agra-elite flour business plan

Agra-Elite Flour

MBA 992: VENTURE MANAGEMENT

BY: ANDREW ARDELL

JUNE 3RD 2016

Agra-Elite Flour 2016

1.0 Executive SummaryPulses are a seed that is harvested from a leguminous pod in a variety of different plants (Statistics Canada, 2015). Pulses primarily include seeds as Peas, Lentils, Beans, and Chickpeas. The Pulse industry is growing exponentially on a global level due to the increasing demand for high protein meat substitutes. Most of Canada’s pulses are exported into global markets such as India and Asia. Through extensive research an opportunity has been identified, to serve the growing demand for pulse flour products in Canadian gluten free products. The gluten free market in Canada is growing at a rate of 26% per year with sales growing from $27 million in 2012 to $460 Million in 2014 (Agriculture and Agri-Food Canada, 2015). This business plan will outline a strategic plan to capitalize on serving the growing pulse and gluten-free markets.

Agra-Elite Flour meets the demand for high quality, natural, organic, gluten free flours to consumers in North America. These flours will be made of four pulse products that are: Chickpeas, Lentils, Yellow Peas, and Soybeans. These flours will be produced at a processing plant to be constructed near Vanscoy, Saskatchewan. The market that Agra-Elite flour will be targeting is the gluten free consumer through gluten free food producers and food wholesalers. Agra-Elite flour will sell these flours in bulk to wholesalers, such as bulk barn, and to gluten free food producers.

The products will be sold business-to-business and marketed strategically through lead generation, inbound marketing, online marketing, and search engine marketing. The products will be sold for $68.25 per 25 Kg Bag with price reductions offered through the advanced pricing strategy. The projected sales generated as an internal rate of return is 37.2% with a 5-year average net income of $111,581.00. This return is relatively high but there is also a high risk associated with a start up business in this industry. This business plan outlines the risks and critical variables along with outlining mitigating strategies for each.

1 MBA 992 – Venture Management Business Plan Andrew Ardell


Table of Contents1.0 Executive Summary.............................................................................................................. 1

Table of Figures..............................................................................................................................3

Table of Tables...............................................................................................................................4

2.0 Business Overview...................................................................................................................5

2.1 Product Overview................................................................................................................5

2.2 Industry Overview................................................................................................................5

2.3 The Opportunity...................................................................................................................6

Operations Plan............................................................................................................................. 7

1.1 Location and Facility............................................................................................................7

1.2 Facility Layout & Functions..................................................................................................8

1 - Raw Product Storage........................................................................................................ 9

2 – Milling Process.................................................................................................................9

3 – Office..............................................................................................................................14

4 – Finished Product Storage...............................................................................................14

1.3 Capital Expenditures..........................................................................................................14

1.4 5-year Production Plan.......................................................................................................17

Production Projections.........................................................................................................17

Cost of Goods Sold...................................................................................................................19

Utilities Summary.................................................................................................................19

Cost of Goods Sold Summary...............................................................................................20

2.0 Human Resources Plan..........................................................................................................20

2.1 Human Resources Architecture.........................................................................................21

2.2 Job Descriptions.................................................................................................................21

2.3 Performance Management................................................................................................22

2.4 Board of Directors..............................................................................................................22

5.0 Marketing Plan.......................................................................................................................23

5.1 Segmentation and Targeting..............................................................................................23



5.1.1 Segment: Gluten Free Food Producers.......................................................................23

5.1.2 Segment: Bulk food Retailers......................................................................................24

5.1.3 Future Segment: East Indian Bazaars..........................................................................24

5.2 Marketing Mix....................................................................................................................24

5.2.1 Positioning.................................................................................................................. 25

5.2.2 Product....................................................................................................................... 27

5.2.3 Price............................................................................................................................ 28

Promotion............................................................................................................................28

Place.................................................................................................................................... 29

5.2 Marketing Strategy Tactics.................................................................................................29

5.2.1 Website Marketing..................................................................................................... 29

5.2.2 Search Marketing........................................................................................................30

5.2.3 Inbound Marketing.....................................................................................................30

5.2.4 Social Media Marketing..............................................................................................31

5.2.5 Lead Generation and Analytics...................................................................................32

5.2.6 Marketing Strategy Conclusion...................................................................................32

5.3 Marketing Budget..............................................................................................................34

5.4 Sales Projections................................................................................................................34

6.0 Accounting & Financial Plan...................................................................................................35

6.1 Financial Structure.............................................................................................................35

6.2 Capital Budget....................................................................................................................36

6.3 Financial Analysis...............................................................................................................36

6.3.1 Revenue Estimates......................................................................................................36

6.3.2 Revenues Per Product Line.........................................................................................37

6.4 Financial Performance.......................................................................................................38

6.5 Break Even Analysis........................................................................................................... 39

6.6 Sensitivity Analysis.............................................................................................................40

6.6.1 Low Sales Scenario......................................................................................................41

6.6.2 High Sales Scenario.....................................................................................................41



6.7 Risk Analysis.......................................................................................................................41

7.0 Conclusion............................................................................................................................. 42

Works Cited................................................................................................................................. 43

Appendix A...................................................................................................................................44



Table of FiguresFigure 1: Location of Facility..........................................................................................................7Figure 2: 3200 sqft Building to be constructed..............................................................................8Figure 3: Pre Cleaned and Sorted Lentils.....................................................................................10Figure 4: Cleaned and Sorted Lentils...........................................................................................11Figure 5: De-Hulled Lentils...........................................................................................................12Figure 6: Split Lentils....................................................................................................................12Figure 7: Lentil Flour....................................................................................................................13Figure 8: Milling Machine............................................................................................................13Figure 9: 25 Kg Bagged Finished Product.....................................................................................14Figure 10: Competitor Map..........................................................................................................26Figure 11: Positioning Map..........................................................................................................27Figure 12: Debt to Equity.............................................................................................................35Figure 13: Sales Trend Analysis....................................................................................................37Figure 14: Revenue Per Product Line...........................................................................................38Figure 15: Break Even Analysis.................................................................................................... 40Figure 16: Wheat Flour Nutrition.................................................................................................44Figure 17: Quinoa Flour Nutrition................................................................................................45Figure 18: Lentil Flour Nutrition...................................................................................................46



Table of TablesTable 1: Capital Investment.........................................................................................................14Table 2: Capital Investment Summary.........................................................................................16Table 3: 5 Year Production Projections........................................................................................17Table 4: Hours worked per Employee..........................................................................................18Table 5: Salaries and Wages........................................................................................................ 18Table 6: Utilities Summary...........................................................................................................19Table 7: Potential Customer Type................................................................................................24Table 8: Competitor Analysis.......................................................................................................25Table 9: Pricing............................................................................................................................ 28Table 10: Marketing Budget........................................................................................................ 34Table 11: Sales Projections..........................................................................................................34Table 12: Proportionate Sales Per Product Type.........................................................................36Table 13: Financial Projections....................................................................................................36Table 14: COGS, Gross Profit, Net Income Expectations..............................................................37Table 15: Revenue Per Product Type...........................................................................................38Table 16: Financial Performance of Investment..........................................................................39Table 17: Break Even Analysis......................................................................................................39Table 18: Sensitivity Analysis.......................................................................................................40Table 19: Risks and Mitigation Strategies....................................................................................41



2.0 Business Overview

2.1 Product OverviewAgra-Elite Flour includes a manufacturing process to produce 4 main products:

Lentil Flour Chick Pea Flour Soy bean Flour Yellow Pea Flour

These products are made from all organic, natural, and locally grown seed. These flours are used as inputs in gluten free, high protein, organic foods that are becoming more and more popular among todays population.

