BUSINESS PLAN FOR FAYA POULTRY FARM

JIMMA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT

NAME ID/NO

1. ELIYAS WOLICHAFO 3589/09

2.HENOK TESFAYE 0279/10

3.ENDALE WEREKA 0197/10

4.BEZAWIT MULALEM 0128/10

5. HUSSEN UMER 5416/10

SUBMITTED TO :-DEBEBE

JIMMA, ETHIOPIA
TABLE OF CONTENTS
1. EXECUTIVE SUMMARY.............................................................................................................................1
1. COMPANY OVERVIEW.............................................................................................................................2
1.1 Company Ownership.........................................................................................................................5
1.2 The Name of the company................................................................................................................5
1. 3 Company Location............................................................................................................................5
1.4 Vision, Mission and Objectives of the Company................................................................................6
1.5 Our Keys to Success...........................................................................................................................6
1.6 Why Invest in Poultry?.......................................................................................................................7
2. Environmental and Industry Analysis......................................................................................................8
2.1 Environmental Analysis......................................................................................................................8
2.1.1 Economic Development in Ethiopia............................................................................................8
2.1.2 Government Policies...................................................................................................................8
2.2 INDUSTRY ANALYSIS........................................................................................................................10
2.2.1 The Poultry Sector in Ethiopia...................................................................................................10
2.2.2 Competitors in the Poultry Industry.........................................................................................11
2.2.3 Strengths and Weaknesses of the Poultry Industry..................................................................12
3. PRODUCTS AND SERVICES.....................................................................................................................14
3.1 Product Description.........................................................................................................................14
3.2 Service Description..........................................................................................................................15
4. OPERATIONS PLAN................................................................................................................................15
4.1 Location and Equipment..................................................................................................................15
4.2 Labour..............................................................................................................................................16
4.3 Housing and Maintenance...............................................................................................................17
4.4 The Poultry House...........................................................................................................................20
4.5 Production Plan...............................................................................................................................20
4.5.1 Production Process...................................................................................................................21
5. Financial Plan.........................................................................................................................................22
5.1 Source of Funds...............................................................................................................................23
5.2 Start up Capital................................................................................................................................23
 5.3 Financial Assumptions.....................................................................................................................25
5.4 Financial Statements.......................................................................................................................25
5.5 Records Management......................................................................................................................27
6. MARKET ANALYSIS SUMMARY...............................................................................................................28
6.1 Market Segmentation......................................................................................................................28
6.2 Target Market Segment Strategy.....................................................................................................29
6.3 Market Trends.................................................................................................................................29
6.4 Competition.....................................................................................................................................30
6.5 Business Competitive Edge..............................................................................................................31
6.6 Marketing Strategy..........................................................................................................................31
6.6.1 Pricing and Promotion Strategy................................................................................................32
6.6.2 Web Strategy............................................................................................................................32
6.6.3 Sales Strategy............................................................................................................................32
7. Management Team...............................................................................................................................32
7.2 Employees.......................................................................................................................................34
8. RISK ASSESSMENT..................................................................................................................................34
8.1 Financial Risks..................................................................................................................................34
8.2 Health Risks.....................................................................................................................................35
8.3 Technological Risks..........................................................................................................................35
8.4 Competition.....................................................................................................................................35
8.5 Other Areas of Vulnerability............................................................................................................36
8.6 Contingency Plans............................................................................................................................36
9. Benefits to the Community....................................................................................................................36
9.1 Direct Impact...................................................................................................................................37
9.2 Indirect Impact................................................................................................................................37
9.3 Ecosystem Impact............................................................................................................................37
10. EXIT STRATEGY.....................................................................................................................................37
1. EXECUTIVE SUMMARY
FAYA poultry is a farm focused on both egg and meat production that provides for a large
market range. It also produces manure as a by-product. It is based in Jimma city, Oromia region.
The persons who have come together to start this business are Eliyas Wolichafo,Endale
Wereka,Henok Tesfaye,Bezawit Mulualem and Hussen Oumer. The founders have noticed the
health implication of red meat and are creating a business to meet the increased demand for
white meat and eggs. Chickens happen to be a great source of white meat, and are also largely
known for egg production.

Not only are the founders interested in meeting the demands of the customer, we also plan to
create utmost satisfaction for these customers. The founders also want to use this business as a
means of creating employment within the community it is based in and to contribute to the
economy of the country. We plan on provide products with quality and maintain this supply
efficiently. This is a partnership business that plans on distributing eggs and chicken to
restaurants, home delivery food centers, hotels, schools, clubs, bakery and catering businesses
and supermarkets. We also plan on doing this at very affordable prices. We will also distribute
manure to farmers that are into crop production.

Not only do we offer products, but we offer services as well. We plan on providing home
delivery services to customers who order a certain amount of products. This offer will mostly be
used by the section of our target market that uses eggs in large quantities like schools and
bakeries.

2000 chickens would be optimum for the initial operation of the business. Production site is to be
in Jimma city, considering plenty open space, cheap labors, road connection, water availability
and immediate access to markets. Finance for this will be gotten from contributions from each
partner and bank loan. Investment in this business shall be allocated to the following purposes:
buying chickens, building cage house, stocking the pellets, hiring the experts and other
miscellaneous tasks. Fifty percent gross margin is expected within 6 months of its operations
withholding the chances of any accidental or unexpected incidence and we hope to obtain the
breakeven point within 2 years.
We have considered the risks, financial, health and technology wisely

1. COMPANY OVERVIEW

1.1 Company Ownership

FAYA poultry is owned by five persons. They are namely Eliyas Wolichafo,Endale
Wereka,Henok Tesfaye,Bezawit Mulualem and Hussen Oumer. It is a partnership and each
person has an equal share in the business and is also equally liable for any business debts or
claims.

