Today, I’m going to illustrate to you just how simple it is to estimate the costs of rearing poultry.
- size of your poultry operation,
- or country,
- or currency
- layer or broiler
- cage, deep litter or free range
…this guide will show you how it’s done.
No grey areas…
Everything spelt out…
Detailed both in breadth and depth & just right for getting started.
Identifying the production cost of rearing layers or broilers
Did you notice the addition of the ‘operative word’ in this first chapter heading?
In case you missed it…
This is the basis of your cost.
Business cost is always in relation to production.
Production (& or service delivery) being the fruit of any business.
And in the case of your layer poultry farm, it’s the production of eggs.
Why labour the point?
Because costs are not an isolated feature of business.
They have their place, just like profit, income, overheads etc.
They all relate.
What type of cost are we talking?
In poultry farming, as with all business, there are various types of cost.
So, before we get stuck into determining the value of those costs, it’s prudent that we firstly allocate them some sound definitions:
In the process of setting up a project whether for rearing layers or broilers, you will incur the following types of costs:
- One-off start-up capital cost
- Operational start-up capital
…and only once your business is up and running, the following would apply:
- Overheads (indirect) costs
- Ongoing cost of goods sold (direct) costs
Let’s get a little more detail on the points above…
Start-up capital cost of rearing layers or broilers
At the beginning of your project to rear chicken you will need to make some one-off investments to prepare your enterprise for operation.
The investments made here are your start-up capital costs.
Again, such costs which are ‘one-off’ in nature, meaning:
- they are pre-requisite & will not typically be repeated after your business is launched…
…By example may include the following for both a broiler or layer farm:
- building chicken housing
- boring a water hole on site
- connecting your chicken housing to electricity network
- feeder and drinker equipment
- bulbs to warm your chicks
- cages, if you choose
- setting up a feed store
- providing a egg store (if rearing layers)
How do we estimate your one-off capital cost?
It really depends…
To get closer, ask yourself the following questions:
- How many birds do I intend to rear?
- What do I already have in hand against the items listed…
- i.e. do I already possess some of those necessary items?
- Which rearing system will I adopt?
- Can I re-purpose current amenities to suffice a worthy substitute for any items listed?
Once you’ve thoroughly audited what you have in hand and what your chosen approach will be as part of your overarching project plan…
You will then have a shortlist of what investments might be necessary for your poultry farm.
Nothing a this stage will be certain and no details firm, but with these point in hand you’ll have developed some scope in mind.
Operational start-up capital costs for rearing layers or broilers
Once you’ve planned the scope of one-off capital purchases in a broad brushstroke or ballpark kind of way…
You’re next task is to estimate your first years worth of operational expenses.
These expenses will need to be paid for in advance of your project or business ‘going live‘.
In time, should your poultry farming enterprise be worth your while…
Your expected business revenues should be suffice for covering these expenses – plus giving you profit on top.
But in order to get the business off the ground…
You’ll need to inject the first year’s operational cost into your estimations.
These operational start-up costs by nature can be segregated into the following categories:
- Direct costs (cost of goods sold): costs directly related to the production involved in rearing your chicken
- Indirect costs (overheads): costs indirectly relating to the activity of rearing your chicken
Examples of direct operational costs of starting your broiler or layer rearing farm are as follows:
- Buying your first few batches of chicks
- Feed for your birds
- Supplements or medicines
These are the direct costs of rearing the birds:
i.e. buying the birds, feeding them and administering measures for preserving health.
Examples of indirect operational costs of starting your broiler or layer rearing farm are as follows:
- Farm labour
- Insurance (building & livestock)
- Water supply
These are the indirect costs of rearing the birds:
i.e. maintaining on-site amenities and personnel for running the farm duties.
Now you have an outline approach – next on the list of things to do is…
Going to market to get what you need to start-up!
Obtaining the ‘best fit’ products and services for your poultry farming enterprise
Getting what you need for your poultry farm is fundamental for making a success of it.
This process in the discipline of business management is known as:
And why does my poultry farm need to manage this?
“Procurement is the process of finding, agreeing terms, and acquiring goods, services, or works from an external source, often via a tendering or competitive bidding process.”
- Procurement – Wikipedia [Original source: A Theory of Incentives In Procurement And Regulation – Tirole Laffont]
We could summarise this simply with one word:
For your poultry farm to run optimally, you need to make the right provision.
In other words…
Deciding the best way to go about preparing the necessary set-up for producing eggs or chicken meat… profitably!
Just like anything in business…
If you don’t have a deliberate approach for maintaining control…
…matters can get…
Out of control.
Getting things wrong with procurement may lead to the following:
- not finding the products or services you need
- purchasing inadequate product or service
- detrimental terms of agreement
- missing out on the ‘best-fit’ supplier
- missing the mark on criteria for purchase
…ultimately, your future business will experience deficiency in operation and therefore profitability, if your decisions regarding provision are off.
Where do you begin managing procurement for your poultry farming business?
Firstly, let’s define the outline order of a procurement exercise.
Leading project management methodologies, summarise good procurement procedure according to the following:
- Planning procurement
- Conducting procurement
- Controlling procurement
- Closing procurement
Let’s open up these points and add some meat on to the bone:
Before you make any firm decisions on what you are going to implement as solutions for the farm…
You’ve got to plan.
