ESTABLISHING CATTLE, GOAT AND

SHEEP FATTENING AND BREEDING FARM

IN SHERARO

PROJECT OWNER :- ATO SEBAGADIS NUGUSIE HAFTU

:-
CONSULATANCY BY:-

KALAYU KIROS INVESTMENT AND BUSINESS CONSULTANCY

MOBILE : +251912033859/+251933473696

Email: jankalayu2011@gmail.com

P.O.BOX : 315

MEKELLE, TIGRAY, ETHIOPIA

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 April, 2012E.C

:-

BACK GROUND ABOUT MEKELLE

1.1 General
Mekelle is one of the ancient cities of Ethiopia. It was found in 1872 Haste
Johannes the IV. Mekelle is the capital city of Tigray National Regional state
(TNRS). It is located in north Ethiopia, at a distance of 783 km from Addis Ababa.
1.2 Climate
Mekelle enjoys a mild climate that can be described as ‘Woinadega’ (mild high
land climate) with an average temperature of 250C. There are two main
seasons: he rainy and dry seasons. The rainy season runs from June through
September while the dry season goes from October through May. The average
annual rainfall is about 579 mm.
1.3 Population and unemployment
The total population size of the city in 2004 was estimated at 207,308. Out of
the total population 96,813 (46.7%) are male and 110,495 (53.3%) are female.
The annual population growth rate is about 5.5%(medium variant).
According to a study conducted between November 2002 and February 2004
by Addis Anteneh and Associates ‘ the overall rate of unemployment in the city
was 21%.’

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 According to the welfare monitoring unit (WMU) of the former Ministry of
Economic Development and Cooperation (MEDaC 1999;2000) 43% of the total
population of Mekelle was living below the absolute poverty line.
1.3 Size of the City
As the size of the city population grows from time to time so the demand for
land increases that determines the size of the city. At its establishment in 1872
by Haste Yohannes the IV the city was relatively equivalent to a small village.
After 130 years of its establishment, the city with the population size of 216,587
has become one of the big cities in the country by engulfing many surrounding
small villages and towns.

The city had the total land area of 16km2 in 1984, the size of the city reached
23.04km2. By showing a dramatic increase, the size of the city reached 53 km2
area in 2004 and 74 km2 in 2005 by engulfing the vast agricultural lands,
neighboring villages and towns.

1.4 Cultural and Recreational Amenities

Cultural and recreational amenities are essential to engage the city population
in general and the youth in particular in useful activities in their luxury time.
They promote and facilitate social interactions with in community; Mekelle has a
number of recreational and cultural centers.
Cultural centers include all spots that have cultural and social importance such
as museums, art galleries, amusement centers, public parks etc. Such activities
are mostly located in or around the centers and sub centers of the city.
With in the city with easy access, there are a number of recreational parks and
playgrounds, palace park, Endra raise Park (near Mekelle Hospital), and Elalla
Hotel park are few of the parks that give services for the city population.

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SUMMARY

A cattle fattening business plan sometimes accompanies the funding documents

designed for farms and meat operations. Rarely is cattle fattening its own business, in
other words, but often it's a vital component of a cattle raising operation and is
therefore described in detail in a section of a larger business plan. Cattle fattening can
take many forms, though it traditionally involves feeding cows that are kept in a tight
enclosure a fat-rich diet designed to get their mass up.
The project proposal deals to establish Cattle fattening farming plant and breeding in
the first phase then it will expand to manufacturing and processing of meat . The
project is intended to be established by a private investor sebagadis Nugusie Haftu
who has a long year developed experience on different business activities. The
project will have a strong for ward and back ward linkage with the development of
agricultural sector.
The total initial investment required for the establishment of the proposed projects is
estimated at birr 15,200,000.00 of which birr 5,750,000.00 is for purchasing of Cattle’s

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and the remaining is for constructing and working capital , it is proposed to be 100% of
from different donor and bank loan.
The proposed project will start its operation at 70% of its capacity and it will increase
to 80% 90% and 100% in its 2nd, 3rd and 4th years of operation respectively.
The project can be said that it is both market oriented and resource based plant since
it is agricultural farming related activity.
The financial viability of the project has been tested using profit and loss statement,
financial internal rate of return and pay back period criteria. Accordingly, the annual
income statement shows that project is financially viable and has IRR of 19% as far as
the pay back period is concerned, the project could recover is fixed investment out
lays after five years and four months.
More over, the project could have socio economic benefits in crating job opportunities,
generating revenue to the government in the form of takes, crating hard foreign
exchange, supplying, supplying basic human needs etc.

