Study notes on business plan, Study notes of Business

Download Study notes on business plan and more Study notes Business in PDF only on Docsity! 1 | P a g e TABLE OF CONTENTS 1. Executive summary 3 2. Product- fresh produce vegetables 4 2.1 Foreword 4 2.2 Benefit to user 4 2.3 Economic role of vegetables 4 2. Specification of product 5 2.4.1 Pumpkins 5 2.4.2 Cabbage 5 2.4.3 Onions 6 2.4.4 Green beans 6 2.5 Selling proposition 6 2.6 Source of revenue 6 2.7 Potential development 6 2.8 Export potential 6 3. Industry analysis 7 3.1 Domestic production 7 3.2 Important stake holders 7 3.3 Growth opportunity 7 3.4 Growth constraints 7 3.5 Market segmentation 8 4. Competitor analysis 8 4.1 Competitive strategy 8 4.2 Market share 9 4.3 Barriers to entry 9 4.4 Market outlook 10 4.5 Recent development 10 5. Supply analysis 10 5.1 Quality, grades and standards 11 5.2 Market information 12 5.3 Neighbouring countries supply 12 6. Operational analysis 12 6.1 Pumpkins 12 6.1.1 Soil preparations 12 6.1.2 Planting 12 6.1.3 Fertilization 12 6.1.4 Irrigation 13 6.1.5 Weed control 13 6.1.6 Pest control 13 6.2 Cabbage 14 6.2.1 Propagation 14 6.2.2 Soil preparations 14 6.2.3 Planting 14 6.2.4 Fertilization 14 6.2.5 Irrigation 15 6.2.6. Weed control 15 6.3 Onions 15 6.3.1 Soil climate requirement 15 6.3.2 Planting 15 2 | P a g e 6.3.3 Fertilization 15 6.3.4 Irrigation 16 6.3.5 Weed control 16 6.3.6 Pest and disease control 16 6.3.7 Harvesting 16 6.4 Green beans 16 6.4.1 Climate control 16 6.4.2 Soil requirement 16 6.4.3 Plant space and seeding 17 6.4.4 Land preparation 17 6.4.5 Time of planting 17 6.4.6 Fertilizers requirement 17 6.4.7 Irrigation 17 6.4.8 Herbicides 18 6.4.9 Disease 18 6.4.10 Length of crop 18 6.4.11 Harvesting and parking 18 6.5 Rotational strategy 19 6.5.1 Practice of rotation 19 6.5.2 Benefit of rotation 19 6.7.4 SWOT ANALISIS 21 7. Human resource and management 22 8.1 Learning development 22 8.2 Socio economic benefit 22 8.2.1Job creation 22 8.2.2 Poverty alleviation 22 8.2.3 Woman participation 22 8.2.4 Skills transfer 23 8.2.5 Household to benefit 23 8. Risk analysis 23 9. Market analysis 24 9.1 Target market 25 9.2 Geographic coverage 25 9.3 Bargaining power of customers 25 9.4 Distribution channels 26 9.5 Marketing strategy and budget 27 10. Financial analysis 29 10.1 Financial objective and strategies 29 10.2 Assumption 30 5 | P a g e 2.4. Specification of product 2.4.1. Pumpkins Scientific name: Curcubita pepo and Cucurbita maxima 2.4.2. Cabbage Cabbage is believed to have evolved from a wild form native to Europe, growing along the coast of the North Sea, the English Channel and Northern Mediterranean. Theoprastus discovered cabbage in 350 BC and the Greeks cultivated it as early as 600 BC and they believed that cabbage was a gift from the gods. Pliny reported a soft-headed form in ancient Rome and the Saxons and Romans probably cultivated it and introduced it to the British. The ardheaded types were only mentioned in the 9th century. The early Egyptians are said to have worshipped it. The plant was used for medicinal purpose to treat gout, stomach problems, deafness, headache and hangovers in the early days. Cabbage is now grown throughout the world. 2.4.3. Onion Onions are broadly categorised into short-day, intermediate and long-day type. In South Africa, only short-day and intermediate-day onions are produced. The former are grown in the northern areas, as far as Kimberley, while the intermediate types are grown in the Eastern Cape. The short-day onions are generally straw-coloured, do not dry to a brown colour and have limited storage life, while the intermediates are copper-to brown-coloured, and have a long storage life under optimal production and post harvest. Total onion production in South Africa is approximately 220 000 tons per year. The top production areas are Ceres (ca.22.2%), Brits (ca 20.9%), Limpopo Province (ca.20.9%) and the combine Free State and Northern Cape production areas (19.8%). Between 25% and 30% of the total production is exported, mainly to Zimbabwe, Namibia and Angola with small volume going to Europe and other destination like Asia. 2.4.4. Green Beans Green beans, otherwise known as snap or string beans, are the most edible pod beans. The lima beans are the most common shell been sold. Edamame, a shell bean, is also called an immature green soybean. The popularity of this bean has grown in the past decade and is now easily found frozen in most major supermarkets. 