1. Feeders Ltd. Business Plan Presented by: Jason Basset David Latendresse Tyler Russell Jared Veness

2. Mission Statement  “To produce high quality finished animals available to local area producers and for export to packing plants.”

3. Goals and Objectives  To establish a prosperous 10,000 head feedlot operation in NW SK (1500 head custom)  Benefit the economy of Meadow Lake and surrounding area by both supplying new jobs as well as a market for barley, wheat, silage, hay and straw  To provide a return on investment in the form of dividends to shareholders  To achieve an internal rate of return of at least 15%  Hopefully expand in upwards of 20,000 - 30,000 within 5-10 years of operation

4. Location of NorthWest Feeders  Located on the N section of 16-60-17 W3, 4 miles N of Meadow Lake, SK  Additional quarter purchased for future expansion  Land has natural gradient of 3%  Many advantages of location  Little competition in NW SK  Greatest number of cows / crop district  Cheaper grain due to high transportation basis

7. Purchasing Procedure  Initially, larger animals purchased to increase turnover during 1 st year  Subsequent purchases, preference for smaller animals due to larger profits / day in feedlot  Purchases also based on the time an animal will be ready for sale  Want to sell 300 animals every week

8. Finishing Process  Animals purchased between 400-900 lbs will be finished to 1250 lbs with restrictive feeding ration  Ration consists of (20 lbs grain, 12 lbs silage, 3 lbs hay and 4 lbs protein supplement) / head / day  Newer animals will be slowly eased into feeding regime and closely monitored in smaller pens

9. Business Operations  Bunks and pens will be monitored twice daily  Feeding will occur three times daily  Average cattle inventory will be 210 days  Average grain inventory of 14 days  Manure is composted and cleaned out once in the fall and once in early spring

10. Flow of Cattle Cattle arrive/leave via truck/trailer truck/trailer Implanted with growth hormones TaggedSorted Cattle are weighed Sick cattle moved to hospital then sick pens Moved into general population population Sent to small pens Finished cattle

11. Human Resources  General Manager - Responsible for the day to day operations of the feedlot including purchases of cattle and feed, caring and feeding of cattle, as well as capital expenditures and financial management.  Marketing Manager - Responsible for feedlot purchases and sales, marketing information systems, and utilizing marketing mechanisms available including the futures and options market and contracting procedures.  Secretary / Accountant - Running the office which includes keeping track of all the financial organizational info.  Feedlot Staff - Receiving, handling, caring for and shipping the cattle. Feed preparation and delivery to cattle. Repair and maintenance of equipment and cattle health.  Part-time Veterinarian - Part time employee, on retainer, responsible for animal health and welfare.

12. Chain of Command MarketingManager Marketing Manager Secretary / Accountant Board of Directors / Shareholders General Manager Feedlot Staff ( 8 ) Veterinarian (on retainer)

13. Cost of Employees

14. Employee Issues Previous feedlot experience required Preference for local employees ( Exception of General Manager ) Job training Regular performance reviews

15. The Markets ØPurchasing markets ØPurchasing markets include feeds and feeder calves ØSelling markets ØSelling markets include finished calves and compost manure

16. Competition  Barriers to Entry  Capital requirement  Feed availability  Buyer Power  Market is the price setter so that packers do not have power over the feedlot  Supplier Power  Lots of growers in our area looking for a market for their product therefore this should not be a problem  Threat of Substitution  Plenty of other feedlots  Since beef is a commodity there are lots of substitutes (Chicken, pork)  Degree of Rivalry  Cheap feed advantage due to transportation basis for grain  Larger trucking distance for shipping end-product

17. Competition  Major competitors are the feedlots in southern Alberta  They have roughly 80% of the Canadian market.  Other feedlots are larger, and have specialized facilities

18. Competition  Competitors  Strengths - close to packing plants, experienced in the feedlot business, likely has existing business ties with buyers  Weaknesses - drought in Alberta; cost of feed  Compared to our competitors - cheap feed vs. location  Counteract the location problem with attempting to increase our margin with the use of cheap feed

19. Competition  Trends that may effect competition and ourselves  Continuing drought in Alberta  increasing cost of feed  Increasing government regulations  International Trade Issues  Beef consumption trends

