Comfort Ibrahim, Rice Processing. Executive Summary. October Business Description. Kingdom Impact. Investment Required. Name: Comfort Ibrahim

Transcription

1 Comfort Ibrahim, Rice Processing October 2011 Name: Comfort Ibrahim Location: Yendi town, northern Ghana Business Name and Location: Wunyurilim (God s love), Yendi Executive Summary Business Description Wunyurilim (God s love) is a rice processing business owned and operated by Comfort Ibrahim for the past 8 years. Comfort is a 50-something year-old widow, a mother of 5 children, a grandmother of 5 grandchildren, and currently the main provider for 7 dependents. Comfort currently buys 2 bags of unprocessed (just harvested) rice twice a week from women who bring the rice from surrounding villages into Yendi. She consistently has four such women (Ashitu, Amina, Sana, Samata) who supply her with rice on different days of the week. Comfort then processes the rice at her house by soaking, boiling, drying, and milling at the local mill. Once the rice is milled, there are bulk buyers waiting outside the mill to purchase the processed rice from her. These bulk buyers retail processed rice in the markets or send the rice to southern Ghana. Because of the tremendous demand for processed rice and its role as a staple food in the country, Comfort wants to increase her inventory from 2 bags of rice to 10 bags of rice. Kingdom Impact Comfort already uses some of her profits to pay for school fees for some poor children from her village who otherwise cannot afford to go to school. She is also the caretaker of several orphans of her relatives. Growing her business would allow her to continue to provide for these children. She also donates to church fundraising projects out of her profit and will continue to do so. Investment Required The total investment needed to start this business is 512GHS which equates to $341USD. The loan amount is for 8 bags of unprocessed rice purchased during low price season and a large pot and basin to process the rice. 1

2 Business Overview Business Description Wunyurilim (God s love) is a rice processing business owned and operated by Comfort Ibrahim for the past 8 years. Comfort is a 50-something year-old widow, a mother of 5 children, a grandmother of 5 grandchildren, and currently the main provider for 7 dependents. Comfort currently buys 2 bags of unprocessed (just harvested) rice twice a week from women who bring the rice from surrounding villages into Yendi. She consistently has four such women (Ashitu, Amina, Sana, Samata) who supply her with rice on different days of the week. Comfort then processes the rice at her house by soaking, boiling, drying, and milling at the local mill. Once the rice is milled, there are bulk buyers waiting outside the mill to purchase the processed rice from her. These bulk buyers retail processed rice in the markets or send the rice to southern Ghana. Because of the tremendous demand for processed rice and its role as a staple food in the country, Comfort wants to increase her inventory from 2 bags of rice to 10 bags of rice. Products and Services Comfort buys unprocessed (just harvested) rice from women from surrounding villages and processes it to sell. The steps to process rice are: Day 1: Soak rice for full day (2 bags of rice requires 3 large pots) Day 2: Boil in the morning and dry Day 3: Take rice to mill to remove husks Because Comfort has been through professional rice processing training, her rice is more hygienic, tastes better, and looks more polished than most other rice processors. This gives Comfort a competitive advantage in selling her rice. Risks and Opportunities Opportunities Because rice is such a staple food, there is a tremendous demand for processed rice. Comfort and other rice processing ladies have informed me that their customers who buy in bulk can buy 20 or more bags at a time. There are not many women who know how to process rice, since it takes a good amount of training. Comfort has received training through the church s women s empowerment program to learn to process rice in a very professional and hygienic way. Her customers notice the difference and will buy from her before her competitors 2

3 Risks Any business dealing with farm crop is directly affected by abnormal farming seasons caused by draught, flooding, etc. For example, if there is a bad harvest one year and rice becomes scarce in the market, then Comfort might not be able to buy as much rice from her suppliers. If there is too much rice in the market, Comfort might not be able to sell all of her rice to customers. A new government policy passed two years ago to supply government programs with locally grown rice has resulted in a heightened demand for unprocessed rice. While the policy helps rice farmers, it could potentially have an adverse effect on individual rice processors like Comfort by buying out her source of unprocessed rice from the farmers. Biography of Candidate Comfort Ibrahim is a 50-something year-old widow, a mother of five children, and a grandmother of five grandchildren. She started and has been operating Wunyurilim for more than 8 years. Although Comfort never went to school, she did join the literacy program through her church, Assemblies of God, and learned to read a little, although she cannot write much. She learned how to process rice through the program eight years ago. Currently she is the main provider for seven dependents, and one of her daughters also makes some money for the family. Comfort has no other business, but she also farms. Personal Testimony: Comfort was a former Muslim and grew up in a Muslim village. She was forced into an arranged marriage with a Muslim man much older than she was. When she gave birth to her first child, she left her husband to stay with her family for two years to raise the child as dictated by her culture s tradition. She stayed with her uncle s family, which was a Christian family in the same village, and she observed the lifestyle of Christians and saw that Christians love and show mercy to each other. She accepted Christ, and when it was time for her to go back to her husband, she returned as a Christian and began to show love to her husband, even though he was a Muslim. She exemplified 1 Peter 3:1-2 to win her husband with her conduct, so that he noticed how she had changed and even asked her if the change was because she had become a Christian. Many people encouraged the husband to divorce her because she had become a Christian, but because of her goodness, he did not divorce her. He died shortly after, and Comfort married another man, who was a pastor. This man died in an automobile accident years later. Comfort is a cleaner for the church and also teaches and counsels other women in the church. Company Structure The business is a Sole Proprietorship with no government or legal issues. Comfort operates the business by herself but intends to hire two people to help her process rice when she increases her stock. She would pay them each 5 GHS per week to help her. 3