6 | P a g e 2.5. Selling proposition Fresh produce vegetables are not seasonal and required as nutritional diet throughout the year. With the ever increasing population, movement to urban areas and the decreasing number of producers, the project is bound to succeed. Our unique selling proposition is quality production and travelling the extra mile to the satisfaction of our customers. 2.6. Source of revenue The project will earn its revenue from strategic marketing of Fresh Produce Vegetables. 2.7. Potential development There is an additional 15ha of dry land which could be developed, this will happened after the total amount of ABSA have being settled in order to procure a pivotal irrigation system and implements that can be cultivated, the production will therefore increase and so as job opportunities for the local society. 2.8. Export potential There is huge export potential to Southern African countries, however due to the perishable nature of fresh produce vegetables it is not an ideal situation to export vegetables but possible with the current technologies. Canned vegetables have a lasting life cycle and may be export all over the world. 7 | P a g e 3. Industry Analysis 3.1. Domestic production There is a decline in the number of commercial producers and an increase in the population. Commercial farmers number fell from 66000 in the 1990’s to 44000 in 2004 and 40000 in 2001. Of the South African population of 47.4 million people, 15.3 million are in the age group of 0 to 14 years, 28.4 million are in the age group of 15 to 60 years and there are 3.7 million people older than 60 years ( Info: Stats SA). It is concluded that in order to provide a healthy diet to all the people in South Africa, current annual production will have to double per annum. Horticultural crops, particularly vegetables are produced throughout South Africa. However the following areas are very important:  The South- Western and Southern region of the Western Cape for deciduous fruit, grapes, wines and vegetables.  The low-lying, sub-tropical areas of Mpumalanga and the Northern Province for subtropical crops, citrus and vegetables.  The lower reaches of river valleys of the Eastern Cape for citrus and vegetables.  The Upington area for export of grapes and wine. Vegetables cultivated in South Africa are either supplied to on of the sixteen Fresh Produce Markets, local and chain retailers/Wholesales, directly to processors or they are sold at farm gate. Although the country has a comparatively large vegetables processing industry, there is scope for growth in processing activities for the domestic and export markets. Tomatoes are the most important vegetable crop, followed by Onions, Potatoes are also important in the fresh produce sector. Potato production ‘s gross value accounts for about 43% of major vegetables, 15% of horticultural products and 4% of total agricultural production (NDA,2003). Potatoes also benefit from being considered as both a stable starch and relish in different sectors of the South African population. There has been steady growth in speciality vegetable products, such as Asparagus, celery, lettuce and baby- marrows. 3.2. Important Stakeholders National Empowerment Fund – Financial support to kick start the project. The Department of Rural Development – Proactive Land Acquisition Strategy. Department of Agriculture – Technical support. Fresh Produce Markets (Mangaung & Kimberley) – Marketing of the product. 3.3. Growth Opportunity The project has growth opportunity to canning (Vegetables in cans) that can be exported to other countries; furthermore the project may also have its own mini market in Kimberley or in Boshof. 3.4. Growth constraints The high cost of inputs 10 | P a g e 4.4. Market segmentation The composition of seller mix (Product, Price, Place and Promotion) will be directed to business user. Our main target market with vegetables is the Fresh Produce Markets and Retailer. 