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1. Choose any small business in
your area and carryout a feasibility study of that enterprise.
“Please, outline
and discuss all the components needed for establishing and operation of a
viable small business in the feasibility study”
SOLUTION:
Feasibility Study
On
Poultry Farm
Khadijat Poultry Enterprise Limited
Head Office:
No. 2, Ali Kai Juwa Road,
Kubwa, Abuja.
Tel:
1.
Introduction/Executive
Summary
Project
Brief
The poultry farm is a project of livestock
sector, in which, the day old chicks (DOCs) are raised on high protein feed for
a period of six weeks. This business can
be started both in rural and semi-urban areas in sheds. The poultry sheds can be acquired on rental
basis. These sheds have all the required
facilities for the poultry farm. The
rent cost varies between N1,000 to N2,000 per square feet depending upon the
location and facilities at the farm.
The poultry birds are sold to traders and the
whole sellers markets in the urban areas.
Some times birds can also be sold directly to the shopkeepers in the
urban markets. Poultry farming is a
profitable venture depending on the demand of the meat in market. Annually, six flocks of birds will be raised
on the same premises of a farm.
Opportunity
Rationale
Poultry meat is the cheapest source of animal
protein available in the country. the
time required for raising poultry birds is lesser than that for big
animals. The consumption of white meat
is increasing due to growing health consciousness in the masses.
According to the Agriculture Statistics of
Nigeria, the per capita consumption of poultry meat is increasing at a rate of
8% per annum. It correlates with the
income level of the consumers.
The existing daily availability of protein
quantity per capita in Nigeria deriving from animal source including beef,
mutton, poultry and fish combined amounts to 11 grams. This is far less than the recommended daily
dietary protein allowance from animal source of 26 grams according to the World
Health Organization Standards.
Total
Project Cost
A Poultry Farm with a population of 7,500 birds
that is established in a rented building, needs a capital investment of about N6,500,000.00
for purchasing farm machinery and equipment.
In addition to this, a sum of N3,000,000.00 is required as working
capital, which will be used for purchasing day old chicks and raw material
(feed & vaccines) etc.
Proposed
Capacity
A poultry farm of about 5,000 thousand birds is
considered to be an economically viable size, which will justify fixed and
operational costs. In this Feasibility
study, all the calculations have been based on a flock size of 7,500 birds,
with raising six flocks per year. There
will be a lag time of two weeks for cleaning and fumigation of the farm.
2.
Current
Industry Structure
The generation line of Poultry comes from pure
line, which is imported. This produces
grand parents for parents stocks and parent stock end up in producing the final
product. The farmers get day old broiler from hatcheries. These hatcheries maintain their breeder
farms, or in some cases, purchase their hatching eggs from breeder farms. These breeder farms depend on producers of
parent stock.
Poultry feed mills are the major player in the
poultry industry, which produce a specific formula feed mix. Poultry feed consists of rich protein
elements like grains, gluten, blood meal, fishmeal and soyabean meal. The major component of cost of production of
chicken mean accounts for feed cost.
In the year 1997, in Nigeria, there were about
315,732 broiler farms that produced 598.6 million broilers in the year 2000
down from 990 million birds. Broiler
population has been growing at a tremendous rate .
3.
Marketing
The marketing of chickens follows the traditional
channels of distribution. Generally,
broilers are distributed in the market through middlemen and wholesalers. The role of middlemen is to identify a farm
and negotiate the price. In some cases,
the middleman provides Day Old Chicks and other farm inputs (feed, etc.) to the
broiler farmers and then agrees to buy back the mature birds from the them.
Birds are transported to the urban market and are
sold to retailers or market-street poultry shops. Birds are sold on live-weight basis. The time spent in getting broilers from the
farm to the retail shop is brief.
Although collection and handling of birds has improved with the use of
loader vehicles, but it is an established fact that greater the distance
between the poultry producer and consumer, more complicated is the marketing
system including their collection, handling and transportation to the consumer
or processing plants.
The trick in marketing is quick availability of
market information of chicken supply and demand, which will determine the
selling price.
4.
Farm
Management
Farm input required for a broiler farm includes
farm equipment (drinkers, feed trays, brooders, and feeders), electronic
fixtures and other consumer items (feed, vaccines and medicines, rice-husk or
saw-dust, water, electricity, etc.).
4.1
Day Old
Chicks
The chicks should be of uniform size, active,
alert and bright eyed. The shank or leg
covering (skin) of healthy chicks appears bring and shiny.
4.2
Brooding
Proper brooding temperature is required to keep
the chicks in comfort.
Coal or sawdust in brunt for supplying heat at
the stage of brooding in the poultry farm.
In the first week, 950F is quite
comfortable. For the first one week, it is also essential to observe four to
five times daily the condition (temperature) of the chicks. They should neither huddle nor move away from
the brooding hover, but should be moving around evenly. As chicks grow, the temperature may be
reduced at a rate of 50F per week unit approximately 750F
is reached in the sixth week.
