PROJECT PROFILE ON POLUTARY FARM

BY

TEAM MEMBER

MAY, 2013

DIRE DAWA

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 TABLE OF CONTENT

1. Executive summary…………………………………………………………… ……………..3

2. Introduction……………………………………………………………………………………4

3. Background……………………………………………………………………………………4

4. Policy environment and incentives……………………………………………………………5

5. Project rationale……………………………………………………………………………….6

6. Project objectives……………………………………………………………………………...8

7. Project area descriptions………………………………………………………………………8

8. Project description…………………………………………………………………………….8
9. Market Descriptions …………………………….…………………………………..9
9.1. Meat demand and supply in Dire Dawa administration …………………………….9
9.2 production type……………………………………..…………………………………13
9.3. project capacity…………………………………………………………….…………13.
11. Establishment……………………………………………………………………….………13
12. Total indicative investment cost……………………………………………………………16
13. Conclusion……………………………………………………………………………….. 17

1. Executive summary

Urban dwellers of the administration are demanding more products of poultry for their daily
meals. The growing demand of poultry products from the neighboring boarder countries is
growing high. There is no formal poultry meat production and supply in the administration
except the traditional life poultry head supply. Based on the estimated national consumption
rate precipita, Poultry meat demand of the administration is about 264 tons in the year 2013.
The projected demand reaches 314 ton by the year 2020.

Current annual production of egg in the adminstration 981,316 and the projection by the year
2020 estimated to be about 1, 0522,104. Only the current demand based on the national average

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per capita consumption reaches about 18,850,000. To satisfy the demands from all side the need
to produce more become essential for the administration.

To meet these demands through producing enough and quality poultry meat and egg, the existing
poultry population in the administration and their product is very small. So establishment of
modern poultry farms for the production of additional egg and poultry meat production is
essential.

This project envisioned the establishment of poultry farm with a capacity of 10000 poultry heads
during the establishment year and reaches to its maximum capability the following three years
which is about 20000. The indicative total establishment cost of the project for poultry is about
birr 5,456,875.60 and it generates employment for 13 permanent and skilled workers.

2. Introduction

Dire Dawa, the administration, is found at the foot of mountains and hills. Mountains of eastern
Harrarge in the south and southeastern part are the main uplands bordering the town of Dire
Dawa. The administration has a good agricultural resource where livestock rearing is a major
one. The potential resource of livestock in the administration is reasonably high. Livestock
products and byproducts are the major income source for the pastoralists and agro pastoralists of
the administration. Every farmer has the experience of rearing poultry. The culture of the farmer
in this area to rear poultry for the best benefit is not however at optimum level. This is because
feed is less available and the management of poultry by the farmer is not well developed.
However, every farmer is exercising poultry rearing to fetch additional benefit.

To alleviate the severe problem of protein shortage in general and meat shortage in particular a
product from poultry has significant contribution. These days’ urban dwellers of the
administration are demanding more products of poultry for their daily meals. Large number of
live chicken during a celebrity days from the neighboring regions is coming to Dire Dawa. But

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the current production level of poultry is not sufficient to satisfy the enormous demand for these
celebrity days with a reasonable price. Thinking this big demand as an additional potential, one
can think to produce more.

Poultry farm establishment for the production of meat and egg with a strategy of intensified
management system leads to improve poultry meat and egg production. To do so medium to
large scale intensive poultry farm projects with the objective of improving the chicken meat and
egg products is very essential, and it helps to satisfy the growing demand of the administration
and foreign market.

3. Background
The total live poultry population in the administration currently is estimated to be about 83,706.
In addition, the number from the neighboring regions reaches more than 4,544,370(CSA, 2012).
The majority of poultry breed in the administration and its surrounding is local type. As a result
of this, per capita production of meat gained from poultry is below optimum level in the
administration and the neighboring regions. The size of the egg is also small. Some management
conducted by individual farmers shows that there is a good potential of improving the total
annual production of this local breed. The quality of meat and egg of the local breed is very
preferable at local market because of its attractive taste and yoke color.

