Table of Contents

Executive Summary...........................................................................................10
I. INTRODUCTION..............................................................................................10
1.1. Background of the project........................................................................10
1.2. Rationale of the project............................................................................12
1.3. Mission of the project..............................................................................14
1.4. Objective of the Project............................................................................13
1.5. Products expected from the project........................................................ 16
1.6. Beneficiaries of the Project..................................................................... 16
II. THE PROJECT ANALYSIS.......................................................................... 16

Market Analysis..................................................................................... 16
 SWOT Analysis.................................................................................. 16
 Current Demand and Target Population............................................. 16
 Consumption Trends.......................................................................... 16
 Conditions of Competition.................................................................. 16
 Distribution Channel............................................................................16

Technical Analysis..................................................................................16
 Location and site..................................................................................16
 Availability of Inputs............................................................................ 16
 Machinery and equipments................................................................. 16

Organization and management............................................................ .16

 Manpower Requirement and salary structure of the project............... 16
 Organization Structure.........................................................................16
Economic and Social benefits.............................................................. 16
Project implementation......................................................................... 16
Financial Analysis.................................................................................. 16
 Total Investment cost...........................................................................16
 Projected Income Statement.............................................................. 16
 Projected Cash flow Statement.......................................................... 16

Financial Evaluations............................................................................ 16
 Payback Period of the project..............................................................16
 Return on investment...........................................................................16
 Net present value (NPV)..................................................................... 16
III. Conclusion ........................................................................................................16
Executive Summary
This proposal concisely narrates the establishment of a modern agro-industry
specializing on livestock on 8.63 hectares area in Babile, East Hararge, Oromia.
The agro-ecologic and climate of the area is recognized as suitable for livestock
farming and further processing. The proposed project is based on concrete
assessment of the presence of local demand for livestock products as well as the
growing potential demand in the international market due to economic
development of different countries and their respective shift to consumption of
meat and meat related products

In addition to establishing a competitive private firm with sustainable financial

return, the initiator also intends to use the same as a modern pilot learning
platform and hence contribute to the improvement of the livelihood of the farming
urban and rural communities in the area.

The major animal farming activities of this project are livestock fattening, poultry
production and processing of these products further and providing to local and
international markets. Forage production for the project and to livestock
producers in the area is also part of the project plan. The project will be carefully
implemented on phase by phase basis in account of the project's supply chains.
In phase one the project will be involved in development of input for further
processing. The required inputs are fattened cattle, poultry, egg and forage for
bothcattle.

In phase two the farm starts possessing- slaughters and pack its products and
provide for local consumers - hotels, groceries, supermarkets and for direct
household consumers in its retail outlets. Moreover cattle, chicken for meat and
egg will be supplied to direct consumers during holydays.
In phase three products will be supplied to international markets (parallelly with
local supply) including poultry, fattened cattle for meat and further processed
and canned products.

The total cost of the project is estimated to reach birr 5019715.5 which will be
covered from the initiator own sources and bank loans.

The owner is qualified enough to implement the project and make it a successful
venture. Moreover different professionals will be employed in the firm for its
further successful development and expansion.

The promoter of this project is Dereje Abi has BA Degree in Management and
Masters Degree in Business Administration and currently working in Addis
Ababa University in a lecturer position.

The owner of the project is qualified enough to manage the project and to make
it successful. Moreover the project will have professionals of the field who
manage the operation of the project and give different technical support and
consultation.
I. Introduction

1.1.Background of the project

Ethiopia's human population is estimated to reach 80 million and is forecasted to
be doubled within 30 years from now. With increased urbanization, there is going
to be greater demand for diversified and high quality animal products. Moreover
there is significant shift in consumption in the world from cereals to animal
products, especially meat. There is, thus, a crucial need for development and
expansion of livestock farms with a parallel paradigm shift from traditional
extensive to modern intensive production systems. This, in turn, entails
introduction, availing and sustenance of improved animal health services, high
quality feed resources development and other inputs.

