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ESTABLISHMENT OF A NEW FEED MILL IN NIGERIA

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ESTABLISHMENT OF A NEW FEED MILL IN NIGERIA Powered By Docstoc
					               PILOT PROJECT
ON THE ESTABLISHMENT OF A NEW FEED MILL IN BUKURU-DOROWA
AREA OF JOS, PLATEAU STATE, NIGERIA.




   PTC+ IDAF PROGRAMME FROM MARCH- MAY, 2012




               PREPARED BY
             OGUNSOLA, OLUSOLA OLUKUNMI
Table of contents

Foreword                                    Error! Bookmark not defined.Error! Bookmark not defined.

1      DESCRIPTION OF THE PRESENT SITUATION                                                       2
       1.1   Introduction of the Country                                                          2
       1.2   Important livestock species                                                          2
       1.3   Present Feed Mills                                                                   3
       1.4   Challenges Regarding Feed                                                            3
       1.5   Work Description                                                                     3
       1.6   Conclusions and Recommendations                                                      4

2      STARTING POINTS FOR THE FEEDMILL                                                           5
       2.1   Location                                                                             5
       2.2   Specie of livestock for which feed will be produced                                  5
       2.3   Required capacity                                                                    6

3.     NUTRITIONAL ASPECTS                                                                        9
       3.1   Raw materials available                                                              9
       3.2   Feed formulation                                                                    10

4.     TECHNICAL ASPECTS                                                                         15
       4.1   Block flow chart                                                                    15
       4.2   Equipment list                                                                      18
       4.3   Time schedule                                                                       19
       4.4   Energy consumption per ton of feed                                                  20
       4.5   Required buildings                                                                  20
       4.6   Total Investment Required                                                           20

5.     ORGANISATIONAL ASPECTS                                                                    22
       5.1   Labour Structure                                                                    22
       5.2   Collection of raw materials.                                                        23
       5.3   Production schedule                                                                 23
       5.4   Distribution of finished product.                                                   23
       5.5   Record keeping (raw materials and finished product                                  23

6.     ECONOMIC ASPECTS                                                                          24
       6.1   Financial starting points                                                           25
       6.3   Calculation of break even production                                                26

7.     CONCLUSIONS AND RECOMMENDATIONS                                                           28



Document1
                       Acknowledgement

Am grateful for the opportunity to study at PTC. I have enjoyed the wonderful cooperation of
the trainers and my colleagues.

The Netherlands government sponsored my stay here. Am grateful.




1
1       DESCRIPTION OF THE PRESENT SITUATION
1.1     Introduction of the Country
       COUNTRY PROFILE: NIGERIA




AREA                923,768 sq Km (356,700 Sq Miles)
POPULATION          144.7 million (World Bank, 2006)
CAPITAL CITY        Abuja (6million)
OTHER MAJOR CITIES Lagos, Ibadan, Kano and at least 7 other cities with over 1 million
                    People
PEOPLE              Hausa / Fulani, Yoruba, Igbo and some 250 ethno-linguistic groups
LANGUAGES           English (official) but Hausa, Yoruba and Igbo are also widely used
CLIMATE             Climate is tropical, so it is hot all year round with two seasons: wet and
                    dry. The wet seasons extends from April to October, the wettest
                    Month being June and the wettest area being the East coast. Between
                    November and March, the weather is dry and very hot. The hot
                    harmattan wind from the Sahara sweeps across the northeastern areas.
RELIGION            Muslim, Christian and Traditional religion practice
CURRENCY            Naira

