BIRANE NIGATU MODEL

FARMER DAIRY FARMING

AND KETTLE FATTENING
PROJECT PROPOSAL
PROJECT TO BE IMPLEMENTED IN OROMIA
REGION JIMA ZONE LIMUGENET TOWN
BUNESS TYPE :- SOLE PROPRIETORSHIP
CONTACT PHONE NUMBER:-
+251917830078/0912999584
SUMMITED TO:- LIMU GANNATINVESTMENTOFFICE

FEBRURY
LIMMU GENET
ETHIOPIA

Feb20,2024
Contents
1. EXECUTIVE SUMMERY................................................................................................................................................3

1.1 PRODUCT DESCRIPTION........................................................................................................................................3

Economic back ground and potential relation to the investment.......................................................................3

1.2Growth & Drivers....................................................................................................................................................5

1.3 Objectives of the project......................................................................................................................................6

1.3.1 General objective...........................................................................................................................................6

1.3.2Specific objectives............................................................................................................................................6

1.4Beneficiaries of the project.....................................................................................................................................6

1.5 Past and Present intervention..............................................................................................................................7

1.6 Justification of the project...................................................................................................................................7

1.7Support for the project...........................................................................................................................................8

2. MARKET STUDY AND PLANT CAPACITY.......................................................................................................................8

2.1Market study..............................................................................................................................................................8

2.2 SWOT Analysis...............................................................................................................................................10

3 Plant Capacity and Production Program.....................................................................................................................11

3.1Plant Capacity.......................................................................................................................................................11

3,2 MATERIALS AND INPUTS.....................................................................................................................................12

3.2.1 MATERIALS...................................................................................................................................................12

3.3 Utilities...............................................................................................................................................................13

4.TECHNOLOGY AND ENGINEERING..............................................................................................................................13

4.1 Technology And Engineering...............................................................................................................................13

4.1.1Production Process........................................................................................................................................13

4.2Machinery and Equipment...................................................................................................................................16

4.3 Proposed Location...............................................................................................................................................17

The proposed location of dairy farm will be near the outskirts of Limmu Ganat town like Mndera and Sunxu
kebels........................................................................................................................................................................ 17

4.4Site Development.................................................................................................................................................18
 4.5 Land use...............................................................................................................................................................18

4.6 Layout.................................................................................................................................................................. 19

4.7 Civil Works...........................................................................................................................................................19

4.8 Manpower and Training Requirement................................................................................................................20

4.9 Manpower Requirement...................................................................................................................................20

4.9.1 Organizational Structures.............................................................................................................................21

4.9.2Training Requirement........................................................................................................................................21

4.10 Financial Analysis...............................................................................................................................................21

4.9.2Total Initial Investment Cost..............................................................................................................................22

4.9.3Production Cost.............................................................................................................................................22

4.9.5 Income and Loss Statement at full capacity.....................................................................................................23

5. FINANCIAL EVALUATION...........................................................................................................................................23

5.1 Profitability.........................................................................................................................................................23

5.2 Break-even Analysis.............................................................................................................................................24

5.3Pay-Back Period....................................................................................................................................................24

5.4 Economic Benefits...............................................................................................................................................24

5.5 GDP Contribution................................................................................................................................................24

5.6 Technology and Knowhow Transfer....................................................................................................................24

 1. EXECUTIVE SUMMERY

1 Project type solepreriator

2 Project Owner Mr, Birane Nigatu
3 Telephone/mobile 091782
4 Nationality Ethiopian
5 Project Location Oromia Region, jimma zone, Limmu Gannat town,
6 Project composition Dairy and fattening Farm Development Project
7 Premises Required 7 hectare
8 Market share For Domestic market
9 PROMOTER BACK WELENSU KEBELE MODEL FARMER
GROUND
10 Startup capital 17,866,186

11 Employment opportunity This project deemed to employ 11 individuals 5 daily

laborers on temporary bases)
12 For the region /country Produce quality milk and fattening and supply at fair
price add value to the economy source of revenue,
create employment opportunity

1.1 PRODUCT DESCRIPTION

Milk: Milk is a traditional constituent of the Ethiopian diet, especially in lowland areas where the
livelihood is based on cattle productionn. Liquid milk handled traditionally has a very limited shelf-life. In
modern dairy production exotic cross breeds or pure breed castles are used and the milk is processed to have
longer shelf-life

Fattening: Fattening means controlling what cattle’s eat by using high quality feed so that to generate
faster weight gains. It is a strategic feeding option which produces a quick result (2-3 months and 3-4 term
per a year), technically quite simple. Agro-industrial by products can be used as feed sources. Once cattle
have eaten to their appetite and remain full, the chances of negative upsets are reduced considerably. In this
regard additional feeding would result in increased weight.