Although conducting research at the administrative level gives the cause for low level
productivity of the local breeds, experience showed that the limiting critical factor for the basic
problem that hampered this industry is availability of optimum, quality feed and poor
management system. Naturally Dire Dawa has conducive environment for rearing chicken.
Knowing that, currently the administration together with the community is working hard to
improve the condition of poultry at farmers’ field level by deriving different strategy. The
administration understood at large the importance of improving the productivity of the local
breed by improving the management. Better feeding and handling and improving the local
breeds through selection as a best way to improve the productivity and production of the local
breeds.

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Establishing better and well prepared poultry feed at the central level and distributing to the
farmer at a reasonable price is among the strategies deployed. The livestock health service sector
also has got due attention by the administration because the work done for the last five years to
strengthen the administration livestock laboratory was significant. Using such fertile
circumstances producers start confidentially to work in this sector with different objectives.

4. Policy environment and incentives

The agriculture policy of Ethiopia encourages the improvement of the productivity of small
holder agriculture (where crop and livestock production are strongly inter-dependent) through
mutually reinforcing ways of achieving enhanced productivity levels which include combining
resources of the farmer. This encouragement may help to have better managed livestock of
improved stand at farmers’ hand that can be purchased by the investor. Commercial-scale
agriculture by leasing land not occupied by small-scale cultivators and which does not jeopardize
the livelihood of pastoralists is another advantage of the policy that helps to create the
environment of harmonizing the relationship with the rural community and the investor.

The National Bank of Ethiopia (NBE) issued a revised rural credit policy to expand credit
operations in the rural sector by providing: (1) short-term credit for agricultural production and
(2) investment credits for the agricultural activities in the rural sector. Therefore, to implement
this policy, both the NBE and DBE expand credit outlets through branch expansion.

The formulation of the National Science and Technology (NST) policy is one of the important
steps taken towards the development of sound policies with regard to agricultural research.
According to the NST policy of the country, the government is committed to allocate up to 1.5
per cent of GDP for Science and Technology Research development. This would be a big
positive policy framework for the investors in the field of agriculture including that of poultry.

The accelerated and sustainable growth in agriculture leads to increased quantity and quality of
agro-industrial raw materials supplied (forward production linkage) to the industrial and export
sector. Unless industry (secondary-modern goods producing sectors) and services (tertiary-
distributive and other services) grow in conjunction with agriculture (primary –agriculture and
allied activities), it is not possible to ensure accelerated growth and sustainable development.

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Council of ministers proclamation N0. 207/2012 on investment incentive says investment made
on agriculture in general and livestock improvement projects in particular should get incentives.
Exemption of income tax for 3 years plus less array for ward, exemption of custom duties and
tax free vehicle purchase depending on the type and the nature of project is affordable as
incentive.

5. Project rationale
Agriculture is central to Ethiopian economy contributing about 41.1% of the GDP, and supports
the livelihood of about 80 % of the population. The country has the largest number of livestock
in Africa. Ethiopia is the largest livestock producer and the biggest exporter of livestock in
Africa. The country has 40 million cattle 25.5 million sheep, 23.4 million goats and 2.3 million
camels (CSA, 2012).Ethiopia offers the global market a wide range of processed and semi
processed livestock products presently. Exporting meat mainly chilled shoats’ carcass and live
animals namely cattle sheep and camels and goats to major destination center including United
Arab Emirates, Kingdome of Saudi Arabia, Yemen and Egypt is done currently. Knowing these
several efforts were exerted by Ethiopian government, like the work done by former livestock
marketing authority (LMA) and the partners to pave the way for the development of plenty local
and foreign market. The establishment of USAID funded Ethiopian sanitary and photo-sanitary
standards and livestock and meat marketing program (SPS-LMM0) in 2005 and Ethiopian meat
and dairy technology institute in January 2008 are major measures taken to support private
sector. Technical assistance and training provided by SPS -LMM which improved productivity
market transparency and infrastructure is essential for the benefit of this sector. In fact using at
maximum these fertile environments for the development of this subsector and exploit the
existing potential needs further effort to better and make advantage out of it

Overcoming the less production due to the less availability of feed, and the incidence of disease
due to poor health services, in general inability to prepare good and ideal all round management
to keep the situation nearly the same at a level for all livestock to bring about the optimum
production are areas to look upon. The work done to maximize poultry products was not enough;
as a result the economic benefit from this livestock subsector is very small. Production systems
aren’t developed and modern poultry farms are very small in number.

