POULTRY FARM AND MEAT PROCESSING

PROJECT PROPOSAL

LOCATION:IN EAST SHEWA ZONE, EAST SHEWA LUME

WEREDA

PROMOTER: DR. LAKEW GEBREKIRSOES

November, 2019
Addis Ababa, Ethiopia

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Contents

Executive Summary........................................................................................................4

1. Introduction..................................................................................................................5

1.1 Background...................................................................................................................... 5

1.2. Objectives of the Project and Justification...................................................................7

1.3. Basic Features of Project Area......................................................................................8

1.4. Socio Economic Activities of the Population:............................................................10

1.5. Infrastructural Development........................................................................................11

2. The Market Demand Potential..................................................................................13

2.1. Current Supply and the Demand Gap.........................................................................13

2.2. Commercial Production Systems................................................................................14

2.3. Village or Backyard Production...................................................................................15

2.4. Poultry Value Chain Analysis......................................................................................20

2.4.1. Marketing chains for traditional poultry production..................................................................20
2.4.2. Marketing chains of breeding and rearing centers..................................................................22
2.4.3. Marketing from large scale commercial operations.................................................................22

2.5. Domestic Market........................................................................................................... 23

2.6. Export............................................................................................................................ 24

2.7. The Envisaged Project Target Market and Strategies................................................24

2.8. Poultry Feeds Availability............................................................................................25

2.9. The Production and the Sales Plan For Poultry Farm................................................26

Ostrich Products.................................................................................................................. 26
Meat Demand.................................................................................................................................... 26
Hide................................................................................................................................................... 27
Feathers............................................................................................................................................ 28
By-products....................................................................................................................................... 28
2.9.1. Production plan....................................................................................................................... 30

3. ORGANIZATIONAL STRUCTURE............................................................................34

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 3.1 The General Manager’s Duties and Responsibilities..................................................35

3.2 General Administration and Finance Department.......................................................35

3.3 The Marketing Department............................................................................................35

3.4 The production Department..........................................................................................36

4. FINANCIAL REQUIREMENT.....................................................................................37

4.1. Fixed Investment........................................................................................................... 37

4.1.1 Building & Construction............................................................................................................ 37
4.1.2. Poultry Machines and Equipments.......................................................................................... 38
4. 1.3 Vehicles................................................................................................................................... 38
4.1.4 Office Equipments.................................................................................................................... 39

4. 2 Expenses....................................................................................................................... 39
4. 2.1 Raw Material Purchase........................................................................................................... 39
4.2.2 Salary Expense........................................................................................................................ 40
4.2.3 Other Operating Expenses....................................................................................................... 41

4.3. Pre -Service Expense...................................................................................................41

4.4. Summary of Financial Requirement and Source of Fund..........................................41

Environmental and Social Impacts of the Project.....................................................45

Project Implementation Plan........................................................................................46

Future Development& Exit Strategies.........................................................................46

Summary........................................................................................................................46

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 Executive Summary
1.Project Name Poultry Farm and Meat Processing
2.Project Owner
3.Nationality Ethiopian
4.Project location East Shewa Zone, Lume Wereda
5.Project Poultry Farming and Meat Processing
Composition ( Hen,Duke, Ostrich, turkey and others
6.Primeses 10,000m2 or 1 hectare
Required
7. Startup Capital For undertaking any activities. Hence for
implementing this project a tot
al of 55,860,552 Eth birr is required. From this
30% or 16,758,166 birr will be covered by the
promoter of the project while the rest 70% or
39,102,386.4 birr will be covered by financial
institutions.
8.Employement This project deemed to employ a total of 400
opportunities individuals of which 386 are unskilled and 14
are skilled and semi- skilled individuals.
9. For The region/ Source of foreign currency, source of
country employment

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1. Introduction
1.1 Background
Our country Ethiopia is a landlocked country located in the Horn of Africa. The country
covers approximately 1,221,900 square kilometers and shares frontiers with Sudan,
Kenya, Somalia, and Djibouti. Much of the Ethiopian landmass is part of the East
African Rift Plateau. Ethiopia has a general elevation ranging from 1,500 to 3,000
meters above sea level. The national capital of Addis Ababa is located in the center of
the country on the edge of the central plateau. The highlands that comprise much of the
country are divided into northern and southern parts separated by the Great Rift Valley.
The Great Rift Valley runs from the Jordan Valley in the Middle East to the Zambezi
River's Shire tributary in Mozambique. The southern half of the Ethiopian segment of
the valley comprises several large lakes. The water bodies in these lakes are often
considered a source of migratory birds which could be carrier of avian flu virus. In July
2005 the country had a population of about 73 million. The population has been
predominantly rural though there has been a steady growth in the rate of urbanization in
the country. The percentage of population that resided in urban areas was merely 6% in
1960. It increased to about 16% by 2006. Note that in developing countries such as in
Ethiopia, the measure of urbanization is often prone to measurement error. It has been
pointed out in several places that estimate of urbanization in Ethiopia could well be an
overestimate owing to treatment of several peri-rural areas as urban in Ethiopia. Even
though rate of urbanization has been increasing over time it continues to be one of the
lowest in Africa. Figure 1 shows the evolution of urbanization in Ethiopia over time. In
sub-Saharan Africa only Burundi and Uganda had levels of urbanization that was below
that of Ethiopia. The average annual population growth rate in Ethiopia between 1985
and 2000 was 2.8%. The annual population growth rates for both the rural and urban
populations have also generally been declining since reaching a peak in 1990, although
the rural growth rates have declined at a faster pace than urban rates (WDI, 2002;
OECD 2004).

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The poultry sector is almost exclusively dominated by backyard and small-scale production
using limited to no inputs in production and which is targeted for either self-consumption or the
market. Unlike other parts of the world, there are relatively few intermediaries operating
between producers and consumers in the Ethiopian poultry sector. However, because of
increased urban development, there are newly emerging private farms responding to growing
consumer demand. Indeed, rising demand for meat products has led to inflationary pressures
on prices, with poultry prices increasing fivefold in nominal terms over the past decade.
Nonetheless, while growing, broiler meat production remains fairly low, with most consumers
favoring traditional forms of poultry over processed products.

The government of the country has been excreting its maximum effort to expand
investment opportunities in the country by designing different policies and strategies
that will facilitate investment through attracting both domestic and foreign investors.
Likewise, the Oromia regional state government has been working day and night to
make poverty history by making its door open to investors both (domestic country and
foreign) to come and invest in the region. Therefore, it is this ample opportunity that
attracts Poultry Farming and Meat Processing, to come to East Shewa Zone in Lume
Wereda which is about 70km far from capital city and engage in this project which
encompasses poultry farm. The investor has a long term business experience in

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different activities for example in metal welding and related services. Hence being one
of the poultry farm and meat processing project, the center is planned to provide: Life
(day old chickens), eggs, and big chickens. The project is identified because of the
highly growing population of the country is in need of life chickens, and eggs.

