Title:- Business Plan on Sheep Fattening

In Sheger Special Zone

By Jemila Juhir

April 2016

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TABLE OF CONTENTS

1. Executive summery------------------------------------------------------------------------------------ 2
2. Business description------------------------------------------------------------------------------------ 3
3. Marketing plan--------------------------------------------------------------------------------------------5
4. Production plan-------------------------------------------------------------------------------------------8
5. Management plan-----------------------------------------------------------------------------------------9
6. Competitive analyses ------------------------------------------------------------------------------------10
7. Financial plan ---------------------------------------------------------------------------------------------11

TABLE OF CONTENTS

Table 1 Demand forecasting...........................................................................................................6

Table 2 Ethiopia price of livestock meat per ton............................................................................ 8
Table 3 Sales Plan........................................................................................................................... 8
Table 4 Human resource plan--------------------------------------------------------------------------------9
Table 5 Income Statement............................................................................................................ 10
Table 6 Operational Plan................................................................................................................ 11

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 1. EXECUTIVE SUMMARY

This Business Plan envisages the production of sheep fattening for local and export consumption
with a capacity of 2000 sheep’s per year. Animal feed is not growing as its potential in the
country. Feeding cattle for export quality, involves feeding high energy rations. The higher
energy rations will promote finishing the cattle to a high value carcass that is desired on a World
market. The feed fed to export quality cattle will account for the majority of the expense.

Improvement of feeding system will better utilize the feedstuffs available in Ethiopia. Fattening
means controlling what cattles eat by using high quality feed so that to generate faster weight
gains. It is a strategic feeding option which produces a quick result (2-3 months), technically
quite simple. Agro-industrial by products can be used as feed sources.

Ethiopia has a large livestock population and diverse agro-ecological zones suitable for livestock
production and for growing diverse types of food and fodder crops. However, livestock
production has mostly been subsistence oriented and characterized by very low reproductive and
production performance. On the other hand, market oriented livestock production has been
gradually emerging in recent years. The Government of Ethiopia is trying to increase the export
of meat and live animals that can contribute to market-led economic growth and poverty
reduction in the country.

The market study reveals unsatisfied demand and an ever growing market as a result of growing
consumer food stuff needs market increment trend and limited producers in the country and the
expected economic growth in the country.

The promoter planned to borrow Birr two million for the expansion of his business from external
fund raisers for the purpose of this sector.

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 2. Busines description

Feed shortage is the main cause for the poor performance of the livestock sector in Ethiopia.
Most livestock destined for export or slaughter are produced in the pastoral areas from rain fed
pastures and are slaughtered with little or no access to better quality feeds required to increase
weight, improve condition and dressing percentage and reduce age at slaughter. In pastoral areas,
natural pastures are the main source of livestock feed. However, they cannot fulfill the nutritional
requirements of the animals particularly during the dry season, due to poor management and
their inherent low productivity and quality. Although the total livestock population is increasing,
the livestock holding per household is decreasing from year to year due a gradual decrease in the
area of grazing land caused mainly by increasing cultivation. Moreover, large areas of grazing
land in the pastoral areas are becoming unsuitable for grazing due to bush encroachment. In the
mixed farming areas both natural natures and crop residues make the main source of livestock
feed. Fodder conservation for use during the dry season is not common in most parts of the
country.

Once cattle have eaten to their appetite and remain full, the chance of negative upsets is reduced
considerably. In this regard additional libitum feeding would result in increased daily weight
gains of up to 700 gm. per day.

Meat produced in the country has two outlets; the local and export market. The greatest portion
of the annual production is consumed locally while small portion of it is exported. Sheep and
goat are exported in various forms. While most of the export is in live animal, they are also
exported in the form of carcasses and half carcasses in fresh or chilled form.

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Both large scale (commercial feedlots) and small scale fattening operations are carried out in
Ethiopia. Commercial feedlots feed relatively large number of animals at a time. The commercial
feedlots keep from as few as about 20-50 animals to as many as 5000 heads of cattle at a time.
Almost all commercial feedlots depend on purchased concentrates and roughage feeds for their
operation as they do not have land for feed production. Most feedlots are located in East Shewa
zone of Oromia Regional State, particularly around Mojo, Adama, Wonji and Melkassa areas.
This gives them easy access to agro-industrial byproducts such as wheat bran, oilseed cakes and
molasses, which form a major portion of the concentrate mix fed to the animals. Purchased
native grass hay from Sululta, north of Addis Ababa, and tef and wheat straws make up the
roughage component of the diet.

