DEVELOPMENT BANK OF ETHIOPIA

RESEARCH AND PROJECT DATA MANAGEMENT

DIRECTORATE
Compound Animal Feed Production and Marketing
Basic Data for Project Financing (4th Update)

Prepared By:

Mekonnen fekadu loan Officer

Anteneh Beziye Sr. market research Officer

Revised By:

Anteneh Mulugeta Team Manager

Million jarso Technical Team Manager

Approved By: commodity and market research Approval committee

NOV, 2023

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 TABLE OF CONTENTS

Contents Page

Contents

1. INTRODUCTION 1
1.1 Background 1
1.2 Objective of the Document 2
1.3 Methodology of the Document 2
1.4 Scope and Limitation of the Document 2
2. PRODUCT DESCRIPTION 3
2.1 Definition of Compound animal feed 3
2.2 Types of animal feed 3
3. MATERIALS AND INPUTS 5
3.1 Types, Sources and supply of Raw Materials and Inputs 5
3.1.1 Major inputs (ingriendents) used for compound animal feed production 5
3.1.2 Sources of inputs (ingredients) 5
3.1.3 Supply of compound Animal Feed Raw Materials 6
3.2 Demand for compound Animal Feed inputs (ingredients) 8
3.3 Packaging and labeling materials 10
3.4 Marketing Arrangements for Materials and Inputs 11
3.5 Price of raw material and inputs 11
4. PRODUCTION PROCESS AND TECHNOLOGY SELECTION 12
4.1 Description of Compound Animal Feed & Scope of the Study 12
4.2 Compound Animal Feed Production Process 12
4.3 Compound Animal Feed Production Process Description 14
4.4 Machinery and Equipment Required 21
5. MARKET DATA 25
5.1 Market Segmentation 25
5.2 Demand of compound animal feed in Ethiopia 25
5.3 Supply Situation 28
5.3.1 Domestic production 28

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 5.4 Marketing Arrangement and Channel 29
5.5 Price of products 30
6. Problems, Constraints and Key Success Factors 30
6.1 Problems 30
6.2 Constraints 30
6.3 Key Success factors 30
7. Parameters, Technical Coefficients And Assumptions 31
7.1 Basic assumption 31
7.2 Revenue determination 31
7.3 Conversion factor/input-output relation 32
7.4 Investment requirement 33
7.5 Operational expenses 34
7.6 Overhead Expenses 37
7.7 Utilities 37
7.8 Fuel and Oil lubricants 37
7.9 Repair and Maintenance 38
7.10 Depreciation and Amortization 38
7.11 Insurance 38
7.12 Land Lease Cost 39
7.13 Working Capital determination 39
8. REFERENCES 40

LISTS OF TABLES

Table 1 Sources Of Inputs (Ingredients)...................................................................................................5

Table 2 Annual Production Trend Of Corn (Ton).....................................................................................6

Table 3 Annual Production Trend Of Oil Cakes Production (Ton)..........................................................7

Table 4 The Production Of Molasses (Ton)..............................................................................................7

Table 5.Total Feed Ingredient Supplied Quantity (Ton)...........................................................................8

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Table 6major Facilities, Installed Capacity And Production Rates Of Private Feed Processing Plants.. .8

Table 7feed Processing Ingredient Quantity Demand By Types In 2020/2021 Ec...................................9

Table 8 Total Feed Ingredient Demand Quantity (Ton)..........................................................................10

Table 9: List Of Pp Bag...........................................................................................................................10

Table 10: Machinery And Equipment Required For Compound Animal Feed Production....................21

Table 11: The Number Of Cattle Used For Dairy Purpose (Exotic And Hybrid Cows)........................26

Table 12: The Number Of Cattle Used For Fattening (Beef) Purpose....................................................26

Table 13: Number Of Hybrid And Exotic Poultry Breed Type..............................................................27

Table 14 Feed Supply For The Years 2020/21........................................................................................27

Table 15: Compound Animal Feed Production.......................................................................................28

Table 16 Feed Supply For The Years 2020/21........................................................................................28

Table 17: Imported Quantity Of Concentrated Animal Feed (Ton)........................................................29

Table 18: Current Selling Price Of Final Products At Factory Gate......................................................31

Table 19: Input And Output Relationship (Percentage Mix).................................................................32

Table 20: Ration Formulation For Poultry..............................................................................................33

Table 21: Vehicle Requirement...............................................................................................................33

Table 22: Major Raw Materials/Inputs Prices (Birr/Unit)......................................................................34

Table 23: Premix Raw Materials/Inputs Prices (Birr/Unit).....................................................................35

Table 24: Packaging And Labelling Materials (Birr/Unit).....................................................................36

Table 25: Truck Fuel Cost.......................................................................................................................37

Table 26: Repair And Maintenance.........................................................................................................38

Table 27: Depreciation And Amortization..............................................................................................38

Table 28: Major Insurance Categories For The Firm..............................................................................38

Table 29: Working Capital Determination..............................................................................................39

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LISTS OF FIGURES

Figure 1: Compound Animal Feed Processing........................................................................................12

Figure 2: Small/Manual Sack Trucks Used In Feed Mill........................................................................14

Figure 3: Pellets Compound Feed...........................................................................................................19

Figure 4: Marketing Channel For Animal Feed In Ethiopia...................................................................29

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ACRONYM AND ABBREVIATION
CSA Central Statistical Data
ITC International Trade Centre

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 1. INTRODUCTION

1.1 Background
In developing economies, the livestock sector is evolving in response to rapidly increasing demand for
livestock products due to the human population growth, higher prosperity and urbanization. Animal
feed and nutrition are the essential link in the livestock production chain that is between crop
cultivation and animal protein production and processing. Surging demands and struggling supplies
result in stressed surroundings in which animal feed operators and farmers need to balance their
activities continuously, taking into account animal performance as well as customer, consumer and
societal demands. Earlier study FAO indicated that producing the additional food needed to feed all
people and livestock in 2050 will require a 9 percent expansion of arable land, a 14 percent increase in
cropping intensity and a 77 percent increase in yields. Ethiopia is a country with largest livestock
population in Africa and with a huge livestock genetic diversity.

However, due to various factors, the country is far beyond the utilization of these huge resources.
Ethiopian government has identified livestock sector as a new source of economic growth. In order to
achieve the GTP plan on livestock sectors, feed subsector is central for all livestock commodities and
is a key pillar of livestock growth and transformation from various perspectives. From economic point
of view, about 70 percent of the cost of animal production is feed and suggesting economic feasibility
of animal agriculture is mainly a function of quantity and quality of nutrients and the science of
feeding. Thus feed is a point of convergence and a critical commodity for which all livestock species
compete and it is a major pillar towards ensuring economic, social and environmental goals of
livestock production. Historically, the development of feed processing plants in Ethiopia dates back to
the beginning of modern livestock husbandry in the early 1950’s

Availability, quality and escalation of price of commercially manufactured feeds have been reported to
be a major problem affecting the feed and livestock industries involved and consumers. Commercially
manufactured feeds are important input for market oriented poultry, dairy and beef production system
in Ethiopia accounting for about 70-80% of total cost of production. The share of commercial feed in
the total supply of all feed sources in the country is increasing from time to time to satisfy the
emerging sector of poultry, dairy and beef enterprises.

