PROJECT PROPOSAL

FOR

POULTRY FARM & MEAT PROCESSING PLANT

PROJECT TO BE IMPLEMENTED IN SHAGER GELAN SUB-CITY

ADMINISTRATION

PROMOTERS: KASIYE ISHATE AND HIS FRINDS MICRO

ENTERPRISE

Aprill, 2023

Shager city Ethiopia

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TABLE OF CONTENT

EXECUTIVE SUMMARY.................................................................................................................................4
1. INTRODUCTION...................................................................................................................................5
1.1. Promoter Profile..........................................................................................................................5
1.2. Project Justifications....................................................................................................................5
1.3. Objective of the Project...............................................................................................................6
1.4. The Socio-Economic Significance of the Project..........................................................................7
1.5. Location, Infrastructure and Land................................................................................................8
2. MARKET STUDY AND PROJECT CAPACITY..........................................................................................10
2.2.1. Market Prospects...............................................................................................................13
2.2.2. Target customers of the project........................................................................................13
2.3. Production Capacity and Program.............................................................................................13
2.4. Pricing........................................................................................................................................14
3. TECHNICAL STUDY.............................................................................................................................15
3.1. Product Nature..........................................................................................................................15
3.2. Raw Materials and Inputs..........................................................................................................15
3.3. Poultry Farm Management........................................................................................................15
3.3.1. Housing..............................................................................................................................15
3.3.2. Feeding..............................................................................................................................16
3.3.3. Lighting..............................................................................................................................16
3.3.4. Drinkers..............................................................................................................................16
3.3.5. Litter...................................................................................................................................16
3.3.6. Health Care........................................................................................................................16
3.3.7. Fumigation and Spraying...................................................................................................17
3.4. Production Process....................................................................................................................17
3.5. Machinery and Equipments.......................................................................................................23
3.6. Source of technology.................................................................................................................24
3.7. Project Design and Engineering.................................................................................................25
3.8. Utilities.......................................................................................................................................25
3.9. Regulation and control standard...............................................................................................25

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 3.10. Project Implementation Plan/ Action Plan.............................................................................26
4. MANPOWER AND ORANIZATIONAL MANAGEMENT.........................................................................27
4.1. Manpower.................................................................................................................................27
4.2. Organizational Structure and management...............................................................................27
5. INVESTMENT COST AND FINANCIAL ANALYSIS..................................................................................31
5.1. Total Initial Investment Cost......................................................................................................31
5.1.1. Fixed Investment...............................................................................................................32
5.2. Annual Production Cost at Full Capacity....................................................................................35
5.3. Financial Analysis and Statements.............................................................................................37
5.3.1. Underlying Assumption......................................................................................................37
5.3.2. Sources of Fund.................................................................................................................38
5.3.3. Loan repayment Schedule.................................................................................................39
5.3.4. Depreciation Schedule.......................................................................................................39
5.3.5. Revenue Projection............................................................................................................39
5.3.6. Balance Sheet (Beginning).................................................................................................40
5.3.7. Income/Loss Statement.....................................................................................................40
5.3.8. Cash Flow Statement.........................................................................................................41
5.3.9. Profitability........................................................................................................................41
5.3.10. Pay-Back Period.................................................................................................................41
6. FUTURE DEVELOPMENT OF THE PROJECT.........................................................................................41
7. ENVIRONMENTAL AND SOCIAL IMPACTS OF THE PROJECT...............................................................42

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EXECUTIVE SUMMARY
1. Project name Poultry farm and meat processing Project

2. Project Promoter KASIYE ESHATE AND HIS FRIENDS MICRO ENTERPRISE

3. Nationality Ethiopian

4. -Project Location Shager Gelan sub city Administration

5. Project Composition Poultry farm and chicken meat processing

6. Land requirement 0.5 hectare which is estimated to be 5,000m2

7. Total initial Investment The total capital of the project cost is Birr 5,000,000(30% equivalent
Capital
to birr 1,500,000financed by the owner equity and 70% equivalent to
birr 3,500,000.00 from bank loan)

8. Employment Opportunity The total manpower required for the plant will be 137 employees at
full capacity.

 Permanent workers 94
 Skilled 56
 Unskilled 38
 Temporary workers 43
 Skilled 5
 Unskilled 38
9. Benefits of the project For Produce and supply of quality chicken and slaughter chicken meat,
The Region/ Country value add to the sector, source of government Revenue, Employment
opportunity, Generate Foreign currency, Benefit for the Local
Community and Stimulate the Local Economy

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1. INTRODUCTION
Developing countries economy is mainly dependent on Agriculture. In Ethiopia agriculture
sector is the main livelihood for the majority of the people and it is the backbone of economy in
which the country’s economy is totally dependent accounts for almost 60% of the GDP, provides
employment opportunity for about 85% of the population, supplies raw materials for 70% of the
agro-industries, and contributes about 90% of the country’s foreign earnings.

There exist abundant resource, ample market and favorable investment climate to engage in
agriculture and agro processing business in Ethiopia. Because of these reasons, the promoter of
the envisioned project planned to invest in Gelan sub city Administration in the area Poultry
farm and meat processing.

Hence, this project proposal is carried out to check the market, technical and financial feasibility
of this project. The result of the study is very sound and promising for the promoters to establish
the project in this area. The promoter is very determined to start the project by expecting the
necessary support that will be gained from the regional and local governments to make the
project operational.

1.1. Promoter Profile

The promoters of the project, Kasiye Eshate and his friends micro enter prise , Ethiopians
entrepreneurs and have ample business experience in different business. Given his business
experience in various sectors, the promoter is expected to be among the most successful poultry
and meat processing companies in Ethiopia.

1.2. Project Justifications

Chickens are already an integral part of human life. Chickens are one of the major sources of
animal meat, aside from pork and fish. As a business, they offer an opportunity for people to earn
big that’s why there are many poultry farms out there. One of the major customers for poultry

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farms are the major fast-food companies, although some of them have their own chicken farms to
supply their needs.

