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Animal feed processing project 2009

ANIMAL FEED

PROCESSING PROJECT

Table of Contents

1 Executive Summary ................................................................................................ 1

1.1 Description of the project ................................................................................ 1

i Access Capital Services S.C


January 2009

Access Capital Services S.C.


Animal feed processing project 2009

1.2 Project objective ................................................. Error! Bookmark not defined.

2 Background Information......................................................................................... 4

2.2 The Project: Cattle Fattening and Slaughter ........ Error! Bookmark not defined.

3 Market Study.......................................................................................................... 6

3.1 General review ................................................................................................ 6

3.2 Demand Analysis.............................................................................................. 7

3.2.1 Volume and value of demand ................................................................... 7

3.3 Identification of target markets .......................... Error! Bookmark not defined.

3.4 Demand forecasting ............................................ Error! Bookmark not defined.

Demand forecasting using the extrapolation (trend) methodError! Bookmark not


defined.

3.5 Supply analysis............................................................................................... 16

3.6 Demand supply gap ............................................ Error! Bookmark not defined.

3.7 Price analysis ...................................................... Error! Bookmark not defined.

3.8 Marketing channel .............................................. Error! Bookmark not defined.

4 Technical study .................................................................................................... 22

4.1 Location ......................................................................................................... 22

4.2 Farm technology and Engineering .................................................................. 22

4.2.1 Production process ................................................................................. 22

10) Packaging ............................................................... Error! Bookmark not defined.

4.2.2 Source of technology ................................... Error! Bookmark not defined.

4.2.3 Machinery and Equipment ...................................................................... 23

4.2.4 Land, building and civil works ................................................................. 24

4.3 Utilities .......................................................................................................... 24

4.4 Material for use (input) .................................................................................. 25

4.4.1 Feed and Water ........................................... Error! Bookmark not defined.

4.4.2 Veterinary service ........................................ Error! Bookmark not defined.

4.4.3 Calf Quarantine ............................................ Error! Bookmark not defined.

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4.4.4 Training .................................................................................................. 26

4.5 Environmental Impact Assessment ................................................................ 26

4.6 Project Implementation Schedule .................................................................. 27

5 Organization, management and manpower ......................................................... 27

6 Financial study ..................................................................................................... 29

7 Socio economic Aspect ......................................................................................... 30

7.1 Economic benefit ........................................................................................... 30

7.2 Social benefit ................................................................................................. 31

8 Conclusion and Recommendation ........................................................................ 31

8.1 Conclusion ..................................................................................................... 31

8.2 Recommendation .......................................................................................... 32

9 Annex ................................................................................................................... 33

9.1 Income statement .......................................................................................... 34

9.2 Balance Sheet ................................................................................................ 35

9.3 Cash Flow ...................................................................................................... 36

9.4 Assumption .................................................................................................... 37

9.5 Sensitivity Analysis ......................................................................................... 38

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Animal feed processing project 2009

1 Executive Summary

1.1 Description of the project


This is a business plan for a planned slaughter house and livestock fattening project. The purpose
of this study is to assess promising opportunities of the Ethiopian livestock sector and to determine
the financial requirement of establishing a project in the sector. The study analyzes the viability of
a slaughter house with a fattening unit which can processes; beef, mutton, goat meat, other by
products and fatten live animals for export and local purpose. The study would enable prospective
promoters view the opportunity and economic return of investing on the sector. The proposed
slaughter house at full capacity will process 300 heads of sheep plus goats, and 100 heads of cattle
per annum. It is assumed to operate 270 working days per year & expected to start operation at
initial capacity of 75 percent increasing by 5 percent annually until it reaches ninety percent at the
third year. The plant is assumed to work at one shift of 8 working hours/day. On the other hand,
the fattening unit is expected to fatten 485 cattle, 970 sheep and 970 goats per year.

The envisage project is going to be financed by Access Capita and the Development bank of
Ethiopia with their respective percentage of 30 and 70%.

Access Capital, the promoter, is an innovative company which assists dynamic Ethiopian businesses
to raise funds for productive growth while widening the opportunities for investors to support
economic growth in Ethiopia. It will seek to achieve above-average returns for its shareholders
while encouraging the growth of sustainable businesses and economic infrastructure in Ethiopia.
One of its projects that facilitate growth and above average return is the cattle fattening and
slaughter house project.

The country has the largest livestock population in the continent. However, it doesn’t use the
resources effectively and efficiently. There is untapped potential due to lack of technologies,
information asymmetry, traditional fattening that lacks proper medication and feed, poor
slaughter houses resulting in low quality meat and meat products. But there is an opportunity of
the country in proximity to target markets and the high demand in the Middle East countries to
export quality live animals and meat products. As such this specific project is planning to use this

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opportunity and in turn to generate income for the company as well as foreign exchange earring
for the country

The project is assumed of producing meat products and live animals that can fit to the
international standard. So, the slaughterhouse machinery & plant auxiliary equipment such as the
rendering plant, wastewater treatment plant, generators, cold rooms and compressors are
assumed to fulfill the international standard. The Proposed construction works include main
buildings, stores, barns, hay & straw shades, fences, office buildings, canteens, toilets & wash
rooms, laboratory, etc which are going to be built by first grade local materials or prefabricated
structures that fit to the standard of the modern slaughterhouse machinery to be installed.

The company will foster an organizational structure that motivates and challenge its employees.
This kind of management will help employees to be driven, efficient and treat their organization
like a family; which will culminate in a superior product and efficiency. The project when fully
operational will be able to employ about 145 people in permanent basis.

A preliminary project study has been undertaken to assess the establishment of a capital intensive
slaughter house and determine financial requirement and viability. As such, the entire project is
estimated to cost, Birr 70million (5.6 USD million). Of which, Birr 54 million (4.2USD million) is cost
of fixed investment items. The working capital cost is estimated at Birr 16 million (1.3USD
million).The project is expected to generate a yearly average net profit of Birr 8 million
(0.6USDmillion) The cash flow projection shows cumulative cash balance of Birr 18million (1.4 USD
million) at the end of the first year which is expected to grow to Birr 61 million (4.8 USD million) at
the end of the 5th year. The IRR (Internal Rate of Return) of the project for owner’s equity is found
to be 126%. With the above economic rate of return, the project is found economically viable and
attractive for investment. Findings stated above manifest that investing in the livestock sector will
enable the capacity to generate foreign currency by exporting beef and mutton to Northern
African and Gulf countries.

When the project is completed it has a social and economic impact to the society. Such as creating
and employment to 145 people, revenue generation to households, and in general safely nets
scheme.

