FINAL-Gracie Evans Farm

Gracie Evans Farm Development Plan

Agro Investment Corporation November 18, 2009 Project Development Department

i

GRACIE EVANSGRACIE EVANSGRACIE EVANSGRACIE EVANS FARM FARM FARM FARM DEVELOPMENT DEVELOPMENT DEVELOPMENT DEVELOPMENT

PLANPLANPLANPLAN

Proposers:

Paula Gracie & Daniel Evans



ii

GRACIE EVANSGRACIE EVANSGRACIE EVANSGRACIE EVANS FARMFARMFARMFARM

DEVELOPMENT BUSINESS PLANDEVELOPMENT BUSINESS PLANDEVELOPMENT BUSINESS PLANDEVELOPMENT BUSINESS PLAN

Submitted to: The Manager/Credit Manager

National Peoples Cooperative Bank of Jamaica Limited Red Hills Branch

Proposer: Ms. Paula Gracie & Mr. Daniel Evans

Jamaica W.I.

Contact: Ms. Paula Gracie

Telephone: (876) 834-6459, 818-3030 / 970-0196 Email: [email protected]

Mr. Daniel Evans Telephone: (876) 925-3541 / 845-4788

This Project Document was Prepared with the Support of Personnel in the Agro Investment Corporation

Project and Development Department c/o AMC Complex

188 Spanish Town Rd, Kingston 11, Jamaica

Contact: Karen Hylton (Investment Officer)

Telephone: (876) 878-0616 E-mail: [email protected]

November 18, 2009



iii

BUSINESS PLAN SECTION/ITEM (MoAICs Responsibility)

CONFORMANCE Page # in Document

REMARKS YES NO

Executive Summary Project Proposal/Deliverables Project Summary (Expected Outcomes) Capital Costs & Funding Requirements/Sources Project Expenses, Revenue and Profitability Results of Financial Analysis Investor/Company Profile Conclusion and Recommendations

Introduction and Background Borrowers and Sub-Borrowers/Investors Profiles Summary Profile of Investor (s) Analysis of Stability

Experience in sector, Family, etc.

Detailed CV Appendices Sector/Industry Analysis Marketing Analysis/Arrangements Project Analysis

Technical Factors/Analysis Market (Current and Future Agreements/Contracts

needed)

Financial Feasibility Analysis Capital Investment and Funding Sources Loan Repayment Estimates of Operating Expenses Estimates of Production and Revenue Cash Flow Analysis Profitability Analysis Sensitivity Analysis (Cost Base Analysis Basis)

Organization/Management and Monitoring and Evaluation Security/Collateral Arrangements (Valuation reports should be less than one (1) year old)

Socio-Economic Analysis Environmental Analysis Risk and Mitigating Measures

LOAN REQUIRMENTS ITEM (Investors Responsibility)

CONFORMANCE REMARKS YES NO N/A

Loan Facility Applying for Funding

National Insurance Fund

Bank of Nova Scotia

Development Bank of Jamaica (MAAP) TCC if Loan Amount exceeds J$2M, for NIF Facility only

TRN NIS RADA Registration Legal Registration of Business - Business to be registered at least as a sole trader or evidence of formalising business within a two month period (can be done two months after approval):

Will be done after loan approval

Registrar of Companies

Registrar of Co-operatives and Friendly Societies

Valuation Report on Assets (Must not be older than 1 Year) Credit reference from your Financial Institution

To be submitted Demonstrate existing market contract/arrangement for commodities



iv

to be produced Loan Charges/Processing Fees

BNS Mortgage Fees: Loan of J$100,000 200,000 = J$5,000.00 Loan of J$200,000 300,000 = J$7,000.00 Loan of J$300,000 500,000 = J$10,000.00 Loans exceeding J$500,000 = $15,000.00

NIF Mortgage Fee Flat Rate of J$10,000.00 Commitment Fee 2% of Loan Amount (BNS & NIF)

Equitable Contribution (Investors Equity)

Cash Surrender Value of Life Insurance Policy Cash at Bank In-kind Personal & Family Labour Invoices in respect of Money (s) spent on capital item expansion

and work capital programmes in the last year

Bank/Financial Institution Reference Proforma Invoices for Capital items to be acquired with Loan Funds (vehicle, building expansion etc).

Life Insurance Policy if Loan Required is Greater than J$600,000.00

Collateral/Security

Valuation Report on Asset to be utilized as Collateral Valuation report should not be older than one (1) year old.

Real Estate (Land Title) First and Second Mortgage Only.

Lien or Bill of Sale on Equipment Bill of Sale only if equipment is insured.

Lien/Bill of Sale on Motor Vehicles 60 to 95% of Force sale Value, depending on year made.

ADDITIONAL COVER LETTERS Ministry of Agriculture Investor

For MoAIC: Name: _ Karen Hylton_ _ Signature: ___________________Date: November 18, 2009

For Investor: Name: _Paula Gracie Signature: ___________________Date:



v

PERSONAL DATA

Company Name: Gracie Evans Farm

Legal Structure: Partnership

Year Incorporated: Not Registered

Mailing Address/ Head Offices: 33 South Monterey Drive, Kingston 6

Telephone Number: (876) 834-6459, 818-3030 / 970-0196 Facsimile: Company Number (TRN) TCC

Nil Nil Nil

Web Page: Nil E-mail: Nil Name and Title of Contact Person (s): Ms. Paula Gracie & Mr. Daniel Evans

Affiliated Companies: Nil

Markets:

Potential/New: All Irish potatoes and onions produced on the farm will be sold to private companies and individuals who purchase directly from farmers for resale to hotels, green groceries and other institutions. The Ministry of Agriculture and RADA will act as facilitators to link the investors with the guaranteed markets. The investors intend to rotate the Irish potatoes and onions with other crops such as escallion, hot pepper, sweet potatoes, sweet pepper and pumpkin. The crops to be rotated will be sold directly with Grace Kennedy whom the investors have a working relationship with.



vi

INVESTMENT INFORMATION SHEET

1. Financial Proposal: Total Initial investment of J$4,208,435.49 (100%) funded as follows:

Loan Request J$2,500,501.49 (59%) Owners Equity J$1,496,704.00 (36%) MoA&Fs Equity J$211,230.00 (5%)

2. Financial Institution: National Peoples Cooperative Bank: Red Hills Branch

3. Funding Source: DBJ- CDB Loan Facility 4. Previous Loan with NPCB:

Nil

5. Collateral/Security

Hypothecation - from C&WJ (Communications & Workers of Jamaica) Co-operative Credit Union Ltd. of $2,500,000.00 on fixed deposit a/c # 1000420.

6. Loan Repayment Terms (Amount and Years):

Repayment period of 7 years at J$498,135.42 per annum

7. Company Name: Gracie Evans Farm

8. Legal Structure and Year of Incorporation:

Partnership

9. Farm Location:

To be finalized

10. Farm Size and Current Operations:

20 Acres (8 hectares)

11. Project Description: The Project will seek to establish 3.9 hectares each of both Irish potatoes and onion on 8 hectares of land. Other crops and condiments such as pumpkin, sweet potatoes, sweet pepper, hot pepper and escallion will also be produced on the Farm on a rotational basis.

12. Project Sector

Domestic Crops: Irish Potatoes and Onions

13. Project Purpose Proposals/Objectives/ Outcomes:

The specific objectives of this project are to establish an efficient and environmentally friendly farm operation with the acquisition of the relevant implements, equipment and manpower. The expected outcomes for this project are summarized as follows:

i. Procurement of the relevant equipment and machinery;

ii. Establishment of efficient management practices to ensure the constant supply of fresh produce to satisfy the established markets;

iii. Production of high quality crops and condiments



vii

at competitive prices iv. To ensure profit accumulation from production

and sales within 2 years.

14. Name and Title of Contact Person or Sub-Borrower (s):

Ms. Paula Gracie and Daniel Evans

15. Name of Main Shareholder Ms. Paula Gracie and Daniel Evans

16. Financial And Economic Analysis

a. Internal Rate Of Return: 58% b. Net Present Value: J$3.99M c. Debt/Equity Ratio: 1.46 d. Annual Foreign Exchange

Earnings/Savings: US$27,999.99 (US$1 = J$90.00)

e. Employment: 4 Permanent: 2 Temporary: 2

f. Initial Investment/Unit Ratio J$526,054.44 g. Shareholders Contribution: J$1.49M

17. Comments

18. Recommendations

Considering the outcomes in the financial analysis, the contribution to rural and micro enterprise development and the foreign exchange earning potential, the project is highly recommended for funding.



viii

EXECUTIVE SUMMARY

This project document outlines the road map for the successful implementation of Gracie Evans Farm which will seek to improve the Jamaican agricultural sector on a whole. This venture involves looking specifically at the domestic crop sub-sector to include the production of Irish potato and onion for local consumption. The document provides justification for the prompt implementation of the project based on the projected positive technical, environmental, social, economic and financial feasibility. This business plan will function as the primary management tool by enabling the investors to plan the farms growth and anticipate changes in a structured way. It outlines the plans and goals of the investor for the successful implementation of the project.