1.2 The Name of the company

The company name should convey a strong mental image of what the business is about and
exude a confident and optimistic connotation for the existing and potential customers. In order to
determine an effective company name, we did a brainstorming. During the session, we agreed
that it is very important to properly assess different names for the business before deciding on an
appropriate one because it will eventually serve as a long-term marketing tool. Further, we were
aware that once a name has been chosen, the business owners need to invest their money in
branding the company products and name in addition to creating different marketing materials
(i.e. product advertisements, public relations, logos, company letterhead and stationery, business
cards, etc.). If by some chance the name has to be changed at a later date, then the modification
process can be a complicated, lengthy, and expensive one. Our conclusions were that the name
should be memorable to customers and have positive implications, it should not be complicated
to spell or pronounce and should communicate something about the company and its products.
Therefore, from several alternatives we selected a simple, yet according to our opinion
unforgettable name FAYA. It is an afan oromo word, which can be translated into English
language as ‘’health’’ or ‘wellbeing’’. FAYA is unique, uncomplicated, and easy to recognize
and recall. In addition, we believe that this name will rouse a strong mental image of what the
company is about.

1. 3 Company Location
The company FAYA will be founded as partnership. Main activity of Faya will be breeding,
production and distribution of meat and egg, primarily of chickens. The organization’s premises
will be located in Jimma city. We are trading from this spot because it is a great place to reach
our target market. We think the population base is large enough for our business and it has a
stable economic base that promotes a healthy environment for the poultry business. In addition,
we think it is a spot that could tap a healthy workforce. We also considered pedestrian traffic and
we think a large percentage of them are potential customers. We plan to have a good parking
space and sufficient security in our working site to create a safe environment for the customers.

1.4 Vision, Mission and Objectives of the Company

Vision
 Becoming the "best and most hygienic poultry producer in the area" complying by the
national standards for food and drugs.
Mission
Faya poultry’s mission is to provide customers with quality, fresh, and valuable products, and to
respect all employees and enable everyone to have a say in company affairs. Quality and service
are our number one priority. We contribute to the community through physical and social
programs. Faya poultry farm intends to have the largest poultry farm products.  We plan to
increase and expand our production of chicken to challenge the ever-growing demand for
chicken products. The nutritious and protein rich products from our farm would always be the
first choice of our consumers.

Objectives
FAYA poultry will measure its success by its ability to achieve the following objectives:
 Turn in profits from the first six months of operations.
 Maintain 50% gross margin ratio.
 Winning the hearts and tastes of our beloved consumers and
 Establishing a brand image of the company through heavy marketing campaigns in
the first one year

1.5 Our Keys to Success

Faya poultry will follow these principles in order to achieve success in its market:
  State of art cage framework accommodating optimum number of chickens with lessened
possible hazards
 Diverse slaughters network, market chain management, optimum inventory level and
‘customer is king’ policy
 Regular visits by veterinary medical workers and hygienic poultry house environment

1.6 Why Invest in Poultry?

Rapid growth in poultry is a national priority: The Ethiopian Livestock Master Plan has put
forward ambitious targets to increase in chicken meat production by 247% and in egg production
by 828% by 2020. The GoE recognizes that an enormous increase in production is essential to
close the projected national meat production-consumption gap. Therefore, the GoE has
prioritized interventions to support the sector, and is currently rolling out several initiatives
including: importation of exotic crossbred chickens with higher genetic potential for eggs and
meat, allocation of adequate land for poultry feed production, promotion of private investments
to increase the number and size of specialized commercial scale broiler and layer units, and
encouragement of private sector investment in poultry agribusinesses.

Ability to produce feed locally: Aside from offering attractive prices for electricity, water, and
land, GoE also provides a key advantage in high potential for increased feed production. Feed is
a critical input for chicken production, comprising 50-70% of the cost of raising chicken. In
Ethiopia, key inputs such as maize, sorghum, soybean oil cake, cottonseed oil cake, and others
are locally available at competitive prices. Furthermore, as Ethiopia has no winter, it offers the
unusual opportunity for double-cropping and year-round production with minimal irrigation,
providing reliable supply. The Ethiopian Government is promoting investment in compound
animal feed through the Livestock Master Plan and Agricultural Commercialization Clusters
Initiative. Specifically, the GoE has removed double imposition of VAT and excessive customs
duties on feed mill ingredients
2. Environmental and Industry Analysis

2.1 Environmental Analysis

2.1.1 Economic Development in Ethiopia

With a population of above 110 million, Ethiopia is the second most populous nation in Africa
after Nigeria. It is also one of the fastest-growing economies in Africa, with a GDP growth rate
of 8.5 in 2019. However, Ethiopia is also one of the poorest countries in Africa, with a per capita
income of US$783 p.a. compared to US$2,192 in low- and middle-income countries and a global
average of US$10,721. Ethiopia aims to reach lower-middle-income status by 2025.8

In 2018, Ethiopia’s economy achieved 10.7% GDP growth rate reinforced by strong, broad-
based growth averaging 10.3% a year from 2007–08 to 2017–18, compared to a regional average
of 5.4%, making it the largest economy in East and Central Africa. Agriculture accounts for 42%
of GDP, out of which livestock production makes up 40%. Ethiopia also accounts for 60% of the
total chicken population of East Africa.

2.1.2 Government Policies

The most important policy of the Ethiopian Government underlying agricultural development is
the Agricultural Growth Program (AGP), which aims at increasing productivity in a sustainable
manner. AGP is a broad-based policy program that attempts to improve the whole range of the
production, marketing and agro-processing of agricultural products. It does this by enhancing
productivity, value addition, and market and irrigation infrastructures at the level of the kebele
(village) and the woreda (district), paying particular attention to ensuring the equal and active
participation of both women and men. Poultry improvement is also included and is implemented
through the distribution of layer Day-Old Chicks (DOC) and pullets.

This is followed by the intensive promotion of poultry to the private sector and farmers by means
of various policies, tax exemptions and financial incentives.
Poultry development roadmap (2015–2028): In 2015, the Ethiopian Government developed a
Livestock Master Plan (in collaboration with the International Livestock Research Institute and
BMGF) with the vision of: (i) meeting egg demand for the country’s growing population, (ii)
producing export surpluses, (iii) increasing farmers’ incomes, and (iv) reducing malnutrition
among the rural and urban poor by moving away from backyard farming.

To realize this vision, the government also outlined a poultry development roadmap that
emphasizes the contribution the poultry industry can make to improving food security, egg
consumption and nutrition, and the huge contribution it can make to economic growth. Among
various recommendations included in the roadmap, significant emphasis is placed on increasing
the scale of poultry operations and the volume of production from commercial poultry
production systems. The major intervention proposed for this purpose was the specialized
poultry production system, characterized by increasing the average number of chickens kept per
farm and the number of layer farms (Table 2).