1.2     Important livestock species
The livestock and poultry production industries are well developed in Nigeria. The different
livestock species kept in Nigeria include poultry, cattle, sheep, goats, donkey, horses, pigs,
rabbits, guinea pigs and rats. The poultry specie includes indigenous and imported chickens,
guinea fowls, turkeys, ducks and geese. Majority of the ruminants (cattle, sheep and goats) are
supplied with fodder feeds harvested from rangelands and grazing reserves. O.T Adebayo et al
(2002) added that cattle production systems are largely pastoral, with the vast majority of cattle
being maintained in transhumance and agro pastoral systems. Most other livestock resources
are reared under the traditional extensive systems. Also over 90 percent of the country’s pig
and rabbit production is managed under traditional husbandry system.
Poultry outnumber all other species of livestock in my working area and indeed in Nigeria
generally. Poultry are found throughout Nigeria even though ducks, guinea fowls and pigeons
are commonly kept, chickens are by far the most common. More than 90 percent of these birds
are commercial layers and broilers kept under intensive systems and are primarily meant for
profit making. Eggs, broiler birds and spent layers are sold for different prices depending on
time of the year and bargaining power of the buyer. Large numbers of birds are reared
intensively on commercial basis. A few of the birds (Local breeds) are kept under traditional
system of management. The commercial birds receive vaccinations against diseases of




2
      veterinary importance. The local breeds do not receive any veterinary services or treatment
      except there is a disease outbreak. They are mostly fed grains like sorghum, millet maize and
      food remnants and scavenge around the neighborhood for survival

      Table 1 SPECIES OF LIVESTOCK POPULATION IN MY WORKING AREA
Livestock Population % Receive      % No        Feeding                                          Rearing
                      concentrate concentrate System                                             System
Poultry   45,000      100               ___     Complete                                         Intensive
Cattle    1500        10               90       Natural                                          Extensive
                                                vegetation/crop
                                                residues
Goats     90              __           100      Natural vegetation                               Extensive
Sheep     120            ___          100       Natural vegetation                               Extensive


      1.3       Present Feed Mills
      Feed Mills          Average Capacity   Feed Quality        Average             Feed Type
                          tons/yr                                Price/25kg
      Grand Cereals &     7million           Good                N 2,20000           Chick, grower,
      Oil Mills Limited                                                              layer,
      ECWA Feed Mill      2.5million         Good                N 2,100.00          All poultry type


1.4         Challenges Regarding Feed
      It has been reported that apart from the higher crude fibre values and low crude protein
      observed in some commercial livestock feeds, the finished feed and feed ingredients were
      adulterated with sand, sawdust, and other contaminants Ogunwolere and Onwuka (1997).
      More than 80 percent of feed manufacturers are in the Southern part of the country (Aduku,
      1992), they buy grains and oil cakes in the middle belt and Northern States and incurs cost in
      transporting them to the South. The company pay the contractor for grains, transport, his
      labour, profit, and interest on the money he borrowed and possibly kick backs, which are all
      billed into his invoice. This is in addition to exorbitant prices paid for vitamins and trace
      minerals due to the falling value of the Naira. Also there is the cost of bags for the feed,
      bagging, sewing the bag and transportation. The further away the feed moves from the
      manufacturer, the more expensive it becomes to the farmer.
      Mojitaba et all (2002) reported that much of the impurities and existence of unwanted particles
      depends on how the ingredients are handled before it arrived at the Feed mill. The presence of
      broken bottles, metal objects, stones and sand are major problems confronting the feed mill in
      Nigeria. Also poor methods of processing and storage leads to infestation by insects of feed
      ingredients, mould growth and rodent attack. The problem of storing grains for long-term use
      without regular checking of the moisture content is very rampant in Nigeria. Most grains are
      stored on bare floor without pallets and under very poor conditions and temperature too.
1.5         Work Description
      I am involved in the weekly planning, supervision and production of feed. I also handle students
      who visit the Feed mill for practical class by showing them how poultry feed is produced and all
      the stages involved in preparing soyabeans in the oil mill before including in the feed.




