Agribusiness – 5 year Report Card

The year 2017, is basically gone. It has been a 5 year journey in agriculture starting with our first bath of day-old layer chicks on January 3, 2013. Having walked this journey half a decade, this is a chance to look back on the road passed see what lies head

Wins

  1. Paid off capital investment debt, so now all operations are self funded
  2. Layer production processes strengthened with current flock beating all metrics: time to lay –  17.5 weeks (1 week early), productivity (87%)
  3. Strengthened logistics support system which is the foundation of our business model – feed production is a completly outsourced service
  4. Supported the development of a Poultry Farm Calculator developed by Styx Technology Group

Learnings

  1. Management processes are key to production all the way from human resource management, records keeping,
  2. Revenue projections on paper never reflect on the ground reality
  3. Data is king – we collect, analyse and review operations data on a regular basis, to drive decision making. We have had instances where our thoughts are in one direction, but the data tells a different story. Numbers never lie
  4. Information is power – over time we have learnt to read detailed documentation, experiences from around the world, and scientific papers to get grounding in the business we are in
  5. Make business model decisions and stay firm until they are validated – unlike traditional knowledge and advice, we made a strategic to outsource feed mixing as we were ill equipped, did not have the knowledge, and time but invested time in building a strong relationship with our feed supplier. This paid off as we can focus on core skills – production process improvements and increasing sales revenue
  6. Capital investment has to be strategic – the dream of many poultry farmers is to have high levels of automation such cages, automated drinkers which reduce human intervention, but require 100% more capital.
  7. Human resource management – this is a make or break area within any enterprise. We use semi-skilled labor, leveraging modern HR management practices for performance management, loyalty building to retain staff.
  8. Process, process, process – this is the foundation of decision making, and we keep the decisions to a minimum and explain why. Once this is well understood we have only had to tweak and never change a process.

Failures/Shortcomings

  1. Expansion into fish farming which as expected was a huge learning curve with inadequate local knowledge, so have to grow own knowledge
  2. Building a double storied structure – this was a consequence of having limited space with no options for expansion, however the capital would have been best invested in expansion elsewhere.

Look Ahead

  1. Formalize the paper based processed into clear documentation to help other farmers grow and develop
  2. Leverage partnership with Styx Technology Group to develop an end-to-end Poultry Management System for layers with analytics and business-level metrics
  3. Expand the farm operations to 10k birds which will provide economies of scale that drive profitability
  4. Expand into local indeginous chicken breeds with a different business model that suits them
  5. Vertical integration of dairy, lusuku and indeginous poultry on a single operation location

 

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9 month Poultry Report Card

A exciting day, our new batch of Isa Brown layers from Asiima Agri-Consult Limited makes 36 weeks and 2 days, finally hits 90% productivity. The productivity journey has been as follows:

  • First egg – 19 weeks
  • 85% to 87% for 10 weeks straight from week 27 to 36

Our secret so far is building on prior experience:

  1. Feed quality – this is outsourced to a supplier whose quality and reliability have been consistent over r the last 3 years
  2. Formula – we r using a basic formula to leave room for improvement as the birds grow older
  3. Biosecurity – use lime at the entrance, also adding a little to the litter, routine spraying outside the houses on a weekly basis. Nobody is allowed into the site – not guests
  4. Vigilant management – the operations manager spends an equivalent of 3 days at the site every week with random visits to support farm management
  5. Fanatical record keeping – diligent record keeping to track trends, and spot patterns in behavior
  6. Fortnightly assessment by a vet as an preventive management pattern

At the same time we are preparing for a new batch of chicks, so repairs to an existing house are underway by plastering the walls exposed to the birds, repairing the floor and replacement of chicken wire mesh.

Once the repairs are completed, a contractor has been hired to disinfect the house which will be the subject of another sharing session

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Poultry Feed Economics 101 – Changing Feed Supplier Scenario 

Genesis East Africa

This is an interesting scenario brought about by Dr. Samuel Sewagudde of Genesis East Africa Ltd in one of a poultry Whatsapp group that highlights the challenges poultry farmers face in their business choices. I will use this scenario to provide step-by-step analysis of how to build the data for decision making.

