BUSINESS PLAN GROUP ASSIGNMENT

Unity poultry farm

Dessie, Ethiopia

Menafesha sub city

GROUP MEMBERS
1
2
3
4
5
Mr.Muluken
6
7
May, 2015
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9
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Table of Contents page
Executive summary.........................................................................................................................3
1. Description of the farm:............................................................................................................5
2. Market Plan:.............................................................................................................................7
2.1. SWOT analysis:................................................................................................................8
2.2. Customer analysis:............................................................................................................9
2.3. Competitors Analysis:.......................................................................................................9
2.4. Marketing strategy:.........................................................................................................10
2.5. Pricing:............................................................................................................................10
2.6. Promotion:.......................................................................................................................11
2.7. Place (distribution channel):...........................................................................................11
3. Production Plan:.....................................................................................................................12
4. Human Resource Plan:...........................................................................................................14
5. Financial Analysis:.................................................................................................................15
5.1 Investment cost....................................................................................................................17
5.2 Income Statement.................................................................................................................19
5.3. Cash Flow...........................................................................................................................19

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Executive summary

Poultry production is an emerging and important sector that has been contributing progressively
to our economy from the past decade. It is one of the fastest growing and most promising
industries with the brightest future in Ethiopia. This sector playing a very vital role in the
reduction of poverty, malnutrition and unemployment problem of our country. Unity Poultry
Farm business is privately owned starter farm which will be established in Dessie town north
eastern district of Ethiopia. The project will specialize in the production and sale of eggs. The
project will essentially purchase ‘ready to lay’ pullets and raise them through their productive
cycle. The project owner identifies a suitable location for the project and has entered into
discussions in connection with leasing a farm. The farm will stocks pullets of Lohman Brown
breed chickens with raising capacity of 1200 heads of hens per annum in rented land with poultry
house and feed store. The purpose is to satisfy the customer by providing quality product (quality
eggs), maximize profitability. This farm will contribute on supplying quality product eggs to
meet the demand of the customers such as fast food restaurants, whole-sellers (local shops),
hotels, bakery and cafeterias, retailer (traders) and individual users. A market characteristic of the
poultry farm is not very much competitive in the area. The demand of the eggs and poultry meat
is very high but the supplier could not able to satisfy the demand of the customers and
consumers. With a total investment cost of ETB 613,000, this project earns a net profit of ETB
73,900, ETB 88,650 and ETB 104,300 during first three years of production period respectively.

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The Company:

The place of the business will be located in Dessie town particularly at Menafesha sub city. The
numbers of the business founders are 7 in number and their contributions to the initial investment
will begin on September, 2015

The owners are:- Yasin Mohammed,Tadele Wondie,Mulugeta Kinfe,Tamirat Arega,Yeshambel

Aweke,Gedefaw Amanu,Abreham Tesega.All are 5th year veterinary students and they will
graduate next year in DVM.

The partners contribution of initial investment is as follows:

1.Yasin Mohammed……………………………….…..17,515

2. Mulugeta Kinfe………………………………….…..17,515

3. Tadele Wondie……………………………………....17,515

4. Yeshambel Aweke……………………….……….....17,515

5. Gedefaw Amanu……………………………………17,515

6. Tamrat Arega…………………………………….….17, 515

7. Abreham Tesega……………………………………..17,515

Total…………………………………………………..122,600

Loan……………………………………………….….490, 400

Total initial investment…………………………….…613000

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 1. Description of the farm:

Poultry is an emerging and important sector that has been contributing progressively to our
economy from the past decade. Poultry is one of the fastest growing and most hopeful industries
with the brightest future in Ethiopia. This sector plays a vital role in the reduction of poverty,
malnutrition and unemployment problem of our country.

Unity Poultry Farm is new starter of poultry business farm owned by the young candidate
veterinarians who will have degree in veterinary medicine in the next year and now we are doing
our DVM thesis in Kombolcha and Dessie. The project will specialize in the production and sale
of eggs through the Dessie town and other town located closer to Dessie.

We have realized that there is great demand for eggs by hotels, breakfast providers, guest houses,
whole sellers (local shops), Universities and other related entities. These entities usually obtain
their eggs from egg traders who collect eggs from far village markets and customers are
inconvenienced financially as well as time wise and their associated costs and risks.

