Download Saskatoba Swine

Saskatoba Swine Inc.
Feasibility Study
Kyle Dyok
Brandy Street
Melissa Fuchs
Jenay Werle
Project Background
• 10,000 head swine finishing facility
near Fleming, Saskatchewan
• Rent pig spaces to Elite Swine Inc.
• Manure is sold as fertilizer to area
farmers
Operations Plan
Location
NE 33-12-30 W1
Site Plan
S
E
W
N
Floor Plan
F
B
A
N
D
E
C
E
W
S
A utility room
B gates
C scale
D shower/bathroom
E load-out
F office/lunchroom
G aisle
way
H hog pen
J feeders/waterers
H
G
ROOM A
J
ROOM B
Production Cycle
All animals into barn
(~ 50 lbs each)
Sort animals by
sex and by size
Count animals
Grower diet
Wash and disinfect
entire barn
Finisher diet
All animals out of
barn by week 20
Weighing
Market weight pigs
tattooed and shipped
Semi-annual sale
of manure
Non-market weight
pigs wait one week
Operating Expenses
Depreciation
$
128,821
Manure Application
$
30,750
Utilities
$
21,250
Phone (Cell and Office)
$
473
Land Taxes
$
170
Accounting
$
3,000
Insurance
$
8,000
Interest
$
152,950
Marketing
$
1,658
Salaries
Contracted in Maintenance
Barn Washing
$
$
$
37,500
5,649
2,200
Total Operating Expenses
$
392,420
Summary of Financial Results
Year One
Net Income After Taxes
$ (101,294)
Net Cash Flow
$ 2,458
Divideneds Paid
$
Growth in Revenues
0.0%
Growth in Total Operating Expenses
0.0%
Year Two
$ (36,364)
$ 123,265
$
92.2%
37.5%
Year Three
$ 4,487
$ 22,724
$ 75,723
0.1%
-7.5%
Year Five
$ 68,950
$ 20,489
$ 99,148
0.1%
-6.0%
Year Ten
$ 169,682
$ (9,131)
$ 90,035
0.2%
-4.4%
Capital Expenditures
Land
Barn Structure
Total Equipment
Total Office Furniture
Tractor
Total Other Building Costs
$ 20,000
$ 1,800,000
$ 850,000
$ 3,210
$ 50,000
$ 388,074
Total Capital Expenses
$ 3,111,284
Human Resources
Corporate Structure
Board of Directors
Accountant
Production
Manager
Production
Technicians
Production
Technicians
Health and Safety
•
•
•
•
•
•
WHMIS
First Aid/CPR
H2S training
Canadian Quality Assurance
Introduction to pig husbandry
Finishing hog manager course
• Hearing and lung tests annually
Salary Summary
Year One Year Two Year Three Year Four Year Five
Total
Manager
$ 35,000 $ 35,700 $ 36,414 $ 37,142 $ 37,885 $ 182,141
Technician One
$ 20,000 $ 20,600 $ 21,218 $ 21,855 $ 22,510 $ 106,183
Technician Two
$ 20,000 $ 20,600 $ 21,218 $ 21,855 $ 22,510 $ 106,183
Total Wages $ 394,507
Benefits Summary
Five Year Estimate
Employment Insurance
3.08% $
12,021
Canada Pension Plan
4.70% $
18,344
Worker's Compensation
3.00% $
11,709
Medical & Dental Benefits
$400/Employee
Total
$
6,371
$
48,446
Marketing Plan
Hog Market Background
• World consumption of pork continues to rise
• Saskatchewan has relatively low hog
production cost when compared to other
provinces within Canada
• Currently Saskatchewan produces approx.
