Green Master Vegetables Business Plan — Break-Even
Break-even at 30.7 hectares against 45 planned by Year 5, and what that margin of safety means for the expansion.
Break-Even
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- 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
|
Measure |
Value |
Basis |
|---|---|---|
|
Gross margin per hectare, Year 5 |
R193 756 |
After seed, fertiliser, chemicals, water, packaging and transport |
|
Fixed cost base, Year 5 |
R5.30m |
Labour, owner remuneration, management, lease, maintenance, certification, administration, security, insurance |
|
Break-even area |
27.3 hectares |
Fixed cost base divided by gross margin per hectare |
|
Margin of safety |
39.3% |
Against the Year 5 plan of 45.0 hectares |
|
Interest, Year 5 |
R659’000 |
Across seven facilities |
|
Break-even area including finance cost |
30.7 hectares |
The operative measure |
|
Margin of safety including finance cost |
31.8% |
Against the Year 5 plan |
|
Hectares, Year 2 |
14.5 |
Below break-even at that year’s cost base |
|
Hectares, Year 3 |
24.0 |
Above the Year 3 break-even of 21.6 hectares |
|
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|
|---|---|---|---|---|---|
|
Hectares planted |
8.0 |
14.5 |
24.0 |
34.5 |
45.0 |
|
Gross margin per hectare, R’000 |
92.5 |
103.2 |
138.0 |
163.9 |
193.8 |
|
Fixed cost base, R’000 |
1 130 |
1 922 |
2 982 |
4 112 |
5 298 |
|
Break-even area, hectares |
12.2 |
18.6 |
21.6 |
25.1 |
27.3 |
|
Margin of safety |
-52.5% |
-28.3% |
10.0% |
27.2% |
39.3% |
A margin of safety of 31.8 per cent means the farm could lose roughly a third of its planted area, or the equivalent in price, and still cover its cost base including finance. That buffer exists at Year 5. It does not exist in Year 2, when 14.5 hectares are planted against a break-even of 18.6, which is the entire argument for the staged build and for funding the establishment years rather than expecting them to trade.