The main features of the project are captured below.

Attractiveness of the Irish Potato sub-sector

According to a Rural Agricultural Development Authority (RADA) news letter, Irish potatoes play an important role in the diet of many Jamaicans. In 2008, the total consumption was 12,454,000 kg; while local production contributed only 3,696,746 kg or 39.6% of the countrys Irish potato demand in the fresh market. It must also be pointed out that the tourism industry is a major consumer of the staple and its primary supply is provided through imports. Therefore, Jamaica is heavily dependent on imports to satisfy the local demand. This heavy dependence on imports (60.4%) to satisfy the local demand can compromise local food security.

Currently, the country imports 9,268,176 kg of a required 14,197,170 kg (costing J$448,198,200) of fresh market potatoes valued at approximately US8M with another US4M being used to import processing potato. In light of this, the Ministry of Agriculture and Fisheries has included Irish potato in the production and productivity programme. Under this programme the Ministry continues to motivate farmers to increase or establish the production of Irish potato by providing assistance with fertilizer, seeds, land preparation, technical support and market access.

Why Invest in Irish Potato?

1. Contributes to National Food Security; 2. Conserves on Foreign Exchange; 3. Income earner; 4. Significant consumption across varying market segments; 5. Has 2 cropping seasons for the year; 6. Locally produced Irish potatoes are preferred to imports.

Attractiveness of the Onion sub-sector

Onion is of economic importance in Jamaica. The condiment is required in the fresh market as well as the agro processing industry. In 2008, total consumption was 6,852,362 kg while local production contributed only 455,000kg or 6.6% of the countries onion demand. Therefore, Jamaica is heavily dependent on imports (93.4%). The Ministry of Agriculture & Fisheries through the Production and Productivity Programme recognized the need to increase the islands production of selected crops including onion. Under this programme the Ministry continues to motivate farmers to increase or establish the production of onion by providing fertilizer, seeds, land preparation, technical support and market access. This is with the notion that the local production of onions will increase to about 30% by 2010.



ix

Why Invest in Onion?

1. The crop will adapt to Jamaicas ecology; 2. There is a strong local demand; 3. There is an opportunity to replace the imported component of our consumption; 4. There is an opportunity to reduce the food import bill.

The Project

Gracie Evans farm is the brainchild of Paula Gracie, an Accountant and Daniel Evans, an Engineer. These business partners believe that there is an excellent opportunity to pursue farming as a business venture in a time where food security and reducing the nations food import bill is of national importance. Other important factors include the fact that:

1. The market demand is strong for locally grown produce. In particular the ministry of Agriculture and Fisheries objective to increase the production of Irish potatoes and onions by 2010.

2. It is possible to lease land at a rate of $6,175 per hectare 3. Agricultural loans are available at a low interest rate of 10% disbursed through the PC Banks across

Jamaica 4. The Ministry of Agriculture is willing to facilitate marketing contracts between farmers and buyers of the

produce

The investors consider farming to be a serious business and they have expressed strong intentions to operate the farm using the best operating standard producing quality crops and by so doing, alleviating shortfalls in the local production of the said crops. This farming enterprise falls in line with what the Ministry of Agriculture and Fisheries is promoting as competitive agriculture. The expansion of the farm is expected to supply its markets with a consistent and stable supply of Irish potatoes and onions.

The specific objective of this project is to establish an efficient and environmentally friendly farm operation that produces quality onions and Irish potatoes. The plan is to:

1. Procure relevant equipment, machinery and implements to be utilized on the project. 2. Establish efficient management practices to ensure the constant supply of Irish potatoes and onions to

satisfy the established markets. 3. To ensure profit accumulation from production and sales within 2 years.



x

Financial Feasibility Analyses

Project Cost and Financial Plan The total capital cost is estimated to be J$4,208,435.49 in capital investments; apportioned into 5 categories as follows:

Financing Plan

ITEMS LOAN Investor's

Equity AIC TOTAL Buildings and Structures 162,500.00 87,500.00

250,000.00 Tools & Equipment 1,780,945.40 958,970.60 - 2,739,916.00 Works 2,800.00 4,200.00 7,000.00 Administrative Expense - 208,495.07 211,230.00 419,725.07 10% Capitalization of Year 1 Operational Cost 554,256.09 237,538.32 791,794.42 Total 2,500,501.49 1,496,704.00 211,230.00 4,208,435.49 Percentages 59% 36% 5% 100%

Projected Operating Expenses The projected annual expense inclusive of production and operating costs is J$9.98M in PY 1 to J$11,08M in PY7.

Projected Revenue Annual projected revenues accruing to the project will be J$10.93M.

Results of Financial Evaluation Cash Flow Schedule (Annual) The projected cash flows indicate a viable production venture with adequate resources to support additional capital re-investments, operational expenses and having net cash flow ranging from J$2.35M in PY1 to J$2.67M in PY7. The projected accumulated net cash balance at the end of the 7 years is over J$18.19M.

Profitability The projected income statement indicates positive, after tax profitability of approximately J$1.47M in PY1 to J$2.79M in PY7. Cumulative net income is J$17.63M.

Cost Benefit Analysis Financial Indicators: These analyses specifically indicated:

1. A Profitability Index (PI) that is greater than one 1.95>1.0;

2. A positive Net Present Value (NPV) of approximately $3.99M, when future cash flows were discounted utilizing a rate of 15% - the Jamaican Government Treasury Bill Rate, assumed to be the accepted market risk free rate of interest. Funding will be sought at 10% for the project implementation;

3. An Internal Rate of Return (IRR) of 58%, which is greater than (i) the Government Treasury Bill Rate of 21% which is more than the T-Bill Rate at the time when the business plan was written; (ii) the cost of capital (10%); and (iii) the industry benchmark or opportunity cost of capital of IRR = 13% for agricultural projects.



xi

Sensitivity Analysis When cost, revenue, and operating expenses were subjected to significant fluctuations (21% either way), the resulting positive NPV was J$852,496.02 and the IRR was 30%.

Conclusions and Recommendations Based on the results of the financial analyses and on the projected positive technical, environmental, social, economic and financial feasibility, it is reasonable to assert that the benefits projected from project activities are adequate to cover all costs and ensure a return on investment. This provides reasonable grounds to recommend that the project be supported for implementation.



xii

TABLE OF CONTENTS Pages EXECUTIVE SUMMARY vii TABLE OF CONTENTS xii LIST OF TABLES xii LIST OF FIGURES xii LIST OF ANNEXES xii LIST OF ABBREVIATIONS xiv 1.0 COMPANY/INVESTOR BACKGROUND 1 1.1 NATURE OF BUSINESS 1 1.2 COMPANY STRATEGY 1.3 REFRENCES

1 1

2.0 MANAGEMENT AND ORGANIZATION 2 2.1 OWNER/SPONSOR

2 2.1.1 INVESTOR PROFILE 2.1.2 PROFILE OF THE CO-BORROWER

2 2

2.2 OTHER HUMAN RESOURCES 2.3 ADVISORS 3.0 MARKET ANALYSIS 3.1 PROFILE OF THE DOMESTIC GOAT MARKET 3.2 PROFILE OF THE DOMESTIC ESALLION MARKET

2 2 2 2 3

3.3 FARMS MARKETING OBJECTIVES 4 3.4 MARKET SEGMENTATION 4

3.5 MARKET POSITIONING 4 3.6 SALES STRATEGY 4 3.7 COMPETITION 5 3.8 COMPARATIVE AND COMPETITIVE ADVANTAGE 3.9 STRATEGIC AUDIT/SWOT ANALYSIS

5 5

4.0 THE PROJECT 6

4.1 PROJECT PURPOSE 4.1.1 BROAD OBJECTIVES 4.1.2 SPECIFIC OBJECTIVES/PROPOSED OPERATIONAL TARGETS

6 6 7

4.2 PROJECT TECHNICAL FEASIBILITY/DESCRIPTION 7 4.2.1 PROJECT SITE 7 4.2.2 TECHNICAL APPROACH 4.2.3 IMPLEMENTATION PLAN

7 7

4.3 PROJECT JUSTIFICATION AND BENEFITS 8 4.4 PROJECT RISKS AND MITIGATING MEASURES 8 5.0 FINANCIAL AND ECONOMIC PROJECTIONS AND ANALYSIS 9

