Mechanization overview Farmers need Custom hiring service & its sectors Benefits Business goals Environment analysis Business analysis Profit analysis Break-even use for recovering capital investment Business projection & Resource requirement Strategies & Action plan Conclusion

1. Topic: Business Plan on
Mechanization Service
Team:BAU Dream Weaver
Members:Md Shakil Mondal(ID:1305004)
Md.Abdul Ahad(1305009)
Md.Zane Alam(1106072)
Bangladesh Agricultural University,Mymensingh

2. Points to be Discussed
• Mechanization overview
• Farmers need
• Custom hiring service & its sectors
• Benefits
• Business goals
• Environment analysis
• Business analysis
• Profit analysis
• Break-even use for recovering capital investment
• Business projection & Resource requirement
• Strategies & Action plan
• Conclusion

3. Mechanization at a glance
• Devise used in Agriculture: power tiller, tractor,rice
transplanter, weeder,harvestor,thresher,winnower
• 1.5 million pumps used for irrigatiom
• 80% land is prepared by using tractor & power tiller
• Maize shelling accomplished almost 100% by maize
shellers
• 80% paddy & wheat are threshing by thresher
• 100% farmers are using sprayer for pesticide
application
Source: International Fertilizer Development Centre, Asia Division, Bangladesh

4. Problems facing farmers
• High purchase value of machineries
• Lack of technological knowledge
• Inadequate expert manpower to service the
implements and machines
• Difficulties for repairing & maintaining of
farm implements and equipment
• scarcity of labour

5. What can we do ?

6. Custom Hiring Service
• Is an important mechanism through which
most small holders can access services of
agricultural machinery.
• Ensure the use of improved farm machinery
even to small and marginal farmers.
• Offers prospects for facilitating rapid
mechanization of agricultural systems in the
region.

7. Customer Hire Service Scenario
Activities Machinery & Countries
Transportation 4WT & 2WT trailer: in all countries
Animal carts: Nepal, Cambodia, Laos
Milling Engine & Motor: all countries
Water pumping Engine,Motor,2WT pump: most countries
Threshing(wheat) 4WT thresher: India, Pakistan, Nepal, China
Threshing(Rice) 4WT & 2WT thresher: most countries
Diesel engine: Thailand
Harvesting(Wheat) Combine harvester: China, India, Pakistan
Harvesting(Rice) Combine harvester: China, Malaysia, India, Thailand , Sri Lanka
Tillage(Dry) 4WT: most countries
Tillage(Wet) 2WT: most countries
Land levelling 4WT laser leveler: India, Pakistan, Cambodia
Seeding 4WT seed drill: China, India, Pakistan
Transplanting(Rice) China, India
Maize shelling India, Bangladesh
Harvesting(Sugarcane) Thailand, India
Source: Indian Agricultural Research Institute (IARI)

8. Service sector
Input supply Growing Post-harvest Distribution Retailing
Land
preparation,
Planting
Intercultural
operations,
Harvesting
Threshing,
Shelling,
Winnowing,
Milling
Spraying & Transport
Types of Custom Hire Services Used to Support
Agri-Food Value Chain Activities

9. Benefits of Custom Hire Services
• Reduce drudgery
• Expand or intensify production.
• Reduce production, post-harvest and
marketing costs
• Increase smallholder incomes

10. Population of Different Farm Machinery
Name of machine Units
Power tiller >7,00,000
Tractor 35,000
Weeder >2,00,000
Seed-cum-fertilizer distributor About 1,000
Sprayer 14,50,000
Combine harvester 160
Reaper 200
Open drum thresher 1,80,000
Close drum thresher 40,000
Winnower 1,200
Dryer 500
Hand maize sheller 12,000
Power maize sheller 2,000
Deep tube well 30,000
Shallow tube well 12,00,000
Low lift pump 1,20,000
Source: Statistical Yearbook of Bangladesh,2012.

