INJIBARA UNIVERSITY
COLLEGE OF AGRICULTURE, FOOD AND CLIMATE SCIENCE
DEPARTMENT OF AGRIBUSINESS AND VALUE
CHAIN MANAGEMENT
Course Title: Project Planning and Analysis
Course Code: AgEc412
PROJECT TITLE: POULTRY PRODUCTION
Group Assignment: Project Plan
Name of group IDno
Tsaga Tamiru 0792/13
Yadesa Misganu 0826/13
Endashaw Gezhagn 0293/13
Agernesh Wondimie 688/12
PROJECT TITLE: POULTRY PRODUCTION
1. INTRODUCTION
1.1 Background/ Project description
Poultry production project refer to the production of meat and egg from broilers and layers
respectively. Poultry egg and meat are important sources of high quality proteins, minerals and
vitamins to balance the human diet. Specially bred egg laying chicken are now available which
have high growth rate and high feed conversion efficiency. Depending upon the farm size, layer
farming can be the main source of family income or source of subsidiary income and
employment.
The project will be profitable due to the demand for meat and eggs due to the reason that the
increase in the urban population requires animal protein supplies. In order to prevent
malnutrition, people will be interested in meat and eggs for protein, hence they will
continue buying both meat and eggs.
1.2. General objective
The main objective of the project is to generate income and make profit through the productionof
eggs and meat.
Specific Objective
To create employment opportunity to the community.
To reduce the problem of malnutrition among household members.
Views,
The project will focus on empowering the youth and other members through gainful ways of
poultry farming initiatives so that they will be able to demonstrate the essential skills, necessary
to function as lifelong productive citizens. The operation of the project will be highly adaptable
to consumers demand
1.3. Location:
MBL Poultry production company, (MBL Co. limited)is a private company based in Nedjo
district 05 kebele engaging in production and marketing of eggs and meat from broiler chicken.
Hence the project will be at 05 kebele
1.4 Products and market of the project;
The project will deal with the following products: eggs, meat, chicken feathers and manure
from broiler [Link] product would sold to different customers include
household ,individuals, hotels ,restaurants and small entrepreneur others as well to different
places like school and city
2. PROJECT APPRAISAL
[Link] aspect.
As it has been explained that the project will be conducted at 05 kebele in Nedjo district, the
area is very beneficial because there are large population can result easy access of cheap labour
for implementing the project smoothly as well there sure market for the products like meat and
eggs. The project expect to employee 8workers both skilled and unskilled labour. Raw materials
such as special feeds for broiler, the project expect to increase number of workers according to
the need of the project.
[Link] aspect.
It is expected that the project will work smoothly with no tension on capital matters because it
has enough fund from too source (from the owners capita and loan from the bank) and from
therevenue which will be obtained from the sales of the broiler produce.
[Link] aspect.
Through provision of employment to the people the project will have increase the
purchasing power of the people by generating income to them through payment of different
salaries which will help in the increase in the country’s economy due to the increase of the
peoples spending, also the project expect to use some part of its net profit for the surrounding
society development such as construction of health center, provision of water supply and other
more hence contribute economically.
2.4. Commercial aspect
The project will stand after the customers wants and need hence the product such as meat and
eggs will be sold to them accordingly for their own health benefit and for the benefit of
thecompany. All the prices of the products will depend to the forces of demand and supply and
thecost of running the project daily.
2.5. Community participation
The project will involve both government and nongovernment institution plus the nearlyvillagers
for through planning on what and how should the project do for their own benefit andthe benefit
of the company
3. PROJECT PREPARATION:
The project is going to last for 5 (five) years starting from 1st december 2017 to 31st May 2023.
The initial capital will be sh. Tsh. 15 million, from which own capital is Tsh. 10 million and
5million as a loan from NMB bank.
This project will be funded from two major sources.
Owner’s equity 10 millions Tshs.
Loan from NMB 5 million Tshs.