2.2 Industry Overview

Pulses are a seed that is harvested from a leguminous pod in a variety of different plants (Statistics Canada, 2015). Pulses primarily include seeds as Peas, Lentils, Beans, and Chickpeas.

The pulse industry in Canada has grown exponentially in the past few years due to high demand for high protein products. Western Canada’s pulse industry was just a blip on the cropping radar almost 20 years ago. Now pulse production is flourishing across the country, with farmers growing all types of pulse crops, processors and packaging, shipping peas and lentils in bulk, and value-added agri-business promoting pulses as a food ingredient. The industry has embraced growth (Barber, 2012). Given Saskatchewan is the largest pulse producer in Canada, 79.3% of Canadian pulses grown in Canada (Statistics Canada, 2015), opportunities of significant value have presented themselves in the past 10 years. Alliance Grain traders entered the market 10 years ago primarily as a value added business and have experienced successful business development and exponential growth annually. Many value added consumers have entered the market in the past 10 years primarily as pulse splitters to begin the processing aspect for the international markets. In 2015 Canada exported more than 6 million tonnes of pulse seeds worth nearly $4.2 Billion (Pulse Canada, 2015). This results in the export market being significantly saturated and not a place for a small business to enter effectively due to high competition and high barriers of entry.



An area that is relatively unpopulated in the pulse market is value added services of complete processing within Canada.

2.3 The Opportunity

Pulse flours are an extremely popular ingredient to be added to gluten free products due to the high protein content of pulses (CIGI, 2014). The Canadian International Grains Institute has carried out many studies in the identification of areas in which pulse flours can be added to gluten free products. They have identified a significant opportunity for these flours to be added and increase the protein and nutrients in gluten free foods. The Gluten free food consumer market in Canada consists of 10 million Canadians and is growing at a 26% rate annually. The sales of Gluten Free products have grown exponentially from $27 million in 2012 to $460 million in 2014. This market segment is growing due to the increased celiac disease awareness and avoidance of gluten for other reasons (Agriculture and Agri-Food Canada, 2015).

Consumers have seen the trend of super foods being added into everyday foods from the development of quinoa in the previous 5-10 years. We believe this will become even more prominent as consumers demand higher quality and more nutritious foods all the time and will be even more evident with pulses. This is primarily due to the fact Pulses contain much more protein content than other grains used in different products. Currently, lentil flour contains 20 times the protein of wheat flour, and twice the protein of quinoa flour (Refer to Appendix A).

Food producers are looking to add pulse flour as a super-food to supplement current food products as well as make foods fully from pulse flours. Some of these products are chips, breads, crackers, pastas and many more.

We at Agra-Elite Flour believe that there is a significant opportunity within Canada in the pulse and gluten free markets and that now is the time to become a player in these industries. The two industries are both expanding exponentially within Canada, target market wise as well as in revenue. This provides a great opportunity for the emergence of Agra-Elite Flour.



Operations Plan

1.1 Location and FacilityThe operations will take place at a facility 27 km south west of Saskatoon, Sk as seen in figure below. The decision to operate in this location was made because Andrew Ardell currently farms in this area and has many connections to potential raw product suppliers in the area. A 4 acre parcel of land will be purchased to have the facility constructed upon. The facility will be a 3200 ft2 steel building. The building will be constructed on a 6” thick concrete pad, and will be fully insulated. The building will include:

- 1 man door- 4 windows- 1 20’ wide by 18’ tall Overhead Door

An example of the building can be seen in the figure below.

Figure 1: Location of Facility



Figure 2: 3200 sqft Building to be constructed

1.2 Facility Layout & FunctionsThe facility will include seed processing equipment, raw storage, finished product storage, and an office space. The facility layout can be seen in the figure below.



The

Building includes one 15’ wide by 18’ high overhead door that allows the bagged pallets of flours to be loaded into trucks to be shipped.

Each of the sections of the facility will be described below as outlined by the corresponding number.

1.2.1 Raw Product StorageThis section consists of the receiving and storage of the raw product (Pulse Seeds). The bin capacity holds 136 ton (5000 bushels). This amount of raw product accounts for 163 hours of plant run time, which is over five weeks of projected production in the first year and two weeks of projected production in year 5. The product is loaded into the storage bin from the delivering truck, and then is conveyed into the cleaning and sorting machine as needed in the process.

1.2.2 Milling ProcessThere are 6 main steps in the process:

Step 1 – Cleaning and SortingThe seed goes through a cleaning and sorting machine where it is separated from any dirt and contaminants that may be immersed in it. The seed is sorted to remove any low quality seeds,


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or off color seeds. The pure seed is then loaded into the surge bin where it can be loaded into the mill. The difference between seed before and after cleaning can be seen in the figures below.

Figure 3: Pre Cleaned and Sorted Lentils



Figure 4: Cleaned and Sorted Lentils

As you can see, after the cleaning and sorting process the off-color and miss-shaped seeds are removed from the bulk product leaving a clean and pure product to produce flour.

Step 2 – De-Hulling ProcessPulse seeds all have a thin skin-like film around the outside of the seed. To create high quality flour products this skin needs to be removed before the seed is processed. This is called De-Hulling. The seed moves through rotating members that remove the skin from the seed, preparing it to be milled. The seed enters the process as shown in Figure 4, then moved through and is finished and ready for milling as seen in the figure below.



Figure 5: De-Hulled Lentils

Step 4 – SplittingThe seed then moves into the splitting machine in which the whole de-hulled seed is split into halves. These halves allow the milling machine to work much more efficiently. An example the finished split lentils made from the lentils shown in Figure 5 can be seen below.