4.5. Recent Development The recent departure of South African white farmers to Georgia and Congo whereby they have being given hectares of agricultural land pose a serious threat to food security in South Africa. The Department of Agriculture, Forestry and Fisheries (DAFF) has observed a general culture of non compliance by Producers, Packers, Sellers and retailers with respect to the regulations relating to the grading, packing and marketing of fresh vegetable intended for sale in South Africa throughout the National Fresh Produce Markets and retailers. Regulation R69 of 13th February 2009 framed under the Agriculture Product Standards Act ( APS Act)1990 (Act no 119 of 1990) was compiled by the end of December 2010. The aforementioned regulations came into force on the 13 February 2009 through Government Gazette no. 31828 which implies that due compliance by the Fresh Produce industry was immediately expected. Fresh Vegetables shall be packed in accordance with section 6 and shall be marked in accordance with Section 10 of regulation R69 of the APS Act. Producers are obliged to apply for a producers code or Pack-house code from the DAFF which is a marking requirement for traceability purposes. Producers are to ensure that containers that are packed with fresh vegetables are marked clearly and legibly with prescribed particulars. The first batch of products which the DAFF inspectors focused on were Carrots, Butternuts, Peppers, Cucumbers, Beetroots, Green Beans, Broccoli, Sweet Potatos, Asparagus, Mushrooms and Cabbages. Products such as Garlic, Tomatoes, Potatoes and Onion are already regulated and need to be fully complied with. 5. Supply Analysis Producers deliver their fresh produce to Market Agents (14 in total of which 4 is under black ownership) who sell the fresh produce to buyers at a negotiable 7.5 % commission. Markets Agents strive towards ongoing relationships with supplying farmers and all of the Agents operating on this market have a combination of small-and commercial fresh produce suppliers. Verbal contracting is applied between Agents and the supplying Producers that they have recruited. The fresh Produce Producers are responsible for the grading, packaging and transport of product to the Market. After the product delivered to the market had been sold, the farmer will receive their sales income within three days to four days. On the market sales staff of the Market Agents negotiates with fresh produce buyers to secure sales with buyers, under the guidelines and margins set by the relevant Market Agent. According to the Market Agents the proposition of fresh produce received from emerging- and small scale producers, vary throughout the year, depending on the season. Problems experienced by Markets Agents on the markets included the theft of produce on trading floor, shortage of trading space due to the growth in the fresh produce market, as well as language and culture gaps in certain cases. Good communication with farmers, networking, maintaining long term relationships and the provision of advice regarding various aspects ( Production, distribution, 11 | P a g e grading, packaging, storage and marketing) are critical issues for the Markets Agents. In terms of the future, the Market Agents anticipated industry growth and increased participation of emerging farmers in the Mangaung Fresh Produce Market. According to a study commissioned by the Mangaung Fresh Produce Market the total fresh produce turnover in South Africa amounts to R40 billion per annum, of which ; R20 billion 50% of total value, is consumed at source- R6 billion, 8% of total value, is sold through all the fresh produce markets in South Africa. R1.8 billion +_ 80000 tonnes, is sold by the Mangaung Fresh Produce Markets annually including the fresh produce sold to informal traders to the value of R900 million per annum. On average trading day, they could see 2000 pedestrians 2900 trucks, 4 light vehicle; 15 000 people and 10 transactions. The market deals with unregistered buyers (informal traders/ Hawkers), registered buyers and guarantee (big) buyers by means of smart card debit system. Buyers on the market have acquired a smart debit card to do purchases on the market. Mangaung Fresh Produce plays an in important role in the South African Produce supply chain, in terms of price determination and being a distribution point for fresh produce. Factors influencing price determination include supply, demand and Fresh Produce quality available on the market. The Fresh Produce price determined on the market, serves as reference price for many role-players in the fresh produce supply chain. 