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Feeding balanced ration, preventing and controlling animal health problem and applying all
round and better management system were not satisfactorily practical. On the other hand, the
local demand only from the administration is increasing to the level of forcing the administration
to produce more. Overcoming only the poor management system can possibly bring better
product from the same number livestock in general and poultry in particular and more so if better
and/or exotic breeds reared in a modern farm.

In addition, Dire Dawa is located in eastern Ethiopia with a strategic location lucrative to the
market of the Middle East, Djibouti and Somali land who have a big population potential.

6. Project objectives

Establishing poultry farm for the production of egg and poultry meat which will be used for local
and foreign market.

7. Project area descriptions

Dire Dawa is located in the Eastern part of the country between 9 027' and 9049'N Latitude and
41038' and 42019'E Longitude. It is bounded in the North, West and East by Somali National
Regional State and the South by Oromya National Regional State. The range of altitude is from
950-2250 masl. Dire Dawa city is 515km away to the East from Addis Abeba. The
Administration covers approximately an area of 1332.62 km square. The topography of the
Administration varies from very steep high mountains to flat plains where the altitude ranges
from 950 - 260masl. The physiography of the Administration involves: mountain ranges, hills,
valley bottoms and river terraces, and flat plains.

According to the assessment for agriculture sector 2012, there are two major agro-climatic zones
in Dire Dawa administration. These are Kola (if it is in 500-1,500 masl) and Weyna Dega (if it is
in 1,500-2,300 masl), regardless of the amount of annual rainfall that a site receives. The rainfall
pattern in the study area is characterized by small rains in spring and big rains in summer. The
rainy season is from February to March and from July to September and the dry season is from
October to January. From the seven rainy months it is only in the months of July and August that
the rainfall exceeds half the potential evapo-transpiration (PET). The mean annual rainfall in the

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study area varies from 550 mm in the lowland northern part and is above 850 mm in the southern
mountain range.

The projected total population of Dire Dawa administration is 377,000, of which 256,774 people
live in urban and the remaining 120,226 live in rural area (CSA, 2007). The city has an annual
population growth rate of 2.5% (CSA, 2007). Seventy (70) percent of the total population is
living on 9.5 percent of the total area size while only 30 percent are settled in the remaining vast
area size (90.5 percent) of the administration (DDA statistical abstract, 2009/2010).

a) Administrative structure: Dire Dawa Provisional Administration (DDPA) comprises Dire

Dawa town and the surrounding rural areas. It is divided into nine urban kebeles and 37 rural
peasant associations.
b. Land availability: The total area available for urban agriculture is 1379.27 ha. There are also
areas which are about 73.54 hectares that can be converted for the same purpose. The available
lands are suitable to implement intensive fattening program.
c. Infrastructure: The road network in the administration nearly reaches at every rural area and
connected well with Dire Dawa town. Access to center of all neighboring regions and to Woreda
towns in these neighboring regions is possible.
d. Service facilities: Telephone service is available all over the administration and almost in all
areas of the neighboring. Almost all areas of Dire Dawa administration and a majority of the
neighboring regions are benefited form the countries central electric power system.
e. Labor force potential: According to CSA (2012), employment unemployment survey, from
the total active labor force of the administration 24 % is unemployed. This means that there is
abundant labor force for any investment activities in the administration.

8. Project description
a. Project name: Poultry farm establishment project.
b. Meaning: producing chicken as meat source through better feeding and management
and rear good layer birds for the production of quality and maximum per capita egg
production.

9. Market Describtion

a. Meat demand and supply in Dire Dawa administration

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 To calculate the meat demand two different ways can be used. One, the daily protein requirement
for human are derived from ideal body weight. The ideal body weight is calculated based on
height and varies slightly for men and women. The protein requirement can also be expressed in
terms of total calorie intake. The world health organization and many national health agencies
have independently conducted studies which ever though they differ slightly, all concluded our
daily protein requirement should be between 10 to 15% of our daily intake. To determine once
daily protein requirement determine once ideal body weight and calculate the specific
requirement is needed. And it estimated between 2 to 4 ounces meat a day which is equivalent
to .035274 gram a day is required for an individual if it is the only source of protein. Because the
data is not available for other protein sources it is not possible to calculate from this demand
side.

