Business plan of beef cattle fattening project
Agricultural Economics (Injibara University)
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Business plan of beef cattle fattening project
By: Duressa Wake
Submission date
August 2024
Adama, Ethiopia
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DECLARATION
I certify that this business plan is entirely my own work, except where I have given fully
documented references to the work of others, and that the material in this plan has not previously
been submitted as business plan for any project before.
Signature:
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PROJECT PROFILE
Project Name: Cattle fattening project
Project Place:
Form of organization: PLC (Private Limited Company)
Status of the project: New
Duration:
Business License: In progress
Investment Permit: On Progress
Recruit of the Employees of the Company: On Progress
Starting Costs of the Project are: 3345450 ETB
Open: By Manager
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Table of Contents
PROJECT PROFILE ................................................................................................................................. 3
LIST OF ABBREVIATION ....................................................................................................................... 5
LIST OF TABLE......................................................................................................................................... 6
SUMMARY OF THE PROJECT .............................................................................................................. 7
1.
INTRODUCTION ................................................................................................................................. 8
1.1.
Mission ........................................................................................................................................ 10
1.2. Vision ............................................................................................................................................... 11
1.3. Core Values ...................................................................................................................................... 11
1.4. Objective of the Project .................................................................................................................... 11
1.4.1. General Objectives .................................................................................................................... 11
1.4.2. Specific Objectives .................................................................................................................... 11
2.
GENERAL VIEW OF BUSINESS PLAN.......................................................................................... 11
2.1. The scope and location of the project ............................................................................................... 12
2.2. Activities and Strategies of the Project............................................................................................. 12
2.3. Farm Housing and Specification ...................................................................................................... 13
2.3.1. Pen ............................................................................................................................................. 13
2.3.2. Quarantine pen .......................................................................................................................... 14
2.3.3. Isolation Pen .............................................................................................................................. 14
2.3.4. Weighing pen ............................................................................................................................ 14
2.3.5. Resting....................................................................................................................................... 14
3.
CIVIL WORK AND LAYOUT OF FARM STRUCTURES ............................................................. 15
4.
FARM CAPACITY AND PRODUCTION PROGRAMME .............................................................. 16
4.1 Feeder Cattle ..................................................................................................................................... 16
4.2. Feed resource of fattening ................................................................................................................ 16
4.3. Ration formulation for fattening ....................................................................................................... 16
4.4. Human Resource Requirement ......................................................................................................... 18
4.5. Equipment and Materials.................................................................................................................. 19
4.6. Utilities ............................................................................................................................................. 20
4.7. Professional fees ............................................................................................................................... 20
4.8. Marketing Strategy ........................................................................................................................... 21
4.9. SWOT Analysis................................................................................................................................ 21
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5.
FINANCIAL FORECAST .................................................................................................................. 22
5.1. Startup capital ................................................................................................................................... 22
5.2. Sales forecast .................................................................................................................................... 25
5.2. Forecasted Income Statement ........................................................................................................... 26
6.
SUMMARY AND CONCLUSION ...................................................................................................... 0
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LIST OF ABBREVIATION
BF
Base Factor
BCR
Benefit-cost ration
IC
Initial cost
IRR
Internal Rate of Return
NPV
Net Present Value
PI
Profitability Index
LIST OF TABLE
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Table 1. Mixing of different feed ingredients .............................................................................................. 17
Table 2. Amount of feed across fattening stages ......................................................................................... 18
Table 3. Materials and equipment for barn cleaning with their estimated cost .......................................... 19
Table 4. Utilities Requirement with their expected costs ........................................................................... 20
Table 5. Professional and training cost ....................................................................................................... 20
Table 6. The expected income from fattened animals per year .................................................................. 21
Table 7. Important Assumptions ................................................................................................................. 23
Table 8. Amount taken for investment from the above sources ................................................................. 23
Table 9. Working Capital ............................................................................................................................ 24
Table 10. Raw Materials............................................................................................................................. 25
Table 11. Other Operational Expenses ........................................................................................................ 25
Table 12. Repayment or Cash out the schedule........................................................................................... 25
Table 13. Estimated sales forecast for the next five year ........................................................................... 26
Table 14. Income Statement ....................................................................................................................... 27
SUMMARY OF THE PROJECT
The agricultural industry of which livestock farming or better still cattle rearing is a subset is no
doubt among the leading industry in most countries of the world. This project will be built on the
expertise of owner Jemberu Safe, and the activities performed in this project and the
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responsibility of each employee is also clearly defined as their need. Its Vision is to become one
of the leading cattle rearing business brands not just in Ethiopia, but also in the World by the
2035 G.c. The purpose of the project is beef cattle farming and producing quality meat. The
project would be run on a private limited basis and with six employees and two different
categories of labor. The total initial investment cost required is 3345450 Birr and money
obtained by loan.
