THE INNOVATIVE & RESOURCE EFFICIENT

WAY FOR SUSTAINABLE HORTICULTURAL

PRODUCTION

Team 109:
Fraser Kay (Leader) – (New Zealand, English 1st language)
Tam Pham - (New Zealand, English 2nd language)
Lukas Louwman - (The Netherlands, English 2nd language)
Prajwal Karki - (Nepal, English 2nd language)
Sanelisiwe Mkhwanazi - (South Africa, English 2nd language)
Ashutosh Singh Kathayat - (Nepal, English 2nd language)
Hakeem O. Akiode - (Nigeria, English 1st language)
Angie Galindez – (Colombia, English 2nd language)
Lewis Kong - (New Zealand, English 2nd language)

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 Table of Contents

Executive Summary: Page 2

Identified Challenge Page 3

Solution Proposition Page 3

Enterprise Objectives: Page 4

Benefits Page 4

Product Overview: Page 5

Market analysis Page 5

Competitor Analysis Page 6

Marketing Strategy Page 6

Partnerships Page 6

Economic Analysis: Page 6

Financial Analysis Page 7

Assumptions Page 7

Future Outlook: Page 8

Table 1: Cost price of packages Page 8

Table 2: Price of Packages Page 8

Table 3: Net Present Value Page 8

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Table 4: Salary Estimation Page 8

 EXECUTIVE SUMMARY

Current methods of horticultural cultivation by means of traditional soil farming have not changed for multiple
generations. The processes used to grow crops in this way are inefficient and often damaging to the
surrounding ecology with wasteful use of water and fertilizer being an unavoidable part of the practice. Due
to the Covid-19 pandemic sweeping the globe, additional pressure has been put on the global food distribution
system; we have been forced to evaluate alternate methods of food production with concerns rising over
disease transmission, scarcity and rapid price inflations.

Our Enterprise, Vertical Aeroponics Solutions, offers an innovative solution developing aeroponic technology
to quickly & easily grow organic crops without the need for herbicides, fungicides or pesticides. This growing
method does not use traditional growing mediums, with root systems suspended within a regulated water-mist
environment, allowing for better absorption and significantly reduced water consumption. This venture would
initially be implemented on a small scale into rural regions where the coronavirus has caused significant
disruptions to distribution networks of fresh produce. With preliminary operations providing proof of concept
for expansion investment, diversification into urban markets is planned. This will be done by forming key
alliances to quickly begin providing high quality organic produce to restaurants, cafes, and upmarket kitchens.
Generated profits will be reinvested into the business to continue innovating within the horticultural market.

Identified Challenge

Traditional growing methods come with a range of issues that are especially prevalent when large-scale
growing takes place a long distance away from market. As problems caused by geographical separation,
growing populations and inefficient use of land have resulted in the need for increasingly complex distribution
networks, excessive strain has been placed on the environment as a product of this cultural lack of individual
self-sufficiency. This has left people reliant on large corporations for produce, resulting in consumption of
vegetables of often unverifiable quality.

Furthermore, large scale agricultural production makes procuring from trusted sources difficult, with multiple
intermediaries and potential for harmful contaminants from the public increasing the risks of disease
transmissions significantly.

Solution Proposition

With developments in technology revolutionizing every aspect of our lives, individuals and large-scale food
producers are both to benefit by optimising their food growing processes with a space saving aeroponic
growing system. Vertical farming is far less labour intensive than conventional growing methods, and results
in a higher density yield per square foot of greenhouse space, while reducing water requirements by 90-99%.
Due to the benefits of aeroponics it is possible to distribute horticultural production into many smaller but
vastly more efficient plots. In this emerging area of agricultural science, controlled growing conditions are
precisely monitored to establish a much more sustainable, reliable, and resource efficient system of food
production. We aim to primarily target our impact to areas where conditions have led to food insecurity, and
plan to combat this with the sale of low cost vertical aeroponics starter kits, as well as a fully automatic &
customisable systems for urban markets too.

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 ENTERPRISE OBJECTIVES
Vertical aeroponic solutions will utilize the adaptable scale of its product to conduct a test-pilot of a low-cost
system in order to gain support from trusted industry partners to fund further expansion. Leveraging these
partners capabilities and their existing distribution channels will be key to further growth into larger culinary
and commercial markets. Our partners in return further their brand exposure and build positive publicity by
association with this social enterprise.

Phase 1: Generate income through the sale of low cost vertical aeroponics kits to farms, orchards, community
areas and individual households in rural Nepal where local conditions have resulted in food insecurity. Profit
margins at this stage of operation are low to ensure the product is affordable to consumers and is adopted
quickly by the market. Discounted units will be sold to schools with the agenda of innovating local agricultural
practices by teaching sustainable farming to children from a young age.

