Cherry Hill of Morocco - Business Plan Analysis

1

Executive Summary

Cherry Hill of Morocco is developing an integrated agro-industrial project focused on the valorization of onion and garlic value chains in Morocco. The project represents a strategic investment across three complementary pillars: agricultural production on 500 hectares, an agro-industrial processing unit, and cold storage infrastructure with 30,000-tonne capacity.

294.04 M

Total Investment (DH TTC)

24%

Internal Rate of Return (IRR)

648.7 M

Net Present Value (DH)

4 Years

Payback Period

                Key Value Proposition: The business model combines fresh produce sales (domestic and export) with value-added transformation into onion and garlic powder, targeting both national and international markets. Transformation products represent 59.3% of total revenue despite using only 50% of raw production.
            

2

Project Overview

2.1 Strategic Vision

The project aims to establish a reference agro-industrial platform founded on three principles:

Operational excellence
Environmental sustainability
Positive social impact

2.2 Geographic Location

Attribute	Details
Industrial Site	Agropolis Meknès, Parcel GI07
Land Area (Industrial)	6.16 hectares (61,600 m²)
Agricultural Site	Communes of Sidi Slimane Moul Kifane and Majjate
Partner	MEDZ (land acquisition)

Strategic Advantages:

Direct access to Rabat-Fès highway
Connectivity via National Route N°6
Proximity to École Nationale d'Agriculture
Proximity to INRA Regional Research Center
Access to railway network
Near Fès-Saïs Airport

2.3 Project Components

Agricultural Production

Crop	Area (ha)	Purpose
Onion	400	Fresh sales + Transformation
Garlic	100	Fresh sales + Transformation
Total	500

Industrial Infrastructure

Modern transformation unit for powder production
Conditioning station meeting international standards
Cold storage facility (30,000 tonnes capacity)
Onion chips processing line
Packaging equipment

2.4 Varieties Selected

Product	Varieties
Onion	Jaune, Darko, Red Lady
Garlic	Ail Blanc, Ail Violet, Printanor

3

Investment Analysis

3.1 Total Investment Summary

Category	Cost HT (DH)	Cost TTC (DH)	% of Total
Technical Studies & Consulting	4,200,000	5,040,000	1.7%
Agro-Industry	177,837,000	213,404,400	72.6%
Agricultural Production	63,000,000	75,600,000	25.7%
TOTAL	245,037,000	294,044,400	100%

Investment Distribution

Agro-Industry72.6%

213.4 M DH

Agricultural Production25.7%

75.6 M DH

Technical Studies1.7%

5.04 M DH

3.2 Industrial Zone Breakdown (190.29 M DH TTC)

Item	Amount HT (DH)
Cold storage (30,000 T capacity)	60,000,000
Industrial unit construction	37,500,000
Onion/garlic powder transformation line	28,000,000
Energy infrastructure	8,000,000
Packaging equipment	7,000,000
Onion chips transformation line	6,400,000
Administrative equipment, lab & software	4,767,000
Machinery (forklifts, trucks, etc.)	3,700,000
Weighbridge, fencing & exterior	3,210,000

3.3 Depreciation Schedule

All assets are depreciated linearly over 10 years:

Category	Annual Depreciation (DH)
Technical Studies & Consulting	504,000
Agro-Industry	21,340,440
Agricultural Production (Year 1-2)	7,560,000
Total Year 1-2	29,404,440
Total Year 3-10	22,348,440

4

Production & Revenue Model

4.1 Yield Assumptions

Product	Area (ha)	Yield (T/ha)	Total Production (T)
Onion	400	80	32,000
Garlic	100	17	1,700

4.2 Product Distribution Strategy

Onion Distribution (32,000 T)

Channel	%	Volume (T)
Fresh - Local Market	20%	6,400
Fresh - Export Market	30%	9,600
Transformation (Powder)*	50%	1,440

*Conversion rate: 9%

Garlic Distribution (1,700 T)

Channel	%	Volume (T)
Fresh - Local Market	50%	850
Transformation (Powder)*	50%	85

*Conversion rate: 10%

4.3 Revenue Structure

Product	Unit Price (DH/T)	Volume (T)	Annual Revenue (DH)	% of Total
Onion powder	110,000	1,440	158,400,000	56.0%
Fresh onion - Export	8,000	9,600	76,800,000	27.2%
Fresh garlic - Local	30,000	850	25,500,000	9.0%
Fresh onion - Local	2,000	6,400	12,800,000	4.5%
Garlic powder	110,000	85	9,350,000	3.3%
TOTAL			282,850,000	100%

                Key Insight: Transformation products (powder) represent 59.3% of total revenue despite using only 50% of raw production, demonstrating significant value addition through processing.
            

