Professional Documents
Culture Documents
Dairy Farm and Milk Processing Plant Ab
Dairy Farm and Milk Processing Plant Ab
APERIL, 2021
ETHIOPIA, FINFINE
3.Nationality ETHIOPIAN
Ethiopia holds large potential for dairy development. In addition, the country
enjoys diverse topographic and climatic conditions favorable for dairying.
These consist of a high central plateau ranging from 1,800 to 3,000 meters
above sea level, a rift valley that divides the country from north to south with
altitudes ranging from 1,000 to 1,800 meters above sea level and lowland
plain areas of less than 1,000 meters above sea level in altitude. Depending
[Type text] Page 4
on the altitude difference, temperature ranges from less than 100 C in alpine
areas to 350 C and more in lowland areas. Moreover, rainfall in most of the
country is adequate for crop and pasture production. The favorable climate
throughout the country supports use of improved, high-yielding animal
breeds and offers a relatively disease-free environment for livestock
development.
The owners of the project are G.M.S.D although is a new business the
farmers have been undertaking many years in Ethiopia. During their stay in
business the owners of this company has accumulated diversified skills and
has also adopted working with many people and customers. Hence, it is this
accumulated experience which initiates him to construct dairy processing
factory in Addis Ababa City, Akaki Kaliti woreda.
The Addis Ababa Citiy government has been exerting his maximum effort to
expand investment opportunities in the region so as to foster the economic
development of the region and sub during the region’s big enemy that is the
The primary objective of the proposed business venture is to produce and supply high quality
dairy farm and milk processing products which will meet national and international Standards
to satisfy ever increasing demand for pipes and fittings demand in Ethiopia.
Specifically:
Produce and market dairy and milk products, that meets internationally accepted
standards
Providing job opportunities at all levels of production and distribution,
Provide excellent services with particular emphasis on quality and customer
satisfaction,
Offer broad selections of dairy and milk processing products at competitive price and
capture key market share,
Generate hard currency through exporting cattle and milk processing products to
neighboring countries
Contribute for the improved health status of inhabitants of cities and towns by
providing product, which are the main component of food supply systems, with
reasonable cost,
To be part of the revenue generation of the state in the form of taxation and other
forms
To contribute in the growth of the country as a whole and the region in particular
Between 1961 and 1974, milk production increased by 16.6% from 637,400
to 743,100 metric tons with an average annual growth rate of 1.6%. This
growth was largely due to the economies of scale in production as well as
marketing, subsidies in transport to the formal market, secured land tenure
and an active free market for feed and other inputs (Steal et al., 1996). On a
per capita basis, however, milk production declined during this period at an
average rate of 0.87% per annum. Processed milk production has stagnated
in the early 1960s but expanded significantly in the second half of 1960s
and early 1970s. To bridge the gap between supply and demand, dairy
imports increased significantly beginning from 1978. This was partly due to
increased food aid milk powder imports by WFP, and a level of dairy
production development that lagged far behind the demand. Imports reached
a peak of 314,700 metric tons in 1986 during the drought period (Reda,
2001). During the period between 1977 and 1989, dairy imports as a percent
of total consumption increased from 4.1% to 12.8%. Commercial imports
grew rapidly at 24.2% per year (Felleke and Geda, 2001). Further, it is
estimated that imported milk powder accounted for 23% of Addis Ababa
market. Post 1991 producer groups such as the Addis Ababa Dairy
Producers Association (AADPA) emerged encompassing 90% of all urban
dairy producers and a large proportion of per-urban producers within a
radius of 100km of Addis Ababa (Staal 1995). Milk production grew faster in
the post reform period, at an annual growth rate of 3%. Per capita milk
production stagnated though grew at a positive but insignificant rate. This
Economic growth: For the past five years ending 2007/08, Ethiopian
economy registered an average real GDP of 11.8%. The economic growth will
contribute in increasing the leaving conditions and purchasing capabilities
of the people. Rapid growth of many cities contributes for increasing the
demand for dairy products (Mo FED 2008). Mainly Because of the impact of
the Global economic slowdown IMF projected that 2009’s Ethiopian Growth
rate will not exceed 7%.
d. Unions
Unions are the next highest stage of cooperatives. Cooperatives are forming
unions for better marketing capabilities and better bargaining power. Selale
Union is among the active union which is doing well. Some milk marketing
cooperatives in the process of forming unions to challenge mainly unfair
market transactions with collectors and processors. Unions are supplying to
different private collectors and processors.
e. Individual collectors
Individual collectors are competing with processors for the raw milk.
