Farming for the future - Business Plan 2017-2020

IntroductionCluster Farming Holding Ltd. (CFH) focuses on sus-tainable agribusiness in all of its aspects through a self-sufficient farming model. In the broad sense CFH facilitates new collaborations between local smallholder farmers and their communities. The model creates real profit by merging these small-holder farms = Satellites attached to the Hub farm, to a solid entrepreneurial group = Cluster, which is capable to share both the benefits as the burden.

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First constructional and infrastructural work on the Hub farm already started in October 2011. The first three and a half years we have been constructing the Hub farm, executing agricultural and aquacultural trials, restructuring ponds and greenhouses based on the trials, talking to possible candidates for the Satelitte Farms, etc. The farm is situated on a 63 acres plot in Ekrawfo, Ekumfi District in the Central Region. It is a mixed farm and consists of a nursery for various (local) cash crops and fruit trees, catfish hatchery and fish cultivation, chicken hatchery and chicken breeding and a production station for animal feed. First it delivers high quality livestock and vegetable seedlings to surrounding Satellites to increase productivity and income improvement. Secondly it serves as an education and training centre to empower people to grow food everywhere.

It is our goal to opening up trade and making basic home grown products more available and afford-able for the local market. These are important ele-ments to obtain positive results and will create the best guarantees for (rural) employment, economic growth and misery reduction in Ghana.

After years of investing and innovating the Cluster Hub Farm is ready for further expansion. We want to do this through an investment program, which is at-tractive for both private and institutional investors.

Investment

Presumptions were made that in 2017 the initial setup and startup can be made so the first production of the Satellite farms can be attained by end 2017. This could result in an operational breakeven in the second quarter of 2018, if all timing targets are met and production can start at the pre-set pace (see our financial prognosis for more detailed information).

The amount of investment that we want to achieve is at least US$ 2.5 million. These funds will serve to improve productivity and especially to expand production of this unique project. The following targets have been set for 2017 till 2020:

• Setup of at least 6 Satellite farms as of April 2017;• Construction of a building for training and education of small scale farmers;• Expansion of current food processing capacity to fulfil future demand;• Purchase of breeding eggs for the chicken hatchery;• Purchase of chicken incubators and expansion of hatchery in order to expand current capacity;• Construction of chicken sheds for parent stock broilers.

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Due to the existing Hub farm we have the option to jump start production. The capital insertion in 2017 will serve to cover construction costs, operational start-up costs and create liquidity buffer. In the business plan the vegetable produce for the local markets and the sales commission of the Satellite farms plus the setup of the Cluster Farming Fresh Shops in 2021 are not being accounted for or evaluated.

Our scope:• Taking full advantage of the African farming potential: strong local markets and cost efficient

export to the Pan African market with demand exceeding supply by far;• Cluster Farming model: economic and sustainable model that can be managed and controlled

as a Franchise model;• Efficiency of Cluster Farming leads to cash flows: targeting international and Pan African cash

crops, diversifying over several products, high operational techniques and inputs;• Real social impact: not donating but participating, training, investing and integrating into

economy and community.

Our Hub Farm operates under a 100% sustainable approach, with a minimal ecological footprint. The expertise and production from the diverse key activities is attained via close collaboration with the food industry in the local and Pan-African market and knowledge centres such as Uni-versity of Cape Coast (Agricultural and Aquacultural faculties), APRA (Agricultural Policy Research in Africa), Wageningen University and IFDC. The base philosophy is: “waste from one crop and animal serves as food or fertilizer for another crop or animal.”

“An ounce of action is worth a ton of theory”

General company description

Cluster Farming Holding Ltd. operates in different fields of the Ghanaian economy with a main focus on agriculture, aquaculture, food and logistics. CFH is a commercial company, not a charitable. Nevertheless, a major goal is the respect for cultural and ecological heritage. It is our mission to develop sustainable commercial projects in Africa with social and ecological added values, such as

• Integrity, trust and respect for the environment, local cultures and laws;• Supporting creativity, commitment and team work;• Excellence in social responsibility, sustainability and transparent communication.

