SHEEP ENTERPRISE THREE YEARS BUSINESS PLAN

Contents
1. Background..................................................................................................................................3
1.1. Business Objectives..................................................................................................................4
1.2. Business Goal...........................................................................................................................4
1.3. Business Study rationale.........................................................................................................4
1.4. Beneficiaries.............................................................................................................................5
1.5. Location and facilities..............................................................................................................5
1.6. Business uncertainties and risks.............................................................................................5
2.0. Sheep farm business plan.............................................................................................................6
2.1. Name of business: Sheep Farm (Fattening)................................................................................6
2.2. Farm executive summary.............................................................................................................6
2.3. Description of farm.......................................................................................................................7
2.4. Main products offered..................................................................................................................7
2.5. Vision statement............................................................................................................................7
2.6. Mission statement.........................................................................................................................7
2.7. Business structure.........................................................................................................................8
2.8. SWOT ANALYSIS.......................................................................................................................8
3.0. MARKETANALYSIS..................................................................................................................9
3.1. Application of sustainomics to the business................................................................................9
3.2. Our Target Market.....................................................................................................................10
3.3. Competitiveness on the market and competitors.....................................................................11
4.0. Risk assessment...........................................................................................................................13
4.1. Risk analysis................................................................................................................................13
4.2. Financial analysis........................................................................................................................13
4.3. Limitations in preparation of the budget:.................................................................................14
5.0. Sustainability and feasibility of the business........................................................................14
5.1. Business financial feasibility analysis........................................................................................14

2
 Sheep Farm and fattening

1. Background

In Fiji, sheep fattening has been long standing practice since the introduction of sheep. It has
been reared to meet demands all throughout the year as well as festive seasons. As compared
to large ruminants, sheep is said to be low-risk and more profitable. Sheep fattening cycle
usually lasts for the whole wet season when pastures are green and provide more nutrients.
Because of the tropical climate of Fiji, farmers often go long way during fattening season due
to lack of adequate feed, poor management and other factors which influenced production
during the year. Therefore, providing adequate feed, proper management and husbandry
practices is crucial in breeding sheep for such purposes. The focus for Fiji right now is
breeding good quality sheep breed that is adaptable to the climate, disease resistance and has
high production rate. A lot has been done during the past years in trying to improve sheep
breeds in Fiji through the Ministry of Agriculture. New sheep breeds have been introduced
and work on breeding is ongoing such that ideal breed can be identified and shared with local
sheep farmers. This business plan provides simple guidelines in sheep farming business for
our small scale sheep farm in terms of feed formulation, feed management and other practices
to improve sheep production.

The National Importance and scope of sheep farming in Fiji is gaining momentum due to the
high demand for sheep in the local market. The introduction and of boar breeds and Barbados
black belly into Fiji, have had great impact on the sheep industry. The positive result from
breeding that gave the outcome of the breed known as Fiji fantastic is another huge output for
the industry. Sheep makes a valuable contribution to the livelihood of the local communities
and the much weaker sections of our societies. Amongst other ruminant livestock, sheep
production is gradually increasing and with good breeding programs, management and
production systems in place, sheep production will eventually become of the major business
to venture into.

3
 1.1. Business Objectives

The broad objectives of the sheep business are as follows;

i. To make a much profit as possible from selling of fattened sheep

ii. To produce high quality sheep meat at affordable cost

1.2. Business Goal

The main goal is to produce cheap quality meat and make as much profit through selling of
the products.

1.3. Business Study rationale

Sheep plays a significant role in the economy and because it is a multifunctional animal, it
provides nutrition to local farmers as well as income. Sheep is well suited to the climatic
conditions of Fiji and it can efficiently survive in the available shrubs, trees and available
pastures around the country. Sheep to majority of the population carries a religious
significance. They are prolific animals and mature around 10 – 12 months. Sheep gestation
period is much shorter than other ruminants and the housing and management requirements
for sheep are relatively lower than those of other ruminant animals. Sheep is the third largest
consumed meat product in the country after pork, chicken and beef.

Sheep meat is good for people or consumers who prefer low energy diets and the leanness of
the meat provides just what the consumers are after. It has high potassium and iron level with
low sodium content as compared to beef, pork, and chicken. Preferably, sheep meat is best
for anaemic people because it is also rich in vitamin B12 which is vital for healthy skin.