This project has the opportunities to provide the following beef cattle products and services:
Commercial breeding, meat, Manure, Milk, and Consultancy services.
1. INTRODUCTION
My business plan intends to fatten cattle in pens/feedlots. The most suitable breeds for fattening
will be purchased from the rural areas of pastoral farmers union and others of parts of Oromia
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region where it is cheap and transported to our farm which is established close to Adama City
East shewa, Oromia region. We will then feed the cattle for a period of 90 days. During this
period, we expect the cattle to increase in weight and an increase in the quality of the beef to
super grade. We will then sell the cattle, and make a profit. We will continuously do this
throughout the year. Most important to us is our financial success and we believe this will be
achieved by offering high-quality fattened cattle while minimizing costs.
A feedlot is a sort of animal feeding operation that uses confined feeding in arranged pens to
finish (fatten) livestock, most commonly beef cattle and sheep, before slaughter. Depending on
the size of the operation, feedlots can hold thousands of animals or only a few hundred. Cattle
spend most of their lives grazing on natural pasture on rangeland or irrigated pasture before
entering a feedlot. Cattle are placed in a feedlot once they reach an entry-level weight of around
200 kg and are fed a nutritionally balanced and specialized diet.
In Ethiopia, the feed resources used in feedlots include conserved hay, silage, and roughage
(crop residues such as straw and Stover), and concentrate feeds such as industrial by-products
like wheat bran, and wheat short, soybean meal, cottonseed meal, vitamin/mineral supplements,
and salt. Feedlot diets are usually very dense in food energy, to encourage the deposition of fat,
or marbling, in the animal's muscles. The ultimate aim of the finishing process is to produce
livestock that will best answer the requirements and desires of the consumer. Factors to be
considered when choosing land for beef farming are fertile soils, no evidence of flooding during
the wet season, convenience for transportation, access to supplies for farming, and, of greatest
importance, year-round supplies of sufficient clean water. Distance from factories (which may
release bad odors or lead to pathogenic infections) and to urban areas (where pollution from farm
effluent will not be tolerated) should also be key influences on location
The reason behind establishing this beef fattening using resource available project is that, the
national demand for meat and the high capacity of the projects area to produce high amounts of
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beef cattle from the points of having enough resources in the area, not only these since there is
marginal land for farming to maintain the food requirements of the family. Many animal nutrition
processing industries demand as a consumer these beef cattle producing farms. But there is a
shortage of produce and market problems related to the collection and assembling as well as
transporting to the national market. There is also a high resource that helps to produce high
amounts of beef cattle for markets due to the high demand for beef cattle in urban and peri-urban
areas and the project area is endowed with enough amounts of resources the project aims to use
this resource and require to fulfill the beef cattle demands of the country for the future.
1.1.
Mission
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My mission is to provide super-grade beef and healthy fattened cattle to customers at affordable
prices.
1.2. Vision
•
To produce high-quality beef that can be marketed to the area.
1.3. Core Values
•
Customer satisfaction
•
Commitment to achieving results
•
Sustainability
•
Innovation e.t.c
1.4. Objective of the Project
1.4.1. General Objectives
•
To generate revenue for making them self-sufficient and profitable
.
1.4.2. Specific Objectives
The operational objectives of our company are:
•
Create jobs as we expand our operation for youth and women in the project areas who
have no job earlier.
•
To develop a sustainable farm, surviving off its cash flow.
•
To satisfy the market demand for beef cattle in the country.
