RIFT VALLEY

UNIVERSITY
ADAMA CAMPUS

Faclulty of Busniss and

Social Science
Department of Accounting and Finance
Project proposal in Bachelor of ART Degree in Accounting
and finance
Course Title: - Project Analysis And Evaluation

GROUP ASSIGNMENT I
Group 2
Group Name ID.NO

Bekelu Tesema 0066/14

Dejene Tadese 0096/14
Mesert Getu 0064/14
Oda Bedada 0062/14
Zenebe Yewalashet 0073/14
 Submitted To: Ins:- Kidest
Submission Date: - December, 2024
Adama, Ethiopia
 ADAMA DAIRY FARM & MILK PRODUCTION PLANT

Contents
Executive Summary.....................................................................................................................................1
1. Introduction.........................................................................................................................................2
1.1. Background of the project........................................................................................................2
2. Objective study of the project..............................................................................................................2
3. Organizational and management..........................................................................................................3
4. Marketing and demand analysis...........................................................................................................3
5. Technical analysis of dairy farms and milk processing can includes:-.................................................3
6. Financial Analysis...............................................................................................................................4
6.1. Total investment Cost Of Dairy Form And Milk Processing..................................................4
6.2. Fixed Investment cost of a dairy farm and milk processing plant can include:.......................5
6.3. Working Capital requirement (WCR)......................................................................................5
6.4. Working capital management..................................................................................................5
6.5. Project Financing.....................................................................................................................6
6.6. Operation and Maintenance.....................................................................................................6
6.7. Material input...........................................................................................................................7
6.8. Utility.......................................................................................................................................7
6.9. Equipment Maintenance..........................................................................................................8
7. Salary and wage...................................................................................................................................9
7.1. Overhead..................................................................................................................................9
7.2. Repair and maintenance...........................................................................................................9
7.3. Economic analysis.................................................................................................................10
7.4. Environmental Impact Of Assessment..................................................................................11
7.5. Conclusions and Recommendations......................................................................................11
 ADAMA DAIRY FARM & MILK PRODUCTION PLANT

Executive Summary
Project Name Dairy farm And Milk Processing Plant
Project Owner B.D.M.O.Z
Nationality Ethiopia
Address +251911270661
Project Location Adama, City
Project Composition D/t types of Agro-Industry dairy farm and
milk processing and oil seed processing
product
Premise Requires 20.000m2/ Own land/
Startup Capital For implementing this project a total of
1500,000 Eth. birr is required from this
30% 450,000 birr will be covered by
promoter of the project while the rest will
be covered 70% 1050,000 by financial
Institution
Employment Opportunity Therefore this project deemed to employee
320 permanent employee which 219 un
skilled while the rest are skilled
For the region /Country/ Source of income for regional gov’t as
business income tax

1
 ADAMA DAIRY FARM & MILK PRODUCTION PLANT

1. Introduction
1.1.Background of the project
The history of dairy farms and milk processing includes the following:
Origins
Milk originated as a glandular secretion in synapsids, the lineage that led to mammals, around
310 million years ago.
Commercial dairy farms
Commercial dairy farms began to develop after the industrial Revolution, driven by the demand
for butter and cheese in cities.
Early dairy farms
Early dairy farms were small, with families milking, feeding and harvesting feed.
Mechanization
The milking machine was an early innovation that led to larger farms.
Pasteurization
Pasteurization is a heat treatment process that extends the shelf life of milk and reduces the
number of pathogenic microorganisms.
Milk processing
Milk processing allows milk to be preserved for longer and reduce food-borne illness. It also
allows milk to be converted into dairy products like butter, cheese and ghee.

2. Objective study of the project

The objectives of dairy farms and milk processing include:
Food safety
Ensure the safety of milk and milk products for consumers by following good agricultural
practices (GAP) and good manufacturing practices (GMP).
Milk quality
Produce high-quality milk from healthy animals in acceptable conditions.
Milk Preservation
Extend the shelf life of milk through cooling, fermentation, or pasteurization.