Two, different countries consume meat as a source of protein in their diet. Meat per capita
consumption for United States of America is 120 KG with an annual per capita increasing rate of
8 kg, the highest registered consumption area in the planet earth. Currently meat consumption for
developed world is 77 kg, for developing countries 30 kg, and sub-Saharan African countries
currently is 10 kg annually with an annually per capita increasing rate of 1 kg and for Ethiopia it
is 9 kg meat per capita consumption annually and remains the same until 2020 according to FAO
STAT 2004.

To estimate the demand of meat the second option was taken. Based on this, the projected meat
demand for Dire Dawa administration for the next 7 years is calculated (see Table 1).

b. Local meat demand:

Per capita consumption was multiplied by the projected population of Dire Dawa to end up with
the total requirement of meat on the bases of the existing quantity for the projected years were
made. Opportunities of local meat demand were made based on the consumption made by other
countries (Table 1) because it is a matter of time and wealth to reach up on the same status.

Table 1: projected local demand of meat requirement in tons.

Description 2013 2014 2015 2016 2017 2018 2019 2020
Dire Dawa Population 377000 386425 396086 405988 416138 426541 437204 448135
Total requirement of
Dire Dawa at the current
consumption rate 3393 3477.8 3564.8 3653.9 3745.2 3838.9 3934.8 4033

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Room for development
scenario 1 as sub
Saharan countries 3770 4250.7 4753.0 5277.8 5825.9 6398 6995.3 7618.3
Scenario 2 As
developing countries 11310 11979.2 12674.7 13397.6 14148.7 14928.9 15739.4 16581
Scenario 3 As developed
countries 29029 30141.2 31290.8 32479. 33707 34976.4 36288 37643
Scenario 4 As United
states 45240 49462.4 53867.7 58462 63252.9 68246.5 73450 78871.7

According to IPMS from the total production of meat, the total annual beef production comes
from cattle 63 %, sheep 25% and Goat 12%. Regarding live animals 8% live animal exports
come from cattle, this shows that the exported meat comes from cattle beef is very small when it
compared to the relative large size production. From the total production of meat in the country,
68% of cattle meat is consumed. The share of meat from chicken is very small compared to the
other meat sources. However, the culture of Ethiopians to celebrate religious festivals with Doro
wet where chicken meat and egg are used as row material is a very good and has a long history.
The per capita consumption for Ethiopia according to the survey made by HICE 2004/5 was 0.7
kg.

Rearing of poultry compared to the other livestock traditionally is very simple in all aspects
according to the farmers’ experience all over the country in general and the administration in
particular. The environment of the administration is vey conducive for the production of poultry.

Population growth and income rise are the two major determinant factors that make the poultry
meat demand to increase. Calculation was made to project the demand of poultry meat for the
next eight years based on the population growth (Table 2). The population of Dire Dawa in the
year 2013 was estimated to be 377,000 and estimated to grow each year by 2.5% and the total
population reaches to be 448,135 in year 2020.

According the regional GDP report of Dire Dawa administration 2012, the real regional GDP
growth forecast is 10.5%. This growth automatically influences the growth of the regional per
capita income of the coming years. Different areas in the world also show as the room and the
potential to increase our consumption. Using the present consumption rate of different areas of
the world trend calculation was made because we are working on to improve our livelihood to
reach to the middle income earning countries in the near future (Table2).

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Table 2. Current and projected poultry meat consumption in Dire Dawa and comfort
consumption zone compared with different world countries.
Description 2013 2014 2015 2016 2017 2018 2019 2020
Dire Dawa Population in (000)
377,000 386,425 396,086 405,988 416,138 426,541 437,204 448,135
annual poultry requirement of
the administration based on
only on current per capita
consumption (000) kg 264 270 277 284 291 299 306 314
Room for development
scenario 1 as African
countries (000)kg 1,847 1,893 1,941 1,989 2,039 2,090 2,142 2,196
Scenario 2 As developing
countries (000) kg 3,808 3,903 4,000 4,100 4,203 4,308 4,416 4,526
Scenario 3 As developed
countries (000)kg 10,707 10,974 11,249 11,530 11,818 12,114 12,417 12,727

