Mpunzungulu Agriculture Marketing

Cooperative Society

Business Plan for Mango Fruits Production and Processing

2019-2023

FINAL REPORT

Prepared by Braison M Salisali and Hermengild Mtenga

December, 2018

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 TABLE OF CONTENTS
TABLE OF CONTENTS......................................................................................................................................2
EXECUTIVE SUMMARY...................................................................................................................................4
1.0 INTRODUCTION...................................................................................................................................5
2.0 PREPARATION OF THE BUSINESS PLAN.....................................................................................6
3.0 DESCRIPTION OF THE BUSINESS PLAN......................................................................................7
4.0 DESCRIPTION OF MPUNZUNGULU AMCOS..............................................................................7
4.1 Establishment of the Cooperative........................................................................................................7
4.2 Organizational Structure.......................................................................................................................7
4.3 Vision and Mission.................................................................................................................................8
4.4 Objectives.................................................................................................................................................8
5.0 HUZI FARM AND FRUITS PROCESSED PRODUCTS................................................................8
5.1 Mango Production...................................................................................................................................8
5.2 Mango Products Processing Plant........................................................................................................9
5.3 Fruits Processed Products....................................................................................................................10
5.3.1 Processing and Packing Mango..........................................................................................................10
5.3.2 Processing and Packing Dried Mango Chips..................................................................................10
5.3.3 Processing Pulp......................................................................................................................................11
5.3.4 Processing Juice.....................................................................................................................................11
6.0 HUZI FARM OPERATIONS AND INVESTMENTS....................................................................12
6.1 Farm Operations....................................................................................................................................12
6.2 Farm investments..................................................................................................................................13
7.0 PRODUCTS PROCESSING FACILITIES AND OPERATIONS................................................13
7.1 Processing Facility.................................................................................................................................13
7.2 Operations of the Processing Facilities.............................................................................................15
8.0 PRODUCTS MARKETING................................................................................................................15
9.0 INVESTMENT PLANNED.................................................................................................................17
10.0 FINANCING SOURCES......................................................................................................................18
11.0 FINANCIAL PROJECTIONS.............................................................................................................18
11.1 Statement of Financial Performance..................................................................................................19
11.2 Statement of Financial Position..........................................................................................................20
11.3 Statement of cash flow.........................................................................................................................20
12.0 RISK MANAGEMENT........................................................................................................................26
12.1 Objectives of Risk Management........................................................................................................26
12.2 Develop Assessment Criteria and Scales..........................................................................................26
13.0 REPORTING AND MONITORING.................................................................................................32
14.0 CONCLUSION AND RECOMMENDATIONS.................................................................................33

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LIST OF TABLES
Table 1: Yearly Projected Mango Trees and Fruits: 2019 - 2023...................................................................9
Table 2: Construction of Mango Products Processing Plants......................................................................9
Table 3: Projections of Processed and Marketed Products.........................................................................10
Table 4: Farm Investment Components and Costs (TZS)...........................................................................13
Table 5: Processing Facilities Components and Costs (TZS).....................................................................14
Table 6: Planned Investment Phases..............................................................................................................14
Table 7: Packages and Prices............................................................................................................................16
Table 8: Phases of Planned Investments........................................................................................................17
Table 9: Revenue Sources.................................................................................................................................18
Table 10: Projected Income and Expenditure (TZS)....................................................................................21
Table 11: Projected Statement of Financial Position (TZS)........................................................................23
Table 12: Projected Cash Flow Statement......................................................................................................24
Table 13: Likelihood Scale................................................................................................................................27
Table 14: Impact Scale.......................................................................................................................................28
Table 15: List of Risks, Potential impacts, Mitigation and Management Approach............................29
Table 16: Assessment of Risk and Consequences........................................................................................32

LIST OF FIGURES
Figure 1.Pulp Making Flow Chart...................................................................................................................11
Figure 2: Mango Juice Making Flow Chart...................................................................................................12

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 EXECUTIVE SUMMARY
This Business Plan is of five years horizon from 2019 to 2023 that will be used as an
instrument for enabling Mpunzungulu Agriculture Cooperative Marketing Society
to embark on commercial farming and processing mango products including
marketing. The activities earmarked are production of mangoes in 700 acres at Huzi
Farm located in Mpunzungulu village Chamwino District in Dodoma Region. Also
major undertaking will be construction of processing facilities at the farm for
parking fresh mangoes, production of dried mango chips, production of pulp and
juice. The total investment in the farm and acquisition of the processing plants are
estimated to cost TZS 867.50 million. The AMCOS is seeking a loan and grant from
TADB worth TZS 639.31 million and grant from LIC TZS 244.55 million. Its own
contribution for enabling the investment will be TZS 101.69 million.

The expected products to be produced and sold over the five years will be fresh
packed mangoes, dried mango chips, pulp and juice. In 2019/20 the sales will be
TZS 576.00 million, 2020/21 sales will be TZS 2.11 billion and in 2021/22 the sales
will reach TZS 10.46 billion. In the remaining period of 2022 to 2023/24 sales will
cumulatively be TZS 46.64 Billion. The financial projections indicates that in the
year (2019) the operations will result into a net profit after tax of TZS 63.34 million
and reach TZS 2.90 billion in 2023/24. Cash flows projections also reveals positive
trend that will start with loss of TZS 90.54 million and end up with TZS 2.14 billion
in the last year 2023/24.

The key drives for the positive performance is all 700 acres being planted with 84,000
mango trees that are expected 50% of them will reach five years in 2020 and thus be
able to produce not less than 100 fruits while the rest will provide not less than 70
fruits, improved capacities of the members that will continue to each own one acre in
the already planted 200 acres block and that the other 500 acres will be put under the
management of the company that will be formed. Others are that the company will
be owned by the AMCOS through joint venture with credible investor, and that all
products will attract customer’s and thus penetrate the market at higher speed. The
key marketing strategy will include ensuring higher levels of market driven
production and distribution efficiency and market driven packing and pricing. The
business plan also contains highlights of the anticipated risks and provides
framework for managing such risks in the event they occur.

Given the positive operational and financial results indicated it is recommended that
the Business Plan to be used as a blue print for the AMCOS and also as a reputable
document that can be used by interested development partners with intention of
supporting the AMCOS.

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1.0 INTRODUCTION
Mpunzungulu Agriculture Marketing Cooperative Society is in process of
establishing small scale commercial mango farming and processing plant at its farm
located at Huzi in Mpunzungulu village Chamwino District in Dodoma Region. The
initiatives started in 2013 by Chamwino District Council (CDC) of which the
objectives are to support establishment of 200 acres mango farm that will be owned
and managed by small scale farmers, to support formation of cooperative
organization that through it the farmers can embark on commercial production of
mangoes and to support establishment of mango juice processing plant. The other
objective of the initiative is to support establishment of a company that will be
owned by the cooperative such that it can undertake business ventures for operating
the mango juice processing including marketing. The company is anticipated to
enter into joint ventures for expansion of mango production, processing and
marketing at the farm and other places.

