ATORO AGRICULTURE ACTIVITIES PLC.

SHEEP AND GOAT FARMING BUSINESS PLAN

RUT ATRIF FEREJA

DECEMBER, 2022

WOLKITE, ETHIOPIA
 Name of the Farming business and Owners

Name of business: Atoro Agriculture Activities plc

Type of business: Partnership business

Names and addresses of the owners of the Atoro Agriculture Activities plc.
No Name Email address Phone number Responsibility

1 Mis. Rut Atrif rutatrif11@gmail.com +251954951229 Manager

2 Mr. Dessalegn Gamini dessalegngamini@gmail.com +251920708355 Assistant manager

 TABLE OF CONTENTS

LIST OF FIGURES.......................................................................................................................IV
LIST OF TABLES..........................................................................................................................V
EXECUTIVE SUMMARY...........................................................................................................VI
1. INTRODUCTION.......................................................................................................................1
2. BUSINESS DESCRIPTION........................................................................................................2
2.1. Location of the Farm.............................................................................................................2
2.2. Vision....................................................................................................................................3
2.3. Mission of the Farm..............................................................................................................3
2.4. Goals and Objectives............................................................................................................3
2.5. Values and Future Strategic Plan.........................................................................................4
2.6. Products and Services of the Farm........................................................................................4
2.7. Facilities for Atoro Agriculture Activities............................................................................5
3. MARKET ANALYSIS................................................................................................................5
3.1. Market Characteristics..........................................................................................................5
3.1.1. Market demand and supply gap....................................................................................5
3.1.2. Target markets...............................................................................................................6
3.1.3. Target customers profiles...............................................................................................6
4. COMPETITOR ASSESSMENT.................................................................................................8
4.1. Market Share.........................................................................................................................8
4.2. Relationship with Customers................................................................................................9
4.3. Financial Strength/cost position............................................................................................9
4.4. Length of Time in Business..................................................................................................9
4.5. SWOT Analysis....................................................................................................................9
5. MARKETING PLAN................................................................................................................11
5.1. Product and Services supplied in the Market......................................................................11
5.2. Price Charged and Place (or distribution system)...............................................................14
5.3. Marketing and Salling Strategy (promotional effect).........................................................14
6. OPERATING PLAN.................................................................................................................16
6.1. Site and Herd Selection.......................................................................................................16
6.2. Feeding and Housing..........................................................................................................16

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 6.3. Business Structure (Ownership and management).............................................................17
6.4. Production Capacity and Production Process.....................................................................19
6.5. Inputs and Equipment and its Estimated Cost....................................................................19
6.6. Land, Building and Civil Works.........................................................................................21
6.7. Human Resource Requirement...........................................................................................21
6.8. Legal and Gender Issues in Business Managements..........................................................22
6.9. Business Risks....................................................................................................................22
6.9.1. Financial risk................................................................................................................22
6.9.2. Operational risks.........................................................................................................22
6.9.3. Marketing risk..............................................................................................................23
6.9.4. Default risks.................................................................................................................23
6.9.5. Human or personal risk................................................................................................23
7. FINANCIAL PLAN..................................................................................................................24
7.1. Start-up Capital...................................................................................................................24
7.2. Sales Forecast......................................................................................................................25
7.3. Balance Sheet......................................................................................................................25
7.4. Income Statement / Business Profit or Loss.......................................................................27
7.5. Forecasted Cash Flow Statement........................................................................................28
7.6. Breakeven Analysis............................................................................................................28
8. FINANCIAL EVALUATION...................................................................................................29
8.1. Payback Period....................................................................................................................29
8.2. Net Present Value...............................................................................................................29
8.3. Profitability Analysis..........................................................................................................29
8.4. Economic Benefit................................................................................................................30

II | P a g e
III | P a g e
 LIST OF FIGURES

Figure 1: Management structure of Atoro Agriculture Activities....................... 18

IV | P a g e
 LIST OF TABLES

Table 1: The customer profile.................................................................................................................... 7

Table 2: The target markets and the percentage their share in getting our products ................................. 12
Table 3: Estimated monthly supply of Atoro farm’s products and services in 2023 ................................. 13
Table 4: Annual Raw Materials and Costs of Sheep and Goat Farm at Full Capacity .............................. 20
Table 5: Manpower and Salary Requirement for Atoro Sheep and Goat Farm......................................... 21
Table 6: Initial Investment Cost ................................................................................................................ 24
Table 7: Estimated sales forecast for the next three year ........................................................................... 25
Table 8: Balance sheet of Atoro Agriculture Activities ..................................................................... 26
Table 9: Income statement of Atoro Agriculture Activities............................. .................................... 27
Table 10: forecasted cash flow statement.................................................................................................. 28

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 EXECUTIVE SUMMARY

This business plan is developed to establish sheep and goat farming business. The established
business is named as Atoro Agriculture Activities to be located in Guraghe zone, Edja woreda,
Zigbaboto kebele that has plenty open space, cheap labors, road connection, water availability
and immediate access to the huge market of our product that is hotels, individuals, slaughter and
other market with the initial investment of birr 36,024,559.The farm will be established with the
aim of supplying the quality sheep and goat meat, creating job opportunities, and alleviating
poverty by increasing the income of the business participants in particular which in turn
increases the GDP of the country as a whole. The main products and services of the farm will be
sheep and goat breed, milk fed lambs, high quality and safe meat (raw and processed), high
quality milk (raw and processed), wool and leather (skin), fiber, consultancy services about
sheep and goat fattening process and training services about our farm business

The farm will have capacity to accommodate 1600 heads of sheep and goat per month. The
actual operation will be based on a batch of 83 heads per week. The whole operations are
managed by the two owners namely Rut Atrif and Dessalegn Gamini. The farm will create the
employment opportunities for 31 individuals in the first year.