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2. GENERAL VIEW OF BUSINESS PLAN
2.1. The scope and location of the project
This project will be conducted near Adama City, as supply and demand side. The City has a
mean altitude of 128m above sea level and is located at 112km Finfine capital city of Ethiopia.
The town has also good infrastructures that facilitate linkage in markets and marketing national
and international. Neighboring towns and districts have a great potential for crop and cattle
production making trade centers for all sorts of products and livestock production inputs.
2.2. Activities and Strategies of the Project
Our Project's major activities
After the inception of our farm at, the stages of growth will be observed in the following
years; 2025, 2026, and 2027 as in the format designed below.
⟶ 2025
•
personnel will be employed
•
Development of adequate pasture land for grazing
•
Purchasing of beef cattle
•
Construction of small offices and sheds for cattle.
⟶ 2026
•
Start the production of beef.
•
Employment of a marketing officer, one skilled worker for culling purposes, and a
helper.
⟶ 2027
•
Packaging of processed meat
•
Increase the number of cattle for beef production.
•
Provision of 5% increment in salary of employments.
•
Start distributing 25% of annual net income to investors
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The Beef Cattle Farming would be run on a private limited basis and with six employees. Two
different categories of labor groups are required for the smooth functioning of the farm, an
administrative and production group. The administration group includes a manager, an
accountant, and a marketing officer. The production group includes skilled workers to do the
culling job, helpers, and cow herders. The employee will be hired on a full-time basis at a
fixed salary with benefits and with an annual increment after five years of operation. This
Company will be built on the expertise of owner Jemberu safe, and the activities performed
above in this company and the responsibility of each employee is also clearly defined their
needs through appropriate allocation of:
▪
Resources
▪
Risks
▪
Rewards
▪
Responsibilities
2.3. Farm Housing and Specification
Beef herds are relatively tolerant to sun, wind, and other environmental conditions when
compared with other livestock farming. Hence, no need to construct a high-cost building for this
farming activity. However, to protect the animals from predators, and theft, and to restrict the
movement of animals it requires fencing for the surroundings and a shed in the feeding area to
prevent rain made from locally available materials. But water troughs and feed troughs should be
constructed from the concrete floor for ease of cleaning and maintenance. Moreover, the
plantation of trees is required against the direction of heavy winds to reduce wind attacks and
even from rain and sun.
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2.3.1. Pen
It can be built out of any available material wood, trees, cable, pipe, or fencing of different types.
The working alley can lead to the processing and unloading and loading area or a hospital pen
area. Other arrangements can be done around a hillside or an area with a slope. Plan how the
water will flow out of the pen. The recommended space per head is 2.5 m2, exclusive of the
feeding and watering area. Floors may be earth or concrete.
2.3.2. Quarantine pen
It is required for holding new animals before joining them with the main farm animals. It
sufficiently reduces the risk of contagious diseases and other parasitical diseases on the main
farm. This pen should be separated from the main farm facilities. All newly purchased stock
should be kept in this pen to follow the standard procedure of quarantine, i.e. identification,
vaccination, de-worming, dipping, and concentrate feed introduction.
2.3.3. Isolation Pen
There shall be a sick shed for segregating ailing and disabled animals. It is good practice to have
a few isolation pens where sick animals can be kept apart from the rest of the herd to avoid
cross-infection. Ideally, the pen should be quite separate from the main housing and grazing area,
to avoid any chance of air-borne infection. Isolation pens should be made of such a material that
they are easy to clean and disinfect after the recovery or death of sick animals. Provide an
isolation pen that should have minimum dimensions of 3 x 3 m (10 x 10 ft) per head, be separate
from the main livestock area, and have a stanchion or tie-stall in one corner. The shed shall be 3
m high with a door 2 meters wide and 2 meters high on one of the broadsides of the shed. The
lower half of the door may be made of wooden planks/metal and the upper half of wire netting.
There may also be a window 0.7 m broad and l.2 m high with a wire net covering.
2.3.4. Weighing pen
Farms that need a weighing crate with suitable handling pens, to save workers time. This will be
useful to weigh animals to manage their feed, and medication and to apply other scientific
management. The weighing pen should be of the same dimensions as cubicles i.e. 120 cm (4 ft)
by 210 cm (7 ft) with entry and exit lines.
