the taste of the Kaisa Milk and assess whether they might be buying Kaisa Milk in the future. The free samples shall be accompanied by a company flyer explaining about the Kaisa Farm, its commitment to quality, unique production set-up (control of the whole process), its long traditions, pricing as the major brands ( in spite of higher quality), the products it offers and where they can be bought. Also future products. Information about the health benefits of consuming milk. 3. Offer discount to retailers who stock 20 litres or more. During the second year, the Kaisa Farm wil l: 1. Exhibit during the June Dairy Month. 2. Offer free samples once every month in selected shops, institutions and big work places (see year one point 2 for more detail ). 3. Offer discount to retailers who stock 20 litres or more. 4. Exhibit during the July National Agriculture and Trade Show ± This is a yearly event at the source of the Nile in Jinja. The show attracts about 75,000 visitors among whom are retailers, college students, heads of institutions etc. During the third year, the Kaisa Farm will: 1. Exhibit during the June Dairy Month. 2. Offer free samples once every month in selected shops, institutions and big work places. (see year one point 2 form more detail s). 3. Offer discounts to retailers who stock 20 l itres or more. 4. Exhibit during the July National Agriculture and Trade Show. 5. Exhibit during the October Uganda Manufacturers Association International Trade Show ± This is the biggest yearly trade show in Uganda, that attracts over 150,000 people. The effect of the above initiatives should be captured by the yearly evaluations performed in connection to advertising program (see advertising program section).

1.4.2 Sales and Distribution The objectives of the Sales and Distribution Program are to: Promote a perception with the retailers and consumers of the Kaisa Farm Products as being always available, fresh, of good quality and competitively priced. Promoting a perception with the retailers and consumers of the Kaisa Farm delivery and sales staff as being knowledgeable about the products they sell, y

y


17


y

y

Ensure that the major retail outlets / customers always have Kaisa Farm Products in stock. Ensure that the Kaisa Farm P roducts always are well displayed and easil y spotted.

A short distribution channel will be adopted, to ensure that the milk is delivered quickly when it is still fresh. Deliveries will be made very early in the morning, starting from about 7.00 am, if possible earlier than competing brands, therefore ensuring that the Kaisa Farm succeeds in having the retailers stock more of its milk. A truck and/or bicycle will deliver to established retail outlets in all the target markets. The Kaisa Farm will also deliver directly to institutions such as universities and schools and hotels among others. During the second year a refrigerated delivery truck will be purchased to deliver the milk. The staff will be divided into two groups. One group will be responsible for delivering the milk, while the other group, the sales staff, will be responsible for customer relations, negotiating with the retailers, receiving feed-back from the retailers and customers, ensuring that the products are well displayed (eye catching), and promoting the Kaisa Farm Products. Three people will initially be employed in the first year as sales staff for the Jinja, Iganga and Kampala markets. These three staff will pay r egular visits to the current retail customers and establish and maintain a personal and effective relationship with the customers. In this regard the sales person will face the same buyer/customer over and over, and become a major link between Kaisa Farm and its customers. The sales person will therefore not only become the Kaisa Farm representative to the customers but will also become the customer representative to Kaisa Farm where any needs, communication from the customer will be delivered to Kaisa Farm through the sales person. Sales calls will also be made to potential customers, institutions, and hotels by the sales people and regularly by the marketing manager or Managing Director to promote Kaisa Milk. Considering the above, there is clear need for training the sales people in interpersonal skills and customer service. A questionnaire / form shall be prepared to monitor the quantitative aspects of the sales on a daily basis. The delivery person will record number of pouches delivered to the individual retailers / distribution points, pouches returned and total sales. The sales staff will aggregate these figures on a weekly basis and report back to the Kaisa Farm. The Kaisa Farm will enter the sales figures into statistical software, which will enable the farm to reveal positive / negative trends in the market. In addition, these statistics will be used for comparing performance of the different sales personnel, which again will be used for awarding bonuses creating incentives for the sales personnel, further stimulating competition among the staff and increasing sales. Another questionnaire shall be prepared to monitor the qualitative aspects of the sales. The sales staff will be responsible for obtaining the information required to complete these questionnaires, such as: The retailers¶ perceptions of the reasons of low / high sales, feed-back on customers¶ perception of the Kaisa Milk and marketing, problems encountered in the marketing / sales of the milk, suggestions for improvement in delivery, storage, display, sales, packaging, taste of the Kaisa Farm Products.


18


During the first year of this Business Plan, the Kaisa Farm will concentrate its sales efforts within Jinja and Iganga, but will also need to include Makerere University and some parts of Kampala to achieve its planned targets of 2700 litres per day. At a planned sales level of 3,300 litres per day in the second year of operation, Kaisa Farm will need to increase i ts distribution efforts to fully cover the Kampala market. In the third year of operations, the estimated sales are planned to be 3,660 litres per day. Current efforts in the local markets, Jinja and Iganga, will be intensified as well as in Kampala. In addition an extra sales person will be employed to cover the Entebbe Market. Staffing and Training A senior Manager/Marketing Manager will actively handle the drive to retain the current customers and increase the customer base beginning first with the retail outlets such as supermarkets and grocery stores in Jinja and Iganga, in addition to selected institutions, schools and colleges. The Marketing Manger will be responsible for all the sales and m arketing functions. Three sales people will be responsible for the Jinja, Iganga and Kampala markets. An extra sales person will be employed for the Entebbe market in the third year. All sales personnel will undergo a rapid on the job training to equip themselves with the appropriate skills in salesmanship, customer service and interpersonal skills. The sales person in Jinja (the home market) will oversee activities of all the sales assistants who make bicycle deliveries to the retailers. The Jinja sales person will be expected to spend 70% of his/her time in the field making market visits, sourcing new clients as well as taking down consumer complaints. 30% of his time will be devoted to m aking plans and administration. An agent will be appointed for the Kampala market to reduce on the transportation costs and other overheads in the initial stages when the sales are low in Kampala. The agent will be responsible for distribution of milk to consumers; however, he/she will be offered a discount to be agreed with management in order to entice him/her to stock Kaisa Milk. The delivery staff (the drivers) delivering Kaisa Milk will in the market place report directly to the sales people. The ³turn boy´ on the truck will directly be under the driver. y

