Project

 

 

Faculty Of Business And Economics Departement Of Entreprenurship and Business Managemnt  PROJECT PROPOSAL ON CHICKEN AND EGG FARM Prepared By: Student Name

ID No.

Getachew Reta

EDEBM/___/08

Lewognesh Bekele

EDEBM/026/08

Meron Adefris

EDEBM/028/08

Yemesirach Mengistu

EDEBM/039/08

Submmited To: Mr. Abddella June/2019 ADDIS ABABA

 

 PROJECT TITLE PAGE

Project Name: Addis Youth Poultry Farm PLC Project Location: Oromiya Region Legetafo Town Promoters:

1. Getachew Reta 2. Lewognesh Bekele 3. Meron Adefris 4. Yemesirach Mengistu Purpose of the business: Production of Quality Poultry Products (Eggs and Meat) Legal Form of the business: Private Limited Company Project: New Project  

 

2. Executive Summary 

Being the largest and most dominant sector in the country’s economy, agriculture constitutes more than 80% of Ethiopia’s population. However, this sector is still backward and underdeveloped. Yet, still it’s an area which could give high profitability if it is worked on, especially in poultry farm area. Although poultry farm business is one of the widely growing businesses in Ethiopia the contribution of the sector to the country’s total GDP is currently low compared to compared  to its potential, this sector holds great promise as a source of export exp ort diversification and import substitution for the future. Recognizing that large capital investments are needed to exploit the Ethiopia’s  Ethiopia’s   resources, various incentives are being provided to encourage investment in the agricultural sector including but not limited to the following: Guarantee facilities for loans by USAID and other international developmental institutions, Marketing arrangements by the government specially when engaged in export, Conducive policies and strategies of the government especially of this sector, so that the agricultural sector makes a significant contribution to Ethiopia’s development.  development.  Poultry products such as Eggs and chicken meat are among the main sources of protein in nutrition and should be easily available both bo th in quality and quantity for the ever growing market. The increase in population coupled with improvement in purchasing power would make the demand for quality egg and meat products to be increased at a high rate. Currently the unsatisfied demand for poultry meat and egg e gg in Addis Ababa is estimated at 7750 tons and 5410 tons respectively. The demand is expected to reach at 7845 tons and 11,283 tons for both eggs and chicken meat respectively in 2020.

 

All in all, the currently existing attractive environment for investment in the country and the highly increasing market demand encouraged the Addis Youth Poultry Farm Entrepreneurs to  plan about the poultry farm project in the country. The Entrepreneurs have diversified experiences and academic background of different d ifferent felids like, entrepreneurship, business management, sociology, and sales experience. This modern poultry farm has planned to rear 15000 chickens per year with rearing 5000 new chickens every 4 months and providing 1,080,000 eggs per year to the market. The site of the project will be at prime location in Oromiya Region Lege Tafo town on 1 h hectare ectare of land, which will be acquired from the government on lease basis. The envisaged poultry farm  project has consumed total initial investment cost of Birr 862,000 of which 30% (Birr 258,600) will be acquired from bank loan, and the remaining 70% is equit equity y capital. Hence, the feasibility study is aimed at determining the viability of the poultry farm project by capturing the current cu rrent and future demand for chicken meat and egg products in Addis Ababa and its surroundings. The main findings of this study indicate that on the first year of the project it will generate a gross profit of birr 7,140,000. In addition to that the the project will have positive net cash flows throughout the first year. Consequently, both from the commercial and financial perspectives, Addis Youth Poultry Farm is considered to be feasible and profitable. Thus, authorities for financial extension (banks and credit associations) are expected to play their stake soon in providing the necessary loan for reasonable time for the envisaged project.

 

3. Project background and description 3.1 Project background Despite the everyday growing number of small chicken ch icken farm businesses in Ethiopia, there is still unmet and growing demand for chicken meat and egg products in the urban centers of the country. In almost all urban retail markets and supermarkets of Ethiopia poultry products (chicken meat and eggs) appear to be sold more quickly. Each and every people need chickens and eggs. Eggs are the ingredient for cake, bread, omelet etc. so, cafes, restaurants, hotels, baker bakery, y, community centers etc needs these poultry products every day. Thus, in addition to the normal household consumptions the above mentioned other customers has high demand for chicken and eggs as a result, this project has high prospect for success. Furthermore, with the growing number of large supermarkets in the city which has a positive effect for the distribution of poultry products this project identifies the market opportunity in Addis and its surrounding as a prior potential market. The ADDIS YOUTH poultry farm company also plans to make its own contribution in terms of  protecting the health and safety of consumers by giving a significant priority and focus for quality of our products.

