Pepper Farming: Business Plan, Cost, Revenue and Profit

Cost, Revenue and Profit Analysis of a One Hectare Pepper Farm

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FARM SET-UP FOR ONE HECTARE OF PEPPER FARMING
VENTURE
Business Description of Pepper Farming
Pepper farming is the cultivation and marketing of peppers in Nigeria. Peppers are planted,
harvested and expected be sold in the open markets in Nigeria or in the organized markets
(supermarkets, hotels and eateries etc.) in Nigeria.
Market Analysis
Market Trend: The ever increasing population of Nigeria is a positive factor for the demand
of habanero peppers in Nigeria. Almost all Nigerians consume peppers. Peppers are used in
making different types of soups and other delicacies consumed by people from all tribes in
Nigeria.
The demand for peppers is fairly constant all through the year. However, the supply of
peppers significantly dips from April to August every year because farmers especially those
in the northern part of Nigeria do not cultivate this crop because of inadequate supply of
water from January-April every year.
To get a good profit from peppers, pepper farmers need to plant at some certain dates.
Target Market: The target markets for supply of peppers are the open markets in Nigeria.
Depending on the hectarage to be cultivated, the peppers can be taken to Mile 12 Market,
Lagos, Maitama farmers market Abuja which is the largest open roof food and commodities
market in Nigeria.
The organized market like supermarkets, eateries and hotels are likely to offer higher prices
than the open market. This class of buyers can also be targeted.
Competitive Analysis: There are a lot of farmers cultivating peppers in Nigeria, however, a
significant percentage of them are subsistent farmers that cultivate less than 2 hectares of
farmland. They are mostly illiterates who implement poor agronomic practices; they also
cultivate their crops only during the rainy season which makes them sell their produce at low
prices because of glut.
Cultivating pepper all year round using smart irrigation equipment like drip irrigation kits
will guarantee that a farmer will sell his produce at good prices. Most of the habanero
peppers consumed in Lagos and Abuja are trucked from the far northern part of Nigeria.
Sales and Marketing
The sales and marketing strategy to be used by a pepper farmer will depend on the type of
market it wants to sell its produce.
Selling in the open market involves just taking the peppers to the market, there are market
agents who help farmers to sell their produce at an agreed percentage.
Selling at the more organized market may involve the use of social media marketing, the use
of website, search engine optimization, words of mouth advertisement and having a retail
store

Cost of Drip Irrigation 825,000.00

Installation of Drip
Irrigation System -
On Site Training of staff in
precision farming -
Soil and Water Analysis -
₦825,000.00
Fertilisers:
NPK (15 bags) 90,000.00
Potassium Nitrate (5 bags) 95,000.00
Camag (3 bags) 60,000.00
Potassium Humate 15,000.00
260,000.00 1
Pesticides:
Insecticides (15 bottles) 50,000.00
Fungicides 70,000.00
Nematicides 30,000.00
150,000.00
PROFIT ANALYSIS FOR ONE HECTARE
OF PEPPER FARMING VENTURE-
SCENARIO 1
Revenue:
600 bags @ N10000 6,000,000.00
Cost:
Rent of one hectare of
farmland -
Fertiliser 260,000.00
Manure 50,000.00
Pesticides 150,000.00
Hybrid Seeds 120,000.00
Labour for 6 months 240,000.00
Knapsack Sprayer 20,000.00
Farm Tools 50,000.00
890,000.00
Profit 5,110,000.00
PROFIT ANALYSIS FOR ONE HECTARE
OF PEPPER FARMING VENTURE -
SCENARIO 2
Revenue:
600 bags @ N4000 2,400,000.00
Cost:
Rent of one hectare of
farmland -
Fertiliser 260,000.00
Manure 50,000.00
Pesticides 150,000.00
Hybrid Seeds 120,000.00
Labour for 6 months 240,000.00
Knapsack Sprayer 20,000.00
Farm Tools 50,000.00
890,000.00
Profit 1,510,000.00
PROFIT ANALYSIS FOR ONE HECTARE
OF PEPPER FARMING VENTURE -
SCENARIO 3
Revenue:
600 bags @ N2500 1,500,000.00
Cost:
Rent of one hectare of
farmland -
Fertiliser 260,000.00
Manure 50,000.00
Pesticides 150,000.00
Hybrid Seeds 120,000.00
Labour for 6 months 240,000.00
Knapsack Sprayer 20,000.00
Farm Tools 50,000.00
890,000.00
Profit 610,000.00
NOTES/ASSUMPTIONS
The profit analyses above were done using three scenarios (best case, mid case and worst
case).
Drip Irrigation: The cost of drip irrigation kit per hectare of habanero pepper is N825,000.
Fertilisers: N260,000 is expected to be spent on fertilisers for one hectare of habanero
pepper. Please note that the volume of fertilisers used is directly proportionate to your
expected yield. Also note that the amount of fertilisers to be used can only be accurately
computed after soil analysis. If your soil is rich, you can expect to spend a significantly low
amount of money on fertilisers.
Pesticides: N150,000 is expected to be spent on pesticides (fungicides, insecticides and
nematicides), however, you should note that the total cost to be spent on pesticides will
depend on pests and diseases pressure which can vary according to season, weather pattern
and location.
Sales Revenue: The price of habanero peppers in the open market in Nigeria moves in a
cyclical manner. The price has a peak season every year and a trough season. During the peak
months (the best months to plant peppers), the price of a 10-20kg bag of habanero peppers
can range between N2,500 and N10,000, sometimes the price of same bag of pepper can
reach N20,000.
It is assumed that 600 bags (15kg-20kg) of habanero peppers will be harvested in a season
from one hectare of habanero pepper. Please note that the harvest can be significantly more
than the assumed figure and it can be significantly lower. Harvests depend on the agronomic
practices of the farmer and to a lesser extent the climatic condition.
Dry season pepper farming can be very lucrative.
Manure: Chicken manure is advised to be used for the farm as it is one of the most potent
manures around. N50,000 is expected to be spent on manure, however, it can be cheaper or
even gotten free from poultry farms around.
Hybrid Seeds: The cost of hybrid seeds to be used for one hectare of habanero pepper farm
is expected to be N120,000. Please note that open pollinated seeds are significantly cheaper
and can be bought for as low as N30,000 for one hectare worth, however, they are not as
disease resistant and high yielding like hybrid seeds.
Cost of Labour: The cost of labour for 6 months is assumed to be N240,000. Please note that
the cost of labour varies according to location and cost of living in the location where your
farm is situated. Some equipment can also be used to reduce the need for human labour.
Knapsack Sprayer: The cost of one knapsack sprayer is N20,000. The cost of one motorized
knapsack sprayer is N150,000.
Farm Tools: N50,000 is expected to be spent on this. However, if mechanized tools are
preferred, the cost will be significantly higher.

PREPARED BY
MUHAMMED BELLO AYAWA
FARM MANAGER