y

y

y

y

y

y

1.5 Production process & development Short Term Strategy ± Years 0-3 During the next three years, Kaisa Farm wish to expand, streamline and consolidate the operations of the farm centred around the production and marketing of the following products: Raw milk; processed milk; cream and butter. The products are to be promoted in a limited number of markets. The expansion and streamlining of the operations are necessary to reduce the operating unit cost, which will ensu re a comfortable profit. The major objectives are: y

y y

y

To achieve the output of raw milk produced of 3,295 litres/day by the end of this business plan period. This will be achieved by an initial purchase of 100 high yielding milking cows (HYMC) in the first year to add to the existing stock. To process raw milk from the farm and sell the processed milk. Mid way through the fist year, to start up production of cream and butter and market these two by-products. To improve the farm operations as described below.


19


y

y

y

y y y y

y

To implement changes in the organizational structure and the human resources management as suggested in this business plan. To undertake training of the employees¶ of the farm for purpose of increasing the efficiency of the employees and ensuring a smooth introduction of new technology ± as suggested in this business plan. To implement activities aimed at improving the internal and external environment on the farm, as suggested in this business plan. To renovate and upscale the dairy plant. To renovate the maize / feed mill. To improve the financial reporting as suggested in this business plan. To re-invest all profit from the farm ± in the farm during the first year of this business plan. Half way through year three undertake a new market analysis to be completed 1-2 months before year four starts. The purpose is to gauge the future demand for the Kaisa Farm products ± revising the current marketing strategy. It is assumed that the farm must expand to new markets and segments to continue to increase sales. The Kaisa Farm may also consider investing in/taking over other dairy producers to widen their reach and build the Kaisa Farm brand name.

Planned Activities

Required Achieving

Planned Objectives: Year 0-3

Below are listed activities in the production area which are deemed necessary to achieve the above mentioned planned objectives. As mentioned above the future farm operations will centre on the goals to: 1. Achieve the production of milk on the farm of 3,295 at the end of the three year period of this business plan and 2. To start up production of cream and butter mid -year one. This is envisaged achieved mainly by: Sub-Objective 1: Increasing the farm¶s herd size and quality through purchasing High yielding parent breeding cows in the first year for breeding through artificial insemination. In order to accelerate the increase in number of high yield milking cows the Kaisa Farm will also purchase well structured local cows as recipient mothers for multiple ovary embryo transplanting. Sub-Objective 2: Increasing the farm¶s production of milk through applying dairy production best practices as described in this business plan and increasing the buying of raw milk from out-growers/external producers to achieve the target output. Sub-Objective 3: Purchasing a separator to produce cream and butter. Ad. Sub- Objective 1: Increasing the farm¶s herd size and quality will be achieved through a breeding program as descr ibed below: The main objectives of the reproductive health / breeding program for the Kaisa Farm are: Every cow is to produce one calf per year so as to have an accelerated increase of the total number of animals. Improve the physical structure of the animals. Improve on the quality of the milk produced. y

y y

In order to achieve the above, the farm will use artificial insemination from a variety of selected bulls as well as using semen from selected bulls from its own


20


farms. An annual review as regards the bulls to be used will be made and if need be changes made. The farm also hopes to introduce reproduction throu gh embryo transfer technique, it is hoped that this will assist in accelerated production of High yielding cows. Three breeds of animals will be kept on the farm namely: Friesian, Jersey and Ayrshire breeds. Cows will be served with semen from similar breeds. Due to the difficulty in detecting heat among the heifers, a bull will be kept for servicing the heifers (i.e. artificial insemination will not be used on the heifers). The bull will also be used in cases where a cow fails to conceive for two consecutive artificial insemination services, a bull will be introduced to service it. After a cow has calved, it will not be serviced for 45 days even if it comes on heat. However, in cases where the cow fails to come on heat three months after calving, an investigation by veterinary personnel will be carried out and if necessary the cow will be given hormonal treatment, to induce it to come on heat and be serviced thereafter. Ad. Sub-Objective 2: Increasing the production of milk will be achieved by: Improving the animal¶s nutrition. The improvement in the animals¶ nutrition will come partly from new and better types of grasses and crops to be grown on the farm¶s pastures (see below), partly through the buying and feeding mixtures preferably in the wet season for use in the dry season. The animals are assumed to have a constant intake of feeding mixtures throughout the year. The feeding mix will be composed as indicated in table 11 below. Table 10 Ingredients Maize Bran Wheat Bran Cotton Seed Cake Bone Meal Urea Premix Salt Total

% of total 32.667 32.7 32.7 1.6 0.003 0.13 0.2 100

An ambitious programme for replanting the major pastures has been suggested. By 15th April 2014 the combined 280 acres of Namisambya and Naminage would have been planted with improved grasses including Rhodes grass. By the same date, the entire 233.5 acres of Namasagali farm would have been planted with improved grasses including Rhodes grass. This will be accomplished by planting 40 acres of each unit every rainy season. The first part of planting programme will be finalized by 15th April 2010. Finally, the Nakavule unit would be cleared to make room for making hay and growing maize. No time schedule has been provided for the Nakavule unit. 1. Investing in the first half of 2010 in a tractor, a plough, a planter, a harrow, a baler, a trailer to: Till the soil, plant seeds and harvest the grasses and the crops. The grasses will be used to improve the fodder for the cows as just mentioned. 2. Investing in the second half of 2010 in a hay barn for storage of the hay from the newly cultivated fields.


