Executive Summary

Jump to section

• Overview & contents
• i. Important Notice
• 1. Executive Summary
• 2. Why Limpopo
• 3. The Market and the Commission Problem
• 4. Water: The Binding Constraint
• 5. Open Field Versus Tunnels
• 6. Crop Plan and Rotation
• 7. SWOT and Competitive Position
• 8. Route to Market
• 9. Unit Economics
• 10. The Five-Year Build and Its Gates
• 11. Funding
• 12. People and Operations
• 13. Certification and Compliance
• 14. Financial Projections
• 15. Break-Even
• 16. Sensitivity and Scenarios
• 17. Risk Management
• 18. Implementation Timeline
• 19. Returns
• 20. Key Performance Indicators
• 21. Key Assumptions
• 22. Conclusion
• A. Appendix A: Consolidated Financial Summary
• B. Appendix B: Capital Schedules
• C. Appendix C: Funding and Debt Schedules
• D. Appendix D: Risk Register
• E. Appendix E: Glossary

1.1 The proposition

Green Master Vegetables is an irrigated vegetable enterprise in Limpopo. It begins with 8 hectares, 7 open field and 1 under tunnel, and grows to 45 hectares by Year 5, of which 4.5 are tunnels.

Output rises from 401 to 3 188 tonnes a year, taking revenue from R2.05 million to R20.81 million at an EBITDA margin of 16.4 per cent. Total capital deployed is R12.81 million, of which the founder contributes R1.95 million and R3.50 million is targeted as non-repayable grant through the Blended Finance Scheme.

1.2 Four things an investor must understand

• A tunnel hectare earns R1 460 000 of gross margin; an open-field hectare earns R53 100. That is a difference of 27.5 times. Tunnels cost roughly 7.1 times as much to establish, so the return on establishment capital still favours them heavily, 317 per cent against 82 per cent. Section 5 sets out why the plan nonetheless keeps most of its area open, and what would change that.
• Break-even is 30.7 hectares against a Year 5 plan of 45 once finance cost is included. The farm does not cover its fixed cost base until Year 3. Years 1 and 2 are funded establishment, not trading.
• Market commission is the third largest cost in the business. At R1.49 million in Year 5 it exceeds fertiliser. Shifting from 86.0 per cent to 58.0 per cent of volume sold through market agents is the single most valuable commercial project in the plan, worth roughly R47 000 for every percentage point moved.
• Fresh produce prices are brutally volatile and largely outside the farmer’s control. A 25 per cent price fall is modelled in Section 16 and it takes Year 5 EBITDA to minus R1.78 million. That is not a remote scenario in this market.

1.3 Headline numbers

1.4 Investment conclusion