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Since Development Bank is a government policy bank, it is an institution that provides financial
support to the sectors that the government prioritizes, and to provide financial support to this sector. In
line with this responsibility, the Bank established applied Research Directorate to undertake study and
to forward valuable data and information to its customer. This is a document which comprises updated
fasten basic raw data and information on Compound Animal Feed Production and Marketing which
could assist during the course of financing of same.

1.2 Objective of the Document

The main objective of this document is to meet the expectation of the concerned units and decision
makers through provision of comprehensive and relevant raw data about Compound Animal Feed
Production and Marketing; thereby enable them to make an appropriate decision.

1.3 Methodology
The document was prepared through collection of both primary and secondary data from different
organizations, concerned stake holders, and field visit. The main instruments for primary data
collection were structured questionnaire and interview.

1.4 Scope and Limitation of the Document

This document focuses on Compound Animal Feeds Production and marketing. There is no significant
limitation except lack of trend data on price for some inputs and products.

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 2. PRODUCT DESCRIPTION
2.1 Definition of Compound animal feed
Compound animal feed is a product obtained from the process of manufacturing compound animal
feed whereby raw materials of widely ranging physical, chemical and nutritional composition can be
converted into a homogenous mixture suitable for producing a desired nutritional response in the
animal to which the mixture is feed.

Compound feed refers to the feed that produced on the basis of animals’ different growth stages,
different physiological requirements and different production uses, as well as the experiment and
Research on the evaluation of feed nutrition value, and according to the scientific formula that mix
feed of various different sources uniformly in a certain proportion and processed by prescribed
technology

Animal feed is a kind of feed prepared for oxen, cows, sheep, goat, poultry etc. reared for their milk,
meat and egg. It contains protein, minerals and other nutrients which are useful for milk egg and beef
production as well as survival and growth of the animals. Animal feed can be prepared from oil cakes,
agro - residues, flour mill by - products, cereals, molasses, minerals and vitamins etc. The major
animal feed consumers are large and small scale cattle rising and fattening farms.

2.2 Types of animal feed

The purpose of providing animals with animal feed is to ensure that they are getting compensated for
the required nutrients that are absent in their natural diet. Animal feed is commonly divided into those
that come from traditional sources and those that are a mixture of additives and other raw materials.

o Traditional feed: This is generally used to refer to food scraps as found in every household
and the by-products as obtained from industries related to food processing. Some of the
common examples of traditional feed are:

Peanuts, corn and soy which are by-products of oil crop milling;

Slop, a food scrap fed to pigs;

Chicken scratch, scrap fed to chicken;

Spent grain, a by-product of the brewing industry etc.

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o Compound feed: These are compound blends made keeping a specific animal in mind. Thus
raw materials and other additives are formulated as per the requirements of specific animals so
as to ensure maximum benefit to the targeted animal. Generally the main ingredient of the same
are feed grains, such as sorghum, soybeans, oats, barley and corn which are formulated by the
feed manufacturers as pellets, crumbles or meal types.
o Premixes: These are sometimes classified under compound feed or sold separately. They
include a blend of micro ingredients in commercial rations and can be easily procured from
companies selling premixes in the sacked form. This easy availability enables the farmer to
purchase a premix of his choice depending on the animals that he rears. The farmers can also
make their own mixes by using their own special formula and yet be assured that their farm
animals are getting the recommended levels of nutrients. Some of the micro ingredients which
form a part of the premixes are Vitamins; Minerals; Antibiotics; Chemical preservatives
Fermentation products etc.

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 3. MATERIALS AND INPUTS

This section discusses materials and inputs for compound animal feed production. An ingredient for
compound animal feed production varies based on content of final output (feed). It also varies based on
type of animals (dairy animals, beef cattle, poultry, and others) for which the feed be manufactured.
Hence, the list of materials and inputs under this section considers such factors.

3.1 Types, Sources and supply of Raw Materials and Inputs

3.1.1 Major inputs (ingriendents) used for compound animal feed production
Materials and inputs for animal feed production can be from agricultural products and/or industrial by-
products; and their source is both domestic and foreign market (import).

The major ingredients used to formulate compound feed include

 maize,
 sorghum,
 flour processing by-products (wheat bran, wheat short, rice bran),
 different kind of oil seed cakes (soyabean meal, Nuog seed cake, linseed cake, groundnut cake,
cotton seed cake, sesame seed cake, and others),
 molasses,
 Salt
 Limestone
 Meat & Bone Meal and
 Ingredients that are added in tiny quantities to boost production (vitamins, minerals, amino
acids and premixes).

3.1.2 Sources of inputs (ingredients)

Table 1 Sources of inputs (ingredients)

Nutrient
Major ingredients Sources
category
Energy Maize Traders /unions
Wheat bran, wheat middling Agro-industries

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 Rice bran Traders /unions
Lentil bran Traders /unions
Molasses Sugarcane factory
Noug cake, soybean cake, cottonseed Agro-industries
cake, flax cake, sunflower cake, peanut
cake, lentil bran
Protein
Meat and bone meal Abattoir
Amino acid premixes Importers /direct
import
Limestone Cement factories
Salt Traders /unions
Mineral/other Bone meal Abattoir
Trace mineral/vitamin premixes Importers /direct
import

3.1.3 Supply of compound Animal Feed Raw Materials

 Corn

Corn constitutes larger proportion in animal feed formulation next to the wheat bran; in the feed
industry where corn is prioritized than bran it constitutes about 65 % of the feed formulation. The
annual production of corn for the past five year was depicted under the following table

Table 2 annual production trend of corn (ton)

Year 2017/18 2018/19 2019/20 2020/21 2021/22

Corn 83,958,872.00 96,357,345.00 105,570,935.90 107,513,689.44

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Source CSA

 Oil Cakes

Oil cakes are the byproduct of oil factories and are the excellent source of protein for animals.
Processing of oil seeds could be carried out at large and medium scales as well as at household levels
with variable degree of efficiency of extraction of the oil from the oil seeds. The production of oil cake
in the country is depicted in the following table.