5.1 ESTIMATED COSTS 9 5.1.1 CAPITAL COST AND FINANCING PLAN 5.1.1.1 EQUITY FINANCING (INVESTOR) 5.1.2 COLLATERAL/SECURITY 5.1.3 CURRENT INDEBTEDNESS 5.1.4 DEPRECIATION

9 9

10 10

5.1.5 PRODUCTION OVERHEADS AND OTHER OPERATING EXPENSES 10 5.1.6 ESTIMATED REVENUES 10 5.2 FINANCIAL FEASIBILITY ANALYSIS 10

5.2.1 CASH FLOW SCHEDULE (ANNUAL) 10 5.2.2 FIRST YEAR MONTHLY CASH FLOW SCHEDULE 10



xiii

5.2.3 PROFITABILITY 11 5.2.4 COST BENEFIT ANALYSIS 11

5.2.5 SENSITIVITY ANALYSIS 12 6.0 ECONOMIC AND SOCIAL IMPACT 12 7.0 ENVIRONMENTAL IMPACT 12 8.0 SUSTAINABILITY 12 9.0 MONITORING AND EVALUATION 13 10.0 CONCLUSIONS AND RECOMMENDATIONS 13

LIST OF TABLES

Table 1 Escallion Production (2000 2004) 3 Table 2 Financing Plan 9 Table 3 Net Present Value and Internal Rate of Return Calculations for the Project 11 Table 4 Sensitivity Analysis 12

LIST OF FIGURES

Figure 1 SWOT Analysis 5 Figure 2 Project Implementation Schedule

8

LIST OF ANNEXES

Annex Assumptions to Financial Schedules 15 Annex 1A Capital Expenditure Table 17 Annex 1B Financing Plan 18 Annex 1C Loan Amortization Schedule 19 Annex 1D Depreciation Schedule 20 Annex 1E Operating Cost Schedule 21 Annex 1F Projected Production Schedule 22 Annex 1G Projected Revenue Schedule 23 Annex 1H Projected Cash Flow (Annual) 24 Annex 1 I Projected Income Statement (Profit and Loss Statement) 25 Annex 2 Monthly Cash Flow Schedule (First Year) 26 Annex 3 Logical Framework for Analyses 29 Annex 4 Hypothecation Letter 31 Annex 5 Resumes 32 Annex 6 Annex 7

ID & TRN Recommendation Letter

33 34



xiv

LIST OF ABBREVIATIONS

ADC Agricultural Development Corporation AIC Agro Investment Corporation AI Artificial Insemination AIC Agro Investment Corporation ASSP Agricultural Support Services Project BMP Best Management Practices CARICOM Caribbean Community CET Common External Tariff CPGA Christiana Potato Growers Association COTED CARICOM Council on Trade and Economic Development CPEC Caribbean Human Resource Development Programme for Economic Competitiveness DBJ EU

Development Bank of Jamaica European Union

FAO Food and Agriculture Organization of the United Nations

GAIN Global Agriculture Information Network GAPs Good Agricultural Practices GDP GOJ

Gross Domestic Product Government of Jamaica

IICA Inter-American Institute for Co-operation on Agriculture IRR Internal Rate of Return JAS Jamaica Agricultural Society JEA Jamaica Exporters Association MoA&F Ministry of Agriculture and Fisheries NPV Net Present Value OECS Organization of Eastern Caribbean States PBP Payback Period NPCB National Peoples Co-operative Bank Limited PI Profitability Index PIOJ Planning Institute of Jamaica PSOJ Private Sector Organization of Jamaica PY Project Year RADA Rural Agricultural Development Authority SPS SRC

Sanitary and Phyto-Sanitary Practices Scientific Research Council

STATIN Statistical Institute of Jamaica SWOT Strengths, Weaknesses, Opportunities and Threats USAID USDA

United States Agency for International Development United States Department of Agriculture

UWI University of the West Indies



1

1.0 COMPANY/INVESTOR BACKGROUND

1.1 NATURE OF THE BUSINESS

The investors intend to secure 8 hectares of land (20 acres) at Amity Hall, St. Catherine or Spring Plains in Clarendon. Spring Plains is more suited for underground crops such as Irish potato while Amity Hall is not suitable for such crops because of the high moisture content of the soil. Lands will be sought for the maximum amount of years possible through a lease arrangement. Irish potatoes and onions will be the first crops produced on the farm where 3.9 hectares (9.75 acres) each of the named crops will be established. After the first cycle of Irish potato has been completed, the investors plan to establish 1.2 hectares (3 acres) each of escallion and sweet peppers. The onion crop will be rotated with crops such as sweet potatoes and pumpkin. In year 2, the hectares under production for Irish potatoes and onions will be reduced to allow for the establishment of 1.2 hectares of hot peppers and 1.2 hectares of sweet potatoes. The partners intend employ the services of RADA to use the tractor to assist with land preparation. In addition, the required implements, equipment and machinery will also be purchased to be utilized in the farming operations.

Management of the Farm is secured as an experienced Supervisor will see to the ongoing operations with the investors offering continued oversight. The farm will be managed on a day to day basis by a supervisor with the business partners overseeing the farm on a once per week basis in the first year of operation. In the second and third year both partners will join full-time, one following the other. A portion of the income to be earned from the existing crops will be used to finance the succeeding crops and well as those used for rotation. The crops to be used for rotating will be sold directly to Grace Kennedy Foods and Services Ltd. The farming business is expected to not only provide income for the investors but to provide income and employment for persons in the wider community.

The Farms markets will be facilitated by the Ministry of Agriculture and Fisheries where contracts will be negotiated with private individuals or entities that operate by purchasing directly from farmers such as the investors. The items purchased by these individuals are usually a range of domestic crops for resale to hotels, supermarkets, green groceries and other institutions. The investors have already approached Grace Kennedy to supply them with the other crops to be established on the farm. The assistance of RADA will also be sought to secure other markets.

The investors will therefore succeed at developing a profitable business through the use of effective management and standardized quality of produce in order to remain competitive. Their pursuit of quality coupled with the drive for effective on-site management along with the flexibility of a local farm will allow the proposed project to exploit the opportunities in the current market.

1.2 COMPANY STRATEGY

The investor would like to accomplish the following goals:

1) Establish a profitable venture; 2) Operate a mixed crop farm producing Irish potatoes, onions, sweet and hot peppers, escallion, pumpkin

and sweet potatoes; 3) Establish and maintain market contracts; 4) Create a brand based on high quality crops.

The investor proposes to achieve the objectives by:

1) Adapting new technologies and techniques; 2) The implementation of good agricultural practices (GAPs);



2

3) Adopting a market led approach to farming; 4) Establishing a relationship with the community and the relevant Agencies; 5) Efficient management.

Exit Strategy

It is recognised that even the best plans may fall short of expectations when put into action. In addition, personal circumstances may change. Whatever the motivating factor, it is recognised that a partner may withdraw from the partnership at any time. In the event of this, the continuing partner will assume full responsibility for the assets and liabilities of the farm. The withdrawing partner will have to negotiate a share of the profits with the continuing partner.

In the event of both partners wishing to withdraw, they will bear equal responsibility to settle the liabilities of the farm prior to the sharing of any resulting profits.

1.3 REFERENCES

Financial Nil Trade Nil

Auditors: Nil

Legal Counsel: Nil



3

2.0 MANAGEMENT AND ORGANIZATION

2.1 OWNER(S)/SPONSOR(S) NAME NATIONALITY OWNERSHIP

PERCENTAGE Ms. Paula Gracie Jamaican 50 Mr. Daniel Evans Jamaican 50

2.1.1 INVESTORS PROFILE

Profile of Ms. Paula Gracie / Partner

Ms. Paula Gracie has more than thirty years experience as an Accountant spanning the period 1973 to present. Positions held include: Principal Finance Officer Ministry of Justice - 2003- Present, Chief Accountant - Jamaica Agricultural Society 2002-2003, Director of Finance Creative Production & Training Centre 2000-2002, Various Accounting Positions within Grace Kennedy & Co. Ltd. 1980 -1999. Paula Gracies Plant Rental - Proprietor-1973-to Present. Ms. Gracie is widowed with two daughters and a granddaughter.

Profile of Mr. Daniel Evans / Partner

Mr. Daniel Evans is an Engineer by profession who has decided interest in the agricultural industry.

2.2 OTHER HUMAN RESOURCE ISSUES

The establishment of the farm is expected to generate direct employment for 1 person on a permanent basis and 2 temporary employees. Seasonal employment will be sought on an as needed basis.

2.3 ADVISORS

Technical personnel will be hired by the farm on an as needed basis.

