Agricultural Production Loan Project Proposal

Agricultural Production Loan Project

Resources Integrated Services (RIS)

Analyzed and Presented by,

Daw Aye Nyein Thu (GM, Project Head)

Daw Lae Lae Win Hlaing (Project Manager)

Daw Su Myat Naing (Project Assistance)

Resources Integrated Services Agricultural Production Loan Project

2

Analyzed and Presented by Daw Aye Nyein Thu, Daw Lae Lae Win Hlaing and Daw Su Myat Naing|

Agricultural Production Loan Project

Resources Integrated Services (RIS)

Yangon, Myanmar

(20.11.2012)

Analyzed and Presented by

Daw Aye Nyein Thu (GM, Project Head)

Daw Lae Lae Win Hlaing (Project Manager)

Daw Su Myat Naing (Project Assistance)

Timeline of Planning Phase

No Date Activities

1 16.9.2012 - 21.9.2012 Delta Region Observation Trip

2 25.9.2012 - 1.10.2012 Mandalay & Shwe Bo Surrounding Region Observation Trip

3 10.10.2012 - 27.10.2012 Shwe Bo Township Survey Trip

4 29.10.2012 – 7.11.2012 Meeting with Mega and GKFF, Scanning & screening the

collected questionnaires to format the data entry, Preparing

Draft project plan to discuss with CEO

5 8.11.2012 - 14.11.2012 Data Entry & analysis

6 15.11.2012 - 20.11.2012 Proposal writing


3


Contents

1 INTRODUCTION ..................................................................................................................... 4

2 VISION ...................................................................................................................................... 5

3 OBJECTIVES ............................................................................................................................ 6

4 BACKGROUND ....................................................................................................................... 7

5 SITUATIONAL ANALYSIS .................................................................................................... 9

5.1 Macro External Environment ............................................................................................. 9

5.1.1 PESTL Analysis ......................................................................................................... 9

5.2 Micro External Environment ........................................................................................... 11

5.2.1 Competitors Analysis ............................................................................................... 11

5.2.2 Power of Customers ................................................................................................. 11

5.2.3 Supply Chain Management ...................................................................................... 11

5.3 Business Case Study ........................................................................................................ 11

5.4 Risk Management ............................................................................................................ 12

5.4.1 Critical Success Factors ........................................................................................... 12

6 EXECUTIVE SUMMARY ..................................................................................................... 13

6.1 Scope ................................................................................................................................ 13

6.2 Stakeholder Identification ................................................................................................ 13

6.3 Partners and Network ....................................................................................................... 14

7 WORK SCHEDULES AND BUDGETS ................................................................................ 14

7.1 Work Schedules ............................................................................................................... 14

7.2 Resources Requirements .................................................................................................. 15

7.3 Project Organization and Staffing .................................................................................... 16

7.4 Budgets Requirements ..................................................................................................... 16

8 STRATEGIES AND TACTICS .............................................................................................. 19

8.1 Service based HR and Technical Support ........................................................................ 19

8.2 Logistic and Procurement ................................................................................................ 19

8.3 Reporting, Communication and Information ................................................................... 19

9 LONG TERM PLAN (SYNCHRONIZED PLAN) ................................................................. 19

9.1 Corporate Social Responsibility (CSR) ........................................................................... 20

Appendix - 1 ..................................................................................................................................... 21

Appendix – 2 .................................................................................................................................... 22

Appendix – 3 .................................................................................................................................... 23


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1 INTRODUCTION

Myanmar is an agricultural country and most of the population resides in rural area. To upgrade

the living standard of the people in Myanmar, firstly needed coverage sector is agriculture. Major

crops in Myanmar are paddy, peas, corn etc. Project main selected area is only seeded paddy crop

as paddy is mainly emphasized crop and main income crop in Myanmar. Modern and systematic

technology for the agricultural sector could bring the way to control the quality of Myanmar crops

and to lift up the poverty of the farmers.

