PROPOSAL

Farmergiant Nigeria Limited

PARENT STOCK

HATCHERY

BROILERS

POINT OF LAY BIRDS

FARMS

BY: FARMERGIANT NIGERIA LIMITED

4th April, 2014

FARMERGIANT NIGERIA LIMITED:

The Plan.

EXECUTIVE SUMARY

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.

1.0 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.

2.0 OPPORTUNITY

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:

1. Business Promoters: Farmergiant Nigeria Limited. harness all the essential coordinates and integrate the partners

2. 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.

3. 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.

4. 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

(2 YEARS)

FIVE YEARS OPTION

TEN YEARS OPTION

BROILER BREEDERS

10,000

20,000

50,000

200,000

LAYER BREEDERS

20,000

50,000

100,000

300,000

HATCHERY CAPACITY

300,000

700,000

1,500,000

5,000,000

BROILER CAPACITY

30,000

60,000

100,000

6,000,000

REARING CAPACITY

50,000

125,000

250,000

750,000

LAYING CAPACITY

NIL

100,000

500,000

2,000.000

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.

ITEMS

DESCRIPTION

COST

REMARK

Breeder Building

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

Land

Estimated cost of 3 hectares

3,000,000

This could be less

Incubator

Capacity to hold 300,000 eggs each time

5,600,000

For a good bargain from partners

Breeder cage

Automated breeder cages with 20 years guarantee from turkey

57,000,000

Automatic egg collector and Manure collector

Generator power

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

1,200,000

2,000,000

Cleaning birds for market.

Initial to be expanded

Hatchery Building

To house the incubators and process chick

3,600,000

T