EXECUTIVE SUMMARY

Piggery is a highly lucrative agribusiness venture in Malawi especially with the rising demand for pork from the urban and peri urban markets.  Pork production and consumption have risen rapidly in Malawi over the past decade, driven by population growth, urbanization, increasing incomes, and changing tastes. In 2011, Malawi had the highest per capita consumption of pork in Africa (3.4 kg/person per year). 

The number of pigs has increased more than tenfold from less than 200,000 three decades ago to roughly 3.2 million. More than 1 million households in Malawi raise those pigs. The majority of the pigs are kept by women in rural areas, with limited access to technology, services and markets.

There is an emergence of medium scale farmers in Malawi engaging in piggery to enhance supply of pork. However the demand for pork exceeds supply and majority of these farms are facing feed challenges. There is minimal knowledge and supply of recommended feeds for pigs and majority of farms are not professionally run as an agribusiness.

Despite the feeding and disease control challenges pig farmers face, pigs present an ideal livestock enterprise advantage because of their prolific rate of multiplication with one sow producing up to over 10 piglets. They are thus an activity intensive livestock enterprise with high returns. 

The project entails setting up of a modern piggery unit starting with 40pigs, 32 sows and 8 boars. The business intends to engage in breeding and multiplication of the pigs as the basis of a large scale commercial pig farm. It intends to sell mature pigs for consumption as well as quality bred piglets to prospective farmers. 

BUSINESS DESCRIPTION

The business will be known as Ulimi Enterprise. This is a new venture which will be situated in Lilongwe District. The business will be fattening and selling pigs to companies and people around Lilongwe, and a country as a whole, through its four proposed outlets. The opportunities to our business are; the available market, that is; meat processing companies Kapani and Nyama world in particular.Research has shown that pig production is the fastest growing livestock business in this country. By looking at its sales projections, the business is able to realize a profit of MWK6, 103,000.00 in the second year of its operation, which is one of the good performances of the business venture.

Location is another advantage of our venture. The venture is located in Lilongwe, the capital city of Malawi where we have more of our demand for pig products. The enterprise will also have its own source of water, a bore hole, since pig production needs a lot of water. Being near Lilongwe, where there is Bunda college being specific Animal science Department, is also an added advantage for it to get technical expertise of pig farming

BUSINESS VISION, MISSION AND OBJECTIVES

Vision

To become a leading producer of quality pigs, and supplier of pig products in Lilongwe city and beyond within 6 years period.

Business Mission Statement

To produce and market quality pigs and its products, to the reduce meat deficits being experienced in the country. Apart from production of pigs for Pork, in consequent years, Ulimi will open up butcheries for bacon and other products with fully fledged abattoir equipment in future.

Objectives

• To produce high quality pigs and pig products which will satisfy customer needs in the city of Lilongwe and beyond.
• To penetrate pig market by 30% within 6years period beginning 2018.
• To support pig growers on contract and those not on contract with training and extension services with a view to produce good qualities of pigs and avoid un necessary disease outbreak in the locality of our business operation.

OWNERSHIP

The business will be owned by two people; MrObedMatiasGondwe, a holder of Bachelor’s degree in Agribusiness Management from Lilongwe University of Agriculture and Natural Resources and Mr Happy Anold Soko.

LEGAL STATUS

Ulimi enterprise will start as a partnership entity

OUTLINE OF BUSINESS OPERATIONS

THE BUSINESS OPERATIONS

The business has been planned to be rolled out in 2018 November 1st. The business will be geared up by a donation to achieve its objectives.

The two owners will be involved in the management of the business and other 4 personnel will be employed as permanent laborers to take care of the feeding, hygiene and all manual work required. Where need be, the casual laborers will be hired to back stop the laborers services.

The aim is to raise pigs and sell them at a bacon stage. This will be after they have attained a weight of 70-90 kilograms. Our farm will be the market center and consumers will have to come and buy from the farm. Serious efforts will also be made to reach out to all potential markets in Lilongwe and beyond and supply the pigs using a one tonner pick up which will be purchased by the business after its two years of its operation. The entire feed ingredient and other goods will be transported using the same vehicle.

All necessary accounting books with double entry accounts will be established for accountability. The books will be opened and managed by the proprietors who are trained in accounting until a time when it will be deemed necessary to hire account personnel.

List of machines and other equipment

• Winning cages
• Kraal
• Vaccines
• Farrowing pens
• Working suits
• Gumboots
• Wheelbarrows
• Shovels
• hoes

Equipment, feeds and feed components such as sorghum, millet maize ban and minerals will be bought from Kulima gold and Farmers World. These are trustful agents with affordable prices.

