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From the Root Up A Herbal Processing Company Jeff Mathieson Doug Senko Trevor Schoenroth.

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Presentation on theme: "From the Root Up A Herbal Processing Company Jeff Mathieson Doug Senko Trevor Schoenroth."— Presentation transcript:

1 From the Root Up A Herbal Processing Company Jeff Mathieson Doug Senko Trevor Schoenroth

2 Location zWilkie, Saskatchewan zCrop District 7B yDk. Brown/Black Soil Zone yAverage yearly precipitation is mm zRural Setting

3 Our Mission Statement We will strive to be a company that helps the producer accomplish his/her production goals, by providing a market for their product. We intend to help the farmer in all areas of production to ensure the best quality for our buyers. By providing an opportunity to diversify, we feel this will improve the local economy.

4 Operations Overview zContract farmers to grow herbal crops that can be harvested mechanically at a large scale. y6 ac. of each six crops zMust be in relatively close proximity zMarket and dry their product and provide rental equipment to lower there input costs zOffer agronomic expertise

5 Crops zFireweed zSt. Johns Wort and root zAmerican Arnica zDandelion Root zStinging Nettle zRed Clover

6 Operations 6 36 acres each seed and production contracts primary processing of raw material Producers (6) Drying Domestic Markets Contracts Primary Processing Find buyers who want to buy larger volumes Strive to give quality as well as quantity Set up long term buyer

7 Flow Diagram

8 Rental Equipment zProviding all necessary equipment to produce and harvest herbs zonly real equipment needed is tractor (75hp) zno capital commitment is needed from the farmer  Total Cost = $120,000

9 Processing Equipment zPrimary processing ydryers, sifter, de-stemmer zMostly used to keep price down zLarge capacity calls for higher number of units  Total Cost= $ 812,945.00

10 Yard Plan

11 Office Plan

12 Personnel

13 Plant Manager/Agronomist zBSA in Agriculture zProduction contracts zCrop scouting zSeed delivery

14 Plant Manager/Agronomist (cont’d) zCrop protection advice zQuality and Quantity Control zPossess strong management skills zOversee all plant operations z$50,000

15 Marketing Strategist zB.Comm in marketing zMaking large and small repeat buyer contacts zKeep up with market demand z$40,000

16 Direct Labour zPlant Manager yFull Time yFarm mechanical experience yPreferred SIAST training but not required yStrong leadership skills y$36,000

17 Direct Labour Staff zSecretary yFull time wage employee y$24,000 zPlant Worker yPart time wage employee yWork during busy season yWHIMIS and First Aid Training y$2,000/month

18 Goal and Objectives Short Term zdevelop a market for six products Medium Term z more production contracts Long Term z other specialty crop contracts z hire more employees with growth

19 Fireweed (Epilobium angustifolium) zNative to North America zfound in disturbed areas, especially with occurrence of fire. zUsed primarily for cosmetics zAlso medicine and food zAnti-inflammatory, anti-irritant. zParts used: arials and root zencapsulated, pill, tea

20 St. John’s Wort (Hypericum perforatum) zNative to temperate and tropical regions of the world zperennial herb zused as antiseptic, general healing properties zencapsulated and also used in a tea form

21 American Arnica (Arnica montana) zPerennial herb zharvested for roots and flowers zUses tincture used for external application to sprains, bruises where skin is not broken epilepsy if applied to scalp will make hair grow zused in an oil form

22 Dandelion Root (Taraxcum officinale) zNative to Canada zperennial zharvested for the root, dried and roasted zbrewed for coffee (new product, Starbucks) zUses cleanses blood stream and liver increases production of bile improves function of kidneys, pancreas, spleen and stomach

23 Stinging Nettle (Urtica dioica) zFound throughout N & S America, namely Alaska. zWhole plant harvested zUsed for medicine, food, cosmetics zChronic diarrhea, chronic eczema, can prevent scurvy zcare must be taken when handling nettle as sharp spines on leaves and stems have been known to cause paralysis

24 Red Clover (Trifolium pratense) zBiennial native to N. America zBronchitis, cough, eczema, boils, acne zTaken internally, respiratory problems - particularly whooping cough. zExternally, chronic skin conditions such as eczema and psoriasis. zRed Clover contains isoflavone compounds ycancer, including breast and prostate cancer

25 The Market

26 Global Market

27 Saskatchewan Market z50 companies in Saskatchewan zEstimated total sales in 1998 between 40 and 50 million zMajority struggling to launch product. zNo company in Saskatchewan is presently offering the service that we are going too. zMany producers are doing it as a diversification of their farm

28 Target Markets 70% of Canadian manufacturers import ingredients to complete production 43% of these claim 100% of ingredients are imported

29 Trends Technological zadvances ensure more efficient field scale production now and in the future Social z81% growth in use of alternative medicines in the past 5 years z146% growth among Canadians aged Environmental zconscious consumers demand for organic products may force us from conventional methods to Organic production

30 Competition zSmaller companies specializing in single products Minor MD Growers, production of St. John’s Wort Elk Run Botanicals, production of St. John’s Wort Mid Northern Growers, milling of Red Clover Major Altex Processing, marketing of raw to final product

31 Customers Farmers approach growers with production contracts, expertise in agronomics provide rental of specialized equipment value added pricing for products Manufacturers large volume consistent product high standards

32 Product Pricing zPrice to manufacturers will be market based zin this scenario we will be a price taker

33 Price to Farmer zPrice set to farmer will be a combination of market based and cost based approach zAs volume of product taken in increases, cost of processing may go down allowing us to give a higher price to the farmer zAs market value rises price to farmer will rise

34 Promotions zPhone sales zcontact manufacturers, informing of available product zinternet sales, post inventories on electronic billboards ztrade shows and conferences

35 SWOT

36 Financial Plan

37 Capital Needed

38 Sources of Funding zTotal Capital = $1,671,191 z76% Equity Financing z24% Debt Financing Equity Financing z50 class A common shares z$18,940 per share zVoting rights, entitled to dividends Debt Financing z2 sources zBank Loan zAgri-Food Equity Fund Bank Loan z$200,000 z8% interest Agri-Food Equity Fund z$524,191 zVariable Rate based on business success

39 Dividend Policy zAny cash on hand over $100,000 zShareholders will receive dividends after first year

40 Summary of Financial Results zNet Present Value = $282,003 zExpected Rate of Return (IRR) 32.4%

41 Ratios zDebt Ratio ydiminishes to nothing

42 Sensitivity

43 Break Even Analysis

44 Summary zRisky Investment y32.4% return yDividends paid starting second year zSensitivity yYield vary by 40% yPrice vary by 40% zSound Community Investment


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