Last updated on July 25th, 2023
Executive Summary
Overview: We are delighted to be a family-owned and operated business located in the center of the pig farming industry in Iowa. Iowa Select Farms employs over 1,200 people, contracts with over 650 farmers, and supports hundreds of small businesses around the state, with approximately 800 swine farms. We’re proud to collaborate with over 1,700 Iowa firms in over 320 Iowa cities and towns, and we work hard to make those communities better places to live, work, and raise a family.
Mission: To provide our clients and the food businesses they serve with safe, healthy, and high-quality pork.
Vision: By cultivating a culture of operational excellence and innovation, we will be able to compete in a global market for protein production.
Industry Overview: After chicken meat and beef, pork is the third most popular meat in America. Pork accounted for about a quarter of Americans’ average yearly meat intake in 2020, with 52.1 pounds eaten per capita. The United States produces the second-largest amount of pigs in the world. The pork industry in the United States is not widely dispersed; rather, it is concentrated in a few states and counties in the Midwest and eastern North Carolina. Over 98 percent of farmed pigs in the United States are kept in factory farms, with many of them concentrated in only a few of the country’s top pork-producing states. Pig production intensification boosts profits for a few mega-corporations at the expense of animals, customers, employees, nearby communities, and global health.
Financial Overview:
Financials is one of the most important sections of a piggery farm business plan. You can get an idea of your projected revenue, required investment amount, is the business sustainable without additional funding, etc.
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Financial Highlights:
| Liquidity | 2020A | 2021A | 2022F | 2023F | 2024F |
| Current ratio | 6 | 12 | 23 | 32 | 42 |
| Quick ratio | 6 | 11 | 22 | 31 | 40 |
| DSO | 8 | 8 | 8 | 8 | 8 |
| Solvency | |||||
| Interest coverage ratio | 8.2 | 11.1 | 14.2 | ||
| Debt to asset ratio | 0.01 | 0.01 | 0.2 | 0.18 | 0.16 |
| Profitability | |||||
| Gross profit margin | 51% | 51% | 53% | 53% | 53% |
| EBITDA margin | 12% | 14% | 21% | 22% | 22% |
| Return on asset | 5% | 6% | 13% | 14% | 14% |
| Return on equity | 5% | 6% | 16% | 17% | 17% |
FUND USAGE:
Industry Analysis
According to the USDA, 129.9 million farmed pigs were killed for food in the United States in 2019. The pork sector in the United States is projected to be worth $19 billion, with 26,310 enterprises and 53,236 jobs. The United States has been one of the largest exporters of hog meat in the world during the previous three decades. Between 2014 and 2019, the pork industry sold an average of 22% of U.S. pork output to overseas purchasers (equal to more than 1 in 5 pigs). Pork exports have been steadily increasing. Pork exports in the United States hit a new high of $7 billion in 2019, and by September 2020, a record 29 percent of pork production—nearly one out of every three pigs—had been exported.
The worldwide pork sector attracts attention as a market dominated by China, the European Union, and the United States. These nations continue to dominate the world in terms of pig population, pork production/consumption, and pig feed production, and their development prospects are bright. From 2021 to 2027, the worldwide pork meat market is expected to grow at a CAGR of 3.9 percent to $257,874.5 million. Pig feed is predicted to expand at a similar rate. During the projected period of 2020-2025, the pig feed market is estimated to grow at a CAGR of 4.1 percent.
The worldwide pig business may be classified into two categories: meat and feed. According to Allied Market Research’s “Pig Meat Market (2021–2027)” analysis, the worldwide pork meat market was worth $236,112.7 million in 2019, and is expected to grow to $257,874.5 million by 2027, with a CAGR of 3.9 percent from 2021 to 2027. Pig feed is predicted to expand at a similar rate. According to Mordor Intelligence’s Swine Feed Market (2021-2026) analysis, the swine feed market was valued at USD 135.30 billion in 2019 and is predicted to grow at a CAGR of 4.1 percent from 2020 to 2025.
