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MINISTRY OF AGRICULTURE

GROSS MARGINS LIVESTOCK


ENTERPRISES IN SWAZILAND

August 2014

Gross margin for livestock commodities in Swaziland


Introduction
A gross margin (GM) is the difference between the gross income and the total variable costs
of production. Total variable costs (TVC) include production costs, operational costs and
marketing costs. Gross margins exclude overhead cost such as insurance, fixed costs and
interest. Thus gross margins are not a measure of the profit of a particular enterprise. When
calculating whole farm profit it is necessary to consider these overhead costs in addition to
enterprise gross margins. A gross margin changes as inputs prices change.
Gross margins are of great importance to assist the farmer in deciding on which livestock
enterprise to venture into.

Break- even Price (BEP)


This is the amount that a farmer can charge for a particular commodity in order to cover all
production costs. For the farmer to realise profits it is important to charge a price above the
BEP.
N.B It is an important tool for the farmer to determine the price of the produce

Break- even Yield (BEY)


This is the quantity of produce a farmer is expected to produce in order to cover all the
production costs. It is important for the farmer to target yields above BEY in order to realise
profits.
BEY = Total Variable Costs (TVC)
Yield

N.B. Farmers are advised to seek further assistance from livestock extension officers,
which are available in all the regions of Swaziland.

The gross margins have been prepared by the Gross Margin Task Team (Marketing Advisory
Unit, Extension Staff, Livestock Marketing Unit (LMU), Horticulture staff, National

Agricultural Marketing Board (NAMBoard), Small enterprises Development Company


(SEDCO,& Technoserve).
1. PIGGERY GROSS MARGIN

10 sows and 1 boar

Gross Income
Item

Unit (Kg)

Growers

Yield

55

Price

240

Value
28

369600

Total income

369600

Less Total costs


Item

Unit (Kg)

Qty

Cost/Unit

Total Cost

Boar

3300

3300

Sows

10

1210

12100

Sow and boar meal

50

90

221.00

19,890

Lactating Sow meal

50

10

263.00

2,630

Pig weaner

50

48

285.00

13,680

Pig grower

50

478

241.00

115,198.00

Pig finisher

50

178

226.00

40,228.00

12

800.00

9,600

85.50

342

Labour

months

Farrow sure B

40ml

Litterguard

100ml

714.00

714

Paperizine

100g

38.00

76

Ectoban

330.00

330

Iron injection

100ml

180.00

180

Eartags

25/packet

10

140.00

1,400

Eartag applicator

420.00

420

Teeth clipper

97.00

97

Pessaries

tablet

Water

months

1
12

E12/t

240

300.00

3,600

Transport
Abattoir
TVC
Gross Margin
BEY (kgs)
BEP (E/poker)
Break even price E18.7/ Kg

3,000
240

80

19,200
246,226
123,373.91
8,793.79
1025.9
18.7

Break even yield 160 pigs

159.89

Is Piggery viable in Swaziland?


The gross margin indicates that the piggery enterprise in Swaziland is viable. A farmer has to
procure at least one (1) boar and ten (10) sows. A farmer can earn a profit of about E123,
373.91 in the first year of production. In the first year the breakeven yield is 160 pokers and
the breakeven price is E18.70/ kg. The farmer should note that this margin can be obtained
under good husbandry practices.

In addition, the pig industrys future looks bright as the SADP program assisted immensely
in the procurement of breeding stock at Mpisi for multiplication. The production of sows and
boars locally will help farmers to revitalise their businesses and go back into production,
producing pokers for sale.

Market opportunities
The market for pork is available in the whole country. Most of the pork consumed in the
country is imported from the Republic of South Africa. There is also a need to form a central
marketing unit by farmers.

2.

Are goats viable in Swaziland?


The gross margin indicates that the goats enterprise in Swaziland is viable. A farmer has to
procure about 50 goats for start-up. A farmer can earn about E33, 028.00 per year. The
breakeven number of goats is 34 per year and the breakeven price is E16.5 per kilogram.

