SINANA DAIRY CATTLE BUSINESS PLANE

EXECUTIVE SUMMARY
Name of the business: Sinan Dairy Cattle Business
Legal form of business: private limited business
Type of the business: Dairy Cattle Business.

Project location: the project will be implemented in Bale zone, Robe town of Oromia regional state.
Land requirement: The total land requirement for the implementation of the project is 20,000m2
for construction of different dairy houses, area for relaxing and resting of cows; and five hectors
(5hct) of farm land for growing green fodders. The construction is also well designed to be at
standard level for the cattle’s safety. Furthermore, project will create job opportunity for
permanent and temporary workers.

The project is found to be birr 27,300,000 of which birr 13,300,000 is for fixed investment items
while the remaining balance of birr will be initial working capital.

Financial evaluation: According to the projected income statement, the project will generate
profit starting from the end of first year of operation. Based on the 5 years average financial
projections, the project’s average annual income estimated as 858,000 birr while the net profit
after tax amounts for birr.

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1. PROECT AREA DESCRIPTION
1.1. Location
The envisaged project is to be located in Oromia region, Robe/Goba town. The proposed project
site is to be located at about 430 - 445 Kms away from Addis Ababa.
The project is strategically located to exploit the opportunities offered by the prevailing policy,
natural environment of the area and its geographic setting. The project area has access to utilities
and other necessary infrastructure facilities.
1.2. Physical characteristics
Bale is one of the zones in the Oromia Region of Ethiopia. Bale zone is the second largest zone
in Oromia National Regional State after Borena zone with a total area of 63,555 Km2. It was 18
districts two administrative centers, 20 urban kebeles and 351 rural kebeles. The Altitude of Bale
extends from less than 300 meters around Mada Walabu and Gura Damole districts; to more than
4377 meters above sea level in Goba district. The annual average temperature of Bale zone is
17.5Oc. The maximum and minimum temperature is 25Oc and 10Ocresoectivily.the mean annual
average rainfall is 875mm, whereas maximum1299mm and 550mm minimum annual rainfall is
was recorded in the zone. Bale Robe, is the town and separate woreda, located in the Bale zone
with the latitude and longitude of 7O7’N 40O0’E/7.117ON 40.00OE with an elevation of 2,492
meters above sea level. It is located about 430Km by road from Ethiopia’s capital Addis Ababa.
1.3. Population
Bale zone has a total population of 1,402,492 of whom 713,517 were men and 688,975 women
(CSA, 2007). Out of its total population 166,758 or 26.20% were urban inhabitants while 44,610
or 3.18% are pastoralists. The total population of the capital – Robe - was reported in the 2007
national census as 44,382 of whom 22,543 were men and 21,839 were women.

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2. THE PROJECT
2.1. Project description
Dairy farming is a type of agriculture that is focused on producing milk, commonly from dairy
cattle. Ethiopia has the largest cattle populations in Africa, estimated at 60 million heads.
Unfortunately, milk production and consumption is very low. Ethiopia is the second most
populous country in Africa; with the population of about 110 million people. This is a huge
market opportunity for milk and milk productions. Ethiopia produces about 4 million liters milk
per year. Per capita consumption is very low, estimated at about 20 liters. The demand for dairy
production is rising rapidly in Ethiopia. Prices are being pushed up as demand is met by
importing products, particularly powdered milk. A dairy cattle farming is a very profitable
business. However, to build a successful, sustainable milk dairy farming business, you require
good management skill.
2.2. project objectives
 To generate income from sale of milk and milk products, and live animals.
 To meet high demand for milk and milk products.
 To create job opportunity for unemployed people.
 To promote organic farming by supplying manure for farmers to improve productivity of
other crops.

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3. SWOT AND PEST ANALYSIS

3.1. SWOT Analysis

Strength, Weakness, Opportunity, and threat of the business are analysis as follows:
Availability of labor, crop resides and water; high demand and good price for milk and milk
products, and genetically improved dairy cows are strength of this enterprise.
High initial capital investment; long production/ turn over period; short shelf life of milk; and
require large area of land are the weakness of this enterprise.
 Strong government policy support; high demand for milk and milk products, creating
jobs; and being socially acceptable enterprise are good opportunities
 Low Diseases resistance ability of exotic (cross breed) cows, and high cost for
replacement of the stock are the threats of the enterprise. Generally, dairy business
requires high level of animal husbandry and management skills.
3.2. PEST Analysis

The political, Economic, Social and Technical (PEST) analysis affirms that, strong political
support of the government, available of the technology, social acceptability of the enterprise, and
high demand of milk and milk products.

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4. PROJECT TECHNOLOGIES (TECHNICAL PLAN)
4.1. Housing and Equipment
4.1.1. Housing

Housing for dairy cows is required for protecting the dairy cattle from adverse weather
conditions, and to allow easier management. The best dairy housing design depends on
the local climatic conditions, budgetary constraints and availability of bedding
materials. The Housing for dairy milk herd need to provide adequate space, feed, water
facilities, milking facilities, west management and live-stock handling features.

