A TITLE OF THE PROJECT: POULTRY PRODUCTION

INDEX NUMBER:

CENTRE: FRIENDS COLLEGE KAIMOSI

NAME OF STUDENT: JEPKOECH FAITH

COURSE NAME: CERTTIFICATE IN GENERAL

AGRICULTURE

EXAM SERIES: NOVEMBER 2023

SUPERVISOR: MR. COLLINS OTIENO

NAME OF THE DEPARTMENT: AGRICULTURE

PRESENTED TO: THE KENYA NATIONAL EXAMINATION

COUNCIL AS PATIAL FULFILMENT

FOR AWARD OF CERTIFICATE IN

GENERAL AGRICULTURE.
DECLARATION

I declare that this research Project is my original work and has never been presented for
examination or any other award of Certificates in any institution and specifically acknowledge
the adaptation from other sources.

NAME OF CANDIDATE: ………………………………...............................

INDEX NO: …………………………………….

Student’s signature; ………………………………………………….

Date; ……………………………………

This proposal has been submitted for the examination purpose with my approval as a college
supervisor.

Mr. ………………………………………………

Friends college Kaimosi.

Signature: …………………………………….

Date: …………………………………………… .
DEDICATION

This booklet would not have been published without the support of the family who gave me
materials, moral and financial support good health and sound mind
AKNOWLEGEMENT

This research project could not have been successful without Mr. Collins Otieno a lecturer at
Friends college Kaimosi who served as my supervisor., Family members who have been my
pillar during this journey, the Kaimosi friend’s college agriculture group, to all academic and
non-academic staff that I directly or indirectly consulted, your contribution has been highly
appreciated.
1.0INTRODUCTION

1.1BACKGROUND/ PROJECT DESCRIPTION

Poultry production project refer to the production of meat and egg from broilers and layers
respectively. Poultry egg and meat are important sources of high quality proteins, minerals and
vitamins to balance the human diet. Specially bred egg laying chicken are now available which
have high growth rate and high feed conversion efficiency. Depending upon the farm size, layer
farming can be the main source of family income or source of subsidiary income and
employment.

The project will be profitable due to the demand for meat and eggs due to the reason that the
increase in the urban population requires animal protein supplies. In order to prevent
malnutrition, people will be interested in meat and eggs for protein, hence they will continue
buying both meat and eggs.
1.2. PURPOSE OF THE PROJECT.:

The main objective of the project is to generate income and make profit through the production
of eggs and meat.

OTHER AIMS,

 To create employment opportunity to the community.

 To reduce the problem of malnutrition among household members.
VIEWS,

The project will focus on empowering the youth and other members through gainful ways of
poultry farming initiatives so that they will be able to demonstrate the essential skills, necessary
to function as lifelong productive citizens. The operation of the project will be highly adaptable
to consumer’s demand

1.3. LOCATION

MBL Poultry production company, (MBL Co. limited) is a private company based in Temeke
district at Mbagala village engaging in production and marketing of eggs and meat from broiler
chicken. Hence the project will be at Mbagala Charambe village.

1.4 PRODUCTS AND MARKET OF THE PROJECT;

The project will deal with the following products: eggs, meat, chicken feathers and manure from
broiler chicken.
The product would have sold to different customers include household, individuals, hotels,
restaurants and small entrepreneur others as well to different places like school and city.
 CHAPTER TWO

2.0 PROJECT APPRAISAL

2.1 TECHNICAL ASPECT.
As it has been explained that the project will be conducted at Mbagala Charambe village in
Temeke district, the area is very beneficial because there are large population can result easy
access of cheap labor for implementing the project smoothly as well their sure market for the
products like meat and eggs.
The project expects to employee 8workers both skilled and unskilled labor. Raw materials such
as special feeds for broiler, the project expect to increase number of workers according to the
need of the project.
2.2 FINANCIAL ASPECT.
It is expected that the project will work smoothly with no tension on capital matters because it
has enough fund from too source (from the owner’s capita and loan from the bank) and from the
revenue which will be obtained from the sales of the broiler produce.
2.3 ECONOMICS ASPECT.
Through provision of employment to the people the project will have increase the purchasing
power of the people by generating income to them through payment of different salaries which
will help in the increase in the country’s economy due to the increase of the peoples spending,
also the project expects to use some part of its net profit for the surrounding society development
such as construction of health center, provision of water supply and other more hence contribute
economically.
2.4 COMMERCIAL ASPECT
The project will stand after the customers wants and need hence the product such as meat and
eggs will be sold to them accordingly for their own health benefit and for the benefit of the
company. All the prices of the products will depend to the forces of demand and supply and the
cost of running the project daily.
2.5 COMMUNITY PARTICIPATION
The project will involve both government and non-government institution plus the nearly
villagers for through planning on what and how should the project do for their own benefit and
the benefit of the company.

