Kabale Distributors LTD Namulonge Pineapple Study 26.03.2020 PDF

PROJECT INCEPTION DOCUMENT
BY
KABALE DISTRIBUTORS LIMITED PINEAPPLE VALUE-ADDITION PROJECT
ON THE
UGANDA
PINEAPPLE INDUSTRY STUDY
AND
BUSINESS PLAN
ON THE
SET-UP & OPERATION
OF A
PINEAPPLE DEMO FARM, PROCESSING & MARKETING CENTRE
AT THE ALLOTTED
20-ACRE PLOT AT NAMULONGE
KABALE DISTIBUTORS LIMITED VALUE-ADDITION PROJECT

PLOT 10/13, NALUKOLONGO, MASAKA ROAD, KAMPALA,
P.O. BOX 31115,
KAMPALA,
UGANDA.
CONTACT PERSON: MR. KAGORO EMPIMAC
Contact Phones: +256-751-704 921/776-704 921
E‐Mail: kagoro2006@gmail.com ; kagoro2006@yahoo.com
MARCH 2020
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KABALE DISTRIBUTORS LIMITED Business Plan Corporate Document
A. TABLE OF CONTENTS
S/NO. DESCRIPTION PAGE
PREFACE 1
1.0 EXECUTIVE SUMMARY 2

1.1 Introduction 2
1.2 The Problem 2
1.3 The Opportunity 3
1.4 Project Objectives 4
1.5 Mission 4
1.6 Value Proposition 4
1.7 Theory of Change 5
1.8 Solution 5
1.9 Project Concept 6
1.10 Domestic Fruit Juices Demand Situation 8
1.11 Market Study on Processed Pineapple Products 9
1.12 Fruit Processing Sector Growth Drivers 10
1.13 Project Set-Up & Operation 10
1.14 Social Return on Investment 11
1.15 Financing Requirement for Project Investment 12
1.16 Financials 13
1.17 Attractions to the Project 14
1.18 Keys to Success 15
PART I: UGANDA PINEAPPLE PRODUCTION, VALUE-

CHAIN & MARKET ANALYSIS 16
2.0 METHODOLOGY 17
2.1 Introduction 17
2.2 Approach 18
2.3 Limitations of the Study 20
3.0 UGANDA PINEAPPLE SUB-SECTOR CASE STUDY 21

3.1 Production 21
3.2 Value Chain 21
3.3 Market Demand 26
3.4 Challenges and Opportunities 32
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4.0 UGANDA FRUIT JUICE INDUSTRY ANALYSIS 34
4.1 Overview 34
4.2 Industry 34
4.3 Juice Industry Value Chain and Main Processes 36
4.4 Juice Distribution 38
4.5 Rivalry among Existing Firms 39
4.6 Market Survey of Fruit Juice Industry Operators 41
4.7 Findings of the Uganda Fruit Juice Consumer Market Survey 56
4.8 Summary of Key Issues in the Domestic Fruit Juice Industry 59
5.0 CONCLUSIONS AND RECOMMENDATIONS 61

5.1 Conclusions 61
5.2 Recommendations 62
PART II: BUSINESS PLAN ON PROCESSING &

MARKETING OF SELECTED PINEAPPLE PRODUCTS 67
1.0 INTRODUCTION/BACKGROUND 68
1.1 Overview 68
1.2 Proposed Products and Capacities 69
1.3 Project Location 70
2.0 TECHNICAL CONSIDERATIONS 71

2.1 Introduction 71
2.2 Location of the Project 73
2.3 Installed Plant Capacity 73
2.4 Modern Food Drying Technology 74
2.5 Production Process 77
2.6 Process Flow Chart 78
2.7 Raw Materials and Packaging Materials 79
2.8 Infrastructure & Transportation 81
2.9 Environmental Matters 82
2.10 UNBS’ Certification of Products 82
2.11 Implementation Schedule 82
2.12 Key Success Factors 82
3.0 LAND & KDL NUCLEUS FARM INFRASTRUCTURE 84

3.1 Land, Location & Infrastructure 84
3.2 Pineapple Nucleus Demo Farm Site Developments 85
3.3 Pineapple Nucleus Demo Farm Machinery & Equipment 86
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3.4 Proposed KDL Pineapple Nucleus Demo Farm Design & Layout Plan 86
3.5 Pineapple Production/Processing & Export Infrastructure 89
3.6 Utilities & Other Infrastructure Services 93
4.0 NUCLEUS FARM-PINEAPPLE OUT GROWER OPERATIONAL MODEL 95

4.1 Organizational Structure 95
4.2 Value Proposition 95
4.3 Business Model 95
4.4 Profit Formula 101
4.5 Measuring Results 102
5.0 MARKET ANALYSIS 105

5.1 Uganda Fruit Juice Market Analysis 105
5.2 European Union Dried Tropical Fruit Market Analysis 106
5.3 KDL’s Competitive Advantage 117
BUSINESS STRUCTURE & ORGANIZATIONAL

6.0 MANAGEMENT 119
6.1 Introduction 119
6.2 Management Structure 119
6.3 Organizational Standard 120
6.4 Overall Farm Management 120
6.5 Farm Production Function 121
6.6 Marketing and Sales Function 121
6.7 Accounts & Finance Function 121
6.8 Technical Staff 122
6.9 Manpower Requirements 122
7.0 OPERATIONAL PLAN 124

7.1 Farm Plan Strategy 124
7.2 Crop Growth 124
7.3 Method of Production 125
7.4 Crops Production Output & Sales Plan 126
7.5 Daily Operating Schedule 126
7.6 Harvest and Quality Control 127
7.7 Inventory Management 127
7.8 Farm Business Management 128
8.0 FINANCIAL ANALYSIS 129

8.1 Important Assumptions 129
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8.2 Introduction 130
8.3 Project Cost and Financing Plan 130
8.4 Financial Plan 132
8.5 Profit & Loss Account 133
8.6 Rates of Return 133
8.7 Payback Period 134
8.8 Capital: Output Ratio 134
8.9 Cash Flow 135
8.10 Balance Sheet 135
8.11 Break-even Analysis 136
8.12 Value Added/Contribution to GDP 137
9.0 RISK ASSESSMENT & CONTINGENCY PLAN 139

9.1 Risk Assessment and Mitigation 139
9.2 Market Risks Assessment Matrix 140
9.3 SWOT Analysis 142
10.0 SUSTAINABILITY AND EXPANSION STRATEGY 144
11.0 ECONOMIC JUSTIFICATIONS 145

11.1 Economic Rate of Return 145
11.2 Value Added 145
11.3 Foreign Exchange Effects 145
11.4 Employment 145
12.0 CONCLUSIONS & RECOMMENDATIONS 146

12.1 Conclusion 146
12.2 Recommendations 146
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B. LIST OF TABLES
T/NO. DESCRIPTION PAGE
1 Fruit Processing Sector Growth Drivers 10
2 Source and Use of Project Financing 12
3 Key Project Performance Parameters (UGX) 14
4 Pineapple Prices in Uganda 2020 25
5 Export of Fruit from Uganda 2011-2017 32
6 SWOT for Pineapple 33
7 Flavoured and Natural Juice Ingredients 34
8 Players in the Uganda Fruit Juice Processing Sector 36
9 Juice Companies Active in the Uganda Market 40
10 Soroti Fruit Processing Factory Stock Ownership 52
11 Attributes of Processed Fruit Juice at Selected Supermarkets 56
12 Other Quality Attributes of Processed Fruit Juice Brands at Supermarket 57
13 Determinants of Price per Serving (100 ml) of Processed Fruit Juice 58
14 Proposed Plant Production Capacity 69
15 Input-Output Ratio Table for Various Dried Fruits 73
16 Annual Dried Fruit Processing Capacity and Output 73
17 Raw Material Requirement at Installed Capacity 81
18 KDL Pineapple Nucleus Demo Farm Building Infrastructure [Planned] 85
19 KDL Pineapple Nucleus Demo Farm Production Machinery & Equipment [Planned] 86
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20 KDL Nucleus Demo Farm Design & Layout Structure 87
21 Combined Nomenclature Codes for Dried Tropical Fruit 107
22 Dried Tropical Fruit Price Breakdown 117
23 Salary and Emoluments for KDL Pineapple Value-Addition Project 123
24 Pineapple Seasons of Planting, their Diseases and Mitigation 125
25 Pineapple Processing and Sales Plan (PY2 – PY6) 126
26 Cost of Project 130
27 Financial Plan 133
28 Summary Profit & Loss Account for First Five Years of the Project 133
29 Rates of Return 134
30 Calculation of Payback Period for Equity and Total Investment 134
31 Capital: Output Ratios 134
32 Projected Cash Flows 135
33 Projected Balance Sheet 136
34 Break-Even Analysis in Project Year 5 137
35 Calculation of Value Added 138
36 Risk Assessment and Mitigation 139
Market Risk Management Plan for KDL Project Pineapple Nucleus Demo
37 Farm Operations 141
38 Key Financial Modeling Assumptions 147

38-1: Pineapple Input-Output Assumptions 147
38-2: Economic Related Assumptions 147
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38-3: Operating Expense Assumptions 147
38-4: Financing Assumptions 148
38-5: Depreciation Rates 148
38-6: Cash Flow Assumptions 148
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C. LIST OF FIGURES
F/NO. DESCRIPTION PAGE
1 KDL Pineapple Value-Addition Project Value Proposition 5
2 KDL Pineapple Value-Addition Project Integrated Solution 6
3 Global Fruit and Vegetables Processing Industry by Segment 7
4 Key Financial Performance Highlights 14
5 Pineapple Value Chain 21
6 Margin and costs of studied pineapple farmers in Uganda per acre per year 23
7 Margin and costs per kg produced of studied pineapple farmers in Uganda per year 24
8 Household Dietary Diversity Score 27
9 Export quantity of fruits in tones 2011-2017 31
10 Drying Curve of Sun Drying 74
11 Drying Curve of Cabinet Drying 75
12 Process Flow Chart for Dried Pineapple 78
13 Dried Organic Pineapple 78
14 KDL Nucleus Demo Farm Design & Layout Structure 88
15 Farm-pack house-market value chain and best practices along the chain 90
16 Flow Chart of Pack House Operations for Most Fruits 91
17 Typical Pack House Layout 92
18 Inside View of a Tropical Fruit Pack House 93
19 Kabale Distributors Ltd Pineapple Value-Addition Business Model 95

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20 Profit Formula 102
21 Dried Tropical Fruits 108
22 European Imports of Dried Tropical Fruit, by Main Origin 111
23 European Imports of Dried Tropical Fruit by Country 2017, Share of Imported Volume (in %) 112
24 European Apparent Consumption of Dried Tropical Fruit 114
25 Common Trade Channels for Dried Tropical Fruit on the European Market 116
26 Proposed KDL Project Management Structure 120
27 Market Risk Assessment Matrix 140

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D. LIST OF FINANCIAL ANALYTICAL SCHEDULES
S/NO. DESCRIPTION PAGE
01: Key Financial Modeling Assumptions 147
02/2: Initial Project Investment Costs 149
02/2: Source and Structure of Project Financing 149
Calculation of Working Capital: I Minimum Requirements of

03/1: Current Assets and Liabilities 150
Calculation of Working Capital: II Projected Annual Pineapple Processing

03/2: Income Estimates 151
03/3: Calculation of Working Capital: III Annual Production Cost Estimates 152
03/4: Calculation of Working Capital: IV Working Capital Requirements 153
04: Fixed Assets and Depreciation Allowances 154
05: Change in Total Investment Costs 155
06: Change in Total Assets 155
07: Projected Cash Flow Table 156
08: Projected Cash flow Table and Calculation of Present Value 157
09: Projected Income Statement 158
10: Projected Balance Sheet 159
11: Business Ratios/Ratio Analysis 160
12: Projected Payback Period 162
13: Sensitivity Analysis @ Project Year 5 163

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E. LIST OF ANNEXES
A/NO. DESCRIPTION PAGE
I: Project Financial Analytical Schedules 147
II: Agreement for Contract Farming of Pineapples 164
III: Food Intake 165

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F. LIST OF ABBREVIATIONS
CBI The Dutch Centre for Promotion of Imports from Developing Countries
CEO Chief Executive Officer
COMESA Common Market for Eastern and Southern Africa
COMTRADE Common format for Transient Data Exchange
EAC East African Community
ERR Economic Rate of Return
EU European Union
FAO Food and Agriculture Organization
FSOU Food Security Outlook
GAM Good Agricultural Management
GAP Good Agricultural Practices
GDP Gross Domestic Product
GMP Good Manufacturing Practices
GOU Government of Uganda
HACCP Hazard Analysis Critical Control Point
HRD Human Resource Development
IGAD Inter-Governmental Authority on Development
IRR Internal Rate of Return
ISO International Standards Organization
KDL Kabale Distributors Limited
KES Kenya Shillings
KOICA Korea International Cooperation Agency
LSMS Living Standards Measurement Study
MAAIF Ministry of Agriculture Animal Industry and Fisheries
MT Metric Tonnes
MTIC Ministry of Trade Industry and Cooperatives
NaCCRI National Crop Resources Research Institute
NGO Non-Governmental Organization
NOP National Organic Program (USA)
OECD Organization of Economic Cooperation and Development
PET Polyethylene Terephthalate
QC Quality Control
SPC Statistical Process Control
TETFGCU Teso Tropical Fruit Growers Cooperative Union
UBOS Uganda Bureau of Statistics
UDC Uganda Development Corporation
UEDCL Uganda Electricity Distribution Company Limited
UEPB Uganda Export Promotion Board
UGX Uganda Shillings
UIA Uganda Investment Authority
UIRI Uganda Industrial Research Institute
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UK United Kingdom
UMA Uganda Manufacturers Association
UNBS Uganda National Bureau of Standards
UNECE United Nations Economic Commission for Europe
UNFFE Uganda National Farmers Federation
USAID United States Agency for International Development
USD United States Dollars
USDA United States Department of Agriculture
USSIA Uganda Small Scale Industries Association
PREFACE
This Fruit Juice Market Study & Business Plan is prepared for the objective and purpose
of understanding the dynamics and factors at play in the rapidly evolving Uganda fruit
juice sector and also makes practical recommendations for the successful entry and
operation of a new market entrant like the Kabale Distributors Limited Pineapple
Value-Addition Project. The Business Plan on the other hand proposes the technical
and financial aspects for the set-up and feasible operation of a 2-in-1 pineapple nucleus
demo centre/hub at the allotted 20 Acre space at the Namulonge NaCCRI site at
Namulonge in Wakiso District for the dual purpose of training of out-grower
pineapple farmers as well as the establishment and operation of a pineapple value-
addition enterprise making pineapple fruit juice for the Uganda domestic market and
the highly lucrative dried pineapples for the export market.
The document is comprised of two (2) parts viz. Part I: Uganda Pineapple Production,
Value-Chain & Market Analysis that considers: the Uganda Pineapple Sub-Sector Case
Study, the Uganda Fruit Juice Industry Survey bas well as conclusions
recommendations. In Part II: Business Plan on Processing & Marketing of Selected
Pineapple Products, the focus of the Study is on: technical considerations, market
analysis, target domestic & export marketing of the value-added pineapple products,
land suitability and pineapple nucleus demo farm infrastructure, the proposed Kabale
Distributors Limited [KDL] pineapple nucleus demo farm out-grower farmer
operating model, business structure and organizational management, operation plan as
well as the project’s sustainability and expansion strategy, implementation plan,
financial analysis, business risk analysis and mitigation plan and its economic impact.
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1.0 EXECUTIVE SUMMARY
1.1 Introduction
Pineapple is the third most important tropical fruit in the world. It is known as the
queen of fruits due to its excellent flavour and taste. It is good for the digestive system
and helps in maintaining ideal weight and balanced nutrition. Processed pineapples are
consumed worldwide and processing industries are trying out or using new
technologies to retain the nutritional quality of the pineapple fruit. This is to meet the
demand of consumers who want healthy, nutritious and natural products. The main
objective of industrial processing of pineapples is to convert perishable fruits into stable
products with longer life. The main purpose of processing pineapples is to minimize the
qualitative and quantitative deterioration of the produce after harvest. Major export
products include dried and preserved vegetables, jams, fruit juice, candy, wine.
Moreover, some of these preserved products such as canned pineapple, fruit juices,
dehydrated products and frozen fruits are gaining popularity in the foreign market and
are good foreign exchange earners.
1.2 The Problem
In Uganda, the rural agriculture sector is a main contributor to its economy,

contributing to 42% of the national gross product and 80% of its export earnings. 84%
of it’s working population are also employed in the sector and in rural areas, farming is
the main source of income and of those working in the sector, 90% are women.
Therefore, the importance of the sector to securing livelihoods, increasing incomes and
reducing poverty is integral.
Although approximately 100,000 Ugandan farmers grow over 200,000 metric tonnes of
pineapples every year, 20% of their harvest is lost before reaching the market, and the
remaining 80% is subject to significant downward pressure on price due to common
gluts in the markets and the perishable nature of the crop. Farmers, who are among
Uganda’s most financially vulnerable population, bear the burden of both these post-
harvest losses and this price uncertainty. Smallholder pineapple farmers lack access to a
consistent, large market for their produce, rendering them unable to consistently make
a profit and dis-incentivized to increase their yields or change their farming practices.
Uganda is the tenth most populous country in Africa and the 38th most populous in the
world – its population is expected to grow from 42 million today to over 130 million by
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2050. This has grave implications for the country’s food security situation, given that it
is heavily dependent on food imports. If global food prices were to spike and drive up
the price of imports, as they did in 2007-2008, Uganda would struggle to feed its
population.
1.3 The Opportunity
A well-located, commercial pineapple processing operation focused on continuous

production rather than absorbing seasonal harvest gluts can increase incomes over five
times for participating smallholder farmers, who comprise 84% of Uganda’s workforce.
The Ugandan government has made a commitment to improve farm-to-processor links
in the pineapple value chain, but no business has yet developed a viable, sustainable
model to competitively aggregate, process, package and sell processed pineapple
products domestically. The KDL Pineapple Value-Addition Project model links
farmers directly to value-added pineapple products production, simultaneously
reducing poverty for small holder farmers, who are among the country’s most
vulnerable population, and decreasing Uganda’s dependence on an imported food
product that is a dietary staple in Ugandan cuisine.
In starting the Kabale Distributors Limited [KDL] Pineapple Value-Addition Project,

the major motivations of its project promoters are basically to:-
(a) Tap the fast-growing market opportunities existing in the production and value-
addition addition for export of pineapples.
(b) Generate strong farm-based income that will lead to fast growth of cash flow and
exponentially improve on the enterprise’s rate of return and profitability.
© Utilize the government-allocated 20-Acre plot of land and natural resources at
Namulonge NaCCRI to the best commercial advantage of the enterprise by
using good farm and environmental management practices for sustainable
productivity and growth of the pineapple nucleus demo farm.
(d) Provide employment opportunities for Ugandans.
(e) Make the farm the KDL Pineapple Value-Addition Project nucleus demo farm
at Namulonge a project that will grow to inspire other up-and-coming demo
farms and export-oriented processing enterprises in Uganda by serving as a self-
sustaining demonstration unit for agricultural inspiration and on-farm training
of primary producers in G. A. P. and organic farming practices.
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1.4 Project Objectives
The key objectives of the KDL Pineapple Value-Addition Project’s nucleus demo farm
and out grower farmer network at Namulonge will be to:
• Train pineapple farmers hailing from the key pineapple production areas of
Luwero and Kayunga districts in Good Agricultural Practices in pineapple
production and also in certified organic farming methods.
• Support sustained pineapple production in terms of yield, quality, and seasonal
availability throughout Uganda.
• Create employment and sustainable incomes in the Uganda pineapple value-
chain to eradicate poverty and increase GDP output by the fruits and vegetable
sector.
• Spur the development of pineapple value-addition directly and indirectly inter-
linked services and other domestic pineapple value-chain activities that also play
a key role in ramping up national GDP.
• Add premium value to Uganda’s pineapples to improve their competitiveness
and marketability in the high-earning export markets of Europe, Middle East and
the Far East.
• Substitute for pineapple juice and pineapple juice concentrate imports and earn
hard currency from the export of dried pineapples.
• Generate substantial government revenue in form of corporate income taxes to
the treasury that will boost public expenditure on the provision of goods and
services.
• Use the profits generated from the KDL Pineapple Value-Addition Project
activities for growing the enterprise, increasing share-holder value and investing
in corporate social responsibility activities.
1.5 Mission
KDL Pineapple Value-Addition Project is an agricultural production company that

believes in the power of farming and processing local food products for local
consumption. Our mission is to make pineapple production a sustainable, profitable
business for Ugandan farmers.
1.6 Value Proposition
Value to farmers: we give farmers the tools and the incentive to sell a greater proportion
of an increased pineapple yield at a consistent, fair price. Value to consumers: we
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provide consumers with access to domestic processed pineapple products that match
the quality of imported products at a lower cost.
Figure 1: KDL Pineapple Value-Addition Project Value Proposition
1.7 Theory of Change
If we can connect Ugandan farmers to domestic consumers of processed pineapple

products, we will improve the lives and incomes of smallholder farmers, provide more
non-farming job opportunities for the increasingly urban population, and increase the
stability and sustainability of the food supply in Uganda.
1.8 Solution
Substantially improving the livelihood of smallholder pineapple farmers requires

moving multiple metrics simultaneously. Farmers must be able to sell more of their
product, by increasing yields and reducing post-harvest losses; they must be able to
capture a greater amount of the value of their harvest; and they must be less vulnerable
to seasonal price fluctuations. To make this possible, KDL Pineapple Value-Addition
Project embeds farmers’ production within a supportive, self-contained agribusiness
ecosystem focused on local production, processing, distribution, and farming practice
improvement.
At scale, Kabale Distributors Limited [KDL] Pineapple Value-Addition Project will

operate three business lines: (1) Farm and agricultural center with farmer education and
bundled inputs to help smallholder farmers grow and harvest crops more efficiently; (2)
Logistics and supply chain support to navigate the “last mile” to smallholder farms and
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safely bring produce to the processing facility; and (3) Food processing and packaging
facility that prepares finished goods for distribution in Uganda.
Figure 2: KDL Pineapple Value-Addition Project Integrated Solution
As the business attains profitability, Kabale Distributors Limited [KDL] Pineapple

Value-Addition Project will consider options to reinvest a portion of profits into
expanded agricultural support programs for farmers in the surrounding community.
Through investment in the community, we hope to further align farmer outcomes with
the success of our venture and improve the lives of smallholder farmers and the
competitive landscape for local agriculture, translating into future returns for the
business.
1.9 Project Concept
1.9.1 The Concept
The Kabale Distributors Limited [KDL] Pineapple Value-Addition Project envisages

setting up of fruit processing unit based on the raw material strength of Uganda for
pineapples among other tropical fruits.
The manufacturing unit can focus on pineapple fruit juices, dried pineapples, spray-
dried pineapple fruit juices, etc.
1.9.2 Fruit Processing
• Processing is one of the most effective solutions to reduce wastage. In Uganda

processing of fruits and vegetables is extremely low and is below 2%. Value
addition to the raw produce is only 7% compared to as much as 23% in China,
45% in the Philippines and 88% in the UK.
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• Thus the processing industry holds tremendous potential not only for
contributing to the GDP but also for generating employment in rural areas and
business opportunities for entrepreneurs.
• There are various fruit processing technologies such as canning, dehydration,
pickling, provisional preservation, bottling etc. With the advent of technology
and preservatives, shelf life of such products has gone up and they can be
preserved for many months with proper packing.
1.9.3 Fruit and Vegetables Processing Industry Overview
The global fruit and vegetables processing industry trends are:

• Sales of processed fruits and vegetables have increased in absolute numbers in
past 5 years.
• Economic growth and rising incomes has been driving demand in developing
economies for frozen fruit and vegetables.
• For juices and related products, rising health-consciousness and the increasing
value of time in developed economies is expanding demand for these products
from OECD country consumers.
• The product segment's share of overall industry revenue has grown over the past
five years.
• In, dried and dehydrated foods category the overall share in industry revenue
has fairly remained constant due to its low cost and its inability to gain traction
with rising middle income consumers.
Figure 3: Global Fruit and Vegetables Processing Industry by Segment
10%
14%
40%
36%
Canned Fruit and Vegetables Frozen Fruit and Vegetables

Juices Dried and Dehydrated Food
Source: IBIS World Industry Report 2016
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1.9.4 The Importance of Value Addition
Value addition from commodities point of view, is processing raw product into a
branded product that consumers are willing to pay for than the raw product. For
example, a food processor like Kabale Distributors Limited [KDL] Pineapple Value-
Addition Project could purchase fruit from farmers and process into fruit juice. This
juice has added value and becomes a branded good. Basically unprocessed raw
products such as, meat carcasses, and fresh pineapple fruit and cotton bolls have no
value added.
The importance of value addition in pineapple processing includes:
 It allows firms to prolong the shelf life of products.

 It emphasizes strength of brand that promote commodity.
 Helps firms increase their unit selling price (USP) for extra income.
 Product achieves higher competitiveness in the market.
 It allows products to become more convenient for handling by the producer and
the consumers
 It allows product to become more attractive to the consumer (buyer)
 It allows producers to make product to the specification and taste of the
consumer
1.10 Domestic Fruit Juices Demand Situation
The Uganda fruit juice market is a newly developing and an unorganized market. Only
recently this sector is getting more organized and attracting more players in the market.
Though the unorganized corner shop vendors dominate this market, Ugandan
consumers are moving towards branded fruit juice because of their improvement in
health consciousness. Ugandan fruit juice market is having a net-worth of US$36.20
million as of now and increasing at a rate of 35% to 40% per year.
There are a number of drinks, in the beverage industry. They are divided into various
branches. Talking about the fruit juice industry, they include natural juices and artificial
juices or the man made ones. People have a number of tastes and they vary from person
to person.
The fruit juice industry has a number of companies. They include Britannia Allied
Industries Limited, Delight Uganda Limited, Jakana Foods Limited, Tursam
Investments Limited, etc. as the market is growing and so is the demand from the
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public, therefore it compels the companies to bring out new and new products from
time to time in order to cater to the demands and requirements of the public.
The demand for processed fruit juice is rising in Uganda due to growth in urbanization,
incomes and middle class. Though locally-processed fruit juice is available, much of the
domestic demand is being satisfied through imports mainly from South Africa and
Kenya, leading to a variety of products in the market. Since processed fruit juice is a
heterogenous product, this study assessed the implicit market values of its quality
attributes for enhancement of nutrition security in Uganda. By fitting market data to the
hedonic price model, size of package was slightly discounted in processed fruit juice
per 100 ml serving. For a unit (ml) increase in size of package of fruit juice, the price per
serving decreased by UGX 0.11 (< US$0.01). Further, fruit juices in transparent packages
were significantly cheaper per serving than those in non-transparent packages by UGX
23 (US$0.01). Besides packaging, the influence of important quality attributes on its
market price was weak. Only fruit juices with added sugar and preservatives were
discounted on the market. Fruit juice concentration and flavour did not have any effect
on the market price of processed fruit juice, probably because market prices of fruit
juices were relatively uniform per serving irrespective of the fruit juice concentration
and flavour. Informal interview with one of the local fruit juice processors revealed that
the price of fruit juice reflected the cost of packaging material that constituted about
70% of total production costs. Results from this study have far reaching implications for
agribusinesses and policy makers for promotion of nutrition security in Uganda. Local
fruit juice processors and distributors could opt for the market-oriented pricing and
segmentation strategies to offer a wide range of products including premium fruit juice
products for high-end, nutrition and health conscious consumers. Moreover, any
government efforts to lower the cost of fruit juice packaging material will promote local
fruit juice production and consumption in Uganda.
1.11 Market Study on Processed Pineapple Products
Global market overview: In the developed nations, consumers have become more
health conscious which has increased appetite for processed fruits. In the developing
world, the expansion of middle-classes has led to increased durable good ownership
rates. As a result, economic growth and rising incomes have led to expanding demand
for products within this segment from the past 5 years.
Uganda is dominated by mass market consumers with low purchasing power, and a
diet high in carbohydrates. In order to boost sales and increase market share,
manufacturers focus on packaging and selling products in affordable small units for
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one-time use. However, an expanding middle-class and rising incomes are prompting
increased demand for low-carbohydrate, low-fat, and even sugar-free food and
beverages. Also growing concerns regarding food safety and dietary quality are also
increasing demand for higher quality products. As a result, local processors are
developing and improving products in order to meet the needs of this niche market.
As a result of the efforts put into the drying of the fruits, the dried fruits are class
products mainly for the upper income group who can afford the additional cost. This
has made consumption of the products in the country to be at its infancy, even though
its consumption has assumed a global dimension. Therefore, the effective marketing of
the dried pineapple fruits, will depend on a number of factors, namely: product quality,
production process, pricing and marketing outlets. This is more so if Kabale
Distributors Limited [KDL] Pineapple Value-Addition Project is to target the export
market. The essence of drying these fruits is to give natural preservation and to be able
to use them in food industry or as snacks and still get the freshness of the fruits.
1.12 Fruit Processing Sector Growth Drivers
The key growth drivers for the fruit processing sector in Uganda are summarized in
Table 1 below.
Table 1: Fruit Processing Sector Growth Drivers

Growth Driver Description
• Rising disposable incomes within masses.
Growing domestic requirement • Growing middle class, rapid urbanization and emergence of high income
young professionals.
• Changing life style habits towards healthier alternatives.
• Increasing integration of Ugandan economy with global economy.
Export opportunities • Proximity to key export destinations is leading the exports figures for Uganda.
• Tremendous potential of growth as the emerging market continue to grow at
a much faster.
• Favourable conditions for horticulture and availability of wide variety of fruits
and other crops.
Supply side advantages • Large amount of aid boosts food processing industry.
• Presence of sufficient water bodies and improved irrigation facilities help to
optimizing the maximum potential of yield.
1.13 Project Set-Up & Operation
The project is for the establishment of processing plant for the production of pineapple
fruit juice and dried pineapple for export.
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Aside from the profitability of the project, which will soon be established, the products
of the project will be associated with the health benefits it intends to bring out, as well
as joining government’s efforts at addressing issues of post-harvest losses normally
encountered by this sub-sector of the economy.
The project is in tandem with the Ugandan Government's new agriculture policy thrust,
which seeks to encourage the development of the agricultural sector of the economy.
The establishment of the project also seeks to contribute to food preservation/security
as well as poverty reduction in the country.
The project also aims at creating employment opportunities for skilled and semi-skilled
workers with other beneficial multiplier effects for the national economy and the society
at large. It further seeks to encourage value-added pineapple production in Uganda,
boost revenue, generate indirect taxes, improve living standard of Ugandans through
the project’s charity and social responsibility activities, and maximize return on
investment on capital costs.
The project will also promote healthy living through natural fruits-based juices and
snacks and boost private sector development through facilitation of lending to farms,
suppliers, local artisans and technicians, and distributors of its products.
A limited liability company shall be incorporated to promote the project. The

authorized share capital of the company shall be high enough as to attract and willing
investors into the project.
1.14 Social Return on Investment
Kabale Distributors Limited [KDL] Pineapple Value-Addition Project will have a

large positive impact on Uganda’s agribusiness sector, the social fabric, and overall
economy by ultimately achieving the following:
• Increase revenues from pineapple sales five times for participating smallholder
farmers by year five.
• Create a demonstration farm that actively spreads agricultural best practices to
the surrounding community.
• Provide a consistent market for approximately 1,000 farmers within our network
by year five.
• Link farmers to markets and strengthen value chains through logistics systems
that are able to navigate the “last mile” to smallholder farms.
11
• Improve access to the appropriate quantities of fair-priced inputs such as
fertilizers and high-yielding seeds/suckers through bundling and pooled
procurement.
• Reduce financial risk from volatile crop prices by offering forward purchasing
agreements.
1.15 Financing Requirement for Project Investment
KDL Pineapple Value-Addition Project seeks an investment capital financing of up to

US$3,477,570 that will be used to finance the establishment and operation of the
proposed pineapple nucleus demo farm at Namulonge:
a) To finance the purchase and installation of new pineapple processing plant
equipment at the Namulonge site.
b) To finance the construction of new demo farm buildings & other infrastructure at
the Namulonge site.
Table 2 below is a summarized snapshot about the sources and applications of project
financing by KDL Pineapple Value-Addition Project at the Namulonge NaCRRI site
in Wakiso District:
Table 2: Source and Use of Project Financing

Source of Finance %age Equity Loan Total
Fixed Costs
Land @ Namulonge 20 Acres 2.61% 108,100 0 108,100
Farm Buildings & Structures 18.97% 0 785,000 785,000
Farm Machinery & Equipment 65.08% 0 2,692,570 2,692,570
Transportation Vehicles 4.83% 200,000 0 200,000
Office Equipment & Furniture 1.25% 51,600 0 51,600
Sub-Total Fixed Costs 92.75% 359,700 3,477,570 3,837,270
Working Capital1
Raw Material Inventory 2.90% 120,000 0 120,000
Pre-Operating Expenses 1.45% 60,000 0 60,000
Initial Working Capital 2.90% 120,000 0 120,000
Sub-Total Working Capital 7.25% 300,000 0 300,000
TOTAL 100.00% 659,700 3,477,570 4,137,270
%age 15.95% 84.05% 100.00%
1 Working capital is the initial project investment expenditure after CAPEX (capital expenditure) and involves initial margin money
for purchase of agricultural inputs (seeds and agrochemicals), fuel & power and other expenses as well as for the payment of
salaries & wages for the first 6 months of the KDL Pineapple Value-Addition Project mixed farm operations.
12
1.16 Financials
The total project cost for set up and operation of the KDL Pineapple Value-Addition
Project is estimated at US$4,137,270 [including the project promoter’s equity
investment of US$659,700 and a medium-term finance loan of US$3,477,570]. This
represents 84.05% medium-term loan finance and 15.95% project promoter’s equity. The
project NPV is US$37,585,178 at a discount factor of 17%, with an IRR of 223.90%,
payback period of 1.53 years and Break-even capacity utilization of 56.47%. The legal
status of this business is proposed as ‘Limited Liability Company.
The total fixed capital investment cost of the KDL Pineapple Value-Addition Project
pineapple nucleus demo farm in existing and planned assets (including land),
construction of pineapple nucleus demo farm infrastructure, purchase and installation
of farm equipment and machinery, and vehicles is US$3,837,270; while the purchase of
pineapple nucleus demo farm input inventory, margin money for working capital and
pre-operating expenses is US$300,000.
We project pineapple nucleus demo farm sales turnover to increase from US$64,523,027
in the first year (Project Year 2) to US$113,818,620 in the third year (Project Year 4), and
US$141,170,657 in the fifth year (Project Year 6). Out of these amounts, pre-tax profits
(operating profits) increase from US$10,105,855 in Project Year 2 to US$19,165,103 in
Project Year 4 and US$23,065,984 in Project Year 6.
Relevant ratios such as the percentage of net profit to total sales, return on equity and
return on total investment show promising returns (Refer to Schedule 11 on pages 160 –
161).
Investment cost and income statement projection are used in estimating the project
payback period. The projects will payback fully the initial investment in 1.53 years
(Refer to Schedule 12 on page 162).
Ultimately the attractiveness of the KDL Pineapple Value-Addition Project pineapple

nucleus demo farm business lies with the fact that customers will choose our processed
pineapple products above those of competitors because of the competitive prices as well
as their high quality. Hence, the KDL Pineapple Value-Addition Project's on-going
initiatives will be to drive sales, market share and productivity so as to provide
additional impetus towards attainment of the company goals and objectives.
Investment in this project is a step in the right direction. Company financial
performance highlights are depicted in Table 3 and Figure 4 below.
13
Table 3: Key Project Performance Parameters (UGX)
KPI/Year Year 2 Year 3 Year 4 Year 5 Year 6
Sales 64,523,027 94,848,850 113,818,620 134,448,244 141,170,657
Gross Profit 14,213,606 20,894,001 24,596,044 27,841,856 29,233,949
Net Profit / [Loss] 7,074,099 11,175,954 13,415,572 15,302,656 16,146,189
Gross Margin 22.03% 22.03% 21.61% 20.71% 20.71%
Net Margin 10.96% 11.78% 11.79% 11.38% 11.44%
Return on Investment 170.98% 270.13% 324.26% 369.87% 390.26%
Operating Profit Margin 17.26% 17.87% 17.64% 16.88% 16.88%
Break-even Point (BEP): US$ 75,928,743 at a capacity utilization of 56.47%

Payback Period: 1.53 Years
Internal Rate of Return (IRR): 229.30%
Gross Value Added: US$ 97,221,129
NOTE: All currency figures in this plan are in US Dollars.
Figure 4: Key Financial Performance Highlights (PY2 – PY6)

Sales Gross Margin Net Profit
160,000,000
140,000,000
120,000,000
100,000,000
US$
80,000,000
60,000,000
40,000,000
20,000,000
0
PY 2 PY 3 PY 4 PY 5 PY 6
1.17 Attractions to the Project


 The project shall utilize one of the best modern and newly developed technology
and quality management team that will ensure its success.
 Available for the project is technical expertise, from the proposed machinery
suppliers, as well as local manpower that could easily be developed through a
much desired technological transfer.
14
 The relatively large number of personnel, over 50 skilled and semi-skilled
personnel, will help to reduce unemployment in the labour market.
1.18 Keys to Success
 High level quality control.