TABLE 2: Estimated number of units and average flock size of enterprises operating specialized
poultry layer farms, and estimated egg production as per Ethiopia Livestock Sector analysis
(2017)

Poultry subsystem 2013 (base 2018 2023 2028 Change compared

year to base year
Specialized poultry layer units 290 587 1,187 2,400 8.3 times
Average flock size of specialized 500 1, 160 2, 673 6250 12.5 times
poultry layer unit
Egg production (in millions) 28 191 1,604 8900 317.9 times

This production system will increase the average number of layers per farm from 500 to 6,250
over a period of five years and will help drive up annual egg production to 8.9 billion by 2028.
This growth is comparable to countries such as China and India, which reached bird farm flock
sizes in the region of 5,000 as they made the transition from being egg deficit countries to being
egg-surplus countries. The surplus eggs created could be also processed into egg powder and
used domestically for new or additional industrial applications (e.g. in the baking industry) or
else exported as egg powder, creating a GDP contribution of approximately ETB 80 billion.
Moreover, farmers’ income will increase by a factor of 2–3 on account of high returns.

To implement this roadmap, the Ethiopian Government is stimulating the poultry industry by
means of various incentives for farmers and private actors (Table 3).

TABLE 3: List of incentives for actors in poultry industry

Easy start-up registration
Financial incentive
Income tax exemption
Import duty exemption
Export duty exemption
• The Ethiopian Investment Commission facilitates the easy
establishment of commercial companies and supports this with
incentives
• Soft loan at 9–9.5% vs. the standard interest rate of 12% for
poultry as a priority sector
• 20-year repayment period, with additional five-year grace
period; no collateral
• Income tax exemption for up to nine years. An additional two
years if 60% of produce is exported
• An additional 30% deduction for three consecutive years if
investment is made in underdeveloped regions
• Tax-free import of poultry machinery
• Exemption from import duty on raw materials necessary for the
production of export commodities
• Tax holiday on poultry exports

2.2 INDUSTRY ANALYSIS

2.2.1 The Poultry Sector in Ethiopia

Traditional production methods dominate the market for birds, eggs and meat. However, during
the past 15-20 years, there has been gradual increase to commercial small- and medium-scale
flock production. This reflects the efforts of the Government of Ethiopia during the period since
the early 1990s to boost the productive basis of domestic birds within a genetic improvement
programme. Herein has been concerted effort to introduce and distribute exotic breeds, provide
improved extension advice and services and to generally exploit the capacity of the sector to
boost rural productivity (with the implications therein for raising incomes, providing
employment and alleviating poverty). These programmes have been introduced courtesy of
poultry multiplication and distribution centres (PMDC) and the Urban and Rural Agricultural
Departments (URAD).

In recent years, an emerging middle-class urban sector with higher income and more buying
power has boosted the demand for poultry products, and this has led directly to expansion of
poultry production particularly within urban and peri-urban areas. One reflection on this has been
the establishment of privately-owned veterinary services – with pharmacies, practices and
medicines widely available. More poultry-service products are now sold.

In addition to the PMDCs, there are a handful of other medium-scale and large-scale
commercial importers of poultry and service materials in both the private and public sectors.
Public sector importers include the agricultural research institutes such as Debre Zeit
Agricultural Research Centre. Private sector poultry farms generally comprise a few dozen
producers, the largest of which are Elfora Agro-Industries, Alema and Genesis. In total they
supply Addis Ababa with about one million chickens and 34 million eggs annually (Demeke
2007). Producers are mainly based in Debra Zeit (60 km from Addis Ababa) and maintain an
important role for the expansion of small-scale poultry production along the main Addis Ababa
and Debre Zeit road axis and in-and-around the two cities.

The demand for improved breed DOC by newly establishing small-scale poultry farmers is much
greater than supply. This is not simply because prices are subsidized, but as a result of the higher
productivity of the exotic breeds and the encouragement of the local office of the UAD. This has
given rise to the emergence of many small-scale importers; for own-use and for trading.

Large-scale investment is following the boom of the small-scale urban and peri-urban poultry
producer, and a number of companies have industrial facilities under construction. Most small-
scale poultry producers sell table eggs and live birds in the local public markets either directly or
through traders. Others have a regular ‘contract’ and supply kiosks, shops and supermarkets.
Most of the main supermarkets in Addis Ababa, for example, receive their poultry products (eggs
and meat) from smallholder producers. Other supermarkets contract with large-scale producers
such as Alema and Genesis Farms.
2.2.2 Competitors in the Poultry Industry
Farms with >1000 broilers or >500 layers are classified as medium- and large-scale intensive
poultry systems. In Ethiopia, statistics on the size and distribution of such producers is not
exhaustive. According to the estimates reported by USDA in 2018, approximately 35 farms in
the country are considered to produce over 1000 broilers. Producers operating with a capacity of
over 10, 000 birds are very small in number and are found in and around Addis Ababa, Debre
Zeit, Modjo and Adama while they are also emerging in the growing urban areas of Mekele,
Bahir Dar, Gondar, Hawassa and Dire Dawa. Currently, there are only a few poultry integrations
in Ethiopia at this scale: ELFORA Agro-Industries PLC, Alema Farms PLC, Ethiochicken,
SAFE Poultry PLC, Astral Foods, and Feedco Animal Feeds PLC. ELFORA Agro-Industries
PLC, located in Debre Zeit, Addis Ababa and Chefa, was established in 1997 and is one of the
largest companies engaged in poultry operations. The company produces parent stock, hen table
eggs, day-old chicks (DOCs), pullets, broilers, and is also involved in meat processing and
retailing for local and export markets.

Broiler meat

ELFORA Agro-Industries PLC and Alema Farms are the two major large-scale intensive broiler
producers in the country. ELFORA has a processing plant with an annual production capacity of
1000 tones of broiler meat. In addition to this, in 2015 it has established an integrated poultry
farm in Chefa with a capacity of 714, 000 broilers per year, producing 5000–6000 tones of
broiler meat annually. Two of its processing plants have export hygiene standards approved and
registered by the Ministry of Agriculture (MoA). Alema Farms has an annual production
capacity of 150, 000 broilers. The farm has a chicken processing plant with a single processing
line for 2000 birds per hour; they also further process some of the chicken meat into sausages.
Currently, Alema Farms operates at limited production, slaughtering only 4 000 broilers per day.