Speaking of Economics, Catherine usually buys layer feed from Matama Feeds Ltd at UGX 800 sh a kg and her birds lay  averagely at  72%. At a recent Farmers Expo she met Augustine who works for Mulegi High Quality Feeds Ltd who convinced her that she would achieve 80% production if she uses Mulegi feeds. Mulegi layer feeds cost UGX 1000 sh per kg. Now if Catherine sells a tray of eggs at UGX 8000, Should Catherine switch and use Mulegi feeds?
In this computation the following assumptions have been made:
  1. Each bird eats 125g of feed per day
  2. The costs of the feeds include transportation so no additional costs are incurred with the feed
  3. There are no additional costs incurred in the sale of the eggs
Using the above information:
  1. Matama feeds cost UGX 100 per day while Mulegi Feeds cost UGX 125 per day
  2. At 72% production each bird generates UGX 192 per day (8000 * 0.72 divided by 30) while at 80% production the revenue per bird rises to 213/= (8000 * 0.8 divided by 30).
  3. The increase in cost of feed is UGX 25/= per bird per day while the increase in revenue is UGX 21/= per bird per day
Therefore changing feed providers means that Catherine will spend an additional UGX 4/= per bird per day, therefore the increase in production does not meet the increased costs of feed.
The moral of the story therefore is increased production does not always translate to increased profitability

Week 7 – Separation of Birds into 2 Rooms

Its now week 7, and time for us to separate the birds into two separate rooms to increase space available for each bird. This was part of the plan as running two brooders is a hassle with no specific benefits.

Now there are 1,215 birds in each house of giving about 1.13 sq feet per bird.  In the new house we mixed the husks with lime, as well as sprayed a disinfectant over the husks & the room during the course of 2 weeks before the move.

Before Separation – Brooding House and New Home

Birds before  separation

Birds before separation

 

Feeder Layout - Top End

Feeder Layout – Top End

Feeder Layout - Bottom End

Feeder Layout – Bottom End

After Moving into New Home

Happy Spacious Birds Lower End

Happy Spacious Birds Lower End

Happy Spacious Birds Upper End

Happy Spacious Birds Upper End

 

Feeding Time in our new home

Feeding Time in our new home

Brooder Week 5 – Learnings and Look Ahead

The chicks are now 5 weeks in the brooder, with a mortality rate of 0.4%, weights less than the management guide (which are based on environmentally controlled conditions) but within range and closing fast, weight uniformity distribution of over 70% and improving.

This post is about lessons learnt in this flock and what we have done differently:

  1. Hired brooding services from a poultry focused service provider who provided a worker for the brooder and a vet who visited regularly: 3x per week in the first two weeks, 2x a week later, currently at 1x per week
  2. The vet provided also supervised and carried out vaccinations as per the recommended schedule
  3. Focused on building immunity in the first 3 weeks, now growth and development of the pullets
  4. Weighed the birds to provide benchmarks for the growth, but only used the data for tracking so did not adjust diets to bring up the weights
  5. Adjusted the chick and duck mash formula, to provide the necessary energy levels and texture for easy feeding.
  6. Provided recommended levels of feeders and drinkers to reduce bullying and contention for deed
  7. Bio-security improvement: started leveraging powdered construction lime for initial disinfection and at entrance to the brooder, disinfectant spraying every week on the premises and proactively spraying inside the brooder with a high mist disinfectant (selected not to have any major side effects for the birds)
  8. Collecting data on feed and water consumption on a day-to-day to better understand the changing patterns – increase in feed consumption is at 4g per bird per week

As always a selection of shots from brooder:

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Day Old Chicks – Flock 4 Now In Brooder

We are excited to be starting a new chapter at the farm, where we have a new batch of chicks that have come in today, Isa Brown, with the learnings from the last 2.5 years of business.