 Another important aspect is the quality check at different stages of the processed
pineapple products production and sales chain. This is very important because
there is a need to check and ensure that the company processed pineapple
product distributors do not supply poor quality to compromise the standards
and quality of our processed pineapple products.
 Individualized customer service - providing our customers with what they want,
when and how they want it.
 Fully integrated distribution channels to help customers increased access to
Kabale Distributors Limited [KDL] Pineapple Value-Addition Project
processed pineapple products.
 Smart processed pineapple products distribution networks will also play an
important role in the success of this business.
 Integrating the changing market fundamentals into the business.
 Long-term partnership with both farmers and our customers so as to acquire
guaranteed market.
 The commercial viability of this project depends upon the availability of regular
pineapple raw material supply.
 To establish a brand name, aggressive marketing efforts are recommended.
15
PART I: UGANDA PINEAPPLE PRODUCTION, VALUE-

CHAIN & MARKET ANALYSIS
16
2.0 METHODOLOGY
2.1 Introduction
To assess the competitiveness of the fruit and vegetable sector it is necessary to further
define the concept of competitiveness. In the literature, there are various definitions, a
commonly applied one being “the ability to deliver goods and services at the time, place
and form sought by overseas buyers at prices as good as or better than those of other
potential suppliers whilst earning at least opportunity cost returns on resources
employed” (Freebairn, 1987; cited in Sharples and Milham, 1990). Although not fully
addressed in the article by Sharples and Milham, the original article by Freebairn states
several important issues related to the definition of international competitiveness at the
firm or industry level (i.e. one supplier versus the other, or the performance of an
aggregated sector versus another country or region):
• First, although not made explicit in the definition, Freebairn states that
competitiveness is a dynamic concept, and the preferences of buyers may change
from one location to the other and over time. What is good for one consumer
may not be acceptable for another consumer. Segmentation of products and
buyer markets is therefore a crucial part of the exercise.
• Second, one must look at all the costs involved in bringing a product to market;
not only the costs of farm production.
• Third, competitiveness is about competing with alternative sources of supply.
Alternative suppliers may learn, improve, and change their production methods,
and other products may go on the market that competes with the firm’s products
(i.e. related to Porter forces of new entrants and substitutes).
• Fourth, it emphasizes that fruit juice suppliers are competing with other
producers for the scarce or costly resources like labour, utilities, packaging
materials, and other inputs. This latter point is important because it means that
no nation will be competitive in the production of all products. Prices of labour
and other resources will increase if a country becomes more competitive in one
industry, at the expense of competitiveness in other industries.
• Finally, industrial producers have a significant say in all markets, i.e. they can
control the prices of raw material inputs (e. g. agricultural products) and do
influence the prices of outputs. This and similar definitions have been used in
many studies.
Most definitions of competitiveness (at firm level, industry level, or nation level) imply
that staying competitive entails either producing at lower costs than other suppliers, or
17
increasing the volume of production. Recently the volume aspect of productivity has
been emphasized more than the cost aspect. If no improvement is achieved,
competitiveness is almost inevitably reduced, as competing suppliers and competing
products are invariably improving.
Based on the above and to address some the short-comings identified, we have defined
competitiveness as: “the medium- to long-run ability of a firm or significant part of the
firms in an industry to increase productivity and/or lower costs in a sustainable way,
and deliver goods and services at the time, place, form, and quality sought by the
targeted customer segment(s) at prices as good as or lower than those of other potential
suppliers, whilst earning a reasonable profit and paying at least opportunity cost of
resources employed”.
2.2 Approach
This study was conducted to identify the existing market structure, industry trends,
existing players and their status in the market, growth possibilities and consumer
behavior of existing fruit juice consumers. The study was conducted to understand the
total market intelligence so that it can guide any new entrant in this sector in Ugandan
market would get befitted. The study includes both primary and secondary research.
Primary research was conducted across Uganda. Primary research involves collecting
information from both consumers and retailers so as to get better understanding about
the market. Hence, Part I of this study can serve as a guide for any new entrant who
wants to enter in this fruit juice market in Uganda. Part I of this study report can also
serve as a basic industry information resource.
2.2.1 Desk Study
The initial overview of the sector is based on a combination of desk research and
stakeholder interviews. The report is based on a desk study, with several additional
interviews with Uganda fruit juice industry stakeholders.
2.2.2 In-depth Interviews with Key Industry Stakeholders
In-depth interviews with key industry stakeholders were conducted in March 2020.
Various type of stakeholders were interviewed, including government representatives,
sector organizations, NGOs, farmers, traders, exporters, fruit juice processors, freight
forwarders and supermarkets. Additional interviews with the Uganda Export
Promotion Board [UEPB] about the position of Uganda in the (regional/international)
market were done.
18
For this study the following stakeholder organizations and private sector players were
consulted:
• Fruit Juice Industry Processors including:

 Britania Allied Industries Limited
 Delight Uganda Limited
 Ho & Mu Food Technology
 Jakana Food Processors
 Kayunga Pineapple Factory
 Nyakihanga Juice Processing Plant
 RUCID [Rural Community in Development] Mityana
 Sulma Foods
 Tursam Investments Limited
• Department of Food Science and Technology, Makerere University
• Hortexa [Horticultural Exporters Association of Uganda]
• Ministry of Agriculture, Animal Industry and Fisheries [MAAIF]
• Ministry of Trade, Industry and Cooperatives [MTIC]
• Uganda Bureau of Statistics [UBOS]
• Uganda Development Corporation [UDC]
• Uganda Export Promotion Board [UEPB]
• Uganda Fruit & Vegetable Exporters and Producers Association
• Uganda Manufacturers Association [UMA]
• Uganda National Bureau of Standards [UNBS]
• Uganda National Farmers Federation [UNFFE]
• Uganda Small Scale Industries Association [USSIA]
2.2.3 Primary Data Collection and Analysis
A survey among up to 10 fruit juice processors in Uganda was conducted to collect

primary data on costs and revenues for key production establishments. The survey
did not take into account the costs for own labour, but only the costs for hired
production expertise. Industrial breakdown and down-time were not considered in our
analysis, but if they occurred, the data was imputed by using estimates based on
industry experts.
For each fruit juice product some of the key fruit juice processors were visited by the
Study Team enumerators. The selection of the fruit juice processors was done based on
snowball sampling in the study fruit juice processors. It provided information on costs
of production, production techniques, challenges and juice processors’ needs. The
results were compared to Kenya to compare the countries on different fruit juice
19
processing parameters. For this, the Study Team made a comparative desk review on
the Kenyan and Ugandan fruit juice industrial sector based on parameters like costs for
inputs, yields and seasonality.
2.2.4 Validation of Findings
We have estimated production costs and benefits using a “typical industry approach”
by working with local experts, industry experts, input suppliers and farmers. The
data represent all the costs and benefits under perfect conditions with Good
Manufacturing Practices and solid market prices. In the second week of March 2020, 2
Focus Group Discussions (FGDs) were organized to validate the preliminary findings
with stakeholders in the fruit and vegetable sector The cost benefit data has been
validated in the FGDs, which also has been used to identify any strengths, weaknesses,
opportunities and threats.
2.3 Limitations of the Study
A focus on specific crops was applied in the case studies. To ensure some level of
representativeness of the type of products, limited availability of data and limited time
and budget meant that we had to focus on a limited number of case studies or take a
broad view without going into much detail. Therefore in the case studies we focus on a
maximum of 5 products [being: banana juice, mango juice, orange juice, passion fruit
juice, and pineapple juice] which are important fruit juice products for Uganda. In that
sense we will be representative of these important products, but not for smaller
products. The same applies to the type of producers: we focus on both smallholders and
larger producers, but the availability of data might imply that we are not fully
representative for each group at all times.
Limitations of the study relate to representativeness of the primary data. The

representativeness of the data is a potential risk. The foods and beverages sector in
Uganda is quite diverse in terms of product diversity, nutritional attributes and
consumer behavior. Therefore, the collected data will not represent all aspects of the
food and beverages industry in Uganda. However, we collected data across the key
fruit beverage industry performance determinants to capture the most essential features
of market trends and consumer behavior.
20
3.0 UGANDA PINEAPPLE SUB-SECTOR CASE STUDY
3.1 Production
The main production areas for pineapple cultivation in Uganda include;
• Central region: Kayunga, Luweero, Wakiso (Busi Island), Mubende;

• Eastern region: Serere;
• Western region: Kasese.
Pineapple production has consistently increased over the years. The majority of the
pineapples produced in Uganda are the Sweet Cayenne variety.
3.2 Value Chain
Pineapple farmers mainly obtain suckers from their own gardens and most of the
pineapples are sold to middlemen who also do the harvesting. The figure below
presents the pineapple value chain. The majority is produced for the local market by
numerous smallholder farmers. There is a small share that is being exported, mainly to
Kenya but also to some other countries in the Middle East and even the EU. Processing
is also done, often by exporters, in the form of dried fruit slices.
Figure 5: Pineapple value chain
21
3.2.1 Farmers
In Uganda, there are no large-scale pineapple growers at present – it is exclusively a

smallholder crop. A typical pineapple plot of one acre lasts for three years with three
harvests. Between 20,000-30,000 suckers are needed to plant one acre. Pineapples are
often mixed with fruits like banana, if the land is owned.
The last harvest typically gives smaller fruits. Many of the pineapple producers are
organic by default. This implies that they hardly use any chemical inputs. There are not
many diseases in pineapple cultivation except brown rust-like patches called
Endogenous Brown Spot (EDS). The major pests of pineapple include scales, mealy
bugs and nematodes.
We found that pineapple production can be very profitable and can enhance incomes
among rural households. However, pineapple farming in Uganda is linked with soil
nutrient depletion. As a result, farmers obtain low crop yields and sometimes
experience crop failure, making it difficult for the farmers to get sustainable incomes
from farming. This is worsened by poor agronomic practices. Furthermore, soil
degradation is widespread in Uganda, mainly due to loss of soil nutrients from fields
with no or minimal replacement. Nutrient depletion in Uganda is estimated at 66kg ha
per year (Zziwa et al., 2017). Consequently, farmers are constantly searching for virgin
land in order to expand cultivation. Pineapples are often grown on land that was
previously fallow or under forest cover due to the fruit’s need for high fertility;
pineapple cultivation thus has a serious environmental impact.
We also observed differences between Luwero and Serere: the prices in Luwero are
generally lower because the pineapples are produced in bulk. Many farmers in Luwero
grow pineapples and all these pineapples ripen at the same time, so the abundant
supply explains the lower prices. In fact, some of the farmers pointed this out as one of
the reasons for high post-harvest losses: because everyone has pineapples and there is
no market, some pineapples rot or get damaged because they are not able to sell them
and also cannot consume them all. Serere District in Eastern Uganda has fewer growers
and consequently a limited supply, which might explain the higher prices. Also, the
Luwero farmers sell to middlemen who buy at lower prices, while the farmers in the
Serere District sell directly to consumers, who usually offer better prices than the
middleman.
During our fieldwork we identified the average pineapple yield to be between 20,000
and 25,000 fruits per acre per year, with an average sales price of UGX 300 to 900 per
22
unit. We calculated a profit margin of between 70 and 90%, see the figures below. One
must bear in mind that pineapple prices do fluctuate heavily, peaking around
September, with prices per unit at farm going up to UGX 2,000-2,500.
Labour is an important factor in the production of pineapples and is mostly provided

by family members. At 75% of total costs, however, hired labour also makes a
significant contribution too. Family labour is dominant for sensitive tasks such as
acquisition of planting materials, while hired labour is mostly used for labour-intensive
and demanding activities such as land clearing, planting and weeding.
Figure 6: Margin and costs of studied pineapple farmers in Uganda per acre per year Source: Author’s field data.
14,000,000
12,000,000
10,000,000
8,000,000
UGX
Margin
6,000,000 Costs
4,000,000
2,000,000
0
Luwero Serere
A study by Zziwa et al. (2017) shows that pineapple farmers obtain information mainly
from fellow farmers and farmer groups. The majority of farmers (57.8%) participate in
trainings organized by extension workers, buyers of processed pineapples, and farmer
groups. Generally, pineapple farmers have limited access to agricultural extension
services at the grassroots level. Consequently, extension services including information
are provided though non-traditional sources including farmers’ associations, research
institutions and trading companies that buy farmers’ pineapples. Respondents
indicated that it is through these sources that they have been able to receive training on
pineapple agronomic practices.
23
Figure 7: Margin and costs per kg produced of studied pineapple farmers in Uganda per year Source: Author’s field data.
1000
900
800
700
600
UGX
500 Margin
Costs
400
300
200
100
0
Luwero Serere
Even though the pineapple sector has been identified as a priority crop by the
government, it has not received any significant interest in the last decade in terms of
research capacity, extensions and support.
3.2.2 Traders
For the domestic market the middlemen buy directly from farmers (see Table 5 below).
There are no fixed contracts with farmers. The trader arranges transport – a full truck
with about 2,000-3,000 pineapples can cost between UGX 450-500,000 for transportation
to the market. The farmers interviewed stated that if a middleman buys a pineapple at
UGX 1,000 they will sell it at UGX 1,200 if small and UGX 1,300 if bigger in size and
then the final consumer buys the same pineapple at UGX 2,000 if small and then UGX
2,500 shillings if bigger in size (see Table 4 below).
From our interviews it appears that some of the Ugandan middlemen who buy from
farmers later sell to Kenyan traders who come to Uganda.
For the export, there are some contracts in place but if the market is poor the contracts
are often breached to the disadvantage of the farmer. Exporters also double as
processors.
24
Table 4: Pineapple prices in Uganda 2020
Farm to wholesale Wholesale to retail Retail to consumer
Large pineapple (price per unit) 800 -1,000 UGX 1,300 UGX 2,000 UGX
Small pineapple (price per unit) 700 – 900 UGX 1,200 UGX 2,500 UGX
Source: Author’s field data.
3.2.3 Markets
Imports of fresh pineapples into the European market have stabilized at around 900,000
tonnes in recent years (CBI, 2019). The pineapple trade is dominated by the MD2
variety, which has now replaced Smooth Cayenne pineapples as the preferred variety in
every major market. Over 80% of all European imports are MD2, but ripe Sweet
Cayennes, with their superior flavour, get air-freighted to the specialist and catering
sectors. The Dutch Centre for the Promotion of Imports from developing countries
(CBI) advises that smaller exporters from developing countries distinguish themselves
with quality, price, and sustainability. The market is dominated by a few multinational
companies: Dole Food Company, Del Monte Foods, Fyffes and Chiquita.
Pineapples are judged mature when they have reached full size and a have nice colour.
The products for the local market get no pre-treatment prior to marketing. Those for
export purposes are, however, brushed before packing and are trimmed to leave a stock
of one inch. Other post-harvest practices among exporters are limited. In Uganda
various important steps considered to be essential for exporting pineapples are lacking
(e.g. the waxing of the fruits). Fresh pineapples are classified according to Size Codes
A–H, with average weights (including the crown) ranging from 2,750 grams (Size A) to
800 grams (Size H).
The climate and agronomic practices in Uganda favour larger sized fruits, which are
regarded unsuitable for export since the European markets prefer smaller-sized fruits.
For instance, Sweet Cayennes do not ship well and normally grow bigger than the
preferred size on the EU market. However, the pineapples that can be exported are
graded according to colour and size. The export product is directly packed into cartons
and transported by trucks or pickups. At the airport the package is palletized. Produce
destined for the local market is put on pick-ups without any form of padding. All the
loading and off-loading is done manually, and this can amount up to 3 times before
being loaded onto the aircraft.
A trader pays UGX 10,000 for a space at local urban markets like Nakasero, and more
like 30,000 if he comes with a truck. He can stay there from midnight to 9:00 a.m. the
following morning, when part of the market becomes a road. The trader sells to retailers
25
that in turn sell to consumers. Grading for local markets usually takes place at the
retailer’s. Preferences vary: some clients prefer green pineapples which are not so ripe,
while others want them to be riper.
There is always a surplus in the market during peak harvest time, resulting in low
prices. Farmers that get to the market early can benefit from better prices.
3.3 Market Demand
3.3.1 National Demand
Local market demand for fruit and vegetables is likely to increase. Various indicators
support this:
• Urbanization rate (since 2012 +3% per year)
• Population growth (since 2012 +7m)
• Moderate GDP growth (5% per annum)
The transition to middle income country will impact the agricultural sector and
yields need to be improved at farm level to be able to feed the increasing urban
population. Uganda’s Vision 2040 envisions a transition to middle income country
status with a largely non-agrarian workforce and urban-dwelling populace. However,
the Ugandan economy is still heavily reliant on the agriculture sector, with 69% of
household’s dependent on subsistence farming for their main source of income, and
nearly 75% of all households residing in rural areas (UBOS, 2014). In addition, food
insecurity is still a problem for some regions of Uganda (FSOU, 2019).
The studied LSMS data shows an increasing diversity in all regions of Uganda. The
biggest increase in household diversity intake can be observed in Central Uganda. In
this part of the country the consumption goes from almost 8 to above 9 food groups that
are consumed, based on a 24hr recollection (Figure 8). Looking at the detailed data the
fruits (85%) and vegetables (73%) are an important contributor to the daily diet of the
household in all parts of Uganda. Between 2012 and 2016 especially the importance of
fruits gained importance in the diet. Annex III presents an overview of the different
food groups. However, the volumes of the vegetables consumed per capita remain
relatively low (insert FAO data, food supply).
26
Figure 8: Household Dietary Diversity Score
10
9
8
7
6
5
4
3
2
1
0
East West North Central Uganda
2009/10 2010/11 2011/12 2013/14
Source: LSMS 2013-14.
3.3.2 Regional Demand
Uganda has a good position in the region and Uganda supplies neighbouring countries
like Kenya, South Sudan, Democratic Republic of Congo (DRC) and Rwanda.
3.3.2.1 Kenya Imports from Uganda
Main imports from Uganda are:
a. Bananas: Imported through the year; greatest demand is for cooking banana
varieties, as Kenya has an adequate supply of ripening bananas. Three traders
reported to import ripening banana recently when Kenya had inadequate supply
due to climate change and increased banana panama disease, which is impacting
the Mount Kenya production region. Upon fact-checking, it was found that there
is also a significant problem of fusarium wilt and nematodes in the Mount Kenya
region – especially bananas from tissue culture production – as farmers do not
manage hygiene in the field. Cooking bananas, which are in shorter supply than
the ripening bananas, are imported throughout the year.
b. Pumpkins: Kenya imports pumpkins from Uganda year-round due to
production shortages, inadequate volumes for aggregation in the areas where
pumpkins grow. There is a culture of farmers using pumpkin leaves as
vegetables and only growing pumpkins as boarder crops, as they are low value.
27
c. Oranges and tangerines: Oranges are imported into Kenya from Uganda during
April and May as seasons differ. Kenya used to produce a lot of oranges in the
same season in its Thika, Machakos and Embu regions, however, the citrus
greening disease wiped out production in these areas ten years ago and the
regions have not gone back into production. There are pockets of production, the
volume of which is mainly consumed in the same regions. Oranges are produced
in the lower parts of the Eastern Counties and coast especially in Kwale, Kilifi
and lower Tana. Infrastructure and aggregation constraints restrict these regions’
access to the market. There are new plantings by medium-scale farmers in
Kibwezi County who produce export varieties, as they also export mangos from
the region. Kenya does not produce tangerines, relying mainly on imports from
South Africa and Egypt.
d. Lemons: These are grown in coastal Kenya in limited volume and shipped to
Nairobi. Kenya relies on Tanzania and Uganda, plus a limited quantity from its
Mt. Kenya and Kibwezi regions. These regions do have potential, and if
production improves, they will supply more citrus to the market than they do
now. Investments from counties are prioritizing citrus, especially in Kibwezi,
Kilifi and Kwale. It remains, however, to be seen how this will improve
production and productivity.
e. Pineapples: Pineapples in Kenya are mainly grown in Thika, Malindi and Kisii,
however, there are few pineapples to harvest during the cold season from June to
September. It is during this window that Kenya imports pineapples from
Uganda. The taste of pineapple from the Kisii region is similar to that of
Ugandan pineapples, so traders who buy pineapples from that region prefer to
purchase Ugandan fruits, as that results in the Thika plantations selling off–
grade pineapples to the local market in order to maintain the taste that
consumers favour. Homabay County is promoting pineapple cultivation, which
may allow a year-round supply from Kenya, as the weather is hot and new
smallholders may grow the region’s market share. However, it is not yet clear
how new plantings will impact the market, as the scale is still small.
f. Watermelons: Watermelons in Kenya are grown by medium-scale farmers, as its
production requires scale and investments. Production is limited from June to
September due to the cold weather and susceptibility to diseases, making it
expensive for the producers to grow during this season and the costs of
importing from Uganda lower. Medium-scale farmers prefer contract production
and as watermelons are controlled by a select number of traders who dictate
prices and sourcing trends, smaller wholesalers who cannot engage in contract
production opt to buy from Uganda where volumes are sufficient. We found
trading relations outside the shortage window among emerging wholesalers not
28
connected to wholesale markets who import from Uganda year-round. These
traders are few and mainly supply to hotels and institutions, making them less
visible than the traders in wholesale markets.
3.3.2.2 Kenya Exports to Uganda
Main exports from Kenya to Uganda are the following:

• Tomatoes: mostly in the month of May.
• Carrots: year-round from Nakuru County but climate change is limiting year-
round production.
• Garden peas: year-round from Nakuru County but climate change is limiting
year-round production: while demand from Tanzania is also growing.
• Mangoes: February to April.
• Passion fruits: February and May.
• Potatoes: year-round from Nakuru County but climate change is limiting year-
round production: while demand from Tanzania is also growing.
3.3.2.3 Transport Costs
Transport from Uganda to Kenya is often 30% cheaper than transport from Kenya to
Uganda. Demand for transport from Kenya to Uganda is higher as more goods are
shipped from and through Kenya to Uganda than the reverse. Transport from Uganda
averages KES 30,000 (USD 290 or UGX 1,08m) for10MT while transport from Kenya to
Uganda averages KES 50,000 (USD 480 or UGX 1.79m) for 10MT.
The vehicles that are used to transport produce from Uganda to Kenya are mainly used
to transport industrial goods to Uganda like chemicals, especially lime and salt from
Mombasa and Kajiado. Due to their size, 10MT, they are more suitable for transporting
fresh agricultural produce back to Kenya, while the larger trucks transport cereals,
maize and animal feed inputs.
3.3.2.4 Cross-border Trade
The nature of cross-border trade differs from trade between Uganda and the rest of the
country. The communities along the border are interconnected and related. On the
Busia border, the Luhyia community that dominates the area lives on both sides of the
border and therefore trades on a different scale than the rest of the country. Dry cereals
– especially beans, maize and ground nuts – are traded across the border in higher
volumes. While other horticultural produce is also traded in Malaba border markets,
cross-border trade statistics are more difficult to ascertain.
29
3.3.2.5 Drivers for Trade
Several factors influence the trade from Uganda to Kenya:
• Seasonality: the most important factor is seasonality for all products. The two
countries have different production seasons, and due to the exclusively rain-fed
nature of agriculture in the two countries and the seasonality of production,
there is a symbiotic relationship in the demand and supply.
• Taste: There are two products that Kenya prefers to consume out of Uganda, as
they find them to have a better flavour than those grown in Kenya: pineapple
and watermelon. The Thika region produces quite acidic pineapples – not as
sweet as pineapples from Uganda. The same is said for watermelon, but there is
no clear characteristic (like acidity) that the traders use to distinguish
watermelons grown in Uganda.
• Reliability of supply: Watermelon traders prefer to source from Uganda due to
the reliability in supply and the demand for volumes which are not consistently
supplied by Kenya. Uganda therefore has priority over Kenya among the traders.
• Variety: There is a huge preference for “Kiganda” green bananas in the Kenyan
market that is quite distinct from the Kenyan green bananas. While Kenya
produces high volumes of green bananas, there is a market perception that
Kiganda is a better green banana variety for children than Kenyan green
bananas. There is a culture of weaning children using green banana, which gives
the Ugandan-grown bananas a higher market share in Kenya.
• Under-utilized transport capacity: Uganda imports products through the port of
Mombasa; but ships back less products than available capacity. Transporters
therefore lower return transportation costs to increase their chances of moving
products back to the country: transport from Uganda to Kenya is often 30%
cheaper than transport from Kenya to Uganda. Demand for transport from
Kenya to Uganda is higher, as more goods are shipped from and through Kenya
to Uganda than the reverse.
The only quality parameters that the traders mentioned are those related to taste. No
trader mentioned price to be an issue except when Kenya is off-season and prices are
higher than Uganda’s prices. However, FAO statistics on wholesale price in Kenya and
Uganda give the impression that the prices in Uganda are lower (excluding transport).
See Figure 6 below.
Uganda’s location at the centre of the Great Lakes region and in the EAC offers
Ugandan farmers access to a regional market with over 150 million consumers. Recent
30
export growth has been stimulated by demand in neighbouring countries such as South
Sudan, which has emerged as an important trading partner, demanding food and other
manufactured materials. However, due to unrest in South Sudan, this market has now
been reduced in importance for export from Uganda. Moreover, the border with
Rwanda has been closed for some time due to political issues and this affects cross-
border trade.
3.3.3 International Demand
Current export volumes of fruits and vegetables from Uganda are estimated by
COMTRADE to be almost 400,000 tonnes of produce with a value of USD 118 million
in 2017. Most of the exported produce consists of vegetables, with the key products
being capsicums (hot peppers, including Scotch Bonnet, habanero, chilies, etc.) and the
garden eggs. As such, the horticultural sector has become important in the Ugandan
economy as it contributes an increasing share of the nontraditional exports.
The major destinations for horticultural exports include the UK and Belgium and are
consumed by ethnic buyers in Europe. This niche market is relatively limited in size
and is subject to only the bare minimum legal requirements regarding MRLs and
sanitary and phytosanitary aspects.
Figure 9: Export quantity of fruits in tonnes2011-2017
Export of Fruits in MT
40,000
35,000
30,000
25,000
20,000
Fruits
15,000
10,000
5,000
0
2011 2012 2013 2014 2015 2016 2017
Despite increasing export during recent years, Uganda continues to struggle in

comparison to export volumes of surrounding countries. See Table 5 below.
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Interviewed importers in the EU mention many challenges in the export value chain,
including a lack of cold storage, lack of traceability and certification, lack of monitoring
at farm level of chemical use, lack of adequate packing material, and other factors. In
the case of beans and peas, the climatic conditions are not favourable (USAID, 2002). In
the case of fresh tropical fruits, due to their weight, they are generally shipped by sea
and the distance to the nearest seaport is further away, compared to countries like
Kenya and Tanzania.
At present, there is no commercial farmer in Uganda that is producing fresh

vegetables up to the standards of major European supermarkets. Foreign supermarket
requirements regarding quality, traceability, and food safety are increasing, and this
leaves room only for serious and professional production of fresh produce. In Uganda
there is neither producer nor exporter that has Global G.A.P. certification.
Table 5: Export of fruit from Uganda 2011-2017 in tonnes

Item 2011 2012 2013 2014 2015 2016 2017
Fresh or dried mangoes 64 41 59 64 1,313 2,521 10,112
Fresh or dried pineapples 2,299 522 815 671 1,012 2,481 3,470
Fresh or dried avocados 4 60 112 128 191
Citrus fruit, fresh or dried 99 206 311 594 3,578 3,139 13,582
Melons, incl. watermelons,
and papaws (papayas), 668 264 446 183 1,114 1,738 5,299
fresh
Bananas, incl. plantains,
fresh or dried 637 270 632 25,522 4,647 2,807 2,501
Fresh strawberries,
raspberries, blackberries,
black, white or red currants, 257 153 55 16 115 72 995
gooseberries and ...
Apples, pears and quinces,
fresh 98 65 232 264 597 801 522
Other 173 140 77 532 230 138 45
Total 4,295 1,661 2,631 27,906 12,718 13,825 36,717
Source: UN COMTRADE
3.4 Challenges and Opportunities
Industry stakeholders identified the key strengths of pineapple production as being the
good taste and the fact that the crop can easily be cultivated in many parts of the
country. Weaknesses identified are the poor agricultural practices due to the limited
availability of extension services. Finally, the lack of knowledge regarding market
standards, weakens Uganda’s position on the export markets. For example, the fact that
the Sweet Cayenne consistently produces large-sized fruits that are too large for the EU
export market.
32
A serious threat is the pineapple farmers’ constant quest for new farm land,
compounded by the limited extension services and the weak support received by the
government. Despite these threats there also opportunities, like increasing the value
additions and promoting the uptake of improved varieties by the sector to increase
yields, as well as boosting the resistance of the crop to pests and diseases.
Table 6: SWOT for pineapple