Table 3 annual production trend of Oil Cakes Production (ton)

Year 2011/12 2012/13 2013/14 2014/15 2015/16

Oil Cake 13,671 13,481 20,800 17,973 138,038

Source CSA

 Molasses

Molasses is a viscous by-product of the processing of sugar cane or sugar beets into sugar. It is the
excellent source of energy. Besides its uses as the source of energy molasses also uses as appetizer and
in blending of feed. The sweetness of molasses makes the feed tasty for animals that animals like to eat
more and more.

The proportion of molasses in animal feed formulation varies according to the type of feed to be
formulated. In plate and block type of feed formulation the amount of molasses may increase up to 40
percent of the feed where as in other it is only about 2- 5 %. The amount of molasses production is
depicted in the following table.

Table 4 the production of Molasses (ton)

Year 2011/12 2012/13 2013/14 2014/15 2015/16

Molasses 29,172 1,615 534 19,770 282,903

Source CSA

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Table 5.Total feed ingredient supplied quantity (ton)
Year Ingredient Supply (ton)
2016/17 73,747.20
2017/18 152,526.40
2018/19 270,656.80
2019/20 278,821.10
2020/21 292,761.90
Source; Demissie Negash. Study on Compound Animal Feed Demand and Animal Products,
Supply, Price and Marketing in Ethiopia. Biomed J Sci & Tech Res 41(3)-2022. BJSTR.
MS.ID.006619.

3.2 Demand for compound Animal Feed inputs (ingredients)

The demand for animal feed is determined by the animal feed processing factories capacities. In the
country there are thirty two commercial animal feed factories with different capacity of production.
Installed capacity and current production level of the main animal feed processing plants included in
the study are presented in the following Table. The average installed capacity of the private feed
processing plants was 5.8 tons per hour while the current production rate was 3.2 tons per hour
suggesting most of the plants are operating at significantly below their potential (55%). Only 27% of
the plants were operating at an average of 75% and above and only one plant was operating at 100%.
The respective average ingredient storage and processed feed storage capacity of the feed processing
plants were 378 and 198 tons. At the time the study was conducted, most feed processing plants were
operating below their installed capacity due to slow growth in demand for finished products, shortage
of ingredients and inconsistent supply of electricity.

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 Table 6Major facilities, installed capacity and production rates of private feed processing plants.

Current capacity as
Installed capacity Current production rate percentage of installed
capacity

Enterprise
Ingr
Feed Ingred. Feed Feed Mixer Ingred. Feed Feed Feed
Mixer Mix ed.
grinder Storage storage grinder (ton/h Storage storage grinde stora
(ton/h) er stor
(ton/h) (ton) (ton) (ton/h) ) (ton) (ton) r ge
age

Kaliti 6 6 600 200 4.5 4.5 600 200 75 75 100 100

Akaki 8 8 500 100 2 2 100 100 25 25 20 100

Friendship 6 6 1000 1000 3.6 3.6 1000 1000 60 60 100 100

Alema 12.5 12.5 800 - 12.5 12.5 800 - 100 100 100 --

Eleri 7.5 7.5 350 - 2..3 2..3 150 - 30 30 50 --

Bora 10 10 20 - 5 5 20 - 50 50 100 -
Addis
4 4 30 6 2 2 3 0.6 50 50 100 100
Alem
Ethio feed 2 1 - - 0.2 0.5 - - 40 40 - --

Beyene 3 1 300 20 0.0.8 0.3 300 20 25 25 100 100

Chancho 3 2 100 10 1 1 30 5 33 50 30 50

Pakana 2 2 80 50 1.5 1.5 12 25 75 75 15 50

Average 5.5 6 378 198 3.2 3.2 301 193 58 53 62 86

Source: Ethiopian Animal Feed Industry Association

Table 7feed processing ingredient quantity demand by types in 2020/2021 EC.

Ingredient type Amount(ton)

Noug seed cake 45,656.50

Ground nut cake 45,686.60

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 soya bean cake 74,480.40

linseed cake 21,544.50

Sunflower 46,264.80

Wheat bran 67,816.50

Wheat middling 47,283.50

Cotton seed cake 23,978.50

Maize 141,973.30

Total 514,684.60
Source; Demissie Negash. Study on Compound Animal Feed Demand and Animal Products,
Supply, Price and Marketing in Ethiopia. Biomed J Sci & Tech Res 41(3)-2022. BJSTR.
MS.ID.006619.
Table 8 Total feed ingredient demand quantity (ton)
Year Ingredient demand (ton)

2016/17 120,897.00

2017/18 250,043.20

2018/19 443,699.60

2019/20 457,083.70

2020/21 574,734.50

Source; Demissie Negash. Study on Compound Animal Feed Demand and Animal Products,
Supply, Price and Marketing in Ethiopia. Biomed J Sci & Tech Res 41(3)-2022. BJSTR.
MS.ID.006619.

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 3.3 Packaging and labeling materials
Animal feed factories uses PP bag which have the capacity to pack 25 kg, 50 kg and 100 kg. This
material is available in the local pp bag factory.

Table 9: List of PP bag

PP bag Source
Domestic Foreign
Empty PP bag 25Kg 
Empty PP bag 50 Kg 
Empty PP bag 100 Kg 

Source: Survived firms

3.4 Marketing Arrangements for Materials and Inputs

Materials and inputs for the manufacturing and processing of animal feed indicates the supply side of
each raw material required for animal feed manufacturing both at domestic level and international
level. As shown under raw material description, most raw materials required for animal feed
processing are sourced from domestic market, while other inputs like premix are imported from
abroad. Marketing arrangement of materials and inputs is an agreement made between the two parties’
i.e. the seller and purchaser about the means of transportation, ownership transfer and other relevant
agreement. It enables to specify which party (buyer or seller) pays for which shipment and loading
costs, and/or where responsibility for the goods is transferred.

For those materials imported from abroad, there are two types market arrangement in general. The first
is a direct purchase from the producer themselves. The second option is from the brokers of foreign
countries who buy from the main suppliers and sell it to the manufacturers. On the other hand the
market arrangement for these materials is order base and the payment is based on L/C system. For
those raw materials purchased from local market the modality of payment is on cash bases. Generally
as a summary the modality of payment to purchase locally available raw materials is on cash bases
whereas modality of payment for imported materials is international method of payment by opening
L/C.

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 3.5 Price of raw material and inputs
Current price of required inputs (ingredients) used for compound animal feed processing are depicted
under parameter part of the document.

4. PRODUCTION PROCESS AND TECHNOLOGY SELECTION

4.1 Description of Compound Animal Feed & Scope of the Study

Compound animal feed is a product obtained from the process of manufacturing compound animal
feed whereby raw materials of widely ranging physical, chemical and nutritional composition can be
converted into a homogenous mixture suitable for producing a desired nutritional response in the
animal to which the mixture is fed. The process is basically a physical one and chemical changes are
few. It should be remembered however that some raw materials will have undergone extensive
processing prior to inclusion into a mixed feed, for example, extraction of oil from oilseeds by
mechanical-extraction or solvent extraction, heat treatment or extrusion of soya beans or other beans to
denature anti-nutritive factors, or the production of fishmeal, bone meal and meat meal.

