e8e83e42a1b87e00aa5fb4d382c2fbc3.ppt
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Feeders Ltd. Business Plan Presented by: Jason Basset David Latendresse Tyler Russell Jared Veness
Mission Statement Ø “To produce high quality finished animals available to local area producers and for export to packing plants. ”
Goals and Objectives Ø To establish a prosperous 10, 000 head feedlot operation in NW SK (1500 head custom) Ø Benefit the economy of Meadow Lake and surrounding area by both supplying new jobs as well as a market for barley, wheat, silage, hay and straw Ø To provide a return on investment in the form of dividends to shareholders Ø To achieve an internal rate of return of at least 15% Ø Hopefully expand in upwards of 20, 000 - 30, 000 within 5 -10 years of operation
Location of North. West Feeders Ø Located on the N section of 16 -60 -17 W 3, 4 miles N of Meadow Lake, SK Ø Additional quarter purchased for future expansion Ø Land has natural gradient of 3% Ø Many advantages of location Ø Little competition in NW SK Ø Greatest number of cows / crop district Ø Cheaper grain due to high transportation basis
Purchasing Procedure Ø Initially, larger animals purchased to increase turnover during 1 st year Ø Subsequent purchases, preference for smaller animals due to larger profits / day in feedlot Ø Purchases also based on the time an animal will be ready for sale Ø Want to sell 300 animals every week
Finishing Process Ø Animals purchased between 400 -900 lbs will be finished to 1250 lbs with restrictive feeding ration Ø Ration consists of (20 lbs grain, 12 lbs silage, 3 lbs hay and 4 lbs protein supplement) / head / day Ø Newer animals will be slowly eased into feeding regime and closely monitored in smaller pens
Business Operations Ø Bunks and pens will be monitored twice daily Ø Feeding will occur three times daily Ø Average cattle inventory will be 210 days Ø Average grain inventory of 14 days Ø Manure is composted and cleaned out once in the fall and once in early spring
Flow of Cattle arrive/leave via truck/trailer Cattle are weighed Sorted Tagged Implanted with growth hormones Finished cattle Moved into general population Sent to small pens Sick cattle moved to hospital then sick pens
Human Resources Ø General Manager - Responsible for the day to day operations of the feedlot including purchases of cattle and feed, caring and feeding of cattle, as well as capital expenditures and financial management. Ø Marketing Manager - Responsible for feedlot purchases and sales, marketing information systems, and utilizing marketing mechanisms available including the futures and options market and contracting procedures. Ø Secretary / Accountant - Running the office which includes keeping track of all the financial organizational info. Ø Feedlot Staff - Receiving, handling, caring for and shipping the cattle. Feed preparation and delivery to cattle. Repair and maintenance of equipment and cattle health. Ø Part-time Veterinarian - Part time employee, on retainer, responsible for animal health and welfare.
Chain of Command Board of Directors / Shareholders Marketing Manager Feedlot Staff ( 8 ) General Manager Secretary / Accountant Veterinarian (on retainer)
Cost of Employees
Employee Issues • Previous feedlot experience required • Preference for local employees ( Exception of General Manager ) • Job training • Regular performance reviews
The Markets ØPurchasing markets Ø Purchasing markets include feeds and feeder calves ØSelling markets Ø Selling markets include finished calves and compost manure
Competition Ø Barriers to Entry Ø Capital requirement Ø Feed availability Ø Buyer Power Ø Market is the price setter so that packers do not have power over the feedlot Ø Supplier Power Ø Lots of growers in our area looking for a market for their product therefore this should not be a problem Ø Threat of Substitution Ø Plenty of other feedlots Ø Since beef is a commodity there are lots of substitutes (Chicken, pork) Ø Degree of Rivalry Ø Cheap feed advantage due to transportation basis for grain Ø Larger trucking distance for shipping end-product
Competition Ø Major competitors are the feedlots in southern Alberta Ø They have roughly 80% of the Canadian market. Ø Other feedlots are larger, and have specialized facilities
Competition Ø Competitors ØStrengths - close to packing plants, experienced in the feedlot business, likely has existing business ties with buyers ØWeaknesses - drought in Alberta; cost of feed Ø Compared to our competitors - cheap feed vs. location Ø Counteract the location problem with attempting to increase our margin with the use of cheap feed
Competition Ø Trends that may effect competition and ourselves ØContinuing drought in Alberta Øincreasing cost of feed ØIncreasing government regulations ØInternational Trade Issues ØBeef consumption trends
