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Investing in Poultry Farming in Uganda

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So you want to do business in Uganda by investing in poultry farming and “Mavi ya kuku”?

For start, I am not abusing anyone like Uganda’s Col. Kahinda Otafire and his, shall I call them “famous euphemisms” including the “Mavi ya Kuku” statement. For the uninitiated, “Mavi ya kuku” is a Swahili word to refer to chicken droppings and when you deal with chicken you will have to literally get your feet deep in chicken s%*t (literally) but I will tell you about these are money makers later on. I present my analysis on investment in the poultry sub sector in Uganda.

FIRST THE CONS (of Course)

1. Too many so called “chicken experts”

The beauty about chicken farming is that almost every Ugandan knows something about it; oh some part of it anyway, almost every “Kampala person” who has gone to their village for Christmas has most likely received a gift of a chicken and likewise those of you who are “traditionalist men” know that in your home you are the only one entitled to eat “nkoko nkulu”. The “Nkoko Nkulu” is the chicken gizzard and it is traditionally served to the head of the house or in many instances to a special visitor (usually male) as a sign of respect and special welcome to that household.

Ugandans know this all because chicken are an integral part of the DNA of Ugandan life. Despite this, having almost every one with knowledge of some form of chicken farming can however also be the worst enemy for the potential investor especially if you are looking to do it on a commercial basis. You see while every “Tom, Dick and Oryem” will claim they have experience in chicken farming, most of it is with indigenous chicken farming which is not the same as commercial farming, the aim of this article.

Local Ugandan chicken for example produce only 40 eggs a year (just over 1 egg a month!) compared to exotic chicken (like the shaver brown variety) which produce about 300 eggs a year (that’s almost one egg a day!)

If you don’t get the right person and choose to listen to every “Tom, Dick and Amerit”, next thing you know your entire stock has been wiped out by coccidiosis.

2. Market and Distribution bottlenecks

Uganda is still very much a “localised retail” based sector for the chicken/poultry sector. You may for example have to sell your eggs shop by shop or to neighbouring towns as there may not be many “super markets” or “whole sale buyers” who provide a ready market to absorb the produce and therefore you may have to rely on middlemen coming from far.This in itself gives rise to price extortion from these middlemen. These bottlenecks are because there is to date no formalised large scale transport distribution network to get your produce from the poultry producing area (mainly Northern and Eastern Uganda) to the key market (mainly Central Uganda). Furthermore our transport network is not well developed given the state of roads. You will therefore early on have to establish the market and distribution logistics for your produce as this can affect your profit.

3. Cost of feed

Chicken feed is perhaps one of the most important aspects to ensure profitability of your poultry business. It has been estimated as costing between 60 and 70% of the total cost of production. You must ensure you get the best quality feed as of course this means you will have healthy chicken (and good quality eggs).

The high feed situation is pretty serious in Uganda and from recent news(August and October 2011) many Ugandan poultry farmers are being driven out of business and so before you invest, you need to consider this very carefully. This high feed price is being driven by increase in prices of maize bran. Maize bran composition is about 52% of chicken feed. Coupled with high Maize bran prices is that fact that fish stocks in Uganda are seeming being depleted quickly (fish is about 10-20% of the chicken feed composition).

4. Disease

I touched upon this briefly when I earlier on mentioned coccidiosis. There are however other chicken diseases like New Castle disease which can wipe out the entire poultry stock. I have however not ranked this risk at the top of the CONS because any serious investor will hire a competent and suitably experienced farm manager to prevent disease threats and also have access to a good veterinary officer/doctor and this should further reduce this threat.

5. Cost of capital

Sustainable commercial chicken farming requires a fair amount of capital particularly because layers take about 17 weeks before they start producing eggs and so for this period there is no income. The investor will therefore need to provide working capital for this period of about 4 months before he can expect any revenue. This working capital includes the key cost of chicken feed.

From my estimates (I will come to that later on) you need about Shs 26m as start up capital for a 1000 chicken farm(shaver brown variety). I will deal with the details in the section below.

AND NOW THE PROS

1. Chicken are here to stay

Chicken have been around a long time and in the developed world chicken is cheaper than beef. The reverse is true in Uganda and chicken is usually reserved for special days (like when I had passed my P.7 PLE exams and was admitted to the school of my first choice). In Uganda, this is however going to change especially as our population grows and more people come out of poverty. Recent studies show that we have increased egg consumption by 28% and chicken consumption by 60% between 2000 and 2006.