4.2 Compound Animal Feed Production Process

The compound animal feed manufacturing process is made up of several unit operations which, in
almost all circumstances, include process steps such as raw material selection and receipt, storage; raw
material preparation; raw material weighing; mixing; pelletizing of mixed feed (optional); and feed
packing/ bagging, storage and dispatch. Their sequence and the size and sophistication of equipment
vary with the output of feed required as well as differences in manufacturer's design. The general
production process is illustrated in the figure bellow.

Figure 1: Compound Animal Feed Processing

Raw Material Receiving

Bulk raw materials Liquid ingredients

Bagged/packaged raw
receiving & storage receiving & storage
materials receiving &
(Grains, oil seed meals, (Vegetable oils, fats
storage (Vitamins,
meat & bone meals) and other liquids)
minerals, salt, pre-
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Raw Material Preparation:
Grinding/Milling &
Extrusion-Cooking
 Weighing/ batching

Mixing

Molasses Receiving Molasses Blending

Meal Feed Weighing & Pelletizing & Cooling

Bagging

Pellet Feed Weighing &

Bagging

Storage & Distribution

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 4.3 Compound Animal Feed Production Process Description
The compound animal feed manufacturing process, sequence and sophistication of equipment vary
with the output of feed required as well as differences in manufacturer's design. The detail description
of compound animal feed general production process illustrated above is presented here under.

 Raw Material Selection, Reception, and Storage

Raw materials coming into a feed processing plant are requested by the nutritionist as being necessary
to meet the nutrient requirements of the diet to be manufactured. The survey result has shown that raw
materials normally delivered or collected from different suppliers using sacks or bags such as hessian,
jute, cotton, or woven polythene sacks. A standard size of sack may not be used for each consignment
and care should be taken to check-weigh as many bags as possible for many small scale operations as a
weigh bridge for weighing a lorry before or after unloading may not be available. For feed mills having
a weigh bridge, the lorry is weighed over the bridge. Bags are often man-handled, although the use of a
small sack trucks will considerably ease the burden of carrying heavy materials within a feed mill area.
In some circumstances, and especially with larger feed mills, raw materials may be delivered in bulk,
necessitating appropriate handling and storage facilities.

Figure 2: Small/manual Sack Trucks Used in Feed Mill

Then the raw material selected fulfilling the desired requirement is stored. This is in order to ensure a
continuous supply of raw materials at the mill, when some may only be seasonally available on the
market, and to take advantage of price fluctuations, some form of storage will be necessary. The
particular method chosen for raw material storage will depend on the local circumstances, but in areas

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where labor is cheap and plentiful and capital funds scarce, it is likely that storage in bags will be
preferable. Raw materials should arrive in good condition and in sacks which have not been used for
the storage of fertilizer, pesticides or chemicals. Contamination by string, large pieces of metal, wood
or stones which could cause extensive damage to machinery can normally be removed on a coarse
metal grid fitted over the sack tipping-in point of the feed mill, and permanent magnets will normally
remove any tramp ferrous metal which may enter the system, particularly before entering the grinder,
mixer or pelleter.

Thus, storage areas must be waterproof and well-ventilated, and provide protection against infestation
by insects and vermin which can quickly cause substantial losses in weight. If materials are to be
stored in bags they should be kept in a building having a concrete floor. The roof and walls need only
to be lightly constructed provided that they are pest and waterproof. The bags should be stacked a few
inches above floor level, for example, on wooden pallets, and away from walls. Raw materials may
also be stored in bulk either in silos constructed from concrete or steel or in bins formed with partitions
in conventional stores. If raw materials are to be stored in this way it is essential that the bin
manufacturers are informed of the raw materials to be handled, since some raw materials which have
poor flow characteristics tend to form bridges of material in the bin base thus preventing their
discharge. In general, raw materials of low bulk density have poor flow characteristics and those of
high bulk density have good flow characteristics. Raw materials which have poor flow properties
normally require large diameter augers for their transfer. Raw materials vary with and region and have
widely ranging bulk densities (weight for a given volume). These differences in bulk density must be
taken into account when determining the space required for the storage of raw materials and finished
products.

The proper storage is not only for raw materials but also it is critical for finished or processed feeds;
since it is essential to prevent physical losses, but is also an important aspect of quality control which
will be discussed in more detail later.

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  Raw Material Preparation: Grinding/Milling and Extrusion Process

There are different ways of preparing the received raw materials as per the mixing and pelletizing
process requirement. The most common methods are grinding/milling process and extrusion-cooking
process.

In the sequence of unit operations involved in feed milling, raw material grinding may occur before or
after weighing. It is a process with high power requirements which is often noisy and dusty. The
design of machine most commonly found in the feed manufacturing industry is the hammer mill.

Inside the grinding chamber, hammers, which may be fixed rigidly to the central shaft, or more often
swinging on steel pins, rotate at high speed. The impact of the raw material on the hammers and the
continual high-velocity impact of particle on particle results in material breakdown until it are small
enough in size to pass through a perforated screen. It is obvious that the smaller the screen size the
more work will be required to reduce the particles to the desired size and the larger the grinder motor
required. Raw materials also have different grinding properties somewhat related to their bulk density
and flow characteristics. In general those of high bulk density grind more easily than fluffy, fibrous
low-bulk density materials. Grinders are most efficient when they are running at maximum capacity
for a given raw material and screen size.

If ground material is to be stored in bins or sacks before further processing it is essential that the heat
generated during grinding be dissipated. Cooling normally occurs as air is drawn into the grinding
chamber, and during the pneumatic conveying of ground material from the grinding screen to its point
of discharge, which may be through a cyclone into a bin or mixer. Many small grinders have suction
fans fitted to the grinder shaft which bring about cooling and conveying of ground material in one
operation. Other grinders discharge directly into conveyors and the air drawn in during grinding is
released through filter bags. Grinders may operate in a horizontal or vertical direction according to
design. If ground material is conveyed pneumatically, the air and material are separated in a cyclone; it
causes air to swirl around its walls depositing the ground material at the base of the cone while the air
exits at the top of the cyclone through a filter.

It should also be noted that the desired fineness of grind will be influenced by the livestock to which
the feed must be fed, or by other processes following grinding. Raw materials for poultry should be

16
more finely ground than for cattle or pigs and raw materials to be pelleted are usually more finely
ground than the equivalent feed as meal.