Market opportunities
The market for goats is available in the country. There is also a need to form linkages by
farmers in order to facilitate proper supply to the market. Her Majesty, the Queen mother has
acquired a market for goats in Seychelles though the logistics have been not formalised.

3. INDIGENOUS CHICKEN PRODUCTION MODEL


HENS
20

ITEM/DESCRIPTION
INCOME
GROWERS
MANURE
TOTAL INCOME

VARIABLE COSTS
FEED
BROILER STARTER CRUMBLES - 50KG
BAGS
MIXED FOWL - 50KG BAGS
MEDICATION
NEWCASTLE VACCINE
FOWL POX VACCINE
DEWORMER - PIPERIZINE (200G)
VIRUKILL
KARBUDUST - 200G
TOTAL VARIABLE COST
GROSS MARGIN
BREAK EVEN PRICE/BIRD

COCKS

UNIT

PRICE/UNIT

TOTAL
VALUE (E)

1008
10

50
10

UNIT

COST/UNIT
(E)

50400
100
50500
TOTAL
COST (E)

24
155

290
222

6960
34410

4
5
3
1
2

45
60
38
170
80

180
300
114
170
160
42294
8206
41.96

BREAK EVEN YIELD (BIRDS)

846

ASSUMPTIONS
DESCRIPTION
# OF CYCLES/HEN/YEAR
TOTAL # OF CYCLES/YEAR
NUMBER OF EGGS/HEN/CYCLE
NUMBER OF EGGS/HEN/YEAR
TOTAL # OF EGGS/YEAR
HATCHABILITY
# OF HATCHED CHICKS/HEN/CYCLE
# OF HATCHED CHICKS/HEN/YEAR
TOTAL # OF HATCHED CHICKS/YEAR
MORTALITY
DEAD CHICKS/BIRDS
GROWERS
# SOLD BIRDS/YEAR
FEEDING QUANTITIES
BROILER STARTER CRUMBLES
(1KG/CHICK/6WEEKS)
MIXED FOWL (60G/DAY/BIRD)
BREEDING STOCK
GROWERS

NUMBE
R
5
100
15
75
1500
80%
12
60
1200
16%
192
1008
1008

1200

24 50KG BAGS

503.7
7257.6

10
145
155 50KG BAGS

GROWERS ARE SOLD AT 5 MONTHS

Are indigenous chickens viable in Swaziland?


The gross margin indicates that the indigenous chicken enterprise in Swaziland is viable. A
farmer has to procure about 23 chickens of which 20 are hens and 3 cocks for start-up. A
farmer can earn a profit of E8, 206 per year. The breakeven number is 846 birds per year and
breakeven price is E41.96 per bird. The farmer should note that this margin can be obtained
under good husbandry practices.

Market opportunities

The market for indigenous chickens is available in the country. There is also a need to form
linkages by farmers in order to facilitate proper supply to the market. In addition, the
Ministry of Agriculture is promoting the commercialisation of indigenous chickens and its
taking shape as there has been multiplication centres established in the country which will
lead to securing good breeding stock.
4. Gross margin for 5- DAIRY COWS

(Small Scale)

ITEM

VALUE

TOTAL
VALUE(E)

QUANTITY

Sales

21900

197100

Empty bags

180

540

manure

400

800

male calf sales

600

1800

total income

200240
COST/UNIT

UNIT

TOTAL COST

Variable Costs
dairy cows

13000

65000

dairy meal

227

180

40860

knapsack sprayer

885

885

milking cream

90

90

milk filter

40

40

1465

1465

97

97

500

1500

330.45

330.45

teramycin

207

207

Anthrax, botulism, blackquarter

162

162

transport

1500

1500

teat dip

160

160

calf starter

250

10

2500

deadline (5L)
rumevite
hay
ectoban

Total Variable Costs

114796.45

Gross margin
BEP (E/L)
BEY (L)
Assumptions

85443.55
5.24
12755.2

Each cow produces a minimum of 12L per day

Lactating period is 305days per year and there is 50% chance that a calf will be male/
female.

