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Olive Business Plan
Olive Business Plan
Olive Business Plan
Olive Business Plan
Olive Business Plan
Olive Business Plan
Olive Business Plan
Olive Business Plan
Olive Business Plan
Olive Business Plan
Olive Business Plan
Olive Business Plan
Olive Business Plan
Olive Business Plan
Olive Business Plan
Olive Business Plan
Olive Business Plan
Olive Business Plan
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Olive Business Plan

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  • 1. Table of Contents 1) Business Idea 1 a. Olive Growing Environment 2 b. Pakistan Government Actions 2 2) Need 3 a. Current market consumption World Wide 3 b. Current market consumption Pakistan 3 3) Features 4 a. Forms 4 b. Usage 4 c. Plant benefits 4 4) Benefits 5 a. Health/ Nutritional Importance of Olive 5 b. Islamic values 6 5) Financial Costing 7 a. Capital cost 7 b. Running cost 8 c. Return 8 6) Product options 9 a. Preparation of Table Olive 9 b. Extraction of Oil 9 7) Current market situation 9 8) Marketing and management Aspects 10 a. Preparation of Table Olive 10 b. Preparation of Oil 11 9) Projected Cash Flow Analysis Table Olives 12 10) Projected Cash Flow Analysis Olive Oil 13 11) SWOT Analysis 14 12) Conclusion 15 13) Interviewed By 16 14) References 16
  • 2. (1) Business Idea: Plantation of Olive Trees in Pakistan 880,000 hectare suitable for olive cultivation. We must know that mainly farmer having land with slopes above 10% would be interested in introducing this crop in their farming system. By considering about 30% of the entire suitable area will reduce the total potential area at around 264,000 hectares. This area would be put under olive cultivation, and by adopting an average plant density of 250 trees per hectare a production of olive oil in the region will be of 72,000 ton per year. [1] Providing consultancies Providing the consultancy to the entrepreneurs about the business.Land suitable for olive plantation in Pakistan:
  • 3. a) Olive Growing Environment:Table 1 - Climatic Requirements for Olive Cultivation Factor Standard Climate Pakistan Climate Temperature 5-25oC 10-45oC Rainfall 700-800mm More than 500mm Humidity 75-90% 70% Altitude 400-1700meter 100-3000meter Chilling Req. 400-2000 hr 400-2100 hr Slope Suitable <20o 10o-50oSoils that have a depth of cultivation of at least 0.4/0.5 m and pH ranging from 6 to 7.5. Olive trees are adaptable to awide range of soil types and can be grown in siliceous and calcareous soil. Medium fertility soils (having 1-2 % oforganic matter) receiving an average rainfall of at least 500- 550 mm per year may guarantee good productions. Olivetree can withstand as low as temperature of -8 or -9 °C as long as it is not subjected to them for many hour providedthat trees are not at the active growing period. b) Pakistan Government Actions:Pakistan’s vegetable oil imports are forecast at a record 2.16 million metric tons (MMT) 2011/12, five percent higherthan the estimated 2.05 MMT imported in the 2010/11. Nearly 75 percent of Pakistan’s domestic consumption ofvegetable oil is met through imports, 81 percent of which is comprised of palm oil. [2]Pakistan demand of edible oil is increasing at the rate of 6 to 8 % per annum greatly switching over from ghee to edibleoil. Pakistan edible oil imports are likely to go up by five percent in 2011/12 to a record 2.16 million tons it must beknown Pakistan is worlds 4th largest importer of edible oil. [3]50Mn naturally grown wild olive trees in marginal areas through them 7Mn grafted with European olive species withthe support of Pakistan Oilseed Development Board (PODB) and Italian Ministry of Foreign Affair. 900 acre Oliveorchards establish in different region of KPK, Balochistan and Potohar. [4]
  • 4. (2) Need a. Current market consumption World Wide:The International Olive Oil Council (IOC) is an intergovernmental organization based in Madrid, Spain, with 23member states. It promotes olive oil around the world by tracking production, defining quality standards, andmonitoring authenticity.In the future, the world olive oil market will probably be more and more segmented on the basis of product qualitydifferentiation, with price playing a relatively less important role than in the past. This is already obvious in therelatively richer countries where olive oil is part of the traditional diet and it can be seen as a mature food.Table 2 – World Olive Production & Consumption Countries Country Production in Tons (2009) Production % Consumption Spain 1,199,200 41.2% 20% Italy 587,700 20.2 30% Greece 332,600 11.4 9% Syria 168,163 5.8 3% Tunisia 150,000 5.2 2% Turkey 143,600 4.9 2% Morocco 95,300 3.3 2%The International Olive Oil Council figures on olive oil consumption show a worldwide increase from 1,666.5 tones in1990 to 2,839 tons in 2009. Consumption went up in the olive’s traditional base in the Mediterranean and Middle Eastfrom 1,427.5 tons in 1990 to 2,242.5 tons in 2009. [5] b. Current market consumption Pakistan:The 5% of richest part of the Pakistani population can be considered for the moment the market segment to which theolive oil supply is addressed. The segment is not yet saturated; big chances of growth are represented by and within thissegment.Olive oil consumer in Pakistan is not yet used to this as basic commodity. In the edible oils business agree that asubstantial growth is possible.
