Tourism Top Crops- Pineapples

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HON. EDMUND BARTLETT, CD, MP MINISTER OF TOURISM It is an honour for the Ministry of Tourism, through our dynamic Tourism Linkages Network, to share viable investment opportunities in locally produced fresh produce, which are in high demand. Like many other initiatives of the Network, the findings in these crop profiles, create a unique opportunity to bring us another step closer to bridging the gap between our hospitality and agriculture sectors.

We have long since recognized that tourism and agriculture are intimately linked and are of the firm belief that our farmers have the ability and the potential to supply our tourism sector. If a linkages approach is not explicitly encouraged, it is too easy for our hotels, restaurants and attractions to purchase only the basics locally while continuing to source goods and services from already-familiar overseas suppliers.

Therefore, as part of our ongoing efforts to bridge this gap, the Network has been actively researching and creating opportunities for our local suppliers to better meet the increased demands of our sector. It is this belief, coupled with the knowledge of potential earnings from supplying the sector that my Ministry has been on a drive to build capacity for our suppliers to capitalize on these earnings.

tourism sector include strawberries, onions, tomatoes, pineapples, sweet peppers and Irish potatoes.

In 2015, we completed the first Tourism Demand Study, which revealed that there was a high percentage of leakages, in products that we are either able to produce or are already producing. Buyers stated that the high imports of particular produce, that are grown locally, are because of the poor frequency of supply and the quality were deemed inconsistent.

I must commend the entire team who worked tirelessly to make these crop profiles a reality. I would like to specially praise the Linkages Network’s Technical Working Group on Agriculture, which commissioned this initiative. I additionally want to thank our partnering Ministries and key stakeholders who will be helping us to facilitate the build-out of this currently scarce commodity.

Hon Edmund Bartlett, Minister of Tourism

We have been working very closely with the Ministry of Industry, Commerce, Agriculture and Fisheries to combat this issue by providing renewed support to our farmers and by sharing the findings of our studies to guide the crop selection for the sector.

I am very proud of this new initiative, which highlights findings of six key crops in high demand within the

Messages

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ADAM STEWART, CD CHAIRMAN, TOURISM LINKAGES NETWORK

With arrivals to Jamaica at an all-time high, the tourism industry’s ability to continue being the pipeline for the growth and advancement of other sectors is tremendous.

One such mutually beneficial and exemplary relationship exists with the agricultural sector; even more so as we continue to work assiduously to further reduce the country’s import gap by contracting the marketing space between local demand and supply.

Over the years, the Tourism Linkages Council has developed strategies and implemented tactical reform aimed at contracting said marketing space, bringing together tourism stakeholders and local farmers.

This interconnectivity is critical to the long-term viability and sustainability of not just Jamaica’s tourism industry but the country’s economic development as a whole.

Today’s opportunities were unheard of yesterday and the tourism platform is now set for even greater explosion, taking other sectors along with it.

When the Tourism Demand Study in 2015 highlighted the loss of revenue due to an import bill which could be offset by local production, the Tourism Linkages Council accelerated its efforts to foster new strategies for agricultural expansion to plug this gap. Compared to many other countries in the region, Jamaica’s climate and soil is rich for multi-crop cultivation and with the right support, cohesive relations and alignment, we now find ourselves at a crucial juncture with the impetus to charge full-speed ahead.

The six investment crop profiles being presented – onions, strawberries, irish potatoes, tomatoes, pineapples and sweet peppers - are essential to the growth of agriculture

4

Adam Stewart, Chairman, Tourism Linkages Network

in our country as it will open doors to increasing opportunities for these crops. We therefore encourage our stakeholders to embrace these opportunities as there are huge potential for all parties.

This is an awesome initiative for Jamaica! Our Island never ceases to amaze me; we are truly the land of opportunities. Let us re-commit, keep the focus and get it done!

Messages

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DR DERRICK DESLANDES CHAIRMAN, AGRICULTURE TECHNICAL WORKING GROUP

The Tourism Linkages Council continues to positively impact the relationship between Tourism and other critical sectors of the Jamaican Economy through its various activities geared at improving the participation of Jamaicans within the sector ultimately improving their lives and livelihood. The latest of these activities is the production by the Agriculture subcommittee of investment profiles to assist existing farmers and other potential investors to better understand the opportunities associated with supplying and meeting the demands of the tourism industry.

We believe at linkages that a critical building block to long-term sustainable relationships between these critical sectors is the provision of information and data to increase knowledge among our farmers, hoteliers and other critical stakeholders in the agriculture tourism supply chain. This is the first in a series of publications aimed at products of economic importance to the tourism industry.

The products selected are guided by the research findings from our tourism demand studies. These investment guides will also be updated from time to time as we strive to improve our service and the quality of the information provided to you our valuable stakeholders.