Agricultural Production Loan Project is a kind of social business to be beneficial for the company,

employees and farmers which may lead to integrate and cooperate among employees and farmers

to get the ultimate goal. The success of this project may lead to extend company’s market share,

good reputation and polish quality of employees. Moreover, because of the social business

implementation process, the selected project area will be trusted upon the company and may

become testing area for the modern and systematic agro-technology in Myanmar; means

mechanized farms, combined harvesting, quality seeds production, seeds bank and small &

medium agricultural loan bank, these all factors may lead the organization as a service based

agricultural corporation in Myanmar in future. Thus, the best suitable strategy is to build up trust

with farmers from selected area which is the best way to bring the success and sustainability of the

business.

In addition, unavailability in the quality seeds, fertilizers and pesticides and the quality and price

of rice sold, depreciation of exchange rate, or the provision of floor prices for crops are possible

cause of Myanmar’s farmers Insolvency. It must be noted, unstable crop prices would initially put

pressure on farmers and loan repayment ought to fall some interval after the harvest date so that

farmers are no longer forced to sell their crops with high prices. Market chain is an important

factor for local people survival. Granted Market Chain Support could help in trust building with

local farmers and will help to develop agricultural activities.

It is an economic issue because medium-size farmers can be more productive per unit of land, as

their yields benefit directly from the adoption of better cultivation practices. With crops like rice,

smaller farms often are more productive than larger ones. In Delta Region, most large-size farmers

said they cannot effort to cultivate efficiently their land as they have not has enough money and

labor. However, these farmers also need support in the form of technical know-how of agricultural

practice, improved water control, reliable fertilizer and pesticides, tractor services, modern milling

etc.

In future, the survival for farmers require a good plan for restructuring of farm debt in a

sustainable way, combined with investments in rural and agricultural infrastructure and

institutions, for example, paddy seeds bank and farmer field school. These investments will

support the reemergence of a competitive and productive agricultural sector, which can become the

healthy development of agro-processing.


5


2 VISION

To upgrade the agricultural sector in Myanmar

To be the best service based organization in agricultural sector in

Myanmar


6


3 OBJECTIVES

To extend the 30% market share of selected project areas in 2015

To contribute technical knowledge to farmers and to upgrade their agricultural

practices

To corporate between our small business units (GKFF, MGI, RIS) which can lead to

best image in the mind of stakeholders such as farmers, community, employees,

shareholders and government in long term.


7


4 BACKGROUND

Shwe Bo Township is situated in Sagaing Region and which has become a major rice producer in

Upper Myanmar since construction of dams have made irrigated water available year round,

enabling to grow two crops of paddy each year. There are about 63 villages in Shwe Bo Township

and most of the villages cultivate rice as their major income crop. Among over 102854 acres

coverage, about 84416 acres are cultivated rice upon the availability of irrigated water from Kar

BoDam, Kin Tat Dam and Maha Nanda Lake. The rest about 18438 acres are depend on the

rainfall. Moreover, other crops like beans, peas, flowers and betel are also grown as their income

crops. Beans and peas total acres of Shwe Bo Township published by MAS are 16664 acres in

2011-12.

Main Paddy Species found in Shwe Bo Township published by MAS according to their seeded

acres for the 2012-2013 Wet Season are –

Shwe Bo Paw San (Bay Kyar) - 90949 acres

Ayar Min - 4384 acres

Manaw Hari - 2393 acres

Shwe Thwe Yin - 4638 acres

Palal Thwe - 18 acres

747 - 472 acres

2012-2013 Dry Season of Shwe Bo Township coverage acres can be seen in Appendix 3 Shwe Bo

Township Map. Main Paddy Species for dry season according to our survey data are –

Ever 9

747

748

Shwe Thwe Yin

Shwe War Tun

Thu Kha Tun

Thu Kha Gyi

Some species that they test in some area are –

Ye Zin Manaw

Sin Shwe Thwe

Man Ayar

309

Chin Zabar

Thai Zabar

VR-9

Mid- and Upper- Myanmar harvests are usually a month or two later than harvests in lower

Myanmar. In Shwe Bo Township, the main wet season crop is seeded in July and the second dry

season crop from February through May, depending on the water resources available from the

irrigation canals. Lesser in climate change and weather risk for the agricultural sector in Shwe Bo

Township than Delta Region; means lesser risk due to flooded case and rainless issue can resist

because of the irrigated water from Kar Bo Dam and King Tat Dam.

