Pre-Feasibility Study BREEDER HATCHERY & POULTRY FARM

TABLE OF CONTENTS

PAGE

I. SUMMARY 100-3

II. FARM DESCRIPTION & APPLICATION 100-4

III. MARKET STUDY AND FARM CAPACITY 100-4

A. MARKET STUDY 100-4

B. FARM CAPACITY & PRODUCTION PROGRAMME 100-8

IV. FARM INPUTS AND UTILITIES 100-9

A. FARM INPUTS 100-9

B. UTILITIES 100-9

V. TECHNOLOGY & ENGINEERING 100-10

A. TECHNOLOGY 100-10

B. ENGINEERING 100-12

VI. MANPOWER & TRAINING REQUIREMENT 100-16

A. MANPOWER REQUIREMENT 100-16

B. TRAINING REQUIREMENT 100-16

VII. FINANCIAL ANLYSIS 100-18

A. TOTAL INITIAL INVESTMENT COST 100-18

B. PRODUCTION COST 100-19

C. FINANCIAL EVALUATION 100-20

D. ECONOMIC BENEFITS 100-22

I. SUMMARY

This profile envisages the establishment of a farm for the rearing of poultry, layering, breeder
and Hatchery with raising capacity of 500,000 heads of poultry and DOCs per annum. Poultry
meat, day old chickens and eggs have become the most important sources of protein in the
human diet by using it directly or after passing through food processing industries.

The major inputs and auxiliary raw materials required are day old chickens, commercial formula
feed, and high quality vaccines which have to be imported.

The present unsatisfied demand for poultry meat and eggs in Addis Ababa is estimated at 7,750
tones and 5,410 tons respectively. The demand is expected to reach at 7,845 tonnes and 11,238
tones for eggs and poultry meat respectively by the year 2020.

The total investment requirement is estimated at Birr 12.84 million, out of which Birr 3.67
million is required for plant and machinery. The plant will create employment opportunities
for 27 persons.

The project is financially viable with an internal rate of return (IRR) of 17.63 % and a net
present value (NPV) of Birr 5.59 million, discounted at 8.5 %.

The poultry farm has a backward linkage effect on animal feed processing industries and a
forward linkage effect on food processing industries. There is also a substantial export potential.
 1. Intro

Although Ethiopia has a vast resource for poultry production, the country is not getting the
required benefits from this sector due to poor productivity of local hens and cocks, undeveloped
production systems and high disease prevalence, among many other reasons. In Ethiopia,
traditional practices continue to dominate domestic poultry production; however, there has been
a shift to commercial production with an increase in small and medium-scale producers to
exploit the urban population demand in the past 20-25 years.

Chickens are the most popular poultry species used for meat and egg production in Ethiopia.
Chicken and chicken products provide a valuable source of protein and income for families.

The trends in the consumption of poultry products are a crucial indicator of opportunities for
investment.

Being the fastest growing economy in Africa and one of the top in the world in the last decade,
Ethiopia provides a vast market opportunity for the poultry sector development. With its highest
GDP growth in addition to being the 2nd largest population in Africa, the country is the perfect
playground and market for poultry production. In addition to this, the geographical location of
Ethiopia makes the country an ideal market.

Table 2: Exotic Chicken Status in Ethiopia.

Breeds in Percent
Years
Indigenous Hybrid Exotic

2010 97.3 0.38 2.32

2012 97 0.58 2.42

2013 96.83 0.8 2.37

2014 96.9 0.54 2.5

2017 94.3 3.21 2.49

 2. BRIEF DESCRIPTION OF PROJECT & PRODUCT

The Breeder Farm and Hatchery is a project of the livestock sector, in which day old chicks
(DOCs) are produced from fertilized eggs of breeders reared on the farm. The unit is proposed to
cater to the demand of poultry meat farmers for production of DOCs. Breeder flock would be
bought and reared on the farm and their fertilized eggs artificially incubated for 18 days in a
Hatchery machine on the same premises to produce DOCs. These DOCs are sold to farmers in
rural and peri-urban areas directly as there is an increasing trend to include poultry meat in diet as
rich source of protein.

The proposed project initiates with the purchase of around 5,000 breeders in year one, having 30%
(1,500) male and 70% (3,500) female quail birds. This size of female quail is increased at a rate of
5% every year going up to 5,000 female chicken breeders in year 5 with 100% capacity. The eggs
produced would be placed in the hatchery machine batch-wise.

The breeder flock would be purchased according to the required egg production per batch. In first
year, the proposed breeder flock would lay eggs that fulfil 65% of the total capacity; the remaining
35% of the hatchery machines’ capacity would be rented out to other farmers who require
incubation services.

The numbers of eggs produced in year one is 930,750 eggs laid by 3,000 female birds. The
production of eggs would be increased by increasing the size of the breeder flock at a rate of 5%
every year would eventually utilize 35% egg capacity of the hatchery machines and rental services
would no longer be offered. After 18 days of incubation of fertilized eggs DOCs will be produced;
these DOCs would be sold immediately to farmers.

The specific requirement of temperature and humidity control in hatchery and feeding, drinking
and lighting system for breeder flock would be monitored regularly. After every 12 months, new
breeder stock would be reared to produce continuous supply of fertilized eggs. The previous
breeder flock would be sold to farmers for slaughtering.

Two days would be spent in proper cleaning, washing, white washing, disinfection and fumigation
prior to the arrival of new flock. During flock rearing, strict measures for bio-security should be
observed at the unit.
 II. MARKET STUDY AND FARM CAPACITY
A. MARKET STUDY
1. Past Supply and Current Demand
Poultry products such as egg, DOCs 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 dishes 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.

2. MARKET ANALYSIS
The marketing of chicken follows traditional channels of distribution. Generally, broilers are
distributed in the market through middlemen (Arti) and wholesalers. The role of Arti is to
identify a farm and negotiate prices. In some cases, the middleman provides day old chicks
and other farm inputs (feed, etc.) to broiler farmers and proposes to buy back mature birds
from them.
Below is a list of the people and business that we will market our chickens and eggs to;
 Households
 Individuals
 Hotels
 Restaurants
 Fast food eateries
 Agriculture merchants

Most of the chickens, DOCs and egg that are supplied to the City Administration’s market come
from other regional states and the number of eggs and chicken that entered the city were
estimated to be 56 million, and 2.1 million, respectively.