      3
1.6       Conclusions and Recommendations
      The issue of feed quality is not given the desired attention in most government and private
      firms in Nigeria. This could be responsible for the low performance of all our animals in term of
      growth, milk, yield and egg production. Most of the impurities and contaminations found in
      finished feeds are due to greed of the individuals and lack of good control measures. If the
      existing mills will not improve, then there is need for the establishing a new feed mill that will
      sell best quality feed at the low price to farmers.
      I recommend that we become more stringent in selection of feed ingredients, since the degree
      of feed quality is a function of the consistency in which the feed ingredients is procured,
      formulated, processed and delivered to the farmer. I would also recommend a system that
      provides the assurance of all incoming ingredients and finished products to meet nutrient
      quality specifications (and not by sight, taste or smell). We need a system that ensures the
      elimination or reduction of errors that can occur at reception, storage, blending, mixing and
      storage of finished feeds. On a regular basis, there is need to plan for corrective action if errors
      are discovered.
      Until this is done, achieving optimum livestock performance in Nigeria will remain a mirage.




      4
 2 STARTING POINTS FOR THE FEEDMILL

 2.1     Location
 The feed mill will be sited in Dorowa-Bukuru area of Jos South Local Government Area of
 Plateau State, Nigeria

                                                  This is where Dorowa is located in Jos
                                                  South Local Government Area of
                                                  Plateau State.




 Map of Jos, Plateau state, Nigeria.
 The Reason for the choice of this location is as follows:
        A. There is no single feed mill in this area where there are a number of small-scale
        poultry and cattle farmers.
        B. Sitting the new feed mill in this area will improve the feed supply to these groups of
        farmers and rural women in agriculture since there is a problem of buying poor quality
        feed at high price from most commercial feed mills.
         C. There is a beautiful road network in place for easy transportation of raw materials
        to the mill, stable electricity and good water supply in the area.
        D. Dorowa- Bukuru is about 3km to a major grain market.
         E. Because of the increasing number of farmers involved in poultry, cattle and pig
         production therefore providing ready market for the feed.


2.2      Specie of livestock for which feed will be produced
        The specie of livestock the feed mill will produce feed for are: Layers, Cattle and Broiler
        Finisher.

         NUMBER OF ANIMALS SPECIES



 5
                        Layers          35,000
                        Broilers                 20,000
                        Cattle(Beef)              1,500

2.3      Required capacity

      The Feeds to be produced by the mill will include Layers and Broilers rations and Beef
      cattle concentrates. The Beef cattle concentrates will be sold to the popular cattle market
      in the community that opens daily. Other feeds will be sold to poultry farmers and
      institutions in the area that are keeping birds.
 POULTRY FEED
 The total layers estimate is 35,000.
 Mortality 10% (5% Chick, 5%Grower)
 Layers Feed
 The Feed mill will produce 20% of feed
 20% of 35000 =7000 Layers
 Layer bird will consume 45kg of feed
 Total feed x Total number of birds= 45kg x 7000 =315,000/1000kg = 315tons
 FEED FOR CHICKS
 Number of Chicks- 100x7000 / 90=7778
 Feed consumption per chick= 2kg
 Total Feed =2kg x 7778 =15.6 tons
 FEED FOR GROWERS
 No of Chicks becoming Growers is less by 5%
 5/100 x7778 =389
 7778-389 =7389
 Total feed for Growers =7389 x8kg = 59112/1000 = 59 tons
 BROILERS
 Total broiler Estimate =20,000
 % Mortality during rearing =2%
 Feed mill will produce 20% of Feed
 20% of 20,000 =4000
 Given: 1 Broiler bird will consume 5 kg of feed in 8 weeks.
          No. of batches in a year 6.5 batches( 52wks/8wks)
 Total to be reared 98%.
 100x4000/98 =4082
 Feed required= 4082 x5kg x6.5 = 132665/1000 =133 tons
 CATTLE (BEEF)
 Estimated total Beef cattle =1,500
 Feed mill will produce 20% of feed
 20% of 1,500 =300
 GIVEN: THAT EACH ANIMAL WILL CONSUME 1.5KG OF FEED/ DAY
 1.5Kg X 300 = 450 kg/day
 1.5 x 300x365days =164250 kg/year = 164 tons
 Total Feed for all Livestock
 Chick       =15.6 tons
 Growers = 59 tons
 Layers      =315 tons
 Broilers     =133 tons