  • 5. According to USDA reports, Pakistan edible oil imports can touch a record 2.16 million tons up by 5% in 2011-12.Pakistan mainly imports low-priced palm oil that meets 81% of total edible oil imports. [6] Table 3 - Import of Olive Oil in Pakistan Year Quantity (tons) Value in (Mn PKR.) 2004-05 461 59.9 2005-06 746 105 2006-07 1463 172.2 2007-08 2008 358 2008-09 2768 380 Source: Federal Bureau of Statistics 2009(3) Features a. Forms:Generally olives are being use in three forms: Olive Oil Table Olive Olive Cake (waste after olive extraction use for fertilizer) b. UsageOlive oil has four grades: Extra virgin olive oil Olive Pomace oil Sulphonated oil Technical oil c. Plant benefitsOlives are now being looked at for use as a renewable energy source, using waste produced from the olive plants as anenergy source that produces 2.5 times the energy generated by burning the same amount of wood. The same referenceclaims that the smoke released has no negative impact on neighbor or the environment, and the ash left in the stove canbe used for fertilizing gardens and plants. The wood is of high value because it is finally graded and used for makinghandicrafts.
  • 6. (4) Benefits a. HealthThe Olives and its oil, leaves, residue, and wood all have different nutrition, health, herbal and natural values and uses.Different products can be made like Edible products, cosmetics, health and beauty products, Personal Care, HerbalMedicine and several other uses. Research on olives & its leaves, olive oil, and prepared different pickles, jams, sauces,extract vinegar, and breads, confectionary, and traditional Pakistani Sweets. Nutritional Importance of Olive: Vitamins E, K, and A Used as a balm, it moisturizes the skin, combating dry skin and softening it Massaged onto the body, Olives fortify the limbs, combat against inflammation Help against wrinkles and delaying the effects of old age Help combat against strokes, heart-disease, High blood pressure, diabetes The powder of seeds mixed with butter is effective in brittle nails It also removes the kidney stones
  • 7. b. Religious ValuesIslam:Olives have been mentioned six times in the Quran and their health benefits have been propounded in Propheticmedicine.(Surat An-Nūr) (The Light) (24:35)“Allah is the Light of the heavens and the earth. The example of His light is like a niche within which is a lamp, thelamp is within glass, the glass as if it were a pearly [white] star lit from [the oil of] a blessed olive tree, neither of theeast nor of the west, whose oil would almost glow even if untouched by fire. Light upon light. Allah guides to His lightwhom He wills. And Allah presents examples for the people, and Allah is Knowing of all things.”(Surat Al-Muminūn) (The Believer) (23:20)“And [We brought forth] a tree issuing from Mount Sinai which produces oil and food for those who eat.”(Surat An-Naĥl) (The Bee) (16:11)“He causes to grow for you thereby the crops, olives, palm trees, grapevines, and from all the fruits. Indeed in that is asign for a people who give thought.”(Tirmizi, Ibn Maja)Hazrat Sayyed Al-Ansari(R.A.) narrates that the Prophet (sallallahu alaiyhi wassallam) said:“Eat the olive oil and massage it over your bodies since it is a holy (mubarak) tree.”
