Faculty Of Business And Economics

Departement Of Entreprenurship and Business

Managemnt

PROJECT PROPOSAL ON CHICKEN AND EGG FARM

Prepared By:

Student Name ID No.

Getachew Reta EDEBM/___/08
Lewognesh Bekele EDEBM/026/08
Meron Adefris EDEBM/028/08
Yemesirach Mengistu EDEBM/039/08

Submmited To: Mr. Abddella

June/2019 ADDIS ABABA

PROJECT TITLE PAGE

Project Name: Addis Youth Poultry Farm PLC

Project Location: Oromiya Region Legetafo Town

Promoters:

1. Getachew Reta

2. Lewognesh Bekele

3. Meron Adefris

4. Yemesirach Mengistu

Purpose of the business: Production of Quality Poultry Products (Eggs and Meat)

Legal Form of the business: Private Limited Company

Project: New Project

2. Executive Summary

Being the largest and most dominant sector in the country’s economy, agriculture constitutes

more than 80% of Ethiopia’s population. However, this sector is still backward and

underdeveloped. Yet, still it’s an area which could give high profitability if it is worked on,

especially in poultry farm area.

Although poultry farm business is one of the widely growing businesses in Ethiopia the

contribution of the sector to the country’s total GDP is currently low compared to its potential,

this sector holds great promise as a source of export diversification and import substitution for

the future. Recognizing that large capital investments are needed to exploit the Ethiopia’s

resources, various incentives are being provided to encourage investment in the agricultural

sector including but not limited to the following: Guarantee facilities for loans by USAID and

other international developmental institutions, Marketing arrangements by the government

specially when engaged in export, Conducive policies and strategies of the government

especially of this sector, so that the agricultural sector makes a significant contribution to

Ethiopia’s development.

Poultry products such as Eggs and chicken meat are among the main sources of protein in

nutrition and should be easily available both in quality and quantity for the ever growing market.

The increase in population coupled with improvement in purchasing power would make the

demand for quality egg and meat products to be increased at a high rate.

Currently the unsatisfied demand for poultry meat and egg in Addis Ababa is estimated at 7750

tons and 5410 tons respectively. The demand is expected to reach at 7845 tons and 11,283 tons

for both eggs and chicken meat respectively in 2020.

All in all, the currently existing attractive environment for investment in the country and the

highly increasing market demand encouraged the Addis Youth Poultry Farm Entrepreneurs to

plan about the poultry farm project in the country.

The Entrepreneurs have diversified experiences and academic background of different felids like,

entrepreneurship, business management, sociology, and sales experience. This modern poultry

farm has planned to rear 15000 chickens per year with rearing 5000 new chickens every 4

months and providing 1,080,000 eggs per year to the market.

The site of the project will be at prime location in Oromiya Region Lege Tafo town on 1 hectare

of land, which will be acquired from the government on lease basis. The envisaged poultry farm

project has consumed total initial investment cost of Birr 862,000 of which 30% (Birr 258,600)

will be acquired from bank loan, and the remaining 70% is equity capital. Hence, the feasibility

study is aimed at determining the viability of the poultry farm project by capturing the current

and future demand for chicken meat and egg products in Addis Ababa and its surroundings.

The main findings of this study indicate that on the first year of the project it will generate a

gross profit of birr 7,140,000. In addition to that the project will have positive net cash flows

throughout the first year.

Consequently, both from the commercial and financial perspectives, Addis Youth Poultry Farm

is considered to be feasible and profitable. Thus, authorities for financial extension (banks and

credit associations) are expected to play their stake soon in providing the necessary loan for

reasonable time for the envisaged project.

3. Project background and description

3.1 Project background

Despite the everyday growing number of small chicken farm businesses in Ethiopia, there is still

unmet and growing demand for chicken meat and egg products in the urban centers of the

country.