Stuff/management structure

• Farm manager
• Supervisors
• labourers

BUSINESS ORGANIZATION

We plan to form a Private Limited Liability Company for the business in the near future. It is our intention to grow Ulimi Enterprise into a large firm with international standard and relationships. The initial and on-going cost of operating as private limited liability company will be a necessary business expense. Also, since a properly run private limited liability company will afford our limited liability, we feel this is the right form of business. We intend to depend on our attorney to handle all aspects of setting up the limited liability company and maintaining proper company records. But for a start the business will start as a partnership where profit sharing will be based on agreement.

MANAGEMENT 

We willmanage the business on a day‐to‐day basis. With our management team we will grow this business and provide jobs to some Malawians as the business expands. There is a plan for continuation of the business in cases of death or incapacitated.

Working hours will be from 7: 30am to 5pm every day from Monday to Friday except for security agents and feeders who will work all day and night.

Staffing requirements

The company will require atotal of 4 employees during its first two years, where 2 employees will provide skilled labor and the other 2will provide unskilled labor. The 2 skilled employees will fill the following positions; Farm manager and supervisor. Below provides information on each position’s staffing need.

Farm manager

The company will require one manager who will be employed on permanent basis. This individual must have knowledge in pig management, he/she will be responsible for controlling the amount of feed given to pigs monitoring animal health and estimating the amount of feeds to be purchased or made in a given period. In addition, the person and it is expected that the person must be knowledgeable in computer applications. And be able to workwell independently as well as in a team-based environment. They must be highly motivated, able to endure long working hours, and possess leadership skills.

Supervisor

The company will need one supervisor who will be employed on permanent basis. The following will be his or her duties.

• To make sure that equipment and materials are provided to workers
• To make sure that hazardous materials are identified and labelled correctly
• To provide information and instructions to workers
• Workers must work incompliance with provision of occupation

Duties of workers

• Feeding pigs
• Clean kraals
• Report the welfare status of pigs
• And any other duties as assigned by the supervisor.

THE SPECIFICS OF THE PIG PRODUCTION

PIG BATCHES

One batch of 40 pigs will be bought, of which 32 will be sows and 8 being boars. Each sow can produce an average of 10 piglets per year, that means an average of 360 pigs will be raised in the first year ( 320 piglets plus 40 of first batch) and will consequently get increased by 25% annually with money from retained earnings from the very same business.  The business will mostly employ the fattening method whereby small piglets weaned from sows will be procured and fattened to the recommended sale weights.

PIG HOUSING

Trista which the business will raise is a hybrid type of pigs which require an intensive system of rearing. Pigs require simple grass thatched housing with strong walls and quarry-cement concrete floors that are easier to clean. Four pig house blocks with 5 rooms each will be constructed thus making a total of 20 rooms. Each room will have an area of 10.5 meters by 6.25 meters and will accommodate 10 pigs for a maximum of 6 months before sale.

FEEDING

Pigs are mono gastric animals and they normally compete for feed with humans in times of scarcity. This project will compute and prepare well balanced feed rations for piglets, growers and boars or sows. On average the piglets will be consuming about 0.5 – 0.8kgs, wieners 2kgs and boars/sows 4kgs every day.

MEDICATION AND SANITATION

Routine medication and vaccines will be provided to the pigs in order to safe guard the pigs from diseases and parasites. The most crucial routine medication will be that of deworming by Piperazine because worms cysts are usually found in roughages and feeds.

The pig houses will be surrounded with a fence and no people will be allowed to enter the premises apart from the care takers. A disinfectant basin where people entering the premises will step on will be provided to avoid entry of external parasites and infections. To minimise the mortality rate, the animals will be regularly dipped, cleaned and the sty will be disinfectants regularly.

RISK ANALYSIS

The problems likely to arise are the disease and parasite outbreaks and the uncooperativeness of the targeted markets as stated in the introduction. Furthermore price fluctuations can also pose a problem to the profitability of the enterprise.

To solve these problems, the following has to be done; first all the animals will be vaccinated against the diseases and also insecticides and medications will be used to treat sick animals. Hygiene in the housing infrastructure will be practiced on top of the use of disinfectants to control the parasites. To solve the problem of in cooperativeness, there will be bidding for contracts so that the supply of pork will be certain. This will also take care of the problem of price fluctuations.

REGULATIONS/ENVIRONMENTAL ISSUES

The production methods do not pose any environmental threat and the materials used are bio-degradable thus the operations are environmentally friendly.

