Dragon Fruit Farming in Nepal Business Plan, Cost, Return

This is the detailed business plan sample drafted with a proper market research of dragon fruit farming in Nepal.

Dragon Fruit Yard in Dhankuta District of Nepal

Dragon Fruit Farming in Nepal

We Ripe Agro Firm aims to promote the entire agro tourism through our small initiative by cultivating dragon fruit concerning the growing national and international demand along with its health benefits.

This firm has a plan to plant 2000 dragon fruit plants in 1.5 bigha (1 acre) land by leasing with a team of 6 members collecting the initial investment of around NRS 6,50,000.

With the huge foreseen prospects in the exotic fruit farming Ripe Agro Firm plans to produce dragon fruit and process it in coming days to produce jams, juice and other ready made products.

Business Description:

Name of the business- Ripe Agro Firm, Birendranagar Surkhet

Vision - 

Prosperous nation, thriving agro industry

Mission- 

To serve the nation with exotic fruit taste.

Goals:

• To create a image of leading agro firm in the nation.
• To conquer the place of national level fruit supplier.
• To influence and motivate youth's placement in agro tourism.
• To diversify the product line and establish a firm as a brand.

Product and Services

Dragon fruit as a major product
Jams, Juice, Smoothies

Target Customers And Business Structure

Ripe Agro Firm focuses on operating its business in B2B Model till the first lot of production. The dragon fruits will be supplied to the wholesalers and connecting suppliers. After the first lot of production we will be installing the juice, jam and smoothie plant. Then Ripe Agro Firm will continue its operation as a B2B firm expanding its product line.

Market Analysis for Dragon Fruit Farming:

The dragon fruit market is experiencing significant growth globally. The demand for dragon fruit is driven by several factors, including its exotic appeal, increasing awareness of its nutritional value, and the rising popularity of healthy and exotic fruits in many countries.

Asia, particularly Vietnam, was the largest producer and exporter of dragon fruit last year. Vietnam's favorable climate and extensive cultivation of dragon fruit contributed to its dominance in the market. Other major producers included countries in Southeast Asia, such as Thailand, the Philippines, and Malaysia.

In addition to Asia, dragon fruit cultivation was expanding in other regions as well. Latin American countries like Mexico, Colombia, and Ecuador were increasing their production to meet the growing demand.

Australia was also emerging as a significant player in the dragon fruit market.
The market for dragon fruit products extended beyond fresh fruit. Processed dragon fruit products, such as juices, smoothies, jams, and dried fruit, were gaining popularity as well. These value-added products provided opportunities for farmers and entrepreneurs to tap into different segments of the market.

The demand for dragon fruit is driven by its perceived health benefits. It is often praised for its high antioxidant content, vitamins, and potential anti-inflammatory properties. Additionally, its vibrant appearance and unique flavor made it appealing to consumers seeking novel and visually appealing fruits.

For the first time in Nepal Veterinary Doctor Mr. Jagannath Rai brought dragon fruit from USA through his friend in 2057 B.S. Gorkha Millennium multipurpose cooperatives ltd formally started cultivation of dragon fruit in commercial from 2070 B.S (2013 A.D)
Nowadays, commercial cultivation of it going in Jhapa and Dhankuta district of Nepal but just for trial.

Challenges In Dragon Fruit Farming

For cultivation, initial investment is higher as compare to others crop. Normal Nepalese farmers are unable to invest huge money because agriculture itself a risk business. So, government must provide subsidy, training, related various extension works through NARC, INGOs, NGOs for better result.

According to regional analysis, Asia-Pacific dominates the market. The main producers of dragon fruit in Asia Pacific are Vietnam, China, and Indonesia. Vietnam alone produced more than 50.0 % of the world's dragon fruit, with the majority of the fruit destined for export instead of domestic consumption. It's known to be a high-value crop, and the Vietnamese fruit sector enjoys an advantage in the marketplace.
 
In 2019, the overall sector under dragon fruit production in Vietnam was around 55,000.0 hectares, with the white flesh variety accounting for more than 95% of production and the red flesh type accounting for 4.5 %. Dragon fruit is mostly farmed in the provinces of Binh Thuan, Long An, and Tien Giang, with over 48,000.0 acres dedicated to its production each year. However, dragon fruit cultivation in Vietnam has recently faced a number of challenges, including the influence of climate change and the emergence of disease.
 
