MEAT PRODUCTION AND PROCESSING PRODUCT PROGRAM

PRODUCT

MEAT PRODUCTION AND PROCESSING PRODUCT PROGRAM

PURPOSE

To provide funding to meat producers and processors through the acquisition of plant and machinery required for effective processing of beef and other meat products.

CRITICAL SUCCESS FACTORS IN LINE WITH GLOBAL BEST PRACTICE

To ensure that the quality of meat produced by the processors meet international standard, the followings are critical success factors:

· Meat processing can only be done under effective and sustained good hygiene practices.

· The processing facilities should be adequately linked with primary producers/cattle farmers to guarantee continuous supply.

· Animals to be slaughtered in the abattoir should be traceable.

· To ensure traceability, cattle should be confined in feed lot for a period not less than 90 days to ensure the animals are well fed with compounded feed and are examined to be clinically free from diseases.

· The carcass weight of the animals determine the revenue to the farmers, hence the need for the animals to be fed with the right ration that can help in improving the carcass weight.

· There has to be involvement of veterinary workers and other support services involved in cattle production and processing to achieve good result.

RATIONALE

i. To resuscitate the sector in order to meet the huge supply gap that is currently being met by importation.

ii. Provide adequate linkage between the different players involved in the meat production/ processing value chain.

iii. To provide the value chain with sustainable source of long-term funding at a reasonable cost thereby improving its competitiveness.

iv. Promotion of foreign exchange savings by increasing domestic meat production and encouraging import substitution.

v. Employment generation for Nigerians.

SOURCE OF EQUIPMENT

Golden Star Mills Manufacturers & Merchandise. Plot 40, Behind Hadiza House, Trade Fair Complex, Off Zoo Road, Kano, Kano State. (goldenstarmill@yahoo.com)

Mepaco Food Processing Solutions Comp: 200 W. Industrial Drive
Beaver Dam, WI 53916-0538, USA.

Bettcher Industries Inc: 6801 State Route 60, Birmigham OH 44889 USA. P.O. Box 336 Vermilion, OH 44089.

TARGET MARKET/CRITERIA

In modern meat processing, most of the processing steps can be mechanized. In fact, modern meat processing would not be possible without the utilization of specialized equipment. Such equipment is available for small-scale, medium-sized or large-scale operations. The category of Customers vis-a-vis fund size required to set up a meat processing outfit as listed and briefly described hereunder.

Microcredit Funding (Category A): This mainly targets the local meat processing outfits that produce minced meat, barbecue and dried meat etc. They will require loans of not more than N5.0m inclusive of Working Capital. This category of Beneficiaries would require only equipment for slicing, grilling, seasoning, as well as in some cases mincing and drying.

SME (Category B): This category is for outfits that process, package, refrigerate with a wide distribution networks or plan. They may require loans of up to N50m and above as some of the equipment are imported and sophisticated.

EMPLOYMENT GENERATION

	Micro	Large
Direct	4	60
Indirect	22	250
Total	26	310

SINGLE OBLIGOR LIMIT

Up to N 200 million in accordance with BOI SME lending limits.

PRICING

Interest Rate: 9 % per annum.

Fees:

(i) Loan less than N50 million.

Processing Fee : 1%

(ii) Loan above N50 million

Processing Fee : 1%

Commitment Fee : 1%

TENOR

3^1/2to 7 years inclusive of moratorium

MORATORIUM

· 6 – 12 months (from date of loan disbursement)

SECURITY

Loan Amount (N’m)	Security Arrangement
≤ N10.0	1. Specific charge over the equipment financed. 2. Irrevocable Personal Guarantee of the Chief Promoter of the company (where applicable). 3. Two (2) external guarantors acceptable to BOI who must belong to any of the following categories: a) Senior Civil Servant (Level 12 and above) who should not be more than 53 years old or not more than 28 years in service (whichever comes first. b) Bankers (not below the level of Assistant Manager) and must have been confirmed by current employer. c) Professionals i.e. Medical Doctors, Lawyers, Accountants, Engineers, etc. d) Senior Staff (not less than a manager) of reputable quoted Companies, International Oil Companies, Telecommunications Companies (GSM providers) e) The guarantees must be supported with Notarized Statement of Net worth acceptable to BOI. 4. Insurance on the livestock
>10.0 ≤ 20.0	1. All assets debenture. 2. Irrevocable Personal Guarantee of the Chief Promoter of the company. 3. One (1) external Guarantor acceptable to BOI who must belong to any of the following categories: a) Senior Civil Servant (Level 12 and above) who should not be more than 53 years old or not more than 28 years in service (whichever comes first. b) Bankers (not below the level of Assistant Manager) and must have been confirmed by current employer. c) Professionals i.e. Medical Doctors, Lawyers, Accountants, Engineers, etc. d) Senior Staff (not less than a manager) of reputable quoted Companies, International Oil Companies, Telecommunications Companies (GSM providers) The guarantees must be supported with a Notarized Statement of Net worth acceptable to BOI. Or Bank Guarantee from Commercial Banks acceptable to BOI.
> 20.0	1. Irrevocable Personal Guarantee of the Chief Promoter of the company in addition to one or a combination of the following: i. All assets debenture. ii. Legal mortgage on pledged property. Or 2. Bank Guarantee from Commercial Banks acceptable to BOI.

FUNDING

STRUCTURE

Loan – 90% maximum for equipment and working capital.

Working Capital could also be provided by the SME-friendly banks and in that case, BOI’s loan shall be limited to equipment procurement).

Equity – 10% (minimum) by the promoter(s)

For an existing project, the estimated value of the factory building and/or relevant processing equipment, may be applied against the borrower’s 10% contribution. The factory building and/or equipment must be valued professionally by any of BOI’s accredited valuers.

LOAN PROCESSING TURN AROUND TIME

2 – 4 Weeks (After all requisite document are in place)

DISBURSEMENT

Term Loan:

In phases in accordance with agreed milestones and shall be backed by provision of performance bond by the accredited equipment suppliers (where the suppliers demand for advance payment before delivery of the equipment).

Working Capital:

After successful installation and testing of the equipment and payment shall be directly to raw materials’ suppliers where practicable.

LOAN REPAYMENT MODE

· Monthly by direct debit of customer’s account domiciled with the participating SME-friendly bank on the basis of a Tripartite Agreement signed between BOI, the SME-friendly Bank and the Customer. Such direct debit collections, must be remitted by the SME-friendly bank to BOI within 24 hours. In the event of default, the SME-friendly bank must notify BOI within 24 hours to trigger prompt remedial action by the Bank.

· In the alternative, the customer should provide post-dated cheques in line with the amortization schedule.

Enterprise Risk Management