Dairy 1 TT
Dairy 1 TT
Dairy 1 TT
Mehalmeda
Contents Page
Summery ........................................................................................................................................ iv
1. Introduction ................................................................................................................................. 1
3.1.1. Customer...................................................................................................................... 17
3.3.1. Required Production Inputs, Materials and Manpower, and It’s Cost ........... 28
ii
5.1. Environmental analysis ...................................................................................................... 55
6. Social Contribution.............................................................................................................. 59
7. Considerations taken while preparing the financial part of the project: ................................... 59
iii
List of Table Page
Table 1 Urbanization: Levels And Growth Rates ......................................................................... 17
Table 2 Estimated Numbers of Livestock in Ethiopia by Region ................................................ 19
Table 3 National livestock product utilization in 2019/2020........................................................ 20
Table 4 Projected demand for milk in Ethiopia ............................................................................ 22
Table 5 Cost of Required Dairy cow and Fatting Cattle............................................................... 29
Table 6 Required Feed and medication and its cost ..................................................................... 30
Table 7 Utility Cost ....................................................................................................................... 31
Table 8 Cost of Required Machinery and Equipment .................................................................. 33
Table 9 Required office equipment and its cost............................................................................ 35
Table 10 Required Manpower cost ............................................................................................... 36
Table 11 Other project cost ........................................................................................................... 39
Table 12 Total project cost in each Year ...................................................................................... 40
Table 13 source of initial Finance ................................................................................................. 42
Table 14 Required initial investment Capital ............................................................................... 42
Table 15 Depreciation ................................................................................................................... 44
Table 16 Estimating of production sale ........................................................................................ 46
Table 17 Gross Income of The Project ......................................................................................... 48
Table 18 Financial Cash Flow Statement ..................................................................................... 49
Table 19 NPV ............................................................................................................................... 53
Table 20 IRR ................................................................................................................................. 54
iv
Summery
Briye Kebede Tilahun Dairy and fatting project is located in 03(Atedass Gedenbo) Kebele, Menz
Gera District/ North Shewa Zone, Amhara Regional State. It is a ten years Project. Its initial
Starting Capital is 5263123 ETB. The production capacity of the project is increasing every year.
In the first year of project operation, it will provide 15 beef cattle to potential Market and
demand in the country. For the remaining 9 project operation years, it will provide 40 beef cattle
each year. Until the completion of the project's operation years, it will provide 375 beef cattle to
the market. In addition, 40 improved breeds of dairy cows are used for milk production. During
the ten operation year of the project 295 Heifers/calves will be born. Out of the born heifers, 40
are left to replace dairy cows whose production is decreasing. The remaining 255 heifers/calves
are marketed to meet the community's demand for improved heifers and bulls. Through this, the
firm contributes to the improvement and productivity of the local community's dairy cow and
fatting cattle. In one year, on average 150,750.00 liters of quality and desirable milk is produced
and marketed at an affordable price to satisfy the needs of customers. In order to alleviate the
existing unemployment and to fulfill the manpower required for the firm 31 By hiring permanent
workers and 250 workers (per operation year) on a temporary basis, creating job opportunities
for the local unemployed community, the social necessity of the part will be released.
In general, for 10 consecutive years of project operation, our firm has been providing
competitive milk product and beef cattle to the market that are of high quality, consider customer
needs and purchasing power, contribute to fill the gap of milk and beef production in the
domestic market.
v
1. Introduction
1.1. Background
In Ethiopia, livestock provides multiple functions including as source of quality food and as
industrial raw materials (FAO, 2015). The livestock sector in Ethiopia play significant
contribution to the economy accounting for 45 % of the agricultural gross domestic product, 18.7
% of the national gross domestic product and between 16 – 19 % to the total foreign exchange
earnings of the country (Eshetie Et al., 2018). However, the livestock sector contribution to the
country economy remains disproportionately low due to low productivity of the animals. The
estimated average live weight of cattle is 250 kg with 14 % off take rates and carcass weight is
110 kg with 44 % dressing percentage due to multifaceted challenges related to production,
husbandry and marketing (MARD, 2010; AGPLMD, 2013). The cattle population is Ethiopia
was estimated to be 59.5 million among which 99 % were local cattle and 1 % were cross breeds
(CSA, 2017). Cattle are a very common asset in Ethiopian households and 70 % of the total
population depend on cattle for their livelihoods and the country produces about 1 million tons of
beef per year valued at USD 5.1 billion (ASL, 2018). The annual contribution of ruminants to
meat production in Ethiopia was estimated to be over 3.2 million tones representing over 72 % of
the total meat production (Issack et al., 2017), from which beef accounted for over 70 % of the
total red meat production and over 50 % of the total meat output in Sub-Saharan Africa (Wabalo
and Anja, 2018). According to Bachewe et al. (2017) in Ethiopia the consumption expenditure
on Animal Source Foods (ASF) increased by 13.4 % in 2011 from which beef accounted for 42
%. Bachewe et al. (2017) noted that the value of exported of meat products increased from 18
million USD in 2005 to 107 million USD in 2015 due to the increase in international livestock
trade. Beef cattle fattening is a common practice in Ethiopia and special attention was given by
the government to boost red meat supply through cattle fattening (Agmas and Adugna, 2018).
Accordingly, cattle fattening is an increasing business at different scales in Ethiopia. Various
research activities in cattle fattening have been conducted over the years to fill the production
gaps, identify the challenges and opportunities of cattle fattening and support needs of the sector.
Therefore, there is a need to review and avail information on cattle fattening for those who wish
to engage on small or large scale cattle fattening as well as on commercial feedlot enterprises in
1
Ethiopia. According to CSA (2015), 52.93 % of beef and 90.04 % of mutton/goat meat were
consumed in the household, and 33.18 % and 3.42 % were sold for export in the country.