20. Sales and Profit Objectives ØDevelop an alternative market for farm based commodities in the Meadow Lake area ØIRR of greater than 15% by our first full year of business ØExpansion of the feedlot business by 2007 ØPay dividends out by 2010

21. Customers - Who and Where  There are a few markets for our cattle in both Canada and the U.S.  These include :  Cargill Foods inHigh River, Alberta  Cargill Foods in High River, Alberta  Lakeside Packers in Brooks, Alberta  XL foods in Moose Jaw, Sask  IBP in Dakota City, Iowa and Pasco, Washington  ConAgra Beef Company in Greeley, Colorado

22. Channels of Distribution ØThe only distribution method that suits our needs is the truck and trailer ØTrucking company used depends on the destination of the cattle and may change on a sale per sale basis ØLarge trucking companies based out of Saskatoon and Lloydminster ØMajor highways to all packing plants

23. Channels of Distribution ØFeed grain, silage and straw will all be shipped on sight by the local suppliers ØCanola meal or alternative sources of protein will be shipped in via private trucking companies

24. Pricing Policy ØPrices are determined at the Chicago Board of Trade and the Winnipeg Commodity Exchange ØThe price has the possibility to vary a small amount depending on a supply/demand basis among different packing plants ØEconomies of size are vital ØSome prices may be locked in on the futures market

25. Selling and Advertising ØNorthWest Feeders will advertise to the packing plants by sending a fax or placing a phone call on a weekly basis ØCustomer direct promotion ØCattle buyers encouraged to drop in at any time to view particular animals ØTours available upon request

26. SWOT – Internal ØUp to date technologies ØTrained, experienced employees ØLocated in West SK ØLow cost of production due to cheap grain ØReputation for quality ØSmaller size feedlot ØIncreased precipitation and cooler climate ØMust transport cattle large distances ØHigh start-up cost StrengthsWeaknesses

27. SWOT Analysis - External ØLocal crop district 9B has largest amount of steers and heifers in need of finishing ØAbility to expand and diversify into other products ØFavorable market conditions ØPositive support from local area producers and potential shareholders ØIncrease in communication techniques ØEnvironmental safety issues ØSubject to international tariffs and trade boycotts from the U.S. ØCost of shipping end product ØAre at risk to possible cultural changes such as rise in vegetarianism and hormone free beef ØRelatively few buyers of our product OpportunitiesThreats

28. Community Impacts ØNew market for agricultural commodities in and around the Meadow Lake area Ø12-15% of the total feedlot population will be from local cattle ØEconomic spin-offs for Meadow Lake ØInitial start-up ØIncreased local traffic ØTrucking

29. Environmental Impacts ØGood management, will help NorthWest Feeders minimize the impact on the local environment ØTo begin production NorthWest Feeders will have to follow the Agricultural Operations Act

30. Opening Balance Sheet ØInitial financial statement for NWF ØStates initial allotment of both debt and equity capital

31. Capital Expenditures ØCapital Budget in start-up phase ØFinancing for Capital Expenditures

32. Cattle Margins ØThe margins used reflect normal market fluctuations.

33. Financial Model ØInternal Rate of Return and Net Present Value of Equity Investment under different scenarios.

34. Financial Model ØNet income shows steady growth throughout the projection

35. Dividend Policy ØNWF’s dividend policy is to pay dividends in the year following a cash balance in excess of $4 million ØUnder this policy, dividends begin payment begins after year 9.

36. Key Financial Ratios ØReturn on equity investment shows encouraging growth throughout.

37. Break-even Analysis ØAll break-even analysis is based on NWFs’ most constraining variable, animal selling price

38. Break-even Analysis ØSelling prices can fall substantially below historical and current values

39. Break-even Analysis ØEconomic break-even analysis is the lowest selling prices that the operation could withstand before it could no longer deliver returns above all direct costs and opportunity costs ØNWF is relatively stable under price fluctuations

40. Feedlot Expansion ØFollowing year 5 (2006), NWF purchases more land and doubles its operation from 10,000 head to 20,000 head.

41. Feedlot Expansion ØFeedlot expansion effect on net income of the venture

42. Conclusion Ø Profitable, feasible business ØExcellent investment opportunity ØAllows shareholders/farmers to add value to their operations and earn dividends ØAdditional economic spin-off for community