Bussiness plan of Nowgong agriculture Producer Company,MP

Business proposition
The business concept identities our market potential within our industry and outlines our action plan for the coming year. Seed shall be the key business activity of the company because of its growing need & existed captive market within DPIP's area. New clients & significant market area is developed by DPIP through huge investment on land, water & PVSP and transferred mainly whom, who were not the clients of regular market earlier. Seed replacement rate (SRR) and Cultivar (Variety) Replacement (CRR) of our state is the poorest in comparison to other state of country. Very poor Seed Replacement rate (SRR) and Cultivar (Variety) replacement rate (CRR) of our state is also providing tremendous opportunity for working of seed. There is huge gap between the demands & supply of the seed in the state and particularly in DPIP's areas which are mostly remote and poorly connected earlier from mainstream. From past few years SRR and CRR has been increased from 4% to 40% in DPIP area because of PVSP and other seed based programmes. It has also created tremendous. shivpuri is well suited area for crop production due to good irrigation availability which is created by MPDPIP, fertile loomy soil and better transport connectivity. Seed production of major crops like groundnut, mustard, wheat their certification, processing & marketing shall be main business activities of the company while supply & marketing of agriculture inputs like seeds, fertilizers pesticides & form equipments to members and non members in the operational area of the company bulk/group marketing of farm produces directly to big merchant/company or under buy-back production system shall by the ancillary business activities of the company.

1.2 Production process & development
Seeds and fertilizers are basic components of agriculture. Although seed & varietals replacement rate of the state is poor but it is increasing significantly from last 5 years. Increasing seed replacement rate and awareness level amongst farmers has created huge seed demand in rural area also. Role of private seed companies is also significant in order to motivating rural farmers for new seeds and varieties. However timely supply of good quality seed in reasonable price, is still a big problem in the rural areas. Seed supplied by the state's Govt. & local private seed companies are always found very poor in quality where good quality seeds which is mostly supplied by out of state seed companies are always very costly which is generally not affordable by our small & poor farmers. These circumstances have been created new niches & opportunities for opening new seed companies in the rural areas. Presently total seed supplied by all govt. agencies in the state is 1 lakh tones (official figure of state Dept of agriculture) which is covering only 10% of crop area while actual seed demand is more than 5 lakh tones where private seed companies are presently supplementing only 25% (1 lakh MT) of remaining seed demand. Hence there is huge gap between demand and supply of good quality seed in the state and district level.
Net shown area of district chhatarpur is 3.83 lakh hectare which compries 1192 villages where DPIP is working in 39 villages and having sown area of 46544 ha (Apporoxi). Major seed replacement rate of district are wheat & gram in rabi and groundnut, urd and til in kharif. Seed replacement rate of district is also increasing as per frend of state SRR which was increased from 4.5 (in year 2002-03) to 8.5 in years 2005-06. where in the area of DPIP SRR is goes up to 30% due to several seed based interpenetrations like PVSP & others. Total seed demand of the district for 5 major crops like gram. Wheat and Groundnut, Til & Urd is about 2700 MT where the requirement of DPIP villages is about 270 MT (Considered only 10% SRR).
Scope Study & Demand Assessment:
2000 Farmers of selected PFTs were interviewed for assessment of their yearly input requirement and the information which came out after the interaction is as under:
• Requirement of seed is 350 MT.
• Requirement of fertilizers 500 MT (300DAP, 100Urea, 100 SSP and 5 Tonnes of Mop)
• Total marketable surplus producer are 1000 Tones.
Description of Business Venture
Seed business (Including Production & Marketing of seeds of 2 major crops of both khrif and rabi), agriculture input trading and bulk marketing of farm producers, value added activities like production, processing & marketing of seed shall be the main business venture of the company.
DPIP has already supported for established of seed processing unit in Nowgong block, which is processing 5-8 tones seed per day. Seed production is practiced by these farmers from last 2 years. Availability of best quality raw seed material has created best scope for seed business in the area. Retails market rate of good quality seed for normal crop seed like Groundnut, Wheat and Mustard is ranged from 18 to 50 /kg.

Seed processing unit is situated at place Nowgong which is 23 KM away from Chhatarpur. This place is well connected with Road. Since raw material is also produced in surrounding villages hence it will reduce transportation cost and will save extra expenditure which finally positively affect the overall price of the product.