Urea fertilizer is mainly used for crop production followed by compound and rock phosphate.

Most of the farmers use china products because of the lower price than Myanmar registered

company products. Most of the farmers prefer to choose fertilizer dealers which allow them to buy


8


on a credit basis system. The interest rate for the fertilizer is between 5 to 7 % which depend on

level of trust based on farmers.

Shwe Bo area has stability of paddy market compare to Delta area which depends on the quality of

Shwe Bo Paw San and the skills of storage and warehouse management of local farmers. Most of

the farmers have technical know-how, knowledge and adaptability of current agricultural methods

distributed by the agronomists and MAS employees. Willingness and level of business condition to

pay back credit of farmers is relatively high compare to Delta area.

50000 kyat per acre with 0.71% interest rate as agricultural loan by the Myanmar Agricultural

Development Bank (MADB) is beneficial for the farmers. Average paddy production cost per acre

is as shown in figures for both wet and dry season.

According to the Myanmar Data(2010) published by Ministry of National Planning and Economic

Development, Central Statistical Organization, wholesale price at Yangon is as shown in table 1.

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

1

14

27

40

53

66

79

92

10

5

11

8

13

1

14

4

15

7

17

0

18

3

19

6

20

9

22

2

23

5

24

8

26

1

27

4

28

7

30

0

31

3

32

6

33

9

Tota

l Pad

dy

Pro

du

ctio

n C

ost

pe

r A

cre

Number of farmers

Fig. 1: Total Paddy Production Cost per Acre in Wet Season

0

50,000

100,000

150,000

200,000

250,000

300,000

1

14

27

40

53

66

79

92

10

5

11

8

13

1

14

4

15

7

17

0

18

3

19

6

20

9

22

2

23

5

24

8

26

1

27

4

28

7

30

0

31

3

32

6

33

9

Tota

l Pad

dy

Pro

du

ctio

n C

ost

pe

r A

cre

Number of farmers

Fig. 2: Total Paddy Production Cost per Acre in Dry Season


9


Table 1: Average Wholesale Prices of Rice at Yangon

(Kyat per unit)

Commodity Specification Unit 2005 2006 2007 2008 2009

1. Rice Ngakywe 38% 50Kg.bag 7595 11398 13519 16995 17366

2. Rice Emata 35% 50Kg.bag 6596 10326 12884 14082 16146

3. Rice Ngasein 35% 50Kg.bag 6379 9600 12298 12649 14972

5 SITUATIONAL ANALYSIS

5.1 Macro External Environment

5.1.1 PESTL Analysis

Political

Myanmar is a country which is in the middle of transforming to Democracy regime since 2010.

Myanmar government is mainly emphasized on poverty reduction and encouraged small and

medium enterprises to develop and survive in the current changing market condition. Moreover,

many INGOs and even World Bank have planned together with Myanmar government to support

and lift up living standard of Myanmar People by educating and sharing technical support of

livelihood, capital, health care, and knowledge to meet their basis needs. This changing policy

trend to be flexible with the current situation may encourage FDI and Myanmar local companies

have to be ready to compete and survive by developing long term strategic business plan.

Environmental and Economic

Most of the foreign companies and multinational enterprises like General Electric, Pepsi, Uniliver,

and many famous American, Japanese, Chinese and other European multinational corporation are

interested to extend their business in Myanmar Market. Competition is very intensive in Today’s

turbulent environment.

Myanmar has potential rice export market to China, Bangladesh, India and bordering countries.

Export quality product (Rice) is needed in agricultural production system to compete in

International market place. Availability of quality seeds is also important factors in export quality

products. Myanmar is a net exporter of both rice and pulses. Internal rice consumption is probably

growing at 1–2% a year, following population growth.