Menz Gra Midir District is one of the districts in North Showa Zone of Amhara National
Regional state. The district is located at 282 km from Addis Ababa, the capital city of Ethiopia,
857 km from Bahar Dar, the capital city of Amhara Regional state, and 182 km from
Debrebarhan, the capital of North Shewa Zone. The spherical location of the circuit is at
39023'51"-39049'43" longitude and 10011'41"-10033'52" latitude.
The Menz Gera Midir district is divided into twenty rural administrative kebeles, Amedguya and
Gwassa Community Conservation Area. The district is bordered by Geshe Rabel in the north,
Menz Mama and Menz Lalo in the south, Menz Qaya in the southwest, Kechene river in the west
with South Wolo zone (Jama and Worailu), Antsokiya Gemza in the northeast and Efrata and
Gdam districts in the east.
2
The coverage of the district is 111831.761 ha, of which 67956.09 ha is agricultural land, 7139.07
ha is pasture land, 12446.2 ha is covered by forest and bushes, and the remaining 24290.401 ha
is covered by other different type of land uses. The agro climatic zone of the district is divided
into weyina dega (7.62%), dega (69.93%) and wurch (22.45%), and the elevation/latitude is from
1657 meters above sea level up to 3561 meters above sea level. The total population number of
the district is 154127(Male =75179 and Female = 78948), (CSA July 2021 G.C). The main
income/economy of the district community is based on agriculture and animal husbandry. In the
district there are 16560 oxen, 15744 cows and 233710 Sheep and Goat, Total 266014 Animals
are available. Out of these, there are only 1915 oxen and 2129 cows with improved breeds (Menz
Gera Midir Woreda Animal Production Office, 2022 G.C). Livestock farming is the main source
of income and economic option for the farmers and they use it as cash and insurance in the times
of crisis and drought period. However, the existing animal husbandry system is largely
traditional and based on open grazing. This has made the productivity and income of the animals
less than expected. As it is known, to solve the food security problem in the district, To increase
3
and improve the income options of the farmers, as well as to improve the nutritional content of
the community, there are works being done on dairy farming and cattle fatting. However, the
works that are being done do not meet the demand of milk and meat in the market and the
operation is done in a traditional way. As it is known, the demand for milk and meat production
in the mehalmeda market as well as in the national level/central market has been increasing.
There is a significant shortage of supply. The milk and meat production provided is not
compatible with the current population growth and food need. Therefore, in order to satisfy the
growing demand for milk and meat production, to make the work in the sector improve and
grow, to increase the contribution of the sector to the country's economy, to create job
opportunities in the sector for unemployed sections of society; It is important to prepare a work
plan and invest in this sector in order to use the product in the market and be profitable. That is
why we have developed a dairy cow and cattle fattening project and our desire to start working is
increasing and growing.
Our Dairy and Cattle Fattening Project work site is located in Menz Gera Midir District, 03
Kebele / Atedas Gedenbo at 574279 Longitude and 1140793 Latitude and is also located at 3152
meters above sea level. Our project site is located 2 kilometers from the Mehalmeda city
administration and is close to the district capital city, Mehalmeda. It is very convenient to
provide milk and milk products to the district and the city administration community in a way
that preserves the quality and freshness on a daily basis. To demonstrate improved practices to
farmers in the kebele where the project is implemented; to ensure that you get and use our best
experiences; It is a convenient workplace to help them improve their own/home livestock
operations and provide natural fertilizers/compost to improve their crop yields. The project site is
very convenient to supply the beef cattle in Mehalmeda and the central market and to meet the
meat needs of the users/customers and to be a part of the profit.
4
In general, the improvement of dairy farming and the breeding of cattle make important
contributions to the reduction of the food shortage/food security problem in our district, as well
as in our country and the improvement of the food nutrition content. The location is suitable for
dairy development and beef cattle. The fact that there is no extensive work done on the sector
and there is high user demand in all areas. Because of the community in the area where the
project is working has the desire/willingness for the project to be implemented and will benefit
from the work. Availability of manpower required for the work. The availability of resources
necessary for the work and the availability of alternative markets and roads to provide resources
that are not available in the area. The field of work in which the project is prepared is supported
by the government's policy and strategy and there is a positive desire for this type of project to
work on the part of the government, Being able to create employment opportunities for the
unemployed community in the project implementing area, As it facilitates the transfer of
improved practices and technologies to the local community. We find it important to prepare a
5
project in this field of work as it is a field of work that provides a better source of income and
makes it profitable.
1.2. Vision
Our vision is to create a competitive and profitable firm in the field of dairy farming and cattle
fatting, and filling the demand gap of consumers.
1.3. Mission.
6
1.3. Core Values
The core value of this firm are;-
Giving priority to the company's reputation and the customers who use the firm's
products
Use health and selected dairy and fatting cattle’s to ensure the healthy and security of
customers that choose our product and service.
Working together and collaboration with other competitors and partners. (Promoting a
culture of working, changing and growing together )
Ensuring accountability and transparency.
Timely payment of taxes and related fees expected from the firm (without delay or
concealment)
Giving respect and recognition to the company's employees to make you like and
satisfied with the organization.
Provide honestly quality, fresh, healthy and customer oriented product and service.
By adapting and integrating the knowledge of the local community with the scientific
method, we work by giving priority to the jobless sections of the society.
We do work that respects and accepts the culture and religion of the community.
We do our work in a manner that does not cause environmental pollution. (We work by
making sure that the surplus product from cattle is disposed of properly and used as soil
fertilizer).