Figure 6: Split Lentils

Step 5 – MillingThe split lentils are then ran through the mills where they are ground up and screened until

they reach the appropriate particle size for the flour. The grinders are two rough rollers rotating opposite of each other at high speeds that force the particles to shrink to pass through the

opening. The lentils then pass through a series of screens that allow the small particles through to final product; also the larger particles pass through the process again to ensure they are

constant particle size. The finished product can be seen in the figure below.



Figure 7: Lentil Flour

The milling machine used can be seen in the figure below, and will be described in more detail in Capital Expenditures.

Figure 8: Milling Machine



Step 6 – BaggingThe finished product flour is then ran through the bagging machine where it is bagged into 25 kg bags of finished product ready to be sold.

Figure 9: 25 Kg Bagged Finished Product

1.2.3 OfficeThe office is a 12’x12’ room consisting of a lunch/break room. There is also a desk and a computer to allow for urgent business matters to be taken care of.

1.2.4 Finished Product StorageThe finished product will then be stacked on pallets are stored in this area of the building. The Pallets can be stacked 3x high, which are 120 bags per stack (40 per pallet). The Product will then be shipped out of the overhead door.

1.3 Capital ExpendituresThe capital expenditure required to bring a pulse processing plant into service is quite large and can be seen outlined below.



Table 1: Capital Investment

Capital Investment

Building - 80'x40'x20'

Materials $48,000.00

Installation $35,000.00Finishings $25,000.00Concrete Pad $38,400.00Insulation $25,000.00Building Total $171,400.00EquipmentCleaning & Sorter $25,000.00Milling Line $50,000.00Bagging Unit $14,250.00Bucket Elevators $10,000.00Surge Bins $15,000.00Electrical Install $7,500.0015' Conveyor $5,000.00Raw Product Bin (8 tons) $13,000.00

Chuting $1,500.00Sorter $35,000.00Miscellaneous Parts $5,000.00

Equipment Total $181,250.00Operations & OfficeSafety Apparel $750.00Desk, chair, tables $1,500.00Spare Parts $12,375.002016 GMC Sierra $34,100.002008-2012 Delivery Van $70,000.00

Website $10,000.00Exhibit Stand $10,000.00Cash Float $50,000.00Bags (10000 units) $1,000.00Operations & $189,725.00



Office TotalTotal $542,375.0020% Contingency $108,475.00Total Capital Investment $650,850.00

Table 2: Capital Investment Summary

Building - 80'x40'x20' $171,400.00Equipment – 20 Mton Capacity $181,250.00Operations & Office $189,725.0020% Contingency $108,475.00Total Capital Investment $650,850.00

The total capital required to build the required facility is $542,375.00. To comprehensively prepare during the projection phase, a 20% contingency is added to the estimate to ensure the project completion in the case of any unexpected costs or mishaps during the construction and start-up. Agra-Elite flour will add 20% to the total capital required to ensure they have adequate capital to finish the construction in the case any of these events occur. The final total capital investment required to construct the facility is $640,850.00.



1.4 5-year Production Plan

Production ProjectionsThe production and workforce plan is built off of 5 year projections in production targets. These production projections are shown in the table below:

Table 3: 5 Year Production Projections

Year 1 Year 2 Year 3 Year 4 Year 5

Planned Capacity

% 10% 13% 16% 18% 19%

Tonnage Capacity

Tonne 1300.01 1733.35 2600.03 3466.7 3466.7

Peas Tonne 325 433.34 650.01 866.68 866.68Lentils Tonne 325 433.34 650.01 866.68 866.68Chickpeas Tonne 325 433.34 650.01 866.68 866.68Soybeans Tonne 325 433.34 650.01 866.68 866.68* Production percentages based on 16 hour day of milling for 100% capacity


Board Of Directors

Andrew Ardell General Manager

Sales & Marketing Manager

Product Sales:S&M Manager

Product Marketing:- Andrew Ardell

- Sales & Marketing Manager

Plant Manager

Flour Mill Operator:Plant Manager

Product Feed & Storage:Operator


As shown in Table 3, the production targets for the plant are set to increase to 100% capacity in the first 5 years of operations. To facilitate the growth, employees of Agra-Elite Flour will also need to be added throughout the first 5 years of operations. The plant capacity target is producing ¼ of the capacity of each type of pulse flour (Pea, Lentil, Chickpea, and soybean) in the first 5 years. These numbers can be seen in Table 3 above.

To efficiently align with the production targets of Agra-Elite flour the employees required can be seen outlined in the table below:

Table 4: Hours worked per Employee

Operations Plan Year 1 Year 2 Year 3 Year 4 Year 5Plant Run Time per week(Hr) 30 40 60 80 80Hourly Employees HourlyPlant Manager per week(Hr) 30 40 40 40 40Plant Manager 2 per week(Hr) 0 0 20 40 40Laborers/week(Hr) 70 80 100 120 120Salaried Employees AnnuallyGeneral Manager/Week (Hr) 60 60 60 60 60Sales and Marketing/Week (Hr) 0 0 40 40 40

As can be seen in Table 4, the running hours during production of the plant increases the amount of employees required to operate it increase as well. In year one and two the plant requires one plant manager and two laborer’s to facilitate production. In year 3, a second part time plant manager as well as part time laborer is added. These additions then become full time employees in years 4 and 5 to facilitate 16 hours of plant operations, 5 days a week. As for employees on salary, a sales and marketing employee is added in year 3. This employee is expected to work 40 hour weeks. In years 1 and 2 the general manager will act as the sales and marketing personal.

The plant employees are paid an hourly wage, while the others are on salary. The expected salaries and wage dollars can be seen in Table 5 below.

Table 5: Salaries and Wages

Year 1 Year 2 Year 3 Year 4 Year 5Hourly Employees Hourly

PM Wage Per $ 18.00 $ 19.90 $ 21.90 $ 23.99 $ 26.19



HourLaborers Wage per hour $ 15.00 $ 15.75 $ 16.54 $ 17.36 $ 18.23

Salaried Employees Annual

General Manager Salary $70,000.00 $80,500.00 $91,525.00

$103,101.00 $115,256.00

S&M Manager Salary $55,000.00 $60,250.00 $65,762.00 $71,550.00 $77,628.00

The wages are all set to increase with an inflation rate of 2% each year. The plant manager’s wage will increase $1.00 on top of the inflation each year he/she remains with the company. The salaried wages are set to increase with inflation each year at 2% plus 5% increase. Salaried employees wages also include a 10% annual bonus upon achieving performance metrics laid out for them during performance evaluations.

Cost of Goods SoldDuring the first 5 years of operations, expenses and cost of goods sold are set to increase. These increases are based on plant operating hours, inflation, and sales and marketing expenses. As the target capacities increase, the utilities will increase from a rise in consumption. The Cost of goods sold will increase as the amount of raw materials being consumed by the plant each year rises.