As for governance, what should over rule your plan for procurement should be your overall project plan or report.
To say it another way:
Your procurement plan is just one of many means by which you hope to achieve the aims established in your project report.
The procurement plan therefore is a component…
Or a piece belonging to the whole puzzle of your poultry farming project.
What goes into your poultry project procurement plan?
The considerations below will ultimately define your procurement requirements:
- Procurement direction from your project plan
- Laying out your requirements clearly
- Reviewing the risks associated with your poultry plan
- Estimated schedules, timeframes and milestones
- Cost estimates related to activities within the start-up & operational process
What are the key activities related to procurement planning?
The following are tools which assist you in making the most beneficial procurement decisions for your poultry farm:
- Make, or buy?!
- Expert judgement
- Market research
What is make or buy?!:
This simply is as head-to-head assessment on paper of the pros and cons of either making or buying any particular feature of your poultry farm’s operation.
Let’s take an example…
e.g. a poultry house in a small scale broiler or layer farm could be made in-house:
- …made from scavenged scrap materials
- …erected to a good standard
- …this would be cost saving
- …yet dependant upon a number of factors including:
- ready availability of the necessary materials,
- expertise to build etc.
- …yet dependant upon a number of factors including:
A quick feasibility and cost comparison will give indication as to which would be the optimal move for you new enterprise.
Get a qualified second opinion.
This is the process by which you test the prospective procurement proposals by presenting them before a panel of respective experts.
If you have any friends, neighbours, family members or colleagues whose expertise will offer advantage in this planning process…
If you consider it wise, ask them if they would be prepared to revise your procurement proposals and provide constructive guidance.
Perform your due diligence to source from the open market the most advantageous combination of supply features.
The better prepared you are in this area…
The greater breadth and depth of your reference group of potential suppliers.
More choice equals…
More opportunity to get the procurement decision right and prosper your poultry farm.
Get face to face with prospective suppliers and quiz them on their products and service levels.
Articulate your questions clearly…
Load your enquiries with precise detail to uncover commercial advantage for negotiation.
Take extensive notes…
Whilst probing for angles which might give you the leading edge.
What are the benefits of writing a procurement plan for your poultry farm?
The following are the benefits that your poultry project should gain from diligent procurement planning:
- Detailed statements of work
- …a clear picture of what you need and how it will be done to get your poultry farm started
- Make or buy decision making
- …firm plan of action for whether or not you will build or buy the necessary items to run you poultry farm
- Requests for quote or proposal (RFQ or RFP)
- …formal communications obtained from suppliers of poultry products and services stating estimated prices/costs for items requested
- …typically there will be 2 types of contract or supply arrangement with suppliers:
- time and material: this usually would apply to services offered, like construction for designing and building a poultry house – ‘time and material’ is as suggests, the supplier quotes you costs relating to both their time/labour and material used to fulfil your request.
- firm fixed price: this usually would apply to products offered, like bird feed per kilogram – as ‘firm and fixed’ implies, the supplier quotes a fixed price which they will commit to should you take them up on their offer.
Conducting the procurement process
Once your plans for obtaining the necessary products and services for the poultry farm are well documented…
Next step is to do according to what you have planned.
Now to get acting on your plan to get what is needed to operate your poultry business…
ACTION! Getting the necessary of products and services for your poultry farm
First, some prep...
Gather together all the documents you’ve gained from the previous stage of planning:
- Bidder conference notes
- …insights gained from speaking with prospective suppliers and their suggestions for how you might achieve the best fit solution for each of your requirements
- Proposal evaluation
- …your estimation on the value offered by each supplier proposal, weighing up the pros and cons of each offer and applying an overall rating
- Cost estimates
- …thorough breakdown itemising each prospective supplier’s costs and pricing policies
- Expert judgement
- …written advice taken from your elected panel of experts for each of their respective areas of speciality
- …final offers given by prospective suppliers, after you have negotiated specific terms of delivery
Once armed with this information…
You will deliberate on the detail and arrive at your decision for each product and service required for your poultry farm enterprise.
The results are as follows:
- Select your sellers
- …formally select the suppliers you will commission to fulfil what you need
- Sign written agreements
- …establish firm written agreements with your selected suppliers for what will be expected – both sides
- Confirm resource calendars
- …schedule when suppliers will be expected to deliver their respective products and services to your poultry farm, whether one-off or repeated
- Submit change requests
- …if any details regarding the quotes given need to change, e.g. volume of feed ordered, make sure this is also agreed at this point
- Update your project plan, if necessary
- …if any relevant updates to your overall project plan need to be made, according to changes following this procurement process, now is a good time to update your documentation
It’s worth noting at this stage the importance of getting the facts straight on supplier agreements…
Because once formal commitments are made on paper…
You might incur related costs for inconveniencing your supplier.
Not to mention damage good will.
In line with this caution..
We ask the question:
What sort of detail should you include within formal supplier agreements for your poultry farming business?
