INTRODUCTION

This business plan details the establishment of a wheat supply operation in Pakistan, focusing
on packaging and selling wheat in standardized 40 kg bags. Given the consistently high
demand for wheat in Pakistan, particularly in large urban centres where flour mills are
widespread, this project is placed to fill a vital role in the wheat supply chain. The business
aims to sell high-quality wheat, sourced directly from farmers or grain markets, to flour mills
across the province of Punjab. By maintaining quality, timeliness, and competitive pricing,
this business intends to secure a stable customer base and sustain profitability through
efficient cost management and targeted market strategies.

[Link] Sector
[Link]. Product Description

 Product: Wheat sold in 40 kg bags.

 Selling Price: PKR 3,200 per 40 kg bag.

 Product Form: 40 kg bags for easy handling and standardization.

 Sales Volume Target: 1,000 bags per month

[Link]. Cost Breakdown

We have classified costs into fixed and variable categories. Based on these, we have
calculated total costs, average costs, and marginal cost.

1) Total Fixed Costs (TFC): These are costs that remain constant regardless of
production levels.
2) Example Costs:
i. Equipment for packaging and loading: PKR 500,000 (one-time)
ii. Warehouse Rent: PKR 100,000 per month (standard market rate for a
small warehouse).
3) Storage Purpose: Ensures that wheat is kept dry and free from pests, maintaining
quality for the mills
i. Salaries and Wages (for management, security staff, etc.): PKR
50,000 per month.
b. Breakdown:
 c. Manager: PKR 30,000

d. Security and maintenance: PKR 20,000

1) Total Variable Costs (TVC): These costs vary with the level of output.

a. Example Costs:

i. Raw Wheat Purchase Cost: PKR 2,500 per 40 kg bag.

b. Wheat is sourced from farmers or wholesale grain markets, with prices
varying slightly based on quality and season.
i. Labor for Handling and Bagging: PKR 200 per 40 kg bag.
This includes loading/unloading and ensuring proper bagging for transport.
ii. Transportation Costs: PKR 100 per 40 kg bag.
c. Based on fuel and distance to the nearest flour mills in your supply area

4) Total Cost (TC):

a. TC=TFC+TVC

b. With an example monthly production of 1,000 bags, the monthly costs would
be calculated as follows:

 TFC (monthly): PKR 150,000

 TVC (for 1,000 bags): 2,500+200+100×1,000=2,800,000
 Total Cost (TC): 2,800,000+150,000=2,950,000
5) Average Fixed Cost (AFC):
 AFC is calculated as fixed cost per unit of output.
 For 1,000 bags: AFC= 150,000/1000= PKR 150 per bag
6) Average Variable Cost (AVC):
 AVC is variable cost per unit of output
 For 1,000 bags: AVC=2,800,000/1000= PKR 2800 per bag
7) Average Total Cost (ATC):
 Total cost per unit of output, incorporating both fixed and variable costs.
 For 1,000 bags: ATC=2,950,000/1000= PKR 2950 per bag
8) Marginal Cost (MC):
 a. Marginal cost is the cost of producing one additional bag. Assuming constant
variable costs:

i. MC = Variable cost per additional bag = PKR 2,800 per bag

9) Revenue and Expected Returns

10) Total Revenue (TR): Revenue generated from selling wheat bags.

a. If 1,000 bags are sold at PKR 3,200 per bag:

i. TR=3,200×1,000=PKR3,200,000

11) Profit Calculation:

a. Profit = Total Revenue - Total Cost

b. Profit for 1,000 bags = 3,200,000−2,950,000=PKR250,000

2. Market Sector
2.1.1. Target Market

The business will operate within the Pakistani market, targeting large urban centres with a
high density of flour mills.

1) Geographic Focus: Punjab province, with cities like Lahore, Faisalabad, and
Rawalpindi where wheat demand is consistently high.

2) Market Structure:

a. The wheat market in Pakistan is characterized as perfect competition, where

multiple suppliers and mills operate, but product quality and supply chain
efficiency significantly affect pricing and demand.

3) Market Demand:

a. Wheat demand in Pakistan is consistently high due to its role as a staple

food crop, making flour mills key consumers.

b. Flour mills need reliable wheat supplies year-round, leading to predictable

demand, though prices may fluctuate seasonally.

2.2. Competitive Analysis

 1) Competitors:

a. Large wholesalers and distributors dominate the market, along with small
farmers who sell directly to mills or in grain markets.

b. Key competitive factors are price, quality, and delivery reliability.

2) Differentiation Strategy:

a. Focus on Quality and Timely Delivery: By maintaining high-quality wheat

and ensuring prompt delivery, the business can attract mills that prioritize
efficiency and product standards.

b. Pricing Strategy: While maintaining competitive prices, your cost structure

allows a profit margin that supports occasional promotional pricing to capture
market share.

2.3. Pricing Strategy

1) Price Determination: The price of PKR 3,200 per 40 kg bag is set to cover costs and
yield profit while being competitive.

2) Profit Margin Analysis:

a. Selling at PKR 3,200 with an ATC of PKR 2,968 yields a margin of

3,200−2,968=PKR232 per bag

3. Consumer Sector
3.1. Target Audience

The primary customers are flour mills, which are intermediate users converting wheat into
flour.

1) Consumer Demographics:

a. Flour mills in urban and semi-urban areas across Pakistan.

b. These mills supply flour to wholesalers, retailers, and bakers, making them
high-volume purchasers.

2) Consumer Needs:
 a. Quality Consistency: Mills expect uniform quality for efficient milling and
production.

b. Reliable Supply: Flour mills require timely delivery to avoid production

downtime, making supply chain reliability essential.

3.2. Consumer Behaviour and Pricing Sensitivity

1) Consumer Preferences: Flour mills prioritize wheat suppliers based on quality,
pricing stability, and reliability.
2) Pricing Sensitivity: Mills are sensitive to price changes but will prioritize reliable
suppliers during times of wheat shortage or price volatility.
3.3. Marketing and Sales Strategy

To effectively reach flour mills and secure a loyal customer base, a focused marketing and
sales strategy is essential. This strategy will emphasize direct engagement, relationship
building, and value propositions tailored to the mills' needs.

1) Direct Sales Effort:

a. Establish relationships with the purchasing departments of flour mills.

b. Regularly communicate product quality, service commitment, and competitive

pricing.

2) Promotion and Value Proposition:

a. Highlight reliability, competitive pricing, and wheat quality.

b. Offer discounts or payment flexibility for bulk purchases to attract large mills.

3) Partnerships with Transport Services:

a. Ensure reliable, cost-effective transport solutions to enhance service quality

and delivery punctuality.

Summary of Financial Projections

Financial Metric Calculation Value (PKR)

Total Fixed Cost (TFC) Monthly basis 150,000

Per 1,000 bags (includes wheat, labour,

Total Variable Cost (TVC) 2,800,000
transport)

Total Cost (TC) TFC + TVC 2,950,000

Average Fixed Cost (AFC) TFC / Total Output (1,000 bags) 150 per bag

Average Variable Cost (AVC) TVC / Total Output (1,000 bags) 2,800 per bag

Average Total Cost (ATC) TC / Total Output (1,000 bags) 2,950 per bag

Marginal Cost (MC) Per additional bag 2,800 per bag

Total Revenue (TR) Selling Price × Total Output 3,200,000

Expected Profit TR - TC 250,000