We will have a high market share in the markets in the district, which accounts about 75 percents
of the market in the area. To increase our market shares, we will advertise our products and
services using different advertising methods like TV, radio and magazines. Besides this we will
increase our customers through strengthening our relationship by providing trainings, distributing
leaflets to the customers, preparing workshops, inviting them to participate in our meeting, and
creating a website blogs. The farming business will get the estimated revenue of Birr 9,556,300
per month and Birr 114,675,600 per year whereas total estimated costs incurred will be Birr
69,883,409, in the first year (2023) and its sales growth rate is 10%. The total sales forecasted for
the future three years will be Birr 114,675,600, 126,143,160 and 138,757,476 with the net profit
of birr 28,432,840.80, 31,276,124.88 and 34,403,737.37 in the year 2024, 2025 and 2026
respectively. The payback period, cash flow, net present value and the internal rate of return
indicates that the business will be accepted. The different risks are estimated, but we will reduce
such risks by providing high quality products and services before its occurrences.

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 1. INTRODUCTION

Ethiopia holds a large number of livestock comprising about 55.03 million in 2013 that plays a
great role for increasing its economy in Africa (Tamiru and Amiza, 2017). During the year of
2009, the contribution of livestock production and marketing to the country’s agricultural GDP
was slightly more than 32billion Ethiopian birr or $3.2 billion US dollars (FAO, 2013). Livestock
production accounts for approximately 30% of the total agricultural GDP and 16% of national
foreign currency earrings; and is used as sources of meat, milk and egg production, sources of
draft power and manure to support crop production, means of transport particularly in the rural
areas, source of foreign currency through export of chilled meat, live animals, skin, hides, etc
(Tadesse and Mengistie, 2016).

From the livestock production sector, sheep and goat ranch are the one that contributes a higher
percentage of the sectors benefit. Sheep and goat products like milk and meat is not only
nutritious and easily digestible food but also a great source of regular income for the poor,
landless and marginal farmers. They are multi-purpose animal that they can produce milk, meat,
skin, fiber and manure at the same time. Because of its higher income contribution, the demand
for participating in sheep and goat farming business is increasing from time to time.

Sheep and goat farming business are less risky business which requires low initial investment or
capital and small area for housing because of their small body size compared to other livestock.
However, establishing the sheep and goat farm is profitable business. In the farming area, there is
a high market demand due to the establishments of hotels, restaurants, cafes and other
institutional establishments that needs a high-quality sheep and goat products.

Even though, there is a high demand in the market, the supply of the sheep and goat products is
very low so that the users of the product cannot get the products as their needs; and this creates
unbalanced demand and supply. Therefore, we will establish the farm to fulfil the market
demands by increasing the supply of sheep and goat breeds and their products.

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 2. BUSINESS DESCRIPTION

Atoro Agriculture Activities is the partnership business, which is located in the Guraghe zone,
Edja woreda, Zigbaboto kebele, SNNPR region, and southern parts of Ethiopia, owned by two
individuals namely Mis.Rut Atrif and Mr.Dessalegn Gamini. This farming business is established
to increase/supply the sheep and goat production and breed in the zone which will in turn
increases the GDP of the country so that poverty will be reduced.

The farm will cover the area of 20 hectares; and has three broad houses. It will start the activity of
producing the sheep and goat breeds and their products in the year of 2023 with the initial
investment of Birr 36,024,559 and will continue up to three years that is 2023-2025. From the
total initial investment, Birr 10,250,189.70 will be from the owners whereas the other Birr
25,774,369.30
will be obtained from the banks. The business will repay the loan within three years.

The immediate target customers will be those who live in the farm and around the farm. In the
target market, our business will mainly be targeting hotels, restaurants and lamb butcheries
which have risen in number over the past few years due to increased business activity in the
district as well as the establishment of a healthcare office which employs numerous expatriates.
Prolong the sufficient supply to the customer is one of our most important purposes. We want to
extend our supply beyond these areas with affordable price.
Atoro Agriculture Activities will get the estimated revenue of Birr 9,556,300 per month and Birr
114,675,600 per year whereas total estimated costs incurred will be Birr 69,883,409, in the first
year (2023). The total sales forecasted for the future three years will be Birr 114,675,600,
126,143,160 and 138,757,476 in 2023, 2024, 2025 year respectively. Therefore, our business will
be profitable.

2.1. Location of the Farm

Our farming business is to be located in Guraghe, SNNPR region, Ethiopia. In the site, there are
accesses to get bed room, well known hotels with respected waiters, reliable shops so that
everyone who comes to this farming business is lucky. This means that the business site is
comfortable, viable and reliable for the customers.

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 2.2. Vision

The vision of farm is to be the first sheep and goat producing farm in Guraghe by 2025.

2.3. Mission of the Farm

Our sheep and goat farming business will be the standard of the future farming business in
providing the quality products and services that cannot be founded anywhere else, to the
customers. Our business will be focused on offering the quality and excellence service that our
customers will be satisfied by employing the known professionals, using quality raw materials or
inputs as well as by supplying both the raw and the processed products. We will enable the
customers to get the sheep and goats themselves, both processed and raw meat of goat and sheep
as well as goat milk to the customers.

Besides supplying the quality sheep and goat meat, creating job opportunities, and alleviating
poverty by increasing the income of the business participants in particular which in turn increases
the GDP of the country, will be our mission.