Our work is free from any kind of political activities and by providing the product in the
market at a reasonable price; we satisfy the needs of the customers and get a reasonable
profit.
The work we do does not contradict any of our country's development policies, strategies
and laws and contributes to its success.
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1.5. Objectives
8
1.6. Ownership
This dairy development and cattle fattening project is a private profit-making project and the
owner of the project is Mr/Ms. Briye Kebede Tilahun. The project is established in Menz Gra
Mider District 03 (Atedas Gedenbo) Kebele.
STRENGTHS
9
Possessions of the latest cattle rearing machines, tools
and equipment that will help us breed our cattle (cows,
Latest technology in cattle rearing and oxen, bulls, bullocks, steers, heifers and calf) in
fattening commercial quantities with less stress.
10
Making work based on the comfortable working
environment, climate and improved animal species.
(Using improved breeds of cattle to improve
Favorable geographical location, climate production and productivity and increase profits,
and breed implementing AI).
Satisfying the needs of the customers and increasing
the profit by providing quality, competitive and
Consumers preference for beef milk and preferred products for the meat and dairy needs of the
beef customers in the market.
WEAKNESSES
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Working closely with government and non-
government organizations that are interested in the
work. Promote work in progress. Show the values that
providing to the user community and the pressure we
Limitations of supporting institutions reduced. Showing the contribution of the works to the
related to beef and cattle development of the national economy
Using Lending Financial Institutions as a source of
credit and obtaining sufficient working capital. Using
Lack of working capital cattle on hand for the job.
OPPORTUNITIES
Due to the increase in population in the country, the
demand for meat and milk is increasing. Therefore, it
is appropriate to produce and market a quality product
Potential demand for beef and milk over that is advocated, preferred by customers, and
the country. competitive.
12
By adding value to the sector and identifying
commercial establishments/companies that process
High potential for profitable slaughter milk and beef to the market, provide quality products
and processing business and increase profits.
Consumers express more interest and Producing products that are affordable and of good
are willing to pay for safe food quality for customers who are willing and able to pay.
Since the project is labor intensive and there is plenty
of manpower around. So, select, hiring and recruit
experienced, skill, committed and unemployed labor
Labor intensive and employment to maximize product of the firm and to create work
opportunities opportunity.
The government’s campaign on promoting indigenous
Government support farm output is an added advantage
Having institutions that lend loans to work will solve
the lack of working capital/financial problems (banks,
Expansion of credit institutions microfinance, Cooperative, etc.)
The proximity to market will play a key role in the
Easy access to market success of the business
Homes source for milk and its by-products and
Large demand for other cattle products industries also source for the raw materials from the
apart from beef livestock farms
THREATS
13
considering this problem design good market strategy
and copying mechanism to minimizing the risk.
High transportation cost (Illegal toll for Establishing partnerships with companies and
14
cattle marketing) individuals that provide freight services.
15
2. Organization/Project Institution Structure
• Institutional structure is the base of the project to develop successful system of the
management. Our project stricture is listed on the following chart.
Manager
secretary
vice manager
Adminstrative staff
Finance department
Production Department
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3. Project Preparation
3.1.1. Customer
When we look at the demand for beef and milk production in the country and in the project area,
it is increasing from time to time. It is widely demanded by consumers in the local and domestic
markets. Various studies show that the product is in demand in the market and there are many
customers who use the product. The main reason for this is the ever-increasing demand for food,
the increase in population and the fact that one of the options used by the society to meet the
demand for food is animals and animal products.
17
Other Developed Countries 77 0.6 0.9
This indicates that the population is increasing. As the population increases, so does the demand
for food, because there is a direct relationship between the increase in population and the
increase in food demand. Animals and animal products have a significant role to fill the food gap
of the growing population and to improve the food composition.
Likewise, according to the 2007 National Population and Housing Census, the population of
Menz Gera district was 102,000 At present, the population of Menz Gera midir district is
154,127 and the population of Mahmalmeda city is 23,676 (CSA July, 2021).
On the other hand, as various studies indicate, there is a large number of animals in the country,
but it does not follow improved practices; Because does not use improved animal species and
new technologies, does not receive adequate medical and vaccination services, does not receive
nutritious feed, does not receive high-quality shelter and water, and because the farming method
is mostly traditional and based on open grazing, it is not possible to provide a product that can
fulfill the needs of consumers in the local and national market. The productivity of the animals is
low and the quality is not competitive in the market. Therefore, there is a high demand for milk
and meat at local and national level. Different Data’s shown that consumers of the product are
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willing to buy quality and healthy beef and milk products.
The users of the product are mainly small cafeteria, restaurant, small tea houses, hotels,
hospitals, tea houses in various institutions, parents with children, factories, and the entire
society consumes milk, milk by-products and beef following religious and national
festivals/holidays. The estimate of total cow milk production for the rural sedentary areas of the
country in 2019/2020 was about 3.89 billion liters (CSA, 2020a). From this total milk, beef and
meat more than 50% was used to home/household consumption (CSA, 2020a).
19
Table 3 National livestock product utilization in 2019/2020
Milk Demand
Demand analysis is one and main factors to determine the product type, product amount, and to
estimate potential customer and potential market.