Through those well thought initiatives, the CDC working in partnership with Local
Investment Climate (LIC) and the farmers entered into an agreement in April 2018
for developing 700 acres mango farm and mango products processing facilities at
Huzi in Mpunzungulu village. The project total costs are TZS 489,242,768 of which
LIC contribution is TZS 317,048,850.00 and the farmers expected contribution will be
172,193,918.00. Specific activities already undertaken are cleaning, tilling and
planting mangoes in 200 acres and additional 200 acres have been added and ready
for planting. Part of the work at the farm also include acquisition of 15,000 mango
seedlings, drilling borehole and installation of water pumping machine and
construction and installation of 3 water tanks for irrigation in the part of the farm
which is already planted with mangoes. Other important works undertaken are
surveying the 200 acres and dividing it into small plots and processing of title deeds
for the plots and hence 175 title deeds of one acre each have been issued to the
farmers and the formation of Mpunzungulu AMCOs. In addition already 100 acres
have been acquired and set aside for construction of the fruits processing plant and
two houses for the staff that will manage the farm and the plant and other activities
expected in future. The total investment for the works undertaken is TZS 266.00
million of which CDC contributed TZS 143.50 million, LIC TZS 72.50 million and the
farmers TZS 50.00 million. The immediate emerging results are that in the past two
mangoes seasons 28,500 fruits have been harvested and sold for TZS 12.95 million.

Those efforts clearly points to the direction of enabling Mpunzungulu AMCOS to

move towards the direction of commercialization of small scale mangoes production
and processing. Still there are works to be done at the already established 200 acres
and also expansion to the earmarked additional 500 acres including the acquisition

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of the processing plant and establishment of marketing arrangements for the farm
products and the products from the plant. Part of the efforts that will be undertaken
is to support Mpunzungulu AMCOs to operate commercially by establishing a
business entity that can deal with the supply of the inputs required at the farm and
managing the production plant and selling of the products.

The aim of this business plan is therefore to serve as a roadmap for directing
implementation of the mentioned strategies and to outsource financing and more so
to serve as a blueprint for Mpunzungulu AMCOS. The expansion is anticipated to
result in profitable farm operations, enabling establishment of the production plant
and hence enabling the members to embark on value addition activities, creation of
job opportunities from the members and other local people in the villages and
nearby villages and hence make contribution to poverty reduction. On overall the
investment at the Huzi Farm and the plant will contribute towards economic
transformation of Mpunzungulu village and the surrounding villages and also will
become a source of revenue to the CDC through the taxes expected to be paid.

2.0 PREPARATION OF THE BUSINESS PLAN

The preparation of this business plan was possible through the financial support
from LIC that commissioned two consultants, Mr. Braison and Mr. Mtenga from
Sundy Merchants Company Limited to guide its preparation. The process for
preparation was highly participatory and hence it included the below mentioned
steps:
 Review of project documents at LIC and CDC including discussions with the
staff of the two organizations.
 Conducting market survey that included commercial mango farmers, services
and extension services organizations, farm equipment and machinery
suppliers, banks, mango juice products producers and traders.
 Visit to Huzi farm and conduct meetings with Mpunzungulu leaders and
members
 Preparation and conducting of stakeholders meeting with key stakeholders
that included some of the organizations visited during the survey, LIC, CDC,
and leaders and members of Mpunzungulu AMCOS. In the meeting the
stakeholders provided inputs on improving the farm operations including
expansion, products to be produced and marketed, organizational
arrangements for the Mpunzungulu, linkages with CDC and supported the
strategy for formation of a company to manage the processing plant and also
the farm operations.

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3.0 DESCRIPTION OF THE BUSINESS PLAN
The business plan covers a period of five years starting from 2019/20 to 2023/24 and
as such is divided into nine sections outlined below:
• Mpunzungulu AMCOS organizational structure, vision, mission and
objectives.
• Farm and factory products
• Huzi farm operations
• Factory operations
• Marketing which includes objectives, strategies, targeted clients
• Investment plan
• Financial forecasting which includes statement of financial performance,
statement of financial position and statement of cash flow.
• Risk management which includes objectives, likelihood, impact and
mitigation

4.0 DESCRIPTION OF MPUNZUNGULU AMCOS

4.1 Establishment of the Cooperative

Mpunzungulu AMCOS was formed in 2015 through the initiatives of CDC as a
strategy for establishing member based organizations that can organize and provide
the required services to the targeted farmers in undertaking commercial mango
production. The organization is registered as a formal cooperative entity through the
Cooperative Act of 2013 and bears a Registration Number DOR/738 members are
158 that comprises of 57 women members. Mpunzungulu AMCOS is the only
cooperative entity in Dodoma and Tanzania formed by small scale producers who
are engaged in commercial mango production and intending to embark on
processing the fruits from their own farms. Each of the members owns a surveyed
plot with a title deed and already planted with mango trees.

4.2 Organizational Structure

The AMCOS is comprised of the members who are the overall decision makers
through their annual general meeting and the Board which is composed of nine
members. The Board is selected by members and is led by the chairperson who is
responsible in overseeing the activities of the Board, a Secretary and seven other
Board members. Currently the day today activities are undertaken by the Secretary
and the treasurer on voluntary basis and hence there are no employees as the
AMCOS is still unable to employ and pay the required staff.

4.3 Vision and Mission

The vision of Mpunzungulu AMCOS is to become and remain the most competitive
supplier of mango products from its own members in the country and beyond
through cooperative arrangements. Linked to the vision is the mission for making

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mango fruits and processed products a major source for improving economic
capacities of the members.

4.4 Objectives
 To organize its members into small scale commercial mango producers as a
strategy for improving their livelihoods.
 To work with development partners in mobilization of resources for enabling
members to effectively undertake mango production as a business.
 To link its members with inputs and output markets including linkages
through joint ventures.
 To link its members with capacity building organizations that provides
mango production technical and management skills development.
 To engage in processing of mango products and thus enable its members to
participate and earn income through value addition.
 To mobilise and sensitize community members participation in undertaking
commercial mango production.

5.0 HUZI FARM AND FRUITS PROCESSED PRODUCTS

5.1 Mango Production

Mango production will as earmarked be undertaken at Huzi Farm whereby the total
acreage set aside is 700 acres for farming and 100 acres for the processing plant. Part
of the 200 acres farm is already planted with mango trees of which some of the trees
are already five years while others are between one to three years old. The total trees
planted are 5,000 and those between three to five years have started producing fruits
such that in the 1st season harvests was 13,000 fruits and the second season was
15,000 fruits. With the already acquired additional 9,000 seedlings all of them will be
planted in the same surveyed 200 acres and thus enabling to reach 70 plants in an
acre. The target is to plant 120 trees and hence the 200 acres will need additional
10,000 seedlings. Over the period of the five years the whole 700 acres will be
planted with 84,000 trees. A seed revolving fund will be established and thus
enabling to acquire the seeds.