Unity Poultry Farm wishes to exploit the opportunities presented by engaging in the production
and sale of eggs. The project will begin by renting poultry house and purchasing equipments and
‘ready to lay’ pullets and, which will be kept and nourished at the premises of the project during
the productive phase of their lifespan. The eggs produced will be collected, sorted and thereafter
sold and distributed to the target market of the project which primarily encompasses whole sellers
(shops), fast food restaurants, hotels and bakery/pastry or burger houses around Dessie town and
also make an arrangement place of sell to individual customers/consumers at the get of the farm.
The purpose of this farm is to contribute on supplying quality product eggs to meet the demand
of the customers such as fast food restaurants, whole-sellers (local shops), hotels, bakery and
cafeterias, retailer (traders) and individual users.

Vision:
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The vision of this farm is making U n i t y P o u l t r y F a r m the best supplier of q u a l i t y
p r o d u c t layer farm of the district by satisfying the customer by providing sufficient good
quality product eggs with affordable price.
Mission:

The mission of the project is to contribute towards promoting good healthy and safe food product
eggs for promoting a healthy well balanced eating nature within the society and maximize
profitability and ultimately adding value to the lives of the owner of the project.

Objectives:

Objective of the farm:

 To meet the demand of customer and built strong customer relationship.

 To create the employment opportunities for us and others.
 To contribute to the sustainable economic development of the country.
 Adding value to the lives of the owner with reasonable profitability.

2. Market Plan:

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Marketing is important because of changing demographic patterns. Populations generally move
from the villages into the towns for business and work as a result of rapid growth of urbanization.
There is also change of way of eating habit in the community like increasing use of animal
products like chicken eggs and meats, perhaps leaving fewer people in the main agricultural
production regions. Combined with the general growth in population, this situation provides
improved opportunities for livestock farming communities to grow and sell more of their
products, particularly in the cities or towns, earning more money and being able to raise standards
of living.

Since Dessie town is also the center of South Wollo Zone, so many meeting and training
programs are carried out in this town and there are a lot of projects are starting (opening) and this
increase population in the town for working in the companies (projects) and for daily labor and
this give the opportunities for opening of many fast food restaurants, cafeterias, hotels and shops
(whole sellers). This in turn increase the demand of chicken and eggs very comprehensively way
but there is insufficient suppliers are present in the area.

The marketing efforts will focus on identifying and understanding the ever changing needs and
preferences of the customers in order to satisfy them. The marketing mix will drive the customer
value proposition of the project. The following is an account on the product, price, promotion and
place (distribution) that will be applied to the selected market segment.

The main products of the project will be the eggs produced by the layer birds. The project will
produce good quality eggs and sold by providing the right nutrition and environment condition
for the layers. Other products to be sold by the farm will include the manure resulting from
chicken droppings. Manure is a desirable fertilizer that is highly wanted after by farmers and
piggery farms. Additionally, the project will sell hens (spent layers) that become unproductive
(around 72 weeks).

Marketing arrangements will be made with whole sellers (local shops), restaurants, cafeterias,
bakeries, local hotels, groceries, merchant and higher income families and regular users. This will
ensure regular orders for the eggs.
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 Whole sellers
End users

Rarer Retailers
Layer farm
Farm Restaurants, Hotels

Cafeterias, bakeries

Regular users

2.1 SWOT analysis:

Strength:
 High interest and motivation to the sector
 Skill of diseases control and prevention, vaccination ability
 Quality oriented
 Service oriented
 Seeking opportunities in change
 Convenience: this in terms of being in close proximity to the customers. Customers
usually purchase from suppliers in close proximity to their business in order to cut down
on transportation costs
Weakness:
 Financial resource shortage
 Qualified labor shortage (specialized in poultry husbandry management)
 Bios security problems and lack of land for construction of the farm
Opportunities:
 Good infrastructure in the area (good road facility for transport goods and products,
24hours electricity supply, telecommunication…etc)
 Financial support loan opportunities= Development Bank, Amhara Microfinance Office,
Investment Office and Commercial Bank of Ethiopia.

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  Government is of the view that strengthening competitiveness and promotion of small and
medium-sized enterprises and cooperatives remain cornerstones for the growth of the
economy and the creation of well-mannered work opportunities.
 Great demand for eggs by bakeries/pastries and breakfast providers (fast food
restaurants), hotels, guest houses, whole sellers and other related entities.
Threats:
 Competition of other suppliers of eggs and birds
 The threat from suppliers – in the case of feed, there is a threat of rising feed costs
 Fluctuation in demand, especially the fasting periods bring down consumption radically
 Outbreak of Diseases
 Cold Weather conditions of the area

2.2 Customer analysis:

As we all know that, chicken and egg are very nutritious food items. People use them in the
preparation of products such as chicken burgers, fried egg, egg soup among, Ice Cream and
baked products – these add quality to the lifestyle of consumers. So, there is a great prospect to
being succeeded as being act as producer. The farm will distributed its products two times in a
week to whole sellers (shops) 20%, fast food restaurants25%, hotels10%, bakeries/pastries15%,
retailers 20% and household customers5% (high income families) etc and selling at the get of the
farm5%.

