PROJECT PROPOSAL

ON
CATTLE FATTENING AND MEAT
PROCESSING

TO BE IMPLEMENTED:
IN OROMIA REGIONAL, STATE EAST
WELEGA ZONE GUTO GIDA WEREDA

PROJECT PROMOTER: CHALTU GOBENA

JANUARY, 2017
ADDIS ABABA/ETHIOPIA
Contents
1. EXECUTIVE SUMMARY.............................................................................................3
2. INTRODUCTION...........................................................................................................4
3. BACKGROUND.............................................................................................................6
4. PROJECT DESCRIPTION.............................................................................................7
4.1 Objectives of the project............................................................................................7
4.2 Basic features of project area.....................................................................................8
4.3. Physical Setting........................................................................................................9
4.3. 1. Relief, Drainage and Climate...........................................................................9
4.3.2. Soil, Vegetation and Wildlife........................................................................9
4.3.3. Socio Economic Activities of the Population..................................................10
4.5. Infrastructural Development...................................................................................12
5. THE MARKET DEMAND POTENTIAL....................................................................13
6. ORGANIZATIONAL STRUCTURE...........................................................................15
7. FUTURE DEVELOPMENT& EXIT STRATEGIES...................................................18
8. FINANCIAL REQUIREMENT....................................................................................18
8.1 FIXED INVESTMENT...........................................................................................19
8.1.1. Building & construction..................................................................................19
8.1.2. Machineries and Equipments...........................................................................19
8.1.3. Vehicles...........................................................................................................20
8.1.4. Office equipments............................................................................................20
8.2. Expenses/Working capital......................................................................................21
8.2.1 Direct production cost.......................................................................................21
8.2.2 Indirect production cost....................................................................................22
8.3. Summary of financial requirement and its source..................................................24
9. PRODUCTION AND THE SALES PLAN FOR CATTLE FATTENING AND MEAT
PROCESSING...................................................................................................................25
9.1 production capacity and revenue projection of fattened cattle................................26
9.2 production capacity and revenue projection of meat processing.............................26
9.3 Total sell plan..........................................................................................................26
10. INCOME LOSS STATEMENT.................................................................................26
Project income...............................................................................................................26
Income statement...........................................................................................................26
10.1. Forecast of profit/or loss (Birr).............................................................................27
10.2. Cash Flow Analysis..............................................................................................27
Cash flow statement.......................................................................................................28
10.3. Financial viability.............................................................................................28
11. ENVIRONMENTAL AND SOCIAL IMPACTS OF THE PROJECT......................29
12. PROJECT IMPLEMENTATION ACTION PLAN....................................................30
13. SUMMARY.................................................................................................................30

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1. EXECUTIVE SUMMARY
1.Project Name Cattle Fattening and Meat Processing
2.Project Owner Ms.Chaltu Gobena
3.Nationality Ethiopian
4.Project location In Oromia, Weast Welega Zone, Guto Gida district
5.Project Cattle Fattening and Meat Processing
Composition
6.Primeses 40,000m2
7. Startup Capital For implementing this project a total of 20,000,000.00birr
is required. From this total investment capital 30 %
( 6,000,000.00) will be covered by the owner of the project
while the remaining 70 % (14,000,000.00) will be covered
by the financial institutions.

8.Eployement This project deemed to employ a total of 507 individuals on

Opportunity a permanent 276 (200 skilled, 76 unskilled) and on a
temporary 231 (100 skilled, 131 unskilled) basis and as
contractual laborers
9. For The region/ Source of foreign currency and source of employments
country

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2. INTRODUCTION
Ethiopia is among the largest producers of many agricultural products and has a
Potential of cattle and meat for domestic and foreign market. Recent years have
seen impressive growth of the Ethiopia export sectors in terms of economy,
technology advancement development and application. Ethiopia is a country of
continental size with a population of over 85 million Out of which 15% live in
urban areas.

Agriculture dominates the Ethiopian economy account for about 50% of GDP
85% of the employment and about 90% of the export earnings. Despite this
agriculture has remained under development because of different reasons,
drought, poor economic base law productivity, poor technology transfer and the
like. The government has embarked on an export diversification program to
reduce its dependence on coffee and its focusing on export oriented horticultural
products oil crops haricot bean and agro industry like cattle fattening & meat
processing and others.

Ethiopia is one of the East African countries with the diversified climatic
conditions, natural scenery and resource bases. Currently the country has a total
population of about 85 million of which more than 30 million is found in Oromia
regional state. Oromia is one of the regional states of Ethiopia with very fertile
land, very conducive weather condition both for crop production and animal
husbandry.

The government of the country has been excreting its maximum effort to expand
investment opportunities in the country by designing different policies and
strategies that will facilitate investment through attracting both domestic and
foreign investors. Likewise, the Oromia regional state government has been
working day and night to make poverty history by making its door open to
investors both (domestic country and foreign) to come and invest in the region.