Milk will be sold at E9.00/L

Viability Dairy small scale production in Swaziland


The gross margin indicates that the dairy enterprise in Swaziland is viable. A farmer has to
procure about 5 cows for start-up under a small-scale production. The breakeven price is
E5.24/L and break even yield is 12 755 litres per year.
Market opportunities
In order to realize profit in the small scale production, the farmer may need to use informal
market which offers higher price, for example E8-E9/kg. Whilst supplying the formal market
under small scale production, the business may not be viable.
Gross Margin for 20- Dairy Cows (Large scale
production)
ITEM

VALUE

QUANTITY

Sales
Empty bags
manure
male calf sales
total income

4.5
3
400
600
UNIT/COST

Variable Costs
dairy cows
dairy meal
knapsack sprayer
milking cream
milk filter
deadline (5L)
rumevite
hay
ectoban
teramycin
Anthrax, botulism, black quarter
transport
teat dip
calf starter
Total Variable Costs
Gross margin
BEP(E/L)
BEY(L)

13000
227
885
90
40
1465
97
500
330.45
207
162
1500
160
250

TOTAL
(E)

VALUE

122000
720
2
10

549000
2160
800
6000
557960
TOTAL COST

20
720
1
4
4
2
2
12
2
2
2
1
4
40

260000
163440
885
360
160
2930
194
6000
330.45
207
162
1500
640
10000
446808.45
111151.55

UNIT

3.66
99290.8

Assumptions
Each cow produce a minimum of 20L per day
Lactating period is 305 days
Milk will be sold at E4.50/L
50% of the calves will be males

Viability Dairy large scale production in Swaziland


In large scale production a farmer may have 20-cows and supply the formal market which
offers less price/L than the informal market that small scale producers supply. The breakeven
price is E3.66/L and break even yield is 99290 litres per year.
Market opportunities
The market for milk is available in the country. There is also a need to form linkages by
farmers in order to facilitate proper supply to the market. These include the formation of
collection centres and further engaging into milk processing.
5. GROSS MARGIN FOR 500 LAYERS
Unit
Item
(Kg)

Yield

Price

Egg trays

4,333

30

129990

10

800

Manure

50 80

Value

Total income

130790

Less Total Variable Costs


Items

Unit

Layers
Laying mash
Packing 30 egg tray
containers

50kg

Electricity

Cost/Unit

Total cost

500 59.00

29,500

345 230.00

79,350

400

5.5 2,200

month

12

180 2,160

Labour

months

12

800 9,600

Water

months

12 300.00

Transport
Virukill
Vitamin stresspack

3,600
3,000

1 170.00

170

1 25.80

26

TVC

129,606

Gross Margin

1,184

BEP (E/tray)

29.91

BEY (trays)

4,320.19

Are layers viable in Swaziland?


The gross margin indicates that the layers enterprise in Swaziland not viable due to escalating
feed costs. A farmer can earn a profit of E1, 184 per year from 500 layers. The breakeven
yield is 4,320 trays per year (batch) and breakeven price is E29.91 per tray. The economies of
scale in this industry should be taken into consideration.

Market opportunities
Informal market for layers is available in the country whilst the formal market is dominated
by large scale producers. There is also a need to form linkages by farmers in order to
facilitate proper supply to the market to avoid the adverse competition with giant producers.
There is also a need to do some marketing research by the farmers before venturing into this
enterprise.
6. GROSS MARGIN FOR 1000 BROILERS
Item
Unit (Kg)
Sales
Manure
Total income

Yield

50

Price/unit
Total Value
95
0 35
33250
100
10
1000
34250

Less Total Variable Costs


Items
Day Old Chicks
Broiler starter
Broiler grower
Broiler Finisher
Vitamins Stress Pac
Lasota Vaccine
Gumboro Vaccine
Virukill Disinfectant
Wood Shavings