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The project assumes to start at 80% capacity at the being of the first year and will increase by 5 %
each year till it reaches 90%. There will be three cycles per year and each cycle takes 90 days,
overall they will produce 256 tons of cattle live weight and, 48 tons of goat plus sheep live weight
for export market. The livestock resources of the low lands in Oromia, Tigray, Amhara national
regional states will serve as a primary resource bases.

The project shows that it is feasible and will generate positive cash flow starting from the
beginning year. Even though the livestock sector in Ethiopia has a lot of constrains despite the
large population, there are some measurements that needs to be done. To mention some, using
modern fattening and slaughter houses, applying proper vaccination and feeding system, skilled
labor force to avoid the market constraints etc. Therefore this project main objective is to apply
the recommended inputs so as to bestow quality products to local as well as to international
market.

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2 Background Information

2.1 The Promoter: Access Capital SC

Access Capital is an innovative company which supports economic growth in Ethiopia by 1) helping
dynamic Ethiopian businesses raise funds and 2) by widening the opportunities for investors.

It seeks to encourage growth of sustainable and productive business and economic infrastructure
while achieving above average returns for its shareholders.

Access Capital was incorporated into a share company on May 2007, after raising more funds
through selling shares to the general public. Since then, Access Capital has expanded to become
one of the major players in the Ethiopian economy employing more than 1,000 people.

Access Capital has three departments that are clustered into Investment, Corporate Advisory and
Research Departments.

Access currently has invested in six companies and is a majority shareholder in these companies.

Companies managed and are majority owned by Access Capital SC are listed below (The month and
the years next to the factory name signifies acquisition date).

1. MA Thermoplastic Factory – January 2008

2. Real Water (T.G.M.D. Trade Works) – July 2008

3. Polytech PP Woven Bags Factory – July 2008

4. Flour Mill – July 2008

5. Piko Juice Factory – Greenfield project launched in February 2009

6. Horticulture – July 2009

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2.2 The Project: Processed cattle and poultry feed project


Access Capital seeks to enter the cattle and poultry feed project after careful study of the market
and returns projected over five years. Access Capital seeks to setup the project in the Amhara
region, because of the favorable investment climate that is offered by the region’s administration.

The project seeks to attain a higher return for its shareholders through supplying quality animal
feed to the Ethiopian market which, as the economy grows is experiencing shortage of such
products.

Initially the envisaged project will start with the processing cattle and poultry feed then after
integrating the project with the cattle fattening and poultry farms planned to be established in
Amhara region and supplying the remaining products to the farmers and other markets. The
product will be of high quality and standard that can effectively compete with the local and as well
in international markets.

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3 Market Study

3.1 General review


The world population is projected to grow to 7.3 billion by the year 2015 up from 6.1 million in
2000 necessitate more food to be produced. This increase of 1.2 billion of 19% in 15 years is a
higher absolute increment than that of the last 15 years. As the world population continues to
grow geometrically, great pressure is being placed on arable land, water, and energy resources to
provide an adequate supply of food while maintaining the integrity of the ecosystem. What
matters most is whether the world will be able to produce enough food for every one's need.
Developing countries are still on a high demographic growth path and will account the majority of
the additional world population in the projected period.

Ethiopia has the largest livestock population in Africa and the tenth largest in the world with 32
million cattle and 42 million sheep and goats which however is below Optimum Utilization. This
livestock sector has been contributing considerable portion to the economy of the country, and
still promising to rally round the economic development of the country. It is eminent that livestock
products and by-products in the form of meat, milk, honey, eggs, cheese, and butter supply the
needed animal protein that contribute to the improvement of the nutritional status of the people.
Livestock also plays an important role in providing export commodities, such as live animals, hides,
and skins to earn foreign exchanges to the country.

Despite its abundant resources the country lags behind benefiting from the sector both in terms of
live animal and livestock products export due to the fact that animal husbandry is mostly being
carried out under traditional pasturing systems which in turn affect the productivity, disease
resistance and quality of the livestock products. Hence to ensure the healthy growth and
productivity of animals, it is necessary to provide them concentrate feed with adequate energy,
protein, vitamin and minerals.

The envisaged project planned to be established at Amhara regional state which has abundant
livestock population accounting almost 25 percent of cattle and goat population, 36 percent of

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sheep and 31 percent of poultry population of the country together with ample natural resource
and raw material to establish animal feed processing industry.

Table 3: 1 Livestock population in Amhara region (000')


Livestock type 2003/04 2004/05 2005/06 2006/07 2007/08

Cattle 9,592 9,695 10,077 10,498 11,757


Sheep 6,116 6,391 7,530 8,237 9,470
Goat 3,969 4,102 4,856 5,153 5,469
Camel 20 14 15 32 47
Poultry 11,244 8,442 9,401 10,402 12,365
beehive 766 919 792 853 976
Total 31,708 29,563 32,671 35,174 40,083

Source: CSA

Taking into account the growing livestock related products demand in the Middle East market,
backward linkage of the sector through supplying standardized and quality animal feed becomes
indispensable. Access capital is planning to invest in the cattle and poultry feed processing industry
through producing standardized and quality animal feed so as to enhance the livestock product
output and features.

3.2 Demand Analysis

3.2.1 Volume and value of demand

The demand for processed improved animal feed emanates directly from the demand for the
country’s livestock and livestock products. As the country is located to nearby Middle East market
export of live animals and meat is increasing at enormous rate despite the export ban from the
importing countries due to health and quality related problems originated from lack of livestock
improved feed, medicine, management etc.

As figure 3.1 indicates the feed usage experiences of the rural area of the country relay on grazing
being the major type of feed accounting about 61 percent followed by crop residue that is about

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27 percent. Hay and by-products were also used as animal feeds that comprise about 7.05 and
0.67 percent of the total feeds, respectively where as a very small amount of improved feed only
0.15 percent was used as animal feed. In terms number of holders about 12.2 million holders have
used green fodder or grazing to feed their animals while about 102 thousand holders used
improved feed during the reporting year 2008/09.

Source: CSA
Figure 3: 1 Ethiopia livestock holders using different kinds of animal feed

Most farmers have small land holdings on which most of the livestock population is concentrated.
The smallholders' priority is to grow cereal grains for human consumption, but these also provide
crop resides like straw and Stover for their animals, which is low in protein and energy. The major
feed resources in the country are natural pasture and crop residues, with agro industrial by-
products and manufactured feed contributing much less.