GLOBAL PORK MARKET
Pork is the most extensively eaten meat in the world, especially in Europe and Southeast Asia. Pork is less expensive than other meats, which contributes to its widespread popularity. Furthermore, the customer is captivated by its flavor, fat content, and texture. Pork production and consumption are very high in industrialized areas like North America and Europe, as well as emerging nations like China and Japan, according to Mordor Intelligence’s Swine Feed Market research. USDA data also backs this up.
Global pork output in 2021 is expected to reach 105 million metric tons, according to the USDA’s “Livestock and Poultry: World Markets and Trade” study. China was the market leader, producing more than 43 million metric tons of pork. With 24 million metric tons, the European Union came in second, followed by the United States with 12 million metric tons. Brazil, Canada, Mexico, South Korea, Japan, the Philippines, and Hong Kong were the nations that came in second, third, and fourth place, respectively.
The most widely eaten meats in the world, according to the USDA research, are chicken and pork, however poultry is anticipated to exceed pig in popularity in the coming years. Pork consumption is expected to rise from 117.35 metric kilotons in 2017 to about 131 metric kilotons by 2027, according to estimates. However, after reaching about 114 pounds per person in the United States, per capita red meat consumption is predicted to plateau.
PORK MARKET TRENDS
According to Allied Market Research’s Pork Meat Market (2021–2027) study, the worldwide pork meat market was worth $236,112.7 million in 2019 and is expected to reach $257,874.5 million by 2027, with a CAGR of 3.9 percent from 2021 to 2027. In 2019, the frozen sector contributed the most to the pig meat market, and it is expected to rise at a CAGR of 3.9 percent between 2021 and 2027. Asia-Pacific accounted for more than half of worldwide market share in 2019, and is expected to increase at a CAGR of 4.5 percent during the forecast period.
According to a type-by-type study of the worldwide pig meat industry, frozen pork meat had the largest share in 2019. Due to the fast rise in meat, poultry, and seafood consumption, the frozen category is rapidly expanding. During the projected period, however, the frozen sector is predicted to increase at a slow pace. Consumers prefer chilled pig meat over frozen pork meat, which explains the segment’s rise.
In 2019, the commercial category accounted for the largest proportion of the worldwide hog meat market by application, according to forecasts. The expanding working population, as well as the tendency of eating meals outside the house, may be directly attributed to the development in commercial application of pig. The epidemic of coronavirus, on the other hand, has lowered demand for pork in commercial facilities, which has had a detrimental influence on swine meat consumption via these businesses. During the projection period, the household sector is expected to develop at a significant pace. Pork consumption has expanded significantly in Asia-Pacific households, owing to the fact that it is a basic diet. Furthermore, several advantages linked with pig meat, such as its high protein and vitamin content as well as its delectable flavor, contribute to the market’s expansion. Furthermore, owing to the installation of strict lockdown, the demand for pig meat for home consumption has grown, resulting in increased home food consumption. In terms of region, Asia-Pacific was the most important market for pork meat in 2019, and it is predicted to rise rapidly over the next several years. Because of the existence of a significant number of local players, Europe and North America are likely to expand at a constant pace during the projection period.
Marketing Plan
A key part of the marketing plan in a piggery farm business plan is the marketing budget. The growth in the number of customers is proportional to the budget and dependent on the CAC.
Direct feeder pig producer to feeder pig finisher. The producer may place local ads for feeder pigs to attract prospective customers, or he or she may form long-term supply agreements with one or more purchasers. In most cases, the price is negotiated, and in cases where the contract is for a longer period of time, the price is also negotiated.
Public auction. A farmer delivers or consigns pigs to a company or farmer-owned marketing cooperative that runs a livestock auction. Pigs are sold to the highest bidder, and the price is determined by the demand of the buyer.
Electronic auction. Health programs, feeding programs, and herd management are used to grade feeder pigs for sale. Using computer modems, potential purchasers may access this information as well as the seller’s identity.