Dr Derrick Deslandes, Chairman, Agriculture Technical Working Group

Messages

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CONTENTS MESSAGES............................................................................................................................................. 3 Minister Of Tourism...................................................................................................................................... 3 Chairman, Tourism Linkages Network............................................................................................................ 4 Chairman, Agriculture Technical Working Group.............................................................................................. 5 INTRODUCTION....................................................................................................................................... 8 Background................................................................................................................................................. 8 History of Pineapple in Jamaica..................................................................................................................... 8 WHY INVEST IN PINEAPPLES................................................................................................................. 9 Local Investment Opportunity........................................................................................................................ 9 Cost Of Production....................................................................................................................................... 10 INVESTMENT ANALYSIS......................................................................................................................... 14 Climate........................................................................................................................................................ 14 Pest And Disease Management..................................................................................................................... 15 FINANCIAL VIABILITY AND BANKABILITY............................................................................................. 16 Project Cost................................................................................................................................................. 16 ANNEXES................................................................................................................................................ 17

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AN INVESTMENT PROFILE OF THE PINEAPPLE INDUSTRY IN JAMAICA

A Tourism Linkages Project

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BACKGROUND Pineapple (Ananas comosus. L Merrill) is cultivated in all the tropical and subtropical countries. The qualities of pineapple in the diet, its exquisite flavor, high digestibility and incomparable beauty has given it a premier place among the world’s fruits. It is one of the best known of all tropical fruits. Pineapple is cultivated in commercial quantities in a great number of countries including Thailand, The Philippines, Brazil, China, and India. In recent years Costa Rica, Ecuador and Colombia have been highlighted.

HISTORY OF PINEAPPLE IN JAMAICA The pineapple plant is native to South America and was likely imported to the Caribbean by native tribes. The first ever record of pineapple in the Caribbean was by the Spanish explorers (Christopher Columbus) who found the fruit in the Caribbean in 1493. It was so treasured that at one time, only royalty in Spain was allowed to eat the fruit.

Different historical accounts reveal that planters at great risk and danger stole pineapples from Jamaica and took them to the Hawaiian Islands from which point pineapple production mushroomed. The appearance of the pineapple as part of the Court of Arms, a Jamaican national symbol, speaks volumes to the importance of this fruit nationally.

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introduction

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LOCAL INVESTMENT OPPORTUNITY The Jamaican pineapple industry is still relatively small. According to Ministry of Agriculture & Lands’ Data Bank information, production totalled only 25,296 tonnes in 2016.

The industry presents viable investment opportunities for both farmers and agro-processors. According to information on external trade from the Uncomtrade database, Jamaica imported over J$357.7 million (CIF value) (table 2) of processed pineapple and pineapple-based products in 2016. While local production of fresh fruits was valued at J$3.58 billion as prices sky rocketed between 2014 and 2016.

The amount of pineapple required to replace imports is estimated at approximately four million kilograms. Currently, most pineapples produced locally are sold as fresh with just a small quantity sold to agro-processors producing tit bits for the local pizza restaurants. Increased demand in the fresh market is expected from the tourism industry as that industry expands, given projections for an increase in room count of approximately 25%, and tourist arrivals by more than 30%.

TABLE 1 Annual Pineapple Production and Value (J$) 2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Crop prod (tonnes)

18,102

20,351

21,368

19,749

17,607

19757

19185

18374

18819

25296

Harvested (ha)

807

910

1,029

1,061

979

1075

1035

1035

1043

1391

Avg. Farmgate Prices

52.16

61.99

76.73

99.74

101.98

99.59

104.8

102.44

121.82

141.36

Crop Value (J$'000)

944,200

1,261,558

1,639,567

1,969,765

1,795,562

1,967,600

2,010,588

1,882,233

2,292,531

3,575,843

TABLE 2 Estimate of Pineapple Production per Quarter QUARTER

2012

2013

2014

2015

2016

Jan – Mar

1,785

1,946

2,424

4,026

4,078

Apr – Jun

8,700

7,121

8,169

6,032

9,648

Jul – Sept

6,764

7,078

5,178

6,293

7,884

Oct – Dec

2,507

3,041

2,603

2,068

3,687

Total Production

19,756

19,186

18,374

18,419

25,297

WHY INVEST IN PINEAPPLEs

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Production trends in Jamaica have begun to show significant changes especially over the past year or so, with demand increasing steadily for processed pineapples although there was a dip in 2013 to 2015 moving from J$300m in 2012 to J$357m in 2016, an increase of 19% over the 5-year period. A significant portion of these imports are bulk concentrate and juice utilized by the agro-processing industry. Some of the major players in this industry have indicated their interest in utilizing local products as long as supplies are constant and of good quality and prices are reasonable. Thus, there is the opportunity for local farmers to produce for the local agro-processing industry; however, the varieties must be ideal for processing - e.g. MD2.

In table 2 production trend as estimates are highest for each second quarter and lowest for the fourth quarters over the 2012-2016 period. Table 3 highlights the movements in farmgate prices over the same five-year period. The maximum price change occurred in 2016 where a 38% upward movement was recorded. The fourth quarter recorded the highest movement in farmgate prices registering a 47% increase.

COST OF PRODUCTION The cost of production to produce one acre of pineapples is a function of the price of the planting material and the variety of pineapples to be grown. The recommended variety and one that is considered quite suitable for both the local and overseas market is the MD2. Typically, farmers secure planting material from imports out of Costa Rica, either through local entrepreneurs, Govt imports or self-importation.

EXPORT INVESTMENT OPPORTUNITY There is a very high demand in the local and export markets of the United Kingdom, the United States and Canada (see tables 6-8). Jamaica can and have export to all three countries in the past as part of various free trade agreements to which we are signatories.