In this regard, Ethiopia is one of the few African countries with a significantly large population
of chicken, estimated at 38.1 million (CSA 2009). However, the number of chicken flocks per
household in most Ethiopian rural communities is small; constituting an average of 7–10 mature
chicken, 2–4 adult hens, a male bird (cock) and a number of growers of various ages (Tadelle
and Ogle 2001). Alemu and Tadelle (1997) also reported that the local chicken in Ethiopia vary
widely in body size, conformation, plumage colour, comb type and feather cover. Moreover, the
productivity and modern use of technology for poultry and meat processing business is
traditional.

In addition to the above facts, the following points are taken as an additional justification for the
project initiation by the promoters;

 High demand for Chicken(hen) and processed meat in domestic and international market

 Dynamic economic growth of the nation

 Development of infrastructures

 Government investment policy and investment incentives for private investment

 Current best government five years development plan (Growth and Transformation Plan
2 (2015/16- 2019/2020) that encouraged agricultural development and agro-processing.

 Huge population, which is potential market for the business

 Political and economic stability of nation

1.3. Objective of the Project

The main objective of the project is to undertake the Poultry farm and meat processing business
with good quality and fair price for domestic market (50%) and export market (50%) in the
future.

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 1.4. The Socio-Economic Significance of the Project

The project has been contributing to the economic development of the nation in general and the
region in specific. The project benefits are explained as indicated below.

A. Supply of Hen, Egg and Slaughter Chicken Meat

The envisioned project will produce chicken, egg and slaughter meat (broiler meat) at reasonable
market (Compare with its competitors) to the market. In that it will plays an important role in
improving essential element and vitamin deficiencies.

B. Add Value

By converting low-value roughage feed resources into high-value meat products, the project will
add value in agriculture sector in general and poultry sub-sector in specific.

C. Source of Revenue

As public policy of any nation, the government collects different forms of taxes from different
business organizations and individuals. Among the different forms of taxes, business income
taxes payroll taxes and VAT are collected from undertaking business activities. Therefore, the
project will serve as sources of revenue for both the region and nation in general.

D. Employment Opportunity

One of the problems that our country faced is unemployment. Therefore, the current objective of
the government is working on tackling the problem of unemployment and fostering the
development process either through creating self-employment or employment in other
organization. Hence, this project will hire 137 persons.

E. Generate Foreign Exchange

By exporting meat cattle and processed meat in international market, the project will generate
foreign currency for the nation in the future.

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 F. Benefit for The Local Community

As a corporate responsibility the project will engage in different development activities on the
surrounding areas. This will better worth the community and contribute for the development of
the region.

G. Stimulate the Local Economy

This project will have positive externality in the district that will encourage the economic
movement of local economy specially by purchasing of cattle from local community and will
create an additional income for them. In that it will plays a viable roll in the region/country’s
economic transformation, and poverty alleviation.

H. Profit

The project will generate profit for the promoters.

1.5. Location, Infrastructure and Land

A. Location

The envisaged project will be located in Administration which is around 20 kms from the
capital, Oromia Regional State. The main justifications behind the selection of this location are:

The main reasons to choice this location is;

 Strategically located to the central and largest market of the nation (Addis Ababa)
 Relatively advanced development in infrastructure (Power, Water, Telephone internet,
road etc.

 All road to the nearest market outlets

 Availability of huge skilled labor force

 Availability of raw materials for dairy production

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  Conducive investment policy and governance

 Favorable climate and topography for poultry farm and meat process

B. Land

The total required area of land is estimated to be 0.5 hectare, which is equivalent to 5,000m 2.
The premises required and the land use plan is indicated in the table below;

Table 1: Premises required and land Use Plan

SN Description Land
Requirement(M2)
1 Poultry Farm Section  
1.1 Poultry House(Parent, Layer & broiler) 1,800.00
2000 m2 each
1.2 Grinding house 150.00
1.3 Incubator house 200.00
1.4 Store 800.00
1.5 Office 200.00
1.6 Waste accumulation area 75.00
1.7 Parking and Green area 675.00
  Sub Total 3,900.00
2 Meat Processing Section  
2.1 Slaughtering house 500.00
2.2 Processed meat storage area 350.00
2.3 Quality Control center 40.00
2.4 Office 160.00
2.5 Waste accumulation area 50.00
  Sub Total 1,100.00
  Total 5,000.00

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 2. MARKET STUDY AND PROJECT CAPACITY

The market study for the poultry farm and meat processing took the data for Addis Ababa market
in general and the specific project location in specific. The Addis Ababa market is taken here
since it is the biggest targeted market for the project as indicated below;

2.1. Past Supply and Current Demand

Poultry products such as egg and poultry meat are the central diets of Ethiopian’s. “Doro Wet”
which is prepared from poultry meat and eggs is one of the favorite dishes of the local population
which is prepared especially during religious festivals and holidays, virtually in every household
in the country. Moreover, eggs as they are easy to prepare and digest, have good test and nutrient
are becoming the favored breakfast items in urban areas like Addis Ababa. Accordingly, due to
the traditional consumption habit and as the awareness of the population on the nutritional and
other advantages of poultry products increases the market for the products is also expected to
expand.

Most of the chickens and egg that are supplied to the City Administration’s market come from
other regional states and, according to the study made by Livestock Marketing Authority in
2004, the number of eggs and chicken that entered the city was estimated to be 56 million, and
2.1 million, respectively.

According to the unpublished data of the City Administration’s Urban Agriculture Department
(2005), the per capita consumption in Addis Ababa was about 2.28 kg of eggs and 2.5 kg of
poultry meat. Accordingly, considering the total population size of Addis Ababa in 2008 the total
consumption of the products is give in the Table below;

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Table 2: Total Egg and Poultry Meat Consumption of Addis Ababa (2008)

Egg consumption per person ( kg) 2.28

Population size (head) 3,400,000
Total consumption ( Kg) 7,752,000
Poultry meat consumption per person ( kg) 2.5
Population size (head) 3,400,000
Total Consumption( kg) 8,500,000

As can be seen from the table above, the total current consumption of egg and poultry meat in
Addis Ababa is 7,752 tons for egg and 8,500 tons for poultry meat.