4.3
Feeding
Broilers are usually fed with the following two
types of ration:
-
Broiler
Starter: It is fed to the broiler birds
up to five weeks of age
-
Broilers
finisher: It is fed to the broiler of more than five weeks of age and continued
till the age of marketing.
Feeding three or four times each day will
stimulate feed intake and prevents wastage.
4.4
Housing
The chicks should be kept in a clean, dry and
well-ventilated room. Broiler house
should have proper ventilation as this provides the birds fresh air and carries
off moisture. The entire building
including litter and all equipment should be fumigated.
4.5
Feeders
It is essential to provide adequate feeder
space. Ideally, one pan type feeder is
sufficient for 50 birds. Therefore, for
7,500 birds 150 feeders would be more than enough.
4.6
Lighting
Most broiler growers provide 24 hours light
during brooding and early growing period.
Recent research conducted in windowless buildings, using intermittent
lighting of 1-2 hours period, has indicated significantly improved feed
efficiency.
4.7
Drinkers
Adequate Drinking space should be provided to the
birds. The drinker should contain fresh,
clean and cold water. It is necessary to
provide extra water during summer. One
drinker is sufficient for 50 birds.
4.8
Litter
Litter is spread on the floor to prevent the
direct contact with the floor. Straw,
rice-husk and sawdust are generally used for making the litter. It should be dry and free of moulds.
4.9
Vaccination
Vaccination can be provided to chicks through
injections, can also be mixed in the water and also through eye drops.
4.10
Fumigation
and Spraying
It is essential to check all equipment and walls
of the broiler house carefully that they are clean, and washed with
disinfectant solution, and dried. The
rooms should be white washed and sprayed before the arrival of birds.
Disinfectant solution can be prepared with
Phenol, Potassium Permanganate, Carbolic Acid and Formaline.
5.
Manpower
Requirements
Semi skilled workers are needed to look after the
feeding, vaccination and cleaning operations at the farm. A single person can handle 3,000 birds
easily. Two people will be hired to
mange the operations of a Poultry farm of 7,500 birds. Each attendant is given a monthly salary of
N120,000.
6.
Farm
Equipment
Various types of farm equipment are needed for
feeding, drinking and handling the birds.
List of the farm equipment, which will be needed, is as under:
|
Farm Equipment
|
No.
|
Unit Price
(N)
|
Total Price
(N)
|
|
Brooder
|
15
|
450
|
6,750
|
|
Drum Heater
|
3
|
1,200
|
3,600
|
|
Small Drinkers
|
38
|
60
|
2,280
|
|
Large Drinkers
|
112
|
180
|
20,160
|
|
Small Feeder
|
38
|
75
|
2,850
|
|
Large Feeder
|
112
|
125
|
14,000
|
|
Shifting Box3
|
8
|
1,800
|
14,400
|
|
Total Machine Cost
|
326
|
|
64,040
|
7.
Land and
Building
Space Requirement
|
Space requirement
|
Required Area (Sq. ft)
|
|
Management Building
|
100
|
|
Shed Space (1Sq.ft/bird)
|
7,500
|
|
Store Room
|
86
|
|
Rooms for Guard and Workers
|
144
|
|
Total Project Space Requirement
|
7,830
|
|
Rental Cost/sq.ft. (N)
|
100
|
|
Total Building Rental Cost (N) per month
|
50,000
|
8.
Project
Cost
8.1
project
Economics
|
Account Head
|
Total Cost (N)
|
|
Machinery and Equipment
|
64,040
|
|
Total Capital
|
64,040
|
|
Raw Material Inventory
|
258,720
|
|
Upfront Building Rent
|
84,564
|
|
Total Working Capital
|
343,284
|
|
Total Project Cost (N)
|
407,324
|
8.2
Project
Return
|
|
Project
|
|
IRR
|
43.03%
|
|
Payback Period (years)
|
3.94
|
|
NPV (N)
|
469,957
|
8.3
Financing
Plan
|
Financing
|
|
Naira
|
|
Equity
|
50%
|
203,662
|
|
Debt
|
50%
|
203,662
|
9.
Key
Success Factors
. Farm
Supervision
Proper technical supervision of the enterprise is
the key to the success of a poultry farm. Farm employees should be aware of the
feeding and drinking habits of birds.
The farm supervisor should be vigilant and should ensure timely feeding
and vaccination, so that the birds stay healthy and disease-free.
. Market
Information
The entrepreneur should be well ware of the
supply and demand of chicken in the city.
This will help the entrepreneur to negotiate well the sale price of
birds. The price of chicken meat
fluctuates tremendously during a year.
. Mortality
Losses
Mortality can only be controlled if the farm
conditions are hygienic. Mortality loses
should be kept below 5% by timely vaccination and medication.
10.
Threats
The poultry industry has some inherent issues,
which can not be controlled by any individual entrepreneur. Following are some threats faced by this
industry:-
-
Disease
Epidemic
Disease like new castle are extremely
dangerous. They can eradicate the entire
bird population, so the birds need to be protected against such type of
diseases, by proper vaccination and medication.
