Two Seasons Garlic Business Plan — Risk Analysis
Tariff dependence, market ceiling, agronomic and price risk, with the controls and trigger points governing each.
Risk Analysis
Jump to section
- Overview & contents
- 1. Executive Summary
- 2. Investment Thesis
- 3. Company and Business Overview
- 4. Problem, Customer Need and Value Proposition
- 5. Products and Services
- 6. Industry Analysis
- 7. Market Analysis
- 8. Customer Analysis
- 9. Market and Competitive Landscape
- 10. Business Model
- 11. Go-to-Market Strategy
- 12. Operating Model
- 13. Management and Organisation
- 14. Strategic Plan
- 15. SWOT Analysis and Strategic Implications
- 16. Risk Analysis
- 17. ESG and Sustainability
- 18. Implementation Roadmap
- 19. Financial Model and Revenue Build
- 20. Projected Income Statement
- 21. Projected Balance Sheet
- 22. Projected Cash Flow
- 23. Capital Expenditure and Working Capital
- 24. Funding Requirement and Structure
- 25. Break-Even Analysis
- 26. Investment Case and Returns
- 27. Debt Serviceability
- 28. Sensitivity and Scenario Analysis
- 29. Key Performance Indicators and Management Dashboard
- 30. Conclusion
- A. Appendix A: Assumption Register
- B. Appendix B: Conditions Precedent to the Seed Subscription
- C. Appendix C: Glossary
- 16.1 Risk heat map
- 16.2 Prioritised risk register
- 16.3 The downside case and the management response
Two risks dominate, trade policy and agronomy, and both are addressed before capital is committed rather than after; everything else is second order and manageable.
16.1 Risk heat map
16.2 Prioritised risk register
|
# |
Risk |
Prob. |
Impact |
Rating |
Mitigation |
Owner |
|---|---|---|---|---|---|---|
|
1 |
Anti-dumping duty lapses or is materially eroded |
3 |
5 |
15 – Critical |
Cost and mix that survive a 34% price fall; association participation; accelerate peeled mix; trade-remedy opinion as a CP |
Chair / CEO |
|
2 |
Crop disease or failure in one block, compromising next season’s seed |
3 |
4 |
12 – High |
Two separated blocks; seed stocks held separately; certified protocols; rotation; crop insurance from FY2027 |
CEO |
|
3 |
Yield below assumption |
3 |
4 |
12 – High |
Cultivar trials before scale planting; own seed selection; agronomy is the largest overhead line; a 10% shortfall costs R5.4m |
Ops director |
|
4 |
Retail listing not secured or later lost |
3 |
4 |
12 – High |
Packhouse audited before listing sought; no retailer above 35%; wholesale and export valves |
Commercial director |
|
5 |
Origin substitution erodes protection without formal change |
4 |
3 |
12 – High |
Quarterly monitoring of imports by origin; support industry compliance monitoring; plan not built on top of price range |
FD |
|
6 |
Input-cost shock (fuel, fertiliser, electricity) |
4 |
3 |
12 – High |
Forward purchase; irrigation efficiency; solar pumping from FY2030; a 10% rise costs R2.2m |
Ops director |
|
7 |
Lease not renewed or water allocation reduced |
2 |
5 |
10 – High |
10-year leases with renewal options; water verified as a CP; alternative blocks identified |
CEO |
|
8 |
Market saturation as the company scales |
3 |
3 |
9 – Medium |
Channel diversification; area capped by absorption; halt option |
Commercial director |
|
9 |
New entrants compress local prices |
3 |
3 |
9 – Medium |
Head start in seed, packing and listings; move up the value chain faster |
CEO |
|
10 |
Funding risk: Series A or B not raised |
2 |
4 |
8 – Medium |
Rounds timed to planting windows with 3-month lead; halt option limits required capital; DFI engagement |
FD |
|
11 |
Key-person loss |
2 |
3 |
6 – Medium |
Succession for agronomy; key-person insurance; trust-based retention |
Chair |
|
12 |
Interest-rate rise |
4 |
2 |
8 – Medium |
Fixed-rate option on 50% of facility; DSCR headroom from FY2030 |
FD |
|
13 |
Labour cost regulation and social compliance |
3 |
2 |
6 – Medium |
Mechanised planting and lifting; ethical audit before listing |
Ops director |
|
14 |
FX on imported inputs and equipment |
3 |
2 |
6 – Medium |
Rand-denominated sales; equipment ordered with forward cover |
FD |
|
15 |
Working-capital squeeze in heavy season |
2 |
3 |
6 – Medium |
Inventory days budgeted at 80; R3m overdraft line to be arranged FY2029 |
FD |
Table 32. Risk register ranked by rating (probability × impact, 1–5 scales).
16.3 The downside case and the management response
If the duty is withdrawn or realised prices fall by more than a fifth, the correct response is to stop expanding planted area, hold the seed bank at its then level, and shift as much volume as possible into peeled and value-added product where imported garlic competes least effectively. The company would settle at a smaller scale with thinner margins and would not return the modelled multiples, but it would not be loss-making at the 34% threshold. Halting expansion is the intended response to price deterioration, and it is available at low cost because most of the cost base is variable and the land is leased rather than owned. Section 23 quantifies the downside case on this basis.