3.1 MARKETNG ANALYSIS
3.1.1 .Product
The main products from this project are a high-quality and graded produced in a range of
varieties. By offering a wide range of variety of grades we will be able to meet the demand
of our customers.
3.1.2. Pricing strategy
This is influenced by the competition, the sensitivity of consume. Initially, a penetration pricing
strategy will be used. Thereafter, we will try to cope with the market forces in determining the
appropriate price touse which is both profitable and beneficial to our project.
3.1.3. Distribution strategy
The project expects to purchase one vehicle with 3 tones capacity for carrying firm product from
the field to the warehouse and then to wholesalers, retailers and to individual consumers who
may need large quantity of the product. There will also be direct distribution by carrying out
deliveries to restaurants, motels/hotels, and fast food take away shops.
3.1.4 Promotion and advertising strategy
The communication and promotion of our products will rely on establishing contacts through
personalsales (e.g. Mail samples, telephone calls) and trade show appearances. Becoming part of
the localcommunity and having relationships with local farmers. These target customers will
also help the company with further promotion by providing opportunities for repeat business,
long-term growth and financial stability.
3.1.5 The competition
The company under this project will greatly dedicate its focus to the strengths, weakness,
opportunities and threats of the competitors. The company will make sure it wins its competitors’
strengths and use their weakness to position its product into the market
3.2 ENVIRONMENTAL IMPACT ASSEMENT
The environmental impact assessment will be dealt before the commencement of the project. The
measures related to environmental conservation will be observed. In establishing the project thee
nvironmental aspect will be considered. Bio-security is the term used to describe as an overall
strategy or succession of measures employed to exclude infectious diseases from a production
site. A comprehensive Bio-security program will be considered and the effects of the chemical
on soil and in air will be mitigated.
3.3 FINANCIAL ANALYSIS
The project is expected to use Tshs 15,000,000 as the initial capital available, which include the
amount of capital needed to pay off all initial expenses until the project is self-sustaining. The
company will buy new machine and about 3 acres of land. Currently the company has 1acres of
land and uses unskilled laborers and skilled labor. The company expects to borrow aloan of Tshs
5,000,000, with an interest rate of 17%.
Addition variable cost to the project will include costs of fuel; The Company will employ (in a
contract basis) one skilled labor (accountant) who will be monitoring cash flows of the project.
The project will be paying marketing officers. The number of unskilled labor will be
reducedfrom 6 to 4 laborers.
Therefore the associated fixed costs of the project in Tshs will include motor
vehicleTshs5,000,000, land Tshs 1,500,000. Annual tax rate being 5% of the gross
[Link] value of the motor vehicle after five years will be Tshs 2,100,000
Depreciation outlay of a motor vehicle (Using sum of year digit
year fraction X OC-SV depreciation
1 5/15 x 900,000 300,000
2 4/15 x 900,000 240,000
3 3/15 x 900,000 180,000
4 2/15 x 900,000 120,000
5 1/15 x 900,000 60,000
TOTAL 900,0000
3.4. SWOT Analysis
The table below shows the Strengths, Weaknesses, Opportunities and Treats of the intended
WEAKNESS WEAKNESS
There is shortage of electricity atthe site and this There is shortage of electricity atthe
will make someoperations difficult site and this will make
someoperations difficult
Project members live very far from the pr Project members live very far from t
oject site and thismakes some routine ope he project site and thismakes some r
rationsdifficult outine operationsdifficult
High concentrations of poultry production High concentrations of poultry produ
Cooperation and coordinationamong firm ction
s participants is notdefined Cooperation and coordinationamong
firms participants is notdefined
OPPORTUNITIES THREATHs
The project will create employmentfor Construction costs
many people. High initial investment is requirefor
When the product is advertised wellthe the construction activities
market share will increase hencethe profits There are many competitors for this
will also increase project.