The Suppliers of the raw products to Agra-Elite Flour will be four main farms in the Vanscoy, Sk area. These are farmers in which Andrew Ardell will buy a 10% equity stake in the business to tie them to the business operations and provide a constant supply of raw product. These equity-holding farms will also occupy the board of directors for the company. By having these farmers involved in the business they will be inclined to provide a high quality product as they are closely tied to the performance. These four main suppliers are: Ardell Seeds Ltd, Ardell Holdings, C2 Farms, and Carter Farms. The benefit to using these suppliers is that they will allow pay as needed contracts where the raw product needed can be bought throughout the year as required to eliminate the chance of being stuck sitting on a large quantity of raw inventory. This also eliminates the pressure of Agra-Elite Flour having to purchase the entire raw product inventory immediately following the harvest of the grain, as this would create an extremely inefficient inventory turnover ratio.

The utilities summary can be seen below. The numbers shown are estimates for the first year of operations. The full 5 years of utilities costs can be seen in the cost of goods sold summary.

Utilities Summary



Table 6: Utilities Summary

Utilities SummaryElectricalMilling Unit 56.90 KWBagging Machine 1.10 KWBucket Elevators X 2 1.10 KWConveyor 0.55 KWPlant lighting - 25 lights 3.20 KWTotal Kw 62.85 KWPlant lighting - 25 lights 250.00 KWTotal Annual Cost $4,774.84Heating - Annual Cost3200 sqft $1,600.00Water & Sewer3200 sqft $480.00

The utility cost estimates are based off the Saskpower rate for power paid at Ardell Seeds Ltd. This rate is 4.87 cents per KWh. This is the rate charged to any farm across Saskatchewan per KWh. The total dollar estimate is based off of the plant operating hours per week for year one.



2.0 Human Resources Plan

2.1 Human Resources Architecture

2.2 Job Descriptions

General Manager The general manager is responsible for business development and operations. This person is required to oversee daily operations to ensure the production targets are being achieved. They are responsible to ensure the Plant employees are familiar with the HACCP and ISO regulations that are required in flour production. The general manager is the acting sales and marketing manager for the first 5 years of production.

Sales and Marketing ManagerDevelop distribution channels through sales and marketing. Manage the product sales and product marketing personal through goal setting and evaluation. Mentor them as well as develop their sales and marketing strategies.


Board Of Directors

Andrew Ardell General Manager

Sales & Marketing Manager

Product Sales:S&M Manager

Product Marketing:- Andrew Ardell

- Sales & Marketing Manager

Plant Manager

Flour Mill Operator:Plant Manager

Product Feed & Storage:Operator


Plant ManagerOversee all production operations in the plant. Specifically in charge of the process of milling the product and ensuring the quality standards are being met. In charge of ensuring the laborers in the plant are working safely and efficiently. In the first 5 years of operations the Plant Manager is also the Flour Mill Operator.

Product Feed and StorageThis person is a laborer who is responsible for handling the storage of finished product in bags, stacked on pallets. They are also in charge of shipping and receiving any raw or finished products.

Product SalesResponsible for consistantly reaching out to individuals and companies looking to buy our flour. Also responsible for reaching out to new and potential clients.

Product MarketingThe duties involve using the four P’s of marketing to successfully and efficiently market Agra-Elite Flour products to the targeted segment. This marketing will also involve attending trade fairs to advertise the company’s vision and quality products.

2.3 Performance ManagementThe hourly employees will receive annual performance reviews from the general manager. During these reviews the person’s skills and abilities will be reviewed, as well as their competency on the job, and the level of achievement in developmental goals in which are set at the beginning of each calendar year. An annual bonus of up to 10% will be awarded based on the scores during this time.

The marketing and sales employees will receive quarterly performance evaluation. These employees will have sales and marketing targets set for them in which they are required to meet. If these goals are not being met, it will be at this time that a solution will be set in place to achieve them. If the targets are being met or exceeded, then the general manager will decide if it is feasible to set the targets higher. At the end of the fiscal year, based on the performance of the employee meeting sales and marketing targets a bonus of up to 20% will be awarded to the employee.

2.4 Board of DirectorsThe board of directors will be comprised of the general managers of the main suppliers of raw product to Agra-Elite Flour. A person will be appointed from each of the four farms outlined in the operations plan: C2 Farms, Carter Farms, Ardell Seeds Ltd, and Ardell Holdings. These individuals are integral in the business and will have invaluable contacts and personal to bring



to the business. As mentioned before, each of these persons will have a 10% equity stake in the company.

5.0 Marketing Plan

Agra-Elite Flour meets the demand for high quality, natural, organic, gluten free flours to consumers in North America. These flours will be made of four pulse products that are: Chickpeas, Lentils, Yellow Peas, and Soybeans.

5.1 Segmentation and Targeting

The market that Agra-Elite flour will be targeting is the gluten free consumer market through gluten free food producers and food wholesalers. Exactly how this will be accomplished will be discussed later in the marketing strategy section.

The development of the gluten free market sector in North America is growing substantially and is an excellent opportunity for Canada’s agriculture and Agri-food sector to capitalize on it. The Gluten free food consumer market in Canada consists of 10 million Canadians and is growing at 26% annually. The sales of Gluten Free products have grown exponentially from $27 million in 2012 to $460 million in 2014. This market segment is growing due to the increased celiac disease awareness and avoidance of gluten for other reasons (Agriculture and Agri-Food Canada, 2015). Growth is primarily due to the increased availability of gluten free products at mainstream retail outlets across the country, which coincidentally is one of the segments in which we will be targeting.

Agra-Elite flour will be targeting two main segments of the gluten free market. These Segments are: Gluten Free food producers and Bulk food Retailers.

5.1.1 Segment: Gluten Free Food Producers

These are organizations that are actively producing gluten free food substitutes to traditional foods most commonly ate by the population containing gluten. Some of these foods include pastas, chips, crackers, breads, and many others. These companies are becoming more and



more prevalent as more people realize the excellent business opportunity available to this growing market. Tolerant foods is among the largest of these food producers and has had most of their products accepted to be sold in Costco Wholesale Stores. The list of these food producers is endless; a few can be seen in the table below. If you would like to look at a more extensive list please refer to the link: http://www.glutenfreefind.com/listings-manufacturers-and-distributors.

Table 7: Potential Customer Type

Company Name ProductsTolerant Foods Pasta, Chips, CrackersKashi Foods Gluten Free food barsPurest Foods Chips, Bread, CrackersGoodbye Gluten BreadBarilla Pasta PastasMediterranean Snack Foods Chips, Crackers

5.1.2 Segment: Bulk food RetailersThese organizations are outlets that sell food in bulk quantities to consumers. They carry a very large number of products from nuts, to candy, spices, pastes, drinks, pastas, flours and many more. They are the Bulk Barns, Nutter’s, Strictly Bulk, and many others across Canada. These stores routinely offer gluten free flours such as lentil, chickpea, soybean, and yellow pea. Due to the growing demand for these gluten free flowers, the bulk food retailers are a prime market to supply the consumer directly with our products.