There are many different structures which can be used for a dairy farms, and these
include free-stall, tie-stall, dairy shads, milking parlor, isolation pens, calving boxes
and feed store as well as dung peat. However, the necessity of the structures depends on
the size of the dairy farming business. The dairy farm also requires good fencing.

4.1.2. Equipment

Equipment necessary for dairy farm include; feeding equipment, feeding mixing
equipment, drinking equipment, buckets, milking machines, milk storage tanks, milk
transporting tanks milk processing equipment, and deep freezer.

4.2. Parent Stock and Herd Dynamic

The Holstein Friesian cross breed heifer having up to 75% exotic blood inheritance giving
20 liters milk per day shall be procured (obtained). The female progeny born will serve as
the replacement stock to replace aging and/or low performing cows. The male progeny and
some of the female will be reared for 15-18 months and sold off.

4.3. Feeding
4.3.1. Dry Matter Requirement

The dry matter requirement will be met with a combination of concentrated feed and
the green from pastures, crop residues, silage and hay. In a day, dry matter equivalent to
2.5% weight of the cow (7.5Kg DM for 300Kg cow) shall be fed. Fast growing local
species of tall and short grasses shall be planted to the extent possible 2025m2 lands per

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 animal. By this calculation almost five Hectors (5hct) of farm land is required for
growing green fodders. The excess green fodder during summer shall be converted into
hey and/or silage, and stocked/stored for feed shortage season.

4.3.2. Feed Concentrates

Cows will be fed with concentrates following the recommended ration combination in
100Kg as follows:

1. Crushed maize--------------42Kg
2. Wheat------------------------35Kg
3. Oil Cakes--------------------20Kg
4. Mineral Mixture------------2Kg
5. Slat----------------------------1Kg
Total---------------------100Kg

4.4. Land Requirement

The total land requirement for the implementation of the project is 20,000m2 for
construction of different dairy houses, area for relaxing and resting of cows; and five
hectors (5hct) of farm land for growing green fodders.

4.4.1. Feeding Regimes/Rules

Generally, an adult unit weighing 300kg body weight shall be fed 7.5Kg DM and 3Kg
concentrate, including maintenance and production/pregnancy allowance.
In feeding the cows:
 Maintain optimum ratio of roughage and concentrate (Generally 60:40 ratio).
 Feed concentrate individually according to production requirements.
 Good quality roughage saves concentrates.
 Feed concentrate mixture at or preferably before milking; half in the morning
and other half in the evening.
 Feed roughage three times a day; Morning, Afternoon and Evening.
 Abrupt change in feed should be avoided.
 Feed store must be dry and well ventilated.

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4.5. Health Care

Health related problems should be avoided to enhance production. To ensure good health
of the herd: Bio-security, Hygiene, Quarantine, and Vaccination should be take place
accordingly.

4.5.1. Bio-Security

Bio-security measures including fencing to restrict access by visitors, dogs and other
animals will be followed to prevent incidence of diseases. The farm will have foot dip
at the entry point.

4.5.2. Hygiene

The shed shall be regularly cleaned and disinfected. Cleaning shall be done before
disinfection. The cow shall be fed balanced feed and provide clean drinking water.

4.5.3.Quarantine

Sick animals should be kept away from rest during from their illness. The newly
purchased animal shall not be allowed to mix with the herd for about six weeks.

4.5.4.Vaccination

Vaccination against known diseases shall be done. Timely vaccination, deworming,

and detection of heat, pregnancy diagnosis, mastitis prevention and control, and care
of hoof shall be ensured to enhance farm productivity.

4.6. Breeding

Artificial Insemination (AI) shall be used for breeding, and selective bulls will be used
when needed. Ear tags will be used for animal identification. Individual cattle register
shall be maintained. A complete breading and herd health records shall be maintained
through maintenance of herd record books.

4.7. Organic wastes

The dung pits shall be constructed and waste materials should be collected in it.

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5. MARKETING PLAN
5.1. Existing Market

Market distributing areas are located in less than 5Km distance. Based on the current
market, the fresh milk will be sold 30 birr per liter to wholesalers, retailers, restaurants,
hotels and households.

5.2.Alternative Strategy

The sales and marketing strategies are based on the information gathered on the field.
Milk and milk products are sold by advertising on Social Medias, Websites and engage in
direct marketing.

If fresh milk cannot be sold, it will be processed into butter and cheese; and the products
were sold later.

