Department of Business Management

Business Plan

Title: Milky Wave Dairy Farm

Name Id No.

1. Muluken Mamure 0327/13

2. Naol Nigussie 0331/13

3. Korsa Guja 0101/13

4. Firaol Tena 0286/13

5. Lalisa Aweke 0168/13

6. Tadesse Mulat 0144/13

7. Leul Nega 0143/13

8. Zelalem Getinet 0312/13

9. Lami Tariku 0152/13

Dec, 2023

Hawassa, Ethiopia
HAWASSA DAIRY FARM MILK & MILK PRODUCT

ADDRESS: HAWASSA TOWN

 EXECUTIVE SUMMARY

This profile envisages the establishment of a farm for the rearing of milk cows with raising
capacity of 20, heads of cows per annum. Milk’s of cows have become the most important
sources of protein, minerals and other necessary elements in the human diet by using it directly
or after passing through food processing industries. The major inputs and auxiliary raw materials
required are milking cows, commercial formula feed, good ventilation, best housing and high
quality vaccines which have to be imported. The present unsatisfied demand for milk of cows in
Hawassa town is estimated at lower number of litter of milk. Therefore; the Milky wave milking
cow’s farm is established to satisfy this demand in Hawassa town. The total investment
requirement is estimated at Birr 1,341,200 birr and out of which Birr 1,005,900.00 birr (75%) is
from Commercial Bank of Ethiopia in coordination with administration of small enterprises and
268,240 birr (20%) gained from the milky wave’ Hawassa Town Owners and Remaining
67,060.00 (5%) will from us. The plant will create employment opportunities for persons and
the major income sources are milk, manure, and culled cows and calves (specially the male).

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TABLE OF CONTENTS
PAGES

EXECUTIVE SUMMARY .....................................................................................1

TABLE OF CONTENTS .....................................................................................2
1.1. Overview of the dairy cows industry...............................................................3
1.2. Description of the farm ........................................................................................................ 3
1.2.1. Mission .......................................................................................................................... 3
1.2.2. Vision............................................................................................................................. 4
2. Immersion .............................................................................................................4
2.2. Objective .......................................................................................................................... 4
3. Incubation .............................................................................................................4
3.1. MARKET PLANNING .................................................................................................... 4
3.3. Market size and trends.......................................................................................................... 6
3.4. Competition .......................................................................................................................... 6
3.5. Estimated sales ..................................................................................................................... 6
3.5.1. Purchase of calves ......................................................................................................... 6
3.5.2. Feeding .......................................................................................................................... 6
3.5.3. Culling ........................................................................................................................... 7
3.6. Cost of development............................................................................................................. 7
3.7. Labor requirement ................................................................................................................ 7
3.8. Expense and capital requirement.......................................................................................... 8
3.8.1. Operating expense ............................................................................................................. 8
3.9. Funding request and return ................................................................................................... 9
4. Insight ....................................................................................................................9
5. Verification & Application ................................................................................10
5.2. Forecast Financial Statement ............................................................................10

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1. INTRODUCTION

1.1. Overview of the dairy cows industry

Milking cows’ farm business is an agro-based project. That means rising of milking cows for the
purpose of commercial milk production. For the purpose of producing hybrid milking cows,
consider the various characteristics of bulls and cows before breeding. There are various types of
highly milk productive cows breeds available throughout the Country. It will become one of the
most profitable business ventures due to easy availability of inputs, and demand for cows,
suitability for all weather conditions, encouragement from the government especially for
educated unemployed and the like. It cannot be said that, agriculture production alone can meet
the demand of human population. In this context production through dairy cows sector has
become center stage as a means of alternative source of minerals and protein.

Dairy represents an important sub-sector in the Ethiopian agriculture. Dairy as industry is also of
high economic value for the country. Dairy products including milk and milk products constitute
a significant share in the global food industry. Cheese with kitfo is commonly preferable food in
various parts of Ethiopia.

In Ethiopia, Dairy cows is an integrated part of the smallholder production systems and plays a
significant role in poverty alleviation because of its source of foreign exchange and it can be an
income earner for households for household farmers.

1.2. Description of the farm

1.2.1. Mission
Milky waves’ dairy cows’ farm is going to be established to provide fresh and high quality milk
and butter to the individual customers, hotels, restaurants and distributors found in and around
hawassa Town.