1.2. Objectives of the Project and Justification

In this project, rate of urbanization is an extremely important variable owing to several
reasons. First, along with income, urbanization determines the tastes and preferences
of the consumers. The primary driving force behind the shift in consumption toward
high-value agriculture (fruits and vegetables, livestock products and processed food for
example) is rising income but changes in lifestyle with urbanization and shifts in the
demographic structure also contribute towards consumption diversification. As incomes
rise, the share of the budget allocated to food tends to decline, but the composition of
the food budget also changes. Households devote a smaller share of the food budget to
grains and other starchy staples and a larger share to meat, eggs, milk, fish, fruits, and
vegetables, processed and prepared foods. Alongside, urbanization changes diets
because urban consumers purchase a larger share of their food (rather than growing it),
because urban consumers face a wider range of foods from which to choose, and
because urbanization is associated with women’s participation in the workforce,
reducing the time available for food preparation. In the context of this project,
urbanization is important as it will directly affect the demand of poultry products.
Secondly, urbanization affects marketing of food products and that includes poultry
products as well. Urbanization creates demand for differentiated products as greater
variety of products are available owing to an access to a wide portfolio of products (for
example through imports). The opportunity cost of time also gets altered with
urbanization thereby increasing demand for processed products which work both
towards value addition as well as product differentiation. Additionally, the collection of
buyers at a single location facilitates emergence of modern marketing channels such as
supermarkets. In Ethiopia, though on a limited scale, some supermarkets have come up
in Addis Ababa. The procurement as well as marketing channels of poultry products are
significantly different if the transaction occurs through modern channels.

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Since the project owner has a deep- rooted experience in the field, the envisaged
project is deemed to have the following objectives:
 To undertake the poultry farm through scientific methods and modern technology.
 To serve as the source of government foreign exchange revenue through
distributing, chickens, Egg, processed meat and natural fertilizers foreign market.
Because the project is assumed to export 20% of the total products to the foreign
market in the future.
 To introduce modern technology that related to poultry farm in the country so that it
contributes somewhat to the technology diffusion.
 To serve as a role model for other investors and farmers that want to invest in
similar business undertakings.
 To contribute somewhat to the governments objectives of reducing the problem of
unemployment through creating employment opportunities to the citizens.
 To bridge the demand gap for products included in the area of engagement.

1.3. Basic Features of Project Area

Location:
Lume district extends between 8012’ -8050’ N and 39001’ -39017’ E’ longitudes. It is located
in the northern part of East Shewa zone. It is bordered with Ada Liben district in the
west; by Gimbichu district in the north; by Adama district in East; and Dugda Bora
district in south. Because of geographical location (i.e. near to the primate city Finfinne
and three roads that leading to south and east part of the country & coming to Finfinne
do radiate through) the district has a great advantage for accessing the local products to
the market and creates ideal condition for provision of the demanded commodities to
the local communities. Currently Mojo town has areas devoted to industrial zone and
considered as industrial town. On the contrary, it has been suffering from environmental
pollution due to down stream effect of Finfinne city wastage.

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Drainage:
The total area of Lume district is fallen in Awash River basin. The Mojo is a perennial
river flow in Lume district and empties into the Koka Lake. There are also intermittent
streams includes Gersa, Gale, Wemecho, Lume and Momo. The district also shares
Koka Lake found between Lume and Adama districts. The Koka Lake regulates the flow
of the Awash River for irrigational schemes taking place in its middle and lower courses.
It is also has high potential fish production.
Climate: Most part of the district (about 90% of its surface area) belongs to sub-tropical
(Gamojii) agro-climate. The mean annual temperature over sub-tropical agro-climate
ranges 18-200c. Cool temperate part of the district is restricted to the northern extreme.
The rainfall is weakly bi-modal with spring a small rainy season during the months of
April and May while summer along rainy season during the months of July, August and
September. The vast area of the district annual rainfall varies between 500 and 900
mm.

Soils:
The major soil categories of Lume are Vertisols 305.02 km 2 or 48.85% and Rendzinas
and Phaeozems 250 km2 or 36.77%, with limited area of cambisols and Luvisols 125.01
km2 or 11.35 % of the land area of Lume. Vertisols are dark in color and are clay
dominated. They expand and contract with change in moisture content forming wide
and vertical cracking when dry. All these are limiting factors in its agricultural potential.
With addition of Urea, farmers utilize these soils for teff, wheat and pulses. Such soils
are not suitable for root crops. Rendzinas and Phaeozems better media for plant
growth. In the rift floor such soils usually develop from volcanic ashes and have limited
depth and are poorly drained and poorly workable. Thus, they have limited agricultural
value.
Cambisols and Luvisols too belong to a single soil category. Cambisols in places, due to
lack of cementation, have no or weak structure(aggregates) which reduces their level of
productivity. Most Luvisols have problems related to root distribution which in turn
reduces their agricultural usefulness. Compared to other tropical soils these are still
good agricultural soils except those situated on steep slopes.

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The project requires about 10,000 m2 or 2 hectare of land and it is allocated as follows.

No Description Plot in hectare

1.1 Ostrich rearing section 1000
1.2 Turkey Raring section 1000
1.3 Duke and other birds rearing section 1000
1.4 Chickens rearing section 1000
1.2 Eggs storage section 1000
2 Store ,Warehouse and processing area 0
2.1 Raw materials store 500
2.2 Meat processing and storing 1000
3 Employees Residence 500
4 Offices 500
5 Shop 500
5 Parking , fence and green areas and buffer 1000
zone
Total 10,000m2

1.4. Socio Economic Activities of the Population:

The Zone has relatively developed infrastructural facilities that could contribute toward
its development. The present favorable economic situation put the Zone at the
advantage of attracting the private sector investment. The establishment of the
envisaged integrated poultry Farm project will no doubt help the population of the town
in getting new employment opportunities in addition to supplying poultry and cattle
product in fair price. Other than being employed in government and private organization,
most of the population of the Town is engaged in trading activities be it formal or
informal. Unlike the urban people, the rural population is engaged in farming. Therefore
aside with all other projects which are undertaken by private and government, this
project is deemed to provide employment opportunities for about 400 individuals at the
initial period and will continue employing every year.
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 1.5. Infrastructural Development
East Shewa Zone has relatively developed social and economic infrastructures.
Facilities such as transportation network, hydro electric power, pipe water and
telecommunication services are available. Health and bank and other social services
are also sufficiently available in the Zone. Above all the availability of well developed
transportation network is an important factor as it determines the project’s proximity to
the market for both out puts and inputs

 Transport And Communications:

Road Transport: The total lengths of all weather roads in district until the end of 1996
E.C. were 82kms. With regard to the type 47km and 35km were respectively
categorized to asphalted and rural road. It accounts for about 18% of the zonal road
length. The district is also access to railway line with 25kms(shares14.7 % of the total
railway line of the zone). Mojo, capital town of the district has a distance of 79km, 20km
and 91km from Finfine, Adama, and Ziway urban centers respectively.

Road density is one of the variables for considering the extent and efficiency of road
distribution over land (defined as the length of roads in km over total area in km 2 per
1000 km2). Thus, it has road density of 112kms per 1000 km 2.
Communications: Mojo town is the only nearest town with automatic telephone service
and department post office that helps for provision of communication service for all the
district population within the district & other areas. Koka town has also manual
telephone and an agent post office.
Water Supply:
The district is endowed with surface and ground water resources. Springs and streams
do act as the community source of drinking water. They are serving as sources of
drinking water to the district people though they are polluted by disposals of the
industries and urban sewerage from Finfine and Lume areas without any treatment.
Regarding water resource availability there are conditions: the northern (north of Mojo
town) parts of the district comprises Farmers Associations Bali, Tulu Re’e, Deke Bora,
kiltu Urji, Tiliti, Haro Gumbu and Ejere do not have no surface water, except small

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ponds that are filled by run off. People in this area get water from unimproved sources
and far places. The southern (south of Mojo Town) parts of the district comprise
Farmers’ Associations Kolba, Dibandiba, Ejersa, Koka and Tede do relatively in better.
They are found near to River Modjo and Lake koka catchments that have enough
surface waters. Even this part has good water resource development, though there are
threatened by fluoride occurrence.

In Lume district most of pipe water is limited to certain urban centers (Modjo, Koka,
Ejersa and Ejere) and rural part. Water supply development schemes (14 water
schemes) were constructed in different parts of the district. As a result the total
population access to potable water during 1995 E.C. was respectively 33%, 83% and
48.5% for rural, urban and district.

