PROJECT FEASIBILITY STUDY 2023

FEASIBILITY STUDY REPORT

FOR
THE ESTABLISHMENT OF POULTRY FARM DEVELOPMENT

PROJECT TITLE: ……FGA POULTRY FARM DEVELOPMENT

PROPOSED LOCATION: …….TIGRAY REGIONAL STATE GOVERNMENT,

AUGUST, 2023

ETHIOPIA

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TABLE OF CONTENTS

I. EXECUTIVE SUMMERY ………………………………………….…..4

II. BACKGROUND INFORMATION ……………………………...….6

III. MARKET ANALYSIS..……………………………………………...…11

IV. TECHNICAL & OPERATIONAL PLAN …………………………26

V. ORGANIZATION AND MANAGEMENT ……………………….42

VI. FINANCIAL ANALYSIS…………………………………………….44

VII. ANNEXES…………………………………..………………………….48

I. XECUTIVE SUMMARY

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The Ethiopian poultry sector is almost exclusively dominated by backyard and small-scale production
using limited to no inputs in production and which is targeted for either self-consumption or the
market. Unlike other parts of the world, there are relatively few intermediaries operating between
producers and consumers in the Ethiopian poultry sector. However, because of increased urban
development, there are newly emerging private farms responding to growing consumer demand.
Indeed, rising demand for meat products has led to inflationary pressures on prices, with poultry
prices increasing fivefold in nominal terms over the past decade. Nonetheless, while growing, broiler
meat production remains fairly low, with most consumers favoring traditional forms of poultry over
processed products.

The agricultural industry of which integrated Poultry farming or better still Poultry cow and growing
ruminant animals are a sector with no doubt among the leading industry in most countries of the
world; it is the industry that produce food for the populace and raw materials for industries. Because
of the significant role that the agriculture sector plays, the government of most countries ensures that
they go all the way to subsidize seedlings, fertilizers, and farming implements and machinery for
farmers and also encourage entrepreneurs to go into various kind of farming including Poultry
farming and Poultry processing activities. Having general facts in mind and to take own part to
contribute in national development strategies, especially in development of agro-processing sub-
sector, the underlying project promoter has inspired to participate in investment like Integrated
Poultry Farm development operation. Hence, the purpose of this document is to facilitate pre-
investment opportunities, such as, Securing Project Land, Licensing, and Legalization as well as to
present the intended project Potential Indication.

Accordingly, FGA Poultry Farm is an Ethiopian owned company to be established as a Sole-

Proprietorship by individual founder Mrs. Frehiwot Gebremedhin Abrha, whose previous work
experience enables her to undertake the intended Poultry project in well-organized manner.
Generally, the envisaged project promoter has grasped an ample experience in development sectors
as-well-as running trade service operations for more than a decade. Hence, she has been residing in
the area and familiar to the environment where the intended project is proposed to be located.

To this end, the establishment of envisaged Poultry Farm Project will be implemented having priority
focus on products composition such as; Growing Poultry Birds, Egg and Meat Production and Supply
of Poultry feed for own farm consumption. Strategically the underlying farm project has an intension
to expand its investment activities and further establishment of more Agricultural operations
including: Poultry products export activities and Commercialization throughout the country in other
regional states.
There are several business opportunities available in the agriculture as-well-as agro- industry and good
thing about the industry is that there is huge market for every products supplied by the underlying Poultry

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farm project. Poultry Investment is a thriving and profitable business due to ever usefulness of its products.
Hence, despite the fact that adequate market is available for every product lines of the project and to
absorb the intended Farm Products and Services, the project under-review is confident enough not to face
market difficulties so it makes the business ever green.

Regarding technical aspects of the project, implementation of the envisaged Poultry farm project will go
through the use of Systematic Land allocation, Modern Poultry inputs and technologies, improved farm
Management system as-well-as related advanced techniques to realize end results and ensure project
viability and sustainability. The Company will be structured by hiring sector experts and professional
management team at all level of the farm to ensure efficiency and better productivity. Therefore, Poultry
Farm specialist, Skilled, Semi-skilled and Supportive staffs are all inclusive of project personnel at
different stages of farm operations. Thus, the project will provide job opportunities for 50 permanent
employees and for more than 100-dcasual/temporary labourers per annum. Similarly, this feasibility study
has considered financial issues of the project as it is crucial to have a separate budget for investment costs
of every Farm production lines as a step-by-step cost determination is indicated in main section of this
document. Thus, the total investment outlay is estimated to be ETB 68,431,336. Out of the total investment
cost, equity contribution will be expected to about ETB 17,431,336 and the remaining ETB 51,000,000 will
be sought from external financer as a long term bank loan.