Table 2: Export Quantity

Crop Unit 2001– 02 2007– 08 2008 – 09 2009–10 2010–11

Rice Thousand tons 939 359 666 818 536

Pulses Thousand tons 1030 1141 1451 1141 929

Source: Selected Monthly Economic Indicators, March 2011, Central Statistical Organization, Naypyitaw, pp. 11–12

and 2008 Statistical Yearbook, p. 198. Reporting year is April 1 to March 31.

Table 3: Distribution of Quality Seeds

Crop Unit 1990

-91

1995

-96

2000

-01

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

Paddy 1000

Basket 601 567 573 46 47 - 79 102 105 120

Sources: Myanmar Data (2010) published by Ministry of National Planning and Economic Development, Central

Statistical Organization


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The dollar exchange rate down to 700–800 in the summer of 2011 was depressing paddy prices

and ruining the profitability of production for many farmers and manufacturers. But the price of

fertilizers and pesticides are still high in the market place and farmers confront with high

production cost and low paddy prices. Fertilizer prices increased in 2007 and increased

substantially after March 2008 due to tight supply and increased export duties by the major

fertilizer export countries. As a result, fertilizer prices in 2008 almost doubled over those in 2007.

Table 4: Utilization of Fertilizers by Crop

Crop Unit 1995-

96

2000-

01

2003-

04

2004

-05

2005-

06

2006

-07

2007-

08

2008

-09

2009-

10

Paddy Metric

Ton 305109 215176 3911 343 3192 6698 3116 7324 4716



Table 5: Pesticides Utilized For Plant Protection by Crop

Crop Unit 1995-

96

2000

-01

2003

-04

2004-

05

2005

-06

2006-

07

2007-

08

2008-

09

2009-

10

Paddy Lb 127670 - 1324 8382 110 27424 1331813 1342174 1352544

Gal 71568 8388 6445 15688 3653 15532 366830 413781 438680



Social

Buying behavior of farmers in fertilizers and pesticides is usually based on the price, credibility

and good relationship with dealers. Most of the farmers use Chinese fertilizers and pesticides

products because of lower price than company registered products. Nowadays, attitudes of farmers

start to change and they start to use company products as they could get technical supports,

grantees and other benefits. Most of the agricultural companies are providing such services as

marketing strategy. Corporate Social responsibility (CSR) is also core of the today business

sustainability. Aspects and needs of local community; means farmers, dealers, local governors,

employees and stakeholders, have to be considered to extend the market share and survive the

organization in competitive environment.

Technology

Technical know-how of farmers in Myanmar is relatively low compared to other bordering

countries. However, willingness of farmers to adapt modernized agricultural machines and

systematic technology could be advantageous for the companies who have good agricultural

services. As a services based agricultural organization, establishing mechanized farms could be a

long term strategic plan for the company and concurrently job creations for the local people should

be considered in this plan as aspects of local people is also essential to develop the business plan.

Legislation

After transforming the Democracy Regime, most of the laws are revitalized to encourage in

economic sector. Union Law has been published and at the same time Land Law, Microcredit and

Microfinance law, Foreign Investment law (FDI) has been announced. Taxation policy is setting


11


up in these days and taxed companies have opportunities to get good relation with government.

Laws and legislations policy is strongly established in this transaction period as free trade policy is

agreed in 2015 among ASEAN countries.

5.2 Micro External Environment 5.2.1 Competitors Analysis

Probability of new competitors enters in the fertilizer and pesticides market place is high because

of the high potential and unsaturated market condition. Rivalries in the market environment are

intensive as market condition is potential to extend market shares. Main competitors are Awba,

Armo, Golden Lion, Golden Dragon, etc. Possibility to switch from one product to another is high

depend on the price, quality, net weight, services offer, product availability if required and trust &

loyalty of the farmers. Consumption of Chinese fertilizers and pesticides are very high and they

got the strong position in the market place as lower in price and not so different quality with

company registered products.

5.2.2 Power of Customers

Bargaining power of customers (farmers) is very high as many local and Chinese fertilizers and

pesticides in the market place. Role of distribution channels; means dealers and regional branch

offices, are essential to get the market share.