The other way of raw material preparation is extrusion-cooking process. The extrusion-cooking
process combines the effect of heat with the act of extrusion. Heat is added to the feed dough as it
passes through the screw by one or more of three mechanisms:
(i) Viscous dissipation of mechanical energy being added to the shaft of the screw;
(ii) Heat transfer from steam or electrical heaters surrounding the barrel or
(iii) Direct injection of steam which is mixed with the dough in the screw.

The temperatures reached by the feed during cooking can be quite high (200 0C) but the residence time
at this elevated temperatures is very short (5 to 10 sec). For this reason, extrusion-cooking processes
are often called HTST (High temperature/Short time). These kinds of processes tend to maximize the
beneficial effects of heating feeds while minimizing the detrimental effects. Extrusion-cooking process
can be classified as wet or dry, depending on the use or not of water and steam to prepare the product
before being extruded. Wet extrusion-cooking often implies the use of a conditioner and always
implies the use of a dryer.

There are several different parameters, which are often interrelated, that must be controlled before and
during the extrusion-cooking process:
(i) particle size of raw ingredient mix;
(ii) ratio of ingredient mix flow in the extruder;
(iii) amount of steam moisture added during the preconditioning;
(iv) retention time of the preconditioning;
(v) retention time and moisture added in the extruder barrel;
(vi) temperature of the mix and the barrel during the extrusion;
(vii) geometric configuration of screw segments and interval ribbing of the extruder barrel;
(viii) size and shape of the die orifice;
(ix) retention time, temperature and air velocity in the dryer

The extrusion-cooking process has different effects on different feed ingredients used. However, the
feed manufacturer should understand the physio-chemical property of ingredients used before running
them via extrusion-cooking process in order to yield good result. The main purpose of involving

17
extrusion-cooking process in compound animal feed processing is to remove toxic ingredients
available in the raw material used (example soybean seed) and converting the raw material particle size
to the size required to produce specific product (example pelleted feed).

 Raw Material Weighing

The accurate weighing of raw materials according to the formulation for a given ration is perhaps the
most important unit operation involved in feed manufacture, since no amount of mechanical processing
can make up for any deficiencies in nutrients which have been omitted from the mixture. The point at
which weighing occurs in the feed milling process will depend upon the design of the mill. Raw
materials may be selected from store, weighed and then subjected to grinding and mixing, or materials
may be pre-ground, then weighed and mixed.

Thus, weighing of raw materials requires great care and inaccuracies must be kept to a minimum. This
is due to the fact that weighing error results greater influence on the growth performance of animals (if
more desirable expensive nutrients are undermined) or it will reduce the profit of the feed
manufacturer. Therefore, the use of accurate scales is of particular importance when handling
expensive and/or potent raw materials such as vitamins and medicinal additives which are added at low
inclusion rates.

 Mixing of Feed Ingredients

Mixing is the process of receiving raw materials prepared and mixing them till they get homogenous
mixture. It is the job of the mixer to produce a homogenous blend of all the raw materials desired in a
formulation, such that at each feeding period each animal receives a balanced mixture of nutrients. The
smaller and younger the animal to be fed, the greater is the need for good mixing. Not only are their
requirements more demanding, but the daily nutrient intakes of those eating small amounts of feed will
be subject to much greater variation as a result of poor mixing. Mixing often improves feed palatability
if one or more of the raw materials is/are unpalatable to livestock.

There are different types of mixers such as vertical mixers, horizontal mixers and conveyor mixers.
Each type of mixers have their own processing properties and one should select the type of mixer
engaged in its plant as per its desire of producing final product which is compound animal feed.

18
After the mixing operation is ended, the feed can be packed and distributed to the destination market or
passed to pelletizing process. This is due to the fact than some reared animals require only mixed or
non-pelleted feed; such as egg layer chickens that produce more fat and reduce egg production if fed
pellet feed. The reason behind this is pellet feed has more palatability and lesser loss. Therefore, the
manufacturer can bypass if the intended customers are egg laying chicken producers.

 Pelletizing of Mixed Feed

Pelletizing is an optional process in compound animal feed processing industry. However, pelletizing
results higher reduction in feed loss offered to animals due to the pellet feed has no powdery granules
remaining on the edges of feed troughs. Pelletizing involves the compression of a mixed feed through
holes in a hardened steel ring or plate (a die) by means of hardened steel rollers. The die forms the feed
into pencil-like extrusions which are cut by knives into pellets of desired length on leaving the die.

Figure 3: Pellets Compound Feed

In a ring die pelleter, the rollers or the die may be driven but in a plate die pelleter the rollers only are
driven. The die and rollers of a ring die pelleter may operate in a horizontal or vertical plane according
to machine design. Pelleter with horizontally running dies is most commonly found in farm-scale feed
mills. The Pelletizing process is very energy intensive, demanding up to 50% of the total power
required for feed manufacture. The diameter of feed pellets is governed by the diameter of the holes in
the die ring but the smaller the die holes the greater effort is required to force meal into these holes,
hence the greater the power demand, that is, the smaller the pellet, the greater the cost of manufacture.

Pellet may also be divided into two further groups according to the pre-treatment of mixed feed prior
to compression or extrusion in the die head. Pelletizing may be considered as cold pellet or conditioner

19
palletize. In cold Pelletizing, mixed feed is fed directly from a bin or auger into the die head at ambient
(normal atmospheric) temperatures. Some water may be added, preferably in the mixer if the meal is
too dry to bring it to approximately 15-16% moisture, but there is no heat treatment of the mixed meal
before it enters the die. During cooling the moisture content is reduced to approximately 12% by
evaporation in order to reduce the risk of sweating and mold growth. Cold Pelletizing is something of a
misnomer since a considerable amount of heat is generated during the Pelletizing operation, but it
serves to distinguish the process from conditioner pelletizing which is the usual process in industrial
pellet.

During conditioner pelletizing, the mixed meal is directly pre-heated with dry steam (i.e. steam which
is in vapor form and does not contain suspended droplets of condensed steam) in a small high-speed
mixer called a conditioner or in a slow turning mixer called a kettle or reopener. The steam preheats or
conditions the meal to the preferred temperature and moisture content for pelletizing according to the
formulation of the mixture, for example, 65°C and 15% moisture. During pelletizing the temperature
of the meal rises by approximately 10°C, hence the final temperature of pellets from a conditioner
pellet is similar to that of pellets from a cold pellet. Coolers for these machines may be of vertical or
horizontal design. Cold air is drawn through a moving mass of pellets either as they fall through the
vertical machine, or as they pass along an open mesh belt through a horizontal cooler.

Generally, the quality of pellets (that is, resistance to break-down after Pelletizing and during handling)
of a given mixture from a conditioner pellet is marginally better than that from a cold pellet, but the
conditioner pellet requires a boiler and associated water treatment plant to treat the feed water for the
boiler.