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2. The Market Demand Potential
2.1. Current Supply and the Demand Gap
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 dish 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.

There are more than 20 private large scale commercial poultry production farms, all of
which are located in and around Addis Ababa, particularly in and around Debre Zeit
(Yami and Dessie, 1997). ELFORA, Alema and Genesis are the top 3 largest
commercial poultry farms with modern production and processing facilities. Established
in 1997, ELFORA has large scale poultry farms at 4 different locations and sub-
locations. ELFORA has modern broiler processing (slaughter houses) and packing units
and produces table eggs, broiler meat and day old chicks. The slaughtering service has
a capacity of 500,000 kg/year. ELFORA annually delivers around 420,000 chickens and
over 34 million eggs to the markets in Addis Ababa (www.ethiomarket.com elfora).
Alema Farm is the second largest enterprise delivering nearly half a million broilers to
Addis Ababa market every year. It has its own parent stock from Holland, a feed
processing plant, hatchery, slaughtering plant, cold storage and transport facility at its
sites of operation. Genesis farm is the third most important private poultry enterprise
with over 10,000 layers and its own parent stock and hatchery (Wossene, 2006).
Genesis farm is the major source of breeding stock and commercial feed for the modern
private poultry sector (Yami and Dessie, 1997). Individuals will wait for more than a year
to get a day old chicken. Hence, this shows that there is a wider gap in the supply of
chicken in the domestic market.

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Eight of the modern poultry farms (ELFORA Agro Industry, Alema, Almaze, Genesis,
Kalehiwot, Sinkinesh, Tseday and Bora chicken farms) have formed a poultry farmers
association known as “The Ethiopian Poultry Farmers Association”
(http/www.ethiopianreporter). These eight farms fall under Sector 1 of the FAO
classification.

2.2. Commercial Production Systems

In Ethiopia, the commercial poultry are run as full time businesses, highly dependant on
the market for inputs. The owners are wealthy by Ethiopian standards. The small scale
modern poultry farms are run either as supplementary to the family income or as a full
time business. Reliable economic data concerning the value of commercial poultry
products sold in any one year is not available. The general indications are that the
intensive poultry industry plays a key role in supplying poultry meat and eggs to urban
markets at a competitive price. The industry also provides employment for a range of
workers from poultry attendants to truck drivers to professional managers.
There are about 18 large scale commercial (with 2,500 to 50,000) poultry farms located
in and around the capital with a collective capacity of 33,500 layers and 208,000 broilers
per annum. Table and fertile eggs, day old chicks and broilers meat are the major
products of these farms. There is also an emerging small scale intensive system in
urban and peri-urban areas, which corresponds to sector 3 of the FAO classification.
Under this system of production, a small number of exotic breeds of chickens (50-1,000)
are produced along commercial lines using relatively modern management methods.
This activity is being undertaken as a source of income in and around major cities and
towns such as Debre Zeit. Most of these farms obtain their feeds and foundation stocks
from Genesis and Alema commercial poultry farms and occasionally from nearby
government owned breeding and multiplication centres. They are also involved in the
production and supply of table eggs to various supermarkets, kiosks and small roadside
restaurants through middlemen. Comparatively larger scale intensive poultry production
is also poultry multiplication and distribution centres located in various regions such as
Adama, Bedelle, Awassa, Bonga, Kombolisha, Andessa and Mekele breeding and
rearing centers.

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There are government-owned poultry breeding and rearing centres aimed at providing
improved dual purpose chickens of exotic breeds. The Ethiopian higher education and
research institutions run a number of modern poultry farms with the objectives of
training and research. The institutions distribute fertile eggs, baby chicks and pullets
and cockerels for MoARD, NGOs and individuals. The MoARD operates a total of 14
modern breeding and/ or rearing centres. Some of them have hatchery units, brooder
and layers houses, and veterinary clinic and feed processing units. The centres directly
import fertile eggs and day-old chicks of dual purpose chickens (commonly RIR) as a
parent stock. During the last 5 years (prior to February 2006) the centres suffered from
a shortage of financial resources, lack of replacement breeding stocks and periodic
disease outbreaks.

2.3. Village or Backyard Production

This system is characterized by a low input (scavenging is almost the only source of
diet), low input of veterinary services, minimal level of bio-security, high off-take rates
and high levels of mortality. Here, there is little or no inputs for housing, feeding or
health care. As such it does not involve investments beyond the cost of the foundation
stock, a few handfuls of local grains, and possibly simple night shades, mostly night
time housing in the family dwellings. The poultry are kept in close proximity to the human
population. Mostly indigenous chickens are kept although some hybrid and exotic breeds
may be kept under this system (Nzietcheung 2008). The few exotic breeds kept under
this system are mainly a result of the government extension programs. The size and
composition of flocks kept by households vary from year to year owing to various
reasons such as mortality from diseases, agricultural activities and household income
needs. Mortality in local birds results mainly from disease and predators as well. A
research report indicated that 62% of small farmers reported disease as the major factor
for high mortality while 11% noted predator as a major factor too (Hailemariam, et. al.
2006). Newcastle disease is identified as the major killer in the traditional system while
other diseases including a number of internal and external parasites contribute to the
loss. The incidence of Newcastle disease is widespread during the rainy season. It often
wipes out the whole flocks when it strikes. In particular, it was found that poultry

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production drops by 50% during the rainy season. Based on Dessie et al., (2003),
Dessie et al., (2001), Bush, (2006) and field interviews in Nzietcheung (2008), typical
household flock sizes vary from 2 to 15 chickens. Flocks comprise chicks (0 to 8
weeks), pullets (8 to 20 weeks), cockerels (8 to 20 weeks), mature cocks and layers. In
this system, there exists great variation in the size and composition of bird flocks per
household and it is a common practice to keep all age and functional groups together.

Most of the birds kept under the backyard system belong to indigenous poultry. Rearing
of indigenous poultry offers farmers nutritional, socio-cultural and economic benefits
(Nzietcheung 2008). In backyard poultry, women are mainly responsible for rearing
poultry. The income earned from poultry keeping is used to buy food and clothes for
children. Poultry and egg offer a quality protein source throughout most of the year.
Poultry meat and eggs play a role in food security. The level of consumption and sale of
chickens and eggs varies during the year. According to Aklilu et al. (2007) and field
interview, there is an increase in chicken and eggs consumption during the Ethiopian
New Year, Christmas and Easter holidays (Nzietcheung 2008). The backyard poultry
production systems are not business oriented rather destined for satisfying the various
needs of farm households. In this case, the major purposes of poultry production
include eggs for hatching (51.8%), sale (22.6%), and home consumption (20.2%) while
chickens for sale (26.6%) and home consumption (19.5%).

Backyard poultry move freely between families in the village. Movement can also be
from household to local market for sale, from market to household in case of unsold
chicken or in form of gifts from household to household. This free movement of
backyard poultry could contribute to the transmission of many infectious diseases in the
backyard system (Nzietcheung 2008). Birds are left for scavenging system and
households put little time, and resource for chicken farming. As a result, poultry output
is very low. For instance, local birds lay, on average, 40-60 eggs per annum. Moreover,
egg sizes are small and chick survival rates are extremely low. Village hens brood and
hatch their own eggs. The high chick mortality rates along with the unsuccessful

16
hatching and rearing also accounts for low egg production. For instance, 50% of all
eggs laid are destined for hatching.
The Amhara and Tigray regional states collectively own about 43% of the total national
poultry population and the average number of chickens per household (flock size) is
estimated at 7.2 and 4.4 in Tigray and Amhara regional state respectively, the values of
which are above that of the national average of 4.1. Annual poultry meat and egg
consumption per household is estimated at 2.19 Kg and 1.72 kg respectively in the
Tigray regional state as compared to the national average of 0.12 and 0, 14 kg
respectively. Similarly, the annual live bird and egg sale per household is estimated at 6
chicken and 100 eggs respectively in the Tigray Regional State. At current market price,
these figures represent an annual income of Birr 322 from household poultry, indicating
that village poultry in extremely poor areas of the country play important economic,
nutritional and socio-cultural roles in the livelihoods of the rural households.