 6
Beef Cattle =164 tons
TOTAL        687 tons
Total capacity of the feed mill is 687 tons/ year.
OPERATIONS OF THE FEED MILL
Total Working Days =5 days x 52 weeks = 260 days/ year
Working Hours daily = 8 hours.
Efficiency = 70%
Production of feed / day = Tons/total Working Days
                          = 687/260 = 2.64 tons/day
Production in tons/hour = production /Day/Efficiency x hours /day
                         = 2.64/0.7 x8 = 0.47 tons/ hour
EXPECTED GROWTH IN 5 YEARS
At 3% growth rate in population per year (Source: Nigerian Bureau of statistics)
SPECIES            1ST YEAR      % INCREASE      INCREASE IN 5            FEED
                                 PER YEAR        YEAR                     REQUIRED IN
                                                                          5YEARS
Chick              15.6          3%              2.34                     17.94
Grower             59            3%              8.85                     67.85
Layers             315           3%              47.25                    362.25
Broiler            133           3%              19.95                    152.95
Cattle             164           3%              24.6                     188.6
TOTAL              686.6                                                  789.59

Capacity in 5 years = tons/working days =789.59 /260 = 3.04 tons
Efficiency % x working hours /Day =3.04 tons / 0.7 x 8 = 0.54 tons/hour.




7
      3.        NUTRITIONAL ASPECTS
      3.1       Raw materials available

        1 Euro = 215 Naira.
RAW                     ME          D.E        C.P.     D.C.P.      Lys     M+     Meth    Fat %   Fibre   Ca %    P%     TDN   DCPcat   Price/k   Availability
MATERIALS               (Poultry)   /(Pigs)    %        (Pigs)      %       c%     %               %                            tle      g
                        kcal/kg     kcal/kg             %
Maize grain             3432           -       8.9      6.6         0.25    0.35   0.18    4.0     2.00    0.01    0.09                  55.00     **
Maize        bran37%       2520       3247     12       8.8          0.49           0.23   5.80    6.00     0.10          67    6        25.00     **
starch                                                                      0.49                                   0.50
Chad fish               2527                   25.00                3.80    2.66   1.50    19.58   4.89    2.89    2.37                  180       **
Sesame Expeller         2480        3337       44.30    39.90       1.11    2.17   1.24    10.40   6.30    1.68    0.94   79    41       16.00     **
Rice Bran 9-15%         2200        2934       13.00    9.00        0.63    0.53   0.27    10.20   11.90   0.10    1.58   66    8        12.00     **
 Rice bran              2860                   12.0                 0.50    0.34   0.24    12.50   12.50   0.04    0.46                  9.00      **
Palm Kernel meal        2175                   18                   0.64           0.39    6.00    12.0    0.21    0.16                  14.00     **
 Salt                                                                                                                                    120.00    **
Groundnut cake          2640        3185       45                   1.60           0.48    6.00    5.00    0.20    0.20                  60.00     **
SBM Expeller 45/46      2700                   44                   2.80           0.59    3.50    6.50    0.20    0.60                  82.00     **
Fish meal 70%           3320        3438       65.10                        2.66   2.03    8.00            3.50    2.80                  250.00    Imported
Full fat Soya           3100        3440       42                   2.80           0.65    18.0    5.50    0.20    0.50                  80.00     **
Blood meal              1927        2845       77.35                3.30    2.40   1.00    0.53    1.46    0.30    0.30                  90.00     **
Rice bran 1-9%          2950        3712       13.60    9.90        0.65    0.54   0.27    6.10    15.60   0.13    1.57   78    9        10.00     **
Cotton Seed cake        2146        1892       25                   1.15    1.02   0.40    9.00    25.00   0.25    0.30                  25.00     **
Limestone                                                                                                  35.00                                   **
Soya oil                9300        1200                                                   99.5                                          125.00    **
Bone Ash                                                                                                   37.00   15                    48.00     **
Monocalcium phos.                                                                                          16.00   22.5                            **
                                                                                                                   0
      Nutritive values based on local / foreign Research
      ** Are for ingredients that are locally available in the market.