3.0 MARKET ANALYSIS

3.1 PROFILE OF THE DOMESTIC IRISH POTATO MARKET

The World Bank estimates that demand for food will rise by 50% by 2030, as a result of increasing world population. Meeting these future targets will require something close to a revolution, and a massive investment in agriculture in developing countries.

The Government of Jamaica (GOJ) has embarked on an initiative to reduce importation by increasing local production of targeted crops while improving productive efficiencies throughout the Agricultural Sector. Irish potatoes are one of the crops targeted under this program and as such, production activities have begun. In addition, to sustain future production, a collaborative effort is now underway through the Ministry with various partners such as the Ministry of Agriculture, Christiana Potato Growers Association (CPGA), Scientific Research Council (SRC) and the University of the West Indies (Mona Campus), to develop clean planting material.



4

Jamaicas micro climate is ideal for growing Irish potatoes. Some five parishes including Manchester, Westmoreland, Trelawny, St. Catherine and Clarendon are excellent locations due to the higher elevation of these regions, reaching two to three thousand feet above sea level or the cool night time temperatures in the lower areas. Despite this, Irish potatoes can be produced island wide. This is topped off by the superior taste of locally produced Irish potatoes, compared to the ones that are imported.

It is the Ministrys intention to substitute the importation of Irish potatoes with locally produced potatoes that will satisfy 49% of the local market needs in the first instance and to move to 80% of the fresh market by 2011. This can only be possible if the country is able to supply farmers with reliable and consistent supplies of clean planting material (seeds). A major advantage of the local Jamaican environment is its ability to produce potatoes all year round. This is however; limited by the availability of seeds which is restricted to October to February based on the planting cycles of our major markets from which we import.

It is the objective of the ministry to increase the local production to completely remove the need to import starting with a planned 88% increase in production this year thus reducing importation by 35%. Achieving this will move local marketable production to 6,940,607 kg by 2010. The required amount of planting material (seed) to achieve this is 1,089,714kg at a costs of J$103,086,952. If are to provide planting material to serve the needs of the entire industry, then this figure would be closer to 250 million and this only applies to one crop. The effort is the culmination of the work of key stakeholders including:

1. Bodles- Virus testing and standard 2. SRC- conservation gene bank 3. UWI- development of the protocol 4. CPG- multiplication

3.2 PROFILE OF THE DOMESTIC ONION MARKET

Worldwide onion is now the second most important horticultural crop after tomatoes. Onion is one of the important condiments widely used in all households all the year round. Onions are used to flavour every type of food including meat and fish. It is a spicy garnish and an excellent jerk seasoning. Onion supply has been tight on the international markets and local production, though increased in the last quarter, has not been able to fill the shortage. At minimum, the Government of Jamaica wants to replace at least 70% of onion imports with local production based on a demand of 6.8 million Kg of onion per year.

On the week ending August 14, 2009 the average retail price of onion was $213/kg while the range of the farmgate price was $88 to $99/kg. The price of onions kept increasing locally in the weeks following. This is a reflection of problems in the overseas market which has affected both yield and quality. These problems have translated into delays in the consignment of onions from overseas suppliers.

In August, 2009 the price fluctuation has seen onion prices soar to a high of $136.36/kg to $27.27/kg The implementation of this project will therefore make a positive contribution to the smoothing out of the demand and supply curve, thus keeping prices steady.



5

3.3 FARMS MARKETING OBJECTIVES

1. To maintain strong marketing links and contracts. 2. Control and reduce cost of production each month and retain and expand customer base. 3. Increase market share through the use of best cost strategies.

3.4 MARKET SEGMENTATION

The investors will combine segmentation variables to create a definable and action orientated marketing mix. They will segment the market into two groups. These are:

Agro-processors Middlemen (private individuals/entities) who supplies various hotels, green groceries and

supermarkets.

3.5 MARKET POSITIONING

The Farm will be positioned as: High quality domestic crop and condiments producer Best Cost Producer Professional and reliable management Consistent standards and production Flexible

3.6 SALES STRATEGY The investors sales strategy will focus primarily on their contractual obligations with private entities and individuals. These crops produced on the Farm are usually marketed by middlemen to the various hotels, green groceries and supermarkets. The Ministry of Agriculture and Fisheries have already identified several markets and will act as the facilitator responsible for linking Irish potato and onion producers like Gracie Evans Farm with the guaranteed markets. In addition, with respect to Irish potatoes the Mile Gully Production and Marketing Organisation (Mile Gully PMO) demonstrated how they run a fortnightly market in Mile Gully square to ensure that farmers' produce are brought to market and not left in the field. The investors can take advantage of this by becoming a member of the said PMO. Also of great importance was a recent initiative by the Ministry of Agriculture & Fisheries and RADA which saw 72,727 kg (160,000 lb) of Irish potato being purchased from farmers and stored at the Christiana Potato Co-op. The potatoes were then distributed into the market.

Domestic crops and condiments produced locally are usually marketed through: (a) Direct crop sales by producer to consumers

Direct Sales to Agro-processor (Grace Kennedy) The investors will sell the condiments and other domestic crops produced on the Farm to Grace.

Direct Sales to Middlemen (private individuals or entities) The investors will sell all Irish potatoes and onion produced on the farm to private individuals and entities who supplies hotel and green grocers etc.



6

3.7 COMPETITION

The investor has identified two major competitive groups. These are:

Local Irish potato, onion and condiment producers; Imported Irish potato and onion; Imported condiments.

3.8 COMPARATIVE AND COMPETITIVE ADVANTAGE

The data presented sections 3.1 and 3.2, supports the idea that both Irish potato and onion production are viable sub-sectors in Jamaica. The research has established that having a stable local supply is desirable especially with the motive to lessen Jamaicas food import bill. With both industries supported by the Ministry of Agriculture and Fisheries, the Irish potato and (condiment) onion sub-sectors will become the most important and fastest growing sub-sectors in the domestic food crop industry. With regards to condiments such as escallion, onion and pepper the value added products such as Escallion Mash and Hot Pepper Sauces will continue to spur increases in demand.

The operations comparative and competitive advantages are manifested in the strengths and opportunities as indicated by the strategic audit conducted in Figure 1 below.

3.9 STRATEGIC AUDIT/SWOT ANALYSES

The operations SWOT is presented below:

Figure 1 SWOT Analysis

Strengths 1. Government committed to significant expansion

of the sub-sector 2. Climatic conditions Island-wide suitable for year

round crop production 3. Rewards from greater product diversification 4. Presence of requisite expertise, skills and

development depth. 5. Production and operational knowledge and

capabilities 6. Guaranteed local market contracts 7. Organized decision-making and implementation

processes 8. Proven profitability 9. Available financial resources (owners equity) 10. Management commitment to improving

productive capacity 11. Strong capabilities in financial and economic

analyses 12. Strong technological capability and good

network 10. Access to experts

Weaknesses 1. No quality assurance systems currently in place 2. Lack of product differentiation 3. Lack of product innovation / re-engineering and /

or development 4. Inadequate use of technology 5. Low technological development of farm 6. Limited experience in marketing 7. Limited financial resources to fund growth and

development.



7

Opportunities Threats

1. Access to production information / technologies as a result of research and development work conducted by local, regional & international Agencies

2. Access to special short term credit facilities at low interest rates

3. The ability to network with the Stakeholders such as Ministry of Agriculture and Fisheries, RADA, Christiana Potato Growers Association and PMOs in the industry who have training in Irish potato and condiment production

4. Supply a fresh rather than frozen product 5. Potential to earn and save foreign exchange 6. Increased consumer demand for locally produced

crops including Irish potato and onion 7. Expanded product line to satisfy wider range of

customer needs 8. Increased market growth 9. Lack of experience and customer knowledge of

new entrants 10. Favourable macro-economic policies 11. Rapid expansion of ago-processing facilities 12. Good potential for product diversification

1. High cost of inputs. 2. No legislation to prevent praedial larceny 3. Unreliable input supplies 4. Increased competition low entry barriers, many

new entrants 5. Vulnerability to product life and business cyclical

changes 6. Severe market changes and fluctuations in prices 7. Resilient competitors response profile 8. Customer and suppliers bargaining power 9. Natural disasters and disease epidemics 10. Sluggish and unstable macro-economic

environment may cause a slowdown in demand 11. Substitutes 12. Praedial larceny

4.0 THE PROJECT

4.1 PROJECT PURPOSE

4.1.1 Broad Objectives

The goal of the business will be to produce high quality produce for the markets at competitive prices, while making a return on investment within 2 years. This is to be achieved while contributing to the continued development and improvement of Jamaicas agricultural sector by:

Directly and indirectly contributing to consistent supplies of high quality and food safe raw materials - to the domestic, wholesale and later the agro-processing markets;

Ensuring successful application of good agricultural practices (GAPS), business and marketing strategies and principles to secure guaranteed markets; and

Supporting local efforts geared at ensuring the economic viability and sustainability of the agricultural sector through improved contribution to: 1. Employment; 2. Rural community development; 3. Stemming rural-urban drift and the subsequent social ill effects of over-populated

urban centers; 4. Increased food security; 5. Ensure an adequate and reliable agricultural raw material supply; and 6. Increased foreign exchange earnings/savings.