Utilization of natural pasture is gradually declining because of the expansion of crop production
into grazing lands, redistribution of common lands to the landless and land degradation. During the
year 2006/07, the total cultivated land covered by the private holdings reached around 12.4
million hectares showing an average growth of 4 percent per annum from 9.7 millions of hectares
in year 2003/04 while the cultivated land in Amhara region increased by the same average growth
rate.

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Table 3: 2: Cultivated and grazing land Use Area (hectares)


Country level Amhara region
Year
Cultivated Grazing Cultivated Grazing
2004/05 10,887,953 844,626 3,474,371 123,095
2005/06 11,292,572 NA 3,683,566 NA
2006/07 11,787,775 987,415 3,750,477 202,953
2007/08 12,382,434 1,529,603 3,969,559 246,649
2008/09 12,896,910 1,383,839 4,092,984 245,289

Source: CSA

On the other hand, the utilization of grazing land is declining from year 2007/08 to 2008/09 both in
country wise and Amhara regional state owing to expansion of crop land into grazing lands.

As indicated earlier the project planned to be established in Amhara regional state kombolcha
town with the objective of supplying processed animal feed for cattle and poultry farms and
individual farmers in Amhara region and the nearby neighboring region Afar and finally to supply
the products all over the country. In order to find out the accurate demand for processed animal
feed identifying the capacity of dairy farms, cattle fattening industries and poultry farms has
paramount advantage.

3.2.1.1 The Dairy processing industry

According to CSA report on large and medium manufacturing industry, in year 2006/07, there were
three medium or large establishments operating within the industry of which two establishments
were privately owned. As table below indicates the pasteurized milk supply of the industry has
reached 13.5 million litters in 2006/07 from 8.9 million litters in 2001/02 by registering a growth
rate of 7.92% percent per annum over the period while butter and cheese reached 3,540 Kg and
4,800 Kg in 2006/07 from 3,840 Kg and 1,880 Kg with an average growth of 10% and 46%
respectively.

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Table 3: 3 Productions of processed dairy products (Kg)


Average
Items 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07
Growth
Milk pasteurized 8,938,200 10,746,900 12,173,900 13,507,700 16,210,300 13,461,700 7.92%

Butter and ghee 3,840 1,800 3,390 3,940 5,880 3,540 10.15%

Cheese 1,880 1,400 1,890 1,040 1,220 4,800 45.87%

Source: CSA

Dairy is the major commercial-oriented livestock activity in the country and of the total dairy farm
about 93% are small-scale businesses with 2 to 5 dairy animals. The traditional smallholder dairy
system makes up the largest part of the dairy production system and characterized by its low
input, feeding and management. Now days the farmers are creating various dairy cooperative
unions in order to sell their products for the processing industry and major towns. Thus, the
development of the dairy subsector necessitated the expansion of enriched animal feeding
processing industries.

3.2.1.2 Cattle fattening and slaughtering industry

The envisaged project planned to be established simultaneously integrating with cattle fattening &
slaughtering and poultry farms. Currently there are 23 companies engaged in the export of live
animals and meat. Out of theses ten of them are engaged in the live animals export, ten of them in
meat export and the remaining engaged in both meat and live animal export. The adoption of the
free market and private sector led economic development in Ethiopia in 1992, has encouraged the
private sector to participate in live animal fattening and meat production and export business.

Although live animals make a considerable contribution to the economy in terms of export
earnings, a great number of the country’s ruminants have been traditionally smuggled to
neighboring countries. As shown the graph, the export value of live animals has shown an
increment despite the export ban regulation by the government in the year 2006/07. The export
value has increased by around 11% in the year 2007/08 from the previous year. For the past five
years, its value has increasing significantly showing that international demand is growing by a

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higher rate. The major importer of Ethiopia’s live animal and meat are Saudi Arabia, UAE and
Yemen.

Source: Ethiopia custom authority


Figure 3: 2 Volume and value of Ethiopia of live animal export

The major problem attributed to the lower performance of the export of live animals and meat
measure up to the countries potential were attributed to under developed local livestock market,
lack of improved animal feed, poor market infrastructures, repeated import ban from importing
countries due to health related issues, uncontrolled illegal trade and poor freezing and transport
facilities such as air conditioned container and air cargo services.

3.2.1.3 Poultry farms

The total poultry population at country level is estimated to be about 38.13 million of which
around 33 percent of the poultry population and about 28% of the total annual national egg and
poultry meat production located at Amhara regional state. While looking at the production of
poultry products in the country, approximately 47,520 tones of chicken meat and 38000 eggs were
produced in 2007 in Ethiopia. Annually the production of chicken meat has been growing 4.1
percent while the production of eggs has been growing 4.7 percent.

Table 3: 4 Total Productions of Poultry Products in Ethiopia

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Item 2000 2001 2002 2003 2004 2005 2006 2007

Chicken meat 37,730 49,840 54,064 50,160 47,096 42,560 45,200 47,520

Eggs Primary 28,583 37,764 39,240 37,060 36,624 36,624 36,624 38,000

Source: FAOSTAT

Although, Ethiopia has great potential for increased poultry production, both for local use and
export, the country’s poultry industry remains highly underdeveloped. Poultry farming is largely a
subsistence activity. Most poultry is owned by women in small holder farms, and is often a rural
women’s source of income. Poultry population in Ethiopia is dominated by village poultry of
scavenge nature, located in mostly in rural area and there is also modern commercial birds, mostly
found in urban areas that only share the smallest part from the total poultry population.

Yet with a large poultry population, Ethiopia’s poultry industry remains highly underdeveloped and
unorganized. A basic problem regarding to the commercial type of poultry population in Ethiopia is
the risk related with vulnerability of sector originated from chicken’s health problem which in turn
affected by lack of consistent and quality processed feed. Processed poultry feed are available
from feed mill that are largely available in and around Addis Ababa and their capacity & number is
very insignificant compared to the country’s potential.

So as to evaluate the potential of project establishment area, the Amhara region account for more
than 65% of the total regional chicken population. There are no large commercial poultry farms in
the region. There are 5 small scale modern poultry farms under construction (Personal
communication with Gezahegn, Manager of the Kombolisha poultry breeding and rearing centre).
The Regional State has two breeding and multiplication centres (Kombolisha and Andessa). The
Kombolisha centre established in 1985 and located in the industrial town of Kombolisha is the
largest of all at the national level, whereas Andessa - located about 15 km from the regional
capital, Bahir Dar - is medium in size and volume of production. The current capacity of the
Kombolisha centre is about 70,000 pullets/cockerels, 175,000 - 345,000 day old chicks, 270,000
hatching eggs and 1,200 tonnes of formulated poultry feed per year.