It is estimated that the poultry population in the Addis Ababa is about 350,000 where most of the
chicken are raised on small scale level in the backyards. The poultry population is insignificant
as compared to the national poultry population, which is estimated at about 63 million. The
existing chicken’s population in the City are estimated to produce about 2,342 tons of egg and
705 tons of poultry meat.

The present unsatisfied demand for poultry meat and eggs in Addis Ababa is estimated at 7,750
tones and 5,410 tons, respectively.

2.2. Projected Demand

The demand for poultry meat is mainly influenced by population growth and income rise. The
1961, 1967 and 1978 population sample survey for Addis Ababa revealed that the population of
Addis Ababa was 0.4, 0.7 and 1.2 million, respectively. The 1984 census put the population of
Addis Ababa at 1.4 million while the 1994 census recorded 2, 112.737 people. There is an
increase of 0.7 million or 50 % increase over a decade period. The annual increase over the
period 1984-1994 is 5 %. The total population of Addis Ababa in 2007 is estimated to be about
3.4. The population grows at an average annual growth rate of 2.9%. The city population is
estimated to reach 4.4 million in year 2015. Accordingly, the rapidly increasing population of the
city will augment the demand for poultry products such as egg and poultry meat.

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With increasing income or purchasing power, people demand more diversified food products like
poultry products. Therefore, the level of poultry products consumption has a strong association
with the growth of income.

One of the indicators that measure the economic performance of a country and the well being of
the population is GDP. During the period 1995-2005 real GDP growth averaged 5.8% a year,
export grew by about 5% a year, annual inflation averaged about 4% and in year 2005
investment had risen to 16% of GDP. The positive performance of the Ethiopian economy is
expected to continue in the future. As a result, the market for poultry products may also be
expected to increase as economic expansion lead to a raise in the income level of the population.

Accordingly, the demand for the products is estimated to grow at 2.9% per annum which is
equivalent to the population growth. As shown in the table below shows the projected demand
for eggs and poultry meat in Addis Ababa computed by taking the estimated present demand as a
base and applying an average annual growth rate of 2.9%.

Table 3: Projected Demand (In Tons)

Projected Demand
Poultry
Year Eggs Meat
2011 6,065 8,689
2012 6,241 8,941
2013 6,422 9,200
2014 6,609 9,467
2015 6,800 9,741
2016 6,997 10,024
2017 7,200 10,315
2018 7,409 10,614
2019 7,624 10,922
2020 7,845 11,238

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 2.2.1. Market Prospects

From the above market demand and supply analysis for poultry meat, there exist huge market
gab in Ethiopian market. Besides, there exists high demand for these products in international
market. Hence, the envisioned project will be successful by entering in to this market.

2.2.2. Target customers of the project

The envisioned project targeted its product for domestic (50%) and international market (50%) in
the future. In general, the project will have the following target customer’s for its live hen and
processed meat. These target customers are mainly located in Addis Ababa and surrounding area,
Bishoftu and Gelan sub-city

 Household user
 Hotels & exporters

 Supermarkets

 Universities

2.3. Production Capacity and Program

Based on the market condition and capacity of the project, the Fidel Integrated Agro Industries
planned in four phases (1st year 60%, 2nd year 80%, and 100 % in 3rd years) to reach full capacity
and then with ultimate goal to get on average 10,000 egg per day from 12,000 layers, to produce
50,000 old day chick (male and female) per 21 days to rear 12,000 broiler and slaughter after 55
days (when it reach 2 kgs). Besides, with the assumption 10% mortality rate and 360 working
days per year, the production capacity of the company per annum is calculated at full capacity
as indicated in the table below;

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Table 4: production capacity and program
SN Description UOM Production year
Year 1 year 2 Year 3-10
Capacity Utilization % 60 80 100
1 Table egg Unit 2,160,000.00 2,880,000.00 3,600,000.00
2 Day Old Chicken male Unit 180,000.00 240,000.00 300,000.00
3 Day old Chicken Female Unit 180,000.00 240,000.00 300,000.00
4 Broiler for slaughter Unit 46,800.00 62,400.00 78,000.00

2.4.  Pricing

It would be important to examine the possible level of price based on the competitor’s action. In
this connection, the existing average retail prices of similar companies in and around project area
were assessed for the benefit of comparison. Based on the existing price in the market the project
stetted the price as follows;

Table 5: Pricing of the Project with VAT

Product UOM Price of project in Br. With
VAT
Table egg Unit 2.65
Day Old Chicken male Unit 7.00
Day old Chicken Female Unit 28
Broiler for slaughter Kg 115

2.5. Marketing Strategy and Promotion Methods

The company will follow the following promotional methods:

 Website Development

 Advertising(Media, flayer and news paper)

 Public Relations

 Branding The marketing strategy mainly focus on the satisfying the needs, order and the
requirement of the customers.

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 3. TECHNICAL STUDY

3.1. Product Nature

Poultry are large domestic fowl (e.g. hens, ducks, geese, turkey) reared for meat or egg. The
consumption of poultry has increased considerably owing to the speed at which fowl mature and
to the small amount of feed required per kg of meat produced.

The project will have a quality and good nature, day old chicken, table egg, 2 kg slaughtered
chicken1 meat (Broiler). In the expansion phase the project will provide different type of Chicken
meat processing.

3.2. Raw Materials and Inputs

The major raw materials and inputs for the envisioned project are chicken for breeding (parent
stock), layers, poultry feed (it is a mixed type), medicines, vitamins and plastic bag.

Most raw materials are available in international and local market. However, the parent stock
may be imported from abroad.

3.3. Poultry Farm Management

3.3.1. Housing

Poultry houses are designed for growing pullet (egg layers), broilers (birds of meat), parent stock
(birds for breeding) and each cage house is equipped with automatic feeders, drinkers, controlled
heating and light system where temperature and humidity are controlled.

The chicks should be kept in a clean, dry and well-ventilated room. The house should have
proper ventilation as this provides the chicken fresh air and carries off moisture. The entire
building including litter and all equipment should be fumigated.

