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Abdi Ahmad Nyagaraa

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95 views13 pages

Abdi Ahmad Nyagaraa

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fabrahim379
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CATTLE REARING AND BEEF FATTENING

PROJECT

PROPOSED LOCATION:-East Hararghe Kersa town

PREPARED BY: abdi ahmad nyagaraa


Tel: +251960759408

April,
2024
Executive summary
1.project title
2.promoter
3.project location:oromia regional state,Qersa woreda,Qersa town.
4.planned land area:1000m2
5.employement opportunity
5.1.permanent
5.2.temporary
6.Total initial investment:5,242,500
7.source of fund
7.1.promoter contribution :1,048500
7.2.bank loan:4,194,000
8.net profit:
8.1.first year.4,852,500
8.2.second year profit 4,852,500

Project Selected Fattening Farming


Project objective
This plan is prepared to provide detailed information about the cattle rearing and fattening business.
The pattern, profitability and revenue forecast for the purpose of soliciting funds for the business
acquisition.
OVERVIEW OF THE BUSINESS
Cattle are one of the main livestock production components in Ethiopia wherein 70 % of

its populations are engaging in traditional cattle production. Next to coffee export, cattle

substantially contribute to Ethiopian foreign currency exchanges. The objectives of this

review were to synthesize available information on recent cattle fattening practices,

challenges and future perspective in Ethiopia. Various methods of fattening practices,

feeding systems and feed treatments are conducted by the farmers to feed cattle, reduce

the length of fattening period and boost profits.

The political reforms and peaceful relationships among the neighboring and Middle East

countries fostering market accessibility for fattened cattle. The use of mobile drone

technology to supply vaccines and establishment of agro-processing industries could also

significantly shift the traditional fattening to a market-oriented commercial fattening

system and enhance the production capacity of the meat industry.

Product/services
Cattle rearing, also called livestock farming, is all about mass breeding of cattle (cows, oxen, bulls,
bullocks and calf et al) for the sole aim of making profit and it is of course a thriving and profitable
business because usefulness of beef and other by products from cattle. People eat beef, drink their
milk, and use their fur and skin. With cattle milk, cheese can be made, along with other dairy
products.
Cattle beef fattening is a livestock production practice that involves reducing the animal activity and
feeding of beef cattle with a protein balanced, high-energy diet for a period of 90 days under
confinement, thereby fattening the cattle more quickly to increase live weights and improve degree of
finish and thus obtain better grades at the abattoir. Beef fattening enables the cattle to express fully
their genetic potential for growth. Larger animals could also be sold for more money in the market as
they yield more meat.
Cattle for Fattening
The selection of the cattle is based on evaluating the potential for beef fattening of different types of
cattle in relation to the market price of different grades of beef. Factors to consider include breed of
cattle, gender, maturity, type and age. This is because different types of cattle respond differently to
the beef fattening process. Some cattle are more suitable for cattle fattening than others. A major
challenge is lack of funds to buy cattle for beef fattening when prices are favorable which is lost
opportunity to make profit. If the wrong decision is made, losses would be made before the start of
the business.
Feed and nutrition
It’s very essential that the right quantity and type of feed is given to cattle. The success of the
business depends on the ability of the cattle to gain weight and to produce high quality beef. These
factors are affected by the quality and quantity of feed. The proper feeding techniques will ensure
that the cattle will grow and utilize the feed efficiently and produce good quality beef. This will
maximize the profits of the cattle fattening farming business. Failing to properly feed the cattle will
lead to losses. The losses will be due to failure to meet the target slaughter weights and beef quality
grade.
There are companies which sell cattle fattening stock feeds. These are complete, balanced feeds,
which are designed for fattening cattle in feedlots over 90 days. The stock feeds are high energy
fattening meals which contain all the nutrients necessary for ad lib cattle pen fattening. We will also
make our own home made cattle beef fattening feeds.
Management and labor
The number of farm workers required depends on the size of the farm. There might be the need for
full time employees to manage the herd. There is need for good technical knowledge of cattle
fattening techniques for success in the business, and good management skills.
Target Market
Naturally, the target market are those who are the end consumer of livestock farm produce and also
those who benefits from the business value chain of the agriculture industry.
Every household consumes produce from livestock farms be it meat, milk, and the skin (leather) used
for bags, belts and shoes production et al. So also a large chunk of manufacturing companies depends
on livestock farms for some of their raw materials.
Profitability of cattle fattening business
Cattle beef fattening is very profitable when done the right way. The profitability of the cattle
fattening farming business depends on the buying price of the cattle, cost of the feed, price margin,
feed margin, feed conversion efficiency ratio, unit cost per kilogram when selling. It is important to
understand the mentioned margins and conversion ratios so that financial losses are not made by
paying too much for the cattle.
Competitive Advantage in the Agricultural Industry
Entrepreneurs are encouraged by the government to embrace commercial farming. This is so because
part of the success of any nation is her ability to cultivate her own food and also export foods to other
nations of the world. This increase the amount of competition in the industry to far greater heights.
Operational plan
The business is to be carried out all year round. So a lot of feeds will be stocked that will suffice all
year round. The feed which include millet/guinea corn hulls, groundnut leaves, maize stalk etc. are
mostly cheap in the market and far cheaper when planted in the farm. The mixture of the feed is done
in such a way that cattle get the required nutrient for proper weight gain. The cattle will be bought in
such a way that the selling interval will be 30 days i.e. a certain number of cattle will be available
each month for sale or slaughter. In order to maximize profit, farming of the cattle feed (groundnut,
millet, guinea corn) will be done and stocked all year round. The main produce will be sold and the
groundnut leaves, millet husk, guinea corn hulls will be kept for cattle consumption.
Management
A good management practice plays a key role in profit maximization. Enlisting people in the
technical know-how of the business either by profession or by experience is essential. The staff
would include, but not be limited, to the following:
1. Chief Operating Officer: responsible for providing direction for the business and evaluating the
success of the organization
2. General Farm Manager: responsible for ensuring compliance during project executions, carrying
out risk assessments, ensuring desired goals are achieved and overseeing the smooth running of the
daily farming.