Hen table eggs

ELFORA produces about 112 million table eggs annually. The layer farms of Alema Farms hold
around 15 000 commercial layers. Ethiopia has around 10–20 medium-scale intensive poultry
producers keeping between 1000–10 000 broilers and layers, e.g. Maranata, Almaz, Abebaw
Modjo, Genesis and Fanta poultry farms. Although data on their exact contribution to national
production is not available, they provide a large amount of eggs and poultry meat to the growing
towns.

2.2.3 Strengths and Weaknesses of the Poultry Industry

 Strengths and weaknesses in production, inputs, etc

Strengths

 Increased recognition of poultry production as a business and employment opportunity

for the youth and women, both in rural and urban areas
 Ethiopia has conducive climate conditions
 No HPAI outbreaks in the country
 Increasing production of agricultural commodities particularly cereals and oil seeds
 Rapidly growing number of agro-processing industries

Weaknesses

 Irregular supply of day old chicks (irregular supply from abroad, low national
production)
 Lack of quality feed and poor enforcement of quality control regulations
 No local production of premixes
 No domestic production of veterinary drugs (except for some vaccines produced by NVI)
 Extended government bureaucracies for licensing new investments and facilitating land
acquisitions (mainly foreign industrial and integrated/large-scale intensive producers)

 Strengths and weaknesses in marketing and trade

Strengths

 No cultural taboos in the consumption of poultry products

 Increasing coverage of mobile communications and rural road access
 Investment opportunities exist
 Growing per capita income
 Increasing urbanization
  Existence and expansion of large number of full boarding public universities and
colleges, and other institutions such as hospitals

Weaknesses

 No consumption of poultry products by Orthodox Christians for a prolonged period of

time every year due to religious reasons (fasting)
 Lack of marketing options and market access
 No reliable statistics and market information on poultry production and demand
 Lack of competition in the value chain (monopoly position of some big farms)
 Inadequate infrastructure to transport fresh broiler meat to the market
 Preferences for indigenous poultry products

3. PRODUCTS AND SERVICES

3.1 Product Description

We offer chicken eggs and chicken meat that will be gotten from layers and broilers to our target
market. We plan to take pride in the uncompromising quality of our products. We also offer
fertilizer in form of chicken manure. This is mostly used in vegetable farming and as an
ingredient for feed in fish farming. Faya poultry shall produce high quality, contaminant-free
chickens and the freshest eggs to satisfy the taste of our beloved costumers. The products shall
be distributed into a number of distributors - supermarkets, public markets, bakeries, restaurants
and in the company’s own retail space for easy access for marketing agents and consumers. In
brief our products are;

 Main products
a) Eggs
b) Live chickens
 By-products
a) Chicken droppings
Future products

We have big plans for the future. We plan on supplying cracked egg shells for some detergent
companies for use. These special detergents are used in washing basins and pots. Another thing
we have planned for the future is the sale of processed chicken meat.

3.2 Service Description

We have a plan to offer service to our customers by providing home delivery for customers who
are willing to buy at least a certain amount of our products.

Future services

In the future, we plan on creating a restaurant that has eggs as its main menu. It will be like a
breakfast restaurant. In the future, if this business gets large enough, we would also like to build
our own bakery. A major ingredient in most baked goods is eggs and we will be funding that
through the poultry.

4. OPERATIONS PLAN
The production plan is a very important aspect of running the business. It is synonymous to the
foundation which the business is built on. In this area, two primary aspects of the production plan
will be taken into consideration namely; the required production equipment on one hand, and the
production technique on the other. In the following paragraphs, these two topics will be
discussed at length in light with the poultry business.

4.1 Location and Equipment

The new production plant of Faya will be built near Jimma. The facilities will cover an area of
500 m2 where state-of-the-art technology will be installed. The location is near the road and the
market as well. Water and electricity supply are available too.

For successfulness of chicken production based on the production type and standard, it is
advisable to use suitable production equipments. The different equipments used in the chicken
house differ according to the chicken age, breed and productivity status. The major production
equipments that will be used in Faya Poultry farm are presented in the following table:
 Equipments Description/ uses
Feeders device used to feed the birds, some of
which are made from plastic or meters.
Drinkers These are device use for holding water
for the birds to drink.
Crates
Lighting system  Bulbs and rechargeable for light
Egg tray
Cages
Others

Material Description/ uses

Feeds Feeds for the birds

Water Water gotten from the borehole
Vaccine Treatments for the birds
Day old chick one day old chicken that will be
reared for 8 to 9 weeks

4.2 Labour
As a result of the investment, at the beginning Faya will hire 5 employees of different
qualification profile. More details are shown in the below table.

Job position Qualification Number of employees

Cleaners Previous experience on the 2
same job
Food technicians Qualified worker 1
Security guard Veteran 1
Veterinarian Diploma and above 1
Total 5

The workers will be full-time employed with the average gross monthly salary of approximately
2000 birr. The sum predicted includes health and pension insurance. The salary of individual
employee will vary depending on the educational background, position and behavior. HR
manager will design special rewarding system, training program and appraisal criteria. HR will
also design recruitment and selection procedures.
4.3 Housing and Maintenance
 Layers

Layers produce many marketable eggs for an extended period of time. But when problems enter
the stable, the production may not reach its high level or will stop. Even when the problem is
solved, the production level could be lower. This section describes the care of the layers we use.

Housing and equipment

The maximum stocking rate of growers will be around 6 chickens per 1m² when slats are not
used. The housing will have proper ventilation, prevent draught, etc.

Health
The vaccinations will be completed during the rearing period to avoid that they have to be
vaccinated during the laying period. It will lead to some amount of stress and reduced egg
production. If the layer is not vaccinated, there will be a big risk on diseases.

Just as the other ages, the layers will be observing a few times a day. Attention will be pay to the
production of eggs and their behaviour in comparing to their feed and water consumption.

