DAIRY GOAT INTEGRATION
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1 DAIRY GOAT INTEGRATION Dairy goat farm including milk processing and feed production BUSINESS PLAN Standard Terms of Reference Horssen Deventer July 2017
2 Contacts Standard TOR Dairy Goat Capriscope Agrix Page 2 of 14
3 Contents 1 Introduction Business Plan Capriscope Agrix F&A Project Development GD Animal Health BP main characteristics The BP deliverables Crossings and breeding Nutrition and rations Health management Buildings and site layout Agricultural production Milk processing Labor requirements Farm management Finance Other considerations Pricing of outputs Implementation plan Site visit and other meetings Business Plan layout Planning Reporting Budget Payment Standard TOR Dairy Goat Capriscope Agrix Page 3 of 14
4 1 Introduction This Terms of Reference details the elaboration of a business plan for a dairy goat farm, including the production of feed and forage and processing of milk (optional). 1.1 Business Plan Setting up a goat dairy farm from scratch, or greenfield, is not an easy venture. Some questions that need to be addressed are: - What goat breed should be used? - Should animals be imported (how many, what origin) or should be crossed with local breeds? - What are the health requirements and what health protocol should be applied? - What feed ration must be used (forage and concentrates)? - Can local food industry by-products be used in the rations? - How to produce forage on the farm (what forage, what equipment)? - What type of forage should be produced and how to store it (hay, haylage, silage)? - What equipment is needed? - What type and size milking parlor should be used (carousel, side-by-side, rapid exit)? - What would be the optimal farm lay out? - How to raise kids, what type of powdered milk dispenser to use? - How to finish bucks? - What type of breeding strategy (artificial insemination, natural, hormone treatment)? - What type of feeding system to apply (TMR, feeding belt)? - How to optimize barn isolation and ventilation? - What dairy products to produce? - What type of dairy processing plant is needed? - How much finance is needed? - What will be de financial return, how profitable will the farm be? - How to finance the new venture? - How much personal is needed and how to train them? - Etc, etc, etc. A business plan is used to thoroughly analyze the new venture and discuss it with all stake holders. The plan includes a financial analyses with calculated total of capital expenditures, operating expenses and Return on Investment. It is also used to present to the bank or other financiers to obtain loans or grants. The business plan will serve as the base for farming business implementation. After the business plan has been completed and finance has been arranged, the Consultants can assist in implement the plan and set up the new goat dairy company. This would include selection of preferred suppliers of equipment and animals. The business plan will provide a lay out of buildings and required characteristics that a local construction company can use to draw technical drawings that comply with local regulations. 1.2 Capriscope Capriscope is the leading consulting firm in The Netherlands and Europe on goat and sheep management. Services in general include: Feasibility study (market research, infrastructure requirements, budgeting, herd flow tables and building design); Standard TOR Dairy Goat Capriscope Agrix Page 4 of 14
5 Business planning (a tailor made plan for an investor starting a new venture or an already operating farm); Farm design (design and construction of goat and sheep barns, including milking parlor design); Nutritional advice (25 years of personal experience with ration composition based on local availability of feed inputs); Management support (long term agreements on farm management support). Capriscope has management contracts with some of the largest goat dairy farms in Europe and was involved with the establishment of many large scale goat dairy farms (a track record will be sent as an annex to this proposal). 1.3 Agrix F&A Project Development Agrix is the leading Food and Agriculture (F&A) consulting firm with headquarters in The Netherlands. Agrix has its roots in a leading F&A holding called Cebeco Group of Companies and started as an independent company in Agrix operates worldwide and in all F&A sub-sectors. Many turn-key projects have been realized in the Russian Federation, Kazakhstan and Uzbekistan. Cebeco had offices in these countries. The projects realized at that time include both large scale crop and animal production. Agrix has been performing feasibility studies and preparing business plans in close collaboration with Capriscope for over a decade. Whereas the two companies cooperate, Capriscope takes responsibility for all the animal related issues like breed selection, nutrition, veterinarian issues, animal husbandry practices, barn lay out, barn construction, feeding system, milking parlor and management system. Agrix is responsible for the agricultural production of animal feed, both forage and grains for concentrates, feed procurement (like milk replacer), farming equipment, barn equipment and the overall responsibility for reporting including the financial analyses. 