Do you know about - Investing in Poultry Farming in Uganda
Egg Donation Money! Again, for I know. Ready to share new things that are useful. You and your friends.So you want to do business in Uganda by investing in poultry farming and "Mavi ya kuku"?
What I said. It isn't outcome that the real about Egg Donation Money. You check this out article for facts about that need to know is Egg Donation Money.How is Investing in Poultry Farming in Uganda
For start, I am not abusing whatever like Uganda's Col. Kahinda Otafire and his, shall I call them "famous euphemisms" together with the "Mavi ya Kuku" statement. For the uninitiated, "Mavi ya kuku" is a Swahili word to refer to chicken droppings and when you deal with chicken you will have to certainly get your feet deep in chicken s%*t (literally) but I will tell you about these are money makers later on. I gift my prognosis on speculation in the poultry sub sector in Uganda.
First The Cons (of Course)
1. Too many so called "chicken experts"
The charm about chicken farming is that roughly every Ugandan knows something about it; oh some part of it anyway, roughly every "Kampala person" who has gone to their community for Christmas has most likely received a gift of a chicken and likewise those of you who are "traditionalist men" know that in your home you are the only one entitled to eat "nkoko nkulu". The "Nkoko Nkulu" is the chicken gizzard and it is traditionally served to the head of the house or in many instances to a special visitor (usually male) as a sign of respect and special welcome to that household.
Ugandans know this all because chicken are an integral part of the Dna of Ugandan life. Despite this, having roughly every one with knowledge of some form of chicken farming can however also be the worst enemy for the potential investor especially if you are looking to do it on a industrial basis. You see while every "Tom, Dick and Oryem" will claim they have perceive in chicken farming, most of it is with indigenous chicken farming which is not the same as industrial farming, the aim of this article.
Local Ugandan chicken for example furnish only 40 eggs a year (just over 1 egg a month!) compared to exotic chicken (like the shaver brown variety) which furnish about 300 eggs a year (that's roughly one egg a day!)
If you don't get the right person and pick to listen to every "Tom, Dick and Amerit", next thing you know your entire stock has been wiped out by coccidiosis.
2. Shop and Distribution bottlenecks
Uganda is still very much a "localised retail" based sector for the chicken/poultry sector. You may for example have to sell your eggs shop by shop or to neighbouring towns as there may not be many "super markets" or "whole sale buyers" who contribute a ready Shop to suck up the furnish and therefore you may have to rely on middlemen coming from far.This in itself gives rise to price extortion from these middlemen. These bottlenecks are because there is to date no formalised large scale vehicle distribution network to get your furnish from the poultry producing area (mainly Northern and Eastern Uganda) to the key Shop (mainly Central Uganda). Furthermore our vehicle network is not well developed given the state of roads. You will therefore early on have to build the Shop and distribution logistics for your furnish as this can sway your profit.
3. Cost of feed
Chicken feed is possibly one of the most foremost aspects to ensure profitability of your poultry business. It has been estimated as costing in the middle of 60 and 70% of the total cost of production. You must ensure you get the best capability feed as of course this means you will have wholesome chicken (and good capability eggs).
The high feed situation is pretty serious in Uganda and from up-to-date news(August and October 2011) many Ugandan poultry farmers are being driven out of business and so before you invest, you need to reconsider this very carefully. This high feed price is being driven by growth in prices of maize bran. Maize bran composition is about 52% of chicken feed. Coupled with high Maize bran prices is that fact that fish stocks in Uganda are seeming being depleted quickly (fish is about 10-20% of the chicken feed composition).
4. Disease
I touched upon this briefly when I earlier on mentioned coccidiosis. There are however other chicken diseases like New Castle disease which can wipe out the entire poultry stock. I have however not ranked this risk at the top of the Cons because any serious investor will hire a competent and suitably experienced farm manager to preclude disease threats and also have way to a good veterinary officer/doctor and this should added sell out this threat.
5. Cost of capital
Sustainable industrial chicken farming requires a fair estimate of capital particularly because layers take about 17 weeks before they start producing eggs and so for this period there is no income. The investor will therefore need to contribute working capital for this period of about 4 months before he can expect any revenue. This working capital includes the key cost of chicken feed.
From my estimates (I will come to that later on) you need about Shs 26m as start up capital for a 1000 chicken farm(shaver brown variety). I will deal with the details in the section below.
And Now The Pros
1. Chicken are here to stay
Chicken have been colse to a long time and in the developed world chicken is economy than beef. The reverse is true in Uganda and chicken is commonly reserved for special days (like when I had passed my P.7 Ple exams and was admitted to the school of my first choice). In Uganda, this is however going to convert especially as our citizen grows and more citizen come out of poverty. up-to-date studies show that we have increased egg consumption by 28% and chicken consumption by 60% in the middle of 2000 and 2006.
Ugandan girls certainly love Chicken (and chips)! [This last statement is "tongue in cheek" in reference to the fact that many a Ugandan man seeking to impress a girl, possibly a Univeristy pupil will often buy her Chips and Chicken from the many "takeaways"in urban areas especially colse to Kampala and its suburbs together with the favorite takeways in Wandegeya which is in the nearnessy of Makerere University.]
I can added expect that with the prolonged East African community addition and us working towards regional integration, there will remain prolonged request for eggs and chicken.