Economic back ground and potential relation to the investment

Our country Ethiopia is on of developing countries with rapid grouth of multy type economies which is
leaded by agriculture with lion shares. spacially jima zone and limu kosa wereda as cash crop area has very
high market shares for commercial farming with the following type. Crop production, dairy farming,
poultry,and cattle fattening. from the listed commercial farming cattle fattening is the most profitable
business in our country Ethiopia.

There are numerous meat sources available from various types of animals. Meat from birds, such as chicken
,meat from fish and the most usable and important meat source and abundantly used is from cattle fattening
commercial farming . They are also loud and take up a lot of room. However, meat farming is a thriving
industry that can easily land you a vendor supplier agreement with the local cattle and meat markets. After
all, people prefer fresh meat.

Limmu kossa wereda area is a growing low to middle class area, counting more than two hundred thousand
population. There are about five hundred businesses close to our location. Most of these residents are
families of three or more. Coffee production in the area is primarily in response to new business and
employment opportunities in the town local residents.

The current demand for beef in the area is high the fattening farm will have farm buildings and shades for
cows and calves. In addition, the farm will have pasture and natural open areas. Cattle fattening is a very
profitable business, and many people are making money all over the world by starting cattle feedlot
business. Cattle pen fattening involves the feeding of beef cattle with a protein balanced, high-energy diet
for a period of 90 days under confinement to increase live weights and improve degree of finish and thus
obtain better grades at the abattoir. Beef cattle fattening enables the cattle to express fully their genetic
potential for growth. To build a successful, sustainable cattle fattening livestock business, you require
sufficient knowledge of how to efficiently do cattle pen fattening i.e cattle fattening techniques, good
management skills, and a good cattle feedlot business plan. This article will outline how to start cattle
fattening business, and the cattle pen fattening business plan. Cattle fattening farming is a lucrative business,
but there are some essential things you need to do before you venture into the livestock farming business.
You have to decide on the size of your cattle livestock project i.e. The number of cattle you want to keep per
cycle; location of the business e.g. A cattle farm, and your target market. These choices will be affected by
the amount of capital you have, and the size of your target market. If you do not have a lot of capital, you
can always start small and grow your cattle pen fattening business overtime. You also need to carry out
market research (Who are you going to sell the cattle or beef to? At what price?) And write a beef cattle
farming business plan before you venture into the business. If you want to raise capital from investors you
will have to present a good cattle fattening project proposal. Ensure you have done your research before
starting the cattle fattening in 90 days business. The decision of where to locate your cattle feedlots is very
important so as to ensure economic viability of the cattle fattening business. Important factors to consider
when choosing land for your cattle feedlot business include: availability of cheap labor, proximity to market
& to sources of feed, prevailing climatic conditions as well as good road networks. Other factors to consider
include: the land should be suitable for construction of cattle feedlots, availability of water supply, low risk
of flooding or veld fire and it should be a distance away from residential or industrials areas to avoid causing
noise and dust pollution to those areas.
The recommended land for cattle feedlots should have a slope of 2-5%, and the soil with 25% or more clay
is better as compared to sand. There should be a reliable source of clean water that can be used for both
human and cattle consumption. Possible water sources for the cattle feedlot farm include boreholes, rivers
and dams. In case of inadequate water source, water tanks can be installed. The cattle feedlot business model
requires keeping and raising the cattle in confined areas. Feed and water is brought to the cattle rather than
the cattle grazing or seeking pasture. Feedlots are actually concentrated cattle feeding operations. The cattle
feedlot pens are confined yard areas where the cattle are completely hand or mechanically fed for the
purpose of beef fattening. The reason why the cattle are fed under confinement is to prevent loss of energy
through movement. Cattle feedlot housing should have the following features : protect the cattle against
adverse weather conditions, offer easy access to water & feed, allow efficient collection of cattle manure,
offer freedom of cattle movement and provide natural ventilation and lighting. The feedlot pens can be
constructed using timber frames. Cattle feedlots housing are usually open sided. The cattle fattening pens
should allocate 5-10 square meters per each cattle. The floors of the cattle fattening pens should be smooth
and not slippery. Roofing is usually not necessary except to cover feeding equipment so as to prevent the
feed from getting wet when its raining. The costs of constructing the cattle pens should be included in the
cattle pen fattening business plan. Feeding equipment may be fixed inbuilt within the cattle pen
structure. They can also be in the form of self-feeders which can be moved around within the pens. Self-
feeders are usually more suitable for small cattle fattening operations. Large commercial feedlot operations
use feed bunks/feed troughs which are fixed and inbuilt close to the edge of the cattle pens. The feed troughs
usually run the entire length of the cattle pen to provide easy access to food. Similarly, cattle drinking
equipment may also be in the form of movable drinkers, or it can be in the form of fixed inbuilt water
troughs at the edge of cattle pens. Whichever type of equipment that you use, you should ensure that the
equipment provides easy access of water and feed to the cattle. The cattle feedlot business plan should
include the costs of the required equipment.