Form of ownershipCFH is a limited liability corporation (LLC), with its registered office in Ekrawfo, Ekumfi District in the Central Region of the Republic of Ghana and has been incorporated in 2011 with the Registrar of Companies in Accra, Ghana.

Daily operations at the Hub farm and supervision at the Satellite farms are executed by a total of 43 full time staff members. During har-vesting periods we will employ an extra 30 temporary workers to assist us at the Hub farm.

Currents assets at the Hub farm are: Agricultural land, Nursery for crops and fruit trees, Chicken hatchery, Breeding sheds for layer hens, Hatchery for catfish and Breeding ponds for catfish.

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catfish cultivation ponds

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plot for chick hatcheryapprox 100 x 60 metre

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parent stock layer shed

poultry breeding shed

protected horticulture crop nursery

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Key Staff Members

Cluster Farming has a strategic and well considered approach to its developments in Africa. Our organisation consists out of a well-diversified and devoted team of Africans and non-Africans, all experienced in the field of agricultural technologies, agribusiness, management, market-ing and financial development. The whole team is united in the idea that the only future for Africa, is a sustainable future.

Gerrit Valkenburg (Dutch), Founder and Managing DirectorGerrit is an experienced entrepreneur with a vast Africa experience. His visionary view on new markets brought him to dif-ferent parts of the world over the last 25 years. As a structural engineer he developed and managed different successful companies in e.g. DR Congo, Ghana, Israel, Germany, Holland,… By founding CFH, Gerrit crowned his successful career by giving something back to the continent that gave him so much: Africa. A strong belief in sustainability and the conviction that Africa is the place to be for the next decades motivated Gerrit to move to Ghana and establish CFH. Full CV

Maurice Valkenburg (Dutch), Supply Chain ManagerSon of Gerrit, Maurice is a certified supply chain expert, having extensive experience in food distribution and marketing, having worked for more than 2 years at AFHC sprl in DR Congo and 8 years at Havi Logistics BV in the Netherlands. His competence range from HACCP controlled (cold) storage and distribution to commercial sales activities. Full CV

Dominic Amissah (Ghanaian), Human Resources ManagerDominic acquired a strong knowledge in aquacultural production systems over the years. He has strong communicative skills and is experienced in finance due to his former employment at the MoF (Ghana Statistical Services). These skills are beneficiary to his responsibility of the HR business at the Hub farm. Dominic holds a BSC in Agricultural Engineering. Full CV

Monique Ahoua Akissi (Ghanaian), Head of SalesMonique is a strongly motivated marketeer with a vast experience in the food and beverages sector in Ghana. Her com-municative skills and capability to build a solid team of sales representatives will be beneficial. Monique holds a BSc in Ad-ministration and Accounting. Full CV

Ebenezer Commodore (Ghanaian), Farm ManagerEbenezer has got demonstrated farm management skills both aquatic and agricultural. Over the years he conducted spe-cialist courses in Ghana and South Africa to strengthen his knowledge in farm management systems. His experience as an Extension Officer at the MoFA will be beneficial to the training and supervision of the Satellite farmers. Ebenezer holds a BSc in Agricultural Economics. Full CV

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Operational Structure

The agribusiness model developed by CFH in Ghana can be defined as a cluster marketing system.

This cluster marketing system begins by confronting the notions that profitable farms must be large (500 Ha+), level valuable rainforest, move people from their ancestral land and must depend on the Western export market. This style of farming has been proven to provide diminishing returns and create various social problems that are felt for generations yet born.

CFH believes that small farms which are “scattered” amongst a region, each having diverse streams of income, connecting through a processing and distribution hub, is the way to cre-ate a farming business model which balances a triple bottom line of people, planet and profit.