The export of fresh pineapple by value increased from US$1.754 billion dollars in 2013 to US$2.091 billion dollars in 2017, an increase of 20% over 5 years. In terms of quantity exports moved from 3,373,792 tons in 2013 to 3,787,865 tons in 2017 which was an increase of approximately 12% over the period. The fresh pineapple export market is dominated by Costa Rica, the Netherlands, Philippines and Belgium. Costa Rica dominates the export market by

TABLE 3 Estimate of Pineapple Farmgate Prices per Quarter QUARTER

2012

2013

2014

2015

2016

INCREASE IN FARMGATE PRICE

Jan – Mar

106.97

109.88

109.98

120.13

151.99

41%

Apr – Jun

85.83

91.91

92.18

108.32

110.58

27%

Jul – Sept

108.87

104.9

100.51

125.98

130.83

21%

Oct – Dec

117.02

131.5

131.46

154.41

178.17

47%

27%

30%

30%

30%

38%

Maximum Price changes during the year* Source: MICAF Annual Crop Estimates

FOOTNOTE Values of local production are calculated using the average annual farm gate prices along with the total annual production

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WHY INVEST IN PINEAPPLEs

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TABLE 4 Imports of Processed Pineapple 2012 to 2016 TRADE FLOW

REPORTER

PARTNER

TOTAL VALUE IN US$

TOTAL VALUE IN J$

TOTAL WEIGHT IN KGS

2012

IMPORT

JAMAICA

WORLD

2,403,687

300,460,875

1,029,471

2,292,632

2013

IMPORT

JAMAICA

WORLD

1,890,985

236,373,125

909,198

2,024,784

2014

IMPORT

JAMAICA

WORLD

2,116,390

264,548,750

952,632

2,121,511

2015

IMPORT

JAMAICA

WORLD

2,369,441

296,180,125

906,638

2,019,083

2016

IMPORT

JAMAICA

WORLD

2,862,291

357,786,375

1,168,798

2,602,913

PERIOD

TOTAL WEIGHT IN LBS

Source: UNComtrade 2018

volume with approximately 57% market share. In 2017, Costa Rica exported 2,160,320 tonnes valued at US$981m, the Philippines exported 495,440 tonnes valued at US$172.4 million while the Netherlands exported 249,150 tonnes valued at US$230.9 million and Belgium exported 121,891 tonnes valued at US$110.4 million. Belgium is the only major exporting country that has seen significant decline in both quantity exported and earning from export of the fruit (Table 6).

The major importing countries by value are the USA, Spain, Netherlands, the United Kingdom, Italy, Japan, China, Germany, Belgium and Canada. The quantity of imports by the top ten countries in 2017 was approximately 2.6 billion tonnes or 77% of world imports. The United States accounts for 33% of the import market (table 7).

In terms of Jamaica’s export performance, the figures are at best minimal as table 9 demonstrates. At the very least there has been a very small but growing export trade. Critical to exporting to the UK however, is the need for the farms to be global gap certified.

TABLE 5 COP and Profit Margin Calculation based on local market SOURCE OF MATERIAL

COST OF MATERIAL PER UNIT

Local Importer

80

2,584,575

71.79

20,000

36,000

141.36

97%

Govt. Agency

50

1,774,575

49.29

20,000

36,000

141.36

187%

Self Import

35

1,369,575

38.04

20,000

36,000

141.36

272%

COP PER ACRE

COP PER KG

PLANTING DENSITY PER ACRE

ESTIMATED YIELD KGS/ ACRE

FARM GATE PRICE 2016 - KG

COP/FARMGATE MARGIN

WHY INVEST IN PINEAPPLEs

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TABLE 6 Top 10 Fresh Pineapple Exporters RANKING

EXPORTERS

2013

2014

2015

2016

2017

MARKET SHARE

WORLD

3,373,792

3,533,793

3,151,647

3,664,036

3,787,865

1

COSTA RICA

1,961,491

2,126,929

1,902,031

2,019,401

2,160,320

57.03%

2

PHILIPPINES

489,955

461,856

267,789

566,928

495,440

13.08%

3

NETHERLANDS

203,729

255,610

246,611

306,769

249,150

6.58%

4

BELGIUM

152,871

124,781

122,083

119,066

121,891

3.22%

5

UNITED STATES OF AMERICA

113,708

121,928

113,920

120,342

121,635

3.21%

6

MEXICO

56,997

41,271

76,987

86,267

87,476

2.31%

7

ECUADOR

51,789

55,545

66,076

73,990

84,691

2.24%

8

HONDURAS

79,086

51,258

60,031

58,817

59,013

1.56%

9

GUATEMALA

21,752

25,091

27,506

35,734

40,347

1.07%

10

CÔTE D'IVOIRE

26,323

39,489

34,844

25,429

38,100

1.01% 91.29%

Source: UNComtrade 2018

TABLE 7

Top 10 Fresh Pineapple Exporters 2013

2014

2015

2016

2017

MARKET SHARE

RANKING

WORLD

3,035,845

3,233,609

3,032,535

NO QUANTITY

3,430,320

1

UNITED STATES OF AMERICA

975,590

1,046,527

1,028,693

1,036,970

1,153,024

33.61%

2

NETHERLANDS

295,184

339,670

266,971

281,585

284,454

8.29%

3

SPAIN

114,842

153,249

143,535

151,793

168,738

4.92%

4

UNITED KINGDOM

139,609

145,571

144,205

147,796

168,426

4.91%

5

ITALY

142,020

159,246

139,475

141,971

163,547

4.77%

6

JAPAN

181,197

166,320

150,621

143,173

156,992

4.58%

7

CHINA

39,458

70,216

84,401

101,932

146,003

4.26%

8

GERMANY

156,829

168,223

143,965

168,317

144,946

4.23%

9

BELGIUM

172,900

154,347

136,178

139,001

141,995

4.14%

10

CANADA

122,630

126,289

109,504

118,543

127,584

3.72%

2,655,709

77.42%

Source: UNComtrade 2018

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WHY INVEST IN PINEAPPLEs

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TABLE 8

Fresh Pineapple Exports to the United Kingdom

PERIOD

TRADE FLOW

REPORTER

PARTNER

TRADE VALUE (US$)

