Farmergiant Nigeria Limited
- PARENT STOCK
- POINT OF LAY BIRDS
BY: FARMERGIANT NIGERIA LIMITED
4th April, 2014
FARMERGIANT NIGERIA LIMITED:
The plan is the establishments of an integrated poultry plant that stock Parent stock at an initial phase of 30,000 capacity. Day old chicks (DOC) would be produced from fertile eggs and sold to poultry farmers to be raised as broilers and layers. As part of integration, 5000 broiler DOC would be retained weekly to be raised to table size; similarly, 5000 pullet DOC will be retained to be raised to Point of Lay (POL) and upon expansion to layers to produce table eggs. By maturation of first phase, the enterprise will be producing on the average 105,000 DOC weekly, 10 ton of broiler meat weekly and 5000 POL weekly. Projected revenue from DOC is N40 million monthly and N520 million annually and from broiler, N20.5million monthly and N266 million yearly. And from sales of Point of lay, the expected monthly income is N17 million and annually, N204 million. Total revenue per annum is in the average of N0.990 billion to N1.24 billion. Of this, gross profit from DOC sales is about N200 million, N52million from processed broiler and N30 million from sales of POL. The total expected gross profit would be approximately N342 million. Net profit before tax is projected would be N239.4 million yearly.
To achieve the above fund to the expected capital investment in the first phase is N265, 000,000 (Two hundred and sixty five million naira). The business should break even at the end of the second year. This farm shall serve as sources of DOC and POL to the teaming farmers in the state and beyond, creating wealth, employments and training for others.
- PROJECT PROFILE
The project essentially is to set up a breeder farm, produce fertile eggs, hatch them into broilers and layer chicks and market them. Management and finance required as well as profits accruable are discussed in the work.
1.1 BUSINESS BRIEF
The breeder farm houses the parent stock. These are acquired by importation of parent stock eggs – Aviagen, Netherlands and Cobbs, South Africa. The Day Old Chicks (DOC) of the parent stocks are reared to laying. The eggs are set in the hatchery for 21 days to hatch into chicks. Setting will be done weekly hence a 300,000 capacity hatchery should be utilized. The breeders can lay for 50 weeks and the spent bird sold out for meat and replaced.
DOC are sold weekly for revenue, excess is taken back to the farm to be raised as broilers or pullets (for Point Of Lay) respectively. The broilers are processed after seven (7) weeks/ batch and the processed meat is sold out to marketers or end users. The pullet angles are sold out as from fourteen (14) weeks in each batch as Point Of Lay (POL) to poultry farmers raising layers.
Nigeria is rarely meeting her poultry demand in poultry meat and eggs. Seventy percent (70%) of our consumed poultry products particularly meat, are smuggled product. The demand for ready to eat eggs alone far outweighs the supply and yet countries like Niger, Chad and Northern Cameroon essentially depend on our meager supply. Companies such as KFC, Sweet Sensation and Mr. Biggs more or less scramble for little supply available and some have refused to introduce some recipes because of non availability of poultry meat. Essentially, our egg supply can only attempt to meet our edible demand hence the industrial need is completely left out.
The Eastern parts of Nigeria as well as the Southern part particularly depend on the Ibadan axis for supply of DOC, eggs and poultry meet. This is basically because a few Lebanese, Israeli and Indian companies have a cluster in Ibadan. The chicks have to suffer the rigor of being transported from this region by road to the eastern and south-south parts of the country thereby affecting viability and quality. The opportunity hence exists.
Market reports also indicate that most oil companies and eateries in the region in question completely depend on the Ibadan cluster to get meat and egg products, this is a large market. Our opportunity is to strategically position ourselves in Abia State and meet this large demand.
The environmental ambience and climatic condition of Abia State is greatly an advantage. We should also know that the purchasing power of our state and its environs is greater than most other parts of Nigeria and demand for poultry product is increasing yearly. Poultry products is also of health advantage, haven recently been classified to be of health advantage rather than risk.
4.0 TIME MARKETING
Broiler demand fluctuates predictably throughout the year. The demand and hence the price increases dramatically in periods preceding festivity such as Christmas, Easter and Sallah. Broiler chicks at these times sell nearly 50% higher. During the down periods, farmers buy chicks targeting to dress for cold rooms.