1.4 GD Animal Health The consultants realize that the animal health issue is very important for the project as described above. To cover the breeding and animal health issues the consultants will use, whenever needed, request the assistance of GD Animal Health the very reputed Dutch national animal health institute in of the Netherlands. GD Animal Health 1 has much experience with sheep and goats in Russia. GD Animal Health acts as partner in many international projects related to animal health, such as disease-control programs, monitoring programs, the establishment of veterinary diagnostic labs, and lab capacity building projects. GD Animal Health has been active in eastern and central Europe, Egypt, Indonesia, India, Ethiopia, Ireland, Finland and Russia. 2 BP main characteristics As stated above, the business plan (BP) will be on a venture which main characteristics are: X dairy goats of a dairy breed; Selection of the right breed, breeding animals will most likely have to be imported; Forage feed and grains for concentrated feed will be produced on the farm; Issues that will be covered in the BP are: o Agricultural production of feed and all of the equipment needed to do so including irrigation facilities; 1 Standard TOR Dairy Goat Capriscope Agrix Page 5 of 14
6 o Design and layout of all the buildings needed, including goat barn, milking parlor and milk processing; o Sourcing of breeding animals; o A general health plan that covers transport and import of animals; o Rations for different age groups; The project includes a milk processing plant that will produce cheese, skimmed milk, yoghurt and butter or any other product the client wishes to produce; The project will also produce finished goat lambs for meat production; The BP will cover all capital expenditures and operating costs to establish a turn-key goat dairy project. The Business Plan will be bankable in such a manner that it can be used to obtain finance from banks and other institutions. 3 The BP deliverables The business plan will elaborate all the technical, economical and managerial aspects of the large scale goat dairy farm, milk processing and related agricultural production. The nine main processes that will be addressed are listed in the table below. A B C D E F G H I Crossings and breeding (including the procurement of breeding goats) Nutrition and rations (resulting in feed raw material that needs to be produced or procured); Health management; Buildings and site layout (including equipment); Agricultural production and irrigation (including equipment); Milk processing (including equipment) Labor requirements; General management (including management system); Finance. 3.1 Crossings and breeding For this large scale goat dairy farm production and breeding goats will most likely need to be imported. The selection of breeds and crossings will take place in close collaboration with local specialists and with the Netherlands GD Animal Health. A.1 Definition of breeds to be used and tested; A.2 Age groups of animals to be imported (lambs, does, mixed); A.3 Sourcing of animals country of origin, both for does and rams; A.4 Mode and costs of transport; A.5 Health status of imported does; A.6 Health status of imported rams; A.7 Assessment of a health program; A.8 Predicted fertility, mortality and culling rates; A.9 A herd development sheet; A.10 Capex & opex 2. 2 Capex stands for capital expenditures (investments in assets and working capital) and opex for operating expenses which are the variable costs related to production Standard TOR Dairy Goat Capriscope Agrix Page 6 of 14
7 3.2 Nutrition and rations Based on the three main ingredients for rations for both breeding and production animals: energy, protein and fibers, for each (age) group of goats an optimum ration will be determined. The composition of these rations also depends on the local availability of feed ingredients. These can be produced by the farm itself or should be purchased. Purchased feed ingredients include food processing by-products, like beet pulp, grain brans, brewers grains, but also soy hulls and minerals. Rations need to be optimized fulfilling the nutritional requirements against the lowest possible costs as feed represents a substantial cost factor in goat dairy production. B.1 Local availability of by-products to be used as feed ingredients; B.2 Crops that can be produced locally as concentrated feed ingredients; B.3 Crops that can be produced locally for forage or silage production; B.4 Optimized ration composition for does in dependence of age and production cycle; B.5 Optimized ration composition for finishing lambs; B.6 Milk replacer requirement; B.7 Minerals and pre-mix requirement; B.8 Purchased feed input requirement; B.9 Capex & opex. 3.3 Health management Health management is crucial for a large scale dairy goat farm that is based on imported animals, both for breeding and production. The deliverables will include: C.1 All veterinary related issues and schematic health management protocol; C.2 Transport health monitoring plan; C.3 Farm health plan for all animal groups; C.4 Farm illness treatment