A BUSINESS PLAN FOR AGRICULTURAL

ENTERPRISE

Enterprise: Mango in Chitwan, Nepal scenario

 TABLE OF CONTENTS

 PROJECT HIGHLIGHTS
 ENTERPRISE INFORMATION
 THEMETIC AREA
 EXECUTIVE SUMMARY
 INTRODUCTION
 OBJECTIVES
 ASPECT OF PROPOSED ALTERNATIVE PROJECTS
 METHODOLOGY
 SWOT ANALYSIS
 RISK INVOLVED AND MANAGEMENT
 MARKET ANALYSIS SUMMARY
 STRATEGY AND IMPLEMENTATION SUMMARY
 SALES FORECAST
 MANAGEMENT SUMMARY
 FINANCIAL PLAN SUMMARY
 CONCLUSIONS
 PROJECT HIGHLIGHTS
SN Case Value Remarks
1 II 900,200 In Rupees
2 VCY 270160 In Rupees
3 SRY 610000 In Rupees
4 NPV 342840.7 In Rupees after 10 years
5 IRR 10.14% Greater than 10 years
6 BCR 1.13  
7 PBP 5.33 years  
8 BEP 26.90  
9 Land 1 ha  

1. II = Initial investment
2. VCY = Variable Cost per Year
3. SRY = Sales Revenue per Year
4. NPV = Net Present Value
5. IRR = Internal Rate of Return
6. BCR = Benefit Cost Ratio
7. PBP = Pay Back Period
8. BEP = Break Even Point
9. Land = Land in lease for 10 years
 ENTERPRISE INFORMATION

 Name : Pancharatna Mango Farm

 Ownership: Joint
 Proprietor: Nabin Kunwar
 Project Area: Shradanagar, Chitwan
 Registration Number: 235648
 Contact: 056-420968
 
 THEMETIC AREA:
We are going to prepare business plan related to pomology area. We are dealing with
Mango production from grafted seedling which gives early fruiting. We are cultivating
amrapali variety of mango from grafted seedling in Chitwan district of Nepal.
 EXECUTIVE SUMMARY:

The following business plan will serve as an operating guide for Farmers. It
contains a description of the farm, its operating goals, management and
marketing strategies and a risk management assessment. It also contains
financial data for the 2018 growing year. Our farm mission is to produce
and grow high quality mangoes to supply local fruit product manufacturers
and consumers both in &out of Chitwan . Our goals include to sell high
quality mangoes to both wholesale and retail. Production methods include
new technology utilizing sustainable agriculture and best management
practices. This farm will be successful because of the regular bearing
variety of mango which has high demand in local and distant market, as
well as value-added mango products. At the particular moment the farm
business plan gives a plan for mango production in 1 hectare of land.
 BACKGROUND:

 This proposal deals with the feasibility study of mango cultivation in Shraddhanagar , Chitwan to meet
the growing demand of mango.
 Chitwan district is a beautiful district with diversified geographical features. Chitwan district is one of
the 75 districts which is located in the southwestern part of Nepal. It extends from 27° 21’ 45’’ North to
27° 52’ 30’’ North latitude and 83° 54’ 45’’ east to 84° 48’ 15’’ eats longitude. It covers an area of
2238.39 sq. km and population of 579984 including 25 VDCs. Population density is 260 per sq km.
 This district is one of the few remaining undisturbed vestiges of the Terai region, which formerly
extended over the foothills of Nepal. It has annual rainfall of 2500 mm and temperature in between 7.3
°C to 40.3°C . The soils are well drained with moderate water holding capacity ranges from 6.5- 7.5
pH.
 The soil is highly fertile loam type with good drainage and water holding capacity. Mango trees
perform well both under tropical and subtropical climatic conditions. The trees can survive at 10 °C to
65 °C but the optimum of temperature is 21° C to 27 °C which is present in terai plain in our country.
Variety Amarapali is cultivated. So it is feasible to cultivate Mango in Chitwan district. With the
increasing demand of mango and better marketing opportunities mango production is feasible in this
district. Mango is king of the fruit which occupy largest space in case of production and areas. Mango
contribute 1.56 of total gross income of agricultural sector.
 OBJECTIVES

Core Objectives:
 To fulfill the growing demand of mango.
 To provide direct and indirect employment to local people.
 To produce the grafted seedlings to the local farmers.