Strengths Weaknesses
• Sweet taste & flavour (Sweet Cayenne) in the • Poor management practices
regional market • Misuse of pesticides
• Grown in many parts of the country • Ignorance of market requirements (variety less
• Relatively easy agronomy suitable for export to EU)
• Absence of seed certification
• Limited research on pineapple
Opportunities Threats
• High demand for fresh pineapple in the domestic and • Farmers keep on searching for new lands to use for
international market, is it the right variety? production
• Available market for pineapple value-added products • Limited extension services
(pulp, juice, dried) • Weak implementation of policy provisions on
developing pineapple value chains
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4.0 UGANDA FRUIT JUICE INDUSTRY ANALYSIS
4.1 Overview
Agriculture and agricultural output are very important to the Ugandan economy. The
agriculture sector of Uganda is the largest employer with 75% earning a living from the
industry. Food and agricultural raw materials account for 44.68% of the exports from
Uganda. Additionally, the sector contributes 22.7% to Uganda’s GDP. The large
contribution of agriculture to the Ugandan economy has led the government to promote
value-addition as a means of increasing the value of exports.
According the Uganda Investment Authority (UIA), the demand for agricultural
organic products is higher than the supply. This imbalance presents quite a high
opportunity for export of organic fruit juice from Uganda. Fruits and farm produce are
wasted and sold at very low prices during peak seasons due to inadequate storage
facilities and lack of effective processing or preservation techniques, leading to high
wastage levels. Juice production not only serves to add value to agricultural export but
also serve as a way to prevent wastage of excess fruits.
The Juice Industry has an opportunity to contribute to the Ugandan economy by

increasing the value of the country exports and simultaneously preventing the wastage
of fruits so high in demand, and creating jobs for Ugandans.
4.2 Industry
The Juice making-industry in Uganda consists primarily of companies that produce

“natural” fruit juices and companies that produce varying mixtures of fruit concentrate,
fruit flavoring, sugar and water. Natural Juices in the Ugandan market are fruit drinks
that consist primarily of juice extracted from fruit flesh or pulp.
The table below shows the two sectors and the ingredients for their Juices.
Table 7: Flavoured and Natural Juice Ingredients

Industry Sector Description/Contents
Flavoured Juices Mixture of fruit juice concentrate, water and sugar
Mixture of fruit purees, water and sugar
Mixture of flavourings, water, colouring and preservatives
Fruit Juices Juice extracted from flesh or pulp of fruit
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The natural Fruit Juices are targeted towards the upper and middle income segments of
the population while the fruit-flavoured juices are marketed towards children and the
lower income segments of the population.
The flavoured juice companies are distributed across the country while the natural fruit
juice companies tend to be concentrated in the Greater Kampala region. A key
distinguishing factor of the Fruit Juice Industry in Uganda is that companies that make
the flavoured juice drinks generally tend to be concentrated in the informal sector.
These companies are usually small, employing one to six people. The mixing of the
flavoured juices usually occurs in one of the entrepreneur’s homes. The juices are then
packed in polythene bags and distributed and sold through roadside kiosks and street
vendors. The flavoured juices are often not able to break into the formal sector because
they lack capital to meet the production and operational requirements set by the
Uganda National Bureau of Standards (UNBS) for juice producers. The Natural Juice
producers tend to be large organizations employing between twenty to two hundred
people. The Juices are made in factories and then distributed to grocery stores, schools
and other vendors.
There are a lot of Natural Juices that are imported into Uganda. The table below depicts
the players in the Uganda fruit juice processing sector. It is important to note that a lot
of the flavoured juice manufacturers are not captured in this table because of the
informal nature of these companies.
35
Table 8: Players in the Uganda Fruit Juice Processing Sector
Company Products Processing Location Operational Status
Capacity
Biofresh Ltd Export of Dried Pineapple, 5 MT per Month of Gayaza-Wakiso Active
Avocado, Apple Banana, Dried Fruit and 30-
Papaya, Jackfruit and 40 MT/Month of
Mango products Fresh Fruit
Britania Allied Industries Apple, guava, mango, 6,000 Lts/Hour of Ntinda-Kampala Active
orange, passion fruit and Juice
pineapple juices
Delight Uganda Limited Flavoured Fruit Drinks – 12,786 Lts of Ready- Kawempe-Kampala Active
[CHEERS JUICE Brand] in Orange, Pineapple, to-Drink and 13,440
Mango, Strawberry, of Dilute-to-Taste
Passion, Blackcurrant & Juice per Day
Apple flavours
Ho & Mu Food Dried Mango and 50 MT of Raw Fruit Kapeeka-Nakaseke Active
Technology Pineapple products per day
Jakana Organic Certified Orange, 7,000 Lts/Day of Kawempe-Kampala Active
Mango, Pineapple & Juice
Banana dried and juice
products
Kayunga Pineapple Pineapple juices 12,000 Lts/Day of Kayunga Active
Factory Juice
Masaka Food Pineapple juices 3,000 Lts/Month of Masaka Inactive
Processors Juice
Nyakihanga Juice Plant Pineapple juices 1,000 Lts/Hour of Ntungamo Active
Juice
RUCID Mityana Pineapple, Hibiscus, 500 Lts/Hour of Mityana Active
Bananas, Passion fruit, Juice
Mango & Jack Fruit dried
and bottled juice products
Soroti Fruit Packers Mango and Orange fruit 12,000 – 25,000 MT Soroti Active
juices of Raw Fruit p. a.
Sulma Foods Dried Pineapple products 1 MT of Dried Fruit Luwero Active
per Month
Tursam Investments Mangoes, Bananas and 1,000 Lts/Day Kampala Active
Limited Pineapples
4.3 Juice Industry Value Chain and Main Processes
Fruit Production:
Fruit production is the responsibility of farmers. In the Uganda market, farmers can be
classified in two groups:
Small-scale farmers: The majority of Ugandan farmers fall in this category. These
farmers are uniformly distributed across the country and grow fruits on relatively small
plots of land (a few Acres). Small scale farming is also characterized by low usage of
36
fertilizers, pesticides and other improved farming techniques. As a result, they suffer
from low and unreliable production. In addition, the harvesting methods employed by
these farmers often lead to damaged and bruised fruits.
Commercial/Large Scale Farms: the commercial fruit farms own very large areas of
land. They use mechanized and technologically advanced processes to cultivate the
land for fruit production and as a result are able to obtain very high quality fruits and
high yields.
Fruit Transportation:
Once the fruits reach maturity and are harvested they may go to the fresh fruit market,
in order to be consumed fresh, or squeezed freshly at home to be consumed as Juice, or
it may enter the processing industry, in order to obtain Juice or other by-products.
Transporters are responsible for getting the fruit from the farms to any of the end-use
activities discussed above.
In Uganda, there is an abundance of fruit transportation companies, fruit traders, whose

sole business is collecting fruit from farms and delivering them to stores, exporters and
food processors. In other cases, one will find that many companies have vertically
integrated fruit transportation into their businesses. It is not uncommon to find food
processors, exporters and wholesalers who buy directly from farmers and manage the
transportation of the fruit themselves.
Fruit Processing:
The fruit processors are responsible for converting the fruits into Juice and other by-
products. Fruit juice processing consists of extraction, filtration, iteration, bastardization
and packaging. The fruits are sorted, washed and prepared for extraction. There are
several methods of extracting Juice depending on the type of fruit. The filtration phase
involves the isolation of the pulp from the Juice. The third process of iteration is
performed to remove the dissolved oxygen. It is done by spraying the Juice into the
vacuum chamber or allowing to flow over a series of baffles (a device for checking or
impeding the flow of gases) while subject to a high scum.
Oxygen reacts with Vitamin C causing deterioration of Juice flavor as a result of other
chemical reactions. Bastardization is a sterilization process which slows microbial
growth in the Juice. Bastardization involves heating the Juice to a specific temperature
for a definite length of time, and then cooling it immediately. In the packaging stage,
37
clean containers are filled with hot Juice from the pastries. They are then immediately
sealed and rapidly cooled. Once packaging is complete, the products are ready to
deliver to the market.
4.4 Juice Distribution
Distributors are responsible for delivering the packaged Juices from the producer to the
retail outlets and in most cases directly to consumers. Like fruit transportation,
distribution is another area that is often integrated in the Juice producer’s business.
Fruit Juice is often distributed through wholesalers and exporters.
Sales
The sales outlets are locations where consumers go to purchase the fruit. In the
Ugandan context, they are primarily retail outlets. The retail outlets that we
encountered are: Grocery Stores; Gas Station Convenience Stores; Kiosks, Street
Vendors, Customers.
The Fruit Juice Industry in Uganda serves both the institutional and household
consumers.
Suppliers
Suppliers to the industry differ for each of the sectors that were defined earlier in this
paper. The primary suppliers for the natural fruit juices are the fruit farmers and fruit
traders. Suppliers to the flavoured Juice sector are the importers of fruit flavours and
retailers who sell fruit Juice concentrates. The main supply-related challenges of
flavoured drink producers occur because the main ingredients for their Juices are not
produced locally and are imported.
The ineffective customs handling of exports often lead to shortages (and associated
price hikes) in the supply of concentrates and fruit flavouring. Other than the increase
in input, the producer may also experience quality/taste degradation. For example, a
producer may use a particular brand of concentrate in its production process, and when
the concentrate becomes unavailable, the producer has a choice of shutting down
production till the concentrate becomes available or using a different brand of
concentrate.
38
A different brand of concentrate results in the product tasting different. For the
Flavoured Juice sector, suppliers are able to exert significant power over the Juice
producers because the producers need to maintain consistent taste for their products. A
retailer or importer may choose to raise prices for a unique concentrate or flavor. Fruit
Juice companies may choose to buy directly from farmers and incur the cost of
transportation from the farmer to their factories or they may choose to deal with fruit
traders to deliver directly to the factory.
When dealing directly with farmers, the Juice companies are able to extract profits from
the farmers but lose some of this advantage to the cost of transportation. With a lot of
the farmers being distributed across the country, transportation costs to the Kampala
region (where most Juice companies are located) can be quite significant. The traders
are not able to exert any supplier power on Juice producers because of the large number
of traders and relative homogeneity of the service provided.
The low capital requirements combined with the lack of regulatory enforcement ensure
that barriers to entry and exit in the flavoured Juice sector are very low. Additionally,
consumers of Juices in this sector are very price sensitive and not concerned about
brand loyalty. Entry barriers for the Fruit Juice sector are much higher than that on the
Flavoured Juice sector. The reason is because the entry requirements into this sector
require high capital investments. In addition to the high capital investments, brand
equity may be difficult to build because of customer loyalty to existing brands.
4.5 Rivalry among Existing Firms
It is difficult to document the number of firms in the Uganda Juice industry because of
the ease of entry and exit in the Flavoured Juice sector and because a lot of firms in the
sector operate informally and are unregistered. The table blow shows the list of Juice
companies selling within the Ugandan market.
The study estimates that there are 100 Juice makers who operate informally. The
Flavoured Juice sector is very competitive.
Market leaders tend to secure supply contracts for primary and secondary school
cafeterias. Compared to the Flavoured Juice sector, there are fewer number of
companies (all registered) who compete within the full Juice sector. Britania Allied
Industries Limited (makers of Splash Juice) based on volumes carried in retail outlets.
Despite the fewer numbers of cool Natural Juice producers, competition is fierce within
this sector as there are a lot of imported Juices on the market.
39
Table 9: Juice Companies Active in the Uganda Market
Company Name Production Sector
LEMMA Food (U) Ltd Domestic Fruit Juices
Joanna Foods LLC Domestic Fruit Juices
Britania Food Products Domestic Fruit Juices
Seven Falls Limited PIP Domestic Fruit Juices
Delight Uganda Limited Domestic Flavoured Juices
House of Eden (U) Ltd Domestic Flavoured Juices
K Enterprises Domestic Flavoured Juices
Del Monte Foreign Fruit Juices
Engage Foreign Fruit Juices
Highlands Foreign Flavoured Juices
Sheehan Foreign Fruit Juices
Apparel Agro Foreign Both
Shark Group Foreign Fruit Juices
Dimes Foreign Fruit Juices
Rain Foreign Fruit Juices
Martini (Kenya) Ltd Foreign Fruit Juices
Kettle Foods Kenya Foreign Flavoured Juices
AY Main National Juice & Refreshments Co. Ltd. Foreign Fruit Juices
Ribbon Foreign Fruit Juices
CERES Foreign Fruit Juices
There is very little difference between the Flavoured and Fruit Juice Sector as the
consumer base for each sector is highly segmented.
Many different small firms with 5-50 employees each fall in the Small-Medium category
but not micro-enterprises which will not be big enough to have the same
management/labour issues.
Required Employees: Require relatively low-income or unskilled/semi-skilled

workers. Want to make sure that job creation would not be limited to the highly
educated or wealthy.
Preferable: Juice industry firms play a significant role in the Ugandan economy, either
in terms of employment or GAM/GMP.
Preferable: High density of firms to insure that mentoring of firms will be logistically
feasible and affordable.
40
4.6 Market Survey of Fruit Juice Industry Operators
There are few players in the Uganda pineapple fruit processing sector who are
mainly for the domestic juice market. The current players in the pineapple fruit
processing sector have made some backward linkages pursuing production agreements
with some fruit farmers or aggregators but this has been minimal. As a result, a large
share of the processed juice consumed in Uganda is still imported to meet the local
demand.
4.6.1 Britania Allied Industries
Company Overview: The Britania biscuit manufacturing in Kampala, was set up in

1991 by the House of Dawda group – a group which has been in existence since 1962 in
the East African region – pioneered by Dr. Hasmukh Dawda. Britania Allied
Industries Ltd. (BAIL) was created through the merger of 2 operating subsidiaries. We
are in the business of manufacturing Biscuits; Confectionery; Fruit Juices [Splash Juice®
and Yojus®] and Tomato Sauces.
Our production facilities are among the most sophisticated and modern in the region
and we possess a level of technological excellence compared to prevailing global
standards. We have highly reliable process equipment and methods in all our
production facilities – Tetra Pak for fruit juices and auto filling machines are a few to
mention. Late 2002, the company acquired the present Manji Food Industries Ltd.,
biscuit factory at Nairobi. Britania owes its success to its creative, determined,
dependable and enterprising people and the co-operation of an extensive network of
customers and partners.
Products: Splash Juice® and Yojus® products are made in 9 flavours that are made out
of apples, guavas, mangoes, oranges, passion fruit and pineapples. Britania Allied
Industries Ltd. (BAIL) is currently the market leader in Uganda in the production and
supply of natural and flavored juices on the market. Splash Juice® is the biggest juice
brand in Uganda since its introduction in 1997. It has become Uganda’s number one
occasion soft drink and has recently risen as one of the top alcoholic mixers in bars.
Production Facilities: The Britania Allied Industries Ltd. (BAIL) production facilities
at Ntinda Industrial Area are among the most sophisticated and modern in the EAC
region and the Company possesses a level of technological excellence compared to
prevailing global standards. The Company has highly reliable process equipment and
methods in all our production facilities.
41
In 2009, the Company invested in the purchase and installation of a US$ 3m (UGX 9
billion) Tetra Brik Aseptic (TBA) plant from Sweden in a move to upgrade the quality of
its juice production. The 2015 TBA-19 model replaced the TBA-3 model that the
Company had been using since 1997.
As a result of its continued market growth, in January 2019, Britania Allied Industries
Ltd. (BAIL) yet again commissioned a newer US$3.5 million Italian-technology
PET plant designed to produce both bottled Splash and water concurrently. The
new PET plant has 15 automated containers for water treatment, water and juice
processing, filling and packaging without human contact to avoid contamination with
the only point of human contact being at the end-process point of PET bottle packaging
for market distribution. The plant has its own bottle blowing, processing and
manufacturing unit in various moulds [sizes] to enable self-sufficiency in production.
The company will not need external bottle suppliers since the plant has its own in-built
PET bottle- making machine. The new plant has a production capacity of 12,000 bottles
of Splash [in capacities of 400 mls and 500 mls] and water [in capacities of 600 mls and
1.5 Ltr] per hour meaning that it will enhance its competitiveness against other local
market brands such as Coca Cola’s Minute Maid®; Riham’s Ona®; and imported Afia®
among other juices.
Contacts: Plot M247B, Ntinda Industrial Area, Kampala; Phone: +256-393263358/ 414
332000
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4.6.2 Jakana Foods
Company Overview: Jakana Foods Ltd (JFL) was incorporated in 2008 with its head
office in Kampala, Uganda. The company is engaged in the commercial processing and
marketing of all natural food products. Today, Jakana Foods, is a well-recognized and
popular brand among Ugandan consumers. Our goal is to provide high quality, all
natural and gourmet food products made from local ingredients, grown and produced
in Uganda. We are currently exporting to the USA, UK, Europe, the Middle East &
Africa. The Company is United States FDA (Food and Drug Administration)-Certified
with FDA Registration Facility number 14385378942
Products:
Organic Certified Dried Fruit

Jakana Foods Ltd is working with hundreds of farmers to bring to the market high
quality organic certified dried fruits while using the principles of direct trade to ensure
protection for our environment, fair wages for our workers, and direct trade for our
farmers.
The Company produces the following NOP USDA Organic and EU 834/2007 Certified
Organic dried fruits:
 Dried Pineapple
 Dried Mango
 Dried Papaya
 Dried Jackfruit
 Dried Apple Banana
 Tropical Mix: Dried Banana, Pineapple & Mango
Jakana Foods Ltd uses unique a dehydration technique to offer raw dried fruit with
higher nutritional value. These Organic dried fruits are the real deal. No added sugar,
no sulfites, no pesticides – nothing but dried fruit and amazing flavor!
Jakana Foods Ltd organic certified dried fruits are available in 50g, 100g, 150g, 250g
bags, or in bulk.
43
Juices & Pulp
Orange Juice
Jakana Foods Ltd Orange Juice is made from 100% Ugandan oranges with no added
color, flavor or sugar. Citrus fruits have the highest antioxidant activity of all fruits,
helping to boost the immune system and protect against cancer and heart disease.
Mango Juice
Jakana Foods Ltd Mango Juice is made from 100% locally grown fruit orchards from
the Northern and Central Regions of Uganda.
Pineapple Juice
Jakana Foods Ltd Pineapple Juice is made from 100% locally grown fruit orchards from
the Central Region of Uganda.
Banana Juice
Banana juice is a traditional East African drink, served at all celebrations and royal
courts of the tribal kingdoms as a way to welcome guests to your home. Banana juice is
an excellent source of potassium and fiber. Jakana Foods Ltd Banana Juice is made from
100% locally grown Musa and Kayinja juicing bananas of the South Central Region of
Uganda.
Tropical Fruit Punch

The combination of the tropical fruits is something our ancestors have brought to us
and now we celebrate it on a daily basis. Jakana Foods Ltd Tropical Punch is made
from 100% locally grown citrus fruits including pineapple, tangerine/and or mango,
banana, and lime from the Southern and Eastern Regions of Uganda (varies per season).
Production Capacity
Jakana Foods Ltd has a juice production capacity output of 7,000 litres of juice per day
out of 140 tonnes of bananas and 70 tonnes of other fruits every month.
Services:
Packing Technology Solutions

At Jakana Foods, the Company is passionate about promoting and supporting good
health. As such, the Company does not use any artificial preservatives or additives in
our products. Alternatively, Jakana Foods uses stand up pouch packaging designed to
add shelf life to its products. With this packaging technology, the Company is able to
44
offer its dried fruit products with absolutely zero preservatives using natural
preservation techniques.
The Company offers contract manufacturing and packaging solutions for other business
who are interested in adopting the same natural preservation practices for their
products.
Packaging is available with full or partial graphics, in aluminium or clear plastic

packaging material. Custom sizes are available.
Organic Certification Training

Jakana Foods Ltd Internal Control System and Extension team offers training services
to farmers, agro-processors, and exporters to prepare them for their organic audits by a
third party Organic Certified Auditor. The standards that Jakana Foods Ltd trains
farmers are for NOP/USDA and EU824/2007. Training requires a commitment from
the participants to learn an Internal Control System, to learn, implement and monitor all
of the standards, and to get farms registered and inspected in preparation for
audit. Jakana Foods Ltd services do not include the Certification Audit, just the steps to
prepare participant farmers for a successful audit.
Jakana Foods Ltd also sells pheromones used for the eradication of mango fruit flies, a
critical component of organic pest control, vital to protecting farmer’s crops and
maintain organic integrity.
Contacts: Phone: One Jakana Place Dr. (Kawempe)

Kampala, Uganda
Mobile: +256-414-567714; (256) 787 427476 or (256) 703 551709
45
4.6.3 Kayunga Pineapple Factory
Company Overview: Kayunga Pineapple Factory is a PPP [Public Private Partnership]

pineapple juice processing plant between the National Agricultural Advisory Services
(NAADS) in partnership with the private sector players including Semu Agro-tech
Consultants Ltd and Entebbe Miracle Center Church. The factory which is still under
construction is located at Kito village, Busaale Sub County in Kayunga district.
Government through NAADS has so far injected UGX 780m in this factory under the
Public Private Sector partnership and the balance of capital investment funding has
been contributed by the other two private sector partners.
Products & Raw Material Sources: Factory is expected to process pineapple juice from
pineapple fruits that that will be supplied to the plant by the more than 20,000
pineapple farmers resident in Kayunga District and neighbouring areas for sale on the
local market. Kayunga district is one of the leading pineapple producing districts in
Uganda producing approximately 15,960 tons of pineapple in a single season.
Plant Production & Financing: This is a 12 metric ton per day pineapple juice
processing line. The factory is expected to employ 20 to 30 people directly and between
casual 100 and 150 casual workers. The entire pineapple juice processing line is
budgeted to cost more than UGX 2 billion with the first phase of the factory estimated
to cost UGX 1.38 billion while the second phase which includes construction of raw
material shades, production stores and the compound is estimated to cost
approximately UGX 700 million.
Operating Status: Pineapple juice processing plant expected to commence operations in

June 2020.
46
4.6.4 Masaka Food Processors Limited
Company History: Located on a 50-acre piece of land in Kimanya-Kyabakuza division

in Masaka town, the fruit-processing factory belonged to farmers under Masaka
Cooperative Union. The factory was built to process and can fruits for both internal and
external markets. The factory is also remembered for its trademark Creps Product– a
soft drink that was made out of pineapple juice. In 1997, the co-operative union sold the
factory to a one Patel Chandrakant who initiated plans to revamp the fruit processing
to exploit the fruit potential in the district and specifically to process pineapples,
mangoes and passion fruits packed in tetra packs and PET bottles. Chandrakant
applied for a US$ 7.5 million loan from the World Bank to procure new machinery for
revamping the factory, but his loan application was rejected on technical grounds.
Chandrakant claims that the World Bank wanted him to pay back the loan in a period
of not less than five years. He however wanted to clear the loan after 8-years. He
explains that it was not possible to service the loan within five years because his project
is based in a low developed country with low purchasing power. Chandrakant now
wants Government to intervene and acquire the loan on his behalf.
Products: Pineapple juice (Creps brand)
Reasons for Collapse: Masaka Creps factory was originally the brain child of the now
ailing Masaka Co-operative Union which took a loan of US$1.5m from the East African
Development Bank [EADB] to start the factory in the late 1970s. The factory, long since
purchased by Indian investor Chandrakant, used to make pineapple juice and other
fruit juices from 1988 up to 1996 when financial constraints, technical problems and
negative political influences against co-operative unions forced it to close.
Technical Issues: The 1981-86 civil war in the country delayed the factory’s construction
and the machines imported from India got worn out under the scorching sun at the
factory site. By the time the factory started to operate, its production capacity fell short
of what was anticipated. The machines broke down every now and again resulting in
zero production on some days.
Financial Constraints: Meanwhile, it became increasingly difficult to service the bank

loan and interest which had to be paid in US dollars although the value of the shilling
against the dollar was falling nearly every passing day during the period of 1988-1996
when the juice plant was in active service. Finally, in 1996 the factory wound up as
government undertook to get to an understanding with the EADB.
47
4.6.5 Nyakihanga Juice Processing Plant
Company Overview: The Nyakihanga Fruit Processing Facility worth UGX 1.4 billion
(US$380,000) commissioned on 20th January 2020 by First Lady Janet Museveni is the
initiative of the Uganda Industrial Research Institute (UIRI) a parastatal company
wholly owned by the government of Uganda. The processing facility is an
establishment of the Nyakihanga Fruits and Vegetable Growers Co-operative Society
Limited based in Ntungamo District was established in 2016 majoring in orange and
pineapple fruits and aims to add value through production of fruit juice to reduce post-
harvest losses.
Products: Pineapple juice
Processing Capacity: The factory having a capacity to process 1,000 liters of pineapple
juice per hour, from 700 pineapple fruits, will be supported by 3,222 pineapple farmers
in the region producing 80,000 pineapples everyday during peak season.
Project Socio-economic Impacts: The construction of the pineapple factory has

increased the price of pineapples from 1,000 UGX shillings to between 1,500 and 2,000
UGX shillings. The number of pineapple farmers has also increased from 156 to 32,202
farmers at present. The factory will benefit pineapple farmers from the districts of
Rwampara, Sheema, and Ntungamo – specifically in the areas of Itojo, Buhanama,
Kayonza and Rukoni Sub-Counties.
48
4.6.6 RUCID [Rural Community in Development] Mityana
Company Overview: Registered in 1994 and based in Mityana District, Rural

Community in Development (RUCID) has been in existence since 1990. RUCID’s
primary aim is to work with small holder farmers so that they can improve and sustain
their agricultural production, household income, environmental protection, health
issues, nutrition, and women in development.
RUCID has been involved in food processing since 2000. The food processing
department produces a variety of fruit and other agro-based products including cassava
crisps, yam crisps, fried groundnuts, dried fruits, fruit juices, fruit wines, fruit jams,
herbs and spices.
RUCID has two fruit drying facility one in Mubende Town Council and the other at our
trial farm in Lubanja village Mityana District. RUCID also has a fruit juice processing
facility in Mityana. All fruits processed are grown by the organically registered and
certified farmers.
RUCID’s food processing department now produces Fresh fruit juices which has been
organically certified and also certified by Uganda National Bureau of Standards
(UNBS) and properly bottled for marketing as ready to drink. In addition to processing
products RUCID, the processing department offers training facilities to RUCID College
students, farmers and other interested persons so that they can acquire skills and
experiences in food processing and value addition.
RUCID food processing department is the only small-scale enterprise in Uganda which
is bottling fruit juices in glass bottles which is a sign of quality.
RUCID food processing department has been incorporated into RuciFresh Ltd. It is
owned by RUCID, an NGO that is offering social services to the farmers. As a result of
RUCID interventions, farm practices have tremendously improved; leading to
increased production. The farmers expected RUCID to buy the produce.
RuciFresh Ltd is a value-addition centre. RuciFresh serves suppliers as trusted allies,

providing them with the loyalty of a business partner and the economics of agri-
business support to ensure organic farm produce quality and efficient accessibility to
the market. RUCID’s training and outreach support is mission critical, so it gives its
suppliers the assurance that it will be there when they need it.
49
Organizational Objectives
 To enhance capacity of our target beneficiaries in order for them to adopt

appropriate agriculture technologies and income generating farming activities.
 To promote networking, collaboration and communication between small scale
farmers and other stakeholders.
 To provide training regarding different aspects of sustainable agriculture
development, incl. health related issues, care for and protection of the
environment.
 To enable the small holder farmers to become self-sustaining by producing
quality fruits and sale them to RUCID.
Products: RuciFresh Ltd sells several Juices products including: Hibiscus, Bananas,
Jack fruits, Pineapples, Mangoes, Passion; and Dried fruits: Pineapples, Jack fruits,
Banana and mangoes at local, regional, national and international markets, and
organizes the farmers who supply the raw materials and trains them and offers them
extension work in order to keep the quality of producing organic products in the
districts of Mityana, Mubende, Kyenjojo, Kyegegwa; with the aim of expanding to Fort
Portal, Kamwenge, Kasese and other districts producing fruits.
Dried Fruits
 Dried Pineapple
 Dried Banana
 Dried Mangoes
 Dried Jack Fruit
Organic Juices
 Pineapple Juice
 Hibiscus juice
 Banana Juice
 Pineapple Ginger
 Passion Fruit Juice
 Mango Juice
 Jack Fruit Juice
Other Products
 Tomato Sauce
 Pineapple Jam
Operating Status: Active

50
Quick Contacts:
RUCID
P. O. Box 123,
Mityana - Uganda.
E-mail:
admin@rucid.org
The Director:
+256(0) 772-469-003
+256(0) 782-278-296
The Principal:
+256(0)-790-441-979
+256(0) 772-479-668
4.6.7 Soroti Fruit Processing Factory
Location: The factory is located in Arapai sub-county, Soroti District, near the town
of Soroti, approximately 292 kilometres (181 mi), by road, north-east of Kampala,
Uganda's capital and largest city.
Overview: The Government of Uganda (GOU), with the assistance of the Korea
International Cooperation Agency (KOICA) and in partnership with the Teso Tropical
Fruit Growers Cooperative Union (TETFGCU), decided to establish a fruit processing
factory in Soroti District to take advantage of the abundant citrus crop in the Teso sub-
region and the high yield per tree. GOU provided the land, utilities, and infrastructure.
KOICA set aside US$7.4 million for equipment and training and is building the
factory. And TETFGCU will grow the fruit that the factory will process. Citrus fruit and
mangoes are the principal fruits under consideration.
Products: Mango Juice and Citrus (Orange) Juice and Juice Concentrates.
Processing Capacity: Teso Fruit Factory has a capacity of processing between 12,000
tonnes and 25,000 tonnes of mangoes and oranges annually. Subsequently, production
of fruits in Teso Sub-Region is expected to increase from an estimated 100,000 tonnes
per year to 150,000 tonnes in order to meet the new demand.
Ownership: The ownership of the factory is as depicted in the table below:
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Table 10: Soroti Fruit Processing Factory Stock Ownership
Rank Name of Owner Percentage of Ownership
1 Uganda Development Corporation 80.0
2 Teso Tropical Fruit Growers Cooperative Union 20.0
Total 100.0
Timetable: Construction of the factory began in April 2015 and was scheduled to be
completed in May 2016. Installing and commissioning the machinery and equipment
was anticipated from August 2016 to October 2016. The factory was scheduled to
commence commercial operation in November 2016.
After years of delay, the factory began test runs of its production lines in May 2018,
with commercial commissioning planned for August 2018. Production is planned to be
phased, starting with one 8-hour shift and gradually increasing to two and eventually
three daily shifts.
Commercial production is expected to begin in April 2019. The factory has capacity to
process six metric tonnes of fruit on a daily basis.
On 13 April 2019, President Yoweri Museveni launched commercial production at the

completed factory. At the beginning, 150 employees were hired, with the expectation to
increase to 250 people when the factory runs at maximum capacity.
In October 2019, the factory began producing mango juice under the label "Teju", short
for "Teso Juice". It is expected that Teju will soon be served on the revived Uganda
Airlines.
52
4.6.8 Sulma Foods
Company Overview: Sulma Foods is a private company in Uganda that is an exporter

of herbs, honey, fruit and vegetables. Sulma engages in the cultivation, processing,
packaging and export of fresh and dry fruits (dried pineapples) and vegetables. Sulma
operates projects which include: The Sulma Foods organic Project in Luwero and
Lugazi project in Mukono District. Sulma Foods sources its pineapples from some 500
farmers united under groups of 20 to 30 people at a sourcing rate of UGX 2,000 per
pineapple ensuring a good return on farming investment for the Luwero pineapple
farmers.
Products: Dried Pineapples; Dried Vegetables; Edible Preparations & Spices; Fresh
Fruits & Vegetables
Value Addition & Export Activities: Sulma Foods, in partnership with Bic Tours
Limited, a travel company with specialty in Japanese market, add value to the organic
pineapple grown by farmers from Luwero to make dried snacks which they export to
Japan.At the moment, Sulma Foods exports one tonne of dried fruit every month to the
Japanese market through the Far East, earning at a total export value of $9,000 (about
Shs33m) per month.
Contacts: +256 772502350 /+256 752 584069 +256 312 110949
4.6.9 Uganda-Chinese Liao Shen Industrial Park Nakaseke [Ho and Mu Food
Technology Company Limited]
Company Overview: Ho and Mu Food Technology Co. Limited is a US$ 12 million

investment that sits on 10 acres of land at Namunkekera, Kapeeka in Nakaseke District.
It is located about 55kms from Uganda’s Capital Kampala and about 41 kms off the
53
busy Kampala- Gulu Highway. It is part of the more than 15 industries at the Liao Shen
Industrial Park at Kapeeka producing a range of items including electronics, grains,
fruit processing and packaging and currently employing more than 2,000 Ugandans but
with a target of accommodating up to 35 factories employing over 8,000 people in the
near future. Ho and Mu Food Technology Co. Limited is a modern fruit-processing
factory with dozens of large-scale food processing equipment. When fully operational,
the company is expected to employ over 350 Ugandans at different levels and help over
6,000 Ugandan households improve their income through providing market for their
fruits.
Products: The Company deals in fruits; it makes dried mangoes, dried pineapple,
mango whisky and pineapple wine
Processing Line: Ho and Mu Food Technology Company Limited fruit-processing