2.4. Goals and Objectives

The goal of the business is to increase the income of the business by 70% yearly and establish

three sheep and goat farming business branches by 2024 (after two years of the establishments)

The farm has the following objectives that will be achieved in the future:

To market and supply the quality sheep and goat breed and their value-added products.
To produce the pure and exotic sheep and goat breed
To benefit the community by creating the job opportunities in our business
To create sufficient profitability to increase the number of farming enterprises in to three.
To represent and promote the interests of sheep and goat producers, by:
 Working to maintain and expand sustainable and profitable sheep and goat
production in Guraghe and around the area.
 Collaborating with Primary Producers in Guraghe zone
 Facilitating the sharing of information and provide network opportunities for
members

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  Promoting the adoption of proven technology and production methods
 Identifying and supporting the development of future industry leaders

2.5. Values and Future Strategic Plan

Customer is first
Honesty
Accountable and responsible:
Inclusiveness: All religion
Excellence: All operations in the farm will be effective, efficient, innovative,
and nullifies wastages of resources.

2.6. Products and Services of the Farm

Our business is capable of providing a quality, healthy and safe products and services depending
on the customer’s choice/order. Quality assurance is the main motto of our business and we are
not-compromise in the question of quality. To ensure the quality we always take high care of our
sheep and goats.

Our business has the opportunities to provide the following sheep and goat products and services:

 Sheep and goat breed

 Milk fed lambs
 High quality and safe Meat (raw and processed)
 High quality Milk (raw and processed)
 Wool and leather (skin)
 Fiber
 Manure
 consultancy services about sheep and goat fattening process
 Training services about our farm business
Main activities of the business will be conditioning, cleaning, feeding, upgrading, etc, of the
above-mentioned breeds. In the farm, intensive flock management, which includes proper
feeding, ensuring the health of the flock, etc, will be carried out.

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 2.7. Facilities for Atoro Agriculture Activities

The necessary facilities for sheep and goat farming business include the followings:

Great source of fresh and clean water supply.

Availability of all types of equipment.
Easily available food source.
Fertile field for crop, grasses and other green plant production.
Availability of full-time labor.
Good transportation and veterinary service.
A market near the farm land so that you can sell your products easily and buy
necessary commodities.

3. MARKET ANALYSIS

It is critical as a business person to understand the market in where it functions. This can be
achieved through market research to understand potential customers and their characteristics, and
reviewing expected product/ service preferences. In the marketing analysis, the targeting market
characteristics, the past, current and forecasted price, the customer profiles and competitor will
be analysed as follows.

3.1. Market Characteristics

In market characteristics, market demand-supply gap, target markets and target customers of
sheep and goat markets in the area are incorporated.

3.1.1. Market demand and supply gap

In the country, Ethiopia, the population is increasing from time to time. This incensement of
population could increase the demand of the quality sheep and goat products either for their
healthy consumption or marketing. Sheep and goat butcheries and retail sheep and goat meat in
supermarkets are found in the major towns at but not in smaller towns. This trend will create a
good opportunity to be succeeded and expand our farm business.

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The supply and demand of both sheep and goat and its products in the market are unbalanced in
the farm area. This means that the supply is lower than the demand so that the customers are not
satisfied. The demand for sheep and goat and their products is very high especially in the
holidays like, Christmas, epiphany, Easter and new year (enqutatash). But at these days the
supply is less so that we will supply more at that time. Therefore, establishing sheep and goat
farming business creates a high level of customer’s satisfaction so that our business will be
profitable in the area.

3.1.2. Target markets

Before deciding on business to establish, we are planning to visit with several businesses in the
target area to determine the products we are selling. This will help us to eliminate the possibility
of establishing the other farms that will be unmarketable. Then after visiting we are deciding on
establishing sheep and goat farming business based on the information we got from the market
and community/residents of the district. Based this market intelligence, the immediate markets
for our farm are those who live in the farm and around the farm. Besides this there will be other
market participants at Woreda and zonal level. Gotam, Agena, Gubre,Wolkite,Shamene,Arekit,
Gunchire, Hossana, Woliso and Addis Ababa markets and other markets in area will be targeted
for our product sales and advertisements. In the target market, our business is mainly targeting
hotels, restaurants and lamb butcheries which have risen in number over the past few years due
to increased business activity in the district as well as the establishment of a healthcare office
which employs numerous expatriates.

3.1.3. Target customers profiles

We are optimistic that, almost all the residents of the Atoro farming business area are willing to
be a customer of our business. Especially the hotels/restaurants and sheep and goat traders are
highly wanted to be a pioneer customer in the district. Our customers will be the hotel/
restaurants, abattoirs, sheep and goat speculators and traders, the community in the area. Our
products and services are favourite for all aged groups so that everyone can get the products and
services as per their demand. We will be intended to target on the customer’s preference and
needs. This means that, our story will target a customer base who wishes to buy locally and
support the sustainable livelihood efforts meant to uplift disadvantaged communities in the area.

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 The customers want to get the quality sheep and goat breeds and products. But in the area the
quality sheep and goat breeds are not there so that the communities are trying to find the good
breeds from other areas. Besides this they are not getting the quality sheep and goat meat,
though they prefer it. However, we will meet their wants and preferences by supplying high
quality and safe sheep and goat meat in the district.

