Rural-Urban Agri-Park Josh Storey
Business Plan for Rural-Urban Agri-Park
Prepared for Josh Storey
December 4, 2003
Prepared By:
Avery Murphy
Ryley Richards
Adam Ornawka
Mike Partyka
Table of Contents
Table of Contents 2
List of Tables and Figures 3
2.0 Human Resource and Operations Plan 4
2.1 Organizational Structure 5
2.2 Staff 6
2.2.1 President 6
2.2.2 Marketing Manager 7
2.2.3 Secretary/Accountant 7
2.2.4 Ethanol Plant Operators 8
2.2.5 Ethanol Plant Workers 8
2.2.6 Human Resource Plan for Feedlot 8
2.2.7 Human Resource Plan for Cow/Calf Operation 12
2.2.8 Human Resources Plan for Hog Operation 15
2.3 Buildings and Floor Plans 19
2.4 Work Plan and Flow of Work 21
2.4.1 Work Plan and Flow of Work for the Ethanol Plant 22
2.4.2 Work Plan and Flow of Work for the Feedlot Operation 27
2.4.3 Operations Plan for Cow/Calf Operation 34
2.4.4 Operation Plan for Hog Operation 41
2.5 Capital Budget 48
2.5.1 Ethanol Plant Capital Budget 50
2.5.1.1 Rural-Urban Agri-Park Ethanol Plant Construction & Equipment Costs 50
2.5.2 Cow Calf Capital Budget 51
2.5.3 Capital Budget for Feedlot Operation 58
2.5.4 Capital Budget for Hog Operation 70
2.6 Working Capital Planning and Management 72
2.6.1 Cash Management 72
2.6.2 Inventories 72
2.6.3 Accounts Receivable 73
2.6.4 Accounts Payable 73
2.7 Cost of Goods Manufactured 74
2.8 Cash Conversion Cycle 75
3.0 Marketing Plan 76
3.1 Introduction 77
3.2 The Marketing Mix (4P’s) 77
3.3 SWOT Analysis 79
3.4 Market Analysis 79
3.5 Marketing Strategy 82
4.0Financial Plan 83
4.1 Sources of Funding 84
4.2 Opening Balance Sheet 86
4.3 Summary Tables 86
4.4 Cash Conversion Cycle 90
5.0 Conclusion 90
6.0 References 91
List of Tables and Figures
Table 2.2: Feedlot Salary Breakdown 9
Table 2.3: Employees Needed 12
Table 2.4: List and Cost of Employee’s 16
Figure 2.2 Site Layout 21
Figure 2.4: Feedlot layout (Comm 492 North West Feeders, 2001) 29
Figure 2.5: Flow of Cattle through feedlot (Comm-492 North West Feeders, 2001) 31
Figure 2.6: Feeding Procedure 33
Figure: 2.7: Plan of Rural-Urban Agri-Park Cow/Calf Operation- Wintering Facilities 36
Table 2.5: Ration Formulation 38
Figure 2.9: Hog Site Layout (Comm 492 Mid Sask. Pork, 1997) 43
Table 2.6:Total Construction Costs 49
Table 2.7: Total Net Working Capital 49
Table 2.8: Total Capital Budget 49
Table 2.9: Ethanol Construction and Equipment Cost 50
Table 2.10: Ethanol Net Working Capital 50
Table 2.11: Ethanol Capital Budget Summary 51
Table 2.12: Cow Calf Construction Costs 51
Table 2.13: Equipment Costs: 52
Table 2.14: Working Capital: 52
Table 2.15: Capital Budget Summary 52
Table 2.16: Rural-Urban Agri-Park Feedlot Operation 58
Table 2.17: Equipment Costs: 59
Table 2.18: Working Capital: 59
Table 2.19: Capital Budget Summary 59
Table 2.20: Costs for Construction of Large Pen 63
Table 2.21: Costs for Construction of small feedlot pen 65
Table 2.22: Major Capital Expenses for Agri-Park Farrow to Finish Operation 70
Table 2.23: Working capital for Farrow To Finish Operation 70
Table 2.24: Capital Budget Summery for Farrow to Finish Operation 70
Table 2.25 Direct Material Purchases 74
Table 2.26 Direct Labour and Benefits 74
Table 2.27 Manufacturing and Overhead Costs 75
Table 2.28 Cost of Goods Manufactured 75
Table 3.1 – SWOT Analysis 79
Table 3.2 Marketing Budget 82
Table 4.1 Balance Sheet 86
Table 4.2 Scenario Analysis 87
Table 4.3 Base Case Results 87
Table 4.4 Best Case Results 88
Table 4.5 Worst Case Results 89
2.0 Human Resource and Operations Plan
3
Commerce 492.3 College of Commerce, University of Saskatchewan
Rural-Urban Agri-Park Josh Storey
2.1 Organizational Structure
A board of directors consisting of 10 people will oversee major strategic decisions. Members of the board would include a municipal representative, producer representative and two major shareholders elected by the shareholders. Having a board of this size will ensure adequate representation by all parties involved and ensure most stakeholders concerns will be addressed. By meeting these criteria, there will be a greater deal of cohesion between the company and the other parties involved.