      9
  These ingredients can be purchased directly from the open market. There is a large grain market
  in Jos where ingredients like soya beans, Millet Maize Cassava and maize bran are always
  available. But Fish meal and other essential amino acids are however imported and readily
  available in the market
  The above table are based on local / International research

  3.2     Feed formulation
   The Nutritional standard used is based international standard.
Type of    ME         CP    DCP LYS        METH M+C C. Fat          C.F   Ca    P
feed       Kcal/kg %        %      %       %       %       %
Chick      2800       20           1       0.45    0.80 6           5     1     0.7
Grower     2800       16           0.8     0.32    0.7              6     1     0.6
Layer      2750       16.5         0.7     0.28    0.6              8     3.4   0.6
complete
Layer      2850       17           0.75 0.3        0.65             7     3.7   0.8
High
Energy
Layer      2700       16           0.7     0.28    0.6              8     2.5   0.8
Low
calcium
Broiler    3000       22           1.20 0.50       0.90 9.0         5.0   1.0   0.50
Starter
Broiler    3200       20           1       0.45    0.8              5     0.9   0.7
finisher 1
Finisher   3100       19.0         0.95 0.44       0.76 10.0        5.0   0.9   0.7
2




  10
BEEF CATTLE REQUIREMENT
REQUIREMENT FOR BEEF CATTLE
Body      ADG          DM-intake   TDN       DCP       Ca   P
weight    (G/DAY)      (kg/day)    (G/day)   (g/day)
50kg
 50       100         2.0          1000      180       10   10
          300         2.5          1200      220       10   10
 100
          200         3.0          1400      200       11   10
 150      400         3.2          1900      250       11   10
 200      300         3.8          2300      230       12   11
          500         4.2          2600      290       12   11
 250      300         4.8          3000      290       12   11
          500         5.0          3900      350       12   11
 300
          300         5.4          4600      330       13   12
 350      500         5.8          4000      370       14   12
          900         6.0          4500      420       18   16
 400      300         6.4          5200      360       14   12
          500         7.0          4600      400       14   13
          900         7.4          5200      440       19   17
          300         7.2          4600      390       15
          500         7.8          5100      420       16   12
          900         8.5          6000      460       20   13
          500         8.3          5400      430       16   18
                                                            13




11
Cattle Feed




12
Broiler Finisher 2




Layer Complete




13
      REQUIRED RAW MATERIALS PER YEAR

                                                     Layers                                     3%       Total
     Ingredients              Broiler                  %                    Beef                losses
                                %                                            %          Total
                            Ton 152.95             Ton 448               Ton 188.6     789.56
Maize                    48.1           74    36.8      164.9      37.25       70.25   309.15   9.27     318.42
Chad Fish                 5            7.6                                             7.6      0.22     7.82
Sesame Meal Expeller     9.1            14                         5           9.43    23.43    0.70     24.13
Bone Ash                 1.2           1.8    3.5             16                       17.8     0.53     18.33
Salt                     0.5           0.8                                             0.8      0.02     0.82
Pre mix Broiler          0.25          0.38                                            0.38     0.01     0.39
Premix cattle                                 0.25        1.12     0.25        0.5     1.62     0.05     1.67
Premix Poultry                                0.25        1.12                         1.12     0.03     1.15
Soyabean Meal            7.35          11     4.6          21                          32       0.96     32.96
Groundnut cake            2            3                                               3        0.09     3.09
Rice Bran 9-15% Fibre     20           30                                              30       0.9      30.9
Fish Meal 70%            3.3           5      2.1         9.4                          14.4     0.43     14.8
Soyabean oil             3.2           5      1.7         7.6                          12.6     0.39     12.97
Cotton seed cake                              14.2        63.6                         63.6     1.90     65.5
Full fat soya                                 3.3          15                          15       0.45     15.45
Rice Bran                                     18.2        81.5                         81.5     2.45     83.95
Blood Meal                                      2          9                           9        0.27     9.27
Limestone                                     5.75        25.8                         25.8     0.77     26.57
Palm kernel Cake                              7.4         33.2                         33.2     0.10     33.3
Rice Bran 1-9%                                                     25          47.15   47.15    1.41     48.56
Maize bran (30%starch)                                             30          56.6    56.6     1.69     58.30
Limestone                                                          2           3.77    3.77     0.11     3.88
Monocalcium Phosphate                                              0.5         0.9
Total                    100         152.58   100        448.12    100         188.6   789.52   22.75    812.23