Demand is determined by different factors such as the customer's purchasing power/income, the
customer's choice and willingness, the price of the product, the quality of the product, the supply
of the product, marketability, product promotion strategy of the project, other competitors with
the same product, population size, etc. However, population size plays a major role in the
demand of the product. Therefore, to design a strategy for marketing of the milk and beef
product of the project for 10 consecutive years of the project and to estimate the number of
demand, it has been prepared as follows. According to the data, there is a demand gap of 47 %
up to 56%. There is an attempt made to project the additional milk requirement to supply the
growing consumer needs in Ethiopia for the coming 9-10 years. In the projection, the annual
growth rate of 2.57 percent of the human population was used in the calculation based on the
Worldometer (2022 G.C population, projection),(https://www.worldometers.info/). To estimate
the milk production, cow milk production growth rate of 4.1 percent calculated based on the
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figures reported by the CSA annual report for the years 2004 to 2010 was used. Milk available
for consumption is estimated based on the report of Felleke (2001) who indicated that 68 percent
of the total annual milk production was to be consumed. The value recommended by FAO
(1990), (62.5 kg/year/person) to be maintained for a balanced diet is considered as a target to be
achieved
21
Table 4 Projected demand for milk in Ethiopia
22
3.1.2. Competitors, (In Case Of Business Project)
Farmers, different public associations/cooperatives and enterprises organized in milk
development and fattening, consumer associations, and investors are the main competitors who
are offered in the market with the same product and are market sharers. Therefore, to be a market
competitor and to find customers who are interested in buying, conduct the work in a timely
manner; it is necessary to provide a quality, healthy, competitive product that is preferred by
customers at an affordable price.
Various materials and resources are required to carry out the project work. That is;-
• Supply of quality and yield-enhancing feed and water for dairy cows, heifers and calves;
• Materials used for the construction of animal shelters, food, product storage, staff offices, etc. Most of
them are located in the project area.
This project has two parts which are milk production and cattle fattening. The improved breed of
dairy heifers/cows/ and fatting cattle needed to start the project will be purchased from the
district where the project is located and neighboring districts (Lalo, Mama, Zamero and Geshe).
The project will start with 15 dairy heifers/cows of improved breed. When the project starts to
use its full potential, the number of heifers/cows of improved breed will reach 40 by purchasing
from suppliers and replacing the calves born. The project will carry out fattening work and offer
3 to 4 rounds of fattening animals to the market in a year, and in one round, 10 up to 14 cattle
will be fattened and marketed. In one year, it provides 40 beef cattle.
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Animal feed
Balanced, high-quality and sufficient fodder plays an important role in maintaining the health of
dairy cows and fattening cattle and improving their productivity. Crop residue/straw and hay is
available in sufficient quantity from the project district and bordering districts (Lalo, Mama,
Zamero, Jiru and Menz Gera). Therefore, barley, wheat straw, bean straw, teff straw and hay for
this purpose will be collected from the district where the project is implemented and bordering
districts according to the season/production period. Regarding additional dairy cow and dairy
cattle feed (fagulo, molasses, frushka and others), since they are not available near the project
site and are located in Adiss Ababa and Debre Berhan, it is necessary to prepare a time schedule
and manage it properly to avoid supply problems. The amount of feed given to one cattle per day
varies according to the animal's age level, service provided, weight, moisture and dryness
condition/quality of the feed, and on average, 4.5 kg/day for calves,8 kg for dairy cows and 8 kg
for fattening cattle. It will be prepared with consideration.
Water Resource
Water plays an irreplaceable role in maintaining animal health, increasing the production of dairy
cows and beef cattle, maintaining the workplace environment and product hygiene. The water
used for this project is located 100 meters away from the project site. Depending on the age level
of the animal, according to the service and weight, depending on the climate of the project area...
etc., the amount of water given to one animal per day varies. However, to meet the water needs
of milk and beef cattle, 20 liters per day for calves, 60 liters for dairy cows and 40 liters for
fattening cattle will be prepared. Likewise, to clean the stalls and milk storage rooms of dairy
cows and fattening cattle, it is necessary to prepare an average of 45 liters per cow/bull. Also, the
24
water required for the construction of the project is available at a distance of less than 100 meters
from the project site.
Building Material:-
Construction is the first phase of the project before other production activities begin. The quality
of the construction determines the amount, quality, demand, continuity, etc. of the production
works carried out in the project. In order for the project to be sustainable and profitable, it needs
to be of good quality, include the types of construction that must be completed, and be
comfortable and maintain quality. Therefore, the construction includes animal shelter and
feeding, Alley, fodder store room, milk room, and quarantine shed, isolated shed, staff office,
fence, etc. Construction materials such as land, stone, sand, gravel, soil and wood are available
around the project site. Factory products such as tins, nails, boards, shutters, etc. are easily
available in Malmeda, Debre Berhan and Addis Ababa. A professional who does the
construction work is easily available in the mehalmeda town. The problem of building materials
to do this work cannot be a hindrance to the project.
Utilities
Electricity, telephone and water have a significant contribution to continue the work of the
project according to the strategy and systems that designed by the project owner. Without
electricity, telephone and water, the project wills not performer its objective properly. Electricity,
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telephone and water are the main variables that contribute to maintaining the quality and
desirability of the project, either increasing or decreasing of its product and sale volume. The
area where the project is located has 24-hour electricity, telephone service and adequate water
supply, so it has positive contributions to the effectiveness of the project. In addition, it is
possible to use sunlight/solar as an alternative energy and reduce the cost of the project and
reduce the problem of power outages in the middle of the project and improve the productivity of
the project.
Infrastructure:-
Infrastructure plays a vital role in procuring and supplying the necessary raw materials and
delivering the project's output to the market where there is a demand for it. To reduce production
cost and to increase production for the project, to maintain product quality, to deliver the
produced product to a customer who is willing and able to pay, to protect and keep the health of
the dairy and beef cattle, to get close and consistent professional and other support, to reduce the
cost of the project and to increase the profit... etc. Infrastructure is important. As the project site
is close to infrastructure, there are favorable conditions for increasing production and
productivity. There is an alternative road (Atayu Asphalt Road from Malmeda, Addis Ababa
Gravel and Asphalt Road from Malmeda, Zamero Asphalt Road from Malmeda, Geshe Gravel
Road from Malmeda and a gravel road connecting 20 menz gera adiminstrativ Kebeles in the
district to Malmeda). Regarding other service-providing institutions, animal health post,
hospitals and other government institutions that do professional and administrative work are
located around the project site. This will make a positive contribution to achieve the vision,
mission and objective of the project.
