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Virtual Prairie Feeders

Virtual Prairie Feeders

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Virtual Prairie Feeders

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  1. Virtual Prairie Feeders Kurtis Sanguin Cory Holeha Brad Dempsey

  2. Mission Statement • Virtual Prairie Feeders is determined to expanding the feeder cattle industry in Saskatchewan by producing uniform, high quality beef animals ready for slaughter, while supporting local industry and keeping money within SK.

  3. Operations and Human Resources Plan

  4. Location • Yorkton Saskatchewan • Selection Based on: • Feed price • Feed supply • Cattle supply

  5. Description of Operations • Pre-purchasing phase • Locate potential feedlots • Negotiate and sign contracts

  6. Description of Operations • Pre-purchasing phase • Locate potential feedlots • Negotiate and sign contracts

  7. Description of Operations • Purchasing to selling phase • Order buyer • Tagging, branding, vaccinating • Market conditions • Weight checks • Herd status checks

  8. Description of Operations • Selling phase: • set up selling price • set up transportation to packers

  9. Description of Operations • Post Selling Phase: • Settle all accounts payable • Transfer funds to T-bills

  10. Net Working Capital

  11. Cost of Goods Manufactured

  12. Organizational Structure

  13. Marketing Plan • Product • High Quality, uniform sized, finished SK steers • 1250 lb average finishing weight • Mainly to Western Canadian Beef Packers Inc. Moose Jaw

  14. Pricing Policy • Price takers • Indirectly related to • Export market (after packer) • mainly to the U.S • Mexico believed to be a future market Millions $

  15. Competition • Other feedlots • Traditionally most of our calves exported

  16. Competition cont. • Sales to packing plants • Alberta has plenty of slaughtering facilities • Worry about in province sales • Other feedlots have history • requires that we produce high quality steers • Our Advantages • large herd relative to average SK farmer • Sell to the packers a promise of up to 10,000 head

  17. Substitutes for beef Other Competition

  18. FINANCE PLAN

  19. Total Financing Required $10,696,083  Long Term Bank Debt $5,000,000 Share Capital $7,500,000 Total Financing $12,500,000 Required Financing

  20. Financial Assumptions • Long-term debt over 10 year period • Inflation constant at 2% • 5 year average buying and selling cattle prices reflect the highs and lows in cattle cycle • No Accounts Receivable, Accounts Payable, or Inventory at year end

  21. Ratio 2002 2007 2011 Debt Ratio 38.1% 21.8% 0% Debt to Equity 68.6% 27.9% 0% ROE 1.5% 4.8% 6.3% Financial Ratios

  22. Net Income Sensitivity Analysis

  23. Net Present Value (5,098,618)) Internal Rate of Return 3.7% 2002 2007 2011 Net Cash Flows to Equity (202,057) (60,091) 11,727,696 Net Income 111,085 444,738 738,380 Summary of Financial Results

  24. Not Feasible Risk high relative to potential returns Dependant on current market situations feed, cattle prices, payout to feedlots Too much profit going towards feedlots Recommendations pay smaller farmers, won’t have to pay going feedlot rate Conclusions and Recommendations