PROJECT AT GLANCE

PROJECT AT GLANCE


REQUEST OF TSH. 25,000,000 FOR EXPANDING POULTY FARM:


PROJECT NAME: EXPANSION OF P & J POULTRY FARM

PROJECT APPLICANT: P & J POULTRY FARM/ MHACHE P. A.

PROJECT OWNER/CARRIER: P & J POULTRY FARM/ MHACHE P. A .

PROJECT TARGET:

1. To supply meat and eggs served extensively in hotels and restaurants and bars.

2. To generate income to the Small Traders dealing with eggs transaction.

3. Provide employment opportunities to the community

4. To assure availability of protein food in my community

PROJECT LOCATION: SALASALA WARD, KINONDONI
MUNICIPAL, DAR ES SALAA, TANZANIA.


PROJECT RECOMMENDING OFFICES:

1. MUNICIPAL DIRECTOR
KINONDONI MUNICIPAL COUNCIL
P.O.BOX 31902
DAR ES SALAAM

2. WARD EXECUTIVES OFFICER
KUNDUCHI WARD
P. O. BOX 31903
DAR ES SALAAM



TABLE OF CONTENTS
Page
1.0 Executive Summary………………………………………………………. 3
2.0 Introduction…………..………………………………………………… 4
3.0 Background Information……………………………………………….. 5
4.0 Project Objectives……………………..……………………………….. 6
5.0 Project Description…………………………………..………………… 6
5.1 Project Location …………………………………………………… 7
6.0 Project Management ………………………………………………….. 7
7.0 Benefit and Justification of the Project………………………………. 8
7.1 Socially …………………………………………………………….. 9
7.2 Economically ……………………………………………………… 10
8.0 Project Market ……………………………………………………….. 10
9.0 Financial Aspect and Project Worthiness …………………………. 10
9.1 Assumption and Consideration ………………………………… 11
9.2 Project Viability ………………………………………………… 11
10.0 Conclusion: ………………………………………………………… 12
11.1 Annexes : …………………………………………………………… 13






1.0 Executive Summary
P & J Poultry Farm is a farm located at Salasala Kunduchi Ward, Kinondoni Municipal Council in Dar es Salaam. It is a family farm owned by one couple of Mr. and Mrs. P. A. Mhache. The farm is in plot no. 1, 2,7 and 8 block B Mbezi Manyema with area covered of 7146m2. Family acquire the land since 1999 and be able to erect residential house and ten rooms of poultry house with capacity of carrying 300 chicks per room that is 3000 total chicks once.
The aim of establishing a farm is to generate income to subsidies my salaries which am getting from my employment, second to give employment opportunities to my community who are suffering daily rooming around the City looking for employment. The employment would be not only to my family but also to those who deal direct to the project and those small traders who are supplying eggs to the restaurant, bars and hotels.
The project idea is undertaken in order to utilize the available infrastructure by renting the existing poultry houses for 10,000 Tsh per month per room which is almost 240,000/= per room during the project period of 2 years. The total rental fees during the project life time will be 2,400,000.00.
The main setback of the P & J Farm is inadequate operating capital to enable buying 3,000 chicks and feed them to make maximum production of eggs and sell them within two years. In order to meet the above narrated target the Firm requires 37,138,000.00 of which 12,138,000.00 will be on Equity contribution and remain balance of 25,000,000.00 will be from external sources that is through bank borrowing.

