State Farms Claims - Investing in Poultry Farming in Uganda
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So you want to do firm in Uganda by investing in poultry farming and "Mavi ya kuku"?
What I said. It is not outcome that the actual about
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State Farms Claims.
How is Investing in Poultry Farming in Uganda
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We had a good read. For the benefit of yourself. Be sure to read to the end. I want you to get good knowledge from
State Farms Claims.
For start, I am not abusing anyone like Uganda's Col. Kahinda Otafire and his, shall I call them "famous euphemisms" including 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 unmistakably get your feet deep in chicken s%*t (literally) but I will tell you about these are money makers later on. I present my determination 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 approximately every Ugandan knows something about it; oh some part of it anyway, approximately every "Kampala person" who has gone to their hamlet 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 approximately every one with knowledge of some form of chicken farming can any way also be the worst enemy for the possible investor especially if you are seeing to do it on a commercial basis. You see while every "Tom, Dick and Oryem" will claim they have sense in chicken farming, most of it is with indigenous chicken farming which is not the same as commercial farming, the aim of this article.
Local Ugandan chicken for example yield only 40 eggs a year (just over 1 egg a month!) compared to exotic chicken (like the shaver brown variety) which yield about 300 eggs a year (that's approximately one egg a day!)
If you don't get the right person and choose 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 furnish a ready Shop to dispell the yield and therefore you may have to rely on middlemen arrival 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 transport distribution network to get your yield from the poultry producing area (mainly Northern and Eastern Uganda) to the key Shop (mainly Central Uganda). Furthermore our transport network is not well advanced given the state of roads. You will therefore early on have to design the Shop and distribution logistics for your yield 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 between 60 and 70% of the total cost of production. You must ensure you get the best potential feed as of course this means you will have healthy chicken (and good potential 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 firm and so before you invest, you need to consider this very carefully. This high feed price is being driven by growth in prices of maize bran. Maize bran combination is about 52% of chicken feed. Coupled with high Maize bran prices is that fact that fish stocks in Uganda are seeming being depleted speedily (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 any way other chicken diseases like New Castle disease which can wipe out the entire poultry stock. I have any way not ranked this risk at the top of the Cons because any serious investor will hire a competent and suitably experienced farm boss to preclude disease threats and also have entrance to a good veterinary officer/doctor and this should further sacrifice this threat.
5. Cost of capital
Sustainable commercial chicken farming requires a fair whole of capital particularly because layers take about 17 weeks before they start producing eggs and so for this duration there is no income. The investor will therefore need to furnish working capital for this duration 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 around a long time and in the advanced world chicken is cheaper than beef. The reverse is true in Uganda and chicken is usually 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 any way going to turn 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% between 2000 and 2006.
Ugandan girls unmistakably 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 student will often buy her Chips and Chicken from the many "takeaways"in urban areas especially around Kampala and its suburbs including the popular takeways in Wandegeya which is in the proximity of Makerere University.]
I can further expect that with the prolonged East African community expanding and us working towards regional integration, there will remain prolonged quiz, for eggs and chicken.
2. Perfect profitability return on capital
Despite the any articles speaking about the cost of chicken feed crippling the commerce I believe this commerce 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: starting capital
A: Fixed costs(one off)
1. Chicken coop and associated 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 income 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 duration to include of the first financial duration (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, income over the duration 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 annual duration that the hens lay)
Pro rating the annual income to the 8 months is income of Shs 54,834,231
Costs (Monthly for 8 months)
1. Chicken feed: 24,261,534. This is estimated on a hen tantalizing 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. transport 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 anyone more to say about this sector but for those who are, well there is a third presuppose this is good.
4. Collective 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 Collective revolution.
Summarising And The Final Word
First the numbers
On the basis of my analysis:
* Capital speculation (A): Shs 28,342,419
* income 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 firm without any income at all, you need to therefore get the primary funds especially for chicken feed. You cannot compromise on the potential of feed or quantity when there are cash flow shortages as this will ultimately sway the potential of eggs and chicken.
* Agriculture keep and training. This is a sector that the government, Ngos, donors have put in a primary whole of money and so there is no excuse for not using keep facilities right from Naads to district keep projects, Ngo supported projects, even many of the day old chick suppliers furnish courses.
* Market/distribution network. There are primary bottlenecks in Uganda and it is well and good to design capacity for 1000 birds but if you cannot get them to the Shop then that's a waste. It will therefore be primary that wherever you choose to locate your farm you consider how you will get it to the market.
* Land. Now you will consideration I havent thought about the cost of land in this analysis. The reasons are multifold. When I thought about this firm 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 consider it to be a major issue. Also chicken don't usually require a lot of land and if primary this land can be "leased" cheaply in many rural areas in Uganda. Of course you should not choose 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 quiz, for agriculture prodcuts. Furthermore with the advanced world becoming more willing to pay for "organic" products, Ugandan poultry will continue to be extremely valued.
I had promised to highlight about "Mavi ya Kuku" in more information and you will consideration that in my income analysis, this sh%*t unmistakably does bring in money because as the agriculture sector continues to develop and as fertilisers continue to be more expensive, farmers will look to alternatives. Chicken droppings may be that time to come and so yes, "Mavi ya Kuku" together with "Nkoko Nkulu" are our future!
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Investing in Poultry Farming in Uganda.
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