8

4.1.2 Specific Objectives/Proposed Operational Targets

The specific objectives of this project are to establish an efficient and environmentally friendly farm operation with the acquisition of the relevant implements, equipment and manpower. The expected outcomes for this project are summarized as follows:

v. Procurement of the relevant equipment and machinery; vi. Establishment of efficient management practices to ensure the constant supply of fresh produce

to satisfy the established markets; vii. Production of high quality crops and condiments at competitive prices

viii. To ensure profit accumulation from production and sales within 2 years.

4.2 PROJECT TECHNICAL FEASIBILITY/DESCRIPTION

4.2.1 Project Site

The project site is projected to be in the Amity Hall area of St. Catherine or in Spring Plains, Clarendon. Spring Plains is better suited for underground crops such as Irish potatoes while Amity Hall is not suitable because of the high moisture continent of the soil. Both areas however, have good roads and easy access as well as adequate water supplied by the National Irrigation Commission (NIC). A river also borders the property at Spring Plains which act as an additional water source. Both locations also have electricity supplied by the Jamaica Public Service (JPS). Security will be the responsibility of the investors who plan to employ 1 security personnel and install the required fencing. With regards to storage, the investors will purchase a 20 ft container to store crops after reaping.

4.2.2 Technical Approach

The project will be implemented as follows:

Procurement of implements and equipment to be used on the Farm; Establishment of crops.

4.2.3 Implementation Plan/Schedule

The bulk of the activities for this project are the standard daily production practices, which will be conducted continuously. However, of paramount importance to the success of the project is the owners ability to ensure the timely implementation of the critical startup activities related to capital investment. The implementation schedule for these activities is presented in Gantt Chart format in Figure 2 below.

Figure 2 Project Implementation Schedule Implementation Schedule

MONTHS 0 1 2 3 4 5 6 7 8 9 10 11 12

LOAN APPLICATION & PROCESSING Buildings and Structures Equipment and Material



9

4.3 PROJECT JUSTIFICATION AND BENEFITS

The implementation of this project can be justified by the financial feasibility outlined in the financial analysis. The project reflects the investors attempt to create an income generating activity for themselves and members of the farming community.

The following facts about the Jamaican agricultural sector and generally accepted facts about the domestic crops and condiment sub-sectors within which the project will participate, provide further justification for the project:

The investors will benefit from the services and training opportunities of RADA when they become members. They will also be able to secure the necessary technical advice after post implementation from RADA Officers;

The implementation of this project will help to alleviate shortfalls in the production and supply of onions, Irish potatoes and other condiments and domestic crops.

The Irish potato and onion sub-sector is increasing in importance in Jamaica mainly because of increased government support. This boost in the industry, especially with the expected returns; will attract more farmers and hence expand the production and supply of these crops in Jamaica that are now satisfied by imports. The investors will therefore be contributing to Jamaicas food security, which will in turn boost the countrys foreign exchange savings capacity by reducing the countrys food import bill.

With a view to address the perennial shortage of onions and Irish potatoes, the investors will be a part of an organized initiative to increase the quality and quantity of the said crops on the local market.

4.4 PROJECT RISKS AND MITIGATING MEASURES

The risks and mitigating measures associated with this project are outlined below:

o Competition: High Competition from Imported Substitutes: Customers have over the last few years developed a dependency on imported Irish potato and onion, due to the lack of a reliable and consistent domestic supply of the items. The project is proposing to assist in filling the inconsistencies in demand and supply through steadily increasing the hectares of the said crops. This will produce a consistent and reliable supply stream of both crops.

o Praedial Larceny: The investors intend to have one or more employees residing on the farm. They also intend to purchase a cellular phone for the Farm Supervisor to utilize. Other security measures including employing security personnel will be implemented.

o Natural Disasters and Disease Epidemic: Irish potato and onion, like any other class of crops, are susceptible to some pests and diseases. The most debilitating disease for Irish potato is the Black Leg disease. Soft Rot disease also affects Irish potato. The investors intend plant seed tuber in well drained soil, treat seed tuber with the approved fungicides, harvest tuber only when mature, avoid excessive soil moisture before harvest and not wash tuber before storage. All these will help to reduce and control instances of diseases in Irish potatoes. Several fungal and bacterial diseases are capable of causing storage rots in onions, particularly if the crop is inadequately or poorly cured following harvest. The investors will ensure that there is adequate ventilation supplied during storage. In general, the investors will ensure that their produce will be free from disease and insect infestations by adhering to the required production practices and liaising periodically with his RADA Extension Officer. The investors will also be securing and



10

utilizing the services of MoA&F, MOH, and the various agencies with responsibility for National Health and Food Safety to monitor the various disease prevention and response mechanisms in the case of major outbreaks.

5.0 FINANCIAL AND ECONOMIC PROJECTIONS AND ANALYSIS

5.1 ESTIMATED COSTS

Estimates are based on project assumptions noted in Appendix 1.

5.1.1 Capital Cost and Financing Plan

The total capital cost is estimated to be J$4,208,435.49 apportioned and summarized in Table 8 with proposed financing plan. Annex 1A provides a list of the capital expenditure items for this project. The capital sums required are separated into 5 categories (Table 2).

Table 2: Financing Plan




The project requires a loan of J$2,500,501.49 to be accessed through the CDB Loan Facility (DBJ) to be repaid over 7 years at J$498,135.42 per annum.

5.1.1.1 Equity Financing (Investor)

Item Amount ($) Cash at Bank $1,496,704.00 Total Equity $1,496,704.00

5.1.2 Collateral and Security

The loan will be secured by a Hypothecation from C&WJ (Communications & Workers of Jamaica) Co-operative Credit Union Ltd. of $2,500,000.00 on fixed deposit a/c # 1000420.

5.1.3 Current Indebtedness Nil

5.1.4 Depreciation Annual depreciation is calculated utilizing the straight-line method and amounts to J$352,633.20 (calculations are presented in Annex 1D).



11

5.1.5 Production Overheads and Other Operating Expenses The total operating costs are computed and presented in the Operating Cost Schedule in Annex 1E. These costs include: (i) direct labour production personnel; (ii) indirect labour managers, supervisors, clerical etc.; and (iii) overhead charges for utilities, depreciation, peril and other insurances. Projected annual expenses inclusive of production and operating costs are:

5.1.6 Estimated Revenue

The gross revenues accruing to the project based on projected marketable output at the unit price indicated are presented in Annex 1G.

Annual projected revenues accruing to the project are:

5.2 FINANCIAL & ECONOMIC FEASIBILITY ANALYSIS

5.2.1 Cash Flow Schedule (Annual) The projected cash flows summarized below (presented in Annex 1H) indicate a viable production venture with adequate resources to support additional capital re-investments operational expenses, having net cash flow ranging from J$2.35M in PY1 to J$2.67M in PY7. The projected accumulated net cash balance at the end of the 7 years is J$18.19M.

PY1 PY2 PY3 PY4 PY5 PY6 PY7

2,356,646.94 2,673,844.98 2,673,844.98 2,673,844.98 2,468,787.38 2,673,844.98 2,674,188.05

5.2.2 First Year Monthly Cash Flow Schedule Annex 2 provides an indication of the uses of funds in the first year of the project.

5.2.3 Profitability

The projected income statement (Annex 1I) indicates positive after tax profitability of approximately J$2.99M in PY1 and annual average of J$3.08M.

Cumulative net income for 7 year projected plan is J$21M.

PY1 PY2 PY3 PY4 PY5 PY6 PY7 1,471,997.03 2,608,191.60 2,638,242.14 2,671,439.36 2,708,112.76 2,748,626.35 2,793,382.25

5.2.4 Cost Benefit Analysis

Financial Indicators: Profitability Index (PI)/Net Present Value (NPV)/ and Internal Rate of Return (IRR) calculations are presented below:

PY1 PY2 PY3 PY4 PY5 PY6 PY7 7,917,944.16 7,917,944.16 7,917,944.16 7,917,944.16 7,917,944.16 7,917,944.16 7,917,944.16

PY1 PY2 PY3 PY4 PY5 PY6 PY7 9,980,932.10 11,089,924.56 11,089,924.56 11,089,924.56 11,089,924.56 11,089,924.56 11,089,924.56



12

PI is given by: [(NPV) + Initial Investment]/Initial Investments NPV and IRR Calculations are summarized in Table 9.