2.0 Introduction
Poultry Industry in Tanzania is the growing opportunity for Small and Medium enterprises as a critical means poverty eradication. It is also used as an alternative way of subsidizing the income of those who are employed but their expenditure is greater than what they earn. Keeping poultry has been taken as a means to survive. The problem is that the project is undertaken in a small scale which give a limited chance to expand and enjoy the economies of scale. To be in position of raising the project one must consider about the cost associated to the project which include erecting or renting of poultry houses, fed them with commercial food which is proper mixed with the proper nutrients such as Broiler starter, Grower mash, Layer mash, a typical poultry house with concrete floor finish. At beginning to the 5 week chicks are raised under close supervision to control the temperature which is very important during the period to avoid unnecessary death. Veterinary services are also required to be close so that all required vaccination can be applied in a time with a right specification to avoid a preventive diseases which affect most of small farmers.
In reality the poultry farm contribute a lot to the national economy and to the well being of citizen in the community, poultry can be kept both for meat and egg production served extensively in hotels and restaurants. It is profitable to give supplements to chicken for growth from the keets stage to maturity Feeding and water troughs must be cleaned not less than twice a week to provide good sanitary conditions.


3.0 Background Information:
P & J Poultry Farm project is an expansion of existing farm located at Salasala Kunduchi Ward, Kinondoni Municipal Council in Dar es Salaam. The farm today has a capacity of growing up 500 chicks. The experience of keeping layers mash started in 2002 where by Twiga Feed Company a company used in hatching eggs, producing and supplying poultry food gave a chance to become an agent of the company to supplying chick and food at Salasala. It is a family is a family business with expectation of future expansion from family to the registered company. The whole activities was undertaken by family members. The farm is in plot no. 1, 2,7 and 8 block B Mbezi Manyema with area covered of 7146m2. Family acquired the land since 1999 at a price of 1,500,000.00 but to-date the market value of the plot is almost 35,000,000.00 without building and other infrastructures development. The area has bee developed by erecting modern residential house with fence and ten rooms of poultry house with capacity of carrying 300 chicks per room that is 3000 total chicks at once. Another activities undertaken within a farm include pigs keeping of which more than 100 pig are kept, Turkey keeping is another activities undertaken within a farm. It cost almost 15,000.00 to raise one turkey to the period of 8 month of which they can develop about 12 to 15 kg of meat. When you go to the market you find one Turkey is sold up to 100,000.00.
The expansion or erection of poultry house is a result of small scale poultry keeping activities. Another project undertaken within the farm is goat keeping where by the farm accommodate about 30 goats. The existing project support each other, take in consideration that output of one project can be the input to the other product. For example as you feed poultry waste from the poultry house can be used to feed pigs and presence of poultry and pigs waste enable grass growing which is a feed to the goat.

With the revenue from the existing project I have been in position to take my kids to school and feed them properly, my family member from Kilimanjaro and Arusha also get a chance to participate in wealth creation process and fight against poverty.


4.0 Project Objectives
The operation of the project is constrained by lack of capital to acquire or utilize the existence opportunities, with enough or stated cost of the project in hand, the following objectives will be acquired:-

Ø To supply meat and eggs served extensively in hotels and restaurants and bars.

Ø To generate income to the Small Traders dealing with eggs transaction.

Ø Provide employment opportunities to the community

Ø To assure availability of protein food in my community


5.0 Project Description
The project entails in expanding the poultry farm from a small scale farm to a medium farm that is from keeping 500 poultry to the rate of keeping 3,000 poultry at once. This can be done by renting an existing ten rooms of poultry house which accommodate 300 poultry at each room.. The rent per room is 10,000.00 per month per room, That is 240,000.00 per project life time per room (2 yrs) equal to 2,400,000.00. Investment cost will be cost of buying chicks and feed them until they began laying eggs that is after six 6 months since the project will be in position to run itself through eggs sales. The project cost and means of finance pattern indicate that the project investment require 37,138,000.00 out of these 12,138,000.00 is contribution of the applicant as owners equity and the remain 25,000,000.00 will be from loan at 18% per annum. (see annex IV for details)

5.1 Project Location
The project will be undertaken at Salasala – Kunduchi Ward, Kinondoni Municipal Council in Dar es Salaam City. The area is conducive and is normally experienced with famous Kuria tribe who are well known as a big supplier of eggs in the city. Also the area is only 7 km from Interchic Industry and Twiga Feed Co. the huge competitive firm in the poultry industry in Dar es Salaam at Mbezi Area.

