A feasibility study on layers arming In Nepal

1. 2018
Rupakheti Poultry firm
Propritor
[LAYER POULTRY FARMING]
This document is prepared for the feasibility study of poultry farming, In Dhunibesi- 5 Dhading

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HIGHLIGHTS ...................................................................................................................................3
INTRODUCTION..............................................................................................................................4
OVERVIEW OFPOULTRY INDUSTRY .......................................................................................4
OVERVIEW OF THE FIRM...........................................................................................................5
MISSION VISION STATEMENT...................................................................................................5
MARKET OVERVIEW..................................................................................................................5
MARKET SEGMENTATION.........................................................................................................6
FORMAL MARKET SECTOR....................................................................................................6
INFORMAL MARKET SECTOR................................................................................................6
MARKETING STRATEGIES.........................................................................................................6
PRODUCT.................................................................................................................................6
PRICING....................................................................................................................................7
PLACE.......................................................................................................................................7
PACKAGING.............................................................................................................................7
PROJECT STRATEGIES ...............................................................................................................7
LONG TERM STRATEGIES......................................................................................................7
MEDIUM TERM STRATEGIES.................................................................................................7
SHORT TERM STRATEGIES....................................................................................................7
FINANCIAL STRATEGIES........................................................................................................7
MARKETING STRATEGIES .....................................................................................................8
OPERATIONAL STRATEGIES..................................................................................................8
HUMAN RESOURCE STRATEGIES..........................................................................................8
FINANCIAL ANALYSIS...................................................................................................................9
KEY FINANCIAL ASSUMPTIONS...............................................................................................9
CAPITAL EXPENDITURE..........................................................................................................10
REVENUE EXPENDITURE.........................................................................................................11
INCOME.....................................................................................................................................11
TOTAL WORKING CAPITAL.....................................................................................................11
PROFITABILITY.........................................................................................................................12
BIBLIOGRAPHY ............................................................................................................................13

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HIGHLIGHTS
Capacity : 6000
Investment :
A. Fixed : NRs. 2,771,000.00
B. Current :NRs. 4,535,000.00
Employment :4 Person
Production cost : NRs. 11,418,000.00
Debt period : 5 Yrs
Cost of Debt : 12%
Income : 14,095,200.00
Expenditure : NRs. 1,31,53,650
Profit(Net) : NRs. 941,550.00

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INTRODUCTION
Layer poultry farming means raising egg laying poultry birds for the purpose of commercial egg
production. Layer chickens are such a special species of hens, which need to be raised from
when they are one day old. They start laying eggs commercially from 18-19 weeks of age. They
remain laying eggs continuously till their 72- 78 weeks of age. They can produce about one kg of
eggs by consuming about 2.25 kg of food during their egg laying period.
Egg production from a Layer Poultry Farming depends on the care and farm management.
Within the first 20 weeks of age, about 5% of hens start laying eggs. About 10% birds start
laying at their 21 weeks of age. When they reach 26 to 30 weeks of age , they produce highly .
Although , it may be different depending on their strain. After laying a maximum number of
eggs, they usually stop laying for a few days. And after this period, their egg production might
reduce slowly. Egg laying rate and size of eggs increases gradually. The hens grow till their 40
weeks of age. Weight and size of eggs increases till their 50 weeks of age.
Commercial poultry is the major segment of agriculture industry of Nepal and includes layers,
broilers, and their products, i.e., eggs and meat. This sector generates employment
(direct/indirect) and income for about 1 million people. The poultry sector is one of the most
organized and vibrant segments of the agriculture industry of the country. About 500000 people
are directly involved in this business. (Age, 2016)
The Rupakheti poultry firm (RPF) has endeavored to explore potential of a medium scale
poultry farm project in Dhading district.
OVERVIEW OF POULTRY INDUSTRY
Nepal is a agricultural country. Poultry industry is a component of Agriculture and forest under
industrial classification of Nepalese industrial classification. Poultry layer farming is gaining
popularity in Nepal due to its lower production cost and growing demand of eggs. Poultry layer
farming is given a lot of importance in the national policy owing to which there is a lot of scope
of improvement and development.
The size of Nepal’s poultry market has grown by 30 percent in the last five years to Rs.65 billion
now, and the GDP contribution of the sector stands at around 3.5 percent, according to the latest
data compiled by poultry entrepreneurs. The per capita poultry meat consumption, however, is
still low in Nepal (Age, 2016) . While looking at the availability of poultry products meat 4.1
Kg, 44 eggs per person per year in the FY 2015/16 (stastastics, 2016). There is a gap between
actual consumption of livestock production and standard nutrition requirement, so to fulfill this
gap the production should be increased to, 14kg of meat and 60 eggs per person per year through
Poultry development for self sustainability. (Finance, 2018)
Poultry is the most organized sector in animal agriculture in Nepal, Production of broiler meat
has increased to 5.5 million tons per annum in 2016-17. Demand for processed chicken meat has
been growing by 15-20% per annum. Total layer production in Nepal has gone up to reach 1.33