1
55 days

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 3.3.2. Feeding

Feed composition for chicken are typically 70% corn, 20% soy, and 10% other ingredients such
as vitamins and minerals.

3.3.3. Lighting

Most broiler growers provide 24 hours light during brooding and early growing period. Recent
research conducted in windowless buildings, using intermittent lighting of 1-2 hours period, has
indicated significantly improved feed efficiency. Initially, for first fifteen days, light intensity
should be 40-60 watts per 200 sq. ft of space and this can be replaced by 15 watts bulb in the
beginning of third week.

3.3.4. Drinkers

Adequate drinking space should also be provided to the birds. The drinker should contain fresh,
clean and cold water. It is necessary to provide extra water during summer.

3.3.5. Litter

Litter is spread on the floor to prevent the direct contact with the floor. Straw, ricehusk and
sawdust are generally used for making the litter. It should be dry and free of moulds. Caked or
moldy material should be removed and refilled with fresh materials. Extensively wet and dusty
litter should also not be used. Using new litter for each flock is good for raising disease-free
broiler.

3.3.6. Health Care

Vaccination can be provided to chicks through injections, can also be mixed in the water and
also through eye drops.

Sick chickens are treated with antibiotics or other medications. These chickens then go through a
withdrawal period before slaughter, to make sure no medication residue remains in their meat.

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The chickens are usually watered through nipple drinkers, so that they don't spill and wet their
bedding.

3.3.7. Fumigation and Spraying

It is essential to check all equipment and walls of the broiler house carefully that they are clean,
and washed with disinfectant solution, and dried. The rooms should be white washed and
sprayed before the arrival of birds.

Disinfectant solution can be prepared with Phenol, Potassium Permanganate, Carbolic Acid and
Formalin. A solution of Sodium Hydroxide/Caustic Soda with warm water can also be used to
clean the house.

To sanitize the broiler house from germs and insects, it is fumigated with Formaldehyde Gas,
which is produced by putting Formalin on Potassium Permanganate. The rooms should be vacant
and sealed for 30 minutes after the fumigation so that the gas infiltrates in every corner of the
room.

3.4. Production Process

3.4.1. Poultry Farm section

Initially the parent stocks will be purchased at the age of day old. These chicks will be reared by
getting electrical heat for 3 weeks. During the 5 months of rearing the chicks will be fed with
feeds that have high protein content so that their growth will be fast. Starting the end of the fifth
month the hens will start laying. The eggs will be collected carefully and stored in a cool and dry
place. After doing this the average sized eggs will be incubated for 18 days. After the 18th day
the eggs will be transferred to the hatchery where the hatching process will take place. The baby
chicks will be sexed and distributed for customers at their own choice. If they are to be
distributed as pullets and cockerels they will be treated to the age of 3 months.

In the modern world, it has been possible to control all problems that are bound to affect any
developmental endeavors. With this regard all places in the country are suitable or could be made
suitable for poultry production. The enterprise can have an adverse effect on the environment
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unless mitigating measures are taken. Poultry manure can pollute the environment if proper
management practices are utilized.

Because of high Nitrogen content poultry manure is excellent natural fertilizer if, it is composted
properly. Besides the composted manure can also be sold and be taken as another source of
income.

3.4.2. Meat processing section

The most popular processed products from chicken meat are chicken frankfurters, hotdogs,
chicken hams and the various breaded and fried products of the chicken nugget type. However,
the envisioned project will only slaughter for this time and will have various mix of chicken mat
processing in the future.

For the production of meat from chicken for processing, the same principles apply as in the beef
and pork sector. Either the entire carcass meat is used for further processing, or some of the cuts
go in fresh meat sales and the remaining into the manufacture. Chicken carcasses are usually cut
in wings, legs and breast in the fig below. Legs can be further subdivided into thighs and
drumsticks. The breast consists of the larger superficial breast muscle and the smaller profound
breast muscle, the latter is also called “filet”

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Fig. Muscle meat of chicken carcass a/b leg (a=thigh, b= drumstick); c1/c2 breast meat
(c1=breast, c2=filet); d=wing

Examples for chicken cutting

Industrial method

In large industrial operations, chicken are usually cut in the hanging position. Carcasses are
suspended by the neck on a conveyor and pass though working stations. At each station a
specific cut is made and a certain part removed, until finally only the bone-carcass structure
remains.

The following is a widely practiced industrial cutting method: First the skin is incised around the
body above the legs (See Fig below). Then the wings are loosened, by cutting between wings and
carcass through the wing joint. Following minor incisions using a knife, the wings are pulled-off
together with the breast meat. The legs are then pulled off the carcass and finally the fillets are
removed (See Fig. below). Only the bone-carcass structure with neck remains.

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Small-scale method

In small-scale operations more attention is usually paid to obtaining intact parts for individual
sales. Conveyor systems are in most cases not available and therefore chicken carcasses are
usually cut-up on a cutting board or table. Many different cutting styles have been developed.
The following is one example.

First the chicken carcass is positioned on the cutting board with the breast muscle facing
downwards. Then a deep cut is made just above the legs following the leg line The two carcass
parts are pulled apart and the legs are separated with a knife by splitting the backbone. Next the
wings are cut off through the lower wing joint If the breast and filets muscles are wanted
separately, they are now removed from the upper carcass part and trimmed

Lean meat can now be trimmed off the carcass parts for further processing; skin and fat are also
obtained.

Grading of chicken meat for large operations

Chicken manufacturing-meat for larger processing operations is usually categorized in four

different grades. The four grades of chicken meat are either used for pure chicken meat products
or for mixed products. In Halal products made from red meat (beef, mutton), the fat portion may
partially or fully be chicken skin.

Also in customary mixed red meat products (like frankfurter, bologna, breakfast sausages,
luncheon meat, etc.) normally made of lean pork and beef or lean pork only, and pork fat, part of
the lean pork may be substituted by lean chicken meat. This is usually done for cost-cutting
reasons i.e. when cheaper chicken meat is available), but also to satisfy the growing demand for
lower fat meat products.