3.2 Rationale for the Project With an increasing number of populations in the country especially in the urban areas there is a huge gap to meet the equilibrium between the demand and supply as a result of supplier’s supplier’s failure  failure to satisfy their customers with their scarce products. Especially, in the case of food business which is a necessary for daily consumption this unbalance between the demand and supply should be alleviated or at least reduced.

 

Chicken and egg is a traditional constituent of the Ethiopian diet and one of the common sources of daily protein consumption. Although chickens are reared in most households traditionally yet this barely serves the demand of the household and usually will not be served to the market. Currently, the societies are facing a supply shortage of the stated products in the country and trying to get these products with a higher cost on top of that. Having this in mind the intention of this project is to engage in poultry po ultry farming and providing the associated poultry products for the domestic market with a reasonable price. In addition Addis Youth Poultry Farm Company Compan y is designed to meet the domestic market’s demand with better quality and sufficient quantity of chicken and egg products with focusing on the population in Addis Ababa and its surrounding areas.

3.3 Goals of the project Taking the shortage of supply in poultry pou ltry and poultry products in the market in to consideration and having the very importance of these products for the society in every age in mind the Addis Youth Poultry Farm project is conceived with a primary goal of providing adequate, safe (hygienic) and high-quality chicken and chicken products(meat and eggs) to all residents and institutions in Addis Ababa and the surrounding areas at a reasonable prices and in the long run, to expand the supply of these products products to other regions of tthe he country so that the society can be  benefited at large.

3.4 Target Population The main targets of this project are to wholesalers, retailers, distributors, business institutions and individuals in Addis Ababa and its surrounding areas. Addis Ababa, the capital cit city, y, has  population of nearly 7 million with an annual growth rate of about 3.1%. This population constitutes 4% of the country’s total population and about 28% the urban population. With this

 

growing number in population size the demand for poultry products in the daily food requirements of the city will increase substantially in the coming years. Thus this project will  benefit the targeted population by satisfying their requirements of chicken and chicken products with the at most quality and quantity.

4. Market and Demand Analysis 4.1 Market Analysis Agriculture is the basis of Ethiopia’s economy and the most important economic sector in terms of generation of foreign currency. Its contribution can equally be well expressed at household level by its role in enhancing income, incom e, food security and social status. The poultry production system in Ethiopia, in respect to marketing situations, can be broadly categorized into three systems: The urban poultry poultr y production system (the city, Addis Ababa, and regional towns); the peri-urban poultry production system (proximity to Addis Ababa and regional towns); the rural poultry production system (farmers in the villages). However in most of the systems, the poultry products markets m arkets are dominated by informal marketing systems. Almost all chicken and egg supply suppl y to Addis Ababa is from urban SME  poultry farmers in Addis Ababa and peri-urban poultry farmers located around the city in Oromia and Amhara Regions The farms deliver chicken and chicken chick en products to customers or, consumers may collect it at the  producer's gate. Studies indicate that in terms of volume 71% of intra-urban producers sell chicken and eggs directly to consumers and payment to producers is generally on a monthly  basis. In addition, on the current market most of the poultry farms provide their products to the market with a relatively high price while there are no standards or quality control mechanisms exist to safeguard the consumers.

 

On the other hand, the peri-urban poultry farms include smallholder and commercial poultry farmers working in the proximity of the city of Addis Ababa Ab aba and other regional towns. Currently, Micro and Small poultry farm enterprises, the “Elfora” agro-industry agro-industry and private  poultry farmers around Addis Ababa are supplying poultry products to the city market.  Nowadays, many investors are interested in participating in the development of the poultry farm  business through the peri-urban system.