The main customers with their address, who made a promise to be our customers, are the
following:

Table 1: The customer profile

No Name Phone Number Responsibility

1. Tarekegn Gamini tarekegngam66@gmail.com Sheep trader

2. Birhane Berta bertabirhane@gmail.com Sinkirt hotel manager

3. Zeleke Birhanu zelekesemma@gmail.com Asnakech restaurant head

4. Andamilak Bireda andubeamilak@gmail.com Kidus mikael hotel manager

5. Tadele Ayele ayeletade866@gmail.com Wool Agent

6. Hamidu and Behailu hamidusewuada@yahoo.com Sheep and goat traders

Sheep and goat traders

7. Melaku Birhanu melakubirhanutiru@gmail.com

Sheep and goat traders

8. Endale Birhanu endalebirhanuadd@yahoo.com

Source: Data from market assessment, 2023

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 4. COMPETITOR ASSESSMENT
Atoro will be the first modernized sheep and goat farming business even though there are sheep
and goat breeders and traders in the districts. In the area the breeders or farmers are supplying the
traditional sheep and goat breeds in the market so that they received a minimum benefits or
profits. The restaurants and hotels in the district are preparing the less quality “wot” because of
the absence of the quality raw materials (health sheep and goat). Therefore, this situation creates
a good opportunity for Atoro Agriculture Activities, since it will have a high-quality product
which in turn increases the number of customers.

In farming area, there is no product, which is packed, graded and processed, supplied in the
market. But our farming business will supply the processed, packed, graded and qualified
products based on customer’s preferences in the market so that our business will be competent in
the market in the district. Regarding to the price, other suppliers and sellers of sheep, goat and
their products in a higher price (birr 6000 and above) without maintain the breed and products
quality; but our farming business will sell the high quality and safe products with fair price (birr
4900).

The competitors are distributing their products in different marketing areas around their farming
area (not in other markets where it far from their farming area). But our products will be
distributed not only in market areas of farming district but also in different markets of the
Woreda, region and country so that we will be beneficial from our farming business
establishments.

4.1. Market Share

A high portion of the market in the area was covered by sheep and goat market so that we can say
that there is a high marketing share of sheep and goat breeds in livestock markets. Even though
there is no high-quality sheep and goat breed, the numbers of buyers are higher. This means that
the number of customers/ buyers will be much higher in number if we will establish the
modernized Atoro Agriculture Activities than other farming business else. Therefore, the market

8
share of our business products will be higher due to our efforts in promoting our product and
services provided to customers.

We will have a high market share in the markets in the districts, which accounts about 75
percents of the market in the area.

4.2. Relationship with Customers

We will create good relationship with customers using different strategies like by:

providing trainings,
distributing leaflets to the customers,
preparing workshops,
inviting them to participate in our meeting
creating a website blog

4.3. Financial Strength/cost position

The competitors have no sufficient financial capitals to lead their business rather than using the
credit obtained from credit and saving institution. But Atoro Agriculture Activities will have its
own sufficient financial capitals. Even initially we have our own initial capital of 10,250,189.70;
but our competitors started the business with credit (had no their own initial capital). Our farming
business will increase its financial position by offering a high-quality products and services to the
customers.

4.4. Length of Time in Business

Most of the competitors do not have business trainings and backgrounds; but they started the
business without business background so that they are not motivated to continue and sustain in
the business. Atoro farming business will be held by the well professional personnel who have
good business backgrounds so that the business will be sustained for many years.

4.5. SWOT Analysis

Strength:

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  Increasing the productivity of the farm
 Producing healthy weaned kids
 Producing commercial breeding stock
 On-going stock improvement programme
 Presence of promotion and advertising effort
 Producing processed and high-quality products
 Presence of incentives like bonuses, rewards, share of profit
 Presence of both local and exotic breeds
 Qualified staffs

Weakness:

 higher expense of operation

 Limited availability of high-quality forage
 High cost of labour
 Persistence of negative consumer behaviour toward goat’s milk

Opportunities:

 Increasing the demand of sheep and goat product

 Development of new production technology
 Possibilities for job creation and additional income from associated activities
 Great market potential for new breeding

Threat:

 Increasing the establishment of other farming business

 Illegal importation of small ruminants from abroad
 Death of sheep and goat
 Broken of the house due to natural accidents
 Financial crisis

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 5. MARKETING PLAN

Important marketing assumption:

 The total number of sheep supplied in the market per month ...…………600
 The total number of goat supplied in the market per month ………….…..450
 The total tone of sheep meat supplied in the market per month ……..100tone
 The total tone of goat meat supplied in the market per month ………..42 tone
 The estimated average selling price of one sheep ……………………Birr4900
 The estimated average selling price of one goat ………………………Birr 4200

5.1. Product and Services supplied in the Market

Atoro sheep and goat farming system will provide Sheep and goat breed, Milk fed lambs, high
quality and safe Meat (raw and processed), High quality Milk (raw and processed), Wool and
leather (skin), Fiber and Manure to the community and or residents of the area and other traders
who come from other places. Most of the products will be supplied and offered to Wolkite
market participants, which covers almost 57% of our products supplied in the market. Next to
Wolkite market, 24.5% of our products will be supplied in Gotam (Emdebir) market.

The following table indicates the target markets and the percentage their share in getting our
products.

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 Table 2: The target markets and the percentage their share in getting our products

No, Target market Products supplied Share Remark

1 Wolkite market 57%

Sheep and goat breed, Milk fed lambs, It covers the highest
High quality and safe Meat (raw and percentage because of
processed), High quality Milk (raw and its short distance from
processed), Wool and leather (skin), Fiber our farming business.
and manure
2 Gotam market Sheep and goat breed, Milk fed lambs, 24.5%
High quality and safe Meat (raw and Next to Wolkite market,
processed), High quality Milk (raw and in Gotam market, there
processed), Wool and leather (skin) and is shortage of the
Fiber products so that only
24.5% of our products
will be estimated to be
enough.