Ugandan girls really love Chicken (and chips)! [This last statement is “tongue in cheek” in reference to the fact that many a Ugandan man seeking to impress a girl, perhaps a Univeristy student will often buy her Chips and Chicken from the many “takeaways”in urban areas especially around Kampala and its suburbs including the popular takeways in Wandegeya which is in the proximity of Makerere University.]

I can further expect that with the continued East African community expanding and us working towards regional integration, there will remain continued demand for eggs and chicken.

2. Excellent profitability return on capital

Despite the several articles speaking about the cost of chicken feed crippling the industry I believe this industry sector still offers some of the best returns on investment. From my estimates below, it has a return on investment of 1.09 years! I set out my estimates below. The estimates are based on a sustainable investment of 1000 layers of the shaver brown variety. All figures are in Uganda Shillings. The exchange rate at November 2011 is about I USD = Shs 2,700

Summary 1: Starting capital

A: Fixed costs(one off)

1. Chicken coop and related items: Shs 3,450,000

2. Electricity and water(connection): Shs 1,000,000

3. Legal and other start up costs: Shs 700,000

4. Training: Shs 42,000

Sub total: Shs 5,192,000

B: First 4 months(week 1-17)

1. Day old chicks (1000 of them): Shs 4,500,000

2. Chicken feed(starter): 13,043,836

3. Other incidentary costs: 220,000

Sub total: Shs 17,763,836

C: Labour (week 1-17)

1. Farm supervisor: Shs 800,000 (200k per month)

2. Farm manager: Shs 1,200,000 (300k per month)

3. Farm hands: Shs 720,000 (Estimated at 3 hands each earning 60k per month)

4. Vet office Shs 90,000 for 3 visits.

Sub total: 2,810,000

D: Contingency(10%): 2,576,584

TOTAL START UP: 28,342,419

Summary 2: Profitability and Return on Investment

REVENUE (for 8 months)

The revenue is estimated on 1,000 hens with a mortality rate of 7% hence 930 hens net. It is estimated that each hen lays 292 eggs per year. This is pro rated over an 8 month period to comprise of the first financial period (as 4 months are in which the chicken are maturing). In Uganda, eggs are sold in trays of 30. It is estimated at August 2011 that each egg cost Shs 300 thereby meaning a tray costs Shs 9,000

On basis of above, Revenue over the period will be:

1000 hens less 7% mortality: 930 hens * 292 eggs each =271,560 eggs = 9,052 trays

Each tray is Shs 9,000 hence 9,052 *9000 = Shs 81,468,000 per year (or 292 days over an annual period that the hens lay)

Pro rating the annual revenue to the 8 months is revenue of Shs 54,834,231

COSTS (Monthly for 8 months)

1. Chicken feed: 24,261,534. This is estimated on a hen consuming about 37kg per year.

At August 2011, layer feed (which chicken feed on for most part of 17 week growth) cost Shs 75,000 per 70 kg bag. On the basis of the above, a chicken consumes about Shs 108.7 worth of feed per day.

The total cost over the 8 months is therefore Shs. 24,261,534

2. Transport to market:Shs 5,400,000 (estimated at Shs 15,000 daily)

3. Labour (on same basis as labour costs in first 4 months but for 8 months): Shs 10,940,000

4. Utilities (water and electricity): 720,000

5. Miscellaneous: 1,800,000

Sub total: Shs43,121,534

Operating profit: Shs 11,712,697

Other income:

1. Sale of chicken(after their productivity cycle ends): 6,510,000. I am assuming each chicken will be sold for Shs 7,000 the market price in August 2011.

2. Less: Costs to market: 200,000

3. Chicken droppings: 8,035,510

(estimated on 11479 kg of droppings produced on basis of this being 1/3 of feed intake). Each kg being sold at Shs 700.

NET Profit(incl other income): Shs 26,058,207

Return on capital: 1.09 years.

As you can see from above, In 1 year you can expect to recoup your cost! I don’t think there is anything more to say about this sector but for those who are, well there is a third reason this is good.

4. Social responsibility advantages

Charities and other NGOs recognise the impact poultry farming has on the rural communities especially on women and several studies show that this is the next social revolution.

SUMMARISING AND THE FINAL WORD

First the numbers

On the basis of my analysis:

* Capital investment (A): Shs 28,342,419

* Revenue per year (including other revenue): Shs 69,179,741

* Profit per year (revenue (including WIFI) and excluding all expenses) (B) is Shs 26,058,207

* Return on capital (years to get capital back or A/B) is 1.09 years

Now the basics you must get right before investing.