According to Gueye (2007) rural households in these areas value most highly the
possibility of cash income from poultry keeping and believe that village poultry act as a
“starter” that enables people to raise themselves and their families from degrading
poverty to a stronger livelihood. According to Aklilu (2007), village poultry is the first step
on the ladder for poor households to climb out of poverty. It is also the only capital that
households have left when livelihoods are threatened by various reasons such as
drought. An important function of poultry is their bartering value. Layers and cocks are
exchanged for farm implements in remote areas where there is no circulation of
currency. For example, in Alaje Woreda, two layers or cocks are bartered for a Maresha
(the traditional ox-plough).

Poultry is a source of self-reliance for women, since poultry and egg sales are decided
by women (Aklilu et al., 2007) and provide women with an immediate income to meet
household expenses such as food. Moreover, poultry are used for strengthening
marriage partnerships and social relationships. In the local culture, particularly in remote
areas of Tigray and Amhara regions, women who can provide men with food like a
chicken dish (Doro wot) are considered to be contributing to a stable marriage. Serving

17
Doro Wot is also a demonstration of respect to guests, thus strengthening a social
relationship which is especially important for poor households. For the poor, poultry
meat is the only special meal they can afford during religious festivities like New Year,
Christmas and Easter. Church leaders and attendants are also served with chicken
dishes. In general, socio-cultural roles are more important in areas with the poorest
market access particularly in the Tigray regional state (Aklilu, 2007).

In contrast, the Afar, Somali, Gambela, Harari, Addis Ababa, Dire Dawa and SNNP
regional/adminstrative states collectively own 20% of the national poultry population.
The average number of chickens per household of these regional states ranges
between 1.4 and 3.9, all of which are lower than that of the national average, indicating
that the role of village poultry in the livelihoods of the rural community of these regional
states is not as important as that of the rural community of northern Ethiopia. In fact,
there seems to be a decline in the role of poultry at the household level in these parts of
the country (CACC, 2003), despite the fact that the market demand and price of live
chickens and eggs experienced during the last 5 years (except at a time of the
outbreak) are high compared to the previous times. The demand for exotic fertile eggs,
chicks, pullets/cockerels and culled layers distributed from the breeding and rearing
centres is also very high (market survey and personal communication with managers of
the breeding centres and chicken traders). Unfortunately however, keeping village
poultry in some areas (example SNNPR) became untenable due to the periodical and
recurrent outbreak of poultry diseases, coupled with predation (Hoyle, 1992).

According to Hoyle (1992) eggs have never been among the top ten animal products
consumed at the household level in rural areas of SNNP Regional State. There are
some case studies in which farmers are asked to rank the importance of poultry against
other categories of food materials in the SNNP Regional State. The results indicated
that both eggs and chickens have never been among the top ten means of survival and
income generation. For poor families, poultry are often one of their few sources of petty
cash and so the birds are kept for sale rather than home consumption (Bush 2006). The
yearly income ranges from ETB 50 to over ETB 300 and is largely under the control of

18
women. This income is significant for poor families with ETB 300 a year representing
25% of the typical annual income of poor families in SNNPR (Bush 2006).
In a study conducted by Dessie, Tadelle and Ogle (1996) on poultry production systems
in the highlands of Ethiopia, it was observed that women look after the birds and the
earnings from the sale of eggs and chicken are often their only source of cash income.
It is therefore, important to actively involve women in the process of poultry
improvement, which has actually been neglected in the past.

Oromiya region has about 34.4% of the total national chicken population and
contributes 36% of the total annual national egg and poultry meat production. The
region’s rural areas constitute about 97.1% of the total regional chicken population while
the urban areas constitute 2.9%. The Regional State is divided into 12 Administrative
Zones of which North, East and West Shewa Zones together account for more than
25% of the total regional chicken population, followed by East and West Welega Zones,
contributing about 18% of the region’s chicken population. Arsi and Jimma Zones each
account for about 12% of the total regional chicken population.

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2.4. Poultry Value Chain Analysis

2.4.1. Marketing chains for traditional poultry production

In the traditional poultry production sector, women are the primary owners and
managers of Chickens. Rural women raise poultry for income generation in order to
purchase basic commodities such as salt, cooking oil and sugar etc. The informal
marketing of poultry and poultry products at open markets is common throughout the
country and both live birds and eggs are sold on road sides. Almost every little shop or
kiosk sells table eggs in Ethiopia. Most indigenous birds are sold live and consumers
take considerable care to ensure that they are buying healthy birds. Farmers may sell
directly to clients at weekly markets or farmers may sell to traders who in turn sell the
product to the consumer. Indigenous birds and eggs can be transported over long
distances to supply urban markets which results in a deterioration in quality. Both eggs

20
and live birds are transported either on foot or using public transportation along with
other bags, sacks of grains, bundles of fire wood etc. The farmers directly sell their
chickens to consumers and/or to small retail traders who take them to large urban
centres. At all the market areas, chicken buyers are made up of traders, direct
consumers, restaurants, farmers and small scale urban chicken keepers. In the primary
markets, producers are the predominant sellers, while in the secondary markets both
producers and traders sell chickens. In the terminal markets, small traders are the
predominant sellers. Small traders operate on a very small scale and the volume of
trade ranges from 10-50 chickens. The current terminal market price of adult live bird is
about Birr 40-60 depending on the size of the bird and market location.

Despite the benefits of village poultry keeping to poor households in most parts of the
country, they face significant market constraints. The distance to the nearest market is a
key factor; the nearer the market, the shorter the marketing chain and the higher the
price received for both live birds and eggs. It is also clear that increased involvement of
intermediaries leads to reduced prices for the producer. A price reduction of 68% for
birds and 25% for eggs was observed in areas with poor market access in Tigray
Regional State compared to those areas with better market access. Transaction costs
may be reduced through improving access to information, infrastructure and
organisation of the poultry producers. However, the costs of transport, credit and
marketing risks should be carefully assessed (Aklilu, 2007). A further constraint to the
marketing of traditional household poultry and products is the fact that there is no
packaging and weight standardisation of market eggs and those traditional storage
methods can lead to deterioration of the quality of table eggs.

In rural Ethiopia, particularly in the Tigray Regional State, both men and women are
involved in the direct selling of poultry. Women make up the majority (40-58%) of the
producers who sell at local markets. Men’s participation in marketing increases with
better market access, and the larger markets in towns are male-dominated. The
participation of gender categories in secondary poultry marketing shows a different
picture. Men make up the major portion of secondary sellers, particularly in northern

21
Ethiopia. In a market survey conducted at 3 different locations in the Tigray Regional
State, it was found that the proportion of women and children in secondary selling was
relatively lower than in primary selling. The proportion of men involved in poultry
marketing tended to increase with greater market access indicating that men become
involved when the benefit becomes larger and access is better. The higher participation
of men as intermediaries can be associated with access to financial resources, ability to
make risks and access to market information.