NET WEIGHT (KG)

2013

IMPORT

UNITED KINGDOM

WORLD

$137,862,938

139,609,220

2014

IMPORT

UNITED KINGDOM

WORLD

$140,906,296

145,570,979

2015

IMPORT

UNITED KINGDOM

WORLD

$138,064,061

144,205,433

2016

IMPORT

UNITED KINGDOM

WORLD

$131,863,723

147,795,671

2017

IMPORT

UNITED KINGDOM

WORLD

$148,035,911

168,425,851

Source: UNComtrade 2018

TABLE 9

Fresh Pineapple Exports to Canada

PERIOD

TRADE FLOW

REPORTER

PARTNER

TRADE VALUE (US$)

NETWEIGHT (KG)

2013

IMPORT

CANADA

WORLD

$107,970,597

122,629,942

2014

IMPORT

CANADA

WORLD

$110,921,074

126,288,908

2015

IMPORT

CANADA

WORLD

$99,052,175

109,504,212

2016

IMPORT

CANADA

WORLD

$99,180,284

118,542,667

2017

IMPORT

CANADA

WORLD

$100,091,074

127,583,645

Source: UNComtrade 2018

TABLE 10

Fresh Pineapple Exports to the United States

PERIOD

TRADE FLOW

REPORTER

PARTNER

TRADE VALUE (US$)

NETWEIGHT (KG)

2013

IMPORT

USA

WORLD

$631,077,829

975,590,464

2014

IMPORT

USA

WORLD

$700,714,005

1,046,527,054

2015

IMPORT

USA

WORLD

$674,587,716

1,028,693,074

2016

IMPORT

USA

WORLD

$721,567,932

742,936,295

2017

IMPORT

USA

WORLD

$749,682,524

803,185,857

Source: UNComtrade 2018

TABLE 11 Fresh Pineapple Exports by Jamaica EXPORTED VALUE IN 2013

EXPORTED VALUE IN 2014

EXPORTED VALUE IN 2015

EXPORTED VALUE IN 2016

EXPORTED VALUE IN 2017

World

0

1

2

1

6

United States of America

0

0

0

0

4

Canada

0

0

2

1

2

United Kingdom

0

1

0

1

0

IMPORTERS

Unit : US Dollar thousand WHY INVEST IN PINEAPPLEs

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CLIMATE The pineapple is a tropical or near tropical plant limited to low elevations between 30°N and 25°S. A temperature range of 18.33-45°C is most favourable, though the plant can tolerate relatively cold nights for short periods. This allows the plant to be grown almost anywhere in Jamaica.

SOIL Though the pineapple can be grown on a wide range of soil types, it does best on well-drained, sandy loams which are acidic (pH 4 – 6) and have a high organic matter content. Ideally the soil should be friable to a depth of at least 60 cm (2 ft). The pineapple plant is susceptible to water logging, so steps should be taken to improve drainage on soils that have poor drainage. Pure sand, red loam, clay loam and gravelly soils usually need some amount of organic enrichment in order to create ideal soil conditions.

PLANTING MATERIAL There are several types of planting material that can be used for propagating pineapples including, suckers, slips, crowns and stumps. The planting material should be stripped of excess dry, dead leaves and rotting tissue to expose young roots. The cut end of the base should be turned upwards and allowed to harden and dry a few days before planting. The MD2 variety has become the popular variety in Jamaica. Other varieties include Sugar Loaf, Red Spanish, Ripply and smooth Cayenne.

LAND PREPARATION Pine apples are cultivated commercially in trenches. The land is ploughed well and made to a fine tilth. Solid clods, rocks, crop debris, and stones must be removed. The land is dug after ploughing and levelled. Trenches are dug subsequently. Each trench may be 15-30cm deep and 90cm wide.

PLANTING DENSITY Planting density will vary according to variety, soil type, fruit size and farmers preference. Pineapples are usually planted in rows using a triangular formation at a spacing of 45-60cm within and along rows. Double row planting will give 11,000 to 28,000 plants/acre.

PLANTING At planting the cut end of the base should be dipped in a fungicide (bravo/mancozeb) and a preferred insecticide to reduce infection. Plants should be allowed to drain before planting. If planted when 5-6 months old, the suckers and slips produce flowers after 12 months. Crowns bear flowers after 12-19 months. It is best to plant so that harvesting does not coincide with the rainy season.

IRRIGATION MICAF suggests that pineapples require approximately 4,600m3/ha (500,000 gallons/acre) of water for growth and development per crop cycle (110 days). Irrigation systems include, sprinkler, drip and furrow and salinity of water should be less than 0.75mmho/cm.