In Asia, Vietnam is the largest provider to the Chinese market, while nations such as Taiwan, Thailand, and Malaysia have become increasingly competitive in markets such as ASEAN and Hong Kong. In addition, Asia is not only the largest producer of dragon fruit, but also the largest consumer of the fruit, particularly among the Chinese. China is the world's largest consumer of dragon fruit, as well as the largest in Asia.
 
Vietnam and the European Union have concluded a free trade agreement called as the European Union-Vietnam Free Trade Agreement (EVFTA). This deal allowed Vietnamese imports to essentially trade tariff-free, allowing them to keep a lid on the price of red skin red pulp dragon fruit throughout the region. As a result, it is expected that exports of red skin red pulp dragon fruits from Vietnam to the European Union will expand at a quicker rate throughout the forecast period.

Considering the growing market of dragon fruit farming and the kind of monopoly ruled by southeast asian countries, we can also be part of that by doing mass production in future.

Scope of Dragon Fruit in Nepal

Dragon fruit is famous in Vietnam, Thailand, Israel and Srilanka. In Nepal commercial cultivation is just in starting phase. Present market price of this fruit in Nepal is Rs 800 to 1000 per kg (7.16$ to 8.95$) . This fruit can cultivate in region of less rainfall at altitude of 1500 from MASL. There are availability of thousand of fallow and marginal land in Terai, Bhitri madhes, valley and lower range of mountain which are suitable for cultivation. The chemical fertilizer
demand of Dragon fruit is less. Nepalese farmers are unable to effort chemical fertilizer in higher altitude. So, we could grow organically using our local manures like FYM, Compost, vermicompost which results into economical and eco-friendly production.

Moreover, Organic dragon fruit can considerably raise price received for it. In spites of having various benefits and advantage still as underutilized crops and considered as fruit for future. Dragon fruit add value of agro-tourism. Dragon fruit has great importance in Nepal as it is beneficial for Small landholder marginal farmers and to improve livelihood of them. It may become the good foreign currency earning ways in future. So, dragon fruit is fruit for future Nepal.

Check the real example of Dragon Fruit Farming in Nepal Covered by My Republica and The Kathmandu Post. The Rising Nepal also writes about a farmer doing Dragon Fruit Farming.

Description of the Products:

Dragon fruit rich in antioxidants, contain phytonutrient, 12 different minerals and vitamin (vit C as equivalent to 10 % of daily value and several B vit). An antioxidant property prevents oxidation of cholesterol. Due to antioxidants properties people often called dragon fruit as a "super-fruit". It contains minerals like Iron, phosphorus makes healthy blood and tissue, Ca present in it makes strong bone & teeth. Lycopene which is responsible for red color has been linked with a lower prostate cancer risk. Similarly, it provides Essential fatty acid. It was found that seeds of dragon fruit are best for providing omega-3 and omega-6 fatty acid that reduces cardiac stress. Not only in human health, it is widely used in restaurant as fruit salads, best eaten chilled or blended into refreshing drinks also. Jams, Ice creams, Jelly, fruit juice, wine etc. are dragon fruit-eating products.

Nutrients: 

United states Department of Agriculture provided data in label form as manufactures are responsible and calculated values per 100 g from values per serving.

Nutritional value per 100 g

Energy 268 kcal
Carbohydrates 82.14%
Protein 3.57%
Vitamin c 9.2 mg
Calcium 107 mg
Sodium 39 mg

The product line will include packed jams, juice bottles, and smoothies after the first lot of production.

Organization and Management:

Ripe Agro Firm established with 6 founding members divides equal management and decision-making responsibilities to all the members.
Tara Acharya is the CEO of the firm and other members will work as the CMO of the firm.

Sumina Rana will manage the supply chain, Shiva Raj KC will work as the technical and operational head of the firm.

As every founder shares equal equity, the procurement, recruitment, and other business decissions will be made jointly. But Tara Acharya will be responsible for business deals and relation after the joint meeting of the members.

Are you wondering, how to calculate WACC in Meroshare?

Marketing and Sales Plan:

• Define target market: Identify the specific target market segments for your agro products. Consider factors such as geographic location, demographics, and psychographics (e.g., farmers, wholesalers, retailers, or end consumers).

• Product positioning: Determine the unique selling proposition (USP) of your agro products. Highlight the quality, freshness, sustainability, or any other distinguishing features that set your products apart from competitors.

