This proposal is intended to facilitate the increased production of yams for export to the US, Canada, UK, and other markets.  This is to be accomplished through the development of a yam packing and processing facility in Wait-A-Bit, Trelawny.  It is projected that during the first three months of operation, Sure Jamaica will increase exports from one (1) container to two (2) containers per month; Sure Jamaica will maintain this level of export for the remainder of year one.

Sure Distributors has the capacity to increase exports more aggressively but has elected not to, for a variety of reasons.  One such reason is that the company must develop and implement policies and processes to ensure the quality of the product and protect against breach in security.  In short, the company’s operation must be refined prior to moving the company to full capacity, in terms of its exports.

In year two of operation the company will increase exports by eight (8) containers over the previous year.  In year three (3), Sure Distributors will increase its exports by forty nine (49) containers over the previous year.  In year four (4) of operation Sure Distributors will increase its exports by forty two (42) containers over the previous year.  In the fifth (5^th) year of operation the company will increase exports by thirty (30) containers over the previous year.  During the sixth (6^th) and seventh (7^th) year exports will be increased by thirty seven (37) containers over the previous year.

The operators propose to achieve this target by;

i.        Development of a yam processing facility:

Ø      Renovation of existing facility

Ø      Procurement and installation of equipment

ii.      Effective and efficient management of the packing facility

iii.    Protection of distribution channel, domestic and foreign markets

Project Costs; Financial Plan; Loan Requirement and Repayment; and Collateral/Security

The total capital cost is estimated to be, J$27,609,392.44 in capital investments; apportioned into 5 categories as follows:

Projected Operating Expense, and Revenue

The projected annual expenses inclusive of production and operating costs range from J$71.85M in PY1 to a high of J$461.19M in PY7.

Annual projected revenues accruing to the project will range from J$89.28M in PY1 to a high of J$572.88M. The projected accumulated revenue at the end of the 7 years is J$2.44B.

Cash Flow Schedule (Annual)

The projected cash flows indicate a viable production venture with adequate resources to support additional capital re-investments and operational expenses, having net cash flow ranging from J$35.64M in PY1 to J$107.88M in PY7.  The projected accumulated net cash balance at the end of the seven (7) years is J$493.46M.

Profitability

The projected income statement indicates positive, profitability of approximately J$14.99M in PY1 to J$110.21M in PY7. Cumulative net income at the end of PY7 is J$488.85M.

These analyses specifically indicated:

1.       A Pay Back Period (PBP) of 0.8 years (8 months) 

2.       A Profitability Index (PI)  of 4.37 which is greater than the bench mark of 1;

3.       A positive Net Present Value (NPV) of approximately J$200.64M when future cash flows were discounted utilizing a rate of 15% - the Jamaican Government Treasury Bill Rate, assumed to be the accepted market risk free rate of interest.  Funding will be sought at 7.875% for the project implementation; and

4.       An Internal Rate of Return (IRR) of approximately 137%, which is greater  than (i) the Government Treasury Bill Rate of 15%; (ii) the Cost of Capital (7.875%); and (iii) the industry benchmark or opportunity cost of capital of IRR = 13% for agricultural projects.

In an effort to obtain the sense of variability and the project’s vulnerability to macro or micro environmental changes in cost, revenue (implicitly, yields or price) and the operating expenses, sensitivity analyses were conducted. The fluctuations in the variables (increase or decrease) resulted in a positive NPV of approximately J$92.46M and an IRR of 90%, in a worst case scenario.

Conclusions and Recommendations

The background of the project reflects a team of determined stakeholders with the requisite skill sets to implement all components of this proposal along with a social and economic environment ripe for the success of this project.

Given the results of the financial analyses conducted and, based on the projected tremendous positive technical, environmental, social, economic and financial feasibility, it is reasonable to assert that the benefits projected from project activities are adequate to cover all costs and ensure a significant return on investment. This provides reasonable grounds to recommend that the project be supported for implementation.