Pullet chicks are of high demand from November to June. Cockerels are of low demand whenever broilers are of high demand due to competition for brooding houses. Normally the demands for cockerels are higher four (4) months to the end of the year as farmers target the end of the year festivities.
5.0 Proposed Business Legal Status
The business intends to integrate investment from four angles:
- Business Promoters: Farmergiant Nigeria Limited. harness all the essential coordinates and integrate the partners
- Technical Partners: These include local and foreign expatriates.
- Safe Poultry from India will provide all the processing equipment as well as training of staff.
- Aviagen-Denmark will provide the parent stock, facility for insemination and trainings on breeding and incubation.
- Kutlusan-Turkey will provide cages, manure management equipment and training.
- Locally, Farmergiant Nigeria Limited will provide support services in terms of training, marketing advice, coordination of the foreign parties, procurement of essential machines and consultation.
- Financial Partners: We propose to obtain money from financial institution (bank). The agricultural loans available in some banks should be harnessed to achieve this project with some equity contribution coming from promotions with government support.
- Guarantors: The government of Abia State is sought to come in as a partner. Other interested individuals are also expected to join forces as partners. Our demand from the government is to guarantee the necessary loans from the banks. We also request for grants from the government to achieve this objectives and in the process grant them partnership right in the laudable enterprise.
5.1 PROPOSED CAPACITY
Table 1:The integrated farm should have the following capacity at different stages
|INITIAL PHASE||EXPANSION PHASE
|FIVE YEARS OPTION||TEN YEARS OPTION|
5.2 INVESTMENT PROJECTION
Equity contribution from the promoters shall be in excess of 10%. With the state’s assistance as guarantor, this study shall focus majorly on the initial phase with emphasis on capital injection in one year. Projection into the three phase expansion of year two, year five and year ten shall be in the detailed second feasibility.(see detail on cash flow projection on excel attached)
TABLE 2: Projected cost of capital investment.
|Housing 30,000 parent stock||22,800,000||Construction at inception in 3 building (12 X 70m)|
Parent Stock Egg
|Imported incubated and hatched||14,000,000||Hatch with company incubator|
|Feeding of parent stock to lay||35000 X 900||31,500,000||Cost till lay|
|Estimated cost of 3 hectares||3,000,000||This could be less|
|Capacity to hold 300,000 eggs each time||5,600,000||For a good bargain from partners|
|Automated breeder cages with 20 years guarantee from turkey||57,000,000||Automatic egg collector and Manure collector|
|To power cages and incubators plus alternatives||6,000,000|
|Broiler building and Equipment||6 pens X 5,000 birds each||24,000,000||Automatic feeder and drinker|
|Rearing Birds Building||5 pens X 10,000 birds each||22,000,000||Rearing POL|
|Broiler Processing Plant
· defeathering and cleaning
· processing line
2 defeathering machines
Automatic processing and packaging
Cleaning birds for market.
Initial to be expanded
|Hatchery Building||To house the incubators and process chick||3,600,000|
|Transport crates||Transport birds for sale at POL or broiler for processing.||2,333,333|
|Transport truck||Transport feeds, birds or equipment||2,000,000||Truck|
|Distribution van||Distributes chicks as at and when due||1,200,000||Fairly used|
|Cold van||Truck with cold room facility||2,800,000||Used|
|Cold Room||Storage of processed broiler meat||3,700,000||Locally built|
|Residential||For offices and housing of some staff||4,300,000|
|Feeding Broiler||Cost of feeding first batch||18,000,000||Feed return each batch|
|Feeding pullets till POL||Feeding chicks to POL||22,000,000|
|Running cost till break even||Salaries, fuel, insurance and contingency||7,2000,000|
6.0 EQUITY AND LOAN
Loans and equity contributed to the project can be recovered in 26 months and could possibly reinvested for a first expansion
- Access road
- Water through private borehole
- Electricity (grid cum private)
- Land (water logged free)
- Security from human sabotage
7.0 CONTRIBUTION TO THE ECONOMY
Poultry contribute about 25% of the agricultural GDP in Nigeria and about 4% of the national GDP. One of the major employers of labour is the agricultural sector.
This present project will employ within the first phase 42 permanent workers and 10 casual staff at each point in time. It shall also generate wealth for the partners, suppliers, distributors, banks and workers. It will automatically add value to the immediate community where it is situated as transporters, land owners, workers and marketers of finished products will directly and indirectly induce improvement on the immediate economy.