Figure 2.1: Organizational Structure
Table 2.1: Salary Breakdown
Annual Salary / $ 250,000 / $ 34,500 / $ 80,000 / $ 70,000
E.I. / $ 10,875 / $ 4,087 / $ 5,520 / $ 5,205
C.P.P. / $ 13,750 / $ 4,484 / $ 6,440 / $ 6,010
Worker Comp / $ 5,000 / $ 690 / $ 1,600 / $ 1,400
Other Benefits / $ 1,200 / $ 400 / $ 800 / $ 700
Total Benefits / $ 30,825 / $ 5,661 / $ 14,360 / $ 13,315
Total Cost / $ 280,825 / $ 40,161 / $ 94,360 / $ 83,315
2.2 Staff
This facility will require quite an extensive staff; therefore there will be management and general office staff as well as well as specialized staff for each of the three operations belonging to the Agri-Park. Each of the employees will need to have unique and specialized skills in order to ensure smooth and efficient operation.
2.2.1 President
A president will manage all operations that occur on the Rural-Urban Agri-Park. The president will be responsible for reporting to the board of directors all necessary information and act as a liaison between the company and the community. It would be expected that the president have strong agricultural skills as well as a keen business sense. The president would need to have experience with ethanol and one of the two other aspects of the Rural-Urban Agri-Park (cattle, or swine). It would be expected that the president have a minimum education of a degree in agriculture as well as a distinguished work history.
2.2.2 Marketing Manager
The marketing manager will be in charge of making sales and purchases on behalf of the Agri-Park. Due to the diverse nature of the organization the marketing manager will need to have a work history with strong marketing and technical skills pertaining to all aspects of the Agri-Park, however most focus will be on grain and livestock marketing. The marketing manager would be responsible for purchasing grain both for the ethanol plant as well as grain and other feed for the livestock operation. Land contracts and animal purchases would also be a major task for the marketing manager.
Not only will the marketing manager be responsible for making purchases, but this employee will also be responsible for ensuring there are markets for the goods produced on the Agri-Park. The marketing manager will have to actively find the best markets prices to be set in contracts for the feeder calves and weanlings, ensuring that the organization receives top dollar for the product they are offering. In order to be successful at these duties, the marketing manager must have strong communication and interpersonal skills. The marketing manager would also have to dialog with fuel companies to sell ethanol and ensure a consistent market. The marketing manager would also work closely with the Secretary and Accountant to ensure the inventory in the books and the actual inventory match.
2.2.3 Secretary/Accountant
There will be a necessity to have two clerical workers in the main office. These employees will be responsible for making official records for all transaction and activities that occur within the organization. These two people would be responsible for monitoring the financial well being of the organization and communicating that information with the president. These people must have extensive computer skills and at least one needs to have an education in the field of accounting and the other would require a diploma in Business Administration.
2.2.4 Ethanol Plant Operators
Operating an ethanol plant requires a very specialized education and a great deal of experience. A Fourth Class Steam Engineering certificate is required in order to operate an ethanol plant due to the presence of gasses and liquids under extreme pressure. Since the plant will remain in constant operation for 24 hours a day and seven days a week, there will be a need for four operators.
