For the past 10 yeas the Botswana Meat Commission has failed to meet 70% of the EU quota for Botswana beef. The cattle population in Botswana outnumbers humans at a 5:1 ratio, but locals do not sell to the BMC because the cattle has to be in a feedlot 90 days prior to the purchase by the BMC. Most people can't afford the feedlot fees, so they sell to local slaughterhouses.
There is a huge opportunity to bridge the gap that exists between the quota set by the EU for Botswana beef, and the actual numbers exported. Botswana is cattle rich, which means that supply is not an issue as farmers tend to sell to slaughterhouses for a cheaper price than they would get when feedlotting the cattle before selling.
Feedlot costs, and transport fees to the BMC has meant less cattle for the export market.
Our forecasts indicate that for an investment of $6 000 000, the investor would get 4 times the initial amount over a 5 year period.
What makes this a good idea is the minimal level of competion, as the BMC is struggling to meet the required export numbers, all competitors (for a change) will be working towards the same goal. We see it as working together as opposed to competition.
The investor has the opportunity to enter the exciting beef market, and hopefully assist us in setting up a new bigger feedlot that will generate income for him even after the initial 5 years when he exits from the project.
We are in the food industry, particularly, in the meat subindustry. This industry will continue to be relevant as people eat meat, irrespective of technological change.
The project is ready for an investor, as we currently have the staff ready to run it. I have managed to secure the services of some leading players in the field, who come from different companies in the cattle industry. We are just waiting on funds to start in the new year.
As this is a startup, the funding is required for setting up, buying initial livestock and feed, and salaries for the first 3 months, after which we will be running on our own.
We are new and want to have reputation as one of the top 3 suppliers to BMC. We are hiring managers with expertise in this area, and who are well connected with farmers in our target sourcing areas.
We plan to be in this business for 10 years, so we plan to go out and be the best in everything that we do. This includes getting cattle from sources at a slightly better price than the competition. We have found out that they pay on average, and we have promised a 10% better price per kilogram of a live cow. This is sustainable as the only competion in our target area is foreigners, who do not speak the local language. We will always know how much they are paying, and we will beat the price.
The opportunity lies in selling big quantities, and we are looking at 7000 cattle per quater to the BMC. We are looking at making between 18-25% profit on each head, depending on how each performs in gaining weight during the 90 day stay in the feedlot.
There is a clear evidence from my discussions with other feedlot operators that there is a lot of money in this business. Incidentally, one of the country's former presidents is doing the same business, and it has made him a very rich individual because of limited competion.
The investment is needed for the initial purchase of livestock, setting up office and paying salaries for the initial 3 months.
Our payback schedule, as can be seen in our cashflow forecast, is to pay for 4 weeks each quater that we will be selling. Because we have no capital, we are offering 50% of the annual profit for each of the 5 years.