11.
Financial
Analysis
Projected
Income Statement
|
|
Yr1
|
Yr2
|
Yr3
|
Yr4
|
Yr5
|
Yr6
|
Yr7
|
Yr8
|
Yr9
|
Yr10
|
|
Sales
|
2,745,924
|
2,745,924
|
2,945,924
|
3,245,924
|
3,445,924
|
3,725,924
|
3,735,924
|
3,845,924
|
4,45,924
|
2,745,924
|
|
Cost of goods Sold
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
DOC (Day Old Chicks)
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Feed Cost
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Vaccination Cost
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Spay Cost
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Litter Cost
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Payroll (Production Staff)
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Heat Expense for Brooding
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Total
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
|
Yr1
|
Yr2
|
Yr3
|
Yr4
|
Yr5
|
Yr6
|
Yr7
|
Yr8
|
Yr9
|
Yr10
|
|
Gross Profit
|
2,745,924
|
2,745,924
|
2,945,924
|
3,245,924
|
3,445,924
|
3,725,924
|
3,735,924
|
3,845,924
|
4,45,924
|
2,745,924
|
|
Operating Expenses
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Fixed Electricity
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Administrative Overheads
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Depreciation
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Mortality Loss
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Total
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
|
Yr1
|
Yr2
|
Yr3
|
Yr4
|
Yr5
|
Yr6
|
Yr7
|
Yr8
|
Yr9
|
Yr10
|
|
Operating Profit
|
2,745,924
|
2,745,924
|
2,945,924
|
3,245,924
|
3,445,924
|
3,725,924
|
3,735,924
|
3,845,924
|
4,45,924
|
2,745,924
|
|
Non-operating Expenses
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Financial Charges on Running Finance
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Building Rent
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Total
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
|
Yr1
|
Yr2
|
Yr3
|
Yr4
|
Yr5
|
Yr6
|
Yr7
|
Yr8
|
Yr9
|
Yr10
|
|
Profit Before Tax
|
2,745,924
|
2,745,924
|
2,945,924
|
3,245,924
|
3,445,924
|
3,725,924
|
3,735,924
|
3,845,924
|
4,45,924
|
2,745,924
|
|
Tax
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Profit After Tax
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Retained Earnings Beginning of year retained Earnings end of
year.
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Total
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
11.2. Projected Cash flow
Statement
|
|
Yr1
|
Yr2
|
Yr3
|
Yr4
|
Yr5
|
Yr6
|
Yr7
|
Yr8
|
Yr9
|
Yr10
|
|
Operating Activities
|
2,745,924
|
2,745,924
|
2,945,924
|
3,245,924
|
3,445,924
|
3,725,924
|
3,735,924
|
3,845,924
|
4,45,924
|
2,745,924
|
|
Net Profit
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Depreciation
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Accounts Receivable
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Stocks-RM
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Accounts Payable
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Total
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
|
Yr1
|
Yr2
|
Yr3
|
Yr4
|
Yr5
|
Yr6
|
Yr7
|
Yr8
|
Yr9
|
Yr10
|
|
Financing Activities
|
2,745,924
|
2,745,924
|
2,945,924
|
3,245,924
|
3,445,924
|
3,725,924
|
3,735,924
|
3,845,924
|
4,45,924
|
2,745,924
|
|
Add: Building rent expense
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Building rent payment
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Repayment of Running Finance
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Issuance of share
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Cash provided by/(used) financing activities.
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Total
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
11.3. Projected Balance
Sheet
|
|
Yr1
|
Yr2
|
Yr3
|
Yr4
|
Yr5
|
Yr6
|
Yr7
|
Yr8
|
Yr9
|
Yr10
|
|
Current Assets
|
2,745,924
|
2,745,924
|
2,945,924
|
3,245,924
|
3,445,924
|
3,725,924
|
3,735,924
|
3,845,924
|
4,45,924
|
2,745,924
|
|
Cash
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Stocks and Inventory
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Accounts Receivable
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Pre-paid building rent
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Total
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
|
Yr1
|
Yr2
|
Yr3
|
Yr4
|
Yr5
|
Yr6
|
Yr7
|
Yr8
|
Yr9
|
Yr10
|
|
Gross fixed Assets
|
2,745,924
|
2,745,924
|
2,945,924
|
3,245,924
|
3,445,924
|
3,725,924
|
3,735,924
|
3,845,924
|
4,45,924
|
2,745,924
|
|
Less: Accumulated Depreciation
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
|
Net Fixed Assets.
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
2,745,924
|
Kindly note that the above computation are not really calculated. These are just demonstrations.
12.0. Attachments.
There are no attachments to this feasibility study due to time
constraints.
References:
Muyiwa, S. and Sam, B.A {2006} Entrepreneurial Studies and
Development, Jos: M.P Ginac Concept ltd
Ndaman A. {2010} Feasibility Study Report
Internet Search Engine 2015
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