Based on the proposed market share and product pricing assumptions the project will financially viable
and accordingly the firm will earn positive net income of net profit of ETB 2,496,655, ETB 7.91; ETB
13.39 Ml; ETB 19.21 Ml; ETB 25.72 Ml; ETB 36.47 Ml; ETB 46.15 Ml; ETB 58.88 Ml; ETB 75.52 Ml; and
ETB 94.08 Ml; during 1st, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th, 9th and 10th Years respectively. Furthermore, the
projected cash flow indicated that the Poultry investment operation will start by generating positive value
of cash surplus about ETB 4,398,344; ETB 14.05 Ml; ETB 28.34 Ml; ETB 47.21 Ml; ETB 70.86 Ml; ETB
99.81 Ml; ETB 138.1 Ml; ETB 184.42 Ml; ETB 241.56 Ml; ETB 313.1 Ml; and ETB 400.61 Ml; during 1st,
2nd, 3rd, 4th, 5th, and reaches at cash surplus of ETB 603.21 Million at the end of 10th Years respectively.

Finally, the financial evaluation of envisaged project shows that an acceptable internal rate of return
(IRR) and positive net present value (NPV) which in both cases encourages the investment decision. It is
an indicator of the efficiency or quality of an investment. Accordingly, the project will have an internal
rate of return (IRR) =40% before tax and (IRR) = 31% after tax that indicating the viability of the outlined
investment is very attractive. Whereas, the net present value of the project over total investment cost at
15.5% discount rate is found to be ETB 25,148,176 with considerable Pay-Back period during 3 rd years of
operations, and hence, it is recommended that any interested stakeholder is going to be advantageous
while working with such viable project.

II. BACKGROUND INFORMATION

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2.1 ESTABLISHMENT

 Project Title: ……………..FGA Poultry Farm Development

 Proposed Location: ……....Tigray Regional State, Mekelle City Administration
 Company Status: ………...New (Under Formation)
 Legal Formation: ………....Sole-Proprietorship (One-Person Ownership)
 Trade Registration:. ……...Under Process
 Investment Permit: ………Under Process
 Sector Classification: …….Livestock Farming (Poultry Production)
 Farm Products Compositions:
 Growing Poultry Birds for Meat
 Growing Layer Birds (Table Egg Production)
 Day-Old Birds Production and Supply
 Poultry Feed Production, etc
 Initial Investment: ……ETB 68,431,336
2.2 DEVELOPMENT VISION, MISSION AND PRINCIPLES
2.2.1 Project Vision
The Vision of FGA Poultry Farm is to become one of the leading Integrated Poultry Farm products
suppliers not just in Ethiopia, but also in the African continent.

2.2.2 Mission Statements

The mission of the company/project is to own a well-integrated Poultry Farming firm that highly
operating within the community. The company’s priority focus includes:
 To implement attainable production and supply of top quality Poultry farm products for national
and international markets.
 Ultimately to establish the center that can solve problem of poultry production meets the need of
the society and brings about sustainable development of creating employment opportunities.
 To provide customers with quality, fresh, and valuable products as-well-as provide the promoter
with opportunities to receive a nice return on investment and
2.2.3 Work Principles/Strategies

Implementation strategies and/or work principles of the farm project will follow the use of Systematic
Land allocation, Modern Poultry inputs, Advanced Technologies, Improved farm Management system and
working with well-structured Management Team that comprises sector experts and professional at all level
of the farm to ensure efficiency and better productivity.
2.3 PROJECT OBJECTIVS

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The general objective of an envisaged integrated Poultry Farm development is to achieve set of
strategic goals by implementing project’s functionality with enhanced farm production capacity and
different product lines. Hence, implementation of the underlying integrated Commercial Poultry farm
project has intended to attain set of specific objectives at three (3) different levels:

2.3.1 Regional and National Level Objective

The proposed project if properly be implemented will contribute to the government strategies on
eradicating poverty in the country and contributed to the attainment of Millennium Development
Goals (MDGs). The project could even fill the gap of the increasing demand of diversified Poultry
farm products in the domestic and global market.