In almost all urban retail markets and supermarkets of Ethiopia poultry products (chicken meat

and eggs) appear to be sold more quickly. Each and every people need chickens and eggs. Eggs

are the ingredient for cake, bread, omelet etc. so, cafes, restaurants, hotels, bakery, community

centers etc needs these poultry products every day. Thus, in addition to the normal household

consumptions the above mentioned other customers has high demand for chicken and eggs as a

result, this project has high prospect for success.

Furthermore, with the growing number of large supermarkets in the city which has a positive

effect for the distribution of poultry products this project identifies the market opportunity in

Addis and its surrounding as a prior potential market.

The ADDIS YOUTH poultry farm company also plans to make its own contribution in terms of

protecting the health and safety of consumers by giving a significant priority and focus for

quality of our products.

3.2 Rationale for the Project

With an increasing number of populations in the country especially in the urban areas there is a

huge gap to meet the equilibrium between the demand and supply as a result of supplier’s failure

to satisfy their customers with their scarce products. Especially, in the case of food business

which is a necessary for daily consumption this unbalance between the demand and supply

should be alleviated or at least reduced.

Chicken and egg is a traditional constituent of the Ethiopian diet and one of the common sources

of daily protein consumption. Although chickens are reared in most households traditionally yet

this barely serves the demand of the household and usually will not be served to the market.

Currently, the societies are facing a supply shortage of the stated products in the country and

trying to get these products with a higher cost on top of that. Having this in mind the intention of

this project is to engage in poultry farming and providing the associated poultry products for the

domestic market with a reasonable price.

In addition Addis Youth Poultry Farm Company is designed to meet the domestic market’s

demand with better quality and sufficient quantity of chicken and egg products with focusing on

the population in Addis Ababa and its surrounding areas.

3.3 Goals of the project

Taking the shortage of supply in poultry and poultry products in the market in to consideration

and having the very importance of these products for the society in every age in mind the Addis

Youth Poultry Farm project is conceived with a primary goal of providing adequate, safe

(hygienic) and high-quality chicken and chicken products(meat and eggs) to all residents and

institutions in Addis Ababa and the surrounding areas at a reasonable prices and in the long run,

to expand the supply of these products to other regions of the country so that the society can be

benefited at large.

3.4 Target Population

The main targets of this project are to wholesalers, retailers, distributors, business institutions

and individuals in Addis Ababa and its surrounding areas. Addis Ababa, the capital city, has

population of nearly 7 million with an annual growth rate of about 3.1%. This population

constitutes 4% of the country’s total population and about 28% the urban population. With this
growing number in population size the demand for poultry products in the daily food

requirements of the city will increase substantially in the coming years. Thus this project will

benefit the targeted population by satisfying their requirements of chicken and chicken products

with the at most quality and quantity.

4. Market and Demand Analysis

4.1 Market Analysis

Agriculture is the basis of Ethiopia’s economy and the most important economic sector in terms

of generation of foreign currency. Its contribution can equally be well expressed at household

level by its role in enhancing income, food security and social status.

The poultry production system in Ethiopia, in respect to marketing situations, can be broadly

categorized into three systems: The urban poultry production system (the city, Addis Ababa, and

regional towns); the peri-urban poultry production system (proximity to Addis Ababa and

regional towns); the rural poultry production system (farmers in the villages).

However in most of the systems, the poultry products markets are dominated by informal

marketing systems. Almost all chicken and egg supply to Addis Ababa is from urban SME

poultry farmers in Addis Ababa and peri-urban poultry farmers located around the city in Oromia

and Amhara Regions

The farms deliver chicken and chicken products to customers or, consumers may collect it at the

producer's gate. Studies indicate that in terms of volume 71% of intra-urban producers sell

chicken and eggs directly to consumers and payment to producers is generally on a monthly

basis. In addition, on the current market most of the poultry farms provide their products to the

market with a relatively high price while there are no standards or quality control mechanisms

exist to safeguard the consumers.

