Is It Legal To Date A 17 Year Old Boy Investing in Poultry Farming in Uganda

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Investing in Poultry Farming in Uganda

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

For starters, I am not abusing anyone like Colonel Kahinda Otafire of Uganda and his, to call them “famous euphemisms”, including the “Mavi ya Kuku” statement. For the uninitiated, “Mavi ya kuku” is the Swahili word for chicken poop and when you deal with chicken you will literally have to dig your feet deep into the chicken s%*t (literally) but I’ll tell you money makers about that later. I present my analysis of investment in the poultry sub-sector in Uganda.

FIRST AGAINST (of course)

1. Too many so-called “chicken experts”

The beauty of chicken farming is that almost every Ugandan knows something about it; oh anyway, almost every “kampala person” who went to their village for Christmas most likely got a chicken as a gift, and also those of you who are “traditionalists” know that in your own home you are the only one who has the right to eats “nkoko nkulu”. “Nkoko Nkulu” is a chicken stomach and is traditionally served to the head of the household or in many cases a special visitor (usually male) as a sign of respect and a special welcome to that household.

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

A local Ugandan chicken, for example, produces only 40 eggs per year (just over 1 egg per month!) compared to an exotic chicken (like the Shaver Brown variety) that produces around 300 eggs per year (that’s almost one egg per day!)

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

2. Market and distribution bottlenecks

Uganda is still very much a “localized retail” based sector for the chicken/poultry sector. For example, you may have to sell eggs in shops or to neighboring towns as there may not be many “super markets” or “whole sale buyers” providing a ready market to absorb the product and therefore you may have to rely on middlemen who come from afar . This in itself leads to price extortion from these middlemen. These bottlenecks are because to date there is no formalized large-scale transport distribution network to get your products from the poultry production area (mainly Northern and Eastern Uganda) to the key market (mainly Central Uganda). Moreover, our traffic network is not well developed considering the condition of the roads. Therefore, you will need to establish a market and distribution logistics for your products early as this can affect your profits.

3. Food costs

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

The high feed situation is quite serious in Uganda and according to recent news (August and October 2011) many Ugandan poultry farmers have been forced out of business, so before you invest, you need to consider it very carefully. This high price of animal feed is caused by the increase in corn bran prices. The composition of corn bran makes up about 52% of chicken feed. Coupled with the high prices of maize bran is the fact that Uganda’s fish stocks are rapidly depleting (fish makes up about 10-20% of chicken feed).

4. Disease

I touched on this briefly when I mentioned coccidiosis earlier. However, there are other chicken diseases such as New Castle disease that can destroy an entire poultry stock. However, I have not ranked this risk at the top of the CONS as any serious investor will hire a competent and suitably experienced farm manager to prevent disease threats and also have access to a good vet/doctor and this should further reduce this threat.

5. Cost of capital

Sustainable commercial chicken farming requires a fair amount of capital, especially since it takes about 17 weeks before they start producing eggs, so there is no income for this period. The investor will therefore need to provide working capital for this period of around 4 months before he can expect any income. This working capital includes the key costs of chicken feed.

According to my estimates (I will come to that later) you need about Shs 26 million as start up capital for a 1000 chicken farm (brown shaving variety). I’ll go into the details in the section below.


1. Chicken is here to stay

Chicken has been around for a long time and in the developed world chicken is cheaper than beef. In Uganda it’s the other way around and chicken is usually reserved for special days (like when I passed my P.7 PLE exams and got accepted into the school of my choice). In Uganda, however, this will change especially as our population grows and more people rise out of poverty. Recent studies show that between 2000 and 2006, we increased our consumption of eggs by 28% and chicken by 60%.

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.]

Furthermore, I can expect that with the continued expansion of the East African Community and our work on regional integration, there will remain a constant demand for eggs and chicken.

2. Excellent return on capital

Despite several articles talking about chicken feed costs crippling the industry, I believe this industry sector still offers some of the best returns on investment. According to my estimates below, it has a ROI of 1.09 years! I have provided my estimates below. Estimates are based on a sustainable investment of 1000 layers of the brown razor variety. All figures are in Uganda Shillings. The exchange rate in November 2011 is around I USD = Shs 2,700

Summary 1: Initial capital

A: Fixed costs (one time)

1. Chicken coop and related items: Sh3,450,000

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

3. Legal and other initial costs: Sh700,000

4. Training: Sh 42,000

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 side costs: 220,000

Total: 17,763,836 Sh

C: Papers (weeks 1-17)

1. Farm Supervisor: Shs 800,000 (200,000 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. Veterinary practice Shs 90,000 for 3 visits.