Taxes also shall accrue to the state government, profit to partners and tariff on corporate taxes to the federal government.
The facility should also be a source of training ground to the youth who want to go into poultry. Foreign experts from outside the country through the agreed partnership shall contribute knowledge and transfer skill to our youth.
8.0 BUSINESS OVERVIEW
Breeder farming is the most technical of all aspect of poultry production. Egg production is the most popular form of poultry farming because egg consumption cut across wide divide; hence the demand for DOC is a continuum for replacement stock. Similarly, demand for broiler DOC is on the increase.
Poultry production come in different forms ranging from parent stock breeder, meat (broiler/production), egg production, Quail production, turkey production, ostrich farming, duck farming, Geese farming and ornamental bird rearing among others. The business could also come in specialization such as brooding, Point of Lay production, liquid egg packaging, egg trading, cold room marketing, day old chicks, feed milling, birds transportation or egg deport business. Because of the vastness of this industry, entrepreneurs focus will be on an aspect and with time add other aspect either for vertical or horizontal integration in Nigeria, this industry is still grossly untapped and any part of the industrial possess great potential. Specialisation and continuous improvement on skills is always paramount.
Poultry industry is a multi-billion naira industry: The major hindrances to the growth of the industry in Nigeria ranges from absence of credit, high interest rate, and high cost of maize, unavailable electricity which is important for incubation, cold rooms, and operation of automated cages. Because of the fallow nature of the industry in Nigeria, the prospect is high. Right now the demand for eggs, broiler meat, day old chicks, day old poults etc remain overwhelmingly high.
8.1 Critical Success factors of the business
- Finance: Fund must be available as when needed according to plan to avoid creating stress factors which would cost so much in revenue lossB. Expertise: The poultry industry is knowledge based home employment of expertise is imperative. Consultancy is paramount. Training and retraining of staff is sacrosanct no matter how small the level and acquisition of knowledge of modern trend is a factor to growth.
- Housing: Proper ventilation and spacing is a critical success factor. Position your house to give the birds’ maximum ventilation and reduce heat.
- Biosecurity: Disease entrance and spread are as a result of any form of breach in biosecurity. There is use of foot bath, car bath and prohibition of unauthorized persons etc.
- Watering and water source is of great importance. Foul water source or water getting contaminated in poultry house signifies that the farm will fail. Water should be managed to ensure that clear and clean water is available for bird ad libitum.
- F. Nutrient: Most farm fail because they wanted to reduce cost of feed by compounding farms should only venture into self-compounding on ground with available experiment. All nutrients must be readily available in the market to prevent malnutrition.
- Sales: Egg produced must be sold. Proper marketing with vigorous advertisement will ensure the product is made available to the target market.
- H. Management: Pilfering shrinkages, indulgence, misappropriation are few of the several epidemic that constantly plaque poultry in Nigeria. Workers steal eggs, birds, feed, money and even drugs if they are not properly monitored. Sales agents and drivers could sell at different prices and report differently. Effective management of this ends are critical factor.
- Administration: At full capacity, Management is separated from administration, when the owner is not directly involved in day to day management. Absentee farming is hazardous. Someone with stake in the venture should give quality time to it to survive.
8.2 MODUS OPERANDI
Broiler chicks and pullet chicks are produced from fertilized parent stocks which are also referred to as parent stock Breeder Stock. Parent stocks are special birds produced from Grand Parent Stocks which are products of careful genetic mix.
The eggs produced from parent stock are set in the incubators and in 21 days will be hatched into chicks. In the case of broiler, all the chicks are equal, be it male or female but the chicks produced from the pullet parent stocks are sorted into male (cockerel) and female (layers).
The layers are priced higher, for instance it could go for N 170/ chick while the corresponding male (cockerel) could go for N 20/ chick.
Most pullet chicken varieties are auto sexed meaning that the cockerels come out with a distinguishing color or physical features that differentiates them from the females. The hatched chicks, when in the processing room are also vaccinated with various vaccine stipulated for DOC. They are then counted into carton packs of 50+1 chicks. Malformed, wet or dead chicks are removed. The chicks are then ready for pick up by farmers, suppliers or agents who must have prepared for them.