Identifying the project target markets

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Improved animal feeds are purchased by different types of users who deal with livestock and
poultry activities. These are subsistent and market-oriented rural farmers, urban dairy producers
and fatteners, commercial poultry producers, livestock and poultry traders, abattoirs and live
animal exporters.
 Subsistent farmers: Some subsistent farmers purchase industrial processed improved feed
for their oxen and other preferred animals. This is the time when availability of natural
pasture and crop residues become very low. Subsistent farmers who do not produce
enough own crop residues and have limited grazing land also buy process animal feed
although in limited amount.
 Market-oriented rural farmers: These farmers are involved in fattening and dairy
production. Fattening is extensively exercised by farmers residing in rural low land areas
while dairying is also undertaken in rural peasant associations and by individual farmers.
 Urban commercial farmers: Urban dairy is practiced in almost all study towns of the
country in different degrees.
 Livestock traders: Livestock traders buy feed for their animals during trekking or until they
sell the animals.
 Abattoirs/meat processors: Export abattoirs quarantine animals for more than 15 days
before slaughtering. During this time, the abattoirs feed the animals improved feeds.
 Live animal exporters: Live animal exporters buy feed to feed animals during holding time
and quarantine period.

3.2.2 Demand forecasting

The demand for processed animal feed appears to be increasing in Ethiopia because of the
increase in market-oriented livestock production activity. As indicated earlier the demand is highly
influenced by the size of the livestock population, awareness of farmers towards the importance of
the product and establishment of modern commercial livestock farms.

As table 3:5 indicated the livestock population of the country has been growing with an average
6%, 12% and 3% for cattle, shoat and poultry respectively. At the same time the demand for live
animals, meat, dairy and poultry products is increasing at much higher rate for the past five years.

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Table 3: 5 Livestock population in the country (000’)


Cattle Sheep Goat Poultry
Year
% % % %
Number Number Number Number
growth growth growth growth
2004/05 38,103 16,576 13,656 35,656
2005/06 38,749 2% 18,076 9% 14,859 9% 30,869 -13%

2006/07 40,281 4% 20,722 15% 16,249 9% 32,032 4%

2007/08 43,125 7% 23,633 14% 18,560 14% 34,199 7%

2008/09 47,571 10% 26,117 11% 21,709 17% 39,564 16%

Average growth 6% 12% 12% 3%

Source: CSA

Considering conditional limiting factor such as product adaptability and awareness and income of
farmers and the like only 10% of the cattle population are assumed to be fed with industrially
processed cattle feed initially. Thus demand for processed animal feed is projected taking into
account the livestock population growth indicated in the table above.

Table 3: 6 Standard Livestock feed intake

Livestock type Feed requirement


per annum (Kg)
Poultry 17
Cattle fattening
Shoat fattening

Food intakes for the first month

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Type of food quantity(kg)


Molasses 1.5-2.5
concentrate 2.5-3
food
silage 5 to 4
Table 4: 1 food intake for the next two to three month

Type of food quantity(kg)


Molasses 2.5-5
concentrate 3-4.5
food
silage 4 to 3

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3.3 Supply analysis


There are five animal feed mixers and millers in the country as observed during the study period.
The mixers and millers produce feed mixes for poultry, dairy and beef, in that order of importance
based on volume. As table below shows volume of animal feed produced by these industries has
shown an average growth of 15 percent per annum for the period covering 2002/03 to 2006/07
and the maximum production of animal feeding industries reached 13,218 tons during period
2005/06.

Table 3: 7: Animal feed processing industries establishments and quantity produced in tons
No Quantity
year
establishments produced (tons)

2002/03 3 6,567
2003/04 4 5,800
2004/05 5 10,501
2005/06 5 13,218
2006/07 1 8,392
Source: CSA

Profile of the major animal feed processing companies examine as follows.

 Mojo Animal Feed Mixer and Miller PLC, located in the town of Mojo, manufactures feed
for beef, dairy, poultry, sheep, and goats. The plant has a capacity to produce 40 quintals
per hour. The manufactured feeds are sold to urban and rural farmers in beef and dairy
production, including fatteners residing in Adama town. The plant caters mainly for
fatteners followed by dairy and poultry farmers. The plant also exports feeds to Djibouti.
The plant uses corn, wheat screening, fine and coarse wheat bran, linseed cake, noug seed
cake, limestone, salt and premixes (vitamins and minerals) as input for formulating the
feeds.

 Bora Animal and Poultry Feed Processing PLC, located at Bishoftu town, manufactures
poultry, dairy, fattening, shoat and pig feeds. The factory sells the feeds mostly to

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governmental poultry farms and also sells to associations and the National Disaster
Prevention and Preparedness Commission (DPPC).

 The Kality Feed Mixer and Miller PLC, located in Addis Ababa city was established in 1976
by the Ethiopian Government and now owned by private investor. It manufactures poultry,
dairy, beef; sheep, goat and swine feed mixes. Most of its produce is poultry and dairy feed
mixes. The types of poultry feeds produced are starter, layer, grower and broiler feed
mixes, while the cattle feeds formulated are dairy, heifer, calves, bulls and beef feed mixes.
For sheep, goat and swine the factory manufactures mother, kid, and fattener feeds. About
50% of dairy and poultry feed mixes are sold to government institutions. Small farms also
buy feed from the plant. The factory has stable demand for dairy and poultry feed
throughout the year.

3.4 Demand supply gap

3.5 Price analysis

3.6 Marketing channel


Compound animal feed is used in all class of livestock throughout the year that the demand never
gets affected with seasons so the proposed project can be started at any time of the year. At the
commencement of the project, it is important to have good knowledge the target clients for a
manufacturer of processed feed i.e. commercial dairy farms, cattle & shoat fattening industries,
poultry farms and market oriented urban and rural farmers. The marketing pattern should be as
follows

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Demand supply gap


The demand for livestock depends mostly on the income, population and urban population growth
of a country. The major target markets for the country are listed below with their demand deriving
factors.

Table 3: 8 Targeted countries with GDP, population and urban population growth rate (%)

Country GDP Population Urbanization


growth growth (%) (%)
(%)
Saudi 4.2 2.31 7.59
Arabia
Djibouti 5.8 2.06 8.77
UAE 7.4 1.54 5.48
Yemen 3.2 3.45 5.94
Sudan 6.5 2.6 6.86
Egypt 7.2 1.78 3.98
Somalia 2.6 3.38 5.25
Ethiopia 11.6 2.36 5.67

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Average 6.06 2.44 6.19

At least on average the income, population and urbanization of the targeted markets will grow by
6.06%, 2.44 and 6.19% respectively.