Total: 2,810,000

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

TOTAL RUN: 28,342,419

Summary 2: Profitability and return on investment

INCOME (for 8 months)

Income is estimated at 1,000 hens with a mortality rate of 7%, so 930 hens net. It is estimated that each hen lays 292 eggs per year. This is estimated over the 8 month period that includes the first financial period (as 4 months are when the chicken matures). In Uganda, eggs are sold in trays of 30. In August 2011, each egg was estimated to cost Shs 300, which translates to a tray costing Shs 9,000

Based on the above, the income during the period will be:

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

Each tray is Sh9,000, so 9,052 *9000 = Shs81,468,000 per year (or 292 days during the annual laying period of the hens)

Pro rating annual income for 8 months is an income of Shs 54,834,231

COSTS (Monthly for 8 months)

1. Chicken feed: 24,261,534. This is estimated for a hen that consumes about 37 kg per year.

In August 2011, broiler feed (which chicks are fed for the most part during their 17-week growth period) cost Shs75,000 per 70kg bag. Based on the above, a chicken consumes about Shs 108.7 feed per day.

Therefore, the total cost for 8 months is Shs. 24,261,534

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

3. Labor (on the same basis as labor costs for the first 4 months but for 8 months): Shs 10,940,000

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

5. Miscellaneous: 1,800,000

Total: Shs 43,121,534

Operating profit: 11,712,697 Sh

Other income:

1. Sale of chickens (after the end of the productivity cycle): 6,510,000. I assume that each chick will sell for Sh7,000 at the August 2011 market price.

2. Less: Market costs: 200,000

3. Chicken droppings: 8,035,510

(estimated at 11479 kg of faeces produced based on 1/3 of food intake). Each kg is sold at Sh700.

NET Profit (including other income): 26,058,207 Sh

Return on capital: 1.09 years.

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

4. Benefits of social responsibility

Charities and other non-governmental organizations recognize the impact of poultry on rural communities, especially women, and several studies show that this is the next social revolution.


First the numbers

Based on my analysis:

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

* Annual income (including other income): 69,179,741 Shs

* Annual profit (revenue (including WIFI) and excluding all expenses) (B) is Shs 26,058,207

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

Now you need to understand the basics before investing.

* Working capital. As I said at the beginning, you will be running this business for about 4 months without any income, so you need to provide the necessary funds especially for chicken feed. You cannot compromise on food quality or quantity when there is a shortage of money as this will ultimately affect the quality of the eggs and chickens.

* Support and training in agriculture. This is a sector where the government, NGOs, donors have invested a considerable amount of money and therefore there is no excuse for not using support facilities directly from NAADS to district support projects, NGO supported projects and even many day-old chick suppliers to provide courses .

* Market/distribution network. There are significant bottlenecks in Uganda and it is good to develop the capacity for 1000 animals, but if you cannot market them then it is a waste. Therefore, it will be crucial that wherever you decide to locate your farm, you think about how you will market it.

* Land. Now you will notice that I have not considered the cost of land in this analysis. The reasons are multiple. When I thought about this business venture and from my research, the investor can get the land “for free” in exchange for e.g. employment of local population, from relatives in rural areas and the like.

So I didn’t find it to be a big problem. In addition, chicken usually does not require a lot of land and if needed this land can be cheaply “rented” in many rural areas in Uganda. Of course, you should not choose to trespass in the Mabira forest or perhaps the swamp because then my “friend” Colonel Otafire might ask you if you are a frog!


As I said, this sector is not going anywhere and there will continue to be demand for agricultural products. Furthermore, as the developed world becomes more willing to pay for “organic” products, Ugandan poultry will continue to be highly valued.

I promised to highlight “Mavi ya Kuku” in more detail and you will notice that in my income analysis this crap is actually making money, because as the agricultural sector expands and fertilizers become more expensive, farmers will look for alternatives. Chicken poop can be that future and so, “Mavi ya Kuku” along with “Nkoko Nkulu” are our future!

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