11. Business Goals
Mission Vision Positioning
• To provide all modern
facilities to the farmers
who can not afford
them as a owner
• To facilitates rapid
mechanization
• To ensure low
production cost
• To increase small
holders income
• To be country’s most
customer centric
company
• Build a platform to
introduce with modern
technologies
• To discover rapid
solution regarding
agricultural operations
• Low hire cost
• Low production cost
than manual operations
• Ensure brand quality
than others
• Through advertisements
“Expect more, Pay less”
• Through extension
services

12. Environment Analysis
CUSTOM HIRING
FARMER-USERS CUSTOM SERVICE PROVIDER
TECHNICAL
SOCIO-CULTURAL
ECONOMICS
SOCIO-POLITICAL (GOVERNMENT POLICY SUPPORT & OTHER SUPPORT SERVICES)
Availability of support services (credit facilities, infrastructures-e.g. farm to market roads, etc.)
• Technical suitability of AMTs to the environmental
conditions, i.e. matching of available technologies to the
field conditions
• Capability of local agricultural manufacturing to provide
machinery for custom hiring
• Skilled operators for the custom hiring machines
• Farmers’ willingness to mechanize / avail of custom
services
• Farmers’ traditional practices
• Labor availability
• Social arrangements for scheduling of custom services for farm operations in
adjacent farm areas
• Capability of the custom service provider for operation and management of the
enterprise
• Cost of traditional practices vs. cost of custom hiring
(mechanized systems)
• Economic benefits of custom hiring
• Availability of capitalization to operate custom hiring enterprise
• Availability of credit facilities
• Service areas for profitable operation of custom services

13. Support Services for Operational Continuity
& Integrity of Custom Hire Services
Equipment Supply
Outlets
Repair and Maintenance
services
Custom Hire ServiceSkilled Field Staff Finance and Credit
ExtensionInputs
Technical and Business
Skill Training
Spare parts

14. Business analysis
Strength
• Precision and quality operation
with farm equipment ensure
higher production
• Low hire cost
• Higher business growth
• Ensure good quality machinery
• Long lasting business
• Good leadership*
• Skilled & professional
recruitment*
• Favorable business environment*
• Well planned strategy*
*key success factors
Weakness
• Lack of trust between
agribusiness and farmers
• Not familiar in this region
• Lack of extension activities
• Insufficient resource

15. Business Analysis
Opportunity
• High initial cost of individual
ownership
• Farmers lack of knowledge in
the aspects of operation,
maintenance and repair of
equipment
• Less time consumption
• More profit in agri-business
Threats
• Poor rural infrastructure
regarding road quality
• Fragmented land
• lack of an appropriate
governmental strategy on
agricultural mechanization
• Insufficient repair and
maintenance services.
• Farmers are reluctant to use
machines because they think
that using the tractors on
their land can damage the soil

16. Profit Analysis
Implements Operating Cost Hiring Charge Profit Pay back Period
Power Tiller 1030 Tk/ha 1150 Tk/ha 120 Tk 2.25 yrs
Tractor 781 Tk/ha 1107 Tk/ha 326 Tk 2.03 yrs
Rice Transplanter 998 Tk/ha 1754 Tk/ha 756 Tk 1.61 yrs
Maize Sheller 110.28 Tk/ton 250 Tk/ton 139.72 Tk 226 hrs
Closed Drum
Thresher
427.28 Tk/ton 692.30 Tk/ton 265.02 Tk 307 hrs
Recommended implements:
 Reaper
 Combine Harvester
 Urea Super Granular injector
 Rotavator
 Sugarcane planter
 Sugarcane stripper
 Sunflower thresher
 High clearance sprayer
Source: MS Thesis in BAU Central Library

17. Break-even Use for Recovering Capital
Investment
0
50000
100000
150000
200000
250000
50 150 250 350 450
Cost&Benefit,Tk.
Maize Sheller
Cost
Benefit
Optimum Time
Hours
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
Cost&Benefit,Tk.
Rice Transplanter
Cost
Benefit
Optimum
Time
Hours
Source: MS Thesis in BAU Central Library

18. Break-even Use for Recovering Capital
Investment
0
200000
400000
600000
800000
1000000
1200000
1400000
100
700
1300
1900
2500
3100
Cost&Benefit,Tk.
Tractor
Cost
Benefit
Optimum
Time
Hours
0
20000
40000
60000
80000
100000
120000
140000
0
400
800
1200
1600
2000
Cost&Benefit,Tk.
Power Tiller
Cost
Benefit
Optimum
Time
Hours
Source: MS Thesis in BAU Central Library