On the other hand, the peri-urban poultry farms include smallholder and commercial poultry

farmers working in the proximity of the city of Addis Ababa and other regional towns.

Currently, Micro and Small poultry farm enterprises, the “Elfora” agro-industry and private

poultry farmers around Addis Ababa are supplying poultry products to the city market.

Nowadays, many investors are interested in participating in the development of the poultry farm

business through the peri-urban system.

SWOT Analysis
SWOT stands for strength, weakness, opportunities and threats and we have made an analysis in

each of these cases as follows.

Strength

• Produce high quality eggs to supplement dietary protein

• Good location and infrastructure

• Good marketing system

• Eggs and chicken are not seasonal products and can be eaten any time of the year

• Poultry farming as business area hasn’t been over-exploited

• Poultry are environmental friendly

Weakness

• Capital intensive. Starting a poultry farm business requires substantial amount of

capital funding.

• Outbreak of disease can ruin entire business

• The smell can be quite disturbing

Opportunities

• Expansion into large scale production and distribution to larger markets

 • Export to neighboring towns

• A large and successful poultry will ensure food security

Threats

• Relatively high competition

• Outbreak diseases

• High cost of poultry feeds

4.2 Demand Analysis

Agriculture is the basis of Ethiopia’s economy and the most important economic sector in terms

of generating of foreign currency. The contribution of livestock to the agricultural economy is

significant and it comes second to coffee in foreign exchange earnings. Its contribution can

equally be well expressed at household level by its role in enhancing income, food security and

social status.

Almost all people in the country enjoy chicken and chicken products such as egg and meat in its

natural form and also use it to make a wide range of food products, including cake, bread,

biscuits, omelets, chicken fries etc.

Although poultry farm in general involves rearing different classifications of birds such as, duck,

goose, chicken, turkey etc, in Ethiopia the vast majority of poultry products used for commercial

and consumption purpose is from chickens. Thus this demand analysis focuses on chicken

related products.

As studies show the present unsatisfied demand for poultry meat and eggs in Addis Ababa is

estimated to be 7,750 tons and 5,410 tons respectively. And the demand is expected to reach at

7,845 tons and 11,238tons for meat and eggs respectively by 2020.
As complementary to these research findings, Addis Youth Poultry Farm company has

conducted additional assessments on the demands and most of the findings proved that poultry

products are in short of supply and the demand for additional diverse products is very high.

The project is planning to produce quality and modern breed chicken and chicken products egg

and meat for the market. These products, though badly needed on the market, are in limited

supply from the existing few poultry farms.

5. Technical Analysis

5.1. Raw materials and input studies

Raw Materials

The main raw materials that are essential for this project are presented as follows.

i) Chicken Feed

The primary raw material required in this project is Chicken feeds. There are different chicken

feed producers in the country such as, Akaki Feed Factory, Ethio feed and Friendship Agro-

Industries. There is a difference in the type of feed for egg producing chickens and chickens for

meat. Thus considering this the feeds will be obtained from suppliers who have specialized in the

area.

ii) Vaccines and drugs

Keeping the health and safety of our products is the main priority of this project. To supply good

quality products for the market having chickens with good health is compulsory. In Ethiopia a

number of vaccines for poultry are produced by one of the well known veterinary vaccine center

named Pan African Veterinary Vaccine Centre which is found in Debre Zeit. The center

produces a number of vaccines for poultry, such as live and inactivated Newcastle disease, Fowl
pox, and Fowl typhoid. Currently the Ethiopian government is registering more and more

veterinary medicines and vaccines. At the moment some of the most important suppliers of

veterinary products are: Equatorial Business Group, East-Africa Pharmaceuticals, Rang vet PLC

and Gas co Trading.

Equipments and Utilities

Beside the above mentioned raw materials some additional equipment are also required for the

operation of this project.