1.2Growth & Drivers

Until recently, agriculture (mainly smallholder farming and livestock production) was the dominating sector
in the Ethiopian economy. While the services sector has recently outstripped agriculture in terms of its share
of GDP (currently estimated at 46%) agriculture remains critical for broad-based growth. The agriculture
sector accounts for 42% of GDP, 80% of employment and 85% of Ethiopia‘s export earnings. The increase
in agricultural production witnessed over the past five years (averaging 8%) is attributed mainly to favorable
weather conditions, improved supply of inputs, improved supply of feed, improved induction of technology,
and reduction in post-harvest losses and expansion in land under cultivation. Given the mainly smallholder
dominated structure, pushing the production frontier without technological innovation and the development
of rural infrastructure will not be feasible. GOE, therefore, sees the diffusion of modern agricultural
technologies and best practices as central to economic transformation. The plan forecasts agriculture to play
a major role in earning the country huge amounts of revenue, contributing 12pc to the GDP, and envisages
stepped up import substitutions to close the gap in the trade balance. The plan also forecasts rapid growth
across sectors and envisages Ethiopia to be on the fast track to becoming a mid-level income country
Agriculture is the corner stone of the development policy of the Government of Ethiopia. According to the
Rural Development Policy and Strategy document, the basic ingredient and resource the country has for the
agricultural development is the abundant land and labor. Most of the western lowlands are endowed with
water resources are virgin and fertile. Up to recently the areas were not developed due to lack of capital and
technology. Therefore, there is strong commitment from the government to make these fertile lands
available for investors that has the capital and technology to develop and distribute.

1.3 Objectives of the project

1.3.1 General objective

 To establish an integrated farming system whereby different sub-system
components support each other and increase productivity and
profitability via maintain environmental sustainability and assist
surrounding community.
 To Fix cost of local milk product and ensure sustainability of milk and
fattened animal supply.

1.3.2Specific objectives
 To develop an integrated system, that is supplementary to each other.
 To produce and deliver high quality ready to use milk and fattened
animal product
 To build an enterprise that balances quality, financial stability with
Social and Community sustainability.
 To transfer technology of hybrid, integrated systems coincide with local potential.
 To create market access for local fattener and milk product.
 To create job opportunity for local community there-by the region.
 To aware the level of the local community and diaspora on way of developing self-
confidence to investing their resource on Ethiopian soil rather out-off mother land. To
create market network with neighboring area and nation.

1.4Beneficiaries of the project

The country will get the contribution in its national income through domestic consumption and
export. This project will provide employment opportunity to the local population, this will raise
the living standards of the people working in this project, and they also learn the latest
 technologies in milk production and fattening and also make use of them in their own farm. The
regional government will also generate the revenue in the form of land rent will be an additional
source of income on land resources. The company, which is making investment on the land and
doing lot of agricultural sector production (dairy and fattening ) activities in developing the land
will be benefitted in terms of return on their investment during the lease period.

1.5 Past and Present intervention

Fattening and dairy production project has a technically strong, knowledgeable and experienced
team to execute the project on time. With the vast knowledge base in agri- business activities, the
company has tangible experience in making this project a success. Conflict in the area may retard
plan of project.