The political environment is stable for economic and social activities.

MARKETING PLAN

THE PRODUCT

Good healthy wienerswhich stay for a period of six months translating to 180 days will be sold because the feasibility study has shown that pork is preferred by many people in rural and urban communities. Within Lilongwe community, the demand for meat products including pork has risen due to an influx in population and pork is cheap relative to its substitutes on the market. At six months, wieners will be weighing about 70 to 80 kilograms. One weaned is expected to be sold at MK50, 000.

POTENTIAL CUSTOMERS

The low price of pork has raised demand for the pork. Our potential customers include restaurants around Lilongwe, Kapani, Nyama world and Langie pork masters. Kapani and Nyama world buys more weanedat the same time.

COMPETITION                 

Currently, there are few famers who raise pigs for commercial purposes and are not able to meet the demand on the ground. Recently, feasibility study has shown that about 1700 wieners are demanded per month but the current supplier produces 800 wieners only per month. This represents a huge market share for us. Initial target market share is 7%.After the entry into the market, the share is expected to eventually increase to 10% following effective strategies that will be put in place as described below.

COMPETITION STRATEGY

Ulimi enterprise will be supplying good healthy wieners as compared to wieners that are currently on the market. As a penetrating price, each wiener will be going at K 50,000 beating the competitor’s price of K 55,000 per wiener. Frequent buyers will also be allowed to buy on credit thereby increasing the sales and establishing good relations with the customers

FINANCIAL PLAN

FINANCIAL ANALYSIS OF ULIMI ENTERPRISE

This section details the results of investment analysis of the pig production. The analysis has been conducted to assess the commercial viability of the pig production business, in various sectors of the livestock industry

Pig industry

This section details the financial needs of a typical pig production. The financial analysis has been done in Malawi kwacha based on the number of assumptions as follows.

1. The analysis assumes a partnership company
2. Corporate tax is at 20% and divided pay-out will be 15%
3. Stock taking will be done at the end of the year
4. Second batch will be acquired from the first batch through breeding sows
5. Drugs, casual labour and feed costs will be increasing at the rate of 10%
6. Operating expenses will be increasing by 5% every year after first year
7. Selling prices per pig will be increasing by 5% every year
8. Number of pigs per batch will increase second year by 25%
9. Debtors will take 60days
10. Creditors will be given 30days
11. Depreciation of fixed assets is based on the straight line method and the rates are as follows:

Land and buildings 2%

Furniture and fittings 15%

Equipment 25%  

PROJECT COST

Substantial financial resources will be required to run and manage the enterpriseforeknown in this analysis. The enterprise will need a lot of physical as well as human resources for it to run smoothly. These will in turn need financial resources for procurement of physical assets, recruitment of personnel and meet operational expenses. The whole project has been estimated to cost MK21, 829,500.00. The table below shows a breakdown of the costs. The financial analysis in this case has assumed that the total project cost will come from Grant.

Table 1 project cost

PROPOSED FINANCIAL STRUCTURE

As said earlier, the proposed financial structure includes donation only.

FINANCIAL ANALYSIS

In order to determine the commercial viability of the pig farming, a number of financial analytical techniques were applied. Principally, profitability analysis, working capital analysis and cash-flow analysis were undertaken. Based on the assumptions used the analysis has demonstrated that the venture has the capacity to realize profits.

Table 2 below shows the Ulimi enterprise income statement projected to six years. Results show that revenues realized will adequately cover the variable costs                                                                          

Table 2 Income statement

Table below shows the details of the projected profit and loss account and the degree of net profitability.

Table 3. Profit and Loss Account and the degree of net profitability

When all the estimated operational costs are taken into account, including the depreciation of equipment, taxes, and estimated dividend pay-out, the figures show that such a business venture could realize retained earnings which could be used for capital development. The average net profit margin of 24.27% is acceptable, considering that this is a big project.

The projected balance sheet shows positive net current assets and progressive growth of business funds. This tells a story of robust business status with adequate liquidity to meet all short-term and long-term financial obligations.

FINDINGS AND RECOMMENDATIONS

• The market is readily available and the project will require future expansion to meet demands.
• The business shall engage a number of technical personnel to assist in research and operations in order to achieve maximum efficiency and productivity.
• The business model is based on providing a basic need to meet a trend that is beyond human control. The venture shall maintain our core business and also explore other lucrative niches within the same industry.
• The business economic and financial model is viable, with impressive returns on investment as well as a short break-even period.