A key factor determining demand is the level of economic growth and disposable income. Demand
for livestock products generally increases with disposable incomes, expressed as the 'income
elasticity of demand' (indicating the percentage increase in demand per 1% increase in income).
This has a higher impact in developing countries that the developed ones, with high incomes and
established patterns of consumption at high levels, the income elasticity of demand for livestock
products is high and increases in per capita incomes will greatly affect demand.

Per capita consumption of meat rises fastest in countries with rapid urbanization is occurring.
Urban populations currently account for about three quarters of total populations in the
developed world but only one third in developing countries. Urbanization affects the livestock
sector on both supply and demand sides. On the demand side, urbanization stimulates changes in
consumption patterns. This is partly due to associated increases in incomes and purchasing power
(at least for a proportion of the population), but also to changes in life-style, and in the relative
prices and convenience of different foods.

With the above major driving forces the demand for livestock and meat products will grow on
average by 6% per annum. However, the existing suppliers of the country can’t satisfy the existing
demand, since the supply was stagnant for a couple of years back and the ones that got the license
from the investment office were on the pre-implementation stage. Therefore, there is a huge
unsatisfied demand gap both locally and internationally since the demand is increasing at an
increasing rate yearly.

3.1 Price analysis


The average price of livestock among the producers and FOB price is differing on average by 50%.
The FOB price is much higher in cattle than sheep. Overall the price of camel is the most expensive
one among the livestock sector. On the other hand exporting processed one is more value added
than exporting live animals.

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Animal feed processing project 2009

Table 3: 9 Producer price of livestock and meat products ( US$/ton)

item 2000 2001 2002 2003 2004 2005 2006 2007


Cattle 273.46 237.38 208.53 238.38 247.89 265.32 279.51 302.31
cattle meat 621.5 539.5 473.93 541.78 563.4 603.01 635.23 687.07
Sheep 393.61 341.69 300.15 343.12 356.81 381.91 305.8 322.21
Sheep meat 787.22 683.36 600.31 686.25 713.64 763.82 611.59 644.43
Goat 538.62 467.56 410.74 469.54 488.27 522.61 318.44 327.16
Goat meat 979.32 850.11 746.8 853.71 887.78 950.2 578.99 594.83
Source: FAO

Regarding the FOB price, the price of cattle has shown an increment of 72% within the period of
2006 to 2009. On the other hand, the sheep price has increased by 34% with the same period.

Table 1: 1 Average FOB price of livestock (birr)

livestock 2006 2007 2008 2009


cattle 3465 3822 4711 5991
sheep 378 400 423 510
Source: CA

3.2 Marketing channel


The supply of livestock has three marketing channels: Primary, secondary and terminal.

Primary: the main actors are producers and small farmer exporters, traders, consumers and local
butchers. In this marketing channel producer dominates to sell livestock primarily to the market
mainly to rural areas.

Secondary: it consists of finished export cattle, breeding heifers, and located mainly in the regional
and zonal capitals. The main actors are wholesale traders, exporters, export agents and, to some
extent, butchers dominate secondary markets serving the local consumers but mainly supplying to
the terminal markets

Terminal: in this marketing channel exporters and imports dominated the market.

Below is the marketing channel of the cross boarder livestock trade

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Animal feed processing project 2009

Chart: Livestock Marketing Channel

Livestock Producers

Primary Market
Fattening co-
operatives

Export Agents Trade


Agents Secondary
Market

Small farmer
exporters

Large and Small


medium scale Exporters
exporters

Illegal route
Terminal
Market

Legal route
Importers
Illegal route

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Animal feed processing project 2009

4 Technical study

4.1 Location
The project is planned to be established located in Kombolcha town, at Amhara regional state 375
kilo meters form the capital city Addis Ababa. The selection of the project site is visible since the
town is ideal to the input and output markets for Amhara region and other nearby regions states
like Afar and Tigray. Besides the availability of infrastructures like electric power, water, telephone,
financial services, topography, climate, existence of sufficient land, availability of manpower both
skilled and unskilled and access to Djibouti port is considered.

4.2 Farm technology and Engineering

4.2.1 Production process

Animal feed mill preparation is an agro-based project in which locally available feed resources rich
in protein and carbohydrate are mixed according to nutritional formula in order to raise the
livestock in such a manner that when fed to livestock, they get nutritionally balanced feed
according to their body needs. The process is done through semi mechanized and with/ without
manual handling of different feedstuffs.

The compound feed preparation process requires.


a) High accuracy and precision of weighing
b) feed ingredient handling and processing
c) mixing
d) packing
e) labeling

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Animal feed processing project 2009

Chart: Production flow of animal feed processing plant

Raw materials Acceptance of feed Separators


collection ingredients And conveyors

Conditioning Mixing Crushing by


Hammer mill

Packaging Exit and storage

4.2.2 Machinery and Equipment

The project will import a complete cattle, shoat and poultry feed production line with a capacity of
producing 4 tons output per hour from company located in India. The machine supplier is a
reputable one whose machineries have been established for similar purpose in different parts of
the world. The detailed list of the machinery and equipments is tabulated as follows.

Table 4: 2 List of equipments

Item Description Qty required


1 Grinding section: comprising of Bucket Elevator, 1
hammer mill and magnetic separator
2 Mixing section: Comprising of Bucket Elevator, 1
Horizontal feed mixer and Batch bin above
3 Palleting section: Comprising of Bucket Elevator 1
and pallet mill

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Animal feed processing project 2009

4.2.3 Land, building and civil works

The total area required for animal feed processing is 3,000 M2. Of this area construction of
buildings lay on 1500 M2 with a total civil work cost of Birr 4.8 million. The detail components of
building construction are presented as follows.

Table 4: 3 Cost of building and construction

Building and Construction Total cost(birr)

1 Animal feed processing and


1,250,000
packing plant

2 Store 2,500,000

3 Office building 500,000

4 Toilet and guard house 125,000

5 Fence and road 500,000

Total 4,875,000

4.2.4 Capacity and capacity utilization

The project under study has installed production capacity of 19,200 tons of processed animal feed
per annum assuming two shifts, eight working hours per day and 300 working days per annum
with capacity of 4 tons of processing per hour. The project is expected to start operation at 75
percent of the installed capacity which will increase at 5 percent per annum until attainable
capacity of 95 percent reached in the fifth operational year.

4.3 Utilities
As indicated earlier

Electricity and water are the predominant utilities required for any fattening programme. The
utilities required and the corresponding cost is given in the table below.