Feeders

Feeders are equipments used in feeding poultry birds. The food is deposited in the feeder and the

birds feed from it. The amount of feeders provided for a poultry farm should be according to the

amount of birds available.

Incubator

An incubator is an instrument used for hatching eggs. Egg hatchery with an incubator can be

described as a means of hatching of eggs in an unnatural way. These means can be employed

when there are many eggs to be hatched and sooner.

Heaters

Heaters are equipments used in regulating and increasing the temperature of the poultry farm

especially during cold weather. These facilities help to keep the birds warm and comfortable

when the weather is cold.

Chick box
The chick box is equipment where the poultry birds are kept for egg laying. It has a roll away

egg tray attached to it so that when eggs are laid, they roll away and the birds will not trample on

the eggs. This particular equipment help in preventing the eggs from damage.

Egg Tray

These trays are tray-like equipments which are used for setting the collected eggs without

damage when or until they are provided for market.

Ventilation Fan

Ventilation fan is equipment used for ensuring maximum ventilation in the poultry farm and it is

used for reducing the temperature of the poultry farm during a hot weather.

Laying Nest

Laying nest is equipment that helps the birds for lying of eggs. One of the advantages of this

equipment is that it increases the egg productivity of the poultry birds.

Egg Scale

This is equipments used in weighing the weight of the eggs. It helps the poultry farmer know the

eggs that are fertile enough for hatchery because it is assumed that an underweight egg does not

have what it take to form a chick.

Water Pots and Drinkers

Clean water is a basic necessity for a healthy growth and digestion of poultry birds just like in

humans. Therefore, the drinkers are equipments used for supplying water to the birds.
Cages and Coops

This poultry equipment is used for keeping poultry birds. Coops and cages are poultry

equipments suitable for small scale poultry farming.

Health and safety materials

In addition to the above mentioned equipments, the use of protective clothing for humans is also

very essential. Some of the protective clothing required for this project are hair caps, rubber

gloves, boots and coverall are required to avoid transmission of unnecessary pathogens or

contamination from the birds to man or from man to the birds.

Poultry farm equipments are available in several farm equipment distributors. The distributors

import these equipments from several companies in abroad, such as Belgium, Italy, the

Netherlands, India, China, etc. The well known importers and suppliers in the domestic market

are Gasco Trading, Wise team PLC and Friendship Agro-Industries which supplies own-made

equipment, like self-designed cages.

5.2 Project Site and Location Selection

The project is located in Oromiya Region Lege Tafo town on 1 hectares of land, obtained from

the regional government on lease basis. This location is chosen taking into account the

availability and reliability of basic infrastructures like telephone lines, asphalted road, power and

water supply, and considering the proximity to target market as well as the favorability of agro

climatic conditions.

In addition, we think it is a spot that could tap a healthy workforce. We also considered

pedestrian traffic and we think a large percentage of them are potential customers.
5.3 Environmental Impact Assessment
This section briefly describes some of the environmental impacts associated with the primary

production of poultry products.

The main environmental issues associated with poultry farming are: the generation of solid

manure and manure slurries, which may pollute surface water and groundwater. In most cases,

the solid manure from chicken droppings is applied to pastures and cultivated land.

Beside this effluents from the farm are generally held in some form of lagoon to allow

sedimentation and biological degradation before they are irrigated onto land.

Manure wastes represent a valuable source of nutrients for fertilizers. However improper storage

and land application of manure and can result in serious pollution of surface waters and

groundwater, potentially contaminating drinking water supplies.

