Project profile for livestock feed processing
APRIL, 2013 G.C
DIRE DAWA
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Table of content page
1. Executive summery……………………………………………………….…3
2. Introduction…………….……………………………………………….…..4
3. Background…………….………………………………………………..…..5
4. Policy environment and incentives………………..……………………..….6
5. Project rationale…………………………………………………………..…7
6. Project objective………………………………………………………….…8
7. Project area description………………………….……………………….…8
7.1. Administration structure……………………………………….…...9
7.2. Land availability………………………………………………….…9
7.3. Infrastructure…………………………..…………………………...10
7.4. Service availability…………………………..……………………...10
7.5. Labor force potential………………………………………………..10
8. Project description…………………………………………………………..10
9. Market……………………………………………..……………………..…10
9.1 Estimated cattle feed…………………………..……………………..…11
9.2. Feed requirement by off take………………….………………………..12
9.3. Other demands………………………………………………………....12
9.4. Existing animal feed processing plant……..………………………..….12
10. Establishment…………………………………………………………………….12
10.1 project capacity……………………………………………………….…... 12
10.2. Feed preparation process……………………………………………….…13
10.3. Components of the project……………………………………………......13
10.4. Source of technology………………………………………………….......15
10.5. Man power……………………………………………………………....…16
11. Total investment……………………………………………………………...…17
12. Conclusion ……………………………………………………………………....17
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1. Exertive summery
Animal feed has always been a major limiting factor in the growth of livestock industry in
developing countries and in Ethiopia. Availability of animal feed is one of the greatest
constraints to the expansion of livestock industry in Dire Dawa administration. Apart the high
and fluctuating costs, some of the ingredients used in the mixed feed notably cereals, grains are
in high demand for human consumption.
In view of the dwindling supply of the conventional free sources and the shortage of foreign
exchange for importation, an alternative source of feed produced locally is very small. The
project profile highlights about the establishment of animal feed processing plant based on the
estimated market demand of the administration and source of row materials available.
The initial indicative cost for the establishment of the project is estimated to be 28,985,695.7 birr.
The project will provide an employment for 29 people.
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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 major ones.
The potential resource of live stock in the administration is reasonably high.
Live stock products and byproducts are the major income source for the pastoralist and agro
pastoralist of the administration. The culture of the farmer in this area to rear cattle for the best
benefit is not at optimum level, Feed is less available and the management of these cattle by the
farmer is not well developed. Intensifying the management system and providing better amount
and quality of feed for these cattle are front line strategies to improve the cattle product and
byproduct. Establishment of medium to large scale feed processing plant with the objective
improving quality livestock feed supply and mitigate its shortage is taken as one strategy.
Large number of cattle from the neighboring regions is brought by owners to Dire Dawa to fetch
for better market, such cattle needs feed until the owners sold them. Different fattening projects,
dairy and poultry farms at commercial level need well processed animal feed for better
production. The farmer needs feed during the dry season to supplement the available feed at
farmers level. This and other demands under the normal condition make the project visible and
key to solve one of the critical causes for poor production of animal product and byproduct of the
administration and its surrounding.
The total establishment cost of the project is 16,095,425.7birr and creates employment for
permanent skilled persons.
3. Background
The total live stock population in the administration currently is estimated to be about 339,681.
In addition, the live stock number from the neighboring regions reaches more than
25,616,695(CSA, 2011). The breed of the cattle in the administration and its surrounding is Zebu
type. The size is small and its average weight is below the international TLU standard. The
genetic potential to provide reasonable production is small when compared to the exotic ones.
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Some management conducted by individual farmers shows that there is a good potential of
improving the production of this breed, and more so wherever there is better and good handling
in a commercial farm.
The administration understood at large the problem of livestock product and quality provided for
local market is under optimum standard. It is also observed that the nature of quality life animal
in the administration and neighboring regions did not reach to its optimum natural potential.
Although there was no research done to find the most limiting critical factor for the basic
problem that hampered this industry, the problem might possibly comes due to less availability
of optimum Quality feed, poor management system, poor genetic makeup and incidence of
diseases. From these all, shortage of feed is the major problem. It is well known that natural
pasture is usually available in the short rainy season. Preparation of hay for dry season in the
administration or bringing prepared ones from the neighboring regions is very limited as a result
in most of the year livestock face shortage of food and more so when it comes to its quality.
Experience showed supplementing feed during feed shortage season by purchasing good quality
animal feed from the market is not easy, because there is almost no animal feed processing
center in the administration
Naturally Dire Dawa has ideal environment to produce live stock products. Knowing that, the
administration together with the community is working hard to better off the live stock product
through the management of grazing land. In addition the establishment of animal feed processing
industry is also one of the strategies set to alleviate the problem of feed shortage by the
administration.