  • 8. (5) Financial CostingOlive orchard on 40 kanal which is 5 acre.Basic Description:835 Plants on 5acre (167/acre spacing of 4x6 meter) a. Capital CostWe have taken the costing of 5 acre area for the plantation of Olive plants.Fertilization expenses: Trolley 1500 PKR and 500 PKR rent (1500+500= 2000 PKR.)Irrigation System Installation Cost: Table 4 – Irrigation equipmentsEquipments Cost PKR.9 Tanks 45,000Land Bore 40,000Hard Plastic Pipe 11,8801 Electric Motor 10,000 = 106,880Initial Cost:Table 5 – Plants Installation CostMaterial No. of Unit Per Unit PKR. TotalOlive Plants 835 30 25,050Fertilization 6 2,000 12,000Land Preparation Labor 3 7,000 21,000Irrigation System 1 106,880 106,880 = 164,930
  • 9. b. Running costTable 6 – Input Cost No. of Months Per Month TotalManpower 12 7,000 84,000Electricity(April, May, June) 3 3,000 9,000Electricity Per Month 9 500 4,500Other Expenses 12 500 6,000Fertilizer 6 2,000 12,000 = 115,500 c. ReturnEstimated Production:We have estimated the production of olives by 95% of successive trees.Table 7 – Production of Olives per Tree Year Olives-kg/Tree Olives-kg /5 Acre Year 1 0.0 0.0 Year 2 0.0 0.0 Year 3 0.0 0.0 Year 4 4.5 3,555 Year 5 6.5 5,135 Year 6 8 6,320 Year 7 11 8,690 Year 8 12 9,480 Year 9 13 10,270 Year 10 15 11,850
  • 10. (6) Product Options Preparation of Table Olive:Fruit is harvested when it is light green. After washing with water fruits are put in 1-2% NaOH for 36-48 hour. Later onfruits are taken out and washed 5-6 times and then put in 6-8% Nacl solution for 14-21 days and last fruits are washedand put in vinegar. Extraction of Oil:Fruits are harvested during October when these are purplish. Later on these are mechanically crushed to get oil. Olivecontains 15-40% oil.(7) Current Market Situation Table 8 - Olive Oil Price at Market Company Type Quantity Price PKR. PKR. Per ltr. Fragata Pomace Oil 5ltr 2125 425 Borges Pomace Oil 5ltr 1650 330 Lasso Extra Virgin Oil 5ltr 3850 770 Borges Extra Virgin Oil 5ltr 3850 770 Mundial Extra Virgin Oil 3ltr 1995 665 Rafael Salgado Extra Virgin Oil 3ltr 1925 641.66 Rafael Salgado Pomace Oil 3ltr 1675 558.33 Mundial Pomace Oil 4ltr 1675 418.75 Source: Local Market PriceThe average current market rate of the Extra Virgin Oil is 726.25 PKR. /ltr and the Pomace Oil is 479.12 PKR./ltr. [8] Table 9 – Table Olive Price at Market Company Quantity Price PKR. PKR. Per kg Figaro 450gm 365 811.11 Marios 595gm 375 630.25 Acora 225gm 165 733.33 Source: Local Market PriceThe average current market rate of the Table Olives per kg is 725.11 PKR.
  • 11. (8) Marketing and Management Aspects Preparation of Table OliveOlive Pitting Machine is being use for making table olives. Company will purchase that machine at the fourth yearhaving the worth of 250,000 PKR. The marketing expenses are accounted to be 10,000 PKR. Table oils will be sellingin the local stores initially at the rate of 500 PKR. This is much lower than our competitor’s price. The pricing strategywe are using is price penetration. Cost of producing Table Olive: Packaging PKR./kg Bottle 35 NaOH 1 Nacl 1.66 Vinegar 40 Labor 2 Utility Expenses 2 Total 81.66 Price Per Kg: Selling Cost PKR./kg Retail Price 500 Manufacturing Cost 81.66 Retailer Margin 20% 100 Sales man Margin 5% 25 Total 206.66 Profit 293.34
  • 12. Preparation of OilThe oil will be extracted at the Tarnab farm where the facility is given for free of cost. Olive oil 1 ltr extracted from8kg olives. Oil will be selling to the local stores where they are sold at the price of 500 PKR./ltr. The marketingexpenses are accounted to be 10,000 PKR. Table oils will be selling in the market initially at the rate of 500 PKR. Thisis much lower than our competitor’s price. The pricing strategy we are using is price penetration.Cost of producing Olive Oil: Packaging PKR./ltr Bottle 35 Transportation 2.81 Labor 2 Utility Expenses 2 Total 41.81Profit Per ltr: Selling Cost PKR./ltr Retail Price 500 Manufacturing Cost 41.81 Retailer Margin 20% 100 Sales man Margin 5% 25 Total 166.81 Profit 333.18