plan; C.5 Vaccination scheme detailed; C.6 Parasite control plan; C.7 Monitoring plan; C.8 Laboratory facilities required; C.9 Employee training plan; C.10 Disinfection practices; C.11 Capex & opex. 3.4 Buildings and site layout The BP includes layout drawings for all the buildings and constructions involved. All drawings will be in 3D and in any format the client requires. Static calculations will be the responsibility of client as these need to comply with local requirements. D.1 Layout pit barn for goats; D.2 Layout barns for rams, orphan lambs and finishing lambs; D.3 Layout milking parlor; D.4 Layout milk processing plant and cheese storage; D.5 Layout storage for manure; D.6 Layout storage for silage, straw and by-products; D.7 Layout machine shed; Standard TOR Dairy Goat Capriscope Agrix Page 7 of 14
8 D.8 Site lay-out; D.9 Barn equipment like fences and gates; D.10 Feeding and water system; D.11 Manure management; D.12 Bedding material; D.13 Climatological conditions; D.14 Capex & opex. The drawings of buildings will include only dimensions and floor plans. The detailed, technical and static calculations, up to local standards, are not included in this proposal and the business plan. 3.5 Agricultural production In dependence of feed requirements based on the optimized ration composition for the different animal groups present on the farm it will be determined what area of crops should be cultivated. To that purpose the consultants will visit the proposed area and discuss the feed issue with local specialists. Except for the agricultural production practices also storage of feed will be discussed. E.1 Quantity and area of forage and silage crops to be produced; E.2 Quantity and area of grains and concentrates to be produced; E.3 Farming equipment needed on the farm and to produce forage; E.4 Crop production scheme; E.5 Irrigation equipment needed; E.6 Forage and silage crop characteristics; E.7 Pre-processing equipment to process grains; E.8 Logistics related to feed supply (including means of transport); E.9 Capex & opex. 3.6 Milk processing F.1 Determination of final products to be produced; F.2 Equipment needed for milk processing; F.3 Packing equipment required; F.4 Consumables needed for milk processing; F.5 Capex & opex. 3.7 Labor requirements The farming operation will need a wide range of employees with different expertise ranging from unskilled labor to highly skilled like a veterinarian and nutritionist. The business plan will assess in detail the labor requirement and associated skills. An on-site training program will also be included. G.1 Labor skill needed for animal production; G.2 Labor skill needed for agricultural production; G.3 Labor skill for milk processing; G.4 Total labor requirement per activity; G.5 Salaries and labor costs involved; G.6 On-site training programs for different groups of laborers; G.7 Opex. Standard TOR Dairy Goat Capriscope Agrix Page 8 of 14
9 3.8 Farm management Managing an integrated goat dairy farm requires skills, experience and the help of automated computerized management tools. The business plan will deal extensively with management tools based on individual recognition of all goats present. H.1 General farm husbandry practices description; H.2 General lambing and rearing strategy; H.3 Computerized farm management system; H.4 Responders and other equipment related to the farm management system; H.5 Capex & opex. 3.9 Finance Financial analyses will be included in the BP. This is especially relevant as the farm will most likely not be set up in one year but in two years or more which makes a cash flow analyses, working capital needs and the total of capex very relevant. The financial analyses will also handle tax incentives, grants, subsidies and soft loans that may be available. The financial analyses will include (10 year horizon): I.1 Input parameters; I.2 Capital expenditures (infra, buildings, equipment); I.3 Capital structure; I.4 Revenues; I.5 Direct operating expenses; I.6 Working capital requirements all operations; I.7 Non-direct operating expenses; I.8 Debt service; I.9 Non-operating expenses; I.10 Income statement (P&L); I.11 Balance sheet; I.12 Cash flow analysis; I.13 Ratio Analysis. 4 Other considerations 4.1 Pricing of outputs As the farm produces dairy products and goat meat lambs it is very relevant to the financial returns of the project to establish realistic prices for these products. The BP will not include a marketing plan, as this is the responsibility of the initiators, but the BP will propose outlets for the products produced and related prices. J.1 Pricing of farm gate and ex-warehouse market prices for dairy and meat 4.2 Implementation plan Standard TOR Dairy Goat Capriscope Agrix Page 9 of 14
