New Business Idea ESTABLISHING A GRAIN GROCERY Production and Marketing with Costs in USD

 ESTABLISHING A GRAIN GROCERY

Introduction
Grains are agricultural products that have a very high demand in the country. They usually include Simsim, groundnuts, soybeans, maize, popcorns, wheat, rice, and cowpeas.
The project idea is based on adding value by packaging good quality grains and selling them at relatively low prices. The project expects to package 72,000 kgs of assorted grains per annum. Initial investment costs are estimated at US$20,370 generating revenue of US$92,695 at a net profit margin of 43% and payback period of approximately 2 years.

Capital Investment Requirements in US$

Capital investment item	units	Qty	@	Total
Motor truck(4 tones)	No	1	14,000	14,000
Furniture & Fittings	No	1	2,000	2,000
Packing machine	No	1	1,000	1000
Grading machine	No	1	1,000	1000
Grain cleaning machine	No	1	1,200	1200
Dust woofers	No	2	400	800
Weighing scale	No	1	370	370
Total	20,370

Production and Operating Costs in US$

Cost Item	Units	@	Qty per day	Pdn cost per day	Pdn cost/ month	Pdn cost/ year
Direct Overheads:
G. nuts	Kgs	0.8	71	56.8	1,476.8	17,722
Soy beans	Kgs	0.3	32	9.6	249.6	2,995
Pop corn	Kgs	0.3	64	19.2	499.2	5,990
Cow peas	Kgs	0.3	64	19.2	499.2	5,990
Packaging material	Pcs	0.05	300	15	390	4,680
Sub-total	531	120	3,115	37,377

General Costs (Overheads):

Field collection fuel	125	1,500
Rent	300	3,600
Utilities	120	1,440
Selling & distribution	50	600
Salaries & wages	200	2,400
Miscellaneous expenses	30	360
Depreciation	424	5,093
Sub-total	1,249	14,993
Total Operating Costs	4,364	52,370

1) Production costs assumed 312 days per year with daily capacity of packing 231kgs of grains.
2) Depreciation (fixed asset write off) assumes 4-years life of assets written off at 25% per year for all assets.
3) Direct costs include: materials, supplies and other costs that directly go into packaging of the grain.
4) Total monthly days assumed are 26-days.
5) The valuation currency used is United States Dollars.

Market Analysis
The market for grains readily exists and their demand continues to grow mainly across borders. It has great export potential.

Project Product Costs and Price Structure

Item	Qty/ day	Qty/ year	@	Pdn cost/ year	UPx	Total revenue
G. Nuts	71	22,130	0.73	16,096	1.3	28,769
Soy Beans	32	9,974	0.73	7,254	1.2	11,969
Pop Corn	64	19,948	0.73	15,510	1.3	25,932
Cow Peas	64	19,948	0.73	15,510	1.3	25,932
Total	231	72,000	52,370	92,602

Profitability Analysis Table

Profitability Item	Per Day	Per Month	Per Year
Revenue	297	7,717	92,602
Less: Production & Operating Costs	168	4,364	52,370
Profit	129	3,353	40,232

Government Facilities and Incentives
Generally, food products are VAT exempt and hence taxes are minimized.

Risk
The business risk involved is price fluctuation, which may affect the targeted profits. However, this can be minimized by setting up buffer stocks in times of low prices and resell later when they are high.