THE draft master plan for the development of livestock sectors drawn up by the FAO in May 2009, shows us that the poor performances recorded by the Congo in agro-pastoral development since the beginning of the 1990s make the food issue a national emergency. .
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Indeed, the weak national animal and vegetable production is in flagrant inadequacy with the human potential, agro-pedological and the richness of the ecosystems. Dependence vis-à-vis the outside in animal products was 98.2% in 2007 for beef; 96.6% for poultry meat; 86.7% for table eggs and 100% for milk and dairy products. These animal products absorb more than 30 billion CFA francs each year
The agricultural sector, although it has enormous potential for its development, does not experience significant performance, which places the country in a situation of importer of foodstuffs.
The volume of imports grows by around 100 million dollars per year, which represents 30% of imports for the year. The participation of private operators in the economy, in particular in the agricultural sector, remains low.
However, civil society groups and associations are experiencing significant dynamism in the context of support to producers through an intensive breeding system which in the past was marked by state farms such as SOCAVILOU (Pointe-Noire), SONAVI (Brazzaville, Dolisie.
Currently, a few private farms not exceeding 5,000 individuals have taken up this activity mainly in Brazzaville and Pointe-Noire. But their rather timid production capacity does not follow the galloping trend of the population's food needs.
In a rapidly changing environment with an uncertain future as to the viability of a project on the one hand and the search for gains on the other hand, we need, with the parameters presented to us, to carry out an evaluation of gains and costs in a risk reduction situation in order to finally decide in which direction we can act or not in making an investment decision in order to ensure the profitability of the project. It should be noted that risk is an uncertainty present in all stages of the life of any project, particularly an investment project.
The agro-pastoral farm Le Berger d'Abrila, which is the subject of our study, is a cooperative Created on February 14, 2005 under the personal initiative of the promoter and the support of his family. It takes its name from the first names of the promoter's two grandsons who are Bergie and Abrila. It is located at the Boko site in the village of Kindinga. It covers 10 exploitable hectares, 2 of which have been occupied since 2008 by market gardening activities.
In addition, it should be noted that the total space of the farm is divided into two parts: on one side the market gardening activity and on the other side the poultry activity. Currently, the farm actually has a sub-project to consolidate market gardening activity.
The main resources of the farm are the profits generated by the activities developed within it, own funds, grants and donations.
For the development needs of its activity, the promoter has developed a broiler breeding project which constitutes the activity which concerns our study, justified by the degree of uncertainty presented by the poultry sector in Congo.
2 - Work methodology
2.1 - General principles
The object of the study is to find out how we can ensure the profitability of this project in an environment fraught with uncertainty.
Two objectives are targeted by the study:
? Evaluate the profitability of the project, since the concept of risk remains linked to the variability of the farm's economic results (income flows);
? Analyze the risk by providing real options, knowing that over time, investors have developed many risk analysis methods; but the most recent are precisely those which place risk at the center of their problematic.
To achieve the first intrinsic evaluation objective of the project, it was necessary to examine the following elements: 1) the project investment schedule; 2) provisional income statements; 3) working capital requirements; 4) the schedule of net liquidated flows (FNL) of the project; 5) the intrinsic profitability of the project. On the FNL schedule, the basic criteria for evaluating the profitability generated by a project will be applied. For the second objective, risk management through the contribution of real options will be applied.
This method allows us to enhance the project by taking into account the contingencies, the uncertainty and the opportunities which may result from it because, by borrowing the words of Pierre Vernimmen, “uncertainty can create value”. This valuation first of all involves determining the various options attached to the project taking into account the results of the evaluation obtained, then the value of the option will be associated with that of the project in a formula called: VANA (net present value increased ).
In some cases, risk management is often wrongly associated with the financial sector alone, concerning banking and insurance, resulting in targeted company policies in terms of diversification or hedging strategies. In reality, this vision appears too reductive because risk management must be understood in a broader perspective, both from a strategic and operational point of view, because any company faces more and more risks that are difficult to control. Thus, correct risk management is one that identifies and fully understands these risks and knows how to take measures to reduce, transfer or eliminate them. To do this, it must understand a wide variety of risks.
This requires determining the types of risks involved and understanding the real options for the business.
2.2 - Typology of risks
To this end, we can determine the various risks incurred by the farm in the long term as part of its extension project, namely:
Production risk : corresponds to the risk that raw materials will not be delivered on time;
Market risk: represents the risk that there will be an unanticipated variation in demand for broilers, due to a sharp change in consumption preferences? Therefore, the prices will drop and the competition may become very intense and our production company will be forced to lower the prices;
Supply risk: corresponds to the risk that the prices of certain inputs will suddenly change.
Financial and cash-flow risks : relate to risks linked to financing but the origin of which may come from a lack of equity likely to lead to liquidation or, on the contrary, from an absence of a dividend which will prevent a capital increase ;
Risk of damage to tools and materials : these risks can lead to a temporary stoppage of activity;
Climatic risks which can be of crucial importance in the agriculture and livestock sector;
Political, regulatory and legal risks , these are the risks which impact the immediate environment with the organization and which can substantially modify its competitive situation and the business model itself.
The structure must proceed in particular by analyzing the:
Economic (or operational) risk which expresses the sensitivity to a change in the level of activity;
Financial risk which depends on the weight of the financial debt.
These are operational, strategic, financial and compliance risks. Treating in a coherent and integrated manner this set of risks, which by nature are very different, represents a major challenge in current risk management in order to provide the project promoter with the necessary tools to complete the execution of their project. A good knowledge of these risks allows the company to know its vulnerability in the event of a change in the level of activity and to better react accordingly. It may also make it possible to study and take the necessary actions to reduce this vulnerability. However, in this case, attention is focused on financial and treasury risks.
2.3 - Definition and typology of options
Real options are opportunities which offer their holder the right but not the obligation to modify an investment project, in particular thanks to the additional information acquired on its prospects for profitability.
The different categories of real options are as follows
The option to develop the activity : An initial investment is a prerequisite which opens up development opportunities in the future (eg accessibility to new markets and development of new products);
The option to postpone the execution of a project : there is a kind of time value that compensates for waiting for a project to materialize. We can therefore have better information on the income and expenditure linked to the project and therefore better understand the creation of value;
The abandonment option : If market conditions have deteriorated significantly, the manager can abandon operations permanently and recover the residual value of the equipment and other assets;
The wait option : The manager leases (or holds the option to buy) a certain asset in terms of input. He can wait x years to see if the price of the output justifies the construction of a factory or the development of a site;
The flexibility to produce option : if prices or demand change, the manager can change the composition of the firm's output. Alternatively, the same outputs can be produced from different types of inputs.
If financial managers treat projects as black boxes, they may be inclined to consider only the first decision to accept or reject and ignore subsequent investment decisions that may be related to it. But while subsequent investment decisions depend on the decisions they make today, decisions today can also depend on what they plan to do tomorrow.
The evaluation of real options is done by decision trees. A decision tree is a representation of the evolution of the project which combines:
Decision points;
The hazards giving the possible evolution of the project.