2.2.5 Ethanol Plant Workers
Due to a high degree of automation there will be minimal need for plant workers. However 10 people will be hired to perform maintenance and observe that machinery is operating correctly. These workers will require minimal education and apprenticeship positions may be offered, however these employees would need to have mechanical understanding and previous mechanical experience. It is expected that residents of the community and engineering students will fill these positions.
2.2.6 Human Resource Plan for Feedlot
The Rural-Urban Agri-Park Feedlot Operation will require 11 employees in order for the feedlot to run efficiently.
Table 2.2: Feedlot Salary Breakdown
(On Retainer)
Number of Employees / 1 / 9 / 1
Annual Salary / $70,000 / $30,000 / $10,000
EI / $2,205 / $8,505 / $315
CPP / $2,860 / 10,256 / $280
Workers Comp. / $1,400 / $5400 / $200
Other Benefits / $700 / $2,700 / $100
Total Cost / $77,165 / $296,861 / $10,895
The Rural-Urban Agri-Park will be looking for employees with experience in the feedlot industry. Salaries can be negotiated, in order to attract skilled labor and management. Recruitment for employees will involve communication within the industry and advertising through local newspapers within the Saskatchewan. Providing jobs to the local community will reinforce the support for the Rural-Urban Agri-Park in the surrounding area.
2.2.6.1 Feedlot Manager
The Feedlot Managers roles will be to oversee the Feedlot Staff to ensure that the employees have been properly trained and that the employees are doing their job. The manager will also be responsible for keeping in contact with the cow/calf operation to inform them on what calves they will need the following week. This will take some planning on the part of both the feedlot manager and the cow/calf manager because different calves finish at different rates and their needs to be a consistent flow of calves finishing every week. The feedlot manager will also be responsible for the livestock from the feedlot. The first responsibility of the manager will be to attract potential buyers of finished calves to the feedlot to see what kind of product the feedlot has to offer. The feedlot manager will also need to inform the buyers that the feedlot will be having a weekly sale involving about 385 finished calves every week. This will require faxing a summary of the calves for sale each week to all the potential packing plants.
The feedlot manager will have to make sure that there is always a steady inventory of feed grains and supplements available at all times and will be responsible for the purchasing of feed. The manager will also be responsible to monitor the amount that each producer supplies so that the secretary can issue payments to the local producer.
The last responsibility of the feedlot manager will be setting up schedules in the spring for the pilling and spreading of manure. This will be dispersed onto the pastureland and also to local farmers who have contracts with Rural-Urban Agri-Park.
It will be a requirement that the manager have extensive of business experience as well as experience in the feedlot industry. The feedlot manager will be paid a salary of $70,000 per year and will probably work 40 – 60 hours a week.
2.2.6.2 Feedlot Staff
There will be nine positions for feedlot staff. Their duties will involve monitoring pens for sick calves, processing new and marketed calves several times a day. Also, they will be required to feed and bed the cattle, mix rations, as well as general maintenance of the feedlot and equipment. These employees will work on a shift so that there are at least 5 members on site both on weekdays and weekends. They will be paid a salary of $30,000 per year. When hiring for this position, the manager will be looking for a mix of people with different experience. There will be a need for employees with mechanical experience and others with experience dealing and handling with cattle. These positions will be filled from the local community. Once hired, people in the feedlot industry will train the feedlot staff. Veterinarians and feed representatives will talk to employees about various topics such as, how to identify a sick animal and the importance of proper feeding. The feedlot manager will deal with any problems or concerns that the staff has.
2.2.6.3 Veterinarian
This position is not a full time position, however the veterinarian will be held on retainer. The veterinarian will be on site at least once a week or when the feedlot manager feels that it is necessary. The responsibilities of this position are to monitor the overall health of the cattle in the feedlot as well as recommend any special feeding or medical remedies needed to ensure the proper health of the cattle in the feedlot.
2.2.6.4 Human Resource Strategy
Feedlot Staff often has a high turnover rate, which is something that Rural-Urban Agri-Park wishes to avoid. By putting the staff on shift work it will give the employees the opportunity to take care of their own operations and increase the vested interest in the feedlot. The salaries offered to the employees are also fair, which should help keep the morale and drive within the staff relatively high.