Individual collectors mainly supplying cafe’s, institutions and restaurants.
They are responsible for the highest portion of the milk supply in the
market. Cafes and restaurants are opting for unpasteurized raw milk mainly
for bulk delivery and of the perception that they have better fat and
nutrients content and test than the pasteurized one. Individual collectors are
using their own transportation system in delivering the milk consistently.
Some of the individual collectors in the Selale milk shed are from Gurage
tribes and there is a slight decline in milk purchase when they are leaving
for holiday vacation in the month of September. The price of the milk will
slightly lower as competition will be ease among the buyers of the union.
f. Urban small holders
Urban smallholders are mainly supplying to households though house to
house delivery. Most of them are using plastic jerry can for handling the
milk. The main end consumers of house delivery are infants and children.
The delivery is often on a monthly contractual basis with minimum delivery
size of half litter. Some urban smallholders are also supplying to cafe’s and
restaurants. Recently these urban smallholders are facing a pressure from
the municipality to shut off their small farms because of health and
The estimated annual production of the first three companies in the year
2008 was about 14 million liters of milk, 120,000 Kg of butter and 20,000 kg
of cheese and 90,000kg of soft cheese. Majority of the processors are
depended on external milk sources. Lema has closed its dairy farm because
of the ever increasing feeding costs and now fully depended on out growers
Milk, butter, cheese, and yoghurt are retailed in super markets at Birr 10per
liter, Birr 70 per kg, Birr 30 per kg and Birr 11 per liter, respectively.
Allowing 30% for retail margin, a price of Birr 5 per liter, Birr 53.10 per kg,
Birr40.77 per kg, and Birr 10.46 per liter, respectively, is recommended for
milk, butter, cheese and yoghurt to be produced by the envisaged plant.
Distribution of the products could be undertaken through small retail
outlets as well as supermarkets and catering establishments.
The average composition of cow's milk is 87.2% water, 3.7% milk fat, 3.5%
protein, 4.9% lactose, and 0.7% ash. This composition varies from cow to
cow and breed to breed. For example, Jersey cows have an average of 85.6%
water and 5.15% milk fat. These figures also vary by the season of the year,
the animal feed content, and many other factors. Vitamin D concentrate may
be added to milk in the amount of 400 international units (IU) per quart.
Most low fat and skim milk also has 2,000 IU of Vitamin A added. Milk is a
perishable commodity. For this reason, it is usually processed locally within
Dairy cows are milked twice a day using mechanical vacuum milking
machines. The raw milk flows through stainless steel or glass pipes to a
refrigerated bulk milk tank.
Dairy cows are milked twice a day using mechanical vacuum milking
machines. The raw milk flows through stainless steel or glass pipes to a
refrigerated bulk milk tank where it is cooled to about 40° F (4.4° C). A
refrigerated bulk tank truck makes collections from dairy farms in the area
within a few hours. Before pumping the milk from each farm's tank, the
driver collects a sample and checks the flavor and temperature and records
the volume. At the milk processing plant, the milk in the truck is weighed
and is pumped into refrigerated tanks in the plant through flexible stainless
steel or plastic hoses.
b. Separating
The cold raw milk passes through either a clarifier or a separator, which
spins the milk through a series of conical disks inside an enclosure. A
clarifier removes debris, some bacteria, and any sediment that may be
present in the raw milk. A separator performs the same task, but also
separates the heavier milk fat from the lighter milk to produce both cream
and skim milk. Some processing plants use a standardize-clarifier, which
regulates the amount of milk fat content in the milk by removing only the
excess fat. The excess milk fat is drawn off and processed into cream or
butter.
A clarifier removes debris, some bacteria, and any sediment that may be
present in the raw milk. The milk is then fortified and pasteurized, which
The milk is pumped into coated paper cartons or plastic bottles and is
sealed. In the United States most milk destined for retail sale in grocery
stores is packaged in one-gallon (3.8-liter) plastic bottles. The bottles or
cartons are stamped with a "sell by" date to ensure that the retailers do
not allow the milk to stay on their shelves longer than it can be safely
stored.