5.2.3 Supply Chain Management

Estimating Sales targets is core of the business that top management should wisely calculate and

determine to be realistic. Supply chain must manage well and systematically to reduce overhead

cost and transaction cost. Well planned rules, steps and procedures should be setting up to

distribute the right quality products with right quantity to right places in right time.

5.3 Business Case Study

The Myanmar Agricultural Development Bank (MADB) provides 50,000 kyat per acre with 0.71%

interest rate mostly issues only on May for the year round. In some destination, The MADB has

extended loan of 20,000 kyat per acre to some farmers in summer season but it is very rare. There

were no other formal-sector lenders for farmers in Shwe Bo Township. Informal credit cost 5% to

10% a month, and it was not always available. These circumstances depressed input use, held

down production, reduced farmers’ incomes, and ultimately increased their indebtedness.

Most of the local agricultural companies have made loan to farmers at the rates of 2% to 5% per

month. While not nearly adequate to meet the borrowing needs of Myanmar’s farm sector. Some

agricultural companies lose the farmer trust and good image of community and consequently to

lose their market share. One of the factors for these is that they are using the wrong system of

borrowing money which can only survive for short term. The mindsets and attitudes of the

shareholders and the role of project organizer and facilitators are important to be considered

beforehand. In Delta Area, many NGOs, INGOs, local Association and companies are providing

and borrowing money to farmers without knowing the real needs of farmers. Mostly, they give

their money to village governors and their parties and many frauds have occurred in these areas

and the plan is not effective so finally result in the late payments and outright default. In Shwe Bo

Township, some agricultural companies such as Golden Dragon, Kabar Kyaw and Biosupprine etc

position themselves negative image in the mind set of customers as their employees give over

promised upon their products quality and bad quality of products and services. Moreover, by force

selling with ration per acre made bad image among the community.

Sources: According to the data collected and interviews with key farmers during the survey.


12


5.4 Risk Management To reduce the risk, systematic rules and procedures are needed. Building up good relation with

farmers can make trust upon company. Contacts of paddy field with farmers could reduce risk of

loss. Rules, steps and procedures of signing contracts need to be discussed in details with

professional lawyer to format the contracts. Making contract with group must set up. 5 farmers

from each owned level of land will be grouping in a contract (၅ ). Negotiate and ask opinion from local governors and focal persons could also strongly support the

project, understand the nature of the local farmers and fit with the current situation. Lack of repay

loan farmers will be taken over the lands or sued by law.

5.4.1 Critical Success Factors

5.4.1.1 Total Quality Management and Value Creation

Fig. 3 – Total Quality Management System

5.4.1.2 Aspect of Human Resource Management

Aspect of HR, recruiting, training and developing, performance appraising and rewarding take the

main role in the organization to get the competitive advantages. Employees are seen as the most

valuable access to give the best service to our clients compare with our competitors. If we say

quality of the products, we could not leave behind the services of our employees to get the unique

valuable products. That’s why theorists used to say that nobody could separate product and service

in today turbulent business environment. Therefore, we’ve to train and change the attitude of our

employees to be motivated and committed to our organization. Employees need to be well

qualified and have a PDP (personal development plan) to perform the tasks effectively and

efficiently.

Inputs

Quality of seeds,

fertilizer and

chemical materials

Agricultural

production costs

Qualified and

skillful technical

support teams

(GKFF & MGI)

Technical know-

how of farmers

C

O

O

P

E

R

A

T

E

Processing

Providing agricultural production loans

Consumption of good fertilizers and pesticides in right time

Managing the whole process to be systematic and convenient

Importance of logistics and procurements

The availability of market place

Outputs

Export oriented

& high quality

products

Wealth of

farmers and

education of

farmers

Sales Volumes

and profit

maximization

for organization


13


Agricultural Production

loans

project team

Farmers

GKFF & Mega Grow

MAS

Local govern-

ment

6 EXECUTIVE SUMMARY

Agricultural production loan project team from RIS actively went to Ayeyarwady Region,

Mandalay and Shwe Bo Surrounding Region to collect the relevant data and to observe the current

agricultural situations, technical know-how level of farmers and their difficulties, especially

concerned with the needs of input and cost in cultivation of rice. During the observation trip,

project team meets and discuss about the agro-loan project with Aung Yadanar Local NGO and

manager of MAS. The project team has reported the finding to CEO after the observation trip and

discussed about the project in advance before the survey trip. Afterwards, the project team has

selected the Shwe Bo Township as sample project areas and continued the in-depth survey to

determine the actual needs of farmers and collect the required data which is the best way to run the

project. Through the analysis of 350 questionnaires from 6 villages, the project plan has been built

up in a ways of marketing supporting plan to extend the market share and good image in

community.

