Saskatoba Swine Inc.Saskatoba Swine Inc.Feasibility StudyFeasibility Study

Kyle Dyok Melissa FuchsKyle Dyok Melissa Fuchs

Brandy Street Jenay WerleBrandy Street Jenay Werle

Project BackgroundProject Background

• 10,000 head swine finishing facility 10,000 head swine finishing facility near Fleming, Saskatchewannear Fleming, Saskatchewan

• Rent pig spaces to Elite Swine Inc.Rent pig spaces to Elite Swine Inc.

• Manure is sold as fertilizer to area Manure is sold as fertilizer to area farmersfarmers

Operations PlanOperations PlanOperations PlanOperations Plan

LocationLocationNE 33-12-30 W1NE 33-12-30 W1

Site PlanSite Plan

N

S

WE

Floor PlanFloor Plan

A

B

C

D

E

H

JG

F

W

A utility roomB gatesC scaleD shower/bathroomE load-outF office/lunchroomG aislewayH hog penJ feeders/waterers

E

N

S

ROOM A ROOM B

Production CycleAll animals into barn

(~ 50 lbs each)Count animals

Sort animals by sex and by size

Finisher diet

Wash and disinfect entire barn

Non-market weight pigs wait one week

Grower diet

Market weight pigstattooed and shipped

All animals out of barn by week 20

Semi-annual sale of manure

Weighing

Operating ExpensesOperating ExpensesDepreciation 128,821$

Manure Application 30,750$

Utilities 21,250$

Phone (Cell and Office) 473$

Land Taxes 170$

Accounting 3,000$

Insurance 8,000$

Interest 152,950$

Marketing 1,658$

Salaries 37,500$

Contracted in Maintenance 5,649$ Barn Washing 2,200$

Total Operating Expenses 392,420$

Summary of Financial ResultsSummary of Financial Results

Year One Year Two Year Three Year Five Year TenNet Income After Taxes (101,294)$ (36,364)$ 4,487$ 68,950$ 169,682$

2,458$ 123,265$ 22,724$ 20,489$ (9,131)$ -$ -$ 75,723$ 99,148$ 90,035$

0.0% 92.2% 0.1% 0.1% 0.2%Growth in Total Operating Expenses 0.0% 37.5% -7.5% -6.0% -4.4%

Net Cash FlowDivideneds Paid Growth in Revenues

Capital ExpendituresCapital Expenditures

20,000$ Barn Structure 1,800,000$ Total Equipment 850,000$ Total Office Furniture 3,210$

50,000$ Total Other Building Costs 388,074$

Total Capital Expenses 3,111,284$

Land

Tractor

Human ResourcesHuman Resources

Corporate StructureCorporate Structure

Board of Directors

Accountant

ProductionManager

ProductionTechnicians

ProductionTechnicians

Health and Safety

• WHMIS

• First Aid/CPR

• H2S training

• Canadian Quality Assurance

• Introduction to pig husbandry

• Finishing hog manager course

• Hearing and lung tests annually

Salary SummarySalary Summary

Year One Year Tw o Year Three Year Four Year Five Total

Manager 35,000$ 35,700$ 36,414$ 37,142$ 37,885$ 182,141$

Technician One 20,000$ 20,600$ 21,218$ 21,855$ 22,510$ 106,183$

Technician Tw o 20,000$ 20,600$ 21,218$ 21,855$ 22,510$ 106,183$

394,507$ Total Wages

Benefits SummaryBenefits Summary

Five Year Estimate

Employment Insurance 3.08% 12,021$

Canada Pension Plan 4.70% 18,344$

Worker's Compensation 3.00% 11,709$

Medical & Dental Benefits $400/Employee 6,371$

Total 48,446$

Marketing Plan

Marketing Plan

Hog Market Background

• World consumption of pork continues to rise

• Saskatchewan has relatively low hog production cost when compared to other provinces within Canada

• Currently Saskatchewan produces approx. 300,000 tons of pork annually

Marketing ObjectivesMarketing Objectives

• To gain community acceptance of intensive To gain community acceptance of intensive hog operationshog operations

• To promote the use of hog manure as a To promote the use of hog manure as a sustainable, affordable source of fertilizersustainable, affordable source of fertilizer

• To convey to potential investors the fiscal To convey to potential investors the fiscal benefits of investing with Saskatoba Swinebenefits of investing with Saskatoba Swine

Competitive Advantages

• No direct competition by other hog producers at this time

• Location

• Value added product

• Price our product competitively, however application provided at no charge

• Cattle and other livestock posses no threat

Informing the Community

• Initial contact: Neighbor visits performed by Myles Fuchs

• Community Information Night• Discussion

• Q & A

Manure

• 10,000 hogs will produce 8.2 million gallons of manure per year

• Manure needs to be applied semi-annually

• Liquid manure contains Nitrogen, Phosphorus, Potassium, and micro-nutrients

Manure Market

• 2,938 acres are required for a 3 year manure spreading rotation within a 2 mile radius