5.1.3 Future Segment: East Indian Bazaars

Following the first 5 years of operations, Agra-Elite Flour will be looking for growth opportunities. The opportunity of selling their flours in East Indian grocery stores across the country will be a market segment experimented with at that time. Pulse flours, and especially chickpea flour or “Besan” as they refer to it, are staple ingredients in their daily diets. The growing East Indian populations in North America will again provide an opportunity to enter a growing segment of the gluten free market.


http://www.glutenfreefind.com/listings-manufacturers-and-distributors

http://www.glutenfreefind.com/listings-manufacturers-and-distributors


5.2 Marketing Mix

5.2.1 Positioning

CompetitorsGiven the high level of attractiveness of the growing market segment, an organization can expect to face a fair amount of competition when operating within this segment. This is the case for Agra-Elite Flour. There are about 15 pulse flour producers across Canada; primarily from western Canada to Ontario. Many of these competitors offer retail to bulk sized quantities, but focus primarily on one of the two. Seen below is a competitor analysis of organization, location, and offerings.

Table 8: Competitor Analysis

Organization Location Products: Lentil, Chickpea, Yellow Pea, Soybean

Customer: Bulk, Retail, Both

Can Mar Grain Products Ltd

Regina, Sk Lentil Retail

Diefenbaker Seed Processors Ltd

Elbow, Sk Chickpea, yellow Pea

Retail & Bulk

Great Western Grain Co Ltd

Lloydminster, Sk Chickpea, Yellow Pea

Retail

Infra-Ready Foods Saskatoon, Sk Lentil, Chickpea, yellow Pea and others

Retail

K2 Milling Ltd Beeton, ON Lentil, Chickpea, Yellow Pea, Soybean and others

Bulk

Northern Quinoa Corp Saskatoon, Sk Lentil, Chickpea, and Yellow Pea

Retail

Jamestown Mills Jamestown Line, ON

Chickpea, Lentil Retail & Bulk

Best Cooking Pulses Inc

Portage La Prairie, MB

Lentil, Chickpea, Yellow Pea, Soybean and others

Retail & Bulk



These competitors serve primarily bulk international customers, or small retail customers. The figure below shows the spread of customers across western Canada.

Figure 10: Competitor Map

PositionThe segment of customers between bulk and retail within North America is a relatively unpopulated area not primarily served by any competitors. This is the best location in the market; therefore setting up Agra-Elite Flour’s position is vital. In analyzing the positioning map this can be seen, as a new player in the industry will want to compete in a relatively unpopulated area of the Positioning map during the entrance.



Figure 11: Positioning Map

5.2.2 Product

Agra-Elite Flour will be producing high quality, natural, organic and gluten free pulse flour. These flours are produced using high quality milling equipment following HACCP and ISO standards of quality production. The four types of flour produced will be lentil, soybean, chickpea, and yellow pea. These are the four most prominently bought pulse flour products.

These flours will be packed in 25 kg bags. These 25 kg bags best fit our demographic we are serving and align with the positioning in the market. In years 3-5 we hope to serve customers in



larger orders, and sell in 1 metric tonne super-sacks. Until these years, if customers would like larger orders of one metric tonne, this is simply just a 40-25kg bag pallet.

5.2.3 Price

Agra-Elite Flour will be using a low price entry to market to allow for an aggressive value proposition to their customers. We will be pricing close to bulk-international pricing, but also allow larger North American customers access to this pricing. These customers are used to having to pay a premium to obtain their raw products and will acknowledge our pricing strategy adds significant value to their business.

The pricing strategy used will apply a price of $68.25 per 25 kg bag of each type of flour. This pricing will remain constant across all four flour products. Most retail flour producers have different prices for each product, due to their demand and access to the products. Given Agra-Elite Flour’s strategic partnerships with farmers in the area, we will not have any issues with obtaining products required. This will be another great addition to the value proposition offered, as customers will see this as a more convenient and constant pricing strategy.

Agra-Elite Flour plans to offer an advanced wholesale pricing option to encourage new and existing customers to purchase larger orders. This pricing strategy will help produce larger orders, which will drop the gross margin slightly, but end up in much higher revenues from the larger orders. The pricing strategy can be seen in the table below.

Table 9: Pricing

Price Per Bag Bags per order$68.25 0-9 Bags$66.25 10-19 Bags$64.25 20-29 Bags$62.25 30+ Bags$55.00 Super Sack (equivalent of

40 bags)

PromotionThe products will be promoted and advertised through business to business marketing tactics. These are primarily digital such as a website, search marketing, inbound marketing, social



media marketing, and lead generation and analytics. There will also be non-digital marketing utilized as well. This will be discussed in more detail below in section 5.2 Marketing Strategy.

PlaceThis product will be sold online on the company website, through phone sales, and at trade shows. The product is all produced and stored on location near Vanscoy, Sk. It is shipped out from the plant delivering in 2-4 weeks from the time of an order placed. The product is shipped out in Agra-Elite Flours delivery van and delivered directly to the buyer’s location.

5.2 Marketing Strategy Tactics

The marketing strategy is built around business to business marketing to build a customer network and database. This involves a marketing blitz in years 1-3, followed by a reduction to about half the marketing in years 4 and 5. The idea is to recruit customers through awareness campaigns and marketing in years 1-3. Then upon obtaining these customers, the recruitment efforts will be cut back and a focus on maintaining customer satisfaction will become more apparent. When the customer network has been developed, it is much easier to reach out to them regarding new products, sales, specials, and anything else that may increase or maintain sales.

The business-to-business marketing strategies we will use are primarily search engine marketing, website marketing, inbound marketing, social media marketing, and through lead generation and analytics. These marketing strategies align best with Agra-Elite Flour’s sales targets and will prove to recruit our customers best.