Despite the importance of sheep meat religiously and economically, there are many areas that
are lacking. Use of proper technology, breeding, housing, processing and availability of
arable land are some of the major challenges. There is no enough or suitable facility available
locally, no clean slaughter house and processing house for processing of product. Scientific
research into sheep farming is also very poor. Feeding management and disease control is
also poor. Therefore, to meet local demand, the import of sheep products is very high in the
country because the industry is not self-sufficient.

4
For these reasons, there is a serious need to upgrade breeding technologies to meet
commercial standard. By increasing breeding, management in terms of feed and disease
control, our sheep industry will definitely yield positive results such that it gears us toward
improving the areas that we lack. It will also provide fundamentals for future production by
being an example to all sheep farmers around the country.

1.4. Beneficiaries

This business could be the centre of production of improved local breeds such that it will
provide consumers with quality meat and generate more profit. Therefore, the main purpose
of the sheep business is to produce high quality meat products at affordable costs. This will
create more profit for the business and income for the employees. The farm will provide
opportunities for students’ internships as well as the integration of new technologies with
respect to housing, rearing and processing facilities on farm. Hence, the beneficiaries are not
only the owner but individuals who get involved in the business in one way or another.

1.5. Location and facilities

The proposed sheep farm will be located in Koronivia, Viti Levu Island near to Nausori town.
The sheep farm has an area of 6 hectare which is equivalent to 60,000 square meters. The
farm will be built with high raised floor building where the animals can be kept in during the
night. The roofing is made of iron with well-ventilated walls on all sides. The farm have
proper road access with electricity and abundance pure drinking water for the animals. There
are more spaces for expansion of the business in the near future.

There will be a total of 200 female sheep and 50 male sheep at the beginning and the number
will continue to increase during the forecast years. The main products will be sheep meat
bought as live weight or carcass.

1.6. Business uncertainties and risks

i. Outbreak of disease – parasites and viral diseases are huge risks to the business since
sheep are susceptible to many diseases and parasite infections.

5
 ii. Theft and predator problems – theft has been an ongoing issues faced by many local
sheep farmers. Also predators such as dogs and other wild animals are major sheep
predators.
iii. Problems with market access – there has been lack of proper information on market in
the context of live weight and meat sales. Many sheep farmers price their sheep both
live weight and meat products based on visual identification. Sometimes prices are
low and other times high.

2.0. Sheep farm business plan

2.1. Name of business: Sheep Farm (Fattening)

2.2. Farm executive summary

The farm business will be located at Koronivia near to Nausori town, and it will be registered
as a livestock farming business mainly focused on sheep fattening. The main focus of the
livestock business will be on sheep rearing and selling, packaging of processed meat products
and sales of kids.

Currently, the business is planning on addressing the following issues in order to transform
and improve the business into a self-supported and profitable enterprise:

 New lesson learned: the business is a lesson for use such that it provides stepping
point where we learned from past setbacks. In this process, we are able to improves
and work on factors that caused setback to the business in the past.
 Realistic approach: The livestock business has been through management and finance
problems. By taking realistic approach, the farm is able to project earnings such that
the business will benefit from the introduction of new innovations, proper
management, economic and financial stability to get past the drawbacks experienced
and help the business grow.
 Unreliable financial support: Funding from the government and other donors has been
a major problem for many local sheep farmers in the past. The business has planned to
get as much needed funds as possible to expand the livestock business not only for the
benefit of the business, but for other local sheep farmers as well. This will aid in
overcoming the financial instabilities we are facing.

6
2.3. Description of farm

2.4. Main products offered

The main goal of the sheep farming business is concerned with sheep farming, live weight,
meat processing and packaging of other products to meet local consumer demand and make
profit.

2.5. Vision statement

The vision is to keep expanding our business and become one of the leading farm in the
sheep industry in Fiji.

 To become a reliable source of meat producer locally, regionally and possibly on the
international market as well.
 To be a major producer of small ruminant meat. This vision is as important as it is
aligned with the governments’ goal of increasing local meat production to reduce
imports on sheep products.
 To link communities, getting them on board in order to improve their livelihood by
increasing the sheep business in the long term. Becoming a linkage will help the local
sheep farmers and consumers in the following key areas:
o Make profit and earn reasonable income
o Improves nutrition and health
o Improves the socioeconomic aspect of our livelihood
o It helps in sustainability
o It encourages the use of new innovations to boost sheep production.

