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Business start-up: 

Peri-urban Vegetable Contract Growing

Vegetable Production in peri-urban areas using enriched potting media technology

This is a start up business involving backyard contract growing of pesticide-free vegetables to poor, unemployed peri-urban residents. Our company will buy enriched potting media of vegetables from established suppliers, distribute these to interested and qualified participants, provide technical and financial support and finally buy back and market the produce.

Facts

Year of establishment

2008

Sales (US$)
Two years ago:
Last year:
This year (forecast): 4,200
Year 2 (forecast): 6,000
Year 3 (forecast): 8,000
Net profit after tax (US$)
Two years ago:
Last year:
This year (forecast): 1,300
Year 2 (forecast): 500
Year 3 (forecast): 2,500
Total number of Employees
Two years ago:
Last year:
This year (forecast): 61
Year 2 (forecast): 71
Year 3 (forecast): 90

How do you expect this to be financed?

Own Contribution in cash 1,000
Loans (debt) 1,000
Shares in your company that you offer to investors (equity)
Other sources
Total finance needed (US$) 2,000

The Business

What is your product/service?

The product will be pesticide-free vegetables (tomatoes, lettuce, mustard, pechay, kangkong, camote tops, spring onions) and herbs (oregano, sweet basil, mollocan spinach, coreander, pepper, etc) produced in the backyard using the enhanced potting medium technology. These products will be produced through a contract growing scheme wherein our company will provide the enhanced potting media, seeds, the A-frame where the potting media will be hanged ( which I will call ,"potting media frame") technical assistance and will then buy back the produce and market them in bulk.

The grower-participant will provide the labor in taking care of the vegetables up to harvesting. They will be trained in vegetable growing using the enhaned potting media, team building, values formation and simple financial management. Initially, at least 60 grower-participants growing one vegetable will be selected to achieve volume. Approximately, there will be 5-7 growing cycles per year. To take advantage of the best price, off season vegetables will be grown as much as possible. The company will market in established wholesale market centers within the municipality or province depending on the volume of production and in selected supermarkets. But the ultimate target is Divisoria.

Initially Our target market are the retailers who have stalls in the wet markets of Laguna and the supermarkets which carry pesticide- free and organic products. Eventually, the target is bulk supplying in Divisoria.

With regards to the supply, the raw materials needed throughout the year are the enriched potting media and seeds which are all available year round. The supplier will be :
Makiling Plant and Products Exchange, Inc (MPPI)
Los BAnos LAguna

Explain how you will sell your product/service (marketing strategy) and how you will reach your customers (distribution strategy)?

Our produce will be marketed as pesticide-free vegetables and herbs available year round. We will be increasing production during off-season when supply is low. The marketing assistant who will be hired will be responsible in contacting wholesale buyers and developing and penetrating the niche market of retailers who sell pesticide-free and organic vegetables. We plan to reach our customers through fliers, email and personal contact. We also plan to join in producers market, just to promote the product , be visible and create awareness.

Presently our competitors are the vegetable growers of Laguna especially those from Liliw and NAgcarlan who produce the so-called "Baguio vegetables". However, they produce vegetables the conventional way, complete with pesticides. We then have different target customers as we target retailers and supermarkets which sell pesticde-free and organic vegetables.. Our prices will probably be 10-15% higher than our competitors, but given the increasing demand for pesticide-free food, we believe we can compete.

What makes your business different/better than your competitors (competitive advantage)?

Our products are pesticide-free vegetables and available during off-season.

The Entrepreneur & Management

Describe the entrepreneur & management

I have been involved in farming systems research and development activities for small farmers. Part of this job is to help translate available technologies into livelihood activities which will impact the rural household and community. The enriched potting preparation is a technology developed and marketed by a Professor-scientist/colleague which can be used as livelihood source for peri-urban dwellers who do not have enough land for conventional vegetable growing.
Although, this is my first time to personally engage in this type of business, my experience as a researcher, and the readily available technical assistance from colleagues give me the confidence that this business will succeed. My business experience is in the line of ink refilling for printers and in my 3 years of managing the business, I have learned that product quality, good service and proper marketing strategy are the basic essentials for success in business.

Development

How does your business improve the local living standards (social and environmental)?

Most often poor peri-urban residents do not have stable sources of income. If they have, the income is not enough to feed the whole family, let alone send the children to school. These residents are mostly also unable to engage in agriculture because they do not own land.

With the development and availability of the enhanced potting preparation, peri-urban dwellers can now engage in vegetable production, earn a decent income and improve food security in their household. Those unemployed members of the household can take care of the vegetables and earn, while those employed can augment their income. In this technology, little space is required to grow vegetables since the potting media can be hung in frames which could be expanded laterally or perpendicularly in any space which is able to recieve at least 2 hours of sun light a day.

With the contract growing scheme, 60 grower-participants are given income generating activities with assured market, since our company will buy the produce and market them in bulk. They are then assured of direct income, and food on the table. In the long run, these households are then able to send their children to school improving access to education. In the first year, 61 people are given jobs and by the 3rd year, we hope to scale up to 90 contract growers.

Needs
Advice - PR, marketing, Network - buyers, customers