2.3 Competitors Analysis:

It is essential for every business organization to identify its existing competitors their skill,
strength and as well as weakness. Direct competition will emanate from small and emerging
players in the poultry industry that are in the project area and target a similar market as the
project. There are one large and three small scale layer poultry farms around Dessie town and
they are operating egg production as a second farming next to hatchery and growing pullets.
Although there are many existing competitors in the area for marketing like many egg traders
which are collecting eggs from different village markets, there is fail to fulfill the customers

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demand supplying with quality product in the perspective of service. Concerning the traders in
the area who are collecting the products (eggs) from different local village markets, since they are
collecting eggs distant from the town, eggs are not fresh and due to high temperature during
transportation and lack of cool room for storage, there is high tendency of incubation of eggs,
consumers preference buying from these traders is under question and inconvenienced financially
as well as time wise by transportation activities and their associated costs and risks. So, it is not
much difficult to compute for market for this farm by providing its product eggs in its freshness,
cleanness and good quality, cost wise as well as time wise to the customers and also this is a good
opportunity to handle these traders as one of the customer of the farm.

2.4 Marketing strategy:

 Distributing the products eggs and spent layers direct to the customers.
 Will ensure quality product with reasonable price.
 Always search for new quality factors related to the farm products that customers wish to
see in the product.
 Provide training and awareness creation for the customers on the production strategies
which the farm using. This can help to promote farm product easily.
 Sell graded or classified eggs. Proper grading or classification can attract all types of
consumers. This would also enable the consumers to make purchasing decisions on the
egg quality (clean) and size at hand.

2.5 Pricing:

Pricing is the most important factor for this business to compete with competitors to sustain in the
market. Pricing method of the project is simple, only sale it’s product with a limited profit that
means the sale price includes cost plus limited profit. It also provide price discount on a bulk
amount of product and also offer different types of price and product discount in different types
of festival.

2.6 Promotion:

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Advertising is essential for the success and growth of poultry businesses as it will help in order to
successfully identify and attract potential customers as well as build good relationship with them.
It is advisable for farmers to promote their products so that they will appear to be different to
others and appeal to as many people as possible. This project also has some promotional strategy
of advertising through:
 Use of direct contact and call,
 Preparing a leaflet,
 Poster etc.
So that people can easily know about our business. This will increase the demand for our
products.

2.7 Place (distribution channel):

The farm will use personal sales representative for selling the eggs. The sales representative will
communicate through direct contact and calling with customers and collect the orders. As per
their order we will directly supply eggs and chickens to the customers by our farm transportation
(this will be done by contract base agreement with available local transport service owners).

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3. Production Plan

Poultry farming today is a huge business that is split into several operations including hatcheries,
pullet (rearing) farms for egg laying, broiler farm for poultry meat production and layer farms for
egg production. This business plan focus on newly established layer farm raises Lohman Brown
breed layers for table eggs production.

The farm plans to start by buying new stock of 1200 Lohman Brown breeds pullets from
Kombolcha Poultry Breeding and Multiplication Center which is found in Kombolcha town. The
Lohmann Brown is an early maturing hybrid and we should be transferred at their 17 weeks of
age to the laying house early enough to avoid stressing the birds as they come into laying point.
The farm will be started buying and stocking with pullets of 17weeks of age 3 weeks before their
laying point in house with deep litter floor housing system with a flooring space of 4birds/m2 in
300 squ. meter room area. Ventilation controls or climate control will be through natural
ventilation system via wire mesh window and insulation system will be constructed from locally
available materials (bamboo tree) and shade trees to maintain optimum internal house
temperature through the year and four hours of extra lighting to the natural day light by artificial
lighting bulb per day will be used.

Teff straw, wheat straw or wood-shavings are available litter materials in the area. The litter
material in the layer house will be always kept loose, dry and turned every week. Any wet
litter/droppings etc. will be removed and replaced with fresh/clean dry litter.