21


3. Investing in the first half of 2010 in a manure spreader, a urine sprayer and a front loader to: Collect and spread the manure, which will improve the output from the fields and as a result the general fodder situation. These investments will be supplemented in the second half of 2010 by construction of concrete manure pits and urine tanks at Naminage and Namisambya. 4. Investing in the first half of 2010 in 47 kilometres of electrical fencing to be supplied by solar power. The new fence will replace the current barbed wire fencing. Electrical fencing is proven to be l ess damaging to cattle. 5. Investing in the first half of 2010 in the construction of a milking parlour for which a pipe milking machine, which can accommodate 40 high yielding cows at Naminage, will be procured in the second half of 2010 . 6. The construction of a better water distribution system for the cows will commence in the second half of 2010. Kaisa Farm will improve the distribution of water by laying down plastic pipes through which water will be pumped to water troughs at Naminage, Namisambya and Namasagali. 7. The milk will still be processed on the farm as the current plant easily can handle the increased volume. There is, however need to carry out thorough renovations and a need to purchase a new packing machine, separator and equipment for making butter. 8. Improving the farm operations as follows: I mproving

management ± training: A qualified farm manager trained and highly experienced in animal production and husbandry will be hired. The farm manager will be in charge of farming operations at operational and managerial levels. The farm manager will to a great extent, be responsible for and carry out the training to be provided to the farm staff although Kaisa Farm will outsource extra know how for training as needed. An expatriate Dairy technician will visit the farm once during the first year and once during the second year. The dairy technician will spend a total of 3.5 months on the farm to facilitate the start-up of the production of cream and butter. An expatriate experienced veterinarian will visit the farm twice during the three year period to assess the herd and the feed mixes. Dr. Jackson Mubiru, responsible for backstopping all farm operations will visit the farm on a quarterly basis to hold management meetings with the Kaisa Farm management. y

y

y

y

Milking: Milking will be done by milking machines on two of the farms (i.e. Naminage and Namisambya farm). The animals will be milked twice a day, in the morning starting at 6.00 am and in the evening starting at 5.00 pm. The animals will be collected 30 minutes prior to the milking time.

To ensure hygiene during milking time, the udders of the animals will be cleaned with a piece of cloth (one piece per animal) kept in a solution of chlorine for disinfecting. The pieces of clothes will have to be replaced monthly depending on their durability. Before the milking is done every animal will be checked for any traces of mastitis. Milk produced per animal will be recorded at every mil king.


22


The milking machines will be cleaned / disinfected with a solution of chlorine or any other available disinfectant and a strong commercial detergent. The milking machines will further be given a thorough cleaning once a month, preferably every last day of the month, where the rubbers will be removed and cl eaned. It will be the responsibility of the farm manager to oversee and provide proper training for milking. The farm manager will further ensure proper maintenance of the milking machines and ensure that proper milking procedures are kept and proper milking environment is provided for the animals and that these skills are passed on to the farm workers. Control: The health control program for the farms will mainly be comprised of: Spraying of animals: This will be done in the already established spray races, using a solution of decatex or any other accaricide recommended by the veterinary staff. The spraying will take place once a week during the dry season and every fourth day during the wet season. At the time of spraying, it is important to ensure that every animal goes through the spray race, as such an inventory of all animals will be carried out at every time of spraying. The veterinary personnel will from time to time advise management as to the need to change the accaricide. De-worming: The Adult herd will be de-wormed once every four months and the calves will be de-wormed every month. Tripanosmiosis treatment/control: As long as there is a threat of tripanosmiosis on the animals they will be covered with a curative drug (Berenil) and after three months they will be covered with a preventive drug (Samorin), to repeat the curative drug after six months. Vaccinations: Vaccinations will be carried out depending on the disease threat in the area/neighbouring districts. It will therefore be the responsibility of the veterinary assistant/doctor to advice the farm every year of what vaccinations if any that should be carried out. Sick animals identification: The herds-men have daily contact with the animals, they will therefore be trained and have the responsibility of looking out for signs/symptoms of any sick animals. These have to immediately be reported to management for either treatment or carrying out any preventive measures to the rest of the herd. H ealth

Branding: For the purpose of identification and registration, the farm will freeze brand all animals. A branding program with the oldest animal branded no. 1 and the youngest having the ³highest´ number will be adopted. Freeze branding will be done once every four months. Before being branded the calves will be identified by piercing the ears following punch numbers for each spot. De-H orning: In order to avoid the animals from causing injury to each other all heifer calves will be de-horned. This will be carried out once every four months. De-H oofing: De-hoofing will be carried out as necessary on an individual cow basis. However, if it is found that this needs to be done regularly, it will be carried out twice a year. Castration: All bull calves will be castrated and kept at Namasagali farm for a beginning as long as the total number allows this. To be later kept in Nakavule for fattening and later sold off for beef. Castration will be carried out once every four months. There will, however, be a selection of some bull calves that will not be castrated, but kept for breeding purposes as earlier mentioned or for sale to the National Animal Genetic Resource Centre & Data Bank (NAGRC & DB) in Entebbe. P asture

Maintenance: A permanent work force will be established to carry out pasture maintenance, where these will on a daily basis remove pasture weeds i.e. grasses/shrubs


23


that are not eaten by the cows. In the future, equipment will need to be purchased for cutting overgrown grasses. Culling: Regular culling will be carried out in accordance with established targets of the Kaisa Farm.

Ad. Sub-Objective 3: Purchasing a separator to produce cream and butter will be achieved by: y

y

Purchasing a second-hand separator for cream and butter in by the end of the 1st half of 2010. Selected staff of the dairy plant will be trained by the dairy technician to allow for commercial production by the start during the second half of 2010 .