2.6. Mission statement

The business mission is to provide high quality sheep products to our customers in every
other ways as much as possible. We will make sure that all our products (carcass or live
weight) are in great quality whilst optimizing our profit. We also want to ensure that

7
sustainable sheep farming business is achieved through our business not to destroy the
environment in any way while we work towards achieving our livestock business goal.

2.7. Business structure

For our business to achieve its goals and mission, a well-established business structure is
important for the farm business to operate efficiently.

In the course of running our well-structured sheep farm business, we will ensure that we hire
the most appropriate and skilled personals to fill all the positions. We will ensure
hardworking, honesty and people with integrity are ready to join out sheep farm business to
drive all operations to where we want it to be. The sheep farm business is structured
according to the following positions.

 Farm manager
 Department supervisors
 Administrator/accountant
 Marketing and sales officers
 Field officers
 Receptionist

2.8. SWOT ANALYSIS

Strength:
The sheep farm business has strength in its relationship with some of the major players in the
livestock industry, both suppliers and buyers outside and within the area. This healthy
relationship enables us to get supplies and sale our products more easily.

Apart from that, we have some machines and tools as well as equipment that will aid in
running and farm especially breeding, construction and other operations necessary on farm.
We are also fortunate to have some very experienced people coming in to help out with the
general farm operations which is a great boost for us specifically in our farm finance section.

Weakness:

8
The financial aspect of this farm is weak because our goals are advanced and high, and if the
proper return is not achieved from our products, there could shortfall of budget in the long
run. Therefore, proper management is paramount to the financial operations.

Opportunities:

Our livestock farm is in a wonderful area with tremendous opportunities. Several

homeowners and industries around the area are presently sourcing sheep, sheep meat and
other raw materials from our farm. We believed that in the long run, the sheep business will
eventually expand into other areas as well.

Threat:

We understand that when starting our livestock farm, there are a number of threats and
challenges that we are likely to face, including an economic downturn that may affect our
farm spending, bad weather or natural disasters, unfavourable policies from the government
and arrival of other livestock competitors within the locality of our farm. The only thing we
can do regarding these threats and challenges is to remain optimistic that things will work out
for us in the end.

3.0. MARKETANALYSIS

It is common practice in commercial livestock farming to specialize in one kind of livestock

or just livestock or sheep farming, because it is much easier to do so. Some even include meat
production as well along with other products on offer. With the advent of new technologies,
we can be able to produce what our consumers want. The fact that there is always a market in
place for smallholder and commercial sheep farming makes it a profitable business for many
sheep farmers.

In fact, one of the new trends in the livestock industry is that recent technological advances
have allowed livestock keepers to improve the different breeds of animals they keep. It is
now easier for ranchers to conveniently import the breeds of sheep or other livestock they
want to keep from many countries of their choice, and advances in technology have also
made it easier to cross-breed different animals. This means we have advantage in making

9
more profit from crossing of high performing sheep breeds that will yield good quality meat
products.

3.1. Application of sustainomics to the business

This proposal identifies some of the key building blocks of Susteomics and how they can
help create strong links between these three dimensions of sustainability.

1. Economical: Growth - Efficiency - Stability

2. Social: Empowerment – Inclusion/Counseling – Management

3. Environment: Resilience - Natural Resources - Pollution

Economically:

Economic welfare is measured on the willingness to pay for the goods and services
consumed, especially for quality products. Most economic policies are aimed at increasing
income and resulting in more efficient production and consumption. The business is
presented in the short and long term as high quality products (animals) are regularly
distributed to the community. This economic efficiency improves the welfare of local farmers
and helps in the expansion of our business.

Social:

Social development is about improving both individual well-being and the well-being of
society as a whole, consistent with justice and poverty alleviation. The social dimension of
this business promises ways to address vulnerability, improve equity, and ensure basic needs
are met. The social domain focuses on enriching social relationships by supporting us sheep
farmers through the supply of genetically superior animals.

These animals can be produced over a long period of time and provide products that are sold
at bargain prices to ensure sustained economic support. Another aspect is empowering
women in rural areas. To reduce vulnerability and maintain the health (resilience, vitality,
organization) of social and cultural systems and empowerment of women.

Environmental:

10
The Environmental Department emphasizes the protection of ecosystem integrity and
resilience. This goal is of great importance from an environmental point of view in Fiji,
making it suitable for the production of organic meat with good marketing potential both
domestically and internationally.