The varied agro-ecology of Ethiopia is suitable for animal production. According

to the recent census (CSA, 2004), the country is endowed with 41 million cattle,
23 million sheep, 23 million goats, etc. Nearly 50% of the equine population of
Africa and about 18% of cattle population in sub-Saharan is present in Ethiopia.
However productivity remained marginal and is lower than the average for sub-
Saharan Africa. Although Ethiopia has huge animal resource, the benefits
drawn from this sector is by far below its potential, due impart to:
 Traditional production system featured with absence of market-
orientation, limitation in science-based knowledge in food sciences and
habits of the local communities.
 Widespread and prevalent animal diseases, resulting huge mortalities
and morbidities as well as serious repercussion on productivity.
 Sub-optimal nutrition, which is critical during the long dry season,
resulted from increasingly expanding crop cultivation practices at the
expense of grazing fields. In recent years, such crop expansions have also
embraced marginal areas hitherto used for livestock grazing and other
purposes.
  Lack of appropriate policy environments that support livestock
agriculture.
 Prevalence of ignorance on the vital role improved animal production as a
paramount pathway out of poverty.
Significant proportion of communities in Ethiopia is known to live in situations
generally considered below accepted poverty levels at a global scale. In view of the
available resource potential, if the above-indicated constraints are properly
addressed, there are substantive reasons to justify comprehensive changes in
Ethiopian agriculture in general and in the livestock sector in particular.
Locally available resources must be rationally exploited, using modern
technologies, inputs and tools, to benefit the nation and its people. Achieving
self-sufficiency in the supply (adequate quality and quantity) of animal products,
in turn, require the vigorous participation and active involvement of the private
sector. The support from the government to the private and other development
partners, in terms of providing appropriate policy environments and inputs such
as land, will also be crucial.

This project proposal is developed to the establishment of a modern agro-

industry specializing on livestock production and processing the product further
and delivering it to local and international markets. The project will be
implemented at a suitable site, with potential for future expansion, in Babile
(Oromia, East Shoa Zone,) located at 75 km of Addis Ababa. Livestock products
being the pillar of both urban and rural communities in the project area, the
sector is featured by several constrains including inadequate provision of animal
heath services and scarcity in feed. As a result, livestock products are in critical
shortage both in quantity and quality.

Closer overview and assessment of the situation in the area revealed that prices
for livestock products in retail markets are very expensive and unaffordable by
many local inhabitants. The level of malnutrition often pronounced in infants
and lactating women, is alarming. Moreover the trend in consumption of meat
and related products is increasing in the global level. These facts on the ground
warrant for search of means to increase availability and access to products by
local communities and international consumers. The establishment of a modern
agro-industry with improved technological backing and attempting to attain
comprehensive objectives given, hence, does not require further legitimate
justification.

Apart from the anticipated financial benefits associated with this project, the
initiators foresees that the farm will provide a modern community-learning
platform for use in the development of local capacity vital for the improvement
of the livelihood of resource poor communities in the area. It is also
anticipated to serve as a repository of database and science-based knowledge
generated from farming practices for potential use by diverse stakeholders
ranging from local farmers to researchers in higher learning institutions and
national agricultural systems. In view of its objectives many households,
particularly young men and women, from within and around Babile town shall
be the primary focal point and ultimate second level beneficiaries form the
current livestock development project. The project fosters a profitable livestock
business based on new research and development thrusts combining technical
and socio-economic dimensions through efficient utilization of available
resources.

The project has three phases of implementation:

Phase one - cattle fattening, poultry (eggs and mature chicken) production.
Phase two- slaughter house construction and processing these products to
supply for the local market.
Phase three- exporting cattle and meat for the international market especially for
middle- east countries.
 1.2. Rationale of the project
The livestock sub-sector in Ethiopia is poorly developed as a result of multitudes
of constraints. As a result, the largest segment of the population leads live styles
generally considered below poverty line. The prevailing material reality in the
country warrants for an urgent need for introduction and adoption of improved
technologies and availing required inputs in the agricultural sector in general in
the livestock sub-sector in particular. The long term goal of this project is to
establish a viable business firm and serve as a local advocate of technology
dissemination venue that produce measurable impact with multiplier effect
among communities in the country and to be a leading exporter of livestock
products in the country.

The following will constitute the rationale and arrays of projected benefits when
the modern livestock farm will be fully operational.
 The agro-ecology of Babile area is suitable forcattle production. It is
therefore possible to develop a modern and profitable livestock farming
business that can satisfy local needs and capable of accessing
international markets
 The local social desirability of the project will not be limited to the creation
of productive employment, but also avails opportunities for the formation
of community-based technology scale up and out. This latter project
dimension will assist in income diversification and improvement of the
livelihood of resource poor urban and rural communities inhabiting the
project area.
 Owing to the facts stated hereinabove, the proposed modern livestock
farm will undoubtedly bring about a new paradigm shift in the agricultural
practice of the area in general and in the traditional husbandry sphere in
particular.
 Of paramount importance and unique feature inculcated in this business
project (to invariably involve other stakeholders including local inhabitants
 to benefit from the practices and technology adoption processes in various
aspects of modern livestock farming operations) is a manifestation of the
strong desire and long term dream of the project initiator.

The owner of this project is qualified enough to effectively manage functions

that are required for long-term viability and expansion of the farm.