3 Addis Ababa Sheep and goat breed, Milk fed lambs, 11.5%
market High quality and safe Meat (raw and Since there is a long
processed), High quality Milk (raw and distance between our
processed), Wool and leather (skin) and farm and Addis Ababa
Fiber marketing area only
11.5% of our products
will be estimated to
supplied.
4 Other market 7% We will also plan to
areas Sheep and goat breed, Milk fed lambs, supply our products in
High quality and safe Meat (raw and other markets other than
processed), High quality Milk (raw and the nearest markets.
processed), Wool and leather (skin) and
Fiber

Total percentage 100%

Source: our computational plan, 2023

The small volume of our products (7%) will be supplied in the other regional markets of the
country, Ethiopia. This is due to many challenges that will hinder us from reaching our products
to other far area markets. From these challenges lack of transportation, loss/wastage of the
products in transporting and other costs are the main factors. In order to reach our products in

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 such marketing area, we will use the quality packaging materials. Hence, we will send only the
packed products to such areas.

Our products that will be supplied in the market will be the processed or packed product. After
processing our products, we will label them to provide full information about the product to the
customers. Besides this we will provide certified and inspected high quality products.

We will also provide the following services

consultancy services about sheep and goat fattening process

Training services about our farm business
Giving rewards for the loyal customers
Giving solutions for the problems raised among customers by identifying their problem
Reaching the products to the customer’s house by making agreement on the date of their
demand.
If the customer’s preference is getting the sheep or goat directly, we will give them the
sheep or goat as they need by inviting them to select which sheep or goat

Prepare workshop and invite our customers to be there and etc.

Therefore, by doing all the above activities, we facilitate our marketing activity. As a result, our
farming business will be more profitable one.

Table 3: Estimated monthly supply of Atoro farm’s products and services in 2023
No. Products supplied Estimated Volumes Units price (P) Total price (P*Q) =R
to be supplied (Q) (In Birr) (In birr)

1 Sheep breed(sum) 600 4900 2,940,000

2 Goat breed(sum) 450 4200 1,890,000
3 Sheep meat(tone) 6 450000 2,700,000
4 Goat meat (tone) 4.5 430000 1,935,000
5 Sheep skin () 200 240 48,000
6 Goat skin 150 242 36,300
7 Sheep & goat Milk (litter) 200 35 7,000

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 Total monthly revenue 9,556,300

5.2. Price Charged and Place (or distribution system)

The price of sheep and goat is dependent upon the supply to the market. According to the market
assessment results, the average price of sheep and goat in the Wolkite town is between 4200-
5600Birr and 3500-5200birr respectively; and the price of the sheep and goat skin is between
120-250birrr. Based on this interval we are envisaged the price to be 4900, 4200, and 242birr
respectively for sheep, goat, and their skin in the area.

We will distribute our products to the different market areas of the country. This means that only
the processed and packed sheep and goat products, such as, meat, skin, will be distributed to the
different market areas of the country, where they are very far from our farm. We also provide
both the processed and unprocessed products to the customers who live around the farm. All in
all, we will supply our products to large group traders, processors/retailers and consumers in the
area.

5.3. Marketing and Salling Strategy (promotional effect)

We will advertise our products and services using different advertising methods like TV, radio
and magazines. We will advertise our products and services once a year on September. Most of
the farming businesses in the area are not promoting/advertising their products and services; but
Atoro farming business will advertise its products and services by developing its own advertising
plan. Atoro Agriculture Activities will publicize its first advertisement with the expense of
100,000 birr.

We will facilitate our marketing and selling activities by using the following strategy:

Using website and social media

Our partnership business will create a website and Face-book page to allow public access to the
business’s story, services, and contact information. Additional social networking sites, such as

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twitter, and online advertising will continually be researched by the Marketing Advisor. We will
also advertise our business activities and services using Television, Radio, YouTube and etc.

Using leaflet and flyers

Small leaflet and flyers with the business description, services, and contact information will be
personally delivered to the homes of the community around the farming business and other areas
known traders/cooperatives. The personal delivery is meant to establish strong customer relations
and business networking that will jump start an initial customer base. Reaching out to our
community to promote our partnerships will prove useful in two ways: loyal customer base and
community motivation. Personally, talking to our community members will build a relationship
that is familiar and close. By promoting our partnership’s success through our background story,
we hope to motivate others from our community that they, too, have the opportunity to be
successful either by becoming a member of our partnership business or starting their own.

Using posts on different sites

The same flyers will be posted to the public bulletin boards of the Wolkite People’s Center, the
City of Wolkite offices, public libraries, and similar public buildings. Additionally, chalk written
logo, slogan, and contact information will be drawn on roads and pathways in our local
townships to actively attract attention.

Magazines and books

We will write the books about our farming business and put it in the library, governmental and
non-governmental office, and in our bureau. Besides this we advertise our products and services
using magazines, reputable newspaper.

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 6. OPERATING PLAN

Important operating assumption:

The total number of sheep for starting ……………………………….1000

The total number of goats for starting ……………………………….600
The total number of staffs employed for starting …………………. ….31
The total operating expense for starting ………………………. birr 2,772,187
The total number of heads purchased in one week ………………...66heads

6.1. Site and Herd Selection

Before establishing a farm, we will select the farming area where there is a great source of fresh
and clean water supply, availability of all types of equipment, easily available food source, fertile
field for crop, grasses and other green plant production, availability of full-time labor and a
market near the farm land so that we could sell our products easily. By considering these
preconditions we select the farming area (Guraghe) in which our business is established.

Regarding to the herd and breed selection, we select the sheep and goat which are healthy,
physically strong, capable in production and reproduction. Sheep are selected for fattening
should be from six months to six months of age. At this age they are weaned and used to eating
green fodder and grass. The sheep and goat will be tagged on arrival to the farm by including the
information about their breed, live weight and age of the date of purchase etc.

