Question

In this report, you will propose an idea for a new business. The business should center on a legal product or service. While it can be similar to a product/service that already exists (e.g., a type of athletic shoe), you will need to clearly identify how your idea is significantly distinct from any in the current marketplace. Your audience will be potential investors in the business.

Answer 1

SPIRULINA - A Modern Diet

                   Spirulina is a micro-algae and as such has been growing naturally in our environment for millions of years, it is a tough plant able to withstand harsh growing conditions, in fact the micro-algae cell never really dies it goes dormant when weather conditions are not favourable, and as soon as these change and the environment is once again suitable for growth, spirulina begins growing and reproducing again. Naturally growing spirulina can be found in high alkaline lakes and in general it is said that where flamingos are, spirulina is sure to be found..

History

The Mexicans where the first to discover its wonderful health properties and in the 16th Century the Aztecs around Lake Texcoco were known to feature it on their dinner tables. In the 1940’s a French phycologist discovered spirulina to be growing in Africa; Lake Chad and the lakes of the Rift Valley in Eastern Africa were the main areas where spirulina thrived. The Kenembus tribe of Chad harvest the algae from the lake and dry it in the sun in a cake shape form, which is locally called “dihe”. This is sold to the markets and has become a staple diet for some of the communities living around Lake Chad. In a study on the correlation between poverty and malnutrition 10 countries were taken as examples. Of those 10 countries 9 were found to have a direct link between poverty and malnutrition – Chad was the only country that was poor but had no malnutrition. Modern day technology allows us to grow spirulina in man-made machines called Photo Bio-Reactors (PBR) – these machines are ideal to grow the algae in conditions where the natural habitat would otherwise not permit the cell to normally grow.

Benefits

        Spirulina has amazing properties and in many ways can be considered a Super Food. It contains the most remarkable concentration of nutrients known in any food, plant, grain, or herb. It’s composed of 60% highly digestible vegetable protein, has extremely high concentrations of beta carotene, vitamin B-12, iron and trace minerals, and the rare essential fatty acid GLA – Gamma-Linolenic Acid (which people who have not been breast fed do not have). It has a balanced spectrum of amino acids, cleansing chlorophyll, and the blue pigment, phycocyanin. All the essential vitamins and minerals a body requires can be provided by spirulina, these provide a variety of benefits for the human body, like nourishment, mental clarity, assisting in cancer recovery, depression help and many others. Several scientific studies show spirulina to have the ability to inhibit viral replication; in particular it was found that 5-10 mg/ml of spirulina will inhibit the HIV-1 virus otherwise known as the AIDS virus.

10 benefits from taking 5-10 grams of spirulina every day

• Increases the CD4 count – Strengthens the immune system (particularly useful for HIV/ AIDS patients.

• Increases RNA (Ribonucleic acid) in the brain for more energy.

• The beta carotene (contains 10 times more that of carrots) is an excellent source of disease fighting antioxidants, and is also good for healthy eyes and vision.

• Contains vegetable protein and amino acids to build muscle .

• High concentration of B Vitamins; which not only break down carbohydrate and lipids but also maintain cardiovascular health.

• It is also an excellent anti-inflammatory, which is an essential benefit to arthritis patients and prevents heart disease.

• Contains anti-aging properties.

• Improves digestive health .

• Contains easy to absorb iron supplements ideal for women and children.

• Reduces cancer with antioxidant protection.

What some Institutions and Organizations have said about spirulina

• The Immune System Miracle Worker (San Francisco Medical Research Foundation)

• Worlds’ Most Powerful Food (biotech-firm.com)

• Spirulina is the most ideal food for mankind (United Nations Recommendation)

• Spirulina: Food for the future (Publication by the USDA – United States Department of Agriculture).

• “There is a need for both national governments and inter-governmental organizations to re-evaluate the potential of Spirulina to fulfil both their own food security needs as well as a tool for their overseas development emergency response efforts” - The UN-Food and Agriculture Organisation (FAO) Report on Spirulina 2008.

• “For WHO, Spirulina represents an interesting food for multiple reasons, rich in iron and protein, and is able to be administered to children without any risk. We at WHO consider it a very suitable food.” - United Nations World Health Organization (WHO), Geneva, Switzerland June 8Th, 1993

• Spirulina- was declared by the United Nations World Food Conference of 1974 as the best food for the future.

How to grow spirulina

                    – The Farm Once an appropriate site is identified, which meets all the climatic requirements, basins or ponds need to be built. These ponds should be about 3 to 4 metres wide and can be as long as 100 metres (the larger they are the more economical the enterprise will be).    The most economical ponds are the ones made of polyethylene and resemble plastic bags hanging off wooden structures (see picture below), however as economical as they may be at start-up they have been proven to be more expansive to maintain due to the wear and tear of the polyethylene material. The polished cement ponds in the end prove the be the most cost effective, particularly with the fact that a paddle wheel can be put in place which could be solar powered hence reducing overall costs A polyethylene cover over the pond or better still a greenhouse around the ponds could increase temperature, decrease evaporation, decrease contamination and decrease cross-breeding – all favourable to micro-algae growth.