According to the unpublished data of the City Administration’s Urban Agriculture Department
(2021), the per capita consumption in Addis Ababa was about 2.28 kg of eggs and 2.5 kg of
poultry meat. Accordingly, considering the total population size of Addis Ababa in 2008 the total
consumption of the products is give in Table 3.1.

Table 3.1
TOTAL EGG AND POULTRY MEAT CONSUMPTION OF ADDIS ABABA ( 2021 )
Egg consumption per person ( kg) 2.28
Population size (head) 3,400,000
Total consumption ( Kg) 7,752,000
Poultry meat consumption per person ( kg) 2.5
Population size (head) 3,400,000
Total Consumption( kg) 8,500,000

As can be seen from Table 3.1, the total current consumption of egg and poultry meat in Addis
Ababa is 7,752 tonnes for egg and 8,500 tonnes for poultry meat.
It is estimated that the poultry population in the Addis Ababa is about 350,000 where most of the
chicken are raised on small scale level in the backyards. The poultry population is insignificant
as compared to the national poultry population, which is estimated at about 63 million.

The existing chicken’s populations in the City are estimated to produce about 2,342 tonnes of
egg and 705 tonnes of poultry meat. The present unsatisfied demand for poultry meat and eggs
in Addis Ababa is estimated at 7,750 tones and 5,410 tonnes, respectively.

3. Projected Demand

The demand for poultry meat is mainly influenced by population growth and income rise. The
1961, 1967 and 1978 population sample survey for Addis Ababa revealed that the population of
Addis Ababa was 0.4, 0.7 and 1.2 million, respectively. The 1984 census put the population of
Addis Ababa at 1.4 million while the 1994 census recorded 2, 112.737 people. There is an
increase of 0.7 million or 50 % increase over a decade period. The annual increase over the
period 1984-1994 is 5 %.

The total population of Addis Ababa in 2021 is estimated to be about 3.4. The population grows
at an average annual growth rate of 4.4%. The city population is estimated to reach 8.8 million in
year 2035. Accordingly, the rapidly increasing population of the city will augment the demand
for poultry products such as egg and poultry meat.
With increasing income or purchasing power, people demand more diversified food products like
poultry products. Therefore, the level of poultry products consumption has a strong association
with the growth of income.

One of the indicators that measure the economic performance of a country and the well being of
the population is GDP. During the period 2005-2015 real GDP growth averaged 5.8% a year,
export grew by about 5% a year, annual inflation averaged about 4% and in year 2021
investment had risen to 16% of GDP.

The positive performance of the Ethiopian economy is expected to continue in the future. As a
result, the market for poultry products may also be expected to increase as economic expansion
lead to a raise in the income level of the population.

Accordingly, the demand for the products is estimated to grow at 2.9% per annum which is
equivalent to the population growth. Table 3.4 shows the projected demand for eggs and poultry
meat in Addis Ababa computed by taking the estimated present demand as a base and applying
an average annual growth rate of 2.9%.

Table 3.4
PROJECTED DEMAND ( IN TONNES)
Year Projected Demand
Eggs Poultry Meat
2023 9610.462 13767.03323
2024 10283.19 14730.72556
2025 11003.02 15761.87635
2026 11773.23 16865.20769
2027 12597.36 18045.77223
2028 13479.17 19308.97629
2029 14422.71 20660.60463
2030 15432.3 22106.84695
2031 16512.56 23654.32624
2032 17668.44 25310.12908
2033 18905.23 27081.83811
2034 20228.6 28977.56678
2035 21644.6 31005.99645
4. Current status of poultry, DOCs and egg in Ethiopia
Table 1. Estimated Numbers of poultry production in Ethiopia by Region
Region Poultry
Tigray 6,317,518
Afar 92,941
Amhara 16,827,119
Oromia 16,668,657
Somale 354,264
Benshangul-Gumuz 884,660
SNNP 7,347,205
Gambela region 229,151
Harari 104,585
Dire Dawa Astedader 129,575
total 48,955,675
Source: CSA (2020a)
In Ethiopia, the term “poultry” is almost synonymous with chicken as other poultry species such
as guinea fowl, geese, turkeys, and ducks are not common in the country.

Chicken production offers considerable opportunities for generating employment, improving

family nutrition, empowering women (especially in rural areas) and ultimately ensuring
household food security. Figure 1 shows a marked increase in the poultry population from 2005
to 2016.

Table 1. Broiler Production Capacity of Major Commercial Poultry Farms in Ethiopia

Table 1. Broiler Production Capacity of Major Commercial Poultry Farms in Ethiopia

Farm Name Boiler Batch Net DOCs Total After Net

 Breeder Broiler (Commercial Mortality of
Flock Size Breeders ) DOCs 5%
Alema Farms 5,000 4 4,600 656,880 624,036
ELFORA 7,500 2 6,900 985,320 936,054
Hage Farm 3,000 3 2,760 394,128 374,422
SW Farm 4,000 3 3,680 525,504 499,229
Bisrate Gebriel Poultry Farm 4,000 1 3,680 525,504 499,229
Elere Farm 6,000 1 5,520 788,256 748,843
Chico Meat 5,000 1 4,600 656,880 624,036
TOTAL 0 4,532,472 4,305,849

Table 1. Estimated Egg Production from Commercial Farms

Farm Name Layer Dual Total Total Eggs Per Total

Breeders Breeders Layers Annum
EthioChicken 120,000 120,000 5,540,400 120 664,848,000
EthioChicken 30,000 30,000 1,385,100 120 166,212,000
ema Farms 7,500 7,500 692,550 246 170,367,300
Gerado Farms 10,000 10,000 923,400 246 227,156,400
Ene Ali Yimer 3,000 3,000 277,020 246 68,146,920
Golden Poultry Farm 4,500 4,500 415,530 246 102,220,380
Hawassa Farm 10,000 10,000 923,400 246 227,156,400
Hawassa Farm 20,000 20,000 923,400 120 110,808,000
Bedele Farm 3,500 3,500 323,190 246 79,504,740
EIAR 3,800 3,800 350,892 246 86,319,432
EIAR 1,700 1,700 78,489 120 9,418,680
Elere Farm 5,000 5,000 461,700 246 113,578,200
TOTAL 87,300 141,700 219,000 12,295,071 1,790,214,048
Commercial Layers
Farm Name Flock Size Mortality Production Number of Productio Total Number
From Flock10% Days Eggs n Rate of Eggs
ELFORA 86,400 77,760 365 28,382,400 80% 22,705,920
Maranatha Poultry Farm 40,000 36,000 365 13,140,000 80% 10,512,000
Debre Holland Poultry farm 40,000 36,000 365 13,140,000 80% 10,512,000
TOTAL 43,729,920
Total egg production in quantity 1,833,943,968
Egg weight in kg 0 .04
Total egg production in kg 73,357,759
Total population 100,000,000
Per capita egg consumption in no. of eggs 18 .339
Per capita egg consumption in kg 0.734

