A Business Plan on,

Rice Farming Sub Project

Govindapur Agriculture Farm

Submitted To, Submitted By,

Asst. Pro. Ram Hari Timilsina Santosh Rajbanshi

Department of Agricultural Extension and Rural Sociology 6th Semester

Email: rhtimilsina@afu.edu.np Exam roll no = 748

AFU, Rampur Chitwan

Table of Contents
Executive Summary:...................................................................................................................................3
Introduction:................................................................................................................................................4
Products and Services:.................................................................................................................................5
Vision Statement:........................................................................................................................................5
Current market scenario:.........................................................................................................................5
Customer/consumer availability:.............................................................................................................6
Competitors:............................................................................................................................................6
Financial Analysis:......................................................................................................................................7
i. Budget Requirement for Business Development:.................................................................................7
ii. Cash Flow and Financial Analysis:.....................................................................................................8
Executive Summary:
With the motto of “Serving fresh Agro- products for healthy lives”, the "Govindapur Agriculture
Farm" is a new enterprise providing different varieties of seedling materials and ma paddy grain
with regular, high quality and full service production and distribution services. The firm is
established by focusing on agro-enterprises as reliable resources and people of cities of province
1 as ultimate consumers of our products. The farm plans to quality paddy grain the region.

The founder of the agriculture farm has long experience in the field of agri-
entrepreneurship and management. The owner has done market analysis, necessary legal works
and rigid commitment to supply best quality grain to the consumers. The plan is to start the
production within 120 days of financial arrangements. The established farm has the coverage
area of 1 hectare. The business development cost of the farm is estimated to be NRs. 3,782,650
and total cost of first year with investment and annual costs is estimated to be NRs. 3,913,550.
The business will have own investment of 25 % and rest 75 % of the capital will be generated
from agricultural loan. The detailed analysis estimates that the annual revenue will begin at
approximately Rs. 2360000 growing upto Rs. 3141160 in the fifth year and cumulated cash flow
reaching to Rs. 2471101 in the fifth year.
We believe that increasing demand of paddy products with health and nutrition related
knowledge, exceptional customer service, government policy and sales and marketing policy of
the firm will help to attain a large number of customers. This will help in business expansion to
Jhapa and Sunsari districts too. New and indigenous varieties of fruit will be produced based on
consumer demand to gain potential base of customers.

Introduction:
Rice is an important source of food for more than half of the world population and about 90% of
the total rice is grown in Asia. It is the leading cereal of the world and two third of the Asian
peoples receive their daily calories from rice. Increased demand for rice was greatest in low-
income countries and regions, where cheap carbohydrates to meet energy requirements are still
the primary need of consumers. The demand growth rate of the rice consumption of south Asia is
increasing day by day. Rice being staple and one of the most prominent cash crops of our
country Nepal, is cultivated widely from prospect of region and season. Rice report 7% to the
Gross Domestic Product (GDP) and more than 20% to the total AGDP. Morang district is a part
of province 1 in terai plain with fertile lands. The favourable agro climate and expanding market
of agriculture create wide opportunity for paddy production. The increasing interest of farmers
towards farming has created wide scope for establishment of paddy farms.

With the purpose of agri-entrepreneurship we have started "Govindapur Agriculture Farm". In

the farm, we have started the cultivate of main season and spring season in about 30 katthas,
commercial paddy cultivation is done in both DSR and PTR system. The firm is established
after market demand/supply analysis and evaluation. Similarly, SWOT and PESTEIL analysis
were also carried out for studying the feasibility to start the agri-business. The consumption of
cereal crops is increasing day by day in the area due to increased income, changed lifestyle,
consumption pattern and awareness.

The market of of this farm is Morang area primarily. However, the strategic plan for increasing
market is kept in prime importance. All political, economic, environmental, social, legal and
technological factors are precisely analysed before running the business. The enterprise will
focus on consumer satisfaction, increase in coverage area, innovative ways of marketing and
sustainable economic growth of firm while ensuring social acceptability. Our purpose of
business is also encouraged and motivated by the government policy towards the agri-
entrepreneurship as government have kept paddy production in prime importance under
Agriculture Development Strategy (ADS), 15 th plan and Chief Minister Model Village Program.
Hence, the firm established have huge opportunity in the field of agriculture entrepreneurship.

Products and Services:

"Govindapur Agriculture Farm" will provide quality grain and paddy straw. Variety of products will
be increased to cultured plants, development, production of specific disease resistant varieties and
production of nursery of locally valuable varieties of cereals, especially Rice.