6.2. Feeding and Housing

For protecting sheep and goat’s health, safety and for easy manure collection, housing goat and
sheep is mandatory. This means that with good housing, a waterproof roof and draught-proof
walls to keep out damp and draughts, we will avoid goats and sheep becoming sick. Therefore,

16
by considering this information, we will build the three room houses that are partitioned for
general flock (Ewe / Doe), ram or buck, lambing or kidding, lamb or kid, sick sheep and goat,
shearing and storeroom and attendant. Regarding food, separate feeders and water troughs should
be placed for concentrate feeds, green fodders and water.

6.3. Business Structure (Ownership and management)

A business structure is a category of organization that is legally recognized in a given jurisdiction

and characterized by the legal definition of that particular category. Business structure is the
paramount for viability of any business so that choosing a good business structure is crucial for
establishments of any business enterprise. Business structure includes sole proprietorship,
partnership, corporation and cooperatives. From these types of business structure, our business is
a partnership business, which is named as “Atoro Agriculture Activities plc.” Our business will
be owned by two individuals namely Rut Atrif and Dessalegn Gamini. I, RutvAtrif, will be the
general manager of the business, that
I make the final decisions concerning about the business venture’s operation. Dessalegn Gamini
is the assistant manager of the business, who assists me in managing the business.

I, Rut Atrif, as the manager of the business, will do the following tasks:
 Managing labor/part time personnel
 Communicating with buyers
 Communicating with lenders and veterinarian
 Making overall decisions with input from others
 Making capital purchase decisions
 Completing business analysis, cash flow projections, and marketing plans

Mr. Dessalegn Gamini will be the assistant manager of the business with the following duties:

 Making decisions in the absence of the manager

 Generating accounting and financial reports

Mr. Dessalegn Gamini will be the secretary of the operation with the following responsibilities:
 Writing the meeting reports
 Any activities related to writing tasks

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  Writing books, posts and notes for news paper

In order to operate all the farming business activities effectively and efficiently, employing other
proficient personnel’s will be mandatory. For this reason, we will employee competent, skilled
and qualified manpower. These qualified and competent man-powers we will be intended to
employ are:

 Human resource and administration manger

 Accountants and casher
 Supervisor,
 Sales and marketing manager,
 Quality inspector and veterinarian
 Sheep and goat custodian/guard

Figure 1: Management structure of Atoro Agriculture Activities

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 6.4. Production Capacity and Production Process

Production capacity

The farm will have capacity to accommodate 3200 heads of sheep and goats. The actual
operation will be based on a batch of heads per week. The main function of the farm will be
conditioning, cleaning, feeding, upgrading etc. of good bread sheep and goats. Hence, one batch
will stay in the farm for one month, however, for effective utilization of resources (manpower,
equipment, transport, etc) and efficient operation and management the farm operation schedule
will be based on weekly basis. In one week, 66 heads, i.e., 39 sheep and 27 goats will be
purchased and considered as one batch.

Production process:

Sheep and goat will reach the farm through suppliers or contract as per the pre-determined
procurement procedure. The next process will be receiving and treating the animals. The
treatment includes weighing, vaccination and Deeping followed by prophylactic treatment.
Physical examination to isolate sick animals and separation of sexes are also part of the
production process. Then, the actual feeding and supplements practice are the main part of the
task. Castration will be done depending on the request of the client. The final stage of this
process will be marketing. At this time, it is also important to separate marketable and unfit
animals.

Production schedule

Atoro Agriculture Activities will start its production in the first year, almost about 90% of its
capacity. And the full production capacity will be started in the second years.

6.5. Inputs and Equipment and its Estimated Cost

The inputs and equipment we will require are land, feeds, sheep and goat, machines.

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Annual inputs requirement at full capacity of sheep and goat farm are described in following
table.

Table 4: Annual Raw Materials and Costs of Sheep and Goat Farm at Full Capacity
No Description Quantity Unit Cost in Birr Total cost
Input
1 Feed (tones) 7300 1,750 12,775,000
2 Sheep (head) 2000 4500 9,000,000
3 Goat (head) 1200 4200 5,040,000
4 Land (ha) 20 1200 24,000
5 Vaccine (in number) 160 450 72,000
Sub total 26,911,000
Machines/equipment
1 Deeping vat 2 200,000 400,000
2 Hoof treamer 6 600 3,600
3 Burdizzo crusher 4 1200 4,800
4 Syringes 10 3,000 30,000
5 Feeder and water trough 16 8,000 128,000
6 Trailer 2 155,142 310,284
7 Water tank 2 120,000 240,000
Subtotal 1,116,684
Utilities
Electricity (Kwh) 11,000 0.1 550
Water (litter) 25,300 0.5 6325
Fuel (litter) 500 80 20000
Sub total 26,875
Grand Total 28,054,559
Source: our operational plan, 2022

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 6.6. Land, Building and Civil Works

The total area required for sheep and goat farm is about 20 ha. Out of which only 1900m 2 is
required as building area for store and treatment. Fencing of the farm area will also need so that
we will fence the farm area with an estimated cost of 1,300,000 Birr. The total cost of building
and civil works is estimated at Birr 5,000,000 birr.

6.7. Human Resource Requirement

We will employee the professional, qualified, knowledgeable and skilled manpower. The
following table show that the manpower requirements with their salary for our farming business.