1.6 Justification of the project

Ethiopia has huge investment potentials for agricultural development and its processing including
livestock production and feed processing. Currently investment in agriculture sector is found to be
more attractive and profitable in diverse sub-sectors ranging from food products, industrial raw
materials to bio-fuel. The agriculture sector accounts for 47% of the Gross Domestic Products of the
country, provides 85% of employment and 90% of foreign currency earning. Moreover, the country has
huge market potential for crop and livestock produced with comparative advantage to the Middle East,
Europe and Asia. For the past five consecutive years the agriculture sector was growing faster with
more than 11% average annual growth. In addition of the contribution to the national growth, the
growth has triggered to the increase in domestic market has for both livestock and food crops. Looking
at the agro climatic condition i.e. average temperature, rainfall, physic-chemical properties of the soil
and the distribution of the rain fall give indication that the proposed land is suitable for cultivation of
various crops but especially fodder and grass. The physic- chemical properties of the soil indicated in
the information sheet provide further confidence for the success of the project. Moreover, the planning
on the financial part of the project i.e. investment, cash flow, return on investment, profitability and cost
benefit ratio will show a positive trend.
The expertise in marketing of farm produced in the local, national and international market will provide
an additional benefit to improve the financial health of the organization. The statistic indicated in the
financial report will provide us confidence in the project. It justifies the investment and returns on the
investment.
1.7Support for the project

The financial support i.e., the equity infusion in form of cash and kind for this project on investments shall
be received from promoters. The company shall receive equity infusion in form of cash or kind from any of
these mentioned companies hereby for its project. The company shall take the financial support in form of
project loan from either development bank of Ethiopia or commercial bank of Ethiopia. The technical
support will be sourced from our in-house experienced, knowledgeable and hardworking team who has
more than 10 years or more experience in the field of agriculture. In addition to our in-house team we are
also interacting with jimma university faculty of Agriculture department of animal science to get timely
support and valuable advice in this project based on their experiences.
We are also expecting support from Agricultural office and responsible government officials for
identification of suitable land and facilitation of the documentation and support of farm machinery and
equipment, farm inputs for the success of this project. It appears to be a joint project of fattening and
dairy production farm project and office of Agriculture, Government of Oromia, as we need lots of
support from the office of Agriculture at various level of implementation of activities in this project.
Without their help and support, it will not be possible to make this project a success.

2. MARKET STUDY AND PLANT CAPACITY

2.1Market study
Livestock productivity depends on access to concentrated feed and fodder. Animal Feed production and Animal
Fattening have direct correlation. The range of possible uses of feed is limitless and new ways of using it are being
devised daily
Before operating next year business, we conducted a thorough market survey and feasibility studies in order
for us to be able to be able to penetrate the available market and become the preferred choice for our
products. We have detailed information and data that we were able to utilize to structure our business to
attract the numbers of customers we want to attract per time. We hired experts who have good understanding
of the merchandise industry to help us develop marketing strategies that will help us achieve our business
goal of winning a larger percentage of the available market in the area.
In other to continue to be in business and grow, we must continue to supply and distribute products
aggressively which is why we will go all out to empower or sales and marketing team to deliver. In general
The Company will adopt the following sales and marketing approach to win customers over;
 Reenergize our business by sending introductory letters alongside our customers for the new
operation year
 Ensure that we have a wide range of products from different brand within and outside the business
area
 Make use of attractive hand bills to create awareness business
 Position our signage / flexi banners at strategic places around the city
 Position our greeters to welcome and direct potential customers
 Create a loyalty plan that will enable us reward our regular customers
C, pricing strategy
Pricing is one of the key factors that gives leverage to diversified product supply and distribution companies,
it is normal for retailers to purchase products from distribution companies that they can goods at cheaper
price. We will work towards ensuring that all our Products are distributed at highly competitive prices
compare to what is obtainable in the market area. We also have plans in place to discount our goods once in
a while and also to reward our loyal customers from time to time.
D, payment options
The payment policy adopted by our Company is all inclusive because we are quite aware that different
customers prefer different payment options as it suits them but at the same time, we will ensure that we
abide by the financial rules and regulation of the accounting board of Ethiopia and IFRS.
Here are the payment options that our Company will make available to its clients;
 Payment via bank transfer
 Payment with cash
 Payment via online bank transfer
 Payment via check
In view of the above, we have chosen banking platforms that will enable our client make payment for farm
produces purchase without any stress on their part. Our bank account numbers will be made available on our
website and promotional materials to clients who may want to deposit cash or make online transfer for the
purchase of our products.
E, Distribution Channel
The core problem revolves around lack of effective and efficient distribution network covering the entire
market in the area. Currently and also in the past, distribution has been limited where companies distribute
their products using agents and also directly to retailers and consumers. Lack of branch sales outlets and/or
sufficient number of intermediaries and clear market outlet expansion has resulted with the failure of the
factories products reaching regional markets. Setting up regional/town distribution networks with proper
implementation modalities can solve this problem and others related to marketing of Our Companies
products. Therefore, in order to exploit the market Our Company needs to set up a distribution system,
which is capable of meeting the demand at each major domestic market segments. The Company could not
distribute its products efficiently by continuing the existing traditional arrangements.
An ideal distribution system has economic benefits for both the distributer and the consumer and it involves
the supplier or in the intermediaries offering the ‘right product’ in the ‘right quantities, at the right time, at
the ‘right price’ and with the ‘right appeal’, the distribution arrangements of the company has supported
with a vehicle that can distribute the products. The following are the main distribution channels that will be
used by Company to reach the consumers.
Direct sale offers the greatest degree of control, but can be uneconomical where there are a large number of
customers for the product in question. Under these circumstances, some form of intermediary may be able to
operate at a lower cost by combining the disparate, but complementary outputs of several manufactures for
re sale to small users of such products.
Distribution through an intermediary offers the company the opportunity to improve his overall profitability,
although at the sacrifice of some measure of control, and so is frequently used to extend the coverage of the
Company’s own sales force. Distribution through Intermediaries has the following advantages :
• The Intermediaries reaches a majority of the last consumers in an arm length,
• The transport and accesses ability problems of the consumer, invoicing and credit control of the
company are comparatively simple,
• Relatively, few sales persons are needed by the Company.
In view of the high costs associated with direct sales to the consumer, most consumer goods companies
prefer to sell through some form of independent retail outlets.
F promotion strategy
Market promotion is an important part of the marketing mix, as it is required to create and increase
consumer awareness, knowledge and readiness to buy through media communications(advertising) and
through special offers to trade and/or consumers (sales promotion). However, it is important to realize that,
on its own; market promotion will not replace selling, change long- term trends, or build long- term
customer loyalty. It has to be supported by quality and distribution efficiency