Company is capable of processing up to 50 tons of fresh fruits daily.
Contacts: Bamunanika Block 269, Namasanga & Namunkekera, Kapeka; Phone: +256
759759302 +256 700372941
4.6.10 Tursam Investments Limited
Company Overview: Tursam Investments Limited is an agribusiness food processing

enterprise which was established in 2013 and incorporated on the 15th of June 2015,
under Reg. No. 202853 by Registrar of Companies.
Products: Tursam Investments Limited produces purely fruit juice drinks from locally
grown fruits namely; mangoes, bananas, pineapples. Company products are branded as
UHURU FRUIT DRINKS®
54
Business Model: Tursam Investments Limited is already working with fruit farmers in
Mubuku Irrigation Scheme, Kasese district in the Rwenzori region that supply it with
fruits, farmers in Mbale district, Kiboga district, Buikwe district and other regions. By
getting fruits from the framers themselves, the Company is assured of reliable,
sustainable and consistent supply of raw materials. Tursam Investments Limited
supports its farmers with seedlings, organic fertilizers, and advance payments for
managing the farms. Since its inception, the Company has been experiencing a steady
growth in sales of approximately 50% annually due to the demand of natural fruit juice
on the market and traditional need of banana juice (Omubisi/Eshande) as locally known
in Buganda and Ankole regions respectively. In fact, the Company’s fastest selling
product is Banana fruit juice. Tursam Investments Limited is the number one company
in Uganda that produces banana juice on a large scale with a production capacity of one
tonne (1,000 liters) per day.
Value Proposition: Tursam Investments Limited is providing nutritious products to

school-going people, young professionals and middle income earners, offering natural
and high value content. The Company capitalizes on abundance of cheap rich fruit in
Uganda to provide to the community natural nutritious healthy fruit drinks.
Market: Tursam Investments Limited currently sells its products both on the local and
regional markets. The domestic sales market for Tursam Investments Limited fresh
juice products includes but is not limited to: All Quality Supermarket branches in
Kampala, Mega Standard Supermarket-Down town Kampala, Standard Supermarket
in Kampala old Taxi park. The Company exports its products to Rwanda, Kenya and
DRC, with Rwanda taking 70% of the exported products. Before the Uganda-Rwanda
border closure in early 2019, most Supermarkets in Kigali used to stock UHURU FRUIT
DRINKS.
55
4.7 Findings of the Uganda Fruit Juice Consumer Market Survey
Attributes of processed fruit juice brands in supermarkets

Fruit juices were made from specific or blend of different fruits such as mango, orange,
apple, pineapple, blackcurrant, strawberry, passion. They were packed in various sizes:
200, 250, 300, 500, and 1000 ml. The fruit juice concentration ranged from as low as 5%
to a maximum of 100%. Some of these brands were exclusively 100% fruit juice others
were formulated in different fruit juice concentrations including 100% or had low fruit
juice concentration of 10% or less. Most of the brands had nutrition labels on them
indicating levels of either/and energy, carbohydrate, fibre, fat, or vitamin C. For
example, for those brands that had indicated the amount of Vitamin C in the nutrition
label it ranged from 1.8 -30 mg/serving of 100 ml. Some brands claimed to have
additional vitamins (A and E) and minerals (iron). The shelf life of juices ranged from
300-365 days. The retail price of fruit juice per serving (100 ml) ranged from UGX 600
(US$0.16) to UGX 780 (US$0.21), depending on the brand (Table 11).
Table 11: Attributes of Processed Fruit Juice at Selected Supermarkets

Attribute N Mean Minimum Maximum Standard
deviation
Size of package (ml) 98 661.22 200.00 1000.00 337.10
Juice conc. (%) 89 47.28 5.00 100.00 41.40
Energy (Kcal*) 92 51.73 41.00 72.00 6.12
Carbohydrates (g*) 92 12.27 9.10 18.10 1.51
Fibre (mg*) 23 12.36 0.10 44.00 14.94
Vitamin C (mg*) 39 10.59 1.80 30.00 5.42
Shelf life (days 98 361.02 300.00 365.00 15.66
Price (UGX*) 98 726.74 600.00 780.00 38.61
Note: * per 100 ml serving; and Exchange rate: 1 US$ = UGX 3,700
56
Other quality attributes of processed fruit juice brands
There were two types of packages used: Tetra Pack’s cardboard-based cartons (75.5%)
and PET (Polyethylene Terephthalate) plastic bottles (24.5%). Plastic bottles were
transparent, available in 300 ml and 500 ml sizes only. While all plastic bottles were
resalable once opened, only cartons of larger sizes (500 ml and above) could be resealed.
Smaller cartons (200, 250, 300 ml) were not resalable once opened probably because
consumers are expected to drink these fruit juice servings at once. All plastic bottles
were transparent and in sharp contrast to cartons. In all the fruit juice packages were
signs and information indicating they were recyclable. All the juice packages bore signs
of quality assurance meaning that they had been approved and considered safe for
consumption by the respective regulatory bodies: Uganda National Bureau of
Standards (UNBS), Kenya Bureau of Standards (KEBS), and others. Over a half (56%)
of the packages had no sugar label on them, particularly those with higher fruit juice
concentrations. Besides, about 29% of the packages indicated preservatives had been
added to juice and, this seemed to be the case with less concentrated fruit juice brands
(Table 12).
Table 12: Other Quality Attributes of Processed Fruit Juice Brands at Supermarket
Attribute Frequency Percent
Sugar added (yes) 55 56.1
Preservatives added (yes) 28 28.6
Presence of quality sign (yes) 98 100.0
Type of package (tetra) 74 75.5
Resaleability of package (yes) 48 49.0
Transparency of package (yes) 29 29.6
Recyclability of package (yes) 98 100.0
Implicit values of Attributes of Processed Fruit Juice

The hedonic pricing model was estimated using the ordinary least squares (OLS)
method. The best-fit model had a coefficient of determination or adjusted R2 of 0.543.
This means that over 54% of the variation in the price per serving (100 ml) of fruit juice
was explained by size of package, sugar added, preservative added, transparency of
package, and country of origin of fruit juice (Table 13).
The size of package of fruit juice had a small negative influence on the price per serving
of fruit juice. For a unit serving (100 ml) increase, the price increased by UGX 0.11 (less
than US$0.01). The other packaging variable that was significant was transparency of
package. Fruit juices in transparent packages were significantly cheaper per serving
than those in non-transparent packages by UGX 22.92 (US$0.006). Presence of quality
sign, package re-saleability, shelf-life of juice, and re-cyclability of package were found
57
to have no influence on price per serving of fruit juice perhaps because of lack of
variation in data. These findings are partially consistent with those from earlier studies
conducted in other countries, such as Australia and Germany, where the size of package
of fruit juice had a negative influence on its price per serving and fruit juice in re-
sealable containers was discounted per serving.
Table 13: Determinants of Price per Serving (100 ml) of Processed Fruit Juice
Variable Coefficient Standard error t-statistic p-value
Intercept 676.129 12.461 54.260 0.000
Size of package (ml) - 0.114 0.012 -9.583 0.000
Sugar added (yes) -13.988 6.191 -2.259 0.026
Preservative added (yes) -14.966 0.809 -2.198 0.030
Transparency of package (yes) -22.917 7.210 -3.179 0.002
Country of origin (Uganda) -33.084 5.852 -5.654 0.000
Adjusted R 2 0.543
Number of observations 89
In Uganda, the cost of packaging material for processed fruit juice was perceived to be
high. An informal interview with one of the fruit juice processors revealed that the
market price of fruit juice in Uganda reflected the cost of packaging material that
constituted about 70% of total costs of production. This is because the government
imposed a high import duty on long life packaging materials. Moreover, cartons and
plastic bottles used in Uganda were small (one litre and less) and costly as compared to
large (five litres or more), cost-saving and re-sealable containers (such as tins) used in
Australia. This suggests that any strategic intervention by the fruit juice processors
and/or government to reduce the cost of packaging material, might lead to further
discount on package size per serving of processed fruit juice in Uganda.
Nutrition and taste variables that were considered in this study included: fruit juice
concentration, amount of energy, amount of carbohydrates, and whether sugar and
preservatives were added on fruit juice. While fruit juice concentration did not have any
influence on the price per 100 ml serving of fruit juice, fruit juices with added sugar and
preservatives were significantly cheaper than those without them by UGX 13.99
(US$0.004) and UGX 14.97 (US$0.004), respectively. Amounts of energy and
carbohydrates had no significant influence on price per serving of fruit juice. Regarding
the taste variables, the only variable that was included in the model used in this study
was the fruit flavour of juice, but, it was found not to influence the price per serving of
juice.
58
However, fruit juice concentration has been found in earlier studies to positively
influence the market price of fruit juice. This suggests that the influence of nutrition
attributes on the price of fruit juice was weak in Uganda since only fruit juices with
added sugar and preservatives were discounted on the market. The absence of
influence of fruit juice concentration and flavour on the market price of processed fruit
juice in Uganda may be because market prices of fruit juices were relatively uniform per
volume serving irrespective of the fruit juice concentration and flavour. There was only
one isolated brand where apple juice was priced slightly above other flavours per given
serving. With the growing middle-class, this presents an opportunity for Ugandan fruit
juice processors to expand the breadth of product offerings including those targeted at
nutrition and health conscious consumers as identified in other countries.
Lastly, local fruit juice brands were significantly cheaper per serving than imported
brands by UGX 36.08 (US$0.01). The discrepancy in market prices per 100 ml serving of
local and imported fruit juice brands could be attributed to transport costs and import
duty levied on imports. Nonetheless, local fruit juice brands might not need to compete
with foreign brands via price only; embodiment of quality attributes could enable them
to gain a competitive edge over the latter, particularly among brand-conscious
consumers as found in previous studies.
4.8 Summary of Key Issues in the Domestic Fruit Juice Industry
 Natural fruit juice manufacturers face stiff competition from imported flavoured
fruit juice brands sold by supermarkets.
 Delayed products payments systems by key product consumers (e.g.
supermarkets) that ties up working capital.
 The strong competition in the Uganda fruit juices market has also been stiffened
in part by the many unlicensed fruit juice-makers in the informal sector who
employ a range of unethical business practices including tax evasion that
inevitably drives down market prices.
 The local Ugandan fruit juice consumers’ biggest issue about the pricing of
locally-made fruit juices is linked to the high packaging costs for the natural fruit
juices [Tetra Pack’s cardboard-based cartons (75.5%) and PET (Polyethylene
Terephthalate) plastic bottles] caused by the high import duty tariffs levied on
imported packaging materials for fruit juices and they were less concerned about
the other important attributes such as nutrition and taste.
 Raw fruit (raw material) supply-chain constraints.
 Cost constraints (high costs of production).
 Product packaging and branding issues.
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 Manufacturing issues.
 Product quality compliance issues that are quite common among the unregulated
fruit juice processors in the informal sector.
 Low market purchasing power leading to weak market demand and consumer
preferences in the domestic beverages market.
 Fruit juices not featuring among top essential consumer commodities.
 Poor infrastructure in some fruit growing areas of the country.
 Lack of industrial project financing for start-up and scale-ups.
 Increase in sub-standard goods and counterfeits leading to unfair market
competition.
 Poorly defined linkage between trade and industrial development.
 Lack of support systems to nurture innovation to full commercialization.
 Globalization which has increased access to information and products and
opened up markets for trade.
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5.0 CONCLUSIONS AND RECOMMENDATIONS
5.1 Conclusions
5.1.1 Uganda Pineapple Production & Value Chain Sub-Sector
Current farming practices in Uganda are rather weak. Farmers must improve overall
agronomic practices, including sustainable pest control, water use, and efficient pre-
and post-harvest practices. It is also necessary to realize a higher added value by
developing national and international markets for fresh produce from Uganda. This
requires training, as well as (private and public) investments for advancing Uganda’s
currently low-cost low-output vegetables and fruits sector.
The domestic and regional market is providing opportunities. The demand for fruits
and vegetables has increased in the last decade and is likely to further increase. The
demand for Ugandan fresh produce was observed to be increasing but the poor
production methods prevent the sector from increasing volumes enough to meet the
demand. Also, the supermarket has become a well-established market segment in
Kampala and this can provide opportunities for the more advanced farmers in terms of
supply. A recent systematic review of contracts between the more advanced farmers
and supermarkets (e.g. Ton et al., 2018) showed that smallholders can benefit from
contractual arrangements that include services and inputs. In the most effective cases
there was a price premium for farmers as well.
Food safety risks are high in the market due to overuse of chemicals and poor post-
harvest practices. Sustainable pest control at farm level and more awareness among
traders at the markets to reduce the risks of contamination of fresh produce are
required.
Reaching the export market is a big challenge for the fruit and vegetable sector. The
export sector keeps on failing to comply with current legal market norms and standards
requirements. The Uganda export sector has a poor reputation in the EU market;
supplying the conventional EU retail market is not feasible due to a lack of tracking and
tracing, certification, consistent volumes and a lack of professionalism amongst many
exporters. Additional challenges include the quality of inputs and regulations that
safeguard the quality of inputs, phytosanitary protocols during production and
transport, and limited market understanding – specifically on buyer requirements in
export markets.
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The government of Uganda has failed to support the sector in a conducive and coherent
way. The actors in the sector therefore feel neglected. Supportive incentive policies and
frameworks for consistent policy implementation are missing and only limited data are
available on the horticulture sector.
5.1.2 Uganda Fruit Juice Industry Sub-Sector
Findings from the Uganda fruit juice industry sub-sector study show that the market
price of processed fruit juice in Uganda depends very much on the packaging costs and
is weakly associated with important quality attributes, such as nutrition and taste. This
has far reaching implications for local agribusinesses and policy makers for promotion
of nutrition security in Uganda. In their competitive strategy, local fruit juice processing
and distributing agribusinesses need to produce and offer a wide range of products
targeting various market segments. While processed fruit juice can be packaged in
various portion sizes, it can also be offered in assorted concentrations, flavours, and
shelf-life. This makes it possible for positioning it in the market as a functional,
refreshing, thirst quenching, and convenient food product. It also allows for
introduction of brands and product lines with a broad spectrum of prices, ranging from
cheap to premium fruit juice products for high end, nutrition and health conscious
consumers. On their part, policy makers could re-consider import duty charged on fruit
juice packaging material as a short-term measure to reduce local fruit juice processors’
costs. Nonetheless, to have a comprehensive view of the processed fruit juice market in
Uganda, further research is needed to investigate consumer preferences and willingness
to pay for attributes of processed fruit juice.
5.2 Recommendations
For the recommendations the study focuses on different levels of the pineapples sub-
sector sector, namely the farm, the value chain and the enabling environment. At the
farm and value chain level we focus on the pineapple case study. The enabling
environment can be an important socio-economic driver and therefore we address this
for the entire food system because there are many overarching recommendations.
5.2.1 Farm Level
Below we have addressed the most limiting factor and related recommendations at
farm level for pineapples:
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 Low input use among pineapple farmers should be addressed. Currently,
pineapple farmers keep on searching for and clearing large portions of virgin
lands for their production. This practice is regarded as very unsustainable and is
not needed. If farmers are able to use efficient fertilizers and apply crop residue
management practices they can continue farming on the same plots.
5.2.2 Value Chain Level
 Pineapples are often exported but farmers and potential exporters are currently
not aware of the market requirements at the export market. Initiatives to further
support the export-orientated value chain of pineapples are recommended. This
includes: awareness training on legal and private standards and all other market
demands set by exporters (e.g. cooling, packaging and preferred fruit sizes).
5.2.3 Enabling Environment
It is recommended that a well-functioning extension system should be available in

Uganda. This requires decisive support from the Government of Uganda. It is clear that
the Government of Uganda is making serious steps in this direction, after the past
privatization of the governmental extension service; however, it appears that until now
many farmers do not receive any field-level support. MAAIF needs to recruit additional
extension workers (or contract private agencies and/or NGOs to complement the public
extension service) who should be equipped with adequate knowledge and skills in
fruits and vegetables and should receive facilitation (transport, training materials, etc.)
to undertake their work and to foster development. In addition, the agriculture-oriented
bilateral and international development agencies can support the training of extension
workers jointly with private extension services (e.g. training provided by commercial
seed companies). Key elements of the expertise transferred to farmers should be the
awareness of the importance of good quality seed and good agronomic practices for
fruits and vegetables, advice regarding how to increase crop yields and farm income
and how to reduce negative environmental impacts.
Support towards the development of more efficient regulations and enforcement is

recommended:
• The horticulture export value chain is a serious contributor for Uganda obtaining
foreign currency, however, the sector lacks consistent support and coordination
from the Government. Advanced policies and regulations and their enforcement
are needed to address critical issues in the sector, like controlling quarantine
organisms and MRL control. For this purpose, investments need to be made in
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hardware (laboratories) and manpower (more horticulture inspectors). The
current export inspections and procedures need to be improved to align with
international standards. Market development should receive attention, which
includes the production of the right varieties at the right moment, the use of the
right packaging material, development and sharing of market information for
both domestic and foreign markets.
• Climate change is likely to have a serious impact on the fruit and vegetable
sector. Recent studies show that farmers need to adopt climate-smart
technologies, including irrigation and water harvesting.
• The sales of agrochemicals and seeds should be done by registered agro-input
dealers by ensuring that only licensed agro-input dealers sell authentic
agrochemicals and that agro-input dealers can sell seed whose quality has been
certified by MAAIF (e.g. ban counterfeits). Also it is important to keep enabling
importers of quality foreign seeds by aligning the import regulations with
international standards.
• Support healthy food and also safe food for the Ugandan consumers, so that
over-use of chemicals and poor harvest and post-harvest practices will be
limited. Sustainable pest control at farm level and more awareness among
traders at markets to reduce contamination risk of fresh produce is therefore
essential. This requires the support to sector-wide multi-stakeholder platforms of
key stakeholders and the development of an integrated National Food Policy
addressing food safety issues. Consumer demand for safe food is likely to be an
important socio-economic driver for systemic change in the horticulture sector
and should be addressed accordingly.
5.2.4 Project Promoter (Kabale Distributors Limited)
For the proposed Kabale Distributors Limited Pineapple Value-Addition Project to

gain accession and emerge as a strongly-competitive and profitable enterprise at the
top-end of the Uganda pineapple value-chain, the following recommendations are
made:
1. KDL Pineapple Value-Addition Project should place more emphasis on product

diversification instead of focusing only on the processing and marketing of
pineapple fruit juice as a stand-alone product by allocating more pineapple
value-addition processing time/product out-turn ratios to high-price-fetchers
like export-grade dried pineapples, pineapple pulp and spray dried pineapple
juice concentrates that all currently earn not less than US$10/Kilo in the EU and
Far East markets. Such a processed pineapple product output strategy serves to
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guarantee quick returns on investment and generate substantial business
momentum early on.
2. KDL Pineapple Value-Addition Project should pay much attention to the key
success factors in tropical fruit industrial operations, namely: product quality,
production process, pricing and marketing channels.
3. As a valuable export market accession strategy to the higher standard EU

processed pineapple export market, KDL Pineapple Value-Addition Project
could consider forging JV Franchise/License partnerships with established
European/International brand names in the processed (value-added) pineapple
products industry. Advantages: Technical Assistance + Technology Transfer +
Ease of access to high-price processed pineapple export markets.
4. KDL Pineapple Value-Addition Project could consider striking strategic

partnerships with key industry facilitators like the UIRI [Uganda Industrial
Research Institute] for personnel training and product quality development.
5. After the initial success of the proposed KDL Pineapple Value-Addition Project
pineapple nucleus demo-centre and out grower farmer network model, Kabale
Distributors Limited should consider extending staggered planting, irrigation
and out grower schemes in different regions of the country as an effective and
time-tested measure for mitigating seasonality and ensuring consistent supply of
raw materials.
6. Efficiency in the value chain is reached from production to processing. For this
purpose, KDL Pineapple Value-Addition Project should put much emphasis on
reduction of post-harvest losses, optimize transport and aggregation and when
possible seek synergies with other value chains to use existing facilities and
infrastructures.
7. KDL Pineapple Value-Addition Project should implement bio-dynamic organic

certification of pineapple farmers in its pineapple farmer out-grower network to
enable it access EU organic fruit markets with much ease.
8. KDL Pineapple Value-Addition Project needs to invest in processing

technology that can deliver a quality product – that is well adaptable to the local
conditions, but yet provide adequate results.
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9. HACCP certification and Global GAP are a necessity: staff needs to be trained in
soft and technical skills.
10. KDL Pineapple Value-Addition Project should optimize the packaging of

processed pineapple products for transportation and preservation of products.
11. KDL Pineapple Value-Addition Project should actively promote investment in

the organic and fair trade niche product markets, which are a new but fast-rising
trend on the export market that offers premium prices to guarantee a quick-
return on project investment.
12. KDL Pineapple Value-Addition Project should forge pro-active cooperative

alliances with other fruit and vegetable value chain actors in Uganda to mobilize
collective strength and unity of purpose that can successfully lobby government
on outstanding industry issues like: tax reduction on some industrial production
inputs like fruit juice packaging materials; subsidization of processed fruit
exporters to mitigate expensive fruit cargo airfreight rates to various foreign
export market destinations; and, implementation of efficient market regulation,
tax compliance and enforcement of strict quality control protocols within the
domestic fruit juice industry.
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PART II: BUSINESS PLAN ON PROCESSING &

MARKETING OF SELECTED PINEAPPLE PRODUCTS
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1.0 INTRODUCTION/ BACKGROUND
1.1 Overview
The objective of this Business Plan is to spur investments in fruit juice and dried
pineapple processing by providing potential promoters [KDL Pineapple Value-
Addition Project] with a comprehensive guide that details how to set up and operate
the facility, along with a business plan demonstrating the financial viability of the
investment to attract banks, investors and other sources of financing.
In recent years, developing countries have been asking for rural techniques for
processing and preserving fruits, vegetables, roots and tubers, in order to increase the
rural population's self-sufficiency as well as their contribution to regional development.
Uganda’s food processing sector remains under-developed despite large market
potential. The country still depends to a good extent on imports to meet its demand for
quality processed foods. Industry sources indicate that activities in the sector had more
than doubled within the last decade, with the sector growing to nearly US$40 million in
sales in 2018. Despite the high-cost of production and modest infrastructure, there is
increasing need for local food processors to differentiate their products in order to meet
the growing tastes of the young and high-income consumers.
Food processing in Uganda is high-cost and under-developed due mainly to sometimes

inadequate and expensive infrastructure such power supply. The challenge is not only
to distribute the production of this sector throughout the whole region, but also to
preserve seasonal surplus through different methods of processing.
The heavy tariff (based on the EAC Common External Tariff manual) imposed on most
imported food items (apart from fruit juice concentrates that still attract relatively low
tax duties as industrial raw materials), the investment climate for fruits and fruit
products is becoming increasingly favorable for local producers and processors. The
development of their industrial uses will stimulate large-scale production of the raw
material crops and enhance diversification of investment into fruits processing plants in
the rural and other peri-urban areas. This will in turn improve the quality of life in the
rural areas and reduce the rate of rural-urban migration.
Uganda’s increasing urbanization and income and a growing middle-class are creating
a class of more sophisticated consumers who deviate from consumption of traditional
Ugandan menu items and who seek greater number of convenience-type foods like
well-packaged and branded fruit juices. An increase in boutique hotels, restaurants, and
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investment in shopping malls and supermarkets in Kampala, Mbarara, Mbale, Gulu
and other cities, will help spur the growth in domestic demand for processed pineapple
products. There is a growing and sustainable demand as well as the export potential for
dried fruits and vegetables, hence the need to develop a strong and compelling business
case to spur investment in this value chain sector.
This report is based on the results and findings which have largely been drawn from the
project study and project investment potential undertaken by the Management
Consulting Team. This report is intended to be used by the sponsors [KDL Pineapple
Value-Addition Project] who may wish to approach financiers and prospective
investors to secure the necessary funding for the project.
1.2 Proposed Products and Capacities
1.2.1 Product Offering
KDL Pineapple Value-Addition Project is a standard pineapple fruit value-adding

company that is committed to producing well processed and packaged fruits products
for both the Ugandan market and the global market.
We are in the industry to make profit and we are going to do all we can to achieve our
business goals, aims and objectives. Here are some of our products;
 Pineapple Juice
 Dried and dehydrated Pineapples (used as fruit flavors)
1.2.2 Production Capacity
As would be analyzed later in this report, the initial install capacities for the products to
be produced from the project shall be: -
Table 14: Proposed Plant Production Capacity (Year 1)

S. No. Product Installed Capacity per Annum (MT) Percentage (%)
1 Dried Pineapples 12,096 80.0
2 Pineapple Juice 2,700 20.0
Total 14,796 100.0%
The capacity is based on single basis of two shifts of 8 hours each per day and for 312
working days in a year. Commercial operation is planned to commence at 50% capacity
utilization, rising by 10% annually to a maximum of 90%.
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As would be seen later, the annual production estimates are calculated on production
time allocation of 80% for mango, 30% for pineapple and 30% for banana. This time
allocation could easily be adjusted to season of the products as well as predominance of
the fruit in the identified project location.
1.3 Project Location
The government-allotted 20 Acre site at the Namulonge NaCCRI location is quite

strategic for basing on the proposed KDL Pineapple Value-Addition Project due to the
following factors in its favour:
• Access to raw materials.

• Access to the market.
• Labour supply at the processing facility location.
• There is infrastructure available in the form of buildings that can accommodate
the pineapple fruit processing plant.
• Consistent supplies of high quality pineapple fruit are potentially available from
communities in the vicinity (especially Luwero District).
• Land is available for expansion.
• All utility services like water and electricity are reliable and readily available.
• Access to transport infrastructure (road, railway, airport).
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2.0 TECHNICAL CONSIDERATIONS
2.1 Introduction
The model business plan is meant to spur investment in spray-dried pineapple

processing by providing the potential project promoter [Kabale Distributors Limited]
with a comprehensive guide that details how to set up and operate the facility, along
with a business plan demonstrating the financial viability of the investment to attract
banks, investors and other sources of financing.
Food processing in Uganda is high-cost and underdeveloped due mainly to poor

infrastructure (power, water, roads). There is also an increasing need by the local food
processors to differentiate their products in order to meet the expanding tastes of
increasing numbers of younger and high-income consumers who want new items to
enjoy. The challenge is not only to distribute the production of this sector throughout
the whole region, but also to preserve seasonal surplus through different methods of
processing.
Preserving available food through processing is the first (and most cost effective) step to
ensure food security for the entire population, even in remote areas of the country.
Processing plays an important role in maximizing the potential capacity of the primary
production sector, in order to stabilize food supplies throughout the year. The different
methods of processing, including canning, drying, and juicing, increase the value of
fresh produce by prolonging shelf life and creating convenience (ready-to-eat) products.
Investors should consider food drying as an integral part of value chain solutions.
Processing fruits and vegetables is intended to do two things: To preserve them by

slowing down the natural processes of decay caused by microorganisms, enzymes in
the food, or other factors such as heat, moisture and sunlight; and to change them into
different foods, which are attractive and in demand by consumers. Like chefs and
caterers, processors should use their skills to develop attractive recipes and make
products that consumers want to eat. By doing this successfully, they can increase sales
and earn an income.
The stages in the drying process are: inspect, wash, sort/grade, and peel (followed by
optional-cut/slice/core, blanch, acid dip, treatment with sulfur dioxide, salt), then dry,
pack, label and store. Inspect to remove moldy, rotten, and badly damaged fruit. Also
remove all visible foreign material (physical contaminants): leaves, stems, stalks, sticks
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and stones. Then use wash tanks or special washers with clean, potable water to remove
surface contaminants, e.g., pesticide residues, insects, soil or dirt.
Next step is to sort and grade to select fruits with the same color, size or maturity.
Uniform size and maturity are important to get uniform drying times for all pieces.
Then peel to prevent moisture from leaving the food and allow faster blanching, sulfur
dioxide treatment and drying. Peel using knives, peelers, small peeling machines.
Check that all traces of peel are removed. The next processes are optional depending on
the type of fruit or vegetable being processed.
Cut, slice, and/or core using corers, choppers, cutters, slicing or dicing machines and
check for uniform pieces. Some vegetables are blanched before drying to prevent color
changes and to reduce the number of contaminating micro-organisms, because the
temperature of drying is not high enough to kill them. Care is needed to prevent re-
contamination of blanched foods before drying. An acid dip can be used to prevent
browning of light colored fruits and vegetables, and involves dipping fruit in 2% citric
acid, lemon or lime juice for 5-10 minutes. Sulfur dioxide protects the natural color of
some fruits (banana, pineapple etc); although it should not be used with red fruits
because it bleaches the color and should not be used for organic dried fruits. Some
vegetables and fruits (such as limes for lime pickle) are salted before drying. The high
salt concentration preserves the food by both drawing out water and by the anti-
microbial properties of the salt. Vegetables must be washed to lower the salt
concentration before they are eaten. Then the products are ready to be dried.
There is air drying, spray drying, drum drying, and freeze drying. Each method has
benefits and drawbacks. For air drying the time needed for drying depends on the
temperature, humidity and speed of the air, the type of dryer and the size of the food
pieces. Dried fruits and vegetables absorb moisture from the air and should therefore be
packed in airtight, moisture-proof containers. Some also need protection from light to
maintain their color. Polythene is a widely available and cheap film in Uganda, but it is
not a good barrier to air and moisture. Polypropylene film gives better protection and a
longer shelf life. Dried fruits and vegetables need a cardboard carton for storage and
distribution, to prevent crushing and to exclude light. Therefore they need to be packed,
labeled and stored in a cool dry place away from sunlight with fragile foods protected
from crushing. Dried fruit and vegetables are products of the future.
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2.2 Location of the Project
As earlier stated, the project of this nature is better-sited near the abundance of the raw
materials, i.e. orchards of: mango, pineapple and banana. This is to principally reduce
the cost of the raw material and the cost of its transportation to the processing factory.
This does not mean that project cannot be sited anywhere in the country. Under this
circumstance, the project promoters should willing and ready to pay a little extra for the
raw material cost and its transportation.
2.3 Installed Plant Capacity
There are several plant sizes available in the market ranging from mini dehydrator to
large scale cabinet dryers.
However, the dryer of choice, and which is recommended here, is the one recently
modified for a World Bank WAAPP project. The dryer has a drying capacity of 200
Metric Tons of sliced fresh fruit per day of 24 hours.
The above drying capacity results in the annual processing capacity of 60,000 tons of
fresh fruits, based on 2 shift operations of 8 hours each and 300 working days per
annum. This further result in specific annual outputs of 28,040 kg of dried mango,
15,120 kg of dried pineapple and 21,600 kg of dried banana, calculated as follows:
Table 15: Input-Output Ratio Table for Various Dried Fruits

Fresh Fruit Initial Water Terminal Amount of Weight Loss Output for 1 Output Input
Content Water Water for 1 Ton of Ton of Input Ratio
Content Dehydrated Product
Mango 83% 15% 68% 680 kg 320 kg 32%
Pineapple 87% 15% 72% 720 kg 280 kg 28%
Banana 75% 15% 60% 600 kg 400 kg 40%
And
Table 16: Annual Dried Fruit Processing Capacity and Output

Fresh Fruit Annual % Time Actual Annual Output Input Annual
Processing Allocation Processing Ratio Production
Capacity
Mango 60,000 Tons 40 24,000 Tons 32% 7,680 Tons
Pineapple 60,000 Tons 30 18,000 Tons 28% 5,040 Tons
Banana 60,000 Tons 30 18,000 Tons 40% 7,200 Tons
Total 19,920 Tons
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2.4 Modern Food Drying Technology
1. Sun drying
2. Cabinet drying
3. Moisture content
4. Working in line / HACCP
5. Quality
Sun drying
Traditional way of drying
 Advantages:
o Low investment
o Sun energy is cheap
o Well know principle
 Disadvantages:
o Uncontrolled drying process
o No guaranties for final quality
o Takes a long time
o Risks for contaminations (HACCP)
o In case of too less sun, not all crop can be dried, might have product losses
(spoilages)
Figure 10: Drying Curve of Sun Drying
Cabinet drying
 With knowledge of modern drying technology we are able to optimize the
drying process and are independent of weather conditions.
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 Once the process has started it doesn’t stop. This is the main reason why the total
process time is much shorter. From over one week to one or two days.
 More important is that the moisture content of the drying air also is controlled. In
the beginning the moisture content is high. This prevents the outside (skin) from
becoming hard. This hardening avoids evaporation of water from the product
and the structure of the final product gets lower quality, mainly bad eating
properties.
 The total drying process is running smooth and each batch can be repeated with
the same results.
 Caused by the fact that the drying process is not interrupted or disturbed, the
quality of the final product shall increase.
 An optimal drying process for apricots, peaches and prunes is a drying
temperature starting at maximum 70°C and after one hour going slowly back to
55°C.
 The moisture content is going from 70% to 20%.
 During the drying process the moisture content must be measured regularly.
This can be done manually and according to the result, the valve for fresh air
must be opened more or less.
 If the moisture measuring is done automatically, the valve can be adjusted
mechanically by a serving motor. This is the best way to control the process.
 The drying time depends on many aspects:
1. type of fruit,
2. preparation – initial treatment,
3. size,
4. quantity
 Once the drying time is established, the time can be set as fixed in the program of
the dryer.
Figure 11: Drying Curve of Cabinet Drying
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Moisture Content
 The moisture content of raw material and final product is very important. For
raw material it is a sign for ripeness and how many water must be evaporated.
For final product it is important for eating properties and shelf life.
 The best way to measuring moisture is using an infra-red moisture analyzer.
 Within 10 minutes a sample is analyzed
 For each final product the optimum moisture content must be described include
tolerances.
 The moisture content should depend on eating properties, shelf life and wishes
of the client.
 Typical maximum moisture contents according to the European food law are:
 Apricots 25%
 Prunes 25%
 Apple 20%
 Raisins 17%
 Figs 24%
 Pears 22 %
 Bananas 24%
Working In Line/UNBS
Modern processing is not only drying in a cabinet. All steps in the total process must be
efficient and process controlled, including hygiene.
 The factory must have a logical route with less transport in between. Keep dirty
products separate from clean products.
 Once fruit is cleaned and washed it goes into a hygienic controlled area. Here,
product is de-stoned and put on trays.
 In the same, but preferable a next room, products goes into the dryer.
 After drying, a next hygienic room is necessary for sorting and packaging.
 Final products must be stored in a cool and clean area
 This way of working creates possibilities for cost price reduction regarding
labour and losses of raw material.
 UNBS certification can be realized when hygienic, education of personnel and
risk management is implemented.
Quality:
 High quality of final product can be guaranteed.
 Clients with high quality requirements can realize new turnover.
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 High quality is the best way for grow and guarantees in the future. Export
countries, but also the local market, is asking more and more for higher quality
of products.
 In order to comply with this demand it is a MUST that processing of dried fruit is
done in a modern way.
 Be aware that dried product has a lower quality than fresh product. We cannot
add quality.
 What we add is:
1. Shelf life
2. New properties
3. Possibilities for new products
4. Transport facilities
5. Costs
 All these additional properties should satisfy the client, who will be willing to
pay a higher price.
2.5 Production Process
The production of dried fruits from fresh fruits (pineapple as it is in this case) follows
the following simple process steps: -
Sorting & Grading:

Not all fruits will dry well, so only the ones known to produce excellent results when
dried are to be concentrated on. Make sure that the fruit you use is mature, firm, and
ripe. Fruit that is damaged, unripe, or overripe will lack nutritional value, won't dry as
well, and won't taste as good since the sugars aren't at their peak stage of development.
The sorting & grading must be done manually with physical inspection.
Washing of Fruits:
This is to be done in a long tray equipped with sponge & brushes. For lower capacity
projects, the washing could be done manually but more hands would be needed.
Peeling & Slicing:

This is partly manual and partly automatic using equipment. For pineapple and
banana, auto-slicing equipment could be easily employed. Mango peeling/slicing is
slightly more complicated because of the hard endoderm in the fruit bunch. Most tree
and bush fruits need to be cut into slices roughly 1⁄8 to 1⁄4 inch (0.3 to 0.6 cm) thin, but
many small vine fruits (berries and grapes) can be left whole. The peeled sliced fruits
are then spread in stainless steel trays and taken to the dryer.
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Fruit Drying:
This is the major operational aspect of the production process. Here the trays arranged
on the racks inside the dryer and left to dry with low heat and for considerable length of
time. The temperature in the dryer is carefully monitored to ensure that it does not
exceed set limit. Hitherto, the racks in the cabinet dryer were stationery and this
required intermittent re-arrangement of the trays to ensure even distribution of the heat
on the drying fruits. In the dryer under focus (being recommended here) the trays to
slowly rotate in order to enhance that heat distribution.
The drying process will take several hours by necessity; do not try to increase heat to
speed up drying process, since doing so will burn the fruit and make it inedible. Fruit
should be chewy, not crunchy or squishy.
Cooling & Packaging of Dried Fruits:

The dried fruits from the dryer are taken to Packing Room where they are allowed to
cool down before being hygienically packed in packs & cartons
Storage & Delivery:

The finished products (in cartons) are then stored in cool dry Finished Goods Store,
preparatory to delivery to customers.
Quality Control:
At any point in the production process, a high level of hygiene is maintained. This is
because of the edible nature of the final product that does not further treatment before
consumption. Good quality control mechanism should be maintained when commercial
activities are in progress.
2.6 Process Flow Chart
The above production process could be demonstrated in a simple process flow chart as
follows: -
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Figure 12: Process Flow Chart for Dried Pineapple
Figure 13: Dried Organic Pineapple
2.7 Raw Materials and Packaging Materials
Fruits:
The primary ingredients in the fruit juice/dried fruit project are, of course, freshly
harvested pineapples.
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The pineapple (Ananas comosus) is a tropical plant with edible multiple fruit consisting
of coalesced berries, also called pineapples, and the most economically significant plant
in the Bromeliaceae family.
Pineapples may be cultivated from a crown cutting of the fruit, possibly flowering in
20–24 months and fruiting in the following six months. Pineapple does not ripen
significantly post-harvest.
Pineapples can be consumed fresh, cooked, juiced, or preserved. They are found in a
wide array of cuisines.
Pineapples rank second on the list of the most consumed fruits in the world and
constitute up to 20% of the world’s production of all tropical fruits. Approximately 70%
of all grown pineapples are eaten fresh by residents of the countries where they grow.
Brazil and Paraguay are homelands for this fruit, and this was where pineapple was
discovered for the first time. It is still unknown how it managed to reach Africa.
The leading producers of pineapple are Nigeria, Brazil, China, Thailand, the
Philippines, India, Mexico, Costa Rico, Indonesia, and Kenya. These countries are
responsible for the production of pineapples for global use. Hawaii is one of the world’s
largest producers and suppliers of the fruit. It mainly supplies the USA and Japan.
Pineapple farming is one very sure money making farming enterprise that is yet to gain
attention of most farmers in Uganda. It is a fruit with a lot of economic importance.
Aside been eaten raw, to make salads and fruit cocktail, it is also processed into fruit
juice, Jam, Wine etc.
Although there are no large scale production of this fruit on farm sites, most of its
production are from small area farmlands scattered around the country with most
coming from Luwero and Kayunga Districts in central Uganda.
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Other additives:
Unlike what obtains in fruit juice production, there are no additives employed I dried
fruit snacks production. This is due to the requirement of keeping it as natural as
possible for the envisaged health benefits.
Packaging Material:
The products of the company would be sold in branded & re-sealable 50g, 100g, 250g
and 500g stand up pouches. The pouches are printed poly bags obtainable from various
packaging industry facilities located in Kampala. The cost the pouches range from UGX
200 to UGX 2,000 each. The packed dried fruits (in pouches) are further packed in
cartons for ease of transportation.
Table 17: Raw Material Requirement at Installed Capacity

Item Quantity Required Units Unit Cost Total Cost at
at Installed (UGX) Installed Capacity
Capacity (MT) (UGX)
Fresh Pineapple 30,000 Tons 2,000,000 60,000,000,000
Diesel Fuel for Furnace 5,000,000 Litres 4,000 20,000,000,000
Pouches 99,600,000 Pieces 1,000 99,600,000,000
Cartons 4,150,000 Pieces 500 2,075,000,000
TOTAL 181,675,000,000
2.8 Infrastructure & Transportation
Access Roads:
The project shall be located where it shall be easily accessible.
Water Supply:
The company shall sink at least one borehole at the project site to take care of its water
requirement. Water is essential in its production process as wells as for cleaning
purposes.
Information Technology & Communications:

Enough budget for IT and communication infrastructures for the plant has been
incorporated into the plan.
Electricity:
As a back-up plan, provision has been made in the project cost for a 100KVA standby
electric generating set. This is considered adequate for a project of this size especially as
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the main machine; the dryer is powered by diesel & not electricity. The generator is
required merely to power the approximated …KVA of electric motors.
2.9 Environmental Matters
The effect of the operation of the plant on the environment is minimal and close to zero.
The solid and light waste from the plant is not hazardous and will be discharged
carefully through the drainage system that is already provided behind the plant
premises.
2.10 UNBS’ Certification of Products
The company would carry along Uganda National Bureau of Standards (UNBS) for the
pre-commissioning recognition of its products in order to facilitate UNBS’ early and
final approval.
2.11 Implementation Schedule
The overall implementation period for the project would span over a period of less than
6 months, starting from when adequate funds would have been secured or assured.
2.12 Key Success Factors
After studying the few dried fruit producers in the Ugandan market today, it is
believed that as a new entrant into the industry, some critical factors revolving around
production and sales need to be considered. These factors are:
i. Project Location: Project is located close the farmers of the fruits thereby
reducing raw material & transportation cost.
ii. The production technology being introduced, the manpower and technical
capacity of the management team serves as another key success factor in
increasing production volume which will determine the long-term viability of
the producer. In order to drive volume and become a key industry player, it is
important to have modern production equipment, improve production
efficiency and reduce cost per unit, thus ensuring cost and price
competitiveness.
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iii. Skilled Human Capital: Technical expertise will be deployed and local
manpower developed thus improving local capacity. The industry labour force
will constitute several semi-skilled workers. The company will also employ the
services of several skilled and experienced staff members in critical areas of
operations like research and quality assurance. This is to continuously ensure
the quality of the product so as to attain and retain consumer loyalty. Also, in
order to prolong the useful life of its machines and equipment and avoid
production hiccups, it is important to have experienced and skilled in-house
technicians and engineers. Alternatively close contact should be maintained
with the machinery suppliers. Thankfully, they are within the country.
iv. Product Quality: The demand for a particular brand is quality driven as
consumers look for durability, nutritional content, colour and taste. It is
therefore imperative for the company to have and maintain consistent quality
in the product delivery.
v. Innovation: The food and beverage industry has been mainly driven by
changing consumer taste. As a result, it is important for players in the industry
to continually maintain innovation in their product. This could be directly
linked to the product offering or to the packaging used for the product.
Companies that innovate regularly stand the chance of having a first mover
advantage in any given category.
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3.0 LAND & KDL NUCLEUS FARM INFRASTRUCTURE
3.1 Land, Location & Infrastructure
3.1.1 Land Availability
i. The location of the proposed Kabale Distributors Ltd [KDL] Pineapple Value-
Addition Project will be at the Namulonge NaCCRI site – which is only about
30 kms by road north-east of Kampala, Uganda’s capital city. The geographical
coordinates of Namulonge are: 00 31 30N, 32 36 54E (Latitude: 0.5250; Longitude:
32.6150). Namulonge possesses strategic and significant manufacturing location
advantage as it already has the basic physical and other utility infrastructure in
place besides being ideal location for the sourcing of raw materials and the fast
distribution and supply of the processed agro-industrial products to both the
domestic consumer markets and identified export markets.
ii. The allocated 20 Acres of land at Namulonge provides ample space for crop land,
farm infrastructure, parking of transportation vehicles and for future expansion.
However, the ratio of farm land and other open spaces to built up area should be
around 9:1 ratio.
The land proposed for the set-up of this project is 20 Acres (approx. 8.09 Ha). This area
will be sufficient for installation of plant machinery and equipment of the proposed
Kabale Distributors Ltd [KDL] Pineapple Value-Addition Project. The area
requirement and farm development financing details are already given in Table 18 in
the next Sub-Section 3.2 below.
3.1.2 Infrastructure Facilities
Modern pineapple crop farming inputs using Good Agricultural

Management/Practices (GAM/GAP) need to be handled tactically, right from the
selection of the site to the final stage when the farm products or processed outputs are
sold. That being the case, the allocation of demonstration farm space is quite ideal in the
sense that movement of raw materials (fresh pineapple produce procured from the out
grower farmers based in Luwero district, Kayunga district and other emerging
pineapple production areas of Uganda) and the transportation of processed pineapple
products out of the facility to domestic and export markets will handled with much
ease given the proximity of the site to Kampala and Entebbe International Airport.
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Already, the Namulonge NaCCRI location is quite well served with the basic requisite
infrastructure on site to facilitate the full-scale implementation of the proposed KDL
Project demonstration pineapple nucleus farm activities including:
 Electricity connection to the national power grid
 Drinking quality water
 All-weather road access
3.2 Pineapple Nucleus Demo Farm Site Developments
The entire Kabale Distributors Ltd [KDL] pineapple production & processing nucleus
farm site at Namulonge NaCCRI location shall be fenced off with barbed wire and will
also be divided into four pineapple production demonstration plots measuring 2.5
Acres each (totaling to 10 Acres) as well as the pineapple nursery/greenhouses plot
measuring 2 Acres in size.
The setting up of the mixed crop farm building and physical infrastructure and facilities
is estimated at a total cost of about US$893,100. Since these are fixed items depreciation
will be estimated using the straight‐line method as detailed in Table 18 below.
Table 18: KDL Pineapple Nucleus Demo Farm Building Infrastructure [Planned]
S/No. Description/Function Area (SQM) Unit Rate Amount
(US$) (US$)
1 Farm Warehouse 1,000 100 100,000
2 Pineapple Pack House 1,200 200 240,000
3 Greenhouses & Nursery 8,000 10 80,000
4 Unloading Bay 1,000 10 10,000
5 Vehicle Parking Area 4,000 10 40,000
6 Gate House and Weigh Bridge _ 20,000 20,000
7 Buildings – Machine Shed 2,000 50 100,000
8 Buildings – Farm Houses (1 unit) 120 150 18,000
9 Borehole and 2 Water Tanks (30,000 lt Capacity) 30,000 30,000
10 Generator House 20 100 2,000
11 A 300 KVA Electricity Transformer and low tension poles/tension wires 10,000 10,000
12 Sanitary Facilities & Wastewater treatment system 20,000 20,000
13 CIP & Solid Waste Management System 25,000 25,000
14 Farm Roads and driveway 30,000 30,000
15 Perimeter fencing and land development 60,000 60,000
16 Sub-Total Farm Infrastructure Cost 785,000
17 Total Cost of Land (20 Acres) 20 Acres 5,405 108,100
18 TOTAL COST 893,100
Exchange rate US$1.00 = UGX 3,700.00
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3.3 Pineapple Nucleus Demo Farm Machinery & Equipment
Equipment and machinery for the crops production section includes 2 brand new
Massey Ferguson tractors for land preparation, tillage and crop harvest operations; 5
mechanical pineapple sucker planters; Pineapple Pack House equipment; primary
coffee processing equipment; secondary coffee processing equipment; miscellaneous
coffee processing equipment; a 200 kVA electric diesel genset; a 110 kW solar-powered
farm water supply and irrigation system; field pest deterrents; and assorted farm-use
equipment and small tools altogether totaling US$2,692,570 as shown in the Table 19
below.
Table 19: KDL Pineapple Nucleus Demo Farm Production Machinery & Equipment [Planned]
S/No. Description/Function Rate (US$) No. of Units Amount (US$)
1 Tractors with accessories 60,000 2 120,000
2 Mechanical Pineapple Sucker Planters 10,000 5 50,000
3 Assorted pineapple farm equipment & machinery 150,000 1 150,000
4 Pineapple Pack House Equipment 600,000 1 600,000
5 Pineapple processing plant machinery & equipment 1,428,570 1 1,428,570
6 Processed pineapple storage and packaging equipment _ _ 20,000
7 Industrial Forklift Trucks 12,000 2 24,000
8 Quality Control Lab Equipment _ _ 20,000
9 Electricity Generator (200 kVA) 50,000 1 50,000
10 110 kW Solar-powered Water Supply & Irrigation System 100,000 1 100,000
11 Miscellaneous farm tools and equipment _ _ 50,000
12 Miscellaneous Industrial Equipment & Accessories _ _ 80,000
Total Equipment Cost 2,692,570
Exchange rate US$1.00 = UGX 3,700.00
3.4 Proposed KDL Pineapple Nucleus Demo Farm Design & Layout Plan
The total allocated space for the proposed Kabale Distributors Ltd [KDL] Pineapple
Value-Addition Project at Namulonge will be 20 Acres [8 Ha] space in total which will
be apportioned into sections for pineapples production area [14 Acres]; agro-processing
area [1 Acre]; administrative/residential area [2 Acres]; infrastructure space [1 Acre];
parking space [1 Acre]; and commercial area (including storage area) [1 Acre]. Table 20
and Figure 14 below show the composition and area allocation plan accordingly.
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Table 20: KDL Nucleus Demo Farm Design & Layout Structure
S. No. Section Composition Size [In Acres]
1. PRODUCTION  Pineapple Demonstration Production Area 10 Acres
 Greenhouses & Nurseries 4 Acres
2. AGRO-PROCESSING  Produce Reception Area
 Produce cleaning, sorting & grading room
 Pineapple Pack House & Including Storage and 1 Acre
Processing Area
 Solar Dryer
3. ADMINISTRATIVE/  1 KDL Nucleus Farm House
RESIDENTIAL  Labour Lines
 Administrative Office/QC Lab 2 Acres
 Machine Shed
 Watchmen Cabins
4. INFRASTRUCTURE  2 Water Tanks + 2 Water Reservoirs
 Farm Roads
 Power Generation Unit
 Fire Protection Equipment 1 Acre
 Sanitary Facilities
 Solid Waste Management Infrastructure
 Perimeter Fencing and Controlled Entry/Exit Point
5. COMMERCIAL AREA  Pre-Export Storage Area
 Export Processing & Shipping Area 1 Acre
6. PARKING SPACE  Vehicle Parking Space
 Loading & Off-Loading Areas 1 Acre
 Free Space (Reserve Space)
TOTAL 20 Acres
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Figure 14: KDL Nucleus Demo Farm Design & Layout Structure
Figure 14: Schematic Diagram of Farm Design & Layout Structure
KDL Pineapple Demo Farm: 2.5 Acres KDL Pineapple Demo Farm: 2.5 Acres
FARM ROADS
KDL Pineapple Demo Farm: 2.5 Acres KDL Pineapple Demo Farm: 2.5 Acres
Machine
Shed PINEAPPLE PROCESSING
AREA & PACK HOUSE:
Cold Room
KDL Pineapple Greenhouses & Main 0.6 Acres

Nursery Beds: 4 Acres Office/QC
Lab
COMMERCIAL AREA: 1 Acre
STORAGE AREA: 0.4 Acres

Agricultural Inputs Store KDL Nucleus Farm House
Labour Lines
PARKING/LOADING –OFFLOADING AREA & FREE SPACE:
1 Acre
Perimeter Fencing
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3.5 Pineapple Production/Processing & Export Infrastructure
3.5.1 Pineapple Production & Processing Investment Requirement
 Irrigation infrastructure in terms of design, procurement set up/ training and

management.
 Access to power (e.g. investments in appropriate power sources such as solar
and wind-based).
 A Farmers Service Centre.
 Pack houses and pack sheds (HACCP and ISO certified).
Human resource: A robust KDL Pineapple Value-Addition Project farm management

team is critical. Comprehensive Human Resource Development (HRD) Plan will be part
and parcel of the Business Plan that will be development by the market-linkage service
provider ([KDL Pineapple Value-Addition Project) and with all the partners.
3.5.2 Pineapple Network Farmers Service Centre
Kabale Distributors Ltd [KDL] Pineapple Value-Addition Project will also set up a
farmers service centre (FSC) at its own nucleus farm that will serve the following
purpose:
 Demonstration plots for the pineapple crop that is being handled at the centre;
 Training room;
 Grading and packaging (pack house);
 Hand-washing;
 Cold room;
 Store room;
 Crates cleaning yard; and
 A dock for loading the cargo into trucks.
3.5.3 Importance of a Pack House
 A pack house enables quality assurance activities that ensure product quality
and quantity meet market requirements and losses are minimized during
transport and distribution to markets. Developing countries incur serious
postharvest losses of vegetables, usually ranging from 20-40% of production.
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 A pack house can serve as a hub for coordination and governance of a farm-pack
house-market organization in which market demand dictates production and
pack house activities (Figure 15).
Figure 15: Farm-pack house-market value chain and best practices along the chain.
 A farm-pack house-market organization maximizes economy of scale, improves

market access, and facilitates technical and business development interventions.
Figure 3 shows the possible technical improvements along the value chain.
 The farm-pack house-market organization can be managed by three teams:

management team (overall leadership; selected officers and members of the
cooperative/group); production team (production and harvest scheduling); and
marketing team (pack house and market operations; market linking). The
production and marketing teams should work closely to meet market demand.
 Overall, the pack house is the focal point of a farm business. Proper management
ensures the business will prosper in a sustainable manner.
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Figure 16: Flow Chart of Pack House Operations for Most Fruits
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Figure 17: Typical Pack House Layout Plan
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Figure 18: Inside View of a Tropical Fruit Pack House
3.6 Utilities & Other Infrastructure Services
A number of utilities are already well in place at the allocated Namulonge NaCCRI
site that will ensure smooth functioning of the proposed Kabale Distributors Ltd
[KDL] Pineapple Value-Addition Project. These utilities include:
a) Water Supply,
b) Supplementary Electricity supply,
c) Paved Road Transportation,
d) Drainage Facility
Water Supply
Clean water supply is a sine-qua-non of a crop demo nucleus farm enterprise. There
should therefore be provision for an alternative source of water since constant and clean
water supply can only be ensured through provision of an internal borehole and, a
minimum of, two (2) overhead water tanks of 30,000 litres capacity.
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Electricity Supply
Since public power supply is not always reliable, provision will be made for a 250 kVA
diesel generating set to supplement UEDCL supply, and ensure uninterrupted supply
of electricity.
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4.0 NUCLEUS FARM-PINEAPPLE OUT GROWER OPERATIONAL MODEL
4.1 Organizational Structure
Kabale Distributors Ltd Pineapple Value-Addition Project plans to operate as a for-

profit entity.
4.2 Value Proposition
Operating a vertically integrated pineapple processing business enables end-to-end

control and allows Kabale Distributors Ltd Pineapple Value-Addition Project to add
value both to farmers on the upstream side and end customers downstream.
Value to farmers: we give farmers the tools and the incentive to sell a greater
proportion of an increased pineapple yield at a consistent, fair price.
Value to consumers: we provide consumers with access to domestic pineapple juice

and dried pineapple products that match the quality of imported products at a lower
cost.
4.3 Business Model
Figure 19: Kabale Distributors Ltd Pineapple Value-Addition Business Model
Farmer Out Grower Logistics Processing Domestic &

KDL
+ Support + Farmer + + & = Export
Nucleus
System Network Packaging Sales
Farm
At scale, Kabale Distributors Ltd Pineapple Value-Addition Project will generate

revenue by manufacturing processed pineapple products [juice and dried pineapples],
branding and packaging them, and selling it directly to two major supermarket chains,
Shoprite and Mega Standard, and indirectly to open-air markets through regional
distributors. Approximately only 5% of the pineapples used for processed pineapple
products will originate from the Namulonge nucleus farm directly operated by Kabale
Distributors Ltd Pineapple Value-Addition Project (“the nucleus farm” or “the
nucleus estate”), while the remaining 95% will be purchased from smallholder farmers
(“the network”) operating within a 100-mile radius of our production facility (“the
factory”).
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The profitability of our company depends on our ability to run the factory at minimum
capacity over the course of the pineapple harvesting season - because pineapples are
perishable fruits and spoil within 5-10 days of harvesting, a constant supply of fresh
pineapples must be delivered to the factory every day. We believe that the best way to
generate this constant supply of high-quality fresh pineapples while remaining asset
light is through a “nucleus estate” contract farming model. The nucleus estate contract
farming model is common for pineapple processing facilities in the Thailand and
Philippines, the two leading countries for processed pineapple (pineapple juice)
production, and the characteristics of this model are defined by the Food and
Agriculture Organization of the United Nations (FAO) as follows:
• Involves a centralized processor and/or packer buying from a large number of
small farmers.
• Vertically coordinated with quota allocation and tight quality control.
• The sponsor also manages a central estate or plantation.
• The central estate is usually used to guarantee throughput for the processing
plant and is sometimes used for research as well.
• Involves a significant provision of material and management inputs.
The Nucleus Farm

In its first year of operation, KDL Pineapple Value-Addition Project will establish an 8
hectare nucleus farm in order to prove that pineapple yields in Uganda can be
improved from 10 MT/Ha to 25 MT/Ha over the course of one year, solely by using
high quality pineapple suckers and fertilizer, and by making basic improvements in
farming techniques. In order to comply with government regulations, which have
barred the use of genetically modified (GM) seeds, KDL Pineapple Value-Addition
Project will source only hybrid pineapple suckers, which are created through farm-
based cross-pollination of two different plants rather than the lab-based genetic
modification of a single plant’s DNA.
At scale, KDL Pineapple Value-Addition Project plans to operate a nucleus estate with
a 2 hectare “best practices” greenhouse and a 4 hectare open-air farm that yields 150
MT/Ha and 75 MT/Ha, respectively. These facilities will be used to guarantee a
minimum throughput for the factory, train farmers in the network on farming best
practices, and conduct ongoing research on pineapple harvesting.
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The Network
In year two, KDL Pineapple Value-Addition Project will recruit its first cohort of
farmers into the network, which will comprise 60 hectares. By year five, the company
will work with a network of farmers operating on 1,000 hectares. Although formal
market surveys have not been conducted, primary information gathered from farms,
villages, markets and distributors during the team’s visit to Uganda in March 2020
suggests that our principal customers are smallholder farmers who grow for the
market. The average smallholder pineapple farm size in Uganda ranges from 1-2
hectares. A few large-scale farmers plant from 10 to 200 hectares of pineapples, leaving
the overall average pineapple field size at 1.5 hectares. For our first farmer cohort, we
will rely upon our existing local partners on the ground, a cooperative of mid-sized
fruit and vegetable farmers, to refer us to smallholder farmers whom we can interview
and vet in the first year as we set up the nucleus farm. As we scale, we expect though
that our greatest product champions and advocates will be the farmers in our network.
A successful, KDL Pineapple Value-Addition Project network farmer who has been
using, KDL Pineapple Value-Addition Project inputs and best practice methods will
be able to demonstrate within his own social network the financial and labor benefit
associated with our model. For our most successful and enthusiastic farmers we will
have them hold field days at which all farmers in the village and the community can be
invited. At these field days the appropriate, KDL Pineapple Value-Addition Project
Agronomy Manager will be invited to speak at the field days and explain how our
partnership works.
Following up on these leads is the role of our agronomy managers who are vital to the
continued expansion of our network farmer model. It is the agronomy managers who
are responsible for applying the KDL Pineapple Value-Addition Project evaluation
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criteria to prospective farmers to determine their suitability to work with KDL
Pineapple Value-Addition Project. Other engagement mediums (advertising, radio,
billboards, print, social, local sponsorship, etc.) will be evaluated on a case-by-case basis
to determine the suitability of each mode of communication.
The Nucleus Farm – Out Grower Network System for Continuous Improvement
KDL Pineapple Value-Addition Project will offer a complete bundle of nucleus farm-
based pineapple farmer support services to help all farmers in the network achieve a
yield of 30 MT/Ha. In general, all of the farming inputs and capital equipment that
KDL Pineapple Value-Addition Project sells to farmers in the network will be sold
without making a profit; that is, we will sell these items to farmers at our own purchase
price. The KDL farmer support system will consist of four main components:
1. Improved Inputs: Sell high quality pineapple suckers, fertilizer and pesticides at
our purchase price, in bundled packages so that farmers can easily determine
how much of each item to use.
2. Training Support: Educate farmers on pineapple-farming best practices through
NGO-developed curricula and hands-on training at the nucleus farm.
3. Forward Contract Financing: Specify a price in advance of the growing season
for delivery of a specified quantity of pineapples, reducing farmers’ exposure to
seasonal price fluctuations and guaranteeing a market for increased yields.
4. Guaranteed Market and Transport for Produce: Establish a pineapple processor
on-site (nucleus farm) that will absorb all surplus production at a reliable price
and manage transport from farm to factory.
Once farmers in the network are able to achieve a yield of at least 30 MT/Ha
consistently over three harvesting cycles, they will be classified as “bronze level”
farmers. KDL Pineapple Value-Addition Project will support its bronze farmers to
make further gains in yield by selling them high-quality drip irrigation systems at our
own purchase price.
In Thailand, where open-air farming is the main technique used to grow pineapples,
drip irrigation systems have been known to increase yields by a factor of 50%. As such,
farmers in the network who are able to achieve a yield of at least 45 MT/Ha consistently
over three harvesting cycles will be classified as “silver level” farmers. KDL Pineapple
Value-Addition Project will support its silver farmers to make further gains in yield by
selling them the materials needed to build a greenhouse at our own purchase price.
Farmers in the network who are able to achieve a yield of at least 60 MT/Ha
consistently over three harvesting cycles will be classified as “gold level” farmers. As
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the most advanced and motivated farmers within the network, and also (by default) as
the farmers with the longest relationship with our company, the gold farmers will be
eligible to participate in the KDL Pineapple Value-Addition Project processed
pineapple products franchise program. This program will enable the gold farmers to
procure low-volume processed pineapple production equipment and produce
processed pineapple products (pineapple juice and dried pineapples) for resale to KDL
Pineapple Value-Addition Project, which will package, brand and sell these network
farmer processed pineapple products alongside the processed pineapple products
produced in the factory.
In this way, over a period of three to five years, KDL Pineapple Value-Addition
Project will transform the most dedicated and motivated farmers into entrepreneurs
who create non-farm jobs in their communities and are able to capture a larger portion
of the pineapple value chain by selling on-farm processed pineapple products rather
than pineapple.
Transporting Pineapples from the Network to the Factory

To transport the pineapples from our network farmers and the nucleus farm to the
processing facility we will use a fleet of leased trucks. A typical pineapple truck holds
10 M/T of pineapples, which is about 14,000 – 15,000 pineapples. We anticipate a need
for one truck in year one and scaling to 20 trucks by Year 5. An additional benefit to
leasing the vehicles is the benefit of a maintenance program and the not requiring the
capital expenditure and depreciation associated with owning the vehicles.
Running the Pineapple Processing Facility

The dried pineapple and pineapple juice pineapple processing facility enables KDL
Pineapple Value-Addition Project to transform highly perishable, raw pineapples into
long-lasting, higher-value dried pineapple and pineapple juice products, and as such it
will always play a large role in the on-going operations of the company. During the
pineapple processing season, which is expected to run all year round, the factory will
run continuous production to minimize pineapple wastage and maximize power
efficiency. The biggest cost associated with running the factory is power, for two main
reasons. First, the electric-powered pineapple fruit dryers will require a constant supply
of electrical energy to dry large quantities of pineapples in any given period. Second,
Uganda’s unreliable national power grid will require KDL Pineapple Value-Addition
Project to run the plant with diesel rather than electricity up to 75% of the time. KDL
Pineapple Value-Addition Project has opted to invest in medium-capacity
infrastructure for the factory for three major reasons. First, the overall capital outlay is
much smaller for medium-capacity equipment than for full-scale equipment; second,
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the modular approach allows us to scale manufacturing capacity in sync with the
growth of the nucleus farm and network; and third, in order for KDL Pineapple Value-
Addition Project to work closely with golden farmers to set up satellite processing
facilities, our company needs to have a clear understanding of equipment that the
golden farmers will use. Staffing requirements will vary based on whether or not the
factory is producing paste. Year-round staff requirements include a plant manager,
engineers to maintain and service the equipment, and a skeleton crew of 5 to 8
additional workers. During peak pineapple processing season, the employee
requirement increases significantly for both skilled and unskilled labor, from 8 and 10
to 18 and 75, respectively.
Marketing of Processed of Pineapple Juice and Dried Pineapples in Domestic Channels

Lastly, KDL Pineapple Value-Addition Project will secure an end market for our local
brand of processed pineapple products. Our approach will be two-pronged: first we
will ensure the off-take of our packaged output to large retail centers, and second our
traditional marketing efforts will drive consumer purchases of our unique product.
1. Get KDL Pineapple Value-Addition Project products on shelves. Initially, we

plan to sell KDL Pineapple Value-Addition Project products to both large supermarket
chains and traditional open air markets. The two largest supermarket chains in Uganda
are Shoprite and Mega Standard, which is the world’s largest food retailer. Both Shoprite
and Mega Standard are large enough that they contract and purchase local food
products directly from local manufactures without going through a distributor. KDL
Pineapple Value-Addition Project will use its fleet of trucks to deliver products directly
to the supermarkets, thereby preserving margin for us and the supermarkets.
While we expect that our initial placement with these supermarkets will be on a trial
basis, once we demonstrate consumer demand, we intend to secure long-term, year-
round delivery contracts with each of these chains for each of their 16 locations
throughout the country (as of 2019).
Despite any success that we have with Shoprite and Mega Standard, we plan to
diversify our distribution channels to traditional open air markets because only 5% of
food in Uganda is retailed through supermarkets. KDL Pineapple Value-Addition
Project’ fleet will transport our product to centralized, large open air market
distributors based in Kampala. From there, these distributors will ensure that our
product makes it to the largest open air markets in the largest cities in the country.
While the price for fresh vegetables fluctuate in the open air markets, the price for our
product and other packaged goods in the market remain fixed. The largest driver of
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costs to be successful in placing our product on retail shelves will be the transportation
costs, namely the diesel, required to truck our product to the various supermarket chain
outlets.
2. Drive consumer purchases. We will drive consumer purchase by promoting a

brand that is high quality and uniquely Ugandan. Our branding strategy will be to
target the lower-, middle-, and upper-income market segments as they all purchase and
use pineapple juices and other processed pineapple products.
KDL Pineapple Value-Addition Project will rely on very frequent traditional

marketing methods, such as radio advertisements, billboards, and taste tests on-site in
supermarkets to drive first time trial of our product. We also plan to get state and
federal level government endorsement of our product as a product that is 100% made
and packaged in Uganda. We will encourage repeat trial of the product by linking
purchase of the product directly to the farmers in our program via advertisements and
social media.
The social media portion of our branding strategy will involve launching pages on
YouTube, Instagram, Facebook, Twitter, LinkedIn, Snapchat, Badoo, Google+ and other
platforms to promote our business and share stories of our farmers on a regular basis.
The largest cost driver for this piece of our operations will be the traditional marketing
spend on advertising space as we plan to flood the market with our unique positioning
early and often.
4.4 Profit Formula
KDL Pineapple Value-Addition Project expects to produce over 3.60 million 250 ml
and 500 mls tetra packs of pineapple fruit juice in year two and 6.48 million 250 ml and
500 mls tetra packs in year five. From our primary research in Uganda, we know that
these 250 ml and 500 mls tetra packs are the most popular size with consumers and sell
in the market for UGX 1,500-1,800 per tetra pack.
Using this retail-selling price as a starting point we work backward to assume that the
retail margin is 40% of the selling price. Our COGS represent 30% of the cost with our
margin and other expenses accounting for the remaining 30%.
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Figure 20: Profit Formula
1600 150 1,500
1400 300
1200
450
1000
800
600
600
400
200
0
Retail Margin COGS KDL Margin Other Expenses Retail Price of 250
ml Packet
4.5 Measuring Results
We measure our success in terms of financial returns, agricultural output as well as

social impact achieved, and will continually measure our progress in these areas.
Management will be held accountable to specific financial, agricultural and social
indicators, and their performance will be evaluated regularly.
Our Farmer performance record (Annex II) provides the ability to track detailed
agricultural and social metrics, which will be reported to investors, partners and other
stakeholders on a regular basis. KDL Pineapple Value-Addition Project will provide
social value to our partner farmers in several ways. In the first three years of operations
we will focus on improving yield per hectare and reporting impact in the following key
areas:
Increase in crop cycle income