2.4.2. Marketing chains of breeding and rearing centers

The marketing channel of the breeding and rearing centers consists of the distribution of
fertile eggs, baby chicks, pullets/cockerels and culled layers to the rural farming
communities at a highly subsidized price. For example, exotic pullets of 3 months of age
are sold at Birr 35 from the private commercial poultry farms, whereas exotic pullets of
the same age are distributed at Birr 18 from the government-owned poultry breeding
and rearing centers, indicating a 50% subsidy. In Ethiopia, the priority is given to women
during the distribution of fertile eggs, chicks, pullets/cockerels and culled layers from the
breeding and rearing centers.

2.4.3. Marketing from large scale commercial operations

Formal marketing operations exist in the urban and peri-urban areas where large scale
commercial poultry production takes place. The larger commercial poultry units have
agreements with clients such as Ethiopian Airlines and the larger hotels to supply
poultry meat and eggs. Most poultry meat is sold frozen. The majority of the products
sold within the formal sector come from the commercial industry but a small number of
frozen indigenous chickens are supplied through supermarkets in Addis Ababa.
Dressed poultry carcasses and table eggs are sold to residents and hotels either in
supermarkets or small shops/kiosks. Most of the supply of dressed poultry carcasses to
Addis Ababa supermarkets comes from the Alema poultry farm, but many unidentified
sources also supply the supermarkets.

22
2.5. Domestic Market
The price of live chicken varies depending on sex, colour, size and market location and
the demand for both eggs and live birds is subject to seasonal variations. According to
Hoyle (1992) and Kenea et al (2003), late May to early June is the opening period of the
“rainy season” which coincides with outbreaks of poultry disease, with farmers selling all
or almost all their flocks in the SNNP Regional State and in Eastern Shewa Zone of the
Oromia Regional State. In most parts of the country, prices fall to their lowest annual
level until the end of August. Prices rise for the Ethiopian New Year (September 11) and
for Meskel feast (September 27). The feast which occurs in December and April also
leads to price rises.

In summary, the largest off-take rates from flocks occur particularly during holidays and
festivals and during the onset of disease outbreaks. The latter is a measure to prevent
or minimise expected financial losses from high morbidity and mortality. In such
circumstances, prices fall dramatically since supply is higher than demand. According to
Aklilu (2007) in northern Ethiopia (particularly in Tigray) most strict Orthodox Christians
households – especially in rural areas – abstain from eating animal products during the
Easter fasting period, pre-Christmas fasting period and on Wednesday and Fridays.
There are fluctuations across the months of the year in sales as well as in consumption
of both birds and eggs. The highest bird sales and consumption overlap with the major
social and religious festivals of the year. These are Ethiopian New Year (September),
Ethiopian Christmas (January), Ethiopian Epiphany (January), Ethiopian Easter (April)
and St. Mary’s day (August). The periods of low bird sales and consumption coincide
with the pre-Easter fasting period which lasts about two months from February through
March. The other low sales and consumption period is during the pre-Christmas fasting
period.

23
2.6. Export
The export market for poultry products is very limited due to international competition,
especially from frozen Brazilian broilers that are sold at very low prices. It may be
worthwhile studying consumer preferences in neighboring countries to determine if
niche markets exist for extensively raised indigenous birds and their eggs.

2.7. The Envisaged Project Target Market and Strategies

Regardless of the traditional and commercial production of chickens yet the supply and
the demand gap is not reconciled. Therefore, as any other poultry projects, the
envisaged project will produce different poultry products and distribute to the domestic
market in the short run and to the foreign market in the long run. The project has target
to distribute its products to the following target groups:
 The residents of the town of Lume Wereda, and surroundings.

24
  The different farmers in eastern and southern parts of Oromia
 The different super markets in the country which are not covered so far
 The government workers club
 Hotels and supermarkets
 Small shops
 Other retailers and wholesalers
 Foreign market
 Breeders and etc.
Hence to reach customers different marketing vehicles will be used. Among the different
marketing strategies and tools for promotion and controlling the market of the Poultry
farming will use:
 Both printed and non printed forms of advertising,
 Seasonal discount pricing
 Different marketing segmentation strategies and tactics.
 Electronic advertising through internet, faxes and other technologies.
 Provide transportation service for customers.

2.8. Poultry Feeds Availability

Processed poultry feed consisting mainly of cereal grains, cereal grain by-products and
oilseed cakes are available from feed mills that are largely concentrated in and around
the capital, Addis Ababa. None of the feed mills have pelleting facilities. This is a
serious shortcoming especially for efficient broiler production. The quality of mixed feed
used is generally poor (Yami and Dessie, 1997). Most formulations available do not
have vitamin/mineral premixes. Ingredients and processed feeds vary in nutritive value
and there is no regular quality control mechanism in the country. The lack of feed quality
legislation and laboratory facilities for chemical analysis also contributes greatly to the
poor quality of processed feeds.

The price of raw materials varies according to source of supply, region and season.
However, the prices of formula feeds doubled in the last 5 years, which does not relate
to the costs of the raw materials. Transport costs add significantly to the cost of feed in
areas distant from the sources of supply.

25
The lack of regional feed mills and dependence on supplies of some ingredients from
large cities add to the overall cost of feed in many parts of the country. The absence of
bulk deliveries and storage facilities increases feed costs and in some cases wastage
occurs due to weevil infestation. The envisage project at the beginning will purchase
feed from different producers but as soon as it starts to generate income it will produce
its own feed mill.

2.9. The Production and the Sales Plan For Poultry Farm

Ostrich Products
The World Ostrich Association receives many requests asking about the demand for
Ostrich Meat and Export regulations.  The following represents the Associations
response to these questions.

Meat Demand
Currently the demand for ostrich meat is far in excess of supply.  Current world
production of Ostrich meat is only 12,000 to 15,000 metric tonnes as the industry has
not yet made a full transition from breeder markets to commercial production.  Around
60% of this production is in South Africa.  The remainder of the production is
fragmented. The percentage of the total of each specie and shows very clearly the
contribution of Pork and Poultry in this growth and the loss of market share experienced
by the red meats Beef, Veal, Lamb and Mutton over the period.  Some of this loss of
market share can be attributed to the advice to eat low fat meats; some of the loss of
market share can be attributed to the lower feed efficiency of ruminants.  Ostrich
produce a low fat, red meat and proven, where reared correctly to be the most feed
efficient red meat specie, with excellent feed conversion.  This means that Ostrich can
contribute to the increased demand for meat whilst utilising fewer resources than
competitive specie to produce that meat. 

The ostrich is a particularly promising substitute for traditional red meat animals in that it
produces a fine-grained red meat with similar protein and iron levels to beef, but unlike
beef and lamb for example, fat deposits on the bird are restricted to sub-peritoneal and
subcutaneous layers. There is no visible intramuscular fat (Deeming, 1995), so it is very
easy to separate the fat during processing and produce a very lean red meat. In fact,
26
the fat content of raw ostrich meat is less than half that of raw chicken breast, at about
0.5 percent (Sales and Horbanczuk, 1998).
A claim often made for ostrich meat relative to beef and chicken is that it also has a
lower cholesterol content. Cholesterol has a physiological role in the transport and
digestion of fat, but is synthesised in the liver and found in all the body tissues. The
cholesterol content of the three raw meats is in fact comparable at around 57mg per
100g (Sales et al, 1996). The nutritive value of ostrich meat undeniably makes it worthy
of consideration by consumers looking for healthier alternatives to traditional red meats.
From the retail perspective meat quality is largely affected by the rate of pH decline
following slaughter and the final pH value. Ostrich meat shows a rapid decline in pH
following slaughter and reaches a high final pH value of around 6.0 within six hours or
less depending on the particular muscle. This high final pH value is thought to be due to
a depletion of glycogen reserves through stress prior to slaughter (Sales and
Horbanczuk, 1998).
A high final pH leads to a risk of microbial growth and reduced storage life, and ostrich
steaks are normally vacuum-packed to increase shelf life. Despite this, refrigerated
storage life is only about two or three weeks, and so it is very important to get the meat
to the consumer as soon as possible after slaughter (Sales and Horbanczuk 1998).
Sainsbury keep their ostrich meat on the shelf for only nine days because they are
concerned to be very conservative with regard to possible health issues related to meat
quality.