2.2 SWOT Analysis

Crucial Factors & Steps in Decision Making for Investment Before making the decision, whether to invest in
this project or not, one should carefully analyses the associated risk factors.

A SWOT
Analysis can help in analyzing these factors which can play important role in making the decision.
Strengths

 Investment in livestock sector is increasing day by day and quality feed is a pre requisite in profitable
livestock farming.
 Feed and Molasses formulation according to modern techniques with proper utilization of locally
available cheaper feedstuffs leads to success in livestock farming hence for feed business too.
Weaknesses

 Limited availability of protein sources of standard quality due to low or static production, processing
technology, variable composition and adulteration.
Comparatively poor nutrient composition of indigenous feed ingredients due to differences in varieties and
use of improper soil fertilizers.
 Improper use of pesticides, the residues of which result in poor feed utilization.
 Lack of proper storage facility. Due to this fact various agricultural products when produced under
quite high moisture content, thus liable to be affected with insect damage, auto-oxidation and fungal
contamination.
 Animal molasses cannot be produced economically on a small scale.

Opportunities
 Rapidly increasing demand for the various kinds of livestock products and feed.
 The agro industrial by products can be better utilized in formulated compound feed.

Threats

 Open and competitive commodity pricing

 there is no feed ingredient quality control program in the woreda and mixing of feed ingredients may
also affect the quality of feed.
 The prices of different feedstuffs vary throughout the year.
 There is limited availability of protein sources of standard quality due to low or static production,
processing technology, variable composition and adulteration.
 Lack of awareness among livestock farmers to use compound feed.

3 Plant Capacity and Production Program

3.1Plant Capacity

Dairy production: The dairy farm would have 30 milking cows at 80 % calving rate. The cows should be exotic
breeds. Average yield per cow is estimated at 15 liters per day. Overall daily total production is about 450 liters /day.

Moreover, there is also fodder (alfalfa), silage (maize) and hay (pasture) production. Thus, the plant is designed to

produce 162,000 liters of milk yearly.

Fattening : Purchase selected cattle-feeding/keeping well-sell and provide for the market. The planned fattened at
first phase will be 25 cattle per year, at full capacity after 3 years which extend up-to 75 cattle per year