5. Pricing and Distribution

The envisaged farm, as a new entrant into the market, has to penetrate the market and create
awareness and product loyalty first. Therefore, the objective of the pricing policy should be to
gain a foot hold in the market, get a sizable market share and attempt to sustain a reasonable
profitability, which at the initial stage, could only be achieved through charging of lower prices
that could influence users of the product. Accordingly, by taking the price of live chicken in to
consideration Birr 20 per kg of poultry meat or 40 per head is proposed for the envisaged plant.

The product can be sold directly to bulk buyers. For individual buyers existing outlets such as
super markets and specialized food items department stores can be used.

The price of poultry products varies depending on the size of poultry product supply and
demand. Supply and demand are affected by the availability of feed, feed cost, foreign currency,
holidays, fasting seasons and other factors.

The prices indicated below are those captured at the time of preparation of this report, in the third
quarter of 2021.

 Broilers: The price of broiler meat ranges from ETB 60 to ETB 80 per kilo when sold
from a farm. Retailers sell at a price between ETB 110 and ETB 125, depending on the
season or supply.

 DOCs: The price of DOCs ranges from ETB 28 to ETB 30. DZARC sells DOCs and
fertile eggs at ETB 10 per unit, which is three times lower than the market price.

 Pullets: The price of pullets ranges from ETB 180 to ETB 300.

 Table eggs: The price of eggs at producer level ranges from ETB 4.00 to ETB 4.50; at
retail level it ranges from ETB 6.50 to ETB 7.80.

B. FARM CAPACITY AND PRODUCTION PROGRAMME

1. Farm Capacity

The proposed annual capacity of the poultry farm by considering the market study and minimum
economies of scale is rearing 500,000 heads. The production capacity is determined based on
300 days per year operation of the farm.

5.1 Product Mix

This project would generate revenue from sale of day old quail chicks weighing between 6-8
grams at Br. 45 per DOCs, poultry meat at Br. 250 and eggs at Br. 4 per egg.

Additional revenues will be generated through the sale of adult breeders at the end of 12 months
egg laying period.

3.4 Proposed Capacity

The project is proposed to run at a capacity more or less dependent on the capacity of the
Hatcher unit installed in the hatchery machines.

The proposed project capacity of the hatchery unit (incubator plus Hatcher) is on average one
million eggs. 25 hatchery machines, each of 40,000 egg incubating capacity along with 5,000
egg hatching capacity are proposed in the project giving a maximum egg capacity of the
incubating unit. The total incubation process period for quail egg is 18 days; the process is
divided into 15 days in incubator and 3 days in hatcher. The project is based on the capacity of
the Hatcher unit that is 10,000 eggs per batch, in which case, at a time 10,000 eggs can be placed
in the incubator every 3 days. After 15 days in the incubator the eggs would be placed in the
Hatcher for 3 day hatching process.

The proposed project initiates with the purchase of around 5,000 breeders in year one, having 30%
(1,500) male and 70% (3,500) female quail birds. This size of female quail is increased at a rate of
5% every year going up to 5,000 female chicken breeders in year 5 with 100% capacity. The eggs
produced would be placed in the hatchery machine batch-wise.

The breeder flock would be purchased according to the required egg production per batch. In first
year, the proposed breeder flock would lay eggs that fulfil 60% of the total capacity; the remaining
 40% of the hatchery machines’ capacity would be rented out to other farmers who require
incubation services. The numbers of eggs produced in year one is 930,750 eggs laid by 3,000
female birds. The production of eggs would be increased by increasing the size of the breeder flock
at a rate of 5% every year would eventually utilize 35% egg capacity of the hatchery machines and
rental services would no longer be offered. After 18 days of incubation of fertilized eggs DOCs
will be produced; these DOCs would be sold immediately to farmers.

In year 1, a total of 930,750 DOCs would be produced and sold. Additionally, a total of 604,988
eggs would be produced and sold in year 1.

The details of operational and installed capacities according to product mix are provided in the
table below:

Table 1: Installed and Operational Capacities

CALCULATION BASIS
Year 1 Year 2 Year 3 Year 4 Year 5
No. of Female breeders at full capacity 5,000 5,000 5,000 5,000 5,000
Starting capacity utilization 60% 60% 60% 60% 60% 60%
Capacity utilization growth rate 10% 10% 10% 10% 10%
Capacity utilization for the year 100% 60% 70% 80% 90% 100%
Female breeders purchased per year 3,000 3,500 4,000 4,500 5,000
BREEDING
No. of Male Birds 30% birds 1,500 1,500 1,500 1,500 1,500
No. of female breeders 70% birds 3,000 3,500 4,000 4,500 5,000
Total No. of Birds 4,500 5,000 5,500 6,000 6,500
No. of birds/feed consumption (extra 1%) 4,545 5,050 5,555 6,060 6,565
Breeder 6 weeks old cost per bird Brs. 40
Breeders mortality rate 1% 1% 1% 1% 1%
Feed requirement per female bird per day kg 0.035 0.035 0.035 0.035 0.035
Feed requirement per male bird per day kg 0.03 0.03 0.03 0.03 0.03
Total feed requirement per day kg 113.71 132.67 151.62 170.57 189.52
Weight per bag kg 50 50 50 50 50
No. of bags per day bags 2.27 2.65 3.03 3.41 3.79
Cost per bag of feed Rs 1,700 1,785 1,874 1,968 2,066
Total feed cost per day Rs 3,866 4,736 5,683 6,714 7,833
Vaccination expense per annum Brs 2,000 2,200 2,420 2,662 2,928
EGG PRODUCTION
 Egg production percentage 85% 85% 85% 85% 85%
Egg production per day per bird egg 1 1 1 1 1
Number of eggs produced per day eggs 2,550 2,975 3,400 3,825 4,250
1,085,87 1,241,00 1,396,12
Total number of eggs produced per year eggs 930,750 5 0 5 1,551,250
HATCHERY
Egg Time period in incubator/setter days 15 15 15 15 15
Time lapse between batches (time period in
hatcher) days 3 3 3 3 3
Total incubation time period days 18 18 18 18 18
Number of batches per year 60 60 60 60 60
Number of eggs per batch for hatchery 5,429 6,334 7,239 8,144 9,049
Number of eggs placed in hatchery/year eggs 325,763 380,056 434,350 488,644 542,938
(Next 18 days production is taken in next year's process)
Number of eggs placed in market per year eggs 604,988 705,819 806,650 907,481 1,008,313