Some mixtures of raw materials do not bind well together when pelleted and require the addition of
special binding agents. Molasses is often added at 2-5% to aid binding, but other binders include
bentonite clays and lignosulphonates, and are added at the suppliers' recommended dosage levels,
usually about 1-2%.

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  Packing/ Bagging, Storage & Distribution

Compound feeds, whether in meal or pellet form, are usually distributed in sacks in developing
countries, although for on-farm use or for distribution to a large livestock unit distribution could be in
bins or trucks. Bags may be filled directly from mixers or from holding bins and may be weighed on a
scale balance or through an automatic pre-set weigh and bagging unit set to weigh. Bags may be of
jute, cotton or paper and can be hand or machine-stitched or tied with a string or metal tie. Stitching
machines do not stand up to abuse and require a constant supply of appropriate needles and thread and
are therefore more applicable to the larger feed mill models. Polythene bags are not normally
recommended for storing animal feeds because of the risk of sweating and mold growth. If old bags are
re-used, care should be taken that they have not been used previously for the storage of fertilizers,
pesticides or other chemicals.

4.4 Machinery and Equipment Required

Compound animal feed processing plant comprises different sets of machineries carefully arranged to
produce planned compound animal feed. What is so ever the plant capacity is involved, there are basic
machineries and equipment’s should compound animal feed producer have. The list and purpose of
each is described here under.

Table 10: Machinery and Equipment Required for Compound Animal Feed Production
No Machine Type Purpose

A. Major Machinery and Equipment Category

1 Grinding machine To pre-crush and grind raw material

2 Milling machine To grind the mixture of raw material to fine particles

To improve the nutritional value and palatability of

3 Grain extruder machine
grains

4 Mixer/ mixing machine To produce a homogeneous mixture of the feed

5 Dry meal conditioner To pre-condition dry meal before pelletizing

6 Pelleter/ pelletizing machine To produce pellets

7 Pellet cooler To cool pellets to the desired temperature and moisture

21
No Machine Type Purpose

content

8 Silos /Tanks To store raw materials

To temporarily store materials with in the feed

9 Bins and Hopers
processing operations

To weigh a raw material lorry before and after

10 A weigh bridge
unloading

11 Weighing scales:

Beam-type
To measure the desired quantity of raw material needed
Dial-type
according to feed formulation
Digital scale, or

Bin-type

12 Molasses tank To store molasses

To deliver the required amount of molasses to the feed

13 Molasses pump
mixture

Molasses delivery pipes, fittings

14 To carry molasses to its destination
& accessories

15 Fat and liquids storage tank To store fat or liquid ingredients

To deliver the required amount of fat and other liquids

16 Fat and liquid delivery pump
to the feed mixture

Fat and liquid delivery pipes,

17 To carry fat and other liquids to their destination
fittings & accessories

Automatic sifter or a coarse- To remove strings, large pieces of metal, wood or stones
18
metal screen: from raw materials

19 Bagging machine To fill the sacks or bags with the required/ desired

22
No Machine Type Purpose

quantity of finished feed

20 Automatic stitching machine: To tie the sacks or bags after finished feed bagging.

B. Auxiliary Machinery & Equipment’s Category

To supply compressed air for assisting pneumatic systems

of the machineries,

To aid in conveying materials from one operation to

1 Air compressor
another, for instance to move ground materials from milling
machine to mixer.

For cleaning purpose

To supply power in case of electricity break down to

various critical processes
2 Electric Generator
To run the whole plant in case the grid supply of electricity
is not available

3 Boiler To supply steam to the plant

4 Material handling equipment:

Sack trucks
To move or transport materials from one operation to
Augers or screw conveyors
another within the plant.
Bucket elevators, and

Belt conveyors

Dust collector (consisting of

5 ducts, fan and filtering To remove dust generated during milling operation
closes)

To separate materials from air, where materials are

6 Cyclone
pneumatically conveyed

23
 No Machine Type Purpose

7 Trucks (vehicles):
To move or transport raw materials and finished feeds to
Truck
and from the plant.
Lorry

8 Wooden Pallets To carry load (for raw materials delivered in sacks)

9 Laboratory equipment: To test the quality of the raw materials delivered to the mill:

Humidity tester To check their identity

To check the presence of adulterants, and pathogenic

Microbial tester
organisms

Moisture tester To check Moisture content

Crude protein(CP) tester Crude protein

Crude fiber(CF) tester Crude fiber

Total ash, Acid-insoluble ash, Acid-soluble ash, salt,

Other constituent tester
calcium, phosphorus and ME content of the finished feed

NB: These above lists of machinery and auxiliary machinery requirements varies with the level of the
compound animal feed plant

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 5. MARKET DATA

5.1 Market Segmentation

Animal feed markets can be segmented based on the end user and which is only domestic market. The
existence of unsatisfied domestic demands is a determining factor for market destination to be local
market.

5.2 Demand of compound animal feed in Ethiopia

Ethiopia is a country with largest livestock population in Africa and with a huge livestock genetic
diversity. The demand for animal feed mainly comes from different commercial livestock farms like
dairy Farming, fattening, and poultry farms in the country. In addition to these some urban and semi
urban livestock rears, livestock rearing associations in cites, livestock research centers/universities,
some NGO’s and Government organizations demands certain amount of animal feed.

In general, the feed sub-sector is central for all livestock commodities and is a key pillar of livestock
growth and transformation from various perspectives. From production point of view, animal
production is essentially a conversion of feed into animal product dictating the level of production and
product quality and safety. From economic point of view, about 70% of the cost of animal production
is feed and suggesting economic feasibility of animal agriculture is mainly a function of quantity or
quality of nutrients and the science of feeding. Thus feed is a point of convergence and a critical
commodity for which all livestock species compete and it is a major pillar towards ensuring economic,
social and environmental goals of livestock production (Makkar, 2016)

The demand for compound animal feed is highly depend on: the livestock population in existing and
planned commercial farms in the country, the price of feed ingredients. Besides, awareness of farmers
towards the importance of compound animal feed, the price of additional inputs, the quality standard of
the compound animal feed produce and the outcome of using compound feed, etc. are among factors
influencing the demand for compound animal feed.

Due to lack of data on capacity of commercial livestock farms in the country and other users of
compound animal feed, it is difficult to determine the demand for compound animal feed. However the
case team assumed all hybrid and exotic breeds of cows and poultries consume concentrate and base

25
the demand analysis on this animal’s demand. Therefore the demand analysis does not show the
countries overall compound feed demand, as it does not incorporate the compound feed demand for
indigenous breeds of all animals in the country, the demand by different fattening farms and other
livestock’s in the country. But the case team believes that this demand analysis help the user of this
document to make comparison of the country’s compound animal feed supply and demand for selected
animals; and view the gap.

o Dairy cows (hybrid and exotic breeds)

These animals requires compound dairy ration for body maintenance, milk production, feats
development two months before birth and to strengthen the cow during delivery.