SWOT Analysis SWOT stands for strength, weakness, opportunities and threats and we have made an analysis anal ysis in each of these cases as follows. Strength 

• Produce high quality eggs eg gs to supplement dietary protein  protein   • Good location and infrastructure • Good marketing system  system   • Eggs and chicken are not seasonal products and can be eaten any time of the year   • Poultry farming as business area hasn’t been over -exploited -exploited • Poultry are are environmental friendly Weakness 

• Capital intensive. Starting a poultry farm business requires substantial amount of capital funding. • Outbreak of disease can ruin entire business bu siness • The smell can be can be quite disturbing Opportunities  

• Expansion into large scale production and distribution to larger markets markets  

 

 

• Export to neighboring towns  towns  • A large and successful poultry will ensure food security securit y 

Threats 

• Relatively high competition • Outbreak diseases  diseases  • High cost of poultry feeds

4.2 Demand Analysis Agriculture is the basis of Ethiopia’s economy and the most important economic sector economic  sector in terms of generating of foreign currency. The contribution of livestock to the aagricultural gricultural economy is significant and it comes second to coffee in foreign exchange ea earnings. rnings. Its contribution can equally be well expressed at household level by its role in enhancing income, food security and social status. Almost all people in the country enjoy chicken and chicken products such as egg and meat in its natural form and also use it to make a wide range of food products, including cake, bread,  biscuits, omelets, chicken fries etc. Although poultry farm in general involves rearing different classifications of birds such as, duck, d uck, goose, chicken, turkey etc, in Ethiopia the vast majority of poultry products used for commercial and consumption purpose is from chickens. Thus this demand analysis focuses on chicken related products. As studies show the present unsatisfied demand for poultry meat and eggs in Addis Ababa is estimated to be 7,750 tons and 5,410 tons respectively. And the demand is expected to reach at 7,845 tons and 11,238tons for meat and eggs respectively by 2020.

 

As complementary to these research findings, Addis Youth Poultry Farm company has conducted additional assessments on the demands and most of the findings proved that p poultry oultry  products are in short of supply and the demand for additional diverse products is very high. The project is planning to produce quality and modern breed chicken and chicken products egg and meat for the market. These products, though badly needed on the market, are in limited supply from the existing few poultry farms.

5. Technical Analysis 5.1. Raw materials and input studies Raw Materials

The main raw materials that are essential for this project are presented p resented as follows. i) 

Chicken Feed

The primary raw material required in this project is Chicken feeds. There are different chicken feed producers in the country such as, Akaki Feed Factory, Ethio feed and Friendship AgroIndustries. There is a difference in the type of feed for egg producing chickens an and d chickens for meat. Thus considering this the feeds will be obtained o btained from suppliers who have specialized in the area. ii) 

Vaccines and drugs

Keeping the health and safety safet y of our products is the main priority of this project. To supply supp ly good quality products for the market having chickens with good health is compulsory. In Ethiopia a number of vaccines for poultry are produced by one of the well known veterinary vaccine center named Pan African Veterinary Vaccine Centre which is found in Debre Zeit. The center  produces a number of vaccines for poultry, such as live and inactivated Newcastle disease, Fowl

 

 pox, and Fowl typhoid. Currently the Ethiopian government is registering more and more veterinary medicines and vaccines. At the moment some of the most important suppliers of veterinary products are: Equatorial Business Group, East-Africa Pharmaceuticals, Rang vet PLC P LC and Gas co Trading. Equipments and Utilities

Beside the above mentioned raw materials some additional equipment are also required for the operation of this project. Feeders

Feeders are equipments used in feeding poultry po ultry birds. The food is deposited in the feeder and the  birds feed from it. The amount of feeders provided for a poultry farm should be according to the amount of birds available. Incubator

An incubator is an instrument used for hatching eggs. Egg hatchery with an incubator can be described as a means of hatching of eggs in an unnatural way. These means can be employed when there are many eggs to be hatched and sooner. Heaters

Heaters are equipments used in regulating and increasing the temperature of the poultry farm especially during cold weather. These facilities help to keep the birds warm and comfortable when the weather is cold. Chick box

 

The chick box is equipment eq uipment where the poultry birds are kept fo forr egg laying. It has a roll awa away y egg tray attached to it so that when eggs are laid, they roll away and the birds will not trample on the eggs. This particular equipment help in preventing the eggs from damage.