FERTILIZERS As a rule of thumb soil tests should be conducted to determine the most appropriate fertilizer regime that is most suited for the crop and the existing soil. Compost and or fertilizer can be worked into beds during land preparation. Pineapples require mostly nitrogen and potassium for optimum growth and yield. During land preparation NPK fertilizer can be applied according to soil and crop nutrient requirements. For synchronized flowering, synthetic flowering inducers can be applied.

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Investment Analysis

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PEST AND DISEASE MANAGEMENT The pest and diseases of pineapple includes: rodents, birds, mealy bugs, scale insects, Stem rot, Fruitlet core rot, and Root rot are the most likely threat to the crop. As stated early dipping the end of the planting material in fungicide and/ or insecticide to take care of stem rot and other fungal diseases is very effective in reducing the fungal load.

HARVESTING AND YIELD Harvesting of pineapples will depend on the market that is targeted. Harvest only mature fruits tested for acceptable Brix levels and eating quality. Fruits should be harvested in early morning when temperatures are lower. High temperature will reduce the shelf life of fruits. Harvest fruit with a sharp knife leaving more than 2.5cm of stalk to the fruit. (Caribbean Pineapple Production-CARDI) POST HARVEST MANAGEMENT Pineapple fruit should be placed in foam-padded field crates to protect the fruits from bruising. Bruising or puncturing can provide an entrance for pathogens and expose the fruit to infection. The harvested fruit should be stored in a cool place, away from direct sunlight. To avoid chilling injury the green fruit should be stored at 8-10â °C and 85-95% Relative Humidity. (Caribbean Pineapple Production-CARDI) MARKETING There is a growing domestic market for fresh pineapples. The common marketing channels for locally grown pineapples are roadside higglers, municipal markets, supermarkets, the hospitality industry, and pizza shops. As stated in previous sections of the document, there is also a huge export market to target. There is also sale for the suckers, heads and stumps.

Investment Analysis

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PROJECT COST In the financial model, the unit cost of development of 5 acres of Pineapple has been prepared. This can be modified to fit other scales of operation taking into consideration the attendant changes to the variables used.

WORKING CAPITAL Working capital represents the operational liquidity that is available to the business enterprise. For this 5-acre model the working capital was calculated as 30% of the total operational cost. This is the minimum amount of cash that the business should have at hand to cover at least 30% of the operational expenditure.

BANK LOAN For this venture the cost of capital was estimated at 8%. Interest rates are retailed between 8-11%. 85% of the development cost of the invest will be funded from equity. The remaining 15% will be funded from a bank loan. The loan is required to purchase a 3-4years old pickup truck.

RATE OF INTEREST For this venture the cost of capital was estimated at 8%. Interest rates for agricultural loans are retailed between 8-11%.

SECURITY The project will be guided the financial stipulations laid out by Development Bank of Jamaica for agricultural loans.

The tenets of Good Agricultural practices will be adhered, to ensure high productivity and produce that is safe for consumption. Proactive actions such as scouting will be implemented for early detection of pest and diseases. The irrigation system established will ensure that the plants are adequately irrigated to give the maximum yield.

FINANCIAL ANALYSIS Financial analysis was carried out for five acres (2.5 hectares) of pineapple cultivation. For financial analysis, the income was assessed on a conservative basis. The detailed calculation of project’s income and expenditure and other financial details hve been indicated in Annexes attached. IRR and NPW for the enterprise model work out to be 61 %, J$6.1million respectively and the details are given in Annexure XII. REPAYMENT OF LOAN Based on the cash flow the detailed repayment schedule has been worked out and furnished in the Annexure IV. The repayment period works out to five years including 6 months grace period for repayment of principal.

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Financial Viability and Bankability

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ANNEXES

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TABLE 1 Cost of Production UNIT

NO OF UNITS

COST PER UNIT

TOTAL ACREAGE

Land Cleaning

MD

10

1500

Ploughing

MD

18

1500

27,000

Furrowing

MD

20

1500

30,000

Maintain Trench

MD

6

1500

9,000

Planting

MD

14

1500

21,000

Pest Management

MD

18

1500

27,000

Weeding

MD

20

1500

30,000

Fertilising

MD

8

1500

12,000

Harvesting

MD

50

1500

75,000

164

300

49,200

COST

TOTAL COSTS

Labour Operations

Lunch

15,000

295,200

Material Inputs Planting Material

1,600,000

Fertiliser

14,500

Fungicide

15,000

Herbicide

5,000

1,634,500

Other Costs Transportation (10% of Material)

10,000

Contingencies (10% of labour and material)

80,000

** Tools discounted for 5 years

7,000

Land Charges per Crop Cycle

10,000

Supervision

50,000

157,000

Total Operating Expenditure per Copr Cycle

2,086,700

Cost of Production per Acre

2,086,700

** Projected Marketable Yield (kg per acre)

27,272.73

Total Yield Cost of Production $/kg

76.51

Revenue

2,400,000

Gross Profit

313,300

Gross Profit Margin

15%

Interest Charges per Crop Cycle Net Revenue Net Margin SOURCE: MOAF (MODIFIED) * PLANTING MATERIAL COSTS $80 PER SUCKER WITH 20,000 NEEDED PER ACRE ** IT IS ASSUMED THAT THE PLANTS WILL FRUIT WITH AN AVERAGE WEIGHT OF 1.36KG

18

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TABLE 2 Cost of Production UNIT