2
 ADAMA DAIRY FARM & MILK PRODUCTION PLANT

Milk Processing
Covert milk into dairy products like cheese, butter and ghee which are easier to transport and
have a longer shelf life.
Economic benefits
Provide higher cash incomes to dairy producers, create jobs, and help deal with seasonal milk
supply fluctuations.
Community benefits
Contribute to food security and nutrition and help with household livelihoods.

3. Organizational and management

Dairy farm and milk pro-cessing management involves planning, implementation and monitoring
and evaluation. These functions are often inseparable and overlap, with each function affecting
the performance of the others.
Dairy management also includes the following processers:
 Breeding
 Feeding
 Grazing system
 Cattle rearing
 Disease and parasite control
 High milk production

4. Marketing and demand analysis

In Ethiopia, fresh milk is distributed through the informal and formal marketing systems. The
informal market involves direct delivery of fresh milk by producers to consumers in the
immediate neigh bourhood and sales to itinerant traders or individuals in nearby towns.

5. Technical analysis of dairy farms and milk processing can

includes:-
 Technical Efficiency
Measuring the efficiency of dairy farmers in using resources to production milk, factors that can
affect technical efficiency include the number of crossbreed cows, labor and the amount of
concentrate.

3
 ADAMA DAIRY FARM & MILK PRODUCTION PLANT

 Key performance indicators (KPIS)

- Using KPIS to understand how a dairy farm is performing financially and physically,
- KPIS can be used to compare a farms performance to other dairy farms art previous years
 Milk Processing
- Analyzing the process of gnuerting milk into dairy production like, butter, cheese and
yogurt ,
- Milk processing can increase the price of product make it easier to transport and extend
its shelf life.
- Hare are some other things to consider when analyzing dairy farms and milk processing
 Milk production in some are of dairy farmers may have low levels of expertise in milk
production and pasture
 Cost of Production in some countries like Ethiopia, the cost of production for livestock
products is low.
 Market Demand the demand for processed milk can vary by location.

6. Financial Analysis
6.1.Total investment Cost Of Dairy Form And Milk Processing
The total cost a dairy farm and milk processing plant can vary depending on the size of the form,
the Equipment and machinery required and the land needed
 Land:- A dairy farm and milk processing plant in Adama, Ethiopia required 20,000M2 of
land
 Investment:- A dairy form and milk processing plant project in Adama required in initial
investment of 150 million Ethiopian birr
 Farm Size:- Large dairy farms have cost advantages over small dairy forms due to
economics of scale.
For Example:- Farms with at least 100 caws have cost advantages of 15% over forms
with 500-499 head.
- The cost of machinery and Equipment is part of the total investment
- Variable Cost:- Include:- Feed, Insemination, Veterinary Costs, milking and repair and
maintenance of machinery and tools
- Cost of Pasture - Cost of Taxes and
- Cost of Labor - Cost of Fiancés
4
 ADAMA DAIRY FARM & MILK PRODUCTION PLANT

- Cost water Consumption

6.2. Fixed Investment cost of a dairy farm and milk processing plant can
include:
 Interest:- on the fixed capital investment
 Depreciation:- on the milk animals, cattle shed and Equipment
 Maintenance:- building and machinery’s
 Energy costs
 Taxes and finances
 Other cost associated with dairy farming include:-
Variable Cost include
 Cost of Labor
 H2O Consumption
 Veterinary feels and more
Feed: - is a significant input that increase milk production costs.
Farm value is based on the cost of land per hectare and cost of building per square mater in
nearby regions.
6.3. Working Capital requirement (WCR)
For a dairy term or milk processing plant it the amount of money heeded to run the business
smoothly, it’s calculated by subtracting a company’s current liabilities from its CA
Some information about working capital in the dairy industry
6.4. Working capital management
- Is an important too for success in the dairy industry.
 Relationship between supplies and consumers
The dairy processing industry has a strong relationship with consumer because dairy products are
a vital part of the daily diet,
 Buying raw materials a broad
The dairy processing industry has the power to buy enough RM abroad, which gives it a strong
position in relation to dairy farmers.
6.5. Project Financing
Dairy and milk production plants can be financed through a variety of
options, including:

5
 ADAMA DAIRY FARM & MILK PRODUCTION PLANT

Short-term and long-term loans: These loans can be used against the sales of raw milk or
value-added products.
Cash advances: Temporary cash advances can be used against the sales of raw milk.
Working capital finance: This can include funding for inputs like land preparation, fertilizer,
livestock feed, and chemicals.
Productivity infrastructure: This can include funding for biogas, storage sheds, and zero-
grazing structures.
Asset financing: This can include funding for assets like chopping and grinding equipment.
Government subsidies: Governments can provide financial support and subsidies for different
stages of the milk production value chain, including production, storage, processing, and
marketing.
Financing agriculture value chains can be a challenge in developing countries. Some barriers to
dairy farmers using credit from financial institutions include:
Fear of losing assets
Fear of being unable to repay the loan
Low chances of success for females
Low chances of success for households with a lower annual income
Low chances of success for households without land
6.6. Operation and Maintenance
The operation and maintenance of a dairy farm and milk production plant
involves a number of tasks, including:
Milking equipment maintenance: Keeping the milking area and equipment clean can help
extend the life of the equipment and reduce the need for repairs. This includes checking for
leaks, ensuring that water flows well, and replacing gaskets when needed.
Health management: Maintaining the health of the dairy herd is a top priority. This includes
regular veterinary check-ups, vaccinations, and deworming programs to prevent disease.
Milking hygiene: Producing milk on-farm from healthy animals under generally accepted
conditions requires good milking hygiene.
Animal feeding and water: Good dairy farming practice requires providing the animals with
proper feeding and water.
Animal welfare: Good dairy farming practice requires ensuring the welfare of the animals.

6
 ADAMA DAIRY FARM & MILK PRODUCTION PLANT

Environmental considerations: Good dairy farming practice requires considering the

environment.
6.7. Material input
Material inputs for dairy farms and milk production plants include:
Land, labor, cows, feed, capital equipment, fuel, electricity, water, and packaging material.
Dairy producers use these inputs to produce milk and milk components like fat and protein.
Milk production plants also use equipment like: Centrifugal separators, Form fill and seal
solutions, High-speed pouch filling and sealing systems, Automatic tube fillers, and Rotary
fillers and sealers.
Cream separators are used to make low-fat and skim milk and cream. These machines separate
fat from milk, producing both cream and milk with a lower fat percentage.
Milk Production - an overview | Science Direct Topics
Animal production and milk production include the care of cows and calves, animals sold or
animals sold for meat, animals maintained off the farm, type of manga.
6.8. Utility
Dairy farms and milk production plants are important for many reasons,
including:
Nutrition: Milk is a nutrient-rich food that is a major part of the global food supply. It provides
protein, calcium, iron, zinc, and vitamins A and B12. In developing countries, milk and other
animal source foods are essential for improving the nutritional status of low-income households.
Food security: Milk production contributes to food security and household livelihoods.
Job creation: The dairy sector creates jobs, with an estimated 240 million people directly or
indirectly employed in the industry.
Land use: Milk production uses less land to produce protein than other livestock or poultry
products.

Cropland capacity: Dairy-based diets can maximize the capacity of croplands to feed people.
Milk can be used in many ways, including:
Sold to a dairy

7
 ADAMA DAIRY FARM & MILK PRODUCTION PLANT

Retailed
Consumed by the farm family
Given to farm laborers
Fed to calves
Used as a raw material for processing into cheese, yogurt, butter, or pasteurized milk
Here are some things to consider when reporting and maintaining a dairy farm and milk
production plant:
6.9. Equipment Maintenance
To keep equipment in good condition, you can:
Inspect and service: Regularly inspect the equipment's performance and service it as needed.
Keep it clean: Keep the milking area and equipment clean to extend the life of the equipment
and reduce repair costs.
Check for leaks: Look for leaks in air tubes, liners, and gaskets during daily washing.
Use recommended products: Use the recommended oil, grease, solvents, and compounds on
food machinery.
Waterproof electrical equipment: Make sure all electrical equipment is waterproofed.
Protect glass instruments: Encase glass instruments like thermometers so they stay in place if
they break.
Dairy herd health
Maintain the health of the dairy herd by:
Regularly taking the herd to the vet for checkups
Vaccinating the herd
Deworming the herd
Early diagnosing and treating illnesses
Assessing the body condition of the cows to ensure they receive the right nutrients