Our most readily quantifiable social impact is the increase in the Gross Margin achieved
by farmers. This is the difference between the Gross Farm Income (GFI) and the total
variable cost (TVC). KDL Pineapple Value-Addition Project will use this technique to
track and determine the cost and return associated with pineapple production for our
farmers. It is mathematically expressed as;
GM = GFI – TVC
Where;
GM = Gross Margin (UGX/Ha)
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GFI = Gross Farm Income (UGX)
TVC = Total Variable Costs (UGX/Ha)
And
NFI = GM – FC
Where;
NFI = Net Farm Income (UGX/Ha)
TFC = Fixed Cost (UGX/Ha)
Other financial metrics we will track include:

Gross Ratio: is the total cost of production divided by the gross revenue. A less than 1
ratio is desirable for our farmers. The lower the ratio the higher the return per naira
invested.
Operation Ratio: is the total variable cost divided by gross income. It shows the
proportion of the gross income that goes to pay for the operating costs. The lower the
ratio the higher the return on investment.
Return on capital investment: is the gross Margin divided by total variable cost.
Increase in pineapple yield per hectare - Knowledge component

Assuming the majority of the farmers in our network produce 26,000 M/T per hectare
in Year 5, the financial benefit from our farmers to the economy is over US$100 million
per annum. Our farmers producing 26,000 tons at a net income of US$4,000 per year
achieve this figure. By year five, the social impact of KDL Pineapple Value-Addition
Project, based solely on this metric, could be as much as US$5,000 per farmer per year.
In tandem with yield increases KDL Pineapple Value-Addition Project agronomy

managers improve physical accessibility by farmers to improved inputs (seed,
chemicals, fertilizer) by providing free delivery of all the raw material. KDL Pineapple
Value-Addition Project will measure improved pineapple yield per hectare by tracking
the total amount of produce harvested for grading. By 2022, we forecast that KDL
Pineapple Value-Addition Project will achieve 70 M/T per hectare in our greenhouses.
Decrease post harvest losses

Estimates suggest that Uganda loses approximately 10-15% of its pineapple production
after harvest. These post-harvest losses are decreases in the amount of agricultural
produce that actually reaches markets in a salable condition. These losses may occur
before transport due to many causes, including sub-optimal application of fertilizer,
inappropriate irrigation, diseases, water loss, and poor ventilation of products. During
103
transport, other losses frequently occur, including mechanical injury, temperature
changes, and contamination.
By improving both farmer transport of produce, increasing the availability of market,

and improving farming practices, KDL Pineapple Value-Addition Project plans to
substantially decrease the percentage of pineapples that are lost after harvest.
Other metrics
We will use the pilot test findings to build out our metrics further and set specific
targets. Additional key indicators for measuring financial returns and social impact will
likely include:
• Sales – Scale of outreach
• Number of farmers – Size of farmer network and its value as a barrier to entry
• Average crop cycle days – Capturing improvements to the length of the harvest
cycle
• Farmer satisfaction – Ability to meet or exceed farmers expectations
• Increased employment – Increasing employment is another key social impact for
KDL Pineapple Value-Addition Project particularly among the young.
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5.0 MARKET ANALYSIS
5.1 Uganda Fruit Juice Market Analysis
5.1.1 Market Trends
If you are conversant with the food industry, you will notice that the different food
consumption patterns have had varied effects in different countries. Fruits and
vegetable processing companies have introduced healthier organic products to fight
competition.
Canned fruit and vegetable producers are more insulated from agricultural price
swings and organic food sales have posed a significant competitive challenge to many
industry players.
The fruits and vegetable industry has grown steadily over the last five years as fruits
and vegetable processing companies have adapted to the rapidly changing consumer
preferences and lifestyle. As a matter of fact, entrepreneurs who own big
plantations/farms find it easier to open a processing plant within their farms. With this,
it is easier for them to maximize profits and of course stamp their feet in the industry.
In Uganda, the demand for processed fruit juice is rising and it is being driven by
urbanization, growth in incomes and middle class, and more nutrition and health
conscious population2. Much of the processed fruit juice demand is satisfied through
imports from mainly South Africa and Kenya. Available statistics depict that Uganda
imports about 18.4 million liters of fresh fruit juice per year worth about US$30 million
and the annual growth in importation of fresh fruit juice, for the period 2012-2016, was
reported at 56 percent to 135 percent3. In response to existing market opportunity, fruit
juice processing in Uganda began with the involvement of both local and global agri-
businesses. These companies procure fruit concentrate from international sources but
have also started sourcing certain kinds of fruits locally for processing. Whether
imported or locally-made, processed fruit juice of different brands and variety is
distributed to consumers predominantly through supermarkets and retail shops4.
2 UIA. Uganda Investment Authority. Investing in Uganda: Investment Potentials in Fruit Juice Processing. UIA, Kampala, 2009.
3 Ibid
4 Elepu G The Growth of Supermarkets and its Implications for Smallholders in Uganda. In: P Pinstrup-Andersen and F Cheng
(Eds.). Food Policy for Developing Countries: Case Studies. Cornell University, Ithaca, New York, 2009.
105
5.1.2 Target Market Segments
Naturally, the end consumers of processed fruits and vegetables and also those who
benefit from the business’ value chain is all encompassing; it is far – reaching. In
Uganda, the fruit juices and dried fruits market is still a small but steadily growing and
strongly competitive market.
Loads of households consume processed fruits and vegetables. In essence, a fruit and
vegetable processing company should be able to sell its products to as many people as
possible.
In view of that, we have positioned our business to attract consumers of processed

pineapple products not just in Uganda alone but also in other world markets such as
the EU and the Far East. KDL Pineapple Value-Addition Project has conducted its
market research and we will ensure that it meets and surpasses the expectations that it
sets for the business.
Below is a list of the people and businesses that KDL Pineapple Value-Addition
Project will market its processed pineapple products to;
 Groceries stores
 Households
 Individuals
 Hotels
 Restaurants
 Fast food eateries
 Processed fruits and vegetable merchants
5.2 European Union Dried Tropical Fruit Market Analysis
5.2.1 Product Description
Dried tropical fruit means ripe fruit which is native to or grown in tropical regions, the
climatic zone surrounding the equator, processed by drying either by the sun or other
recognized methods of dehydration, with or without added sweetening agents, such as
cane sugar, and food additives. Another method is to soak the fruit in syrup before
drying, creating a very sweet shelf-stable product. This is widely done for soft fruit,
such as papaya and pineapple.
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In some production methods, such as for banana chips, the product is not actually dried
but fried in hot oil, similar to the production of potato chips. Another aspect of banana
chips is that the raw material used is not ripe but green fruit.
Depending of the species and variety, dried tropical fruit can be cut into different
shapes. The most common are halves, slices, pieces, spears, chunks and cubes.
The most popular dried tropical fruit in Europe include dried bananas, mangos,
pineapples and papayas. However, other types of dried tropical fruit are also becoming
popular, such as guavas, carambola or star fruit, durian, rambutan, passion fruit,
jackfruit and pitahaya.
Dried tropical fruit is used at home, as a snack or cooking ingredient, out of home in
hotels, restaurants and other places, and in the food industry, such as in the bakery and
confectionery products, as well as in breakfast cereal mixtures.
This Sub-Section covers general information regarding the market for dried tropical
fruit in Europe, which is of interest to producers in developing countries.
This Sub-Section covers general information regarding the European market for
natural dried tropical fruit. Please see Table 21 below for the specific products and their
product codes used for statistical analysis. However, the range of dried tropical fruits is
wider than statistical analyses can show, as some statistical codes include many
different products besides dried tropical fruit.
Dried fruit preserved by sugar, i.e. candied or crystallized fruit, is not included in the
extensive statistical analysis. Dried mangoes and dried pineapples are also excluded,
due to the absence of relevant statistical codes. However, all types of dried tropical fruit
will be included in the qualitative analyses.
Table 21: Combined Nomenclature Codes for Dried Tropical Fruit

Number Product
08134065 Dried tamarinds, cashew apples, lychees, jackfruit, sapodillo plums, passion fruit,
carambola and pitahaya
08134050 Dried papayas
08039090 Dried bananas
08031090 Dried plantains
107
Figure 21: Dried Tropical Fruits
Dried Banana Slices Dried Pineapple
Dried Passion Fruit

Sugar-infused Dried Papaya
Quality:
Specific quality standards for dried tropical fruit have not been officially defined by the
European Union. The most common standards used are standards published by the
United Nations Economic Commission for Europe (UNECE). However, until now
UNECE has only defined specific standards for dried tropical fruit: for mango and for
pineapple.
The basic quality requirements for dried tropical fruit are:

 Fruit free from insects, mould, damages and blemishes.
 Moisture content: this varies among the different types of dried tropical fruit.
Generally, for natural dried fruit without added preservatives or sugars, the
moisture content must be lower than for fruit with added preservatives or sugar.
For natural dried mangoes, the maximum moisture content is 15% and for
pineapples 20%. For dried mangoes treated with preservatives the maximum
moisture content is 20% and for treated pineapples 44%.
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 Food additives: some types of food additives are allowed in the production of
dried tropical fruit. Additives used in production of dried tropical fruit include
sodium chloride and calcium chloride to protect from moisture increase, sulphur
dioxide to prevent rotting and colour change, and citric acid as antioxidant to
prevent colour change. Sugar or fruit juice are also allowed and often used in the
production of dried candied tropical fruit infused with sweeteners.
 Quality classification: Although European legislation does not define
classification of dried tropical fruit concerning allowed defects, suppliers usually
use three classes: Extra, Class I and Class II. This classification determines the
percentage of defective products by number or weight.
Labeling:
The label should include the name of the fruit and the word ‘dried’. However, in some
cases instead of word ‘dried’, in order to better describe a product, some other
description can be used, such as ‘dehydrated’, ‘sun-dried’, ‘freeze-dried’, ‘soft’, etc.
It is common that specifications on the label include the crop year, style of cut, variety
and origin. Best before followed by the date is usually optional for natural dried
products, but mandatory for soft fruit, i.e. high-moisture dried tropical fruit.
For retail packs, labels must comply with the European Union Regulation on the
provision of food information to consumers. This regulation defines nutrition labelling,
origin labelling, allergen labelling and legibility (minimum font size for mandatory
information) more clearly. Dried tropical fruit is not included in the regulation’s
allergen list. However, sulphites must be indicated as potential allergens if they are
used as preservatives. Retail packs must be labelled in a language easily understood by
the consumer in the European target country, so generally in the country’s official
language. This explains why European products often carry multiple languages on the
label.
In case of bulk packaging for export, the name of the product, lot identification, and the
name and address of the manufacturer, packer, distributor and importer must appear
on the packaging, as well as storage instructions. The lot number allows consumers to
trace the product in the event of any dispute or health risk. It should be written in
accordance with to the European Union Regulation on indications or marks identifying
the lot to which a foodstuff belongs.
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Lot identification, and the name and address of the manufacturer, packer, distributor or
importer may also be replaced by an identification mark, provided that such a mark is
clearly identifiable with the accompanying documents.
Packaging:
Packaging used for dried tropical fruit must protect the organoleptic and quality
characteristics of the product, protect the product from bacteriological and other
contamination, including contamination from the packaging material itself, and not
pass on any odour, taste, colour or other foreign characteristics to the product.
Dried tropical fruits are usually packaged in plastic bags or plastic liners placed in
carton boxes of different sizes. Packed products should be transported on EURO pallets
(80 x 120 cm) and further transported in containers. Twenty-foot containers may contain
1,600 cartons of 12.5 kg or 2,000 cartons of 10 kg.
Dried tropical fruit does not require special temperature of transport or storage.
However, extremely low or high temperatures should be avoided. At high storage
temperatures fruit sugar particles may form on the surface of the product, hardening
and discolouring them. Such crystallised fruits may, however, be reconditioned using
steam.
5.2.2 European Union Import Market Opportunities
The Netherlands, the United Kingdom and Germany offer you the best opportunities.
Besides these three leading markets, opportunities can be found in the growing markets
of Central and Eastern Europe.
Imports
Dried tropical fruit largely re-exported within Europe
 Between 2013 and 2017, European imports of dried tropical fruit grew in value at
an average annual rate of 11%, but decreased in quantity at an average annual
rate of 7%. European imports of dried tropical fruit reached €43 million and 16
thousand tonnes.
 When adding the import of dried mangoes, dried pineapples and other dried
tropical fruit that isn’t included in the statistical codes, European imports of
dried tropical fruit can be roughly estimated at just over 25 thousand tonnes. In
addition, European imports of candied tropical fruit are estimated to be just
above 5 thousand tonnes.
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 Import prices of dried tropical fruit in Europe have slightly increased in the last
five years.
 Imports from developing countries are growing fast. In the 2013-2017 period,
they grew even faster (+16%) than imports from other European countries.
 A large share of imported dried tropical fruit is re-exported within Europe. After
importing the bulk product, dried fruit is often repacked into retail packaging, or
the product is simply re-exported in bulk.
 It is expected that imports of tropical dried fruit will continue to increase in the
coming years, especially in the segment of naturally dried tropical fruit with no
added sugar. This expected increase will be driven by the growing demand for
healthy food and particularly by the popularity of healthy snacks, such as dried
fruit and nut mixtures, and dried fruit bars.
Figure 22: European Imports of Dried Tropical Fruit, by Main Origin (in € thousand)
25,000
20,000
15,000
10,000
5,000
0
2013 2014 2015 2016 2017
Intra-EU Developing countries Rest of the World
The Netherlands is the largest importer of dried tropical fruit

European imports of dried tropical fruit are moderately concentrated by three leading
importers. The Netherlands, the United Kingdom and Germany account for
approximately half of total imports.
 Dried tropical fruit: Among the largest importing countries, the highest average
annual import growth in quantity over the last five years was in Austria (57%),
followed by Poland (50%) and Croatia (37%). Poland most significantly increased
its European market share of dried tropical fruit mainly through increasing its
volume of dried bananas.
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 Dried mangoes: The largest European importer of dried mangoes is the United
Kingdom with an estimated 1,500 tonnes, followed by Germany (1,000 tonnes).
 Dried bananas: The largest European importer of dried bananas is the
Netherlands (1,700 tonnes), followed by Poland (1,500 tonnes). Polish imports
increased from only 90 tonnes in 2013 to 1500 tonnes in 2017, which is nearly 17
times more. Most of these dried bananas were imported from Germany and the
Netherlands.
 With 1,670 tonnes, the Netherlands is also the largest European importer of dried
plantains, followed by Belgium (880 tonnes). As dried bananas and dried
plantains are similar products, it can be concluded that the Netherlands is the
largest European importer of bananas and plantains combined (3,400 tonnes).
 Dried papayas: The largest European importers of dried papayas are Italy and
Denmark, each accounting for 246 tonnes in 2017.
 Other dried tropical fruit: The largest European importer of other dried tropical
fruit, which includes pineapples, lychee, dragon fruit, guava and passion fruit, is
the United Kingdom, which imported 2,090 tonnes in 2017, followed by Austria
(712 tonnes).
 Candied tropical fruit: The largest European importer of candied tropical fruit is
Slovakia (943 tonnes), followed by France (850 tonnes), Italy and the United
Kingdom (745 tonnes each). Slovakia significantly increased imports of candied
fruit from 100 tonnes in 2012 to 943 tonnes in 2017. In the subcategory of candied
fruit with more than 13% sugar, Italy was the largest importer in 2017 (738
tonnes), followed by France and the United Kingdom.
Figure 23: European Imports of Dried Tropical Fruit by Country 2017, Share of Imported Volume (in %)
Netherlands United Kingdom Germany Poland Belgium Other
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Production
 Tropical fruit is not grown in Europe, except in very limited quantities in the
south of Spain or in isolated territories such as the Spanish Canary Islands or the
Portuguese island of Madeira. Therefore, direct production of dried tropical fruit
does not exist in continental Europe. However, there are different types of
further processing of imported dried tropical fruit.
 The world’s leading processors of dried tropical fruit differ per type of product.
Thailand is The leading producer of candied (sugar or juice infused) tropical
fruit, especially pineapples and papayas. The leading producer of banana chips is
the Philippines, followed by Ecuador. Leading producers of natural and organic
dried mango are South Africa, Burkina Faso, Ghana, Mexico and the Philippines.
China is increasing its production of dried tropical fruit and is introducing new
types of dried tropical fruit to European markets, such as star fruit and durian.
 The most important suppliers of dried mangoes to Europe are South Africa,
Burkina Faso and Ghana. South and Central American producers of dried mango
are more focused on the United States of America and Canada, and are therefore
less present in Europe. The leading mango varieties processed in African
countries and exported to Europe are Kent and Keit, followed by Tommy Atkins,
Amélie and Brooks.
 The leading producer of banana chips is the Philippines, where Cardava and
Cavendish bananas are used for processing by more than 30 processors. Most
banana chips are produced in Mindanao, Southern Philippines. The banana is
peeled, sliced and then dipped into a sugar and flavouring solution, before being
fried in coconut oil. There is also production of unsweetened banana chips.
 The leading producer of sugar infused pineapples, mangoes and papayas is
Thailand. Thailand also produces sugar infused guavas, melons, jackfruit,
rambutan, longan and other dehydrated fruit. To produce those types of
products, fruit is soaked in cane syrup before being cut into slices or dices and
dehydrated. Most Thai sweetened dried fruit in Europe is used in the bakery and
cereal manufacturing industry.
 Naturally dried pineapples without added sugar are produced in several
countries, such as Thailand, South Africa, Ghana, Uganda, Togo, Costa Rica,
Bolivia and Colombia.
Consumption
Consumption of dried tropical fruit is growing
 In the last five years, apparent consumption of dried tropical fruit increased at an
annual average rate of 9% in quantity and 18% in value. In 2017, consumption of
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dried tropical fruit covered by the statistical codes explained in the introductory
chapter, reached six thousand tonnes. With the addition of natural dried
mangoes and other tropical fruit, total European consumption of dried tropical
fruit is estimated at 12–15 thousand tonnes.
 Statistically, consumption of candied fruit increased in value at an average
annual rate of 5% in the last five years, but decreased in quantity at an average
annual rate of 1%, reaching €5.8 million and 2.2 thousand tonnes in 2017.
However, European consumption can actually be estimated at more than 20
thousand tonnes, which almost 10 times more. The reason for such a big
difference is that the leading supplier, Thailand, doesn’t use the same statistical
codes as Europe.
 It is expected that consumption of dried tropical fruit will continue to grow in
the next several years. This predicted growth will be driven by a demand for
healthy snacks, with new product launches such as fruit bars and different types
of breakfast solutions, as well as other applications of dried tropical fruit as an
ingredient.
Figure 24: European Apparent Consumption of Dried Tropical Fruit (in € thousand)
25,000
20,427
20,000
16,364
15,000
12,603
10,671 10,815
10,000
5,000
0
2013 2014 2015 2016 2017
Consumption
Note that the figure above displays the apparent consumption of dried tropical fruit
calculated as the difference between external European imports and exports to non-EU
destinations. Although there is no production of dried tropical fruit in Europe, it is very
likely that some imported dried tropical fruit can be imported and further processed
before re-exporting, which means adding value.
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5.2.3 European Union Import Market Trends
A general overview of the most relevant general market trends for developing country
exporters can be found on CBI Trends for Processed Fruit and Vegetables
(https://www.cbi.eu/market-information/processed-fruit-vegetables-edible-
nuts/trends). In addition, there are some specific remarks that can be made about dried
tropical fruit.
 Consumption of dried fruit in Europe, including dried tropical fruit, continues to
increase as dried tropical fruit is finding applications in new product
development. At the latest SIAL trade fair in Paris, several new products with
dried tropical fruit were launched. This included dried fruit bars made of 100%
tropical fruit, freeze dried tropical snacks, freeze dried popsicles, snacks made
of dehydrated tropical fruit purees and different types of other snacks.
 Freeze-drying technology is one of the main influences on the dried fruit market.
Although products are not the same as naturally dried fruit, they offer a different
structure and new possibilities for applications. Freeze-dried tropical fruit is
used in mueslis, in the production of snacks or even grinded into powders.
However, this requires another type of investment into equipment as the starting
material is frozen fruit.
 Consumption of sweetened dried fruit is decreasing. A recent survey by IRI
International, revealed that two-thirds (70%) of people across Europe are buying
healthy food - with less salt, sugar, fat or calories. This is an increase of 41% in
just three years.
 Production of fruit bars as snacks is one of the newest European trends, where
dried tropical fruit is finding an application as ingredient. They are more
frequently produced without added sucrose as a sweetener, but with fructose,
stevia, fruit purees or fruit juice as a natural sweetener. Some fruit bars are
naturally sweet and do not require any sweeteners. Many ingredient
combinations are on the market, such as different types of dried fruit with seeds
and nuts.
 Many consumers are now consciously searching for a healthy diet, which is
likely to increase the demand for foods like fruit snacks. The health-conscious
population demands foods with fewer calories and with an optimal combination
of essential nutrients.
 According to International Trade Centre
Report (http://www.intracen.org/uploadedFiles/intracenorg/Content/Publica
tions/Sustainibility%202018%20layout-FIN-web-v1.pdf) voluntary standards
related to sustainable and ethical production are becoming more important.
There are more partnerships addressing the major sustainability challenges such
115
as recent example of merger of Rainforest Alliance and UTZ
(https://www.rainforest-alliance.org/business/sustainable-farming/farm-
certification/2020-rainforest-alliance-certification-standard/).
5.2.4 EU Marketing Channels for Dried Tropical Fruits
Figure 25: Common Trade Channels for Dried Tropical Fruit on the European Market
Approximately 60% of the total imported dried tropical fruit in Europe is used as an
ingredient for further processing, while some 40% is re-packed and sold by retailers or
used in the food service segment. Please note that this share reflects the continued
leading role of sweetened tropical fruit used by the industry. However, when it comes
to natural dried tropical fruit without added sugar, a much larger share is sold in the
retail segment as a snack.
Dried tropical fruit, included sweetened fruit, is used as a snack without further
processing except repacking by commercial brands or retail chain private label brands.
In the food processing industry, dried tropical fruit has many applications in breakfast
cereals, the bakery and confectionery industry, fruit preparations for dairy industry and
snack bars.
5.2.5 EU End-Market Prices for Dried Tropical Fruis
Calculating margins according to final retail prices for dried tropical fruit is not very
indicative and will only give a very rough general overview of price developments.
However, the CIF price is estimated to represent approximately 30% of the retail price
of a pack of dried tropical fruit. If dried tropical fruit is used as an ingredient, it is even
more complicated to estimate the added value, due to the number of different
ingredients and the production process.
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Prices also very often fluctuate due to harvests which change from year to year, and
recently the strong influence of El Niño. In some cases there is also the influence of the
materials used in the production process, such as the recent high in the price of coconut
oil, which is used in the production process of banana chips.
In 2017, FOB prices for natural dried mangoes ranged between €8 and €10 per kilo,
while the price of most sugar-infused dried fruit from Thailand was between US$3 and
US$5 US$/kg (€2.6–€4.3/kg).
The most common end-market prices ranges in Europe for selected dried tropical fruit
are the following:
 Dried mango: €20–€27/kg (US$21.62-US$29.19) — prices of organic dried

mangoes are higher;
 Dried pineapples: €15–€20/kg (US$16.22-US$21.62);
 Dried banana (banana chips): €6–€10/kg (US$6.49-US$10.81).
Table 22 below shows an approximate breakdown of the prices:
Table 22: Dried tropical fruit price breakdown

Steps in export process Type of price Average share
of the retail
price
Production of fruit or vegetables Raw material price (farmers’ price) 5–20%
Handling, processing and selling bulk product FOB or FCA price 20–30%
Shipment CIF price 35–50%
Import, handling and processing Wholesale price (value added tax included) 60%
Retail packing, handling and selling Retail price (for average packaging of 250g) 100%
5.3 KDL’s Competitive Advantage
A close study of the fruits and vegetables processing industry reveals that the market
has become much more intensely competitive over the last decade. As a matter of fact,
you have to be highly creative, customer centric and proactive if you must survive in
this industry. KDL Pineapple Value-Addition Project is aware of the competition and
we are prepared to compete favorably with other pineapple product processing
companies in Kampala and throughout Uganda.
Part of what is going to count as competitive advantage for KDL Pineapple Value-
Addition Project is our access to high quality inputs, attractive product presentation,
117
economies of scale and of course the vast experience of our management team, we have
people on board who are highly experienced and understand how to grow a business
from the scratch to profitability.
So also, KDL Pineapple Value-Addition Project has healthy relationships with loads of
major players in the industry within and outside Uganda. KDL Pineapple Value-
Addition Project will source for and install some of the latest processing equipment
and farm tools that will help it to cultivate and also process high quality pineapple.
Aside from KDL’s relationship (network) and equipment, the Company can confidently
boast that it has some the most experienced hands in the sales and marketing of
industrially-processed products in our payroll.
Lastly, KDL Pineapple Value-Addition Project employees will be well taken care of,
and their welfare package will be among the best within our category in the industry,
meaning that they will be more than willing to build the business with us and help
deliver our set goals and objectives. KDL Pineapple Value-Addition Project will also
provide good working conditions and commissions to freelance sales agents that we
will recruit from time to time.
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6.0 BUSINESS STRUCTURE & ORGANIZATIONAL MANAGEMENT
6.1 Introduction
A private limited liability company shall be duly incorporated by KDL Pineapple

Value-Addition Project, under the 251 Act 1 Companies Act of 2012, to implement and
run the project. The company shall be incorporated with appreciable level of authorized
share capital in order to attract able and willing investors to the project. The major
objective clauses of the proposed company shall include, amongst others: -
o Permission to own and operate agro-allied value-added equipment,
o Permission to acquire and operate a pineapple orchard,
o Permission to trade in agricultural products, etc.
The shareholders and directors in the company shall have, in addition to their
qualifications, enough passion and entrepreneurial skill to manage a fruit production
and valued-added processing project of this nature.
6.2 Management Structure
The paramount duty of the Board of Directors is to select a Chief Executive Officer
(CEO) and to oversee the CEO and the other senior management staff in the proper and
ethical operation of the company.
The Board would identify, and periodically update the qualities and characteristics
necessary for an effective CEO of the company. With these principles in mind, the
Board should periodically monitor and review the development and progression of
potential internal candidates against these standards.
The CEO will be in-charge of the day-to-day management of operations and is

responsible for ensuring that the company and management functions are organized,
run and developed in accordance with the law, Articles of Association and decisions
taken by the Board, and the Annual General Meeting of the Shareholders.
The management structure, presented in Figure 26 comprises of various mixed farm

management functions including farm management, production, sales & marketing and
accounts & finance.
The structure is characterized by clear assignment of responsibilities as well as a

reduced number of interfaces.
119
The selected CEO will be responsible for delivering policy and performance for
customers, society, staff, suppliers and the business. The core activities are briefly
described as under:
Figure 26: Proposed KDL Project Management Structure
General/Farm
Manager
Manager
Manager Manager
Marketing & Crop Agronomist Quality Control
Agriculture Finance & Admin
Logistics
Pineapple Pack
Quality Control
Accountant House
Staff [3]
Technicians [2]
Pineapple Pack Store Keepers (2)

Sales Clerks [2] House Operators
[15]
Drivers (4) Nucleus Farm

Workers (18)
6.3 Organizational Standard
The organization and management are structured in accordance with best practices in
the industry, and based on the manpower structure recommended by the
manufacturers of the factory equipment and the prevailing employment environment in
the country. The company will continuously strengthen every one's commitment to
satisfy customer needs in the most cost effective and efficient way by ensuring that
management behaviour, image, communication and recognition systems reflect the
norms and values that support quality, integrity and continual improvement.
6.4 Overall Farm Management
The farm management function will be the direct responsibility of the farm’s General
Manager. Core functions include responsibility for the financial and physical
performance of the farm that involves implementation of the KDL pineapple
production & processing nucleus farm enterprise and works with the other
120
departmental managers to ensure success. Farm management also optimizes the
performance of the farm as a unit in accordance with company policy.
6.5 Farm Production Function
The Farm Production Function is directly responsible for all the production aspects of
the KDL pineapple production & processing nucleus farm enterprise and will be
headed by the Production Manager. Key functions of this department include:
preparation and planning of farm tasks on a regular basis; planning, implementation,
and completion of daily and long-term farm production tasks; oversight and
supervision of all crop and livestock production on the mixed farm; ensuring that all
production employees adhere to company policies and guidelines; hiring, supervision,
and termination of production employees as necessary to fulfill priorities established by
the enterprise and remain within the company annual budget; management of farm
stores and oversight of distribution of wholesale and retail orders; management and
oversight of activities delegated top farm mechanics; management and oversight of all
production work crews; promotion of good employee morale and teamwork;
identification and resolution of problems and potential problems; promotion and
maintenance of good customer relations; and organization and conduct of farm tours
and other designated agricultural events.
6.6 Marketing and Sales Function
The sales and marketing function will bear the responsibility for the marketing and sale
of the mixed crop and livestock products produced by KDL Pineapple Value-Addition
Project. Part of the work under this function includes the advertising and marketing of
the mixed farm’s products.
6.7 Accounts & Finance Function
The accounts & finance function will be responsible for all financial matters in terms of
billing, settlement of invoices, negotiating and finalizing deals, effectively managing the
huge amount of cash that a mixed farm enterprise generates, managing administrative
expenses etc. Payment recovery and preparation of accounts in terms of quarterly, half
yearly and annual reports in line with audit requirements will be some of the other
responsibilities of this department. The personnel required will include one Accountant
and two (2) Sales Clerks.
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6.8 Technical Staff
The KDL pineapple production & processing nucleus farm’s technical/professional

staff includes a Quality Controller and Crop Agronomist. In an export-oriented
agricultural production enterprise like KDL Pineapple Value-Addition Project, the
work of the Quality Controller will be to provide technical services to the KDL
pineapple production & processing nucleus farm enterprise including but not limited to
ensuring that the products that the Company produces and markets all meet company
and customer expectations. QC will develop and coordinate activities and programs
necessary to meet and maintain quality standards. The QC department will work
closely with our Marketing & Logistics Department and our Repack department to help
manage inventories, workloads, and help provide better overall customer service
The Crop Agronomist on the other hand will take charge of all the disciplines of crop
production including variety selection, crop harvesting, soil management and crop
entomology at the mixed farm. The Crop Agronomist will liaise between the KDL
Pineapple Value-Addition Project and crop research institutions in Uganda, reviewing
detailed research findings and incorporating these into recommendations for the benefit
of the mixed farm enterprise. He/she will also ensure that new developments in crop
varieties, disease and pest control, crop rotation, and tillage systems are implemented
into the mixed farm’s growing operations.
6.9 Manpower Requirements
Details of manpower together with monthly wages and annual payments for KDL
Pineapple Value-Addition Project are shown in Table 23 below.
The Quality Control (QC) specialist position is to ensure that the products we ship all
meet company and customer expectations. QC will develop and coordinate activities
and programs necessary to meet and maintain quality standards. The QC department
will work closely with our Supply Chain Specialist and our Repack department to help
manage inventories, workloads, and help provide better overall customer service
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Table 23: Salary and Emoluments for KDL Pineapple Value-Addition Project
Designation Number Rate (US$) Monthly Salary Annual Salary
(US$) (US$)
Direct Labour
Manager Agriculture 1 1,500 1,500 18,000
Crop Agronomist 1 1,200 1,200 14,400
Quality Controller 1 1,200 1,200 14,400
Quality Control Staff 3 1,000 3,000 36,000
Pineapple Pack House Technicians 2 1,000 2,000 24,000
Pineapple Pack House Operators 15 400 6,000 72,000
Farm Hands 18 300 5,400 64,800
Allowances (20%) 4,060 48,720
Sub-Total 41 24,360 292,320
Indirect Labour
Chairman/CEO 1 3,000 3,000 36,000
General/Farm Manager/COO 1 2,000 2,000 24,000
Manager Finance & Administration 1 1,500 1,500 18,000
Manager Marketing & Logistics 1 1,500 1,500 18,000
Accountant 1 1,500 1,500 18,000
Sales Clerks 2 1,200 2,400 28,800
Store Keepers 2 1,000 2,000 24,000
Drivers 4 500 2,000 24,000
Allowances (20%) 3,180 38,160
Sub-Total 13 19,080 228,960
Grand Total [US$] 54 43,440 521,280
Grand Total [UGX] 160,728,000 1,928,736,000
The direct labour includes the KDL pineapple production & processing nucleus farm
direct production personnel in factory, while the indirect labour is made up of the
administrative personnel.
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7.0 OPERATIONAL PLAN
The concept of production refers to the transformation of inputs or resources into

outputs of goods & services. The inputs are the resources which used in the production
of goods & services. There are two kinds of inputs as Fixed Inputs & Variable Inputs.
The term Fixed Inputs refers that inputs or resources which cannot change be readily
changed during the time period under consideration, except perhaps at very great
expenses. The Variable Inputs refers that inputs or resources which can easily varied
and on very short notice.
The concept of Short–Run Time Period & Long–Run Time period is mostly used in the
production concept. For the Short–Run Time Period, we refer to the time period during
which at least one input act as fixed. And for the Long–Run Time Period, we refer to the
time period when all the inputs are variables.
7.1 Nucleus Farm Plan Strategy
KDL Pineapple Value-Addition Project has a government land allocation of 20 Acres

of land at the Namulonge NaCCRI site in Wakiso District – which is only about 30 kms
by road north-east of Kampala, Uganda’s capital city. KDL Pineapple Value-Addition
Project will use all the allotted 20 Acres as a nucleus pineapple production
demonstration farm unit for training of out grower pineapple farmers in modern
pineapple agronomy and also as a pineapple processing and export centre by parceling
it into appropriate sections for pineapples production area [14 Acres]; agro-processing
area [1 Acre]; administrative/residential area [2 Acres]; infrastructure space [1 Acre];
parking space [1 Acre]; and commercial area (including storage area) [1 Acre].
7.2 Crop Growth
Given Central Uganda’s climate and optimal growing conditions, pineapples grow well
on well drained fertile sandy loam soils. Pineapples can be easily propagated from
suckers, slips or crowns, with the latter being the most preferred planting material used
by Ugandan farmers. Suckers (off-shoots of a pineapple) take about 17 months to fruit;
slips (under growths of a pineapple) take about 20 months to fruit; while crowns (top
spikes of a pineapple) take about 22-24 months to fruit.
The table below (Table 24) shows the key pineapple planting and disease and
mitigation aspects that will be applied on the KDL Pineapple Value-Addition Project
nucleus demo farm at Namulonge.
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Table 24: Pineapple Seasons of Planting, their Diseases and Mitigation
FRUIT DAYS TO INSECT PESTS COMMON DISEASES MITIGATION
FIRST
HARVEST
Pineapples 17 months for  Nematodes  Phytophora root rot 1. Removal and destruction of infected
suckers  Smphyliids  Phytophora heart rot fruits.
20 months for  White grubs 2. Dipping of seed material in
 Mealy bug wilt rot
slips  Pineapple red mite
 Yellow spot appropriate fungicide.
22-24 months
for crowns 3. Avoidance of fruit wounding during
harvest.
4. Control of ants using an appropriate
insecticide.
5. Use of natural enemies such as lady
beetles to control mealy bugs
7.3 Method of Production
We have a proper Production Farm (P/F) for our production set-up with the name of
“KDL Pineapple Value-Addition Project Nucleus Demo Farm” (P/F) which has
control on each & every operation of the production. Our Production Line has following
characteristics as:
 Daily 9 Hours working time

