iGallus Company Profile

What now? Establishing the layout of the poultry breeding farm

To run is not necessarily to arrive. ~ Swahili proverb.

We have found enough land to be able to establish both rearing and production farms. For example the farm above has 3 quarantine rearing houses on the right hand side and 6 production houses on the left.

Total land size over 200 hectares. Spacing between rearing and production sites over 500 meters and spacing between houses or sites over 200 meters.

Notice the house orientation of the production houses on the right. They are orientated east to west using a compass on my Pajero. No GPS was used only a compass and a very long tape measure.

The farm has a main road access that needed to be widened and some swampy areas filled or culverts added. The internal roads needed to be made from scratch. The farm was forested and we needed to first mark out the main access roads into the site (White in color on photo) We then sent in a rather large bulldozer to knock down any trees in the road way and clean up the grass and bush. The soil type is sandy so after the bull dozer we sent in a road grader.

Once we had cleaned an access road we measured the site entrances outwards off this access road. We had to site four of the sites to one side of the farm as the other gets very water logged in the wet season.

This is something to be very aware of when planning, as a stuck truck with a load of feed or fertile eggs on a remote part of the farm can cause some unforeseen problems! The Main 33 kva power supply to the farm and then the internal power supply must also run along one side of the road. This will make it easier at some stage when fault finding at 12 o clock at night in a thunderstorm.

Main water supply should also follow road networks for the same reason of being able to spot leaks easier.

Do not take out all the bush and trees on the entire farm or even site. Only take out tree's that will be in the way of the road or buildings. Having trees close to the poultry houses has some advantages in hot or stormy weather.

Power supply to a farm or site always takes longer than expected, So make sure your project plans incorporate the use of a back up power system not only for the building period but also the start of production. In most cases production and normal farm activities will commence while construction is carrying on.

Make sure the two activities can be separated in terms of access, bio-security and your time. At any one stage a large project like this might have upwards of 100+ people working on the site.

Temporary site establishment and accommodation for the project or farm manager must be set up. Be prepared with temporary power and water supply for this camp. Try to start construction of the managers housing, office and storage first.

There are many more aspects that I have not covered here.

If you would like further information. Please contact me on jeremy@igallus.com

Thanks again for reading!

From scratch. Building a modern poultry breeding farm in Africa.

"Plan purposefully. Prepare. Proceed Positively. Pursue persistently." - William A. Ward.

Part 1

Planning.

Take the key elements of a modern poultry breeding farm and apply to the plan. Some of these key elements are:

1) Bio-security and correct farm layout.

2) Orientation of houses according to topography, climate, water supply and road access.

3) Site which is available for the development.

4) Controlled environment housing and automated systems.

Bio-security and farm layout

Design the farm layout with correct spacing between quarantine, rearing and production sections. Take into account prevailing winds in dry season and main road access. Have main entrances to each section with shower blocks and vehicle disinfection. Divide each section into sites with correct spacing and individual bio-security amenities such as showers and fumigation rooms.

Orientation of poultry houses

Despite the use of controlled environment housing still try and orientate housing according to severe weather patterns and sun direction. Take care of designing access roads to the sites with regard to passing poultry houses. Take into account flooding and water drainage from houses.

Availability of suitable land

Taking into account the previous points, to establish a large poultry breeding complex would require a large piece of land often over 200 hectares. Large parcels of land such as this are becoming more and more difficult to source in Africa. Often farm layouts need to be changed or even more than one parcel of land used long distances away. Whatever the case bio - security must be well designed.

Controlled environment and automated systems

Plan with the future in mind. Modern poultry hybrid breeds require optimum environments to produce the best results. Keeping temperatures within the houses stable and providing enough air to the chickens is a key factor as well as quality feed and water. A stumbling block to using controlled environment housing can be erratic power supply. Take measures when planning to account for this by setting up back up power generation and also measures in case this too fails.

Use automated mechanical systems that reduce staff numbers. The use of computer operated automatic systems should be kept to a minimum as they are often difficult to understand and break due to power surges. Simple on off mechanical automation will suffice.

I have only covered a very few items that need to be considered when planning a poultry breeding farm.

I will continue with the series of articles next week.

Thanks for reading!

Please contact me jeremy@igallus.com or visit www.igallus.com for more information.

Part 2 "Establishing large poultry businesses in Africa"

This week Standard Chartered Private Equity invested $35 million into Al Jazeera Agricultural Company, a fully integrated poultry company in Jordan. This gives them a significant minority stake in the company to take advantage of the growing importance of chicken as a source of protein in the region.