Table 5: Manpower and Salary Requirement for Atoro Sheep and Goat Farm
No. Description Req. Monthly Annual salary
No. salary, (Birr) (Birr)
1 Farm Manger 1 20000 240000
2 Sales and marketing manager 2 8000 192000
3 Secretary 2 2500 60000
4 Flock Attendant 6 2000 144000
5 Veterinarian 2 7500 180000
6 Record keeper 2 2500 60000
7 Accountants and casher 4 6500 312000
8 Drivers 2 3750 90000
9 Quality inspector &Supervisor 4 5500 264000
10 Sheep & goat custodian/guard 6 2500 180000

Sub Total 31 1,722,000

Employees benefit 172,200
(10%)
Grand Total 31 1,894,200

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 6.8. Legal and Gender Issues in Business Managements

We will do all the activities based on the rules and regulation of trade in the country. We will be
licensed from the office of trade. Regarding to gender issue, we will employee both male and
female staffs in our farming business.

6.9. Business Risks

Atoro Agriculture Activities may face following types of risks. But in order to reduce those risks
expected different strategic plans will be developed.

6.9.1. Financial risk

It is the risk that results when the farm business borrows money and creates an obligation to
repay debt. Our expected revenues and costs may change due to the change in pricing policies of
our competitors and the country, failure of our promoter/advertiser from well promotion and or
advertising of our product, the length time related to payments of the debt. To solve this risk, we
will try to ensure good marketing and good value.

6.9.2. Operational risks

To attract and retain users to the business products, we must continue to provide quality and
hygienic content. This confers certain risks including the failure to:

 Anticipate and respond to consumer preferences for content, preferences and service
 Attract, excite and retain a large audience of consumers to the farm products
 Create and maintain successful strategic alliances with high quality partners
 Deliver high quality, customer service and adequate information
 Build the business brand rapidly and substantially
 Compete effectively against better established sheep and goat farming business
 Avail the required feed and budget timely
 Create favourable environment for the growth of sheep and goat
 Unknown outbreak of disease

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6.9.3. Marketing risk

We will supply the high-quality products in the market based on the customer preferences. But
due to the change in the marketing policy, the price may be either deflated or inflated. In this
case the customers demand, preference and tastes might be affected. Therefore, these risks would
be reduced by offering high quality product and service to the customers.

6.9.4. Default risks

Default occurs when somebody fails to honour an agreement. This may be a farmer who
promised to deliver a product but decides to sell it to a third party who offers a better price.
Therefore, to avoid such risks, we will receive the products from the owner as much before
maturity date of the agreement as possible and shorten

6.9.5. Human or personal risk

It refers to factors such as problems with human health or personal relationships that can affect
the farm business; may be due to accidents, illness, death, and divorce are examples of personal
crises that can threaten a farm business. To reduce this problem, we will employee many
qualified personnel; and train all staffs about all operations and marketing activities of the
business so that if one staff died, the other can have ability to replace him and do his activities for
future.

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 7. FINANCIAL PLAN

Important Assumptions:
Year 1 Year 2 Year 3
Plan month 1 2 3
Current interest rate 10.00% 10.00% 10.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 30% 30% 30%

7.1. Start-up Capital

The total initial investment cost is Birr 36,024,559. From this birr 10,250,189.70 is our owners’
equity and Birr 25,774,369.3 is obtained from bank.

Table 6: Initial Investment Cost

Cost Items Cost in birr

No.
1 Site preparation 150,000

2 Inputs/raw materials 26,911,000

3 Machines and Equipment 1,116,684

4 Utilities 26,875

5 Stationery 100,000

6 Building 5,000,000

7 Fence 1,300,000

8 Advertisement and promotion 100,000

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9 Insurance 120,000

10 Working capital 1,200,000

Total investment cost 36,024,559

7.2. Sales Forecast

The table below outlines our estimated sales forecast for the next three years.

Table 7: Estimated sales forecast for the next three year

Products sale forecast Year 1 Year 2 Year 3
No.
1 Sheep breed 35,280,000 38,808,000.00 42,688,800.00
2 Goat breed 22,680,000 24,948,000.00 27,442,800.00
3 Sheep meat 32,400,000 35,640,000.00 39,204,000.00
4 Goat meat 23,220,000 25,542,000.00 28,096,200.00
5 Sheep skin 576,000 633,600.00 696,960.00
6 Goat skin 435,600 479,160.00 527,076.00
7 Sheep & goat Milk 84,000 92,400.00 101,640.00
Total sales forecasted 114,675,600 126,143,160 138,757,476

Total cost incurred 69,883,409 76,871,749.90 84,558,924.89

Source: our computational plan, 2023

7.3. Balance Sheet

Balance sheet shows the financial position of a given business in a given period of operation. The
total assets in the first, second and third year is birr 36,024,559,39,627,015 and 43,589,716
respectively. From these assets, birr 10,250,189.70, 11,275,208.67 and 12,402,729.54 in the
respective years are our owners’ equity.

The table below summarizes the estimated balance sheets for this period.

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 Table 8: Balance sheet of Atoro Agriculture Activities
Atoro farming business , Balance Sheets

Assets Liability and owners equity

Current Year 1 Year 2 Year 3 Current Year 1 Year 2 Year 3
Assets Liabilities
(CL)
Cash 606,512.30 667,163.53 733,879.89 Accounts 4,989,006.42 5,487,907.06 6,036,697.77
Payable

Accounts 329,116.00 362,027.60 398,230.36 Notes Payable 7,048,539.47 7,753,393.42 8,528,732.76

Receivable
Inventories 26,911,000.0029,602,100.0032,562,310.0 Accruals 2,929,455.71 3,222,401.28 3,544,641.41
0
Total 27,846,628.3030,631,291.1333,694,420.2 Total CL 14,967,001.6 16,463,701.7 18,110,071.9
Current 5 0 6 4
Assets
Fixed Assets Long-Term 10,807,367.7 11,888,104.4 13,076,914.9
Debts 0 7 2
Land and
5,024,000.00 5,526,400.00 6,079,040.00 Total 25,774,369.3 28,351,806.2 31,186,986.8
Buildings Liabilities 0 3 5
Machinery 1,116,684.00 1,228,352.40 1,351,187.64 Shareholder's
and Equity (SE)
Equipment
Vehicles 2,150,000.00 2,365,000.00 2,601,500.00 Preferred 5,185,000.70 5,703,500.77 6,273,850.85
Stock
Total Fixed
8,290,684.00 9,119,752.40 10,031,727.6 Common 3,250,000.00 3,575,000.00 3,932,500.00
Assets 4 Stock