4.4 Production Timeline

Year	Production Status	Revenue
Year 1	Infrastructure development - No production	0 DH
Year 2-10	Full production capacity	282,850,000 DH/year

5

Cost Structure Analysis

5.1 Agricultural Operating Costs

Onion Production (400 ha) - 19.6 M DH

Item	DH/ha	Total (DH)
Fertilizers	11,000	4,400,000
Drip irrigation tubing	10,000	4,000,000
Phytosanitary treatment	10,000	4,000,000
Seeds	8,000	3,200,000
Agricultural operations	6,000	2,400,000
Labor	4,000	1,600,000
Total	49,000	19,600,000

Garlic Production (100 ha) - 4.9 M DH

Item	DH/ha	Total (DH)
Fertilizers	11,000	1,100,000
Drip irrigation tubing	10,000	1,000,000
Phytosanitary treatment	10,000	1,000,000
Seeds	8,000	800,000
Agricultural operations	6,000	600,000
Labor	4,000	400,000
Total	49,000	4,900,000

5.2 Industrial Processing Costs - 38.86 M DH

Item	Unit Cost (DH/T)	Volume (T)	Total (DH)
Fresh Onion Export
- Transport	1,500	9,600	14,400,000
- Miscellaneous	500	9,600	4,800,000
- Packaging	300	9,600	2,880,000
Onion Powder Production
- Energy, hygiene, labor, packaging	11,000	1,440	15,840,000
Garlic Powder Production
- Energy, hygiene, labor, packaging	11,000	85	935,000
TOTAL			38,855,000

5.3 Fixed Overhead Costs - 3.25 M DH

Item	Annual Cost (DH)
Agricultural land rental	2,000,000
Taxes and insurance	600,000
Salaries	372,000
Social charges	115,892
Services and maintenance	100,000
Bonuses and allowances	57,231
TOTAL	3,245,123

5.4 Human Resources

Position	Headcount	Annual Payroll (DH)
Permanent workers	67	2,000,000
Technicians & vocational graduates	8	72,000
Engineers & senior executives	5	150,000
TOTAL	80	2,222,000

5.5 Total Annual Operating Costs Summary

24.5 M

Agricultural Production (36.8%)

38.9 M

Industrial Processing (58.4%)

3.2 M

Fixed Overhead (4.9%)

66.6 M

Total Operating Costs

6

Financial Performance Indicators

6.1 Key Metrics Summary

24%

Internal Rate of Return (IRR)

648.7 M

Net Present Value (DH)

4 Years

Payback Period

282.9 M

Annual Turnover (Year 2+)

6.2 Projected Income Statement Summary

Item	Year 1	Year 2	Years 3-10 (each)
Total Revenue	0	282,850,000	282,850,000
Cost of Sales	63,355,000	63,355,000	63,355,000
Gross Margin	-63,355,000	219,495,000	219,495,000
G&A Expenses	3,172,440	3,172,440	3,245,123
Operating Margin	-66,527,440	216,322,560	216,249,877
Depreciation	29,404,440	22,348,440	22,348,440
Financial Result	-95,931,880	193,974,120	193,901,437
Net Result After Tax	-95,931,880	126,083,178	126,035,934

6.3 Cash Flow Analysis

Year	Cash Flow (DH)	Discounted CF (DH)	Cumulative DCF (DH)
0 (Investment)	-294,044,400	-294,044,400	-294,044,400
1	-66,527,440	-66,527,440	-360,571,840
2	148,431,618	140,029,828	-220,542,012
3	148,384,374	132,061,565	-88,480,447
4	148,384,374	124,586,382	36,105,935
5	148,384,374	117,534,322	153,640,257
6-10	148,384,374/yr	Declining	648,737,580

Note: Payback achieved in Year 4 (highlighted in green)

6.4 Profitability Ratios

Ratio	Value
Gross Margin Rate	77.6%
Operating Margin Rate	76.5%
Net Margin Rate (after tax)	44.6%
Return on Investment (ROI)	42.9%
Cost of Sales / Revenue	22.4%

7

Financing Structure

7.1 Capital Structure

Source	Amount (DH)	Percentage
Equity (Capital propre)	58,808,880	20%
Debt (Capital emprunté)	235,235,520	80%
Total	294,044,400	100%

Debt Financing80%

235.2 M DH

Equity Financing20%

58.8 M DH

7.2 Government Incentive

                Important: The business plan indicates that 16% of the total investment will be reimbursed to the investor upon complete project realization. This represents approximately 47,047,104 DH in government subsidies/incentives.
            