Good quality concentrate poultry feed will also be purchased from Kombolcha Poultry Breeding
and Multiplication Center. In this case, a total of 34 round feeder of ∅ 45cm and the feeding space
will be 4cm per birds and feed will be given twice in a day and feed consumption per hen housed
is calculated as 116gm of well balanced feed per day. And also fresh, cool and clean drinking
water will be provided for the chickens from the town’s water supplying source where there is no
problem of water supply source in the area and water will be stored in tanks that are not exposed
to hot sun especially in summer. Water will be always available at birds. The farm will use 11
plastic round drinkers having a size of ∅ of 35cm for adequate watering space per bird (1cm/bird).
The reason of using plastic drinker is that, they will not rust therefore they will last longer.

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Provision of good quality water for the chickens is mandatory. This can be achieved by keeping
the drinkers clean through hanging and cleaning it every day and adjusting the water level in it.

A total of 160 laying nest boxes will be provide and one compartment (30 cm wide, 30 cm deep
and 35 cm height) for every 7 birds. Nest boxes (shelves) will be arranged at the middle length
of the house and placed about 50 cm lifted above the floor and fitted with a landing plat form or
perch for the birds to land on before entering the nest. Curtain will be used as the shade to keep
dark nests for encouraging laying eggs in the nest to reduce floor egg number and clean straw or
wood shavings will be used as nest box litter. Also a total of about 180 meter length perches will
be arranged in 7 rows having 24 meter length in the layer house which is 15cm of perching space
per bird is used.

Regular inspection of the stock is always essential and particularly in the period after housing to
ensure that all birds make the transition from rearing farm to laying farm successfully without
any undue stress that will affect their production potential. The health of the flock will be
maintained through:
 Checking daily the health and welfare of stock.
 Practicing good management: using good quality feed, clean water and litter.
 Keeping personal and house hygiene
 Using a good vaccination program.
 Keeping the farm and poultry house limited to visitors
 Keeping poultry sheds and surrounding areas free of vermin and snakes.
 Using all-in-all-out methods of management.

After every batch of spent layers are removed off farm (after 58 weeks of stocking or age of 72
weeks in this case), the dirty litter materials and manure will be removed, walls and floors will be
cleaned and disinfected with available disinfectant and also use insecticide spray and the house
will be ready for receiving next batch. This will take 3 weeks.

The production facilities will include layer house with egg store and equipment store, one
separate feed store and one extra guard tool shed. The farm will start on rent land with chicken

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house area of 0.25 hectare and by buying equipments. The equipments are feeders, drinkers,
thermometers, laying nest box, perches, egg trays and boxes, catching screen, Sprayer, scoop for
feed, weighing balance and other cleaning and hygiene equipments etc.

The production plan indicates the occupation cycle of 52 weeks (2weeks pre laying period,
48weeks production period and 2weeks for cleaning and disinfection) every batch every year
round. Assumptions per year operation of the farm are 7% of cumulative mortality 1200 x 7%=
1116 hens at the end, 110gram feed per day per bird and a total of 297 eggs are the production
capacity per hen housed a total of . From the total egg production 97% and 3% 1st class and 2nd
class eggs respectively. Through this, the total feed required during the production period is
43133 Kg and 1 Kg of it costs ETB 6.75= ETB 291150 and selling price 1st class egg ETB 2.75 x
296777= ETB 816136 and 2nd class eggs ETB 2.25 x 8229 =ETB 18515 and ETB 107 x 1116=
ETB 119970 spent layers.

4. Human Resource Plan:

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In business human resources is one of the most important factors and have a big role in a business
organization. The manager of the farm will work as human resource manager and financial and
administrative activities will be done by him. For maintaining technical work, chickens (layers)
take care, feeding, cleaning drinkers, cleaning working environments, collecting eggs, recording
and reporting and reached the product to the desired customers, the project will have one full time
professional worker and also one guard during night. They should be skillful on their own field.
If additional skill and efficiency needed, training program will be arranged through collaboration
with Agriculture and Rural Development Office experts.

Staffing:-

Ro No position numbers Qualification Monthly estimated Total year estimated

salary salary

1st 2nd 3rd 1st 2nd 3rd

year year year year year year
1 manager 1 DVM 1,300 1,400 1,500 15,60 16,800 18,000
0
2 Operational 2 DVM 1,186 1,246 1,313 14,23 14,952 15,756
officer 2
3 Animal 2 DVM 1,186 1,246 1,313 14,23 14,952 15,756
health officer 2
4 Security 1 Grade 10 500 550 600 6,000 6,600 7,200
guard
Total 6 6,544 6,934 7,352 78,52 83,208 88,224
8

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5. Financial Analysis

The egg production financial projections is an outline of the project key assumptions, a budget of
all the project’s requirement, summary of profit and loss, cash-flow and breakeven. The key
assumptions of production could vary from project to project and project location. They include
the project size, production level, costs, prices and loan. The project would begin by buying of
pullets (layers) that are ready to produce eggs. Pullets of the age 18 weeks shall be purchased
from reputable suppliers. The project will purchase 1200 point of lay pullets which will be kept
as laying hens for a period of 52 weeks occupation cycle and then sold as spent layers. The
assumption of point of lay for the project is at their 20 weeks of age.