19. Break-even Use for Recovering Capital
Investment
0
20000
40000
60000
80000
100000
120000
0 100 200 300 400 500 600
Cost&Benefit,Tk
Closed Drum Thresher
Cost
Benefit
Optimum Time
Hours
Source: MS Thesis in BAU Central Library

20. Business Projection
Figure in Amount(BDT Mio.)
Particulars *2016 Gr % 2017 Gr % Y2018
Sales 190.23 10 209.25 20 250.98
Opt. Cost 130.55 9.99 143.60 19.99 172.31
Gross Profit 59.68 10.10 65.71 19.72 78.67
GP% 31.37 31.4 31.47
Others Exp. 5 5 5.25 5 5.51
Others Exp.% 2.62 2.51 2.19
Net Profit 54.68 10.57 60.46 21 73.16
Net Profit% 28.74 28.89 29.14
*In 2016 No. of Tractor-40,Power Tiller-120,Rice Transplanter-60,Maize Sheller-60,
Closed Drum Thresher-150 *Target Area 15 Upazilla in 2 District

21. Business Projection cont.
Figure in Amount (BDT. Mio.)
190.23
209.25
250.98
59.68 65.71
78.67
54.68 60.46
73.16
2016 2017 2018
Sales Gross Profit Net Profit

22. Business & Resource Requirement
Y2016 Y2018Y2017
Projected Revenue:
BDT: 209.25 Mio
Resources/Investment:
a) Fixed asset: BDT: 200 Mio
b)Office Space: 222060 sq.ft
c) Partner/Supplier: 3
d)HR Requirement: 500
e) Working Capital:
BDT: 154 Mio
Projected Revenue:
BDT: 190 Mio
Resources/Investment:
a) Fixed asset: BDT: 200 Mio.
b)Office Space: 222060 sq.ft.
c) Partner/Supplier: 3
d)HR Requirement: 500
e) Working Capital:
BDT: 140 Mio
Projected Revenue:
BDT: 250.98 Mio
Resources/Investment:
a) Fixed asset: BDT: 200 Mio
b)Office Space:296340 sq.ft.
c)Partner/Supplier: 3
d)HR Requirement: 600
e)Working Capital:
BDT: 184.8 Mio

23. Strategies
 The service: Customers are aware of what the hire
enterprise can offer in terms of services and the
flexibility and quality of such services.
 The price: The price of the service is clearly defined and
based on the needs of the customers and the price is
competitive.
 Demonstration: Customers have seen the service being
conducted on other farms and/ or demonstrations have
been provided.
 Promotion: Potential customers (importantly others
involved in the input supply chain, for example input
dealers, and others in the local area, for example farmer
cooperatives) are aware of the service enterprise and
the services being offered.

24. Action Plan
2. Map the gap : Financial , Non-financial
and personal goals like number of
customers , revenues , profits etc.
3.Select the focus area : Small farmers of
firstly two divisions then country wide
4.Know the customer point of view : Low
hire cost and lower production cost than
manual operations , more profit
5.Show uniqueness in market : New
commercially available , best machinery
product , quality service
6.Know the sets we apart : Least hire
charge , free repair and maintenance
service
7.Build a strong belief on customer mind :
Through extension activities like workshop,
seminar, fair etc.
8.Select a distribution channel : Direct
service ,Via retailers, phone service ,agents
etc.
9.Select right strategies : Advertising ,
tele- marketing , extension service, local
entrepreneurship
10.A 90 day sells and marketing schedule :
It will help to plan the strategies ,tactics,
timing and to take immediate action
• 1.Create a revenue plan : Amount of
product and fix the hire charge

25. Conclusion
• Hire service have the potential of providing improved
livelihood to small scale farmers the world over.
• This service is available in our country in very small scale
rather than large one.
• Large scale custom hire service is not only highly profitable but
also have a great opportunity in future.
• But the crying need is the government & private organization
to come forward for the development entrepreneurship of
custom hire service in Bangladesh.
The End