Accumulated 112,753.30 124,028.63 136,431.50 Paid- in 1,200,000.00 1,320,000.00 1,452,000.00

Depreciation Capital
Net Fixed
8,177,930.70 8,995,723.77 9,895,296.14 Retained 615,189.00 676,707.90 744,378.69
Assets Earnings

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 Total SE 10,250,189.7 11,275,208.6 12,402,729.5
0 7 4
Total Assets 36,024,559 39,627,015 43,589,716 Total 36,024,559 39,627,015 43,589,716
Liabilities &
Equity

7.4. Income Statement / Business Profit or Loss

Atoro Agriculture Activities will capitalize on the strong demand for high quality and nutritious
sheep and goat products. The owners have provided the farm with sufficient start-up capital.
With successful management aimed at establishing and growing magnificent customer base, the
farming business will increase the capital or net worth in the first two years. It will maintain a
healthy increasing of gross margin, which combined with reasonable operating expenses, will
provide enough cash for further growth.

Table 9: Income statement of Atoro Agriculture Activities

Year 1 Year 2 Year 3
Sales 114,675,600 126,143,160 138,757,476
Cost of Goods Sold 69,883,409 76,871,750 84,558,925
Gross Profit 44,792,191 49,271,410 54,198,551
Less Operating Expenses
Selling and marketing Expenses 396,000 435,600 479,160
payroll Expenses 1,894,200 2,083,620 2,291,982
Land rent 24,000 26,400 29,040
Maintenance 52,272 57,499 63,249
Utilities 26,875 29,563 32,519
Payroll tax 378,840 416,724 458,396
Total Operating Expenses 2,772,187 3,049,406 3,354,346
Operating Profit 42,020,004 46,222,004 50,844,205
Less Interest Expenses 1,401,660 1,541,826 1,696,009
Net Profit Before Tax 40,618,344 44,680,178 49,148,196
Less Profit Tax (at 30%) 12,185,503.20 13,404,053.52 14,744,458.87
Net Income After Tax (Net profit) 28,432,840.80 31,276,124.88 34,403,737.37

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 7.5. Forecasted Cash Flow Statement

Table 10: forecasted cash flow statement

Cash flow Present value factor Present value of cash flows
Year (NPV)
(Discount factor) (10%)
-36,024,559 1 -36,024,559
0 (initial outlay)
16,286,720.73 0.909091 14806111.24
1
18,538,248.84 0.826446 15320861.6
2

24,992,963.13 0.751315 18777588.09

3

23,793,373.70 3.49 12,880,001.93

Total

7.6. Breakeven Analysis

The breakeven analysis is the process of determining points where the profit is zero. The point
where the total cost is equal to the total revenue is called breakeven point.
The breakeven point for Atoro Agriculture Activities in each three years is as follows:
𝑭𝑰𝒙𝒆𝒅 𝒄𝒐𝒔𝒕

¿ cost 36,024,559
For year 1: 𝑩𝑬𝑷 = = =80.426 %
sale−variable 114,675,600−69,883,409
¿ cost 36,024,559
For Year 2: 𝑩𝑬𝑷 = = =73.11 %
sale−variable 126,143,160−76,871,749.90
¿ cost 36,024,559
For Year 3: 𝑩𝑬𝑷 = = =66.47 %
sale−variable 138,757,476−84,558,924.89

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 8. FINANCIAL EVALUATION

8.1. Payback Period

The payback period is the period required recovering the original investment outlay through the
accumulated net cash flows earned by the farming business. Accordingly, based on the proposed
cash flow it is estimated that the project’s initial investment will be fully recovered within the
first one months of second year (1 year and 45 days).

Payback period (T) = Io/R= 36,024,559/23,793,373.70= 1.51(one year and 45 days)

8.2. Net Present Value

Net present value (NPV) is the total present (discounted) value of a time series of cash flows.
NPV aggregates cash flows that occur during different periods of time during the life of a
business in to a common measuring unit i.e., present value; and it is an indicator of how much
value an investment adds to the capital invested. Mathematically, NPV=∑30

𝐶𝐹𝑖=DF1*CF1+DF2*CF2+ DF3*CF3=-
36,024,559+14806111.24+15320861.6+18777588.09=12,880,001.93Birr.

In principle a business is accepted if the NPV is greater than zero. Accordingly, the net present
value of the farming business at 10% discount rate is found to be Birr 12,880,001.93 which is
acceptable.

8.3. Profitability Analysis

According to the proposed income statement, Atoro Agriculture Activities will start generating
profit in the second year of operation. Important ratios such as profit to total sales, net profit to
equity (Return on equity) and net profit plus interest on total investment (return on total
investment) will show an increasing trend during the life-time of the farming business.
The income statement and the other indicators of profitability show that the business is viable.
This means that the trend of income obtained from the business will be increasing as indicated in
the income statements.

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PI=NPV/Io= 12,880,001.93/36,024,559= 36%

8.4. Economic Benefit

Our farming business will create employment for 31 persons. In addition to supply of the
domestic needs, the project will generate a tax revenue of birr 12.56 million. The establishment
of Atoro Agriculture Activities will reduce the poverty by increasing the GDP of our country.

30