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6. ORGANIZATIONS AND MANAGEMENT
The organization and management, which considers the specific need of the project, has been
designed to successfully implement the project. At the project level, project owners will
employ an executive manager who is responsible for the proper running and overall
management of real estate development project. The manager will be accountable to the
company managing director.
6.1. Organizational Structure

The project will be organized in such a way that there are four major units, namely the Technical
& production, Marketing (Sales & promotion), Supervision; Finance, administration & Supply units
under the office of the project manager. The major project units will have their own plan and
responsibility. The organizational chart of the project is depicted as follows:

Managing Director

Project Manager

Auditor Planning Service

Technical & Marketing (Sales Supervision Finance,

production Unit & promotion) Unit administration
Unit & Supply

6.2. Management
The human power classes take part in dairy farm business were: One executive manager, one
accountant/casher, one sales and marketing manager, one purchaser, one cleaner, one milker,
one feeder, two fodder cultivators, one ration formulator, one guard and some labor workers
will be used for operating in and out of the farm.

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 Executive Manager
 Responsible for the planning, management and coordinating all farm activities.
 Leading and implementing of the overall organization’s activities.
 Evaluate the success of the organization.
 Responsible for carrying out risk assessment.
Accountant/Casher
 Responsible for preparing financial reports, budgets, and financial statements for the
organization.
 Provides managements with financial analyses, development budgets, and accounting
reports; analyzes financial feasibility for the most complex proposed projects.
 In control of financial forecasting and risks analysis.
 Performs cash management, general ledger accounting, and financial reporting for one
or more properties.
 Responsible for developing and managing financial systems and policies.
 Responsible for administering payrolls.
 Handles all financial transactions for the organization.
 Serves as internal auditor for the organization.
Purchaser
 Responsible for purchasing materials.
Sales and Marketing Manager
 Responsible for handling business research, market surveys and feasibility studies for
clients.
 Responsible for supervising implementation, advocate for the customer’s needs, and
communicate with clients.
 Develops, executes and evaluates new plans for expanding increase sales.
Milker
 Responsible for milking and storing of milk in milk tanks.
 If fresh milk cannot be sold, milkers were responsible for processing milk into butter
and cheese; and the products were sold later.

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7. FINANCIAL PLAN
7.1. Fixed Investment Cost
The initial investment cost of the project is 27,300,000 which include:
 50 pregnant heifers------------------4,000,000
 Structures-----------------------------3,000,000
 Equipment---------------------------1,000,000
 Establishments----------------------1,000,000

The cost break-up of initial investment cost is:

I Cows Single Total

1) Cost of Cows--------80,000-------------4,000,000
II Structures
1. Cost of structures/Housing-------------5,000,000
2. Fencing -----------------------------------2,000,000
Sub-total-------------------------------7,00,000
III Equipment
1. Aluminum Milk Cans-----50,000-----------500,000
2. Cream Separator-----------1,500,000--------1,500,000
3. Refrigerator-----------------200,000----------200,000
4. Milk Sterilizer--------------100,000----------100,000
5. Milking machines----------500,000----------2,000,000
6. Feed processing machine -2,000,000-------2,000,000
Sub-total--------------------------------------6,300,000
IV Establishment--------------------------------------10,000,000
Total Capital---------------------------------27,300,000

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 7.2. PROFIT AND LOSS ACCOUNT
The assumptions considered in determining the profit and loss account includes:
1) Forty five (45) cows out of fifty (50) will be in milking stage at all times.
2) Average milk production per cow is 20 liters milk/day.
3) Forty five (45) cows shall give milk for three hundred (300) days a year at of
20 liters milk/day.
4) The milk price is 30 birr/liter.
5) On average 3Kg concentrate/day shall be fed.
6) The feed is priced at 20 birr/Kg.
7) Labor cost is accounted at birr 50,000/month.
8) Forty (40) young animals are sold annually at birr 50,000/animal.
9) Five cows will be sold annually at birr 80,000 from year two.
Cost Benefit Analysis
I. Cost In One Year In Five Years
1) Concentrate feed………..30,0000……………………150,000
2) Fodder & crop dev’t……20,000……………………...100,000
3) Animal attendant……….120,000…………………….600,000
4) Miscellaneous…………..50,000………………………25,000
Total Cost…………..175,000……………………875,000
II. Income In One Year In Five Years
1) Sale of fresh milk……………………...720,000……3,600,000
2) Sale of replaced Cow from year two….. 80,000…….. 240,000
3) Sale of stock from Year two…………… 150,000…...........450,000
Total Income……...........................950,000……….4,290,000

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8. IMPLEMENTATION PLAN
The project will be implemented consciously in planned manner.

S.N Activity 2020

Jul Aug Sept Oct Nov Dec

1 Land acquisition X X

2 Construct sheds, store; and fencing X X

3 Develop Fodder, Water Tank X X X

5 Manpower recruitment X X

6 Utility installation X

7 Purchase 50 pregnant Heifers X X

8 Purchas 5 milker machines & X X

cream separator

Fodder development will take time. It needs at least one growing season of 6 months. For this
reason the purchase of cows shall be staggered.

The pregnant heifers will be purchased in 2nd quarter of 1st year after the structures are ready.
They will be fed with crop residues and fodder already available in the farm along with the
purchased feed concentrates.

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