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1.2.2. Vision

The milky wave project envisages production of milk and milk product. Milking cows’ farm is
profitable and our vision is at the 5th year the total debt to be returned and being one of the
mostly known competitive milking cows farm in the country.

2. Immersion

2.2. Objective
It is expected that the dairy farm will meet the following objectives

 To ensure self-awareness about milk & milk product for customers.

 To create work opportunities for others.
 To market milk and milk products for the consumers.
 Milk will be market for individuals, hotels, restaurants and different consumers.

 Reach profits that allow the whole group members to work for the company full-time and
make sufficient incomes.

3. Incubation
3.1. MARKET PLANNING
Strength:
 Favorable Government policy measures.
 Good network of animal health institutions.
 Milk and milk products constitutes an important component of human diet in the most of
the developing countries in the world. The consumption is also increasing at rapidly due
to easy availability & cost effectiveness.
 Calcium, Phosphorus and Iodine along with fat.
 Dairy farming requires no much large area husbandry and agriculture activities.
 Ample professional knowledge of members on livestock production and health
management.

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  Commitment of the members to run the business.

Weakness:
 Price fluctuation.
 Highly capital intensive.
 Slow adoption of automation in production system.
 Lack of capital to invest in assets, equipment and inputs that would improve quality are
the major challenges faced by the market value chain.
Opportunity:
 Availability of infrastructures.
 Availability of cheap labor force.
 Availability of local materials used for making different equipments.
 Good progress of modern animal production system in the country.
 Domestic Consumption.
 Changing social trend
 Increase demand of milk and milk products
Threat:
 Short shelf life in Our Country
 Price fluctuations in the market
 Lack of adequate land.
 Livestock market structure

3.2. Customers
The primary customers will be local community, hotels, and restaurants with milk distributors.
There are highly demand of hotels around Industry Zone for meal in hawassa and nearby cities
like shashemene and demand of local community, so that there will be more production. Cows’
by-products such as manure will be sold to local farmers to be used as fertilizer.

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3.3. Market size and trends
The product can be sold directly to bulk buyers. For individual buyers existing outlets such as
super markets and specialized food items department stores can be used. Past Supply and
Current Demand: Dairy products such as milk, butter and cheese are the central diets of
Ethiopian’s virtually in every household in the country.

3.4. Competition
There is some small sized individual household milking cows farms in the town. In which thus
are not such strong competitors in the market by taking the higher demand of the population into
consideration.

3.5. Estimated sales

Table 1: Estimated sales in birr
Sales in birr
1st year 2nd year 3rd year
Products 1st quarter(4month) 2 n d quarter 3 r d q u a r t e r
Milk During fasting 20*42*12(5)=50,400 20cows*55 days*12(5)birr=66,000 20cows*35 days*12(5)birr=42,000 20cows*141days*12(5)birr=169,200 24cows*141 days*12(5)birr=203,040

Not fasting 20*78*12(7.5)=140,400 20 cows*65days*12(7.5)birr=117,000 20cows*85days*12(7.5)birr=153,000 20cows*224days*12(7.5) birr=403,200 24cows*224days*12(7.5) birr=483,840

Culled cows During fasting 0 0 4cows*2000birr 5cows*2000birr 5cows*2000birr

Non fasting 0 0 4cows*3500birr 5cows*3500birr 5cows*3500birr

Manure 8quntals*80birr 8quntals*80birr 8quntals*80birr 10quintals*80 birr 10quintals*80 birr

3.5.1. Purchase of calves

The calves should be of uniform size, active and alert. The skin of calves should be free from
disease. Improved and high yielding calves should be purchased from reputed farms.

3.5.2. Feeding
The requirement of feed during milking depends on the rate of milk production and the body
condition of milking cows. The cows need more feed in winter and less feed in summer. During

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summer months the herd is under severe stress then it is suggested to temporarily change the
ration to a higher level of protein content. The actual feed consumption may be influenced by
several factors as follows:
 Body condition of the cow.
 Rate of milk production.
 Season and weather condition.
 Health and physical condition of the cows.
 Feed quality such as protein contents, caloric value of feed etc.
Generally the feed intake increases with an increase in milk production.

3.5.3. Culling
Culling is the procedure of selection and rejection of unproductive and poor producers. Culling is
a very important job for running dairy farm profitably. Poor milking cows should be culled to
minimize the cost of production.