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Therefore, it is this ample opportunity that attracts Ms. Chaltu Adunga to come in
a business of investment in cattle fattening and Meet Processing. The
promoters have a long term business experience in different business activities
in the area.
Hence being one of the Integrated Agricultural Development centers, the center
is planned to provide:-packed meets and life animals in areas around Addis
Ababa, Adama , special Zone of Oromia and middile east countries .

The present economic policy of our country is highly inviting the private sector to
respond to the government invitation, there by contributing their share to the
development process. In line with this, the envisaged project is identified by the
promoter. The project is identified because the highly growing population of the
country is in need of life cattle and packed meet.

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3. BACKGROUND
Project of cattle fattening and meat processing is going to establish at Oromia
region, East Welega Administrative zone, of Guto Gida district. The site of the
project is the zone which will have plan and is accessible throughout the year. A
plot of land covering an area of 40,000m2 will be secured from the relevant
Oromia special administrative zone of East Welega or the investment Board of
Oromia Regional state.

The total planned investment cost of the project amounts to birr 20,000,000.00 of
which 70% or 14,000,000.00 birr One of the banks in Ethiopia is expected to inject
birr and while the balance of birr 30% or 6,000.000.00 is planned to be contributed
by the promoter of the project.

The market study reveals that is a demand of meat in the country as a whole.
The supply of life cattle and meat in the region couldn’t have satisfied the market
demand since the later significantly exceeds the supply.

The producing capacity of the proposed project is calculated taking an average

output that will be produced per each working hour.

With regard to capacity utilization, the project is expected to utilize 70% of its
capacity in the first year, 85% in the second year, and 100% in the third year and
in each of the remaining project years.

The project will be managed by a professional general manager and hence is

expected to face no managerial problem. Besides employing a professional
general manager, the promoter of the project will also supervise the day to day
activities of the plant using his work experience and skill in the field.

The projected profit and/ or loss statement shows that the project is profitable
throughout its life.
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Finally, the project is recommended to be under taken because of the following
social and economic benefits such as:-
 The project will create new employment opportunities
 The project will contribute to the government’s treasury through taxation.
 It will contribute towards satisfying the demand of the products.
 It will increase the benefit the surrounding people could earn from the
project.
 It will generate income for the promoters.
 It will reduce demand & supply gap of meat.

4. PROJECT DESCRIPTION
The project is designed to establish Cattle fattening and meat processing project
in East Welega of Guto Gida district. Observing the good market condition, the
promoters of this project has decided to invest on the project within the following
objective.

4.1 Objectives of the project

Since the project promoters have a great interest in the field, the envisaged
project is deemed to have the following objectives:
 To undertake the cattle fattening and meat processing through scientific
methods and modern technology.
 To serve as the source of government foreign exchange revenue through
exporting, life animals and packed meat to the foreign market. Because
the project is assumed to export 50% of the total products to the foreign
market, while the rest 50% to be consumed in the domestic market.
 To introduce modern technology that related to cattle fattening and meat
processing in the country so that it contributes to the agricultural
development led industrialization strategy policy of the country.
 To serve as a role model for other investors and farmers that wants to
invest in similar business undertakings.
 To contribute to the governments objectives of reducing the problem of
un-employment through creating wide employment opportunities to the
citizens.
 To bridge the demand gap for in the area of engagement.
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4.2 Basic features of project area
a. Location:
Guto Gida district is located in the northern part of East Welega zone. It is
bordered with Anger district in the north; by Neqmte district in the weast; by
Anger district in East; and Neqmte district in south.

Because of geographical location (i.e. near to the primate city Neqmte and three
roads that leading to south and east part of the country & coming to Neqmte do
radiate through) the district has a great advantage for accessing the local
products to the market and creates ideal condition for provision of the demanded
commodities to the local communities. Currently Mojo town has areas devoted to
industrial zone and considered as industrial town. On the contrary, it has been
suffering from environmental pollution due to down stream effect of Finfinne city
wastage.

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4.3. Physical Setting
4.3. 1. Relief, Drainage and Climate
The present land configuration of the Guto Gida district is the result of past
tectonic and denudation activities .The relief feature of the district is dominated
by flat land that broken by hills, undulating and rolling plateaus.
There are two major landform categories: the southern part that constitutes 70%
parts of the district relief elevation ranges between 1500-2000 m.a.s.l. is mainly
flat plains.; while the northern part that lies between 2000 and 2500 meters
(30%) is dominated by hills & undulating topography. There are also smaller hills
that scattered over district.