The results of the financial analysis conducted support the earlier assertion that the benefits projected from the project activities are adequate to cover all costs and ensure a significant return on investment. This provides reasonable grounds to recommend that the project be supported for implementation.

These analyses specifically indicated:

1. A Profitability Index (PI) that is greater than one - 1.95>1.0;

2. A positive Net Present Value (NPV) of approximately J$3.99M when future cash flows were discounted utilizing a rate of 21% - which is higher than the Jamaican Government Treasury Bill Rate at the time when the business plan was prepared, assumed to be the accepted market risk free rate of interest. Funding will be sought at 10% for the project implementation;

3. An Internal Rate of Return (IRR) of 58%, which is greater than (i) the Government Treasury Bill Rate of 21%; (ii) the cost of capital (10%); and (iii) the industry benchmark or opportunity cost of capital of IRR = 13% for agricultural projects.

Table 3: Net Present Value and Internal Rate of Return Calculations for the Project Capital Investment Net Cash Flow 4,208,435.49 (4,208,435.49)

PY1 2,356,646.94 PY2 2,673,844.98 PY3 2,673,844.98 PY4 2,673,844.98 PY5 2,468,787.38 PY6 2,673,844.98 PY7 2,674,188.05

NPV $3,991,862.83 IRR 58%

5.2.5 Sensitivity Analysis

The sensitivity analysis is summarized and presented below in Table 4.

Table 4: Sensitivity Analysis NPV IRR

No Change in Parameters 3,991,862.83 58% 15% increase In Cost of Capital 3,489,849.16 51% 15% Increase in Operating Cost 1,750,429.09 38%

15% Decrease in Revenue

852,496.02 30%

The results of the sensitivity analysis provide sufficient evidence to support earlier suggestions that the project is suitable for funding and implementation. The fluctuations in the variables resulted in a positive NPV of approximately J$.852M and an IRR of 30%, in the worst case.



13

6.0 ECONOMIC AND SOCIAL IMPACT Other indirect expected benefits from the implementation of this project can be examined from the standpoint of its contribution to economic and social development in Jamaica.

Improved Sustainability of the Jamaican Agricultural Sector: A highly productive enterprise such as the one being proposed will assist with the sustainable development of the domestic food crop and condiment sub-sector, taking into consideration its positive contribution to food security, environmental and social concerns.

Increased Employment, Export Earnings/Savings, Food Security Rural Development and subsequent Poverty Alleviation: The project will result in the direct employment of 2 production employees and 1 Supervisor. It will also impact on indirect employment in agricultural related activities (for example, the distribution-marketing, tourism and agro-processing sectors).

7.0 ENVIRONMENTAL IMPACT & MITIGATING MEASURES The investors intend to employ a range of measures and management practices to mitigate their projects threat to the environment. They intend to employ greater efficiency in the use of resources. Also, the investors intend to efficiently manage water use by ensuring that crops are not over irrigated hence preventing wastage.

8.0 SUSTAINABILITY The achievement of sustainability of the project can be assessed by the extent to which the project will improve the continued existence and comparative advantage of the participating agro-entrepreneur through:

Sustained compliance to local and global trade related issues will improve the continued acceptance of farmers commodity by consumers and policy makers;

Improved levels of income earned; Increased income will also motivate and sustain interests in the productive processes resulting in

longer-run business; Requisite technical and management skills development, Other output indications of the projects sustainability are:

Investors personal investment of capital and time in the project; Increased contribution of domestic agriculture to the financial and economic stability of the

farm environs and the subsequent improvement in the national position on domestic agricultural production;

Increased availability of high quality supply of escallion and goat meat to major sub-sectors, such as agro processing, and tourism.

9.0 MONITORING AND EVALUATION After the successful implementation of the project, personnel from the Agro-Investment Corporation will assist in the monitoring of the project. Technical assistance from RADA will also be sought with the objective of monitoring the project and providing advice. A periodic review of the projects performance will form an important basis upon which to measure the output of the project. Annex 3 presents a logical framework for analysis, the basis upon which the project performance can be evaluated.



14

10.0 CONCLUSION AND RECOMMENDATION Based on the results of the financial analyses and the investors marketing and pricing strategies, along with the availably of a contracted market for the crops outlined, as well as the consistent demand for Irish potato and onion; it is reasonable to assert that the benefits projected from project activities are adequate to cover all costs and ensure a return on investment. This provides reasonable grounds to recommend that the project be supported for implementation.



15

ANNEXES



16

Annex 1 Financial Tables and Schedules

ASSUMPTIONS GRACIE EVANS FARM DEVELOPMENT PLAN

General 1. All prices are quoted in Jamaican Dollars, at constant prices. 2. 90% of crop yield PY 1 3. 1 acres is 0.404 hectares 4. 1 hectare is 2.5 acres 5. 10% Capitalization in PY1

Capital Depreciation Schedule (Annex 1D) 6. Depreciation is computed utilizing the straight line method (no salvage value).

Operating Expense Schedule (Annex 1E) 7. Operation expenses cover all costs including labour charges for 2 general production employees and 1

Supervisor and 1 security personnel. 8. Indirect labour costs as shown in schedule. 9. Administration includes peril insurance and office supplies etc. 10. Maintenance for equipment, and implements cost is computed on an annual basis at 1% of direct

expenses.

Revenue Schedules (Annexes 1G) 11. Output is based on marketable produce. 12. Annual revenue is calculated from the summation of annual units per item of output multiplied by

estimated price per unit.

Projected Cash Flow and Income Statement Schedules (Annex 1H & 1I respectively) 13. These are based on line items computed in earlier schedules.



17

ANNEX 1A CAPITAL EXPENDITURE

Unit Quantity Area (M2) Rate/Unit Total($) Capital Items Buildings and Structures Container for storage 20 ft lump sum 1 125,000.00 125,000.00 Container for Farm House 20 ft lump sum 1 125,000.00 125,000.00 Subtotal 250,000.00 Tools & Equipment Mist Blower each 2 51,500.00 103,000.00 5 gall Knapsack Sprayer each 2 14,208.00 28,416.00 Bush Wacker 220 each 1 55,000.00 55,000.00 Irrigation System (drip) Hectares 3.90 315,000.00 1,228,500.00 Overhead Irrigation System (midi) Hectares 3.90 250,000.00 975,000.00 Small tools, Machines & modification of container lump sum 350,000.00 Subtotal Tools & Equipment 2,739,916.00 Works Land Clearing Hectares 0.20 35,000.00 7,000.00 Subtotal 7,000.00 Administrative Expense Project Documentation manday 10 23,470.00 234,700.00 Loan Processing Charge ($15,000 + 5% of Loan) 140,025.07 Bank Letter for Collateral 45,000.00 Sub total 419,725.07

10% Capitalization of Year 1 Operational Cost 791,794.42

Total Capital Expense 4,208,435.49



18

ANNEX 1B FINANCING PLAN






19

ANNEX 1C LOAN AMORTIZATION SCHEDULE

DBJ (CDB) Loan Amortization Schedule Inputs Key Figures

Loan Principal Amount $ 2,500,501.49 Annual Loan Payments 498,135.42 Annual Interest Rate 10.00% Monthly payments 41,511.29 Loan Period in Years 7 years Interest over the term of the Loan 986,446.48

Sum of all Payments 3,486,604.91

Interest in First Calendar Year 238,357.72 Payments in First 12 Months

Year 1 Month Balance Interest Principal Payments Cum Int Cum Prin Ending Balance

1 2,500,501.49 20,837.51 20,673.77 41,511.29 20,837.51 20,673.77 2,479,827.72 2 2,479,827.72 20,665.23 20,846.05 41,511.29 41,502.74 41,519.83 2,458,981.66 3 2,458,981.66 20,491.51 21,019.77 41,511.29 61,994.26 62,539.60 2,437,961.89 4 2,437,961.89 20,316.35 21,194.94 41,511.29 82,310.61 83,734.54 2,416,766.96 5 2,416,766.96 20,139.72 21,371.56 41,511.29 102,450.33 105,106.10 2,395,395.39 6 2,395,395.39 19,961.63 21,549.66 41,511.29 122,411.96 126,655.75 2,373,845.74 7 2,373,845.74 19,782.05 21,729.24 41,511.29 142,194.01 148,384.99 2,352,116.50 8 2,352,116.50 19,600.97 21,910.31 41,511.29 161,794.98 170,295.31 2,330,206.19 9 2,330,206.19 19,418.38 22,092.90 41,511.29 181,213.36 192,388.21 2,308,113.29 10 2,308,113.29 19,234.28 22,277.01 41,511.29 200,447.64 214,665.21 2,285,836.28 11 2,285,836.28 19,048.64 22,462.65 41,511.29 219,496.28 237,127.86 2,263,373.63 12 2,263,373.63 18,861.45 22,649.84 41,511.29 238,357.72 259,777.70 2,240,723.79