  • 13. Projected Cash Flow Analysis Table OlivesYear Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Olive kg 0 0 0 0 2,133 3,081 3,792 5,214 5,688 6,162 7,110Manufacturing Cost 0 0 0 0 184,181 261,594 319,655 435,775 474,482 513,189 590,603Total Cost 164,930 115,500 115,500 115,500 549,681 377,094 435,155 551,275 589,982 628,689 706,103Revenue 0 0 0 0 799,875 1,155,375 1,422,000 1,955,250 2,133,000 2,310,750 2,666,250Net Profit -164,930 -115,500 -115,500 -115,500 250,194 778,281 986,845 1,403,975 1,543,018 1,682,061 1,960,147Income -164,930 -280,430 -395,930 -511,430 -261,236 517,045 1,503,890 2,907,865 4,450,883 6,132,944 8,093,091Cumulative Cost 164,930 280,430 395,930 511,430 1,061,111 1,438,205 1,873,360 2,424,635 3,014,617 3,643,306 4,349,409Cumulative Revenue 0 0 0 0 799,875 1,955,250 3,377,250 5,332,500 7,465,500 9,776,250 12,442,500
  • 14. Projected Cash Flow Analysis Olive OilYear Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Olive ltr 0 0 0 0 444 642 790 1,086 1,185 1,284 1,481Manufacturing Cost 0 0 0 0 18,579 26,837 33,030 45,416 49,545 53,674 61,931Total Cost 164,930 115,500 115,500 115,500 134,079 142,337 148,530 160,916 165,045 169,174 177,431Revenue 0 0 0 0 166,641 240,703 296,250 407,344 444,375 481,406 555,469Net Profit -164,930 -115,500 -115,500 -115,500 32,561 98,366 147,720 246,428 279,330 312,233 378,038Income -164,930 -280,430 -395,930 -511,430 -478,869 -380,502 -232,782 13,645 292,976 605,208 983,246Cumulative Cost 164,930 280,430 395,930 511,430 645,509 787,846 936,376 1,097,292 1,262,337 1,431,511 1,608,942Cumulative Revenue 0 0 0 0 166,641 407,344 703,594 1,110,938 1,555,313 2,036,719 2,592,188
  • 15. SWOT AnalysisStrengths: Opportunities:  High profit margin  Growing tastes and preferences  Suitable with Pakistani climate  Can be exported to neighboring countries  Barren / marginal land can be utilized  Huge free barren land  It can be cultivated on the fertile land along with  Can develop a strong national and other crops as well international brand.  Whole plant right from the seed to fruit is beneficial and useful  Religious importanceWeakness: Threats:  Lack of Awareness (both producers and  Big players response consumers/ customers)  Strong brands loyalty  Government level subsidy not availed  Government policies  Low entry barriers
  • 16. (9) ConclusionOlive Oil Demand Increased:With growing needs and market potential there is a huge demand for food and other household products. Growinghealth consciousness and increased incomes have caused a shift in eating habits of people which are still evolving.Historically, the demand for edible oils has gone through different stages which are mainly marked by consumer due tohealthy properties of the oils. Pakistani has shifted in their diet habits from animal saturated fats (butter) to healthierproducts like vegetable saturated fats (ghee) and finally to even healthier products such as vegetable unsaturated fats(canola, sunflower oils). Nowadays a further substitution of ghee and vegetable oils with olive oil can be envisaged. Inrural areas and amongst the poorest parts of Pakistan the consumption of ghee is relatively higher than in urban areas,indicating that the people who are shifting to healthier oils are mainly living in urban areas and have a higher level ofeducation and income.
  • 17. (10) Interviewed By  Mr. Hakm Dad, Havelian; Grafting and have sapling  Mr. Iqbal, Khanpur; grafting on wild olive trees  Mr. Mukhtar NARC Islamabad; research centre for olives  Dr. Hafiz Ishfaq, University of Arid Agriculture - Rawalpindi; Researcher  Mr. Azmat Ali Awan, PODB Tarnab; SCIENTIFIC OFFICER  SHAJARPAK PVT LTD, Pakistan; Lahore(11) References1). Olive Oil Pakistan (2010), Official website available from http://www.oliveoilpakistan.com/; Accessed on April 02,2011.2). gain.fas.usda.gov/.../Oilseeds%20and%20Products%20Annual_Islamabad_Pakistan_4-4-2011.pdf3). Edible Oil Report (2010), Official website http://www.edibleoilreport.com; Accessed on April 13, 2011.4). http://www.olives101.com/2007/11/02/pakistani-government-to-develop-olive-oil-production/; Accessed on March20, 2011.5). http://www.buzzle.com/articles/increasing-olive-oil-consumption.html; Accessed on April 12, 2011.6). http://www.commodityonline.com/news/Pakistan-edible-oil-imports-may-touch-216-Mn-tons-USDA-38300-3-1.html; Accessed on April 19, 2011.7). http://www.tradingeconomics.com/pakistan/inflation-cpi; Accessed on April 23, 2011.8). Moon emporium store, local retail store; Visited April 22,2011

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