Water and feed

Clean fresh water is necessary for all type of chickens. The water is required for their
metabolism, but also maintains their body temperature. 500 Layers can drink about 105 litres a
day when it is 20C˚, but when temperature is 25C˚ they will drink around 120 litres. If the water
is not cold enough, the chickens drink a less as possible, which can influence the production.
When they drink less, they also eat less. Therefore, the temperature of the water will be between
20 and 25 degrees. In addition, the water will be checked at least twice a day during hot days.

Recording

We will use a different ways of recording for broilers and layers. The following table shows the
format of recording by layers.

Pen number Number of hens housed

Age in weeks Initial number of hen this week
Weeks in production Final number of hens this week
Day Date Total eggs collected 2nd Grade eggs Dead+ Feeds Remar
MOR AFT Total MOR AFT Total culls mash cereals ca ks

Total + + =
Sample weight eggs:……… kg per ……...… eggs Live weight hen:………………. Gram

Real delivered Number of eggs: Second grade Kg eggs:

…………. eggs: ……… ……………….
Cumulative Total of eggs: Second grade Kg eggs: Kg feed:
…………. eggs: ……… ………………. …………………..

 Meat Chickens

The equipment and care for the meat chickens is almost the same as laying chickens. But meat
chickens grow faster than laying chickens, so the space and kind of materials that are used are
different. In very good conditions, a chicken can reach the weight of 2.5 kg in less than 6 weeks.

Housing
Meat chickens cannot be housed at a slatted floor system because of their weight. At the end of
their life, they cannot walk over the slats; they are too heavy. Therefore, four chickens per square
meter will be hold in case of a bedding material system.

Feeding and watering

The watering space for meat chickens will be around 2.5 centimetres. The water consumption is
higher than laying hens, meat chickens drink around 350-400 ml a day (by a temperature of
27C˚). Meat chickens need 10-13 cm of space
Recording
The table below shows the format that we are to use for weekly recording by broiler.

Week Number of chickens at the start of this week

number:
…………
Day Mate Feed in kgs Dead chickens Calculation
AM + PM = total
1 Mon Average bodyweight at the
end of the week
2 Tue

3 Wed Target weight

4 Thu

5 Fri Mortality % cumulative

6 Sat

7 Sun Feed/chicken/day

Total this week

Previous total Feed chicken cumulative

New cumulative
(Transport to next week)
Remarks:

4.4 The Poultry House

The inside of the plant and equipment will be designed to enable easy, effective cleaning. The
poultry house will incorporate concrete floors, washable (i.e. impervious) walls and ceilings,
accessible ventilation ducts and no internal pillars or ledges.
The wall will not be completely solid, this to allow air movement through the stable
(ventilation). Good air movement is essential to remove moisture, excess heat in hot weather and
odor and gasses from animal waste. Air movement makes sure that animals stay cool, dry and
clean. Providing openings or low built walls, about 1 meter height (with a max of 1.5 meter), will
provide sufficient ventilation without infecting the chickens.

The farm will be located at about 30 meters or more from a road connecting to the poultry farms
and distance of 12 meters from another poultry farm of the same species. It therefore must be
located at a distance of at least 12 meters from another house. Fencing of the poultry farm is also
necessary. The proposed poultry house will be enclosed with a fence such that it will prevent
entering of humans and animals. This fence should reach a height of at least 1.50 meters from the
ground. Lastly, the floors of the house will be concrete to enable the ease of cleaning and
disinfection and it will be elevated to about 30 cm above the surroundings level

The optimal reproductive performance is dependent upon achieving high management standards
in the early life stages. Management during the first seven days of a breeder chick’s life is critical
as it has a lasting influence on health and performance for the remainder of the chick’s life. The
principle objective during the brooding period is to obtain the best possible early chick
development and uniformity.

4.5 Production Plan

In our poultry, we are planning to keep 1000 chickens for meat, and 1000 layers for eggs. For
1000 layers for eggs, each hen is expected to lay least 1 egg per day. For the whole day, 1000
eggs will be produced. For every 3 months, 1000 adult chickens will be sold. Our production
target is to reduce cost of production by at least 20% in the next 3 years.

4.5.1 Production Process

The production process for this business refers to the techniques and stages involved from
sourcing the day-old chick up to the time they are grown and ready for the market. Although this
is just a business plan, nevertheless, it is relevant to understand how the birds will be made ready
for the final market. The system of production adopted by the farmer depends on the number of
chickens that will be raised. In the following sub sections, the production techniques for broilers
and layers will be separately treated.
Production Technique for Layers

We are starting with POL (point-of-lay), these are birds in their fourteen to twenty weeks of age
(birds often start dropping their first egg from 22 weeks to 24 weeks of age). Advantage of
acquiring Point Of Lay birds is the reduced risk. During the rearing period, the chicken is
preparing for laying. An excellent rearing period is conditional for first class egg production. The
chickens will be controlled in health, condition and protected to diseases.

The maximum stocking rate of growers will be around 6 chickens per 1m². The housing will
have proper ventilation, prevent draught, etc.

Production Technique for Broilers

It takes about 8-9 weeks for a day-old broiler to reach maturity and all-in all-out technique will
be used. Under this technique, day-old broiler chicks are purchased in one single batch, grown
until maturity and sold in one batch to the market. This technique allows us to clean and disinfect
the farm before receiving the next batch of broilers, making it easier to control the spread of
disease.

PHASE 1: day-old chicken is purchased from a reliable source and reared in the brooding facility
for 4 weeks and then transfer to the broiler’s cub after 4 weeks.

PHASE 2: Four-week old chicken are continued to be reared for another 4 to 5 weeks, before it
is ready for the market. Production capacity of the proposed farm is One thousand broilers for
the start, which is subject to change, it takes 9 weeks for a day-old broiler to grow to maturity. In
a period of 1 year, about 4000 broilers will be reared.