In summary, what are some of the street wise methods to use when looking at establishing poultry businesses in Africa?

1) Contract a company who has the experience and ability in the Poultry Industry in Africa to assist in all aspects of the project from start to finish. The most important aspect of this company would be that it will stay on after the construction phase to assist and support the new business with day to day operations.

2) Choose a region or country with an existing poultry industry but with a low base to grow from.

3) Look at an area that has a viable access to an existing supply of poultry feed, grain and breeding stock.

4) Find suitable parcels of land, market and with location in mind look at various poultry product options that fit the following: area, market, budget, profit model and land size.

5) Design a number of poultry business options and site layouts around the these previous aspects.

6) The contracted company should then cost the entire project according to each option. The CAPEX or capital expenditure should include everything from buildings through to pens and pencils in the office.

7) A market study should be carried out by the contracted company to establish not only the market for the proposed poultry products but current production costs and wholesale / retail prices.

8) Profitability models are then compiled according to each proposed project option. The CAPEX for each is included to be able to show return on investment for each.

In summary, some points on how much the Private Equity Fund really needs to invest to get the return they require.

The aim is to invest as little as possible wisely into appropriate infrastructure and equipment to achieve the required quality product. Support the business with excellent planning, management, systems and raw material inputs.

1) Contract a company who understands the appropriate level of technology required to produce the correct quality of poultry product with the least capital investment.

2) Use appropriate buildings for the situation. Most African countries have their own sources of building materials that can be used to construct modern poultry infrastructure. In most cases at a lower cost but better suited to local conditions than imported pre-fabricated buildings. Look local first.

3) Investing in the basics to obtain the production results required. Rather than hire independent companies each to complete their section of the project, take their money and leave. Hire a company that will be completely accountable for each step of the project, a company that can deliver a "Turnkey Solution".

In summary, how does the Private Equity Fund achieve success with a return and an on time exit?

1) Find an experienced company to assist in planning the investment, operations and exit strategy.

2) Invest as little as possible and appropriately.

3) Build a brand and a distribution network using the poultry products. A good distribution network and brand is worth more than the operation itself.

4) The exit strategy can be planned as an expansion of the business into another sector say from eggs to poultry meat. The new investor or buyer will be attracted by the existing distribution network and invest directly into the expansion.

I have only really covered a few items in my article but the key thread is to find an experienced company that can provide the support for your new venture.

Contact me for more information and advice on jeremy@igallus.com or visit our website: www.igallus.com

Thanks for reading!

Establishing large poultry businesses in Africa.

Where there is risk, there is also profit. Where there is planning, there is guaranteed profit.

Overview

Consumption of products such as poultry meat and eggs is increasing in Africa. At the moment this consumption comes from a low base compared to other regions in the world. Thus we can say there is good growth from a low base, which means..opportunity?

Most markets rely on imported meat and eggs to satisfy their customers. Their ongoing challenge though is consistency of supply and quality. Locally produced products can be generally of good quality (freshness) but smaller volumes with inconsistent supply.

The local companies

While there are several well established privately owned poultry companies in Africa, few are integrated and none are able to keep up with demand. Many face cash constraints to expand at the rate that the market requires. Their counterparts in the EU and USA are able to raise large amounts of cash to fund expansion at low rates from the markets and established banking sectors.

New corporate entrants

Slowly, there is expansion into African markets by larger companies predominately from South Africa. These companies are expanding into the African market due to the profitability of the new businesses they either set up or buy shares in. Some of these companies are listed on the Johannesburg Stock Exchange and their annual reports show very good profits stemming from their African operations.

Their success in part is because they already know the business very well and are "street wise". Setting up carefully planned operations, investing carefully into appropriate production and processing facilities that will perform under African conditions. Their business models are based on low capital investments carefully run within a corporate business model.

Private Equity Funded Projects

Interest in the poultry industry as a profitable stable business option to invest into is increasing with Private Equity Funds. The purchase of the privately owned Ingham Enterprises (Australia's largest poultry integrator) by TPG Capital for $880 million demonstrates this interest.

There are a couple of new poultry business projects in Africa which are being funded by Private Equity Funds. These funds reportedly ranging from $30 to $80 million are investing into production and processing facilities across the continent. This is good for the local market and ultimately the countries economies.

Questions

Are these new projects also using the appropriate and successful "street wise" methods the corporations mentioned before use?

Are the Private Equity Funds being guided correctly in terms of how much they need to invest into these new projects to get the return required by their investors?

How do they make sure the project is a success thus enabling them to exit at the right time with a good return?