The following are advisable details to include in written agreements with your poultry farm suppliers:
’14 Key ingredients for commercial agreements with poultry farm suppliers’
- Clear definition of deliverables:
- …declare exactly what you are agreed to receive in finite detail not cutting corners on defining with precision what is expected – leave nothing to doubt or ambiguity
- Schedule baselines:
- …set firm milestones for times when you expect to receive the good or services procured.
- Performance reporting:
- …have clear lines of communication for reporting feedback on performance and established occasions for performance review
- Period of performance:
- …be certain about how long you expect the arrangement to continue – don’t leave it open ended, keep both you and them keen on maximising value by setting defined boundaries – taking nothing for granted
- Roles and responsibilities:
- …be sure to determine who will carry out each task along with details on what ought to be done – recorded on paper – leave no grey areas
- Seller’s place of performance:
- …determine in advance exactly where the delivery of service or product will be exchanged – as not to have disappointments
- …agree prices in advance – so that there is no mistake on the value exchanged
- Payment terms:
- …know exactly what you are paying, how and when you are paying to ensure you can keep on top of what you have committed to – any delays in this area can upset your supplies and hinder your business
- Place of delivery:
- …know exactly where your supplier is agreed to deliver either service or goods – make it easy for them, they’ll be on a tight schedule. Provide adequate access.
- Inspection & acceptance criteria:
- …you’ll want to make sure that the delivery of each service and product batch is examined before you assume acceptance – agree how this will be done in advance to avoid offence or loss
- …what happens if anything goes wrong with the quality of what was delivered? Have your supplier tell you what assurances for quality they will offer i.e. what they will do if they miss the mark.
- Product support:
- …from time to time, you will need help with using the product or deliverables of service. Know what formal channels of help your supplier has provided to keep you supported for getting optimal value.
- …understand the liability that both you and the supplier will carry – key aspects are: handover/acceptance, quality assurances etc.
- …when things go wrong on either end e.g. supplier fails to deliver, or you fail to pay – agree compensatoin which will be collected appropriately, to reflect the loss of the other party.
- Performance bonds: perhaps agree deposited amounts to be held on bond to cover loss of value through missed performance targets.
- Subcontractor approval: if a supplier is to use subcontractors to perform any portion of duty for you, ensure they declare their identity for approval
- Change requests: if something within the agreement needs changing to better suit your business, ensure pathways are clearly set for how this ought to be done avoiding inconvenience.
- Termination clause: decide for how the agreement should be terminated in an appropriate manner should circumstances change.
Now, once the deal is made its worth keeping a keen eye on matters to make sure you get what you bargained for.
Controlling the procurement process
Once your supplier agreements are in place along with any supporting technical documents – it’s time to make sure what you get is what you expected.
This is the essence of procurement control.
The key tools for assessing your poultry farm supplier performance are as follows:
- inspection and audits
- performance review records
- performance reporting
Here’s what we mean by this…
Inspections & audits:
Formal examining of the quality of what was delivered by they supplier, performed at agreed intervals according to appropriate criteria
Performance review records:
Once supplier performance has been recorded, you should review your records periodically to keep ahead of curve of whether or not the arrangement is optimally profitable for your poultry farm
It’s always useful to receive feedback on how you are doing. It is worth firming up the relationship with your supplier by offering performance feedback when appropriate.
Closing the procurement process
Whilst there are some supplier arrangements which are ongoing in nature…
And others which are more temporary or even one-off transactions…
You’ll want to have a clear process for opening and closing the arrangement with your supplier.
Setting expectations keeps both parties focused on obtaining maximum value for the time engaged.
How to make accurate cost estimations for rearing poultry
In order to produce accurate cost estimations for your poultry project start-up costs…
We need to assemble your informational sources– these will influence how you determine your costs:
- Overall project plan:
- …detailed direction of the type of poultry farm you will run
- Procurement plan:
- …approach for making provisions of products and services to run your farm
- …capacity and chosen rearing model of poultry operation
- …research knowledge of external factors which will impact costs of products and services acquired
- …risks involved within the project which will be considerations for planning costs
Your business costs are directed by the higher level strategic drivers.
In other words…
Those important thoughts and purposes involved in your business plans which determine your overall business objectives and goals, come first…
Then your costs and budgeting details follow afterwards.
Once you’ve got your pre-requisites set…
It’s time to decide on your preferred method of cost estimation:
Methods of estimating poultry rearing costs
To estimate the costs of you upcoming poultry project, you could adopt any one of the staple cost estimation techniques used by management professionals in industry.
The following are the most commonly used cost estimation methods:
Analagous cost estimation:
“…uses a similar past project to estimate the duration or cost of your current project” – PM Learning Solutions
“…[multiplying] the unit cost or duration [by] the number of units required for the [entire] project or activity.” – PM Learning Solutions
“…In this style, project managers tally their costs upward, starting at the bottom and accounting for each expected cost. In sum, the total costs should equal the finished project. It’s a basic method of estimating, but the benefit is that it’s the most accurate means of estimating a project’s total cost.” – Liquid Planner
“…project is analyzed from a cost overruns point of view and buffers are placed in appropriate place. These buffers are called Contingency and Management Reserves… Contingency Reserves are buffers to account for risks that you know will occur…Management Reserves are for risks that have not been identified.” – Bright Hub PM
- Pad each activity cost estimate:
- …add a little extra budget on top of every activity to make sure you have enough
- Pad high risk activities:
- …only add extra estimated cost onto the activities which you think are particularly risky
What will your chosen method be?