5.2.1 Website MarketingThe central hub of our marketing strategy is to have our current customers and future customers visit our website. The website must be an effective use of our customer’s time. The website will offer detailed information on all the products offered by Agra-Elite Flour. The website will contain a blog that is updated daily with the current news and events in regards to pulse flours, pulse industry, and gluten free food markets. This will drive customers to our site more frequently to stay up to date with the current news and events in the industry. The website will also include the purchasing function for customers to make their flour orders online quick and easy. When customers visit the ordering screen, or the blog they will be



prompted to sign up for an account. This will allow us to retain customer information of those who visit the site, and help develop our customer network. The website will contain a feedback option in which customers can offer feedback on what they like or do not like, as well as offer suggestions as to what they think we could change. It is extremely important that the website is professional, credible, and offers all information our customers need to establish a strong sense of the way we operate and our principles. The website is the central hub of the business for customers to understand the company and products, it is extremely important it is maintained diligently. To understand if the website is serving the customer’s needs we will be consistently asking ourselves 7 questions when analyzing the website:

- Is the site credible?- Is the site trustworthy?- Is this a professional company?- Is this company stable?- Is this a company I could work with?- Does this site answer my questions?- Am I in the right place?

If any of these questions do not leave us feeling that the customer will answer yes, changes will be made in that regard to ensure that the site maintains its effectiveness.

5.2.2 Search MarketingThrough the use of search engine optimization (SEO) marketing we will aim to target our customers and attract them to our website. Given this is a B2B marketing plan, the search volumes are lower but through effective use we will be able to target a tightly-knit market. Google Adwords will be used as a search-marketing tool as well, as we can even further target our customers this way.

5.2.3 Inbound MarketingInbound marketing is using content to attract customers to our business through different stages of the purchasing tunnel. In Agra-Elite Flour’s case this will be the use of the website blog, Trade Shows, social media marketing, videos and SEO’s. As talked about previously the website blog will be updated daily with current news on pulse flours, pulse industry, and gluten free food market.

Agra-Elite flour will have its marketing and sales rep attending 12 trade shows per year in years 1-3, and 6 per year in years 4-5. At these trade shows we will have a booth, with posters that accurately depict Agra-Elite Flour’s products and value propositions to customers. The marketing and sales rep will have all the up to date information on pricing, delivery dates, and purchases. The rep will hand out brochures to customers, and have as many prospective



customers provide there information (email and phone) so we can add them to our customer database. This will be a very effective form of inbound marketing, as we will have some of our most knowledgeable staff there to answer any and all questions customers may have.

SEO marketing will be an effective inbound driving force as noted before. As well as social media marketing through LinkedIn and Facebook, utilizing these platforms we will be able to drive customers to our website; this will be discussed in section 5.2.4. We will also post videos of major production practices from milling and shipping products to harvesting the raw product in the fields. This will show our customers how their products are made, and where they are coming from.

5.2.4 Social Media MarketingAgra-Elite flour will use two main types of social media marketing: Facebook and LinkedIn. We will have a public and a private Facebook page. The public Facebook page will be for any customers inquiring about our company, where we are located, and what we do. We will post information about products offered and major production goals along the way. This is an excellent place to post videos and pictures as well. The public site will drive these prospective customers to our website for more information, in hopes they will provide their information to us to be added to our customer database. The private Facebook page will be a page for people currently in our customer database. They will have to be accepted into the group by our marketing staff. This page will release information on specials or promotions that includes semi-proprietary information like pricing. This type of information we don’t want released to the general public but just to our current customer base. We will also be sending out the same information via email to our customers in our database.

We will create a LinkedIn business profile using the premium business option. Our sales and marketing staff will also have personal LinkedIn profiles made. The business profile will post information about our products, as well as current information about the pulse flours, pulse industry, and gluten free food markets that pertain to our business. This will allow current and prospective customers to follow our business and the industry’s activities. In doing this we will be able to see who is interested in our business and contact them directly. Currently LinkedIn is widely used by many successful companies to update customers on many different aspects of the business from CSR activities to production. It is essential we have a strong LinkedIn presence.



5.2.5 Lead Generation and AnalyticsLead generation and Analytics is a bit of a liaison between social media marketing, search marketing, inbound marketing and website marketing. These marketing strategies are used to generate leads that will build the customer database. The goal of search engine marketing, inbound marketing, and website marketing is to connect with the customers and obtain their information so we can then send them information on new products and promotions.

We will also be pushing sales of products at this time, but we want to ensure we make the connection. Through trade shows, inbound marketing strategies, SEO’s, and our website we will drive customers to purchase our products through the website while building a customer database.

Some extra lead generation strategies that will take place is cold calling to set up meeting with prospective customers about our products. These customers will be considered by our sales and marketing personal via web searches, or LinkedIn. They will be contacted to find out if they currently use products our company produces or if they might use them in the future. If the answer to this question is yes then our marketing and sales personal will set up a time to meet with their team and discuss further how Agra-Elite Flour can meet their pulse flour requirements. The sales and marketing personal will also focus on nurturing current relationships with customers in the database, and provide meetings and discussions to ensure we are meeting their pulse flour requirements.

5.2.6 Marketing Strategy ConclusionTo conclude the marketing strategy section we will again highlight the main goals of the strategy. The marketing strategy end goal is to create sales, but there are a few main steps along the way for this to happen. In all of the marketing strategies used, the goal is sales but also it is equally as important to obtain prospective customer information to add to our customer database. Whether its social media marketing, inbound marketing, search marketing or website marketing we will be pursuing customer’s information (email and phone) to build our database. When the database is built it is much easier to reach out to our customers through emails and calling. This in turn is why we estimate the marketing costs to decrease in years 4-5. It is in these years that we can market through email and the website more effectively now that we have a way to contact our target market directly and easily. This can be seen depicted in the diagram below.




Sales and Marketing

Team

Marketing Strategy Customer Database


5.3 Marketing Budget

Table 10: Marketing Budget

Marketing Costs Weekly Year 1 Year 2 Year 3 Year 4 Year 5Sales Meetings (30 per yr) 30Fuel $ 300.00 $9,000 $9,000 $9,000 $9,000 $9,000Food $ 300.00 $9,000 $9,000 $9,000 $9,000 $9,000Hotel $ 300.00 $9,000 $9,000 $9,000 $9,000 $9,000Miscellaneous $ 100.00 $3,000 $3,000 $3,000 $3,000 $3,000Total Annually $ 30,000.00 $30,000 $30,000 $30,000 $30,000 $30,000Trade ShowsEach show $6,696.00

12 shows/year $80,352.00 $80,352.00 $80,352.00 $80,352.00 $40,176.00 $40,176.00

Cell Phones $2,400.00 $2,400.00 $2,400.00 $2,400.00 $2,400.00 $2,400.00

Computers (2) $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00

Social Media $ -Google AdWords

$195,000.00 $195,000.00 $292,500.00

$195,000.00 $97,500.00 $48,750.00

LinkedIn $12,000.00 $12,000.00 $12,000.00 $12,000.00 $12,000.00 $12,000.00Total Marketing Costs $320,752 $418,252 $320,752 $183,076 $134,326