• Competitive analysis: Conduct a thorough analysis of your competitors, their products, pricing, distribution channels, and marketing strategies. Identify gaps in the market that your agro products can fill.

• Product portfolio: Assess your agro product offerings and determine which products are most profitable and align with market demand. Consider introducing new products based on market trends and customer feedback.

• Pricing strategy: Develop a pricing strategy that takes into account production costs, market demand, and competition. Determine whether you will adopt a cost-based, value-based, or competitive pricing approach. Consider offering bulk discounts or promotional pricing for larger orders.

• Distribution channels: Identify the most effective distribution channels to reach your target market. This may include direct sales to farmers, partnerships with wholesalers or retailers, or online marketplaces. Develop relationships with key distribution partners and ensure efficient logistics and timely delivery.

• Promotional activities: Promotional activities includes a lots of marketing technique to increase the awareness about the product manufactured by the Ripe Agro Farm. It may be advertising, sample promotion and other campaigns.

• Branding: Develop a strong brand identity for your agro products. Create a compelling brand story, logo, and packaging that resonates with your target market and communicates the quality and value of your products.

• Online presence: Establish a professional website and optimize it for search engines. Leverage social media platforms, such as Facebook, Instagram, or LinkedIn, to showcase your products, engage with customers, and share relevant content.

• Content marketing: Create informative and engaging content related to agro products. This could include blog articles, videos, tutorials, or case studies that provide value to your target audience and position your brand as a trusted authority in the industry.

• Trade shows and events: Participate in relevant industry trade shows, agricultural fairs, or farmer's markets to showcase your products, network with potential customers, and generate leads.

• Customer testimonials: Collect and share testimonials from satisfied customers to build credibility and trust in your agro products.

• Relationship building: Every business man must understand the importance of relation in the business because it helps to foster the business. Public Relation, Personal selling and other technique are inevitable in every business activities.

•  Customer service: Provide excellent customer service throughout the sales process and beyond. Address customer inquiries and concerns promptly and professionally.

•  Loyalty programs: Implement loyalty programs or reward schemes to incentivize repeat purchases and foster long-term customer loyalty.

• Partnerships: Collaborate with agricultural influencers, farming associations, or local community organizations to expand your reach and build mutually beneficial relationships.

• Monitor and evaluate: Regularly track and analyze the performance of your marketing and sales efforts. Use key performance indicators (KPIs) such as sales volume, customer acquisition cost, customer retention rate, and return on investment (ROI) to measure the effectiveness of your strategies. Make data-driven decisions and adapt your plan as needed.

• Continuous improvement: Stay updated on market trends, technological advancements, and customer preferences. Seek feedback from customers and adapt your agro product offerings, marketing messages, and sales strategies to stay competitive and meet evolving market demands.

Remember to customize this plan based on the specific characteristics of your agro products, target market, and resources. Regularly review and adjust your marketing and sales plan to ensure maximum impact and success in promoting and selling your agro products.

Financial plan

Cost of Dragon fruit transplants or seedlings: In order to cultivate dragon fruits, it is better to go for cutting and transplanting rather than seed production and sowing as seed production and sowing is a time consuming and laborious process. In an area of 1.5 bigha dragon fruit farm, it can accommodate around 2000 plants of which every 4 plants or transplanted cutting for every T structure. The cost of one dragon fruit seedling or cutting is around Rs. 30 per plant. Therefore, for 2000 plants, it costs around Rs. 60,000. The given figure is an approximate average figure.
 
Cost of land/Rental value of farm: We are going to cultivate dragon fruit in 1.5 bigha area. Moreover, the duration of highly productive dragon fruits is about 5 to 7 years. Therefore, we have to calculate the rental value of 1.5 bigha land for 5 years. It is about Rs. 2 lakha. Dragon fruit cultivation is done in barren lands or where there is less availability of water. Hence the land can be acquired in rent at low cost.

Cost of T support systems: As dragon fruit plants belong to the cactus family, they need support for growth and development. Therefore, we need to establish T support system or ladder support system. For 1.5 bigha dragon fruit farm, we must establish 500 T support systems. In order to construct the T support, we have to dig a pit up to a depth of 2 ft * 2 ft and place a 3.5 mt pole with upper round type or cement structures. In order to construct those T supports in 1.5 bigha Dragon fruit farm, it incurs around Rs. 2 lakhs which are durable up to a period of 5 to 7 years.