As for us, our preferred approach for arriving at the most accurate costs will be a combination of all methods…
Each one adding the benefit of verification…yet, the significance is in the order:
- …firstly, we take note of the FAO and global standards – and use these to set the parameters for…
- Bottom up:
- …secondly, dividing up the categories into their smallest units for the process of building up an accurate estimate…
- …thirdly, add a little extra cost on top for contingency – just in case anything turns out to be more costly than expected…
- Analogous (if available):
- …lastly, we recommend taking historical costings of similar projects conducted in the past and using them to benchmark your outcomes to see if your estimates are valid
Determining your budget
Once you’ve established a basis for estimating your costs – it’s simply a matter of piecing together the puzzle of your overall cost.
Producing firm estimates on cost give you a baseline to work from whilst building your project funding estimates.
This information feeds back into your project plan and informs your next move for getting your funds prepared.
Cost Of Rearing Poultry
Before we take a look at some practical illustrations and examples of calculating the cost of rearing poultry…
We ought to identify the most common categories of cost involved in such a farm.
The following are what you would typically expect:
A Categorical List Of Running Costs For Rearing Either Broilers Or Layers
- Flock purchase:
- …running both layer and broiler farms requires you to keep your flock continually topped up
- …replenishing with new and optimally conditioned stock maintains maximum production and profit
- Heating & lighting:
- …depending on your set-up you may have differing needs for heat and light, particularly for your your brooders in the early weeks of growth
- …whether electricity based or otherwise – you’ll need to account for this within your costings
- Feed consumption:
- …your birds need daily feeding, using differing compositions and quantity of diet depending on age and breed
- …make sure you cost exercise accounts for all nuances associated with feed
- …between batches changing over in any particular poultry house, the accommodation and all equipment must be thoroughly cleansed & sanitised
- …account for material and labour for keeping your farm in tip-top shape
- Supplements & Medicines:
- …your chicken will require keen handling to keep them disease free
- …the no.1 factor in maintaining a healthy flock is cleanliness…but you may choose a course of supplementary help one way or another
- Consumables for packaging:
- …if you adopt layer farming as your mode of production, you’ll be assuming the additional cost of packaging
- …consider whether you will use durable plastic trays or cardboard
- …frequency of transport is markedly different between layer and broiler farms…
- …mainly because layer production involves a derivative product which is recurring, by the same batch during its rearing cycle
- …for broiler production the bird itself is the product – once in, once out
- …both layer and broiler farming are relatively labour intensive and hold similar demand for being attended by staff
- …birds need to be: fed & watered, examined, exercised, weighed – their houses cleaned and restocked on a continual schedule throughout the rearing process
- …layer farming has additional routine collections pf eggs along with packaging/storage duties compared with raising broilers
- …you might opt for covering your buildings and contents (equipment etc.) against potential loss due to one or other unforeseeable occurrence
- …if you do, the recurring annual premium costs will need to be accounted for
- …lighting and perhaps ventilation will most likely need to be powered by electricity
- …supply costs need to be tallied and added to the sum of overhead expenses
- …will you incur costs from your water provider for ongoing provision of clean drinking water to refresh your flock?
- …culling your flock for disease or removal of dead birds is a common feature of the job of poultry farming
- …responsibly disposing of dead/culled birds – namely by incineration will need to be costed
Whilst some of these may be inappropriate for smaller scale or even backyard operations…
The idea of listing a comprehensive line-up is to keep the thought in mind both for now, and also later.
Now, with all the above firmly seated in our minds…
Let’s tackle some practical scenarios!
Small Scale Example: Cost of Rearing 100 Layers
Example [A]: Cost Projection For Raising Layers For Eggs in Nigeria
Yomi is from Abuja, Nigeria, and has ambitions of rearing poultry on some rural land he owns…however, he’s relatively new to the idea.
His online research has lead him to get up to speed quite quickly.
Yomi’s full-time occupation is skilled labour on some of Nigeria’s most prominent agricultural building projects…
Yet he himself has no animal husbandry experience.
He seeks a grass roots diversion at this juncture in his working life and thinks poultry to be his way out.
Aside, from rearing poultry, he has considered starting up alternative types of farm production that he could run on his own land.
But it is rearing poultry in particular has taken his interest.
He perceives poultry farming to bear relatively lower risk, in many ways – for a newbie farmer, in comparison to raising other types of livestock.
Rearing layer birds for egg production is Yomi’s preferred model.
Yomi wants to project some accurate costs for his investment in such a farm.
He considers 100 layer birds to be a good capacity to start from, just to learn the trade…then hopes to multiply his flock to 500+ once settled in.
Yomi gets researching…
And after finding our advice on ‘How To Start A Poultry Farm – Self Start Techniques For Beginners‘ – Yomi gathers enough confidence to firmly decide on building toward his vision of poultry farming.
His first step is emailing us (The Big Book Project) with a short request:
‘To The Big Book Project Team – Greetings,
My name is Yomi.
I am looking to set-up a poultry farm in Nigeria selling eggs.