CHAPTER THREE
3.0 PROJECT PREPARATION:
The project is going to last for 5 (five) years starting from 1 st January 2015 to 31st December
2020.
The initial capital will be sh. Ksh. 15 million, from which own capital is Ksh. 10 million and
5million as a loan from NMB bank.
This project will be funded from two major sources.

 Owner’s equity 10 million Kshs.

 Loan from NMB 5 million Kshs.

3.1 MARKETNG ANALYSIS

3.1.1. PRODUCT
The main products from this project are a high-quality and graded produced in a range of
varieties. By offering a wide range of variety of grades we will be able to meet the demand of
our customers.

3.1.2. PRICING STRATEGY

This is influenced by the competition, the sensitivity of consume. Initially, a penetration pricing
strategy will be used. Thereafter, we will try to cope with the market forces in determining the
appropriate price to use which is both profitable and beneficial to our project.

3.1.3. DISTRIBUTION STRATEGY

The project expects to purchase one vehicle with 3 tones capacity for carrying firm product from
the field to the warehouse and then to wholesalers, retailers and to individual consumers who
may need large quantity of the product. There will also be direct distribution by carrying out
deliveries to restaurants, motels/hotels, and fast food take away shops.

3.1.4 Promotion and advertising strategy

The communication and promotion of our products will rely on establishing contacts through
personal sales (e.g. Mail samples, telephone calls) and trade show appearances. Becoming part of
the local community and having relationships with local farmers. These target customers will
also help the company with further promotion by providing opportunities for repeat business,
long-term growth and financial stability.

3.1.5 The competition

The company under this project will greatly dedicate its focus to the strengths, weakness,
opportunities and threats of the competitors. The company will make sure it wins its competitors’
strengths and use their weakness to position its product into the market

3.2ENVIRONMENTAL IMPACT ASSEMENT

The environmental impact assessment will be dealt before the commencement of the project. The
measures related to environmental conservation will be observed. In establishing the project, the
environmental aspect will be considered. Bio-security is the term used to describe as an overall
strategy or succession of measures employed to exclude infectious diseases from a production
site. A comprehensive Bio-security program will be considered and the effects of the chemical
on soil and in air will be mitigated.

3.3FINANCIAL ANALYSIS

The project is expected to use Kshs 15,000,000 as the initial capital available, which include the
amount of capital needed to pay off all initial expenses until the project is self-sustaining.
The company will buy new machine and about 3 acres of land. Currently the company has 1
acres of land and uses unskilled laborers and skilled labor. The company expects to borrow a
loan of Kshs 5,000,000, with an interest rate of 17%.
Addition variable cost to the project will include costs of fuel; The Company will employ (in a
contract basis) one skilled labor (accountant) who will be monitoring cash flows of the project.
The project will be paying marketing officers. The number of unskilled labor will be reduced
from 6 to 4 laborers.
Therefore, the associated fixed costs of the project in Kshs will include motor vehicle Kshs
5,000,000, land Kshs 1,500,000. Annual tax rate being 5% of the gross benefit.
Salvage value of the motor vehicle after five years will be Kshs 2,100,000

Depreciation outlay of a motor vehicle (Using sum of year digit method)

Year Fraction X OC-SV Depreciation
1 5/15 x 900,000 300,000
2 4/15 x 900,000 240,000
3 3/15 x 900,000 180,000
4 2/15 x 900,000 120,000
5 1/15 x 900,000 60,000
Tota 900,000
l

3.4. SWOT ANALYSIS

The table below shows the Strengths, Weaknesses, Opportunities and Treats of the intended