Labor cost in Dragon fruit farm: As we are doing a commercial crop farming, we must employ at least 1 labor or skilled worker to manage 1.5 bigha dragon fruit farm. On average, we may pay Rs. 10,000 per month. For one year, the labor cost is Rs. 120,000 for one skilled labor or worker.

Cost of fertilizers and nutrients: On average it costs Rs. 10,000 for the fertilizer and nutrient management in 1.5 bigha dragon fruit farm. We have to supply both micronutrients as well as macronutrients.

Cost of pesticides for 1.5 bigha Dragon fruit farm:
Pesticides like fungicides to control various dragon fruit diseases and insecticides to control insect pests and insect virus vectors, they may cost up to Rs. 10,000 for a year for acre area.

Intercultural operations cost: Intercultural operations include weeding in between the plants for every 15 to a 20-day interval in order to maintain proper health of the dragon fruit plants. Intercultural operations cost about Rs. 15,000 for the machinery rent and the electricity bill for 1 year.

Miscellaneous costs in 1.5 bigha Dragon fruit farm:

These include the cost of irrigation equipment, irrigation facilities, and other supplies. It may be about Rs. 15,000 for a year.

The Total cost of Dragon fruit farm in 1 acre for 1 year: 'C' in Rupees.

Seedling cost: 60,000

Land lease value: 2,00,000

Labor costs: 120,000

T support system cost: 2,00,000

Cost of pesticides: 10,000

Cost of fertilizers: 10,000

Intercultural operation: 10,000

Miscellaneous costs: 15,000

Therefore the total cost of 1.5 bigha dragon fruit farm is Rs. 6,25,000.

Land lease cost, seeding cost, T support cost are the fixed cost. Hence if we exclude fixed cost our operating cost per year becomes 165000 per year.

Return From 1.5 bigha dragon fruit farming

Profits in dragon fruit farm are various but it is constant at most of the plants in the country. For the first year, the dragon fruit farmer can get about 7 to 8 quintals or 700 to 800 kg of dragon fruits per 1.5 bigha area. 1 kg Dragon fruits are sold at Rs. 250 per kg (Wholesale price at the farm gate, this may change from time to time and region to region). For 1000 kg, it is Rs. 2,50,000. Hence, 1.5 bigha dragon fruit farm can give an income of Rs. 2.5 lakhs for the first year.

Even though, the profits are confined to the first year are very less. From the preceding year, the dragon fruit farmer can earn up to Rs. 4 lakh per annum as the yield increases about 70% for every year.

This is all about dragon fruit farming in 1 acre and its profits from 1.5 bigha up to 5 years.

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Logistics Plan:

Transportation

Since dragon fruits are delicate fruits, they should be transported promptly to maintain their quality. We will use a dedicated transport vehicle with temperature control to pick up the dragon fruits from the farm and deliver them to the market. The goal is to ensure that the fruits are delivered in a timely manner without damage.

Packing

Quality packaging is essential for preserving dragon fruit from damages while in transit. The fruit will be packed in ventilated boxes that will help to prevent molding, and a layer of foam padding will be added on the bottom and sides of the container to prevent bruising.

Storage

Dragon fruits have a short shelf life; therefore, proper temperature-controlled storage is necessary. We will install specific cold rooms designated for storage, with temperature control for proper preservation.

Operational Plan:

The financial data related to operational plan is covered in financial plan.

We will be hiring a expert person along with his or her helper in the farm who work as harvester and labor in the farm.

Labor

Dragon fruit farming requires manual labor for planting, weeding, harvesting, and processing. The farm will hire skilled and knowledgeable workers to ensure quality and product consistency.

Harvesting

Harvesting should be done when the fruit reaches maturity. Each fruit will be inspected for maturity before picking, and only fully matured ones will be harvested to maintain the quality of the fruit.

Quality Control

Dragon fruits that do not meet quality standards will be immediately removed from the packing line. The quality of the dragon fruit is crucial in meeting customer expectations regarding freshness, ripeness, and appearance.

Equipment

Specific equipment such as pruning shears, baskets, and storing containers will be required. Regular maintenance of equipment is essential to keep the farm running efficiently.

Adhering to this updated logistics and operational plan will help the dragon fruit farm run efficiently, produce high-quality fruits, and meet customer expectations.

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