The milk cartons or bottles are placed in protective shipping containers
and kept refrigerated. They are shipped to distribution warehouses in
refrigerated trailers and then on to the individual markets, where they are
kept in refrigerated display cases.
g. Cleaning;-
sent to the cooler where it is cooled to about 2-5 oC, then pumped to the
storage tank. The milk is, then, preheated and pasteurized to a temperature
temperature to 3oC, after which the milk is stored in the surge tank for
filling into suitable containers for various uses. After such a process, a
specified quantity of the milk is sold as a pasteurized product while the
remaining portion is further processed in the plant for the production of
other milk products such as butter and cheese. The details of the production
processes are stated as follows.
a) Butter Production
Whole milk is partially or totally separated to produce standardized whole
milk with 3.25% milk fat, low fat milks, 1-2% milk fat, and skim milk. After
separation, cream is held in stainless steel tanks and refrigerated at (4-7 oC).
curd matrix is cut and cooked to about 126 oF (52oC). Separation of whey
from the curd is rapid, and is followed by two or three water washings at
warm to chill temperatures. Washing removes whey from residues and acts
as a cooking medium. After drainage of the last wash water, the chilled curd
CEO
Production
Department Marketing Department
General Administration Department
1 General Manager 2 BA
2 Accountant 10 BA
3 Cashier 4 10 grade
th
4 Secretary 4 Dip
5 Storekeeper 14 10 grade
th
6 Salesperson/Purchaser 15 Dip
7 Cleaner and Messenger 25 8 grade
th
6. FINANCIAL ANAYSIS
The financial resource is a prime resource for undertaking any activities.
Hence for implementing this pervious project Capital total of150,
000,000.00 Eth birr required. From this 30% or 45,000,000.00birr will be
covered by the promoter of the project while the rest%70or
105,000,000.00birr will be covered by financial institutions. Therefore, the
said amount of finance is needed for undertaking the following
6.1. Project Investment
The total cost of the project is 150,000,000 birr, out of which the capital
cost of the project is 72,182,930 birr for purchasing the animals and
constructing the building and the rest is used to meet the working capital
requirement.
The ideal mixed herd should consist of 100% cows for the viability of a
farm. The cows are comparatively high yielder as compared to buffaloes.
Animal market, Government and private livestock farms are the main
sources for purchasing milk animals. There are different contractors
available in the markets that help locating the proper animals. These
contractors work on commission basis and the commission rate charged
may vary from 1-2% of the animal price.
2A byproduct of wheat harvesting used as dry roughage for livestock and dairy
animals
Sugarcane Bagasse Sadabahar Sugarcane tops
Cotton Seed Hulls Guar
Corn Cobs
(Reference: Livestock & Dairy Development Department, Lahore)
(Reference: FAO Statistical Databases)
There is no fixed fodder requirement for the animals but a rule of thumb
says that an animal needs daily fodder equal to 9%-10% of its body weight
(3% of live body weight on Dry Matter Basis). According to estimates,
consumes 50-55 kg fodder daily while cow consumes about 40-45 kg.
Wheat straw is major, typical, and very popular dry roughage. It is always
chaffed, and is the main or even only major dry roughage used on almost
all the dairies. Traditional threshing methods break the straw into short
pieces, boos, and modern mechanical threshers have been designed to
break the straw.
6.4 Medication
Buffalo milk contains less water, more total solids, more fat, slightly more
lactose, and more protein than cow's milk. Cow's milk contains 12-14%
total solids and the butterfat content is usually between 3% and 5%.
Phospholipids are lower but cholesterol and saturated fatty acids are lower
in cow’s milk. Normally the protein in cow’s milk contains less casein and
slightly less albumin and globulin. The mineral content of cow's milk is
Cow’s milk enriches the yellow pigment carotene, precursor for vitamin A,
and its yellowness is frequently used to differentiate it from buffalo’s milk
in the market. Despite the absence of carotene, the vitamin A content in
buffalo milk is almost as high as that of cow's milk. Apparently the buffalo
converts the carotene in it's diet directly to vitamin A. The two milks are
similar in B complex vitamins and vitamin C, but buffalo milk tends to be
lower in riboflavin.
The proposed farmer will raise breeding stock containing future dairy
animals at his own farm by selecting good off springs of high producers.
Instead of breading bull the Insemination will be done Artificial
Insemination of imported Semen of breeding bulls. The first generation (F 1)
will be capable of giving milk after 2 years in cows.
In this feasibility study, it is assumed that all the milk will be sold to milk
processing companies, households& milk shops etc.
Farm revenue will increase with the passage of time, as the milk
production will increase with the growth in herd size as well as its quality.
Male calves will be sold at the farm sooner after birth for birr 10,000 per
animal. They can also be reared in separately for beef production.
USEFUL TERMINOLOGIES
Breed
Animals that, through selection and breeding, have come to resemble
one another and pass those traits uniformly to their offspring.