* Working capital. Like I said at the start, for about 4 months you will be sustaining this business without any income at all, you need to therefore secure the necessary funds especially for chicken feed. You cannot compromise on the quality of feed or quantity when there are cash flow shortages as this will ultimately affect the quality of eggs and chicken.

* Agriculture support and training. This is a sector that the government, NGOS, donors have put in a considerable amount of money and so there is no excuse for not using support facilities right from NAADS to district support projects, NGO supported projects, even many of the day old chick suppliers provide courses.

* Market/distribution network. There are significant bottlenecks in Uganda and it is well and good to develop capacity for 1000 birds but if you cannot get them to the market then that’s a waste. It will therefore be critical that wherever you choose to locate your farm you consider how you will get it to the market.

* Land. Now you will notice I havent considered the cost of land in this analysis. The reasons are multifold. When I considered this business venture and from my research, an investor can get the land for “free” in return for for example hiring local people, from relatives in rural areas and the like.

I therefore didn’t consider it to be a major issue. Besides chicken don’t usually require a lot of land and if necessary this land can be “leased” cheaply in many rural areas in Uganda. Of course you should not choose to encroach on the land at Mabira forest or perhaps in a wetland because then my “friend” Col Otafire may ask you if you are a frog!

FINAL WORD

Like I have said, this sector is going nowhere and there will continue to be demand for agriculture prodcuts. Furthermore with the developed world becoming more willing to pay for “organic” products, Ugandan poultry will continue to be highly valued.

I had promised to highlight about “Mavi ya Kuku” in more detail and you will notice that in my revenue analysis, this sh%*t really does bring in money because as the agriculture sector continues to expand and as fertilisers continue to be more expensive, farmers will look to alternatives. Chicken droppings may be that future and so yes, “Mavi ya Kuku” together with “Nkoko Nkulu” are our future!

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Source by D E Wasake

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Where to Find Those Efficient and Hardworking Affiliates?

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Everyone wants a hardworking affiliate, employee, associate, partner, or even spouse, and why not? It’s the next best thing to doing the work yourself. However with the massive outbreak of work and income opportunities available online, how can you beat everyone else and find that one (or more) ideal person who will make your online business explode with success? Here are some of the most ingenious and uncommon ways to snag the idea affiliates for your affiliate program

Direct Sales Agents

Direct sales people are really one of the most enterprising, hard-working individuals in business. They mostly work on commissions or rebates and are willing to literally go door-to-door offering their products to anyone and everyone they bump into. Imagine how much easier their job would be if they could be an affiliate and simply work via the Internet and a mobile device or desktop.

Also, most direct sales people tend to carry more than one brand in their product arsenal so signing up as an affiliate would be almost the same type of work but using a different approach.

Colleges and Universities

Many college kids would be interested in a part-time income opportunity if it would mean funds to help pay for their education, loan, or partying. All you have to do is make sure to offer them products they can endorse as a student.

Freelancers

Did you know that the U.S. Census Bureau’s latest annual report show that 75% of U.S. businesses used freelancers in 2011? Freelancers earned a whopping US$990 billion in 2011 which is a 4.1% increase from the previous year. The only industries where the number of freelancers decreased were in insurance, finance, and construction. Most probably your affiliate program isn’t a part of these 3 industries.

Furthermore, online business and finance experts are predicting the growth to increase incrementally every year even with an economy that is improving. People just want income security and more control over their earnings. With the spate of lay-offs, it’s understandable why many would prefer to work as an affiliate than as an employee.

Scout For Them At Affiliate Conventions

There are annual affiliate conventions held in different cities around the country. You should try to catch one when it is held somewhere near your location. The average turn-out for these types of conventions has increased regularly over the years. Last year, many of them were sold out weeks before the event.

Advertise!

The US Census Bureau has said that as of 2012, 15% of Americans are poor, 43% of young adults depend on their parents to some extent for money. Even more surprising is that the median income of young adults in 1982 was $31,583 and last year it was $30,604 for the same age group! Income is dropping and people are looking for ways to earn additional income outside of their 9 to 5 jobs. That’s where you can come in playing the hero and helping others realize their dream income.

Finally, go online and talk about your product. Make the affiliate marketers come to you and have the luxury of picking the best candidates. You will need some help in marketing your affiliate program so target a marketer who’s experienced in affiliate program and SEO.

