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Investing in Poultry Farming in Uganda
So you want to do business in Uganda by investing in chicken farming with “Mavi ya kuku”?
First of all I am not persecuting anyone like Col. Kahinda Otafire of Uganda is his, I would call them “famous words” including the words “Mavi ya Kuku”. For the uneducated, “Mavi ya kuku” is a Swahili word for chicken droppings and when you fight a chicken you have to get really deep in chicken s%*t (literally) but I’ll tell you about it. money makers later. I present my economic analysis of the poultry sector in Uganda.
GETTING STARTED (Actual)
1. Many so-called “poultry experts”
The good thing about poultry farming is that almost every Ugandan knows something about it; oh the other thing, almost any “Kampala man” who went to his village for Christmas can receive a gift of chicken and those of you who are “traditional men” know that you are alone at home. one is eligible to eat “big chicken”. The “Big Rooster” is a gizzard and is usually given to the head of the house or more often to a special guest (usually a male) as a sign of respect and a special welcome to the house.
Ugandans know all this because chicken is an important part of the DNA of Ugandan life. However, having almost everyone know about some type of poultry farming can also be a potential buyer’s worst enemy especially if you want to do business. You see when “Tom, Dick and Oryem” each claim to have skills in poultry farming, most of them have poultry farming which is not the same as commercial farming, the purpose of this article.
For example, Ugandan chickens produce only 40 eggs per year (more than one egg per month!)
If you don’t find the right person and decide to listen to “Tom, Dick and Amerit” everyone, the next thing you know your entire property has been wiped out by coccidiosis.
2. Poor market performance and distribution
Uganda is still part of the “localized local retail” sector of chicken/poultry. For example, you may need to sell eggs at a supermarket or in neighboring towns because there may not be “supermarkets” or “all-in-ones” that provide a ready market for the produce, so you may need to rely on vendors. coming from far away. This in itself leads to extortion of prices from these sellers. These limitations are because there is currently no formal way to distribute your produce from the poultry farm (mainly in Northern and Eastern Uganda) to the market (mainly in Central Uganda). Also our transportation is not well developed considering the condition of the roads. So you need to establish a market and distribute your produce as soon as possible because this can affect your profitability.
3. The cost of food
Poultry feed is probably one of the most important factors in making your poultry business profitable. It is estimated that they consume between 60 and 70% of the total production cost. You need to make sure you get the best feed because this means you will have a healthy chicken (and good eggs).
Food development is very difficult in Uganda and in recent news (August and October 2011) many Ugandan chicken farmers have lost their jobs so before investing, you should consider this very carefully. This high food price is driven by the rise in the price of maize. Maize makes up about 52% of chicken feed. Coupled with high maize prices is the fact that fish in Uganda appears to be in rapid decline (about 10-20% of chicken feed).
I touched on this briefly when I spoke earlier about coccidiosis. There are other chicken diseases such as New Castle disease that can wipe out whole chickens. However I did not put this risk above CONS because a great entrepreneur will hire a good and knowledgeable farm manager to avoid the risks of disease and have access to a good vet/doctor and this should reduce this threat.
5. Cost of money
Raising sustainable chickens requires a lot of money especially since it takes about 17 weeks for hens to start laying eggs so there is no money at this time. The seller must provide working capital during this period of approximately four months before any payment can be expected. These operating costs include the basic cost of chicken feed.
From my estimation (I will get to that later) you will need about Shs 26m as start-up capital for a 1000 chicken farm (shaver brown variety). I will deal with the details of this section below.
AND NOW Goodness
1. The chickens are here
Chicken has been around for a long time and in developed countries chicken is cheaper than beef. These changes are true in Uganda and chicken is often reserved for special days (like when I passed my P.7 PLE exam and got admitted to my first choice school). In Uganda, this will change especially as our population grows and more people rise out of poverty. Recent studies show that we have increased egg consumption by 28% and chicken consumption by 60% between 2000 and 2006.
Ugandan girls 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, perhaps 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 also expect that as the population of East Africa increases and we try to integrate the regions, there will still be a demand for eggs and poultry.
2. Excellent financial performance
Despite several issues related to the cost of chicken feed that are hindering the industry, I believe that this sector of the business still offers the best return on investment. From my analysis below, it has a profit of 1.09 years! I have listed my readings below. These figures are based on a fixed cost of 1000 units of shaver brown. All figures are in Uganda Shillings. The exchange rate for November 2011 is approximately I USD = Shs 2,700
Summary 1: Basic salary
A: Fixed fee (one time discount)
1. Chicken coop and other items: Shs 3,450,000
2. Electricity and water (connection): Shs 1,000,000
3. Basic legal and other expenses: Shs 700,000
4. Tuition: Shs 42,000
Total amount: Shs 5,192,000
B: First 4 months (weeks 1-17)
1. Day-old chicks (1000 of them): Shs 4,500,000
2. Chicken feed (first): 13,043,836
3. Other unexpected expenses: 220,000
Total amount: Shs 17,763,836
C: Work (weeks 1-17)
