Cost and Income Analysis for Small-scale Pig Farming

Business in Nigeria
INTRODUCTION: Increasing investments in the agricultural sector is crucial to the Nigerian government
goal of achieving complete food security by 2030. The multiplier effects of such investments will be felt
in terms of greater employment opportunities, increased raw materials for industries, adequate supply
of food for the populace, and other economic benefits.

Indeed, there are several business opportunities available in the agricultural sector and one good thing
about the sector is that there is a ready-made market for all the farm produce, whether crops, timber or
livestock. In livestock farming for example, pig husbandry is a potentially great investment portfolio.
Available data from the Pig Farmers Association of Nigeria indicate that investors in pig farming can
make substantial profits within a year. Also, analysts familiar with the agricultural sector consider pig
farming a buoyant sector with strong potential to contribute over #265 billion to the Nigerian economy
by 2029, if given the required attention and investments. So valuable is the pork industry that the Food
and Agricultural Organization (FAO) described it as an asset of wealth or safety net in times of crisis
when viewed from the economic perspective of serving as a rich source of protein nutritionally.
Moreover, a study by the African Union Interaction Bureau for Animal Resources (AU-IBAR) revealed
that 80 per cent of the pork consumed in Nigeria is imported at an estimated annual cost of
approximately $3 billion. It must be stated, however, that the Nigerian pork industry is not dominated
by a single pig farm and the barriers to trade is quite low. Hence, small scale pig farming can successfully
compete in the industry and still make appreciable profits.

From the foregoing, it can be seen that funding pig farms in Nigeria is a reasonable poverty alleviation
scheme since it will generate more employment opportunities and improve the standard of living in the
country. Hence, this cost and revenue analysis becomes necessary to ascertain the viability of pig
farming in Nigeria. Through cost analysis of set-up expenditure, working capital and projected revenue,
it is shown that piggery is indeed a profitable and sustainable business in Nigeria.

Assumptions and Basis of Financial Projections

Basis: A genetically superior breed of pig is selected and sourced from the Pig Farmers Association of
Nigeria.

 Quoted prices are competitive and based on existing market conditions

 The piggery will be sited in southern Nigeria where there is no religious norms against pig
farming
 There is an existing market for pork across the states
 It is assumed that farmland for piggery is already available
 It is assumed that all farming operations will take place on the farmland
 30 gilts and 50 growers shall be procured to setup the piggery
 Maternity rate is based on minimum values
 Mortality rate is negligible due to the choice of a superior breed
  Period of financial projection – 1 year
 The inflation rate remains below 30.0% in the year
 Company Income Tax – 0% Pa
 Number of workers - 4
Farm manager - 1
Number of farm assistants – 2
Security - 1

Pro Forma Setup Cost Analysis for the First Year of Production

Table 1.0: Estimated Cost of Farm Implements

S/N Particulars Qty Unit Price (#) Total Value (#)

1 Water bowl 2 3,500 7,000
2 Nipple drinker 10 1,500 15,000
3 Feeding trough 10 2,000 20,000
4 Packer 10 200 2,000
5 Broom/brush 7 200 1,4000
6 Shovel 4 2,000 8,000
7 Wheelbarrow 3 10,000 30,000
8 Machete 2 2,000 4,000
9 Disinfectant 10 200 2,000
10 Detergents 10 500 5,000
11 Bucket 6 1,000 6,000
12 Weight gauge 2 10,000 20,000
13 Plastic tank 1 80,000 80,000

Total Cost of Farm Implements = #200,400

Table 2.0: Estimated Cost of Constructing Ten Pens

S/N Particulars Qty Unit Price (#) Total Value (#)

1 Cement 6 5,000 30,000
2 Stones 2 15,000 30,000
3 Block 1,500 500 750,000
4 Sand 1 90,000 90,000
5 Bricklayer @ 2 3 days 5,000 30,000
6 Labor @ 2 3 days 3,000 18,000
7 Zinc 10 15,000 150,000
8 2 × 2 Wood 100 350 35,000
9 2 × 4 Wood 30 500 15,000
10 3 × 4 Wood 20 600 12,000
11 Facial Board 30 250 7,500
12 12mm Steel Rod 19 5,800 110,200
 13 Carpenter 2 days 5,000 10,000
14 Miscellaneous 50,000
items

Total Estimated Cost of Constructing Ten Pens = #1,337,700

Table 3.0: Estimated Capital Expenditures

S/N Particulars Unit Cost (#) Total Amount (#)

1 Land Lease for 12 months
2 CAC Registration
3 Pens Construction
4 Licenses & Permits per
year
5 Farm Implements
6 Miscellaneous Expenses
50,000 600,000**
- 20,000
- 1,337,700
- 80,000
- 200,400
- 50,000

Total Estimated Capital Expenditures = #2,288,100

* Amount is subject to market conditions

Pro Forma Recurrent Expenditures For The First Year of Operation

Table 4.0: Purchase of Growers

Estimated Expenditure Cost per Unit (#) Number of Units Total Cost (#)
Cost of gilts 25,000 30 750,000
Cost of growers 12,000 50 600,000
Total 1,350,000

Table 5.0: Feeding Cost for 80 pigs

Particulars/Food Items Daily Cost (#) Average Number of Monthly Cost (#)
days
50kg of PKC (18,500 p/ton) 1,000 30 30,000
Blood meal 350 30 10,500
20kg of bread 500 30 15,000
Premix 200 30 6,000
Bone meal 100 30 3,000
10 bags of brewery waste 2,000 30 60,000
Total monthly feeding
cost = #124,500
Table 6.0: Wages/Salaries

Personnel Unit Monthly Wages Number of workers Total Monthly Wages

(#) (#)
Farm manager @ 1 40,000 1 40,000
Farm assistant @ 2 20,000 2 40,000
Security @ 1 20,000 1 20,000
Medication & - - 50,000
miscellaneous expenses
(veterinary services)

(Estimated Total of monthly Feeding + Wages + Veterinary Services = #274,500)

However, during the pig’s gestation period of 3 months, 3 weeks and 3 days, the additional number of
50 growers acquired will be fattened and sold in the week the ‘in pigs’ are expected to begin farrowing.
This creates room for the ‘in pigs’ to farrow.