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Source by Lina Stakauskaite

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Recession Is Here… Six Costly Mistakes Home Sellers Make During Recessions And How To Avoid Them

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The U.S. is officially in a recession. What is a recession? A recession is a business cycle contraction or general economic decline due to significant drop in spending and other commercial activities. Most pundits and politicians will blame Covid-19 crisis for the recession, but even pre-Covid-19 the proverbial writing was on the wall.

The U.S. had over 120 months of economic growth, which was the longest expansion in the modern history. Other indicators, such as negative yield spread on treasuries (long term bonds having lower interest rates than short term T-notes), were pointing to an imminent change of the economic cycle and an impending recession. The only real question was: when and how bad?

Then Covid-19 came… If the cycle was going to change anyway, Covid-19 acted as a huge and unexpected accelerant to make the recession much more immediate and severe.

Inevitably during recessions all classes of real estate, including residential homes and condominiums, will be negatively impacted as lower consumer spending and higher unemployment rates affect real estate prices and marketing times.

Here are the six costly mistakes home and other real property sellers make during recessions and how to avoid them:

Mistake #1: This will pass and real estate market will be hot again soon

First thing to remember is that real estate cycles are much longer than general economic cycles. Even if the general economy recovers, which eventually it always does, a typical real estate cycle takes as long as 10 to 15 years. The cycle has four key stages: Top, Decline, Bottom and Rise.

Let us consider the last real estate cycle, which lasted approximately 14 years:

  • 2006 – Prices hit the Top
  • 2006 to 2012 – Prices Decline
  • 2012 – Prices hit the Bottom (Trough)
  • 2012 to 2019 – Prices Rise*
  • 2020 – Prices hit the Top
  • 2020 to? – Prices Decline

*NOTE: In 2016 the national residential real estate price index reached its pre-recession 2006 peak levels. It took 10 years for the real estate market to recover.

The way to avoid this mistake is to recognize that real estate cycles take years to run and plan accordingly. Additionally, nobody knows for sure when the prices will hit the top or bottom until after the fact.

Mistake #2: Low interest rates will make the economy and real estate market rebound

Between 2006 and 2011 the interest rates (Fed Funds) were continuously cut by the Federal Reserve Board and went from low 5% to almost 0%. However, that did not stop the real estate recession and depreciation of property values.

Undoubtedly, low interest rates made the economic decline and real estate recession less severe and saved some properties from foreclosures, but it still took six painful years for the real estate market to hit the bottom and then four more years for the prices to go back to their pre-recession levels.

Some markets had never fully recovered. For example, residential home prices in some parts of California, Arizona and Nevada are still below their 2006 highs.

To avoid this mistake, one needs to realize that although low interest rates help stimulate the economy and the real estate market, they do not cure them.

Mistake #3: I don’t need to sell now, so I don’t care

If you do not need to sell until the cycle plays out, which typically is over ten years, then you will not be as affected, especially if you have a strong equity position, limited mortgage debt, and solid liquid assets.

However, it is good to keep in mind that “life happens” and either professional or personal circumstances can change and we may need to sell property before the downturn runs its course.

Furthermore, if a property has a mortgages and its value declines to the point being “upside down,” meaning the mortgage loan balance exceeds the value of the property, then the options of selling, refinancing or even obtaining an equity line of credit, will be significantly limited.

This does not mean that everybody should be rushing into selling their real estate if there is no need to do so, just keep in mind that circumstances may and often do change and property options will be affected, so plan in advance. As one wise proverb says: “Dig your well before your thirst.”

Mistake #4: I’m selling, but I won’t sell below my “bottom line” price

This is a common and potentially very costly mistake. Generally speaking, every seller wants to sell for the highest price and every buyer wants to pay the lowest price. That’s nothing new. When selling real estate, most sellers want to achieve a certain price point and/or have a “bottom line.”

However, it is important to understand that the market does not care what the Seller, or his/her Agent, think the property value should be at. The market value is a price a willing and able buyer will pay, when a property is offered on an open market for a reasonable amount of time.

Overpricing property based on Seller’s subjective value or what is sometimes called an “aspirational price,” especially in a declining market, is a sure first step to losing money. When a property lingers on the market for an extended period of time, carrying costs will continue to accumulate and property value will depreciate in line with the market conditions.

Additionally, properties with prolonged marketing times tend to get “stale” and attract fewer buyers. The solution is to honestly assess your selling objectives, including the desired time-frame, evaluate your property’s attributes and physical condition, analyze comparable sales and market conditions, and then decide on market-based pricing and marketing strategies.