The varieties already planted and earmarked are Apple, Tommy and Alphonso.
Those varieties will be 15,000 and the supplier contracted is G. Dollar Commission &
D.J. Construction of Morogoro. The total supplying costs will be TZS 37,800,000.
Those varieties are very sweet with high yields and proved to be very good in
making different mango products including being consumed as fresh fruits. All of
them under well managed practices can be planted 120 trees in an acre, and on

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 minimum can produce 100 fruits in the 3 rd year and by the fifth year minimum of 300
fruits with weight ranging from 300 to 500 grams.

Table 1: Yearly Projected Mango Trees and Fruits: 2019 - 2023

Year Acreage No of trees No of fruits Tons
2019 400 40,000 1,600,000 480
2020 700 70,000 6,000,000 1,800
2021 700 70,000 7,000,000 2,450
2022 700 70,000 14,000,00 4,200
2023 700 70,000 21,000,000 6,300
Total 70,000 49,600,000 15,230

The above yearly projections are based on the assumptions that trees in an acre will
be 100 and that by the 3rd year (2019) the average yield will be 80 fruits for each tree
and by the 5th year the yield will reach 300 fruits in each tree. Moreover the average
weight will be 300 grams/fruit.

5.2 Mango Products Processing Plant

Mango processing plants will be constructed at Huzi Farm in the 100 acres set aside
for production of mango products. Construction of the processing plants is
earmarked to start in 2019 and end in 2020. The expected operational years will be
2019 for fresh mangoes, 2020 for dried chips and pulp making plants and 2012 for
juice making plant. Table 2 below provides the construction phases.

Table 2: Construction of Mango Products Processing Plants

No Year Plant Expected
Operational Year
1 2019 Construction of Fresh mango park house 2019
2 2019 Construction of sundries for mango chips 2020
3 2020 Acquisition and installation of pulp making plant 2020
4 2020 Acquisition and installation of juice making plant 2021

Apart from the construction of the plants, two houses will be constructed for
housing the plants manager and the farm extension staff. The houses are expected to
be constructed in 2019.

5.3 Fruits Processed Products

The processed products will be mango fruits, dried mango chips, mango pulp and
mango juice. Table 3 provides the yearly expected projections.

Table 3: Projections of Processed and Marketed Products

Product 2019 2020 2021 2022 2023 Total
Mango fruits 480 1,757 400 400 400 7,037
(Tons)

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Dried chips (kgs) - 2,000 5,000 10,000 12,000 29,000
Pulp (kgs) - 12,000 16,000 20,000 20,000 68,000
Juice (lts) - - 3,018,240 4,979,595 9,453,000 17,450,835

Assumptions
 Year 2019: All 480 tons will be packed (100% of total production).
 Year 2020: 1,757 Tons will be packed (97.6% of total production), 24 Tons (1.33%
of total production) will be dried as chips, and 19.38 tons (1.08% of total
production) will be processed in to pulp.
 Year 2021: 400 Tons will be packed (16.33% of total production), 12 Tons (0.5% of
total production), 25.84 (1.05% of total production) will be processed in to pulp
and 2012.16 (82.13% of total production) will be processed into juice.
 Year 2022: 400 Tons will be packed (9.52% of total production), 24 Tons (1.14% of
total production) will be processed as dried chips, 32.27 Tons (7.68% of total
production) will be processed into pulp and 3,319.73 Tons (88.57% of total
production) will be processed into juice.
 Year 2023: 400 Tons (5.88% of total production) will be packed, 48 Tons (0.71% of
total production) will be processed in to dried chips), 48 Tons (0.71% of total
production) will be processed in to pulp and 6,302 Tons (92.71% of total
production) will be processed into juice.

5.3.1 Processing and Packing Mango

The ripe mango product will be among of the products that will be processed. The
processing will entail picking full ripe mangoes, aggregated, washed, sorted into
different sizes, packing in accordance to sizes into poly bags and put into light crate
boxes and stored in cold room. All those activities except picking will be done in the
park house earmarked for construction.

5.3.2 Processing and Packing Dried Mango Chips

Dried mango chips are an important value added product that will be produced.
The product will be made from mango slices and dried by using solar drier. There
are clear business opportunities observed in the market as most of the fruits dried
chips are imported. With proper application of solar dries and packing in different
sizes that will range from 50-100-500 grams to 1kg the product will be sold by
targeting different market segments. The assurance for reaching the markets is
enhanced by the increased shelf life of up to one year while retaining the same
basic qualities of mango fruit.

Process Flow for Drying Mango Chips

Firm ripe mangoes Washing Peeling Slicing

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 Packing in 50grams -1kg Drying by solar Slices placed in trays
poly bags driers 2-3 days

5.3.3 Processing Pulp

To process the pulp there will be need for acquiring plant facilities that can process
pulp. Although it was not possible to obtain reliable data for pulp production and
marketing in the country there are clear indications that the product demand is
growing fast. In the shops, hotels and restaurants of different levels a lot of juices of
different kinds that uses pulp exists of which even some of them are sold by hawkers
in the street. Those juices are produced locally and others are imported. Thus there
are clear market opportunities for the product. Pulp is on demand for making juices,
in bakeries and even in medicine making companies. For the planned plant pulp
making machine will be part of the processing facility. The processed pulp will be
traded as stand- alone product for selling and also for making juices at the factory.

5.3.4 Processing Juice

Figure 1.Pulp Making Flow Chart

Two types of juices are earmarked for production that will all need pulp as the main
ingredient. The products are those that are drunk straight after opening and those
that will be used little by little from bottles which are stored between uses. Both
products will need to be preserved by combination of natural

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Figure 2: Mango Juice Making Flow Chart

6.0 HUZI FARM OPERATIONS AND INVESTMENTS

6.1 Farm Operations

Improving and sustaining the production capacities of the farm is one of the major
undertakings. It is clearly understood that the farm is the only source of supplying
mango fruits that will be needed in selling fresh mangoes, and making dried chips,
pulp and juices. The already planted trees in the 200 acres will be managed by
applying all the best mango fruits production practices such starting by the 2019
season onwards will be able to provide the fruits required for enabling to attain the
volumes for each product projected in each year. The remaining 500 acres are
expected to be planted and thus by the year 2020 the whole farm will have 70,000
mango trees. Surveying of the 500 acres and issuing title deeds to members will be
done so as to ensure all the 700 acres are owned by farmers that will have to be
members of Mpunzungulu AMCOS. The varieties that will be planted are Apple,
Alphonso and Tommy. Each of the members will be trained on all required technical
and management skills and policies and regulations will be developed that will have
to be followed by each member.

To ensure the farm successfully becomes a centre for supplying the required
projected volumes of mango fruits in each year, a competent farm extension staff
with the required technical and management capacities will be employed. Apart
from being responsible for managing the farm the extension staff will be responsible
in training the farmers in all aspects required so that each individual plot becomes
viable and thus make profits. Through those arrangements the whole farm will
become viable and sustainable.