6.1 Scope

Agricultural production loan project team went to Shwe Bo area to survey the current condition of

the farmers. Survey team collected details data in 6 villages and observe over 15 villages to choose

the sample project area. Among these villages, Si Thar village, Taunt Tin village and Nyaung kan

village have been selected as project area in this coming season because these villages have

necessary criteria based on project needs. Criteria that the project team set are –

Only paddy field area

Lesser insolvent rate of pay back to Myanmar Agricultural Development Bank (MADB)

Fair economic condition

Willingness to adapt the systematic technical know-how distributed by agronomists and

MAS

Medium size villages with 200 to 300 households which possess over 1000 acres coverage

Attitude of farmers upon the service based agricultural company

Lesser in gambling cases

Key farmers of GKFF and Mega Grow will be considered in this project based on their attitude,

loyalty and repeat purchasing behavior of the company’s products. Choosing key farmer policy

will be setting up by GKFF and Mega Grow as which will become one of the marketing promotion

plan for the main key farmers.

6.2 Stakeholder Identification


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Agricultural Production

Loans Project Head Office

GKFF Mega Grow

6.3 Partners and Network

7 WORK SCHEDULES AND BUDGETS

7.1 Work Schedules

Agricultural Production loan Project will start on Si Thar Village, Taunt Tin Village and Nyaung

Kan Village. They possess about 1150 acres estimated in each village and in total it will be about

3350 acres. Our team needs to cooperate with GKFF and MGI to achieve the targeted objectives.

Actual Project have to start on the second week of February 2013 so the required planning for

office rent and introduction of project to famer have to make in advance. In December 2012, the

office set up on Shwe Bo and at the end of December the meeting with village governor will be

held together with GKFF, MGI and MCPL Team. Seminars to the farmers on the intended villages

need to make in January 2013. Regular technical know-how supporting activities will be discussed

in details with GKKK and MGI and will be setting up as monthly plans. Details monthly tactical

plans for year round will be reported in details after approving the proposal.

Project Field

Branch Office

Nyaung Kan

Village

Taung Tin

Village

Si Thar Village

Key Farmers

of GKFF

Key Farmers

of Mega Grow


15


Table 6: Action Plan of Agricultural Production Loan Project, Year 2012-2013

Activity

D

e

c

J

a

n

F

e

b

M

a

r

A

p

r

M

a

y

J

u

n

Ju

ly

A

u

g

Se

pt

O

c

t

N

o

v

D

e

c

J

a

n

F

e

b

Office set up

Discussing and Meeting with

village governors, formatting

policy and procedures.

Giving seminars and workshops

to farmers cooperating with MGI

and GKFF

Issue the loan and credit card for

fertilizers and pesticides to the

farmers for summer season

Supporting Regular Agro-

technical services, making

demonstration plot and building

trust with farmers

Collect the loan and interest

from the farmers

Issue the loan and Credit Card

for Fertilizers and pesticides to

the farmers for rainy season

Supporting Regular Agro-

technical services, making

demonstration plot and building

trust with farmers

Collect the loan and interest

from the farmers

Control, Monitoring and

Evaluation

7.2 Resources Requirements

Resources are the foundation of a business to meets their objectives. Thus, to be a successful

organization, well planned resources plan is needed. Resources in Business Environment are

known as 7 Ms,

Money

Man power

Material

Management

Method

Machine

Minute (Time)

Regarding human resources, the project organization chart is as shown in Figure. Human resources

are also the core of the business success to get to the ultimate goals.