2.3.2 Sectorial and Community Level Objectives

 To enhance the entrepreneurial skills and knowledge among the community
 To introduce new concept within the urban community how the Poultry investment will
support as an input for other sectors efficient productivity
 To widen the commercial Poultry farm in the areas and encourage potential access to resource
capitalization that enables to create quality product development and marketing linkages
 To contribute on the national strategies towards the improvement of current level commercial
Poultry farm products and enhance the per capita consumption of the community
 To eventually use the modern technology for heightening the level of community awareness on
the high potentials of integrated Poultry development
 To contribute on the overall attainment of the national strategy in general and that of Mekelle
City Administration strategic plan for boosted urban based agro-industrial focus.

2.3.3 Project Specific Objective includes:

The underlying project’s firm level specific objective is primarily to secure Land of 20,000 M 2 (2-
hectares) for envisaged Poultry farm project implementation, which enables to embark on a
sustainable plan to achieve reliable sources of Poultry farm products. Hence, the project intention upon
the initial start-up phase is to produce and supply diversified Poultry farm products for local and
global market, which encompasses:
 To establish and run urban poultry production business to supply fresh and quality poultry
products to domestic market in the short term and for export in the long term so it will play an
important role in the food supply and income-generating schemes
 To enhance the technical skills and thereby decreasing the incidence of low productivity of urban
Poultry development activities of surrounding community,
 To reduce the economic expenditure of the consumers thereby producing poultry products of
affordable and favorable price, and
 To attain target profit earnings that allow the company for future investment expansion in other
regional areas

2.4 PROJECT OPPORTUNITIES AND RATIONALE

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Although its productivity and commercialization remains low, Ethiopia has the largest inventory of
livestock in Africa. Hence, the establishment of envisaged Poultry Farm development is in line with the
government development strategy as it is designed to meet the high expectation of the country which
mainly considered as an opportunity and rational for project establishment.
2.4.1 The Opportunity
 High demands of poultry products; the immediate community and other surrounding
communities have on very pressing need of chicken meat and eggs and the existing poultry
product supply fail to meet their needs.
 Land availability and suitable climate; the cost of land in the area is favorable and the
condition of moderate rain fall during the rainy season and moderate cold during the
winder favors the activities of poultry farming.
 Rapid growth of urban population; continually increasing level of urbanization is a great
opportunity that serves as a targeted market that can support the business even in the future.
 Limited number of poultry farming entrepreneurs; Existence of modern commercial
poultry development in the whole Tigray Region in general and Mekele City Administration in
specific is insignificant to meet the huge potential demand from the community.

2.4.2 Key Success/Rationale for the Project

 There is a vast area of suitable land for the Poultry farm development and thus it is possible to
increase farm productivity.

 The diverse climatic conditions of Ethiopia in general and Tigray Regional State in particular
are suitable for Poultry farming operations with different varieties of products application.

 National level poultry production has been identified as a priority area for the Government,
which aims to enhances the per-capita consumption of poultry products

 With the objective of promoting commercial Poultry production and the inflow of foreign
capital and technology into the country, the Ethiopian government provides various
packages of regulatory fiscal incentives to both foreign and domestic investors engaged in
establishing new enterprises and expansions.

These indicate the high possibility of efficiency for integrated Poultry farm development and easy
conversion of products to other assets and the country become leading producer and supplier of integrated
Poultry Products in the world within short period of time. Thus, the rationale behind establishment of
envisaged integrated Poultry Farming Project is the motive derived from the above listed reasons and
visionary plans of the project promoter to contribute her part in development strategies of the country with
specific focus on regional development through application of modern products commercialization.

2.5 PROJECT SUMMARY AND OWNERSHIP

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Development of successful and sustainable Poultry industry will be realized by strategic interventions of
the Investors in to all parts of possible entry points along the poultry products value chain especially on the
innovation of new products. Accordingly, several entry points to produce new modern commercial poultry
farm products can be considered as intervention opportunity in the Poultry industry value chain with varied
degree of resource requirement and level of competitions. There is no doubt that the Poultry sector is
among the leading industry in most countries of the world; it is the industry that produce food for the
populace and raw materials for industries.