6.0 Project Management
The overall management of the project will be undertaken by the Farms’ Directors in assistance of Project Farm Manager and Accountant. Project manager will be responsible who is going to be responsible for daily to daily activities from a day of purchasing of chicks, feeding, selling of eggs, making a contact with veterinary office incase of any problem and keeping daily records of the project progress. The project Accountant will be responsible on keeping financial records of all transactions take place during the project period, she will also be responsible to collect all sales made during the project period and make deposit to the bank account, also she is going to be responsible in making sure that the loan repayment installment is made on time. Project attendants will be responsible on daily feeding of the chicken and general cleaning of the poultry house according to the directive from the firm manager. Security Guard will be responsible on the security of the firm during the day and night hours.

7.0 Benefit and Justification of the Project:
The investment cost is shown in Annex I whereby ten room were rented for 24 months of the project life other items included in the investment cost are purchases of feeding containers such as water canes, food canes, office furniture’s including table and chairs. Purchases cost of chicks is included in the investment cost as long as is the main demanding item with big initial outlay during the project time. As long as project is going to demand financial inflow from day one of the project to five and six month other direct costs such as feedings has been taken as Investment cost. With 3000 chicks we use to take a average of consuming five bags per day of starter per two month, average of five bags Grower mash per day for month 3 and 4, an average of five bags of Layers Mash per day for month 5 and 6. With good feed and without unexpected damage Layers will start laying eggs during month 5 and six. Other cost incurred direct to the project has been considered as investment costs including medicines and some vaccination such as small pox, new castle and Gombora.
Manpower requirement and its costs is shown in Annex II where by one project Manager is required, on project Accountant, projects attendants, veterinary doctor who can be hired for temporary and security guard are required, it is required to have amount of 33,600,000.00 to pay manpower for 18 months, since the project is for a short period that is 2years project no incremental on manpower costs . Operation cost is shown in Annex III whereby during the first 6 month the period Layers starting laying eggs cost will be 1,345,000.00, during 7th to 12th month the operating cost will be 28,902,500, the cost for 13th to 18th is 28,340,000/= and 19th to 24th months is 27,827,000.00. The total cost is about 88,414,500. The main contribution of the cost is feeding of Layers of which it estimated that an average of 5 bags of 50 kg will be consumed per day of which total of 300 bags will be consumed per month. The price of 50 kg Layers Mash is 20,000.00. That is for 18 month Layers will consume 2,700 bags @ with cost of 20,000.00. Sales turnover of the project is shown in Annex V where by it is estimated that among 3000 Layers 2800 will be in position to lay eggs, for 18 month amount of 50,400 tray of 30 eggs each will be collected and be sold for wholesale price of 4,500 per tray and yield amount of 226,800,000.00. At the end of 24 months the old layer will be sold at price of 3,800,000 to start new project. Therefore total amount of sales will be 236,600,000.00.
Repayment schedule of the grant/loan and interest amounting to Tsh. 5,624,500.00 Is shown in details see Annex VI.

7.1 Socially:
The project is expected to stimulate social development to my community those who are within the project and my neighbors who can imitate what am I doing for their fortunes. The project will employ about 8 permanent workers and other about 50 eggs mongers who are expected to collect an average of 20 tray per day from the firm and make distribution to the households, restaurants, bar and hotels.
7.2 Economically
Revenue generated from the project will enable the expansion of the project from small firm to a large one. The lying idle resources (poultry house) will be utilized efficiently and generate an income of 2.4 million as rent which can be used to expand the business. This can be approved with a total turnover of 236,000,000 at the end of the project.
8.0 Project Market :
The project has a positive market since population of Dar es Salaam is increasing daily at 4.3% per annum due to migration and mortality rate. Numbers of restaurants, bars, hotels, groceries, supermarket, shoppers are increasing daily. That means the demand of eggs is growing considerably. The market is not saturated since most of small farmers contribute in a magnitude to the market. The possibility of expanding market to other region such as Zanzibar is great.
9.0 Financial Aspect and Project Worthiness :
9.1 Assumption and Consideration
The following assumption is undertaken during implementation of this project.
Ø The project life time will be 2 years the period Layers are expected to produce at a maximum level.
Ø Akiba Commercial Bank which is where the firm current account is operating will give loan of 25 million with an interest of 18% per annum of which grace period of six month would be granted.
Ø Death rate of Layers will be at a minimum level and production of eggs will affect only 200 Layers and having a maximum of 2800 Layers production in efficient.
Ø Killer disease “ Bird Flu” will not outbreak during the project life time .