• 980 acres/year is required for application• Application costs to Saskatoba - $62.76/acre

• Cost of manure to producer - $ 21.11/acre

Manure Application Costs

Cost to Producer Expenses/Acre Producer Applied * Saskatoba AppliedWheat crop/ Black Soil ZoneFertilizerNitrogen $15.60 $21.11Phosphorus $7.20 $4.50

Machinery OperatingFuel $8.40 $0.00Repair $8.00 $0.00

Custom Work & Hiring $6.25 $0.00

Machinery Depreciation $16.00 $0.00

Total Costs with N applied $54.25 $21.11

Total Costs with P and N applied $61.45 $25.61

* Producer applied cost taken from the 2002 Crop Planning Guide (Sask Ag and Food)

Financial PlanFinancial Plan

Financial Activities

• Forecasted along a ten year period, adjusted for inflation

• Important costs to the operation are:

Year One Year Two TotalInterest Expense 152,950$ 146,697$ 299,647$ Manure Application 30,750$ 63,345$ 94,095$ Utilities 21,250$ 43,775$ 65,025$ Wages 37,500$ 76,500$ 114,000$

Financing The Barn

Long Term Bank Debt 2,300,000$ Equity Investment 900,000$

Total Equity 3,200,000$

Net Income Projection

(150,000)

(100,000)

(50,000)

-

50,000

100,000

150,000

200,000

1 2 3 4 5 6 7 8 9 10

Year

Net

Inco

me

Sensitivity Analysis

$(150,000)

$(100,000)

$(50,000)

$-

$50,000

$100,000

Barn Rental Wages Manure Sales

Critical Variables

Ne

t P

res

en

t V

alu

e

Base Case

Best Case

Worst Case

Break Even Analysis

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

0 2 4 6 8 10 12

Year

Bar

n R

enta

l

Economic Breakeven

Net Income Breakeven

Base Case

Cash Flow Breakeven

Financial RatiosRatios Year One Year Five Year TenLiquidityCurrent Ratio 1.89 3.62 2.99Leverage RatiosDebt ratio 0.73 0.73 0.53Debt to Equity Ratio 2.76 2.92 1.23Profitability RatiosGross Profit Margin -0.35 0.12 0.34Net Profit Margin -0.35 0.12 0.27Return on Equity -0.13 0.11 0.20

The End

References Abacus Signs. Saskatoon, SK. Personal communication. November, 2002. Baskerville, Heather. Elite Swine Incorporated. Brandon, MB. Personal communication. October, 2002. Bergen, Barry. Elite Swine Incorporated. Brandon, MB. Personal communication. October, 2002. Baudry, Guy. Elite Swine Incorporated. Brandon, MB. Personal communication. October, 2002. Eister, Susan. Elite Swine Incorporated. Brandon, MB. Personal communication. October, 2002. Fuchs, Myles. Fleming, SK. Personal communication. September-December, 2002. Henley, Bill. Saskatchewan Agriculture and Food. Saskatoon, SK. Personal communication, October, 2002. Johnston, Bob. CIBC: Account Manager. Humboldt, SK. Personal communication. September-December,

2002. Kaastra, Shepp. Elite Swine Incorporated. Brandon, MB. Personal communication. October, 2002. Ransom, Jeff. CIBC: Agriculture Division. Winnipeg, MB. Personal communication, September-December,

2002. Redeckop, Doug. Elite Swine Incorporated. Brandon, MB. Personal communication. October, 2002. RM of Maryfield. Maryfield, SK. Personal communication. September-October, 2002. RM of Moosomin. Moosomin, MB. Personal communication. September-October 2002. Saskatchewan Agriculture and Food, Agricultural Operations Section. Manual for developing a manure and

dead animal management plan. March 2000. Available online: www.agr.gov.sk.ca Accessed: October2002.

Saskatchewan Agriculture and Food, Inspection and Regulatory Management. Establishing and managinglivestock operations. July 2001. Available online: www.agr.gov.sk.ca Accessed: October 2002.

Sask Energy. Saskatoon, SK. Personal communication. November, 2002. Sask Power. Saskatoon, SK. Personal communication. November, 2002. SaskTel. Saskatoon, SK. Personal communication. November, 2002. Swanson, Darren. Community Pork Ventures. Outlook, SK. Personal communication, November, 2002. T. L. Penner Construction. Kola, MB. Personal communication. November, 2002. Williams, Dr. R. D. University of Saskatchewan. Personal communication. September, 2002. Wright, Marten. Community Pork Ventures. Outlook, SK. Personal communication, September-December,

2002.