Manpower/Labor Resource
In order to start the project, to produce quality products, to ensure that the dairy cows and dairy
cattle get adequate care and increase their productivity, there is a need for manpower who can be
employed in the project through permanent employment, temporary employment/temporary
workers. For this, there is sufficient supply of manpower in the area where the project is located.
The project will create job opportunities by employing 10 employees with diploma and above,
15 with 10th grade and above and 9 without education/unskilled. The project will meet the
26
manpower needs. It also hires 250 temporary/daily laborers per fiscal year who can perform
various labor tasks that can increase project output. In addition to benefiting from the available
manpower, the project will create permanent and temporary job opportunities for the
unemployed youth and farmers in the area to increase their income and improve their
livelihoods, thereby creating a favorable environment for them to fulfill their social and
economic responsibilities.
Land
Land has an important role to implement all the activities of the firm included in the project
activities. There is 2427 square meters of land available for this purpose. As the owner of the
land is the owner of the project, no additional cost is required. Therefore, the firm can build the
constructions required for the project in the time schedule, size and quality and run the project
without facing any land problems.
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market in one year, and 10 to 14 fattening cattle are offered to the market in one round.
3.3.1. Required Production Inputs, Materials and Manpower, and It’s Cost
The development of dairy resources and dairy cattle work is a work that requires different
expenses. Work efficiency, product quality, production volume and profitability have a direct
and indirect relationship with the project cost. The higher the quality and soundness of the inputs
purchased for the project, the higher the quality and quantity of the project's output. Therefore,
the various materials and resources required for this project as well as the cost amount are
detailed below.
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Table 5 Cost of Required Dairy cow and Fatting Cattle
Production Required dairy/milk cow/ Required cattle to fatting Total no of required dairy and fatting
year cattle
Quantity Unit Price Total Price in Quantity Unit Price Total Price Total Total Cost in ETB
in no in ETB ETB in no in ETB in ETB Quantity
in no
2015 15 50,000 750,000 15 25000 375,000 30 1,125,000
2016 20 50,000 250,000 40 25000 1,000,000 60 1,250,000
2017 30 50,000 500,000 40 25000 1,000,000 70 1,500,000
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Table 6 Required Feed and medication and its cost
30
12,000 189,147
10 2024 120 222 177,147
100,500 1,562,690
Total Cost 1,829 1,462,190
Utility Cost
Utility Type
Electricity Water
Unit Total
Production Qyt in Cost in Cost in Unit Cost in Total Cost in Total Utility
Sr.No Year KWH ETB ETB Qyt in M3 ETB ETB Cost in ETB Remark
Free Access
31
Free Access Free Access
6 2020 1000 1.2 1200 3,187 1200
Free Access Free Access
7 2021 1000 1.2 1200 3,304 1200
Free Access Free Access
8 2022 1100 1.2 1320 3,304 1320
Free Access Free Access
9 2023 1100 1.2 1320 3,304 1320
Free Access
10 2024 1100 1.2 1320 3,304 Free Access 1320
Total 6250 1.2 7500 27,571 7,500
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Table 8 Cost of Required Machinery and Equipment
Sr.No Item Description Qut in No Unit Cost in ETB Total Cost in ETB
Hand Tools (shovel, Spade, saw,
1 hammer, etc) 35 1,000 35,000
2 Watering Equipment 95 600 57,000
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28 Reservoir 1 350,000 350,000
Total 1,408,900 1,682,800
Constriction Cost
Construction is one of the activities of the firm that carry out the project work practically and
visibly on the ground. In order to actually start the project, various construction works need to be
done. They are animal shelter and feeding, alley, fodder store room, milk room, quarantine shed,
isolated shed, staff office, fence, etc. The land area set aside for the project is 2427 square
meters. Out of this, 774 square meters of land will be left for the constructions listed above. That
is, shelter and feeding for dairy cows and fattening cattle is 560 square meters, 21 square meters
to identify/isolate cattle with health problems, 24 square meters to quarantine newly purchased
cattle until their health conditions are checked, milk storage room 9 square meters, animal feed
storage room 50 square meters, staff office 50 square meters, storage room for various materials,
hand tools and machines 60 square meters, a total of 774 square meters. During the construction,
local and factory-made materials are used, and at the current market price, it costs 1600 Birr to
construct one square meter. Therefore, 1238400 Birr is needed to cover 774 square meters. The
remaining 1653 square meters of land will be fenced off and will be used as a site for various
activities of the project; it includes areas where dairy cows, fatting cattle and calves can move,
rest and breathe.
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7
6
5
4
3
2
1
Sr.
No
e
er
tion
Item
Kent
Table
Chiare
Printer
Stapler
comput
Punctur
Descrip
No No No No No No No Unit
3 1 1 5 3 - - Qut
- - - 5 3 - - Qut
- - - 10 4 - - Qut
Table 9 Required office equipment and its cost
5 - - 13 - 1 1 Qut
- 1 1 - - - - Qut
35
- 250 500 - - - - Price 2019
- - - - - - - Qut
Year
- - - - - - - Price 2020
Required office equipment and its cost
- - - - - - - Qut
- - - - - - - Price 2021
- - - - - - - Qut
- - - - - - - Price 2022
- - - - - - - Qut
- - - - - - - Price 2023
- - - - - - - Qut
- - - - - - - Price 2024
8 2 2 33 10 1 1 Qut
2,000 500 1,000 13,200 8,000 70,000 70,000 Price Total cost
3
2
1
Sr.