I. Market situation
Marketing is the performance of all business activities involved in the flow of
commodities from the point of production to the hands of potential final consumers
through different channels or outlets. The most important and driving force for success
if the on going poultry development effort in the region would be the availability of
promising year round market for the poultry products. Because, market is an important
aspect and is a final step in the stockman’s operation which determines the loss or
profit on the financial, labor, time investment of the producer.
The proposed fattening project is actually the production of food which is one of the
most vital elements necessary for human health and progress. There fore, hygiene
and traceability are all important. How ever, at present there is no any commercial
Cattle fattening farming activities in the region rather the demand for the product is
somehow being satisfied smalls farming activities and individual traders.
Supply

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According to mekelle urban agricultural office, there are 6210 households in mekell
city which have 15105 indigenous breed and 4800 exotic breeds of caws. Hence
about 4600 numbers of cattles in estimated to be produced to the market This means
it’s very insignificant in relation to the population of the city. Rather, the individual
traders supply more than 10,000 which has been administrated by tigray region
bureau of agriculture that produces and getting from the rural farmers. The suppliers
of Cattle fattening products .
Demand
Concerning the demand side, Mekelle the capital of Tigray region, have more than 80
hotels, 95 restaurants and 89 bucture , universities, ) as well as several hospitals,
universities, military camp and their ever-growing human population that consume
poultry products. According to the feasibility study of the project the demand of the
town should be for meat very high for year. Besides,
There fore these are expected to be the major consumers of the out puts of the
project..
Generally, the demand for this item emanates from house holds of a relatively mid and
high-income level, hotels and restaurants, canteens and institutions such as schools,
universities hospitals, and training centers. The demand for the product of the
proposed project is affected by a number of economic variables such as income level,
urbanization, population growth rate, price level for the product etc. the Cattle fattening
in the region in particular and the country in general is at a very rudimentary level.
Data obtained from central statistics authority depicts that the stock of cattle’s
production in the region on private based holdings shows that is between 50 thousand
to 100,000 thousand and it is very low in comparison to the urban population number.
Because of this fact, the price of cattle in the past few years is increasing from time
and this shows that there is ample unsatisfied demand for meat.
Data obtained from mekelle urban agriculture shows that the price of meat increases
from birr 70 to birr 100 in these years. Above and beyond, the regional government
through the agricultural bureau has introduced the development of small fattening
farming activities in the region and this by it self has created demand .

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Moreover, Fattening consumption is growing rapidly all over the world and fattening
has now become a global food industry. There fore, dressed chicken meat has also a
huge market potential on foreign market. so the proposed modern fattening farming
activity has an ample market for its out both on local and foreign market and
implementation of the project is highly recommended.
II. production capacity and program
production capacity
the proposed Cattle fattening farming activities production capacity will be determined
based on a number of economic variables such as the scope of the market, level of
investment, availability of skill manpower, quality and selling price of the product,
availability of supply inputs etc. the proposed project will start its operational activities
by purchasing 25 female and 75 male hybrid Cattle. The total cost of the Cattle
fattening to be purchased is expected to be birr 750,000.00 at a unit cost of 7500 birr
per cattle for female and male respectively. In addition to this the proposed project will
start using 4000m3 land will be necessary of the above basic facts, the annual sales
attainable at full production.
.

