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Black honey and date syrup production facility

Opportunity Description: This opportunity aims to add value to local crops by producing syrups suitable for both export and local consumption as alternative sweeteners. The crops in focus are sugarcane and dates mainly, because of their local abundance and seasonality.
Initially the focus was on sugarcane, which was highlighted as a crop that is widely cultivated locally. It is mainly used for sugar processing in several factories in the region, such as Armant and Qus. It is also used to produce black honey but through rudimentary techniques that affect quality and capacity. This opportunity aims to upgrade both the quality and quantity of black honey being produced in Luxor.
Dates were later selected as a suitable secondary crop to better utilize the facility. This way the facility operates on locally sourced crops only; sugarcane during the winter and dates during the summer, using the same technology for both.
PRODUCT: Product A: black honey extracted from fresh sugarcane
Product B: date syrup extracted from palm dates
Sector: Sustainable Agriculture and Food Processing
Market: Distribution and Marketing Companies, Local and Export
Initial Investment Required: EGP 21m
Details Available: Pre-feasibility Study
Market Potential: The markets to target could be Italy, Spain, Tunisia, Algeria and Saudi Arabia, since they rank top as export markets for these products already, yet Egypt holds a low market share.
Target Market Size is estimated at USD 18m.
Year 1 revenues for this facility are expected be around USD 2 million, with a net margin of 9%, at 50% operational capacity. This improves by Year 5 to USD 5 million, with a net margin of 13%, at 91% operational capacity.
Supply: If the facility is operating at 100% capacity, it will consume the following amounts of crop per year, based on their respective yields:
• 4,800 tons of fresh sugarcane, yield of 12.5%, producing 600 tons of product.
• 4,800 tons of palm dates, yield of 50%, producing 2,400 tons of product.
Process: The production line for manufacturing syrups uses industry standard technology that is well-established and mature. The line can be manufactured (stainless steel structures etc.) and assembled (components such as gauges, motors etc.) entirely locally.
The production process consists mainly of the following steps:
1. Receiving raw material
2. Washing
3. Chopping /Destoning
4. Squeezing
5. Filtration
6. Holding Tank
7. Evaporation
8. Sterilizing
9. Cooling
10. Packaging
Human Resources: Position # of Staff
Management
CEO 1
Production - Permanent
Plant Manager 1
Quality Control 2
Hall Supervisors 2
Engineering 1
Workers 4
Production – Seasonal
5 workers x 2 seasons 10
Sales, General and Administration
Procurement 2
Sales Manager 1
Sales 2
Marketing 2
Finance & Accounting 2
HR Manager 1
Maintenance 4
Security 2
Total 37
Financial: Capital Expenditure Requirements EGP 13m
Working Capital Requirements for 3 months EGP 8m
Minimum Investment Required EGP 21m
Business Internal Rate of Return 32%
Simple Payback 5.3 yrs
Profitability Index 1.86
Risk: Low yields in sugarcane juice, expected to be around 40-50% from fresh sugarcane before concentrating into honey, can be improved by investing in more efficient hydraulic crushers that can increase juice yield to 70%.
IMPACT: Economic - Value added to local crops such as sugarcane and dates is quite significant. Based on this study’s assumptions, before deducting other COGS (cost of goods sold) and overheads:
• 8 kg of sugarcane cost EGP 8 to produce 1 kg of black honey selling at EGP 25 – that is 68% value added to the crop.
• 2 kg of dates cost EGP 6, to produce 1 kg of syrup selling at EGP 25 – that is 52% value added to the crop.
Social - Direct jobs created by this facility will include 27 permanent plant staff plus another 10-15 seasonal workers. Indirect jobs created will be mainly in logistics, marketing and distribution, and increased dedicated farming to supply the plant over time.
Environmental – Decreased losses post-harvest as demand for second grade dates, which are suitable for date syrup production, increases. Sugarcane bagasse will be generated in larger concentrated quantities in an industrial facility, as opposed to traditional production methods, which can be sold directly to paper, Medium Density Fibreboard (MDF) manufacturers for extra revenue.