III. FARM INPUTS AND UTILTIES

A. FARM INPUTS

The principal farm inputs required are chicken for breeding, poultry feed, and medicines.
Chickens and poultry feed required by the plant can be acquired locally. The annual
requirement for farm inputs and the corresponding cost at 100% capacity utilization is given
in Table 4.1. The total annual cost of farm inputs is estimated at Birr 3,740,000.

Table 4.1
Annual Requirement And Cost Estimates Of Farm Inputs
S/N Description UM Qty. Unit price Cost (Birr)
1 egg for hatchery No. 50,000 5 250,000
2 poultry breeders (Female) No. 3,000 250 750,000
3 poultry breeders (Male) No. 1,500 220 330,000
4 Animal feed Tonnes 1810 3320 6,009,200
5 Medicines Kg 50 2000 100,000
Grand Total 7,439,200

B. UTILITIES
The major utilities required are: water for feeding chickens and general purpose, electric power
for lighting and heating. The total yearly consumption of utilities at 100% capacity utilization
rate and their estimated costs are given in Table 4.2. The total annual cost of utilities is estimated
at Birr 195,652.

Table 4.2
Annual Utilities Requirement And Estimated Cost
Sr.No. Description Unit of Qty. Cost Birr
Measurement Unit Total Cost
Cost
1 Water m3 50,000 3.25 162,500
2 Electric power kWh 70,000 0.4736 33,152
Grand Total 195,652

IV. TECHNOLOGY AND ENGINEERING

A. TECHNOLOGY
1. Production Process
Chicken production is typically carried out at so-called complexes. Each complex contains a feed
mill, a hatchery, a processing plant, and chicken farms where the chicks are raised, usually in a
30-40 mi (48.3-64.4 km) radius from the processing plant. But the envisaged farm starts from the
day old chicken from the hatchery and grows them for about six month and sells them.

The chicks live in large houses which hold as many as 20,000 birds. These grow-out houses are
kept at about 85° F (29.4° C) through heating and ventilation controls. The birds are not caged,
and typically they are provided with approximately 0.8 sq ft per bird. The floor of the house is
covered with a dry bedding material such as wood chips, rice hulls, or peanut shells. The birds
are fed a diet of chicken feed, which is typically 70% corn, 20% soy, and 10% other ingredients
such as vitamins and minerals. When the chickens are old enough for slaughter, they are
collected and shipped to the processing plant.

Sick chickens are treated with antibiotics or other medications. These chickens then go through a
withdrawal period before slaughter, to make sure no medication residue remains in their meat.
The chickens are usually watered through nipple drinkers, so that they don't spill and wet their
bedding.
A significant waste produced in chicken farming is the feces of the birds. Because the flocks are
so large, with 100,000 chickens per batch typical for a broiler growing-out farm, the amount of
feces is enormous. So these feces has to be collected and used for fertilizer or bio gas generation
for own energy source, by doing so the environmental effect will be controlled.

2. FARM MANAGEMENT

Farm input required for a unit includes farm equipment (cages, hatchery unit, egg refrigerators
etc), electronic fixtures and other consumer items (feed, vaccines & medicines, clean drinking
water, electricity etc.).

1.1. Proposed quail farm

The breeder of good genetic worth would be purchased from a private farm. A flock of 70%
female, 30% male would be bought every year. The birds would be settled in 5 tier cages. The
cages are required to be equipped with a proper feeding and nipple drinking system, monitored
by the concerned staff.

After one year, a gap of 2 days is required for the preparation of farm to receive the new flock.
During these days, proper cleaning, washing, disinfection and fumigation would be performed
prior to the arrival of new flock. During flock rearing, strict measures for bio-security should be
observed at the unit.

The following practices are suggested to be performed under the supervision of an expert. This
shall protect the flocks from 80% of the diseases and improve farm management:

 Sanitation and disinfection program strictly followed during and after the completion of
one year cycle. Automatic drinkers and feeders should be checked on regular basis for the
functioning.

 Breeders should be given enough space according to their age as less space could give
rise to different complexities.

 Feed should not be stored for long time as it would lose its nutrition and there is a chance
that feed would get fungal and can prove to be poisonous to quail chicks.
  On poultry farm it should be strictly prohibited for employees to keep free range chickens
or any other bird so that disease spread is avoided.

2.2. Purchase of Day Old Chicks

The chicks should be of uniform size, active, alert and bright eyed. The shank or leg covering
(skin) of healthy chicks should appear bright and shiny. Improved and high yielding chicks
should be purchased from reputed farms.

2.3. Brooding

Proper brooding temperature is required to keep the chicks in comfort during rearing period
when they are sensitive to cold and need some artificial heat source to maintain their
normal temperature. Coal or sawdust is burnt for supplying heat at the stage of brooding in the
poultry farm.
2.4. Feeders

It is essential to provide adequate feeder space. Ideally, two pan type feeders are sufficient for 50
birds. Therefore, for 5000 birds, 200 feeders are enough.

2.5. Drinkers

Proper drinking space should be provided to birds. It is necessary to provide extra water during
summer and extremely hot weather. Generally, one large drinker is sufficient for 50 birds. The
feasibility study has therefore taken 100 large drinkers and 50 small drinkers.