Production Program

At the initial stage of the production period, the plant would require some years to penetrate into the market and
develop production skill. Therefore, in the first, second and third year of production, the capacity utilization rate will
be 70%, 85% and 95%, respectively. In the fourth year and thereafter, full capacity (100%) production shall be
attained. The table below shows program of the production

s/n Description Qty Production years

1st 2nd 3rd 4th

1 Fatten cattle No, 52 63 71 75

2 Milk Lit 113,000 137,700 153,000 162,000

 3,2 MATERIALS AND INPUTS

3.2.1 MATERIALS
Initial stock of dairy imported breeds of 50 cows is considered. A total of about Birr 3,500,000 investments is
required. The internal stock would be replaced after five years of production and then the subsequent replacement
will take place within the same time interval. And also the envisaged project purchase 75 medium cattle investing
1,875,000 birr at full operation. Raw material required for the production of fattening and livestock feed, at full
operation capacity and the corresponding costs are shown in following table
Description Measure Qty Unit Price Total Price
Sr. Ment
No
1 Oil Seed cake Kg 1000 300 300000

1000 150 150000

2 Molasses Lit
3 Salt Kg 750 30 22500

4 Wheat Bran Kg 750 50 37500

5 Cow No, 50 70,000 3500000

6 Cattle No, 75 25,000 1875000

7 Veterenary & A.I sevice Doz 50 1200 60000

Total 5,945,000

3.3 Utilities
Utilities required by the plant are electricity, fuel (for cars and generator) and water for
proceeding and sanitation. Annual utilities requirement of the plant and corresponding cost are
indicated table 9. Major utilities cost for feed production)
The major utilities required are: water, electric power and Fuel for lighting and heating. The total
yearly consumption of utilities at 100% capacity utilization rate and their estimated costs are
given in in the following table. The total annual cost of utilities is estimated at Birr 1,974,560.

Annual Utilities Requirement and Cost

No Description Qty Cost Birr
1 Electricity (Kwh) 1.30 birr per wh 1,000 1,300,000
2 Water (M3) 31,200 312,000
3 Fuel (litter) 20,000 360,000
4 Regular telephone 1,560
5 Internet CDMA 1,000

Total 1,974,560

4.TECHNOLOGY AND ENGINEERING

4.1 Technology And Engineering

4.1.1Production Process
After construction and establishment of the farm including buildings, farm structures, fodder
production, etc. Calf heifers will be purchased from a reliable supplier. These heifers would give
birth in six to nine months’ time and production of milk will be started nearly at the end of the first
year. Daily milk production is estimated to be 450 per day. The milk will be taken directly from the
milking parlor with pipe line to a cooling tank for temporary storage and processed immediately.
One per cent of the fat content is separated and chilled in a cold store. Then, the cream is either
churned to butter or sold as it is depending on the availability of local market. After cream
separation process, the milk is filtered and sealed with plastic bags or bottled and distributed to the
market

Raw materials, oil seed cake, molasses, lime, straw or stock and salt are supplied to the Processing
plant. The stock or straw is unpacked and break into pieces before salt lye treatment took place.

Classification of feed ingredients: Feeds or feedstuffs are composed of several distinctly different
groups of substances, known as nutrients e.g. proteins, carbohydrates, fats, minerals, vitamins and
water. These have definite functions in body. For intelligent ration formulation, nutrients, nutrient
composition and palatability of feedstuffs are important. Collect the final by product and process
for biogas alternative power sources. These feedstuffs are grouped as follow,

Protein feedstuffs:
Common protein feedstuffs from plant origin are residues of oilseed after expeller or solvent
extraction or products of wet milling of maize in starch making process. Nutritive value of protein
feedstuffs depend upon their available amino acid composition, toxic materials and the changes
brought during processing.
  Seed cake/meal

 Sunflower cake/meal

Feed ingredients (Trucks) - Feed Analysis in laboratory- Acceptance of feed ingredients-

Separators and conveyors- Hoppers- Crushing by hammer mill- Dosage bin (separate for each
feed) - Mixer Conditioning (Molasses, Minerals) - Packing- Storage or Exit

Carbohydrate/energy feedstuffs:

 Molasses

Mineral supplements:

 Salt

 Bone meal (for chicken)

Fats and oils: This source of energy can be obtained from meat processing industry, refining
of vegetable oils or vegetable oils itself.

Main feed machine raw material receiving section – Grinding and mixing section – Bucket
elevator – stock bin – Pelletizing section - Bucket elevator – Cooling and Screening section –
packing section
 Grinding system:

Crushing the raw materials into powder

Main equipment’s:- permanent magnetic sleeve, hammer mill, and dust collector.

Batching and mixing system:

Batching the powder feed raw materials according to the formula.Main equipment’s: permanent magnetic
sleeve, mixing machine, and dust collector

Sales department for feed processing Machine:

Contact: Ms.Sunny

Cellphone & WhatsApp: 0086 13837907056 Skype：Luodate-International

Tel: 0086 379 63788388

Email:info@lyluodate.com Web: http://www.lyluodate.com

 Address: White Horse Temple Town, Luoyang City, Henan Province, China.