STRENGHTS WEAKNESS
 One of the advantages offered by the  There is shortage of electricity at
project is that it will produce the site and this will make some
chickens, meat and feather of high operations difficult
quality and it will also provide  Project members live very far
continuous supply of chickens to its from the project site and this
customers. makes some routine operations
 Labor is readily available at lower difficult
cost  High concentrations of poultry
 Land and water has been provided production
by around spring and well at  Cooperation and coordination
 minimal cost. among firms participants is not
 The firm has many well trained and defined
very competent poultry professionals

OPPORTUNITIES THREATHS
 The project will create employment  Construction costs
for many people.  High initial investment is requiring
 When the product is advertised well for the construction activities
the market share will increase hence  There are many competitors for
the profits will also increase this project.
 Funding available to assist with
implementation

3.5. CAPITAL INVESTMENT OUTLAY AND FINANCING, (COST PROJECTION).

3.5.1 INITIAL CAPITAL,
ACTIVITIES COST
purchase of land 1 ,500,000
construction of buildings 2,000,000
Purchase of vehicle 5,000,000
purchase of breeding
chicks 1,000,000
Total initial investment
 9,500,000

3.5.2 OPERATING COST PER ANNUM.

ACTIVITIES COST
Feeds 800,000
Electricity cost 200,000
Water bills 50,000
Salaries 700,000
Medicine 150,000
Other operating cost 600,000
Total operating cost 2,950,000

The remaining Ksh. 2,550,000 will be injected to the working capital basket.
Revenue projection
 Revenue from sales of broiler
 Revenue from sales of eggs
 Revenue from the manure and feathers of broiler.

3.6A PROJECTED PROJECT’S CASH FLOW OF 6 YEARS WITH R-20%

YEARS 0 1 2 3 4 5
COSTS ‘000 ‘000 ‘000 ‘000 ‘000 ‘000
Purchase of land 1500
construction of 2,000
buildings
purchase of breeding 1,000
chicks
purchase of vehicle 5,000
purchase of machinery 2,500
Operating cost 2950 2950 2950 2950 2950
Loan payment, 850 850 850 850 850
(interest)
Tax. (5% of revenue) 385 480 457.5 400 470
Total outflows, 12,450 6,685 4,280 4,257.5 4,200 4,270
(costs)
Discount factor, r- 1 0.8333 0.6944 0.5787 0.4823 0.4019
20%
Discounted cost, r- 12,450 5,570.61 2,972.03 2,463.8 2,025.66 1,716.11
20% 1
BENEFITS
sales from broiler 0 3,500 4,000 3,800 4,200 5.000
sales from eggs 0 3,700 5,000 4,800 3,500 4,000
sales from manure and 0 1,500 1,600 1,550 1,300 1,400
feathers
Total inflows, 0 8,700 10,600 10,150 9,800 10,400
(benefits)
Discount factor, r- 1 0.8333 0.6944 0.5787 0.4823 0.4019
20%
Discount benefits, r- 0 7,249.71 7,360.64 5,873.8 4,726.5 4,179.76
20%
Net Benefit -12,450 564.71 3,080.64 1,616.3 526.5 -91
From the cash flow,
Total cost = 36,142,500/=

Total discounted cost = 27,197,580/=

Total benefit = 49,650,000/=

Total discounted benefit = 29,390,350/=

3.7.NET PRESENT VALUE AND BENEFIT COST RATIO.

The table below summaries data to be used in the computations of NPV and BCR,

Years TC TB DF- r=20% DTC DTB

0 12,450,000 - 1 12,450,000 -
1 6,685,000 8,700,000 0.8333 5,570,610 7249710
2 4,280,000 10,600,000 0.6944 297,203 7360640
 3 4,257,500 10,150,000 0.5787 2,463,810 5873800
4 4,200,000 9,800,000 0.4823 2,025,660 4726500
5 4,270,000 10,400,000 0.4019 1,716,110 4179760
TOTAL 36,142,500 49,650,000 27,197,580 29,390,350

Where: TC = Total cost

TB = Total benefits

DF = Discounting factor

DTC = Discounted total cost

DTB = Discounted total benefit

3.7.1. NET PRESENT VALUE (NPV),

The NPV of a project is defined as the value obtained by discounting separately for each year;
the cash net flows accruing throughout the life of the project at a fixed predetermined interest
rate

Discount rate (r) being 20%

Data from the table,

Total discounted cost = 27,197,580

Total discounted benefit = 29,390,350

Initial investment cost = 12,450,000

NPV= ∑Bt/(1+r)t - ∑Ct/ (1+r)t - A0

Where ∑Bt/(1+r)t = discounted future benefit, ∑Ct/(1+r)t = discounted future cost at time t and r
= the opportunity cost of capital and A0 is the initial cost at year zero.