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2.3.5. Resting
To avoid disturbance and ensure suitable opportunities for resting, enough space should be
available for each animal. Cattle spend about 50 % of their time lying, for about 10-15 periods
per day, each of about 60-80 minutes duration. The duration of each lying period is influenced by
the housing environment but total lying time seems to be fixed. An animal will not stay
recumbent for too long before it becomes uncomfortable. This is because the large body weight
of heavy animals causes high pressures to be imposed on those parts of the body that are in
contact with the ground. Lying entirely on one side is only possible for about 10-15 minutes at a
time. This is because the pressures exerted cause disturbances in pulmonary blood flow and the
disposal of rumen gases.
Figure 1. Natural lying positions
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3. CIVIL WORK AND LAYOUT OF FARM STRUCTURES
For the beef fattening enterprise development project, the pens described under part 2 will be
constructed to handle the maximum capacity of 48 animals per annum and meet the targeted
demand. Construction of buildings and civil works should be finalized during the initial
investment outlay.
4. FARM CAPACITY AND PRODUCTION PROGRAMME
4.1 Feeder Cattle
Animals selected for fattening should be from four to six years of age. At this age, the Animal
finished its growth and it is ready to fatten. As compared to growing animals the daily weight
gain capacity is also better at this age. The weight and age of all animals should be similar
otherwise the larger and older animals would not let the smaller animals eat feed according to
their requirement. Selected animals should not be sick, weak, or with physical disabilities. The
fatteners not only have to select the better breed which can bring results for fattening but also has
to select the most suitable animals from the selected breed.
The fattening project will have a capacity of procuring 4 heads of cattle per month with 90 day
feeding period. Stock mobilization can be arranged every month for each batch. This level of
production (48 heads per annum) is considered to be more realistic as it will enable proper
management and efficient utilization of resources and assets. The farm will work all year round.
Feeder cattle will be finished to achieve a market weight of 400-500 kg body weight.
4.2. Feed resource of fattening
Feed is a serious limiting factor in the fattening industry with the result that many animals arrive
at the market in less than optimal body conditions with body weight on the lower end; there is a
dire need to ensure feed availability round the year with proper protein contents for increasing
livestock productivity. In this regard, supplementary feed must be provided to the livestock,
especially during periods of drought and scarcity.
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4.3. Ration formulation for fattening
A feed or mixture of feed is given to animals to meet the nutrient requirement of the animals
depending on their physiological state of the animals. The amount of feed provided will be
variable depending on many factors. Among others, are weights, sex, age, fattening stage, and
fattening duration. The ration should be composed of different feed ingredients. Feed ingredients
are mixed based on the nutrient contents of the ingredients. For example, in different fattening
phases the composition of roughage and mix is different for profitable fattening.
Table 1. Mixing of different feed ingredients
Ingredients
Amount (kg)
Noug seed cake
35.6
Wheat short
28.4
Wheat bran
35.0
Salt
1.0
Summary
100
The ratio of roughage to concentrate mix is different across the fattening stages. In early
fattening, the first month, roughage is 90 % and 10 % concentrate mix and increasing the level of
concentrate mix and decreasing roughage at every 10 %.
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Table 2. Amount of feed across fattening stages
Feed Ingredients
Duration or fattening phases
1st
2nd
3rd
Concentrate feed (Kg/head)
2.5 – 3
3 - 4.5
3 - 4.5
Roughage (Kg/head)
5-4
4–3
4–3
Total
7.5 – 7
7 - 7.5
- 7.5
4.4. Human Resource Requirement
Semi-skilled persons are required for performing routine farm operations and husbandry
practices. The number of farm workers required depends on the size of the farm. There might be
a need for full-time employees to manage the herd. There is a need for good technical knowledge
of cattle fattening techniques for success in the business and good management skills.