NO OF UNITS

COST PER UNIT

Labour Operations

MD

10

1500

15,000

Land Cleaning

MD

18

1500

17,000

Ploughing

MD

20

1500

30,000

Maintain Trench

MD

6

1500

9,000

Planting

MD

14

1500

21,000

Pest Management

MD

18

1500

27,000

Weeding

MD

20

1500

30,000

Fertilising

MD

8

1500

12,000

Harvesting

MD

50

1500

75,000

164

300

49,200

Lunch

TOTAL ACREAGE

COST

TOTAL COSTS

295,200

Material Inputs Planting Material

1,600,000

Fertiliser

14,500

Fungicide

15,000

Herbicide

5,000

1,634,500

Other Costs Transportation of Material

30,000

Contingencies (5 percent of labour and material)

96,485

Land Charges per Crop Cycle

10,000

Equipment Maintenance Cost

18,000

Supervision (15 man days per acre)

60,000

214,485

Total Operating Expenditure per Copr Cycle

2,144,185

Cost of Production per Acre

2,144,185

** Projected Marketable Yield (kg per acre)

27,272.73

Total Yield Cost of Production $/kg

78.62

Revenue

2,400,000

Gross Profit

255,815

Gross Profit Margin

11.9%

Interest Charges per Crop Cycle Net Revenue Net Margin SOURCE: MOAF (MODIFIED) * PLANTING MATERIAL COSTS $80 PER SUCKER WITH 20,000 NEEDED PER ACRE ** IT IS ASSUMED THAT THE PLANTS WILL FRUIT WITH AN AVERAGE WEIGHT OF 1.36KG

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TABLE 3 Basic Assumptions PARAMETERS

VALUE

Exchange rate USD:JMD

132

Area Planted (acres)

5

Area Planted (hectares)

2

Time to maturity (9-23 months)

3-4 MONTHS

Marketable yields per acre (kg)

27273

Marketable yields per Hectare (kg)

67364.31

Number of crops per year - Crop cycle is indefinite

2

Number of plants per acre

19801

Sales distribution Local to processors via middlemen

60%

Local to higgglers for municipal markets

40%

Prices USD/kg: Local to exporters via middlemen

0.7

Local to higgglers for municipal markets

0.7

TABLE 4 Capital Costs UNITS

NUMBER OF UNITS

FT2

100

Fencing (barb wire)

ACRE

Pickup truck Knapsack sprayer

CAPITAL COSTS Shed/storeroom

RATE/UNIT

TOTAL

2,000

200,000

5

209,000

1,045,000

EACH

1

3,000,000

3,000,000

EACH

2

10,000

20,000

Mist-blower

SET

1

40,000

40,000

Irrigation Equipment

ACRE

5

100,000

500,000

Drip pipe fittings

SET

1

52,272

52,272

Venturi pump

EACH

1

2,000.00

2,000

Water storage Tank (1000gal)

EACH

2

90,000.00

180,000

Water pump

EACH

1

45,000.00

45,000

SET

0

60,000.00

-

Nutrient storage tank

EACH

0

14,000.00

-

Miscellaneous equipment and tools

EACH

1

200,000

Instruments (pH,EC&TDC Metres)

Total

20

200,000 5,284,272

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TABLE 5 Operating Costs UNIT

QTY

UNIT PRICE (J$)

YR1

Direct Expense Crop establishment ACRES

5

200,000.00

1,000,000

Marketing expenses

Pineapple

YR

1

40,000.00

40,000

Contingency

5%

52,000.00

Subtotal

1,092,000

Indirect expenses Land lease

ACRES/YR

10

5,000.00

50,000

Owner/manager

MTH

12

100,000.00

1,200,000

Security

MTH

12

60,000.00

720,000

Fuel

MTH

12

50,000.00

600,000

Salaries and wages:

Accounting and audit fees

MTH

12

20,000.00

240,000

Equipment Maintenance

MTH

12

10,000.00

120,000

Motor vehicle expense/ servicing

MTH

12

20,000.00

240,000

Motor vehicle insurance

YR

1

120,000.00

120,000

Water

MTH

12

20,000.00

240,000

Telephone internet

MTH

12

10,000.00

120,000

Utilities:

-

Electricity

MTH

12

10,001.00

120,012

Stationary &office supplies/printing

MTH

12

10,000.00

120,000

Bank charges

MTH

12

20,000.00

Contingencies

5%

240,000 315,700.60

Sub-Total

4,445,713

Total Operating Costs

5,537,713

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TABLE 6 Annual Operating Costs YR1

YR2

YR3

YR4

YR5

Direct Expense Crop establishment Pineapple

1,000,000

1,100,000

1,210,000

1,331,000

1,464,100

Marketing expenses

40,000

44,000

48,400

53,240

58,564

Contingency

52,000

57,200

62,920

69,212

76,133

1,092,000

1,201,200

1,321,320

1,453,452

1,598,797

-

-

55,000

60,500

-

-

-

-

1,200,000

1,320,000

1,452,000

1,597,200

1,756,920

Security

720,000

792,000

871,200

958,320

1,054,152

Fuel

600,000

660,000

726,000

798,600

878,460

Accounting and audit fees

240,000

264,000

290,400

319,440

351,384

Equipment Maintenance

120,000

132,000

145,200

159,720

175,692

Motor vehicle expense/servicing

240,000

264,000

290,400

319,440

351,384

Motor vehicle insurance

120,000

132,000

145,200

159,720

175,692

-

-

-

-

Subtotal Indirect expenses Land lease Salaries and wages: Owner/manager

Utilities

50,000 -

-

66,550

73,205

Water

240,000

264,000

290,400

319,440

351,384

Telephone internet

120,000

132,000

145,200

159,720

175,692

Electricity

120,012

132,013

145,215

159,736

175,710

Stationary &office supplies/ printing

120,000

132,000

145,200

159,720

175,692

Bank charges

240,000

264,000

290,400

319,440

351,384

Contingencies

315,701

347,271

381,998

420,197

462,217

Sub-Total

4,445,713

4,890,284

5,379,312

5,917,243

6,508,968

Total Operating Costs

5,537,713

6,091,484

6,700,632

7,370,695

8,107,765

22

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TABLE 7 Annual Marketing Yield YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