4.2Machinery and Equipment

Machinery and equipment required for dairy farm are listed in the following table . The total costs are estimated to
be Birr 3,871,000
List of Machinery and Equipment

Unit price
No Description Qty (Birr) Tota; cost

1 Tractor (70 hp) 1 3,500,000 3,500,000

2 Trailers (6 ton) 1 50,000 50,000
3 Disc harrow 1 50,000 50,000
4 Dipping vat 1 50,000 50,000
5 Water pump 2 64,000 128,000
6 Cruch 1 5,000 5,000
7 Tools (miscellanous) 1 25,000 25,000
8 Water tank (7000 lts) 2 13,000 13,000
9 Vet. Clinic equipment (set) 1 50,000 50,000
Milk equipment
Lump sum
10 Tank insulated 1
11 External reserviour 1
12 Parallel filters (set) 1
13 Regulator 1
14 Compact plate pasturizer 1
15 Butter mold 4
16 Butter churm for curning 1
Spiral air copmresser 1
17 Water refregrator 1
18 Centrifugal pump 1
19 Connecting pipes, valves, etc 1
20 Laboratort equipment 1
21 Balance instrument 1
22 Authomatic filter –sealer for 1
plastic bags
Total 3,871,000

4.3 Proposed Location

The proposed location of dairy farm will be near the outskirts of Limmu Ganat town like Mndera and
Sunxu kebels.
Land and Location

i) The total space required for buildings, product store, plant installation and raw material
store and other accessary will be 1 ha and about 6 hectares of land for fattening. The exact
design and details of the built up area has to be decided in consultation with the plant and
 machinery supplier or with a professional consultant.

ii) The location of site should have proximity to road facilities, services, such as water,
electricity and social infrastructure, etc.

4.4Site Development

i) Preferably the entire site should be fenced with grass/bush or compound wall is
constructed with gates at suitable places

ii) Internal roads should be of cobble depending upon the soil conditions, rainfall and the
number of animals moving every day.

iii) Proper drainage arrangements should be made to ensure cleanliness.

4.5 Land use

The land use plan of the proposed project is summarized as follows.

Land use plan of the project

No Items Quantity (Quantity

X Area)
Fattening centre
1 Fatting centre (Shades) 6,300m2
2 Raw materials 2,000 m2
4 Guard's House 1000 m2
6 Outside toilet pit 1000 m2
7 Changing roam 1000 m2
8 Staff cafeteria 1000 m2
9 Office 1000 m2
10 Green area 20,000 m2
11 Grazing land 20,000 m2
12 Waste treatment plant 1000 m2
Feed processing centre
1 Feed processing plant 4,000 m2
2 Workshop 1000 m2
3 Raw materials store 1000
4 Product store 1000
5 Cafeteria 500
6 Office 500
7 Green area 1000
8 Guard's House 200
9 Outside toilet pit 300
10 Changing roam 500

Remark, the shade and roof will be constructed on corrugated iron. Layout and Civil Works

4.6 Layout

The total covered area depends on the processes involved, products manufactured, the quantity
of manufactured feed production and processing handled and the equipment chosen product
manufacturing.

4.7 Civil Works

The total area of land required for the project is about 7hectares. The total built-up area will be 60,000
square meters and the estimated cost will amount to Birr 7,035,000
Estimated Cost of Structure for a 60,000m2 of feed production project
N Items Quantity (Quantity Unit Total Cost (birr)
o X
Area) Price
(Cost/M2)
Fattening centre and dairy
1 Fatting centre (Shades) 500m2 1000 500000

2 Raw materials 2,000 m2 1000 200000

4 Guard's House 200 m2 1000 200000

6 Outside toilet pit 200 m2 1000 200000

7 Changing roam 100 m2 1000 100000

8 Staff cafeteria 200 m2 1000 100000

9 Office 400 m2 1000 400000

10 Green area 1,000 m2 - 0

11 Grazing land 10,000 m2 - 0

12 Waste treatment plant 200 m2 1000 200000

Feed processing
centre
1 Feed processing plant 4,000 m2 1000 400000
2 Workshop 1000 m2 1000 100000
3 Raw materials store 1000 1000 200000
4 Product store 1000 1000 200000
5 Cafeteria 500 1000 200000
6 Office 500 1000 300000
7 Green area 1000 - 00
8 Guard's House 200 1000 200000
9 Outside toilet pit 300 1000 3000000
10 Changing roam 500 1000 200000
Sub-total 6700000