9.2 Project Viability
The project has a Net Present Value (NPV) of 76,325,903 which shows that it worth to be undertaken. Annex X, shows the calculations.

10.0 Conclusion
The project is viable and it is in a position to repay back the grant/loan it is therefore recommended for funding.















c) What are the other documents required to accomplish before the business gets financial assistance.

The following are the documents which are required to be accomplished before this business gets financial assistance:
ü Certified copy of letter of offer which shows the ownership of the farm and its uses.
ü Registration Card for my Car Double Cabin Pick-up with registration number T528 AEX.
ü Comprehensive Certificate of Insurance of my Car T528 AEX which is going to be used as a Mortgage.
ü Business License from Kinondoni Municipal Council which allow me to undergo poultry farm within the City.
ü Legal Contract between me and Financial Institution stipulating about the payment program with its interest and period of repayment.








d) Some huddles which are anticipated during the project executed period:

The following are anticipated huddles:
ü Poultry disease outbreak such as Newcastle, Smallpox and Birds flue. If the disease outbreak the projected return of the project will be in danger since assumption is made that with the initial purchase of 3000 chicks will be alive through out the project period. In case of any default only 200 chicks will be affected.
ü Market saturation during the expansion of the project to the other area. This huddle can bring down the price of eggs which at the end affects the projected revenue.

Ways to overcome:
ü To be close to the veterinary services and being updated with proper vaccination to avoid the disease outbreak. To avoid unnecessary visit to the other farm which may cause disease transmit ion.
ü To undergo some marketing strategies to enable my supplies remain in the market even if the market is saturated, this can be done by signing a contract with my customers such as hotels, bars, restaurant etc.




11.1 Annexes



ANNEX I
INVESTMENT COST IN TSH


ANNEX II
MANPOWER REQUIREMENT AND COST IN TSH






ANNEX III
PROJECT OPERATING COSTS IN TSH









ANNEX IV

PROJECT COST AND MEANS OF FINANCE IN TSH













ANNEX V

PROJECTED PROJECT REVENUE






ANNEX VI
PROJECT GRANT/LOAN REPAYMENT IN TSH











ANNEX VII


ECONOMIC DEPRECIATION AND AMORTIZATION IN TSH.
















ANNEX VIII



PROJECTED PROFIT AND LOSS ACCOUNT FOR THE END OF THE YEAR IN TSH.











ANNEX IX

CASH FLOW FORECAST IN TSH.









ANNEX X
DISCOUNTED CASH FLOW

Initial investment in this project is 52,138,000.00 with discount rate of 10% for a period of 2 years. The NPV of the project will be as follow:

n
NPV = - Io + ∑ NCFt
T = 1 (1 + r)n


Where by:

NPV = Net Present Value

Io = Initial investment/cash outlay

NCF = Net Cash Flow

t = any time

r = discounted rate

n = project expected life.

NPV = -37,138,000 + 137,365,500(0.826)

= - 37,138,000 + 113,463,903

= 76,325,903


The project is found having a substantial positive NPV, that is the project NPV Z 0 THE PROJECT IS VIABLE AND ACCEPTABLE.