Seed processing unit will be establishment in the centre place & near to the District Head quater considering the basic requirement like electricity, phone and easy transportation. Seed Production Programme will be undertaken with selected farmers of PFTs Nowgong, Harpalpur. Farmers of remaining PFTs shall be participated in normal crop production by the company to their members.

Net profit margin in case of self seed production, processing & marketing is varies from 250-300/Qty. by selling of only 1500 Qty of certified/foundation seed Rs. 4.5 lakh can be earned (considering margin of only 300/Qty). Margin in trading of fertilizer or grain is very poor and generally various from 180-200 MT where in case of pesticides it is better. However despite of low margin in fertilizer, it has very sure market and having big demand amongst farmers. By supply of 500-1000 MT fertilizers to the members and non members company can earn 0.90 lakh to 1.0 lakh easily.

Company should also work on grain trading since repayment from farmers will not be always in farm cash and it would be generally in kind form. So Company can earn Rs. 300 to 500 per tonnes from bulk trading of all grain, pulses and other farm produces where by sell of minimum 500-1000 MT of grain, company can earn 1.5 to 5 lakh annual profit.

1.2.1 Suppliers
Company shall sell their product especially of seed with two channel one is directly through company's outlet by company staff's/VRP and another through either local traders of VDC in commission basis.
1.3 Market structure and analysis
1.3.1 Target market and customer base
Company's market outlet shall be initially two quater level and another is at block/cluster level. One salesman/marketing person along with one go down keeper and labour will be worked at each marketing centre. Supply to government department and other government project like MPRLP will be the target clients of this company. Pricing shall be competitive and it will finalize as per available rate of nearest market. Seasonal declared rate of state seed Corporation and Lamps rate will be also considered during the finalization of sell price of the products.

Premium to Growers:
Company shall provide a premium amount ranged from 50-100 per quintal to the seed growers additional with average rate of local mandi price on the raw seed supplied to the company.

1.3.2 Competitor analysis
Producer Company core strength is their well defined customers which were generally isolated with main stream market and living very unorganized earlier therefore this company has created mostly new clients for their business however healthy and open business competition supports growth of all players who believes in fare & healthy business and finally customers shall be benefited in such situations.
This producer company is different from other company since here farmers himself owners of the company and profit shall be distributed amongst members therefore by providing effective backward & forward linkages, ensure quality input supply and technical services to the farmers members it has differentiated himself from all other market players.
1.3.3 Market size and potential
Ground presence and huge farmers networking of Producer Company provides excellent business opportunity after entry of such mega business giant in this field. Our producers company can make synergy with these corporate through working as business franchises and ground support.

1.3.4 Competitive advantage
What are the unique selling points of your products/services; how will you deal with risks of potential competitors; how will you protect your product (legally)?

1.4 Marketing & Sales
1.4.1 Sales
Business Goals
In the first year 2007-08, immediate business goal of the company is to attain break even point which needs total profit margin of 6.67 lakh. This can be attained on following ways:
Table: 4
Business proposition
Volume of Business Total framers required Min. Margin Rs. /Qtl Gross profit amount (Rs. In lakh) Source of Capital
A. Seed production , Processing & Marketing by company itself 1500 Qtl 50 250 3.75 10 lakh from world Bank thru DPIP remaining from Bank / Stock hypothecation
B. Seed production under buy back production system with other company 5000 Qtl 250 50 2.50 Starting money from buyers/share money/ project grant and remaining from business rotation
C. Input delivery service to members & retail management
1. Trading of Agro inputs Fertilizers 5000 Qtl 5000 (3500M+ 1500NM) 20 1.00 From CIF money/ family budget/ credit from supplier
2. Trading of Vermi compost 5000 Qtl 20 50 2.50 Starting money from buyers
2. Trading of Pesticides & grain storage Agro inputs Fertilizers 1000 litre 2000 100-200 1.00 Starting capital from farmers share and remaining by credit

This model is quite viable and easy model of agri business since in early stage our company has good ensure/captive market of DPIP project area itself for selling of such produced seed. The volume of business can be increased after 1-2 years when working area membership of company shall be increased. Company shall increase seed production volume @ 25-50% per year for initial 3-4 years and then it would be become static after reaching a substantial level of volume. of major popular crop like wheat for expansion of their business.
In second and third year company shall expand business volume up to 25-50% in each year basis. When total business volume in terms of money shall be 70 lakh and 80 lakh respectively then company can earn 7 and 8 lakh net profit deducting all expenses.
Table: 4.1
Production & Arrival of Major Crops in Mandi Unit in MT

Years Ground nut Wheat Gram Maize
Production Arrival Production Arrival Production Arrival Production Arrival
2003-04 190000 65100 45100 84200
2004-05 303600 148300 76900 88900

Other source of income:

Some extra income up to 0.60 lakh can be also generated through establishing of Agriculture information & training centre (Extending services to 2000 farmers@ 30/Member /Year) since company is having qualified professionals however Subject Matter Specialist can be arranged from out side or from Agriculture University or KVK etc as per requirement. Company can also charge minimum Rs.50 per member annually as a service charge to the member.