Drainage: The total area of Guto Gida district is fallen in Abay River basin.
There are also intermittent streams includes Angar gute river.
The district also shares Anger river found between Guto gida and Anger districts.
The Anger river regulates the flow of the Abay River for irrigational schemes
taking place in its middle and lower courses. It is also has high potential fish
production.

Climate: Most part of the district (about 90% of its surface area) belongs to sub-
tropical (Gamojii) agro-climate. The mean annual temperature over sub-tropical
agro-climate ranges 18-200c. Cool temperate part of the district is restricted to the
northern extreme.

The rainfall is weakly bi-modal with spring a small rainy season during the
months of April and May while summer along rainy season during the months of
July, August and September. The vast area of the district annual rainfall varies
between 500 and 900 mm.

4.3.2. Soil, Vegetation and Wildlife

Soils: The major soil categories of Guto gida are Vertisols 305.02 km 2 or 48.85%
and Rendzinas and Phaeozems 250 km2 or 36.77%, with limited area of
cambisols and Luvisols 125.01 km2 or 11.35 % of the land area of Guto Gida.
Page of 31 9
Vertisols are dark in color and are clay dominated. They expand and contract
with change in moisture content forming wide and vertical cracking when dry. All
these are limiting factors in its agricultural potential. With addition of Urea,
farmers utilize these soils for teff, wheat and pulses. Such soils are not suitable
for root crops. Rendzinas and Phaeozems better media for plant growth. In the
rift floor such soils usually develop from volcanic ashes and have limited depth
and are poorly drained and poorly workable. Thus, they have limited agricultural
value.
Cambisols and Luvisols too belong to a single soil category. Cambisols in places,
due to lack of cementation, have no or weak structure(aggregates) which
reduces their level of productivity. Most Luvisols have problems related to root
distribution which in turn reduces their agricultural usefulness. Compared to other
tropical soils these are still good agricultural soils except those situated on steep
slopes.

Vegetation Covers: The largest proportion (79.4%)of district area is devoted to

cultivation land. The natural vegetation is highly distributed through human
intervention. With the exception of pocket areas currently, there are no land
occupied by forest in the district. The only existing vegetation covers of Lume
does grassland, which account for 11.2 % of the district area . The southern part
of the district land is occupied by water body (8.2%)and 1.2% is belongs to
swampy land.
Wild Life: There is no reserved area for wildlife conservation; as a result only
limited wild animals like hyena, monkey, warthog, rabbit and fox are abundantly
existed.

4.3.3. Socio Economic Activities of the Population

Population: Population dynamics of a given settlement area is the result of

fertility, mortality and migration. Those demographic processes are complex
phenomenon affected by social, cultural, economic, political and psychological
factors.

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Currently, Guto Gida district has a total population of 130969. About 67353
(51.4%)and 63616 (48.6 %) of the district population are, respectively, males and
females. In terms of age distribution 44 % belongs to the age under15 and 4.6 %
above age 64. The remaining 51.4 % of population belongs to age15-64. This
fact implies that the population of Guto Gida district belongs to young that is
characterized by high fertility. In terms of spatial distribution 36.9 % has been
living in the urban centers (Neqmte, & uke towns) while the remaining 63.1 % are
living in rural areas.
It has a crude population density of 179 persons / km2, while the agricultural
density of the district is 142 persons/ km2. Total average family size for the
district is 5 with 4.9 and 5 for urban and rural areas respectively.
Agriculture
Agriculture is the main stay the district of the population and hence it provides
almost the largest shares livelihood of the population. However, it is
characterized by lack of access to modern technology, market, low productivity,
dependency on rainfall and lack of irrigation practice, etc. As a result the sector is
remained subsistence in its nature

Despite of this fact the district is potential rich particularly for farming practice. Its
agro-climatic condition (dominates by as sub-tropical) does suitable for
production of cereals.

Peasant Associations: peasant association is the lowest level of rural

government structure. In 1996 E.C. there are 35 peasant associations that have
11483 farmers. In 1995 E. C. only 12 farmers services cooperative where
embraced in 35 peasant associations. The total number of member’s farmers’
services cooperatives was 10115 at which 9530 members were males and 585
members were females.

Those 12 cooperatives have a total of 2134912 Birr at which 512198 Birr were
fixed capitals and 1622714 Birr were operational capitals. They had been

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rendering inputs, grain to market, tractor, and grain mill, credit and storage
services’ to their members and local farmer

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Crop production
Guto Gida district is one of the most known agriculturally rich districts of zone. It is
better known in farming activities. Climatic condition (sub-tropical in its nature) as well
as its soils formation (Vertisols) does suitable for production cereals (teff, sorghum,
maize) and, pulses (lentils, horse beans, chick peas, vetch and haricot Beans and field
peas). It is one of the leading producers of teff, field peas and chickpeas.