Pineapple (kgs)

88,637

97,501

107,251

117,976

129,774

Total

88,637

97,501

107,251

117,976

129,774

TABLE 8 Selling Price (/kg) YR1 Pineapple

YR2 70

YR3 78

YR4 86

YR5 96

106

TABLE 9 Gross Revenue Schedule (J$) YR1

YR2

YR3

YR4

YR5

Pineapple sales

6,204,608

7,575,826

9,250,083

11,294,352

13,790,403

Total

6,204,608

7,575,826

9,250,083

11,294,352

13,790,403

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TABLE 10 Financing Plan TOTAL FINANCING REQUIRED

EQUITY

LOAN

GRANT

TOTAL

Capital Costs Shed/storeroom

200,000

200,000

200,000

Fencing (barb wire)

1,045,000

1,045,000

1,045,000

Pickup truck

3,000,000

3,000,000

3,000,000

Knapsack sprayer

20,000

20,000

20,000

Mist-blower

40,000

40,000

40,000

500,000

500,000

500,000

52,272

52,272

52,272

2,000

2,000

2,000

180,000

180,000

180,000

45,000

Irrigation Equipment Drip pipe fittings Venturi pump Water storage Tank (1000gal) Water pump

45,000

45,000

Instruments (Ph/EC&TDC Metres)

-

-

-

Nutrient storage tank

-

-

-

200,000

200,000

Miscellaneous equipment and tools

200,000

Physical contingencies (10%) Sub-Total

5,284,272

1,239,272

4,045,000

-

5,284,272

Operating Costs Crop establishment Pineapple

1,000,000

1,000,000

1,000,000

40,000

40,000

40,000

Marketing expenses Contingency Subtotal

52,000

52,000

52,000

1,092,000

1,092,000

1,092,000

-

-

50,000

50,000

Indirect Expenses

-

Land lease

50,000

Salaries and wages:

-

-

1,200,000

1,200,000

1,200,000

Fuel

600,000

600,000

600,000

Accounting and audit fees

240,000

240,000

240,000

Equipment Maintenance

120,000

120,000

120,000

Motor vehicle expense/servicing

240,000

240,000

240,000

Motor vehicle insurance

120,000

120,000

120,000

-

-

Owner/manager

-

Utilities

-

Water

240,000

240,000

240,000

Telephone internet

120,000

120,000

120,000

Electricity

120,012

120,012

120,012

Stationary &office supplies/printing

120,000

120,000

120,000

Bank charges

240,000

240,000

240,000

Contingencies

315,701

315,701

315,701

Sub-Total Total

4,445,713

4,445,713

-

-

4,445,713

10,821,985

6,776,985

4,045,000

-

10,821,985

Equity

63%

Leverage

37%

24

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TABLE 11 Loan Repayment Schedule MONTHS MONTHS 1-3 = YR0 1

LOAN

LOAN

PRINCIPAL

INTEREST

INTEREST

TOTAL DEBT

LOAN

DISBURSEMENT

BALANCE AT SOY

PAYMENT AT EOY

PAYMENT AT EOY (8%)

ACCRUED BUT NOT PAID (8%)

SERVICEABLE DEBT AT EOY

BALANCE AT EOY

4,045,000

4,045,000

809,000

323,600

-

1,132,600

3,236,000

3,236,000

809,000

258,880

-

1,067,880

2,427,000

2,427,000

809,000

194,160

-

1,003,160

1,618,000

1,618,000

809,000

129,440

-

938,440

809,000

809,000

809,000

64,720

-

873,720

-

4,045,000

970,800

2 3 4 5 Total

5,015,800

Moratorium - 6 mths Loan period - 5 Yrs (including moratorium) Interest rate:

= 10% per Annum

TABLE 12 Depreciation Schedule ASSET Shed/storeroom Fencing (barb wire) Pickup truck Knapsack sprayer Mist-blower Irrigation Equipment Drip pipe fittings Venturi pump Water storage tank (1000gal) Water pump

ORIGINAL COST

RESIDUAL VALUE

200,000 1,045,000

10

18,000

30000

1,015,000

10

101,500

2,700,000

10

270,000

18,000

10

1,800

5

7,000

5

90,000

50,272

5

10,054

1,500

3

500

170,000

10

17,000

10

4,000

(5,000)

10

(500)

(3,000)

10

(300)

180,000

5

36,000

20,000

2,000

40,000

5,000

35,000

500,000

50,000

450,000

52,272

2,000

2,000

500

180,000

10,000

45,000

5,000

Nutrient storage tank

200,000

DEPRECIATION PER YEAR

180,000

300,000

-

ESTIMATED LIFE (YRS)