Egg Tray

These trays are tray-like equipments which are used for setting the collected eggs without damage when or until they are provided for market. Ventilation Fan Fan  

Ventilation fan is equipment used for ensuring maximum max imum ventilation in the poultry farm and it is used for reducing the temperature of the poultry farm during a hot weather. Laying Nest

Laying nest is equipment that helps the birds for lying of eggs. One of the advantages of this equipment is that it increases the egg productivity of the poultry birds. Egg Scale

This is equipments used in weighing the weight of the eggs. It helps the po poultry ultry farmer know the eggs that are fertile enough for hatchery hatcher y because it is assumed that an un underweight derweight egg does not have what it take to form a chick. Water Pots and Drinkers

Clean water is a basic necessity for a healthy h ealthy growth and digestion of po poultry ultry birds just like in humans. Therefore, the drinkers are equipments used for supplying water to the birds.

 

Cages and Coops

This poultry equipment is used for keeping poultry birds. bi rds. Coops and cages are p poultry oultry equipments suitable for small scale poultry farming.

Health and safety materials

In addition to the above mentioned equipments, the use of protective clothing for humans is also very essential. Some of the protective clothing required for this project are hair caps, rubber gloves, boots and coverall are required to avoid transmission of unnecessary pathogens or contamination from the birds to man or from man to the birds. Poultry farm equipments are available in several farm equipment distributors. The distributors import these equipments from several companies in abroad, such as Belgium, Italy, the  Netherlands, India, China, etc. The well known importers and suppliers in the domestic market are Gasco Trading, Wise team PLC P LC and Friendship Agro-Industries which supplies own-made equipment, like self-designed like self-designed cages.

5.2 Project Site and Location Selection The project is located in Oromiya Region Lege Tafo town on 1 he hectares ctares of land, obtained from the regional government on lease basis. This location is chosen taking into account the availability and reliability of basic infrastructures like telephone lines, asphalted road, power and water supply, and considering the proximity to target market as well as the favorability of agro climatic conditions. In addition, we think it is a spot that could tap a he healthy althy workforce. We also considered  pedestrian traffic and we think a large percentage of them are potential customers.

 

5.3 Environmental Impact Assessment This section briefly describes some of the environmental impacts associated with the primary  production of poultry products. The main environmental issues associated with poultry farming are: the generation of solid manure and manure slurries, which may pollute surface water and groundwater. In most cases, the solid manure from chicken droppings is applied to pastures and cultivated land. Beside this effluents from the farm are generally held in some form of lagoon to allow sedimentation and biological degradation before they are irrigated onto land. Manure wastes represent a valuable source of nutrients nut rients for fertilizers. However improper storage and land application of manure and can result in serious pollution of surface waters and groundwater, potentially contaminating drinking water supplies. As for many other farming operations, the main environmental en vironmental impacts associated with all  poultry farm activities are the high consumption of water, the discharge of effluent with with high organic loads and the consumption con sumption of energy. Poultry farming requires very large quantities of fresh water. Water is used primarily for cleaning process of equipments and work areas so as to maintain hygiene standards. The dominant environmental problem that could be caused by  poultry farm is the discharge of certain quantities of liquid effluent. effluent. The effluents generally exhibit the following properties:

  High organic load due to the presence of organic components from the chickens;

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  Agents and other chemicals from pesticides and antibiotics; a ntibiotics;

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6. Project Implementat Implementation ion and Managemen Managementt Plan 6.1 Project Implementat Implementation ion Implementation of the project

 

 Preparation (First Quarter) First period  –  Preparation 1. Look for workers and proper site for the project. The workers shall consist of the following:

  Manager (par time) 1

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  Secretary/Cashier (par time) 1   Poultry Caretaker 1

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2. Preparation for the tools, equipment, and necessary documents. 3. Construction of fences and poultry facilities 4. Giving of orientation/training, including the methods/strategies in the operation of the project.