4.5. Infrastructural Development

The East Welega Zone of Oromia has relatively developed social and economic
infrastructures. Facilities such as transportation network, all weather roads, hydro
electric power, pipe water and telecommunication services are available. Health and
bank and other social services are also sufficiently available in the Zone. Above all the
availability of well developed transportation network is an important factor as it
determines the project’s proximity to the market for both out puts and inputs.

13
4.6. Land Layout action
The project requires about 40,000 m2 of land and it is allocated as follows.
Type Beef animal farm Unit area Total area
building required per required for 50
animal steer
1 Living yard 2.5 m2/head 9000m2
2 Watering trough 0.5 m2/10 heads 200 m3
3 Feeding trough 0.7 m3/head 280 m3
4 Assembly yard 2 m2/head 8000m2(includes
cute and dipping
5 Store 14*7 m2 392 m2
6 Office 4*6 m 96
7 Guard house 3*3 m 9
8 Waste disposal 10*5 m 200 m2
9 Outdoor recreation and 12 m2/head 4800m2
exercise
10 Green feed production 6660m2
Sum 29,637
Small ruminant shade
1 Living yard 1 m2/head 2000m2
2 Watering trough 0.2 m3/10 heads 80 m2
3 Feeding trough 0.252 m3/head 80 m2
4 Assembly yard 1 m2/head 1600m2(includes
cute and dipping
5 Waste disposal 10*6 m 240 m
6 Outdoor recreation and 4 m2/head 2000m2
exercise
7 Green feed production 5376 m2
Sum 11,376
Total land required 40,000m2

5. THE MARKET DEMAND POTENTIAL

The demand for food item in Ethiopia is highly increasing therefore, the target
customers of this envisaged integrated project center include:
 The residents of the city of Addis Ababa and region.
 The different super markets in the country
 The government workers club
 Hotels and supermarkets
 Small shops
 Other retailers and wholesalers
 Foreign market/ Middle East and Asian countries

14
 DEMAND-SUPPLY GAP FORECAST FOR CATTLE FOR BEEF
Year Unit Projected Peri-Urban Projected Supply
Demand Supply Gap
2009 Heads 144,539 2,251 142,288
2010 >> 147,749 2,300 145,449
2011 >> 150,999 2,351 148,648
2012 >> 154,321 2,403 151,918
2013 >> 157,716 2,456 155,260
2014 >> 160,870 2,510 158,360
2015 >> 164,409 2,565 161,804
2016 >> 168,026 2,621 165,405
2017 >> 171,723 2,679 169,044
2018 >> 175,501 2,739 172,762

In Addis Ababa and surrounding towns, there are more than 8,000,000 residents, more
than 9000 restaurants and bars, about 1000 supermarkets, more than 12,000 small
shops, and more than 5000 hotels that demand the products of this integrated project.
The demand varies based on season; for example, more than 50% of the total
population of Ethiopia is followers of Christian Orthodox religion and thus the demand is
very low for about 2 consecutive months. The daily, monthly and yearly estimated
demand potential is summarized in the following tables.
Demand for Life animal and other products
Daily Monthly Annual
NO DESCRIPTION Consumption consumption Consumption
1 life animals 2,000 60,000.00 720,000.00
2 other products 10,000 300,000.00 3,600,000.00
Total 12,000 360,000.00 4,320,000.00

Hence to reach customers at different market places, vehicles will be used. Among the
different marketing strategies and tools for promotion and controlling the market the
cattle fattening and meat processing projects will use:

15
  Both printed and non printed forms of advertising,
 Seasonal discount pricing
 Different marketing segmentation strategies and tactics.
 Effective and customer centric marketing strategies, that is the marketing
strategies that focuses on different groups pf customers based on different
segmentation tools; for example, Age , Sex, income level, and the like.
 Electronic advertising through internet, faxes and other technologies.
Competition
There are different forms of competition that may face the integrated project such as
price and non price based competitions. Moreover, there are different competitors that
will compete with the project under discussion either directly or indirectly. But the project
under discussion has diversified marketing strategies that could enable it cope up with
the different competitors in the market. Moreover the cattle fattening and Meat
Processing Project will frequently conduct competitors research which focuses on, the
strength and the weaknesses, the different competitor’s strategies, the techniques they
use in rendering services, their customer handling methods, and others.

6. ORGANIZATIONAL STRUCTURE
The organizational structure of the project is designed by including all the necessary
personnel under the right division. At the top of the organizational structure, there will be
a general manager with the responsibility of supervising the 0ver all activity of the plant.
Depending upon the nature of the center and the amount of work to be performed; there
will be auxiliary units under the general manager. Employees under each unit will be
supervised by the unit head that is accountable to the general manager.