Table 4: 4 UTILITIES REQUIREMENT & COST

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Animal feed processing project 2009

Sr.No. Utility Qty. Unit Price Cost

1 Electricity[kWh] 14,361,709 1.5 21,542,563.53

3 Water[m3] 100,000 3.25 325,000

Total

4.4 Material for use (input)

4.4.1 Wheat bran

There are three types of wheat bran supplied in the country fine, coarse and mixed. Mixed bran is
produced by some factories that do not sieve out the coarse bran. Wheat bran is also
differentiated based on the type of wheat.

4.4.2 Seed cakes

The seed cakes supplied in the study areas are from noug, cotton, linseed, and sesame. The
importance of the particular seed cakes varies from place to place. Below, we give descriptions of
the supply situation of the seed cakes in the study areas.

The type of extraction method also creates quality differences. Modern and big edible oil mills use
organic solvent extraction method which squeezes most of the oil and the resultant seed cakes are
considered poorer in quality. The other extraction method is mechanical pressing method, which is
not efficient in oil extraction. The cake produced from this method is considered of better quality.
Seed cakes should contain some oil lest they become very tough for the animals to feed on.
Number of extractions also affects quality of cakes. For example, cotton seed cake obtained from
second round extraction is reportedly preferred to the cake obtained from the first round
extraction since the latter has too high oil content. Cakes can also be produced in fine and coarse
form by varying machine adjustments. Livestock producers prefer fine seed cakes to the coarse
ones.

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Animal feed processing project 2009

4.4.3 Wheat bran

There are three types of wheat bran supplied in the country fine, coarse and mixed. Mixed bran is
produced by some factories that do not sieve out the coarse bran. Good quality wheat bran is the
one which has good proportion of flour and husks, has not developed mould, is not solidified, is
whitish in color, is not adulterated with foreign materials and does not have bad odour and density
is a good indicator of quality for grind mill by-products the higher the density, the better the
quality.

4.4.4 Water Supply

The amount varies depending on the type of breed and feed used in the fattening process;
however, 30 to 35liters of water will have to be the average intake a day.

4.4.5 Training

 Products grading

 Meat technology

 Products quality control

 Meat inspection and hygiene

4.5 Environmental Impact Assessment


A new report from FAO(2008) says livestock production is one of the major causes of the world's
most pressing environmental problems, including global warming, land degradation, air and water
pollution, and loss of biodiversity. Using a methodology that considers the entire commodity chain,
it estimates that livestock are responsible for 18 percent of greenhouse gas emissions, a bigger
share than that of transport. However, the report says, the livestock sector's potential contribution
to solving environmental problems is equally large, and major improvements could be achieved at
reasonable cost.

Negative

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Animal feed processing project 2009

 Use one third of arable land, contributed to 20% rangeland degradation

 Loss of domestic animal genetic resources

 Deforestation, greenhouse gases- The livestock sector is by far the single largest
anthropogenic user of land. Grazing occupies 26 percent of the Earth's terrestrial surface,
while feed crop production requires about a third of all arable land.

Positive

 Potential for carbon sequestration

 Energy saving

 Fertilizer saving( could supply 50% of nutrients)

4.6 Project Implementation Schedule

5 Organization, management and manpower

The manpower needed for the cattle fattening and slaughtering project to be set up in Amhara
region, Ethiopia should be managed by a General Manager, appointed by the board of directors.
There will be three functional departments: production, commercial, administration & finance that
support the General Manager.

The manpower to be employed by the company will be high caliber that have technical experience
in the wheat industry and will be managed by professionals with long experience.

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Animal feed processing project 2009

The project when fully operational will be able to employ about 145 people in permanent basis. By
offering job opportunities, the project seeks to alleviate the unemployment problem that is
prevalent in the country.

Table: Wages and salary

Title No Monthly Annual


Salary Salary

General Manager 1 6,000 72,000

Secretary 1 1,025 12,300

Quality Control Service 1 2,343 28,116

Veterinary 3 1,200 43,200

Marketing Manager 1 2,231 26,772

Accountant 1 1,836 22,032

Head of production 1 2,583 30,996


Department

Sales Person 2 731 17,544

Secretary clerk 2 1,221 29,304

Purchaser 3 638 22,968

Store keeper 3 2,583 92,988

Junior Accountant 2 731 17,544

Cashier 1 547 6,564

Administration 1 2,231 26,772

General Service Officer 1 1,221 14,652

Drivers 8 402 38,592

Guards 8 285 27,360

Janitor 10 285 34,200

Supervisors 10 895 107,400

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Animal feed processing project 2009

Butchers 10 477 57,240

Foreman Animal Handling 3 731 26,316

Assistant foreman 3 638 22,968

Products Storekeeper 3 638 22,968

Herdsmen 36 311 134,352

Laborers 30 250 90,000

Total 145 32,033 1,025,148

6 Financial study

The project is assumed to be financed 70% debt and 30% equity. The equity structure will be: 15%
of the total equity provided by Access Capital, and 85% will be raised through public share offering
in the Amhara region. 10% of the shares of the company will be allocated to Access Capital as
sweet equity, which is for managing, organizing the project as well as raising fund from the public.

Income Statement

The projection for the income statement is primarily derived from market based sales estimates
which is based on an adequate market assessment. The net profit to be generated by the
company will grow from Birr 8 million in its first year to Birr 21 million by year five:

Balance Sheet

Net Capital of the company will grow from about Birr 85 million in year one to Birr 122 million by
year five.

Cash Flow

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Animal feed processing project 2009

The cash flow forecast indicates the company will have surplus cash over the five years it operates.
The equity internal rate of return over the projected period is 126% with equity payback period of
14 months.

7 Socio economic Aspect

7.1 Economic benefit


In the horn of Africa, livestock populations in pastoral areas are:-

 51 million cattle (53%)

 58 million sheep (71%)

 50 million goats (68%)

 100 % of the camels

The economic benefits are:-

 53 % of the total beef production

 70 % of sheep meat

 60% of goat meat

 33% of cattle milk

 household gross revenue of over 50 percent, or

 overall household food energy of 20 percent or more

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Animal feed processing project 2009

7.2 Social benefit


The main social benefit of livestock is social safety nets & risk spreading, which are

 Loan, gifts & exchanges in response to different events

 Dowry and bride wealth payment

 Payment for blood-money compensation

A constraint to the social capital is declining & loss of traditional supporting mechanisms and safety
net in time of crises.

8 Conclusion and Recommendation

8.1 Conclusion

Livestock is an important economic asset especially for the small holder rural farmers. They
provide sources of livelihood through milk and meat production and market sales. In addition,
livestock are extremely important in Ethiopia to economic development and to pro-poor
development strategy. Ethiopia is generally considered to have the largest population of livestock
of any country in Africa. There are huge numbers of cattle, sheep, goats, horses, donkeys, mules,
camels, poultry and beehives in the country.