My initial goal is to begin rearing 100 layer hens on a small piece of land which I own…to get my eye in.
I’m a construction labourer by trade, so I think I will be able to build my own poultry housing…my intention would be to raise then hens in an open house (no cages)…
I just need a little direction, particularly with an approach to costing…
…So my start-up investment figure and ongoing operational expenses are accurate.
Please can you assist me?
Thank you and kind regards from Abuja, Nigeria,
What an encouragement to see another reader of our online advice get in touch with us for further information…
We share with you our email response:
We are delighted to have received your email requesting guidance on cost of rearing 100 layers in Nigeria.
Please read the following step-by-step rationale for breaking down the costs associated with rearing layers in your scenario:
Step #1 – One-off capital costs – subject to availability & contractor quotes (if applicable)
Advice: In order to set-up your layer poultry farm, typically entrepreneurs would have some one-off capital costs to account for, namely:
- Housing & Storerooms
Land & Housing
The order denoted above would indicate both importance and weighting of costs – the cost of land acquisition usually being the most burdensome…
When examining the benefit cost ratio (BCR) of much bigger poultry farming project reports or investment proposal, the cost of land is usually the capital item which makes all the difference to investor attractiveness.
But in your case…
As you already have the land in your possession…:)
And that your occupation in construction means you have the ability to construct your own poultry housing…
You already have great advantage in cost reduction!
You must also, remember a secure storehouse for keeping your eggs every week, where they must be prepared for dispatch.
Your chicks will require heating in the early weeks of development and lighting at appropriate intervals…
Therefore, you will require some kind of electrification – either main grid power, generator powered or solar powered, being the typical choices.
Without detail of infrastructure on your land, we are limited to advise currently in this area.
Keeping your flock adequately hydrated daily is a key to their optimal production…
And as such, you are required to have on-site a plentiful supply of clean drinking water for your layer chicken.
Our question would be:
Is your farm connected to a continual supply of fresh drinking water?
If not, you may consider installing a borehole for water, or getting connected to the municipal supply.
Your daily water requirement could be anything up to 38 litres per day for a flock of 100 mature layers + 50 brooder cum growers.
The cost of this would need to be accounted for.
Layer farms are typically required to make egg deliveries weekly to customers. As such you will require a suitable van to facilitate, the size of the van will depend on your overall flock production capacity.
In other words, to deliver 600 eggs per week to 3 customers will require a much smaller van than delivering 3,000 eggs per week to 3 customers.
Finally, the equipment you require for starting your layer farm will be as follows:
- …depending on the dimension and system of drinker, manufacturers will recommend ideal housing distribution and numbers of birds per drinker…
- …similarly as with your drinkers, there will be recommendations for the optimal number of feeders per flock of given size.
- …you will need to deliver the eggs in trays to your customers – either the durable type or the cardboard variety…remember if you provide plastic trays, you’ll need a contingency of trays for when your previous week’s trays (from delivery) are yet to be collected.
- Bulbs and Wiring:
- …to provide necessary heat to young chicks
- Cleaning materials:
- …regular cleaning of drinkers & feeders, plus between changeover from one batch of chicks to another, you will need to clean thoroughly
Example cost estimation on your one-off capital costs:
The following examples are under the adoption of a 1+2 poultry housing system…
- Where there are two batches of chicks bought per year –
- …28 weeks apart with a new batch bought to replace the lost productivity of the batch due for sale as spent hens.
Capacity example = 100 layers
(Already in possession) – but depending on the area of land available, you will have restrictions – naturally.
TOTAL ESTIMATED COST:
NIL – (assuming ample room).
Using the 1+2 layer rearing system, you are required to have 3 purpose built poultry houses.
ONE HOUSE for accommodating your brooder cum growers (ages 1 day to 20 weeks old), of the following dimensions…
- i.e. before they reach physical maturity and egg laying ability.
…at the above ages, the FAO advise, a minimum floor space per bird of 1.36 sq. ft. using a deep litter system (i.e. no cages):
- Minimum size deep litter brooder cum grower house (50 birds): 68 sq. ft. floor space
Plus, TWO HOUSES for mature layer (21 weeks old +) batches to produce eggs simultaneously, of the following dimensions…
…at the above ages, the FAO advise, a minimum floor space per bird of 1.94 sq. ft. using the deep litter system (i.e. no cages):
- Minimum size deep litter layer house (50 birds): 97 sq. ft. floor space per house
- …(*remembering that there is a need for 2 layer houses x50 birds within this rearing system)
TOTAL ESTIMATED FLOOR SPACE REQUIRED:
Deep litter poultry house…
- = 68 sq. ft. (for brooder cum grower house) + 194 sq. ft. (for 2x layer houses)
- = TOTAL ESTIMATED SQ. FT. = 262 sq. ft
- = TOTAL ESTIMATED SQ. FT. = 310 sq. ft including contingency for spacing between the poultry houses
- …therefore, minimum area of land ~400 sq.ft. to accommodate houses, stores etc.
Depending on your accessibility to raw materials and labour, this cost could vary considerably.
TOTAL ESTIMATED COST:
= ₦ [Depends on your accessible resources and labour for construction]
The expected production level of eggs per week with a layer capacity size of 100 laying hens is around 600 eggs.