      14
4.     TECHNICAL ASPECTS


4.1    Block flow chart

      TRANSPORT



      RECEPTION



       WEIGHING



       STORAGE



       BLENDING

                           ADDING FINES
       GRINDING



        MIXING



      BAGGING



      WEIGHING

PRODUCTS

       STORAGE




       DELIVERY




15
FLOW CHART




     T       WP   S   WP   HM   AG   VM   WP   FP   T




17
 4.2    Equipment list

Code    Name         Power (kw)   Capacity   Measurements      Price/      Remarks
                                             (length, width,   Naira
                                             height)
HM      Hammer        5.5         907                          322,500
        mill
BN      Bin                       750kg      D=1200,H=2000     193,500     1
VM      Vertical      2.2         500Kg      1000, H=3 300     494,500
        mixer
WP      Weighing      -                                        483,750     3
        platform
ES      Electronic    -           10kg                         10,750      1
        scale
AG      Auger         1.1         8t/h                         204,250
BS      Bag                                                    50,000      1
        Sewing
        machine
        Wheel cart                                             30,000      2
TOTAL                                                          1,759,250




 18
4.3       Time schedule

Step and time                                  20                  40                  60              80                  100         120

                                  10                     30                  50                   70             90              110
                                  7
Blending
                                                    27
                                                                                        67
Grinding                                                      37

                                                                        41                       68
Filling

                                                                                  56                        83
Mixing

                                                                                            64                        91
Bagging



Cycle time process: 91-64= 27 mins
Capacity of this unit:0.54 t x 60/27= 1.2 t/hr
Capacity of the feed mill calculated = 0.54 ton/ hr

Mixer Capacity - batch size       = 500kg
Cycle time                        = 27 mins ( FT=4, MT=15, BT=8 )
Capacity 60/27 x 500 = 1.2 tons / hr.




19
4.4     Energy consumption per ton of feed
The unit of electricity consumption = kWh (kilowatt hour)
Electricity consumption / ton = kWh/batch/T on produced / batch
Calculate             Batch size 500kg
electricity           (time schedule)
consumption per
batch.
Code                  Name              Power in kWh      Running time per     Electricity
                                        (from equipment batch (from time       consumption per
                                        list)             schedule) (r)        batch
                                                                               E = P x (r/60)
HM                   Hammer mill       5.5                 30                  5.5x30/60=2.75k
                                                                               W/h
VMI                  Vertical mixer    2.2                 23                  2.2x23/60=0.84
                                                                               kW/h
AU                 Auger              1.1               4                      1.1x4/60=0.073
Sub total                                                                      3.663
Add up miscellaneous 10%(lamps starting /stopping)                             0.3663
Total energy consumption per batch (b)                                         4.0293
Electricity Consumption =4.0293kW/h
Batch Size = 500kg
Electricity consumption =4.0293*1000 / 500kg =8.0586 kwh/ton

4.5     Required buildings
A. Total tons to be produced = 789.56 /52 = 15 tons / week
B. Storage of raw materials = 4wks, with 1 ton/m2
        15tons x 4 = 60 total surface needed for ingredients ( add 3% loss =61.85)
        Premix storage is 12m2
C. Storage of finished products 1wk is 0.5/m2
        15 x1/ 0.5 = 30 m2
       Area for Equipment = 30m2 ( small Equipment 6m2)
       Office                 = 12m2
        Toilet               = 4m2
        Land for future expansion 16m2
       Total =62+30+30+12+12+4+6+16 = 172 m2.
       Measurement of the building will be 15 x 11.45 = 172m2

4.6     Total Investment Required
Land                                                    750,000
Building Assumed                                        2,000,000
Equipments Cost                                         1,759,000
Stuck truck 8 tons                                      1,000,000
Total                                                   5,333,950




20
TECHNICAL DRAWING LAYOUT




21
      5. ORGANISATIONAL ASPECTS


5.1      Labour Structure



          Position                 Responsibilities          Monthly Salary   Annual Salary


                              In charge of all
                              administrative support,
                              planning and program
                              schedule, ration
                              formulation, purchase and
Manager / Accountant (1)                                        15,000          180,000
                              marketing, record
                              keeping, employment of
                              supportive staff and
                              welfare. Assigns duties
                              when necessary.