No
9
8
Position
Manager
Supervisor
Processing
ry
Labor Cost
Vice Manager
Total Cost
Shelf
Statione
Qyt in No 2015 No No
Monthly Salary in ETB
- -
Annual Salary in ETB
6,900 1,000 -
1 Qyt in No 2016
1 Qyt in No 2018 -
7500 Monthly Salary in ETB
7,450 1,000
90000 Annual Salary in ETB
- -
1 1 Qyt in No 2019
36
5500 7500 Monthly Salary in ETB 1,750 1,000 -
66000 90000 Annual Salary in ETB - -
1 1 Qyt in No 2020
1,000 1,000 -
Required Manpower cost
1 1 Qyt in No 2022 - -
5500 7500 Monthly Salary in ETB
1,000 1,000 -
66000 90000 Annual Salary in ETB
- -
1 1 Qyt in No 2023
15
14
13
12
11
10
Staff
Mixer
Driver
officer
officer
Expert
Secretary
Accountant
Procurement
Adminstrative
Animals Health
Unskilled Labor
Field Supervisor
Machine Operator/
Animal Production
1 1 1 1
2,000 3,500 4,000 3,500
1 1 1 2 1 1 1 1 1 1
2,500 4,000 2,000 4,000 4,000 3,500 4,000 4,000 4,000 3,500
30,000 48,000 24,000 48,000 48,000 42,000 48,000 48,000 48,000 42,000
1 1 1 2 1 1 1 1 1 1
2,500 4,000 2,000 4,000 4,000 3,500 4,000 4,000 4,000 3,500
30,000 48,000 24,000 48,000 48,000 42,000 48,000 48,000 48,000 42,000
7 1 1 1 4 1 1 1 1 1 1
10,500 2,500 4,000 2,000 8,000 4,000 3,500 4,000 4,000 4,000 3,500
126,000 30,000 48,000 24,000 32,000 48,000 42,000 48,000 48,000 48,000 42,000
7 1 1 1 1 6 1 1 1 1 1 1
37
10,500 2,500 3,000 4,000 2,000 12,000 4,000 3,500 4,000 4,000 4,000 3,500
126,000 30,000 36,000 48,000 24,000 72,000 48,000 42,000 48,000 48,000 48,000 42,000
7 1 1 1 1 10 1 1 1 1 1 1
10,500 2,500 3,000 4,000 2,000 20,000 4,000 3,500 4,000 4,000 4,000 3,500
126,000 30,000 36,000 48,000 24,000 240,000 48,000 42,000 48,000 48,000 48,000 42,000
7 1 1 1 1 10 1 1 1 1 1 1
10,500 2,500 3,000 4,000 2,000 20,000 4,000 3,500 4,000 4,000 4,000 3,500
126,000 30,000 36,000 48,000 24,000 240,000 48,000 42,000 48,000 48,000 48,000 42,000
7 1 1 1 1 10 1 1 1 1 1 1
10,500 2,500 3,000 4,000 2,000 20,000 4,000 3,500 4,000 4,000 4,000 3,500
126,000 30,000 36,000 48,000 24,000 240,000 48,000 42,000 48,000 48,000 48,000 42,000
7 1 1 1 1 10 1 1 1 1 1 1
10,500 2,500 3,000 4,000 2,000 20,000 4,000 3,500 4,000 4,000 4,000 3,500
126,000 30,000 36,000 48,000 24,000 240,000 48,000 42,000 48,000 48,000 48,000 42,000
7 1 1 1 1 10 1 1 1 1 1 1
10,500 2,500 3,000 4,000 2,000 20,000 4,000 3,500 4,000 4,000 4,000 3,500
126,000 30,000 36,000 48,000 24,000 240,000 48,000 42,000 48,000 48,000 48,000 42,000
882,000 270,000 216,000 432,000 240,000 1,400,000 432,000 420,000 480,000 432,000 432,000 420,000
16 Guards
456,000
24,000
48,000
48,000
48,000
48,000
48,000
48,000
48,000
48,000
48,000
2,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
1
2
17 Daily Laborer/year
450,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
45,000
18 Total
1,029,000
1,029,000
1,029,000
1,029,000
1,029,000
8,168,000
225,000
609,000
609,000
719,000
861,000
15,000
47,000
47,000
61,500
74,000
82,000
82,000
82,000
82,000
82,000
14
14
23
27
31
31
31
31
31
5
Other Costs
38
5
4
3
2
1
Sr.No
Total
Table 11 Other project cost
cost
interest
Item Description
ETB
ETB
ETB
ETB
ETB
ETB
39
Other project cost
total cost
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Sr.No Cost description Unit
148,450
2,750
2,000
2,000
2,000
2,000
2,000
6400
1 Office Equipment Cost ETB
1,074,000
1,074,000
1,074,000
1,074,000
1,074,000
654,000
764,000
906,000
654000
2 Manpower (labor) Cost ETB
1,140
1,200
1,200
1,320
1,320
1,320
4 Utility Cost ETB
105076.667
49,720.00
136,507
162,827
169,897
182,077
189,147
189,147
189,147
189,147
5 Feed and medication Cost ETB
40
8
7
6
Total Cost
cost
Other Cost
Construction (building) Cost
Dairy Cow and Fatting Cattle
ETB
ETB
ETB
ETB
41
3,853,154.18 1,527,878 1,250,000
As detailed above, it is stated that various costs are required to implement the project according
to the plan and to produce the products demanded by the market while maintaining their quality
and providing them to the consumers. Although various costs are required in all the production
years of the project to increase the production of the project and improve its profitability, the cost
of starting the project in the first year is the main, basic and the cost of starting the production of
the project. Therefore, Birr 4,393,995 is required to start the project, of which Birr 1,600,000
(30.4%) will be financed by the project owner, and the remaining Birr 3,663,123.05 (69.6%) will
be financed by loans from lending institutions. The start-up money of this project includes the
interest paid on the loan in the first year and the 15% VAT paid to the government from the
income from the products produced and sold in the first year.