Contingency (5%) 335000

Total 7,035,000
 4.8 Manpower and Training Requirement

4.9 Manpower Requirement

Manpower requirement of the farm and the corresponding labor cost are shown in Table below.
Man Power Required And Labor Cost

No Description Req. Monthly Annual salary,

No. salary, Birr Birr
1 Dairy farm Manager 1 7000 84000
2 Time keeper 1 3000 36000
3 Milk processing plant workers 1 3000 36000
4 Barn workers 3 2000 24000
5 Tractor operators 1 5000 60000
6 Veterenarian 1 5000 60000
7 Pasture area worker 2 2000 24000
Sub –Total 10 16700
324000

Employees benefit (25%) 81000

Grand total 405000

4.9.1 Organizational Structures
Dairy farms and fattening are administered and managed by qualified and
experienced management. They have to be well educated and experienced in terms
of production practice, selection of optimum production area, verity of cultivar and
plant management system and farm market integration is very important for
sustainability of the newly established commercial farm

4.9.2Training Requirement
A two weeks training will be provided for the manager and other four workers of the dairy
farm at the site of the project by the machinery supplier. Total cost of training will be Birr
28,250.

4.10 Financial Analysis

The financial analysis of the dairy project is based on the data presented in the previous
chapters and the following assumptions:-
Construction period
2 years
Source of finance
2 years
70 % loan
Tax holidays 30 % equity
Bank interest 4 years
Discounted cash flow 13%
Land value 10%
Repair and maintenance Accounts Based on estimated lease rate of the
receivable Limmu Ganat town
2% machinery cost
Raw material local 30 days
 30 days

4.9.2Total Initial Investment Cost

The total initial investment cost of the project including working capital is estimated at Birr 18570500
birr, out of which about 70% will be required bay loan and 30% equity For details see Table

Initial investment cost

Sr. No Cost Items Total cost

1 Land 72,000
2. Building and Civil Work 7,035,000

3. Plant Machinery and Equipment 3,721,000

4. Office Furniture and Equipment 350,000
5. Caw and cattle
5375000

6 Pre-production Expenditure
250,000
7 Total Investment cost
16,803,000

8 Working Capital 1,063,186

9 Total
17,866,186

4.9.3Production Cost
The annual production cost at full operation capacity is estimated at Birr 1566416 birr
Annual production cost at full capacity

Items Cost

Raw Material and Inputs 176800

Labor 250500

Utilities 22200
Energy and Power 00

Spare parts 00

Maintenance and repair 136000

Factory overheads 33000

Administration Overheads
320
00
Cost of finance
779915.5
Depreciation
136000
Total Operating Costs
1566416

4.9.5 Income and Loss Statement at full capacity

Description Revenues Year 1
Equety capital
Sales Revenues
Total revenue 6,775,000
Cost of goods sold
Growth income 6,775,000
Expenses
Raw Material and Inputs 2770000
Labor 405000
Utilities 22200
Spare parts 77420
Maintenance and repair 136000
Factory overheads 33000
Interest exp. 724249

Total exp 4167869

Taxable income 2607131

Tax 35% 562495
Income 2044636

5. FINANCIAL EVALUATION
5.1 Profitability

According to the projected income statement, the project will start generating profit in
the second 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) will show an increasing trend during the life-time of the project.

5.2 Break-even Analysis

The break-even point of the project is estimated by using income statement projection.

BE = Fixed Cost= 30 %
Sales – Variable Cost

5.3Pay-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 within 3 years.

5.4 Economic Benefits

The project can create employment for 10 persons. In addition to supply of the domestic
needs, the project will generate Birr 4.6 million interims of tax revenue.
Moreover, the Government can collect employment, income tax and sales tax revenue.

5.5 GDP Contribution

The project contributes to the GDP of the country by increasing the income of the employee
and the owner too. It is known that economic analysis of the project is concerned with its
impact on the national economy. In this case it has an impact on promoting export of export
of the country, government income, reduction of unemployment and enhancing foreign
exchange earning of the country.

5.6 Technology and Knowhow Transfer

In mechanized farming system, modern technologies transfer to the local communities

starting from planting to harvesting and storage of produce.. Plant protection and handling of
agro chemicals without harming environment is another aspect injected to the local people.
Therefore, experience sharing and addition of trained qualify human resource to country’s
economic sector