Hide
The hide of the ostrich is distinctive for the diamond-shaped ‘crown’ containing the highly valued
quill pattern that extends along the back and down to the wingfold and stomach quill. For
grading purposes the crown is divided into four quarters, and for the existing market a grade 1
hide must have three quarters completely free of defects. One quarter may have a defect, often
caused during skinning or by feather pecking, not larger than 40*40mm. The exotic leather
industry utilises the crown for its luxury goods and the remainder of the hide is discarded.

27
In South Africa birds have traditionally been reared extensively and slaughtered at 12-
14 months in order to achieve the requirement of the exotic leather goods industry in the
Far East for a hide of 14.5 sq. ft. It is known that the age of the hide is not crucial to
achieving this market requirement, so achieving slaughter weight at a younger age
through improved nutrition would not affect hide quality. However the level of fat on a
slaughter bird does influence the success of the tanning process. Hides from over-fat
birds are more difficult to clean without damaging the leather, and salting to preserve
the hide before tanning may be less efficient, resulting in microbial damage. The uptake
of chrome in the tanning process is also affected, resulting in greater colour variation.
All of these things will affect the value of a hide for the established market.

Feathers
After plucking the feathers have to be graded into many different categories for the
requirements of the feather market. This is a time-consuming and labour-intensive
process, and is generally only considered to be worthwhile in areas where cheap labour
is plentiful. Under European conditions the feathers are also frequently too
contaminated by soil and dirt to be of much value. For these reasons producers do not
believe feather processing is a viable option, and any contribution to the economic value
of a slaughter bird should be discounted. However, some UK producers do offer
feathers for sale, and may charge £1.50 for a single plume for example It may well be
possible to develop new uses for ostrich feathers in addition to the traditional uses in the
fashion trade and as anti-static dusters in the automotive and electronics industries.

By-products
There is also potential for other value-added products from an ostrich enterprise. The fat
can be rendered to produce an oil which is claimed to have therapeutic value in the
treatment of skin complaints. It is also possible to produce extremely attractive
ornaments from intricately carved and decorated ostrich egg shells. The project under
discussion shall produce day old chickens, poultry products, which include: eggs,
packed chicken, and natural fertilizer. The products will be distributed to the different
customers in different parts of the country. Above all the project will produce chickens of
different types both for domestic market (80%) as well as international market (20%).

28
Moreover a hen and other birds( duke and turkey) starts producing eggs at the age of
19 to 20 weeks, it reaches its sexual peak at the age of 8 weeks and it continues
produce eggs for 52 weeks. The first phase ends at the age of 72 (20+ 52) weeks. In
addition the expiration/ dying or miscarriage during the period of rearing assumed to be
12% per annum or 1% per month. During the first phase each hen assumed to produce
275 eggs per- phase (calculated on the generation of birds at 5% production; this
measurement is called Hen House).
The incubator will hatch 9 eggs at one time and it takes 42 days for ostrich egg to be
hatched and the production will not interrupted all the year and the company will
produce for 365 days a year. Moreover, an ostrich will be mature in three year. After
three year the company will use its own farming for egg. Again on average an ostrich
will lay 60 eggs per year. Additionally, the probability of getting female ostrich is 50%
and premature death is 1%. Moreover, After three year the company will add another 2
additional incubate and thus its production capacity will increased by two folds. Hence
based on the above assumption the company under consideration will have the
following production scheme.

29
2.9.1. Production plan
A. other birds
The Revenue of the Project is assumed to be generated from the sales of the following:
1. Life Chickens sales ( day old)
2. Processed and Packed Chicken’s meat
3. Eggs of chickens
4. Fertilizer’s sales

Production Plan
No Description Year1 Year 2 Year 3 Year 4 Year 5

1 Life chicken (day old) 200,000

Duck 20,000 40,000 30,000 55,000 80,000
Turkey and others 20,000 40,000 30,000 55,000 80,000
Total
2 Eggs of chickens from 2000 hen and one hen can lay 270
egg per year
Total
Expiration of egg , Premature death 1% per annum

Net total
2 Processed and Packed Chicken’s meat

4 Fertilizer’s Production from waste materials 32,000 64,000 96,000 128,000 160,000

30
S/No Description Qty Year 1 Year 2 Year 3 Year 4 Year 5 Year 6-10
1 Ostrich no 77 77 231 236 241 246
2 Egg no 0 0 6930 7069 7210 7354
3 Hide kg 0 0 0 590 603 615
4 Feature kg 0 0 0 295 301 308
5 Others kg 0 0 0 1770 1808 1845
6 Meat kg 0 0 0 3245 3313 3382
B. ostrich farm
Further assumptions
 the probability of egg to be break is 1%.
 the per annum increase in egg is 2% starting from year 4
 the per annum increase in ostrich is 2% starting from year 4
 Starting from the 3rd year the company will export 50% of eggs
 starting from the 4th year the company will slaughter 25% of the ostriches
 On average an ostrich weigh 100kg
 feather weigh 5% of an ostrich
 bone and others 30% of the total weight
 Hide about 10%

2.9.2. Estimated Sales Plan ( on Average)

a. other poultry
No Description Years 1 Unit price in birr Total price
1 Life Chickens 60,000 30 1800000
2 Eggs of birds 560,000 2.05 1148000
3 Processed and Packed Chicken’s meat 0 0 0
4 Fertilizer’s Production from waste materials 32,000 1 32000
Total sales     0
No Description Years 2 Unit price in birr Total price
1 Life Chickens 120,000 30 246000
2 Eggs of birds 1,120,000 2.05 2296000
3 Processed and Packed Chicken’s meat 5000kg 55 275000
4 Fertilizer’s Production from waste materials 64,000 1 64,000
  Total sales      0
No Description Years3 Unit price in birr Total price
1 Life Chickens 160,000 30 4800000
2 Eggs of birds 1,680,000 2.05 3444000
3 Processed and Packed Chicken’s meat 10,000kg 55 550000
4 Fertilizer’s Production from waste materials 96,000 1 96000
  Total sales     0 
No Description Years 4 Unit price in birr Total price
1 Life Chickens 220,000 30 6600000
2 Eggs of birds 2,240,000 2.05 4592000
3 Processed and Packed Chicken’s meat 15,000kg 55 825000
4 Fertilizer’s Production from waste materials 124,800 1 124800
  Total sales      0
No Description Years 5-10 Unit price in birr Total price
1 Life Chickens 260,000 30 7800000
2 Eggs of birds 2,800,000 2.05 5740000
3 Processed and Packed Chicken’s meat 20,000kg 55 1100000
4 Fertilizer’s Production from waste materials 160,000 1 160000
Total Sales      0