300,000 tons of pork annually
Marketing Objectives
• To gain community acceptance of intensive
hog operations
• To promote the use of hog manure as a
sustainable, affordable source of fertilizer
• To convey to potential investors the fiscal
benefits of investing with Saskatoba Swine
Competitive Advantages
• No direct competition by other hog
producers at this time
• Location
• Value added product
• Price our product competitively, however
application provided at no charge
• Cattle and other livestock posses no threat
Informing the Community
• Initial contact: Neighbor visits performed
by Myles Fuchs
• Community Information Night
• Discussion
• Q&A
Manure
• 10,000 hogs will produce 8.2 million
gallons of manure per year
• Manure needs to be applied semi-annually
• Liquid manure contains Nitrogen,
Phosphorus, Potassium, and micro-nutrients
Manure Market
• 2,938 acres are required for a 3 year
manure spreading rotation within a 2 mile
radius
• 980 acres/year is required for application
• Application costs to Saskatoba - $62.76/acre
• Cost of manure to producer - $ 21.11/acre
Manure Application Costs
Cost to Producer Expenses/Acre
Producer Applied * Saskatoba Applied
Wheat crop/ Black Soil Zone
Fertilizer
Nitrogen
Phosphorus
$15.60
$7.20
$21.11
$4.50
Machinery Operating
Fuel
Repair
$8.40
$8.00
$0.00
$0.00
Custom Work & Hiring
$6.25
$0.00
Machinery Depreciation
$16.00
$0.00
Total Costs with N applied
Total Costs with P and N applied
$54.25
$61.45
$21.11
$25.61
* Producer applied cost taken from the 2002 Crop Planning Guide (Sask Ag and Food)
Financial Plan
Financial Activities
• Forecasted along a ten year period, adjusted
for inflation
• Important costs to the operation are:
Interest Expense
Manure Application
Utilities
Wages
Year One
$ 152,950
$
30,750
$
21,250
$
37,500
Year Two
$
146,697
$
63,345
$
43,775
$
76,500
Total
$ 299,647
$ 94,095
$ 65,025
$ 114,000
Financing The Barn
Long Term Bank Debt
Equity Investment
Total Equity
$ 2,300,000
$ 900,000
$ 3,200,000
Net Income Projection
200,000
150,000
Net Income
100,000
50,000
1
2
3
4
5
6
(50,000)
(100,000)
(150,000)
Year
7
8
9
10
Sensitivity Analysis
$100,000
Net Present Value
$50,000
$-
Barn Rental
Wages
Manure Sales
Base Case
Best Case
Worst Case
$(50,000)
$(100,000)
$(150,000)
Critical Variables
Break Even Analysis
700,000
600,000
Barn Rental
500,000
400,000
Economic Breakeven
Net Income Breakeven
Base Case
Cash Flow Breakeven
300,000
200,000
100,000
0
2
4
6
Year
8
10
12
Financial Ratios
Ratios
Liquidity
Current Ratio
Leverage Ratios
Debt ratio
Debt to Equity Ratio
Profitability Ratios
Gross Profit Margin
Net Profit Margin
Return on Equity
Year One
Year Five
Year Ten
1.89
3.62
2.99
0.73
2.76
0.73
2.92
0.53
1.23
-0.35
-0.35
-0.13
0.12
0.12
0.11
0.34
0.27
0.20
The End
References
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Abacus Signs. Saskatoon, SK. Personal communication. November, 2002.
Baskerville, Heather. Elite Swine Incorporated. Brandon, MB. Personal communication. October, 2002.
Bergen, Barry. Elite Swine Incorporated. Brandon, MB. Personal communication. October, 2002.
Baudry, Guy. Elite Swine Incorporated. Brandon, MB. Personal communication. October, 2002.
Eister, Susan. Elite Swine Incorporated. Brandon, MB. Personal communication. October, 2002.
Fuchs, Myles. Fleming, SK. Personal communication. September-December, 2002.
Henley, Bill. Saskatchewan Agriculture and Food. Saskatoon, SK. Personal communication, October, 2002.
Johnston, Bob. CIBC: Account Manager. Humboldt, SK. Personal communication. September-December,
2002.
Kaastra, Shepp. Elite Swine Incorporated. Brandon, MB. Personal communication. October, 2002.
Ransom, Jeff. CIBC: Agriculture Division. Winnipeg, MB. Personal communication, September-December,
2002.
Redeckop, Doug. Elite Swine Incorporated. Brandon, MB. Personal communication. October, 2002.
RM of Maryfield. Maryfield, SK. Personal communication. September-October, 2002.
RM of Moosomin. Moosomin, MB. Personal communication. September-October 2002.
Saskatchewan Agriculture and Food, Agricultural Operations Section. Manual for developing a manure and
dead animal management plan. March 2000. Available online: www.agr.gov.sk.ca Accessed: October
2002.
Saskatchewan Agriculture and Food, Inspection and Regulatory Management. Establishing and managing
livestock operations. July 2001. Available online: www.agr.gov.sk.ca Accessed: October 2002.
Sask Energy. Saskatoon, SK. Personal communication. November, 2002.
Sask Power. Saskatoon, SK. Personal communication. November, 2002.
SaskTel. Saskatoon, SK. Personal communication. November, 2002.
Swanson, Darren. Community Pork Ventures. Outlook, SK. Personal communication, November, 2002.
T. L. Penner Construction. Kola, MB. Personal communication. November, 2002.
Williams, Dr. R. D. University of Saskatchewan. Personal communication. September, 2002.
Wright, Marten. Community Pork Ventures. Outlook, SK. Personal communication, September-December,
2002.