6.2 Farm investments

The investment required includes preparing the 500 acres, surveying and acquisition
of title deeds, installation of irrigation system, buying and planting seedlings,
buying of farm machinery and equipments and maintaining the farm. The total
investment earmarked is TZS 403,750,000.00. The investment is planned to be

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undertaken over a period of 4 years from 2019 to 2022. The sources of financing will
be TZS 100,937,500 (which is 25%) from members of Mpunzungulu AMCOS and the
rest 75% (TZS 302, 812,500) will be sought as combination of grant and loan. The
grant and the loan will be sought from Tanzania Agriculture Development Bank
(TADB) which has the window for financing viable agriculture development
investments. To be able to apply for the funding the earmarked Huzi Mango
Company (HUMACO Ltd) will be formed early 2019 and thus take over the
responsibilities for managing the farm including applying for the fund.

Table 4: Farm Investment Components and Costs (TZS)

No Component Phase 1: Phase 2: Phase 3: Total (700
2019 (200 2021 (200 2022 (100 acres)
acres) acres) acres)
1 Preparation cleaning, tilling, 21,000,000 21,000,000 10,500,000 52,500,000
digging holes and putting manure
2 Surveying and acquisition of title 23,500,000 23,500,000 11,750,000 58,750,000
deeds
3 Installation of irrigation systems: 32,000,000 32,000,000 16,000,000 80,000,000
water pump, pipes and 15 tanks
4 Buying and planting 50,000 50,000,000 50,000,000 25,000,000 125,000,000
seedlings
5 Buying farm machinery and
equipments: tractor, trailer, disc - 87,500,000 - 87,500,000
plough and rotary tiller.
Total 126,500,000 214,000,000 63,250,000 403,750,000

7.0 PRODUCTS PROCESSING FACILITIES AND OPERATIONS

7.1 Processing Facility

Products processing facility will comprise of parking house for fresh mangoes
receiving washing and cooling, sorting in different sizes, packing and cold storage
room, pulp making machine and juice making machine. The facility also will include
building for housing the pulp and juice making machines, storage of packaging
materials and juices, dressing and office rooms. Toilets will also be needed including
bathing room for male and female workers. The cold room will be partitioned such
that can be used for storing pulp as well. The total projected investment is TZS
463,550,000 of which TZS 210,550,000 will be for construction of the park-house and
acquisition and installation of the pulp and juice making machines. The other
investments will be TZS 111,000,000 for construction of the building that will house
the machines while other costs are projected to be 142,000,000 which includes
fencing, staff houses, electrification, water systems and toilets.

Table 5: Processing Facilities Components and Costs (TZS)

No Component Price per Unit (in Frequency Costs (TZS)
TZS)
1 Mango park house comprising of 370,000/m2 100m2 *370,000 37, 000,000

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 receiving place, cooling and washing,
sorting, parking and cold room
2 Solar drier and equipments 23,4000,000 1*23,400,000 23,400,000
3 Pulp making machine -2tons/hr including 33,150,000/set 1 *33,150,000 33,150,000
installation
4 Juice making machine(water treatment,
juice preparation system, filling & 117,000,000/set 1* 117,000,000 117,000,000
packaging line)-1500-2000lts including
installation
5 Building for housing machines, storage, 370,000/m2 300m2*370,000 111,000,000
dressing and office
6 Toilets and bathrooms 12,000,000 1*12,000,000 12,00,000
7 Installation of water system: Tank and 15,000,000 1* 15,000,000 15,000,000
pipes
8 Electrical system installation 45,,000,000 1*45,000,000 45,000,000
(transmission, transformer, wiring,
switches )
9 Construction of staff houses 15,000,000 2*15,000,000 30,000,000
10 Construction of fence 40,000,000 1*40,000,000 40,000,000
Total Costs (TZS) 463,550,000

The construction, acquisition and installation of the machines and other facilities will
be done in phases. Table 5 below provides the phases.

Table 6: Planned Investment Phases

No Year Construction and installation Costs (TZS)
1 2019 Construction of fence 40,000,000
2 2019 Construction and equipping mango park house 37,000,000
3 2019 Construction of staff houses 30,000,000
4 2019 Installation of water distribution system 15,000,000
5 2019 Construction of Toilets and bath rooms 12,000,000
6 2019 Installation of electricity 45,000,000
7 2020 Construction of building for housing pulp and juice making 111,000,000
machines, offices and stores
8 2020 Acquisition and installation of mango chips sun dries and 56,550,000
pulp making machine
9 2021 Acquisition and installation of juice making machines 117,000,000
Total Costs (TZS) 463,550,000

7.2 Operations of the Processing Facilities

The operations of the processing facilities will be put under the management of
HUMACO Ltd and hence competent manager and technical staff will be hired. Two
technical staff will be needed that will supervise mango parking facility and the
other will deal with pulp and juice making operations. The technical staff dealing
with mangoes parking will also oversee the mango chips drying operations. The
manager will be the overall supervisor of the processing facilities and the farm
operations. The manager will report to the company board which will be formed
after the formation of the company. All the other required operational staff will be
picked and trained from the village and other surrounding villages. Through those
arrangements the processing facilities will enable to create employment to the locals

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and thus making contributions to the vision and mission of Mpunzungulu AMCOS.
Workers in the dried mango chips will all be women.

8.0 PRODUCTS MARKETING

The entire farm and processing facilities will be operated commercially while guided
by market requirements so as to access reliable markets for the intended products
and thus marketing will be among of the major functions that will be undertaken.
Over the five coming years and taking into consideration that it will entail entering
to fruits products sector as a new player, the objectives will be to position and
develop a recognized brand for each product, enhancement of customer
relationships and ensure growth in sales and profits.

To be able to reach those objectives of becoming a competitive mango producer and

seller the operations will focus on:

Production efficiency
That will entail becoming a customer focused company and hence concerned with
producing and delivering products by applying optimal combination of inputs to
produce maximum output at the minimum cost. The achievement comes through
focusing on managing input, inventory control and decreasing waste. Control over
these factors will enable to meet clients’ expectations by timely and conveniently
produce and deliver the products at affordable prices. The company will take
advantage of having the opportunity of the major inputs needed for production in
one stop shop/ place (at Huzi) to ensure higher production and delivery of high
quality products at competitive prices that are acceptable by different clients.

Packaging and pricing of products

All products will be packed into different sizes and combined with customer driven
pricing approach that will assure higher level of acceptance of the products by our
customers. Among of the innovations for positioning and branding will be to write
the products basic specifications in Swahili and English so that all types of customers
can comfortably read and make decision. Through such approach it is expected that
our products will reach and be bought by different incomes earners from lower,
middle to higher income earners while aware of the ingredients and the health
benefits that the products offers.