Our services will include provision of technical knowhow about production technology of crops,
invaluable trade resources, informative monthly newsletters, training and product
demonstrations, effective promotional programs, custom-designed marketing material, as well as
information on the latest market trends in the cereal industry.
Vision Statement:
The vision of the firm is to make it a recognized and model farm for paddy production with
production of hybrid varieties of paddy. The other stakeholders of the firm will be viewed as
priceless partners. Sustainability of farm will be aided by assurance of quality products, regular
input supply, justifiable pricing and innovative promotional strategy.

Market

Current market scenario:

The farmers in the area are suffering from low production, low varietal choice, pest infestation
like yellow stem borer, rice ear cutting caterpillar, sheath blight and low efficiency in production.
Likewise, irregularity in production and poor quality of paddy in spring season are the conditions
which create high price variation in the market. Due to these conditions, tonnes of Indian rice are
imported in the country. The main reason behind this is poor planting material, low producing
varieties in the market, lack of modern technology, resource poor condition of farmers and
difficulty of farmers to reach for credit. Hence, there are limited numbers of commercial agro-
entrepreneurs involved in cereal production. Smallholders with irregular production also create
market fluctuation and low profitability. Hence large scale production with regularity should be
the major focus of farm. Similarly, marketing directly to customers, high producing varieties in
main and spring season with consumer satisfaction is rarely seen in the area. The farm can help
in managing the value chain, decreasing the dominance of Indian agro-products and increasing
consumer satisfaction.

Customer/consumer availability:
There is high demand of paddy grain in the market as population in the Morang area is
increasing and number of farming families is decreasing. However, increased income levels and
change in pattern of consumption has led to increase in demand for cereal especially paddy and
wheat. In case of farmers, the farmers in the area are now attracted towards high yielding,
disease resistant and marketable crops in the Biratnagar but the area have limited supply of such
varieites. The case is worse in outside areas. Similarly, people have no access to quality paddy
grain So, there is significantly high number of customers which are to be served.
Competitors:
There are limited numbers of commercial farms with regular production and market coverage.
However, the brokers/middlemen from Indian and outside market might act as major competitors
for marketing. Similarly, some large farms from Sijuwa, Urlabari and Sanischare of Morang and
Damak of Jhapa are major competitors of our farm. As the firm have limited supply of chemical
fertilizer during main season of rice cultivation, other firms will not act as major hindrances in
the market. Major marketing activities will be directed towards regularity in production,
replacing the poor quality grains.

Future Plan and Marketing Strategy:

The farm is established with the motive of providing people with quality paddy grain regularly.
Additionally, in future productive, diverse and quality seed varieties materials of different cereal
crop will be supplied on regular basis as per demand. Irregularity and no spring season
cultivation of paddy are the major problems in Morang. Hence, our objectives will be directed
towards filling the gap and producing paddy with no compromise in quality regular basis but
high price fetching products will be focused primarily.

Most of the farmers in the area lack technical knowledge about the cultivation of cereal crops.
The subject matter specialists from the farm will provide farmers with technical knowledge and
on farm demonstrations related to cultivation. In addition, the regular customers of the farm will
be provided with technical and marketing services during every stages of production, post-
harvest handling and distribution.

The firm will collaborate with government and non-government agencies, private farms and
farming communities for effective management and promotion of farm. It will provide the
regular consumers with membership who will get some services free of cost. The farmers will be
considered as invaluable partners of the farm, so the activities will be directed accordingly.
Regular market and farmers survey will be done to determine activities to be put forth. Integrated
marketing strategies will be applied to deliver quality products while maintaining the consistent
image of farm.

For promotion, the news releases to media and press will be forwarded in initial phase. The
company will make use of monthly newsletter where articles about our firm will be published. In
addition, to make the newsletter more popular there will be additional fun stories, wordweb
games, pictures and promotion offers. Frequent advertisements will be provided on STS
Television, Mechi F.M., Radio Koshi Today, radio Prabhu Jhalari and Dinesh Khabar for word
of mouth advertising. Likewise online promotion and marketing strategies like social media
advertising, cyber extension and e-extension will be followed.

Financial Analysis:

i. Budget Requirement for Business Development:

The initial investment required to start the business is presented in the following table.

Table 1: Budget Requirement for Business Development

Total
amount(
Items Units Quantity Rates Rs) Source of Money
own
investment(25 Loan(75%
Fixed Cost %) )
Land lease Kattha 30 1000 30000
32,00,00
Tractor no. 1 0 3200000
Thresher no. 1 200000 200000
Fences sq.m 30 1500 45,000
Pump set no. 1 250000 250000
Weighing balance no. 1 8000 8,000
3,703,00
Sub total 0
Deprication 15% 15% 555,450
Closing cost 3147550
Total investments 3733000

Main
Variable cost Season
Seeds kg 20 90 1800
Fertilizer urea kg 209 25 5225
DAP kg 130 60 7800
Potash kg 100 50 5000
Zinc kg 25 200 5000

Spring Season
 Seeds kg 20 90 1800
Fertilizer urea kg 209 25 5225
DAP kg 130 60 7800
Potash kg 100 50 5,000
Zinc kg 25 200 5000
Sub-total 49650
Business Developments 3,782,65 2836987.
cost 0 945662.5 5

ii. Cash Flow and Financial Analysis:

Detailed cash flow and financial analysis of the paddy farming project for 4 years is presented in
the following table. The financial appraisal follows discounting method.