The four grades are described below (See fig below Fig.):

GRADE Chicken 1 (CH1) Chicken white muscle meat with visible fat, connective tissue and
skin removed

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For this grade mainly breast and filet meat is used. As meat of this grade is used for reconstituted
chicken hams and chicken sausages with visible coarse meat parts, all fat and skin must be
removed from the lean meat.

GRADE Chicken 2 (CH2) Chicken muscle meat with adhering subcutaneous and intramuscular
fat

Deboned and skinless meat from all chicken cuts (breast, legs, and wings) can be used. This meat
is usually ground or chopped during further processing. Smaller quantities of subcutaneous and
intramuscular fat are usually not removed and incorporated in the final product.

GRADE Chicken 3 (CH3) Chicken skin/fat

Chicken skin is removed from the carcass or individual cuts and collected separately. Chicken
skin has a high fat content and is ground prior to being added to processed meat products.
Chicken fat serves as the fat portion in all-chicken processed meat products such as chicken
frankfurters or chicken bologna. It can also be used as fat in lean beef or mutton products, such
as Halal frankfurters etc. Chicken skin is added to meat products for the same purpose as pork fat
in pork/beef products, namely to contribute to product flavor and softer product texture.

GRADE Chicken 4 (CH4) mechanically deboned chicken meat (MDM)

This grade is manufactured in industrial chicken plants by mechanically separating remaining

muscle tissue from the chicken carcasses after removing legs and wings and the breast muscles
including skin. Chicken necks are also used for MDM. MDM contains muscle meat, connective
tissue and some fat remaining on the bones after removing the meat cuts. MDM is a typical
industrial product and not produced in small operations. However, it is available on the meat
market and can be purchased by smaller producers as frozen blocks for further processing.

Chicken MDM is an ingredient for lower-cost meat products for partial substitution of the lean
meat. However, MDM addition is limited as high amounts of chicken-MDM will affect the
quality of products (deficiencies in texture and taste) and may in some countries result in
products which are not in line with national food regulations.

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Fig. Grading scheme for chicken meat (industrial scale)

Grading of chicken meat for small operations

In small-scale operations, more emphasis is given to sales of fresh chicken parts. Therefore
usually only three grades of processing meat are obtained (See Fig. below):

GRADE 1: Trimmed lean breast and filet muscle meat (light color)

GRADE 2: Leg meat (darker color) and trimmings from carcass

GRADE 3: Skin/fat

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Fig. Grading scheme for chicken meat (small-scale)

3.5. Machinery and Equipments

3.5.1. Poultry Farm Section

The project needs the following machinery and equipments for Poultry farm section;

 Incubator2

 Egg room cooler

 Egg tray

 Drum Heater

 Small Drinkers

 Large Drinkers

 Small Feeder

2
Capacity of 3500 chicken at a time

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  Large Feeder

 Shifting Box

 Manure handling system

3.5.2. Slaughter section

The project needs the following machinery and equipments for Chicken slaughtering section;

 Boiler

 Compressor

 Water treatment set

 Conveyor

 Feather removing equipment

 Vacuum lung aspirator

 Cooling water tank

 Automatic weighing scale

 Freezing room

 Autoclave

 Digester

 Other Slaughter equipments

3.6. Source of technology

The source of technology for the envisioned machineries and equipments will be imported from
china.

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 3.7. Project Design and Engineering

The proposed project comprises stock of different components to be executed at different phases
of the project life. These activities include: Design and Construction of various buildings
(workshops), importing of few machineries and medical cares.

3.8. Utilities

The project needs to have the following utilities;

 Water Supply,

 Fuel

 Supplementary Electricity supply,

 Telephone line

 Paved Road Transportation,

 Drainage Facility

3.9. Regulation and control standard

The project will meet all the regulation standard and control of ministry of agriculture, ministry
of health and other concerned bodies regulation and standard towards poultry farm and Chicken
meat slaughtering.

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 3.10. Project Implementation Plan/ Action Plan

The major activities include Bank loan processing, construction of the building, cleaning the area
around the building, procurement of equipments and start rendering services. The time schedule
for the above mentioned major activities is presented below:

Table 6: Project-Implementation-Schedule
SN Activities Date

1 Land Approval June 2023

2 Bank loan processing July –August 2023

3 Site Development September 2024

4 Building and construction work October – November 2024

5 Purchasing of Machines and Equipments December 2024

6 Production execution January 2024

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 4. MANPOWER AND ORANIZATIONAL MANAGEMENT

4.1. Manpower

At the top of the organizational structure, there will be a general manager with the responsibility
of supervising the overall activity of the project. Depending up on the nature of the center and
the amount of work to be performs; there will be auxiliary units under the general manager.
Employees under each unit will be supervised by the department head that is accountable for the
general manager.

The company will use efficient trained staffs in the area of marketing to be competitive supplier
poultry products to the market. The opportunities of being serviced by well skilled professionals
well enable the company to evaluate the internal weakness and strength of the company as well
as to assess the global opportunity and risks in the world market so that the project can cope up
with the dynamics of the market situation.

The total manpower required for the plant will be 137 employees at full capacity.

 Permanent workers 94
 Skilled 56
 Unskilled 38
 Temporary workers 43
 Skilled 5
 Unskilled 38

The detail human power requirement, monthly and yearly salary is indicated in part 5 financial
part.

4.2. Organizational Structure and management

The organizational structure of the project is designed by including all the necessary personnel
under the right division. At the top of the organizational structure, there will be a general
manager with the responsibility of supervising the overall activity of the project. Employees
under each unit will be supervised by the department head that is accountable for the general

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 manager. General Manager is accountable to the owner of the project as indicated in figure
below ;

Fig Organizational Structure

Owner/s

General
Secretary
Manager

Production Dept. Marketing &

Admin. &
Sales Dept.
Finance Dept.

Poultry Farm Meat Processing Quality Control

Section Section

Hence the following section deals with the duties and responsibilities of some departments.