10 The business plan will include a plan of implementation that will propose a step wise establishment of the company. Basically three processes will have to commence simultaneously: procurement of breeding and production goats; agricultural production of feed; construction of barns and other buildings. The implementation plan will elaborate the actions to be undertaken during the first years of establishment until the farm reaches a stable level of operation. K.1 Implementation plan 4.3 Site visit and other meetings It is essential to the consultants to meet at least twice with the initiators of the project. A kick-off meeting and a meeting to present the final project results are anticipated. L.1 Site visit and management meetings Expenses on airline tickets, visa, local transport and hotel accommodation 3 will be charged separately (or provided in kind locally) and are not included in the quotation. Two meetings with the project initiators are anticipated during the preparation of the business plan: a kickoff meeting and one closing meeting to present the findings. 5 Business Plan layout A general lay out of the final BP is listed below. The real layout can deviate slightly from this standard. Table of contents 1 Executive summary 2 Introduction 3 General company description 4 Market for goat dairy products (optional) 5 Procurement of goats 5.1 Breed definition 5.2 Local breed or import 5.3 Age groups to be procured 5.4 Sourcing origin suggestions 5.5 Mode and cost of transport 5.6 Required health status procured animals 6 Health plan and herd development 6.1 Health and vaccination program 6.2 Parasite control plan 6.3 Monitoring plan 6.4 Predicted fertility 6.5 Predicted mortality 6.6 Disinfection practices 6.4 Culling rates 6.5 Herd sheet 7 Nutrition, rations and feeding 3 Standard good business hotel Standard TOR Dairy Goat Capriscope Agrix Page 10 of 14
11 7.1 Feeding 7.2 Rations Lactating goat ration Gestating goat ration Finishing buck ration Other rations 8 Site description & farm layout 8.1 Site location 8.2 Infrastructure 8.3 Utilities available 8.4 Utilities required 8.5 Location of main buildings 9 Buildings design & drawings 9.1 Drawing main goat barn 9.2 Barn bedding and bedding requirement 9.3 Orphan barn 9.4 Buck finishing barn 9.5 Machine and tool shed 9.6 Office and social rooms 9.7 Housing 9.8 Barn climate 9.9 Water supply 9.10 Lighting 10 Barn equipment 10.1 Barn fences and gates 10.2 Milk replacer dispenser 11 Milking parlor 11.1 Milking parlor characteristics 11.2 Drawing milking parlor 12 Basic feeding system 12.1 TMR 12.2 Feeding belt 12.3 Creep feeding 13 Sourcing of concentrates and food by-products 13.1 Barley 13.2 Triticale 13.3 Corn 13.4 Wheat bran 13.5 Sunflower and soybean meal 13.6 Milk replacer 13.7 Premixes 13.8 Salt 13.9 Local food production by-products 14 Forage production 14.1 Forage requirements 14.2 Crop yields 14.3 Corn silage 14.4 Oats and vetch silage 14.5 Alfalfa silage 14.6 Haylage 15.7 Hay 15 Farm & farming equipment Standard TOR Dairy Goat Capriscope Agrix Page 11 of 14
12 15.1 Farm equipment Feeding Internal transport Manure handling Straw blower 15.2 Farming equipment Soil tillage Crop protection and fertilization Transport Hay making Harvest Traction 16 On-site feed milling 17 Feed storage & handling 17.1 Silage pits 17.2 Hay and straw storage 17.3 Concentrates storage 18 Manure storage & handling 19 Milk processing 19.1 Product portfolio and capacity 19.2 Process description 19.3 Plant description 19.4 Storage requirements 19.5 Building lay out 20 General farm husbandry practices 20.1 Lambing and rearing strategy 20.2 Kid management 21 Identification & management support software 21.1 RFI responders & tags 21.2 Management support software 22 Tasks and labor requirement 22.1 Task descriptions 22.2 Job descriptions 23 Training programs 23.1 General farm management 23.2 Veterinarian 23.3 Nutritionist 23.4 Care takers 24 Economic analyses & finance 24.1 Capital expenditures 24.2 Capital structure and funding 24.3 Revenues 24.4 Direct operating expenses 24.5 Depreciation 24.6 Debt service 24.7 Profit and loss account 24.8 Non-operating expenses 24.9 Balance sheet Cash flow 24 References 25 Annexes Standard TOR Dairy Goat Capriscope Agrix Page 12 of 14
13 6 Planning The business plan will take three months to complete. A B C D E F G H I J K L M Goat dairy planning 2017 Month 1 Month 2 Month 3 Subject H1 H2 H1 H2 H1 H2 Crossing and breeding, origin Nutrition, rations and feed requirement Health management Buidlings and site layout Agricultural production of feed and irrigation Milk processing Labor requirements Farm management issues Finance and modelling Market and pricing Implementation plan Site visit and other meetings Reporting 7 Reporting Total execution of the business plan will take three months, first reporting will be after two months. Of course the consultants will submit any information to client when requested. L.1 Reporting Standard TOR Dairy Goat Capriscope Agrix Page 13 of 14
14 8 Budget (Budget to be negotiated) 9 Payment Required payment is a first down payment of 50% or EUR.. within 5 (five) working days after agreed upon the assignment either verbally or by signing a contract, which comes first. At the beginning of Month 2 Client receives a mid-term report and an additional 45% or EUR.. needs to be paid. The remaining 5% or EUR.. needs to be paid within 5 working days after the assignment has been completed and accepted by Client. After full payment Client receives a working Excel model of the integrated goat farming operation. Standard TOR Dairy Goat Capriscope Agrix Page 14 of 14
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