16
 CEO

Advisor Internal Auditing &

Inspection
General Manager

Production
Department Marketing Department
General Administration Department

As clearly shown in the organizational structure, the integrated project center has CEO
three Departments under the general manager, Advisor and the internal Auditing and
Inspection.
These departments are the Production Department, The Marketing Department, and
The General Service Department. Under each Department there are different sections
which are undertaking different activities.
Hence the following section deals with the duties and responsibilities of each division.
The General Manager’s Duties and Responsibilities
He will plan, organize, direct and control the overall activities of the integrated project
He will devise policies and strategies that will enable the project to be profitable.
He will incorporate modern technological innovation that will facilitate the service
delivery of the project center and increase customer’s satisfaction.
He will plan, organize, direct and control the human and non-human resources of the
project so as to achieve the short and long run objectives of the organization.

17
General Administration and Finance Department Is responsible for undertaking
the following activities
 It plan, organize direct and control the financial transaction of the project by using
the entire necessary document.
 It develops sound financial control system by developing modern financial control
systems.
It prepares the annual financial statements and prepares condensed reports for both the
General Manager and other concerned government body.
It will control the human and non human resources of the cattle & Meat processing
center, which include: effective handling of the different inventories of the cattle
fattening & Meat Processing center, and devise strategies of controlling against fraud
and damage.
The Marketing Department
Handle the overall marketing activities of the organization which include planning,
organizing, directing, and controlling.
Develop the marketing strategies for future project center’s development. Conduct both
foreign and domestic market research for expanding the sales of the company and will
develop effective customer handling strategies
The production Department
It is the core department of the project center and it encompasses sections like: Cutting
(slaughtering), Cleaning, processing Packing, Quality Control and Inspection. Thus it
undertakes the following activities:
 Produce life cattle in sufficient quantity so that the production process is
facilitated.
 Produce products in different grams so that customers have diversified choices.
 Use modern production and processing technologies that will boost production
and productivities.
 Produce quality product that will enable the center to be competent both in the
domestic and international markets.
 Control on the quality of raw materials, quality of the product and also the overall
production process.

18
  Produce products in least cost so that the profitability of the center is guarantied.
 Since producing good quality is based on using good input, the department will
use strategies and polices that will link the different sub sections i.e. the cutting,
cleaning, processing, packing, quality control and inspection. Moreover control
over the quality of meat production process.

7. FUTURE DEVELOPMENT& EXIT STRATEGIES

Every business undertakings be it large or small should have to have future
development plan. It is a plain fact that business activities are running in a dynamic and
turbulent environment. Hence, to overcome or minimize the risks of uncertain future
businesses should devise effective strategies that enable them to be successful in their
operation. Likewise cattle fattening and meat processing center has devised strategies
to overcome the future risk of operation. The first strategy is diversification of its
activities to different other business forms. The second future development plan of the
project is expanding its branches in many other parts of the region. The third strategy of
the center is making a joint venture with other similar business undertakings either in
the domestic country or from abroad. The final strategy of the center is selling to other
organization or individuals.

8. FINANCIAL REQUIREMENT
Finance is an important factor for undertaking any activities. Hence for implementing
this project a total of 20,000,000.00 Eth birr is required. From this 70% will be
covered by the financial institutions and while the rest 30% will be covered by promoter

19
8.1 FIXED INVESTMENT
8.1.1. Building & construction
No Description Area in Unit cost Total cost
m2
2 Cattle shade 5,600 100 560,000
4 Store for feeds 1,000 350 350,000
5 Cattle feeding area. 1,120 100 112,000
6 Biogas production center 400 500 200,000
7 Employees Residence 128 500 640,000
8 Offices 288 1000 288,000
9 Meat processing section 14,000 110 1,540,000
10 Parking , fence and 7,384 200 1,476,800
green areas
Total 40,000 5,013,300.00

8.1.2. Machineries and Equipments

No Description Unit Qty Unit Total cost
cost
1 Animal feeding equip No 2000 2500 5,000,000.00

2 Water pan “ 600 2100 1,260,000.00

3 Water tanker “ 10 15000 150,000.00
4 Meat processing section " 1,300,000.00
equipments
Total 7,710,000.00

20
8.1.3. Vehicles
No Description Qty Unit Price Total Price
1 Cooler Van 1 600,000.00 600,000.00
2 Service vehicle 1 250,000.00 250,000.00
3 4wD 1 450,000.00 450,000.00
4 Fork Lift 1 1,000,000.00 1,000,000.00
Total 2,400,000.00

8.1.4. Office equipments

No Description Qty Unit cost Total cost
1 Managerial Tables 15 3,000 45,000

2 Managerial chairs 10 1,500 15,000

3 Computer Tables 6 700 4,200
4 Secretarial chairs 4 700 2,800
5 Computer with its 10 10,000 100,000
accessories
6 Shelf 10 4500 45,000
7 Filing Cabinets 10 2,500 25,000
8 Guest chairs 40 500 20,000
Total 257,000