3. Administrator / Accountant: responsible for preparing financial reports, budgets and financial
statements for the organization. He/she would also develop financial forecast, risk analysis reports
and administer payrolls.
4. Cattle Ranch and Animal Manager / Supervisor: responsible for managing the commercial
breeding of cattle. He/she would work closely with the General Manager to achieve the
organizations’ goals and objectives
5. Sales and Marketing Officer: responsible for handling business research, market surveys and
feasibility studies for clients. He/she also documents all customer contact and information
6. Field Workers / Contract Staff: responsible for feeding cattle as instructed by the supervisor,
cleaning the ranches, changing the water in the water troughs and feeding the cattle on a regular
basis.

Following the agricultural business plan project cycle which consists of five distinct stages to
develop a cattle rearing and cattle fattening business plan. These five stages include:

1. Identification/selection of project: it involves finding potential projects which will


usually arise from investors, promoters, technical specialists and politicians. Ideas for

new projects can be a startup or an expansion of existing agribusiness. Sources of

potential projects could be the expansion of an existing production, Import substitution,

Export promotion etc. Projects are selected based on desirable criteria which may include

suitable soil, climatic factors, available raw materials and many others. These identified

projects must agree with the national agricultural sector plan, objectives, targets, policies

and regulations.

2. Project preparation and analysis: It involves all the work necessary to bring a project

to a point where it can be carefully reviewed, appraised and analyzed to determine the

suitability of the proposed project for implementation and commitment of scarce

resources. Agricultural projects preparation task require the input of technical experts in a

multi-disciplinary such as agronomist, agricultural economist, animal scientist, engineers,

financial analyst etc. The first step in the preparation of agricultural project is to carry out

a detailed feasibility study that will supply enough information to guide the decision to

commit resources to project or otherwise. This involves the business plan described

below.

3. Project Appraisal: This is a critical review of all the assumptions made concerning the

project budget undertaken by an independent analyst to ascertain the reality of the

assumptions. The review appraise the technical, commercial, environmental and financial

aspects of the feasibility report to establish reality of the project. Analyst will review

input prices, expected output, output prices, market share, industry structure, competition,

production technology, availability of manpower, availability of inputs, effective


demand for the products, target market, sensitivity to price change, profitability etc.

4. Implementation or monitoring: The stage where scarce resources are committed to a

project is that it has been adjudged viable. At this stage implementation is seriously

monitored to ensure that actual result reflects the expected result as contained in the blue

print or project plan. Budget is closely monitored for variability and deviation since price

is a dynamic variable that is determined by prevailing market conditions. A control

mechanism should be included in the implementation plan to ensure viability of the

project at all time.

5. Evaluation: At this stage, the actual achievement is evaluated to learn some lessons as financial
analyst etc. The first step in the preparation of agricultural project is to carry out

a detailed feasibility study that will supply enough information to guide the decision to

commit resources to project or otherwise. This involves the business plan described

below.