Production Plan:
Production plan is an important part of any business plan. Here we are providing seed production plan of Nowgong Agriculture Producer Company for coming three years. It includes seed rolling plan and seed production programme with yearly production increment.
Table: 5 Seed Rolling Plan 2007-2010
District: Chhatarpur Quantity in Quintal
Sr. No Crop Variety Certified Seed Target Foundation Seed Requirement Breeder Seed Requirement
2007 2008 2009 2010 2011 2007 2008 2009 2010 2007 2008 209

1 Ground nut TAG-37 A _ 5000 6250 7813 9766 500 625 781 977 50 63 78
TPG-41 _ 6000 7500 9375 11719 600 750 938 1172 60 75 94
2 Wheat Raj-3077 300* 5000 6250 7812.5 9766 250 313 391 488 13 16 20
3 HI-!479 200* 5000 6250 7812.5 9766 250 313 391 488 13 16 20
4 Gram JG-11 200* 5000 6250 7812.5 9766 500 625 781 977 50 63 78
JG-74 5000 6250 7812.5 9765.6 500 625 781 977 50 63 78
Considering SMR of Wheat is 20 and SMR of Gram & Ground nut is 10

• = To be purchased from market

Table: 6

3 Years Seed Production Programme Plan (Season wise)
Production Target Requirement (that's needed to be arranged)
Sr Season Crop Variety Class Production (Qtl) Area required (Ha) No. of Producers needed Requirement of Parent Seed (Qtl) Class of seed Rate of Foundation Seed/Qtl Total Amount (Rs.) Name of seed supplier Time of Supply
1 2 3 4 5 6 7 8 9 10 11 12 13 14
1 Kharif-07 Soybean JS-9305 C/S 6000 400 700 320.00 F/S 2400 768000 JNKVV/ BARC 20th May
Soybean JS-335 C/S 5000 333 583 266.67 F/S 2400 640000
Rabi-07-08 Wheat WH-147 C/S 5000 250 438 250 F/S 1600 400000 HAU Hissar 10th Oct
Wheat Lok-1 C/S 5000 250 438 250 F/S 1600 400000 IARI Indore
Gram JG-11 C/S 5000 417 35 333 F/S 2800 933333 JNKVV Indor 25th Sept
Gram IG-412 C/S 5000 417 36 333 F/S 2800 933333 JNKVV JBP
Total 31000 2067 2229 1753 F/S 4074667

2 Kharif-08 Soybean JS-9305 C/S 7500 500 875 400.00 F/S 2450 980000 JNKVV/ SOPA / Others 20th May
Soybean JS-335 C/S 6250 417 729 333.33 F/S 2451 817000
Rabi-07-08 Wheat WH-147 C/S 6250 313 547 312.5 F/S 1525 476563 Self 10th Oct
Wheat Lok-1 C/S 6250 313 547 312.5 F/S 1550 484375 Self
Gram JG-11 C/S 6250 521 911 417 F/S 2525 1052083 JNKVV 25th Sept
Gram IG-412 C/S 6250 521 911 417 F/S 2526 1052500
Total 38750 2583 4521 2192 4862521
3 Kharif-09 Soybean JS-9305 C/S 11250 750 1313 600.00 F/S 2500 1500000 JNKVV/ SOPA /Others 20th May
JS-335 C/S 9375 625 1094 500.00 F/S 2501 1250500
Rabi-09-10 Wheat WH-147 C/S 9375 469 820 469 F/S 1550 726563 Self 10th Oct
Lok-1 C/S 9375 469 820 469 F/S 1575 738281 Self 10th Oct
Gram JG-11 C/S 9375 781 1367 625 F/S 2550 1593750 JNKVV 25th Sept
IG-412 C/S 9375 781 1367 625 F/S 2551 1594375 JNKVV
Total 58125 3875 6781 3287.50 7403469

