ESTABLISHING A GRAIN GROCERY BUSINESS IN UGANDA

wmutenza 21/10/2020 Compendium
ESTABLISHING A GRAIN GROCERY BUSINESS IN UGANDA

Introduction

Grains are agricultural products that have a very high demand in the country. They usually include: Simsim, ground nuts, soy beans, maize, popcorns, and cow peas.

The project idea is based on adding value by packaging good quality grains and selling them at relatively low prices. The project expects to package 72,000 kgs of assorted grains per annum. Initial investment costs are estimated at US$20,370 generating revenue of US$92,695 at a net profit margin of 43% and payback period of approximately 2 years.

Capital Investment Requirements in US$

Capital investment item units Qty @ Total
Motor truck(4 tones) No 1 14,000 14,000
Furniture & Fittings No 1 2,000 2,000
Packing machine No 1 1,000 1000
Grading machine No 1 1,000 1000
Grain cleaning machine No 1 1,200 1200
Dust woofers No 2 400 800
Weighing scale No 1 370 370
Total 20,370

Production and Operating Costs in US$

Cost Item Units @ Qty per day Pdn cost per day Pdn cost/ month Pdn cost/ year
Direct Overheads:
G. nuts Kgs 0.8 71 56.8 1,476.8 17,722
Soy beans Kgs 0.3 32 9.6 249.6 2,995
Pop corn Kgs 0.3 64 19.2 499.2 5,990
Cow peas Kgs 0.3 64 19.2 499.2 5,990
Packaging material Pcs 0.05 300 15 390 4,680
Sub-total 531 120 3,115 37,377

General Costs (Overheads):

Field collection fuel 125 1,500
Rent 300 3,600
Utilities 120 1,440
Selling & distribution 50 600
Salaries & wages 200 2,400
Miscellaneous expenses 30 360
Depreciation 424 5,093
Sub-total 1,249 14,993
Total Operating Costs 4,364 52,370
  1.  Production costs assumed 312 days per year with daily capacity of packing 231kgs of grains.
  2.   Depreciation (fixed asset write off) assumes 4-years life of assets written off at 25% per year for all assets.
  3.   Direct costs include: materials, supplies and other costs that directly go into packaging of the grain.
  4.   Total monthly days assumed are 26-days.
  5.   The valuation currency used is United States Dollars.

Market Analysis

The market for grains readily exists and their demand continues to grow mainly across borders to such places as Southern Sudan.

Project Product Costs and Price Structure

Item Qty/ day Qty/ year @ Pdn cost/ year UPx Total revenue
G. Nuts 71 22,130 0.73 16,096 1.3 28,769
Soy Beans 32 9,974 0.73 7,254 1.2 11,969
Pop Corn 64 19,948 0.73 15,510 1.3 25,932
Cow Peas 64 19,948 0.73 15,510 1.3 25,932
Total 231 72,000 52,370 92,602

Profitability Analysis Table

Profitability Item Per Day Per Month Per Year
Revenue 297 7,717 92,602
Less: Production & Operating Costs 168 4,364 52,370
Profit 129 3,353 40,232

Government Facilities and Incentives

Generally, food products are VAT exempt and hence taxes are minimized.

Risk

The business risk involved is price fluctuation, which may affect the targeted profits. However, this can be minimized by setting up buffer stocks in times of low prices and resell later when they are high.

1 Comments

  • Gideon Talemwa says:
    27/05/2020 at 20:48

    Hello Mr/Mrs
    I want to start this as my business and a source income.
    I want to Know more about this opportunity. Thank you

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