START-UP EXPENSES AND CAPITALIZATION


The most important expenses is the construction of the cattle ranch / cages / fencing as the case may
be.
Below are some of the basic areas we will spend our start – up capital in setting up our cattle rearing
business / cattle ranch:
1.PROCUREMENT OF LAND FOR FARMING
S.N MATERIAL quantity Unit cost Total cost

Land payements 50,000


TOTAL 50,000
2. PROCUREMENT OF CATTLE

S.N MATERIAL quantity Unit cost Total cost

20 Cattle each 30 40,000 1,200,000


month X 18
months (except
first month which
is 2 cattle)

TOTAL 1,200,000
3.CATTLE FEED
S.N MATERIAL quantity Unit cost Total cost

concentrates 300 quint. 2000 60,000

Grass 10,000m2 200 2,000,000


TOTAL 2,600,000

4.STORE ROOM
S.N MATERIAL quantity Unit cost Total cost

6” Vibrated blocks 500 120 60000

Cement 30 bags 2500 75000


Sharp sand 1 truck 10000 10000
Gravel ½ truck 18000 18000
Wood and zinc 137000 137000
Laborers 75000 80000
Others 20000
TOTAL 400,000
5.PREPARATION OF LAND AND CATTLE HOUSING
S.N MATERIAL quantity Unit cost Total cost

SHADE 500 3000 1500000


3X4 PLY WOOD 700 200 140000
LABOR 60000 600000
MISCELLANEOUS 5000 360000
EXPENSE
PREPARATION OF LAND 1900000
TOTAL 500,000

6.MACHINE, WORKING TOOLS AND FENCING


S.N MATERIAL quantity Unit cost Total cost

CATTLE FEEDING 4 200000 200000


CRUSHING MACHINE
500000
Electrical wiring and
lighting

Livestock Trailer 2 1000000 2,000,000


WATER TANKS 1 20000 20,000
MANURE SPREADER 1 500000 500,000
RTOTAL 3200,000

PAYMENT FOR YEAR


S.N MATERIAL quantity Unit cost Total cost

Chief Operating Officer 1 8000 96000


General Farm Manager 1 10000 120000
Administrator Or 1 7000 84000
Accountant
Cattle Runch And Animal 1 7000 84000
Manager
Sell And Market Officer 1 8000 96000
Field Workers 10 6000 600,000
TOTAL 1,080,000 ETB

ADVERTISEMENT AND MARKETING


S.N MATERIAL quantity Unit cost Total cost

Launching and official 50,000


website
Business card , adverts 50,000
and promotion
For proposal payements 15,000
Preoperating expenses 10,000
Liscence fees 5,000
TOTAL 130,000
FINANCIAL STATEMENTS AND PROJECTIONS
This cattle fattening business will hopefully be financed with a loan/grant from the bank and the
payback period is estimated to be three years six months. Though the profit is not fixed, there is a
projected profit of 100,000 per head after all expense deductions.
Generating Funding / Startup
No doubt raising start – up capital for a business might not come cheap, but it is a task that an
entrepreneur must go through. It is a family owned business and it will be financed by the owners of
the cattle ranch.
• Generate part of the start – up capital from personal savings and sale of his stocks

• Generate part of the start – up capital from friends and other extended family members

• Generate a larger chunk of the startup capital from the bank (loan facility).
Buyers/demand
The demand for beef is a continuous and essential one. It’s a necessity and as vital and grains and
vegetables in every household. This makes the business more inviting and less stressful. The buyers
will be local butchers and market men from the local and modern markets. The selling point will be
in the local market or abattoir with competing bid for higher prices.
Profitability
The profit is usually 100% of the original buying price of each fattened cattle. A cattle bought at a
100,000 would be sold in between 240,000 and 260,000 depending on the nature of the market. So
the excess 40,000-60,000 will be for the feeds and other expenses. The profit will be 100,000.
Payback period
The payback period will be between three and half years. The first two months will not count
because it takes three months to transform a malnourished cattle to a healthy fattened cattle. However
the profit generated will be 5,000,000 at the 30th month of the commencement of the business at a
net profit of 100,000 by 4 cattle monthly. In addition to the first two months that are excluded from
the revenue projection, additional 3 months are included in case of any shortfall or unforeseen
circumstances on the monthly projected revenue.
STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS (SWOT) ANALYSIS
The need to conduct a proper SWOT analysis cannot be over emphasized for the success of the
business. We know that if we get it right from the onset, we would have succeeded in creating the
foundation that will help us build a standard cattle rearing and fattening business that will favorably
compete with leading cattle rearing / livestock farms in Nigeria.