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Million eggs per annum in 2016-17. Nepal has Imported poultry product of worth 68 million.
(2016-17)
Industry sources estimate CY2017-18 feed consumption to go from 0.5 to 0.57 million tons,
which includes corn and soya bean and pearl millet.
OVERVIEW OF THE FIRM
Rupakheti Poultry firm is a proprietorship firm established in small and cottage industry in
Dhading district. with aim of production of poultry and its products to fulfill needs of market
over Dhunibesi Municipality and Kathmandu.
Firm is established in favorable location for Poultry farming. Facilities of resources and
infrastructures like water, Transportation and electricity are assessable. We have well knowledge
of the farming, and has been working in this farming since 12 years in small scale.
Now we have focused in expansion of market and size of firm in new way, with value chain
approach i.e. Production of feed supplement required for the firm and Poultry farming and
marketing .
Main objective of Choosing this value chain concept is to increase in profitability and give a
good/ Quality feed supplement to the poultry. This will flourish firm in three way,
1. Quality feed supplement will helps in increase in productivity.
2. Lowers in Contamination from fungal diseases.
3. Production of Feed supplement in low cost.
MISSION VISION STATEMENT
Our vision is to be one of the known poultry farm product supplier in Nepal with a mission to
raise healthy birds at a very profitable cost. This could be one mile stone for countries fulfillment
of one goal of becoming a self reliant in poultry products production.
What
Production of quality of Eggs and meat in reasonable rate and fulfill demands in local market.
Mobilization of funds and increase in national income.
How
 Commercialization of Poultry firm and reducing traditional way of farming by improving
in technology.
 Keep and maintain hygienic farms for healthy eggs and birds
 Quality of output and timely services.
why
Sustainability, Profitability and Employment generation.
MARKET OVERVIEW
In Nepal, the per capita consumption of eggs has gone up from 30 eggs per annum to 44 eggs per
annum, and that of chicken from 400Gms per annum, to 4.1 kg per annum in the last 5 years.
Human nutritionists recommend a minimum of 180 eggs & 10 kg chicken per annum for a
healthy adult human, which means that the Nepali poultry market is laden with opportunities.

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Adult population in most developed countries consume over 240 eggs and 20 kg of chicken per
annum.
Production of broiler meat has increased to 5.5 million tons per annum in 2016-17. Demand for
processed chicken meat has been growing by 15-20% per annum. Total layer production in
Nepal has gone up to reach 1.33 Million eggs per annum in 2016-17. Nepal has Imported poultry
product of worth 68 million. (2016-17). Nepal has nearly reached a self- reliant position in
poultry products. Thus there are lots of markets demands in second and third country also for
exports of poultry products.
MARKET SEGMENTATION
This section divides the market into similar groups with common characteristics so as to identify
a lucrative market segment for the products of Rupakheti Poultry Firm.
Generally, the potential market segments for the poultry farming business are as listed below:
FORMAL MARKET SECTOR
 Grading and packaging entities
 Wholesalers
 Retailers
 Franchise store
 Processing entities
 Export
INFORMAL MARKET SECTOR
 Hawkers
 Spot hen depots
The project will target small and medium businesses as this segment shows a distinctive
consumer need for exploitation. The project will essentially focus on small and medium sized
lodges, mine kitchens, bed and breakfasts and guest houses near Dhunibesi, Municipality and
other resorts in close reach to the project. This segment has potential for future growth and has a
few direct competitors of a similar nature to the project.
MARKETING STRATEGIES
PRODUCT
The main products of the project shall be the eggs produced by the layer birds. The project will
strive to improve the quality of the eggs produced and sold by providing the right nutrition and
environment condition for the layers. Other products to be sold by the project will include the
manure resulting from chicken droppings. Manure is a desirable fertilizer that is highly sought
after by farmers and flower growers. Additionally, the project will sell layers (cull hens) that
become unproductive (around 70 -110 weeks). Cull hens are considered to be a delicacy for most
consumers and as such, the business will be in position to sell these at lucrative prices.