5.4 Sales Projections

Table 11: Sales Projections

Financial ProjectionsYear 2017 2018 2019 2020 202125 Kg Bags Sold Per year 13750 17875 21450 23595 24774.75Price Per Bag 68.75 70.13 71.53 72.96 74.42Revenue per Product Line Yellow Peas $141,796.88 $188,022.66 $230,139.73 $258,216.78 $276,550.17 Lentils $378,125.00 $501,393.75 $613,705.95 $688,578.08 $737,467.12 Soy Beans $141,796.88 $188,022.66 $230,139.73 $258,216.78 $276,550.17 Chickpeas $283,593.75 $376,045.31 $460,279.46 $516,433.56 $553,100.34



Revenue Total $945,312.50 $1,253,484.38 $1,534,264.88 $1,721,445.19 $1,843,667.80 Total Cost of Goods Sold $368,671.88 $488,858.91 $598,363.30 $671,363.62 $719,030.44 Total Expenses $704,734.54 $868,078.21 $830,565.88 $731,864.45 $702,001.00 Taxes $ - $ - $ - $24,000.77 $52,829.55 Net Income $(128,093.91) $(103,452.75) $105,335.69 $294,216.35 $369,806.82

6.0 Accounting & Financial Plan

6.1 Financial StructureThe financial structure of the company would be composed of 45% equity and 55% bank debt. The debt financing will be obtained through farm credit Canada at a rate of 6.25%. This relates to a $250,000.00 equity investment, and $308,770.00 Debt investment to the company. The debt will be paid off over a period of 10 years. No additional debt is planned to be acquired in the following 5 years. An operating line of credit of $250,000.00 will need to be acquired to help deal with liquidity and solvency issues in the first 1-3 years.

Bank debt31%

Equity69%

Bank debtEquity

Figure 12: Debt to Equity

6.2 Capital BudgetThe facility will operate in a location near Vanscoy, Saskatchewan in on a 4-acre parcel of land with a new building constructed on it. The building will be constructed at a cost of $171,400.00 and include plant equipment inside valued at $181,250.00. The plant equipment will all be purchased new and has been sourced by an overseas vendor to be shipped here. The remainder of the capital budget is $189,725.00 and contains everything from a company



vehicle, delivery van, to office supplies and equipment, and spare plant parts and equipment. The capital budget also includes a $50,000.00 float to help with any inventory purchasing and holding issues. The total capital budget comes out to $542,375. A 20% contingency was then added to bring the total capital allowance to $650,850.00. This is the total amount to be split between the debt and equity financing.

6.3 Financial Analysis

6.3.1 Revenue Estimates

Agra-Elite Flour has one source of revenue only, the selling of lentil, chickpea, yellow pea, and soybean flour. The sales of these products are split up in the following way:

Table 12: Proportionate Sales Per Product Type

Pulse Type Percent of SalesLentil 40Yellow Pea 15Chickpea 30Soybean 15

The table below outlines the financial projections we can expect in the first five years of operations.

Table 13: Financial Projections

Financial ProjectionsYear 2017 2018 2019 2020 202125 Kg Bags Sold Per year 13750 17875 21450 23595 24774.75Price Per Bag 68.75 70.13 71.53 72.96 74.42Revenue per Product Line Yellow Peas $141,796.88 $188,022.66 $230,139.73 $258,216.78 $276,550.17 Lentils $378,125.00 $501,393.75 $613,705.95 $688,578.08 $737,467.12 Soy Beans $141,796.88 $188,022.66 $230,139.73 $258,216.78 $276,550.17 Chickpeas $283,593.75 $376,045.31 $460,279.46 $516,433.56 $553,100.34 Revenue Total $945,312.50 $1,253,484.38 $1,534,264.88 $1,721,445.19 $1,843,667.80 Total Cost of Goods Sold $368,671.88 $488,858.91 $598,363.30 $671,363.62 $719,030.44 Total Expenses $704,734.54 $868,078.21 $830,565.88 $731,864.45 $702,001.00 Taxes $ - $ - $ - $24,000.77 $52,829.55 Net Income $(128,093.91) $(103,452.75) $105,335.69 $294,216.35 $369,806.82



The figure below illustrates the trends we can expect from revenues, COGS, and net income.

1 2 3 4 5

$(500,000.00)

$-

$500,000.00

$1,000,000.00

$1,500,000.00

$2,000,000.00 Agra-Elite Flour Trend Analysis

Revenue Total

COGS & Ex-penses & Taxes

Net Income

Figure 13: Sales Trend Analysis

It can be seen from the trend analysis that in years one and two the business will experience negative net income. This is primarily due to the high marketing cost in these years in obtaining the customer network as noted in section 5.2 Marketing Strategy. In years three to five the business will begin to experience higher sales and a significant drop in marketing costs that will push the net income into a profitable margin.

Table 14: COGS, Gross Profit, Net Income Expectations

2016 2017 2018 2019 2020Sales 945,313 1,253,484 1,534,265 1,721,445 1,843,668COGS 368,672 488,859 598,363 671,364 719,030

Gross Profit 576,641 764,625 935,902 1,050,082 1,124,637Net Income (128,094) (103,453) 105,336 294,216 369,807

6.3.2 Revenues Per Product Line

The table below represents the revenues per product type we can expect in the first five years of operations.

Table 15: Revenue Per Product Type

2017 2018 2019 2020 2021Yellow Peas 15% $141,796.88 $188,022.66 $230,139.73 $258,216.78 $276,550.17Lentils 40% $378,125.00 $501,393.75 $613,705.95 $688,578.08 $737,467.12



SoyBeans 15% $141,796.88 $188,022.66 $230,139.73 $258,216.78 $276,550.17Chickpeas 30% $283,593.75 $376,045.31 $460,279.46 $516,433.56 $553,100.34Total Revenue 100% $945,312.50 $1,253,484.38 $1,534,264.88 $1,721,445.19 $1,843,667.80

The figure below illustrates the revenues per product that can be expected in the first five years of operations.

2017 2018 2019 2020 2021 $-

$100,000.00

$200,000.00

$300,000.00

$400,000.00

$500,000.00

$600,000.00

$700,000.00

$800,000.00

Revenue Per Product Line

Yellow PeasLentilsSoyBeansChickpeas

Figure 14: Revenue Per Product Line

6.4 Financial Performance

The initial capital expenditure of $650,850.00 is split as 31% bank debt and 69% equity as mentioned before. For an equity investment of this type the investors will want to see a return on investment of roughly 25% or higher to take on this level of risk. The table below outlines the financial performance indicators that can be expected from this investment.