c. Potential export meat demand

According to the Economic Commission for Africans (ECA) “Economic report on Africa(2002),
Ethiopian average meat export growth over the period of 1991-2000 were 4.8 % per annum,
accordingly the future export market demand for the product is assumed to grow by 4.8%
annually and almost all the source of these export meat is not including poultry. Some report
shows that in the year 2005 alone a total of 736,000 day old chickens had been imported from
different countries to Ethiopia for breeding purpose and to satisfy the all round demand of the
country. This shows that, there is a potential demand of poultry as a source protein food in the
country.
d) Potential demand of egg
The average per capita consumption of egg in Ethiopia is approximately 57 in number. The
potential egg consumption per capita of Addis Abeba is 2.28 kg which is equal to 50 eggs almost
equal to the national average. The national average egg percaipta consumption can be taken for
Dire Dawa since no data for Dire Dawa is available currently.

An egg weights about 45 grams (according to the investment survey for Dire Dawa, 2013). The
demand of egg as a source of protein in local dish is not that mach developed currently
throughout the country except during holidays. Looking the future economic development and
population growth of the country and the administration, there will be a promising potential

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demand increment. The demand from the neighboring countries like Djibouti and Somali land is
also a potential foreign market for egg export.

e) Poultry meat supply: currently there is no firm, market of farm that can supply poultry meat
in the administration.
f) Current estimated egg production and requirement: Dire Dawa produces 971,600 eggs in
the year 2012 according to regional GDP study of Dire Dawa administration. The forecast of
RGDP growth for the next few years is one percent more on each year economic growth.
Therefore the projected egg production in the year 2020 will be about 1,052,104. Per capita
average consumption of egg in Ethiopia is about 57 per annum (Alemu and Tadele 1997). Based
on the information we have ( the national average), the current total egg requirement of the
administration based on current national percapita consumption rate is about 18,850,000.
9.2. Production type: productions expected from the project are of poultry meat and egg.
9.3. Project capacity

The project plans to rear 10,000 layer birds at the beginning year, 15000 in the second and 20000
at the third year and at the fullest capacity annually. And the same number of chicken for meat.
To have planned stock in the farm in the first project year, number of day old chicken first enter
in the farm will be 625 in a batch. The production time range for supply is calculated to be one
week interval. To do so, in each week there will be a batch to join the farm and 4 batch in a
month. The total batches to join the farm will be 20. And this will take 5 months to reach to the
first year project potential plan. In the second year number of day old chicken first enter in the
farm will be 938 and in the third year it reach 1250. At maturity 50% male chicken and 50%
layers are expected from the total population entered in the farm at each batch. The mortality at
each batch was taking 20% approximately. The maturity period for both layers and cock is
estimated to be 6 month under normal condition.

10. Establishment

The components of the project establishments are; available capital, housing, equipment and
selection and purchase of day old chicken. Available capital is essential to purchase every project
components and construct housing, feeding and watering materials and etc, without money
nothing can be implemented.

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a. Land, building and civil works: The total area required for the poultry farm is about 6000m2
the building area for the poultry is 4000m2. The total cast of buildings and civil works is birr 300
per m2. The total cost of land lease at the rate of birr 9.78 birr m2 and the lease period is for 99
years.

b. Housing: Permanent type housing consisting of GI roofing, timber frames and concrete floor.
The shelter is open sided covered with mesh wire for ventilation. Each 5 hen can be allocated
within 5 sq. meters. Feed store, with a capacity able to store feed of 20000 poultry population the
same time. Concrete water trough will be built near the poultry shelter that can supply enough
drinking and sanitation purpose for about 20000 chickens. Small areas for Alfa Alfa gardening
from the total areas will be reserved.