The Hub farm will support several Satellite farms to grow, process and distribute food. The Hub farm will not only be a working farm, it will serve as a classroom to market the Cluster Farming approach to villages and governments, allowing us to select the best candidates to become Satellite farms. These smallholder farms will be assisted by CFH in form of finance and training/education in order to master all necessary facets of becoming a solid part of the cluster model.

DiversificationSeveral types of crops and animals can be cultivated on the farms creating diversification, stronger yields and sustainability for either the farm, crops, animals or the local community. Each of the prod-ucts, cultivated by the farms will be monitored individually and each product will be valued at his own profit contribution and overall return.

SupplyThe farms will be created technically and operationally in such a manner they can be serviced and managed by local workers with products that are locally available. It will be ensured that all products going in, such as: fertilizer, seedlings, fish-/ animal feed, fingerlings and livestock will be supplied by the Hub farm creating a huge advantage for the farms, since they will receive high quality input at competitive prices.

Nursery & HatcheryEvery farm needs to have a nursery in order to decrease the lead time plants need to germinate. At only 1 hectare, we have the capacity to grow over 20,000 various crop plants (including oil palm, fruit trees and vegetables) at one time. For a controlled germination process the farm has its own climate cell. Similar to the nursery, the farm holds its own hatchery for the breeding of fingerlings (catfish and tilapia) and a hatchery for the breeding of chicks (layers and broilers). Next to this we have a hatchery / breeding station for Giant Land Snails. The farm controls the entire process from start to finish. The nursery and hatcheries are also used as a training centre for education in practical and technical skills.

Hub farm

Satellite farms

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will be re-circulated. All sets of fishponds have ‘traditional backup filtering units so they can be oper-ated separate from the main systems. The water will circulate between the different ponds and since all ponds are separated we can operate the entire setup individually.

CompostingIt is well known that “the path of the farm of your dreams leads right through the middle of a compost pile.” Our farm is built with waste as an asset, from vermicomposting to passive piles, our compost will be the backbone of our farm. While many value added products can be created from our compost, we want to ensure that our nursery has the best soil.

Storage & DistributionIn order to have the highest quality of products we need to ensure they are harvested and stored within a temperature controlled environment to ensure freshness. Our facility will have cold store facilities with a (shock) freezer unit, able to freeze fish for resale, a chilled unit for stocking vegeta-bles at a comfortable temperature to prevent “sweating” and decomposition and a harvesting area to prevent the spread of bacterial related diseases.

The distribution and trading of the products is done by the Hub farm through a separate sales organi-zation for the local and Pan-African market using all existing networks.

• A uniform quality and price advantage for the buyers trough centralized supervision and logistics;• Cost effectiveness for the operational side (larger scale and capacity planning);• The Satellite farms will be diversified towards different crops, animal or fish so every farm has its

speciality and can operate at its full potential, especially since they do not have to put their energy in marketing and sales of the produce.

Our sales organization will setup a direct sales network for sales penetration into the (super)market and hotel and restaurant branch from Accra, Takoradi, Cape Coast to Kumasi, etcetera.

In 2021 we will start with the “Cluster Farm Fresh Shops”; first pilot store will be in Accra. These shops will have all of the farm products in their assortment and will be present at strategic selling points in Ghana. The shop itself will be a low cost / low maintenance structure, such as a “container” shop with all necessary fittings and solar powered. This project will be constructed as a franchise model.

At a later stage we plan to start with “Fresh Cooking Outlets” at a number of “Cluster Farm Fresh Shops” where we will offer local dishes with products from the farms. All dishes will be packed with nutritious vegetables to show that local food can be a source of proteins and vitamins and therefore extremely healthy.

Water managementFertilization and disease control are crucial on each farm: all water is re-circulated, so keeping the water healthy and clean is the first prior-ity. If no contamination occurs, the farm is healthy. This entails that all protective and curative measures have to be a priory - 100% organic and natural. The filtering will be versatile: bio-filtering, phyto-filtering and mechanical filtering. No waste water is produced since all water

Local market & products

The local impact for the villages is huge and generates local trading and economy. The cash flow for these products is important for the village community and the trading / selling of these products to other local communities reinforces the local economic development of the region.