Specific objective:
 To establish model mango farm as a training and research Centre.
 To analyze financial feasibility study of mango farm.
 To offer suggestions to improve the production and Returns of
mango.
 Aspect of proposed alternative
projects:
 Technical Aspect
This is a small scale industry to produce and supply mango fruit. Location of the project is at Chitwan,
Nepal. The equipment requires to run the firm are present in working condition. There is no problem
of electricity in Chitwan district. Irrigation facilities are also nearby. Necessary raw material like
fertilizers, sapling is easily available in the local market at the reasonable price. Working labor are also
easily available.
 Marketing aspect:
The necessary inputs like fertilizers, fruit seedling, etc are easily available at right quantity, of right
quality and at feasible price at farm area. There is growing demand of mango in the local community
and neighbor cities. The produced mango can also be marketed to Kathmandu.So it is feasible to
cultivate mango as commercial crops as there will be no problem of market.
 Managerial aspect:
The firm is running with one permanent staffs along with household members. The labors can be
easily hired during peak period.
 Socio-economic and environmental aspect:
The proposed project is one of the projects from fruit sector so it neither depletes natural resources nor
causes any environmental pollution in terms of smokes, etc. This firm directly or indirectly provides
employment to the local people and helps in increasing the living standard of people
 METHODOLOGY
 
1. Net Present value(NPV)
It was used as discounted cash flow measure of absolute profitability. NPV was computed
as present worth of incremental benefits (cash inflows) less present worth of incremental
cost (cash outflows) due to farm enterprise.
NPV= , Where
 Bt= benefit
 Ct= cost
 T= time in years
 I= interest (Discount rate) %
2. Benefit cost ratio(BCR) :
It is defined as the ratio of discounted benefit to discounted cost

For the firm to be financially feasible B-C ratio should be greater than 1
 METHODOLOGY
  3. Internal rate of return (IRR):
 It is the discount rate at which NPV is zero. Thus it is the value of ‘I’ which makes
 In other words, IRR is the maximum interest that a project can pay for the resources used if
the project is to recover its investment and operating expenses and still just break – even.
The method for interpolating the value of IRR lying between the two discount rates, too
high on one side and too low on other is given below.
 IRR=Lower discount rate + Difference between two discount rates
 Investment in farm enterprise will be financially feasible if IRR is greater than interest rate
on farm establishing and running loan
3. Break- Even Point(BEP):
 BEP was calculated as the ratio of fixed cost to difference between sales revenue and
variable cost.
 BEP=(
 SWOT Analysis

 Strengths:
1. Everyone loves mango
2. Locally grown mango are in demand at several markets.
3. Fresh mango and its processed product is very popular and sells at a
high profit margin.
 Weakness:
1. storage of mango is difficult and wasteful.
2. The fruit drop of mango during full growth is major problem of
mango.
 SWOT Analysis

 Opportunities:
 There is a definite need for grafted mango to increase the
production
 Expansion of mango production can be done to increase
production
 Threats:
 The climatic condition of Chitwan favours various diseases and
pest.
 Mango fruit drop is serious threat.
 RISKS INVOLVED AND
MANAGEMENT

 The risks involved in the business are the pests and diseases and
biennial behavior of mango. The above can be managed by
planting regular bearing variety like amrapali neelam ratna etc,
using of grafting of mango, soil testing for both pathogens and
plant nutrients present in the soil.
 FINANCIAL ANALYSIS
Financial Plan:
Fixed Cost Assessment

Total annual
expenses after 2nd
year (including
SN Items Unit Quantity Rate(Rs.) Total cost (Rs) Cost for 1 year (Rs.) Expected life (year)
interest rate 10%
and depreciation
10%