Implementation of the following functions is, thus critical:

 Formulation and careful definition of organizational objectives, strategic
plans, milestones and projected outputs/outcomes.
 Creation of a sustainable learning institution that foster professional
development of its employees and execute a system of reward/incentive
based of rigorous performance evaluation.
 Through participatory appraisal exercises, involving key stakeholders, the
project will set a mechanism in place that ensures long-term as well as
continued success of the business by way of providing improved
leadership quality and morality.
 Introduce an effective evaluation and monitoring process

1.3.Mission of the project

The mission of the project is to satisfy the need of consumers (local and
international) by producing high quality livestock products and to contribute
for the sustainable development of Ethiopian economy.

1.4.Objective of the Project

The major objective of the project is to establish livestock farm and contribute
to poverty reduction endeavors in the country through optimum utilization of
locally available resources and modernization of the agricultural processes and
operations. The specific objectives of the project are:

o to establish a modern and economically viable agro-industry (livestock)

employing improved technologies, tools and inputs.
o to produce adequate quantity and quality of animals and animal products
to meet the local demands and access international markets through
export.
o to develop modern collection, processing and marketing platform of
various animal products originated from within the proposed farm and the
surrounding communities.
o to develop and conserve feed resources base employing improved
technologies and inputs that prevents soil erosion and loss of biodiversity,
o to develop environmentally sustainable production system promoting
optimize use of manure and other agricultural by-products in nutrients
recycling processes.
o to generate, test and transfer locally sustainable technologies to all
potential beneficiaries (community members, GOs, NGOs, private sector
partners, and other relevant stakeholders) and help create communities of
modern practice and purpose nurturing both the private and public goods.
o to contribute to the creation of a local and modern pilot learning model
site that contribute to knowledge management, information flow, thus
serve as advocate for change and advancement of technology among local
communities in the area.
o to create a modern farm data repository centre that promotes modern
farming practices in a rural setting that could be of potential value to
diverse stakeholders (students, farmer groups, development agents,
researchers and other professionals).
o Creating market opportunities for small local producers to sell their
livestock to our farm to be processed further.
o Creating job opportunity for the local community, thereby increasing
income of the unemployed women and youth in the surrounding area. The
project believes that women are very good poultry attendants and care
takers in feeding, watering, egg collection and handling, cleaning
equipments and premises.
 o Generating foreign currency for our country, Ethiopia and contributing in
the sustainable development of its economy.

1.5.Products expected from the project

The project is intended to produce the following products and deliver to different
users:
o Slaughtered and ready to eat livestock meat for local and international
consumers
o Processed and packed meat for local and international consumers
o Egg for hotels, supermarkets, small shops and direct household
consumers
o Cattle for the international market
o Mature chicken, cattle, and egg for direct consumers during holidays.
o Day old chicken for companies and households involved in poultry
production.
o Manure of poultry and cattle and feather from poultry for different
purposes

1.6.Beneficiaries of the Project

o Employees who get job opportunity in the project
o Consumers who can get quality products of the project with affordable price
and satisfy their need.
o Shareholders of the project who directly get income from profit of the project
o The country- Ethiopia, since the project supports the country’s economy in
the form of tax from its income , creation of job opportunity for the people it
generating foreign currency from export of its products to abroad.
o Small local producers- get market opportunities since the project accepts
cattle from local farmers for further processing.
o Technology transfer for the community involved in livestock production.
 1.7.Company Ownership
Gudru agro industry is a sole proprietor farm. Ato Dereje Abi is the owner of
this project. It is Ato Dereje’s intention to offer outside ownership in Gudru
agro-industry on an equity basis in order to facilitate the growth of the farm.
Ato Dereje holds a BA degree in management and masters degree in business
administration (MBA). He has also sufficient experience and commitment to
manage the project to make it successful. Moreover the project will have
professionals of the field who manage the operation of the project and give
different technical support and consultation. This will contribute a lot for the
proper implementation of this project.
II. THE PROJECT ANALYSIS

2.1. MARKET ANALYSIS

SWOT Analysis: Opportunities and Threats

Opportunities
i. Location- The project is located in Oromia region, Babile town which has
many advantages like:
 conducive environment for livestock production
 Proximity to the targeted local consumers which are mainly located in
Addis Ababa
 Existence of well-developed infrastructures in the project area
 Presence of veterinary institutions in the surrounding area (Adama) to
get different technical supports.
 Availability of financial institutions that provides different financial
supports for the project.
 Proximity to inputs, like cattle, day old chicken and forage from sugar
and oil factories

ii. Higher potential return and minimum payback period of the project

iii. Untapped and growing market demand

The preliminary situational assessment indicated that there is high demand for
livestock products but the supply is low and dependent on house hold
supplies. This gap is an opportunity for this project. Moreover consumption of
animal products is increasing globally resulted from economic developments in
different countries like china, India and in the middle east which increases the
demand in international market.
iv. Lower initial investment -agricultural investment needs relatively lower
initial investment than other projects
v. Government policy
The agricultural led economic policy of the country encourage agricultural
investment and conducive environments created by the government including
land availability, exemption periods from different payments and other
incentives are good opportunities for this project.