Second Period –   –  Implementation  Implementation Proper (Second-Third Quarter)

1. Purchase of the chickens and care for theim 2. Distribution/Marketing of the chickens products (eggs) Third Period –   –  Terminal  Terminal Period (Fourth Quarter)

1. Assessment/Evaluation of the project 2. Continuity and expansion of the project 3. Preparation of documentary report to be sent to the donor agency 6.2 Project Organization

6.3 Management And Personnel For any enterprise to succeed, proper and efficient management is essential in order to realize good returns on investment. Both poultry and pig farming are labor-intensive enterprises. For

 

maximum production, efficient labor is required on daily d aily basis. Therefore close supervision is necessary. Feeding, watering, cleaning and sanitation, observation of diseases and disorders, collection of products for market and arranging an efficient system of sales must be well coordinated by a qualified manager. Management Teams for The Project

The management teams of this project are simply the partners of the business who has held different positions in the organization. 1.  Yemesirach Mengistu  Position- Chief Executive Officer Role in the project - As the top manager or the CEO, she is typically responsible for the entire

operations of the poultry. It is her responsibility to implement decisions and initiatives and to maintain the smooth operation of the poultry, with the assistance of the other management team.

- Routinely checks the corporation's financial health and integrity. 2.  Lewognesh Bekele  Position- Chief Financial Officer   Role in the project - She is responsible for analyzing and reviewing financial data, reporting financial

 performance, preparing budgets and monitoring expenditures and costs. 

 

-As chief financial officer of the project she will directly report to the CEO 3. Meron Adefris Position- Chief marketing officer   Role in the project-

- Assessing the existing market for the farm’s products, and in charge of o f all marketing activities such as market plan, promotion and expansion. -Reports directly to the CEO 4. Getachew Reta Position- Chief Revenue Officer   Role in the project - Responsible for all revenue generation processes in an a n organization, and is

ultimately accountable for driving better integration between all revenue-related revenue -related areas. 

Other Personnel

In addition to the management team, there are also other personnel in the poultry farm which works in the day to day activity of the farm. These include Cleaners, Security, and a driver. All these personnel are employed individuals on a monthly payroll. Table-1 Proposed personnel to carry out the work wo rk on these farms Personnel

Number

Qualification

Remuneration per month

 

Manager

1

BA Degree in Management

3500

Finance officer

1

BA Degree in accounting

2800

Marketing officer

1

BA Degree in marketing

2800

Cleaners

2

Primary school

1500

Driver

1

Level-3 driving license

1800

Security guard

1

Senior six

1500

Total

7

13900

Organizational Structure

General Management

Finance and

Secretary   Secretary

office administration

Marketing

Production &

Department

Maintenance

Procurement

department

Distribution and

Promotion and

Quality

Repair and

Sales

Market

Assurance

Maintenance

Procurement

De Deve velo lo emen ementt  

 

7. Financial Analysis  Investment Structure 

Item

Amount in birr

Land

1,000,000

Building

300,000

Purchase of day old chicken

100,000

Furniture farm tools

10,000

Purchase of other tools

5,000

Preliminary expenses

15,000

Total capital expenditure

1,430,000

Initial working capital

1,000,000

Total investment

2,430,000

Working Capital Provision

Working Capital Item

Cover months

Amount in birr

Feeds for chickens

6

180,000

Lobour cost

6

49,200

Drugs and vaccination

6

50,000

 

Other expense

6

Total initial working capital

720,800 1,000,000

Our project has start up cost and we will need a bank account, we chose our bank to be commercial bank of Ethiopia because of its proximity in the area. This section of the plan shows  projected startup costs prior to our opening. Start-up expenses for the project project include initial insurance payments covering both general liability and product liability, pre-launch marketing to cover flyers, fl yers, a direct mail campaign, and advertisements in local papers, the development of o f a website for customer interaction, and the normal legal expenses for consultation and permitting. Other current assets a ssets include office and store furniture, shelving, a computer, phone system, and tools. Long-term assets include the computer, printers, delivery van. In our business, the financing structure and ways wa ys of doing it is like the path below. 1) Equity contribution: this cover the land we are using for the poultry, and also the facilities in

the building. The total income will be store rooms, office and constructions as well as the furnishing part. 2) Personal income of 1 million birr, which will be used to start-up the operations, the hatchery

equipment and other equipment’s needed for the poultry.  poultry.  Since for a part up business borrowing money mone y from a bank is not advisable for our financing  project. Financing by loan becomes our secondary motive if we can get enough income for the start up business. When we borrow and use personal income, it is easier to obtain and quicker than loan. The tax rate is low. Projected Income statement

