Pepper Farming: Business Plan, Cost, Revenue and Profit

April 5, 2022


To engage in pepper farming, you need to compute and analyse the expected cost, expected revenue and expected profit. This can only be done by writing a business plan.

This article shows a business plan for pepper farming in Nigeria. It shows all the variables you need to consider including the financial implication before you start your pepper farming venture.

Cost, Revenue and Profit Analysis of a One Hectare Pepper Farm (₦)

FARM SET-UP FOR ONE HECTARE OF PEPPER FARMING VENTURE

Cost of Drip Irrigation

625,000.00

Installation of Drip Irrigation System

-

On Site Training of staff in precision farming

-

Soil and Water Analysis

-

625,000.00

Fertilisers:

NPK (15 bags)

90,000.00

Potassium Nitrate (5 bags)

75,000.00

Camag (3 bags)

30,000.00

Potassium Humate

5,000.00

200,000.00

Pesticides:

Insecticides (15 bottles)

30,000.00

Fungicides

30,000.00

Nematicides

10,000.00

70,000.00

PROFIT ANALYSIS FOR ONE HECTARE OF PEPPER FARMING VENTURE- SCENARIO 1

Revenue:

600 bags @ N10000

6,000,000.00

Cost:

Rent of one hectare of farmland

25,000.00

Fertiliser

200,000.00

Manure

50,000.00

Pesticides

70,000.00

Hybrid Seeds

120,000.00

Labour for 6 months

240,000.00

Knapsack Sprayer

5,000.00

Farm Tools

10,000.00

720,000.00

Profit

5,280,000.00

PROFIT ANALYSIS FOR ONE HECTARE OF PEPPER FARMING VENTURE - SCENARIO 2

Revenue:

600 bags @ N4000

2,400,000.00

Cost:

Rent of one hectare of farmland

25,000.00

Fertiliser

200,000.00

Manure

50,000.00

Pesticides

70,000.00

Hybrid Seeds

120,000.00

Labour for 6 months

240,000.00

Knapsack Sprayer

5,000.00

Farm Tools

10,000.00

720,000.00

Profit

1,680,000.00

PROFIT ANALYSIS FOR ONE HECTARE OF PEPPER FARMING VENTURE - SCENARIO 3

Revenue:

600 bags @ N2500

1,500,000.00

Cost:

Rent of one hectare of farmland

25,000.00

Fertiliser

200,000.00

Manure

50,000.00

Pesticides

70,000.00

Hybrid Seeds

120,000.00

Labour for 6 months

240,000.00

Knapsack Sprayer

5,000.00

Farm Tools

10,000.00

720,000.00

Profit

780,000.00

NOTES/ASSUMPTIONS

The profit analyses above were done using three scenarios (best case, mid case and worst case).

Drip Irrigation: The cost of drip irrigation kit per hectare of habanero pepper is N625,000.

Fertilisers: N200,000 is expected to be spent on fertilisers for one hectare of habanero pepper. Please note that the volume of fertilisers used is directly proportionate to your expected yield. Also note that the amount of fertilisers to be used can only be accurately computed after soil analysis. If your soil is rich, you can expect to spend a significantly low amount of money on fertilisers.

Pesticides: N70,000 is expected to be spent on pesticides (fungicides, insecticides and nematicides), however, you should note that the total cost to be spent on pesticides will depend on pests and diseases pressure which can vary according to season, weather pattern and location.

Sales Revenue: The price of habanero peppers in the open market in Nigeria moves in a cyclical manner. The price has a peak season every year and a trough season. During the peak months (the best months to plant peppers), the price of a 10-20kg bag of habanero peppers can range between N2,500 and N10,000, sometimes the price of same bag of pepper can reach N20,000.

It is assumed that 600 bags (15kg-20kg) of habanero peppers will be harvested in a season from one hectare of habanero pepper. Please note that the harvest can be significantly more than the assumed figure and it can be significantly lower. Harvests depend on the agronomic practices of the farmer and to a lesser extent the climatic condition.

Dry season pepper farming can be very lucrative.

Manure: Chicken manure is advised to be used for the farm as it is one of the most potent manures around. N50,000 is expected to be spent on manure, however, it can be cheaper or even gotten free from poultry farms around.

Hybrid Seeds: The cost of hybrid seeds to be used for one hectare of habanero pepper farm is expected to be N120,000. Please note that open pollinated seeds are significantly cheaper and can be bought for as low as N30,000 for one hectare worth, however, they are not as disease resistant and high yielding like hybrid seeds.

Cost of Labour: The cost of labour for 6 months is assumed to be N240,000. Please note that the cost of labour varies according to location and cost of living in the location where your farm is situated. Some equipment can also be used to reduce the need for human labour.

Knapsack Sprayer: The cost of one knapsack sprayer is N5,000. The cost of one motorized knapsack sprayer is N150,000.

Farm Tools: N10,000 is expected to be spent on this. However, if mechanized tools are preferred, the cost will be significantly higher.

Business Description of Pepper Farming

Pepper farming is the cultivation and marketing of peppers in Nigeria. Peppers are planted, harvested and expected be sold in the open markets in Nigeria or in the organized markets (supermarkets, hotels and eateries etc.) in Nigeria.

Market Analysis

Market Trend: The ever increasing population of Nigeria is a positive factor for the demand of habanero peppers in Nigeria. Almost all Nigerians consume peppers. Peppers are used in making different types of soups and other delicacies consumed by people from all tribes in Nigeria.

The demand for peppers is fairly constant all through the year. However, the supply of peppers significantly dips from April to August every year because farmers especially those in the northern part of Nigeria do not cultivate this crop because of inadequate supply of water from January-April every year.

To get a good profit from peppers, pepper farmers need to plant at some certain dates.

Target Market: The target markets for supply of peppers are the open markets in Nigeria. Depending on the hectarage to be cultivated, the peppers can be taken to Mile 12 Market, Lagos which is the largest open roof food and commodities market in Nigeria.

The organized market like supermarkets, eateries and hotels are likely to offer higher prices than the open market. This class of buyers can also be targeted.

Competitive Analysis: There are a lot of farmers cultivating peppers in Nigeria, however, a significant percentage of them are subsistent farmers that cultivate less than 2 hectares of farmland. They are mostly illiterates who implement poor agronomic practices; they also cultivate their crops only during the rainy season which makes them sell their produce at low prices because of glut.

Cultivating pepper all year round using smart irrigation equipment like drip irrigation kits will guarantee that a farmer will sell his produce at good prices. Most of the habanero peppers consumed in Lagos are trucked from the far northern part of Nigeria to Lagos..

Sales and Marketing

The sales and marketing strategy to be used by a pepper farmer will depend on the type of market it wants to sell its produce.

Selling in the open market involves just taking the peppers to the market, there are market agents who help farmers to sell their produce at an agreed percentage.

Selling at the more organized market may involve the use of social media marketing, the use of website, search engine optimization, words of mouth advertisement and having a retail store.

Do you need a pepper farming business plan? If yes, why not contact us through sales@veggieconcept.ng. 

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