1. General Manager
Duties and responsibilities

 She/he will plan, organize, direct and control the overall activities of the project
 She/he will devise policies and strategies that will enable the project to be profitable.
 She/he will incorporate modern technological innovation that will facilitate the service
delivery of the project center and increase customer’s satisfaction.
 He/he will plan, organize, direct and control the human and non-human resources of the
plant so as to achieve the short and long run objectives of the organization.

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2. Production Department
It is the core department of the project center and its has three main sections (Poultry farm, meat
processing and quality control). It has the following responsibilities.

 Select and order for purchase good old day chick and control the quality of meat
processing.
 Produce/ quality hen and processed meat that will enable the project to be competent in
the market.
 Control on the quality of raw materials, inputs, quality of the meat product and also the
overall project process.
 Responsible for the feeding of Chicken
 Control health status of the chicken and meat
 Moreover control over the quality of the final output of the project (Hen and Chicken
meat).
3. Administration and Finance Department
Duties and responsibilities:-

 Will plan, organize direct and control the financial transaction of the project by using the
entire necessary document.
 Will develop sound financial control system by developing modern financial control
systems.
 Will prepare the annual financial statements and prepare condensed reports for the
general manager, owner and other concerned government body.
 Will control the human and non human resources of the project, which include: effective
handling of the different inventories of the equipments, raw materials, chicken, and
devise strategies of controlling against fraud and damage.
 Manage and execute the company national and international procurement procedure
 Administer and control the company logistic resource
 Provide and manage general supportive service to the project.

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4. Marketing and Sales Department
Duties and responsibilities:-

 Will handle the overall marketing activities of the organization which include planning,
organizing, directing, and controlling.
 Provide pricing inputs for the company based on competitor price
 Gather information on new product mix
 Approval of new products profile & brand plan analyzes market research.
 Plan and execute sales(distribution)
 Will develop effective customer handling strategies
 Will develop the marketing strategies for future project center’s development.
 Conduct both foreign and domestic market research for expanding the sales of the
project

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5. INVESTMENT COST AND FINANCIAL ANALYSIS

5.1. Total Initial Investment Cost

The total amount of money that is required to establish the envisaged project is estimated to be
birr 5,000,000.

Table 7: Total Initial Investment Capital

SN Description Cost in birr in Br

1 Land, Building & Construction 1,666,945.08
2 Machines & Equipment 1,280,032.40
3 Vehicle 682,200.09
4 Office Equipment 282,357.71
  Total Fixed Investment Cost 3,911,535.28
5 Pre service Expense 247,087.47
6 Initial Working capital 512,805.56
  Total 759,893.03
  Contingency (10 %) 328,571.69
  Total Initial Investment Capital 5,000,000

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5.1.1. Fixed Investment
A. Building & Construction
Land Unit cost Total cost in
SN Description
Requirement(M2) in br br
1 Poultry Farm Section      
Poultry House(Parent, Layer
1.1 1,800.00 3,800.00 6,840,000.00
& broiler) 2000 m2 each
1.2 Grinding house 150 3,900.00 345,000.00
1.3 Incubator house 800 2,800.00 120,000.00
1.4 Store 800 2,600.00 160,000.00
1.5 Office 150 2,700.00 220,000.00
1.6 Waste accumulation area 75 1,500.00 112,500.00
1.7 Parking and Green area 175 1,200.00 110,000.00
2 Meat Processing Section      
2.1 Slaughtering house 500 8,200.00 150,000.00
2.2 Processed meat storage area 300 8,200.00 150,000.00
2.3 Quality Control center 40 4,200.00 128,000.00
2.4 Office 160 5,200.00 112,000.00
2.5 Waste accumulation area 50 2,200.00 60,000.00
Electric line and water line
3     100,000.00
Installation
4 Fence and Site Development _ _ 325,000.00
5 Design and Supervision _ _ 650,000.00
6 Land lease initial     800,400.00
  Total 5,000.00   2,475,400

B. Machinery And Equipment

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 Unit Price in Total price in
SN Item UOM Qty
Br. Br.
1 Incubator(2 setter & 1 hatcher) Set 2 955,000.00 910,000.00
2 Grinder Unit 2 470,000.00 940,000.00
3 Egg room cooler Set 2 500,000.00 500,000.00
4 Egg tray Unit 100 6,500.00 250,000.00
5 Drum Heater Set 3 190,000.00 170,000.00
6 Small Drinkers Set 40 5,000.00 10,000.00
7 Large Drinkers Set 20 5,960.00 119,200.00
8 Small Feeder Set 50 5,500.00 75,000.00
9 Large Feeder Set 20 8,100.00 162,000.00
10 Shifting Box Set 20 5,000.00 100,000.00
11 Manure handling system Set 14 8,000.00 72,000.00
12 Boiler & Compressor Unit 1 690,000.00 90,000.00
13 Water treatment System Set 1 675,000.00 75,000.00
14 Conveyor Unit 1 235,000.00 135,000.00
15 Feather removing equipment Set 4 75,000.00 150,000.00
16 Vacuum lung aspirator Unit 4 45,000.00 80,000.00
17 Cooling water tank Unit 1 35,000.00 35,000.00
18 Automatic weighing scale Unit 3 5,000.00 15,000.00
19 Freezing room Set 1 450,000.00 150,000.00
20 Autoclave Unit 1 85,000.00 85,000.00
21 Digester Set 2 90,000.00 180,000.00
22 Other Slaughter equipment Ls   150,000.00
23 Generator(400 KVA) Unit   146,832.40
  Total   2,000,032.4

C. Vehicle

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 Unit Price in
SN Description Qty Total Price in br. Remark
br.
1 Pick up 1 900,000 900,000 Duty free
Total   9,000,000.00  

D. Office Equipment

SN Description Qty Unit cost in Br. Total cost in Br.

