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Vegetable Farm using Drip Irrigation Business ProposalBusiness DescriptionVegetable farm using drip irrigationDraft: 6 August 2007ProponentMrs. Sibanda has only one year experience as the owner of the vegetable farm named “KhodaAgencies”. She is assisted by a team from the National Masterplan for the Arable Agricultureand Dairy (Nampaad), who also developed the business plan for the vegetable farm. Mrs.Sibanda is chairlady of the Glenvaley farmers association. She managed to develop the farmand turn it into a profitable business within one year. She was a paid employee before shestarted the vegetable farm and has a diploma in marketing. The farm is financed through theCitizen Entrepreneurial Development Agency (CEDA) and has 6 employees.LocationThe vegetable farm is located on the outskirts of Otse (55km from Gaborone), South-East ofthe village centre.Business FactorsThe vegetable farm consists of threedistinct areas: Open field with drip irrigation Net house with drip irrigation Covered area with hydroponicsThe open field (see photo on the right)consists of 3 hectares and different cropsare grown such as onion and cabbage.There are two boreholes at the farmwhich are approximately 160m deep.The water is pumped into a reservoir(see photo on the right).The net house has an area of 1 hectare.A wide range of vegetables are grown inthe net house such as bell peppers,lettuce, spinach, broccoli, beetroot,eggplant and cauliflower.At the left of the field are onions, at theback are cabbages and the drip irrigationsystem can be seen at the rightThe covered area totals 0.5 hectare,where tomatoes are grown usinghydroponics. Most hydroponics systemscomprise of beds or pots that are filledwith an inert substrate, or growingmedium such as vermiculite or sawdust,which replaces soil to hold plant rootsand moisture. A liquid nutrient solutionruns through the beds to feed the roots.The roots are always kept moist, but areaired periodically so they do not rot.Water is circulated and nutrient levelsare closely monitored and added asrequired for optimum plant growth.Water storage of 185.000 litres1

Mrs. Sibanda, the owner of the vegetable farm inside the net houseThe farm is connected to the mains electric grid and uses electricity for pumping water into astorage tank, operating booster pumps for drip irrigation and pressure pumps for the hydroponicssystem and for lighting. This case study compares the use of grid electricity with solar PVelectricity for pumping water using drip irrigation to grow cabbage in the open field. Calculationsfor other vegetables are similar. Growing of vegetables in the net house and hydroponically werenot considered due to lack of information regarding some of the parameters that are required forthe calculations. These farming techniques are also not as easy to replicate due to the largercapital investment and complexity of operation, such as in the case of hydroponics.Pre-AssessmentThe vegetable farm is an existing and operating business. It has proven to be feasible. Thisexercise serves as an assessment to determine if similar vegetable farms may be feasible usingsolar PV for water pumping and to determine the most important success and failure factors.Only growing cabbage in open field using drip irrigation is considered for the case study. Thegrowing season for cabbage is 3 months and 4 crops can be harvested during the year. For easeof comparison, calculations are carried out for one hectare. From working experience andrecords that were kept, the following parameters are known:Cost of equipping the borehole and irrigation system per hectare:P88,714Cold room, office and office equipment:P14,250Drilling of the borehole and pump:P49,120Storage tank (370.000 litres). This is double the size compared topumping with grid electricity to cover for cloudy days:P42,5003Cost of solar PV array for solar pump with head of 50m, 90m /dayand P35/Wp:Small truck:P121,092Average kg cabbages per year (20% production losses):224,000 kgAverage price of cabbage per kg:P1.62Wages labourers and manager:P11,700Insurance per year:P800Ploughing per ha per year:P1,200Vehicle maintenance cost per year:P10,000P200,0002