1. Farm manager: Shs 800,000 (200k per month)
2. Farm manager: Shs 1,200,000 (300k per month)
3. Farm hands: Shs 720,000 (Compared to three hands each earning 60k per month)
4. Vet office Shs 90,000 for three visits.
Total number: 2,810,000
D: Emergency (10%): 2,576,584
ORIGINAL TOTAL: 28,342,419
Summary 2: Profit and Return on Investment
MONEY (for 8 months)
The amount is estimated at 1,000 hens that die with 7% and thus 930 net. It is estimated that each hen lays 292 eggs a year. This is rated in 8 months to have the first financial period (like the 4 months the chicken matures). In Uganda, eggs are sold in trays of 30. It is said that in August 2011, each egg cost Shs 300, which means that a tray costs Shs 9,000.
Based on the above, the Earnings for the period will be:
1000 chickens with less than 7% mortality: 930 chickens * 292 eggs each = 271,560 eggs = 9,052 trays
Each tray is Shs 9,000 so 9,052 * 9000 = Shs 81,468,000 per year (or 292 days per year that chickens lay)
Pro rating annual income for 8 months is Shs 54,834,231
TYPES (Monthly for 8 months)
1. Chicken feed: 24,261,534. This is compared to a chicken that eats about 37kg per year.
In August 2011, portioned feed (which chickens eat most of the time at 17 weeks of growth) costs Shs 75,000 per 70kg bag. Based on the above, a chicken consumes food worth Shs 108.7 per day.
The total amount in 8 months is therefore Shs. 24,261,534
2. Transport to the market: Shs 5,400,000 (estimated at Shs 15,000 per day)
3. Labor (equal to the cost of labor in the first four months but for 8 months): Shs 10,940,000
4. Utilities (water and electricity): 720,000
5. Miscellaneous: 1,800,000
Operating profit: Shs 11,712,697
1. Sale of chickens (after their harvest): 6,510,000. I think each chicken will sell for Shs 7,000 market price in August 2011.
2. Minimum: Purchase price: 200,000
3. Chicken droppings: 8,035,510
(a total of 11479 kg of faeces produced as a result of this being 1/3 of food). Each kilo is sold at Shs 700.
Net profit (including other expenses): Shs 26,058,207
Return on capital: 1.09 years.
As you can see above, In one year you can expect to pay back your cost! I don’t think there is much more to say about this episode but for those who are, well there is a third reason this is good.
4. The benefits of social responsibility
Charitable organizations and other non-governmental organizations recognize the role of poultry farming in rural areas, especially for women, and many studies show that this is a social change.
CORRECTION IS THE LAST WORD
First the numbers
Based on my analysis:
* Investment (A): Shs 28,342,419
* Annual income (including other expenses): Shs 69,179,741
* Annual profit (income (including WIFI) and excludes all expenses) (B) is Shs 26,058,207
* Payback (years to payback or A/B) is 1.09 years
Now the basics you need to get before investing.
* Operating expenses. As I said at the beginning, for four months you will be doing this business without any money, you need to get the necessary money especially for feeding the chickens. You cannot compromise the quality of food or its quantity when money is scarce because this will compromise the quality of eggs and poultry.
* Support for agriculture and education. This is an area where the government, non-governmental organizations, donors have given a lot of money so there is no reason not to use the resources from NAADS to aid sectors, projects supported by NGOs, even many chicken donors today. providing education.
* Market / distribution network. There are big constraints in Uganda and it is good to increase the population to 1000 birds but if you can’t get them to the market then just throw them away. So it will be important that wherever you choose to locate your farm you think about how you will reach the market.
* Earth. Now you’ll notice that I haven’t considered the cost of land in this analysis. The reasons are many. When I think about this business and my research, the funder can get the land “for free” i.e. by hiring local people, relatives from the countryside and so on.
So I didn’t think it was a big issue. Besides, chickens do not require a lot of space and if necessary the space can be “rented” cheaply in rural areas of Uganda. Of course, don’t choose to venture into the Mabira forest or the swamp because then my “friend” Col Otafire may ask you if you are a frog!
As I said, this sector is not going anywhere and there will be demand for agricultural products. In addition, as developed countries become more willing to pay for “natural” products, Ugandan chickens will continue to be in demand.
I promised to review “Mavi Ya Kuku” in detail and you will see that in my financial analysis, this sh%*t is actually making money because the agricultural sector continues to grow and fertilizers continue to decrease in price. , farmers will look for other options. Chicken droppings can be that future and yes, “Mavi Ya Kuku” along with “Big Chicken” is our future!
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