As a cattle rearing business, we look forward to maximizing our strength and opportunities and also
to work around our weaknesses and threats. Here is a summary from the result of the SWOT
analysis conducted:
STRENGTHS

LOCATION The cattle house will be located in the central


area of the FCT which is easily accessible to
nearby markets and abattoirs
CONTACT IN BUSINESS, SUPPLIERS AND Healthy relationships with loads of major players
MAERCHANTS (agriculture merchants) in the livestock farming
industry; both suppliers and buyers within and
outside of Holeta
enthusiasim The owner is so energetic and passionate about
the business and willing to do whatsoever to
make sure it succeeds. The closeness and
commitment creates a large positive driving force
towards it success.
Latest technology in cattle production Possession of the latest cattle rearing machines,
tools and equipment that will help us breed our

Professional staff worker Experienced hands in cattle rearing / livestock


farming industry in the payroll
weakness
Limeted financial resource Relatively large debt will have to provide the
funding for adequate start up but projections
indicate that the loans can be serviced in good
time without any issues
opportinity
Rising demand As the population is rising, so also the demand of
beef
Government support The government’s campaign on promoting
indigenous farm output is an added advantage
Easy access market The proximity to market will play a key role in
the success of the business
Large demand for other cattle products Homes source for milk and its by-products and
industries also source for the raw materials from
the livestock farms
Threats
theft With the current rise in cattle rustling, a close
vigil and security will be insured

Economic and Social Benefit and Justification

The envisaged project possesses wide range of benefits that help promote the socio-economic
goals and objectives stated in the strategic plan of the OromiyaNational Regional State. It
boosts inter sectorial linkage between the agricultural (livestock) and industrial sector. At the
same time, therefore, it helps diversify the economic activity of the region. The other major
benefits
are listed as follows:

A. Profit Generation

The project is found to be financially viable and earns on average a profit of Birr 2.84 million
per year and Birr 7,770,098 Birr within the project life. Such result induces the project
promoters to reinvest the profit which, therefore, increases the investment magnitude in the
region.
B. Tax Revenue

In the project life under consideration, the region will collect about 442,029.8 Birr from
corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such result creates
additional fund for the regional government that will be used in expanding social and other
basic services in the region.

C. Employment and Income Generation

The proposed project is expected to create employment opportunity to several citizens of the
region. That is, it will provide permanent employment to 6 professionals as well as support
staff. Consequently the project creates income of Birr 1080,0004 within a year. Moreover, the
envisaged project benefits rural income from the sale of cattle, onions and the like.

Risk Plan
The cattle house is fenced and secured in such a way that criminals cannot gain easy access. A
veterinary expert would always be consulted at every stage to ensure proper welfare and healthy
being. Additional 3 months are added to the payback period of the loan/grant in order to stay on
track with the payback time.

Source of finance,4
Equity 1,048,500
Loan from bank 4,194,000
Interest rate 17% 712,980
Payment period in 5years(60 )months 4194000

Yearly sales plan

Product 1 Purchasing Unit selling Total selling Total profit Gross total
price for 1 beef price price profit
20 beef 40000 70000 1,400,000 60000 1,800,000

Since we sold three times per year, we will optain net profit of Birr 1,800,000 per year.so,in five years of
operation we will obtain 9,000,000 million Birr ETB.
Financial estimations

For procurement 1,200,000

Cattle feed:260000

Store room:400,000

Preparation of house:500000

Machine costs:200,000

Salary payment:1080000

Total payed 3,770,000

Interest payable:

Principal payed

Tax payable.

Description Total expense


Financial estimations 3,770,000
Interest payed
Principal payed
Tax payable

Proforma balance sheet

Descriptio Year 1 Year 2 Year 3 Year 4 Year 5


n
Financial 3770,000
estimation
s
Interest 411,980.4 411,980.4 411,980.4 411,980.4 411,980.4
payable
Principal 20846.34 20846.34 20,846.34 20,846.34 20,846.34
payed
Total 4,202,826.34 432,826.76 432,826.76 432,826.76 432,826.76
payement
Gross 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000
sales

Gross _2,402,826.34 1,367,174 1,367,174 1,367,174 1,367,174


profit

Principal 104,231.7 104,231.7 104,231.7 104,231.7 104,231.7


payment
Tax - 442,029.8 42,029.8 42,029.8 42,029.8
payment
Gross - 1,262,942.3 1,262,942.3 1,262,942.3 1,262,94
profit 2.3
before tax
Net profit 820,912.2 820,912.2 820,912. 820,912.
after tax 2 2

Balance sheet

Asset Amount Liability Amount


Cash 9,000,000 Cattle feed 260,000
House 500000 Salary payment 1080000
Cattle 1200000 Advertising 130,000
Store room 400000 Interest payment 2,059,902
Machine 200000 Principal payment
Tax payment
Total asset 11,300,000 Total liability 3,529,902
Net worth 7,770,098 Net worth and 11,300,000
liability

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