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PRICING
The pricing of the egg products will also depend on the grade of the egg. and Prevailing market
rate as determined by market Given below is a breakdown on the suggested price per dozen of
eggs in accordance to the grades. These are based on the average market prices for 2017.
Grade Weight Selling price per Crate
Grade one (Big) 51g - 59g NRs300.00
Grade two (Medium) 41g - 50g NRs.270.00
Under grade (Small) Below 41g NRs.240.00
PLACE
The firm shall be located at Dhunibesi-5, Dhading, main target area of the product of firm shall
be Dhunibesi and kathmandu.
PACKAGING
The egg products of the project will be packaged in paper egg trays and neatly sealed with a
protective plastic covering. The plastic covering will bear the name of the project or brand name
as well as a catchy phrase. Information regarding the weight and nutritional value of the products
will also be provided.
PROJECT STRATEGIES
LONG TERM STRATEGIES
 Expansion and diversification through the formation of strategic relationships and
strengthening relationships with strategic alliances. This will be aimed at establishing at
least two more poultry farms within the district. Diversification will focus at moving into
the broiler and day old chick industry
 Enter new markets such as the export market
MEDIUM TERM STRATEGIES
 Focus on competitiveness by striving to achieve the desired positioning in the market
 Focus on customer intimacy and process efficiency
 Focus on niche markets
 Focus on quality
 Grow the market share of the project by understanding the needs and expectations of the
customers better than the competitors
SHORT TERM STRATEGIES
 Formalize the organizational structure
 Standardization of processes and procedures
 Training and development of staff
FINANCIAL STRATEGIES
 Enhance the profitability of the business by setting a sales mix that results in the most
profitable contribution margin

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 Minimize operating expenses by monitoring against the budget on a weekly and monthly
basis
 Minimize the bad debts by having a strict debt issue and collection policy
MARKETING STRATEGIES
 Improve awareness of the project by advancing publicity, having presence on the internet
by developing a website and other marketing efforts
 Improve the competitiveness of the project by implementing market intelligence
initiatives such as improving the competitive advantages of the business, studying the
competition, conducting market surveys and being more customer intimate
 Improve the image of the business by branding the business and its products as well as
provide excellent customer service and delivering promptly
OPERATIONAL STRATEGIES
 Improve the efficiency of operations by ensuring that tasks are completed timely and that
process and procedures are evaluated so as to eliminate redundancies in workflow
 Improve operations by standardizing processes
 Employ technology
 Regular audits in processes
 Improve health and safety for the customers and employees by conducting regular audits
to ensure that all health and safety related regulations and standards are being met
HUMAN RESOURCE STRATEGIES
 Improve the skills, knowledge and competencies of the members and employees of the
project and eliminate the risks associated with the loss of key man in the project by
providing ongoing skills development and training.
 Employ a performance management system
 Align the values of the individuals to team values

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FINANCIAL ANALYSIS
KEY FINANCIAL ASSUMPTIONS
The following are the underlying assumptions for all the financial statement projections drawn
up for Rupakheti Poultry Firm project.
Item Assumption
Capital expenditure NRs. 2,771,000.00
Working capital requirements NRs. 4,535,000.00.
Working days per month 30 days
Debtors collection period 40 days
Creditors payment period 10 days
Revenue growth 10%
Farm capacity 6,000 layers
Mortality rate 8% per annum
Efficiency result per layer
bird
280 eggs per annum are produced by each layer bird;
approximately 23 eggs are produced by each layer bird per month
Rate of lay 2 eggs every 3 days per layer bird
Laying period Effective period of laying = 52 weeks
Birds will be hosted at 18 weeks of age and molted at 91 weeks of
age
Laying period feed per bird 40 - 50 Kg per layer bird
Feed consumption 120g - 150g per layer bird
Feed required to produce a
dozen eggs
1.75 + - 0.19 kg feed
Weight of feed per bag per
Kg
50Kg
Average selling price of eggs
(per dozen)
NRs. 120.
Average selling price of eggs
per tray (30 eggs)
NRs. 300
Sale of manure and litters Selling price = NRs. 20 per 25Kg bag
Sale of unproductive aged
layer birds (fowl)
 Age of sale = 70 - 110 weeks of age
 Average weight = 1.8 Kg
 Average farm price = NRs.120/kg
Table: 2.1