2.6. Litter

Litter is spread on the floor to prevent the direct contact with the floor. Straw, rice-
husk and sawdust are generally used for making the litter. It should be dry and free
of moulds. Caked or moldy material should be removed and refilled with fresh
materials. Extensively wet and dusty litter should also not be used. Using new litter
for each flock is good for raising disease-free broiler. Litter can also be resold in the
market.

2.7. Housing and Management of Quail Breeders

The system of housing would be a cage system. The cages would be kept in closed farms. A
concrete floor is essential, and the building should be fulfilling basic requirements, not only to
deter rodents and other pests but also to provide drought-free and well-ventilated, sheltered
accommodation. Canvas-cloth is sometimes hanged over on both sides of the house to prevent
direct sunlight into the cages. The quails should not be exposed to direct sunlight.

A 5 tier high cage system is required. Each unit is about 6 feet in length and 1 foot in width, and
subdivided into 5 subunits. The birds stand on sloping slatted wire mesh floors. The droppings
fall into pull-out trays/conveyor belt. Front and rear of cages are closed by slats. Long narrow
feed troughs are placed in front of the cages and PPC water troughs are placed at the back of the
cages. The eggs roll out under the feed troughs and are collected twice daily, once in the morning
and once in the evening. Commercial egg layers are usually housed in colonies of 10-12 birds
per cage. For breeding purposes, male quails are introduced in the cages in the ratio of 1 to 3
females. In Egg Production, cage specifications are very important for maximum production.

 Easy to transport and move with powerful block system and lockable wheels
 Automatic watering system with high Capacity reservoir and automatic nipples
 Inclined cage bottom for moving eggs to the cage front
 Feeding boxes throughout the tiers
 Manure trays for each tier

2.8. Lighting Management

It has been proved through experiments that light has more importance than temperature in
stimulating quails to lay eggs. A dim light is enough to maintain wakefulness and social activity
in the flock. Electric bulbs of 40 or 60 watts may be used in colony pens. For the light to be
effective it must be turned on before dark and calculated to go off after the day has been
extended to 14 or 16 hours. Control of the light may be by a time switch.

2.9. Practical Feeding

Nutrition is one of the most important factors required to maintain quails in good physical
condition and to obtain normal growth and egg production. Since feed constitutes 60-70%
investment at the farm, for deriving maximum benefit out of quail farming it is necessary to feed
a balanced ration which will have all the nutrients in necessary proportion. There are several
forms in which a balanced ration may be fed to chicken - all dry mash, pellets or crumbs. In
tropics usually dry all mash feeding system is being used.

The local farmers may use the poultry starter and layer diets for their growing and laying chicken
and supplement them with high protein ingredients, such as soybean meal and skimmed milk.
Fast early growth is achieved with high-protein diets. Indigenous chickens, which mature at 5 to
6 weeks of age, respond favorably to higher dietary protein concentration. These high protein
starter feeds will give quick development to growing birds and bring earlier and more consistent
laying process to hens. When there is deficiency of vitamins and minerals in the female chicken
breeders, the chicks obtained from their fertile eggs are usually lean with weak legs. To prevent
this, the breeder females should be provided with optimum minerals and vitamins in their feed

The feed required up to 6 weeks of age is about 500 g per chick, and thereafter it is about 30 g
per bird per day. During the laying period, birds require about 3 kg of feed per kilogram of eggs
at maximum. For birds just prior to maturity, the dietary requirements are similar, except for
calcium and phosphorus. A diet containing 1.25 percent total phosphorus and 3.50 percent
calcium is recommended; this may need to be increased to 3.9 percent. In hot weather when
chickens eat less food but still require calcium to maintain egg production, broken oyster-shell or
limestone grits may be given ad lib. It is better to give high protein and high vitamin feed during
summer. Feeding should be done during the cooler parts of the day to promote feed
consumption.

When the ration contains only plant protein, supplemental methionine and lysine may be
beneficial. The main feed ingredients of feed are Corn, Soybean, Canola, Sunflower meal, Rape
seed meal, Lime stone etc. There are indications that these are the first limiting amino acids for
indigenous chickens. Feed for laying quail should contain 19 percent crude protein with 2 650
M.E. Cal/ kg.

It is important to obtain fresh feed and it should be stored in covered containers with tight fitting
lids in a clean, dry, cool area free from animals and vermin. Feed stored longer than 8 weeks is
subject to vitamin deterioration and rancidity, especially in hot humid tropics.

2.10. Vaccination

Vaccination can be applied to chicks through injections. The medicine can also be
mixed in the water and also through eye. Vaccination is provided to the birds once in
the rearing period and once in the laying period. Average vaccination cost per bird
usually varies between Brs 2-4. The feasibility study has taken vaccination cost at R\Brs 3 per
bird.

2.11. Fumigation & Spraying

It is essential to disinfect all equipment and walls of the broiler house. The rooms should be
white washed and sprayed before the arrival of birds.

Disinfectant solution can be prepared with Phenol, Potassium Permanganate, Carbolic Acid and
Formaline. A solution of Sodium Hydroxide/Caustic Soda with warm water can also be used to
clean the house.

To sanitize the layer farm from germs and insects, it is fumigated with Formaldehyde
Gas, which is produced by putting Formaline on Potassium Permanganate. The rooms
should be sealed for 30 minutes after the fumigation so that the gas infiltrates in every corner of
the room.

2.12. Culling

Culling is the procedure of selection and rejection of unproductive and poor producers. Culling is
a very important job for running layer farm profitably. Poor layer should be culled to minimize
the cost of production. The birds that have laid well for short period but have stopped laying for
one reason or another should be culled out.
3. Incubation Process

3.3. Pre-incubation Egg Care

Successful quail propagation begins in the pre-incubation period. Eggs should be collected twice
daily and more frequently in hot weather. Special care must be taken in collecting and handling
chicken eggs for they are thin-shelled. If egg collection is delayed, the eggshells may get
damaged or crack because of the frequently moving and active birds. Indigenous chicken eggs
can be stored at room temperature for 5-7 days during normal seasons.

Eggs should be of a uniform size as extremely large or small size eggs have low hatchability.
Eggs held for incubation should be kept in a cool, clean, dust-free room at a temperature of 14 +
3ºC (55 + 5ºF) and 70 + 10 percent relative humidity. Eggs should be stored large end up and
they should not be held for more than 12-14 days before being placed in the incubator. The eggs
set in the incubator must be clean. Eggs to be incubated should not be washed; if cleaning is
required, it should be done with a clean abrasive or sandpaper. The egg is mostly water and quail
egg dehydrates more rapidly. Eggs stored in PVC bags may be stored for a longer period of time
(14-21 days) and the hatchability rate would be higher than from unpackaged eggs stored in low
temperature.