Feed

8
 ADAMA DAIRY FARM & MILK PRODUCTION PLANT

Feed is a significant cost on a dairy farm, so farmers are always looking for ways to reduce
expenses. However, it's important to provide the cows with the right nutrients to produce high
milk yields. AI Overview
Dairy Farming: Dairy farming is one of the most profitable agricultural business ideas. Aside
from milk, it also produces manure. There is a high demand for organic dairy products all year
round such as milk, cheese, curd, cream and so much more
The salary or wage for a dairy farm or milk production plant job can vary depending on the role
and experience:

7. Salary and wage

Dairy farm assistant
In New Zealand, this role doesn't require a specific secondary education, but knowledge of
agricultural and horticultural science, math’s, and English is useful Dairy farm salary.
7.1. Overhead
Overhead costs for a dairy farm and milk production plant include:
Maintenance: The cost of maintaining buildings and machinery
Energy: The cost of energy
Labor: The cost of labor
Taxes: The cost of taxes
Finances: The cost of finances
Other costs associated with dairy farming include:
Feed: The cost of feed for all livestock
Pasture: The cost of pasture for all livestock
Veterinary: The cost of veterinary care
Insemination: The cost of insemination
Milking: The cost of milking
7.2. Repair and maintenance
The cost of repairing and maintaining machinery and tools. The cost of milk production can
vary depending on the size of the farm, with small farms generally having higher costs per liter. e
project report on a dairy farm in India states.
7.3. Economic analysis
Economic analysis of dairy farms and milk production plants can include:

9
 ADAMA DAIRY FARM & MILK PRODUCTION PLANT

Cost and benefit analysis

This can compare the costs and profits of different dairy farm sizes, such as small and large
farms. For example, one study found that large dairy farms in Ethiopia earned more annual
revenue than small farms, and had a higher gross margin.
Budgetary analysis
This can estimate the costs and returns of a milk processing enterprise. The net farm income
(NFI) is the difference between the gross revenue and the total costs of processing the raw milk.
Operational efficiency index
This measures how efficiently resources are used in the production and marketing of a
commodity.
Milk production costs
These can vary depending on the scale of production. For example, one study found that large-
scale intensive production systems had lower milk production costs than small-scale traditional
systems.
Economic impact of cattle mastitis
This can include the reduction in milk production caused by cattle mastitis. For example, one
study found that economic losses caused by mastitis in the United States dairy industry exceed
$1 billion annually.
Other factors that can affect the economic analysis of dairy farms and milk production plants
include:
The opportunity cost of land, family labor, and capital
The economies of scale
The institutional support, such as infrastructure and veterinary services Product diversification:
Processing plants can produce a range of value-added dairy products like cheese, yogurt, butter,
and ice cream, increasing market potential.
Improved shelf life:
Processing extends the shelf life of milk, reducing spoilage and food waste.

Important Considerations:
Animal welfare:

10
 ADAMA DAIRY FARM & MILK PRODUCTION PLANT

Implementing humane practices on dairy farms is crucial to maintain public trust and ethical
production.
7.4. Environmental Impact Of Assessment
Minimizing water usage, managing waste, and using sustainable feed sources are important
aspects to consider.
Market analysis:
Understanding local market demands and consumer preferences is key to successful dairy project
development.
The cost of a dairy farm and milk production plant project can vary depending on the size of the
project and the types of equipment and facilities involved:
Adama, Ethiopia
A dairy farm and milk processing plant in Addis Ababa requires an initial investment of 150
million Ethiopian birr. The project will be located on 20,000 square meters of land and will
include oilseed processing.
Adama city, Ethiopia
A dairy farm and milk processing plant in Adama city requires an initial investment of
21,609,413.30 Ethiopian birr. The project will be located on 60,000 square meters of land.
Dairy and Milk Processing Project
A dairy and milk processing project proposal requires 39,254,733 Ethiopian birr to cover the cost
of building construction, machinery and equipment, dairy animals, and working capital. Raising
cattle for agricultural purposes, including to produce milk for use in dairy products, contributes
heavily to deforestation, as land is cleared to …Raising cattle for agricultural purposes, including
to produce milk for use in dairy products, contributes heavily to deforestation.
7.5. Conclusions and Recommendations
Dairy chain value: A successful dairy development strategy should create value for every player
in the dairy chain, including farmers, processors, retailers, and more. This ensures that everyone
in the chain makes a profit and that consumers can get more dairy products for their money.
Small-scale production: Small-scale milk production can improve food security and create jobs
in rural areas. Small-scale producers can compete with large-scale dairy farms if they are well
organized and have low production costs.