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CAPITAL EXPENDITURE
S.N Particulars Units Per Unit cost Qty Amount
(NRs.)
1 construction of shed for
chicken(one chicken per 2 sq ft area
in ground)
2 Sq Ft/ Chicken
150.00 12,000.00 1,800,000.00
2 Heater bhukari for breading of
chicken and temperature
maintenance
10
5,000.00 50,000.00
3 Gas cylinder 5 3,500.00 17,500.00
4 Feeding pot for chicks (up to 3
weeks)
1 pot/50 chicks
150.00 120.00 18,000.00
5 Feeding pot for Chicks (from 4
weeks)
1 pot/60 chicks
500.00 100.00 50,000.00
6 Water feeding Pot (up to 3 weeks) 1 pot/50 chicks 200.00 120.00 24,000.00
7 Water Feeding pot for Chicks (from
4 weeks)
1 pot/70 chicks
700.00 85.00 59,500.00
8 Water tank 6 tank of 1000
ltr.
11,000.00 6.00 66,000.00
9 Feed grinder with mixture 1/2 ton
per hour 630,000.00 1.00 630,000.00
10 Water filter 56,000.00 1.00 56,000.00
Grand total 2,771,000.00
Table :2.2
General Analysis of benefits of feed grinder with mixture.
Particulars For (6000 Layers) For (2000 Layers)
Cost of Feed Grinder with mixture 630,000.00 630,000.00
Rate of interest 12% 12%
Annual feed consumption in (KGs.) 216,000.00 72,000.00
Market average rate 47.30 10,216,800.00 47.30 3,405,600.00
Production Rate 40.00 8,640,000.00 40.00 2,880,000.00
Annual cost saving 1,576,800.00 525,600.00
Payback Period of Machine (In year) 0.40 1.20
Table: 2.3
Consideration of electricity cost and other operation cost is included in cost of production.

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REVENUE EXPENDITURE
SN Particulars Remarks Qty Rate
(NRs.)
Amount (NRs.)
1 Feed & Feed Supplements
Mass dana 2kg (0-8) weeks = 12000kg @50
Grower mass 5kg(9-20)weeks=30000kg @48
Layer mass 29 kg (21-52)weeks =174000kg
@ 47
216,000.00
44 9,504,000.00
2 Cost of 1 day old chicken 6000 150 900,000.00
3 Medicine & Vaccine cost @ 70000/ 1000
chicken
6000 70 420,000.00
4 Bhus 2 kg per
chicken
6000 12 144,000.00
5 Electricity / Gas 50,000.00
6 Transportation 300,000.00
7 Other Miscellaneous 100,000.00
Total 11,418,000.00
Table 2.4
INCOME
Particulars Units Units cost Qty Amount (NRs.)
Egg Small sized (15%) Crate of 30 240 6879.6 1,651,104.00
Eggs medium Sized (20%) Crate of 30 270 9172.8 2,476,656.00
Eggs Big sized (65%) Crate of 30 300 29811.6 8,943,480.00
Manure Bag of 30Kg 20 24000 480,000.00
Sales of fouls 5400 @1.8kg Kg 216 5400 1,166,400.00
Total 14,717,640.00
Table: 2.5
TOTAL WORKING CAPITAL
Particulars 4 months 1 year
Raw materials (4 months) 2,835,000.00 9,504,000.00
Salary 240,000.00 720,000.00
1 day Chicken 900,000.00 900,000.00
Interest Expenses 200,000.00 600,000.00
Medicine & Vaccine 360,000.00 420,000.00
Total 4,535,000.00 12,144,000.00
Note: production starts after4 months only

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Total project Fund
S.N Particulars Amount (NRs.)
1 Fixed 2,771,000.00
2 Working Capital (4 months) 4,535,000.00
Total 7,306,000.00
PROFITABILITY
Total sales 14,717,640.00
Less : Revenue Expenditure (11,418,000.00)
Less : Depreciation & Non cash expenses (415,650.00)
Less : Intrest Expenses @12% (600,000.00)
Less: Admin cost (Salary) (720,000.00)
Revenue 1,563,990.00
Return on Investment 21%
Profit Net 11%
Table : 2.6

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BIBLIOGRAPHY
Age, N. B. (2016, May 30). Nepal Self-reliant on Poultry Products. Retrieved from New
Business Age: http://www.newbusinessage.com/Articles/view/3630
Finance, G. o. (2018). Economic Survey 2017-18. p. 59.
stastastics, C. b. (2016, 7 10). ekantipur.com. Retrieved from Kantipur online:
http://kathmandupost.ekantipur.com/news/2016-07-10/nepals-poultry-industry-worth-rs3372-
billion.html
(2018). Stastical information on Nepleese Agriculture. kathmandu: Ministry of Agriculture.
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