4. Policy environment and incentives
The agriculture policy of Ethiopia encourages the improvement of the productivity of small
holder agriculture (where crop and livestock productions 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 live stock that can
create opportunity that springs from better managed live stock. Improved live stock stand with
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better quality can serve as a seed stock and can be purchased by the investor better to perform
the objective of the investor by generating profit from the extra gap originated from the
remaining feed and less management gap in a very short period of time. 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 Development Bank of Ethiopia (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.
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.
Council of ministers proclamation N0. 207/2012 on investment incentive says investment made
on agriculture in general and live stock 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 support
the livelihood of 80 % of the population. The country has the largest number of livestock and is
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the largest live stock producers 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,2011/12).
Ethiopia offers the global market a wide range of processed and semi processed live stock
products presently. To use these fertile environments and exploit the existing potential still needs
further effort to better off and make advantage out of it.
Natural grazing land is the main source of feed in the administration which supplies crude
proteins and metabolizable energy for maintenance and production requirements of ruminants.
Animals could get forage from various feed resources which include grazing land, crop residues,
aftermath grazing, forest land, bush land, etc. The type and amount of particular feed type is
depending on topography, altitude, temperature, rainfall, soil type, etc.
Generally, there is no shortage of feed supply in Dire Dawa administration if the availability of
feed in terms of dry matter is considered. Unfortunately most of these forage resources are not
consumable as the dry period advanced due to the increase of lignin in the cell wall. The annual
forage yield in particular area depends on climatic and soil nature of the grazing area.
The existing live stock in the administration and neighboring regions faces feed shortage during
dry period. Farmers are forced to buy floor mill byproducts as a feed source for their live stock
during this period. The existing and newly established fattening, dairy and poultry farms needs
well prepared animal feed for reasonable product.
Overcoming the less live stock productivity and production due to the less availability of feed, in
particular, and inability to prepare good and ideal all round management program in general to
keep the situation nearly the same at a level for the livestock to bring about the optimum
production are areas to look upon. Because feeding balanced ration, preventing and controlling
animal health problem and applying all round and better management system can possibly bring
additional product from the same number of livestock. Therefore applying aforementioned
efforts are positive action and necessary steps to be taken to improve the live stock products and
byproducts.
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Establishment of animal feed processing industry can be the best solution to alleviate the
problem of feed shortage. In doing so we are not only solving the problem due to animal feed
shortage, but substantial progress can be achieved in growing the livestock product and
byproduct used for local consumption. Increasing the foreign currency earnings from the sector
will increase as a result of extra surplus used for export. Experiences showed that the well supply
of good ration feed and better management Helps to overcome the devastating effect of the
environment and can bring better and quality livestock product. In general we can conclude that
In addition to the adaptation of the existing live stock to the harsh environment, its good
potential for responding for better feeding and management. Therefore the big potential of live
stock resource and the experience at export market enables the administration to gain much from
the growing global market if more effort in supplying better quality feed is done
In addition, Dire Dawa is located in eastern Ethiopia with a strategic location lucrative to the
animal feed market of the Middle East, Djibouti and Somali land who have and manage
reasonably high livestock population.
6. Project objective: Establish live stock feed processing plant for the preparation of better and
quality animal feed for local use and export.
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. The capital Dire Dawa city is 515km away to the East from Addis Abeba. The
Administration covers approximately 1332.62km. 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
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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
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).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. According to Dire Dawa administration 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 and there are also areas which are
about 73.54 ha that can be converted to the same purpose.
c) Infrastructure
The road network in the administration nearly reaches at every rural area and communicated well
with Dire Dawa town. Access to center of all neighboring regions and to Woroda towns in these
neighboring regions is possible.
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d) Service facilities
Telephone service all over the administration and almost in all areas of the neighboring regions
is available. Almost all areas of Dire Dawa administration and a majority of the neighboring
regions are benefited form the country’s central electric power system.
e) Labor force potential
According to CSA, employment unemployment survey 2012, from the total active labor force of
the administration 24 % is unemployed.
8. Project description
a) Project name: live stock feed processing project
b) Meaning: Live stock feed processing is preparation of better animal feed
ration using the product from the available food factory products that exists in
the administration and nearby regions.
9. Market Description
Table 1: projected cattle population of Dire Dawa and neighboring regions for the next eight
years
Live stock 2013 2014 2015 2016 2017 2018 2019 2020
No/year(000 heads
Cattle Dire Dawa 65 66.1 67.3 68.4 70 71.2 72.4 73.6
Cattle of 9126.0 9901.7 10743.4 11656.6 12647.4 13722.4 14888.8 16154.4
neighboring regions
a. Estimated Animal/cattle Feed requirement for the drier period
The total number of cattle used for breeding is estimated to be half the number of the total cattle
at hand; Assuming that, for better performance all farmers will buy the minimum rate of feed
which is 2.5 kg concentrate based on the per capita consumption per day according to planning
and programming unit of dairy development enterprise, 1985-90, the estimated feed requirement
by the administration and neighboring regions for a day for this number of stock is shown on
table 2.