Table : Cash flow and financial analysis of paddy Farming Project

years
Investements Units Quantity Rates Value
Fixed Cost 2021 2022 2023 2024
Katth
Land lease a 30 1000 30,000
32,00,00
Tractor no. 1 0 3200000
Thresher no. 1 200000 200000
Fences sq.m 30 1500 45000
Pump set no. 1 250000 250000
Weighing balance no. 1 8000 8000
3,703,00
Sub total 0
Deprication 15% 15% 555450 555450 555450 555450
3,147,55 2,592,1 2,036,65 1,481,20
Closing cost 0 00 0 0
Total investments 3733000

Main
Variable cost Season
Seeds kg 20 90 1800 1980 2178 2395.8
6954.47
Fertilizer urea kg 209 25 5225 5747.5 6322.25 5
DAP kg 130 60 7800 8580 9438 10381.8
Potash kg 100 50 5000 5500 6050 6655
Zinc kg 25 200 5000 5500 6050 6655

Spring
Season
Seeds kg 20 90 1800 1980 2178 2395.8
 6954.47
Fertilizer urea kg 209 25 5225 5747.5 6322.25 5
DAP kg 130 60 7800 8580 9438 10381.8
Potash kg 100 50 5000 5500 6050 6655
Zinc kg 25 200 5000 5500 6050 6655
66084.1
Sub-total 49650 54615 60076.5 5

Full times job

labour no. 1 8000 96000 105600 116160 127776

Seasonal
Employment
Labours no. 3 500 1500 1650 1815 1996.5
129772.
Sub-total 97500 107250 117975 5

Fuel
Diesel lit 50 112 5600 6160 6776 7453.6
Electricity units 12 150 1800 1980 2178 2395.8
Transportation 1 1000 1000 1100 1210 1331
Maintainance cost 25000 25000 27500 30250 33275
Sub-total 33400 36740 40414 44455.4

Total operating cost(

Fuel maintainance 100490. 110539.
cost+variable cost) 83050 91355 5 55
Total Annual
cost(Total operating 218465. 240312.
cost+labours cost) 180550 198605 5 05
Total cost (Annual 3,913,55 218465. 240312.
cost+Investment) 0 198605 5 05
375696. 413266. 454593.
Tax on profit 341542.5 8 43 07
4,255,09 574301. 631731. 694905.
Total cash out flow 3 8 93 12

Annual Revenues
Main season +Spring
Season Product
Paddy grain quint 700 3300 2310000 254100 2795100 3074610
 al 0
Byproduct
Straw trally 20 2500 50000 55000 60500 66550
259600
Sub-Total Revenues 2360000 0 2855600 3141160
Gross
Margine(Revenue- 250464 2755109 3030620
Operating cost) 2276950 5 .5 .5
375696. 413266. 454593.
Income Tax(15%) 15% 341542.5 8 43 07
Annual Income after 1935407. 212894 2341843 2576027
tax 5 8 .1 .4
Salvage or remaining 1,481,20
value of durable item 0
Total Net Revenues
with remaining value 1935407. 212894 2341843 4,057,22
of assets 5 8 .1 7
-
Cash Flow(Annual 1,978,14 193034 2123377 2,335,71
income-Total cost) 3 3 .6 5
Discount
Factor(15%) 0.8696 0.7561 0.6575 0.5718
Discount Cash flow - 145961 1396155 1335452
at 15% 1720124 7 .2 .8
Cumulative cash - 1135648
Flow 1720124 -260507 .1 2471101
B:C ratio 1.87
2.19
Pay Back Period(yrs) years
Npv at 15% 2471101
IRR 89.47

Conclusion

Rice farming has become integral component of the Nepalese economy as it contributes 7% to
GDP and has been the source of income to rural farmers, employment opportunity and help in
poverty reduction. The agro-ecological diversity and climatic suitability have been boon for the
people of the Morang for the commercial cultivation of the vegetables. Most of the farmers are
unaware about the marketing system and information regarding the channels to be used, farm
gate price, market price, demand, supply, subsidies etc. If proper adoption of the modern
technology and management of the marketing system can be promoted then this will ultimately
bring a remarkable change in the production system of the district.