16


GM

(Project

Head)

Finance

Manager

Admin /

Finance

Facilitator Facilitator

Project

Manager

Facilitator

7.3 Project Organization and Staffing

Fig. 4: Project Organizational Chart

7.4 Budgets Requirements

Labor Cost ks

Project Head (500,000 ks x 6 moths) 3,000,000

Finance Manager (200,000 ks x 6 months) 1,200,000

Project Manager (200,000 ks x 6 months) 1,200,000

Labor cost in Branch office (probation for 1 Admin/Finance & 2

Facilitators) 80000ks x 3 months x 4 persons 960,000

Labor cost in Branch office (1 Admin/Finance & 3 Facilitators)

100000ks x 3 months x 4 persons 1,200,000

1st season of the project (Feb-July) 7,560,000

Labor cost in Branch office (1 Admin/Finance & 2 Facilitators)

100000ks x 7 months x 4 persons 2,800,000

Project Head (500,000 ks x 7 moths) 3,500,000

Finance Manager (200,000 ks x 7 months) 1,400,000

Project Manager (200,000 ks x 7 months) 1,400,000

2nd season of the project (Aug-Feb) 9,100,000

Labor Cost for 1 year project life 16,660,000


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Fixed Cost ks

Office rental charges (200,000ks x 12 months) 2,400,000

Computer ( 2 pcs) 850,000

Motorcycle (2 pcs) 1,000,000

Tables and Chairs ( 4 tables & 8 chairs) 225,000

Locker (1 pcs) 100,000

Safe box (1 pcs) 500,000

Telephone (handset & sim card) 300,000

File stand (1 pcs) 40,000

Total Fixed Cost 5,415,000

Administrative Cost ks

Monthly phone card (10,000ks x 2 cards x 6 months) 120,000

Fuel (40,000ks x 2 motorbike x 6 months) 480,000

Motorcycle Maintenance (20000 ks x 2 motorbike x 6 months) 240000

Miscellaneous expenses 800,000

Training & Seminar 500,000

Transportation 500,000

1st season of the project 2,640,000

Monthly phone card (10,000ks x 2 cards x 6 months) 120,000

Fuel (40,000ks x 2 motorbike x 6 months) 480,000

Motorcycle Maintenance (20000 ski x 2 motorbike x 6 months) 240000

Miscellaneous expenses 800,000

Training & Seminar 500,000

Transportation 500,000

2nd season of the project 2,640,000

Total Administrative Costs 5,280,000

Operational Cost in 1st season ks ks

In Cash (50,000 ks x 2500 Acres) 125,000,000

In Kind (70,000 ks x 400 Acres) MGI & GKFF products 28,000,000

Key Farmers (120,000 ks x 1000 Acres) 120,000,000

Total Operational Cost 273,000,000

Cash at bank in 1st season 11,385,000


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Principle Amt 273,000,000

Interest Rate 2%

No. of months 5 months

Interest 27,300,000

Net Income in the 1st season of the project 300,300,000

Net Profit for 1st season 311,685,000

Overhead cost for 2nd season (11,740,000)

Operation cost for 2nd season 299,945,000

Principle Amt 299,000,000

Interest Rate 2%

No. of months 6 months

Interest 35,880,000

Net Income in the 2nd season of the project 334,880,000

Cash at bank in 2nd season 945,000

Net Cash Flow Over 1 Year Project

Initial Investment -300,000,000

Net Income at the end of year 334,880,000

Retained Money 945,000

335,825,000 335,825,000

Net Profit at the end of year 35,825,000


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8 STRATEGIES AND TACTICS

8.1 Service based HR and Technical Support

Coordination between Technical teams & agricultural production loan teams should be

harmonized and could provide in time services for our clients. Continuous and in time technical

advice can get better solution to produce the quality products and can help trust building between

the farmers and the organization. In the selected villages, project team has a plan to make a

demonstration plot with strong technical support. Seminars and training services are the most

useful tools to give the environmental and agricultural awareness for the local community,

especially, to reduce the danger of pests and mice to get better outputs for their livelihood. As a

result, the organization can be a service based reputable organization and it can be profitable in

long term and can maximize its sales volumes and extent its market shares.