The financial analysis of this farm is based on the data presented in the previous chapters and the
following assumptions:-

Construction period 1 year

Source of finance loan from Commercial bank of Ethiopia
Loan repayment period 3 years
Bank interest 8.5%
Repayment loan annually
The total investment cost of the project including working capital is estimated at ETB 613000

Based on the projected profit and loss statement, the project will generate a profit throughout its
operation life. Annual net profit after tax will grow from same number of birds from ETB 54450
to ETB 82425 during the life of the project. And also the project can create employment for at
least 3 persons on farm. In addition to supply of its product to customers/consumers needs, the
project will generate ETB 69775 in terms of tax revenue during these three years.

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5.1 Investment cost

Bank Sheet

money needed for:

Rent house + land ETB 40550

Equipment ETB 56750

short term money

ETB11730
purchase of pullets 0
ETB29115
purchase of feed 0
Other paid costs (health care, elect., water, litter, etc) ETB 12000
Hygiene/bios insecurity materials ETB 4300
Labor ETB 78550
Constant stock of the feed for emergency reasons ETB 7500
Constant amount of cash at hand ETB 5000
Total ETB 515750

Total loan ETB 613000

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1200 layer unit

annual costs
rent house + land rent ETB 35150
Maintenance ETB 3750
interest 8.5 % ETB 1650
ETB
40550
Equipment ETB 56750
depreciation 3 Years ETB 18925
interest 8.5 % ETB 2400
maintenance 2 % ETB 1125
ETB
24475
purchase of pullets ETB 97.5 1200 Pullets ETB 117300
Feed ETB 6.75 43133 Kg ETB 291150
other paid costs (health care, water, lit,) ETB 10 1200 Doses ETB 12000
Hygiene/bios insecurity materials ETB 4300
Salary /labor cost ETB 78525
Constant stock of the feed for emergency reasons ETB 7500
Constant amount of cash at hand ETB 5000
ETB
total 515750
costs of short term money
depreciation 3 Years ETB 171925
interest 8.5 % ETB 21925
ETB
193850

selling
selling of 1st class eggs ETB 2.75 97% 309601 ETB 831450
selling of 2nd class eggs ETB 2.25 3% 9575 ETB 21050
selling of spent layers ETB 107 1116 ETB 119975
selling manure ETB 1950 ETB 1950

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5.2 Income Statement

annual costs annual income

Fixed costs
House + land rent ETB 40,550 selling of eggs ETB 852,475
selling of spent
layers ETB 119,970
Equipment ETB 22,475 Manure ETB 1,950

Variable costs
ETB
purchase of pullets 117,300
ETB
Feed 291,150
other paid costs (health care, water, lit,) ETB 12,000
Hygiene/bios insecurity materials ETB 4,300
Salary /labor cost ETB 78,525
Constant stock of the feed for emergency reasons ETB 7,500
Constant amount of cash at hand ETB 5,000
bank interest short ETB 21,925 Total ETB 974,400
ETB
Sell vat % 127,875
ETB
total costs 665,550

ETB
Profit 308,850

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5.3 Cash Flow

Year 1 Year 2 Year 3

Number of layers 1200 1200 1200
Sale
selling of eggs 852475 903625 957850
selling of spent layers 119975 127175 134800
selling manure 1950 2075 2200

103287 109485
total sale 974400 5 0

Fixed cost
land + house 40550 40550 40550
equipment 22475 22475 22475
Variable costs
purchase of pullets 117300 124350 131800
Feed 291150 308625 327125
other paid costs (health care, water, lit,) 12000 12725 13475
Salary /labor cost 78525 83225 88225
Hygiene/bio security materials 4300 4550 4825
Constant stock of the feed for emergency reasons 7500 7950 8425
Constant amount of cash at hand 5000 5300 5625
Variable costs of interest 21925 23225 24625
Sell vat % 127875 135550 143675

total costs 728625 772300 818625

Gross profit 245825 260575 276225

Loan repayment 171925 171925 171925
Net Profit 73900 88650 104300

Inflation rate 6 %
Mortality rate (cum) 7 %

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