1 Land (Lease) ha 2 50,000 100,000 100,000 55000

2 Building / Farm structure
2.1 Office room sq. m 25 8,000 200,000 8000 28000 25
2.2 Storage room (Fertilizer) sq. m 80 5,000 400,000 16000 56000 25
2.3 Storage room (harvest fruit) sq. m 80 7,000 560,000 22400 78400 25
2.4 Compost pit sq. m 40 8,000 320,000 12800 44800 25
3 Equipments
3.1 water Pump no. 2 1,00,000 2,00,000 20,000 20,000 10
3.2 Sprayers, Rosecan, Buckets no. 10 40,000 400,000 40000 80000 10
3.3 Wheel barrow no. 2 4,000 8,000 800 1600 10
3.4 Furniture Set 25,000 25,000 2500 5000 10
3.5 Pipes 5,000 5,000 500 1000 10
3.6 Miscellaneous 1 7,000 7,000 700 1400 10

4 Planration
4.1 Seedling of mango 200 90 18,000 1200 3000 15
4.2 Labour 50 800 24,000 2,400 2,400
4.3 Fertilizer 25,000 1,000 1,000

4-Jan levelling field tractor hours 6 1200 7,200 720 1440

Total Fixed Cost 2,099,200 229,020 379040

 FINANCIAL ANALYSIS
FINANCIAL ANALYSIS
Variable Cost for mango

quantit Rate( Total Interest rate Total cost /

SN items Unit y Rs.) (Rs.) (10%) yr(Rs.) Remarks

1 Manpower

65,00 Rs. 5000 for

1.1 Labour 6 390000 39000 429000
0 13 month
Labour for harvesting and
1.1.1 person 20 300 6000 600 6600
Storage
Rs. 2000 per
2 Electricity 18 2000 36000 3600 39600
month
3 Fertilizers
3.1 FYM Doko 300 50 15000 1500 16500
3.2 DAP kg 200 50 10000 1000 11000
3.3 Urea kg 400 25 10000 1000 11000
3.4 Potash kg 100 36 3600 360 3960
4 Miscellaneous 10,000 1000 11000
Total Variable cost 480600 48060 528660
 FINANCIAL ANALYSIS
FINANCIAL ANALYSIS

Total cost for mango enterprise

Total cost for 1st year(Rs)
Total fixed cost /year 229,020
Total variable cost 522,060
Total cost for 1st year(Rs) 751,080
Total cost for 2nd and 3rd year(Rs)
Total fixed cost /year 379040
Total variable cost/year 522,060
Total cost /year 901100
Total cost after 3rd year(Rs)
Total fixed cost /year 379040
Total variable cost 528660
Total cost after 3rd year 907700
Total initial investment 2,099,200

Note: For 1st , 2nd and 3rd year the harvesting and storage labour cost is not included in variable cost.
 FINANCIAL ANALYSIS

Calculation of income

SN Particulars Year 1 2 3 4 5 6 7 8 9 10
Production
1 40 65 85 105 130 150 150
(kg/plant)
Total 3000
2 8000 13000 17000 21000 26000 30000
production(kg/year) 0
Total income(@Rs. 170000 250000 3000
3 800000 1300000 1900000 3000000
100/kg) 0 0 000
 FINANCIAL ANALYSIS
Calculation of break even point
SN Particulars Year 1 2 3 4 5 6 0 8 9 10 total

3000 132500
1 Income 0 0 0 800000 1300000 750000 1900000 2500000 3000000
000 00

2 Total fixed cost 229,02 37904 3790 379040 379040 379040 379040 379040 3790 36403
0 0 40 40 379040 80
522,06 522,0 5286 5286 527340
3 Total variable cost 0 60 60 528660 528660 528660 528660 528660 60 528660 0
-
4 BEP(2/(1-3)*100 -43.87 -72.60 72.6 139.69 49.14 171.25 27.64 19.23 15.34 15.34
0

Sales revenue 2850 125875

5 0 0 0 760000 1235000 712500 1805000 2375000 2850000
decreased by 5% 000 00

Variable cost 54816 54816 5550 5550 553707

6 increased by 5% 3 3 93 555093 555093 555093 555093 555093 93 555093 0
BEP when sales - -
7 revenue decreased by 43.86 0 71.69 163.845 53.662542 206.1792 29.697416 20.52926 16.32 16.328499
4223 12 863 05 33 85 92
5% 852 8