21
8.2. Expenses/Working capital
8.2.1 Direct production cost
 Cost Purchasing cattle

Qty
Year Description purchased unit cost Total Cost
1 Cattle 200 6,000 1,200,000
2 Cattle 200 6,500 1,300,000
10-Mar Cattle 600 7,900 1,000,000
Total 2000 3,544,000

Year Description Qt cost/day Total Remark

Per head Price
1 Cattle 60 72,000 600cattle/phase
1200
2 Cattle 70 84,000 800cattle/phase
1200
10- Cattle 65 104,000 600cattle/phase
Mar 1600
Total 4000 260,000

 Cost of fodder
Since the production of cattle fattening is divided in to three phases the estimated
consumption 90 days and it rounded to a year.
Year Description No Qty/Annum Unit Total Cost
cost
1 Cattle 1200 1 50 60,000
2 Cattle 1200 1 50 60,000
10- Cattle 1600 1 50 80,000
Mar
4000 200,000

 Medication (estimated in year)

Year Description No Qty/Annum Unit Total Cost
cost
1 Cattle 1200 1 50 60,000
2 Cattle 1200 1 50 60,000
10- Cattle 1600 1 50 80,000
Mar
4000 200,000

22
8.2.2 Indirect production cost
 Salary expense
No Position qualification No Monthly Annual
Requir salary Salary
ed
1 General manager Bsc in anim.sce. 1 7000 7,000
2 veterinary and animal B.sc in Vet. 2 6500 13,000
health Medicine
3 Purchaser Dip. In mgt 3 3000 90,000
4 Food technologist Bsc. In food Tech. 3 5000 180,000
5 Machine operators Dip. In M/c tech. 10 3000 30,000
6 Machine Technician Dip in GM. 5 3500 210,000
7 Workshop Workers 10+2 in M/C tech 20 1000 280,000
8 Electricians 10+3 in Elec. Tech 5 1650 99,000
9 Quality Control workers Bsc. in applied 3 4000 144,000
chem
10 Sanitary and Bsc in 1 4000 48,000
Environmentalist Environmental
scince
11 Marketing Head BA in Mmgt. 1 5000 60,000
12 Sales workers Grade 8th 3 300 108,000
13 cleaners Grade 4th 10 500 60,000
14 Meat processing workers Grade 8th 100 450 220,000
15 Guard Grade 5th 4 800 38,400
16 Administration &Finance BA in Acc. 1 4500 54,000
Head
17 Feeders Grade 6th 45 500 13,000
18 Accountants BA in accounting 5 2000 120,000
19 Cashers Dip in acc. 1 800 9,600
20 Drivers 3rd level lic. 4 1200 57,600
21 Daily laborers 30birr/day Unskilled 25 600 15,000
for 30
Total 507 631,600

 Pre -service expense

Description Cost
Project proposal & Environmental Impact Assessment 45,000
Licensing fee 15000
Other fee 4,700
Total 64,700

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  Other operating expenses
No List of Items Qty Unit of Unit Total cost
Measure cost Per annum
1 Computer paper 10 Pack 100 1000.00
2 Staples 20 “ 7 140.00
3 Pens, pencils, and 10 pack 70 700.00
others
4 detergents 100 pcs 30 3000.00
5 uniforms 80 pcs 200 16000.00
6 Water - - - 10,530.00
7 Electricity - - - 8,000.00
8 Transportation cost - - - 100,000.00
9 Telephone - - - 6,000.00
10 Repair expense - - - 150,000.00
11 Cash register 1 - - 10,000.00
11 Copy machine. 1 - - 26,000.00
Total 331,370.00

 Fuel, oil and lubricant costs

Consumer Ann. Working Fuel Total Fuel Total cost
hrs. or mileage consumption fuel price
Lt/hr Lt/km per lit
Pick up (1) (20,000)kms - 0.125 1,500 20 30,000.00
Service (1) (20,000)x1kms - 0.125 2,500 20 50,000.00
Oil & lubricant - - - - - 15,000.00
(10%) of the
fuel cost
Fuel for 300,000.00
machineries
Total - - - - - 395,000.00

8.3. Summary of financial requirement and its source

No Description Cost in Year 2 Year 3-10

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 birr(yr1)
1 Fixed Investment - -

1.1 Building 5,013,300 - -

&Construction
1.2 cattle fattening 7,710,000 - -
equipment
1.3 Office Equipment 257,000 - -
1.4 Vehcle 2,400,000
Total Fixed Investment 15,380,300 - -
Cost
2 Operating
Expenses
2.1 Cattle Purchase 3,132,030 3,544,000 4,320,000
and cost of fodder