3.4. Artificial Incubation

Indigenous chicken eggs can be incubated successfully in standard size commercial incubators.
Indigenous chicken eggs will hatch successfully if they are placed in an incubator in any position
except with the large end down. The incubator should have a fan to provide adequate air
circulation because the developing embryos use oxygen and give off carbon dioxide and heat.
Little ventilation is needed at the beginning but the requirement increases as incubation
progresses. The machine should be equipped to allow automatic turning of all eggs through an
angle of 90 at least 4-6 times per 24 hours. Turning regularly is particularly critical in early
incubation to prevent the embryos from adhering to the shell membrane. Lack of turning during
the first 3 to 4 days will produce some malformed embryos and may have other minor defects.

Fan-ventilation incubators should be set at 37.5 + 0.3 ºC. If the temperature of the incubator
exceeds these recommendations many embryos may die. During the hatching period temperature
should be lowered 0.5 ºC. A relative humidity of about 60 percent is satisfactory during
incubation and should be raised to about 70 percent during the hatching period. The incubation
period is 16 1/2 to 18 days and may range from 16 to 18 days depending upon temperature,
humidity and genetic variability. The developing eggs may be transferred to a separate hatcher
on 15th day of incubation. It takes 10 hours from piping to hatch, and an additional 5 hours for
drying the chick. Then the days old chicks are ready to be distributed to other farmers or to go
into the brooder for rearing.
3.5. Automatic Incubator / Hatchery Controller
The latest microprocessor technology is employed in incubator controller system with high
intelligence and measurement accuracy (±0.1 C). During the process of incubation, temperature
control, over-temperature alarm and egg turning are automatically done by the controller. The
control panel is easy to operate.
3. Source of Technology
Machinery and equipment for poultry rearing and processing plant can be acquired from local
market and Far East countries, etc. through contacts with the commercial attaches of respective
embassies to Ethiopia.
B. ENGINEERING
1. FARM MACHINERY & EQUIPMENT
Various types of farm equipment are needed for feeding, drinking, handling the birds and for
egg artificial incubation and hatching process. The list of required plant machinery and
equipment is given in Table 5.1. The cost of machinery and equipment is estimated at Birr 3.675
million, of which Birr 3.12 millions is required in foreign currency.
Table 5.1
Machinery and Equipment Requirement for Poultry layering with Estimated Costs

Sr. Description Qty. Cost ( Birr)

No No F.C L.C. Total
.
1 Drinking system (set) 255981,250 243,750 1,225,000
2 Feeding system (set) 255881,250 243,750 1,125,000
3 Brooder (set) 255
1,210,000 390,000 1,600,000
4 Manure handling system (set) 255828,750 146,250 975,000
Grand Total 3,901,250 1,023,750 4,925,000
Table 5.2
Machinery Details Incubation and Hatching Plant with Estimated Costs
 s/n Description Unit Unit Cost Total Amount
1 Cages per bird cost (incl. drinkers, feeders etc) 5,601 115.5 646,916
2 Air coolers 4 7,700 30,800
3 Egg storage refrigerator 1 30,800 30,800
4 Hatchery machine (Incubator + hatcher) 2 770,000 1,540,000
5 Generator (25 kVA) 1 445,484 445,484
6 Fans 4 12,500 50,000
7 Lighting bulbs for breeder 193 500 96,500
8 Exhaust fans for breeder 4 25,000 100,000
9 Misc equip (egg trays, chick boxes etc) 50,000
Total Machinery Cost 2,990,500

Table 5.2
OFFICE EQUIPMENT AND FURNITURE
Following tables present the office equipment and furniture/fixtures proposed for the unit:

S/ Unit Total
n Description Unit Cost Amount
1 Computers 1 30,000 30,000
2 UPS (2 kVA) 1 30,000 30,000
3 Computer printer (s) 1 15,000 15,000
4 Telephones 2 1,500 3,000
5 Fax machines 1 15,000 15,000
6 Tables 2 15,000 30,000
7 Chairs 12 12,000 144,000
8 Misc. Furniture 200,000
Total 467,000

V. MANPOWER AND TRAINING REQUIREMENT

A. MANPOWER REQUIREMENT
The total manpower required is 59 persons. Details of manpower and annual estimated labour
cost including the fringe benefits are given in Table 6.1. The total annual manpower cost is
estimated at Birr 2,612,250.
B. TRAINING REQUIREMENT
The poultry rearing technology is simple and does not require any special training. The
supervisors, laborers and veterinary doctor needs a one week orientation in one of the poultry
rearing farms operating in the country. The cost of such training is estimated at Birr 15,000.
Table 6.1
 MANPOWER REQUIREMENT AND ESTIMATED LABOUR COST
Sr. Description No. of Salary, Birr
No Person Monthly Annual
. s
1 Manager 1 52,500 630,000
2 Secretary 1 1700 20,400
3 Production supervisor 1 3,200 38,400
6 Veterinary doctor(diploma level) 1 5,000 60,000
7 Laborer 37 2,500 1,110,000
8 Electrician 1 600 7,200
11 Accountant 1 1,200 14,400
12 Sales/Purchase man 1 900 10,800
15 Store keeper 2 1,000 24,000
16 Cleaner 1 350 4,200
17 Cashier 2 500 12,000
18 Driver 2 1000 24,000
19 Guard 8 1,400 134,400
Sub-Total 59 2,089,800
Employees' benefit (25% of basic salary) 522,450
Total 2,612,250

VI. FINANCIAL ANALYSIS

The financial analysis of the poultry rearing and processing project is based on the data
presented in the previous chapters and the following assumptions:-
Construction period 1 year
Source of finance 30 % equity 70 % loan
Tax holidays 5 years
Bank interest 11.50%
Discount cash flow 11.50%
Accounts receivable 18 days
Raw material local 120 days
Work in progress 120 days
Finished products 30 days
Cash in hand 90 days
Accounts payable 30 days
Repair and maintenance 5% of machinery cost