Livestock are estimated to contribute to the livelihoods of 60- 70% of the Ethiopian population. In
general, the benefits of livestock are human, financial, physical, natural and social

 Human

• Source of food and health( household consumption of milk and meat, hides used
for cloth and for household implements

 Financial

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Animal feed processing project 2009

• Source of income( saving, exchange for grain, income provider through selling of
milk and meat)

 Physical

• Drought power for crop cultivation among agro-pastoralists

 Natural

• Manure for maintaining soil fertility

• Dung is used as a source of fuel or burnt to repel flies.

 Social

 Social safety nets and risk spreading

As such livestock is a necessary good for the individual as well as for the country (GDP growth and
also generating foreign exchange earning via exports). And as shown in the studied project, there is
a huge unsatisfied demand gap especially internationally. Although the country is considered to
have the largest population of livestock in African and has a considerable rank (ninth) in the world,
there is untapped potential. Hence main objective of this project is to reduce the unsatisfied
demand gap by giving an emphasis to the export market, and to be money-spinning both for
Access Capital and for the country by generating foreign exchange earnings. The financial study of
the project shows that the project will be profitable starting from the first year of operation.

8.2 Recommendation

The study shows that there are a lot of constraints to the livestock and meat processing market.
Some of them are
 Diseases
• High disease prevalence in the region and mobility of livestock
• Poor disease control due to : Remoteness of the pastoral area where
the services were not available, Poor government’s capacity to provide
services and they cannot afford the services

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Animal feed processing project 2009

 Remoteness to the market


 Poor infrastructure
 Information asymmetry
 Lack of technologies
 Expertise
 Low quality products etc

In order to reduce and alleviate the above problems, below are some of the recommendations:

 A well-organized marketing system, is the key to guaranteeing a better price for


their livestock products
 Using modernized technologies for efficient and effective production
 Improving animal health( by applying vaccination and others continuously)
 Developing the livestock market( creating linkage between producers and traders)
 Encourage sustainable use of resources
 Providing quality products to export market
 Applying the competitive strategy
 Using modern cattle fattening and slaughter houses

9 Annex

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Animal feed processing project 2009

9.1 Income statement

Year 1 Year 2 Year 3 Year 4 Year 5

Sales 146,967,719 100% 165,731,033 100% 175,637,091 100% 184,719,891 100% 194,277,897 100%

Cost Of Goods Sold 119,652,466 81% 129,599,247 78% 137,124,437 78% 143,980,659 78% 151,179,692 78%

Gross Profit 27,315,253 19% 36,131,786 22% 38,512,654 22% 40,739,232 22% 43,098,205 22%

Expenses

General And Adminstrative 5,680,242 4% 5,964,254 4% 6,262,466 4% 6,575,590 4% 6,904,369 4%

Selling and Distribution 2,280,730 2% 2,451,841 1% 2,582,530 1% 2,713,162 1% 2,850,430 1%

Miscelleneous 285,000 0% 299,250 0% 314,213 0% 329,923 0% 346,419 0%

Total Expenses 8,245,971 6% 8,715,344 5% 9,159,209 5% 9,618,674 5% 10,101,218 5%

EBITDA 19,069,282 13% 27,416,442 17% 29,353,445 17% 31,120,558 17% 32,996,987 17%

Dep. & Amt. 4,581,035 3% 4,583,035 3% 4,583,035 3% 4,583,035 2% 4,583,035 2%

EBIT 14,488,248 10% 22,833,407 14% 24,770,410 14% 26,537,523 14% 28,413,953 15%

Interest Expense 6,275,428 4% 7,141,640 4% 7,475,565 4% 7,051,223 4% 6,568,308 3%

EBT 8,212,820 6% 15,691,767 9% 17,294,845 10% 19,486,300 11% 21,845,645 11%

Corporate Tax - 0% - 0% - 0% - 0% - 0%

EAT 8,212,820 6% 15,691,767 9% 17,294,845 10% 19,486,300 11% 21,845,645 11%

Profitability Indicators
Year One Year Two Year Three Year Four Year Five
Return on Equity 33% 62% 69% 77% 87%

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Animal feed processing project 2009

9.2 Balance Sheet


Year 1 Year 2 Year 3 Year 4 Year 5

Assets

Current Assets

Cash 18,082,605 21% 38,294,244 37% 47,098,893 42% 55,868,336 47% 61,286,262 50%

Account Recievable 1,469,677 2% 3,314,621 3% 5,269,113 5% 9,235,995 8% 9,713,895 8%

Inventory 16,103,521 19% 17,346,971 17% 18,330,193 17% 19,246,703 16% 20,209,038 17%

Total Current Assets 35,655,803 42% 58,955,835 57% 70,698,199 64% 84,351,033 70% 91,209,194 75%

Long Term Assets

Fixed Assets and Others (at Cost) 54,106,512 64% 54,116,512 52% 54,116,512 49% 54,116,512 45% 54,116,512 44%

Less Accumulated Depreciation 4,581,035 5% 9,164,069 #REF! 13,747,104 #REF! 18,330,138 #REF! 22,913,173 #REF!

Total Long Term Assets (NBV) 49,525,478 58% 44,952,443 43% 40,369,409 36% 35,786,374 30% 31,203,339 25%

Total Assets 85,181,280 100% 103,908,278 100% 111,067,607 100% 120,137,407 100% 122,412,534 100%

- - - - -

Liabilities

Current Liabilities

Dividend Payable 4,106,410 5% 7,061,295 7% 6,917,938 6% 15,589,040 13% 21,823,799 18%

Trade Payable - 0% - 0% - 0% - 0% - 0%

Total Current Liabilities 4,106,410 5% 7,061,295 7% 6,917,938 6% 15,589,040 13% 21,823,799 18%

Long Term Liabilites

Long Term Debt 51,738,840 61% 58,880,480 57% 55,806,260 50% 52,307,697 44% 48,326,219 39%

Long Term Debt Net 51,738,840 61% 58,880,480 57% 55,806,260 50% 52,307,697 44% 48,326,219 39%

Total Liabilities 55,845,250 66% 65,941,775 63% 62,724,198 56% 67,896,737 57% 70,150,018 57%

Capital

Paid In Capital 25,229,621 30% 25,229,621 24% 25,229,621 23% 25,229,621 21% 25,229,621 21%