20000

3,000,000

Instruments (pH/EC&TDC Metres)

Miscellaneous equipment and tools

DEPRECIABLE COST

5,000 3,000 20,000

40,000

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TABLE 13 Projected Net Income YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

Gross Revenue

6,204,608

7,575,826

9,250,083

11,294,352

13,790,403

Operating Cost

5,537,713

6,091,484

6,700,632

7,370,695

8,107,765

Operating Profit

666,895

1,484,342

2,549,451

3,923,656

5,682,638

Depreciation

537,054

537,054

537,054

537,054

537,054

18,000

18,000

18,000

18,000

18,000

Fencing (barb wire)

101,500

101,500

101,500

101,500

101,500

Pickup truck

270,000

270,000

270,000

270,000

270,000

Knapsack sprayer

1,800

1,800

1,800

1,800

1,800

Mist blower

7,000

7,000

7,000

7,000

7,000

Irrigation Equipment

90,000

90,000

90,000

90,000

90,000

Drip pipe fittings

10,054

10,054

10,054

10,054

10,054

500

500

500

500

500

17,000

17,000

17,000

17,000

17,000

Water pump

4,000

4,000

4,000

4,000

4,000

Instruments (Ph/EC&TDC Metres)

(500)

(500)

(500)

(500)

(500)

Nutrient storage tank

(300)

(300)

(300)

(300)

(300)

36,000

36,000

36,000

36,000

36,000

452,500.00

452,500.00

452,500.00

452,500.00

452,500.00

Interest Payment

323,600

258,880

194,160

129,440

64,720

Profit before Tax

(646,260)

235,907

1,365,737

2,804,662

4,628,364

Taxable Profit

(646,260)

235,907

1,365,737

2,804,662

4,628,364

Tax (33.3%)

(215,204)

78,557

454,790

933,952

1,541,245

Net Profit after Tax

(431,055)

157,350

910,946

1,870,709

3,087,119

(431,055)

(273,705)

637,242

2,507,951

5,595,070

Shed/storeroom

Venturi pump Water storage tank (1000gal)

Miscellaneous equipment and tools Residual value

(Profit before tax less tax) Cumulative Net Profit

26

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TABLE 14 Summary of Project Costs & Benefits

WORKING

OPER.

TOTAL

SALES

SALVAGE &

WORKING CAPITAL TOTAL

NET

INFLOW

LOAN

OUTFLOW

EQUITY

(1,252,477)

BENEFIT

1,132,600

848,962

BENEFIT

(4,164,877)

1,067,880

1,948,791

CAPITAL

8,318,421

1,916,842

1,003,160

3,087,716

YEAR RESIDUAL VALUE 1,661,314

9,835,771

2,951,951

938,440

(REC)

452,500

1,827,445

11,662,773

4,026,156

4,909,418

REVENUE

6,204,608

2,010,190

13,608,060

873,720

COST

12,483,298

7,575,826

402,500

2,211,209

5,783,138

COST

5,537,713

7,918,929

9,250,083

102,500

16,323,233

CAPITAL

1,661,314

6,091,484

8,710,822

11,294,352

2,432,330

4,045,000

1,827,445

6,700,632

9,581,904

100,500

5,284,272

2

2,010,190

7,370,695

13,790,403

1

3

2,211,209

10,540,095

432,500

4

8,107,765

$6,184,476

2,432,330

61%

$6,356,552

5

NPV = Assuming a real discount rate of 10% Conclusion: Project is viable if NPV positive IRR =

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annex

TABLE 15 Annual Cash Flow Projection ($) YR 1

YR 2

YR 3

YR 4

YR 5

INFLOWS Loan

4,045,000

Equity

6,776,985

Grant

-

Sales

6,204,608

7,575,826

9,250,083

11,294,352

13,790,403

Total Inflows

17,026,592

7,575,826

9,250,083

11,294,352

13,790,403

OUTFLOWS Capital Cost

5,284,272

Operating Cost

5,537,713

6,091,484

6,700,632

7,370,695

8,107,765

-

-

-

-

-

1,661,314

1,827,445

2,010,190

2,211,209

2,432,330

Outflows before Debt & Tax

12,483,298

7,918,929

8,710,822

9,581,904

10,540,095

Cash Flow before Debt & Tax

4,543,294

(343,103)

539,261

1,712,448

3,250,309

Debt service

1,132,600

1,067,880

1,003,160

938,440

873,720

Tax

1,512,917

(114,253)

179,574

570,245

1,082,353

Net Cash Flow

1,897,777

(1,296,730)

(643,473)

203,763

1,294,236

Cumulative Net Cash Flow

1,897,777

601,047

(42,426)

161,337

1,455,573

Capital Replacement Working Capital

Net Present Value

28

J$1,112,914.86

annex

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REFERENCES

1. Cost of Production Estimates (2017), Ministry of Industry Commerce Agriculture and Fisheries, Databank Division 2. Crop Production Estimates (2016), Ministry of Industry Commerce Agriculture and Fisheries, Databank Division 3. International Trade Centre (ITC), https://www.trademap.org/Index.aspx 4. Gregory Robin, Ronald Pilgrim, Sharon Jones and Dorian Etienne (2011), Caribbean Pineapple Production and Post Harvest Manual : FAO/CARDI 5. https://www.agrifarming.in/pineapple-farming/

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