Feedstuffs
Any substance of nutritive and biological value used in production of
compound feed.
Compound feed
Any ground mixture of ingredients intended for feeding the animals. It
includes a concentrate mixture accordingly to formula.
Dehorning
The process of removal of horns (in adult animal) or horn buds (in
young calves). The process may be done by mechanical or chemical
means.
Heifer
The term refers to young female bovine that reaches puberty age and is ready
to breed.
Ration
Amount of balance feed in 24 hours
birr in actuals
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 42,507,520 56,594,1 82,061,0 105,760, 134,530, 173,770, 226,301, 297,867, 395,025, 527,219,
20 08 628 849 599 735 615 021 074
Cost ofgoods sold 21,057,6 22,457,0 25,879,9 31,444,2 39,545,6 50,554,8 64,795,6 83,584,5 107,828,
15 76 66 31 33 91 00 17 428
21,002,390
GrossProfit 35,536,5 59,603,9 79,880,6 103,086, 134,224, 175,746, 233,072, 311,440, 419,390,
05 32 62 618 966 844 015 504 645
21,505,130
2
Depreciation expense 1,604,658 1,604,65 1,604,65 2,676,91 2,676,91 2,676,91 5,088,46 5,098,73 5,098,73 7,065,13
8 8 0 0 0 4 0 0 4
Amortization expense 90,000 90,000 90,000 90,000 90,000 - - - - -
Miscellaneous expense - - - - - - - - - -
Subtotal 3,285,916 3,485,62 3,852,60 5,324,76 5,911,34 7,344,34 10,682,1 11,969,0 13,690,2 19,122,8
2 8 3 4 9 51 35 40 16
Operating Income 18,219,214 32,050,8 55,751,3 74,555,9 97,175,2 126,880, 165,064, 221,102, 297,750, 400,267,
83 24 00 74 618 693 980 264 829
Earnings Before Interest & 18,536,450 33,202,4 59,110,8 81,810,3 110,042, 148,161, 165,102, 270,930, 369,865, 517,903,
Taxes 13 15 79 257 014 568 162 946 048
Taxable earnings for the year 10,912,564 25,882,8 52,711,1 76,084,0 105,133, 143,268, 192,128, 262,546, 358,753, 503,031,
23 67 50 040 529 109 539 787 635
Tax 2,728,141 6,470,70 13,177,7 19,021,0 26,283,2 35,817,1 48,032,0 65,636,6 89,688,4 125,757,
6 92 12 60 32 27 35 47 909
NET PROFIT/(LOSS) AFTER 9,491,223 21,423,1 41,804,2 60,040,8 82,625,1 112,343, 117,070, 205,293, 280,177, 392,145,
TAX 38 74 41 38 882 541 528 499 139
2
6.6 Balance Sheet Statement
Statement SMEDA
Summaries
Balance Sheet
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Assets
Current assets
Cash & Bank 1,400,00 4,944,713 18,085,8 49,103, 95,985, 161,354 264,253 403,805 592,737, 849,575 1,302,937
0 79 934 655 ,022 ,904 ,823 821 ,812 ,580
Raw material inventory 9,688,195 10,100, 11,135,6 13,235,2 16,692,9 21,836,0 29,049,0 38,666,3 51,727,5 69,038,2 -
Pre-paid annual land - 554 38 71 27 14 64 16 78 83 -
lease - - - - - - - - -
Total Current Assets 11,088,1 15,045,26 29,221,5 62,339, 112,678 183,190 293,302 442,472 644,465, 918,614 1,302,937
95 7 17 204 ,582 ,036 ,968 ,139 399 ,095 ,580
Fixed
assets 3,000,00 3,000,000 3,000,0 3,000,0 3,000,0 3,000,0 3,000,0 3,000,0 3,000,00 3,000,0 3,000,000
Land 0 00 00 00 00 00 00 0 00
Building/ 20,388,5 19,369,07 18,349,6 28,173, 26,612, 25,050, 57,255, 54,005, 50,755,7 70,253, 65,866,42
Infrastructure 00 5 50 965 353 741 578 644 09 760 6
Animals 40,000,0 40,000,00 40,000,0 40,000, 40,000, 40,000, 40,000, 40,000, 40,000,0 40,000, 40,000,00
00 0 00 000 000 000 000 000 00 000 0
Revaluation Surplus/ - 1,600,000 9,848,0 16,799, 26,585, 38,274, 53,121, 71,711, 95,175,5 124,593 (39,200,0
2
(loss) 00 000 000 000 000 850 00 ,604 00)