5. Financial Plan
Financial planning is the process of estimating the capital requirement. Here the financial plan
includes the financial projections for the first 2 years of operation, pre operating and operating
expenses, startup capital, funding source, proposed selling price and financial assumptions
5.1 Source of Funds
The source of fund for the business will be from two origins. The first will be from bank, while
the other will be from personal means (from the founders). However, the higher portion of the
fund will be sourced from the founders. The percentage for each of the fund source will be
named in the table below

TABLE 4: Source of Funds

SOURCES OF FUNDS AMOUNT %

Bank loan 613, 800 40
Personal equity 920, 700 60
Total Funds 1, 534, 500 100

5.2 Start up Capital

Items Amount

Pre-operating Expenses 230, 000

Opening Stock 12, 600

Total Operating Expenses -3months 1,291,900

Total Startup Capital Estimated 1, 534, 500

Pre-operating Activities

This comprises of the cost of land, cost of preparing the land, electrical, cost of equipment’s, cost
of preparing the brooding room for day old chicken and cost of registering the business. All of
which are cost activity that precede the operation

TABLE 5: Pre-operating Activities

Pre-Operating Activities Amount

Land acquisition …….
Land preparation/Building 150,000
Electrical/Plumbing 10, 000
Purchase of equipment 100, 000
 Business registration/local gov’t tax 15,000
Total 230,000

Operating Expenses

The operating expense refers to the estimated amount required to keep the business running on a
periodic basis. In this case, one period represents three month, which comprise of 90 days on an
average. Thus, in this aspect, the focus is on the general cost including the cost of feed,
maintenance as well as salary for the staff.

Monthly Period 1 Period Period Period Period Period Period Period Total
Expenses 2 3 4 5 6 7 8
Apr-jun Jul-sep Oct- Jan- Apr- Jul-sep Oct- Jan-
dec march jun dec march
Salary 30000 30000 30000 30000 30000 30000 30000 30000 240000
Expenses
Feeding 1004400 100440 100440 100440 100440 100440 100440 100440 8,035,20
Cost 0 0 0 0 0 0 0 0
Vaccine 2,500 2500 2500 2500 2500 2500 2500 2500 20000
&
Medicati
on
Purchase 250,000 125,00 125,00 125,00 250,00 125,00 125,00 125,00 1,000,00
of DOC 0 0 0 0 0 0 0 0
Insurance 5000 5000 5000 5000 5000 5000 5000 5000 40000
on Birds
Total 1,291,90 3502400
Operating 0
Expenses
Opening Stock

Stock/Item Cost
Vaccination 10, 000
Cleaning materials 2,000
Nose mask 600
Total 12,600

5.3 Financial Assumptions

In order to be able to make financial calculation, the following assumptions are considered:
assumption for Inflation is 5%, assumption on Interest rate is 9%, assumption on Tax is 5%,
assumption on depreciation is based on straight line method, assumption on Salary increment
5%, assumption on Insurance 5%, and assumption on exchange rate

5.4 Financial Statements

In every project, we have to pass through the financed process. This have to do with the starting
of business, whether the personal income used or term loans from banks. In our business, the
financing structure and ways of doing it is like the path below.

Products Description /details Proposed Selling price

BROILER 1 BROILER 400
Egg 1 egg 5
MANURE 1 BAG OF MANURE 150

Projected Income statement

Income 1st year 2nd Year

Live chicken Sales 4704000 4704000

Eggs sales 5292000 5292000

Fertilizers 41600 41600

Total income 10037600 10037600

Expenses

Feed 2640000 2640000

Day old chicken purchase 625000 625000

Insurance 50000 50000

Long term assets 1601000 0

Labor 912000 912000

Advertisement 10000 10000

Other expenses 100000 200000

Total expenses 7240000 5739000

Net income before tax 3697600 4286000

Taxes 379760 379760

Net income 2668010 3256410

In the third year, we are planning to raise 1000 addition point-of lay chickens. This will make
our income to rise as well as the cost of feed and POL chicken to increase. The total income will
rise from 10037600 to 11176000. We will need also 2 additional cages that will cost 100000.
The depreciation amount comes from the equipment’s that are expecting to be sold after a certain
period of time.

Cash flow analysis

No Particulars Year 1 Year 2

I Costs:
1 Capital cost 3,000,000 0
2 Recurring Costs:
a Land and building 1,601,000 0
b Cost of chicks 975,000 975,000
c Cost of feed 2,640,000 2,640,000
d Insurance 50,000 50,000
e Labor 912,000 912,000
f Internet 50,000 50,000
h Advertising 10,000 10,000
j Other expense 100,000 200,000
Total 7,240,000 5,739,000
Benefits
3 Sale of manure 41,600 41,600
4 Sale of eggs 5,292,000 5,292,000
5 Sale of live chickens 4,704,000 4,704,000
6 Depreciated value of
a Cages 25,800 25,800
c Other equipment 11,600 11,600
d Building 6,000 6,000
7 Tax 379760 379760
Total benefit 2,668,010 3,256,410

Tax to be paid is 15% of the net profit. Depreciation on cages is 8.3% of the money we bought
them. Depreciation on building is 3% of the money used to build. Depreciation on other
equipment is 15% of the money we purchased them.

5.5 Records Management

As to records management, each project will have a record book on which information on the
number of stocked live birds, slaughtered and deaths are recorded. Record keeping will help us
to budget accurately and make informed decisions about the poultry. The records will contain
information such as

 All feeds consumed and purchased

 Number of hens purchased
 Deaths and causes
 Vaccination and other veterinary requisites expenses
 Labor and other variable costs
 Number of eggs collected daily
 Number of eggs sold and used for home consumption
 Number of eggs damaged and
 Water and feed intake daily.
6. MARKET ANALYSIS SUMMARY

6.1 Market Segmentation

Although in Ethiopia, there are a few taboos, religious or cultural practices that will prevent the
consumption of poultry products, during the market segmentation, we found out that nearly
everybody eats eggs and meat, so we are targeting the whole market, individuals, homes and
firms that use eggs and chicken in large quantities. Specifically there is a high demand for live
chickens for home consumption or as gifts during festivals like Christmas, Eid-al-fitr, New Year,
Easter, etc.
 Market Segmentation

Hotels and restaurants

Bakeries and food joints
Retail shops
Homes
Individuals
Others

6.2 Target Market Segment Strategy

Individuals are a small sector in the market segmentation. They are a pretty large group but they
buy a relatively small amount of eggs.

The part of the market that we hope to supply large amount of eggs to are the industries that
need eggs. We have strategically placed our site close to these industries. They are bakeries,
restaurants, boarding schools, home delivery food centers, retail shops and supermarkets.

