The Financial angle of starting a poultry business!

The Financial angle of starting a poultry business!

Last week we did an episode on how to start up a poultry business. Thanks for all the comments, questions which has made us do a follow up on the financials angle.

Like any good business, poultry farming can deliver decent profit if well managed. It is a business that thrives on quantity as the profit may look small on a small base. Let me show you how to make money from poultry farming.  To explain, i will use an example of 120 layer birds.

  1. Production: Remember that you will buy a Point of Lay bird of 16 weeks at about N900 each. This young layer/bird can lay eggs for about one year before it stops and can be sold as an old layer at about the same price of N800- N900. If you have 120 birds, you should get about 80% production every day when the layers are operating at their best. This means you get about 96 eggs per day (3 crates and 6 eggs) from 120 birds.  To get the birds to lay well, they need to be well fed, drink clean water daily, take their vitamins and should be generally well taken care of. The vitamins are needed because the layers are laying eggs daily and they need the vitamins to replenish lost nutrients. There are several brands of vitamins out there for old layers.

When the layers get to about 9 months and their production drops to about 50%, you can also use egg booster to help them produce better. Note that egg boosters is not needed when the layers are still young and laying at about 80% because egg boosters will definitely increase production from about 80% to 85% but it will also make the birds  stop laying  about 3 months faster/earlier.

  1. Feeding/consumption: At maturity, the layers eat about 120g per day. So the 120 birds will eat about 14,400g per day. This is same as 14.4kg per day. The chicken feed is mostly sold in a 25kg bag. This means a bag of 25kg will almost feed about 120 birds for 2 days. I.e 120birds * 120g * 2 days= 28.8kg feed needed. A bag of 25kg feed is about N2,200.
  1. Gross margin in a month.

Sales; Remember we said 120 birds will give about 3 crates of eggs a day. In 30 days, that is 90 crates of eggs. 1 crate of egg is about N650 from the poultry farm (depending on location, it can be up to n700). So sales in a month is 3 crates * 30 days * 650 per crate = N58,500 sales per month.

Feeding cost; the 25kg bag of feed is almost enough for 120 birds in 2 days. In a month, you will need 15-16 bags. A bag of feed is about N2,200 so total cost of feeding in a month is N2,200 per bag * 16 bags = N35,200.

Vitamins:  A sachet of vitamin is about N600. If you give them once a week, you need 4 a month, so N2,400. Ideally, you should give them twice a week.

Other costs; you need to get access to clean water for daily drinking, vaccination once every three months,  space to raise the birds, initial start- up cost of setting up the deep-litter poultry system. .I recommend deep-litter for new poultry start up because it is cheaper unlike the battery cage that costs N80,000 for about 120 birds. You also need 1 staff to raise about 1000 birds.

Rough estimate on Profit:  if you round up the total cost per month to about N40, 000, you can make a GROSS Margin of N20, 000 per month from 120 birds.  In a year, this is N240,000. From this, you pay yourself a salary and re-invest the balance in growing the business. It may seem little but imagine when you increase from 120 birds to 1000 birds!!!! It is over 2 million naira a year.

If you missed the 1st episode, please see https://mrsceonaija.com/2015/08/13/how-to-start-a-poultry-farm-and-make-profit/

So what do you say?

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14 comments

  1. Ibifaa, First, there are 2 main types- the old manual system or the automated ones. Some cages come in 2 tiers- 60 birds/unit, some come in 3 tiers- 90 birds per unit, some come in 120s, 140s, 200 e.t.c To house 1,000 birds, you can get 9 sets of the 120 unit. You can get a professional to fabricate for you, you can also import. Before you make your final decision, please research a lot about it. Check different vendors and read up extensively on battery cages.

    When designing, you must consider the below factors:
    1. Adequate ventilation- a building with open sides is ideal to allow cross air ventilation. Do not place the cages in a closed house.
    2. Lighting: the poultry design should allow enough lighting. The birds thrive better when the environment is not dark and dingy.
    3. Shelter: Design must protect from wind/rain e.t.c

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  2. Read both articles on poultry farming and really impressed. Very well written Tolu. Well done!! Having run a family poultry business for years, indeed it can be a very successful business and a money spinner if managed well. Some key pit falls are the seasonality of eggs!. Sometimes there is a glut so you have hundreds of crates of eggs the usual buyers either won’t buy or will buy below cost of production. This is usually when guinea fowl eggs come out in the north as a lot eggs are sold to the north. You need to have alternative buyers and probably build a relationship with buyers that will buy at a reasonable price at this period.
    Second pit fall is theft. You need to be prepared for this by having trusted hands and if the farm is big enough, you have to engage some sort of security. This is very important and can make the difference between success and failure. Even when you have this you need to do spot checks to ensure there are no thefts. If your production reduces and the birds are not sick, old and the feed and environment okay, it might be a case of theft.
    From profitability analysis above, it is clear that feed is about the biggest variable cost, therefore also the biggest opportunity for cost savings. It is a good idea to learn about feed formulation. While for a beginner, this might not be ideal but as the farm grows, this is important as you can formulate richer feeds at a lower cost than those on sale. Have had birds laying at over 90% production with formulated feeds. This is in addition to the savings on the cost of feeds itself.

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    • Hello Dunni, spot on ! Im sure many will benefit from this counsel. I agree on compounded/formulated feed too. On theft, we faced a lot of this too. My best advise on this is to immediately investigate once the output from farm drops as most likely there is a shady operation happening. On sales drop out, this is very valid too.

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  3. There are several causes of drop in egg production that include the following:
    Cannibalism, Unbalanced feed ration, Overcrowding, Poor ventilation, Poor sanitation, Poor lighting, Disease, Hot weather, Inadequate feed and water supply, Noise (from generators, horns etc.), parasites (lice & worms) and pilferage.

    You should investigate the cause(s) and determine whether the drop in egg production is a temporary drop or a persistent drop.

    Normally, egg production fluctuates even when everything is in place. You cannot have 200 chickens and expect that their production will be constant at 180 eggs on daily basis. On a day, it could be 180 eggs, another date it could be 178 eggs, another date it could be 183 eggs. Their nature provides for this fluctuation which is perfectly normal.

    However, if your farm attendant is dishonest and the owner is not observant, the attendant can exploit the loop in their nature and make some money for himself to the detriment of the owner. Close monitoring is essential to success in chicken farming.

    Abnormal drop in egg production is when it drops from say, an average of 180 eggs daily to 140 eggs daily. It could be a temporary drop in an instance where a drug has been applied that led to a drop in production for say 1 to 3 days and production goes up again to normal. But where the drop from 180 to 140 is persisting beyond a reasonable period, something is wrong that requires prompt remedy. The age of the birds also count because at a certain age, diminishing return certainly will set in.

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