Table 16: Financial Performance of Investment

Equity Investment $450,000.00Average 5-YearIncome

$111,581.00

Net Present Value $1,233,099.5IRR 37.2%



Net Payback $7,012,982.00

The average 5-year income is $111,581.00. This includes negative net incomes in years one and two of the venture, with the net income becoming positive in years three to five. The present net value of the equity investment is valued at $1,233,099.50. This value may seem high to some investors but I believe it is reasonable for the risks being taken on during this venture. Internal rate of return (IRR) is used in capital budgeting as a metric to measure the profitability of potential investments. The IRR of this venture is 37.2%. Which also may seem high but it is again fairly reasonable considering the risk in this venture weighed against the potential profits.

6.5 Break Even AnalysisIn this section I will describe the key performance metrics for Agra-Elite Flour to meet these financial estimates. The break even analysis is based on how many 25 kg bags of pulse flour will be required to be sold each day to achieve the projected sales revenues. The table and figure below outline the expectations for the base case in bags sold per day each year, as well as the number of bags required to be sold each day each year to break even.

Table 17: Break Even Analysis

Base Case Bag/week 264 344 413 454 476Breakeven Bag/week 397 461 425 353 321



1 2 3 4 50

100

200

300

400

500

600

264

344

413454 476

397

461

425

353321

Net Income Breakeven

Base Case Bag/year Breakeven Bag/year

Year

Num

ber o

f Cus

tom

ers p

er d

ay

Figure 15: Break Even Analysis

It can be seen that the break-even analysis reflects the net income estimates for the first five years of operations. As seen in section 6.3.1, Agra-Elite Flour expects a negative net income in the first two years of operations with year three being the year net income moves to a positive value. This is reflected in the figure above, as the base case for sales is lower than the break-even case for years one and two. In year three the base case surpasses the break-even case that translates into a positive net income.

For an in depth financial analysis of the venture please refer to the financial model submitted with business plan.

6.6 Sensitivity AnalysisThe sensitivity analysis outlines the expectations for any variance in the sales estimates. For example, if you sell more or less product than expected. The variable for the sensitivity analysis is based on the amount of bags sold per day. The growth estimates remain constant between the different cases, with the amount of bags sold per day in year 1 being the varying factor.

Table 18: Sensitivity Analysis

Bags Per Week Plant Capacity

Average 5-Year Net Income

Net Payback IRR Year 5 Owners Compensation

216 8.4% $(34,162.00) $3,621,290.00 19.6% $104,622.00240 9.4% $41,336.00 $5,291,660.00 28.3% $104,622.00264 10.3% $111,581.00 $7,012,982.00 37.2% $204,622.00



288 11.2% $181,140.00 $8,865,347.00 46.8% $298,319.00313 13.1% $248,562.00 $10,543,944.00 56.3% $451,226.00

It can be seen that with just a slight change in bags sold per day it creates a large variance either positively or negatively on the financial performance of the venture.

6.6.1 Low Sales ScenarioThe worst-case scenario analyzed is sales down as low as 216 bags sold per week (45 bags per day). In this case, the venture is not feasible as the average 5 year net income is negative with significant negative cash flows. This results in a low IRR of 19.6%, which would be too low for equity investors to be willing to take on the risk of investing in this venture.

The next lowest scenario, selling 240 bags per week (50 bags per day), results in a low but positive average 5-year net income. The business would incur significant negative cash flows, but would be able to weather the storm using the operating line of credit at this time. The IRR of this scenario is 28.3%, which is high enough to attract equity investors. The first five years of this venture may be a little tight financially but upon establishing a customer base the benefits are substantial in the future years.

6.6.2 High Sales ScenarioIn both of the high sales scenarios the IRR is substantially higher than the base case. The average 5 year net income is significantly larger as the fixed costs are being covered much easier leaving the business with more cash on hand. These scenarios are extremely positive, as it would foster expansion of the business through building a second facility in another province much sooner than expected.

6.7 Risk Analysis

The table below outlines some significant risks that Agra-Elite Flour can expect to face in the first five years of operations as well as the mitigation’s to these.

Table 19: Risks and Mitigation Strategies

Risk MitigationRaw Product Quality Raw Product Producer RelationshipsLow-Med Barriers to Entry First in Space

Producer RelationshipsSales Volumes Following through with Marketing PlanLiquidity/solvency Problems Operating Line of Credit



Product Quality HACCP & ISO CertifiedPrice Fluctuations Estimates of raw product made at highest price historically

Strategic Product producer relationships

The strategic relationships with the raw product producers will primarily mitigate these risks. By allowing each of the four farmers to own 10% of the venture through equity investment, Agra-Elite Flour can protect its raw product prices in the event of a large price fluctuation. Having these strategic relationships also protects Agra-Elite Flour from raw product quality issues as the farmers are closely tied to the performance of the company and will ensure they are doing the necessary due diligence to maintain the high quality of the products they are growing for the business.

7.0 ConclusionAfter thoroughly analyzing internal and external factors that Agra-Elite Flour will face in the first five years of operations it is apparent that the business is feasible. In the case the owner of this plan chooses to proceed it can be used to now obtain the proper equity investment from the strategic partners – raw product producers. Upon receiving the equity investment, the plan can then be provided to debt financing institutions to obtain the necessary financing. This venture is scaled as a medium to high risk with a potential for a high IRR. I strongly advised serious consideration to any investor wishing to pursue a potentially profitable business.



Works CitedAgriculture and Agri-Food Canada. (2015, 12 08). Gluten Free in the Marketplace. Retrieved 04 10, 2016, from Agriculture and Agri-Food Canada: http://www.agr.gc.ca/eng/industry-markets-and-trade/statistics-and-market-information/by-product-sector/processed-food-and-beverages/reports-and-resources-food-processing-innovation-and-regulations/gluten-free-claims-in-the-marketplace/?id=1397673574797

Barber, J. (2012, 01). Farm Forum. Retrieved 05 25, 2016, from Canadas Pulse Industry Adapts to meet Demand: http://farmforum.ca/article/canada%E2%80%99s-pulse-industry-adapts-to-meet-demand/

CIGI. (2014). CIGI. Retrieved 5 25, 2016, from Development of Gluten Free Products using pulse Ingredients: https://cigi.ca/wp-content/uploads/2015/01/PF-Gluten-Free-1-Pager_Final_14102801.pdf

Pulse Canada. (2015). Pulse Canada. Retrieved 05 25, 2016, from Pulse Industry: http://www.pulsecanada.com/pulse-industry

Statistics Canada. (2015). Pulses in Canada. Retrieved 05 25, 2016, from Statistics Canada: http://www.statcan.gc.ca/pub/96-325-x/2014001/article/14041-eng.htm



Appendix ANutrition Content of Wheat, Quinoa, and Pulse Flours:

Figure 16: Wheat Flour Nutrition



Figure 17: Quinoa Flour Nutrition



Figure 18: Lentil Flour Nutrition


agra-elite flour business plan

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