                              Maintenance of all
                              equipment and machines.
                              Supervises day to day
 Foreman/ Supervisor (1)      running of the mill.              10,000          120,000
                              Compliment the manager
                              in activity and also writes
                              general reports



                              Feed production. Loading
                              and unloading materials
                              and feed in truck; One of
                              the will also serve as
Production staff/driver (4)   driver for feed distribution
                                                                 7,500          360,000
                              maintaining and repairing
                              of machines within their
                              capabilities and general
                              cleaning and sanitation of
                              the mill.


     Night watchman (1)       Security of mill at night.         5,000

           Total                                                                660,000




22
5.2     Collection of raw materials.
 The proximity of the mill to Bukuru Market ( a major grain market ) gives it access to procure
 and transport the materials to mill at a very little cost. The Bukuru market is less than 3 km to
 the mill. Grains and oil seed products will be procured from the market while vitamin and
 mineral premix ( though imported) are also on sale in Bukuru market. Transport cost of these
 ingredients is approximately 30.00 naira/ 100kg.


5.3     Production schedule

 Total tons = 789.59
 Layer feed = 448.04 tons x5 /789.59 = 2.8 days
 Broiler feed = 152.95 tons x5 /789.59 = 0.96 of a day
 Cattle feed = 188.6 tons x5 /789.59 = 1.19 days
 Monday, Tuesday and Wednesday will be devoted to producing Layer and Broiler feeds,
 Thursday for cattle feed while Friday will be used for the following activities: stock balance,
 writing of weekly reports, evaluation, planning for the next week and general sanitation of
 the mill.

5.4     Distribution of finished product.

 The farm truck will deliver finished feed to distribution centres in town. The mill can also have
 a shop in town to break the monopoly of middle men. In these shops farmers can buy the
 products, or purchase directly at the farm gate and payment will be on cash and carry basis.
 The feed may be packed in different colours for ease of identification within the mill and
 between selling points and for storage purposes.

5.5     Record keeping (raw materials and finished product

Below is the inventory for monitoring raw materials brought in and finished products leaving
the farm. Every ingredient is to have a card. Regular checks of material quality and quantities to
ensure prompt action.
Raw materials
 Date              Raw material                Quantity in          Quantity          Balance
                                                  stock            used


FINISHED PRODUCTS

Record sheet of finished products
Type of feed: Layers mash
Minimum amount to be kept in store: 10 tons
Production date Tons in store        Expected sales         To be produced       Actual sales
1/5/2010            8                   11                  13                   15




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     6. ECONOMIC ASPECTS

FEED FORMULATION FOR LAYER
RAW             % IN            488 TONS     PRICE OF         TOTAL
                LAYER           OF FEED      RAW MAT./        COST
                FEED            (A)          KG (B)           (A X B)=C
MATERIAL
Maize          37.05          180.8           55.00           9944
Fish meal      2.1            10.24           250.00          2560
Cottonseed     14.2           69.29           25.00           1732.25
Cake
Soya meal      4.8            23.42           82.00           1920.44
F/fat soya     3.3            16.1            80.00           1288
Rice bran      18.2           88.8            9.00            7992
Blood meal     2              9.76            90.00           878.4
Bone Ash       3.5            17.08           48.00           819.84
Limestone      5.5            26.04           12.00           312.48
Premix         0.25           1.22            660.00          805.2
Palm k/cake    7.4            36.11           14.00           505.54
Soya oil       1.7            8.29            125.00          1036.25
TOTAL          100            488             1450            29,794.4
Plus 3% losses= 29,794.4 x1000 /97 =30,715.90