The changes that we have put in place:

  1. Increased bio-security with a dry lime bath on entry into the brooder
  2. Testing a new “sigiri” in addition to the pots
  3. Using newspapers as a bio-layer over the coffee husks, that will disintegrate and mix with the litter
  4. Contracting with an experienced poultry brooding services company to provide a dedicated person to raise the birds from day-old to about 6 weeks, depending on the progress and learnings that we have had.

Photos below

Brooder - Day old chicks

Brooder – Day old chicks – View 1

Brooder - Day old chicks

Brooder – Day old chicks – View 2

Brooder - Day old chicks

Brooder – Day old chicks – View 3

Poultry Feed Dilema – Mix My Own or Outsource?

The major factor affecting poultry egg production and therefore revenue & profitability is the feed. Its not enough to just provide feed, but rather a consistent product, with little variability in composition, quality and texture.
Birds are usually kept in high concentrations, so any change in the feed will quickly have a ripple effect on the productivity measured in days, with return to regular production taking longer usually weeks. The cause is that egg laying, a.k.a reproduction is not critical to a bird’s well being, so is reduced in any shocks to nutrition.
Given how critical this is, should I mix my own feed so that I have full control of the process, and outputs. That is a loaded question, my answer and advice being that it varies depending on your (the farmer) strengths and your business model.
Considerations for mixing your own feed:
  • Cash flow – as most of the ingredients are to be paid for in cash
  • Supply chain – you need to develop relationships with the providers of the ingredients to cater for times of shortages as most of them are agricultural based
  • Storage – you need to maintain your own stores and manage moisture contents along with other contamination sources. This will also include bio-security controls for the traffic within the farm related to ingredients
  • Mixing Space- you will have to mix feed regularly which period reduces with the size of operation you are running. In Uganda, you also need to manage electricity supply, repairs and operations of the motors, human resources (the mixers) along with pillage (some ingredients like premix are prone to this due to their high unit cost)
  • Dust from mixing operations – if you have a large area then this will not affect you much as this areas can be separated from the rest of the farm and living quarters
  • Consistency – can you keep doing this regularly, consistently for ever?
  • Cost – does the capex & opex for mixing your own feed add up to savings?
  • Feed formulation – do you have the necessary expertise to formulate, adjust formulae for the birds as conditions change?
Considerations for outsourcing your feed mixing:
  • Operational Capability – what capacity does your supplier have to stock up on key ingredients, ensure a consistent supply from the market even when they are shortages, and to maintain a consistent predictable feed mix. Do they have the right machinery and personnel in place, as well as capability to formulate, refine and advise on feed formulations.
  • Consistency – how consistent is the output of the feed mixing
  • Checks and balances – how is the quality of the feed maintained, and controlled, do you have to be there when the feed is being mixed all the time. Do you trust the quality of the product that you are receiving?
  • Turn around time – what is the turn around time from ordering to receiving your feed
  • Scale – will your supplier be able to scale with you as the numbers grow?
  • Feed formulation – does your supplier have the necessary expertise to formulate, and adjust formulae for the birds as conditions change?
Essentially the two camps are evenly matched with the choice depending on your particular conditions, with the ability to mix and match options as your farm grows and scales.
What choice did you take? I took the choice of outsourcing feed mixing, with the major drivers being:
  • We do not have experience with agricultural ingredient selection and quality management
  • The space we are working with is too small to allow mixing
  • The supplier we have is currently is working out for us, and we have been able to develop an efficient operation to ensure un-fettered just-in-time feed supply to the farm
  • The largest customer that our supplier services has 30,000 birds there is scaling capability there
  • There are no major cost savings given the local cost of capital & operations, so we are focusing our energies on ensuring higher revenue for our products.
  • The feed supplier is well versed with feed formulation, as well as other aspects of poultry layer management which provides additional value

Why did you make the choice you did, how is that working out for you, if you had to do it again what would you do?