Pricing the products

We foresee pricing will be complex as there will be a need to consider the existing
local and imported fruits products and also other soft drinks that are manufactured
locally and those imported. To compete alongside those products pricing is among

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the key factors. As such, the pricing structures to be used will take into consideration
the other direct or related fruits products in the market including those other types
of soft drinks. For each product packaging and pricing will be directly linked
including the delivery to customer arrangements. Included as a strategy will also be
involving use of different pricing methods such as value-based pricing (setting price
based on buyers’ perception of value), cost based pricing (add a standard markup to
the cost of the product) and competition-based pricing (setting price based on
following competitors’ prices). Above all to compete with the other products is
efficiency in production, processing and delivery that will ensure low costs and
hence peg prices that will be competitive and attractive to customers.

Table 7: Packages and Prices

No Product Package size Price (TZS)
1 Fresh mangoes 500 grams 600.00
1 kg 1,200.00
2 Dried chips 50 grams 500.00
100 grams 1,000.00
200 grams 2,000.00
500 grams 4,500.00
3 Pulp 1kg 55,000.00
4 Juices 250 mlts 500.00
500 mlts 1,000.00
1lts 2,500.00

Gradual expansion of market coverage

It is clear that our products will not be totally new to the soft drinks industry and
also there are giants and hence there will be a need take the strategy for introducing
the products gradually but aggressively. Initially each product will be promoted
through commissioned based promotion approach. That also will include setting up
a main wholesale selling point in Dodoma that apart from selling to traders will also
serve as feeder to strategically selling points that will be established in Dodoma City.

Same approach for establishing selling points that will be operated by identified
business individuals on commissions’ agreements in nearby townships will be
undertaken. Part of the strategy is to buy tricycles with cool boxes that will be
moving around in Dodoma City by selected hawkers. The acquisition of the tricycles
will be acquired by the company and rented to selected hawkers. Those cool boxes
will contain all the products and hence enabling to have conveniently the right
product mix strategy in place. Experiences gained from the Dodoma City and other
nearby places will be used to expand to other regions after a thorough market
potentials analysis have been undertaken. The expansion will target Singida,
Manyara, Iringa, Njombe, Ruvuma, Mbeya and Songwe Regions.

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9.0 INVESTMENT PLANNED
Over the five years of this business plan the investment will focus on improving and
expansion of the farm and acquisition of the processing facilities for mango parking,
making dried mango chips, making pulp and production of juices. Investment for
farm improvement and expansion are forecasted to start in phases from 2019 and
end in 2022 while for processing facilities are planned from 2019 to 2012. The total
costs for farm improvement and expansion of the 500 and thus enabling to have 700
acres are TZS 403,750,000 and for construction, acquisition and installation of the
processing facilities will be TZS 463,550,000. Hence the total planned investment is
TZS 867,300,000.

Table 8: Phases of Planned Investments

No Year Investment Costs (TZS)
Farm improvement and expansion
1 2019 Farm preparation, surveying and title deeds acquisition, buying 126,500,000
and planting seedlings (200 acres)
2 2021 Farm preparation, surveying and title deeds acquisition, buying 214,000,000
and planting seedlings (200 acres) and buying of farm machinery
3 2022 Farm preparation, surveying and title deeds acquisition, buying 63,250,000
and planting seedlings (100 acres)
Total cost farm improvement and expansion 403,750,000
Processing facilities investment
4 2019 Construction of fence, mango park house, staff houses, water 290,000,000
distribution, system, toilets, bathrooms and installation of
electricity
5 2020 Construction of building for housing pulp and juice machines, 56,550,000
acquisition and installation of mango chips solar dries and pulp
making machine
6 2021 Acquisition and installation of juice making machine 117,000,000
Total cost processing facilities (TZS) 463,550,000
Total farm and processing facilities costs (TZS) 867,300,000

10.0 FINANCING SOURCES

The Huzi farm improvements and expansion funding is expected to be financed by
grant and loan from TADB. TADB has two products which fits well with this project;
these products are small-scale farmers guarantee scheme is can be accessed in terms
of affordable loan and innovative fund which is always provided as grants. The
amount expected from TADB will be TZS 307,812,000 which is 75% of the total
required investment and the remaining 25% will be financed by the members of
Mpunzungulu AMCOS. The amount planned to be acquired as grant will be TZS
125,000,000 which is intended for establishing revolving fund for seeds acquisition
while loan will be TZS 182,812,000. The constructions, acquisition and installation of
machines and other facilities are expected to be financed by TZS 244,548,850 as grant

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from LIC. That amount is part of the total agreed upon grant of TZS 317,048,850
between Mpunzungulu AMCOS and LIC. The remaining amount of TZS 219,001,150
which is 47.3% will be sought through loan application to TADB. Timing and use of
the funds are further elaborated in section 11.0 that provides revenues and the
sources.

11.0 FINANCIAL PROJECTIONS

This component of the business plan provides financial projections over the five-year
period. The projections are also linked with the planned investment in the Huzi
Farm and the acquisition of the processing plants and projected revenue over the
five years period. The financial statements shown in this section are the Statement of
Financial Performance, Statement of Financial Position and Statement of cash flow.
Products earmarked for selling are parked mango fruits, dried mango chips, pulp
and juice. From those products total revenues are projected are TZS 53,922,064,500
while net surplus after tax will be TZS 5,162,828,461. The sales revenue accounts to
98.21% of the income. Other incomes amounting to TZS 985,549,100 are expected
from TADB window for agriculture development grants and loan (TZS 639,312,750),
LIC grant (TZS 244,548,850) and Mpunzungulu members (TZS 101,687,500).

Table 9: Revenue Sources

Revenue Sources (TZS)

No Source 2019 2020 2021 2022 2023 Total
Income from
1 Sales 518,400,000.00 2,011,860,000.00 9,411,498,000.00 14,943,406,500.00 27,036,900,000.00 53,922,064,500.00
Loan from
2 TADB 337,125,950.00 0.00 118,124,800.00 59,062,000.00 0.00 514,312,750.00
Grant from
3 TADB 50,000,000.00 0.00 50,000,000.00 25,000,000.00 0.00 125,000,000.00
Grant from
4 LIC 70,998,850.00 56,550,000.00 117,000,000.00 0.00 0.00 244,548,850.00

Mpunzungulu
5 contribution 40,375,000.00 0.00 40,875,000.00 20,437,500.00 0.00 101,687,500.00
Total 1,016,899,800.00 2,068,410,000.00 9,737,497,800.00 15,047,906,000.00 27,036,900,000.00 54,907,613,600.00

Therefore, the projected Financial Plan and Statements have been drawn basing on
the following assumptions:
(i) Inflation annual rate is single digit.
(ii) Sales will be made locally.
(iii) Discount rate of 9.18% on the projected cash flows.
(iv)There will be no any legal changes which will affect the operational activities.
(v) Farm operations will improve including expansion to 700 acres.
(vi)Acquisition and installation of the processing facilities will be done and
completed in 2019/20
(vii) Revenue collection efficiency is 95% on average over the five years.