The promoter of this business plan engaged to produce feed processing plant for those animal
fattening projects around the market in the marketplace. In the first place the promoter will
produce in his own farm with modern production plant and, since, the producer of the feeding in
the country scattered throughout the country in different places, the promoter would like to
concentrate on his positional selected markets.

Meat exporting companies

1. ELFORA plc

2. HELMECS plc

3. Safi trading plc

4. Mewashe plc

5. Luna export abattoir

6. Semir Kedir general importer and exporter

7. Amare Alemu Tasew general importer and exporter

8. Mojo modern export abattoir

9. Alema farms plc

Meat and live animal exporters

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1. ELFORA Agro Industry

2. Dr. Tefera Hailu

3. Pioneer agro – Industry

In the case of this business the promoter plans to use a strategy of market penetration growth
strategy since the household animal fattening is not mostly customer of the modern feeding so
that it will handle to the level of maximum development with respect to using the products. In
addition to that there is a huge export potential towards export market, in the long run the
promoter plans to deliver his product for export market.

3. Marketing plan

The market of animal feeding in Ethiopia becoming growing with average growth rate of 4% for
Cattle, 7% for Sheep and 6% for Goat feed need every year. Based on the number of livestock
potential found in the country and related need of the feeding the promoter plan to take
considerable share from potential market. Details of demand forecasting presented below taken
from CSA.
Table 1 Demand forecasting
% % %
Cattle Sheep Goat
Growth Growth Growth
2015/16 61,904.53 4% 31,994.81 7% 28,962.65 6%
2016/17 64,622.41 4% 34,300.57 7% 30,811.18 6%
2017/18 67,459.62 4% 36,772.50 7% 32,777.70 6%
2018/19 70,421.40 4% 39,422.58 7% 34,869.72 6%
2019/20 73,513.21 4% 42,263.64 7% 37,095.27 6%
2020/21 76,740.77 4% 45,309.44 7% 39,462.86 6%
2022/23 79,810.40 4% 48,481.10 7% 41,830.63 6%
Source: CSA

3.1 TARGET MARKET

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The main target markets of the intended products are the following listed below;

• Subsistent farmers

• Market-oriented rural farmers

• Urban commercial farmers

• Livestock traders

• Dairy and poultry farms

• Abattoirs/meat processors

• Live animal exporters

• National Disaster Prevention and Preparedness Commission (DPPC)

• Export market

• Associations

• NGO’s

The pricing strategy will depend on the market value of the commodity in the whole market. In
recent market conditions the price of feeding per quintal varies from birr 1200 to 1500 according
to the type and place of production.

Therefore a price of Birr 1200 taken to the analysis of this business plan and the promoter will
conditionally assess the market price and flexibly apply in the market based on the customer’s
preferences.

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 Table 2 Ethiopia price of livestock meat per ton

Description 2017 2018 2019 2020 2021 2022 2023 2024 Avarege
Growth
Cattle meat 152379 233,140 356,70 545,757 835,008 1,277,56 1,954,671 2,990,647
4 3
Goat meat 18,493 25,150 34,205 46,518 63,265 86,040 117,015 159,140
Sheep meat 19466 26668 36536 50054 68574 93046 128706 176328
Source: CSA

4. Production Plan
Based on the capacity planned to produce 2,000 quintal per month period, the sales plan is
presented as below on the table:
Table 3 Sales Plan
Total
Months Unit Sales Plan
Production

March kg 15,000 1,200,000

April kg 15,000 1,200,000

May kg 15,000 1,200,000

June kg 15,000 1,200,000

July kg 15,000 1,200,000

August kg 15,000 1,200,000

September kg 15,000 1,200,000

October kg 15,000 1,200,000

November kg 15,000 1,200,000

December kg 15,000 1,200,000

January kg 15,000 1,200,000

February kg 15,000 1,200,000

Total
Kg
Production 180,000 14,400,000

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5. Management plan

The farm will run through 9 professionals directly responsible for the activities of the farm and
hired permanently for smooth operation of the business. But in some seasons when the high time
of the operation the additional labor and wage workers are in place as well.