INVESTMENTS
Land                                              750,000
Building                                          2,000,000
Equipments
     Hammer Mill                                  322,500
     Vertical Mixer                               494,500
      Storage bin                                 193,500
      Weighing platform ( 3 )                     483,750
      Electronic Scale                            10,750
      Auger                                       204,250
      Bag sewing Machine                          50,000
      Stuck truck                                 1,000,00
Total                                             5,509,000

Cash in hand
Raw Materials in store 789.56/52=15x4=            60tons
Feed in store 789.56/52                           15.2tons

Total Investment

TECHNICAL STARTING POINTS
Tons to be produced                               789.56
Capacity of the mill                              0.54t/hr
Type of feed to be produced
              Layer feed    488.6 tons
              Cattle feed   188.6 tons

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              Broiler Finisher 152.95 tons

Distribution and transport System
Feeds will be sold in shops and farmers can also buy directly from the mill.

Manpower needed
Manager/ Accountant (1)
Foreman/Supervisor (1)
Production Staff(4)
Watchman(1)
Average storage of Raw Materials       4weeks
Tons of materials in store             60 tons
Average storage of finished products 1week
Tons of finished products in store      15.2 tons
Sacks will be used to pack the finished feed. They will not be recycled.


6.1     Financial starting points
Interest rate                                          7%
Electricity Cost per kWh                               8
Demand Charges                                         2,500 (naira)
Packing Cost per ton                                   2,000
Manpower Cost                                          2,000
Transport cost                                         1,000,000
Insurance Cost                                         20,000
Office/ stationary costs                               1,000
Fencing, road, pavement cost                           650,000
Depreciation on buildings                              6%
Rate of maintenance of the building                    4%
Rate of maintenance of Equipment                       10%

CALCULATION OF FIXED COSTS
 ( for the whole Mill)
Interest on land 10 % of 750,000                       75,000
Buildings: depreciation
           6% x 2,000,000                              120,000
           Interest
            2,000,000 +0 x10%
                2
          Maintenance
            2,000,000x4%                               800,000
Equipment
            10%x4,509,000                              450,900




25
 Interest         5,509,000+0 x10                   275,450
 Maintenance 5,509,000x10%                     550,900
Insurance Cost                                         20,000
Labour cost                                            660,000
Advertisement cost                                     6,500
Interest on stock(Raw & finished)                      189
Cash at hand (interests only)                         50,000
Total Fixed costs are                               3,008,939

Fixed costs per ton =Total fixed costs/ Total tons produced
                     = 3,008,939/ 789.56 = 3,810.90
6.2      CALCULATION OF VARIABLE COST(PER TON)
Cost of producing layer mash + 3% losses(30,715.90/488) = 6294.2
Packaging cost/ton                                          =1,500
Transport cost (1,000,000/789.56)                           = 1,266
Cost of Energy consumption/ton(8.0586x8)                     = 64.48
Demand charges(2,500/789.56)                                 = 3,166
Labour costs/ ton(660,000/789.56                              = 836
Total Variable Cost                                          13,126.68
Cost price Calculation
Total fixed costs/ ton = 3,810.90
Total variable cost/ ton 13,126.68
Cost price /ton           =16,936.68
Mark up price 10%          = 1,693.668
Sales price/ton            = 18,630.348



6.3    Calculation of break even production

          Total Fixed Costs                    .
Cost price/ton – Variable cost /ton
3,008,939          .   = 5467152 tons
18,630.348 – 13,126.68

Therefore the breakeven point for the Feed mill is 546.715 tons




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     7. CONCLUSIONS AND RECOMMENDATIONS

       The feed mill will be located in Dorowa Bukuru area of Jos Nigeria.

       The initial investment is high and so is several other assumptions for which I take
       personal responsibility. However, I acknowledge my weakness in certain areas and
       some calculations will have to be adjusted and certain costs reviewed.




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Description: LEARN HOW TO ESTABLISH A NEW FEED MILL IN SUB-SAHARA TROPICS.