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(viii) The processing capacity/volume for the five years is assumed to reach the
levels projected
(a) Mango fruits 2,060 Tons
(b) Dried chips 29,480 kgs
(c) Pulp 68,000 kgs
(d) Mango juice 19,485,768 litres
(ix) Prices on average over the five years will be as follows:
(a) Mangoes 1kg 1,200 TZS
(b) Dried chips 1 kg 8,500 TZS
(c) Pulp 1kg 55,000 TZS
(d) Juice 1 litre 3,000 TZS

11.1 Statement of Financial Performance

Table 10.0 provides trends of revenues generated from the sale of products and
investment by Mpunzungulu, and grants from TADB and LIC and also loan from
TADB. Total projected sales are anticipated to increase from TZS 518.40 million in
the year 2019/20 to TZS 27.037 billion in the final year 2023/24. It is also assumed
that expenditure items will rise as projected in the statement of financial
performance from TZS 703.54 million in the year 2019/20 to TZS 11.28 billion in the
year 2022/2023, mainly as a result of production and sales expansions. Part of the
expenses will be TZS 867.50 million that will be spent in improving and expansion of
the farm and acquisition of processing facilities. The net profit after tax is expected
to be TZS 63.38 million in 2019/20 and a loss of TZS 18.36 million is expected in
2020/21 mainly due to investments and then pick up to 2.90 billion in 2023/24.

11.2 Statement of Financial Position

The information given in the Table 11.0 is a statement of financial position or
commonly referred to as a balance sheet. It is statement showing the financial
position at the end of each financial year for the next five years. On overall, the
financial capacity will be growing at a favorable pace each year.

11.3 Statement of cash flow

The cash flow statement (CFS) provides information on the inflow and outflow of
cash and cash equivalents as indicated in Table 12.0. The projections in the cash flow
statement indicates positive and growing trend. Cash flow growth reflects the fact
that there is expected increase in cash receipts, increase in production, processing
and selling in all products. The Cash flow generating from operations will increase
from TZS 90.54 million (in financial year 2019/20) and reach TZS 2.14 billion in the
financial period 2023/24. The drivers of the growth in cash flow are the growth in

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operating income and an improvement in net working capital. In addition, it is an
indication of positive trend in improvements of the rotation of accounts receivable
and inventories in each year.

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Table 10: Projected Income and Expenditure (TZS)
Projections 2019-2023
Income 2019/20 2020/21 2021/22 2022/23 2023/24 Total
Sales
Fresh Packed Mangoes 518,400,000.00 1,897,560,000.00 432,000,000.00 432,000,000.00 432,000,000.00 3,711,960,000.00
Dried Mango Chips 0.00 15,300,000.00 38,250,000.00 76,500,000.00 91,800,000.00 221,850,000.00
Pulp 0.00 99,000,000.00 792,000,000.00 990,000,000.00 990,000,000.00 2,871,000,000.00
Juice 0.00 0.00 8,149,248,000.00 13,444,906,500.00 25,523,100,000.00 47,117,254,500.00
Sub-total 518,400,000.00 2,011,860,000.00 9,411,498,000.00 14,943,406,500.00 27,036,900,000.00 53,922,064,500.00
Other Income
Loan from TADB 337,125,950.00 118,124,800.00 59,062,000.00 514,312,750.00
Grant from TADB 50,000,000.00 50,000,000.00 25,000,000.00 125,000,000.00
LIC 70,998,850.00 56,550,000.00 117,000,000.00 0.00 0.00 244,548,850.00
grant/contributions
Mpunzungulu 40,375,000.00 0.00 40,875,000.00 20,437,500.00 0.00 101,687,500.00
contribution
Sub-total 498,499,800.00 56,550,000.00 325,999,800.00 104,499,500.00 0.00 985,549,100.00
Cost of Sales (43% of 222,912,000.00 865,099,800.00 4,046,944,140.00 6,425,664,795.00 11,625,867,000.00 23,186,487,735.00
sales)
TOTAL NET 793,987,800.00 1,203,310,200.00 5,690,553,660.00 8,622,241,205.00 15,411,033,000.00 31,721,125,865.00
INCOME
EXPENSES
Selling and 129,600,000.00 502,965,000.00 2,352,874,500.00 3,735,851,625.00 6,759,225,000.00 13,480,516,125.00
Distribution(25% of
sales)
Administrative and 77,760,000.00 301,779,000.00 1,411,724,700.00 2,241,510,975.00 4,055,535,000.00 8,088,309,675.00
Employee expenses
(15%)

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Processing facility 290,000,000.00 56,550,000.00 117,000,000.00 0.00 0.00 463,550,000.00
investment costs
Farm improvement and 126,500,000.00 0.00 214,000,000.00 63,250,000.00 0.00 403,750,000.00
expansion costs
Repairs and servicing 0.00 0.00 0.00 7,500,000.00 8,600,000.00 16,100,000.00
Farm Operational Costs 77,000,000.00 115,500,000.00 121,275,000.00 131,100,643.00 146,832,720.00 591,708,363.00
Principal on loan 0.00 112,375,317.00 151,750,250.00 171,437,584.00 59,062,000.00 19,687,334.00
Interest on loan (12%) 0.00 40,455,114.00 54,630,090.00 61,717,530.00 21,262,416.00 7,087,440.00
Other expenses (0.05% 2,592,000.00 10,059,300.00 47,057,490.00 74,717,032.50 135,184,500.00 269,610,322.50
of sales)
Depreciation 0.00 89,855,462.00 89,855,462.00 89,855,462.00 89,855,462.00 359,421,848.00
TOTAL EXPENSES 703,452,000.00 1,229,539,193.00 4,560,167,492.00 6,576,940,851.50 11,275,557,098.00 24,345,656,634.50
Surplus before Tax 90,535,800.00 -26,228,993.00 1,130,386,168.00 2,045,300,353.50 4,135,475,902.00 7,375,469,230.50
Corporate Tax (30%) 27,160,740.00 -7,868,697.90 339,115,850.40 613,590,106.05 1,240,642,770.60 2,212,640,769.15
Net surplus 63,375,060.00 -18,360,295.10 791,270,317.60 1,431,710,247.45 2,894,833,131.40 5,162,828,461.35

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Table 11: Projected Statement of Financial Position (TZS)
Projection
2019/20 2020/21 2021/22 2022/23 2023/2
ASSETS
Current Assets
Inventories 57,600,000 164,045,824 244,379,049 362,387,851 1,164,288,798
Trade receivables 189,231,935 101,441,080 327,035,586 669,334,305 968,946,132
Cash at hand and bank 21,507,109 24,966,810 127,191,819 178,879,217 241,655,063
Total Current Assets 268,339,044 290,453,714 698,606,454 1,210,601,373 2,374,889,993
Farm Properties, plants and
equipment (less Depreciation
10%) 292,906,769 298,561,769 433,039,652 439,364,652 439,364,652
TOTAL ASSETS 561,245,813 589,015,483 1,131,646,106 1,649,966,025 2,814,254,645