A tray of eggs holds 30 eggs.
This would total 20 trays for transit per week.
The chosen vehicle would need to hold a total capacity of 20 trays of eggs at one time.
A compact mini-van would be adequate.
Something in the line of Chevrolet Astro would do:
TOTAL ESTIMATED COST:
= ₦ 599,999 (Used minivan)
As for the regular drinkers for chicks, there is a bell shape 4-10 litre variety which serves up to 50 chicks at a time:
The unit price of this item is: ₦ 2,700
As for the drinkers for the mature layers, there is an Automatic Bell Drinker (With Elongated Bell), one of which would be suffice for 100 birds:
The unit price of this item is: ₦ 7,900
TOTAL ESTIMATED COST:
= ₦ 10,600
The number of feeders required depends on the mode of production, i.e. cage or deep litter.
If you opt for deep litter, then circular feeders would suffice.
A hanging plastic feeder holding 5-10 kg can feed up to 14 birds at a time.
Each of the layer houses would hold 4 circular feeders a piece….making 8 circular feeders for layer houses.
= ₦ 6,000 unit price x 8 feeders (for your total of 100 birds)
= ₦ 48,000
As for the brooder cum grower house, you could opt for linear feeders which accommodate 28 birds each.
In this case you would need 2 linear feeders for you brooder cum grower house.
= ₦ 1,250 unit price x 2 feeders (for your total of 50 birds)
= ₦ 2,500
TOTAL ESTIMATED COST:
= ₦ 48,000 + ₦ 2,500= ₦ 50,500
Many egg vendors, opt for the durable egg trays which are less of a recurring consumable cost, but a one-off provision.
Of course, number of necessary trays is dependent upon your expected production output.
Should your layer capacity be 100 hens, you can expect an optimal output of production being approximately 600 eggs per week.
To make your weekly deliveries and you’d need (2x) 24 trays [= 600 eggs / 30 trays (+ 4 trays contingency for increased output)]
= 48 trays
Why (2x) 24 trays?
Whilst one weeks deliveries results in trays being left on-site with customers until the next round are delivered, you need another set of 24 trays to package the following week’s eggs.
In addition to the 48 trays we also add…
…a few extra trays in case of breakages or loss
= 60 trays
They can be purchased in bundles of 36 trays for…
So, you would need to order 2 bundles…
TOTAL ESTIMATED COST:
= ₦6,050 x 2
To heat your chicks when they are delivered for the early brooding stages of development, you’ll need a ‘heating lamp’…
One 250 watt bulb, is usually sufficient for up to 100 chicks – for your model with batch sizes of 50 chicks, one bulb will do the job.
TOTAL ESTIMATED COST:
Miscellaneous cleaning expenses for cleaning the poultry houses and cleaning the eggs prior to delivery
TOTAL ESTIMATED COST:
TOTAL CAPITAL START-UP COSTS:
= ₦ 694,700
(* the figure above does not include your costs of: electricity or water connection, nor material and labour to build your chicken houses – for reasons stated above)
Step #2 – Operation costs – subject to availability & contractor quotes (if applicable)
Advice: The following are the operational costs associated with running a 1+2 layer farm with laying capacity of 100 birds…
- Cost of chicks
- Cost of feed
- Cost of supplements & medicine
Cost of chicks
Using a 1+2 rearing system, having a layer capacity of 100 birds will mean buying batches of 50 chicks at a time.
The chicks are typically sold in cartons of 50 chicks.
With an expected bird mortality rate of 5%, you should plan to buy…
53 birds per batch.
The price per batch of 50 chicks currently is in the region of: ₦ 12,000 (per batch of 50 chicks)
TOTAL ESTIMATED COST:
= ₦ 12,720 (per batch including 3 additional chicks per batch to compensate for bird mortality)
…in order to achieve the 1st year’s target of 100 mature layers producing, you would need to buy 2 batches…
…giving a total cost of chicks of…
= ₦ 25,440 (inc. delivery)
Cost of feed
Layer feed is calculated according to age requirements, which itself changed as rapidly as the bird’s themselves begin to grow.
The following is a table taken from the FAO guidelines of layer feed consumption:
- Further reading: Good Practices In Planning Poultry Farming Management – FAO
We can interpret from this, the optimal feed provision for 50 chicks from day 1 to week 8 in total sum would be:
…between the ages of 9-20wks the daily consumption of a single grower is on average quoted as being 70 g per day…
So, with a batch size of 50 birds and 77 days within the 11 weeks (wk 9 – wk 20)…
The estimated feed consumption will be approximately…
= 270 kg (70g x 7 days per week x 50 birds x 11 weeks / 1,000)
As for the layer stage, the FAO recommendation for feed consumption at optimal rates are as follows:
- Further reading: Good Practices In Planning Poultry Farming Management – FAO
From the table above we can interpret the following figures:
Firstly, let’s note the duration of rearing cycle denoted above being 76 weeks.
However, typically the consensus commercially is that layer hens are ‘spent’ i.e. enter into a rate of productivity which is unprofitable, at age 72 weeks.
Our advice is that you replenish your laying flock at 72 weeks…
Therefore, our feed consumption cost calculation will only be for 72 week, rather than 76 weeks.