8

Risk Assessment & Critical Observations

8.1 Assumptions Requiring Validation

Assumption	Stated Value	Risk Level	Commentary
Onion yield	80 T/ha	Medium	High yield assumption; industry average is 40-60 T/ha
Garlic yield	17 T/ha	Low	Reasonable for irrigated production
Export price (onion)	8,000 DH/T	Medium	Market-dependent; requires validated offtake agreements
Powder price	110,000 DH/T	High	Premium pricing; requires market validation
Conversion rate (onion→powder)	9%	Low	Industry standard 8-12%
Full capacity from Year 2	100%	High	Aggressive ramp-up assumption

8.2 Market Risks

Risk	Description	Mitigation
Price Volatility	Onion/garlic prices highly volatile globally	Diversified product mix (fresh + transformed)
Export Market Access	Dependent on maintaining export quality standards	Investment in quality infrastructure
Competition	Established competitors in powder market	Focus on quality certifications (ISO, organic)
Currency Risk	Export revenues exposed to exchange rate fluctuations	Consider hedging strategies

8.3 Operational Risks

Risk	Description	Mitigation
Weather/Climate	Drought, flooding affecting yields	Drip irrigation infrastructure
Pest/Disease	Crop losses from pest outbreaks	Phytosanitary treatment budget allocated
Water Availability	Groundwater depletion in region	Well infrastructure; water management
Labor Shortage	Seasonal labor availability	Mix of permanent (80) and temporary workers

8.4 Financial Risks

                Key Financial Risks:
                High Leverage: 80% debt financing increases financial risk
Year 1 Loss: -95.9M DH operating loss requires adequate reserves
Working Capital: Not explicitly addressed in documentation
Interest Rate Risk: Debt servicing costs not shown in projections

            

8.5 Critical Observations

                Missing Elements:
                Detailed debt service schedule (interest payments, principal repayment)
Working capital requirements
Sensitivity analysis
Detailed market study for powder pricing validation
Competitor analysis
Offtake agreements/Letters of Intent

            

                Optimistic Assumptions:
                Year 2 immediately achieves 100% production capacity
No revenue growth or inflation factored over 10 years
Static pricing over entire projection period
No provision for crop failures or yield variations

            

9

Recommendations

9.1 For Investors

Priority	Recommendation
High	Request detailed debt service schedule to understand true cash available for distribution
High	Validate powder pricing with market study and potential offtake agreements
High	Request sensitivity analysis on key variables (yield, price, production ramp-up)
Medium	Clarify the 16% government reimbursement terms and conditions
Medium	Review detailed working capital requirements
Low	Consider phased investment approach to de-risk

9.2 For Project Sponsors

Priority	Recommendation
High	Secure pre-sales agreements for powder production
High	Obtain water rights and environmental permits
High	Develop detailed construction and commissioning timeline
Medium	Establish quality certification roadmap (GlobalGAP, ISO, etc.)
Medium	Create risk mitigation fund for Year 1-2 operational contingencies
Low	Explore crop insurance options

9.3 Strategic Recommendations

                    1. Diversification

                    Consider adding storage-as-a-service revenue stream from the 30,000T cold storage facility

                    2. Vertical Integration

                    Explore retail packaging for local market to capture higher margins

                    3. Export Strategy

                    Prioritize EU market entry with appropriate certifications

                    4. Sustainability

                    Implement renewable energy (solar) to reduce energy costs and enhance ESG profile

10

Conclusion

The Cherry Hill of Morocco onion and garlic project presents a compelling investment opportunity with strong fundamentals:

                    ✓ Strengths:
                    Strategic location with excellent logistics
Integrated value chain (production → transformation → storage)
Strong financial returns (24% IRR, 648M DH NPV)
Diversified revenue streams
Government support (16% reimbursement)

                

                    ⚠ Challenges:
                    High initial capital requirement (294M DH)
Aggressive production assumptions
Market price validation needed for powder products
High leverage (80% debt)

                

                Overall Assessment: The project is financially viable with attractive returns, but success depends on achieving the projected yields and securing market access for transformed products at the assumed prices. Investors should conduct additional due diligence on market validation and consider negotiating milestone-based investment tranches.
            

🌿 Cherry Hill of Morocco