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Average yearly imports in metric tonCucumbers 25,000 Tomatoes 84,000Onions and shallots 75,000 Maize 151,000Rice 508,000 Chicken 73,000Fish 175,000

Source: UN Commodity Trade Statistics Database

Ghana is a large importer of vegetables, fruit and animal products due to the lack of a sound local production market. The Hub farm and Satellites focus on significant local products sustaining economy and local markets with the main focus on proteins such as catfish and chicken. At a later stage other local products will be added, like -, fruits - coconut, mango, avocado, lemon, orange and papayas - and vegetables - cassava, coco yam, plantain, egg-plant, ocro , tomatoes, cucumber, peppers and onions.

Fish is recognized as the most important source of animal protein in Ghana and of the vari-ous sources of protein, fish stands out as the most important in terms of food security be-cause its price, relative to the price of other high quality protein sources such as milk, meat and eggs is very competitive and it is the only source of high quality protein whose shelf life can be readily enhanced through low-cost sustainable technologies such as smoking, drying and salting. Average per capita consumption in 2016 has been estimated at 26 kg.

The most important domestic market and consumption centre is Accra, the capital of Ghana. Other important centres are Kumasi, Tarkwa, Tema and Sekondi-Takoradi. Neither farmed fish products nor fish seed are exported from Ghana because production is low.

Another good protein is chicken. Ghanaians consumes so what 6.6 kg per capita of which more than 75% is coming from imported frozen poultry products. Nevertheless, Ghanaians generally prefer the taste of local chicken over imported chicken as it has more flavour and a better structure.

Ghana’s poultry imports have been increasing since 2002 and are over 165,000 MT. Imports are supplied mainly from the United States, EU and Brazil. Therefore, the Ministry of Food and Agriculture will begin the strict enforcement of a poultry and livestock import policy to boost local production and cut down the country’s importation.

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Social and Economic Impact

A part of the net profit is distributed back to the community in terms of structural and infrastructural investments for the community involved into the Breeding Hub. CFH can determine together with the community how the money is used and on what projects. These funds can be used to built a sanitation house or school, profiting generations to come. This is direct profit and involvement for the community.

Local communities supply the young workers needed for the Hub farm, and Satellite farms.

The Cluster Farming approach will be replicated throughout Ghana in a period of 5 years, partly financed out of the profits from the Hub farm and commercial investments. We will build 10 Hub farms with 200 Satellites, making a difference 71,300 Ghanaians on a structural basis within 5 years.

The biggest contribution we noticed so far is not directly the number of people we employ but the duration of the employment. By giving a solid and strong income during several years, the entire community starts to benefit from it. They are sustainable spending more, therefore redistributing their profit towards the entire community. Our workforce is also evenly distributed since we start by hiring male workers and at the start of the production / nursing we will add female workers to the workforce.

After a period of 4 years our direct sales network will be extended with “Cluster Farm Fresh Shops” located at a number of highly populated areas. At these Fresh Shops we will offer the full range of our produce from the Cluster Farms. The social impact of these Fresh Shops is affordable food with a high quality for the population of Ghana and it is estimated that it will bring employment for at least 1,200 people, making a difference for 12,000 people on a structural basis.

Calculating the social impact is easy for us, if we just look at the situation at our farm. Due to the so-cial structures we encountered, each worker has his wife and their children combined with siblings and parents, up to 10 people depend on each worker.

1 Hub + 20 Satellites = 713 employees = a difference for 7,130 Ghanaians on a structural basis

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Why Ghana

Ghana, the first Sub-Saharan African to get independence in 1957, is characterized by its sta-ble political environment with established democratic institutions, a high degree of personal safety and systems to ensure good governance of the country. By consequence Ghana had the chance over the years to build on a comparatively well-developed infrastructure, internal and external communications as well as sea and airport facilities.