EQUITY AND LIABILITIES

Equity and reserves
Capital Fund 161,373,850 217,923,850 425,798,850 471,236,350 471,236,350
Accumulated surplus (40%
annually net surplus) 25,350,024 18,005,906 334,514,033 907,198,132 2,065,131,385
Total Equity and Reserves 186,723,874 235,929,756 760,312,883 1,378,434,482 2,536,367,735
Loan 337,125,950 234,809,933 196,554,393 47,461,279 34,861,385
Current Liabilities
Trade payables 9,345,222 89,208,104 147,059,986 195,791,164 214,670,314
Provisions 28,050,767 29,067,690 27,718,844 28,279,100 28,355,211
Total Current Liabilities 37,395,989 118,275,794 174,778,830 224,070,264 243,025,525

TOTAL EQUITY AND

LIABILITIES 561,245,813 589,015,483 1,131,646,106 1,649,966,025 2,814,254,645

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Table 12: Projected Cash Flow Statement

Projection
2019/20 2020/21 2021/22 2022/2023 2023/2024
CASH FLOW FROM
OPERATING
ACTIVITIES
Receipts
Loan 337,125,950.00 0.00 118,124,800.00 59,062,000.00 0.00
TADB grant 50,000,000.00 0.00 50,000,000.00 25,000,000.00 0.00
LIC Grant 70,998,850.00 56,550,000.00 117,000,000.00 0.00 0.00
Mpunzungulu
Contribution 40,375,000.00 0.00 40,875,000.00 20,437,500.00 0.00
Fresh parked
mangoes 518,400,000.00 1,897,560,000.00 432,000,000.00 432,000,000.00 432,000,000.00
Dried chips 0.00 15,300,000.00 38,250,000.00 76,500,000.00 91,800,000.00
Pulp 0.00 99,000,000.00 792,000,000.00 990,000,000.00 990,000,000.00
Juice 0.00 0.00 8,149,248,000.00 13,444,906,500.00 25,523,100,000.00
Other receipts 0.00 0.00 0.00 0.00 0.00
Total receipts 1,016,899,800.00 2,068,410,000.00 9,737,497,800.00 15,047,906,000.00 27,036,900,000.00
Payments
Cost of buying
mango and packing -222,912,000 -815,950,800 -185,760,000 -185,760,000 -185,760,000
Cost of mango
buying and drying 0 -6,579,000 -16,447,500 -32,895,000 -39,474,000
Cost of mango
buying and pulping 0.00 -42,570,000.00 -340,560,000.00 -425,700,000.00 -425,700,000.00
Cost of mango
buying and making
juice 0.00 0.00 -3,504,176,640.00 -5,781,309,795.00 -10,974,933,000.00

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Administrative and
Employee salaries
and benefits -77,760,000.00 -301,779,000.00 -1,411,724,700.00 -2,241,510,975.00 -4,055,535,000.00
Selling and
Distribution -129,600,000.00 -502,965,000.00 -2,352,874,500.00 -3,735,851,625.00 -6,759,225,000.00
Processing Facility
Investments -290,000,000.00 -56,550,000.00 -117,000,000.00 0.00 0.00
Farm Investments -126,500,000.00 0.00 -214,000,000.00 -63,250,000.00 0.00
Farm Operational
costs -77,000,000.00 -115,500,000.00 -121,275,000.00 -131,100,643.00 -146,832,720.00
Repairs and servicing
costs 0.00 0.00 0.00 -7,500,000.00 -8,600,000.00
Principal on Loan 0.00 -112,375,317.00 -151,750,250.00 -171,437,584.00 -59,062,000.00
Interest on Loan 0.00 -40,455,114.00 -54,630,090.00 -61,717,530.00 -21,262,416.00
Other costs -2,592,000.00 -10,059,300.00 -47,057,490.00 -74,717,032.50 -135,184,500.00
Total Payment -926,364,000.00 -2,004,783,531.00 -8,517,256,170.00 -12,912,750,184.50 -22,811,568,636.00
CASH FLOW FROM
OPERATING
ACTIVITIES 90,535,800.00 63,626,469.00 1,220,241,630.00 2,135,155,815.50 4,225,331,364.00

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12.0 RISK MANAGEMENT
Risk management is an integral part of good management practice and an essential
element of sound business management and governance. Identifying and
managing risk enables a more robust basis for decision-making and facilitates
continuous improvement in performance. Business risks (threats and
vulnerabilities) are things that could prevent or seriously impede the achievement
of strategic or operational objectives or plans or from complying with regulatory
and legal obligations including attaining its performance targets and quality of
products. The planned targets as provided in the farm and processing facilities
operations are exposed to financial risks emanating from the required financial
support, liquidity risks and credit risks. Other risks include; break down of
diseases in the farm, compliance, people, and products delivery and machinery
breakdowns. These risks need to be managed through total risk management
framework.

12.1 Objectives of Risk Management

The objectives of managing the risks are to provide:
(i) Protection and continuity of the core business activities and essential services,
(ii) Fulfillment of legal obligations.
(iii) Safeguards members’ expectations and the public and employees.
(iv) Operation and protection of assets at lowest cost.

The farm production and processing facilities and products delivery to customers
are the core planned activities and without them the commercial functions will be
interrupted or may be terminated. Therefore, Planning around risks will allow to
take a proactive, market-wide approach to policy making, supervision and
enforcement which, combined, seek to ensure efficiency.

12.2 Develop Assessment Criteria and Scales

Traditional risk analysis defines risk as a function of likelihood and impact.
Indeed, these are important measures. Therefore, CPB define scales for rating risks
in terms of impact, likelihood, and other dimensions. These scales comprise rating
levels and definitions that foster consistent interpretation and application by
different department. The followings Table 13.0, 14.0, 15.0 and 16.0 illustrate the
scales and criteria used for assessing the risks likelihood, impact, consequences
and mitigation measures respectively.

• Likelihood

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Likelihood represents the possibility that a given event will occur. In this analysis,
likelihood expressed using qualitative terms (frequent, likely, possible, unlikely,
and rare) (Table 13.0).

• Impact
Impact (or consequence) refers to the extent to which a risk event might affect the
operations. Over the five year of planning, impact assessment criteria includes
assets, financial, liquidity, reputational, organizational structure, organization
culture, employee, and operational impacts. Therefore, when assigning an impact
to a risk, if the highest consequence is anticipated, then the impact rating is 5 even
though other criteria may fall lower in the scale (Table 14.0).

A summarized Table 15.0 demonstrates the risk likelihood and consequences of

identifying eight strategic risks, with two indicated as being within high risk
category.