- - -
8 BEP when variable 41.779 69.147 68.2 154.768 50.884204 194.4722 28.1833613 19.4888 15.50 15.5032481
cost increased by 5% 9531 34 355 8 496 32 8
54 32 84
 FINANCIAL ANALYSIS

Calculation of pay back period

SN Particulars Amount(Rs)
1 Total initial investment (X) 2,099,200
2 Cumulative income in 4 years(Y) 800000
3 Cumulative income in 5 years 2100000
4 Net income of 5th year(Z) 1450000
Initial investment recovered between the years 4: (W) and 5 year
Pay back period=W+(X-Y)/Z 4.90
 FINANCIAL ANALYSIS
Calculation of Benefit Cost ratio and NPV
SN Particulars 1 2 3 4 5 6 7 8 9 10sum
total
907,7 90770 89137
1 Total cost 751,080 901100 907,700 907700 907700 907700 907700 907700
00 0 80
30000 13250
2 benefit 0 0 4 800000 1300000 750000 1900000 2500000 3000000
00 004
4 Discount factor(at 10% 0.9091 0.8264 0.751 0.6830 0.6209 0.5645 0.5132 0.4665 0.4241 0.3855
discount rate) 3
744710. 68196 619971.31 512372.98 423448.74 38495 349957.643 54295
5 Discounted cost 682800 563610.2849 465793.6239
7 8 34 63 9 3 8 87.2
6 Discounted Benefit 0 0 3.005 546410.7 807197.72 423355.44 975000.4246 1166268.4 127229 1156629.868 63471
3 643 75 51 3 58.5
1.1689
7 B/C ratio 0.00 0.00 0.00 0.88 1.43 0.83 2.09 2.75 3.31 3.31 947
- - - -
8 Net present value - 744710. 68196 73560.54 243587.435 89017.538 509206.800 742819.70 88733 806672.2245 91757
682800 7 15 9 1.34
7 5 91 77
5 Sales revenue decreased 0 0 3.8 760000 1235000 712500 1805000 2375000 28500 2850000 12587
by 5% 00 504
6 Variable cost increased by 548163 548163 5550 555093 555093 555093 555093 555093 55509 555093 55370
5% 93 3 70
- - -
7 NPV when sales revenue - 744710. 68196 100881.0 203227.549 - 460456.7795 684506.27 82372 748840.7311 60021
decreased by 5% 682800 110185.3111 9 5 3.41
7 6 87
- -
NPV when variable cost - 167274.7 110019.92 907313.46 10368 29483
8 increased by 5% 498330 453027 41704 763 462528.64 03 690149.9453 93 79 942617.4871 79.6
.3 7
 FINANCIAL ANALYSIS

Calculation of Internal rate of returns

sum
SN Particulars 1 2 3 4 5 6 7 8 9 10
total

1 Total cost 751,080 901100 907,7 907,700 907700 907700 907700 907700 90770 907700 8913780
00 0

12500 1325000
2 Benefit 0 0 0 200000 450000 750000 950000 1250000 1250000
00 4

3 Discount factor at 15% 0.8695 0.75614 0.657 0.571753 0.497176735 0.4323275 0.37593704 0.3269017 0.2842 0.247184706
discount rate 652 4 5 246 96 74 6
- - - - -
- - 67389.166 58599
NPV at 15% -653113 783565 6863 482476.8 295250.8901 127041.625 35283.57088 17 .3 50955.89124 2886138
.2 52 35 7 .5
Note:NPV at 10 % is +ve and NPV at 15% is -ve. So IRR lies between 10%
and 15%

IRR=
10+5*342840.7/(342840.7+270778)

Internal rate of
return(IRR)=10.14
 Conclusion:

 From the financial analysis of project, B-C ratio is found to be

greater than 1, NPV is found to be +ve, IRR greater than interest
rate. So project is feasible. Considering the future cost may be
increased by 5%, sensitivity analysis was done and the project was
found insensitive and project was found non sensitive at 5%
decrease in benefit. Risk is also assessed by using grafted plants,
early planting and soil test.
 References:

 www.cbs.gov.np
 www.fao.org
 Krishi dairy