100% foreign ownership of companies is possible but you will find a dynamic private sector willing to collaborate with foreign partners. The country has an abundant, adaptable and easy trainable labour force with an internationally competitive daily minimum wage.

Apart from tourism, the Ghanaian economy is built on the abundance of minerals such as gold, diamond, bauxite etcetera, agricultural and other natural resources which include forests, vast areas of arable land and oil. Ghana is the second largest cacao producer in the world. Oil pro-duction has started in late 2010. The country produces his own electricity via the hydro-electric power facilities on the Volta Lake, the largest man-made lake in the world. Finally we find a very rich marine fishing reserve in the Atlantic ocean and offshore deposits of hydrocarbon and natural gas. Ghana, one of the fast growing economies in the world, has an economic growth rate of 5,9% (2010 est.). Its major trade partners include Nigeria, China, United States, United Kingdom, Germany, Togo, France, Netherlands and Spain.

Its strategic and central location within West Africa provides access to the ECOWAS market with an estimated population of nearly 300 million people. Duty free access of manufactured exports to the United States and Europe combined with excellent sea and air connections fa-cilitates trade with the two continents. The emerging Asian market for palm oil and food is an important growth parameter for the next decades.

The Government of Ghana is fully committed to private sector development. A globally com-petitive private sector will play a key role in the economic transformation and social develop-ment of Ghana. The Ghanaian government provides the conditions necessary for private sector growth.

Cluster Farms Satellites and together they will form a solid entrepreneurial group, capable of sharing both the benefits and the bur-den. The Satellite farms are within a radius of 50 kilometres to the Hub farm and will be setup as mixed farming companies; the one with fish, grass cutters and crops, the other with goats, sheep and crops and another with laying hens, broiler chickens and crops, etcetera.

The Hub farm will supply the Satellite farms with animal feed, fish feed, young animals, fingerlings and seedlings. All products are produced and grown on the Hub farm to ensure the quality and sustainability. Next to this the Hub farm will deliver the necessary infrastructure such as barns and/or fish ponds. The Satellite farmers will be trained by the Hub farm in the field of animal care, preparation of feed schedules, identifying diseases and managing the accounting, management and planning in order to promote their independence.

Distribution, marketing and trading of the produce is done by the Hub farm. In this way the Satellite farmers can focus on the produc-tion of their crops and animals. The sales organization will setup a direct sales network of local roadside sales and sales penetration into the hotel and restaurant branch.

In 2021 we will start with the “Cluster Farm Fresh Shops”; first pilot store will be in Accra. These shops will have all of the Cluster Farm products in their assortment and will be present at strategic selling points in Ghana. The shop itself will be a low cost / low maintenance structure, such as a “container” shop with all necessary fittings and solar powered. This project will be constructed as a franchise model.

At a later stage we plan to start with “Fresh Cooking Outlets” at a number of “Cluster Farm Fresh Shops” where we will offer local dishes with products from the farms. All dishes will be packed with nutritious vegetables to show that local food can be a source of proteins and vitamins and therefore extremely healthy.

Providing the funds and making sure that there are incentives for Satellite farmers.

Replication of the project throughout the African continent.

Africa is ready to feed their continent and can help to feed the world!

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“A successful multiplication of this farming model will breathe new life into the local economy and above all empower people to grow food everywhere”

7 Steps Plan

The initial action, setting up a Hub Farm has been taken and now we have to use the 7 Steps Plan on this page as a follow up to make a success out of this venture.

The Cluster Hub Farm will select 20 existing local farm-ers, who are practicing small scale agriculture and link them to the Hub farm. These farmers will be the

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Cluster Farming Road 17

Ekumfi Ekrawfo

Central Region, Ghana

info@clusterfarming.org

www.clusterfarming.org