As for many other farming operations, the main environmental impacts associated with all

poultry farm activities are the high consumption of water, the discharge of effluent with high

organic loads and the consumption of energy. Poultry farming requires very large quantities of

fresh water. Water is used primarily for cleaning process of equipments and work areas so as to

maintain hygiene standards. The dominant environmental problem that could be caused by

poultry farm is the discharge of certain quantities of liquid effluent. The effluents generally

exhibit the following properties:

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

 Agents and other chemicals from pesticides and antibiotics;

6. Project Implementation and Management Plan

6.1 Project Implementation

Implementation of the project
First period – Preparation (First Quarter)

1. Look for workers and proper site for the project. The workers shall consist of the following:

 Manager (par time) 1

 Secretary/Cashier (par time) 1

 Poultry Caretaker 1

2. Preparation for the tools, equipment, and necessary documents.

3. Construction of fences and poultry facilities

4. Giving of orientation/training, including the methods/strategies in the operation of the project.

Second Period – Implementation Proper (Second-Third Quarter)

1. Purchase of the chickens and care for theim

2. Distribution/Marketing of the chickens products (eggs)

Third Period – Terminal Period (Fourth Quarter)

1. Assessment/Evaluation of the project

2. Continuity and expansion of the project

3. Preparation of documentary report to be sent to the donor agency

6.2 Project Organization

6.3 Management And Personnel

For any enterprise to succeed, proper and efficient management is essential in order to realize

good returns on investment. Both poultry and pig farming are labor-intensive enterprises. For
 maximum production, efficient labor is required on daily basis. Therefore close supervision is

necessary. Feeding, watering, cleaning and sanitation, observation of diseases and disorders,

collection of products for market and arranging an efficient system of sales must be well

coordinated by a qualified manager.

Management Teams for The Project

The management teams of this project are simply the partners of the business who has held

different positions in the organization.

1. Yemesirach Mengistu

Position- Chief Executive Officer

Role in the project

- As the top manager or the CEO, she is typically responsible for the entire

operations of the poultry. It is her responsibility to implement decisions and

initiatives and to maintain the smooth operation of the poultry, with the assistance

of the other management team.

- Routinely checks the corporation's financial health and integrity.

2. Lewognesh Bekele

Position- Chief Financial Officer

Role in the project

- She is responsible for analyzing and reviewing financial data, reporting financial

performance, preparing budgets and monitoring expenditures and costs.

 -As chief financial officer of the project she will directly report to the CEO

3. Meron Adefris

Position- Chief marketing officer

Role in the project-

- Assessing the existing market for the farm’s products, and in charge of all

marketing activities such as market plan, promotion and expansion.

-Reports directly to the CEO

4. Getachew Reta

Position- Chief Revenue Officer

Role in the project

- Responsible for all revenue generation processes in an organization, and is

ultimately accountable for driving better integration between all revenue-related

areas.

Other Personnel

In addition to the management team, there are also other personnel in the poultry farm which

works in the day to day activity of the farm. These include Cleaners, Security, and a driver. All

these personnel are employed individuals on a monthly payroll.

Table-1 Proposed personnel to carry out the work on these farms

Personnel Number Qualification Remuneration per month

 Manager 1 BA Degree in Management 3500

Finance officer 1 BA Degree in accounting 2800

Marketing officer 1 BA Degree in marketing 2800

Cleaners 2 Primary school 1500

Driver 1 Level-3 driving license 1800

Security guard 1 Senior six 1500

Total 7 13900

Organizational Structure

General
Management

Finance and Secretary

office
administration

Marketing Production & Procurement

Department Maintenance
department

Distribution and Promotion and Quality Repair and Procurement

Sales Market Assurance Maintenance
Developement
7. Financial Analysis

Investment Structure

Item Amount in birr

Land 1,000,000

Building 300,000

Purchase of day old chicken 100,000

Furniture farm tools 10,000

Purchase of other tools 5,000

Preliminary expenses 15,000

Total capital expenditure 1,430,000

Initial working capital 1,000,000

Total investment 2,430,000

Working Capital Provision

Working Capital

Item Cover months Amount in birr

Feeds for chickens 6 180,000

Lobour cost 6 49,200

Drugs and vaccination 6 50,000

Other expense 6 720,800

Total initial working capital 1,000,000

Our project has start up cost and we will need a bank account, we chose our bank to be

commercial bank of Ethiopia because of its proximity in the area. This section of the plan shows

projected startup costs prior to our opening.