Farmergiant Nigeria Limited farms plan to horizontally integrate this process further by budgeting to reserve 10% of the chicks always for further activity. The incubation period for chicken eggs is 21 days. Plan to set 150,000 eggs per week. The intention hence, is to have 30,000 breeder hens, 10,000 of which will be broilers. At 72% lay, we shall obtain 151,200 eggs to set. The projection is 70% hatchability which is 105,840 chicks per week of which broiler would be 35,000 chicks and layers, 35,000 and cockerel, 35,000 chicks. Revenue from chicks on weekly basis would be about N10 million, N40 million per month and about N520 million per annum. Fourteen percent (14 %) of the broilers is positioned for raising in the broiler section to table size (5,000 chicks) and similarly 14% of the layer chicks (5,000) to be raised in the layer section to POL.
To this effect, 6 broiler pens of 30,000 capacities should be constructed to 5,000 each. The mode is “all-in-all-out”. Every week, 5,000 chicks go in every week, 5,000 birds come out (allowance shall be made to 5% mortality). Revenue from this section hence will be N5.1 million weekly and N20.5 million monthly and N266.5 million per annum.
The projection for producing POL is similar in as much as time lag is 14 weeks per batch. Weekly average of POL output is targeted at 5,000 with projected revenue at N4 million weekly, N17 million monthly and N204 million yearly. Other means of income could be from sales of manure which is projected at N135 thousand per annum.
Total revenue per annum is in the average of N0.990 billion to N1.24 billion. Of this, gross profit from DOC sales is about N200 million, N52million from processed broiler and N30 million from sales of POL.
The total expected gross profit would be approximately N342 million. Net profit before tax is projected would be N239.4 million. From every indication, the project has the capacity of breaking even by the end of the second year.
Note that feed is one of the major costs of production. It is above 60%.
Technical skill is of optimum importance to the success of such integrated poultry, as this; hence all parties shall be surely involved to success in the first phase. Thereafter, the capacity shall be doubled by the second year. In five years, it is projected that Farmergiant Nigeria Limited farm would be expected to expand to five times the size of the first phase with annual revenue leaping to about N7 billion especially with the further integration to egg production of about 500,000 capacity. Annual net profit at this stage would come to about 1.5 billion naira before tax.
By ten years, Farmergiant Nigeria Limited integrated farm is projected to be a formidable player in the poultry industry with efficiency in day old chick production, meat production and egg production.
Note: Unlike normal layers, breeders often start lay at 7 months of age and lay for 10 to 12 months.
Breeders can be raised on deep litters but for cleaner eggs, ease of management and accessibility to insemination, specialized caging is paramount.
Control lightening (photoperiod) aid laying, ventilation, temperature and feed intake is also closely monitored for effective production.
Packaging of fertile eggs and storage are professionally handled to enhance higher percentage of hatchability.
Advantages of cage system in breeder farm also include cleaner eggs, maximum space, disease prevention and control of which all increase hatchability.
9.0 HARZARDOUS POINTS
Identifiable risks in the project include;
- Disease outbreak: Diseases such as Newcastle disease, Gumboro and Mareks are still endemic in Nigeria. Most viral diseases of poultry are prevented by vaccination hence strict vaccination protocol shall be put in place for all birds from the breeders, broilers and pullets. The chicks shall also receive routine vaccine before leaving the hatchery to ensure immunity in the client’s farm.
- Bacterial diseases are often product of contaminated water source. To prevent diseases such as salmonelloses, water treatment and continuous monitoring of water quality shall be a practice to ensure good flock health.
- Fungal infection could result from moldy. Training of staff to identify such hazards shall eliminate or minimize the outbreak of fungal disease.
- Reportable poultry diseases such as Avian Influenza could result in eradication of the whole farm even if the outbreak is not registered in the farm but a nearby farm. The only possible control point is in insurance.
- Natural disasters such as wind, flood and community crises could also be covered by insurance
- Fire, burglary and other hazards shall by insured policies attract 2.5% of the total cost of the birds
9.1 OTHER RISKS
An ill managed marketing system could result in excessive unsold products such as chicks, meat and eggs despite an existing surplus demand. This should be recognized as possible risk and rigorous marketing put in place to ensure that at each point in time, demand exceeds products availability.
Revenue in poultry is real ‘vanity’ because it is really large but 70% of that income goes to feed hence the profit margin is relatively low. Clear picture of the financial status should always be known to avoid over spending resulting in recklessness.