Thus, considering the aforementioned truth and having general facts in mind and to take own part to
contribute in national development strategies, especially in development of agro-processing sub-sector, the
underlying project promoter has inspired to participate in investment like Integrated Poultry Farm
development operation. Hence, the project is envisaged to be established as a commercial oriented
integrated Poultry farm business line with initial investment cost about ETB 68.43 Million and the Farm
Project is proposed to be located in Tigray Regional State, Mekelle City Administration within the
available vicinity of urban Poultry development allocated by city land management office.

Accordingly, FGA Poultry Farm is an Ethiopian owned company to be established as a Sole-Proprietorship

by individual founder Mrs. Frehiwot Gebremedhin Abrha, whose previous work experience enables her to
undertake the intended Poultry project in well-organized manner. Generally, the envisaged project
promoter has grasped an ample experience in development sectors as-well-as running trade service
operations for more than a decade. Hence, she is familiar to the environment where the intended project is
proposed to be located and currently performing various pre-project implementation activities, such as,
Licensing & Legalization, Processing Project Land request, identifying project Potential Indication and all
related arrangements with concerned stack-holders

2.6 PRODUCT DESCRIPTION AND APPLICATION

Poultry are large domestic fowl (e.g. hens, ducks, geese, turkey) reared for meat or egg. To this end, the
primary products of envisaged project comprises; Growing Birds for Meat, table eggs and other subsidiary
products which include; incubation\hatchery, fertilizer for farmers and brooding, young chickens for sale
etc. However, the broilers comprise of both fast-grower broilers and layers which provide white meat with
low fat content which coincide with the high growing need of low fat white meat as a result of
prescriptions and proscription. At this stage, the major consumers of the product of the envisaged farm and
its application includes; supply to hotels, restaurants, supermarkets, various institutions with food catering
services, and households. Furthermore, as a future plan the project will extend its wing to engage in the
establishment of

 Eggs and meats processing, packaging and marketing

 Commercial Poultry feed production,
 Poultry equipment manufacturing, etc

2.7 PROJECT BENEFITS

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2.7.1 Benefits for the Regional State
Development of Poultry Farming is the primary focus of the country in general and the private sector
engagement on improved Urban-Poultry investment is prioritized strategic plan of Mekelle City
administration in particular and in the following forms.

 Employment opportunity: Investment is expected to provide direct and indirect employment

that range from unskilled causal workers, semi-skilled and skilled employees.
 Improving growth of the economy: Through the use of locally available resource, it contributes
towards growth of the economy by contributing to the growth of domestic product.
 Source of Revenue: The investment eventually attract taxes including VAT which will be
payable to the government hence increasing government revenue
 Source of Foreign Currency: The implementation of intended project as fully domestic
product will save foreign exchange and its future export will also generate hard-currency

2.7.2 Benefits for the Community

Basically, the strategic plan of the company is to provide project related training to indigenous people
to help broaden their skills, identify new product uses and build market access. Hence, the most
desirable effects of the projects will greatly improve the living condition of the people specifically
more on the increase of farmer’s family income which will afford them to basic access on health
services, better education of their children and access to employment opportunities. The project will
strengthen the engagement of communities with private sectors and build community capacity in
leadership and entrepreneurship development through:

2.7.3 Benefits for the Investor/Project Promoter/

Mekelle is the capital of Tigray Regional State and one of largest and most economically significant
cities in the country. According, the city is the major urban setup in the region that capable of
delivering scale economies in terms of concentrated demand, specialization, diversity and depth of skills,
innovation, and technology transfers. Thus, the promoter will be benefited in the following forms:

 Mainly getting capable and expert human power from the labour market.

 The strong industrial base enables to expand on diversified investment operations

 Investors will be getting a comprehensive set of incentives for priority sectors, which include:
 Customs duty free privilege on investment related capital goods and materials
 Investors have the right to redeem a refund of customs duty paid on inputs (raw
materials) when buying capital goods and basic inputs for investment of same
 Income tax exemption of up to 6 years agro-processing and up to 9 years for
agricultural investment.
 Several export incentives, including Duty Draw-Back, Voucher, Bonded Factory, and
Manufacturing Warehouse, and Export Credit Guarantee schemes

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