 The project will have 5 (five) pineapple crop plantation areas that will be sub-
divided into 4 (four) field pineapple plantation crop areas of 2.5 Acres each and
one (1) plot for controlled pineapple production under greenhouse and nursery
bed conditions measuring 4 Acres.
 Quality Output
 Efficient use of inputs or resources
 Low or no wastage
 Minimum ratio of Natural Variation in the Final Output
 Labor & Machinery Oriented Assembly Line
 Have complete control on cost behavior of product cost
 No Extra–Qualified & Experienced Labor is required
For the operational practice of the KDL Pineapple Value-Addition Project Nucleus
Demo Farm, we required a huge capital outlay & manpower but all of these costs will
be no more when we get to break-even point with optimum production output and low
operating costs with minimum ratio of variation.
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7.4 Crops Production Output & Sales Plan
The 6-year projected annual production output and sales turnover of the KDL
Pineapple Value-Addition Project at its Namulonge-based pineapple nucleus demo
farm are displayed in Table 25 below.
Table 25: Pineapple Processing and Sales Plan (PY2 – PY6)

Description/Project Year 1 2 3 4 5 6
Installed Capacity
Dried Pineapples Kgs 48,000 48,000 48,000 48,000 48,000
Pineapple Juice Kgs 12,000 12,000 12,000 12,000 12,000
Capacity Utilization 50% 70% 80% 90% 90%
Dried Pineapples Kgs 24,000,000 33,600,000 38,400,000 43,200,000 43,200,000
Pineapple Juice Kgs 6,000,000 8,400,000 9,600,000 10,800,000 10,800,000
Output Input Ratio
Dried Pineapples % 28% 28% 28% 28% 28%
Pineapple Juice % 25% 25% 25% 25% 25%
Product Output
Prices (US$)
Dried Pineapples US$/Kg 9.30 9.77 10.25 10.77 11.30
Pineapple Juice US$/Kg 1.35 1.42 1.49 1.56 1.64
Sales Income (US$)
Dried Pineapples US$ 62,496,000 91,869,120 110,242,944 130,224,478 136,735,701
Pineapple Juice US$ 2,027,027 2,979,730 3,575,676 4,223,767 4,434,955
Net Sales Revenue (US$) 64,523,027 94,848,850 113,818,620 134,448,244 141,170,657
7.5 Daily Operating Schedule
The daily operating schedule for the “KDL Pineapple Value-Addition Project Nucleus
Demo Farm” will be set as follows:
 From 8:00 am to 1:00 pm

 1 Hour Lunch Break up to 2:00 pm
 From 2:00 pm to 6:00 pm
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7.6 Harvest and Quality Control
Market demand requires fresh, clean and attractively presented fruits and vegetables.
For organically grown fruits and vegetables consumers have even higher expectations
for appearance and cleanliness. The Farm Manager and workers are trained to
cultivate, harvest and handle (wash, package, chill) in keeping with these quality
standards.
Post-harvest handling of the harvested crops tends to be the most labour-intensive facet
of the operation, especially as fresh garden vegetables and greens are delicate and are
double washed. While our current packing facility is basic, we plan to install
customized faucets so that each sink cleaning area has overhead washing faucets with
shower-flow heads. This will free hands to concentrate on cleaning the product. After
each product has been washed, it is placed in small quantities (about five pounds) on
drying trays and the Farm Manager inspects the product. The Farm Manager has the
option to return the tray to the cleaner for additional washing. If the tray is excellent
quality then a packaging crew handles the boxing or bagging of the product. This
provides three points of inspection. Before a product leaves the farm a final check is
done by choosing a random item from each product. One item from each harvested
crop is also kept to monitor shelf life.
Quality Statement
“The quality is an integral part of our commitment to world – class products. Our aim is to
provide zero defected and zero variation products to our consumers”
For the Quality Enhancement Program in KDL Pineapple Value-Addition Project, we

will use the Statistical Process Control (SPC). In the SPC format, we will use a statistical
method for separating variations from the special cause to natural cause, for the
elimination of special cause variations and minimizing the natural cause variations on
the basis of fostering continual improvements in the fruit products production process.
7.7 Inventory Management
Every Monday of the week, KDL Pineapple Value-Addition Project will estimate yield
quantities for the week. Staff log anticipated yield numbers in a spreadsheet to manage
distribution. This system will help KDL Pineapple Value-Addition Project to
accommodate fluctuations in weekly yield to ensure customer satisfaction. To
maximize freshness, KDL Pineapple Value-Addition Project will harvest as soon as the
127
seasonal field crops are ready for harvest and maintain little inventory. For all points of
sale, our policy is to harvest and distribute the same day. KDL Pineapple Value-
Addition Project plans on installing a 760 cubic foot reefer (cold storage facility), which
will have an alarm system to monitor possible power outages.
7.8 Farm Business Management
A. Data Management
We would like to obtain or develop profit-tracking software which will help monitor all
specialty crop profit data.
B. Risk Management
We will look at the availability of crop insurance and as a farmer’s market distributor
we would also need to purchase marketing related liability coverage as well as property
and facility liability coverage.
C. Insurance
As a farmer’s market distributor we would also need to purchase marketing related
liability coverage as well as property and facility liability coverage.
D. Taxes
Given that the company is a legal corporation in the Republic of Uganda, it is subject to
standard corporate other business income taxes that are payable once annually to the
Uganda Revenue Authority (URA).
E. Licenses & Permits
KDL Pineapple Value-Addition Project determines to apply the Good Agriculture

Practices (GAP) training and third party audits.
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8.0 FINANCIAL ANALYSIS
This section evaluates various financial aspects of the project (cost of project, earnings
forecast, rates of return, payback period, cash flow, balance sheet, etc.). Wherever
calculations, workings, etc. are voluminous, a summarized version is presented in this
chapter and detailed calculations are given in the relevant Schedules of Financial
Analysis.
8.1 Important Assumptions
• We assume that the Ugandan economy grows at an average rate of 10% p.a.
without any major recession in the ten-year analysis period.
• We assume that the exchange rate remains stable at an average of UGX 3,700 to
US$1.0.
• We assume that the Ugandan economy remains in a stable non-hyper
inflationary rate of below 5% p.a.
• We assume that the background work on the proposed project implementation
aspects of KDL Pineapple Value-Addition Project will take 9 months to
complete as indicated in this Business Plan’s project implementation schedule.
• We assume that we will grow as managers during the process, this growth will
manifest itself as a flat line expense over the ten-year analysis period, leading to
increased annual cash flow.
• We assume access to equity capital and financing sufficient to maintain our
financial plan as shown in the tables and schedules (appended).
• We assume increase in popularity of the KDL Pineapple Value-Addition Project
pineapple nucleus farm outputs (i.e. dried pineapples and pineapple fruit juices)
by both the contractual export market buyers and wholesale/retail markets in
the targeted urban centres.
• Total Installed Capacity 60,000 MT per annum.
• The unit will operate in a single shift of 8 hours for 312 days.
• Share of products considered is 80 per cent and 20 per cent for each dried
pineapples and pineapple fruit juice respectively.
• Capacity utilization: First year – 50 per cent; second year – 70 per cent; third year
80 per cent and fourth year onwards – 90 per cent.
• Repayment period of five years with one year grace period has been considered.
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8.2 Introduction
For the purposes of this Business Plan we have assumed a medium-term loan of
US$3,477,570 is made available to the KDL Pineapple Value-Addition Project
enterprise.
The Business Plan tests the viability/profitability of the project against a bank charge
rate of 10.00% per annum. Repayments will commence after one (1) year grace period –
(i.e. in the second year of the project).
The medium-term loan will cover the cost of the KDL Pineapple Value-Addition
Project enterprise plant & equipment as well as buildings and on-farm infrastructure
and other operating capital assets.
An exchange rate of UGX 3,700 to US$1 has been used for purposes of this document.
8.3 Project Cost and Financing Plan
Total project cost is estimated at US$4,137,270 as shown below in Table 26 in

summarized form.
Table 26: Cost of Project (In US$)

Source of Finance Share Equity (US$) Loan (US$) Total (US$)
Fixed Costs
Land – 20 Acres 2.61% 108,100 0 108,100
Working Capital
TOTAL 100.00% 659,700 3,477,570 4,137,270
%age 15.95% 84.05% 100.00%
Funds will be required for the purchase of the KDL Pineapple Value-Addition Project
pineapple nucleus demo farm production inputs, purchase and installation of the KDL
130
Pineapple Value-Addition Project pineapple nucleus demo farm’s machinery and
equipment, construct a variety of the KDL Pineapple Value-Addition Project
pineapple nucleus demo farm infrastructure facilities, acquire pineapple nucleus demo
farm produce and products transportation vehicles and cover part of the initial pre-
operational expense budget. It is expected that the KDL Pineapple Value-Addition
Project pineapple nucleus demo farm will run for 365 days a year on a continuous basis
and in the second year capacity utilization will start off 50% eventually growing to 90%
of capacity utilization by Project Year 5.
Land:
The KDL Pineapple Value-Addition Project will use its government allocated land
based at the Namulonge NaCCRI [national Crops Resources Research Institute] in
Wakiso District – whose details are provided in Section 3.1 of this Business Plan. This
farm that measures 20 Acres (8.09 Ha.) is the basis for the operation of the pineapple
nucleus demo farm enterprise and accounts for a market value of US$108,100 at an
average rate of UGX20 million [US$5,405] per Acre.
Planned Mixed Crop Farm Infrastructure:

The KDL Pineapple Value-Addition Project plans to put up a number of farm building
infrastructure at the Namulonge pineapple nucleus demo farm including a farm
warehouse, a pineapples Pack House, pineapple nucleus demo farm greenhouses, a
vehicle parking area & unloading bay, a machine shed, one farm house, a generator
house, water storage tanks/reservoirs, a gatehouse and weighbridge, sanitary facilities
and a wastewater treatment system, a CIP & Solid Waste Management System as well
as a pineapple nucleus demo farm perimeter fencing and general land development.
The estimated cost of this farm infrastructure is US$785,000 and will be financed out of
medium-term loan finance capital.
Machinery and Equipment:

This pineapple nucleus demo farm component includes mechanized farming
equipment, assorted pineapple demo farm equipment & machinery, pineapple Pack
House equipment, pineapple post-harvest processing equipment, processed pineapple
storage & packaging equipment, a 200 kVA electric generator, a 110 kW Solar-powered
Water Supply & Irrigation System plus miscellaneous agro-industrial equipment and
accessories with a cost value of US$2,692,570. This capital cost component will also be
financed out of the medium-term loan finance facility.
Transportation Vehicles:
There are two (4) vehicle units required by the KDL Pineapple Value-Addition Project
131
including 2 utility pick-up vehicle and 2 Fuso-type trucks. Farm vehicles are required
for the movement of raw material and other inputs into the pineapple demo farm and
for the transportation and distribution of marketable pineapple demo farm products to
market and are estimated to cost US$200,000. The component budget for the
transportation vehicles will be covered by the principal project promoter – KDL
Pineapple Value-Addition Project.
Furniture & Fixtures:

This will include office furniture and fixtures as well as office equipment like
computers, operational software etc. valued at US$51,600. This budget component will
also be borne by the principal project promoter – KDL Pineapple Value-Addition
Project.
Working Capital:
Crop farming is a business in which cash flow is very high and companies in the
industry tend to generate cash surpluses on a regular basis, most of the crop products
are sold on cash basis on the market. Working capital is mostly required for paying for
purchase of vital production inputs such as crop seeds and seedlings, crop protection
agro-chemicals, fertilizers and pest-control chemicals, various crop farming
consumables, packaging materials, agricultural products in cold and dry storage that
have to be preserved and/or dried before release into the market, for paying of utility
bills, wages, fuel for vehicles and for spares and also for covering the initial salaries and
wages payroll during the first 3-6 months of the project. The Working Capital
requirements have been estimated at US$300,000 and will be financed by the project
promoter – KDL Pineapple Value-Addition Project.
8.4 Financial Plan
The project is proposed to be financed through a combination of project promoter’s

equity and development bank institutional financing in the ratio of 84:16 respectively.
The development bank institutional loan will carry a bank charge rate of 10.00 percent
per annum payable over a period of six years.
132
Table 27: Financial Plan (In US$)
Source of Finance/Component Share Local Foreign Total
Currency Currency
1) Financial Assistance
Medium-Term Development Loan
Farm Buildings 18.97% 785,000 0 785,000
Farm Plant & Equipment 65.08% 269,257 2,423,313 2,692,570
Sub-Total (1) 84.05% 1,054,257 2,423,313 3,477,570
2) Equity
Project Sponsors [KDL Project]
Land [20 Acres] 2.61% 108,100 0 108,100
Office Fixture Furniture & Equipment 1.25% 51,600 0 51,600
Vehicles [4 units] 4.83% 200,000 0 200,000
Working Capital 7.25% 300,000 0 300,000
Sub-Total (2) 15.95% 659,700 0 659,700
TOTAL (1) + (2) 100.00% 1,713,957 2,423,313 4,137,270
8.5 Profit & Loss Account
The projected income statement for the KDL Pineapple Value-Addition Project is
given in Table 28 below.
Table 28: Summary Profit & Loss Account for First Five Years of the Project (In US$)
Description Year 2 Year 3 Year 4 Year 5 Year 6
Sales 64,523,027 94,848,850 113,818,620 134,448,244 141,170,657
Less: Cost of Goods Sold 50,309,421 73,954,849 89,222,576 106,606,389 111,936,708
Gross Profit 14,213,606 20,894,001 24,596,044 27,841,856 29,233,949
Less: Operating Expenses 3,079,751 3,948,351 4,520,941 5,140,919 5,397,965
Operating Profit 11,133,855 16,945,649 20,075,103 22,700,937 23,835,984
Less: Bank interest payment 348,000 280,000 210,000 140,000 70,000
Less: Loan service 680,000 700,000 700,000 700,000 700,000
Provision for Tax (30%) 3,031,757 4,789,695 5,749,531 6,558,281 6,919,795
Net Profit 7,074,099 11,175,954 13,415,572 15,302,656 16,146,189
Cum. Retained Earnings 7,074,099 18,250,053 31,665,625 46,968,281 63,114,470
8.6 Rates of Return
On the basis of the projected income statements and related projections, rates of return
for the project are calculated and shown in Table 29:
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Table 29: Rates of Return
Gross Profit to Sales 22.03% 22.03% 21.61% 20.71% 20.71%
Operating Profit to Sales 17.26% 17.87% 17.64% 16.88% 16.88%
Net Profit to Sales 10.96% 11.78% 11.79% 11.38% 11.44%
Net Profit to Investment 170.98% 270.13% 324.26% 369.87% 390.26%
8.7 Payback Period
Payback period for the project, both in terms of owner’s equity and total investment, is
calculated below:
Total Project Investment = US$4,137,270

KDL Project Equity = US$659,700
“Profits” = Net Profit + Bank Charges + Depreciation
Table 30: Calculation of Payback Period for Equity and Total Investment (In US$)
Year Amount paid back from Balance of Total Investment Balance of Total Equity
“Profits” [US$] [US$]
1 0 -4,137,270 -659,700
2 7,756,141 3,618,871 7,096,441
3 11,789,996 15,408,867 18,886,437
4 13,959,614 29,368,481 32,846,051
5 15,776,698 45,145,179 48,622,749
Payback period for Equity = 1.09 Years

Payback period for Loan-Financed Investment = 1.53 Years
8.8 Capital: Output Ratio
Capital output ratios, representing the production potential of the project in relation to
the investment involved in its establishment, are calculated in Table 31:
Table 31: Capital: Output Ratios (In US$)

Total Investment 4,137,270 _ _ _ _
Sales (Output) 64,523,027 94,848,850 113,818,620 134,448,244 141,170,657
Capital: Output Ratio 1: 15.60 1: 22.93 1: 27.51 1: 32.50 1: 34.12
134
8.9 Cash Flow
The projected cash flow for the first six years of the project is shown hereunder:
Table 32: Projected Cash Flows (In US$)

Project Year 1 2 3 4 5 6
Costs (US$)
A. Cash inflow 4,137,270 64,523,027 94,848,850 113,818,620 134,448,244 141,170,657
1. Financial resources Total 4,137,270 _ _ _ _ _
2. Sales revenue total _ 64,523,027 94,848,850 113,818,620 134,448,244 141,170,657
B. Cash outflow -4,137,270 -16,896,457 -14,125,650 -14,019,663 -15,742,590 -14,301,308

1. Total assets schedule
including replacements -4,137,270 -9,748,950 -4,399,604 -2,831,191 -3,195,390 -1,205,548
2. Operating Costs _ -3,079,751 -3,948,351 -4,520,941 -5,140,919 -5,397,965
3. Debt Service
a) Bank charges _ -348,000 -280,000 -210,000 -140,000 -70,000
b) Repayments _ -680,000 -700,000 -700,000 -700,000 -700,000
4. Corporate tax _ -3,031,757 -4,789,695 -5,749,531 -6,558,281 -6,919,795
5. Dividends 4% on equity _ -8,000 -8,000 -8,000 -8,000 -8,000
C. Surplus / deficit 0 47,626,570 80,723,200 99,798,956 118,705,655 126,869,348
D. Cumulative cash balance 0 47,626,570 128,349,770 228,148,727 346,854,381 473,723,730
8.10 Balance Sheet
Projected balance sheet for the first five years of operation is shown below:
135
Table 33: Projected Balance Sheet (In US$)
CAPITAL EMPLOYED: YR.1 YR.2 YR.3 YR.4 YR.5 YR.6
Share Capital 200,000 200,000 200,000 200,000 200,000
Retained Earnings 7,074,099 18,250,053 31,665,625 46,968,281 63,114,470
Shareholder's Equity/Deficit 7,274,099 18,450,053 31,865,625 47,168,281 63,314,470
Long-Term Liabilities 3,480,000 3,480,000 2,800,000 2,100,000 1,400,000 700,000
3,480,000 10,754,099 21,250,053 33,965,625 48,568,281 64,014,470
EMPLOYMENT OF CAPITAL: `
Farm Buildings & Infrastructure 785,000 765,375 745,750 726,125 706,500 686,875
Farm Equipment & Machinery 2,692,570 2,423,313 2,154,056 1,884,799 1,615,542 1,346,285
Office Furniture & Equipment 51,600 41,280 30,960 20,640 10,320 20,000
Farm Vehicles 200,000 160,000 120,000 80,000 40,000 200,000
LONG-TERM ASSETS: 3,729,170 3,229,968 2,930,766 2,631,564 2,332,362 2,053,160
CURRENT ASSETS: -249,170 8,317,040 19,248,480 32,325,257 47,307,146 63,009,099
Accounts Receivable 256,646 329,029 376,745 428,410 449,830

Stock (Inventory) 9,477,804 13,807,857 16,594,249 19,740,891 20,727,936
Bank Balance and Cash 14,500 11,667 8,750 5,833 2,917
Other Current Assets -1,431,909 5,099,927 15,345,512 27,132,012 41,828,416
CURRENT LIABILITIES/DEBT: 792,910 929,193 991,196 1,071,228 1,047,789

Accounts Payable 444,910 649,193 781,196 931,228 977,789
Current Portion of Long-term
Liabilities 348,000 280,000 210,000 140,000 70,000
NET CURRENT ASSETS: -249,170 7,524,131 18,319,287 31,334,061 46,235,919 61,961,310
TOTAL CAPITAL 3,480,000 10,754,099 21,250,053 33,965,625 48,568,281 64,014,470
8.11 Break-Even Analysis
The project’s commercial break-even level (profitability break-even) in Project Year 5 is

calculated in Table 34 below:
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Table 34: Break-Even Analysis in Project Year 5 (In US$)
Items VC FC TC
Fresh/Raw Pineapples 25,342,601 8,447,534 33,790,135
Export Preparation Costs 1,926,925 642,308 2,569,233
Packaging Costs 42,906,190 14,302,063 57,208,253
Utilities 9,779,076 3,259,692 13,038,767
Salaries and Wages 402,298 201,149 603,447
Maintenance & Repair 71,950 35,975 107,925
Sales & Marketing Expenses 1,792,643 896,322 2,688,965
Transportation Expenses 570,941 285,470 856,411
Pineapple Demo Farm Overheads 173,644 86,822 260,466
Administration Costs 231,525 115,763 347,288
Insurance 22,211 11,105 33,316
Consumable Stores 69,458 34,729 104,186
Miscellaneous & Contingencies 92,610 46,305 138,915
Depreciation 0 334,042 334,042
Financial Expenses 0 140,000 140,000
TOTAL 83,382,071 28,839,279 112,221,349
Sales Value of Production = US$134,448,244
Break-even Sales = 28,839,279 = 28,839,279 = 28,839,279

1 – 83,382,071 1 – 0.6202 0.3798
134,448,244
Break-even Sales = US$75,928,743
Capacity utilization required to Break-even = US$75,928,743 x 100 = 56.47%

US$134,448,244
8.12 Value Added/Contribution to GDP
Implementation of the project is expected to have a beneficial economic impact on

regional/national economic development. The project’s contribution towards the
country’s Gross Domestic Product (GDP) is estimated in Table 35 below.
137
Table 35: Calculation of Value Added (In US$)
Value of Production (Sales) 64,523,027 94,848,850 113,818,620 134,448,244 141,170,657
Less Intermediate Input:
Cost of Goods Sold (CoGS) 50,309,421 73,954,849 89,222,576 106,606,389 111,936,708
Maintenance & Repair 93,230 97,892 102,786 107,925 113,322
Other Operating Costs 2,226,461 3,052,397 3,580,189 4,153,129 4,360,785
Depreciation 334,042 334,042 334,042 334,042 334,042
Total Intermediate Inputs 52,963,154 77,439,180 93,239,593 111,201,485 116,744,857
Value Added 11,559,873 17,409,670 20,579,027 23,246,760 24,425,800
Value Added as a %age of Output 17.92% 18.36% 18.08% 17.29% 17.30%
Value Added per Worker 214,072 322,401 381,093 430,496 452,330
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9.0 RISK ASSESSMENT & CONTINGENCY PLAN
9.1 Risk Assessment and Mitigation
The following table summarizes the important challenges and our mitigation
approaches.
Table 36: Risk Assessment and Mitigation

RISK MITIGATING FACTORS
Organic crop and  Thoroughly tested organic methods and systems
production fails  Expert technical assistance available
through pests, natural  To anticipate losses, yield assumptions are conservative
causes, and or other  Ongoing research experiments to ensure new learning
unforeseen
circumstances.
Market risks caused by  The high rate of population and the strong and consistent growth in global food
price fluctuations due and cash crop markets mitigates and softens this market risk
to low demand
Political and economic  The political and economic conditions in Uganda are quite conducive for business
risk and trade both internally and outside. Uganda enjoys security, peace and freedom
for citizens and property. It has close links with the East African Community,
COMESA, IGAD, EU and USA where goods and services can be exported at
competitive prices. This symbolizes the good economic conditions Uganda is
having with outside countries which benefits agricultural producers
Fiscal risks of foreign  Liberalization of the Ugandan economy has eliminated the forex availability and
exchange and headline stability risk
inflation  This is determined by market forces but controlled by government through use of
fiscal and monitory policies. It is of an advantage that international project
financing loans do not exceed 10% interest rate for agricultural sector
investments. Uganda’s inflation is now standing at 5 to 6% but keeps fluctuating
depending on high and low yields of production and fuel price fluctuations.
Force Majeure risks  Lightning/thunder can be controlled by the terrain and lie of the land where the
such as floods, crops are to be planted – meaning that the farm buildings and other infrastructure
earthquakes, should be protected against lightning strikes using lightning arrestors.
lightning/thunder,  Livestock to be ensured by pursuing rigorous and regular livestock health and
drought, and crop and disease prevention and control programmes.
livestock disease  Apply constant and consistent crop protection methodologies involving the use of
epidemics herbicides and IPM (Integrated Pest Management) techniques.
Low Sales  Regular customer feedback.
 Diversified product mix.
 Proven demand for products.
 Diversity of markets.
 Options to reduce expenses, if necessary.
High operating costs,  Diversity of markets increase direct sales and improve margins.
139
low margins  Source lower cost local supplies, e.g., animal manure.
Difficulty in attracting  Grow committed farm workers from within the KDL Pineapple Value-Addition
suitable staff Project system and expose early to other benefits – trips to conferences, site
visits.
 Seen at the moment as doing cutting edge work so we are in high demand.
Operational problems,  Thoroughly tested system.
poor food quality,  Technical assistance available to investigate unforeseen crop failures.
delivery time  KDL Pineapple Value-Addition Project system reinforces importance of product
quality, assessment and feedback given to farm staff three days per week.
Marketing problems,  Diversity of end markets.
regulatory barriers and  Certified organic status to be achieved.
costs  Farmer training classes to teach safe food handling strategies.
Departure of key  Inherent to KDL Pineapple Value-Addition Project system is the training,
project employees empowerment and employment of company staff.
 KDL Pineapple Value-Addition Project Board will create a succession plan.
9.2 Market Risks Assessment Matrix
Lastly, a risk analysis was done revealing market risks and ways of mitigation these
risks. Market risks exist in three categories namely; customer risk, competitor risk and
supplier risk. However, in this analysis, we used the risk assessment matrix to identify
risks of highest priority down to the lowest ones. This enables us to assess the impact of
the risks on the business start-up.
Figure 27: Market Risk Assessment Matrix
Fire outbreak in the Late delivery of

High
(Severity of potential consequences)
warehouses/plant Health risk through accidents and products to Highest

machine breakdown sikcness customers priority
Medium
Impact
Theft of business ideas by Medium

competitors NEMA regulations priority
Low
Lowest
Advancement in technology priority
small medium high
Likelihood
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A market risk management plan was developed to help recognize and rationally
respond to both the most obvious risks and the unanticipated occurrences irrespective
of the magnitude in a cost effective manner. The risk management plan is shown in the
table below.
Table 37: Market Risk Management Plan for KDL Project Pineapple Nucleus Demo Farm Operations
Priority Risk factor Type Likelihood Severity of Mitigation tactics
potential
impact
1 Late delivery of Operational High Large - Increase production capacity.

products to - Improve products supply chain
customers logistics.
2 Health risk Operational Medium Large - Health Insurance.