B. sales from ostrich products

s/no Description of the product Qty Unit price Total Price

 1 Life ostrich 77 0 0
2 Egg 0 0 0
3 Meat 0 0 0
4 Feather 0 0 0
5 Hide 0 0 0
6 Other by products 0 0 0
Total Sales for year 1      
Year 2
1 Life ostrich 77 0 0
2 Egg 0 0 0
3 Meat 0 0 0
4 Feather 0 0 0
5 Hide 0 0 0
6 Other by products 0 0 0
Total Sales year 2     0
Year 3
1 Life ostrich 231 70,000 16,170,000
2 Egg 6930 400 2,772,000
3 Meat 0 0 0
4 Feather 0 O 0
5 Hide 0 O 0
6 Other by products 0 O 0
Sales of year 3     18,942,000
Year 4
1 Life ostrich 236 70,000 16520000
2 Egg 7069 400 2827600
3 Meat 590 2000 1180000
4 Feather 295 30,000 8850000
5 Hide 1770 45,000 79650000
6 Other by products 3245 30,000 97350000
Total sales year 4     206377600
Year 5
1 Life ostrich 241 70,000 16870000
2 Egg 7210 400 2884000
3 Meat 603 2000 1206000
4 Feather 301 30,000 9030000
5 Hide 1808 45,000 81360000
6 Other by products 3313 30,000 99390000
Total sales     210740000
Year 6-10
1 Life ostrich 246 70,000 17220000
2 Egg 7354 400 2941600
3 Meat 615 2000 1230000
4 Feather 308 30,000 9240000
5 Hide 1845 45,000 83025000
6 Other by products 3382 30,000 101460000
   Total Sales     215116600

3. ORGANIZATIONAL STRUCTURE
The organizational structure of this poultry 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 plant. 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 unit head that is accountable for the general
manager.

Managing Director

Advisor
(Consultant)
General Manager

Production
Department Marketing Department
General Administration Department

As clearly shown in the organizational structure, the integrated project center has
Managing Director, three Departments under the general manager, Advisor. These
departments are the Production Department, The Marketing Department, and The
General Service Department. Under each Department there are different sections which
are undertaking different activities.

Hence the following section deals with the duties and responsibilities of each division.
3.1 The General Manager’s Duties and Responsibilities
 He will plan, organize, direct and control the overall activities of the integrated
project
 He will devise policies and strategies that will enable the project to be profitable.
 He will incorporate modern technological innovation that will facilitate the service
delivery of the project center and increase customer’s satisfaction.
 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.

3.2 General Administration and Finance Department

Is responsible for undertaking the following activities
 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
both the General Manager and other concerned government body.
 Will control the human and non human resources of the Poultry Farm, which
include: effective handling of the different inventories of the Poultry Farm and
devise strategies of controlling against fraud and damage.

3.3 The Marketing Department

 Will handle the overall marketing activities of the organization which include
planning, organizing, directing, and controlling.
 Will develop the marketing strategies for future project center’s development.
 Conduct both foreign and domestic market research for expanding the sales
of the company
 Will develop effective customer handling strategies

3.4 The production Department

It is the core department of the project center and it encompasses sections like: Cutting
(slaughtering), Cleaning, Processing, Packing, Quality Control and Inspection. Thus it
undertakes the following activities:
 Producing life chicken in sufficient quantity so that the production process is
facilitated.
 Produce eggs in sufficient quantity and make ready for distribution to customers.
 Produce products in different grams so that customers have diversified choices.
 Use modern production and processing technologies that will boast production
and productivities of the envisaged project.
 Produce quality product that will enable the center competent both in the
domestic and international market.
 Control on the quality of raw materials, quality of the product and also the overall
production process.
 Produce products in least cost so that the profitability of the center is guaranteed.
 Since producing good quality is based on using good input, the department will
use strategies and polices that will link the different sub sections i.e. the cutting,
cleaning, processing, packing, quality control and inspection.
 Moreover control over the quality of chicken meat and egg production.
4. FINANCIAL REQUIREMENT
The financial resource is a prime resource for undertaking any activities. Hence for

undertaking business. Hence for implementing this project a total of

55,860,552 Eth birr is required. From this 30% or 16,758,166 birr will be
covered by the promoter of the project while the rest 70% or 39,102,386.4
birr will be covered by financial institutions. Therefore the said amount of finance
is needed for undertaking the following:

4.1. Fixed Investment

4.1.1 Building & Construction

No Description Total cost

1 Poultry rearing
1.1 Chicken Rearing 4,800,000
1.2 Duck and turkey Rearing 4,000,000
1.3 Ostrich Rearing 4,000,000
1.2 Eggs storage section 2,000,000
2 Store and Warehouse 0
2.1 Raw materials store 5000,000
2.2 Processed and packed meat store 5,000,000
3 Employees Residence 800,000
4 Offices 600,000
5 Shop 760,000
5 Parking , fence and green areas and buffer 600,000
zone
Total 0
 4.1.2. Poultry Machines and Equipments
N0 Description Unit Qty Unit cost Total cost
1 Incubators No 5 1000,000 5,000,000
2 Dust Bath “ - 0
3 Egg lying Equip. “ 2000 400 800,000

4 Poultry feeding Equip. “ 5000 80 400,000

5 Equipment for egg collection 2000 20 40,000
6 Container for egg 4000 100 400,000
7 Heat system “ 45 1500 67,500
8 lamps 200 25 5000
9 Refrigerator 10 100,000 1000,000
10 Different other equipments for Lump sum 1500,000
slaughtering house
Total 0
Assumed to be imported or to be purchased from the local market

4. 1.3 Vehicles
No Description Qty Unit Price Total
Price
1 Pick up 1 1000,000 1000,000
2 12 seat van 1 800,000 800,000
3 Generator 1 50,000 50,000
4 Insurance (10%) 0
Total 0

4.1.4 Office Equipments

N Description Qty Unit cost Total cost
o
1 Managerial Tables and chairs 4 5,000 20,000
2 Secretarial chairs 1 1500 1500
3 Computer with its accessories 2 13,000 26,000
 4 Shelf 1 5000 5000
5 Filing Cabinets 1 1000 1000
Total 0

4. 2 Expenses
4. 2.1 Raw Material Purchase
A. Purchase of poultry
The company will first import different types of birds like: chicken, duck,
Turkey, ostriches and others. Especially it will import hen of the following types
which are disease resistant varieties and intial cost or budget.
i. Leg horn
ii. Plymouth rock
iii. Rhodes Island
iv. Sussex
v. New Hampshire
vi. Isa brown and other domestic species

Hence initially it will import 3000 hens.

B. Poultry feeds
Since the production of poultry is divided in phases the estimated consumption is
rounded to a year.
No Description No Qty/Annum Unit price Total Price Remark
 1 Birds’ feed 60,000 17280 quintal 400 birr 6,912,000 80g/hen
2 Some ingredients 500,000
Grand Total 00
C. Medication (estimated in year)
No Description of medication No Qty/Annum Unit Total Cost
cost cost

1 Hens Vaccine and others 60,000 8 0.50 240,000

2 Miscellaneous Vaccinations 60,000 2 1 120,000
Grand Total 0

4.2.2 Salary Expense

No Position No Required Qualification Monthly Annual Salary
salary
In Birr
1 General manager 1 BA in mgt 30000 360,000
2 Purchase and store workers 2 Dip purch 10000 240,000
3 Egg collectors 270 Basic - 1,800,000
4 feed workers 6 10+1 500 36,000
5 Sales workers 2 10+1 500 12,000
6 Cleaners 6 Basic 300 21,600
7 Guard 10 Basic 1000 120,000
8 Accountants 1 BA in Accounting 10,000 120,000
9 Cashers 1 10+2 4000 480,000
10 Drivers 1 8th grade 2000 24,000
11 Daily laborer 100 Unskilled 500 72,000
Total 0 0
Employee Benefits (20%) 657120

Total Salary 0

4.2.3 Other Operating Expenses

No List of Items Qty Unit Unit cost Total annual cost
1 Computer paper 20 Pack 80 1600
2 Staples 10 “ 50 500
3 Pens, pencils, and others 20 Pack 70 1400
4 Detergents 15 Pcs 40 600
5 Uniforms 1000 Pcs 500 500,000
6 Water - - - 12000
7 Electricity - - - 15000
8 Fuel cost - - - 100,000
9 Telephone - - - 3500
10 Repair expense - - - 2500
11 Miscellaneous Costs - - - 200,000
Total 00
4.3. Pre -Service Expense
No Description Cost
1 Project proposal 10,000
2 Licensing fee and others 2000
Total 12,000