8.2 Logistic and Procurement

Not Only Production loan but also supporting fertilizers and pesticides are also important for the success of the project and the organization. Therefore, the quality of the fertilizer and pesticides, in time supply chain management, realistic technical know-how supporting services need to be synchronized in the project plan. Logistic and procurement system need to be systematic to

maintain the quality of the products. Warehouse technology and packaging system are the most

valuable factors to get the best export quality products. Sufficient transportation service needs to

arrange to transport the products in the right time and right place.

8.3 Reporting, Communication and Information

Reporting system and procedure may directly send to the CEO (U Myat Kaung) as he requested

the RIS employees to implement this project and cooperate with Mega Grow International Co., Ltd

and GKFF strategic business unit (SBU). Communication steps and procedures will be

systematically set up according to the organizational chart and role and title of the employees.

Centralized and decentralized management style will be needed in today’s turbulent environment

to handle the issues in time. Train and upgrade the skills of employees and empower them their

tasks to be effective and to get the competitive advantage compare to the competitors by using the

employees as core of the organization. Information flow may concurrently share in all parts of the

organization; means cross sharing information system among the department heads, employees

and all staffs of the organization.

9 LONG TERM PLAN (SYNCHRONIZED PLAN)

As for the organization, borrowing money will take the role of incentives to bring trust from

farmer. And as for farmer, this project can lift up their standard of living, technical know-how

level of farmers and their agricultural practices. A systematic credit system with adequate

information on borrowers would typically not lend to such borrowers. But borrowing money only

to large acreage possess farmer cannot be an effective ways to increase the productivity of

Myanmar’s farm sector. Such circumstances may eventually lead the small acreage farmers to

survive the rice production with extra- high rate of interest and finally, lose their land. Therefore,

organization has to build up the trust through the agro-loan project which can support to have the

company’s good reputation and to extend the market share. Building trust and good relation with

farmer is clearly a long term sustainable and beneficial ways of doing business and it could serve

as a platform for future growth of company.


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If the above approach is successful, company can make any agricultural and production plan not

only selling company product but also other agricultural practices and activities whatever they

want and extend to improve the agricultural sector. (For example, Land Leveling, establishing

mechanized farm, combined harvesting, quality seeds productions, technical services teams and

even agricultural loan bank.)

9.1 Corporate Social Responsibility (CSR)

Agricultural Production Loan services are means of Corporate Social Responsibility (CSR) as CSR

is a critical success factor in these days that all the organizations drive to obtain good will. We

have to consider for our organization to be good image in the community and to extend the market

share, CSR activities need to perform with plan. Plan for social-welfare of local community and

technical knowledge for the farmers from the project can build up good reputation for our

organization. Good relation with local community can get better profit and higher sales volume for

GKFF and Mega Grow and can extend market share.


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Appendix - 1

0

1000

2000

3000

4000

5000

6000

7000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63

Fig. 5: Total Acres of Paddy Field by Villages in Shwe Bo Township

ဆည္ေရေသာက ္ မိုးေရေသာက္ Total Acres

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

11

42

74

05

36

67

99

21

05

11

81

31

14

41

57

17

01

83

19

62

09

22

22

35

24

82

61

27

42

87

30

03

13

32

63

39

Tota

l co

st P

er

Acr

e

Number of farmers

Fig. 6: Consumption of Fertilizers


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0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

1 9

17

25

33

41

49

57

65

73

81

89

97

10

5

11

3

12

1

12

9

13

7

14

5

15

3

16

1

16

9

17

7

18

5Fig. 8: Acres owned by farmers in Taunt Tint Village

လယ္ဧက

ယာဧက

Total Acres

Appendix – 2

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.001 8

15

22

29

36

43

50

57

64

71

78

85

92

99

10

6

11

3

12

0

12

7

13

4

14

1

14

8

15

5

16

2

16

9

Fig. 7: Acres owned by farmers in Si Thar Village

Acres


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Appendix – 3

Documents

Agricultural Production Loan Project Proposal