Funding available to assist with
implementation
3.5. CAPITAL INVESTMENT OUTLAY AND FINANCING, (COST PROJECTION).
3.5.1 Initial capital,
activities cost
Purchase of land 1,500,000
Construction of building 2000,000
Purchase of vehicle 5000,000
Purchase of breeding chicks 1000,000
Total initial investment 9,500,000
3.5.2 Operating cost per annum
activities cost
feeds 800,000
Electricity cost 200,000
Water bills 50,000
salaries 700,000
medicine 150,000
Other operating cost 600,000
Total operating cost 2,950,000
The remaining Tshs. 2,550,000 will be injected to the working capital basket.
Revenue projection
Revenue from sales of broiler
Revenue from sales of eggs
Revenue from the manure and feathers of broiler.
3.6A PROJECTED PROJECT’S CASH FLOW OF 6 YEARS WITH r-20%
YEARS 0 1 2 3 4 5
COSTS ,000 ,000 ,000 ,000 ,000 ,000
Purchase of 1500
land
Construction 2000
of building
Purchase of 1000
breeding
chicks
Purchase of 5000
vehicle
Purchase of 2500
machinery
Operating cost 2950 2950 2950 2950 2950
Loan 850 850 850 850 850
payement
(interest)
Tax. (5% of 385 480 457.5 470
revenue)
Total 12450 6685 4280 4257.5 4200 4270
outflows(cost)
Discount 1 0.8333 0.6944 0.5787 0.4823 0.4019
factor, r-20%
Discounted 12450 5570.61 2972.03 2463.81 2025.66 1716.11
cost r-20%
BENEFITS
Sales from 0 3500 4000 3800 4200 5000
broiler
Sales from 0 3700 5000 4800 3500 4000
eggs
Sales from 0 1500 1600 1550 1300 1400
manure and
feathers
Total inflow , 0 8700 10600 10150 9800 10400
(benefits)
Discount 1 0.8333 0.6944 0.5787 0.4823 0.4019
factor, r-20%
Discount 0 7249.71 7360.64 5873.8 4726.5 417976
benefit r-20%
Net benefis -12,450 564.71 3,080.64 1,616.3 526.5 -91
From the cash flow,
Total cost =36,142,500
Total discounted cost =27.197,580
Total benefit =49,650,000
Total discounted benefit =29,390,350
3.7. NET PRESENT VALUE AND BENEFIT COST RATIO.
The table below summaries data to be used in the computations of NPV and BCR,
Years TC TB DF-r=20% DTC DTB
0 12,450,000 - 1 12,450,000 -
1 6,685,000 8,700,000 0.8333 5,570,610 7249710
2 4,280,000 10,600,000 0.6944 297,203 7360640
3 4,257,500 10,150,000 0.5787 2,463,810 5873800
4 4,200,000 9,800,000 0.4823 2,025,660 4726500
5 4,270,000 10,400,000 0.4019 1,716,110 4179760
TOTAL 36,142,500 49,650,000 27,197,580 29,390,350
Where: TC = Total cost
TB = Total benefits
DF = Discounting factor
DTC = Discounted total cost
DTB = Discounted total benefit
3.7.1. NET PRESENT VALUE (NPV),
The NPV of a project is defined as the value obtained by discounting separately for each year;
the cashnet flows accruing throughout the life of the project at a fixed predetermined interest rate
Discount rate (r) being 20%
3.7.1. NET PRESENT VALUE (NPV),
The NPV of a project is defined as the value obtained by discounting separately for each year;
the cashnet flows accruing throughout the life of the project at a fixed predetermined interest rate
Discount rate (r) being20%
Data from the table,
Total discounted cost =27,197,580
Total discounted benefit =29,390,350
Initial investment cost = 12,450,000
NPV=∑Bt/(1+r)t- ∑Ct/ (1+r)t- A0
Where∑Bt/(1+r)t = discounted future benefit,∑Ct/(1+r)t = discounted future cost at time t and
r = theopportunity cost of capital and A0 is the initial cost at year zero.