3.2. Our Target Market

Of course, the target market of livestock end-users and those who benefit from the
agribusiness business value chain is all inclusive. It is extensive.

Majority of the population of Fiji consume sheep unlike other ruminants and non-ruminants.
These households purchase mostly carcass and other live weight depending on the occasion.
Sales to most of the abattoirs and slaughter companies depend on ranchers for some of their
raw materials. Basically, sheep farms need to be able to sell their produce to as many people
as possible. We ensure that we position our operations to attract consumers of agricultural
products not only locally, but also part of the region as well.

3.3. Competitiveness on the market and competitors

As the agricultural market is a proxy for competitive markets, the expected market for the
business products will be intense from local farmers and private farms engaged in similar
activities in the other parts of the country as well in other Pacific Islands countries. We will
have competition. , motion regions, and other stiff resistant from other livestock businesses as
well. The main difference between the products offered by our business and those offered by
competitors is that the products that will be offered by our sheep farm business will be well
controlled, and have the age and quality required by our customers.

Technology

To carry out its activities, the business uses exotic breeds for the purposes of crossbreeding
and artificial insemination. Additionally, higher quality boar sheep and Fiji fantastic breeds
will be crossed for our fattening business. Additionally, best management practices and
veterinary services will be implemented to provide the highest quality products and services
to our customers. It is generally assumed that with the current technology and progress, our
sheep will yield high rate of profit in the sheep farm business.

11
Our Competitive Advantage

A marketing activity or service includes many phases such as: Collect small ruminants from
our farmer, manage them into required products after fattening period, transport to potential
markets and distribute to clients such as exporters, hotels and restaurants. From an economic
standpoint, it adds time, place, and format advantages to give end users a product they can
accept when they need it. It's easy to find entrepreneurs who flock to industries known to
generate consistent income. As such, there are many smallholder sheep farms in the area, and
of course most of the agricultural produce.

Production and pricing strategy

The main goal of this sheep farm business is to raise sheep up to fattening phase to maximize
profits and make the business sustainable and expand. Achieving this goal requires
consideration of production and other costs that determine profitability. Boar and Fiji
fantastic sheep breeds are relatively large and have a morphology suitable for meat
production and export demand compared to other sheep breeds which are in high demand in
the local market. As a result, boar sheep and Fiji fantastic sheep fattening sheep can be
supplied to our customers at a relatively low cost.

In addition, minimizing feed costs, which account for more than half of total production
costs, benefit from small-scale production of ruminants. Therefore, attempts to improve
commercial production of small ruminants and increase their efficiency must focus on
making better use of available forage resources. We therefore have about 6 hectares of
pasture and fodder management areas. In addition, the sheep farm business will also be able
to purchase feed from other commercial companies. By utilizing these resources, production
costs are lower than domestic commercial small-scale ruminant farms. In addition, the
business will adjust the price of products delivered to consumers based on meat and other
products quality and market research.

Promotion

To promote the commodity, our business will use various promotional tools such as leaflets
and posters, press releases in local newspapers and magazines, radio and television. In

12
addition, there are seasonal promotions, especially on religious holidays. Promotions are
based on specific types of products available for each occasion.

4.0. Risk assessment

4.1. Risk analysis

A business-oriented approach to production naturally carries risks. However, the level of risk
varies from business to business. Most agribusinesses are vulnerable, mainly due to the
biological nature of their production systems, and are vulnerable to natural changes such as
weather, disease, and pests. It is one of the most profitable businesses, but it comes with
many kinds of risks. The main risks associated with small ruminants are:

i. Disease
ii. Difference in weather conditions;
iii. Market issues of inputs and outputs;

The main risk is due to the danger of diseases, and these diseases are mostly contagious.
Disease outbreaks not only lead to greater physical losses for animals, but also a
simultaneous loss of demand for products due to negative consumer sentiment that affects
taste and product preferences. Inputs for small ruminant farms include labour, feed and feed
processing sectors, and pharmaceuticals. For Company Inputs and Outputs: example, Milk,
crossbreds and fattened livestock, if there is a market for them. Businesses are at greater risk
if there is a time lag between demand and supply of products and importable inputs. In
addition, during the dry season or drought, the business may face feed shortages, which may
affect the business activities. Any kind of instability can also disrupt and adversely affect the
implementation of this sheep farm business. This could prevent the farm business from
delivering the required quality of product on time, affecting the marketing of the product in
local and export markets.