9.1.3 SABOTAGE Burglary, shrinkages, malpractices from farm workers and other parties could result in failure of the project.
Biosecurity measures are all measures necessary to prevent disease agents (instruments, vehicles and clothing) personnel, other animal handlers, veterinarians or vectors from the stock into the farm resulting in health breach. Details of biosecurity handled in that section.
Products to be marketed in this project include;
- Day Old Chicks (DOC)
- Broiler DOC
- Layer DOC
- Cockerel DOC
- Dressed broilers
- Live broiler
- POL birds
- Spent layers
- Spent breeders
- Table eggs
- Fertile eggs
- Manure and dead birds
11.1 Channels for DOC include;
- Breeder farms
- Broiler farms
- Layer farms
- Commissioned DOC agents
- Poultry shops
- Online marketing
11.2 Channels for birds include;
- Agents selling spent or POL
- Poultry farms stocking POL
- Cold room buying dressed birds
- Distributors of dressed birds/broiler
- Bird sellers (housing them in cage and then dressing)
11.3 Channels for eggs include:
- Fertile eggs are targeted towards hatcheries
- Marketers of DOC also buy fertile eggs
- Egg depots
- Egg distributors
- Shops and malls
- Eateries and hotels
11.4 Channels for manure and dead birds
- Manure is for vegetable farms
- Dead bids is for dog food producers
12.0 MARKETING ON INTERNET
This formidable force shall be employed not only to advertise the farm product but the farm’s website as well as other popular websites which is employed to showcase and widen the reach and directly market products from the farm.
- Live birds are transported in crates by night utilizing open truck for proper ventilation and management
- Dressed birds are transported in cold van under good hygienic condition
Marketing strategy shall be further discussed.
14.0 KEY ASSUMPTIONS TO FINANCE
- Initial phase in the first year would consume N280 million to start
- To effectively start at optimum capacity in the second year, N720 million shall be needed
- Government partnership or bank guarantor is envisaged to obtain this loan from the bank. Alternatively, Government financing is expected
14.1 ASSUMPTION RELATING TO PARENT STOCK
- Hens will be reared for 28 weeks and lay for about 50 weeks before replacement
- Spent breeder are sold, money utilized for replacement
- Flock size shall be 30,000 initially then 70,000 in the second year with continual plan for expansion.
- Mortality of up to 9% is provided for
- Housing shall be via automated cage system.
- Parent stock eggs shall be obtained from specialized companies overseas.
14.2 HATCHERY ASSUMPTIONS
- Durable incubators shall be imported from reputable firms in Hong Kong
- Total capacity of the hatchery in the first phase is 300.000 eggs
- 14% of the chicks produced shall be reared into meat or POL.
- Alternative power supply shall be made available for incubators and cold room
14.3 BROILER SECTION ASSUMPTIONS
- Initially 5,000 broiler DOC shall be retained weekly, raising population to 30,000
- Weekly 5,000 broilers processed
- Cold room shall be provided
- Processing plant shall be put in place
14.4 POINT OF LAY ASSUMPTIONS
- In the first year, chick shall be raised to POL on litter system
- 5,000 chicks shall be retained weekly
- POL shall be sold out at 14 weeks of age
14.5 GENERAL ASSUMPTIONS
- Exports shall be employed
- Specialized foreign companies shall be engaged
- Consultancy utilized throughout to ensure success
- Insurance shall be put in place too
- Financial management shall be professional.
Poultry product is one source of protein widely accepted across cultures and religion. It is the most affordable and most recommended protein source health wise in the livestock industry. Nigeria is yet to meet up to 30% of her demand especially with reference to meat production.
Farmergiant Nigeria Limited is employing most of the available recent innovation to ensure that the wholesome product is available in our market. Consultations have been sought far and wide to minimize setbacks. Employment shall be created, wealth maximized and value inputted to our society with the acceptance and promotion on this great idea.
We crave for support because every index concur that this idea is very realistic. Necessary support is all it needs. We thank you as you birth yet another great idea.
We pray you sir for the following:
- That you embrace and birth this project for us with your support.
- That you create fund for the implementation of this project in form of partnership or grant
- Or provide us with state guarantee to secure an agricultural loan from the banks.
Thank you for your overwhelming support.
Dr Paul Adoyi
Promoter, Farmergiant Nigeria Limited