4.4. Summary of Financial Requirement and Source of Fund

No Description Cost in
birr
1 Fixed Investment  
1.1 Building &Construction 27,560,000
1.2 Poultry Machines and Equipments 9,212,500
1.3 Office Equipment 0
1.4 Vehicles 2,035,000
Total Fixed Investment Cost 0
2 Operating Expenses
2.1 Purchase 5,000,000
2.2 Poultry feed 0
2.3 Medication cost 0
2.4 Salary Expense 0
2.5 Other operating Expense 0
2.6 Total operating 0

2.6 Pre- Service Expense 12,000

Total cost 0
Contingency (10%) 7,397,664
Total Investment cost 0
Sources of Fund: source of fund to finance the project is planned to be from two
sources. These are promoter’s equity and bank loan. The loan is expected to be
obtained from one of the local lending institutions. Since the project is expected to take
some times to repay all its debts, the bank loan is assumed to obtain on long term credit
basis. Taking the financial position of the promoter into account, equity contribution and
bank loan to finance the total investment outlays of the project are assumed to be 50%
and 50%, respectively. Accordingly, the total financial requirement from the two sources
will be:
%
No Description Amount(in birr)
share
1 Owners Share 50 40,687,152
2 Bank Loan 50 40687152
Total 100 81,374,304
4.5. Loan Repayment Schedule

Year principal Interest Total Annual Remaining

Payment (10%) Payment Balance
0 0 0 0 40687152
1 4068715.2 20343576 24412291.2 36618436.8
2 4068715.2 18309218.4 22377933.6 32549721.6
3 4068715.2 16274860.8 20343576 28481006.4
4 4068715.2 14240503.2 18309218.4 24412291.2
5 4068715.2 12206145.6 16274860.8 20343576
6 4068715.2 10171788 14240503.2 16274860.8
7 4068715.2 8137430.4 12206145.6 12206145.6
8 4068715.2 6103072.8 10171788 8137430.4
9 4068715.2 4068715.2 8137430.4 4068715.2
10 4068715.2 2034357.6 6103072.8 0

4.6. FINANCIAL STATEMENT

1. BALANCE SHEET
Poultry Farm and Meat Processing
Balance Sheet
Meskerem 1, 20xx
Asset
Current Asset  
Cash 22,642,052
Inventory of raw materials 0
Total Current Asset 0
Fixed Asset
Building &Construction 27,560,000
Poultry Machines and Equipments 9,212,500
 Office Equipment 0
Vehicles 2,035,000
Total fixed Asset 0
Total Asset 81,374,304
Liability
Account payable 40687152
Owners Equity
Capital 40,687,152
Total Liability & Owners’ Equity 81,374,304

Summary of sales revenue

Year 1 Year 1 Year2 Year 3 Year 4 Year 5-10

Other birds 0 0 0  0  0
Ostrich 0 0 18,942,000 206377600 425856600
Total 0 0 0 0 0

Description Rate
Cost Deprecation
Building &Construction 27,560,000 0.05 1378000
Poultry Machines and
9,212,500 10 921250
Equipments
Office Equipment 53,500 20 10700
Vehicles 2,035,000 10 203500
Total 38,861,000   2513450

a. INCOME LOSS STATEMENT

Poultry Farm and Meat Processing
Profit /loss statement, projected
Projected for 1-10
Revenue 1 2 3 4 5-10
Total sales 2,980,000 6,235,000 27,832,000 218,519,400 440,656,600
Expenses
Purchase 2500000 3000000 4000000 4500000 5,000,000
Poultry feed 7,412,000 8153200 8968520 9865372 10851909.2
Medication cost 180000 216000 288000 324000 360,000
Salary Expense 1971360 2365632 3154176 3548448 3,942,720
Other operating 418550 502260 669680 753390 837,100
Expense
Deprecation 2513450 2513450 2513450 2513450 2513450
Loan payment 24412291.2 22377933.6 20343576 18309218.4 11188966.8
Lease payment 50,000 50,000 50,000 50,000 50,000
Total Expense 39457651.2 39178475.6 39987402 39863878.4 34,744,146
Profit Before Tax -36,477,651 -32,943,476 -12,155,402 178,655,522 405,912,454
Tax(30% ) 0 0 0 53596656.48 121773736.2
Net Profit -36,477,651 -32,943,476 -12,155,402 125,058,865 284,138,718
The Purchasing, Poultry feed\, medication cost, salary expense and other operating
costs are 50.60,70,80 and 100% in the 1st to 10th year respectively.

Cash flow statement

 Year Year 0 Year 1 Year 2 Year 3 Year 4
Equity Capital 40,687,152        
Loan principal 40687152        
sales 0 2,980,000 6,235,000 27,832,000 218519400
Total cash in flow 81,374,304 2,980,000 6,235,000 27,832,000 218519400
cash payment  0        
Purchase 0 2500000 3000000 4000000 4500000
Poultry feed 0 7,412,000 8153200 8968520 9865372
Medication cost 0 180000 216000 288000 324000
Salary Expense 0 1971360 2365632 3154176 3548448
Other operating
0 418550 502260 669680 753390
Expense
Investment 81,374,304 0 0 0 0
loan repayment 0 24412291.2 22377933.6 20343576 18309218.4
Lease payment 0 50,000 50,000 50,000 50,000
Tax payment 0 0 0 0 53596656.48
Total payment 81,374,304 36944201.2 36665025.6 37473952 90947084.88
Cash surplus / Deficit 0 -33,964,201 -30,430,026 -9,641,952 127,572,315
Cumulative Balance 0 33,964,201 -64,394,227 -74,036,179 53,536,136
Assumptions
 Sales cost and expiration 10% of total cost.
 Feed and medication grow by 20% per annum starting from 5-10
 Salary expense starts to grow by 1% starting from 5-10.
 Operating cost increases by 1% 5-10
 Dep equip 20%
 Dep Building 5%
 Dep of poultry eq 20%

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. Inline with this
environmental policy the envisaged project deemed to mitigate the different impacts that
may be caused by actions of the project. For this, a detailed analysis of environmental
impact of the project together with their mitigation will be included within the EIA reports.

Project Implementation Plan

This project will be implemented upon taking the land required.
Activities Time plan
Land requisition February 2019
Land Acquisition February 2019
Land clearance March 2019
Building and Construction March 2019-21
Import of Machineries March 21
Office structuring May –July 2021
Production September 2019

Future Development& Exit Strategies

Every business undertakings be it large or small should have to have future
development plan. It is a plain fact that business activities are undertook in a dynamic
and turbulent environment. Hence, to overcome or minimize the risks of uncertain
future, businesses should devise effective strategies that enable them to be successful
in their operation. Likewise, Poultry Farm and Processing center has devised strategies
to overcome the future risk of operation. The first strategy is diversification of its
activities to different other business forms. The second future development plan of the
project is expanding its branches in many other parts of the region. The third strategy of
the center is making a joint venture with other similar business undertakings either in
the domestic country or from abroad. The final strategy of the center is selling to other
organization or individuals.

Summary
As clearly the project income statement shows the promoter of the project has
sufficient amount of money that enable him pay the bank loan with in short period of
time and invests in other business of his interest. In general, the financial statement of
the project shows that the project under discussion will cover its entire investment costs
with in short period of time. Hence the promoter of the project has along term plan
engaging in other agro processing business enterprises.