Yearly Schedule of Balance and Payments

Year

Balance Interest Principal Payments Cum Int Cum Prin Ending Balance

1 2,500,501.49 238,357.72 259,777.70 498,135.42 238,357.72 259,777.70 2,240,723.79 2 2,240,723.79 211,155.60 286,979.82 498,135.42 449,513.33 546,757.52 1,953,743.97 3 1,953,743.97 181,105.07 317,030.36 498,135.42 630,618.39 863,787.88 1,636,713.61 4 1,636,713.61 147,907.84 350,227.58 498,135.42 778,526.23 1,214,015.47 1,286,486.03 5 $ 1,286,486.03 $ 111,234.44 386,900.99 $ 498,135.42 889,760.67 1,600,916.45 $ 899,585.04 6 $ 899,585.04 $ 70,720.85 427,414.57 $ 498,135.42 960,481.52 2,028,331.03 $ 472,170.47 7 $ 472,170.47 $ 25,964.96 471,827.40 $ 497,792.36 986,446.48 2,500,158.42 $ -



20

ANNEX 1D DEPRECIATION SCHEDULE

Depreciation Schedule

Item Initial Cost Expected Life (Yrs) Annual Dep. Buildings and Structures 250,000.00 10 25,000.00 Mist Blower 103,000.00 5 20,600.00 5 gall Knapsack Sprayer 28,416.00 5 5,683.20 Bush Wacker 220 55,000.00 5 11,000.00 Irrigation System (drip) 1,228,500.00 10 122,850.00 Overhead Irrigation System (midi) 975,000.00 10 97,500.00 Subtotal Tools & Equipment 350,000.00 5 70,000.00 Total Depreciation 2,989,916.00 352,633.20



21

ANNEX 1E OPERATIONAL SCHEDULE

Units Amount Rate/Unit Units/Yr PY1 PY2 PY3 PY4 PY5 PY6 PY7

Direct Expense

Direct Labour & Material - Production

Production Cost (Irish Potato) 2,695,428.65 2,695,428.65 2,695,428.65 2,695,428.65 2,695,428.65 2,695,428.65 2,695,428.65

Production Cost (Onion) 3,810,060.62 3,810,060.62 3,810,060.62 3,810,060.62 3,810,060.62 3,810,060.62 3,810,060.62

Sub-total Direct Labour & Material - Production 6,505,489.26 6,505,489.26 6,505,489.26 6,505,489.26 6,505,489.26 6,505,489.26 6,505,489.26

Indirect Cost /Overheads

Indirect Labour

Farm Supervisor (1) Monthly 1 35,000.00 12 420,000.00 420,000.00 420,000.00 420,000.00 420,000.00 420,000.00 420,000.00

Labour (2 Temporary) Weekly 2 7,000.00 26 364,000.00 364,000.00 364,000.00 364,000.00 364,000.00 364,000.00 364,000.00

Subtotal Indirect Labour 784,000.00 784,000.00 784,000.00 784,000.00 784,000.00 784,000.00 784,000.00

Indirect Material

Administration Costs Monthly 3,500.00 12 42,000.00 42,000.00 42,000.00 42,000.00 42,000.00 42,000.00 42,000.00

Subtotal Indirect Material 42,000.00 42,000.00 42,000.00 42,000.00 42,000.00 42,000.00 42,000.00

Other Indirect Cost

Lease Annually 8 6,175.00 1 49,400.00 49,400.00 49,400.00 49,400.00 49,400.00 49,400.00 49,400.00

Security Weekly 1 7,000.00 52 364,000.00 364,000.00 364,000.00 364,000.00 364,000.00 364,000.00 364,000.00

Irrigation Maintenance 1% dir exp. Monthly 65,054.89 65,054.89 65,054.89 65,054.89 65,054.89 65,054.89 65,054.89

Water Monthly 9,000.00 12 108,000.00 108,000.00 108,000.00 108,000.00 108,000.00 108,000.00 108,000.00

Subtotal Other Indirect Costs 586,454.89 586,454.89 586,454.89 586,454.89 586,454.89 586,454.89 586,454.89

Subtotal Indirect Expense/Overheads 1,412,454.89 1,412,454.89 1,412,454.89 1,412,454.89 1,412,454.89 1,412,454.89 1,412,454.89

TOTAL OPERATING EXPENSES 7,917,944.16 7,917,944.16 7,917,944.16 7,917,944.16 7,917,944.16 7,917,944.16 7,917,944.16



22

ANNEX 1F PROJECTED PRODUCTION SCHEDULE

Items PY1 PY2 PY3 PY4 PY5 PY6 PY7 Irish Potato Hectare Prod/Cycle 3.9 3.9 3.9 3.9 3.9 3.9 3.9 Cycles/Year 1 1 1 1 1 1 1 Expected Yield/Hectares (kg) 13,817 15,352 15,352 15,352 15,352 15,352 15,352 Total Yield/Year (kg) 53,886 59,873 59,873 59,873 59,873 59,873 59,873 Onion Hectare Prod/Cycle 3.90 3.90 3.90 3.90 3.90 3.90 3.90 Cycles/Year 2 2 2 2 2 2 2 Expected Yield/Hectares (kg) 13,500 15,000 15,000 15,000 15,000 15,000 15,000 Total Yield/Year (kg) 105,300 117,000 117,000 117,000 117,000 117,000 117,000



23

ANNEX 1G PROJECTED REVENUE SCHEDULE

PY1 PY2 PY3 PY4 PY5 PY6 PY7 CROP Sales Irish Potato Total Yield/Year (kgs) 53,886 59,873 59,873 59,873 59,873 59,873 59,873 Expected Sales (kgs) 51,191 56,879 56,879 56,879 56,879 56,879 56,879 Expected Price/kg ($) 66.00 66.00 66.00 66.00 66.00 66.00 66.00 Revenue 3,378,622.10 3,754,024.56 3,754,024.56 3,754,024.56 3,754,024.56 3,754,024.56 3,754,024.56 Onion Total Yield/Year (kgs) 105,300 117,000 117,000 117,000 117,000 117,000 117,000 Expected Sales (kgs) 100,035 111,150 111,150 111,150 111,150 111,150 111,150 Expected Price/kg ($) 66.00 66.00 66.00 66.00 66.00 66.00 66.00 Revenue 6,602,310.00 7,335,900.00 7,335,900.00 7,335,900.00 7,335,900.00 7,335,900.00 7,335,900.00 Grand Total Revenue 9,980,932.10 11,089,924.56 11,089,924.56 11,089,924.56 11,089,924.56 11,089,924.56 11,089,924.56



24

ANNEX IH PROJECTED CASH FLOW

Items Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Inflows

Revenues 0.00 9,980,932.10 11,089,924.56 11,089,924.56 11,089,924.56 11,089,924.56 11,089,924.56 11,089,924.56 Loan 2,500,501.49 0.00 0.00 0.00 0.00 0.00 Equity 1,707,934.00 0.00 0.00 0.00 0.00 0.00 Total Inflows 4,208,435.49 9,980,932.10 11,089,924.56 11,089,924.56 11,089,924.56 11,089,924.56 11,089,924.56 11,089,924.56 Outflows

Capital costs 4,208,435.49 0.00 0.00 0.00 0.00 Capital Replacement

0.00 205,057.60 Operating costs

7,126,149.74 7,917,944.16 7,917,944.16 7,917,944.16 7,917,944.16 7,917,944.16 7,917,944.16 Total Outflows 4,208,435.49 7,126,149.74 7,917,944.16 7,917,944.16 7,917,944.16 8,123,001.76 7,917,944.16 7,917,944.16

Net Cashflow Before Debt Service 0.00 2,854,782.36 3,171,980.40 3,171,980.40 3,171,980.40 2,966,922.80 3,171,980.40 3,171,980.40

Debt Service :

Principal 259,777.70 286,979.82 317,030.36 350,227.58 386,900.99 427,414.57 471,827.40

Interest 238,357.72 211,155.60 181,105.07 147,907.84 111,234.44 70,720.85 25,964.96

Total Debt Service 498,135.42 498,135.42 498,135.42 498,135.42 498,135.42 498,135.42 497,792.36

Net Cashflow after Debt Service

2,356,646.94 2,673,844.98 2,673,844.98 2,673,844.98 2,468,787.38 2,673,844.98 2,674,188.05



25

ANNEX 1I PROJECTED INCOME STATEMENT (PROFIT AND LOSS STATEMENT)