The feed intake figures above are quoted for batches of 1,000 birds and are also in KG.
Let’s take the first week of laying at 21 weeks as an example for converting the present numbers to reflect our chosen flock size of 50 birds:
= 7.5 kg per 100 birds per day
= 52.5 kg per 100 birds per week
= 26.25 kg per 50 birds per week
…if we continue extrapolating the feed consumption figures from 21 weeks of age to 72 weeks of age…
The total feed consumption for 50 bird batch would be:
= 1,872.50 kg
…2x batches of mature layers would consume approximately…
= 3,745 kg of feed consumed by layers over 52 weeks of rearing
Remembering, that within this system of 1+2 rearing, you won’t have 2 complete mature laying cycles of 52 weeks…
Only one batch rearing cycle would be completed, with another batch’s cycle part completed, staggered at 28 interval week apart…
A precise calculation for feed, we use an in-house tool which apportions feed according to the scenario of each project…
According to your project of 100 layers, using the 1+2 layer rearing system the feed consumption in the 1st year as:
TOTAL 1st YEAR FEED CONSUMPTION 100 LAYER CAPACITY USING 1+2 REARING:
…per age group proportionally, the amount of feed required for 1st year is as follows (for batch sizes of 50 chicks using 1+2 rearing system):
- 166kg brooder mash in total
- 588kg grower mash in total
- 1,230.25 layer mash in total
…the total being, again:
= 1,984.25 kg of feed for the first year
Now, let’s look at the cost:
Feed in quantities of 25kg is typical for each age group:
…this would be the break down of number of bags required…
= 7 bags of feed for brooders (= 166kg total feed / 25 kg bags)
= 24 bags of feed for growers (= 588kg total feed / 25 kg bags)
= 50 bags of feed for layers (= 1,230.25 kg total feed / 25kg bags)
…total number of bags of feed for the 1st year of operation:
= (81x) 25kg bags of feed [rounded up to the nearest whole number]
…Now, lets look at cost…
Brooder chick feed (₦ 3,600 per 25kg bag):
= 7 bags x ₦ 3,600
= ₦ 25,200
Grower pullet feed (₦ 2,750 per 25kg bag):
= 24 bags x ₦ 2,750
= ₦ 66,000
Layer bird feed (₦ 2,950 per 25kg bag):
= 50 bags x ₦ 2,950
= ₦ 147,500
TOTAL FEED COST FOR 1ST YEAR:
= ₦ 238,700
Cost of medicines & supplements
The regimen which you approve for supplementing the health of your birds, will determine the corresponding cost.
Some opt for the official medical route, whilst other prefer the natural supplement approach.
Each marketplace will have various naturally occurring raw ingredients for natural supplements, as well as access to medicinal products.
We deem it to be beyond the scope of this communication to apply a parametric approach to this operational cost (i.e. to break down itemised costings for each cost element)…
Perhaps something more anecdotal would suffice.
Looking at historical project reports published online…
From a variety of countries…
We would estimate that a reasonable estimation on cost for layer medicines and supplements would be:
3% of the cost of…
…chick purchases plus feed purchases.
Therefore, in your case as estimated within the earlier portions of this email,
We would consider a fair estimate supplements & medicines cost to be in the region of:
= (₦ 238,700 feed + ₦ 25,440 chicks) x 0.03 (for 3%)
= ₦ 264,140 x 0.03
= ₦ 7,924.20 (medicines & supplements for 1st year)
As for litter material, there are many commonly available materials used in Nigeria for this purpose – each with their performance pros and cons (not to mention economic costs).
Common materials include:
- paddy husks,
- groundnut hulls,
- coir pith,
- chopped straw,
The recommendation for litter depth according to the FAO is 5 cm deep.
We suggest you investigate the local market for accurate estimates, to cover your floor space.
As for labour, depending on your availability, you might find the scale of operation easily handled and managed by yourself alone
…Spending no more than a couple of hours per day.
If you were to seek labour to assist you in the endeavour – we’re sure your local knowledge of available resources will lead you in the right direction.
Electricity supply is necessary for heating and lighting for chicks.
As your operation grows in scale and capacity, there may likewise grow a demand for mechanical ventilation, if required.
It’s difficult to estimate the cost of electricity for a number of localised economic factors…
Also for the fact of alternative heat sources – which are not dependent upon power.
Fuel costs for your deliveries will again depend on factors such as:
- local variations on price
- distance between farm and customers
- number of drop-offs on delivery days…etc
It would be impractical for us to suggest an estimate cost for you.
TOTAL OPERATIONAL (RECURRING) 1ST YEAR COST:
= ₦ 272,064.20 (not including: fuel for delivery, electricity tariff, labour or litter)
TOTAL PROJECT START-UP COST FOR 1st YEAR:
= ₦ 272,064.20 + ₦ 694,700
= ₦ 966,764.20
RECURRING ANNUAL OPERATIONAL COSTS AT 100 CAPACITY:
= ₦ 272,064.20
We hope this gives you an idea of overall project cost of rearing 100 layers in Nigeria.
As for, profit estimation – we advise you read this article focused on granting such advice.