I) Feeding, wages and medical expenses for the first 4 months = #274,500 × 4 = #1,090,000
II) Feeding 30 sows and 3 boars for the next 2 months = #274,500 × 2 = #549,000
III) Feeding 30 sows, 3 boars & 30 growers for the next 6 months = #274,500 × 6 = #1,647,000

However, during the pig’s gestation period of 3 months, 3 weeks and 3 days, the additional number of
50 growers acquired will be fattened and sold in the week the 'in pigs’ are expected to begin farrowing.
This creates room for the ‘in pigs’ to farrow.

Table 7.0: Income Analysis for the First Twelve Months

Fourth Month:
50 pigs at a targeted weight of
75kg each = 3750kg
Sales price of #500 per kg =
#1,875,000
Sixth Month:
150 weaners @ sales price of
#4,500 per weaner = #675,000
Twelfth Month:
150 weaners @ sales price of
#4,500 per weaner = #675,000
30 pigs at a targeted weight of
100kg each = 3000kg
Sales price of #500 per kg =
#1,500,000
SUMMARY OF PRO FORMA INCOME & EXPENDITURE ANALYSIS FOR THE FIRST TWELVE MONTHS

Table 8.0: First Twelve Months

Month Description Expenditure (#) Income Balance (#)

0 Business grant 7,000,000 -
1 Set-up cost 3,826,200 3,173,800
1 Cost of initial 30 gilts 750,000 2,423,800
1 Cost of initial 50 600,000 1,823,800
growers
1-4 Feeding & med/salary 1,090,000 733,800
for first 4 months
4th month sale of 50 1,875,000 2,608,800
pigs
5-6 Feeding & med/salary 549,000 2,059,800
for next 2 months
6th month sale of 150 675,000 2,634,800
weaners
7-12 Feeding & med/salary 1,647,000 987,800
for next 6 months
12th month sale of 150 675,000 1,662,800
weaners
12th month sale of 30 1,500,000 3,162,800
pigs

Note: Further analysis into the successive months will show a huge increase in income over expenditure
if other conditions remain the same. The sale of weaners will continue for as long as we continue to
cross the existing sows.
TRAINING BUDGET
Training is very important to the success of any human development scheme. It exposes the
beneficiaries to skills required to succeed in their endeavors. Such a training must, however,
have a budget tailored to the aim and objectives of the scheme.
In this regard, a training budget has been created to ensure the smooth operation of the pig
farming business training program. The training will be delivered to a group of select individuals
in 17 modules as enumerated below:
1. Understanding the prevailing pig farming system in Nigeria with its importance on
livelihood.
2. Prevailing housing systems of pig, their advantages and disadvantages and scope of
improvement.
3. Available breeds of pig in Nigeria and criteria of selection for pig farming.
4. Restraining and transportation of live pig/piglets.
5. Care and management of pregnant and lactating sows and neonates.
6. Care and management of growing and finishing pigs and boars, maintenance of farm
records and daily routines.
7. Reproductive cycle of pigs.
8. Selection of breeding animal and breeding management.
9. Feeding different categories of pigs for optimum production.
10. Computation of ration with locally available feed resources.
11. Cultivation of food-feed crops for feeding pigs (where possible).
12. Common diseases of pigs and their preventive measures.
13. Mode of transmission of germs and hygienic practices for prevention and control of
diseases.
14. Minor surgical problems of pigs.
15. Economics of a small piggery unit.
16. Credit and insurance schemes relevant for pig farming business.
17. Field visit
Note: The suggested modules are only indicative; facilitators may modify the modules and set
the time table as deemed fit.
Target Group: Unemployed graduates and other disempowered members of the society
Period of Training: 4 hours/day for 10 days
Mode: Group training
Requirements:
2 resource persons to administer the training (2 hours each per day)
Hall to host training
Public address system
Display board
Black board/ white board
LCD projector with accessories (where possible)
Feed samples
Disinfectants samples
Stationery materials (markers, chalks, pens, pencils, masking tapes etc.)
Flip charts, chart paper
Cards
Advertisement
Equipment for practical demonstration
Welfare (snacks and soft drinks)

Training Budget

Unit cost (#) Number of days Total cost (#)

Facilitators (2) 100,000 × 2 = 10 2,000,000
200,000
Hotel accommodation 50,000 × 2 = 100,000 10 1,000,000
Hall rent 550,000/day 10 5,500,000
Public address system 10,000 10 100,000
Generator set (rent) + 10,000 10 100,000
fuel
Stationery (exercise 100,000 - 100,000
books and pens)
Advertisement 30,000 - 30,000
Training materials rent 30,000 10 300,000
Field visit 50,000/day 1 50,000
Welfare (snacks & soft 100,000 10 1,000,000
drinks)
Miscellaneous expenses 20000/day 10 200,000
Estimated training cost 10,380,000
Projected Total Cost
Item Amount (#)
Estimated Material Expenses 6,932,100
Estimated Training Cost 10,380,000
Estimated Total Expenditure 17,312,100