3.6. Cost of development

Table 2: Total Project Cost
Description Qty Unit Price Total Price

Cows 4 35,000.00 140,000.00

Land 1 900,000.00 900,000.00

House 1 101,000.00 101,000.00

Total 1,141,000.00

3.7. Labor requirement

The total manpower required is 9 persons. There will be labor requirement who are skilled,
unskilled and professional. We will recruit employees who are well experienced and also in
accordance of their skill they will take short term training. Details of manpower and annual
estimated labor cost including the fringe benefits are given in Table 3. The total annual
manpower cost is estimated at Birr 166,200.

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Table 3.Manpower requirement and estimated labor cost
Sr.No Position No of Salary in Birr
Employees
Monthly Salary Annual Salary

1, Manager 1 3,000.00 36,000.00

2, Secretary 1 1,200.00 12,000.00

3, Production Supervisor 1 2,000.00 26,000.00

4, Laborer 1 1,500.00 18,000.00

5, Accountant 1 2,300.00 27,600.00

6, Sales Man 1 1,500.00 18,000.00

7, Store Kipper 1 1,100.00 13,200.00

8, Cleaner 1 500.00 6,000.00

9, Guard 1 750.00 9,000.00

Total 9 166,200.00

3.8. Expense and capital requirement

3.8.1. Operating expense

Table 4: Operating expense
Cost of Production

Fixed Cost 1,010,000.00

Cost of Cows 140,000.00

Feed Cost 25,000.00

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Salary 166,200.00

Total 1,341,200.00

Note: - The debt will be taken from Commercial Bank of Ethiopia and other credit institutions
with correlation to administration of small enterprises and covers 75% of our total budget and
20% Hawassa town Owners and Remaining 5% of the budget is from us.

3.9. Funding request and return

The debt that was taken from the bank in 6% interest as a loan will be paid up in 4 consecutive
years of operation. The breakdown of the money return will be as follows:
Table 4 Funding request and return

Amount Payback years

s t n d r d t h t h
1 2 3 4 5

A mo u n t 254,828.00 254,828.00 254,828.00 254,828.00 254,828.00

4. Insight
4.1. Select the Business

The Reason to select this Business (Milk & Milk Product) is Very Important for like hawassa
Town Society, because Hawassa town have many Industries. So, around Industry sector Workers
& Society needs High energy immunity we can get from milk & milk product, and In Ethiopia
much of the milk and butter is produced by household farmers. The high increase in consumers’
demand for dairy products mainly in urban areas will have major implications on the prices of
the products which obviously is important for those engaged in the sector. They will primarily

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raise for human food. Dairy consumption is more common in urban than in rural areas and
commonly high during holiday periods.

4.2. Outlook of Other enterprise

Small enterprise outlooks about Dairy Farm considered unwanted business, because of this
business wants highly Commitments to work & known about Industrial Sector Employees &
Society needs, but not knowhow about this.

5. Verification & Application

5.1. List of Cost Benefit Analysis

Most of the time I Believe that how to maximize profit with minimize cost, If I Sale many
amount of product with less profit expectation I will achieve Goal.

For example; - If there is One Compotator sole one litter milk Birr 20.00, Salary/ litter 12.45, For
Food For Cow Birr 2.38/litter, House & Other Cost 4.50/Litter in the same Condition I sold birr
19.65 within only 0.35 cents/ litter, and if the not be one time customer I will sale in birr 19.55,
deduct 0.45 cents/ litter and so on, From this Example I will get between Birr 0.22 & 0.32 so if I
use like this method I will attract so many consumers.

5.2. Forecast Financial Statement

Let;- Have 04 Cows, Give milk per day 80 Litter

Selling price per litter Using Birr 19.65/Litter

Calculate Revenue Amount/ Year= L*D*U.P

=80*365*19.65

Revenue = 573,780.00

Note; - L= Litter

D= Days

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 U.P= Unit Price

5.2.1. Income Statement

Loan Pmt For Creditors/ Year -----------------------254,828.00

Salary For all Employees/ Year----------------------166,200.00

Feeding for Cows/ Year --------------------------------25,000.00

Income Tax/ Year ---------------------------------------40,408.20

Other Muslanus Expense / Year -----------------------12,300.00

Total Expense /Year----------------------------------------------------498,736.20

Sale (Revenue) / Year --------------------------------------------------573,780.00

Net Income/ Year ---------------------------------------------------------75,043.80

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