Other in puts
On cattle fattening farming activities taking health care for cattle is very important.
There are a number of activities which are under taken to keep cattle health. The best
for the prevention of diseases is good hygiene and disinfection. Besides vaccination
and using antibiotic is very helpful to have health cattle in the farm. At full capacity
operation the annual total cast for medicine ,chlorine and water treatment is estimated
about birr 25,000.
utilities
utilities such as water supply, electricity, diesel, communication facilities etc are
indispensable for the smooth operation of the project activities. Water supply is used
for drinking chicken, cleaning the chicken house purposes etc. above all the supply of
wither for the plant should be cool, clean and fresh water. Lack of water can seriously
retard growth and impair egg production. Since the body of hens is made up of 60%
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water and eggs are approximately 56% water. Lick wise, electric power is used for
drive motor operating machines, heating poultry after the incubation period and
lighting purpose. Diesel is also used for running the water pump machine. All these
facilities are already in place.
The annual utilities cost at full capacity operation of the proposed plant is estimated
about birr 73,825. The required amount of utilities with its respective price is shown here
below in
Annual utilities cost at full capactity
s/n Utilities type Unit of measurement Required Qty Total value (birr)
1 Electricity KWH 12000 6,000.00
2 Water M3 19800 24,700.00
3 Diesel liter 4500 19,125.00
4 Communication 10,800.00
facilities (fax,
telephone etc.)
5 lubricant 7,200.00
6 Other 6,000.00
Total 73,825.00
III. Technology
4.1. Technology
Cattle fattening farming is raised all round the world under very different
circumstances. The main objective is always the same, which is to maximum no cattle
with low cost as possible. There are two form of cattle fattening raising, namely
subsistence fattening farm, keeping small no. of cattle Fattening at home and large
scale commercial cattle fattening farm a steady supply of low cost feed must be
available and guaranteed. In this case, use of locally available resources and
materials is indispensable.

2.2. Office equipment

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Office equipment such as computer, fax machine and other fixture are very important
for the operation of the plant. Office furniture will be purchased form the local
manufactures. The total cost of office equipment and furniture is estimated about birr
35,000.
4.2.3. Location and civil work
i) Location
The project can be said both market and regional development since it is going to be
established in Mekelle town, the capital city of tigray region where the basic
infrastructural facilities such as electric power, water supply, telecommunication, road
etc.. which are highly demanded by the plant exists. Mekelle as a capital city is
expected to have about 250, 000 population, this by itself will have huge amount
demand for selling of meat and .
Plant lay out
The project lay out will be made in such a way that a smooth linkages among the
different type of Cattle fattening farming plant exists. In other words, it has been made
according to the generally accepted modern cattle fattening farming plants. The lay
out of the plant consists of fattening palce.
ii) Civil works
the required total land of the envisage project is 50,000m 2 out of which 37000 m2
squire meter is built up area the remaining 13000m 2 used for other activities including
for irrigation purpose, which will grow different type of vegetables to use for cattle
fattening feed and also for the loading and unloading of the product, parking etc,. The
total cost of the building and land lease is birr 250,000.00 and land will be getting from
the government for long term leasing. the built up area of the plant will be used for,
fattening , store, administration staff office etc.
the required buildings for the proposed project with their respective cost are given
here below table.

No Description unit Total price

1 Fattening & breeding where houses (100m*50.m)* 5 Birr 10,000,000.00
2 Office, toilet &sealing house (50m* 40.m) birr 50,000.00
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3 Store (100m*50.m) Birr 40,000.00
4 Food processing room (100m* 50m) Birr 30,000.00
Total 250,000.00
IV. organization and manpower
An organization is dependent on its environment which provides resource inputs
and utilizes its out in order to achieve an efficient and effective operation of a firm,
it is necessary to have a realistic arrangement between the work flows. The
organizational structure of the under study cattle fattening farming plant shall have
three major sections, namely fattening section, food processing section and
administration section. All sections will report to the general plant manager.
The proposed plant should be strongly managed to achieve solid growth.
Accordingly, the plant will be managed by the owner of the project since he has a
long year experience on cattle fattening farming activities. He has a generated
experience on planning, designing, and coordinating on the operational activities of
cattle fattening farming.
The finance and administration section is responsible for budgeting, accounting
record, costing, and sales and distribution, purchasing and other day-to-day
activities. The cattle fattening will be responsible for all performance of the cattle
such as daily health, feeding, cleaning, watering etc, and also the Fattening feed
processing will be responsible for cultivating and preparing ( processing) of cattle
feed etc.
The estimation of manpower requirement is determined based on the type of
investment level of invested capital and level of the technology and it will create job
opportunities from the existing local market. Accordingly, the proposed plant is
expected to create job opportunity for more than 138 persons. The annual labor cost is
estimated to be birr 91,200. The detail break down is shown here below.
S/ Job description Required Monthly salary Total annual
No number per employee salary
1 Plant manager (finance and 1 1400 16800