Business structure
Chief Operating Officer
General Farm Manager
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Manager/Accountant
Supervisor
Sales and Marketing Officer
Field Workers
4.5. Equipment and Materials
Table 3. Materials and equipment for barn cleaning with their estimated cost
Item
Quantity
Cost/unit
Total cost
Weighing Scale (1000 kg)
1
10,000
10000.00
Wheelbarrow
3
1520.0
4560.00
Shovel
4
115.0
460.00
Sun gloves
12
28.0
336.00
Boots
6
155.0
930.00
Black Overalls
8
238.0
1904.0
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Fork
4
265.0
1060.00
Belt
20
65
1300
Sprayer
1
480.0
480.00
Knife
4
120.0
480.00
Total
21, 510
4.6. Utilities
Table 4. Utilities Requirement with their expected costs
No.
Utility
Utilized per
month
Average Charge
Cost (Birr)/month
Cost/year
1
Electricity
200 kwh
1.00 birr/Kwh
200
2,400
2
Water
0.6 m3
0.23 birr/0.001
m3
138
1,656
3
Telephone
10 hrs
21 birr/hr
210
2,520
Total
6,576
4.7. Professional fees
Table 5. Professional and training cost
Description
Total Cost
Professional fees (business plan preparation, consultancy,
legal, etc.)
21,000.00
Payment for the trainers
12,250.00
Transport service cost (5%)
2,562.50
Total
35,812.50
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Table 6. The expected income from fattened animals per year
Revenue Item
Weight/
head(Kg)
Income/Kg
Carcass or Meat
109
Bone
Expected total
revenue/head
Expected total revenue
from herd/year
120
13,080
627,840.00
20
35
700
33,600.00
Offal (internal organ)
15
25
375
18,000.00
Hide/head
5
20
100
4800.00
Manure
-
-
-
7,560.00
14,355.00
691,800.00
(birr)
Total
4.8. Marketing Strategy
Our business will attempt to rapidly achieve awareness in Adama city about its business in the
first year. To be successful in this business, you should have many customers. Our marketing
strategy is based upon the marketing mix, which are the 4 p’s of marketing, which are product
(service), price, promotion, and place (distribution).
4.9. SWOT Analysis
Strengths
•
A large market
•
Experienced owner-operator
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•
Good quality feeders
Weaknesses
•
Limited Capital
•
High feed costs
Opportunities
•
Growing market
•
Export market opportunities
•
Cheap labour in the market
Threats
•
Disease outbreak
•
A decline in cattle demand
•
Low market prices for beef
5. FINANCIAL FORECAST
Table 7. Important Assumptions
YEAR1
YEAR2
YEAR3
YEAR4
YEAR5
Yearly Plan
1
2
3
4
5
Current interest rate
10%
10%
10%
10%
10%
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Long Term interest
rate
10%
10%
10%
10%
10%
Tax Rate
35%
35%
35%
35%
35%
5.1. Startup capital
The total initial investment cost is Birr 3345450 Birr and obtained by loan.
Source of finance
The investment will be made by the private limited owners and the source of finance is financial
institutes-banks and private investors.
Table 8. Amount taken for investment from the above sources
Source of finance
Available amount for investment
Investment from Bank
836362.5
Investment private investor
2509087.5
Total
3345450 Birr
Type of Investments:
•
•
•
•
•
•
Salary
Working Capital
License fees
Raw materials
Pre-operational expenses
Operational expenses
Table 9. Working Capital
Fixed Asset:
Land
1800
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Pasture Development
50000
Infrastructure
Administrative Block
Miscellaneous Store House
Chilling and Storage Area
Processing Area
Fencing
Cattle Shed
752500
Office Equipment
25000
Miscellaneous Accessories
25000
Computer with Accessories and Software(2)
40000
Cattle Purchase
112500
Breeder Herds
60000
Tax on Cattle
150
Vehicles
450000
Total Fixed Assets
1516800
Table 10. Raw Materials
Necessities
Quantity /Year
Amount/Year
Karma Feed
21600
475200 Birr
Oil Cake
21600
324000 Birr
Straw
43200
16200 Birr
Total
86400
815400 Birr
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Table 11. Other Operational Expenses
Marketing Launch
25000
Training Expenses
20000
Fuel Expense
110000
Traveling Expense
20000
Total
460600
Table 12. Repayment or Cash out the schedule
Investment from Bank
1472650Birr
Investment from Private
1472650 Birr
Total
2945300 Birr
5.2. Sales forecast
The employees of the project will develop experience and also expand the business to create
awareness about the great importance of foreign exchange. As a result, the sale of the business is
expected to increase by 25% each year. In line with this, the estimated benefit of the project over
the three five plans is depicted in the table below. The table below outlines our estimated sales
forecast for the next five years.