Managerial Tables with
1 6 9500.00 57,000.00
chair
2 Secretarial chairs 2 7500.00 15,000.00
3 Office Chairs with tables 18 4000.00 72,000.00
4 Computer 7 15000.00 105,000.00
5 Printers 4 19564.43 78,257.71
6 Shelf 5 7000.00 35,000.00
Telephone and fax
7 2 1800.00 3,600.00
machine
8 Filing Cabinets 3 5500.00 16,500.00
9 Decoration and others     100,000.00
Total     482,357.71

E. Initial Working Capital

The initial working capital is estimated to be birr 1,345,607.29

F. Pre-Service Expense
SN Description Total Cost in br
1 Project proposal preparation 35,000.00
2 Environmental Impact Assessment Study 40,000.00
3 Promotion and billboard 160,000.00
4 Licensing fee and others 12,087.00
  Total 247,087.00

5.2. Annual Production Cost at Full Capacity3

a. Raw Materials and Inputs

3
@Third year of operation

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 SN Description Unit Qty Unit cost in Total cost in
br Br
1 Parent Stock Unit 2,100 150 315,000
2 Layer Unit 12,000 80 960,000
3 Fertile Egg Unit 2,000 5.17 10,340
4 Animal Feed(Mix) Ton 1120 3020 382,400
5 Other Animal Feed Ton 410 4100 681,000
6 Medication cost LS     250,000
7 Plastic packages LS     500,000
Grand Total -     3,098,740

b. Salary Expense
SN Description No Qualification Monthly in Br. Annual Salary
in Br
I Permanent Worker        
1 General Manager 1 MSC in Animal Science 10,000.00 120,000.00
2 Accountant 3 BA in Accounting 3,500.00 126,000.00
3 Admin and Finance 1 BA in mgt/Acct 6,000.00 72,000.00

35 | P a g e
 head
4 HRM officer 1 BA in HRM 3,000.00 36,000.00
5 Cashier 3 10+2 in Accounting 1,800.00 64,800.00
6 Poultry Farm Head 1 BSC in Animal Science 7,000.00 84,000.00
7 Secretary 2 Diploma in Secretarial Science 2,000.00 48,000.00
8 Marketing Head 1 BA in Marketing Management 7,000.00 84,000.00
9 Storekeeper 3 10+2 in logistic management 2,000.00 72,000.00
10 Feed Specialist 3 Diploma in Animal Science 2,100.00 75,600.00
11 Feeder 18 Unskilled 900.00 194,400.00
12 Slaughter head 1 BSC in Animal Science 7,000.00 84,000.00
13 Veterinarian 2 BSC in Vet. Science 3,500.00 84,000.00
14 Purchaser 2 10+2 Pur. & Supplies mgt. 2,100.00 50,400.00
15 Salesperson 6 Diploma in salesmanship 2,000.00 144,000.00
16 Cleaner 10 Unskilled 900.00 108,000.00
17 Lab technician/Quality 2 BSC in Chemistry 3,000.00 72,000.00
18 Driver 5 10 completed + license 1,800.00 108,000.00
19 Slaughters 21 Basic 1,300.00 327,600.00
20 Guards/security 6 Basic 1,000.00 72,000.00
21 Gardener 2 Unskilled 900.00 21,600.00
  Sub Total 94   68,800.00 2,048,400.00
II Temporary Worker        
1 Electrician 2 Diploma in General Electricity 2300 55,200
2 Auto Mechanic 2 Diploma in Automotive 2350 56,400
technology
3 Plumber 1 10+2 in Plumbering 1300 15,600
4 Laborer 38 Unskilled 900 410,400
  Sub Total 43   6850 537,600
Total 137   75,650.00 586,000
Benefit (20 % of Basic       517,200
Salary)
Grand Total 137   75,650.00

c. Other Operating Expenses

SN Description Annual Cost in br Assumption Used

1 Property Insurance 305,792.00 1% of fixed Investment cost
2 Audit & Legal service 42,000.00 Br. 3500 per month
3 Advertisement cost 250,000.00 Lump sum

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 4 Uniforms(work cloth) 38,000.00 200*Br. 190
5 Telephone, fax and postal 24,000.00 Br. 2000 per month
6 Cleaning goods supplies 30,000.00 Br. 2500 per month
7 Stationery and other office supplies 18,000.00 Br. 1500 per month
8 Electricity 187,500.00 Br. 0.75*250,000KW per year
9 Water 12,000.00 Br. 2 .*5,000m3 per year
10 Fuel 392,700.00 18700 lit @ br 21
11 Oil & Lubricant 39,270.00 10% of cost of Fuel
2.5% of the Fixed Investment
12 Repair and Maintenace cost 764,480.00 Cost
13 Miscellaneous Expense 120,000.00 Br. 10000 per month
  Total 2,223,742.00  

5.3. Financial Analysis and Statements

5.3.1. Underlying Assumption

The financial analysis of the envisioned project is based on the data provided in the preceding
sections and the following assumptions.

A. Construction and Finance

Construction period 16 months

Source of finance 30% equity and 70% loan

Bank interest rate 14 %

Duration of loan 10 Years

Operating Costs increase by 3% after year 3

Raw materials and inputs increase by 3% after year 3

Salary and wages increase by 2 % after year 3

Sales revenue increased by 3 % after year 3

B. Depreciation

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Building 5%

Machinery and equipment 10%

Office furniture 10%

Vehicles 20%

C. Working Capital

Accounts receivable 30 days

Raw material local 30days

Work in progress 5 days

Finished products 30 days

Cash in hand 5 days

Accounts payable 30 days

Mortality of Chicken 5%

5.3.2. Sources of Fund

SN Description % share Amount(in birr)
1 Owners Share(Equity) 30 1,500,000
2 Bank Loan 70 3,500,000.00
Total 100 5,000,000

5.3.3. Loan repayment Schedule

Year Principal Interest (@14%) Total Paid Balance
2021 $839,524.13 $2,421,071.04 $3,260,595.17 $29,160,475.87
2022 $1,607,693.71 $3,981,898.01 $5,589,591.72 $27,552,782.16
2023 $1,847,789.95 $3,741,801.77 $5,589,591.72 $25,704,992.21