Organizational Plan:
Financial Plan
Earnings:
Income Statement:
| 2020A | 2021A | 2022F | 2023F | 2024F | |
| ANNUAL REVENUE | |||||
| Item 1 | 9,217 | 59,117 | 175,410 | 415,277 | 781,357 |
| Item 2 | 34,701 | 222,558 | 660,368 | 1,563,394 | 2,941,580 |
| Item 3 | 4,067 | 19,561 | 46,432 | 78,519 | 114,905 |
| Total annual revenue | 47,985 | 301,236 | 882,211 | 2,057,189 | 3,837,842 |
| % increase | 528% | 193% | 133% | 87% | |
| COST of REVENUE | |||||
| Item 1 | 360 | 2,259 | 6,617 | 15,429 | 28,784 |
| Item 2 | 480 | 3,012 | 8,822 | 20,572 | 38,378 |
| Item 3 | 52,000 | 65,000 | 78,000 | 91,000 | 104,000 |
| Item 4 | 720 | 3,615 | 8,822 | 16,458 | 23,027 |
| Item 5 | 140,000 | 336,000 | 560,000 | 840,000 | 1,120,000 |
| Item 6 | 60,000 | 144,000 | 240,000 | 360,000 | 480,000 |
| Item 7 | 32,000 | 61,333 | 85,533 | 112,153 | 141,435 |
| Total Cost of Revenue | 285,560 | 615,220 | 987,794 | 1,455,612 | 1,935,625 |
| as % of revenue | 595% | 204% | 112% | 71% | 50% |
| Gross Profit | -237,575 | -313,984 | -105,583 | 601,578 | 1,902,218 |
| SELLING & ADMIN EXPENSES | |||||
| Item 1 | 28,000 | 96,800 | 154,880 | 175,692 | 193,261 |
| Item 2 | 75,000 | 105,000 | 120,000 | 120,000 | 120,000 |
| Item 3 | 36,000 | 96,000 | 108,000 | 120,000 | 120,000 |
| Item 4 | 8,000 | 12,000 | 12,000 | 12,000 | 12,000 |
| Item 5 | 3,839 | 18,074 | 44,111 | 61,716 | 115,135 |
| Item 6 | 3,359 | 12,049 | 26,466 | 41,144 | 76,757 |
| Item 7 | 5,600 | 10,000 | 12,904 | 15,034 | 17,376 |
| Item 8 | 6,667 | 14,000 | 22,067 | 30,940 | 40,701 |
| Total selling & admin expenses | 166,464 | 363,924 | 500,428 | 576,525 | 695,230 |
| as % of revenue | 347% | 121% | 57% | 28% | 18% |
| Net profit | -404,039 | -677,907 | -606,011 | 25,052 | 1,206,987 |
| Accumulated net profit | -404,039 | -1,081,947 | -1,687,957 | -1,662,905 | -455,918 |
Cash Flow Statement:
| 2020A | 2021A | 2022F | 2023F | 2024F | |
| CASH FLOW from OPERATING ACTIVITIES | |||||
| Net profit before tax | -$404,039 | -$677,907 | -$606,011 | $25,052 | $1,206,987 |
| Depreciation | $44,267 | $85,333 | $120,504 | $158,127 | $199,512 |
| Payables | |||||
| Item 1 | $4,333 | $5,417 | $6,500 | $7,583 | $8,667 |
| Item 2 | $11,667 | $28,000 | $46,667 | $70,000 | $93,333 |
| Item 3 | $6,250 | $8,750 | $10,000 | $10,000 | $10,000 |
| Item 4 | $3,000 | $8,000 | $9,000 | $10,000 | $10,000 |
| Item 5 | $667 | $1,000 | $1,000 | $1,000 | $1,000 |
| Total payables | $25,917 | $51,167 | $73,167 | $98,583 | $123,000 |
| change in payables | $25,917 | $25,250 | $22,000 | $25,417 | $24,417 |
| Receivables | |||||
| Item 1 | $320 | $1,506 | $3,676 | $5,143 | $9,595 |
| Item 2 | $360 | $1,807 | $4,411 | $8,229 | $11,514 |