4 Marketing Industry and Market Overview Rice is a staple food in Ghana. However, rice is mostly grown in the Northern and Volta Regions by small farmers while the majority of Ghana s population is in the south in major cities such as Accra and Kumasi. Foodstuffs from the north are trucked in bulk to the south to supply this demand. However, there are multiple layers of middlemen who make this happen, one of which is the person like Comfort who processes rice to sell to wholesale sellers who will in turn sell to the truckers going south. Tamale is the largest city in the northern region of Ghana, and Yendi is the next largest town, situated approximately 150km east of Tamale. There is a main highway connecting Tamale to large southern cities Accra and Kumasi. Because of this, Tamale is the main trucking hub for grains going south, and Yendi is the secondary point of collection in the region. Rice is grown in Ghana but also imported from countries such as China, Thailand, Vietnam, and the U.S. (Texas). Those who consume the historically cheaper imported rice hurt the local rice farmers. In an effort to stimulate consumption for locally grown rice, the government of Ghana passed a policy about two years ago stating that it will supply all schools and government facilities (hospitals, etc) with local rice. As a result, several large milling companies have sprung up, including one between Tamale and Bolgatonga. There is now a much greater demand for unprocessed rice and, while the policy helps rice farmers, it could potentially have an adverse effect on individual rice processors like Comfort by buying out her source of unprocessed rice from the farmers. Next to truckers who bring the processed rice to the southern region, local chop bars in villages and towns as well as individual consumption are the major end markets for rice. Customers Comfort has four major customers consistently. She supplies her church s school, Assemblies of God school, with all of their rice for meals. She also has three other major customers in Yendi: Lamatu, who buys her rice and takes it to Yendi market to sell, and two others who sell the rice to truckers. Her current supply of rice is not enough for them because her customers will fight for her rice. She believes she can sell all 10 bags of rice (including new stock) to her current clientele. Competition Comfort has four or five direct competitors who also process rice in Yendi and sell at the same mill that Comfort does. However, because Comfort has had training to process rice in the most professional and hygienic way, she always sells out first because her rice has a more polished 4

5 appearance and tastes better. If she doesn t finish selling, her competitors cannot sell. They even ask her how she processes her rice, but she doesn t let them know her techniques. Comfort frequents two grinding mills so that if one mill has too many people in queue, then she has the option of going to the other on. Location & Distribution When Comfort finishes milling the rice, there are customers waiting outside of the milling factory to buy her rice. She does not need to travel to her customers. Pricing Comfort charges market price for her rice by the bowl. The price per bowl of rice fluctuates depending on the season. Low season, when rice is harvested and floods the market, is December to February. Starting in March, the price slowly begins to rise until it hits peak in September, October, and November. Unit Price Name of Product or Service in Cedis Processed Rice - high price season 3.5 Processed Rice - low price season 2.5 One bag equals 20 bowls of rice. Promotion Because her current clientele are demanding more rice from her, Comfort believes that she only has to tell her current customers that she has additional inventory. However, she would also encourage current customers to direct new people to her through referrals. 5

6 Financial Startup Costs Startup costs to ramp up the business include 8 bags of unprocessed rice for inventory, a large pot and basin to process rice, and some operating cash for the first month. One-Time and Startup Items Cedis $ Tools and Equipment (see below) 100 $67 Equipment Installation & Prep. $0 Starting Inventory 240 $160 Veterianary Fees $0 Advance Rent $0 Other Fees (legal, etc.) $0 Licenses and Permits $0 Initial Advertising & Promotion $0 Operating Cash 172 $115 Total Start-up Expenses 512 $341 Investment Required Investment required is 512 GHS, which is equivalent to $341 USD. Financial Plan Assumptions All unit prices and unit costs are based on a normal year, when rice is harvested at the expected time. On an off-year, when rice becomes scarce or floods the market, the margins will change. Assumes that Comfort can turn over all her inventory (2 original bags + 8 new bags) twice per week. She insists she can actually turn over all her inventory 3 times per week, but a conservative assumption was made. She intends to hire two people to help her maintain inventory turnover. Assumes that current expenses for firewood, water, milling, and transportation stay the same. Assumes that market conditions will not change and government policy will not affect her ability to obtain unprocessed rice. 6

7 Projected Income Statement Wunyurilim - God's love (all amounts are in $) Year Incom e Processed Rice - high price season $6, $6, $6, Processed Rice - low price season $4, $4, $4, Gross Sales $11, $11, $11, Expenses Cost of Goods Sold $7, $7, $7, Wages $ $ $ Water $ $ $ Firew ood $ $ $ Milling $ $ $ Transportation $96.00 $96.00 $96.00 Loan Payments $ $66.00 $0.00 Total Expenses $10, $9, $9, Projected Cash Flow Cash Profit $1, $1, $1, Loan Proceeds $ Start-up Costs $ Cash Flow (Cumulative) $1, $3, $4, Financial Investment Required Cedis $ Loan Amount (Principal) 512 $ One-time Service Fee Percentage 15.00% Number of Years 1 Months before First Payment 2 Monthly Payment Amount 49 $32.67 Total of all Payments 589 $ Total Service Fee Paid 77 $51.33 Loan to be paid back in 12 monthly installments of 49 GHS, or $32.67 USD, over a 1 year period. First payment to be due at the end of the 3 rd month. 7

8 Action Plan Date Jan 2012 Jan 2012 Item Hire 2 people to work for her Buy 8 bags of unprocessed rice 8