Threats
i. Disease

 Poultry diseases of various kinds may result unexpected losses of loss for
the project.

 Intensive veterinary care supported by efficient management and

vaccination will be carried out to prevent the disease. Moreover the project
will get advisory supports from the veterinary institutions surrounding the
project.
ii. Unorganized marketing system- the livestock marketing system in the
country is disorganized and relies on household supplies in scattered areas.
This may create difficulty in getting inputs (cattle) for the project.
iii. Lack of inputs- the project may lack different inputs in its initial stage.
Among them, forages, fertile eggs for incubation, adequate and differentiated
(male & female) day old chicken, appropriate cattle fro fattening and other
necessary inputs. This problem may be solved when the project starts its full
operation and produce all the inputs for it-self and others involved in the
activity.
iv. Excessive involvement of middlemen in the market that makes it
unpredictable and full of distortions.

Current Demand and Target Population

Although there is no compiled statistical data regarding the total current
demand of livestock products the gap between the demand and supply in the
market shows shortage of products. In addition in the preliminary market
demand assessment supermarkets and hotels show their willingness to buy
egg, slaughtered cattle meat and other processed meat products.

The primary target population for the project’s product is located in Addis
Ababa and the surrounding areas in Oromia region, however it will strive to
export high quality livestock products to different countries outside Ethiopia
especially middle east countries. This will be implemented in phase three of the
project.

The local targeted population is composed of household consumers,

supermarkets, hotels, groceries and other companies involved in livestock
production. In its international market target consumers will be identified
through time.

Consumption Trends
Currently different restaurants, hotels and biscuit factories are expanding and
that is an opportunity which increases consumption of poultry products.
Moreover economical developments locally and at international level are
boosting the consumption of meat and related products.

Conditions of Competition
The existing supply of livestock products in the market couldn’t satisfy the
demand of consumers. There is a serious shortage of qualitycattle products in
the market and this causes extreme increment of price of the product. This is
the result of absence or few numbers of organized and well established
suppliers of the product. The market is almost dependent on subsistence
household productions. This is an indication of less competition in the market
and an opportunity for this project to have a good market share.
Distribution Channel
The primary focus of the project is on hotels, supermarkets that can
redistribute the product to consumers, and food processing factories (biscuit
factories for egg) that directly buy our product. Moreover we will have mini-
market outlets in different locations that distribute our product directly to
consumers at an affordable price. Small shops will have the access for our
products from the company’s mini-markets.

2.2. Technical Analysis

Location and site

The project will be implemented at a suitable site, which is about 8.63 hectares
of land, in Babile town (Oromia region, East Shoa Zone). The area is located
75km of Addis Ababa. The specific project site could be a locality where feed,
water resources and other infrastructures could be available, in close proximity
of the main road to Addis Ababa that allows easy transportation of products,
inputs and with potential for future expansion.

Availability of Inputs
The basic inputs for the project, such as cattle, chicken, feed (molasses from
sugar factories in Oromia and Afar regions, by-products from food oil factories
in Babile) and man power exist sufficiently in the area.

Machinery and equipment

The project will be equipped with machineries and equipment such as forage
mixers, slaughter machines, incubators, refrigerator and other necessary
equipment. In implementing phase three of the project total mechanization
and heavy machineries like tractors, Lories, overhead cranes and others will be
installed.
 Inputs and utensils needed for sound operation of the proposed project.
Description Items Quantities
Utensils Measuring balance 1
Washing basin 2
Rubber hose (100m) 1
Washing brushes 5
Spades 5
Veterinary/husbandry Sprayer, dehorner, castrators, hoof 1-2 each
inputs tremors
Drugs (antibiotics, anthelementics, Adequate
acaricides, vaccines, disinfectants... quantity
Syringes, gloves, needles Adequate
quantity
Surgical kits 1
Other consumables Adequate
quantity
Supplies Detergents Adequate
(consumables) quantity
Disinfectants Adequate
quantity
Overhaul Adequate
quantity
Boots Adequate
quantity
Others Adequate
quantity
Forage Adequate
quantity
Day old chicken Adequate
quantity
Egg Adequate
quantity
Pullets Adequate
quantity
Major physical facilities and land requirement of the proposed farm

The project needs 8.63 hectares of land for its proper implementation. The
major facilities and the respective area requirement of land are demonstrated
in the table given below.