Income Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Sales 9,980,932.10 11,089,924.56 11,089,924.56 11,089,924.56 11,089,924.56 11,089,924.56 11,089,924.56 Less Direct Expense 6,505,489.26 6,505,489.26 6,505,489.26 6,505,489.26 6,505,489.26 6,505,489.26 6,505,489.26 Gross Margin 3,475,442.84 4,584,435.30 4,584,435.30 4,584,435.30 4,584,435.30 4,584,435.30 4,584,435.30

Less Indirect Expense 1,412,454.89 1,412,454.89 1,412,454.89 1,412,454.89 1,412,454.89 1,412,454.89 1,412,454.89 Interest 238,357.72 211,155.60 181,105.07 147,907.84 111,234.44 70,720.85 25,964.96 Depreciation 352,633.20 352,633.20 352,633.20 352,633.20 352,633.20 352,633.20 352,633.20 Total

2,003,445.82 1,976,243.70 1,946,193.16 1,912,995.94 1,876,322.53 1,835,808.94 1,791,053.05

Net Profit/Loss 1,471,997.03 2,608,191.60 2,638,242.14 2,671,439.36 2,708,112.76 2,748,626.35 2,793,382.25

Cumulative Net profit/Loss 1,471,997.03 4,080,188.63 6,718,430.77 9,389,870.13 12,097,982.89 14,846,609.25 17,639,991.49

Gross Margin % 34.8 41.3 41.3 41.3 41.3 41.3 41.3

Net Margin % 14.7 23.5 23.8 24.1 24.4 24.8 25.2



26

Annex 2 Monthly (First Year) Cash Flow Schedule



27

ANNEX 2 MONTHLY CASH FLOW SCHEDULE (FIRST YEAR)

MONTHS

1 2 3 4 5 6 7 8 9 10 11 12

CASH AVAILABLE

Beginning Balance (O E+ L T Loan) 4,208,435.49 2,902,310.21 1,554,525.51 1,701,881.06 1,849,411.77 1,997,119.11 2,145,004.55 2,293,069.57 2,441,315.66 2,589,744.34 2,738,357.13 2,887,155.56 Sales 831,744.34 831,744.34 831,744.34 831,744.34 831,744.34 831,744.34 831,744.34 831,744.34 831,744.34 831,744.34 831,744.34 831,744.34

Total Cash Available 5,040,179.83 3,734,054.56 2,386,269.85 2,533,625.40 2,681,156.11 2,828,863.45 2,976,748.89 3,124,813.91 3,273,060.00 3,421,488.68 3,570,101.47 3,718,899.90

Cash Required

Capital Expense

Buildings and Structures 125,000.00 125,000.00 - - - - - - - - - -

Tools & Equipment 1,369,958.00 1,369,958.00 - - - - - - - - -

Works 7,000.00 - - - - - - - - - - -

Sub-total 1,501,958.00 1,494,958.00 - - - - - - - - - -

Direct Expense

Direct Labour & Material - Production 542,124.11 542,124.11 542,124.11 542,124.11 542,124.11 542,124.11 542,124.11 542,124.11 542,124.11 542,124.11 542,124.11 542,124.11

Sub-total 542,124.11 542,124.11 542,124.11 542,124.11 542,124.11 542,124.11 542,124.11 542,124.11 542,124.11 542,124.11 542,124.11 542,124.11

Indirect Cost /Overheads

Farm Supervisor (1) 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 35,000.00 Labour (2 Temporary) 33,090.91 33,090.91 33,090.91 33,090.91 33,090.91 33,090.91 33,090.91 33,090.91 33,090.91 33,090.91 36,400.00 Adminstration Costs 3,500.00 3,500.00 3,500.00 3,500.00 3,500.00 3,500.00 3,500.00 3,500.00 3,500.00 3,500.00 3,500.00 3,500.00

Lease 4,116.67 4,116.67 4,116.67 4,116.67 4,116.67 4,116.67 4,116.67 4,116.67 4,116.67 4,116.67 4,116.67 4,116.67

Security 30,333.33 30,333.33 30,333.33 30,333.33 30,333.33 30,333.33 30,333.33 30,333.33 30,333.33 30,333.33 30,333.33 30,333.33

Irrigation Maintenance 1% dir exp. 5,914.08 5,914.08 5,914.08 5,914.08 5,914.08 5,914.08 5,914.08 5,914.08 5,914.08 5,914.08 5,914.08

Water 9,818.18 9,818.18 9,818.18 9,818.18 9,818.18 9,818.18 9,818.18 9,818.18 9,818.18 9,818.18 9,818.18

Sub-total 72,950.00 121,773.17 121,773.17 121,773.17 121,773.17 121,773.17 121,773.17 121,773.17 121,773.17 121,773.17 121,773.17 125,082.26

TOTAL OPERATING EXPENSES 615,074.11 663,897.28 663,897.28 663,897.28 663,897.28 663,897.28 663,897.28 663,897.28 663,897.28 663,897.28 663,897.28 667,206.37

Interest 20,837.51 20,673.77 20,491.51 20,316.35 20,139.72 19,961.63 19,782.05 19,600.97 19,418.38 19,234.28 19,048.64 18,861.45

TOTAL CASH REQUIRED 2,137,869.62 2,179,529.05 684,388.79 684,213.63 684,037.00 683,858.91 683,679.33 683,498.25 683,315.66 683,131.55 682,945.91 686,067.82 NET CASH POSITION 2,902,310.21 1,554,525.51 1,701,881.06 1,849,411.77 1,997,119.11 2,145,004.55 2,293,069.57 2,441,315.66 2,589,744.34 2,738,357.13 2,887,155.56 3,032,832.08



28

Annex 3 Logical Framework for Analysis



29

ANNEX 3 LOGICAL FRAMEWORK ANALYSIS

Project Title: Gracie Evans Farm Development Proposal Economic Sector: Agriculture: Domestic Crops

Proposers: Ms. Paula Grace & Daniel Evans 33 South Monterey Drive, Kingston 6

Project Budget: Capital Investment of J$4.21M; Financed with (i) Owners equity J$1.49 (36%); Loan- J$2.5M (59%) and (ii) MOA&F J$0.211M (5%)

Proposed Funding Partners: CDB Loan Facility- DBJ Support Agencies: MOA&F, AIC, JAS, RADA, JGFA, Feed Companies and JLA Narrative Summary Expected Results Performance Measurement Assumptions/Risk Indicators

Project Goal/Targets: To increase the income of the investors through the application of sound production techniques and the provision of processing and guaranteed markets for quality domestic crops and condiments.

Impacts 1. Increase in domestic crop production; 2. Strong and reliable supply linkages to

customers; 3. Farmers personal capital investment in

project; 4. Establish high quality farm output; 5. Improve productivity/yield; 6. Establish relationship with contracted market

and prospective clients.

Performance Indicators 1. The extent of increased income accruing to

the investor and the Jamaican economy; 2. The degree of increased production

efficiency achieved; 3. The reliability of market arrangements

(contracts etc); 4. Establish an average annual Irish potato

and onion production output of approximately 59,873 kg and 117,000 kg per year, respectively.

Assumptions: 1. The domestic crop and condiments sub-

sectors will remain viable especially under the new initiative of the MoA&F. The Irish potato, and condiments subsectors will remain viable with the thrust from the Government of Jamaica, Grace and other agro-processors and the establishment of different processing plants across the island;

2. Good weather conditions; 3. Agro-processors, tourism sector and domestic

household purchase more locally produced products;

4. Improved price competitiveness in the domestic market.

Risk: 1. Inadequate and unfavourable agricultural

policy by government; 2. Praedial larceny; 3. Diseases; 4. Natural disasters; 5. Loss of established market.

General/Broad purpose The emphasis will be on supporting local efforts geared at ensuring the economic viability and sustainability of the agricultural sector through improved contribution to employment, rural development, and increases in food security and foreign exchange earnings/savings.

Outcomes: 1. Adoption of improved technologies, research

and GAP in the productive processes; 2. Increase employment in the agricultural sector

within the project environs; 3. Active participation of beneficiaries and

associated agencies.

Performance Indicators 1. Records of sales and cost of production

analysis; 2. Records of employment.

Assumptions: 1. Strong government support; 2. Active participation of supporting agencies; 3. Available technical support.

Risks: 1. Natural disasters such as flooding may impact

negatively on the project; 2. Lack of support from participating agencies.

Resources:

Employment for 1 Supervisor and 2 part-time employees along with the relevant support and technical staff members; Investors equity; MoA&F Grant; Production Capital (Land etc).

Outputs:

1. Farming activities conducted; 2. Equipment bought.

Performance Indicators: 1. Invoice for equipment, stock purchases and

physic

Documents

FINAL-Gracie Evans Farm