We hope this helps you in your efforts to start-up your micro agricultural enterprise.
The Big Book Project Team”
Example: Cost of Rearing 1,000 Broilers
Example [B]: Cost Projection For Raising Broilers For Meat In South Africa
He’s a self-employed business consultant – using his home as a base, in South Africa, Durban.
Simon has experience of rearing 200 layers at his smallholding farmland, but looks to try his hand at rearing broilers…
After seeing demand for free-range meat increase in his locality.
Whilst having confidence in small scale layer farming, Simon is in need of a little technical reassurance for his new broiler venture.
His research online brings him to FAO PDFs on broiler farming.
To gain clarity on broiler rearing systems and the associated feed costs, Simon searches online for poultry consultants offering FREE 1st time consultations…
He found The Big Book Project…and submitted a contact email.
His enquiry read:
“Dear Sirs @ The Big Book Project,
I’m seeking your advice on the cost of rearing 1,000 broilers at my smallholding in Durban.
I have a bit of experience rearing layers, at smaller quantities…
But I am not confident as yet with calculating costs of a broiler farm of a thousand birds delivering meat once a fortnight to market.
At this stage, I don’t need numbers, but more the approach…
Can you help?
Thanks in advance.
Having received Simon’s email we responded…and share the details with you:
Thank you for your enquiry.
Glad to hear that you are venturing into broiler production.
As you already have experience of the basics of poultry farming at least on a small scale – we’ll not waste time addressing the fundamentals of the discipline…
Rather we’ll dive into the mechanics of broiler farming.
For rearing 1,000 broilers with the anticipation of delivering meat to market once a fortnight…
The rearing system which you will need is 4+1.
Here is schematic of how the system would operate from a standing start to being in full flow:
The first notable expense that you will discern from the model above will be the need for 5 (4+1) broiler houses.
In order to engineer the production frequency to meet fortnightly deliveries…
…You will need to accommodate anywhere up to 4 batches of broilers at any given time.
Having experience of setting up poultry housing in your market already, we hope you’ll be able to arrive at a sound estimate for cost.
The next significant cost implication is livestock cost.
As you are aiming for a marketable batch to be ready every 2 weeks, your anticipated number of batches purchased per annum will therefore be:
= 26 batches.
This is a far more intensive livestock purchase routine than with layer birds…which even at large scale commercial levels buy up to 5 batches per year.
Herein lies another significant cost.
Finally, the cost of bird feed related to your chosen ambitions will be greatly increased compared with what you will be familiar with through layer farming.
The quantity of feed required will be in excess of what you’re used to.
Also, the formulation and consumption figures are different to layer farming.
Below is a table, with FAO guidelines from which optimal feed consumption estimates can be derived for broiler farming:
- Further reading: FAO
This table shows feed efficiency and weight gained at each week of rearing.
Whilst this table doesn’t directly provide optimal feed quantities for broilers, it does give weight gain and feed efficiency…
From which you can derive what the FAO would recommend as feed consumption for broiler farming:
Let’s have a go at calculating the optimal feed consumption of a broiler over 6-7 weeks of rearing…
2.02 feed efficiency x 2100 g
= 4,242 g of feed to get a broiler from day one to market sized.
Now to estimate the direct cost of operations for your 1,000 bird broiler farm per annum – according to the 4+1 rearing model, you would simply need to do the following:
Step #1 – Multiply the number of broiler batches to be purchased in any one year, by:
- = 26 batches (i.e. a batch bought every 2 weeks within a 52 week year)
Step #2 – Multiply the number of batches by batch price:
- = 26 batches x batch price
Step #3 – Multiply the feed consumed per bird by the total number of birds sold in a year
- = 4,242 g of feed x 26,000
- = 110,292,000 g of feed per annum
- …110,292 kg of feed per annum
- …110.29 tonnes of feed per annum
…coupled with the additional one-off start-up capital for additional housing and equipment…
This is the kind of approach we would take to sure up some costings for your proposed broiler operation.
We hope this points you in the right direction.
The Big Book Project Team.”
Final thoughts on cost of rearing poultry…
Of course, costs cannot be viewed in complete isolation from its related topics of production and profit…
But at times it benefits to get a focused handle on costing in absence of distraction.
This way you can really see how expenses and overheads claws away at potential profits.
As is so often quoted by industry commentators, as far as ongoing cost is concerned…
Poultry feed contributes over 70% of the running costs of a poultry farm.
Under-subscribe in feed calculations and you could be in for a shock.
Consider your rearing systems and their dictation of capacity and overall flock size.
Also, the components of feed for the different growth stages of bird for both layer and broiler give differing feed cost per bag or per kg.
As far as one-off capital expense is concerned, having land already or having handy skill like carpentry can make your prospective project all the more feasible, profit wise.
Whatever, model you choose, we advise think it through thoroughly on a piece of paper first, before you take the plunge.
Read up on the pros and cons of various models and weigh up the benefit cost of each.
Happy poultry farming!
Do you need taking through some of the detail 1-to-1?
Feel free to reach out to us.
Do you have experience with local costs in your marketplace and would like to share your findings with others?
Feel free to comment below.
Are you a supplier who has cost saving tips for poultry farmers everywhere?
Join the conversation.