5.1. Quality, grades and standards In order to ensure that the produce sold at the market is safe for consumption; random fresh samples are sent to an independent laboratory on a weekly basis, testing for residues and contamination that may be found on the produce, Product grading is a critical component of price determination on the market. However, only garlic and potatoes are still officially graded on the market while the grades for the other fresh produce are based on experience and negotiations. The fresh produce quality standards that were originally developed by the marketing authority serve as a reference point. According to some of the interviewed market agent’s personnel, the size of producers did not guarantee good quality produce. Thus, both emerging and commercial farmers were able to comply with product standards and consequently there was no need to compromise of fresh produce quality due to the role of emerging farmers. Many potato processors ( E.g. McCain, Simba, Willard’s) engage with contract farmers, but also procure first grade potatoes from the market to top up their raw material level in cases of shortage or natural disasters. Other major business buyers on the market include Pick n Pay, Fruit and Veg City, Tiger Brands, Spar and Fresh mark. The quality of product procured by these buyers on the market depends on consumer needs, availability and market price. 12 | P a g e 5.2. Market information The communication of market information is extremely important component of the functioning of the market. In order to supply market information as widely as possible, the Johannesburg Fresh Produce Market is developing a SMS based system, this will enable the market to supply producers with up to date market data on a regular (and relatively cheap) basis to a wide range of producers, including emerging farmers with cell phone access. 5.3. Fresh produce in some of South Africa neighbouring countries. Buyers at the Mangaung Fresh Produce Market include buyers from Lesotho. 6. Operational Analysis NB: Soil samples will be regularly sent to laboratories to determine any deficiency in nutrition and soil disease. Water will also be tested The Fresh Produce Vegetable is under irrigation. 6.1. Pumpkins 6.1.1. Soil preparation The soil should be ploughed to a depth of 15cm, especially if it contain sods or clay, at least one month before planting, special care should be taken to remove from the land any portion of the diseased plant which might affect the new plants. About two weeks before planting, the soil should be harrowed, rolled and dragged until it is smooth and mellow. It is then ready to be laid off in rows properly spaced to accommodate the vegetable. 6.1.2. Planting Planting on raised bed promotes drainage, so the roots do not have to deal with constant wetness, which leads to disease problems. The seeds can be planted directly in the site where they will mature. Pumpkins are usually planted in hills. Plant two to three seeds per hill, about 2,5 cm deep and later thin to one plant per hill. Spacing varies with variety and vine size. Plants bush or shortvined varieties (these must be 0,5m to 1m apart in the row and 1m to 1,5m between rows. The seeds can also be grown occasionally in seed trays. Sowing can begin outdoors in August, although September to November is the most favourable period countrywide, except for the low veld where seed is sown in autumn and winter. 6.1.3. Fertilisation The plant respond to liberal dressing of manure and compost, which also hep the soil to retain moisture. Pumpkins appreciate to be treated generously through their growth period. Good feeding for pumpkins is liquid manure applied at interval of 2 weeks to 3 weeks, starting when the first flower buds open. Apply 5l per planting station following a good watering. A bit of additional feeding with 2:3:2 or 2:3:4 at a rate of 25g to 50g per plant when flowering starts and then again four weeks later will be beneficial. With a new hybrid pumpkin cultivar, STAR 7001, fertilisation with 15 | P a g e very light soils or on soils that are very high in potassium. Spraying the plants with 5kg magnesium per hectare can rectify the problem. Cabbage is very susceptible to molybdenum deficiency. Plants should be sprayed with 125g of sodium- or ammonium molybdate in 500L of water per hectare as soon as signs of deficiency are noticed. The availability of molybdenum may be increased by providing enough lime prior to planting. Iron may be applied with a foliar spray with 1% iron sulphate or chelelate. The deficiency of iron is common on calcareous. Alkaline soil. Manganese deficiencies are prevalent on soils with a ph of more than 5, 5. A foliar spray of 5kg per hectare of manganese sulphate or 2 to 3kg/ha of manganese oxide is suggested as soon as symptoms of deficiency are observed. Cabbage may have boron deficiencies in areas with high rainfall. Three kilograms of Solubor are effective in controlling boron deficiency. 