In the table above 13 the amount of initial investment cost/budget required for the project launch
and the source of the budget are set. Fixed and variable inputs, materials, equipment, machinery
and others that are required to start the project are also listed in the following table.
42
Required initial investment Capital
Sr.No Item Description Unit Amount
Fixed Cost
1 Office Equipment Cost ETB 7900
2 Machinery and Equipment Cost ETB 1682800
3 Dairy Cow and Fatting Cattle cost ETB 1125000
4 Construction (building) Cost ETB 1238400
Sub Total 4054100
Variable Cost
5 Manpower(labor) Cost ETB 270000
6 Utility Cost ETB
7 Feed and medication Cost ETB 49720
8 Other Cost ETB 889303.0548
Sub Total 1209023.055
Total 5,263,123.05
43
o
Sr.N
Depreciation
Total
Cost
Cost
)Cost
Item Description
Office Equipment
Construction (building
Table 15 Depreciation
3
15
10
n in %
Depreciatio
44
202,608 33,908 155,017 13,683 4th Year
Depreciation
This dairy development and cattle fatting project is a project that established to make profit. It
works to earn income by marketing and selling dairy and beef cattle products that are of high
quality, consider customer needs and purchasing power, and are healthy. Among the products
and by-products it offers to the market are fattened beef cattle, born heifers/calves, milk, cows
that have finished their service period/reduced productivity/ and animal manure. The
considerations taken to calculate the income from the products that the project offers to the
market are listed below:
• Sale of fattened/beef cattle: - One fattened/beef bull was sold from Birr 60,000 to Birr 110,000
in mehalmeda. However, in order to provide the user with an affordable price and to be
competitive in the market, the fattened/beef cattle of this project will be offered for sale in the
market for 80,000 Birr.
• Born heifers/calves: - The results of the project include heifers/calves born. The selling price of
heifers and bulls in the market is also different. However, the heifers/bull born in this firm will
be offered for sale at an average price of 35,000 thousand Birr per heifer/bull to the market that
is suitable for the project and has the best demand.
• Due to the end of their service period, with regard to the cows offered to the market, by taking
proper care of them, maintaining their health and improving their weight, one cow will be
offered for sale for Birr 55,000.
• Animal manure: One of the project's contributions to the community is providing animal
manure at an affordable price. In the area where the project is located, there is a significant loss
of soil fertility and productivity, so providing the animal manure to the farmers will improve the
fertility of the land and increase its productivity.. Therefore, the price of one kilogram of animal
feed is 1.92 Birr in the mehalmeda market, and the project provides 0.75 Birr to the beneficiary
farmers. For farther information, the details are listed in the following table.
45
Year
2019
2018
2017
2016
2015
5 5 Qut in No
46
875,000 525,000 350,000 - - Total
Price
120,120 114,660 98,280 81,900 32,760 Qut in Kg
Sale Product type
Estimating of production sale
1 1 1 1 1 Unit Price
Price
40.00 5 10 10 5
375 40 40 40 40 40
255 75 40 30 30 30
47
8,925,000 2,625,000 1,400,000 1,050,000 1,050,000 1,050,000
8 1 1 1 1 1
400 40 40 40 40 40
Total
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
1 Beef Cattle Sale ET
30,000,000
1,200,000
3,200,000
3,200,000
3,200,000
3,200,000
3,200,000
3,200,000
3,200,000
3,200,000
3,200,000
B
2,200,000
275,000
275,000
275,000
550,000
550,000
275,000
of their
-
-
service/producti
on) period
3 Heifer/calves ET
1,050,000
1,050,000
1,050,000
1,400,000
2,625,000
525,000
875,000
Sale B
-
4 Milk sale ET
2,700,000
3,600,000
5,400,000
6,300,000
6,300,000
7,200,000
7,200,000
7,200,000
7,200,000
7,200,000
5 Animal Manure ET
24,570
61,425
73,710
85,995
90,090
94,185
98,280
98,280
98,280
98,280
Sale B
Gross Income ET
10,385,995
10,740,090
11,819,185
12,098,280
12,098,280
12,173,280
13,123,280
3,924,570
6,861,425
9,023,710
48
1
1.5
1.4
1.3
1.2
1.1
Sr.No
Milk sale
Beef Cattle Sale
Heifer/calves Sale
ETB
ETB
ETB
ETB
ETB
49
61,425 3,600,000 - - 3,200,000 2016
Income
2.6
2.5
2.4
2.3
2.2
2.1
Gross Income
Utility Cost
Manpower(labor) Cost
Office Equipment Cost
50
1,250,000 105,077 654,000 6,400 6,861,425
Net Profit
Other Cost
Total Expenditure/cost
Construction (building) Cost
ETB
ETB
ETB
ETB
51
3,635,763 3,225,662 1,210,185
14,000,000
12,000,000
10,000,000
Cost/expense
8,000,000
gross income
6,000,000
net incom/revenu
4,000,000
2,000,000
0
2015 2,016 2017 2,018 2019 2,020 2021 2022 2023 2024
-2,000,000
-4,000,000
52
As stated in the above table, the total cost of the project is 39,411,142 Birr. This project cost
includes 15% VAT, interest; fixed cost depreciation, transport cost, advertisement and promotion
cost and different legal fees. Looking at the net income of the project, it is 102,248,095 Birr. As
we can see in Table17 above, it shows that the income of the project is increasing year by year.