Sales and Profit Objectives Ø Develop an alternative market for farm based commodities in the Meadow Lake area Ø IRR of greater than 15% by our first full year of business Ø Expansion of the feedlot business by 2007 Ø Pay dividends out by 2010
Customers - Who and Where Ø There a few markets for our cattle in both Canada and the U. S. Ø These include: Ø Cargill Foods in High River, Alberta Ø Lakeside Packers in Brooks, Alberta Ø XL foods in Moose Jaw, Sask Ø IBP in Dakota City, Iowa and Pasco, Washington Ø Con. Agra Beef Company in Greeley, Colorado
Channels of Distribution Ø The only distribution method that suits our needs is the truck and trailer Ø Trucking company used depends on the destination of the cattle and may change on a sale per sale basis Ø Large trucking companies based out of Saskatoon and Lloydminster Ø Major highways to all packing plants
Channels of Distribution Ø Feed grain, silage and straw will all be shipped on sight by the local suppliers Ø Canola meal or alternative sources of protein will be shipped in via private trucking companies
Pricing Policy Ø Prices are determined at the Chicago Board of Trade and the Winnipeg Commodity Exchange Ø The price has the possibility to vary a small amount depending on a supply/demand basis among different packing plants Ø Economies of size are vital Ø Some prices may be locked in on the futures market
Selling and Advertising Ø North. West Feeders will advertise to the packing plants by sending a fax or placing a phone call on a weekly basis Ø Customer direct promotion ØCattle buyers encouraged to drop in at any time to view particular animals ØTours available upon request
SWOT – Internal Strengths Ø Up to date technologies Ø Trained, experienced employees Ø Located in West SK Ø Low cost of production due to cheap grain Ø Reputation for quality Weaknesses Ø Smaller size feedlot Ø Increased precipitation and cooler climate Ø Must transport cattle large distances Ø High start-up cost
SWOT Analysis - External Opportunities Threats Ø Local crop district 9 B has largest amount of steers and heifers in need of finishing Ø Ability to expand diversify into other products Ø Favorable market conditions Ø Positive support from local area producers and potential shareholders Ø Increase in communication techniques Ø Environmental safety issues Ø Subject to international tariffs and trade boycotts from the U. S. Ø Cost of shipping end product Ø Are at risk to possible cultural changes such as rise in vegetarianism and hormone free beef Ø Relatively few buyers of our product
Community Impacts Ø New market for agricultural commodities in and around the Meadow Lake area Ø 12 -15% of the total feedlot population will be from local cattle Ø Economic spin-offs for Meadow Lake ØInitial start-up ØIncreased local traffic ØTrucking
Environmental Impacts Ø Good management, will help North. West Feeders minimize the impact on the local environment Ø To begin production North. West Feeders will have to follow the Agricultural Operations Act
Opening Balance Sheet Ø Initial financial statement for NWF Ø States initial allotment of both debt and equity capital
Capital Expenditures Ø Capital Budget in start-up phase Ø Financing for Capital Expenditures
Cattle Margins Ø The margins used reflect normal market fluctuations.
Financial Model Ø Internal Rate of Return and Net Present Value of Equity Investment under different scenarios.
Financial Model Ø Net income shows steady growth throughout the projection
Dividend Policy Ø NWF’s dividend policy is to pay dividends in the year following a cash balance in excess of $4 million Ø Under this policy, dividends begin payment begins after year 9.
Key Financial Ratios Ø Return on equity investment shows encouraging growth throughout.
Break-even Analysis Ø All break-even analysis is based on NWFs’ most constraining variable, animal selling price
Break-even Analysis Ø Selling prices can fall substantially below historical and current values
Break-even Analysis Ø Economic break-even analysis is the lowest selling prices that the operation could withstand before it could no longer deliver returns above all direct costs and opportunity costs Ø NWF is relatively stable under price fluctuations
Feedlot Expansion Ø Following year 5 (2006), NWF purchases more land doubles its operation from 10, 000 head to 20, 000 head.
Feedlot Expansion Ø Feedlot expansion effect on net income of the venture
Conclusion Ø Profitable, feasible business Ø Excellent investment opportunity Ø Allows shareholders/farmers to add value to their operations and earn dividends Ø Additional economic spin-off for community
e8e83e42a1b87e00aa5fb4d382c2fbc3.ppt