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Table 2: Estimated Animal Feed requirement per day for the drier period in the administration
and neighboring regions.
. Live unit 2013 2014 2015 2016 2017 2018 2019 2020
stock/cattle
No/year(000
heads
Cattle Dire ton
Dawa 81.25 82.625 84.125 85.5 87.5 89 90.5 92
Cattle of ton
neighboring
regions 11407.5 12377.1 13429.3 14570.8 15809.3 17153 18611 20193
The most critical periods where animal feed needed from outside the farmers’ area is usually on
the months of March to May, when there is no rain. Not like the drier months the need in other
months is not small. Projected total animal feed requirement for the next eight years both at the
administration and neighboring regions are shown on table2.
b. Feed requirement by Off take
The off take potential for cattle regarding Dire Dawa is not small and reaches 5200 cattle in the
year 2020 (Table 3). These cattle are inputs by different fattening centers where the need for
better feed is needed. Potential from the neighboring regions is also big and to satisfy such farms
needs more available processed feed. In other words the establishment of such processing plant
could encourage the existing and upcoming new farms or projects by minimizing the problem of
animal feed shortage.
Table 3: projected off take potential of cattle from Dire Dawa and neighboring regions.
Regions / location 2013 2014 2015 2016 2017 2018 2019 2020
Off take potential Dire
Dawa 4.55 4.63 4.71 4.79 4.90 4.98 5.07 5.15
Off take potential
Neighboring regions 638.80 693.10 752.00 816.00 885.30 960.60 1042.20 1130.80
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Table 4: feed requirement for projected off take potential for Dire Dawa administration
and the neighboring regions:
Regions/ unit 2013 2014 2015 2016 2017 2018 2019 2020
location
Off take potential ton
Dire Dawa 46.41 47.2 48.1 48.84 49.98 50.84 51.70 52.55
Off take potential ton
Neighboring
regions 6515.76 7069.62 7670.4 8323.2 9030.06 9798.12 10630.44 11534.16
c. Other demands
A demand from the existing commercial live stock farms and from the future development of
this sector is big. There are more than fifteen medium to large scale dairy, more than ten
fattening and a number of poultry farms in Dire Dawa alone. All the stated commercial farms
don’t have access to buy well formulated animal feed at a reasonable distance. The growing
establishment of such farms in and around the administration is also promising. Therefore to
share in solving this gap the need to establish such processing plant is important.
d. Existing animal feed processing plant
There is no animal feed processing plant in Dire Dawa administration currently. Commercial
farms and the farmer are currently formulating the ration by themselves. Raw materials for this
ration are brought about by purchasing factory byproducts from the existing floor and oil
processing industries in the administration.
10.Establishment
a) Project capacity
A project planned to be established has to produce at least 50 ton per day to satisfy the need from
the rural area of Dire Dawa administration only. The demand from commercial farms was not
small as well. The culture of the farmer to feed live stock with a recommended rate was not
developed in fact, but the advantage of feeding live stock with balanced ration is believed to
bring better benefit for the farmer. To increase the farmers’ exposure, towards using the
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processed balanced ration from feed processing plant, extending the knowledge and promoting
the product will be done at wider extension system. The demand from the neighboring regions is
very big.
b) Feed preparation process
Feed processing in this project is the process of mixing available feed products and byproducts
in balanced ration form. The process includes the mixing of different available feed items in
natural or Pellet form based on the recommended proportion of diet elements in the form of
ration.
a. Components of the project:- The components of the project establishments are;
available capital, Housing, equipment and raw materials.
i. Available capital: money is essential to purchase every project components
and construct housing, machineries and materials, without money nothing can
be implemented.
ii. Land building and civil works
The total area required for the feed possessing plant is about 5000m2 the building area for the
processing plant is 2300 m2. The total cast of buildings and civil works is birr 2500 per m2. The
total cost of land lease at the rate of birr 9.78 birr m2 and for 15 years is shown on table 5.
iii. Hosing and buildings
The housing can be built with standards outlined for this kind of industry
Table 5: Land and building cost
No Description Unit amount Unit cost Total cost
1 Land lease cost years 30 5000.00 x 2,965,500.00 ( 10% for
19.77 initial year)
2 Main industry building M2 2300 2500.00 5,750,000.00
3 Store M2 150 2000.00 300,000.00
4 Office M2 27 2000.00 54,000.00
5 Fencing M 300 600.00 180,000.00
Total 6580550.00
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To store the cattle feed properly well ventilated and protected store with an area of 150 m2will
be built. The store will have the capacity to accommodate 150m tone.