The net income of the project in 10 consecutive years is 62,836,953 Birr. As seen in the table
above 17 the total investment cost for the project will be returned by the firm's production in less
than 5 years. The total fixed and variable cost of the company during the 10-year project period
is 39,411,142 Birr, and the project's income from sales until the 5th year is 40935790 Birr. This
shows that the firm has covered its expenses and has a profit of 1324648 Birr only in five
production year. In general, it means that the company will cover the total cost of the investment
in less than 50% of the 10 working years of the project and the sales obtained in the remaining
five years will be the income of the project. Thus, it shows us that the project is an effective
project.
4.1. NPV
Since the Payback Period does not show the time value of money, it is a better choice to see the
effectiveness of the project using the Net Present Value. Therefore, the profitability of this
project is checked by Net Present Value as follows.
Table 19 NPV
Inputs
Discount Rate(%): 7
53
5 7172871 5114156.6 0.712986
6 7732476 5152473.52 0.666342
7 8216597 5116885.78 0.62275
8 8216477 4782063.56 0.582009
9 8279594 4503552.68 0.543934
10 9093781 4622814.48 0.508349
Result
Net Present Value (NPV) is 35259631.84 as shown in the table above. This indicates that the Net
Present Value (NPV) is greater than zero. This means that if the firm implements this project and
works, it will be profitable.
Table 20 IRR
Inputs
Initial Invest Amount: 5263123 ETB
Number of years: 10
54
3 5295006
4 6532841
5 7172871
6 7732476
7 8216597
8 8216477
9 8279694
10 9093781
Result
As indicated in the table above 19 Internal Rate of Return (IRR) is 56.261%. This means that it is
effective if the firm continues the project until the capital cost (discount rate) rises from 7% to
56.261%.
In general, as confirmed by all three methods (Payback period, NPV & IRR), it means that the
company will be effective if it continues this project.
55
Sr.No Impact Description Suitable Measures to be Taken
1 greenhouse gas Avoiding the use of animal feed which is a cause of
(GHG) emissions deforestation
Increase in the concentrates-to-forage ratio.
support a transition away from cattle -- which accounts
for 41% of livestock-related GHG emissions but only 5%
of calories -- towards other animals
/Increase of available space per Livestock Unit (LU)/
Planting/cultivating trees in the project area
OVERGRAZING Avoid free grazing dairy farming and fattening.
Ensuring that they have enough fodder and water in their
barn.
Soil erosion and Make sure they have enough feed and water in their barn,
Degradation By preventing them from walking outside the project area
in search of fodder and water, the soil erosion caused by
their Nail/ Shekona
Pollution Pollution occurs due to the problem of cattle dung/Manure
management, cattle feeding, lodging, product storage ------
etc. due to lack of hygiene.
Therefore, preparing a good and sufficient well and
storing cattle dung/Manure in a way that does not pollute
the environment and making a promise to use it for land
improvement. Keeping house and environment clean.
Establishment and use of waste incinerators and burial
pits.
56
Product hygiene and The milk and beef products produced by the firm must be
disease clean and of good quality to ensure the health of the user.
Maintaining the health of the animals, ensuring that they
receive timely examinations and vaccinations.
If there are animals with health problems, it is necessary
to isolate them and not to market their products.
The workers who do the work must be clean and healthy
to prevent product contamination.
Transmission of Buying healthy and selected animals at the time of
disease from purchase,
animals to animals not mixing them with the animals in the house (keeping
them in quarantine), Vaccinating/sickening them.
Identify if there are any diseases in the production
process; do not mix with healthy animals, do not market
and do not sell to other breeders without professional
confirmation that they have been treated and taken care of.
57
Status of key policy issues relevant for dairy and fatting investment
Issues position
Policy and strategy issues
a) Agricultural Policy - n place
b) Livestock Development Policy Draft
c) Livestock Research Policy In place (Amh)
d) Dairy development Policy Draft
e) Livestock Master plan In-preparation
f) Dairy Dev. Master Plan n-preparation
g) Ruminant Livestock Dev. Strategy Draft
h) Cattle Milk Research Strategy In place
i) Animal Health Research Strategy In place
j) Animal Feeds & Nutrition Strategy In place
Dairy and related acts
a) Dairy Regulation Draft
b) Dairy Industry act In place
c) Public Health act In place
d) Cooperative Statute In place
e) Regulations enforcement Draft
f) Standard enforcement In place
g) Veterinary surgeons act Draft
l) Animal Diseases act In place
Therefore, the implementation of this project is supported by government policy and law and is
58
not against the law.
6. Social Contribution
The project will make various environmental and social contributions in the area where it works,
including:
It creates temporary and permanent job opportunities for the unemployed sections of the
community living in the area. (The quantity depends on the detailed manpower
requirement of the project).
As there is a shortage of dairy and fatting cattle with improved breeds in the area,
heifers/calves will be made available to the local community at affordable prices. The
local community will benefit from improved breed of dairy heifers and bulls.
During the winter season, the organization hires workers to plant/take care of 500 to 1000
seedlings.
The community will share experiences on improved dairy farming and cattle fattening
operations. The community will learn and implement how to work in a way that is free
from open grazing. This helps prevent environmental degradation.
It will contribute to reduce the social pressure caused by lack of milk and beef
production.
The local community gets cattle dung/Manure at a low price to improve their farm
land.
2. Discount rate 7 %
3. The loan repayment period will be completed in five years and will be paid once a year.
4. 15% VAT
5. There is a possibility that water will be available for free, so no cost has been allocated.
59