Financial Analysis: Table -7
Statement on Production, Sale ,Expenditure & Income
Sr. No Particulars 2007-08 2008-09 2009-10
Kharif Rabi Kharif Rabi Kharif Rabi
Soybean Wheat Gram Total Soybean Wheat Gram Total Soybean Wheat Gram Total
1 2 3 4 5 2 7 8 9 2 11 12
1 Target Production (In quintal) 11000 10000 10000 31000 13750 12500 12500 38750 20625 18750 18750 58125
2 Procurement Cost of Soybean @ Rs 1125 per quintal & Cost of Wheat for Rabi @ 900/Qtl, & Gram 1500 /Qtl (Increment of 50 /Qtl) 123.75 90.00 150.00 363.75 158.13 115.63 190.63 464.38 242.34 178 290.63 711
3 Good seed, quintal 8800 8000 8000 24800 11000 10000 10000 31000 16500 0 15000 15000 46500
4 Sale of good seed, quintal 8800 0 8000 8000 24800 11000 10000 10000 31000 16500 15000 15000 46500
5 Quantity remain unsold, quintal 0 0 0 0 0 0 0 0 0 0 0 0
6 Quantity being sold next year, quintal 0 0 0 0 0 0 0 0 0 0 0 0
7 Total quantity sold(4+6), quintal 8800 8000 8000 24800 11000 10000 10000 31000 16500 15000 15000 46500
8 Sale Rate of Good Seed @ Rs. per Qtl 1600 1450 2400 1650 1500 2450 1700 1550 2500
9 Value realized from sale of good seed (Lakh) 140.8 116.0 192.0 449 181.50 150.00 245.00 576.50 280.50 232.50 375.00 888.00
10 Quantity of undersize, quintal 1100 1000 1000 3100 1375 1250 1250 3875 2062.5 1875 1875 5812.5
11 Value realized from undersize (@ Rs 800/QTL of Soybean, 500 of Wheat & 900 o,f Gram) in lakhs 8.8 5 9 22.80 11.69 6.88 11.88 30.44 18.05 10.78 18.28 47.11
12 Realization (9+11) in lakhs 149.60 121.00 201.00 471.60 193.19 156.88 256.88 606.94 298.55 243.28 393.28 935.11
13 Profit margin (20/Qtl) from input like fertlizer supply to Member & Non-members 500MT/Year (200Rabi+300Kh) with 25% Increment on quantity) 0.40 0.60 1.00 0.50 0.8 1.30 0.60 1.2 1.80
14 Profit from sell of Pesticides(margin Rs.100/litre) toal 1000 litre (500Soya+500Gram) 1.00 1.00 1.50 1.50 2 2.00
15 Profit from sell of seeds of vegetables & other crop margin min.Rs.200/kg to Rs300/Qtl, starts from 200 Unit (50% incremnt) 0.40 0.40 0.60 0.60 1 1.00
16 Profit margin from bulk trading of farmer's produces directly/under buyback arrangement (800MT/Year with profit of Rs.300/Tons & 25% Increment on quantity) 2.40 2.40 3.00 3.00 4.50 4.50
17 Total Income (12+13+14+15+16) 476.40 613.34 944.41
18 Total Expenditure 456.38 581.58 889.86
19 Interest of loan taken 35Lakh in sucesive year @ 13 % yearly. 4.55 4.10 3.64
20 Gross Expenditure 460.93 585.68 893.50
21 Yearly Net Income (In Lakh) (14-17) 15.47 27.66 50.91

Company sahll sell their product especially of seed with two channel one is directly through company's outlet by company staff's/VRP and another through either local traders of VDC in commission basis.

Company's market outlet shall be initially two quater level and another is at block/cluster level. One salesman/marketing person along with one go down keeper and labour will be worked at each marketing centre. Supply to government department and other government project like MPRLP will be the target clients of this company. Pricing shall be competitive and it will finalize as per available rate of nearest market. Seasonal declared rate of state seed Corporation and Lamps rate will be also considered during the finalization of sell price of the products.

The provision of agri-input to farming communities is need of the centuries so this is our unique product.

The capacity building of the farming communities with the help of scientists and service providers is also unique to our producer company

I am working in the development sector since 1994 having got MSc from
university of Poorvanchal.Chance to get exposure from Centre of Environment Education,Gujrat and Management development Programme from IRMA,Anand.

with going through participatory studies from Manage,Hyderabad and the same is implementing in the field will definately lead to the promotion of this producer company.

The smile of the face of our farminf communities that establishes food security.