Another part of our target market that will order our products in medium quantities are the
homes that will require our home delivery as we have a set amount of eggs they need to order
for. Homes generally utilize eggs in the preparation of edibles like chicken burger, chicken pie,
salads, etc.

The parts of our target market interested in live chickens are small scale poultry farmers and
festive individuals. We have considered the needs of each section of the target markets and we
plan on meeting these needs effectively.
6.3 Market Trends
With over 100 million people, the Ethiopian population is the second largest and one of the
fastest growing in Africa. It is expected to grow to about 112 million in 2020 and to 125 million
in 2025 (UNDESA, 2017). Currently, about 20 percent of the population lives in the cities. The
urban population increased from 9.7 million to 19.3 million between 2000 and 2015. This
number is expected to rise further to 30.2 million by 2025 and 70.5 million by 2050. Although
the current consumption of poultry products is among the lowest in the world, the domestic
market is expected to take off following the trends in the population growth and increasing
income. The market share of eggs and chicken meat from exotic breeds is growing. For instance,
in 2018 the contribution of exotic chickens to the total national egg output was less than 5
percent (CSA, 2019). In 2019, exotic breeds contributed to 27.3 percent of the total number of
eggs produced nationally (CSA, 2020).

Although traditionally the eggs and meat from exotic breeds are less preferred to the indigenous
owing to the existing cooking and consumption habits, the trend is changing. There are large
numbers of bulk consumers such as full board public universities and colleges (serving over half
a million students), hospitals, hotels and restaurants. Promotion and education on preparation of
different food recipes is underway and public awareness on diverse cooking styles is on the rise.

None of the major international fast food brands (e.g. McDonald's or Kentucky Fried Chicken)
has restaurants in Ethiopia. The reason is that there are no poultry meat processing plants in
Ethiopia meeting the welfare, slaughter, health, biosecurity and Hazard Analysis and Critical
Control Points (HACCP) standards required by these major fast food chains (USDA, 2019).

6.4 Competition
Competition is not so keen in the markets. However, it still exists. The reasons are;

 Poultry products are not branded products; hence, what usually matters is effective
positioning and timing.
 Poultry market is not crowded; it is a seller’s market.
  Most poultry products are sold through informal channels. Competition is usually found
within local products and imported ones.

However, this is an increasing business in terms of number of people who are doing it. This is
because Ethiopia is still importing chicken product from other country. Our competitors include
those who sell meat and fish. Although those competitors are available, a large number of
Ethiopians still lacking essential food components, which are proteins. According to data from
CBN and FAO, only 0.5Kg of beef is available to an average Ethiopian per year, and only 1Kg
of eggs is available to each Ethiopian in a period of one year. There are poultry farmers;
however, many of them are backyard farmers, small scale and they production is too low to
satisfy the demand of customers. The demand is high for live birds and eggs either for
consumption or for gift in the time of Christmas, New Year, Easter, id-el-fitri etc. The products
of poultry are also needed in fast food business, which engages in the sale of products like
chicken, eggs bronze, etc. After having a look and analyzing this scenario, we decided to come in
this industry to solve problem of malnutrition in our population. Therefore, to achieve a
breakthrough in our business we will be using our motto “customer is the king.” This means that
everything we will be doing is basically to satisfy the needs of our customers.

6.5 Business Competitive Edge

Our strength over competitors is firstly based on the fact that we are not entering this business to
make much money. We are entering this industry to solve the present problem that our
population is facing. We are here to provide quality affordable chicken products. We saw that
some of our competitors are seasonal they only produce their chicken at a given period of time.
We will not work like that always is ready to provide chicken and eggs. We know the importance
of time and know that people have many and varying activities; knowing all that we will be
delivering our products to the customer’s door. Through our motto “customer is the king” we
will have an ever fast delivery. The other factor that will help us to have success over our
competitors is to motivate our employees and helping them to improve their way of living, this
will help our employees to be focused on their work and provider better services to their
customers. We expected our business to grow and start working at national level and this will be
achieved through hardworking of management team and efficiency and effective use of materials
and time is the key to be successful over our competitors.
6.6 Marketing Strategy
Faya poultry will strive for the production of products with the highest quality and we plan on
employing the following strategies. Our location puts us in proximity of a major hotel,
restaurant, schools with campuses and home deliver food centers we will be supplying to. We
would also make contracts with hawkers in markets to sell our live chickens and eggs. We would
also make contracts with retail shops for constant supply of eggs at intervals.

6.6.1 Pricing and Promotion Strategy

The price of the chicken would range from 300 up to 500 birr depending on the size and quality.
Also, the price for an egg ranges from 3 to 6. The price of a wheelbarrow of manure costs about
200. These prices would also vary depending on the existing market price of poultry meat and
eggs. As we compete with other poultries, we will promote our products through advertisements
with the aid of streamers and pamphlets. We will also make our products and service known in
the newspapers. We have created a website too to let the consumers know of our business.

6.6.2 Web Strategy

Faya poultry also has a website where customers can interact with us and get a feel of what the
business is about. We know a site or two where we can place online advertisements and we
would also make mentions of our poultry in online newspapers.

6.6.3 Sales Strategy

 Better farm management practices
 Regular visit by veterinary doctors
 Recycling wastes as fertilizer
 “consumer is king” policy
 Keeping up with new technology for production efficiency

7. Management Team
The management team is simply the partners in this business. The team members that will be
chosen to lead the company towards successful start–up and constant growth should represent
combination of experience, up-to date knowledge in technology and communication abilities
with the suppliers and customers.
The management team consists of the founders. These are Eliyas Wolichafo,Henok
Tesfaye,Endale wereka,Bezawit Mulualem and Hussen Oumer .

1. Eliyas Wolichafo: Chief Executive Officer: As the top manager, the CEO, he is typically
responsible for the entire operations of the poultry. It is his responsibility to implement
decisions and initiatives and to maintain the smooth operation of the poultry, with the
assistance of the management team
2. Bezawit Mulualem: Chief Operational Officer: as the COO, she looks after issues related
to marketing, sales, production and personnel. More hands-on than the CEO, the COO looks
after day-to-day activities while providing feedback to the CEO.
3. Henok Tesfaye, Chief Financial Officer: Also reporting directly to the CEO, he is
responsible for analyzing and reviewing financial data, reporting financial performance,
preparing budgets and monitoring expenditures and costs. The CFO routinely checks the
corporation's financial health and integrity.
4. Hussen Oumer, Chief Information Officer: She reports directly to the CEO and is a more
internally oriented person focused on technology needed for running the poultry. She is also
in charge of the web designs of the poultry.
5. Endale wereka, Chief Revenue Officer: He is responsible for all revenue generation
processes in an organization, and is ultimately accountable for driving better integration
between all revenue-related areas.