13
4.2. Financial analysis

Profit expansion is the most important factor in most business decisions. Therefore, an
economic feasibility analysis is required to determine whether investments in sheep
production plans will yield long-term returns. A key component of a business plan, budgeting
is a management tool that helps manufacturers assess the feasibility of proposed business and
identify areas for improvement. A budget can identify the financial resources and annual
operating expenses needed to invest in sheep. Budgets help managers make decisions based
on realistic data.

4.3. Limitations in preparation of the budget:

 Budgets are typically prepared to reflect future behaviour and it is difficult to accurately
predict future prices and earnings.
 Production and marketing risks limit budget availability. Despite using our best estimates,
budget estimates may change due to production and price fluctuations.
 Even with careful use, errors can pile up to the point where little or no budget is available.
 Business planning decisions are complex in the agricultural sector in general, and in the
livestock sector in particular. This is especially true when planning the production of
small ruminants. Margins are usually small unless or until a strict regime is followed.
 Detailed evaluation
 Effective management
 Loss aversion, i.e. Loss drivers should be assessed early to avoid large losses later.

5.0. Sustainability and feasibility of the business

Rural people are small farmers who have been involved with sheep all their lives.
Technology is not new, it is part of people's lives. People are accustomed to raising sheep and
sorting and buying them for their communities.

5.1. Business financial feasibility analysis

14
Economics of a sheep fattening barn. There is an estimate for a fattening barn with 200 sheep.
A year he goes through 4 fattening cycles and a total of 800 sheep are fattened. To determine
the feasibility of investing in a sheep farm, costs are estimated as follows:

Capital cost
  Number Cost Unit Total Per Ewe
Ewes 200 $150 head $30,000 $150.00
Rams 50 $400 head $20,000 $100.00
Fencing   $3,000 total $3,000 $15.00
Corral/Working pens   $1,500 total $1,500 $7.50
Pasture est./improvement 6 $75 acre $450 $2.25
Watering system   $1,000 total $1,000 $5.00
Housing cost   $0 total $0 $0.00
Supplies and equipment   $500 total $500 $2.50
Other   $0 total $0 $0.00
Total start up-cost       $56,450 $282.25

Annual lambing
Flock composition   Production parameters  
 Number of Ewes 200 Percent lamb crop sold 160%
 Number of Rams 50 Ewe replacement rate 15%
 Adult death loss 5.0% Ram Replacement Rate 33%

OPERATING COSTS: No. Amt/hd Unit Cost Total Per

Head Ewe
             
Feed costs
 Hay 250 0.3 ton $120.00 $9,000 $45.00
Grain 250 165 lb. $0.150 $6,188 $30.94
Salt and Minerals 250 12.0 lb. $0.48 $1,440 $7.20
Supplemental feed for lambs 320 120.0 lb. $0.150 $5,760 $28.80
Pasture maintenance 570 6.0 acre $50.00 $300 $1.50
    # doses        
HEALTH PROGRAM
 Deworming (adults) 250 1 doses $1.00 $250 $1.25

15
  Deworming (lambs) 320 2 doses $0.75 $480 $2.40
 CD-T booster (adults) 250 1 doses $0.50 $125 $0.63
 CD-T vaccinations (lambs) 320 2 doses $0.50 $320 $1.60
  250   head $5.00 $1,250 $6.25
Other vet costs
Shearing 250   head $5.00 $1,250 $6.25
Ram replacement 16.50   head $400.00 $6,600 $33.00
Bedding 250   head $5.00 $1,250 $6.25
Marketing and Hauling 327   head $8.00 $2,612 $13.06
Supplies 250   head $5.00 $1,250 $6.25
Interest on operating money 6.0%   Cost for 6 months $1,142 $5.71
 Total operating cost         $39,21 $196.08
7

Income calculation No. lbs./hd Net Unit Total Per Ewe

Head Price
 Market lambs 290 200 $1.30 lb. $75,400 $377.00
 Cull ewes 20.0 160 $0.50 lb. $1,600 $8.00
 Cull rams 16.50 200 $0.50 lb. $1,650 $8.25
Total income per year $78,650 $393.25

Total return or profit = Total revenue income – total operating cost

$78,650 - $39,217 = $39,433.00 profit in year one of production.
It is projected that after three years of production, the profit generated by our sheep farm
business will triple the current profit amount.

16