Miscellaneous: Working conditions influence operations. The Kaisa Farm plans to invest in the construction of new staff housing during 2011 and in other working environment friendly minor initiatives in the first half of 2010 . Medium Term Strategy ± Years 4-6

Assuming the objectives for the first period have been achieved, Kaisa Farm during the next three year period wishes to: Depending on the new marketing strategy (see short term-strategy for years 0-3) further increase the production and processing of milk on the farm aiming for a raw milk output of 6,500 litres per day in year 6. This will be achieved by: A steady increase in the number of High yielding milking cows and further increase in yield. The Namasagali farm unit may be opened up to accommodate 200 cows for milking. The Kaisa Farm during this time frame will continue to use reliable quality conscious out-growers for an approximate 10-20% of its milk supply. This way, the Kaisa Farm will create a supply buffer. The advantage is that when demand is low, the farm will not waste its own milk but instead reduce the intake from out-growers. Depending on the new marketing strategy, further increase the sales of cream and butter. Start Yoghurt production in year 5 Test production of ice cream in year 6. This will require further training of personnel. Human resource management will continue to be strengthened as will financial reporting systems and administrative functions. Half way through year six undertake a new market analysis to completed 1-2 months before year seven starts. The purpose is to gauge the future demand for the Kaisa Farm products ± revising the current market strategy. It is assumed that the farm must expand to new markets and segments to continue to increase its sales. Kaisa Farm may also consider investing in/taking over other dairy producers to widen its reach and build the Kaisa Farm Brand name. y

y

y

y

y y

y

y


24


Long

Term Strategy ± Years 7-10

Assuming that the medium term objectives have been achieved, the Kaisa Farm during the next four years may consider to: Depending on the new marketing strategy (see medium term ± strategy for years 3 ± 6 above) further increase the production and processing of milk on the farm. This will be achieved by: A steady increase in the number of High yielding milking cows , a further increase in their yield and an improvement in the quality of milk produced. A possible acquisition of neighbouring farms bordering the Naminage and Namisambya units or acquisition of farm units closer to the Kaisa Farm main markets to reduce transport costs. Moreover, the farm wishes to increase its purchasing of milk from outgrowers. By combining the farm¶s and the out-growers efforts, the farm hopes to reach a raw milk base of 12,000 litres/day in year 10. The use of milk from out-growers should be limited to out-growers, who are quality conscious as the Kaisa Farm so as to safeguard the Kaisa Farm¶s relatively high product quality ± around which its marketing efforts are centred. y

y

y

1.6 Company structure 1.6.1 Management The Kaisa Farm Board of Directors are: Mr. S. B. Kaisa Mr. S. B. Kaisa has over 30 years experience in the dairy and poultry business. Positions he has held include General Manager, Namulesa Coffee Factory; Member of the Board of Directors of then Uganda Commercial Bank; member of National Animal Breeding Policy task force committee; member of the governing council of the Church of Uganda province; Chairman Land Commission, Kamuli District and Chairman animal breeding association, Kamuli District. He has won several prizes in the dairy and poultry farming, including the 3rd prize in dairy competitions of the Ministr y of Agriculture, Animal Industry and fisheries. Mr. S. B. Kaisa is the Chairman Board of Directors. Mr. Joseph Kaisa After graduating from Makerere University with a bachelors degree in social sciences (social administration and political science), Mr. Joseph Kaisa assisted with the general management of the Kaisa Farm and day to day operations before proceeding to the USA for his MBA studies. In the USA he held various management positions first as finance manager and later as operations manager with the North America Association of Christians in Social Work. He also worked as a consultant for the Global Partners Investments based in Pennsylvania, USA. Mr. Joseph Kaisa has served as the Chairman Board of Directors of the National Animal Genetic Resour ces Centre and Data Bank (NAGRC & DB) an organization that is responsible for the improvement of livestock in Uganda through animal breeding and regulation of importation of livestock and genetic material. Mr. Kaisa is also a member of the executive committee of the Eastern African Association of Dairy Stakeholders (EADAS). Mr. Joseph Kaisa is also a resource person with Enterprise Uganda, where he trains Entrepreneurship and Finance for Non-Finance Managers. He is also a business management systems adviser with the International Trade Centre (ITC). Mr. Joseph Kaisa is the vice chairman Board of Directors and the Managing Director.


25


Other company Directors are: Mrs. E. B. Kaisa ± Treasurer Dr. M.K Kisenyi ± Member Mrs. Dorothy Nuwamanya ± Member Dr. Grace Kaisa ± Member Management Mr. S. B. Kaisa and Mr. Joseph Kaisa above are directly involved in the management of the company. Dr. Jackson Mubiru, a veterinary doctor and a specialist in assisted reproductive technologies and animal breeding provides technical backstopping on all operations of the farm. Other key people involved with the day to day operations are Mr. Siraje Katuntu and Mr. Joshua Biko. Mr. Katuntu is a trained artificial inseminator and Para-Vet, Mr. Katuntu has one of the best records in artificial insemination with nonrepeat service of about 80%. Mr. Biko is a supervisor on the farm; he is trained in forage management and animal husbandry. The company is in the process of recruiting a farm manager; the desired candidate will have experience in animal production and dairy processing. In view of the planned future expansion of the production and sales at the Kaisa Farm, it will necessitate to recruit additional staff and training of the current and new staff. The Kaisa Farm has therefore reviewed / formalized its organisational structure. In the organizational plan, related activities have been clustered and middle -managers have been inserted to be responsible for individual areas such as finances, production and sales. The middle managers would, in consultation with the Managing Director, assume responsibility for establishing clear targets for their individual area, managing their own area, monitor progress and report to the Managing Director. In order for the staff to perform fully, it will be necessary to specify what exactly each staff member is expected to do and ensure that they are aware of this. Therefore, it is required to: y

y

y y

y

y

y

Prepare job descriptions for all employees which clearly define each employee: -Responsibilities -Duties -Daily activities -Daily or monthly targets These job descriptions will be kept short ± with simple, accurate and easily measurable targets. Have contracts for all staff to which the job description would be attached specifying the conditions of service and, importantly, the consequences in case of non-performance. Clearly define who reports what to whom and when. Review all employees¶ skills against their job descriptions and ensure that all staff have either adequate skills or will be trained. Have the remuneration reflect: the complexity of the job / current market price for the job ± adjusted for the employees¶ current level of skills. Keep attendance records ± and pay staff according to the days they report to work. Keep a roster for the various staff categories ± to ensure that the farm can always quickly recruit replacements for non-performing staff.