2.2 Cattle fodder cost 260,000 286,000 314,600

2.3 Medication cost 200,000 220,000 242,000
2.4 Salary Expense 631,600 844,760 629,236
2.5 Other operating 331,370 364,507 400,958
cost
2.6 Pre- Service 64,700 71,170 78,287
Expense
Total operating cost 2,127,670 3,190,437 3,109,481
Total Investment cost 20,007,970 21,008,767 31,009,644

Sources of Fund: source of fund to finance the project is planned to be from two
sources. These are promoter’s equity and bank loan. Since the project is expected to
take some times to repay all its debts, the bank loan is assumed to obtain on long term
credit basis.
Accordingly, the total financial requirement from the two sources will be:
No Description % share Amount(in birr)
1 Owners Share 30
6,000,000.00
2 Bank Loan 70 14,000,000.00
Total 100 20,000,000.00

(Loan repayment schedule)

The loan will repaid with interest rate of10% in ten years

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 Total
Principal Interest (at Annual Outstanding
year payment 10%) payment Balance
0 0 0 0 14,000,000.00
2,800,000.0
1 1,400,000.00 1,400,000.00 0 12,600,000.00
2,660,000.0
2 1,400,000.00 1,260,000.00 0 11,200,000.00
2,520,000.0
3 1,400,000.00 1,120,000.00 0 9,800,000.00
2,380,000.0
4 1,400,000.00 980,000.00 0 8,400,000.00
2,240,000.0
5 1,400,000.00 840,000.00 0 7,000,000.00
2,100,000.0
6 1,400,000.00 700,000.00 0 5,600,000.00
1,960,000.0
7 1,400,000.00 560,000.00 0 4,200,000.00
1,820,000.0
8 1,400,000.00 420,000.00 0 2,800,000.00
1,680,000.0
9 1,400,000.00 280,000.00 0 1,400,000.00
1,540,000.0
10 1,400,000.00 140,000.00 0 0.00

Annual depreciation schedule of the fixed asset

Description Initial value Annual depreciation

Rate Value
1.Building &construction 5,224,300.00 5% 261,215.00
2.Machinery and Equipment 3,410,000.00 10% 341,000.00
3.Vehicles 2,900,000.00 20% 1,380,000.00
4.Office furn. & Equipment 97,800.00 10% 9,780.00
Total - - 1,991,995.00

9. PRODUCTION AND THE SALES PLAN FOR CATTLE FATTENING AND

MEAT PROCESSING
The project under discussion shall produce cattle fattening and meat processing, which
includes packed meat and life cattle (fattened). The products will be distributed to the

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different customers. Above all the project will produce fattened cattle and packed meat
both for domestic market as well as international markets.

9.1 production capacity and revenue projection of fattened cattle

Sales
Year Description Qty sold price/unit Total Sales
1 Cattle 600 22,000 13,200,000
2 Cattle 600 26,000 15,600,000
10-Mar Cattle 800 28,000 22,400,000
Total 51,200,000

9.2 production capacity and revenue projection of meat processing

Sales
Year Description Qty sold price/unit/ton Total Sales
1 Packed meat 2000 30,000 60,000,000
2 Packed meat 3000 35,000 105,000,000
10-Mar Packed meat 4000 40,000 160,000,000
325,000,000

9.3 Total sell plan

Year Description Amount birr
1 Cattle and packed meat sold 73,200,000
2 Cattle and packed meat sold 120,600,000
3 and Cattle and packed meat sold 182,400,000
above

10. INCOME LOSS STATEMENT

Project income
The project earns its revenue by selling the proposed output by competitive in the
market, the sales of the projects output are determined in such a way that it does not
impose higher price on ultimate consumers. Accordingly, the project expects total sales
revenue of 73,200,000.00Birr when it starts operates at full capacity.

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Income statement
Here, project revenue and production costs operating and production are listed and
compared to see whether the project generate profit or loss. According to the forecasted
income statement tales the project is found profitable through its life. The amount of the
net profit to be generated by the project varies from 14, 200,000.00 birr at the end of the
first year to 2,400,000 birr at the end of tenth year.