- Protective gear
- Visible signs
- Mandatory regular checks
3 Machine Technology Small Large - Maintenance

breakdown - Insurance of plant machines
- Train local engineers
- Maintain inventory of machine
parts to avoid having to spare
parts at short notice
4 Fire outbreak in Operational Small Large - Install First Aid kit

storage - Install fire extinguisher
warehouses - Fire drill start training
- Emergency exit points
5 Theft of business Competition Medium Medium - Protect exhibits,

ideas measurements and
ingredients during
presentations
6 Advancement in Technology Medium Low - Upgrade for particular

technology machine parts
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9.3 SWOT Analysis
Internal Strengths: Internal Weaknesses:
 Devotion to the pineapple nucleus demo farm  Off-farm jobs take precedence over farming.
business.  Need to generate high income from a medium-sized
 Well known in the community and reputation for area to be financially viable.
quality.  Need income stability, but produce prices fluctuate.
 Commitment to quality and success.  Time and labour are an issue at peak time.
 Off-farm income is helpful for start of the farm  Transportation and delivery to consumer markets
enterprise. have been an issue of time and money.
 Land area and capacity with good soils.  Capacity may be limited due to capital equipment
 The use of high-input technology. purchase and start-up costs.
 Attend trainings and workshops for management and  New growers are entering the market.
production.  Limited commercial bank credit for agricultural
 Ability to extend the growing season and control projects in Uganda.
disease.  High interest rates on loans for agriculture in Uganda.
 Better insight into consumer preferences of the  Being a new pineapple production and
informal African sector. processing enterprise on the fruit products
 The Namulonge NaCCRI farm at Namulonge in market, it might take KDL time to attract big time
Wakiso District is the food crop research nucleus of customers in the industry. KDL aware of this and from
Uganda that has been in existence since 1947 and its its projection; it will overcome this weakness with time
world-famed crop research reputation and leadership and turn it to a major advantage for the Company.
provides the proposed KDL Pineapple Value- 
Addition Project a strong starting point for its
proposed pineapple production & research activities.
 Skilled labour in agricultural research and production
and production in Uganda is readily available.
 KDL Pineapple Value-Addition Project will acquire,
install and operate some of the latest processing
equipment and commercial farm tools that will help it
to cultivate, process and package pineapple products
of high quality that are market-competitive.
 Product quality from modern pineapple processing
technology.
 Modern technology can be used to process other fruits
being produced in large volumes in Uganda.
 Versatility of machines, can process other fruits
with minimal adjustment of machines.
 Manageable investment, etc.
External Opportunities: External Threats:
 Favourable and conducive political, economic, social  Local Farms are Competitors.
and environmental macro factors for agricultural  Consumer tastes and preferences vary.
production and investment in Uganda.  Unpredictable weather conditions.
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 Location of the proposed KDL Pineapple Value-  Disposable income of consumers and what they are
Addition Project at Namulonge in central Uganda and willing to pay for processed food products in Uganda.
the existence of an excellent all-weather road network  Distribution costs.
puts it in a good vantage position to exploit the  Additional supplies from new producers/processors
neighbouring regional agricultural markets. may lead to over-supply and falling of prices.
 If located near towns (e.g. peri-urban) concentrates on  Rising costs of inputs.
perishable crops.  While competition from fresh produce poses a threat,
 Target products have good prospects on both the demand for industry staples will continue to grow
domestic and export market sectors. across the global market.
 Will exploit opportunities to supply Government food  Some of the threats and challenges that KDL is likely
contracts. going to face when it starts its own pineapple
 Improve quality and quantity to supply formal production and processing enterprise are global
marketing channels. economic downturn (global recession) and/or a global
 Farmers and agri-business are under political pressure pandemic like the current corona virus (COVID-19)
to work with new, small-scale farming sector. pandemic that can impact negatively on household
 Possibilities for range or other rurally based spending, bad weather-cum-natural disasters,
enterprises to increase income, e.g. added value, unfavorable government policies and the arrival of a
contract labour services. competitor within the same location. There is hardly
 Lack of quality agricultural produce at chain food anything that can be done as regards these threats
stores. other than to be optimistic that things will continue to
 Chain stores shelf-life of fruits is very short and lack work for the common good.
flavour.
 Other pineapple fruit processing technologies to be
explored.
 Growing food demand worldwide.
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10.0 SUSTAINABILITY AND EXPANSION STRATEGY
The future of a business lies in the number of loyal customers that they have, the
capacity and competence of their employees, their investment strategy and business
structure. If all of these factors are missing from a business, then it won’t be too long
before the business closes shop.
One of our major goals of setting up the proposed KDL Pineapple Value-Addition
Project is to build a business that will survive off its own cash flow without the need for
injecting finance from external sources once the business is officially running.
We know that one of the ways of gaining approval and winning customers over is to
retail our well – processed and well – packaged pineapples a little bit cheaper than what
is obtainable in the market and we are prepared to survive on lower profit margin for a
while.
KDL Pineapple Value-Addition Project will make sure that the right foundation,
structures and processes are put in place to ensure that our staff welfare are well taken
of. Our Company’s corporate culture is designed to drive our business to greater
heights and training and re-training of our workforce is at the top burner.
KDL Pineapple Value-Addition Project knows if that is put in place, the Company it
will be able to successfully hire and retain the best hands it can get in the industry; the
Company will be more committed to help it build the business of our dreams.
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11.0 ECONOMIC JUSTIFICATIONS
11.1 Economic Rate of Return
The project will yield an Economic Rate of Return (ERR) of 75%. This rate is adequate
when compared with the prevailing development bank's opportunity cost of Capital of
10% being applied in the country.
11.2 Value Added
The project is expected to contribute USD 97.22 million (UGX 359.72 billion) over a
period of five years in Gross Value Added to the national income. This is equivalent to
USD 1.80 million (UGX 6.661 billion) per person employed and 60.7% of net sales
revenue.
11.3 Foreign Exchange Effects
The net foreign exchange savings to be generated over a period of five years stands at
US$531,568,243 (UGX 1,966.80 billion) for the project. This gives a ratio of foreign
exchange saving/total project cost of 475,387:1 for the project.
11.4 Employment
The implementation of the project will generate direct employment for 54 persons and
intended external employment for over 200 persons. This gives an average capital cost
per person employed of US$ 76,616 (UGX 283,479,611.00) which is considered
satisfactory when compared with other similar projects in the sector.
145
12.0 CONCLUSION AND RECOMMENDATIONS
12.1 Conclusion
Based on the business concept, the financial model and macro-economic assumptions
built into the financial forecasts of the project, it can be boldly stated that the model
project is financially feasible, economically viable and developmentally sustainable for
both internal and external financing. However, it is important to recognize that the
underlining assumptions are subject to change and are not necessarily reflective of
actual results that may be experienced. The actual ability for the project to achieve the
results stated is contingent on the would-be sponsors’ determination to control factors
to the extent possible in line with the assumptions.
The KDL Pineapple Value-Addition Project will not only lead to increased pineapple
fruit production in Uganda, but also greatly improve the economic return to all
pineapple farmers in the key production areas of Uganda, step up value-added to the
pineapple fruit commodity, substitute for imported pineapple fruit juices in the
domestic market, create hundreds of direct and indirect employment within the
Ugandan domestic pineapple value chain, and generate substantial hard currency
earnings for the economy and generally boost Uganda’s balance of trade account.
The project also shows encouraging pay back rate of 1.53 years with a scale of operation
and marketing capability required to ensure sustained long term return on investment.
This will also ensure a project break-even point within a short period.
12.2 Recommendations
Based on the above therefore, we recommend the project for productive utility of the
allocated 20 Acres at the Namulonge NaCCRI as a pineapple nucleus demonstration
farm/hub for incremental training and instruction of Good Agricultural Practices in the
Uganda production and pineapple value chain and also for any possible project
financial procurement by KDL Pineapple Value-Addition Project to promote and
grow the enterprise as a promising start-up enterprise.
The project has the capability to generate enough cash-flow to offset the liability, while
carving a niche for itself in the domestic pineapple juice and export dried fruit market.
146
ANNEX I: PROJECT FINANCIAL ANALYTICAL SCHEDULES
Schedule 01: Key Financial Modeling Assumptions
Table 38-1: Pineapple Input-Output Assumptions

Project Year 1 2 3 4 5 6
Raw Pineapple Input at Installed Capacity Kgs 60,000,000 60,000,000 60,000,000 60,000,000 60,000,000
Dried Pineapples [80%] Kgs 48,000,000 48,000,000 48,000,000 48,000,000 48,000,000
Pineapple Juice [20%] Kgs 12,000,000 12,000,000 12,000,000 12,000,000 12,000,000
Dried Pineapples [80%] Kgs 24,000,000 33,600,000 38,400,000 43,200,000 43,200,000
Pineapple Juice [20%] Kgs 6,000,000 8,400,000 9,600,000 10,800,000 10,800,000
Output: Input Ratio
Pineapple Juice % 25% 25% 25% 25% 25%
Product Output
Fresh Pineapple Prices US$ 0.54 0.57 0.60 0.63 0.66
Table 38-2: Economic Related Assumptions

Inflation rate p.a. 5%
Wage growth rate p.a. 5%
Electricity growth rate p.a. 5%
Operating expenses growth rate p.a. 5%
Sales prices growth rate p. a. 5%
Table 38-3: Operating Expense Assumptions in Project Year 2 (In US$)

Export Preparation Costs US$0.15/Kg 1,233,000
Packaging Costs US$3.34/Kg of Output Products 27,454,800
Utilities p.a. (PY 2) US$0.658/Kg of Output Products 5,405,405
Salaries & Wages Please, refer to Table 23 on page 123 for details 521,280
Repair & Maintenance Expense 2.5% of Capital Investment Costs p.a. 93,230
Sales & Marketing Expenses 2% of Sales Revenues p.a. 1,290,461
Transportation Expense US$0.05/Kg of Output Products 411,000
KDL Nucleus Farm Overheads US$225,000 p.a. increasing at a rate of 5% p.a. 225,000
Administration Expense p.a. US$25,000 p.m. 300,000
Insurance Expense 0.75% of Total Capital Investment Costs p.a. 28,780
Consumables Expense (PY4) US$7,500 p.m. 90,000
Sundry & Miscellaneous Expense5 US$10,000 p.m. 120,000
5 These cover the hidden and incidental costs of doing business including casual labour.
147
Table 38-4: Financing Assumptions
Bank charge rate on medium-term finance 6%
Debt (Medium-Term Loan) US$3,480,000
KDL Project Equity US$659,700
Debt tenure (Years) 6
Grace Period (Years) 2
Annuity payments per Year 1
Table 38-5: Depreciation Rates

Building and infrastructure 2.5%
Plant Machinery & Equipment 10%
Miscellaneous Fixed Assets 10%
Office Furniture & Equipment 20%
Vehicles 20%
Table 38-6: Cash Flow Assumptions

Accounts Receivable Cycle (In Days) 30
Accounts Payable Cycle (In Days) 30
Initial cash at hand (US$) 120,000
Pre-Operating Cost (US$) 180,000
Exchange Rate: - UGX 3,700 = US$ 1
Inflation Rate: Assume Uganda remains a non-hyperinflationary economy

[up to 5% p.a.] over the ten year financial analysis period.
148
Schedule 02/1: Initial Project Investment Costs (In US$)
Account Head Total Cost (US$)
Land [20 Acres] @ Acre = US$5,405/Acre 108,100
Mixed Farm Buildings & Structures 785,000
Mixed Farm Machinery & Equipment 2,692,570
Transportation Vehicles 200,000
Office Furniture & Equipment 51,600
Total Fixed Costs 3,837,270
Raw Material Inventory 120,000
Pre-Operating Expenses 60,000
Initial Working Capital 120,000
Total Working Capital 300,000
Total Project Cost (US$) 4,137,270
Schedule 02/2: Source and Structure of Project Financing (In US$)

Source of Finance %age Equity Loan Total
Fixed Costs
Land - 20 Acres 2.61% 108,100 0 108,100
Working Capital6
TOTAL 100.00% 659,700 3,477,570 4,137,270
%age 15.95% 84.05% 100.00%
6 Working capital is the initial project investment expenditure after CAPEX (capital expenditure) and involves initial margin money
for purchase of agricultural inputs (seeds and agrochemicals), fuel & power and other expenses as well as for the payment of
salaries & wages for the first 6 months of the KDL Pineapple Value-Addtion Project mixed farm operations.
149
Schedule 03/1: CALCULATION OF WORKING CAPITAL:
I Minimum Requirements of Current Assets and Liabilities
(a) Accounts receivable: 30 days at total production costs minus depreciation

and bank charges
(b) Inventory:
Cost of Sales: 30 days
Salaries & Wages: 30 days
Production Operations: 60 days at total operating expenses
Building & Eqpmt maintenance: 90 days
Work in progress: 9 days at total cost of sales
Finished products: 18 days at total cost of sales
© Cash-in-hand: 15 days, see separate calculations at the bottom of

Schedule 03/4.
(d) Accounts payable: 30 days of 10% total operating expenses
N.B.: All the local cost price factors for cost of sales, operational costs and working
capital are indicated in US Dollars for the ease of computational and financial analysis.
150
Schedule 03/2: Calculation of Working Capital: II Projected Annual Pineapple Processing Income Estimates (In US$)
Description/Project Year 1 2 3 4 5 6
Installed Capacity
Dried Pineapples Kgs 48,000 48,000 48,000 48,000 48,000
Pineapple Juice Kgs 12,000 12,000 12,000 12,000 12,000
Output Input Ratio
Pineapple Juice % 25% 25% 25% 25% 25%
Product Output
Prices (US$)
Dried Pineapples US$/Kg 9.30 9.77 10.25 10.77 11.30
Pineapple Juice US$/Kg 1.35 1.42 1.49 1.56 1.64
Sales Income (US$)
Dried Pineapples US$ 62,496,000 91,869,120 110,242,944 130,224,478 136,735,701
Pineapple Juice US$ 2,027,027 2,979,730 3,575,676 4,223,767 4,434,955
Net Sales Revenue (US$) 64,523,027 94,848,850 113,818,620 134,448,244 141,170,657
151
Schedule 03/3: Calculation of Working Capital: III Annual Production Cost Estimates (In US$)
ACCOUNT HEAD FINANCIAL YEAR OF OPERATION
YEAR 1 2 3 4 5 6
Operating Costs (US$)
Cost of Goods Sold
Fresh Pineapples 16,216,216 23,837,838 28,605,405 33,790,135 35,479,642
Export Preparation Costs 1,233,000 1,812,510 2,175,012 2,569,233 2,697,695
Packaging Costs 27,454,800 40,358,556 48,430,267 57,208,253 60,068,666
Utilities 5,405,405 7,945,945 10,011,891 13,038,767 13,690,706
Sub-Total Cost of Goods Sold 50,309,421 73,954,849 89,222,576 106,606,389 111,936,708
Overhead Costs
Salaries and Wages 521,280 547,344 574,711 603,447 633,619
Maintenance & Repair 93,230 97,892 102,786 107,925 113,322
Sales & Marketing Expenses 1,290,461 1,896,977 2,276,372 2,688,965 2,823,413
Transportation Expenses 411,000 604,170 725,004 856,411
KDL Nucleus Farm Overheads 152,713 225,000 236,250 248,063 260,466
Administration Costs 300,000 315,000 330,750 347,288 364,652
Insurance (0.75% of Capital Investments) 28,780 30,219 31,730 33,316 34,982
Consumable Stores 90,000 94,500 99,225 104,186 109,396
Miscellaneous & Contingencies 120,000 126,000 132,300 138,915 145,861
Sub-Total Overhead Costs 3,079,751 3,948,351 4,520,941 5,140,919 5,397,965
Total Operating Expenses 53,389,172 77,903,201 93,743,517 111,747,307 117,334,673
Financial Costs (USD)

Bank Charges on Medium Term Loan (@ 10% p.a.) 348,000 280,000 210,000 140,000 70,000
Depreciation 171,900 334,042 334,042 334,042 334,042
Total Financial Costs 682,042 614,042 544,042 474,042 404,042
Total Production Costs 54,071,214 78,517,243 94,287,559 112,221,349 117,738,715
152
Schedule 03/4: Calculation of Working Capital: IV Working Capital Requirements (In US$)
X Y Requirements (US$)
Minimum Coefficient
days of
Item of coverage turn-over PY 2 PY 3 PY 4 PY 5 PY 6
I. Current assets
A. Accounts receivable 30 12 256,646 329,029 376,745 428,410 449,830
B. Inventory
a) Cost of Production 30 12 1,351,351 1,986,486 2,383,784 2,815,845 2,956,637
b) Salaries & Wages 30 12 43,440 45,612 47,893 50,287 52,802
c) Mixed Crop Farm Operations 60 6 513,292 658,059 753,490 856,820 899,661
d) Maintenance & Repair 90 4 23,308 24,473 25,697 26,981 28,330
e) Work-in-Process 9 40 1,257,736 1,848,871 2,230,564 2,665,160 2,798,418
f) Finished Products 18 20 6,288,678 9,244,356 11,152,822 13,325,799 13,992,089
C. Cash-in-hand (from V below) 15 24 14,500 11,667 8,750 5,833 2,917
D. Current assets 9,748,950 14,148,553 16,979,745 20,175,135 21,180,683

_ _
II. Current Liabilities
A. Accounts payable -444,910 -649,193 -781,196 -931,228 -977,789
30 12
III. Working Capital
A. Net Working Capital 9,304,040 13,499,360 16,198,549 19,243,907 20,202,894
B. Increase in Working Capital _ 4,195,320 2,699,189 3,045,358 958,987
IV. Total Production Costs 54,071,214 78,517,243 94,287,559 112,221,349 117,738,715

_ _
Less: Cost of Sales 50,309,421 73,954,849 89,222,576 106,606,389 111,936,708
Sales Expenses _ _ 3,079,751 3,948,351 4,520,941 5,140,919 5,397,965
Depreciation _ _ 334,042 334,042 334,042 334,042 334,042
_ _ 348,000 280,000 210,000 140,000 70,000
V. Required Cash Balance 15 24 14,500 11,667 8,750 5,833 2,917
153
Schedule 04: Fixed Assets and Depreciation Allowances (In US$)
Year 1 2 3 4 5 6
Initial Dep Dep Dep Dep Dep
Asset Value Allowance Allowance Allowance Allowance Allowance
Farm Buildings & Infrastructure 785,000 19,625 19,625 19,625 19,625 19,625
Farm Equipment & Machinery 2,692,570 269,257 269,257 269,257 269,257 269,257
Office Equipment & Furniture 51,600 5,160 5,160 5,160 5,160 5,160
Motor Vehicles 200,000 40,000 40,000 40,000 40,000 40,000
TOTALS 3,729,170 334,042 334,042 334,042 334,042 334,042
154
Schedule 05: Change in Total Investment Costs (In US$)
Period Construct Full Capacity KDL Nucleus Farm Operation
Year 1 2 3 4 5 6 Total
1. Fixed Investment Costs 3,837,270 0 0 0 0 0 4,037,270

a) Initial fixed investment costs 3,837,270 0 0 0 0 0 3,837,270
b) Replacement (Vehicles) 0 0 0 0 0 200,000 200,000
2. Pre-operational expenses 300,000 0 0 0 0 0 300,000
3. Working Capital increase 0 9,304,040 4,195,320 2,699,189 3,045,358 958,987 20,202,894
Total Investment Costs 4,137,270 9,304,040 4,195,320 2,699,189 3,045,358 1,158,987 24,540,164
Schedule 06: Change in Total Assets (In US$)

Year 1 2 3 4 5 6 Total
1. Fixed Investment Costs 3,837,270 0 0 0 0 0 4,037,270

a) Initial fixed investment costs 3,837,270 0 0 0 0 0 3,837,270
b) Replacement (Vehicles) 0 0 0 0 0 200,000 200,000
2. Pre-operational expenses 300,000 0 0 0 0 0 300,000
3. Current Assets increase 0 9,748,950 4,399,604 2,831,191 3,195,390 1,005,548 21,180,683
Total Assets 4,137,270 9,748,950 4,399,604 2,831,191 3,195,390 1,205,548 25,517,953
155
Schedule 07: Projected Cash Flow Table (In US$)
Year 1 2 3 4 5 6 *Sal val Total
Costs (US$)
A. Cash inflow 4,137,270 64,523,027 94,848,850 113,818,620 134,448,244 141,170,657 _ 552,946,668
1. Financial resources total 4,137,270 _ _ _ _ _ _ 4,137,270
2. Sales revenue total _ 64,523,027 94,848,850 113,818,620 134,448,244 141,170,657 _ 548,809,398
B. Cash outflow -4,137,270 -16,896,457 -14,125,650 -14,019,663 -15,742,590 -14,301,308 20,997,869 -58,225,069
1. Total assets schedule
including replacements -4,137,270 -9,748,950 -4,399,604 -2,831,191 -3,195,390 -1,205,548 20,997,869 -4,520,084
2. Operating Costs (Cost of Sales) _ -3,079,751 -3,948,351 -4,520,941 -5,140,919 -5,397,965 _ -22,087,927
3. Debt Service
a) Bank Charges _ -348,000 -280,000 -210,000 -140,000 -70,000 _ -1,048,000
b) Repayments _ -680,000 -700,000 -700,000 -700,000 -700,000 -3,480,000
4. Corporate tax _ -3,031,757 -4,789,695 -5,749,531 -6,558,281 -6,919,795 _ -27,049,058
5. Dividends 4% on equity _ -8,000 -8,000 -8,000 -8,000 -8,000 _ -40,000
C. Surplus / deficit 0 47,626,570 80,723,200 99,798,956 118,705,655 126,869,348 20,997,869 494,721,599
D. Cumulative cash balance 0 47,626,570 128,349,770 228,148,727 346,854,381 473,723,730 494,721,599
*Salvage values. Land: 108,100; 0.875 of buildings: 686,875; Working Capital: 20,202,894 20,997,869
156
Schedule 08: Projected Cashflow Table and Calculation of Present Value (In US$)
Year 1 2 3 4 5 6 *Sal Val Total
Investment Costs -4,137,270 _ _ _ _ _ _ -4,137,270

Net Profit after Tax _ 7,074,099 11,175,954 13,415,572 15,302,656 16,146,189 _ 63,114,470
Depreciation _ 334,042 334,042 334,042 334,042 334,042 _ 1,670,210
Bank charges Add back on
Mid-term Loan _ 348,000 280,000 210,000 140,000 70,000 _ 1,048,000
NET CASH FLOWS -4,137,270 7,756,141 11,789,996 13,959,614 15,776,698 16,550,231 20,997,869 82,693,279
Discount Factors at 14% 0.8772 0.7695 0.675 0.5921 0.5194 0.4556 0.3996 _
PV at 14% -3,629,213 5,968,350 7,958,248 8,265,487 8,194,417 7,540,285 8,390,748 42,688,322
NPV at 14% 42,688,322
Discount Factors at 17% 0.8547 0.7305 0.6244 0.5337 0.4561 0.3898 0.3332 _
PV at 17% -3,536,125 5,665,861 7,361,674 7,450,246 7,195,752 6,451,280 6,996,490 37,585,178
NPV at 17% 37,585,178
Internal Rate of Return = 223.90% 223.90%
NPV at 14% = USD 42,688,322
NPV at 17% = USD 37,585,178
157
Schedule 09: Projected Income Statement (In US$)
Year 1 2 3 4 5 6
Sales _ 64,523,027 94,848,850 113,818,620 134,448,244 141,170,657
Cost of Goods Sold _ 50,309,421 73,954,849 89,222,576 106,606,389 111,936,708
GROSS PROFIT _ 14,213,606 20,894,001 24,596,044 27,841,856 29,233,949
Less: Operating Costs

(excl. Cost of Goods Sold) _ 3,079,751 3,948,351 4,520,941 5,140,919 5,397,965
OPERATING PROFIT _ 11,133,855 16,945,649 20,075,103 22,700,937 23,835,984
Bank Charges @ 10% p.a. _ 348,000 280,000 210,000 140,000 70,000

Less: Annual Repayments (Loan Finance) 680,000 700,000 700,000 700,000 700,000
NET PROFIT BEFORE TAX _ 10,105,855 15,965,649 19,165,103 21,860,937 23,065,984
Corporation Tax 30% _ 3,031,757 4,789,695 5,749,531 6,558,281 6,919,795
NET PROFIT _ 7,074,099 11,175,954 13,415,572 15,302,656 16,146,189
Accumulated Net Profit (Loss) _ 7,074,099 18,250,053 31,665,625 46,968,281 63,114,470

Net Profit Margin _ 10.96% 11.78% 11.79% 11.38% 11.44%
Gross Profit Margin 22.03% 22.03% 21.61% 20.71% 20.71%
Rate of Return on Investment _ 170.98% 270.13% 324.26% 369.87% 390.26%
Operating Profit Margin _ 17.26% 17.87% 17.64% 16.88% 16.88%
158
Schedule 10: Projected Balance Sheet (In US$)
CAPITAL EMPLOYED: YR.1 YR.2 YR.3 YR.4 YR.5 YR.6
Share Capital 200,000 200,000 200,000 200,000 200,000

Retained Earnings 7,074,099 18,250,053 31,665,625 46,968,281 63,114,470
Shareholder's Equity/Deficit 7,274,099 18,450,053 31,865,625 47,168,281 63,314,470
Long-Term Liabilities 3,480,000 3,480,000 2,800,000 2,100,000 1,400,000 700,000

3,480,000 10,754,099 21,250,053 33,965,625 48,568,281 64,014,470
EMPLOYMENT OF CAPITAL: `
Buildings & Infrastructure 785,000 765,375 745,750 726,125 706,500 686,875
Machinery & Equipment 2,692,570 2,423,313 2,154,056 1,884,799 1,615,542 1,346,285
Office Furniture & Fixtures 51,600 41,280 30,960 20,640 10,320 20,000
Vehicles 200,000 160,000 120,000 80,000 40,000 200,000
LONG-TERM ASSETS: 3,729,170 3,229,968 2,930,766 2,631,564 2,332,362 2,053,160
CURRENT ASSETS: -249,170 8,317,040 19,248,480 32,325,257 47,307,146 63,009,099
Accounts Receivable 256,646 329,029 376,745 428,410 449,830

Stock (Inventory) 9,477,804 13,807,857 16,594,249 19,740,891 20,727,936
Bank Balance and Cash 14,500 11,667 8,750 5,833 2,917
Other Current Assets -1,431,909 5,099,927 15,345,512 27,132,012 41,828,416
CURRENT LIABILITIES: 792,910 929,193 991,196 1,071,228 1,047,789

Accounts Payable 444,910 649,193 781,196 931,228 977,789
Current Portion of Long-term Liabilities 348,000 280,000 210,000 140,000 70,000
NET CURRENT ASSETS: -249,170 7,524,131 18,319,287 31,334,061 46,235,919 61,961,310

TOTAL CAPITAL 3,480,000 10,754,099 21,250,053 33,965,625 48,568,281 64,014,470
TOTAL ASSETS 3,480,000 11,547,008 22,179,246 34,956,821 49,639,508 65,062,259
159
Schedule 11: Ratio Analysis (In US$)
Capacity Utilization (%) Dev’t Full Capacity KDL Nucleus Farm Operation
Year 1 2 3 4 5 6
Sales Growth 5% 5% 5% 5%
Percent of Total Assets
Accounts Receivable 2.22% 1.48% 1.08% 0.86% 0.69%
Inventory 82.08% 62.26% 47.47% 39.77% 31.86%
Other Current Assets -12.40% 22.99% 43.90% 54.66% 64.29%
Total Current Assets 72.03% 86.79% 92.47% 95.30% 96.84%
Long-term Assets 27.97% 13.21% 7.53% 4.70% 3.16%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00%
Current Liabilities 6.87% 4.19% 2.84% 2.16% 1.61%

Long-term liabilities 30.14% 12.62% 6.01% 2.82% 1.08%
Total Liabilities 37.00% 16.81% 8.84% 4.98% 2.69%
Net Worth (Total Capital) 93.13% 95.81% 97.16% 97.84% 98.39%
Percent of Revenues
Revenues 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin 22.03% 22.03% 21.61% 20.71% 20.71%
Management / Administration 0.14% 0.10% 0.09% 0.08% 0.08%
Net Profit (after Bank charges&
Tax) 10.96% 11.78% 11.79% 11.38% 11.44%
Main Ratios
Current 10.49 20.72 32.61 44.16 60.14
Quick -1.46 5.86 15.87 25.73 40.35
Total Debt to Total Assets 30.14% 12.62% 6.01% 2.82% 1.08%
Pre-tax Return on Net Worth 93.97% 75.13% 56.42% 45.01% 36.03%
Pre-tax Return on Assets 87.52% 71.98% 54.83% 44.04% 35.45%
Business Vitality Profile

Revenue per Employee $1,194,871 $1,756,460 $2,107,752 $2,489,782 $2,614,271
160
Schedule 11: Ratio Analysis.……continued (In US$)
Additional Ratios
Net Profit Margin 10.96% 11.78% 11.79% 11.38% 11.44%
Return on Equity 97.25% 60.57% 42.10% 32.44% 25.50%
Activity Ratios
Accounts Receivable Turnover 25.14 28.83 30.21 31.38 31.38
Collection Days 30 30 30 30 30
Inventory Turnover 0.32 0.29 0.27 0.26 0.26
Accounts Payable Turnover 1.20 1.20 1.20 1.20 1.20
Payment Days 30 30 30 30 30
Total Assets Turnover 5.59 4.28 3.26 2.71 2.17
Fixed Assets Turnover 0.95 1.35 1.72 2.20 2.63
Debt Ratios
Debt to Net Worth 0.32 0.13 0.06 0.03 0.01
Current Liability to Liability 0.23 0.33 0.47 0.77 1.50
Debt-Service Coverage Ratio 7.54 12.03 15.34 18.78 21.49
Liquidity Ratios
Net Working Capital $9,304,040 $13,499,360 $16,198,549 $19,243,907 $20,202,894
Interest Coverage [Times
Interest Earned Ratio - TIE] 31.99 60.52 95.60 162.15 340.51
Additional Ratios
Assets to Revenue 0.18 0.23 0.31 0.37 0.46
Current Debt / Total Assets 3.01% 1.26% 0.60% 0.28% 0.11%
Acid Test -1.46 5.86 15.87 25.73 40.35
Sales/Net Worth 6.00 4.46 3.35 2.77 2.21
161
Schedule 12: Projected Payback Period (In US$)
YEAR/ITEM 2 3 4 5 6
Net Profit 7,074,099 11,175,954 13,415,572 15,302,656 16,146,189

Bank charges (6% p.a.) 348,000 280,000 210,000 140,000 70,000
Depreciation 334,042 334,042 334,042 334,042 334,042
"Profit" 7,756,141 11,789,996 13,959,614 15,776,698 16,550,231
Year Amount paid Balance of Balance of
back from Total Equity
"profits" Investment Investment
1 0 -4,137,270 -659,700
2 7,756,141 3,618,871 7,096,441
3 11,789,996 15,408,867 18,886,437
4 13,959,614 29,368,481 32,846,051
5 15,776,698 45,145,179 48,622,749
6 16,550,231 61,695,410 78,245,640
Pay Back Period = 1.53 YEARS
Pay Back Period (on Equity) = 1.09 YEARS
162
KABALE DISTRIBUTORS LIMITED PINEAPPLE PROJECT Business Plan Corporate Document
Schedule 13: Sensitivity Analysis @ Project Year 5 (In US$)
Items PAT BEP IRR Payback
Base Case 15,302,656 56.47% 223.90% 1.53 Yrs
Increase in Operating Costs by 5% 15,122,724 56.83% 221.35% 1.54 Yrs
Selling Prices up by 20% 34,125,410 36.99% 446.94% 1.25 Yrs
Decrease in Cost of Goods Sold by 10% 22,765,103 44.32% 311.59% 1.37 Yrs
Increase in Cost of Goods Sold by 10% 7,840,209 73.15% 134.32% 1.98 Yrs
Key:
BEP: Break-Even Point
IRR: Internal Rate of Return
PAT: Profit after Tax
163
ANNEX II: AGREEMENT FOR CONTRACT FARMING OF PINEAPPLES
Annual Pineapple Registration
The Company offers to buy pineapples. The conditions under which the crop will be
grown and sold are outlined below.
Technical
1. The Company will allocate pineapple inputs to each farmer that will not exceed
the acreage held by each individual pineapple farmer.
2. All crop production activities must be followed in accordance with Company
recommendations and activities.
3. The Company guarantees to buy all pineapples produced out of the allocated
input quotas.
4. Buying will be at designated locations and buying slips will be issued
immediately after purchase.
5. All pineapple fields must effectively fenced against animals and other intruders.
Financial
6. All necessary seed, chemicals and fertilizer will be charged to the farmers.
Payment for pre-sowing cultivation charges may be advanced.
7. All fresh pineapple supplied by the pineapple farmers covered by this
Agreement will be purchased at UGX 2,000 per kilogram.
8. Farmers will be prohibited from selling pineapples covered under this
Agreement, to any other buyer without the written consent of the Company. Any
breach of this Agreement will result in farmers forfeiting their contracts.
9. Packaging materials (PP bags) will be supplied by the Company, which retains
ownership thereof, and any loss will be debited to the farmer’s account.
10. Farmers will be paid when their crops have been harvested and sold to the
Company and all outstanding crop advances have been deducted.
If you wish to grow pineapples on the above terms and conditions, please fill this Form
and return it to the Company office before………so that we may reserve your
production inputs quota of……… Signed on……../……./20….
164
ANNEX III: FOOD INTAKE
Food group 2011-2012 Rank 2015-2016 Rank
Cereals 80% 5 83% 5
Dairy products 38% 9 36% 11
Eggs 11% 12 18% 12
Fish 38% 10 39% 10
Fruit 38% 11 45% 9
Meat 47% 8 49% 8
Oils and fats 68% 6 75% 6
Outside food and drinks, condiment and
beverages 99% 1 100% 1
Pulses & Nuts 89% 4 89% 4
Roots & Tubers 90% 3 90% 3
Sweets 61% 7 69% 7
Vegetables 92% 2 93% 2
Source: LSMS
165

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PROJECT INCEPTION DOCUMENT

KABALE DISTRIBUTORS LIMITED PINEAPPLE VALUE-ADDITION PROJECT

PINEAPPLE INDUSTRY STUDY

SET-UP & OPERATION

PINEAPPLE DEMO FARM, PROCESSING & MARKETING CENTRE

20-ACRE PLOT AT NAMULONGE

KABALE DISTIBUTORS LIMITED VALUE-ADDITION PROJECT

S/NO. DESCRIPTION PAGE

1.0 EXECUTIVE SUMMARY 2

PART I: UGANDA PINEAPPLE PRODUCTION, VALUE-

3.0 UGANDA PINEAPPLE SUB-SECTOR CASE STUDY 21

5.0 CONCLUSIONS AND RECOMMENDATIONS 61

PART II: BUSINESS PLAN ON PROCESSING &

2.0 TECHNICAL CONSIDERATIONS 71

3.0 LAND & KDL NUCLEUS FARM INFRASTRUCTURE 84

4.0 NUCLEUS FARM-PINEAPPLE OUT GROWER OPERATIONAL MODEL 95

5.0 MARKET ANALYSIS 105

BUSINESS STRUCTURE & ORGANIZATIONAL

7.0 OPERATIONAL PLAN 124

8.0 FINANCIAL ANALYSIS 129

9.0 RISK ASSESSMENT & CONTINGENCY PLAN 139

10.0 SUSTAINABILITY AND EXPANSION STRATEGY 144

11.0 ECONOMIC JUSTIFICATIONS 145

12.0 CONCLUSIONS & RECOMMENDATIONS 146

T/NO. DESCRIPTION PAGE

1 Fruit Processing Sector Growth Drivers 10

2 Source and Use of Project Financing 12

3 Key Project Performance Parameters (UGX) 14

4 Pineapple Prices in Uganda 2020 25

5 Export of Fruit from Uganda 2011-2017 32

6 SWOT for Pineapple 33

7 Flavoured and Natural Juice Ingredients 34

8 Players in the Uganda Fruit Juice Processing Sector 36

9 Juice Companies Active in the Uganda Market 40

10 Soroti Fruit Processing Factory Stock Ownership 52

11 Attributes of Processed Fruit Juice at Selected Supermarkets 56

12 Other Quality Attributes of Processed Fruit Juice Brands at Supermarket 57

13 Determinants of Price per Serving (100 ml) of Processed Fruit Juice 58

14 Proposed Plant Production Capacity 69

15 Input-Output Ratio Table for Various Dried Fruits 73

16 Annual Dried Fruit Processing Capacity and Output 73

17 Raw Material Requirement at Installed Capacity 81

18 KDL Pineapple Nucleus Demo Farm Building Infrastructure [Planned] 85

21 Combined Nomenclature Codes for Dried Tropical Fruit 107

22 Dried Tropical Fruit Price Breakdown 117

23 Salary and Emoluments for KDL Pineapple Value-Addition Project 123

24 Pineapple Seasons of Planting, their Diseases and Mitigation 125

25 Pineapple Processing and Sales Plan (PY2 – PY6) 126

26 Cost of Project 130

27 Financial Plan 133

29 Rates of Return 134

30 Calculation of Payback Period for Equity and Total Investment 134

31 Capital: Output Ratios 134

32 Projected Cash Flows 135

33 Projected Balance Sheet 136

34 Break-Even Analysis in Project Year 5 137

35 Calculation of Value Added 138

36 Risk Assessment and Mitigation 139

38 Key Financial Modeling Assumptions 147

F/NO. DESCRIPTION PAGE

1 KDL Pineapple Value-Addition Project Value Proposition 5

2 KDL Pineapple Value-Addition Project Integrated Solution 6

3 Global Fruit and Vegetables Processing Industry by Segment 7