Table 4 Human resource Plan

No. of Salary ( Birr)
No. Position persons Monthly Annual
1 plant manager 1 8000 96000
2 Secretary 1 3000 36000
3 Purchaser 1 2500 30000
4 Accountant 1 5000 60000
5 Fattening specialist 1 6500 78000

6 Production workers 2 2500 60000

7 Guards 2 800 19200
Sub Total 9 379200
Workers benefit (20% of Basic 94800
salary)

Grand total - 474,000

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 6. Competitive analysis

Financial Feasibility analysis provides a basis for a decision as to whether to proceed or not with
the establishment of the project. The basic assumption for financial analysis of the project is
presented in key assumption part of this study. The financial study of the project is conducted by
taking into account the current changes price, technology and systems of productions.
Table 5 Income Statement
Opening
Mar Apr May Jun Jul Aug Sept
Balance
Income:
Sales Revenue 1,200,000 1,200,000 1,200,000 1,200,000 1,200,00 1,200,000 1,200,000
0
Total Income 1,200,000 1,200,000 1,200,000 1,200,000 1,200,00 1,200,000 1,200,000
0
Expenses:

operational cost
1,229,000 1,174,000 1,169,000 814,000 814,000 814,000 814,000
Total Expenses
1,229,000 1,174,000 1,169,000 814,000 814,000 814,000 814,000
Closing
Balance -29,000 26,000 31,000 386,000 386,000 386,000 386,000

Annual
Opening Balance Oct Nov Dec Jan Feb
plan
Income:
Sales Revenue 1,200,000 1,200,000 1,200,00 1,200,000 1,200,000 14,400,000
0
Total Income 1,200,000 1,200,000 1,200,00 1,200,000 1,200,000 14,400,000
0
Expenses:

operational cost
814,000 814,000 814,000 814,000 814,000 10,898,000
Total Expenses
814,000 814,000 814,000 814,000 814,000 10,898,000
Closing Balance
386,000 386,000 386,000 386,000 386,000 3,502,000

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7. Financial plan
The operational plan of the annual business plan will incorporated with different types of
activities and operations. Some of the activities are underlined below on the table:
Table 6 Operational Plan
Activities Mar Apr May Jun Jul Aug Sept
Purchase
350,000 350,000 350,000 0 0 0 0
semens
working items 5,000 5,000 5,000 5,000 5,000 5,000 5,000
Animal feeding 220,000 220,000 220,000 220,000 220,000 220,000 220,000
Raw material
purchase 320,000 320,000 320,000 320,000 320,000 320,000 320,000
salary 39,500 39,500 39,500 39,500 39,500 39,500 39,500
computer 35,000 0 0 0 0 0 0
working capital 55,000 35,000 30,000 25,000 25,000 25,000 25,000
Maintenance 12,000 12,000 12,000 12,000 12,000 12,000 12,000
spare parts 8,500 8,500 8,500 8,500 8,500 8,500 8,500
Transport 53,000 53,000 53,000 53,000 53,000 53,000 53,000
Farm inputs 56,000 56,000 56,000 56,000 56,000 56,000 56,000
Miscellaneous 75,000 75,000 75,000 75,000 75,000 75,000 75,000
Total Cost 1,229,000 1,174,000 1,169,000 814,000 814,000 814,000 814,000

Annual
Activities Oct Nov Dec Jan Feb
plan
Purchase
0 0 0 0 0
semen 1,050,000
working 5,000 5,000 5,000 5,000 5,000 60,000
items
Animal 220,00 220,00 220,00 220,00 220,00
feeding 0 0 0 0 0 2,640,000
Raw material 320,00 320,00 320,00 320,00 320,00
purchase 0 0 0 0 0 3,840,000
salary 39,500 39,500 39,500 39,500 39,500 474,000
computer 0 0 0 0 0 35,000

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 working
25,000 25,000 25,000 25,000 25,000
capital 345,000
Maintenance 12,000 12,000 12,000 12,000 12,000 144,000
spare parts 8,500 8,500 8,500 8,500 8,500 102,000
Transport 53,000 53,000 53,000 53,000 53,000 636,000
Farm inputs 56,000 56,000 56,000 56,000 56,000 672,000
Miscellaneou 75,000 75,000 75,000 75,000 75,000 900,000
s
Total Cost 814,00 814,00 814,00 814,00 814,00 10,898,00
0 0 0 0 0 0

CONCLUSION

Based on the business plan come across all parts of analysis made shows that the business is very
ideal and return its capital that invests within specified time of period. Therefore it is
recommendable to materialize this business endeavor for the promoter and for the region as well.

The overall livestock potential of the country is immense so that this is a favorable condition for
such sector to grow more ahead in coming periods.

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