iv. Other kinds of Buildings
a) 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.
b) Other buildings: Guard house with a minim cost, on an area of 2m2 just to provide a
shed for the guard will be constructed.
c) Annual row materials: annual row materials required by the possessing plant is shown
on table 6;-
Table 6: Annual row material required
No Description unit quantity Cost in (000)birr
Local Foreign Total
1 Teff Hey ton 3150 500 1575000
2 Wheat bran ton 4200 3000 8600000
3 Wheat screenings ton 3150 1000 3150000
4 Molasses ton 5250 1000 5250000
5 Cotton seed cake ton 1985 2500 4962500
6 Salt kg 0.105 1500 157.5
Total 23,537,657.5
d) Machine and equipments: Machines and equipments required by the processing plant is
shown on table 8.
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Table 8: The machine and equipments
No Description Quantity
1 Hammer mill and accessories (unit) 1
2 Intake feeder 1
3 Bucket elevator (40 tone per hour) 4
4 Redeler conveyers 4
5 Belt weigher 3
6 Belt conveyer 5
7 Row material silo 8
8 Pre cutter 2
10 Straw cutter 2
11 Feeding table 1
12 Horizontal mixer 1
13 Lay mixing tank 1
14 Lay mixer 1
15 Lye-(NaOH) holding tank(33m3) 1
16 Molasses’ tank(30 m3) 1
17 Molasses’ mixer (7 tone/hour) 1
18 Conditioner(20 m3) 1
19 Pellet processor)( 7t/l 1
20 Sieve (30t/hour) 1
21 Straw feederer 1
22 Finished feed silo and bagging equipment 1
23 Stem production plant and other auxiliaries 1
c) Source of technology: Machine and equipments required can be purchased from Jinan
Zhuoheng Extrusion Machinery Co.Ltd. Company. China
Address: China main land.
The total estimated cost of the machineries varies based on the type of the plant. It ranges from
15000 up to 100000 dollars per set. In order to calculate the cost of the project we take the
maximum cost, the cost could be small otherwise.
d) Utilities: Annual estimated requirement of electricity, water and steam is estimated as lump
sum, the estimated cost is stated in table 8.
Table 7: Utilities
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No Type of utilities Unit Yearly Total cost lump sum
in birr
1 Electricity Kwt hour 60000
2 Water M3 15000
3 Steam litters 30000
Total 105,000
e) Man power: The total estimated man power needed for the project will be stated on table 9.
Table 9: man power needed by the project
No Man power Unit Amount Unit Total cost Total
cost/ .mon per cost/year(birr)
th (birr) month(birr)
1 General manger number 1 3000 3000 36000
2 Shift supervisor 3 1500 4500 54000
3 secretary 1 1000 1000 12000
4 Milling line operator 3 1500 4500 54000
5 Straw operator 3 1200 3600 43200
6 Molasses line operator 3 1200 3600 43200
7 Fished line operator 3 1500 4500 54000
8 Fork lift operator 3 1000 3000 36000
9 Mechanic /electrician 1 1000 1000 12000
10 clerks 2 750 1500 18000
11 Driver 3 1000 3000 36000
12 Laborer 3 900 2700 32400
Employer benefit (20%) 80760
Total 511560
11.Total indicative starting investment cost
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1. Land and build cost - 6,580,550.00 birr
2. Raw materials (first year) - 10% 0f 23,537,657.5birr = 2,353,765.7 birr
3. Materials and equipments - 20,000,000birr
4. Utilities - 8750.00birr
5. Man power - 42,630 birr
Total project cast 28,985,695.7 birr
12.Conclusion
Live stock feed shortage is one of the problems that hampered livestock product and byproduct
In Dire Dawa administration. The existing natural pasture could support livestock of the
administration somehow during rainy season. The is no experience to collect surplus feed
during rainy season in the administration therefore dry seasons are usually period of feed
shortage and is big problem as well as economical. As a result the demand for live stock feed
currently in the administration especially in dry season is very high. Demand from the
neighboring regions having similar environment like Dire Dawa and nearby border countries like
Djibouti and Somaliland is extremely high especially during dry season. Knowing this the
administration put a strong policy direction that creates better situation for every intervention
made to alleviate the problem of live stock feed shortage and effort on investment made to
satisfy the demand. Therefore it is believed that the establishment of animal feed processing
plant to mitigate the shortage of animal feed in the administration using available resources can
be taken as one step to overcome the overall problem.
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