Covered areas where tomatoes are grown using hydroponicsBased on these figures a Pre-Assessment of the vegetable farm using drip irrigation with solarPV was carried out. Results are shown in Table 1. Also calculations were carried out comparinggrid electricity with PV solar electricity. Results of this assessment are shown in Table 2.Table 3 below shows a comparison between the two sources of energy.Solar PV ElectricityGridElectricityROI44%63%Paybackperiod (yrs)1.811.35It can be observed that growing vegetables in both cases is highly profitable. The largeinvestment for the solar panels has a limited impact on the ROI. The reason for this can beobserved from the sensitivity analysis below Table 3. The cost of energy/unit has only a limitedinfluence on the change of ROI.Market AssessmentMost of the vegetables are sold to the supermarketchains in Gaborone. Limited amounts are sold from thefarm to local customers. The vegetables aretransported in a small truck (bakkie). Since Mrs.Sibanda resides in Gaborone, she drives backward andforward between Otse and Gaborone and takes loadsof vegetables with her. There is not a plannedmarketing strategy and marketing is mostly donethrough word-of-mouth. The demand is currently higherthan supply therefore there are no problems selling thevegetables the market. Late payments for the sales ofvegetables sometimes cause problems.Seedlings are bought and readily available. To reducecosts, the farm will grow their own seedlings from seedsfor most vegetables in the future.Harvested and packed cabbagesready to be marketedThe cost of chemicals and fertilisers is perceived as very high and it was expressed thatgovernment should subsidise these items to help farmers.3

Operational PlanThe vegetable farm managed to develop into a successful business within a year, mainly due theenergetic input from Mrs. Sibanda. Although she did not have any prior farming experience, shestarted the business, and through her background in marketing and good communication skills,she managed to access the market easily and obtain information from experts as required.Strategic choices have been made to spread risk. Farming is carried out using differenttechnologies, e.g. open field with drip irrigation, net house with drip irrigation and covered areawith hydroponics. Risk is further spread through growing different type of crops.With the feasibility and viability firmly established in Tables 1 to 3, table 4 gives the dynamicdevelopment of income and cost during the first three years of operation. The cash flow analysisshows how much financing is required, which is P511,000. The graphs visualize this businessdevelopment for the first year and the first 3 years. Finally, Table 5 gives the profitability forecastand balance for the business.4

Table 1: Pre-Assessmentof vegetable farm using drip irrigation with solar PV electricityINSABA Preassessment of Project ProposalsBotswanaSouth East district, OtseSolar PV pumpVegetable Farm with drip irrigationCountry:Pilot Region:RE Technology:Business Idea:Proponent name, contactMrs SibandaYears of experience as owner of businessNumber of employees w/contractProponent uses bank acount(yes 5, No 0)Experience with formal loan(received 5, applied 3, no 0)Experience in cost calculations, business p(no 0, several 5)Practice in maintaining/operating equipment (RET) (none yet 0, regularly 5)Total16553020Calculation of ROIBWPDetermination of parametersInvestment Capital88,714Cost of equipping the borehole and irrigationsystem per hectareInvestment Capital14,250Cold room, office and office equipmentInvestment Capital49,120Drilling of the borehole and pumpInvestment Capital42,500Storage tank (370.000 litres). This is double thesize compared to pumping with grid electricityto cover for cloudy days.Investment Capital121,092Cost of solar PV array for solar pump with headof 50m, 90m3/day and P35/WpInvestment Capital200,000Small truckTotal InvestmentCapitalInvestmentLifespan515,6767 year loan period plus 2 years grace period for Life of the investment - i.e. period before it mustCEDA loanbe replaced224000Price/unitRevenueVariable cost/unitVariable cost/unitVariable cost/unitVariable cost/unitTotal 54Average kg cabbages per year (20%production losses)Average price of cabbage per kgPula/yearCabbage seedlingsFertiliserPest controlTransport cost0.00Cost of electricity per kg producedFixed costsFixed costsFixed costsFixed costs11,7008001,20010,000Wages labourers and managerInsurance per yearPloughing per ha per yearVehicle maintenanceTotal fixed costs23,700Total fixed costs per yearAmortization/unit:0.2657,297Direct costs perunit:0.55122,349Gross Margin/unit1.070.11Total costsNet Margin0.650.97Units produced per yearSales price per unit produced and soldSales price multiplied by number of units soldCost per unit produced e.g. material, processingpackaging0.29Fixed costs/unitDepth of b.h. is 162 mTotal cost of investment9ProductionCost of energy/unitDefinitionsCosts solar PV averaged over 20 yr, fuel for caradded to variable costAnnnualAnnnualAnnnualAnnnualAnnual indirect costs such as rent, telephones,salariesAmount needed per unit to cover investment inlifetimeVariable costs plus amortization plus cost ofenergySales price per unit less the direct costs per unitNote that all calculations are per hectarewith the exception of the drilling and146,049 equiping of the borehole216,831Total fixed costs divided by the number of unitsproducedDirect costs plus fixed costsRevenue less total costs5