Table 11: The number of cattle used for dairy purpose (Exotic and Hybrid cows)
Year Total Dairy cow between 3- 10 years
2017/18 6,659,362
2018/19 7,090,619
2019/20 7,150,187
2020/21 7,556,402
2021/22 7,822,894
Source: CSA’s yearly livestock report (2017/18- 2021/22)
o Fattening
 This document incorporates the feed demand for indigenous breeds of all animals in the country
demanded by different fattening farms.

Table 12: The number of cattle used for fattening (beef) purpose
Year For Fattening(Beef)
2017/18 75,679
2018/19 68,946
2019/20 107,546
2020/21 858,436
2021/22 762,136
Source: CSA’s yearly livestock report (2017/18- 2021/22)

26
 o Poultry

Poultries are among highly compound feed demanding animals in order to timely develop for meat
purpose and lay the required quantity, quality and volume of eggs.

Table 13: Number of Hybrid and Exotic poultry breed type

2017/18 6,620,059

2018/19 8,506,015

2019/20 8,956,642

12,052,063
2020/21

9,079,635
2021/22
Source: CSA’s yearly livestock report (2017/18- 2021/22)

Table 14 Feed supply for the years 2020/21

Feed type Quantity Demand Feed (ton)

Poultry 298,214.10

Dairy 833,305.50

Beef 27,594.00

Others 27,594.00

Total 1,944,490

Source; Demissie Negash. Study on Compound Animal Feed Demand and Animal Products,
Supply, Price and Marketing in Ethiopia. Biomed J Sci & Tech Res 41(3)-2022. BJSTR.
MS.ID.006619.

5.3 Supply Situation

The supply of animal feed in Ethiopia emanates from domestic production and import.
27
 5.3.1 Domestic production
A. Compound Animal Feed Supply

According to the data obtained from Ethiopian Feed Industry Association, The Ethiopian commercial
feed subsector had a total of 80 enterprises under 4 major categories. The dominant feed processing
plants were private enterprises and farmers unions engaged in production of compound feed followed
by importers or manufactures of specialty ingredients (premixes, feed additives, etc.) and importers or
manufactures of feed processing equipment.

Table 15: Compound Animal feed Production

Year Quantity (tons)
2012/13 35,277
2013/14 245,362
2014/15 413,211
2015/16 3,379,044
2016/17 399,961
Source: CSA, Large and Medium Scale Manufacturing Report (2012/13-2016/17)

Table 16 Feed supply for the years 2020/21

Feed type Quantity supply 2020/21 (ton)

Poultry 204,933.40

Dairy 52,697.10

Beef 20,493.30

Others 14,638.10

Total 292,761.90

Source; Demissie Negash. Study on Compound Animal Feed Demand and Animal Products,
Supply, Price and Marketing in Ethiopia. Biomed J Sci & Tech Res 41(3)-2022. BJSTR.
MS.ID.006619.
i. Import

Table 17: Imported quantity of concentrated Animal Feed (Ton)

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HS Code Years
2018 2019 2020 2021 2022

2,119 2,860 4,141 3,302 3,011

230990
Source: ITC Trade map

5.4 Marketing Arrangement and Channel

Products are distributed to customers from finished feed store of each factory, farm areas and
distribution center(s) of the factories in different strategic location in A.A and respective towns. The
price of compound animal feed is similar at factory gate and distribution centers, products are sold for
customers both directly in cash base at factory gate price and credit base, usually products are
produced by order and sold based on pre-production contract agreement between the producer and the
buyer. The transportation cost mainly depends on the agreement between the seller and the buyer.

Commercial
Livestock Farms

Urban and peri-urban

Livestock farms
Producers
Regional Rgional
Dealer customers

Livestock
Research
Centers/Universties
:
Figure 4: Marketing channel for animal feed in Ethiopia

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 5.5 Price of products
The current cost of compound animal meals is shown in the document's parameter section.

6. PROBLEMS, CONSTRAINTS AND KEY SUCCESS FACTORS

6.1 Problems
 Raw materials price escalation
 Supply seasonality, outright shortages and escalating price of feed ingredients are key
challenges for sustainable and affordable delivery of compound feeds
 Shortage of foreign currency for importing raw materials
 Power Interruption

6.2 Constraints
 Shortage of working capital
 Shortage of feed ingredient supply due to Inadequate production& Poor efficiency of
utilization of available feed resources
 Soaring of ingredient/compound feed prices due to shortage of feed ingredient supply;
high transport costs; poor market orientation of feed production.
 Poor quality of ingredients: due to adulteration common practice. ; lack of access to
feed laboratories resulting in no possibilities for checking on quality and deterioration in
feed quality during storage common 
 Lack of knowledge and skills for Feed industry personnel in Ration formulation ;Feed
milling technology and Skills on physical tests on feed ingredient &mixed feed quality

6.3 Key Success factors

 High demand for the products at local market
 Professional Management and skilled labor
 Selection best fit technology
 Producing quality products

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 7. PARAMETERS, TECHNICAL COEFFICIENTS AND ASSUMPTIONS

7.1 Basic assumption

 Working days per annum ………….…………………………......270
 Working days per week ………………….………………………. 7
 Number of shift in a day ……………………………………………2
 Working hours per shift …………………………………………….8

7.2 Revenue determination

Table 18: Current Selling price of final products at factory gate
Selling Price Birr/quintal ( VAT
it.no Description
inclusive )

1 Broiler Grower (Pellet) 4,705

2 Rearing Temp 4,195

3 Pullet Temp 3,810

4 Layer Temp NA

5 Broiler Temp (Pellet) NA

6 Layer parent phase 1 4,250

7 Layer parent phase 2 NA

8 Broiler Breeder 4,195

9 Piglet (Pellet) 4,297.5

10 Pig fattener 3,465

11 Sow general 3,265

12 Sow lactation 3,295

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 13 Layer concentrate 25% 4,750

14 Calf rearing (Pellet) 3,190

15 Beef Fattening basic 2,642.5

16 Dairy Temp (Pellet) 2,105

17 Dairy Basic (normal) 2,642.5

18 Sheep and Goat (Pellet) 2,335

19 Hiefer (Pellet) 2,408

20 Broiler Finisher (Pellet) 4,660

21 Chicken starter (Crumble) 4,675

Source: Alema Koudijs Feed PLC, Gumara Animal Feed Factory and Binmas Animal Feed Factory

7.3 Conversion factor/input-output relation

Production loss …………………………………………………………3%

Table 19: Input and output relationship (Percentage Mix)