It is expected that the above will improve the efficiency on the Kaisa Farm. The Kaisa Farm also hopes to further increase efficiency by improving on the working conditions for the middle-managers by the construction of staff housing on the farm.


26


Once the above improvements have been implemented and are working satisfactorily the Kaisa Farm will establish a simple performance evaluation system. A performance management system is basically a tool that will seek to ensure that all employees agree to pull the Kaisa Farm in the right direction by: y y

y

y

Ensuring that the farm always has updated objectives and strategies Increasing the involvement of all staff as they negotiate and agree on their job descriptions and output targets (derived from the farm¶s objectives) Implementing an incentive structure to support these efforts ± monetary and career wise Improving the planning and monitoring by regu larly reviewing in detail each employee¶s performance

A performance evaluation system will take its point of departure in the strategies, objectives and concrete activities derived from the Farms mission statement. Through a farm wide negotiation process staff will be involved in setting targets for the farm (ideally) and for their own work areas (more realistic in this case). At a yearly negotiation the employee to the extent possible will set his/her own targets for the next year / each month. The inv olvement of the employee in the planning process will ideally create greater commitment to the farm¶s overall goals or at least the employee¶s own goals. The remuneration will initially be set according to the level of work that the employee has committed him/herself to complete. The employee¶s job description would be revised to refl ect the change in responsibilities. The performance evaluation system will also allow for discussing the employee¶s career aspirations, if any, and how to achieve them, which would create additional incentives for the employees and might enable the management on the farm to identify staff that aspires for higher positions in the future. At least twice a year, the employer would review the employee¶s performance with the employee to detect under or over compliance. This will allow the manager to constantly adjust the work areas of the individual employees to ensure that work is accomplished according to the targets set ± and possibly adjusting salary to ensure that the incentive structure is fair. It also will force management to regularly review the staff¶s skills and training requirements. Another positive outcome of the performance appraisal system will be that it will force management to regularly set targets for the organization including management itself, based on a rolling strategy planning, making it more likely that the Farm, from top to bottom, is focused in its undertakings. Training program A training program has been designed for the Kaisa farm in line with the current / future technology and work processed to be applied on the Kaisa Farm. Training objective The training objective for the staff at the Kaisa Farm is to improve the skills of the individual staff member in his/her function, and thereby enable the Kaisa Farm to maximize the operational output of the investm ents. Training assumptions Kaisa Farm¶s present organizational structure, where there is a supervisor who supervises the daily operations, has f ormed the basis for the training model.

The present level of training of the farm staff is not adequate to achieve the goals and values of the Kaisa Farm.


27


In general the training will be designed as f ollows: y y

On-the-job training, to be implemented by the Farm Manager to be recruited External training to be i mplemented in another country ± (African or abroad)

The training considered for the Kaisa Farm is primarily meant for the production staff at the farm. However, training of the assistant farm manager in skills in animal and field farm management is required. The sales staff (especially the sales / marketing manager) will also participate in some of the training ± e.g. for the dairy plant ± on hygiene, how the milk is handled ± to make them fully acquainted with the product they are promoting and its delicacy. This will enable them to better handle the milk ± and they would be better able at instructing the retailers on correct storing of milk, to ensure that the product the consumer drinks is always fresh. The sales personnel would also be better equipped for answering questions and for projecting the quality image the Kai sa Farm seeks to promote. Training of the foremen in the two separate sections of the milking parlour and fields is considered important and will therefore be included in the detai led training plan. External training will mainly be for the Managing Director in an established training programme to be sourced. On-the-job training will be by far the largest i nput, as it will be implemented continuously during the three year period of this business plan. This part of the training will be reviewed periodically and the Farm Manager together with the Managing Director will work out and update the training plans continuously based on the reviews with 3 -4 months intervals. However, on-the-job training of various staff members in their functions will be concentrated on the management and foremen levels to ensure that further training of staff is implemented by these individuals. It is assumed that the qualification of the Farm Manager will strengthen the applied structure of the on-the-job training. On-the-job training will consist of two major parts. y y

Cattle-management training and Field-management training

Cattle management training The following areas will be covered during the practical ³on-the-job´ cattle-management training (see table below).


28


Area for training 1. Cattle Feed and Fodder Control

What is to be covered Quality and composition of animal feeds. Feed intake control. Farmers¶ yield control. Budgeting animal feeds. Monitoring heat. Heat control. Controlling gestation . Cattle replacement management. Calving and breed control. Feed hygiene control. Livestock building hygiene. Treatment of animals. Hygiene in connection with calving. Type of service personnel. Other animals in livestock building. Purchase / selling of animals. Digestive diseases due to wrong feeding. Metabolic diseases in cows, including calving fever ketose, grass tetany and fat lever. Disease in the udders, mastitis control, hygiene in the cow boxes. Disease problems in calves, bronchial infection. Tail injury / necroses. Diarrhoea. y

y y y

2. Cattle Reproduction Management

y y y y y

3. Health Management

y y y y y y y

4. Disease Management

y

y

y

y

y y

5. Milking Management

y y y

y

6. Production Control

y y y

7. Livestock building management

y y y y y

8. Calves Management

y y

y y y

Milking techniques. Milking hygiene. Milking machine and milking tank management. Procedures for inspecting the milking plant. Recording the milk production. One-day feed control exercise. Periodic feed control measures. Working environment training. Daily routines in the barn. Cattle nursing and care taking. Ventilation in the barn. Climate. Feeding with raw milk. Feed supplements and course of feed. Drinking control / water. Hygiene of calves. Accommodation of calves.