Table 13: Likelihood Scale

Annual Frequency Probability
Ratin Descripto Definition Descriptor Definition
g r

5 Frequent Is expected to occur in most Almost > 90%-100%

circumstances - frequently certain
during the year
60%-90%
4 Likely Will probably occur - once Likely
during the year

3 Possible Might occur at some time – Possible 30%-60%

once every 3 years

2 Unlikely Could occur at some time – Unlikely 5%-30%

once every 5 years
May only occur only in
1 Rare exceptional circumstances. Rare <5%
This event is known to have
occurred elsewhere – once
every 5+ years

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Table 14: Impact Scale
Rating Descripto Definition
r
5 Extreme Financial loss of TZS 50 million or more,
Plants/machines failures,
Failure of production or low production
Negative media coverage; loss of market share
Significant prosecution and fines, conflict among members,
conflicts between company and the AMCOS, conflict among
leadership,
Significant injuries or fatalities to employees or third parties,
such as the hawkers,
4 Major Financial loss of TZS 20 million up to 49 million,
Power supply shortage
Plants/machines failures,
Failure of production or low production
Losses in production due to diseases breakdown
Organizational culture
National long-term negative media coverage; significant loss of
market share,
high turnover of experienced staff
3 Moderate Financial loss of TZS 5 million up to TZS 19 million,
National short-term negative media coverage
Report of breach to regulator with immediate correction to be
implemented
Widespread staff morale problems and high turnover
Multiple senior leaders leave (e.g. farm extension staff and
Manager).
2 Minor Financial loss of TZS one million up to TZS 4.9 million,
Local reputational damage,
No or minor injuries to employees or third parties, such as
customers or hawkers,
General staff morale problems and increase in turnover
1 Incidental Financial loss up to TZS one million,
Local media attention quickly remedied,
No injuries to employees or third parties, such as customers or
hawkers,

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Table 15: List of Risks, Potential impacts, Mitigation and Management Approach

S/No. Name of Risk Description Potential Impact Mitigation and Management

Approach
Asset risk This may arise from low quality of the acquired  Failure of  Rehabilitation, Repair and
1 (Existing, new machinery and constructions, poor infrastructure that production or low Maintenance,
investments) makes the cost of operations go up. It is an area production  Preparation of Asset
worthy investing prior engaging suppliers and  Low quality Management Plan(AMP)
construction companies. Planned repairs and products/services  value for money in
maintenance schedules will be very necessary.  Loss of procurement
Property, plant and machines, which are subject to customers/consume
higher operating costs than normal are also classed as rs
risk assets.  stiff competition
2 Organizational Given the nature of the organization and the expected  Legal liability which  Ensuring having a legal
Risk products, business contracts or stakeholder might lead to fine, counsel preferably using
agreements will be made (e.g. Sales contract, penalty and hence the legal advisor of CDC
procurement route, and forward contracts). Breach of reduce or destroy of  Hedging: leads to the
contract, voluntarily or involuntarily and lead to legal the AMCOS and the elimination of risk through
liability is unavoidable (legal risk). Company image as its sale in the market, either
Public entity. through cash or spot
market transactions or
through a transaction, such
as a forward, future or, that
represents an agreement to
sell the risk in the future.
 Transfer it – Acquire
insurance for protection.
3 Operational Risk Operational risks refer to the various risks that can  Internal fraud and  Developing reliable ICS
arise from ordinary business activities. The external fraud, or  The governing body and
operational risk category includes lawsuits, fraud risk, both management should link
and personnel problems (personal risk). achievement of the
organization’s internal

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 control objectives to
individual performance
objectives. Each person
within the organization
should be held accountable
for the achievement of
assigned internal control
objectives.
 The governing body,
management, and other
participants in the
organization’s governance
system should be
sufficiently competent to
fulfill the internal control
responsibilities associated
with their roles.
 Improve records
management.
4 Competitive risk Is the chance that competitive forces will prevent you  Potential decrease in  Improve in promotions and
from achieving a goal. It is often associated with the revenue. distributions channels and
risk of declining business revenue or margins due to  Increases in raw Sales strategy.
the actions of a competitor. materials costs due
to competitive
market

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 5 Liquidity Risk Funding liquidity risk is driven by the possibility • Incapability to deal • Design liquidity framework
(Funding/Market) that over a specific horizon the Company/AMCOS with financial to deliver the appropriate
will become unable to settle obligations with obligations when term and structure of
immediacy. they are due. funding consistent with the
• Loss of key Liquidity Risk Appetite
suppliers (including and is fully compliant with
farmers). regulatory requirements.
• Improve accounts
receivables management
and inventory movement
management.
• Improve production cost
scheduling to incorporate
the effect of inflation rate.
Market liquidity risk is the potential loss, because • Loss of market share • Restructure market strategy
assets cannot be sold at the price previously thought. • Reduce revenue, model with new one that
• Increase possibility would add market share.
of funding liquidity
risk

8 Financial Risk Financial risks involve contractual or potential • Decrease the value • Improve cash flow
contracted payments where the cash flows either are of the firm management
known for certain or are conditional. The timing of • Improve Risk Management
these cash flows is also either certain or conditional. • Loss of key on (Market Risk, Credit
The risk is that at some point the company/AMCOS stakeholder(e.g. Risk, Liquidity Risk, and
will be unable to meet its financial obligations. financial Operational Risk).
institutions, famers • Improve working capital
and other suppliers) management, investments,
and financing decisions.

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Table 16: Assessment of Risk and Consequences
Likelihood Consequence
Almo
Name of risk st Likel Modera Unlike Rar Lo Mediu Hig
S/No
certai y te ly e w m h
n
1 Asset risk √ √
Organizational
2 √
Risk √
Operational
3 √
Risk √
4 Competitive risk √ √
5 Culture Risk √ √
6 Liquidity Risk √ √
8 Financial Risk √ √

13.0 REPORTING AND MONITORING

The management of the company will report on the Business Plan’s progress as
part of its reporting process. The management will use one or more of the
following methods, techniques and engagement opportunities:
• Major review and minor review of the Business Plan (conducted every two
years).
• The Board will provide an annual summary of progress towards
achievement of the Business Plan’s goals during its annual review and
planning meetings with members.
• Annual consumers’/customers’ satisfaction surveys will be conducted and
revealed to the public
• Meetings jointly held by the AMCOS and the company that will enable
members to discuss challenges and work joint strategies for overcoming
them.

In additional to fulfilling this requirement, the company will jointly with the
AMCOS utilize the Business plan as the basis of preparation of annual plans and
budget. In this regard, Management will monitor and evaluate the implementation
of Business Plan terms of standards set (indicators), implementation of annual
budgeting and time. The Management will evaluate the plan against
implementation on various aspects and propose on the improvements/changes
based on the existing situation. Where applicable, this Business Plan shall be
reviewed to reflect the prevailing environment.

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14.0 CONCLUSION AND RECOMMENDATIONS
The Business Plan (2018-2023) has demonstrated that the commercial functions are
profitable and offers a reasonable return on invested funds. The return on
investment offered over the period of five years evaluated is high. In view of these
observations it is recommended to undertake and implement the plan since it is
financially and economically viable.

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