Net value of animals 40,000,0 41,600,00 49,848,0 56,799, 66,585, 78,274, 93,121, 111,711 135,175, 164,593 800,000
00 0 00 000 000 000 000 ,850 500 ,604
Machinery & 7,573,68 7,068,768 6,563,8 14,009, 12,974, 11,939, 21,753, 19,995, 18,237,0 28,913, 26,326,68
equipment 0 56 912 936 959 455 247 39 893 0
Total Fixed Assets 71,732,9 71,728,27 78,371,6 102,512 109,621 118,633 175,418 189,068 207,433, 266,936 96,077,45
30 2 13 ,663 ,753 ,843 ,855 ,856 776 ,195 8
Intangible assets
Pre-operation costs 450,000 360,000 270,000 180,000 90,000 - - - - - -
Training costs - - - - - - - - - - -
Total Intangible Assets 450,000 360,000 270,000 180,000 90,000 - - - - - -
TOTALASSETS 83,271,125 87,133,538 107,863,130 165,031,868 222,390,335 301,823,880
468,721,823 631,540,995 851,899,175 1,185,550,2901,399,015,038
Other liabilities
Long term debt 35,698, 28,752,2 20,626,5 11,120,6 - - - - - -
177 77 55 11
105,000,000
Total Long Term Liabilities 35,713, 28,783,0 20,672,6 11,182,1 76,875 61,500 46,125 30,750 15,375 -
552 27 80 11
105,000,000
2
Shareholder
s' equity 105,000, 105,000 105,000, 60,430,2 60,430,2 60,430, 105,045 105,192 105,192 140,375, 140,375,8
Paid-up 000 ,000 000 71 71 271 ,193 ,808 ,808 854 54
capital
Gain/ (Loss) on - 1,600,00 9,848,00 16,799,0 26,585,0 38,274, 53,121, 71,711, 95,175, 124,593, (39,200,0
revaluation of anim 0 0 00 00 000 000 850 500 604 00)
Retained earnings - 8,184,42 27,596,5 67,129,9 124,192 203,042 310,494 454,590 651,500 920,565, 1,297,839
3 41 16 ,953 ,734 ,131 ,212 ,117 457 ,184
Total Equity 105,000, 51,419, 79,080,1 144,359 211,208 301,747 468,660 631,494 851,868 1,185,53 1,399,015
000 986 03 ,187 ,224 ,005 ,323 ,870 ,425 4,915 ,038
TOTAL CAPITAL AND 83,271,1 87,133, 107,863, 165,031 222,390 301,823 468,721 631,540 851,899 1,185,55 1,399,015
LIABILITI 25 538 130 ,868 ,335 ,880 ,823 ,995 ,175 0,290 ,038
2
6.7 Cash FlowStatement
Birr in actuals Year0 Year1 Year2 Year 3 Year 4 Year5 Year6 Year7 Year 8 Year9
Year10
Operating activities
Net profit - 8,184,42 19,412,1 39,533, 57,063, 78,849, 107,451 144,096, 196,909, 269,065,3 377,273,
3 18 375 037 780 ,397 082 905 40 726
Add: depreciation - 1,604,65 1,604,65 1,604,6 2,676,9 2,676,9 2,676,9 5,088,46 5,098,73 5,098,730 7,065,13
expense 8 8 58 10 10 10 4 0 4
amortization expense - 90,000 90,000 90,000 90,000 90,000 - - - - -
Raw material inventory (9,688,195 (412,359) (1,035,08 (2,099,6 (3,457,6 (5,143,0 (7,213,0 (9,617,2 (13,061, (17,310,7 69,038,2
) 5) 32) 56) 87) 50) 52) 262) 05) 83
Cash provided by (9,688,195 9,482,09 20,087,0 39,143, 56,387, 76,488, 102,899 139,551, 188,931, 256,837,9 453,361,
operations ) 8 66 776 666 978 ,882 919 998 90 768
Financing activities
Change in long term debt 105,000,000 (5,937,385) (6,945,901) (8,125,721) (9,505,945)
(11,120,611) - - - - -
Change in short term debt - - - - - - - - - - -
Add: land lease expense - - - - - - - - - - -
Land lease payment - - - - - - - - - - -
Issuance of shares 105,000 - - 18,794, - - 44,614, 147,615 - 35,183,04 -
2
,000 709 922 6
Cash provided by / (used 83,271, (5,937,385 (6,945,90 10,668, (9,505,94 (11,120, 44,614, 147,615 - 35,183,04 -
for) financing 125 ) 1) 987 5) 611) 922 6
Investing activities
Capital expenditure (72,182, - - (18,794, - - (44,614, (147,615) - (35,183,04 -
930) 709) 922) 6)
Cash (used for) / (72,182, - - (18,794, - - (44,614, (147,615) - (35,183,04 -