The overall purpose of the first phase of operations is to provide a cost-effective solution while providing
proof of concept to gain funding which will be used to expand and diversify into new regions and markets.

Phase 2: With proof-of-concept and funding secured, expansion into the urban commercial market is
forecasted. Sales of this more comprehensive aeroponics systems will be targeted towards high-end kitchens,
with options ranging (depending on customer requirements) from simply providing chefs with herbs and
greenery, to offering an entire system inclusive with installation, consultancy and start-up materials provided.

Benefits:
• Indoor systems have no seasonality issues, with all-year-round crop production resulting in higher
yields (Benke and Tomkins, 2017).
• Can be done using inexpensive materials which are readily available in most parts of the world
(Coleman, 2014).
• Requires little maintenance and is easily accessible to the elderly and the disabled by virtue of their
vertical nature (Coleman, 2014).
• Saves water and nutrients that are not absorbed by the roots and recycles back them into the
system (Despommir and Ellington 2008).
• Cuts the distribution costs and C02 emissions associated with transporting food over long distances as
a result of increased localized production (Benke and Tomkins, 2017).

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 PRODUCT OVERVIEW
Both the urban and the rural systems are designed to be as cost effective as possible; with the rural product
primarily consisting of a standard food grade plastic barrel, a manually operated pressure pump and a water
reservoir at the base. An additional smaller water container located on top allows for simple addition of
fertilizers and PH balancers to the water supply. The product has 50 slots constructed from PVC pipes where
saplings are planted. The pressure within the system and the small water requirement delivers extended misting
periods and infrequent pump usage for the customer.

The urban version of the product will use freely available blueprints from IKEA with added modifications to
incorporate fully automated aeroponic capabilities. These urban systems will be customizable in form to allow
for the aesthetics of the product to become a primary feature in populated areas such as parks, reserves, urban
gardens, etc. Largely flat-packable design and low-cost materials will allow for competitive pricing.

Figure 1: Rural Prototype Figure 2: Urban IKEA Blueprint “The Growroom”

Market Analysis
Despite Neal being regarded an agricultural country, development of agriculture is not keeping pace with
population growth (FAO, n.d.). Productivity is low, with a large proportion of land degraded or poorly
managed. People have moved to growing cash crops (Deshar, 2013), which has resulted in soil quality
deterioration and land wasted or used for non-agricultural purposes (Shakya, 2020). All these factors result in
Nepal being heavily reliant on agricultural commodities imported from overseas (Simkhada, 2019). The Food
and Agriculture Organization has stated a risk of a food crisis with sizable disruption to the supply chain
(Yadav & Prasain, 2020). Moreover, some main providers of food, such as India, are taking action to restrict
food exports over the lockdown period with domestic demand expected to rise as mass movements of Nepalese
workers return home from overseas work (Gill, 2020).

Competitor Analysis
Currently, there are institutions conducting research into hydroponics that have started up commercial
ventures (i.e. Hydroponics Nepal). The traditional farmer will oppose this system as initial costs of
hydroponics farming are high. Large-scale hydroponics cost up to $ 30,000 NZD, and small-scale hydroponics
around $4000-5000 NZD. Farmers who have established hydroponics farms in Nepal have managed to do so
by employing consultants from India. Therefore, system providers from the Indian market will be our major
competitors to contest with (Nepal Pride TV, 2019). In the domestic market the most prominent agricultural
systems providers are Kisan Agro Mart & Hydroponics Nepal. Kisan Agro is headquartered in Kathmandu
Nepal. They provide consultancy, training seminars, and nursery services. Their product line has also
diversified into hydroponic pots, making them direct competitors (Kisan Agro-Mart Pvt. Ltd., 2020).
Hydroponics Nepal provides training, consultation, and instalment services to Nepalese producers. The
product lines offer specifically hydroponic systems which also include seeds and nutrients packages
(Hydroponics Nepal, 2020).

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Marketing Strategy
In rural Nepal, low-cost marketing platforms will provide a vital marketing solution. Incentive programs will
be implemented targeting influential community leaders on a customer referral basis to begin generating sales.
It is expected word of mouth to travel quickly however this will be backed by local advertisements in local
shops, on vans/trucks and through corporate partner support. In urban areas where the product begins adding
value through appealing design features and customizability, the marketing budget will be greater. This will
allow for expenditure on adds in local newspapers, sponsored advertisements through social media and direct
mail to relevant consumer bases.