The above practical training will be implemented continuously during the 36 month of this Business plan. All levels of staff at the farm will be covered.


29


The above trainings are basically routines, which must be repeated continuously until they are a part of the staff¶s way of working. Consequently, there will be no time limits involved in this type of training. The other part of the cattle-management training will constitute a theoretical ³on-the job´ training. This training will cover the following areas. Area for Training 9. Records Management and Registration

What is to be covered Registration of the herd. Registration of the breeding and insemination. Registration of the feed composition. Recording health and diseases. Recording the milk production. Cost control and planning. Quality and composition of feeds. Feed rations. Factors determining the feed for dairy cattle. The stomach¶s feed requirements. Recommended max. allocation of feeds. Minerals and Vitamins. Complete feed analysis. Feed budgets and feed systems. Reproductive organs. Hormone system. Observing heat. Heat control and gestation percentage. Replacement percentage. Heat cycle. Breeding Strategy. Selecting the bulls. Planning and insemination. Immunity and immunity status. Protection against infections. Livestock building hygiene. Treatment of animals. Hygiene in connection with calving. Service personnel. Other animals in the livestock building. Purchase of animals. Digestive diseases in cows. Metabolic diseases in cows. Diseases of the udders. Infectious diseases. Diseases of the skin. Limbs and hooves. Intestinal parasites / mastitis General disease problems in calves. Bronchial infection. Tail injury / necroses. y y

y

y y y

10. Feed Management

y y y

y y

y y y

11. Reproductive Techniques

y y y y

y y

12. Breeding Strategies

y y y

13. Health and Diseases

y y y y y y y

y y y y y y y y y y y


30


14. Milking Management

y y y y y

15. Production Control

y y y y

16. Livestock Building

y y y

17. Meat Production

y y

18. Economy

y y y y y

y y

19. Calves

y y y y

Milking techniques. Milking hygiene. Classification. Bacterial control and counting. Cell counting. Goal for re-production. Milk and beef production. Milk recording. Feed control. Arrangement of cattle-houses. Animal environment. Animal handling and management. Feed control. Load factors. Gross proceeds. Unit costs. Contribution margin. Book depreciation. Result of capital payback and shareholders return. Financial costs. Results from farming. Raw milk. Feed supplements and course feeds. Water and drinking. Hygiene and calves¶ housing.

The theoretical training will be implemented at foreman level. The total number of people who will be trained is approximately 10. The theoretical training will commence beginning of 2010. The duration of each section of the theoretical training is estimated approximately three weeks. Field-Management Training The following areas will be covered during the practical ³on-the-job´ field-management training.

Area for Training 20. Choosing the crops

What is to be covered Seed change and management. Climate and watering. Trade fertilizers. Organic fertilizers. Fertilizer planning. Distribution methods. Preparing and sowing place. Sowing depth. Sowing methods. The use of commodities for planting protection. The use and adjustment of the field spraying. Bacteria. Fungi. Pest and germ control. Viruses and deficiency diseases. Levels of ripeness. Waste and products from y y

21. Fertilising

y y y y

22. Soil Treatment

y y y

23. Planting Protection

y

y

24. Disease and Pest Control

y y y y

25. Harvesting

y y


31


y y y

26. Vegetation and Flora 27. Techniques for taking notes 28. Machines

y y y y y

harvesting. Germination. Water content. Storing and treatment of the field after harvesting. Through practical education on-site. Through practical education on -site. Driving techniques. Safety of machines. Maintenance of machines.

The above practical training will be implemented continuously during the 36 months of this Business Plan. All levels of staff at the farm will be covered. The other part of the field-management training will constitute a theoretical ³on-the-job´ training. This will cover the following areas. Area for Training 29. Type of Crops

What is to be covered Climate. Soil types. Watering options. Green fields ± disease from change of seed and grain. Contribution to profitability. Fertilisers. Organic fertilisers. Type of crops. Rainfall patterns and pre -ripping. Types of soils. Expected yield from fertilisation. Reaction numbers, phosphorus and calcium count. Change in seed and grain planning. Texture analysis. Sowing bed. Soil treatment. Sowing and sowing methods. Germination. Treatment of leaves. Treatment of soil, including systematic treatment. Means of cohesion. Selective means / non ± selective means. Poisoning of humans and animals. Damage to crops. Pollution from out-washing and dewatering. Protective means and dosing. Climatic conditions. Storing plant-protection commodities. y y y y

y

30. The Crop¶s need for fertilisers

y y y y y y y

y

31. Soil types

y y y y y

32. Means of plant - protection

y y

y y

y y y

y y y

33. Diseases and pest control

y y y

Bacteria. Fungi. Pest.


32


y y

34. Harvest

y y y y

35. Ecological Farming

y y y y y y

36. Notes and Records Management.

y y y y y y

Virus diseases. Macro/micro fertilisers. Level of ripeness. Weight of dry matter. Air humidity. Storage density. Conditions for production. Ecological planting and cultivation. Weed control and round-up. Timing and planning the treatment. Field covering and control. Manuring and soil-structure. Planting and cultivation. Field-leaves for fodder-crops. Field-leaves for fodder sale. Seed change planning. Fertiliser planning. Water balance account and water accounting.

The time schedule for the field-management training will be the same as for cattle management training as described above. Safety training and training in Good working practice and Environment. In addition to the above training, special training tailored for the purpose of training in safety procedures, and procedures to ensure a good working environment will be undertaking. The following areas will be covered. Area to be Trained 37. Accidents and Machines

What is to be covered Power and transmission exchange. Covering chains and straps. Coupling de-coupling machines. Children and other traffic. Driving safety. Removing animals. Mechanical milking of animals. Soil treatment. Artificial fertilising. Products for treatment of diseases. y y y y y

38. Accidents involving animals

y y

39. Dust Control

y y y

40. Noise

y y

41. Falling Accidents

y y

42. Lifting and Pushing Techniques

y

Noise control. Noise from machines and tractors. Stairs and ladders. Hand-railing. Practical education on site.