Start-up expenses for the project include initial insurance payments covering both general

liability and product liability, pre-launch marketing to cover flyers, a direct mail campaign, and

advertisements in local papers, the development of a website for customer interaction, and the

normal legal expenses for consultation and permitting. Other current assets include office and

store furniture, shelving, a computer, phone system, and tools. Long-term assets include the

computer, printers, delivery van.

In our business, the financing structure and ways of doing it is like the path below.

1) Equity contribution: this cover the land we are using for the poultry, and also the facilities in

the building. The total income will be store rooms, office and constructions as well as the

furnishing part.

2) Personal income of 1 million birr, which will be used to start-up the operations, the hatchery

equipment and other equipment’s needed for the poultry.

Since for a part up business borrowing money from a bank is not advisable for our financing

project. Financing by loan becomes our secondary motive if we can get enough income for the

start up business. When we borrow and use personal income, it is easier to obtain and quicker

than loan. The tax rate is low.

Projected Income statement

Income 1st year 2nd Year 3rd year

Live chicken Sales 300,000 350,000 400,000

Eggs sales 200,000 250,000 300,000

Fertilizers 60,000 70,000 80,000

Total income 560,000 670,000 780,000

Expenses

Feed 180,000 200,000 250,000

Day old chicken 50,000 50,000 50,000

purchase

Laying eggs chicken 50,000 50,000 60,000

purchase

Insurance 1,000 1,000 1,000

Internet 1,000 500 500

Labor salary 8,200 8,200 8,200

Business card 2,000 1,000 500

Advertisement 2,000 1,000 1,000

Other expenses 10,000 10,000 10,000

Consultant 10,000 5,000 5,000

Depreciation 50,000 50,000 50,000

Total expenses 364,200 376,700 436,200

Net income before tax 195,800 293,300 343,800

Taxes 29,370 43,995 515,70

Net income 166,430 249,305 292,230

8. Risk Assessment
Chicken farming has some challenges that need to be attended to with vigor. Below are some of

the common challenges that are faced by farmers:

Financial risks

• Changes in our pricing policies or that of our competitors

• Fluctuation in revenue from distributors and retailers

• Timing of costs related to acquisitions or payments

Health risks

Contagious disease and virus outbreak is very deadly; if one of the chickens should catch the

disease, all of them will be affected and if it's not recognized and treated early it will lead to the

death of all the chickens which is a great loss for the business. And also some of the diseases are

also contagious to human not just between the chickens which will affect the workers and also

those that eat it.

Disease prevalence varies from one area to the other. The problems that may trigger disease

conditions are direct sunlight on egg trays or nests, poor ventilated houses and very high

temperatures in and outside the poultry house, which may weaken egg shells resulting in poor

egg quality. All these conditions will be avoided to the best of our abilities.

Another thing we considered during the risk assessment is the mortality of the chickens which is

inevitable since we are dealing with living things. This can be managed with good management

and has been calculated to range between 5-10%.

Technological risks

Technology is good but they also have their disadvantages. There are normally problems

involved in using technology; the use of the machine that collects eggs may fail to work or spoil,

making the work slow and adding more cost to the business by repairing it.
The cost for electricity is also not easy and some electric problems can lead to fire outrage and

burn the building causing the loss of assets and perhaps the entire business.

Contingency plans

As we considered these risks we have also made contingency plans for unprecedented events or

occurrences. As per the health risks, we will have plans with a veterinary doctor that will have

regular checkups with the chickens while giving them the best environmental conditions.

Another contingency plan we will make is insurance that will protect our assets.

The occurrence of a fire outrage will be curbed by placing fire extinguishers at strategic places.

And in case of financial crises, we may have to resort to getting loans.

 Table of Contents

PROJECT TITLE PAGE ..................................................................................................................................... 2

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