Discounted B= ∑Bt/(1+r)
Discounted benefit = 29,390,350
Discounted C= ∑Ct/(1+r) t
Discounted cost = 27,197,580
NPV=∑Bt/ (1+r)t- ∑Ct/(1+r)t-AO= -29,390,350-27,197,580=2192770
Since the value ofNPV =2192770 and is positive, then the project is feasible for implementation
and it isaccepted.
3.7.2. BENEFIT COST RATIO (BCR),
BCR =DTB/ (DTC + AO)
=29,390,350 / 27,197,58
=1.08
BCR=1.08
Since the ratio is greater than one, the project is feasible for implementation
.Hence the project is accepted
3.7.3. INTERNAL RATE OF RETURN (IRR),
Year TC TB DF-r=79% DTC DTB
0 12,459,000 - 1 12,450,000 -
1 6,685,00 8,700,000 0.5587 3,734,909.5 4,860,690
2 4,280,000 10,600,000 0.121 1,335,788 3,308,260
3 4,257,500 10,150,000 0.1744 742,508 1,770,160
4 4,200,000 9,800,000 0.09744 415,898 954,520
5 4,270,000 10,400,000 0,05444 196,615.2 565,760
TOTAL 36,142,500 49,650,000 18,875,718.7 7,084,769
The IRR is the discount rate at which the present value of cash inflows is equal to the Present
value of cash outflows and the NPV is zero. The IRR indicates the actual profit rate of the total
investment outlay. It also indicates the maximum loan interest rate that could be paid without
creating any losses for the project.
IRR= R 1 + (R 2-R 1) (NPV1/NPV1 +NPV2)
Discounted rate being79%
NPV2=∑Bt/(1+r)t - (∑Ct/(1+r)t - AO
Discounted B= ∑Bt/(1+r)t=7,084,769
Discounted C= ∑Ct/(1+r)t=18,875,718.7
Initial investment capital= 12,450,000
NPV2=18,875,718.7 -7,084,769= -11,790,949
NPV2=11,790,949
NPV1 = 2,192,770
IRR= R 1+ (R 2-R 1) (NPV1/NPV1 +NPV2)
IRR =20% + (79% - 20%) (2,192,770/ (2,192,770+11,790,949)
IRR = 0.20 + (0.59*0.236)
IRR=0.3392= 33.92%
Therefore the project is feasible at internal rate of return of 33 .92%
4.0. SENSITIVITY ANALYSIS
The unforeseen project’s future worthiness will be tested by using a ‘Risk adjusted discounted
rate’. Thismethod will tell whether the project will be viable to carry despite uncertainties in the
[Link] discounted rate will be added from 20% to 45%
Year TC TB DF-r=45% DTC DTB
0 12,450,000 - 1 12,450,000 -
1 6,685,000 8,700,000 0.6897 4,610,644.5 6,000,390
2 4,280,000 10,600,000 0.4756 2,035,568 5,041,360
3 4,257,500 10,150,000 0,3280 1,396,460 3,329,200
4 4,200,000 9,800,000 0.2262 9,65,874 2,216,760
5 4,270,000 10,400,000 0.1560 5,63,823 1,622,400
TOTAL 36,142,500 49,650,000 22,022,369. 18,210,110
5
Discount rate (r) being45%
NPV=∑Bt/ (1+r) t - (∑Ct/ (1+r) t- A0)
NPV = 18,210,110-22,022,369.5NPV = -3812259
BCR =DTB/ (DTC + AO)
=22,022,369.5/ 18,210,110
BCR = 0.826
Therefore the project will not be worth to carry simply because it has negative NPV of -
3,812,259 and BCR is less than one (0.826) when there change in discount factor.
5. CONCLUSION.
From the above analysis of the project, the measures of project worthiness shows that the projectis worth
to undertake and is profitable, it also provide a lot of remarkable benefit to all thestakeholders abided to
the project through provision of education, employment, food vitamins and improvement of their life then
the project should be undertaken for the benefit of both thestakeholders and the project owner which at
the end will come up with many young entrepreneur from the education gained hence solve the social-
economic problems of the society.