Retained Earnings 4,106,410 5% 12,736,882 12% 23,113,789 21% 27,011,049 22% 27,032,895 22%

Total Capital 29,336,031 34% 37,966,503 37% 48,343,410 44% 52,240,670 43% 52,262,515 43%

Total Liabilities and Capital 85,181,280 100% 103,908,278 100% 111,067,607 100% 120,137,407 100% 122,412,534 100%

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Animal feed processing project 2009

9.3 Cash Flow


Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Cash flow from Operating Activities
Net Income 14,488,248 22,833,407 24,770,410 26,537,523 28,413,953
Account Recieveable (1,469,677) (1,844,943) (1,954,492) (3,966,882) (477,900)
Inventory (16,103,521) - (1,243,450) (983,222) (916,510) (962,335)
Depreciation 4,581,035 4,583,035 4,583,035 4,583,035 4,583,035
Trade Payable - - - - -
Corporate Tax Paid - - - - -
Net cash flow from operating activitites (16,103,521) 17,599,605 24,328,049 26,415,730 26,237,166 31,556,752

Cash flow from Investing Activitites


Plant Machinery and equipment incl. freight(54,106,512)

Net cash flow from investing activities (54,106,512) - - - - -

Cash flow from Financing Activities


New lines of credit
Long term 45,463,412
Medium/Short term
Repayment of lines of credit
Long term 6,275,428 7,141,640 (3,074,220) (3,498,563) (3,981,478)
Medium/Short term
Interest Paid (6,275,428) (7,141,640) (7,475,565) (7,051,223) (6,568,308)
Dividend Paid - (4,106,410) (7,061,295) (6,917,938) (15,589,040)
Paid up capital 25,229,621
Net cash flow from Financing Activities 70,693,033 (0) (4,106,410) (17,611,081) (17,467,724) (26,138,826)

Net Increase/Decrease in Cash 483,000 17,599,605 20,221,639 8,804,650 8,769,443 5,417,926

Cash at the beginning of the year - 483,000 18,082,605 38,304,244 47,108,893 55,878,336

Cash at the end of the year 483,000 18,082,605 38,304,244 47,108,893 55,878,336 61,296,262
(70,693,033) 18,082,605 38,304,244 47,108,893 55,878,336 61,296,262
(25,229,621) 18,082,605 38,304,244 47,108,893 55,878,336 61,296,262

Equity 116%
Total Investment 25%

10,790,720

Equity Seven Months


Total Investment Fifteen Months

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Animal feed processing project 2009

9.4 Assumption
Assumptions and Basis for Projection (All Monetary Values in Birr Currency)

Inflation 1.0 Source of Finance/Equity - Debt Structure


Forex Depr. 1.1 Equity 30% 21,222,910
Interest rate 11% Debt 70% 49,520,123
Tax Rate 30% Total 70,743,033
Dividend Rate 90%
Discount Rate 36%
Capacity 3,780 tons/annum Initial Investment Summary
Grace Period On Repayment of Loan 0 year(s) Fixed Assets and Other Costs 54,639,512
Yearly Increase in Expenses Working Capital 16,103,521
Fuel And Lubricants 1.1 Total 70,743,033
Raw Material 1.0
Labor Salary 1.0
General Increase in Costs 1.05
Miscelleneous 5% of total expense

Working Hours/Day 20
Working Hours/Month 500
Working Hours/Year 6000
Exchange Rate -Birr/Euro 18

Average Unit Average Unit


Capacity Total Production in Prodction Selling Gross
Uitilizaion Tons Cost Total CGS Price Total Sales Gross Profit Profit %

Year 1 75% 2,835 42,209 119,652,466 51,845 146,967,719 27,315,253 19%

Year 2 85% 3,213 40,339 129,599,247 51,586 165,731,033 36,131,786 22%

Year 3 90% 3,402 40,311 137,124,437 51,632 175,637,091 38,512,654 22%

Year 4 90% 3,402 42,326 143,980,659 54,302 184,719,891 40,739,232 22%

Year 5 90% 3,402 44,442 151,179,692 57,112 194,277,897 43,098,205 22%

Fixed Assets and Others

Machinery Quantity (Set) Unit Price Total


Complete Equipment 1 10,600,000 10,600,000
Vehicles 1 7,808,888 7,808,888
Organizational Cost 1 737,553 737,553
Building Cost and Site Works 1 21,501,003 21,501,003
Others 1 13,992,068 13,992,068
Total 54,639,512

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Animal feed processing project 2009

9.5 Sensitivity Analysis


Cost of Goods Sold Increase

Increase By 5%

Revenue Cost Gross Margin Expense EBITDA Depr/Interest EBT Tax EAT

Year 1 146,967,719 125,635,089 21,332,630 8,245,971 13,086,659 10,856,462 2,230,197 - 2,230,197

Year 2 165,731,033 136,079,209 29,651,824 8,715,344 20,936,480 11,724,675 9,211,805 - 9,211,805

Year 3 175,637,091 143,980,659 31,656,432 9,159,209 22,497,223 12,058,600 10,438,623 - 10,438,623

Year 4 184,719,891 151,179,692 33,540,199 9,618,674 23,921,525 11,634,258 12,287,267 - 12,287,267

Year 5 194,277,897 158,738,676 35,539,221 10,101,218 25,438,003 11,151,342 14,286,660 - 14,286,660

IRR 22% Payback Period


Equity IRR 126% Total Investment 30 months
Equity 14 months
NPV 46,496,432

Expense Increase

Increase By 5%

Revenue Cost Gross Margin Expense EBITDA Depr/Interest EBT Tax EAT

Year 1 146,967,719 119,652,466 27,315,253 8,658,270 18,656,984 10,856,462 7,800,522 - 7,800,522

Year 2 165,731,033 129,599,247 36,131,786 9,151,112 26,980,675 11,724,675 15,256,000 - 15,256,000

Year 3 175,637,091 137,124,437 38,512,654 9,617,170 28,895,484 12,058,600 16,836,885 - 16,836,885

Year 4 184,719,891 143,980,659 40,739,232 10,099,608 30,639,624 11,634,258 19,005,366 - 19,005,366

Year 5 194,277,897 151,179,692 43,098,205 10,606,279 32,491,926 11,151,342 21,340,584 - 21,340,584

IRR 22% Payback Period


Equity IRR 126% Total Investment 30 months
Equity 14 months
NPV 46,496,432

Investment Increase

Increase By 5%

Total Investment 74,280,184

Equity 22,284,055

IRR Total Inv 22% IRR Equity 126% Payback Total Inv 30

NPV 46,496,432 Payback Equity 14

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Animal feed processing project 2009

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