Partnerships
Lal Teer Seed was established in Bangladesh in 1995 and later expanded its operations to other countries in
South-Asia. It is the only company that has a full value chain in Nepal, from breeding to extension
services. Lal Teer has many seed farms in Nepal which will be beneficial to transport seed orders to our
clients efficiently. We will partner with Lal Teer Seed as it will be essential small seedlings with existing
root systems are procured for planting into the vertical aeroponic systems. By providing high quality
seedlings we will ensure we can retain our clients base, while additionally keeping opportunities open to
franchise this aspect of production out ourselves in the future.

IKEA is an internationally well-known home furnishing retailer. It was founded in 1943 and has been
growing rapidly since then. Besides the furniture retail stores, IKEA also is involved with social
entrepreneurship through the “IKEA Foundation”, where they support many new projects designed to make
our world a better place. They are particularly well-known for efficient methods of flat packaging their
products, this being one reason for a desired collaboration, the other being to help manufacture and
distribute an affordable vertical aeroponic product that is highly sustainable so that the people can provide
themselves with their basic vegetable requirements in a cost effect way.

ECONOMIC ANALYSIS
Nepal has status as an agricultural exporter however in the last few years has faced problems leading to the
country becoming a net-importer of agriculture products. According to the Ministry of Agriculture, the country
produced around 4 million tons of vegetables in the FY 2018-19, while imports of vegetables during the same
period was approximately 3 billion tones.

The major issue farmers are facing is competitive prices from the Indian market. There is a severe lack of
industrialization and commercialization of the agriculture sector. Our hydroponics prototypes and services are
targeted directly to this area. Commercial farmers will benefit from this system by producing organic
vegetables in shorter cycles and at minimum cost & resources. This productivity will enable them to more
effectively compete in their local market. Therefore, especially for those only owning small areas of land,
vertical hydroponics can be highly economically beneficial (Gurung & Thapa, 2016).

Furthermore, to combat rising issues the Nepalese Government has announced agricultural subsidies to
businesses trading in the private sector. This is designed to inject capital into domestic infrastructure for the
purpose of developing underdeveloped regions and stimulating exports. Under the new provision 50%
subsidies to agricultural equipment will be allocated, applying to all seeds and fertilizers (Gautam, 2018).

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Financial Analysis

Assumptions:
1. In the case of raising start-up capital, we will have business partnerships with Ikea and Lal Teer Seed. The
individual contributions are as listed below:

• Ikea: $21000
• Lal Teer Seed: $5000
• Capital from the promoters (GEE seed fund): $4000

2. In the financial model, in calculating the price of starter packs for both urban and rural products, variable
and fixed cost have been adjusted for the average inflation of 6% in Nepal (Statista, 2020).

3. In the financial model the discount rate is 15% based on the report published by Dolma Impact Fund with
support from UK aid. Here, average cost of capital for agribusiness is 15% (Dolma Development Fund).

4. The main objective of our project is to support rural farmers, increase self-employment and reduce
dependence on large commercial producers. Thus, the financial model has been designed in a way that
channels revenue acquired from the urban areas to support the proliferation of hydroponic farming practices
in rural areas. This can be observed in the cost estimation of starter packs from year 4 where the price of an
urban starter pack has increased, whereas the price of the rural starter pack has remained stable at $92 NZD.
The price listing is shown in Table 2 of the Appendix.

5. Finally, based on our calculations NPV is positive at $62,638 with the discount rate of 15%.

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 FUTURE OUTLOOK
Mass supply

In the future, we expect to franchise our model in order to spread this agricultural production method across
the country and into markets abroad. It will cause a shift in the agriculture development of developing
nations, enabling farmers to produce enough to supply to supermarket chains and restaurants year-round.

Water shortage being a problem in many countries we see the potential to introduce our method to all
regions in severe water crisis. The initial move into the global market would be through India, a country
sharing a border with Nepal. The huge demand for water to support their agriculture puts large amounts of
pressure on their water supply system (Snyder, n.d.). Our venture is a suitable solution to solving these
agriculture issues in India and other countries.

Teaching sustainable practices

Through reinvestment of profits this venture hopes to radicalise the way horticultural and farming practices
are taught and practiced globally. We expect to impact Nepalese people’s perception, as kids that have been
taught using sustainable agricultural products throughout their childhood will have reinforced habits of
responsible production and consumption. People in urban areas growing vegetables in their own garden will
gain intimate knowledge of the growing process and be better at making wise choices when shopping for
produce. Farmers in the rural areas will be made more aware of their impact on the environment and how
they can minimize it. With a positive shift in people’s awareness and an increase in local supply of safe
food, agricultural practices, hunger and water crises will all change for the better.

APPENDIX
Table 1: Cost price of packages Table 2: Price of Packages

Table 3: Net Present Value (NPV) Table 4: Salary Estimation

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