11
 ADAMA DAIRY FARM & MILK PRODUCTION PLANT

Improved cattle breeds: Using higher-performing indigenous dairy breeds can increase milk
output.
Improved feed supplies: Improved feed supplies and management can increase milk output.
Support for dairy cooperatives: Supporting the establishment of dairy cooperatives in remote
areas can help with milk collection.
Training for farmers: Training farmers on hygienic product handling and providing suitable
equipment can help improve the quality of dairy products.
Milk testing equipment: Providing milk testing equipment to dairy cooperatives can help
address contamination issues.
Cooling centers: Supporting the establishment of cooling centers in key dairy producing areas
can help improve the quality of dairy products.
Socioeconomic functions: Considering the socioeconomic functions that dairy cattle play in
many low-income countries can help with balancing environmental impacts and animal nutrition
and health.

12
 TIONS FOR FINANCIAL PROJECTION 000 B
Monthly Annually
ADAMA DAIRY FARM & MILK PRODUCTION PLANT
1 2 3 4 5 6 7 8 9
E PROJECTION
70, 77, 84, 136,56
5,840 080 088 797 93,276 102,604 112,865 124,151 136,566 6
70, 77, 84, 136,56
eam 5,840 080 088 797 93,276 102,604 112,865 124,151 136,566 6
48, 52, 58, 113,52
ilk 4,015 180 998 298 64,128 70,540 77,594 85,354 113,521 1
17, 19, 21, 36,24
1,460 520 272 199 22,255 23,368 24,653 25,763 36,248 8
205, 226, 249, 422,90
860 446 091 272,936 299,117 327,977 359,418 422,901 1
OJECTION
1, 1, 1, 2,03
Wage 115 374 443 515 1,591 1,670 1,754 1,841 1,933 0
5, 6, 6, 8,47
ed, Medicine & materials 478 735 022 323 6,639 6,971 7,319 7,685 8,070 3
7
, Repair & Maintenance 4 50 53 55 58 61 64 67 70 4
40
bricants 23 275 289 303 318 334 351 369 387 6
51
nsurance and transportation 29 350 368 386 405 425 447 469 492 7
1
12 13 13 14 15 15 16 17 8
3
2 24 25 26 28 29 31 32 34 5
5
3 36 38 40 42 44 46 48 51 3
3
Materials 2 20 21 22 23 24 26 27 28 0
4
3 30 32 33 35 36 38 40 42 4
2
plies 1 15 16 17 18 19 20 21 22 3
7
Miscellaneous 4 50 53 55 58 61 64 67 70 4
n
84
g 845 845 845 845 845 845 845 845 5
3, 3, 2,
Machineries & Equipments 989 022 249 1,630 1,135 739 422 169
12, 12, 11, 12,62
805 237 882 11,703 11,669 11,758 11,949 12,230 2

WORKING CAPITAL
REQUIRMENT
1 2 3 4 5 6 7 8 9

Wage 229 240 252 265 278 292 307 322 338

ed & Medicine 2,868 3,011 3,161 3,319 3,485 3,660 3,843 4,035 4,237

, Repair & Maintenance 8 9 9

13 10 10 11 11 12 12

bricants 46 48 51 53 56 58 61 64 68

58 61 64 68 71 74 78 82 86
ADAMA DAIRY FARM & MILK PRODUCTION PLANT

14