 

Income

1st year

2nd Year

3rd year

Live chicken Sales 

300,000

350,000

400,000

Eggs sales 

200,000

250,000

300,000

Fertilizers 

60,000

70,000

80,000

Total income 

560,000

670,000

780,000

Feed 

180,000

200,000

250,000

Day old chicken

50,000

50,000

50,000

50,000

50,000

60,000

Insurance 

1,000

1,000

1,000

Internet 

1,000

500

500

Labor salary 

8,200

8,200

8,200

Business card 

2,000

1,000

500

Advertisement

2,000

1,000

1,000

Other expenses 

10,000

10,000

10,000

Consultant 

10,000

5,000

5,000

Depreciation 

50,000

50,000

50,000

Total expenses 

364,200

376,700

436,200

 Net income before tax  195,800

293,300

343,800

Taxes 

29,370

43,995

515,70

Net income

166,430

249,305

292,230

Expenses

 purchase  Laying eggs chicken  purchase 

 

8. Risk Assessment Chicken farming has some challenges that need to be attended to with vigor. Below are some of the common challenges that are faced by farmers: Financial risks 

• Changes in our pricing policies or that of our competitors  competitors  • Fluctuation in revenue from distributors distributo rs and retailers • Timing of costs related to acquisitions or payments  payments   Health risks 

Contagious disease and virus outbreak is very deadly; d eadly; if one of the chicken chickenss should catch the disease, all of them will be affected and if it's not recognized and treated early it will lead to the death of all the chickens which is a great loss for the business. And also some of the diseases are also contagious to human not just between the chickens which will affect the workers and also those that eat it. Disease prevalence varies from one area to the th e other. The problems that may trigger disease conditions are direct sunlight on egg trays or nests, poor ventilated houses and very hi high gh temperatures in and outside the poultry house, which wh ich may weaken egg sh shells ells resulting in poor egg quality. All these conditions will be avoided to the best of our abilities. Another thing we considered during the risk assessment is the mortality of the chickens which is inevitable since we are dealing with living things. This can be managed with good management and has been calculated to range between 5-10%. Technological risks 

Technology is good but they th ey also have their disadvantages. There aare re normally problems involved in using technology; the use of the machine that collects eggs ma may y fail to work or spoil, making the work slow and adding more cost to the business by repairing it.

 

The cost for electricity is also not easy and some electric problems can lead to fire outrage and  burn the building causing the loss of assets and perhaps the entire business. Contingency plans 

As we considered these risks we have also made m ade contingency plans for unp unprecedented recedented events or occurrences. As per the health risks, we will have hav e plans with a veterinary doctor that will have regular checkups with the chickens while giving them the best environmental conditions. Another contingency plan we will make mak e is insurance that will protect our assets. The occurrence of a fire outrage will be curbed by p placing lacing fire extinguishers at strategic places. And in case of financial crises, we may ma y have to resort to getting loans.

 

 

Table of Contents

PROJECT TITLE PAGE ..................................................................................................................................... 2 3. Project background and description ......................................................................................................... 5 3.1 Project background ................................................................................................................................. 5 3.2 Rationale for the Project ......................................................................................................................... 5 3.3 Goals of the project................................................................................................................................. 6 3.4 Target Population.................................................................................................................................... 6 4. Market and Demand Analysis ................................................................................................................... 7 4.1 Market Analysis ....................................................................................................................................... 7 SWOT Analysis............................................................................................................................................... 8 4.2 Demand Analysis ..................................................................................................................................... 9 5. Technical Analysis ................................................................................................................................... 10 5.1. Raw materials and input studies .......................................................................................................... 10 5.2 Project Site and Location Selection ....................................................................................................... 13 5.3 Environmental Impact Assessment ....................................................................................................... 14 6. Project Implementation and Management Plan .................................................................................... 14 6.1 Project Implementation ........................................................................................................................ 14 6.2 Management And Personnel ................................................................................................................ 15 7. Financial Analysis .................................................................................................................................... 19 8. Risk Assessment ...................................................................................................................................... 22