The farm manager will be responsible for the overall training and the sourcing of the training materials/content, where necessary expertise will be out-sourced to conduct the training. Dr. Jackson Mubiru responsible for backstopping all farm activities will also play an active role in the training.


33


1.7

Risks

The Kaisa Farm¶s greatest risk lies in the area of achieving the targeted productivity of its cows and its farm labourers. Care must be taken to ensure good genetic animals are purchased right from the beginning and that the cows receive a sufficient and steady supply of good food and water. In addition the staff need s to learn how to become more productive and to use the correc t techniques in caring for the herd. The Kaisa Farm must also be certain to expand its markets as forecast. Special attention will need to be paid to the third year when the target market will need to be moved aggressively to absorb the quantities of milk that are going to be supplied by the farm. Also, marketing efforts will need to focus on moving cream and butter sales. These sales are pivotal in maintaining a healthy bottom line. Without them the business plan as presented will be hampered. Other risks related to scheduling of the implementation of the various activities needed to achieve the planned objectives for year one. Quite a number of activities have been scheduled for execution during the first year. These activities involve procurement of Livestock and equipment, construction of fencing, milking parlours, manure pits and urine tanks, a barn, installation of new milking machines, clearing land, planting of new pastures and harvesting which requires training. To ensure a successful and timely implementation of these numerous activities will require careful work and financial planning as well as minute monitoring. The Kaisa Farm will at an early stage develop a work plan format which includes all outputs within a production year, related activities and assign responsibilities and state deadlines. The Kaisa Farm will also closely monitor the developments related to the production and sales, updating the financial schedules. The Kaisa Farm on a monthly basis will compare actual developments with the projections made, constantly analysing the reasons for deviations and recommending remedial actions in case o f negative developments. There are also environmental risks (external and internal) due to expanded production which have been analyzed and mitigation measures put in place. These are indicated in table below Key issues

Potential / actual negative impacts

Mitigation measures implemented

to

be

Waste water from the dairy

Pollution of nearby bore hole

Waste water, manure and urine from the milking parlour

Pollution of the soil, soft hooves and soil on the udder

Manure and urine concentrated around water hole

Pollution of ground water

Analyze the water for organic and inorganic pollution in the short term Construction of two concrete collection areas for the cows, two urine tanks and two storage areas for manure - one set at each milking parlour. Spreading of urine / waste water and manure by use of respectively a urine spreader and a manure spreader mounted on a front loader and pulled by a tractor Construct more water holes for the herd on three of the farm units. Water holes to be supplied by pumps through pipes from distant water source


Objectively verifiable indicators Bacteria in analysis samples Cleaner and healthier cows and better milk quality. Fertiliser spread on the fields

Tests of ground water immediately below ± before and after construction

34


Pasture fencing

Chemicals from the spraying race

Carrying of milk in the main milking parlour, manure / urine inside the milking parlour

General working environment Hygiene in production

The barbed wires give wounds on the animals. The current fencing requires too much wire and too many poles. The spray chemicals present a health hazard to the staff and may pollute the soil.

Electric wire fencing powered by solar energy

Ceiling to ground polyethylene flap doors for the in ± and outlet of the spray race. Spreading of the chemical waste from the race over a huge area by using the urine spreader. Gloves and gum boots for the staff. Working environment Construction of new milking related: The carrying of parlour at Naminage, with pump milk is potentially / pipe milking machine to avoid strenuous to the staff the staff to carry the milk. Will also improve on the hygiene in The manure and urine relation to the handling / storing create unhygienic of the milk in the parlour. Will working conditions improve the ability to easily and swiftly remove the manure and urine in the parlour. Inadequate housing / Construction of 4 houses for long transport (65 km main supervisors on each of the from the Kaisa Farm to farms. Jinja) deters qualified staff from working on the farm.

Lesser wounds on the animals and lesser use of wire and poles Interviews with the workers ± before and after Surface soil tests

Interviews with the workers ± before and after

Test of the milk quality (bacteria)

Easier to recruit and retain qualified management staff

Distance of work

Out - growers

Contamination of the milk due to inadequate hygiene Use of plastic jerry cans which cannot be properly cleaned

The Kaisa Farm to rent or sell Stainless milk churns to the out growers

Better milk quality (tests)

1.8 SWOT analysis STRENGTHS Experience in the dairy sector Arable and large acreage of land competitive forward and Back ward linkage

WEAKNESSES Few trained personnel Poor production equipment

OPPORTUNITIES Growing economy Increasing demand of milk Appropriate climate for milk production Relatively stable country ± politically and economically and Friendly government policies encouraging investment in dairy sector Name recognition and consumer satisfaction with Kaisa Farm products in primary market Availability of specialized human

THREATS Strong and versatile competition Relatively long distance from market Fluctuating demand for milk ± (i.e. high during dry and low during wet season) Perishability of the product

y y

y y

y

y

y

y

y

y

y

y

y

y

y


35


resources ± production reproduction experts

and

1.9 Investment Plan A - Finance needed Fixed assets by area of improvement:

Amount (USD)

Livestock

Breeding cows

109,299

E quipment

Milking facilities and equipment Improve parlour Concrete cow yard, (Nge.) Concrete Cow yard (Nbya) Milk pipelines and pump (Nbya) Milking machines (Nbya) Dairy plant renovations Drinking water for cows Nge water piping and pump Nbya water piping Ngali water piping and pump

69,000 33,000 16,506 4,138 10,759 50,000

4,138 1,954 2,989

Distribution Equipment Truck 3-ton, refrigerated

13,218

Fences Fencing Nge/Nbya/Ngali w solar gens

22,874

H ousing

Housing ± Manager Housing - Staff P asture:

16,500 37,500

Equipment, seeds and storage

Baler Harrow Planter Plough Sprayer Tractor Trailer Seeds Barn Hay storage Waste Management ± facilities & Equipment Front loader Manure Spreader Urine sprayer Concrete Manure pit ± Nge Concrete Manure pit ± Nbya

17,483 4,713 6,989 13,586 298 40,345 8,069 6,898 73,505

4,713 10,195 11,494 46,506 23,253


36


Urine tank ± Nge Urine tank - Nbya Working capital: Working Capital ± Purchase

Animal

Feeds

&

Milk

TOTAL INVESTMENT still NEEDED (USD):

1,506 747 Amount (USD) 40,000

702,170

The above stated capital is expected to be raised through a combination of debt, equity, own contributions and retained earnings/reinvestment of profits. Kaisa Farm has to date invested USD 1,062,443 into the farm. The majority of which went into purchase of land, buildings and some limited equipment. The farm does not have any current outstanding loans. It hopes to raise USD 400,000 from equity; USD 40,000 for working capital from a loan, USD 20,000 as own contribution and the balance will be raised from reinvestments of the company income.

2. THE ENTREPRENEUR 2.1 Personal motivation & individual qualities For the majority of his work experience, Mr. Kaisa has been in private Agribusiness having grown up on a farm. He is engaged in farming out of personal belief that this is his contribution to the development of Uganda. He believes that Africa in general and Uganda in particular will never develop, until people can meet their basic needs especially in terms of feeding themselves. Given the vast natural resources in the country. Mr. Kaisa believes that he can positively contribute to the sustainable development of his local community and make a contribution to the overall economic development of Uganda while earning good profit for himself and other shareholders. Over the next three years therefore Mr. Kaisa would like to set up one of Uganda¶s most productive and efficient dairy enterprise, utilising leading and appropriate dairy practices so that the highest market returns will reward the farm shareholders, the employees and the local community. Mr. Kaisa has excellent team building and interpersonal skills. He is highly motivated and self driven.

2.2 Experience Mr. Kaisa is a graduate of Makerere University, Kampala, Uganda. Where he obtained a Bachelor of social science degree in social administration and political science. He also has a Masters degree in Business Administration ± Economic Development from Eastern College, Pennsylvania, USA. He has carried out various short trainings in dairy production and processing. His work experience spreads across 20 years working in Agribusiness, specifically dairy, poultry and commercial maize growing. He has served as a Board Chairman of the National Animal Genetics Resource Centre and Data bank, a government agency responsible for development of livestock in the country. He is also an executive member of the East Africa Association of Dairy Stakeholders. He has travelled and visited various dairy enterprises in the region which in addition to the above has tremendously prepared him to build up a successful dairy enterprise.

2.3 Personal role Mr. Kaisa as managing director ± will be the main driving force of in the execution of the business plan for the Kaisa Farm. He however has set up strategic alliances with an expert in dairy production and reproduction Dr. Jackson Mubiru who will back stop most of the activities on the farm.


37


2.4 References Dr. Mwanja Commissioner Ministry of Agriculture Animal Industry and Fisheries P. O. Box 4 Entebbe Email: [email protected] Office Tel: +256-414-320563 Mobile Tel: +256-772-594923

Mr. Charles Ocici Executive Director Enterprise Uganda P. O. Box 24581 Kampala Email: [email protected] Office Tel: +256-312-261900 Mobile Tel: +256-772-699808 Personal details for Joseph Kaisa Passport number: B0635143 Nationality: Ugandan Date of Birth: March 17, 1966 Place of Birth: Namisambya


38


3. THE FINANCIAL PLAN 3.1 Budgeting Sheet


39


3.2 Fixed Asset Purchases (P.T.O)


40



41


3.3 Cash Flows


42


3.4 Profit and Loss Statement


43


3.5 Balance Sheet


44


4. THE DEVELOPMENT IMPACT This section includes information on the Kaisa Farms impact on the economic and social development of Uganda.

4.1 Economic Impact I mpact

on E mployment: Over the three years the employment on the Kaisa Farm is projected to increase by 36 staff, in the production and in sales.

In addition, the various construction projects (milking parlour, concrete cow yards, manure pits, urine tanks, and staff housing), to be carried out by external contractors, will create extra employment in the construction industry as well as in the industries supplying them with materials. I mpact

on the consumption of Raw materials, E lectricity, Water«. With increases in the production, processing and selling of milk and the cultivation of fields there will be a continuing increase in the consumption of the various inputs required to sustain these activities.

The milking machines and the dairy plant, including the storage fridge, will consume more electricity. The supplying of still higher quantities of milk to the local market as well as the cultivation of the fields will require an increased use of transport and petrol / diesel ± a non ± renewable resource. More packing material will be needed for the processed milk. The consumption of water will increase significantly. The various construction projects (hay barn, milking parlour, staff housing) will temporarily necessitate an increased use of various raw materials ± cement, i ron, bricks. A positive environmental initiative is the collection of manure from the milking cows for use as fertiliser on the fields. Overall, the project will increase the use of raw materials / inputs. The increased requirement for material / inputs, however, can be described as reasonable seen from perspective: They are indispensable to the implementation of the project, they are common in this kind of production, they cannot easily be replaced or reduced.

4.2 Local social impact of the business¶s products or services Besides the economic impact described above, the Kaisa Farm will also have positive social impact described below: I mpact

on Health: Milk is highly recommended for consumption due to its positive health impacts. As mentioned in the market analysis, however, the consumption of milk in Uganda is far below WHO¶s recommended levels. The Kaisa Farm through this business plan is likely to increase both the quantity and the quality o f consumed milk in Uganda. Quantity A major part of the reason for the low consumption of milk is the low income levels in the country. To increase the consumption of milk in the country it is theref ore essential to


45

Kaisa Farm Business Plan

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