A. TOTAL INITIAL INVESTMENT COST

The total investment cost of the project including working capital is estimated at Birr 12.84
 million, of which 24% is required in foreign currency. The major breakdown of the total initial
investment cost is shown in Table 7.1.
Table 7.1
INITIAL INVESTMENT COST ( ‘000 Birr)
Sr.No Cost Items Local Cost Foreign Cost Total Cost
1 Land lease value 2,027,016 0 2,027,016
2 Building and Civil Work 4,700,000 0 4,700,000
3 Plant Machinery and Equipment 1,257,374 7,125,125 8,382,499
4 Office Furniture and Equipment 467,000 0 467,000
5 Vehicle 1,800,000 0 1,800,000
6 Pre-production Expenditure* 1,183,706 0 1,183,706
7 Working Capital 1,141,660 0 1,141,660
Total Investment cost 12,576,755 7,125,125 19,701,880
* N.B Pre-production expenditure includes interest during construction ( Birr 547.38 thousand), training ( Birr 15
thousand) and Birr 75 thousand costs of registration, licensing and formation of the company including legal fees,
commissioning expenses, etc.
B. PRODUCTION COST
The annual production cost at full operation capacity is estimated at Birr 17.9 million (see Table
7.2). The raw material cost accounts for 42% per cent of the production cost. The other major
components of the production cost are land lease, depreciation and financial cost which account
for 7 %, 7% and 6.79 % respectively. The remaining 45% is the share of direct labor, utility,
repair, maintenance, labor overhead, other administration cost and other cost.
Table 7.2 Annual Production Cost At Full Capacity ('000 Birr)
Items Cost %
Raw Material and Inputs 7,439,200 42%
Advertising & Promotion 198,000 1%
General & Administrative 213,098 1%
Insurance 300,000 2%
Marketing 297,000 2%
Maintenance 265,000 1%
Professional Fees 280,000 4%
Technology 590,000 3%
Travel, Meals and Entertainment 370,000 2%
Utilities 432,000 2%
Miscellaneous 150,000 1%
Salaries and Benefits 2,612,250 15%
Rent and Overhead 300,000 2%
Land lease cost 2,027,016 11%
Total Operating Costs 8,034,364.00 45%
 Depreciation & Amortization 1,216,356 7%
Cost of Finance 1,193,646 7%
Total Production Cost 17,883,566.37 100%

C. FINANCIAL EVALUATION
1. Profitability
Based on the projected profit and loss statement, the project will generate a profit through out its
operation life. Annual net profit after tax will grow from Birr 1.14 million to Birr 1.68 million
during the life of the project. Moreover, at the end of the project life the accumulated cash
flow amounts to Birr 17.63 million.

2. Ratios
In financial analysis financial ratios and efficiency ratios are used as an index or yardstick for
evaluating the financial position of a firm. It is also an indicator for the strength and weakness of
the firm or a project. Using the year-end balance sheet figures and other relevant data, the most
important ratios such as return on sales which is computed by dividing net income by
revenue, return on assets ( operating income divided by assets), return on equity ( net profit
divided by equity) and return on total investment ( net profit plus interest divided by total
investment) has been carried out over the period of the project life and all the results are found to
be satisfactory.

3. Break-even Analysis
The break-even analysis establishes a relationship between operation costs and revenues. It
indicates the level at which costs and revenue are in equilibrium. To this end, the break-even
point of the project including cost of finance when it starts to operate at full capacity ( year 3) is
estimated by using income statement projection.

BE =Fixed Cost=30 % Sales – Variable Cost

4. Payback Period
The pay back period, also called pay – off period is defined as the period required to recover the
original investment outlay through the accumulated net cash flows earned by the project.
Accordingly, based on the projected cash flow it is estimated that the project’s initial investment
will be fully recovered within 6 years.
5. Internal Rate of Return
The internal rate of return (IRR) is the annualized effective compounded return rate that can be
earned on the invested capital, i.e., the yield on the investment. Put another way, the internal rate
of return for an investment is the discount rate that makes the net present value of the
investment's income stream total to zero. It is an indicator of the efficiency or quality of an
investment. A project is a good investment proposition if its IRR is greater than the rate of return
that could be earned by alternate investments or putting the money in a bank account.
Accordingly, the IRR of this project is computed to be 17.12 % indicating the viability of the
project.

6. Net Present Value

Net present value (NPV) is defined as the total present ( discounted) value of a time series of
cash flows. NPV aggregates cash flows that occur during different periods of time during the life
of a project in to a common measuring unit i.e. present value. It is a standard method for using
the time value of money to appraise long-term projects. NPV is an indicator of how much value
an investment or project adds to the capital invested. In principal a project is accepted if the NPV
is non-negative.

Accordingly, the net present value of the project at 8.5% discount rate is found to be Birr 5.59
million which is acceptable.

D. ECONOMIC BENEFITS
The project can create employment for 27 persons. In addition to supply of the domestic needs,
the project will generate Birr 3.55 million in terms of tax revenue. The poultry farm has a
backward linkage effect on animal feed processing industries and a forward linkage effect on
food processing industries. There is also a substantial export potential.
 Forecast Period
FINANCIAL STATEMENTS 2023 2024 2025 2026 2027
Assumptions
Income statement
Revenue Growth (% Change) 5.0% 4.5% 4.0% 3.5% 3.0%
Cost of Goods Sold (% of Revenue) 45.0% 50.0% 55.0% 60.0% 60.0%
Salaries and Benefits ($000's) 2,612,250 2,612,250 2,612,250 2,612,250 2,612,250
Rent and Overhead ($000's) 300,000 300,000 300,000 300,000 300,000
Depreciation & Amortization (% of PP&E Open Bal) 7.0% 7.0% 7.0% 7.0% 7.0%
Interest (% of Debt Open Bal) 11.5% 11.5% 11.5% 11.5% 11.5%
Balance Sheet
Accounts Receivable (Days) 18 18 18 18 18
Inventory (Days) 120 120 120 120 120
Accounts Payable (Days) 30 30 30 30 30
Debt Issuance (Repayment) ($000's) - (1,763,992) (2,587,586) (2,885,158) (3,216,951)
- - -
 Forecast Period
FINANCIAL STATEMENTS 2023 2024 2025 2026 2027
Income Statement
Reveneue 17,343,319 22,188,509 27,829,304 34,376,373 41,954,563
Cost of Goods Sold (COGS) 7,804,493 11,094,255 15,306,117 20,625,824 25,172,738
Gross Profit 9,538,825 11,094,255 12,523,187 13,750,549 16,781,825
Expenses
Advertising & Promotion 198,000 247,500 321,750 418,275 543,758
General & Administrative 213,098 766,373 996,284 1,295,170 1,683,720
Maintenance 265,000 331,250 430,625 559,813 727,756
Travel, Meals and Entertainment 370,000 462,500 601,250 781,625 1,016,113
Utilities 432,000 540,000 702,000 912,600 1,186,380
Miscellaneous 150,000 187,500 243,750 316,875 411,938
Salaries and Benefits 2,612,250 2,612,250 2,612,250 2,612,250 2,612,250
Rent and Overhead 300,000 300,000 300,000 300,000 300,000
Depreciation & Amortization 1,216,356 1,131,211 1,052,026 978,385 909,898
Interest - 1,193,646 1,355,933 1,058,360 726,567
Total Expenses 5,756,704 5,237,107 5,320,209 4,948,995 4,548,715
Earnings Before Tax 3,782,121 5,857,147 7,202,978 8,801,555 12,233,111