Mistake #5: I will list my property for sale only with Agent who promises the highest price

Real estate is a competitive business and real estate agents compete to list properties for sale which generate their sales commission incomes. It is not unusual that Seller will interview several agents before signing an exclusive listing agreement and go with the agent who agrees to list the property at the highest price, often regardless if such price is market-based.

Similarly to Mistake #4, this mistake can be very damaging to Sellers, as overpriced properties stay on the market for extended periods of time costing Sellers carrying expenses such as mortgage payments, property taxes, insurance, utilities and maintenance.

Furthermore, there is the “opportunity cost” since the equity is “frozen,” and it cannot be deployed elsewhere till the property is sold. However, the most expensive cost is the loss of property value while the real estate market deteriorates.

During the last recession, we have seen multiple cases where overpriced properties stayed on the market for years and ended up selling for 25% to 40% below their initial fair market values.

The solution is to make sure that your pricing strategy is based on the market, not empty promises or wishful thinking.

Mistake #6: I will list my property only with Agent who charges the lowest commission

Real estate commission rates are negotiable and not set by law. A commission usually represents the highest transactional expense in selling real properties and is typically split between Brokers and Agents who work on the transaction

Some real estate agents offer discounted commissions, in order to induce Sellers to list their properties with them. But does paying a discounted commission ensure savings for the Seller? Not necessarily.

For example, if the final sales price is 5% to 10% below property’s highest market value, which is not that unusual, due to inadequate marketing, bad pricing strategy, and/or poor negotiation skills, it will easily wipe out any commission savings and actually cost the Seller tens of thousands of dollars in lost revenues.

The solution is to engage an agent who is a “Trusted Advisor,” not just a “Salesperson.” A Trusted Advisor will take his/her time and effort to do the following: 1) Perform Needs Analysis: listen and understand your property needs and concerns; 2) Prepare Property Analysis: thoroughly evaluate your property and market conditions; 3) Execute Sales and Marketing Plan: prepare and implement custom sales and marketing plan for your property; and 4) Obtain Optimal Results: be your trusted advocate throughout the process and achieve the best possible outcome.

Finding such a real estate professional may not be always easy, but it certainly is worth the effort and will pay off at the end.

In conclusion, this article has outlined six costly mistakes real estate Sellers make during recessions and how to avoid them. The first mistake is not understanding that real estate cycles are long and take years. The second mistake is a misconception that low interest rates alone will create a recovery. Another mistake is not realizing that circumstances may change and not planning in advance. Mistakes number four, five and six pertain to understanding the market value, proper pricing and selecting the right real estate professional.

By understanding and avoiding these mistakes, real estate Sellers have significantly better chances of minimizing the negative impact of a recession while selling their properties.

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Source by Robert W. Dudek

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Useful Tips To Build The Best Gaming Computer

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Every gamer will want their computer to be the best gaming computer among their peers. Sometimes, with a little knowledge and tips and tricks, it is possible to build the best gaming computer and show it off to your peers. This article will show you how:

1) You can’t get the best gaming computer from computer retailers

If you want to get the best gaming computer, you have to build your own. Different gamers have different requirement for their gaming machine. Unless you are willing to pay a high price, you will not be able to buy a commercial computer that fulfills all your gaming needs. The only option you have is to build your own gaming computer.

2) You don’t have to be rich to build the best gaming computer

It is not necessary to burn a hole in your pocket to build the best gaming computer. With some due diligence, do some market research and compare prices around the marketplace. Merchant such as TigerDirect and NewEgg give regular discount to their products and you could save a lot of money if you catch them during their promotional period.

3) Most expensive parts do not have to be the best part

Sometime, the latest model or the most expensive model does not have to be the best part for your computer. It requires various components to work together to form the best computer system. When choosing a computer part, what matters is how well it can integrate with the rest of the components. Compatibility is more important than individual performance. What use is there if you spend lot of money on the latest quad-core processor and find that your motherboard doesn’t support it?

4) You don’t need to change the whole PC to own the best gaming computer

It is a misconception that you have to change the whole gaming machine to build the best gaming computer. If you already have a good barebone system, what you need to do is to upgrade the necessary parts and your gaming computer can roar back to life instantly.

5) Brand is important

Unless you want to see your computer system malfunction every few days, it is important that you purchase the parts from branded manufacturers with strict quality control. Motherboard brand such as Gigabyte, ABIT, ASUS are some quality brands that you can consider

If you follow diligently to the tips stated above. You will be on your way to build the best gaming computer. While price can be an issue, it is better not to scrimp on important computer parts such as motherboard, CPU, RAM and graphics card as it will cost you more to upgrade in the future.

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Source by Damien Oh

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