Discounted B= ∑Bt/(1+r)t

Discounted benefit = 29,390,350

Discounted C= ∑Ct/(1+r) t

Discounted cost = 27,197,580

NPV=∑Bt/ (1+r) t - ∑Ct/(1+r)t -AO =- 29,390,350-27,197,580= 2192770

Since the value of NPV =2192770 and is positive, then the project is feasible for implementation
and it is accepted

3.7.2. BENEFIT COST RATIO (BCR),

BCR = DTB/ (DTC + AO)

= 29,390,350 / 27,197,580

= 1.08

BCR = 1.08
Since the ratio is greater than one, the project is feasible for implementation.
Hence the project is accepted

3.7.3. INTERNAL RATE OF RETURN (IRR),

Years TC TB DF- r=79% DTC DTB

0 12,450,000 - 1 12,450,000 -
1 6,685,000 8,700,000 0.5587 3,734,909.5 4,860,690
2 4,280,000 10,600,000 0.3121 1,335,788 3,308,260
3 4,257,500 10,150,000 0.1744 742,508 1,770,160
4 4,200,000 9,800,000 0.09744 415,898 954,520
5 4,270,000 10,400,000 0.05444 196,615.2 565,760
TOTAL 36,142,500 49,650,000 18,875,718.7 7,084,769

The IRR is the discount rate at which the present value of cash inflows is equal to the Present
value of cash outflows and the NPV is zero. The IRR indicates the actual profit rate of the total
investment outlay. It also indicates the maximum loan interest rate that could be paid without
creating any losses for the project.

IRR= R1 + (R2-R1) (NPV1/NPV1 +NPV2)

Discounted rate being 79%

NPV2 = ∑Bt/(1+r) t - (∑Ct/(1+r)t - AO

Discounted B= ∑Bt/(1+r)t = 7,084,769

Discounted C= ∑Ct/(1+r)t = 18,875,718.7

Initial investment capital = 12,450,000

NPV2 =18,875,718.7 -7,084,769 = -11,790,949
NPV2 = 11,790,949
NPV1 = 2,192,770
IRR= R1 + (R2-R1) (NPV1/NPV1 +NPV2)
IRR = 20% + (79% - 20%) (2,192,770 / (2,192,770+11,790,949)
IRR = 0.20 + (0.59*0.236)

IRR = 0.3392= 33.92%

Therefore, the project is feasible at internal rate of return of 33 .92%

CHAPTER FOUR
4.0. SENSITIVITY ANALYSIS

The unforeseen project’s future worthiness will be tested by using a ‘Risk adjusted discounted
rate’. This method will tell whether the project will be viable to carry despite uncertainties in the
future.

The discounted rate will be added from 20% to 45%

Years TC TB DF- r=45% DTC DTB

 0 12,450,000 - 1 12,450,000 -

1 6,685,000 8,700,000 0.6897 4610644.5 6000390

2 4,280,000 10,600,000 0.4756 2035568 5041360

3 4,257,500 10,150,000 0.3280 1396460 3329200

4 4,200,000 9,800,000 0.2262 965874 2216760

5 4,270,000 10,400,000 0.1560 563823 1622400

TOTAL 36,142,500 49,650,000 22,022,369.5 18,210,110

Discount rate (r) being 45%

NPV= ∑Bt / (1+r) t - (∑Ct / (1+r) t - A0)

NPV = 18,210,110-22,022,369.5

NPV = -3812259

BCR = DTB/ (DTC + AO)

= 22,022,369.5/ 18,210,110

BCR = 0.826

Therefore, the project will not be worth to carry simply because it has negative NPV of-
3,812,259 and BCR is less than one (0.826) when there change in discount factor

5.0. CONCLUSION.
From the above analysis of the project, the measures of project worthiness shows that the project
is worth to undertake and is profitable, it also provide a lot of remarkable benefit to all the
stakeholders abided to the project through provision of education, employment, food vitamins
and improvement of their life then the project should be undertaken for the benefit of both the
stakeholders and the project owner which at the end will come up with many young entrepreneur
from the education gained hence solve the social-economic problems of the society.