provided by investing 930) 709) 922) 6)
NET CASH 1,400,0 3,544,713 13,141,16 31,018, 46,881,7 65,368, 102,899 139,551, 188,931,9 256,837,9 453,361,
00 6 055 21 367 ,882 919 98 90 768
2
Year 1 Yea Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year Year 11
r2 10
1 2 3 4 5 6 7 8 9 10 11
Animals
Average # of cows 198 18 2 24 27 32 38 46 56 68 83
9 0 0 8 7 8 5 2 3 6
4
# of lactating cows 158 15 1 19 22 26 31 37 45 54 66
1 6 2 2 2 0 2 0 6 9
3
# of calve 176 16 1 12 14 17 21 26 32 38 47
4 4 7 0 0 5 4 3 8 2
3
Calve older than one year 0 88 8 99 11 13 15 18 22 27 33
(Cows)/Heifer 0 3 3 6 7 3 3 1
Total animals older then 198 27 2 33 39 46 54 65 78 95 11
one year 7 8 9 1 0 4 2 5 6 67
4
Total Animals 374 44 4 46 53 63 75 91 11 13 16
1 2 6 1 1 9 6 09 43 40
8
2
2 6 9 2 2 0 8
# of Male Calve sold 88 82 7 63 70 85 10 13 16 19 23
2 7 2 2 4 6
Total Animals Sold 88 92 1 10 11 13 16 19 23 28 33
1 7 8 8 7 8 7 1 6
0
2
Production of milk (ltrs) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11
Cows 3,168 3,780 4,896 5,760 6,672 7,848 9,312 11,160 13,488 16,392 20,064
Milk for calve 704 656 573 507 561 682 859 1,056 1,294 1,551 1,889
Net Annual milk 899,360 1,140, 1,577 1,917,2 2,230,3 2,615,692 3,085,4 3,688,0 4,450,9 5,416,8 6,633,8
production 260 ,800 36 84 03 11 74 70 46
Other Revenue
Sale ofCulledCows - - 1,794,0 1,929,6 2,058,000 2,083,2 2,145,9 2,189,5 2,277,5 2,437,1
1,584,000 00 00 00 60 80 61 61
Sale of Low Yielder Cow - 960,00 1,185, 1,345,0 1,585,0 1,865,000 2,225,0 2,745,0 3,243,2 3,984,8 4,830,0
0 000 00 00 00 00 50 38 00
Sale of Calves 880,000 820,00 716,5 634,125 701,700 852,150 1,073,5 1,319,8 1,616,9 1,939,0 2,361,3
0 75 50 25 38 75 50
880,000 1,780, 3,485, 3,773,1 4,216,3 4,775,150 5,381,7 6,210,7 7,049,7 8,201,4 9,628,5
000 575 25 00 50 85 68 74 11
Total Annual Revenue 42,507, 51,449 67,81 79,459, 91,886, 107,897,8 127,741 152,853 184,282 223,592 273,269
520 ,200 9,015 525 380 70 ,430 ,185 ,088 ,354 ,471
2
Financial study
Investment and financing
The total investment cost will reach 100,000,000 million. The cost breakdown of each
investment is presented in the following table
Out of the total investment cost more than 30% will be covered by the project owner. The
remaining 70% or about 70, 000, 00 million will be also covered through bank borrowing.
Farm operating cost
The farm running cost consists of fixed costs that do not vary with the volume of production
and variable cost that do vary with the production volume
The total production cost at full capacity is about birr 18 million per annum. The detail is
shown below
Financial evaluation
Based on the projected profit and loss statement (income statement), the project will generate
a profit throughout its ten years life total 169 million. The payback period, also called pay –
off period is defined as the period required recovering 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. 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 NPV and IRR of this project discounted at (12% average
private banks lending rate) are computed to be birr 53 million and 24 % indicating the
viability of the project. The financial schedules are annexed.
ENVIRONMENTAL IMPACT 3
The dairy products plant does not have any pollutant emitted from the production process,
except the washing water which has to be connected to appropriate sewerage line to get rid of.