6.2.5. Irrigation Cabbage should be irrigated immediately after sowing or transplanting. Thereafter, irrigation should be applied at intervals of 10 to 12 days in heavy soils of eight. Days in light soils and the schedule should be followed until the heads are fully developed and firm. Young plants should receive enough water for vegetative growth before forming heads. Excess moisture when the heads have formed may cause them to crack. 6.2.6. Weed Control Weeds are controlled mechanically or by hand as well as chemically through the application of registered herbicides. Mechanical cultivation should be done during land preparation until the plants are about half-grown. The first cultivation should be done two to three weeks after transplanting. 6.3. Onion Most a necessity when long-term storage and shipping under ambient are envisaged. The concentration and timing of application are critical, as high concentration and premature applications lead to development of soft bulbs which are prone to decay. 6.3.1. Soil and Climate requirement The best result can be obtained on loamy soils which are deep and well drained to a depth of 120 cm, with a ph between 5,5 and 6,5. Onions grow best in temperature ranging from 18 to 22 Celcius Degree, higher temperature will promote bulb formation, while lower temperature will induce flowering. 6.3.2. Planting Onions can be sown directly or seedling can be transplanted. After the transplanting, keep the soil moist for the first 5 days to overcome transplanting shock. 6.3.3. Fertilisation During soil preparation, work in 100g of 2:3:2 (22) or 2:3:4 (30) per 1m2. Use 10g LAN per 1 m2 as well as 10g KCI per square metre 3 weeks after transplanting and again 6 weeks after planting. 16 | P a g e 6.3.4. Irrigation Onion requires approximately 400 to 600mm of water during the growing season. Don’t irrigate onion for 3 weeks before harvesting. 6.3.5. Weed Control Weeds are pulled out by hands. Mechanical weed control can also be used. Use only registered herbicides. 6.3.6. Pest and Disease control Thrips are very small insects which feed on leaves by sucking plant sap. Registered chemicals, good cultural practices (such as proper crop rotation) as well as field sanitation are the three mechanisms that should be integrated to control all the pests and disease affecting the crop. Proper sanitation should include the removal and destroying of all the disease plant material. 6.3.7. Harvesting  Harvesting maturity is normally determined by the extent to which the tops have fallen. Bulbs which are harvested very late have a shorter storage life, however, they will also be significantly bigger than bulbs from early harvest, and therefore there will always be a compromise between maximum yield per hectare and maximum storage potential of crop.  Curing bulbs will be lifted and stacked in windows to dry, this take place anywhere from two to eight weeks, depending on factors such as rainfall, maturity at harvest etc. The dried foliage of the bulb is then clipped, and bulbs are store in bins until grading and packing. 6.4. Green Beans 6.4.1. Climate requirement The bean is warm season crop which is very sensitive to frost but dislikes hot conditions. It can be grown only during the frost-free portion of the year. Optimum mean temperatures are 15 to 27 Celsius degree. At temperature of 5 Celsius degree and lower, beans have a poor quality, with short, puffy, malformed pods; this can be a serious problem where beans are grown over winter in cooler frost-free areas. Temperature above 35 Celsius degree, especially when accompanied by hot, dry winds, may cause excessive shedding of flowers and young pods, resulting in poor yields. Ideal temperatures for germination are 20 to 30 Celsius degree, when plants should emerge within 5 to 10 days; minimum temperature for germination is 10 Celsius degree. During the summer, when periods of cool, cloudy weather encourage tender leaf growth are followed by hot dry days, the growing leaves are susceptible to sunburn and dieback. 6.4.2. Soils Beans can generally successfully cultivated on a wide variety of soil types, ranging from sands to relatively heavy clays, provided they are well-drained to at least 400mm. Sandy-loam to loam soil are preferred. Soil which tends to crust should be avoided, because they may seriously reduce emergence, as well as detrimentally affecting subsequent growth. Green beans are amongst the 17 | P a g e most sensitive vegetables to brackish condition and to high boron content in the soil. The ideal ph (chic) is between 5, 5 and 6,0. 