Water requirements are the most important step to growing spirulina, and although spirulina can grow in a variety of types of high alkaline waters the following “ingredients” are required;

• Sodium bicarbonate (if direct CO2 is not available)

• Magnesium sulphate

• Potassium nitrade

• Citric acid

• Common salt

• Urea

• Calcium chloride

• Iron sulfate

• Ammonium sulphate

The pH should be around 10 at 200 C – normal tap water is generally around pH 7. Other facilities required are;

• Harvesting basins

• Drying rooms or racks

• A room to analyse the spirulina flakes and transform them into powder and/or capsules.

TYPICAL SMALL SCALE INVESTMENT REQUIREMENTS

4.1 Operational requirements

4.1.1 Technical inputs

Since spirulina is essentially a plant which grows in water, the technical inputs to set up a spiurlina farm are quite basic. On average 1 sq. m of water will produce 10 grams of spirulina, so to produce 1000 grams of spirulina (or 1kg) you require 100 sq. meters of pond roughly a pond 5 metres wide by 20 metres long. A pilot pond 500sq. m. would be approximately 6 metres wide by about 85m in length. For this you require:.

• Land with a high boundary wall (fence) to avoid intruders

• Lighting

• PV solar panel

• Raceway pond with paddle

• Culture pond – where the actual culture is tested for growth

• Harvesting station and dryer room

• Infrastructure – office, guard house, admin building etc./ packing and grinding unit

• Laboratory for testing.

HR requirements.

The facility would require a farm manager to manage the overall running of the farm, a lab operator, a packaging manager plus two staff for each pond (2 shifts) for quality control of ponds and for daily harvesting and two night watchmen (guards) for two shifts. In total the farm would employ seven staff. It is obvious that as the ponds increase in number so too would the number of staff dedicated to working the ponds.

Other operational requirements

As mentioned above a PV solar panel would considerably lower the cost of the plant and would make the plant totally CO2 neutral. Furthermore micro-algae absorb double their own weight of Co2, so for every tonne of micro-algae produced you have mitigated climate change and absorbed two tonnes of Co2.

Marketing and distribution requirements

Kenya Bureau of Standards permits from other countries and a promotional campaign to raise more awareness about Kenyan spirulina.

Risks in success

In order to have a successful spirulina production, from a technical perspective, certain things need to be in place. A good and healthy supply of “soft” water, high in alkaline (with the right nutrients). The correct atmospheric temperature between 15 and 35 degrees Celsius, but ideally the algae thrives on temperatures between 30 and 35 degrees, (in lower temperate areas the use of a greenhouse has proven to be successful in increasing the temperature). Care has to be taken and water constantly checked to avoid cross-breeding and contamination from nearby water sources (lakes, rivers etc.). Rain is beneficial as it compensates for evaporation, however heavy torrential rains can cause damage to the pond and allow the water to overflow causing culture loss.

Financials –

  Approximate capital costs for a pilot farm

The approximate capital costs for a pilot spirulina farm keeping in mind a 6m x 80m pond (around 500sq. m) in total would be around Euros 60,000. This will vary from area to area and depending on land costs. The bulk of the costs (Euros 39,000) are in the shared infrastructures and these can vary too depending on the cost of labour and materials in the country of production.

Approximate operating costs for a pilot farm Operating costs can vary as well from location to location; this will depend primarily on labour costs. An approximate indication is given in Annex IV of Euros 1,370 which includes the cost of buying the culture (seed) which can vary on the market anything from Euros 80 - 150.

Potential revenue Based on a 25 day month, a maximum production of 5kg per day and a wholesale price (Kenya price) of Euros 50 per kg, the total revenue is Euro 4,500 per month, less monthly expenses would yield a profit of almost Euro 3,000 – this would mean the payback time for your investment would be approximately 20 months, Euro 3,000 X 20 months = Euro 60,000 (initial investment cost) Economies of scale would mean increasing the amount of ponds and production while marginally increasing your land and labour costs would make the venture much more fruitful.

Scope:

This food product can be introduced to the other parts of the world and the revenue is something unimaginable.

Let us take India as a sample

The densely populated country is in need of alternate food .

Single Pond cost with mother spirulina and chemicals included -   Rs. 30000 (one time)

                                                                 Maintanace charge   - Rs.30000 (per month)

                   Assuming 5kg per day 5*600 = 3000 revenue per day.

                   Profit per month will be almost equal to Rs.60000.

                    On setting of more tanks profit will considerably raising .

*Location and climate is the base for Spirullina.