| Total receivables | $680 | $3,314 | $8,087 | $13,372 | $21,108 |
| change in receivables | -$680 | -$2,634 | -$4,773 | -$5,285 | -$7,736 |
| Net cash flow from operating activities | -$334,536 | -$569,958 | -$468,280 | $203,311 | $1,423,180 |
| CASH FLOW from INVESTING ACTIVITIES | |||||
| Item 1 | $16,000 | $13,200 | $14,520 | $15,972 | $17,569 |
| Item 2 | $20,000 | $22,000 | $24,200 | $26,620 | $29,282 |
| Item 3 | $28,000 | $22,000 | $14,520 | $10,648 | $11,713 |
| Item 4 | $96,000 | $88,000 | $72,600 | $79,860 | $87,846 |
| Item 5 | $20,000 | $22,000 | $24,200 | $26,620 | $29,282 |
| Net cash flow/ (outflow) from investing activities | -$180,000 | -$167,200 | -$150,040 | -$159,720 | -$175,692 |
| CASH FLOW from FINANCING ACTIVITIES | |||||
| Equity | $400,000 | $440,000 | $484,000 | $532,400 | $585,640 |
| Net cash flow from financing activities | $400,000 | $440,000 | $484,000 | $532,400 | $585,640 |
| Net (decrease)/ increase in cash/ cash equivalents | -$114,536 | -$297,158 | -$134,320 | $575,991 | $1,833,128 |
| Cash and cash equivalents at the beginning of the year | – | -$114,536 | -$411,693 | -$546,014 | $29,978 |
| Cash & cash equivalents at the end of the year | -$114,536 | -$411,693 | -$546,014 | $29,978 | $1,863,105 |
Balance Sheet:
| 2020A | 2021A | 2022F | 2023F | 2024F | |
| NON-CURRENT ASSETS | |||||
| Item 1 | $16,000 | $29,200 | $43,720 | $59,692 | $77,261 |
| Item 2 | $20,000 | $42,000 | $66,200 | $92,820 | $122,102 |
| Item 3 | $28,000 | $50,000 | $64,520 | $75,168 | $86,881 |
| Item 4 | $96,000 | $184,000 | $256,600 | $336,460 | $424,306 |
| Item 5 | $20,000 | $42,000 | $66,200 | $92,820 | $122,102 |
| Total | $180,000 | $347,200 | $497,240 | $656,960 | $832,652 |
| Accumulated depreciation | $44,267 | $129,600 | $250,104 | $408,231 | $607,743 |
| Net non-current assets | $135,733 | $217,600 | $247,136 | $248,729 | $224,909 |
| CURRENT ASSETS | |||||
| Cash | -$114,536 | -$411,693 | -$546,014 | $29,978 | $1,863,105 |
| Accounts receivables | $680 | $3,314 | $8,087 | $13,372 | $21,108 |
| Total current assets | -$113,856 | -$408,380 | -$537,927 | $43,349 | $1,884,214 |
| Total Assets | $21,878 | -$190,780 | -$290,791 | $292,078 | $2,109,122 |
| LIABILITIES | |||||
| Account payables | $25,917 | $51,167 | $73,167 | $98,583 | $123,000 |
| Total liabilities | $25,917 | $51,167 | $73,167 | $98,583 | $123,000 |
| EQUITIES | |||||
| Owner’s equity | $400,000 | $840,000 | $1,324,000 | $1,856,400 | $2,442,040 |
| Accumulated net profit | -$404,039 | -$1,081,947 | -$1,687,957 | -$1,662,905 | -$455,918 |
| Total equities | -$4,039 | -$241,947 | -$363,957 | $193,495 | $1,986,122 |
| Total liabilities & equities | $21,878 | -$190,780 | -$290,791 | $292,078 | $2,109,122 |