6.4.3. Plants spacing and seeding rate Dwarf beans are planted 40 to 70 mm apart in rows drain 450mm to 600mm apart. The closer spacing are generally preferred. With runners, spacing of 100mm to 150mm within the rows, and 900mm to 1000mm between the rows, is employed. Seed is planted directly in the field, to a depth of 30mm to 50 mm in sandy soil, and 20 to 30 mm in heavier soil, at the rate of 75 kg to 110kg per hectare for bush beans, and about 50kg per hectare for runner beans. 6.4.4. Land preparation Prepare land to a good depth and tilth. Take care not to over-work and pulverise the soil, because this can increase soil capping. 6.4.5. Time of planting Sep to Jan August to March 6.4.6. Fertilisation requirement The approximately absorption of major nutrients by relatively good crop and bush green. N P K 15 tons/ha Plants 100 50 10 6 55 45 total 150 16 100 Bearing in mind that this leguminous crop fixes some of its own nitrogen requirements, and that the plants are almost invariable ploughed back into the soil after harvest, it is clear that the fertiliser requirement are relatively low. Provided the soil phosphorus(P) and potassium (K) levels are reasonable high, the recommended application would be 70 kg nitrogen (N) and 40 kg per hectare at planting. A light top-dressing of nitrogen ( 30 kg N/ha), two or three weeks after emergence, may sometimes be advisable. For runner beans the fertiliser rates could be increased by about 25%. One or two extra light side dressing of nitrogen would normally be beneficial for pole beans. A general fertiliser programme could be 250 to 500 kg 2:3:4 (30)/ha at planting, followed by 200 to 250 kg LAN 3 weeks later. 6.4.7. Irrigation Rapid, uninterrupted growth is necessary for good yields. Wet the soil to a depth of 450 mm before planting, and do not re-wet until the plants have emerged, unless the topsoil in which the seed occurs dries out excessively. During the first half of the growing season ( about four weeks in most instances), wet the soil to a depth of 450 mm only when the depletion of the available soil moisture approaches 80%, this allows the development of a deeper and more extensive root-system without normally detrimentally affecting yield or quality. Thereafter, wet the soil to a depth of 600 mm when no more than half the available soil moisture has been utilised. Maintaining soil moisture from early 20 | P a g e  It reduces risk: A single crop may fail because of drought. It may be attacked by pests. Or its market price may be low when time comes to sell. Producing several different crops reduces these risks.  Crop rotation may also replace ploughing the soil since it helps aerate, the soil, recycles nutrients, and help control weeds, pests and disease hence perfectly fitting within the ideals of conservation agriculture.  Intercropping, strip cropping and relay cropping bring many of the same advantages as rotation. Even so, it is a good idea to rotate crops even if you use these approaches. Which crop should not be planted together or in rotation? The table below indicates which crop are in the groups that suffer from the same pest and disease problems and which should therefore not be planted in rotation. Group 1 Group 2 Group 3 Group 4 Group 5 Group 6 Group 7 Cucumber Broccoli Eggplant Beetroot Corn Beans Garlic Gourds Brussels Pepper Spinach Cereal Peas Leeks Musk melon Sprouts Potato Beet Onion Pumpkin Cabbage Tomato Carrots Summer squash Collards Lettuce Watermelon Kole Parsnips Winter squash Kohlrabi Radsh 21 | P a g e 7. SWOT Analysis 7.1. Strength  The farm is available with Vegetables infrastructure in place.  There is a 9ha under irrigation for planting of Vegetables.  There is strong sufficient water.  The farm has the right soil type and temperature for the envisaged Vegetables.  There is Market agreements with Agents at Mangaung and Kimberley Fresh Produce.  The farm is located between two major cities, approximately 60km from Kimberley and 130 km from Bloemfontein were Markets are based.  The Extension Officer from the Department of Agriculture is based in Boshof which is 10km from the farm for technical support. 7.2. Weakness  Financial constraints to pull the project. 7.3. Opportunity  Diversify in terms of product offering and targeted markers.  Increase prices through better coordination.  Increase production quantity and quality and sales through better technical and business skills. 7.4. Threats  Farmers producing the same products in the area.  Basic survival is a struggle for many emerging farmers. 