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 administrator head)
2 Animal veterinary expert 5 1000 12,000.00
3 Animal (feed) production expert 5 800 9,600.00
4 Animal health technician 3 600 7,200.00
5 Food supplier to animal 35 500 30,000.00
Casher & store keeper 15 450 10,800.00
6 Seller and purchaser 5 400 9,600.00
7 Gourde and cleaner 28 500 90,000.00
8 Daily laborer 41 400 48,000.00
Total 217,200.00

VI financial and economic analysis

The financial analysis of the project has been worked out under the following major
assumptions.
 The smooth life span of the project is estimated to be 10 years, though the
projects life could be more than 10 years.
 The initial investment cost will be covered donors and bank loan .
 Replacement of fixed assets is not assumed during the estimated 10 years
life span of the project. Therefore, at the end of the 10th year of operation
the scrap value of fixed assets would be their book value.
 Fixed assets are bound to deprecate on straight-line method i.e.
 6.1. Initial investment
6.1.1. Initial fixed investment
The initial fixed investment category comprises a capital requirement for
purchases of different food items for the cattle and equipment building, office
equipment, etc. the initial investment out lays for the implementation of the
under consideration plant is estimated to be birr 250,000.00.
6.1.2 Working capital
For the starting of its operational activities, the project requires a working
capital, which is utilized to salary and wage raw material for cattle fattening

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 feed etc , as shown below, the working capital requirement of the project
during full capacity operation of the plan would reach birr 137,766. the initial
investment break down of the envisaged project is given here below.
Description Amount value (birr)
A. Fixed assets
Building and land lease 250,000.00
Some equipment for fattening 100,000.00
Cattle , Goat and sheep purchasing 750,000.00
Office furnisher 50,000.00
Erection and installation 9,000.00
Pre-production expense 5,000.00
Sub Total 1,164,000.00
B. working capital
Row material 50,000.00
Veterinary drugs and chemicals 6,000.00
Utilities 9,0000
Salary and wage 217,200.00
Other costs 15,000.00
Sub Total 297,000.00
Grand Total (A+B) 1,471,000.00
The total initial investment cost of the envisage project is estimated to be birr
25,471, 000.00 generally, poultry farming activities involve a slightly higher initial
investment but their superior performance and durability combined with lower running
costs means a better return on investment.

6.2. Source of finance

The financial structure of the proposed project investment will be covered 20 % from project
owner the remaining form bank loan.
6.3. Price and profitability

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 The average unit selling prices of birr 10,000.00 for a single cattle fattened
considered to estimate annual sales revenue. These estimated selling prices are too
lower than that of the existing market prices.
Even at such level of prices as the income statement shows (annex IV) the project will
be financially sound & viable. Based on the existing investment law, the project is
assumed entitled to the first year tax holiday, which is very conservative. The net profit
increases from 326,220 birr in the first year to birr 430, 400in the 10th year of operation
6.4 Financial internal return (FIRR) & NPV
The envisaged project is financially viable having FIRR after tax of 19% the net
present value of the net cash flow streams over the ten years discounted at10% which
is the nearest rate to the opportunity cost of capital, is birr 3,456,935, which is higher
than the initial investment.
6.5 Economic benefits the implementation of the proposed project will have the
following major socio economic benefits to the country in general and the region in
particular.
 It will create employment opportunities for about 138 employees form the local
labor market.
 It will supply its product to the domestic demand at best quality at a reasonable
selling price.
 It create revenue to the government through taxation
 It create forward and back word linkage with agricultural sector
 It will create foreign currency through exporting its product.

Item Start up Full capacity operation

1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th
70% 80% 90% 100% 100% 100% 100% 100% 100% 100%
Building 42.26 42.26 42.26 42.26 42.26 42.26 42.26 42.26 42.26 42.26

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and land
value
Machinery 70.15 70.15 70.15 70.15 70.15 70.15 70.15 70.15 70.15 70.15
&
Equipment
Office 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00 6.00
equipment
Per 3.8 3.8 3.8 - - - - - - -
production
expenditure
Total 122.21 122.21 122.21 118.41 118.41 118.41 118.41 118.41 118.41 118.41