Table 3: Land and building cost

No Description Unit amount Unit cost Total cost

1 Land lease cost years 7 6,000m2 x17.99 755,580.00 ( 10% for the initial year)
2 Poultry shelter M2 4,000 300.00 800,000.00
3 Store M2 150 2,000.00 300,000.00
4 Office M2 27 2,000.00 54,000.00
5 Fencing M 200 1,000.00 200,000.00
6 Guard house M2 4 2,000.00 8,000.00
Total 1,437,558.00

To store the chicken feed properly well ventilated and protected store with an area of 150 m2 will
be built. The store will have the capacity to accommodate total quantity of feed for 20000
chickens for at least for six months. To minimize extra cost purchase of feed once and storing it
is an important part of the project action.

c. Other kinds of buildings and inputs required

i) Office: 3 Small offices with an area of 3m by 3 m which is equal to 27m2 for the
manger the secretary and technical personnel will be built.
ii) Other buildings: Guard house with a minim cost, with an area of 2m2 just to provide
a shed for the guard will be constructed.
iii) Equipment: the farm will have the following equipment.
Sprayer: to treat and clear the external parasite, poultry are sensitive to the extranet parasite.
Weighing balance: to determine the average weight of the chicken for meat and fix the price

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Overhead water tanker: to secure continuous water flow in the farm a water tanker is
important. It can use to contain water for a period of no water.
In addition the following inputs are required for the project implementation.
iv)Day old chicken purchase: purchase of day old chicken will be purchased because good
breed of day old can be reared for the purpose of both meat and egg.
Table 4: Annual row material required

No Description unit quantity Cost in (000)birr

Local exotic Total
1 Chicken day old number 12500 20 250000
2 Feed ton 352.8 2500 882000
4 Vaccine treatment KG kg 12 4000 48000
Total 1,180,000

d) Feed availability and resources: Well prepared as a good source of feed can be purchased
from Addis Abeba with a reasonable price. There is also an opportunity of preparing the rations
at the project cite by the owner of the project because the row material is available in Dire Dawa.

e) Utilities: Annual requirement of electricity, water and fuel are stated in Table 5
Table 5: Utilities:

No Type of utilities Unit amount Unit cost Monthly cost Yearly Total cost
in birr
1 Electricity Kwt hour 2 0.83 49.80 597.6
2 water M3 3 5 1250 15000
3 fuel litters 5 16 2400 28800
Total 43597.6

f) Source of technology: Machine and equipments required can be purchased from

Dah chong Hong(Japan)Ltd.
(K.K. Tashia)Bouekekou(10). 18-2,Ruppongi 5-Chome,Minato-Ku, 106-0032
Tele: 03-3582-0032
Fax: 03-3586-8393, 03-3582-7148. Address: Addis Abeba
Table 6:The machine and equipments
No Description Quantity Unit price Birr in 1000 birr
Foreign local Total
1 Drinking system 4 175000 700000
2 Feeding system 4 175000 700000

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3 Brooder 4 400000 1200000
4 Manure handling 4 100000
system 400000
5 Knapsack sprayer 4 1630 6520
6 De beaker 1 5000
Total 2,611,520

g) Man power:-The total man power needed for the project will be stated on table 7.

Table 7: man power needed by the project:-

No Man power Unit Amount Unit Total cost Total

cost/ per month cost/year
.month
1 Farm manager number 1 3000 3000 36000
2 Secretary 1 1200 1200 14400
3 Production supervisor 3 1000 3000 36000
accountant
4 Sales person 1 1500 1500 18000
5 Assistant feed special list 1 800 800 9600
6 Veterinarian 1 1350 1350 16200
7 Store keeper 2 1000 2000 24000
8 Drivers 1 1000 1000 12000
9 Guards 2 750 1500 18000
Total 184200

11. Total indicative investment cost

1. Land and build cost - 1,437,558.00 birr
2. Raw materials (first cycle) - 1,180,000.00 birr
3. Machine and equipments -2,611,520.00 birr
4. Utilities - 43,597.60
5. Man power - 184,200.00
Total indicative project cast - 5,456,875.60 birr

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12. Conclusion

Poultry meat and egg as part of daily meal is growing in the administration in addition to the
market demand from the nearby neighboring countries which is growing from time to time. The
management of the existing local breed is very poor as a result the productivity of meat and egg
from the existing local bread is very small when compared to exotic breeds and hybrids. The
demand for poultry meat and egg is growing and will be higher in the future. The demand from
foreign market is also growing and become attractive. The production expected from the local
breeds with the existing management cannot keep reasonable pace with the growing demand.
Knowing these the administration put a direction to work hard for the development of poultry
industry. Such circumstances encourages investment in establishing a modern poultry farm, and
producing more poultry meat and egg for the satisfaction of the existing demand and pave a way
for sustainable poultry product to support the growing demand for the product of his industry.

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