22 | P a g e 8. Human Resource and Management 8.1. Leaning and development Learning& development objective Strategies To be one of the best farm employee. Match values and principles of all farm workers with those of the business. To attract the best farm skills and talents to the business. Head hunt and remunerate employees based on performance. To retain the best skills and talents. Create conducive and motivating work environment. To increase use of farm technology in order to enhance competitive advantage. Employee training in the use of the latest farm technology. 8.2. Socio Economic Benefit 8.2.1. Job Creation The following job creation will be realised: 6 x Fulltime Employers 8.2.2. Poverty alleviation The project will address the issue of imbalance land ownership in South Africa, alleviate poverty through job creation and enhance food security in our country. 8.2.3. Woman participation 3 x Woman will be fulltime employed. 1 x General Manager 6 x Fulltime Workers 20 x Seasonal Workers 25 | P a g e 10.2. Target Market and Geographic Coverage. Figure3, Shows Bloemfontein (Mangaung) is our largest target, follows by Kimberley and then retailers in both cities. Mangaung Fresh Produce (Bloemfontein) is one of the four medium markets in South Africa while Kimberley one of the six smaller markets. 10.3 Bargaining powers of customers Producers market directly to Fresh Produce Markets and Retailer; therefore many significant and beneficial aspects can be taken advantage of, in particularly the following: security of payments, lower marketing costs in return for them is lower prices, convenience, less handling and better quality. Vegetables buyers or consumers have a relatively high bargaining power within the industry, demands for Vegetables is therefore largely reflected by consumers consumption patterns, customers preference, social appetite, belief and viewpoints per unique geographical location. The farmer is largely depend on the consumer, the consumer ability to purchase is influence by his/her income level, current debt situation and prices willing to pay. 70% 20% 10% fresh produce in bloemfontein fresh produce in kimberly retailers 26 | P a g e 10.4 Distribution Channels The distribution channels within South Africa are diversifying leading to ample choice of market option for farmers. Figure 4, shows vegetable channels before reaching the consumer Local (Municipality) authorities around South Africa own a total of 17 Fresh Produce Markets. The Markets form the primary distribution channel for vegetables. Although the world economy remains uncertain global food supply and demand are favourable, so farmers can expect product prices at current or higher levels in the coming years. The role of the Fresh Produce Market was (and still is) to provide the necessary and obvious facilities to compensate for and cover the growing gap in the market that was emerging. The provision of these FPMs was to allow for equal trade opportunities for large scale, commercialised producers and smallholder farmers producing small quantities of produce. The implementation of these markets started as a Government Act. They are legally bound to allow anyone to engage in trade without discrimination base on size, colour or origin. The FPMs have allowed for small scale farmers to find a market and sell their products easily, as the barriers to entry into the market would otherwise be near impossible, as large corporate buyers and marketing agents are not interested in procuring small, fluctuating quantities. Retailers/Supermarkets Producer/Farmer Fresh Produce Markets Private Sales Consumer 27 | P a g e 10.5. Marketing Strategy and Budget The marketing is done strategically by the Agents based at the Fresh Produce Markets at a fee of 12, 5% (Market + Agent) for all crops, the fees are therefore deducted from the price of the vegetables. Product Price Place Promotion Cabbage 1ha yield 75 tons under irrigation 75tons x 9ha = 675 tons/9ha 1ton = R1 731.67 R1 731.67 x 675 = R1 168 877.25 Fresh Produce Markets in Bloemfontein and Kimberley Market arrangements Onions 1ha yield 60 tons under irrigation 120 tons x 2ha = 120tons/2ha 1ton = R2585.53.53 R2585.53 x120 = R310 263.60 Fresh Produce Markets in Bloemfontein and Kimberley Market arrangements Green Beans 1ha yield 12 tons under irrigation 12 tons x 2ha = 24tons/2ha 1ton = R6 892.14 R6892.14 x24 = R165 411.36 Fresh Produce Markets in Bloemfontein and Kimberley Market arrangements Pumpkins 1ha yield 40 tons under irrigation Fresh Produce Markets in Bloemfontein and Kimberley Market arrangements