10.1. Forecast of profit/or loss (Birr)

Revenue Year 1 Year 2 Year 3

Sales 73,200,000.00 120,600,000.00 182,400,000.00

Purchase of Raw Material 28,100,000.00 30,910,000.00 34,001,000.00
Net sales 45,100,000.00 89,690,000.00 148,399,000.00
Expenses
Salary Expense 631,600.00 7,844,760.00 8,629,236.00
Operating Expenses 331,370.00 364,507.00 400,957.70
Deprecation Building 500,665.00 525,698.25 551,983.16
General Equipment of Depn. 4,771,000.00 5,009,550.00 5,260,027.50
Deprecation Vehicles 1,280,000.00 1,344,000.00 1,411,200.00
Pre operating Expense 64,700.00
Principal pay. & Interest 14,000,000.00 13,300,000.00 12,600,000.00
Expense
Total Expense 28,079,335.00 13,300,000.00 28,853,404.36
Profit Before Tax 17,020,665.00 76,390,000.00 119,545,595.64
Tax(30% ) 5,106,199.50 22,917,000.00 35,863,678.69
Net Profit 11,914,465.50 53,473,000.00 83,681,916.95

10.2. Cash Flow Analysis.

The liquidity position of the project can be seen from the project cash flow statement.
According to this projection the project will be healthy financial position to repay all its
debts. This is because the analysis shows that the project will have positive cash flow
throughout the anticipated life.

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Cash flow statement
2013 2014 2015
cash on hand 6,910,000.00 9,440,830.50 14,704,563.50
Total Sales 13,200,000.00 20,600,000.00 22,400,000.00
Cash available for
use 19,110,000.00 29,040,830.50 36,104,563.50
cash payment
Material purchases 28,100,000.00 30,910,000.00 34,001,000.00
Salary 631,600.00 844,760.00 929,236.00
Operating cost 331,370.00 364,507.00 400,957.70
Principal Payment & 14,000,000.00 13,300,000.00 12,600,000.00
interest
Tax Payments 5,106,199.50 22,917,000.00 35,863,678.69
Total payment 54,669,169.50 75,336,267.00 91,494,872.39
Cash surplus / 49,440,830.50 94,704,563.50 185,609,691.11
Deficit

10.3. Financial viability

As it is a private firm established with the primary objective of generating profit the
project should be financially viable for the promoter. These financial measures for this
study are income statement cash flow analysis
The IRR and the payback period of the project
The internal rate of the project is the rate of discount that reduces the net present value of the
envisaged project to zero. In calculating the IRR, the discount rate can be adjusted until the NPV
becomes zero or at least as close to zero. Hence, the IRR of this project is calculated as follows.
IRR=r1+[r2-r1)*NPV1
NPV1-NPV2

Hence the project will return its initial capital investment within 3 years of operations

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11. ENVIRONMENTAL AND SOCIAL IMPACTS OF THE PROJECT
Currently the issue of Environment and development has got a due emphasis and the
government has enshrined environmental policy within the constitution. In line with this
environmental policy the envisaged project deemed to mitigate the different impacts that
may be caused by actions of the project.
The cattle fattening will employ a wide range of environmentally sound practices,
ranging from basic manure management programs to high-tech systems that convert
cow manure to electricity.
Water Conservation

• The project will use water responsibly in their milking parlors and in manure
management and storage. For example, wastewater is recycled to flush feed alleys
and irrigate fields.

Waste Management

 Manure is spread on crop fields according to detailed nutrient management plans.

These plans take into account the types of soil on the farm, the terrain of the fields,
soil moisture levels, and the amount of nutrients the next crop on that field will need.
 New methane digester technology converts manure into methane-rich biogas, a
renewable fuel that can be used to generate electricity. Farms with this technology
may generate more than enough electricity to run their operations, and the project
will sell the excess energy back to the local utility company.
Air Quality

 The project protects air quality by following proper manure storage practices and
maintaining clean facilities. When applying manure to their fields, farmers work to
schedule around their neighbors’ plans.

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12. PROJECT IMPLEMENTATION ACTION PLAN
The envisaged project has the following implementation schedules.
Activities Time plan
Land requisition January 2009
Land Acquisition February 2009
Land clearance February 2009
Building and Construction March 2007-Feb 2009
Import of Machineries March-July 2008
Office structuring May –July 2009
Production September 2010

13. SUMMARY
As clearly the project income statement shows the promoter of the project has sufficient
amount of money that enable him pay the bank loan with in short period of time and
invests in other business of his interest. In general, the financial statement of the project
shows that the project under discussion will cover its entire investment costs with in
short period of time. Hence the promoter of the project has along term plan engaging in
other agro processing business enterprises. Hence in the coming future the project
owner has a plan to engage in:
 Agro processing plant
 Fuel substituting product processing and milk processing industry
Every business undertakings be it large or small should have to have future
development plan. It is a plain fact that business activities are undertook in a dynamic
and turbulent environment. Hence, to overcome or minimize the risks of uncertain future
businesses should devise effective strategies that enable them to be successful in their
operation. Likewise the cattle fattening and meat processing center has devised
strategies to overcome the future risk of operation. The first strategy is diversification of
its activities to different other business forms. The second future development plan of
the project is expanding its branches in many other parts of the region. The third
strategy of the center is making a joint venture with other similar business undertakings
either in the domestic country or from abroad. The final strategy of the center is selling
to other organization or individuals.

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