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 2024 $2,123,742.64 $3,465,849.08 $5,589,591.72 $23,581,249.57
2025 $2,440,906.70 $3,148,685.02 $5,589,591.72 $21,140,342.87
2026 $2,805,436.66 $2,784,155.06 $5,589,591.72 $18,334,906.21
2027 $3,224,406.26 $2,365,185.46 $5,589,591.72 $15,110,499.95
2028 $3,705,945.64 $1,883,646.08 $5,589,591.72 $11,404,554.31
2029 $4,259,399.07 $1,330,192.65 $5,589,591.72 $7,145,155.24
2030 $4,895,506.39 $694,085.33 $5,589,591.72 $2,249,648.85
2031 $2,249,648.85 $79,346.50 $2,328,995.35 $0.00
Totals $3,500,000.00 $25,895,916.00 $55,895,916.00  

5.3.4. Depreciation Schedule

Original Value Depreciation Depreciation Per
SN Description
In Birr rate in % year

Land, Building &

1 2666,945.08 5% 833,347.25
Construction
2 Machines & Equipment 2,280,032.40 10% 1,028,003.24
3 Vehicle 9682,200.09 20% 1,736,440.02
4 Office Equipment 482,358.00 10% 48,235.77
  Total 6,111,535.28   3,646,026.28

5.3.5. Revenue Projection

Based on the price and the capacity program of the project indicated in previous chapter (chapter
2), the revenue of the factory projected as indicated in the table below;
SN Description Year 1 Year 2 Year 3-10
1 Table egg 5,724,000.00 7,632,000.00 9,540,000.00
2 Day Old Chicken male 1,260,000.00 1,680,000.00 2,100,000.00
3 Day old Chicken Female 5,040,000.00 6,720,000.00 8,400,000.00
4 Broiler for slaughter 5,382,000.00 7,176,000.00 8,970,000.00
Total 17,406,000.00 23,208,000.00 29,010,000.00

5.3.6. Balance Sheet (Beginning)

Asset
Current Asset Value in Br.
Cash 4,532,801.73
Inventory of raw materials and inputs 2,212,805.56
Total Current Asset 6,745,607.29

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 Fixed Asset  
Land, Building & Construction 16,666,945.08
Machines & Equipment 10,280,032.40
Office Equipment 482,357.71
Vehicles 8,682,200.09
Total fixed Asset 36,111,535.28
Total Asset 5,000,000
Liability  
Account payable 3,500,000.00
Owners’ Equity  
Capital 1,500,000
Total Liability & Owners’ Equity 5,000,000

5.3.7. Income/Loss Statement

Revenue Year 1 Year 2 Year 3-10
Total Sales Revenue 17,406,000.00 23,208,000.00 29,010,000.00
Sales Before VAT 15,135,652.17 20,180,869.57 25,226,086.96
VAT 2,270,347.83 3,027,130.43 3,783,913.04
Purchase of Raw Materials and Inputs 4,259,244 5,678,992 7,098,740
Gross Profit 10,876,408 14,501,878 18,127,347
Expenses      
Salary Expense 2,482,560 2,792,880 3,103,200
Other Operating Expenses 1,778,993.60 2,001,368 2,223,742
Deprecation Building 698,145.00 698,145 698,145
Deprecation Machineries & Equipments 861,220.00 861,220 861,220
Deprecation of Vehicle 1,520,000.00 1,520,000 1,520,000
Deprecation Office Equipments 40,410.00 40,410 40,410
Interest Expense 2,513,280.00 2,261,952.00 1,130,976.00
Total Expense 9,894,608.60 10,175,974.80 9,577,693.00
Profit Before Tax 981,799.57 4,325,902.77 8,549,653.96
Tax(30% )     2,564,896.19
Net Profit 981,799.57 4,325,902.77 5,984,757.77

5.3.8. Cash Flow Statement

 Year Year 0 Year 1 Year 2 Year 3-10
Equity Capital 3,500,000
Loan principal 1,500,000
Net Profit 0 1,981,799.57 4,325,902.77 8,549,653.96
Depreciation 3,646,026.28 3,646,026.28 3,646,026.28
Total cash in flow 5,000,000 5,627,826 7,971,929 12,195,680

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 Cash payment
Purchase of Raw materials & Inputs 0 4,259,244 5,678,992 7,098,740
Loan Principal Payment 839,524.13 1,607,693.71 1,847,789.95
Investment 36,111,535 0 0 0
Total payment 3,511,535.28 5,098,768.13 7,286,685.71 8,946,529.95
Cash surplus / Deficit 6,745,607.29 529,057.72 685,243.34 3,249,150.29
Cumulative cash flow 6,745,607.29 529,057.72 1,214,301.07 3,934,393.64

5.3.9. Profitability
According to the projected income statement, the project will start generating profit in the 1st
year of operation. Important ratios such as profit to total sales, net profit to equity (Return on
equity) and net profit plus interest on total investment (return on total investment) show an
increasing trend during the lifetime of the project.

The income statement and the other indicators of profitability show that the project is viable.

5.3.10. Pay-Back Period

The investment cost and income statement projection are used to project the pay-back period.
The project's initial investment will be fully recovered at the 8.6 years of operation.

6. FUTURE DEVELOPMENT OF THE PROJECT

The project has an expansion step in phase two that will produce process different mix of
processed chicken meat using modern and advanced food technology.

7. ENVIRONMENTAL AND SOCIAL IMPACTS OF THE

PROJECT
Currently the issue of Environment and development has got a due emphasis and the government
has enshrined environmental policy within the constitution. In line with this environmental

41 | P a g e
policy the envisaged project deemed to mitigate the different impacts that may be caused by
actions of the project.

The main impacts from poultry rearing are the effects of ammonia, odor and dust emissions
from housing, and from land spreading of litter. Other activities such as inappropriate litter
utilization and poor management of the site can result in contaminated run-off entering
watercourses and contaminating soil. Because the poultry industry is relatively homogenous in
nature, it is practicable to list the main activities likely to affect the environment.

Quantifying environmental effects is dependent on the number, type and proximity of sensitive
receptors, but a generic assessment of the potential effects of emissions can be made by listing
the main emissions from the installation and outlining their potential effects on air, water, soil,
ecosystems, people etc.

Therefore, the envisioned cattle fattening and meat processing project will undertake a separate
Environmental Impact Assessment to see the detail impacts with their mitigations.

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