Products types
Input types
Dairy Dairy Fattening Poultry Calves Sheep
special (%) normal (%) and
Goat
Wheat bran 40 40 50 12.50 50 50
Nug, 25 25 25 33 8 24
Limestone 9 3 1.50 37.50 2 -
Salt 15 2 - -
Cotton cake 10 30 15 - 7.5 12
Bioprimix 1 - - 12.50
Maize 7.5 4.50 7.5 14
Source: previous commodity study

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Table 20: Ration Formulation for poultry
Inputs types Starter Diet (% Finisher (% required)
required)
wheat bran and wheat middling 10 13.5
Maize 44.25 44.5
Oil Cake (nug/soya bean/sun flower cake) 30 26
Meals(Fish, Meat, and Bone) 13 13
limestone( calcium carbonate) 0.5 0.75
Salt 0.25 0.25
Mineral and vitamin mixture 0.1 0.1
Amino acids( lyasine and Methinon) 1.9 1.9
Source: previous commodity study

7.4 Investment requirement

7.4.1 Vehicles

Table 21: Vehicle requirement

Type of vehicle Purpose

Automobiles For administration

Service vehicles For employees
Cargo Trucks For delivery of products and collection of inputs

NB: Vehicle requirement is varied based on the size of the factory

7.4.2 Machinery and equipment

Machinery and Equipment required for Animal food production are listed in the technical part of the
document.

33
 7.5 Operational expenses
Table 22: Major Raw Materials/inputs Prices (Birr/Unit)

Raw Materials UoM Unit Price

Lime Stone/Calcium Carbonate Quintal 625.00

Corn Soya bean Mix powder (Faffa) 4725.00

Defatted Soya “ 4,550.00

Defatted Soya Cold Press “ 3,650.00

Lupine “ 872.00

Lentil Husk 2450.0

Meat and Bone Meal “ 5,000.00

Molasses “ 1560

Nough Cake “ 3,125.00

Cotton seed Cake “ 2,750.00

Peanut Cake “ 3,575.00

Rapeseed Cake “ 2,200.00

Read Beans (Haricot) “ 2,050.00

Rice hulls (Rice Bran) “ 900.00

Salt (Nacl) “ 1,436.00

Soya bean Cake 4700.00

34
Sesame Husk “ 750

Sunflower cake “ 2,500.00

Sorghum “ NA

Urea “ 4,409.00

Wheat Fernacciho “ 2,000.00

Wheat bran “ 2,138.00

Maize (normal) “ 3,875.00

Bone Char “ 1500

Source: Alema Koudijs Feed PLC, Gumara Animal Feed Factory and Binmas Animal Feed Factory

Table 23: Premix Raw Materials/inputs Prices (Birr/Unit)

List of Inputs UoM Purchase price per Unit Price

Bester mine premix Kg 371.00

Breeder premix “ 342.00

Broiler Grower 473.58

Broiler Starter Premix “ 276.00

DCP (Di-Calcium Phosphate) “ 129.00

Chlorine chloride “ 105.224

Intraco “ 142.00

Fishmeal “ 130.25

35
Fishmeal premix “ 210.00

Layer premix “ 297.56

Layer Concentrate “ 211.25

Lysine HCL 79% “ 317.00

Grower finisher 197.295

Yellow Collunate 591.885

Methionin 99% “ 490.00

Mono calcium phosphate “ 87.00

Poultry premix 0.5% “ NA

Toxin binder “ 80.00

Bio premix 0.5% “ NA

Broiler Super pre-starter “ NA

Source: Alema Koudijs Feed PLC, Gumara Animal Feed Factory and Binmas Animal Feed Factory
Table 24: Packaging and Labelling Materials (Birr/Unit)
List of packaging materials UoM Purchase Price per Unit
Empty PP bag 25 Kg Pcs 15.43birr
Empty PP bag 50 Kg Pcs 28.00birr
Labeling Materials - 2.07 birr/Piece of PP bag
regardless of the size of the bag

Source: Alema Koudijs Feed PLC, Gumero animal feed plc and Sidama Elto Farmers Union

36
 7.6 Overhead Expenses
 Telephone, post & internet: on average 0.02% of annual sales
 Travel and Perdium .............……………...0.05 % of total salary
 Office supplies……………………………0.0001% of annual sales
 Medical expense......................................5% of wage and salary
 Price for Uniform:-
 Use submitted Proforma Invoice

7.7 Utilities
 Water consumption:- as per the specification of machinery
 Electricity consumption:- as per the specification of machinery

7.8 Fuel and Oil lubricants

Fuel and lubricant oil for vehicle depends on the distance purpose of the vehicles intended for.
However the Fuel cost:

a) For Automobile: 13-15 Km per litre

b) For Service Vehicle : 0.013559 lit/seat/km
c) The cost of oil and grease: 2% of fuel cost
d) For Truck:

Table 25: Truck fuel cost

Gross Distance Fuel Fuel Consumption
AVERAGE
Vehicle Pay Load travelled in one Consumption per Km for each
lit/km/ton
Weight liter per Km ton of load
7.5 TON 3.124 Ton 5.840 km/lit 0.171 lit/km 0.055 lit/km/ton
12 TON 6.311 Ton 5.500 km/lit 0.182 lit/km 0.029 lit/km/ton 0.035
18 TON 10.198 Ton 4.540 km/lit 0.220 lit/km 0.022 lit/km/ton

37
 7.9 Repair and Maintenance
Table 26: Repair and Maintenance
Percentage of Original Value
Description

Building and Construction 2% of original cost

Machinery & Equipment 5% of original cost
Furniture and Fixture 5% of original cost
Vehicles 5% of original cost
Generator 5% of original cost

7.10 Depreciation and Amortization

Table 27: Depreciation and Amortization
Description Percentage of Original Value
Building and Construction 5% of original cost
Machinery & Equipment 10% of original cost
Furniture and Fixture 10% of original cost
Vehicles 20% of original cost
Generator 10% of original cost

7.11 Insurance
Table 28: Major Insurance Categories for the Firm
Description Types of Insurance
Building, Machinery & Earthquake, flood, Fire and lightening
equipments and Furniture
Vehicles Motors commercial and third party
Life insurance Working hrs and work man composition for employee and 24 hrs
personal and work team for managers
 For Insurance Premium refer to the “Cross Cutting Project Supporting Data,2020”

38
 7.12 Land Lease Cost
Refer to land lease agreement between the project and concerned office from where the land would be
availed.

7.13 Working Capital determination

Table 29: Working capital determination
Description Period
Raw material Import 4 months
Local 1 months
Salary and Wages 1 months
Fuel and lubricant 1 months
Stationary and P.T.T 1 months
Travel and per diem 1 months
Insurance 12 months
Work in progress 2 days

39
 8. REFERENCES
 Alema Koudijs PLC
 Gumara animal feed plc
 Central Statistical Data
 Binmas Animal Feed Factory
 International Trade Center
 Champrix | Your Partner in Feed Solutions

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