Table 13. Estimated sales forecast for the next five year
Products
Qty
Unit
Total Sale
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Price
Year1
Year2
Year3
Year4
Year5
Breeding
5
1000
0
50000
125000
156250
195312.5
244140.625
Meat
8000k
g
200
200000
0
250000
0
3125000
3906250
4882812.5
Milk
2550
L
30
76500
95625
119531.25
149414.0625
186767.57812
Manure
10 ton
100
1000
1250
1562.5
1953.125
2441.40
212750
0
272187
5
3402343.7
5
4252929.687
5
5316162.1031
2
Total
5.2. Forecasted Income Statement
The forecasted income statement is estimated using the total sales and total costs. The total sale
is estimated with the expectation of a 25% increment every year whereas; the total cost is
estimated with the increment of 4% every year. In line with this, the estimated revenue and cost
of the business over the three years plan are depicted in the table below.
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Table 14. Income Statement
Revenue
2025
2026
2027
2028
2029
Total sales
2127500
2721875
3402343.75
4252929.6875
5316162.10312
Expenses
Salary
726000
755040
785241.6
816651.264
849317.31456
Cattle Purchase
112500
117000
121680
126547.2
131609.088
Pasture
Development
50000
52000
54080
56243.2
58492.928
Land
1800
1872
1946.88
2024.7552
2105.745408
Cattle Shed
752500
782600
813904
846460.16
880318.5664
Tax on Cattle
150
150
150
150
150
Miscellaneous
Accessories
25000
26000
27040
28121.6
29246.464
Computer with
Accessories and
Software(2)
40000
41600
43264
45294.56
47106.3424
Breeder Herds
60000
62400
64896
67491.84
70191.5136
Vehicles
450000
468000
486720
506188.8
526436.352
Raw Materials
815400
848016
881936.64
917214.1056
953902.66982
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License Fees
3100
3224
3352.96
3487.0784
3626.561536
Other Operational
Expense
460600
479024
498184.96
518112.3584
538836.84433
Depreciation
9,000
9000
9000
9000
9000
Interest (12%)
127,062.86
93,762.86
60,462.86
27162.86
-
Total cost
3633112.86
3739688.86
3851859.9
3970149.7816
4100340.390054
Gross profit
1505612.86
1017813.86
449516.15
282779.9059
1215821.713066
Estimated tax
(35%)
425537.5995731
356234.851
157330.6525
98972.967065
425537.5995731
Net profit
1931150.4595731
1374048.711
606846.8025
183806.938835
790284.1134929
28
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6. SUMMARY AND CONCLUSION
Beef cattle farming project is a private registered livestock farming project that will be based
in the outskirt of Adama, Oromia, Ethiopia, and owned by Jemberu Safe. The project will
finance by loan at least for a period of time. The Vision of the project is to become one of the
leading cattle rearing business brands not just in Ethiopia, but also in the World by the 2035
G.c. The project would be run on a private limited basis and with six employees. Two
different categories of labor groups is required for the smooth functioning of the farm, an
administrative and production group. The administration group includes a manager, an
accountant, and a marketing officer. The production group includes skilled workers to do the
culling job, helpers, and cow herders. The employee will be hired on a full time basis at a
fixed salary with benefits and with an annual increment after five years of operation. This
Company will be built on the expertise of owner Jemberu Safe and the activities performed
above in this company and the responsibility of each employee is also clearly defined us their
need.
The employees of the project will develop experience and also expand the business to create
awareness about the great importance of foreign exchange. As a result, the sale of the
business is expected to increase by 25% each year.
In general, When I conclude With the assumption of the business is remunerative where the
net present value of the business is positive with the total value of +775771.32768108, the
payback period of the business is at the end of the third year which confirms the project is
highly promising 4 and The IRR of the business is greater cost such as 20% > 4%, then the
project investment is will be accepted.
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