Taxes - - - - -
Net Earnings 3,782,121 5,857,147 7,202,978 8,801,555 12,233,111
 Forecast Period
FINANCIAL STATEMENTS 2023 2024 2025 2026 2027
Balance Sheet
Assets
Cash 2,218,795 6,393,046 10,743,747 16,003,950 24,435,131
Accounts Receivable 855,287 1,094,228 1,372,404 1,695,273 2,068,992
Inventory 2,565,861 3,647,426 5,032,148 6,781,093 8,275,969
Property & Equipment 16,160,159 15,028,948 13,976,921 12,998,537 12,088,639
Total Assets 21,800,101 26,163,648 31,125,220 37,478,853 46,868,732

Liabilities
Accounts Payable 641,465 911,857 1,258,037 1,695,273 2,068,992
Debt 15,000,000 13,236,008 10,648,422 7,763,264 4,546,313
Total Liabilities 15,641,465 14,147,864 11,906,459 9,458,537 6,615,305
Shareholder's Equity
Equity Capital 2,376,515 2,376,515 2,376,515 2,376,515 2,376,515
Retained Earnings 3,782,121 9,639,268 16,842,246 25,643,801 37,876,912
Shareholder's Equity 6,158,636 12,015,783 19,218,761 28,020,316 40,253,427
Total Liabilities & Shareholder's Equity 21,800,101 26,163,648 31,125,220 37,478,853 46,868,732
 Forecast Period
FINANCIAL STATEMENTS 2023 2024 2025 2026 2027
Cash Flow Statement
Operating Cash Flow
Net Earnings 3,782,121 5,857,147 7,202,978 8,801,555 12,233,111
Plus: Depreciation & Amortization 1,216,356 1,131,211 1,052,026 978,385 909,898
Less: Changes in Working Capital 2,779,683 1,050,115 1,316,718 1,634,578 1,494,876
Cash from Operations 2,218,795 5,938,243 6,938,287 8,145,361 11,648,132

Investing Cash Flow

Investments in Property & Equipment - - - - -
Cash from Investing - - - - -

Financing Cash Flow

Issuance (repayment) of debt - (1,763,992) (2,587,586) (2,885,158) (3,216,951)
Issuance (repayment) of equity - - - - -
Cash from Financing - (1,763,992) (2,587,586) (2,885,158) (3,216,951)

Net Increase (decrease) in Cash 2,218,795 4,174,251 4,350,701 5,260,203 8,431,181

Opening Cash Balance - 2,218,795 6,393,046 10,743,747 16,003,950
Closing Cash Balance 2,218,795 6,393,046 10,743,747 16,003,950 24,435,131
 Forecast Period
FINANCIAL STATEMENTS 2023 2024 2025 2026 2027
Supporting Schedules
Working Capital Schedule
Accounts Receivable 855,287 1,094,228 1,372,404 1,695,273 2,068,992
Inventory 2,565,861 3,647,426 5,032,148 6,781,093 8,275,969
Accounts Payable 641,465 911,857 1,258,037 1,695,273 2,068,992
Net Working Capital (NWC) 2,779,683 3,829,797 5,146,515 6,781,093 8,275,969
Change in NWC 2,779,683 1,050,115 1,316,718 1,634,578 1,494,876

Depreciation Schedule
PPE Opening 17,376,515 16,160,159 15,028,948 13,976,921 12,998,537
Plus Capex - - - - -
Less Depreciation 1,216,356 1,131,211 1,052,026 978,385 909,898
PPE Closing 16,160,159 15,028,948 13,976,921 12,998,537 12,088,639

Debt & Interest Schedule

Debt Opening 15,000,000 15,000,000 13,236,008 10,648,422 7,763,264
Issuance (repayment) - (1,763,992) (2,587,586) (2,885,158) (3,216,951)
Debt Closing 15,000,000 13,236,008 10,648,422 7,763,264 4,546,313
Interest Expense - 1,193,646 1,355,933 1,058,360 726,567
 Forecast Period
FINANCIAL STATEMENTS 2023 2024 2025 2026 2027
Charts and Graphs

Earnings (2023 - 2027) Cash Flows (2023 - 2027)

$50,000,000 $14,000,000
$12,000,000
$40,000,000
$10,000,000
$30,000,000 $8,000,000
$20,000,000 $6,000,000
$4,000,000
$10,000,000
$2,000,000
$0 $0
2023 2024 2025 2026 2027 2023 2024 2025 2026 2027
-$2,000,000
Revenue Gross Profit -$4,000,000
Earning Before Tax
Operating Investing FInancing

Revenue 17,343,319 22,188,509 27,829,304 34,376,373 41,954,563

Gross Profit 9,538,825 11,094,255 12,523,187 13,750,549 16,781,825
Earning Before Tax 3,782,121 5,857,147 7,202,978 8,801,555 12,233,111

Operating Cash Flow 2,218,795 5,938,243 6,938,287 8,145,361 11,648,132

Investing Cash Flow - - - - -
Financing Cash Flow - (1,763,992) (2,587,586) (2,885,158) (3,216,951)