7.2 Employees
Apart from the management team, other personnel include

1. Cleaners
 2. Security
3. food technician
4. Veterinary doctor

There are 2 cleaners, 1 security, 1 food technician and a veterinary doctor. Except from the
veterinary doctor, the personnel are on a monthly payroll and are all in a short time contract with
the poultry.

8. RISK ASSESSMENT

8.1 Financial Risks

 Changes in our pricing policies or that of our competitors
 Fluctuation in revenue from distributors and retailers
 Timing of costs related to acquisitions or payments

8.2 Health Risks

Contagious disease and virus outbreak is very deadly; if one of the chickens should catch the
disease, all of them will be affected and if it is not recognized and treated early it will lead to the
death of all the chickens which is a great loss for the business. And also some of the diseases are
also contagious to human not just between the chickens which will affect the workers and also
those that eat it.

Disease prevalence varies from one area to the other. The problems that may trigger disease
conditions are direct sunlight on egg trays or nests, poor ventilated houses and very high
temperatures in and outside the poultry house, which may weaken egg shells resulting in poor
egg quality. All these conditions will be avoided to the best of our abilities.

Another thing we considered during the risk assessment is the mortality of the chickens, which is
inevitable since we are dealing with living things. This can be managed with good management
and has been calculated to range between 5-10%.

8.3 Technological Risks

Technology is good but they also have their disadvantages. There are normally problems
involved in using technology; the use of the machine that collects eggs may fail to work or spoil,
making the work slow and adding more cost to the business by repairing it. The cost for
electricity is also not easy and some electric problems can lead to fire outrage and burn the
building causing the loss of assets and perhaps the entire business.

8.4 Competition
The company would be new on the domestic market, where several companies have already
established brands. Even though FAYA will pursue the strategy of penetration, the competition
is expected to act very quickly. The competitors are expected to react in one of the following
ways:

 Reduce prices of their products

 Improve certain attributes of their products
 Start a more aggressive promotional activity
 Find out more efficient channels of distribution

8.5 Other Areas of Vulnerability

The company cannot influence the macroeconomic factors since the government regulates them.
However, the company would fight against these changes by its flexibility and readiness to
adjust changes quickly.
8.6 Contingency Plans
As we considered these risks, we have also made contingency plans for unprecedented events or
occurrences. As per the health risks, we will have plans with a veterinary doctor that will have
regular checkups with the chickens while giving them the best environmental conditions.
Another contingency plan we will make is insurance that will protect our assets. One of the risks
we have to face mentioned earlier, the occurrence of a fire outrage will be curbed by placing fire
extinguishers at strategic places. And in case of financial crises, we may have to resort to getting
loans.

The company has anticipated the possible ways that could be used to fight the competition. The
management expects that launching period of the company's products, when the prices will be
slightly lower than those of the competitors' brands would take long enough to attract the
customers. The quality of the products and the intensive distribution would add up positive
results, which when combined with the aggressive promotional campaign would contribute
towards achieving the planned success

9. Benefits to the Community

Ethiopia is a unique market in which investment can contribute to improvement in incomes and
livelihoods. With 42% of GDP and 77% of employment, agriculture is the lifeblood of Ethiopia
and presents an opportunity for impactful investment. Poultry in particular is often raised in a
decentralized model, contributing directly to smallholder farmer livelihoods, and increasing
availability and affordability of chicken meat and eggs will be critical to combating malnutrition
in Ethiopia.
9.1 Direct Impact

This investment would employ 500+ people in the rearing and processing of poultry, in addition
to providing partial employment to smallholders if an out-grower scheme were used for raising
chickens.

9.2 Indirect Impact

By creating a demand sink for animal feed, particularly soybean and maize, this plant would
support farmer livelihoods. Furthermore, by supporting import substitution, the investment
would preserve foreign exchange earnings.

9.3 Ecosystem Impact

By increasing production of eggs and chicken meat, Faya will enable Ethiopia to increase
availability and affordability of quality protein sources, addressing malnutrition.

10. EXIT STRATEGY

Our strategy is to fortify our position on the domestic market and increase our market share
gradually. We direct all our business efforts towards becoming leader and taking the place of the
current one. This should be realized through high capacity utilization and massive distribution of
our high quality products. In order to expand the business at medium term perspective, we would
consider the following actions:
  Acquisition of domestic company, offered for privatization, and
 Establishing joint venture with foreign partner

The first move could be planned as introductory one in expanding the business. In the country,
there is number of companies looking for investors to privatize. We would make the decision for
acquisition of existing company, once we have conducted a detailed analysis and have
recognized opportunities to expand our market share and improve our competitive advantage
significantly. This would surely strengthen our position on the market, especially if we could
achieve forward vertical integration.

The other possibility is, as mentioned before, to create joint venture with some of the existing
competitors. Our company should have the majority stake in the newly formed entity. This could
also be realized with a foreign investor interested in the Ethiopian market. When a big foreign
company would come to explore the possibilities, we would be able to offer our company with
the acquisitions previously realized. It would significantly improve our chances to sell the
company to a potential investor at a much higher price. The strategy of all big companies is when
making acquisitions or mergers; they do it with the market leaders. Since our business goal is to
become one, they could consider our company as a prime potential partner. The potential buyer
would evaluate our company based on its most recent performances and future perspectives:
What do we have to do?

There are several key points for our company in creating good image for the possible partner:

1. We have to keep high profile by getting well known by industry competitors.

2. Rapid growth is what we are expecting to achieve with the company. Potential partner
will appreciate more rapid growth, which leads to high profits.
3. Controlling market share can contribute to a big valuation of the company
4. Building up technical advantage over the competitors

However, our company would pursue the strategy of becoming leader on the market, and
keeping that position in the following years. The value of every business would depend on the
market demand and on the way we are managing the business, which would determine the profits
our company would generate.