2. Perfect profitability return on capital
Despite the any articles speaking about the cost of chicken feed crippling the manufactures I believe this manufactures sector still offers some of the best returns on investment. From my estimates below, it has a return on speculation of 1.09 years! I set out my estimates below. The estimates are based on a sustainable speculation of 1000 layers of the shaver brown variety. All figures are in Uganda Shillings. The transfer rate at November 2011 is about I Usd = Shs 2,700
Summary 1: beginning capital
A: Fixed costs(one off)
1. Chicken coop and connected items: Shs 3,450,000
2. Electricity and water(connection): Shs 1,000,000
3. Legal and other start up costs: Shs 700,000
4. Training: Shs 42,000
Sub total: Shs 5,192,000
B: First 4 months(week 1-17)
1. Day old chicks (1000 of them): Shs 4,500,000
2. Chicken feed(starter): 13,043,836
3. Other incidentary costs: 220,000
Sub total: Shs 17,763,836
C: Labour (week 1-17)
1. Farm supervisor: Shs 800,000 (200k per month)
2. Farm manager: Shs 1,200,000 (300k per month)
3. Farm hands: Shs 720,000 (Estimated at 3 hands each earning 60k per month)
4. Vet office Shs 90,000 for 3 visits.
Sub total: 2,810,000
D: Contingency(10%): 2,576,584
Total Start Up: 28,342,419
Summary 2: Profitability and Return on Investment
Revenue (for 8 months)
The revenue is estimated on 1,000 hens with a mortality rate of 7% hence 930 hens net. It is estimated that each hen lays 292 eggs per year. This is pro rated over an 8 month period to consist of of the first financial period (as 4 months are in which the chicken are maturing). In Uganda, eggs are sold in trays of 30. It is estimated at August 2011 that each egg cost Shs 300 thereby meaning a tray costs Shs 9,000
On basis of above, revenue over the period will be:
1000 hens less 7% mortality: 930 hens * 292 eggs each =271,560 eggs = 9,052 trays
Each tray is Shs 9,000 hence 9,052 *9000 = Shs 81,468,000 per year (or 292 days over an each year period that the hens lay)
Pro rating the each year revenue to the 8 months is revenue of Shs 54,834,231
Costs (Monthly for 8 months)
1. Chicken feed: 24,261,534. This is estimated on a hen involving about 37kg per year.
At August 2011, layer feed (which chicken feed on for most part of 17 week growth) cost Shs 75,000 per 70 kg bag. On the basis of the above, a chicken consumes about Shs 108.7 worth of feed per day.
The total cost over the 8 months is therefore Shs. 24,261,534
2. vehicle to market:Shs 5,400,000 (estimated at Shs 15,000 daily)
3. Labour (on same basis as labour costs in first 4 months but for 8 months): Shs 10,940,000
4. Utilities (water and electricity): 720,000
5. Miscellaneous: 1,800,000
Sub total: Shs43,121,534
Operating profit: Shs 11,712,697
Other income:
1. Sale of chicken(after their productivity cycle ends): 6,510,000. I am assuming each chicken will be sold for Shs 7,000 the Shop price in August 2011.
2. Less: Costs to market: 200,000
3. Chicken droppings: 8,035,510
(estimated on 11479 kg of droppings produced on basis of this being 1/3 of feed intake). Each kg being sold at Shs 700.
Net Profit(incl other income): Shs 26,058,207
Return on capital: 1.09 years.
As you can see from above, In 1 year you can expect to recoup your cost! I don't think there is whatever more to say about this sector but for those who are, well there is a third presuppose this is good.
4. Communal responsibility advantages
Charities and other Ngos recognise the impact poultry farming has on the rural communities especially on women and any studies show that this is the next Communal revolution.
Summarising And The Final Word
First the numbers
On the basis of my analysis:
* Capital speculation (A): Shs 28,342,419
* revenue per year (including other revenue): Shs 69,179,741
* behalf per year (revenue (including Wifi) and excluding all expenses) (B) is Shs 26,058,207
* Return on capital (years to get capital back or A/B) is 1.09 years
Now the basics you must get right before investing.
* Working capital. Like I said at the start, for about 4 months you will be sustaining this business without any revenue at all, you need to therefore accumulate the needful funds especially for chicken feed. You cannot compromise on the capability of feed or quantity when there are cash flow shortages as this will ultimately sway the capability of eggs and chicken.
* Agriculture sustain and training. This is a sector that the government, Ngos, donors have put in a needful estimate of money and so there is no excuse for not using sustain facilities right from Naads to district sustain projects, Ngo supported projects, even many of the day old chick suppliers contribute courses.
* Market/distribution network. There are needful bottlenecks in Uganda and it is well and good to build capacity for 1000 birds but if you cannot get them to the Shop then that's a waste. It will therefore be needful that wherever you pick to search your farm you reconsider how you will get it to the market.
* Land. Now you will observation I havent thought about the cost of land in this analysis. The reasons are multifold. When I thought about this business speculation and from my research, an investor can get the land for "free" in return for for example hiring local people, from relatives in rural areas and the like.
I therefore didn't reconsider it to be a major issue. Besides chicken don't commonly want a lot of land and if needful this land can be "leased" cheaply in many rural areas in Uganda. Of course you should not pick to encroach on the land at Mabira forest or possibly in a wetland because then my "friend" Col Otafire may ask you if you are a frog!
Final Word
Like I have said, this sector is going nowhere and there will continue to be request for agriculture prodcuts. Furthermore with the developed world becoming more willing to pay for "organic" products, Ugandan poultry will continue to be extremely valued.
I had promised to feature about "Mavi ya Kuku" in more detail and you will observation that in my revenue analysis, this sh%*t certainly does bring in money because as the agriculture sector continues to advance and as fertilisers continue to be more expensive, farmers will look to alternatives. Chicken droppings may be that hereafter and so yes, "Mavi ya Kuku" together with "Nkoko Nkulu" are our future!
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