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November 25, 2020
poultry production

Cost and Returns of Broiler production in Nigeria

Cost and returns of broiler production is often a critical factor to be considered once there is a concept to invest in broiler production cost and returns of broiler production in Nigeria is important so as to evaluate the viability of investment in broiler production for “return of investment cost” and profit, which however could be foreseeably determined based on certain regulating principles of broiler production.

Cost and Returns of Broiler production in Nigeria

Generally the regulating principles of broiler production, accounts for the optimistic and pessimistic views and approach towards the cost and returns estimation of broiler production so as to provide a clear and accurate situation for the expectation of investment in broiler production. However, the projection of the costs and returns of broiler production in Nigeria can be practically be unactualized, actualized even more so surprising, depending on the management of the broiler as with every other livestock. These principles are vital to provide a bankable business plan for an investor for broiler production.

Principles and important guides for cost and returns of broiler

  1. Type of House – deep litter with open sides for cross ventilation
  2. Production plan – all-in- all- out
  3. Feeding system – Ad libitum
  4. Litter type – wood shavings of appropriate type and quality
  5. Stocking density – 12 mature broiler per m2
  6. Breed of broiler – viable commercial breeds/hybrids
  7. Maturity age and live weight – 6-7 weeks and 1.6-2kg
  8. Mortality – 5-10% maximum (including runts and deformed)
  9. Feed intake – per broiler from start to finish
  10. Price of mature live broiler
  11. Recommend 6-6.5 production batch per year
  12. One batch/production period takes 7-8 weeks to completion( including one week period of cleaning and rest of the pens)
  13. Medication – maximum of 5% of the feed cost including payment for vet services
  14. Minimum of 5 years financial projection is required for a business plan.

                             Assumption:  Cost and returns of 600 broilers

*Assumption: 1. already available land with bore hole

  1. Each production cycle will be made up of 600 birds per batch of production.
  2. Minimum of 6 batches of birds per year
  3. Selling price of mature broiler = #2000

COSTS

Expenditure

(Fixed cost)

CostAnnual CostCost per batch
Building(10m/5m)36250030208.335034.78
Poultry Equipment and facilities12520015435.332572.22
Variable Cost
Day old chick@ #250 per chick                __           __138,000
FEED
Starter (960kg @#140 per kg)              __            __134,400
Finisher (1440kg @ #132 per kg)                __              __190,080

TOTAL:     324,480

Medication (5% of feed cost, including Vet services) ———————————–16,224

 

TOTAL VARIABLE COST:  495,739.2

Labour cost @ #10,000 per month for a poultry attendant

= Annual Cost= #120,000

Cost per batch= #20,000

              Summary of Total cost per batch

Building                                                                5034.78

Poultry equipment& facilities                     2572.22

Day old chicks                                                    138,000

Feed                                                                      324,480

Medication                                                         16224

Other cost                                                           17035.20

Labour                                                                  20,000

Total                                                                      #523346.2

                                              Revenue Estimation

 Amount
Sales of Mature live broiler @ #2000#1,200000

                        

                                        COST RETURNS ANALYSIS OF BROILER PRODUCTION

INCOME(#)EXPENDITURE(#)NET INCOME(#)
1,200000523346.2676633.8

 

Benefits Cost Ratio (BCR) = 676653.8 (income/expenditure)

523346.2 (cost/expenditure)

= 1.30

Thus, using the benefit cost ratio as a tool of analysis for the above broiler production cost and returns, the business is viable.

NOTE: all the values used in the above calculation are the best of the real and contemporary obtainable values.

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