Units
Box
50
50
50
100g
1000 doses
1000 doses
Litre
Bales

Unit
1000
20
30
20
4
1
1
1
4

Unit/ Cost
(E) Total Cost (E)
6.5
6500
290
5800
290
8700
270
5400
25.8
103.2
45
45
53
53
170
170
75
300

Transport
Wages
Gas Refill
Total Variable Costs

Month
Month

3
1.5
2

300
350
390

900
525
780
29276.2

Gross Margin

4973.8

BEP (E/bird)

30.82

BEY (birds)
837 birds
Assumption
Mortality= 5%

836.46

Are Broilers viable in Swaziland?


The gross margin indicates that the broilers enterprise in Swaziland is viable. A farmer can
earn a profit of E4, 973.80 per batch of 1000 birds. The breakeven yield is 837 broilers per
batch and breakeven price is E30.82 per bird. The farmer should note that this margin can be
obtained under good husbandry practices. The economies of scale in this industry should be
taken into consideration so to avoid the adverse competition with giant producers.There is
also a need to do some marketing research by the farmers before venturing into this
enterprise.

Market opportunities
Farmers are advised to get a market first before venturing into this enterprise. Currently the
market in this industry seems saturated.

7. GROSS MARGIN FOR BEEF (FEEDLOT)


20 cows
TOTAL
(E)

10 cows
VALUE

ITEM

COST/UNIT(E) QUANTITY

Income
Revenue
Empty bags
Manure
offals
Total income

8377.2
3
50
600

20
288
100
20

167544
864
5000
12000
185408

COST/UNIT

QUANTITY

TOTAL COST

3000

20

60000

30000

142

288

40896

20448

162

162

419.95
330.45

1L
1

330.45

49.95

49.95

62

124

150

150

120

120

133
420
70
2.5
150
800

1
1
1
1
20
3

133
420
70
2.5
3000
2400

Variable costs
Stock (feeder cattle)
Feed
Fattening ration
Drugs and tools
Vaccine black qt +
botulism
Panacure
Ectoban
Eartag
permanent
marker
Eartags
for
cattle
yellow
Supona aerosol
Peni LA 15/15-VMD
100ML
Cattle weigh belt
Eartag applicator
Syringe
Needle
abbattoir costs
Hired labour

TOTAL VALUE
83772
432
2500
6000
92704
TOTAL COST

81
165.225
24.975
62
75
60
66.5
210
35
1.25
1500
1200

Transport
Total costs
Gross Margin
BEP/ animal
BEY (no of animals)

1500

1500
106357.9
79050.1
5317.895
12 animals

750
53178.95
39525.05
6 animals

The following assumptions were considered:


the feeder stock will be bought at E3 000.00 each
the animals will consume 8kg of feed per day for 90 days
the price of a 50kg fattening ration is E135.00
the animals will gain 1.2kg per day
the carcass will be sold at E45.00/kg
the dressing percentage will be 52%
entry weight into the feedlot of each animal is 250kg
Is feedlotting viable in Swaziland?
The gross margin of E79 050.90 indicates that the feedlot enterprise in Swaziland is viable. A
farmer has to procure at least ten (10) growers. The breakeven number of stock is 12 cows in
3 months and the breakeven price is E5 317.89 per animal. The farmer should note that this
margin can be obtained under good husbandry practices. This is possible provided that there
is a continuous supply of feeder stock so as to avoid breaks in production. The Ministry has
to sensitize local farmers to practice cow-calf production units to make feeder stock readily
available.
Market opportunities
The market for beef is available in the whole country. The Swaziland Meat Industries buys
cattle from local farmers so as to meet its European quota.

8. Gross margin for 600 fingerlings


Item

Unit

Fish

Yield
570

Price/kg

242.25

Value
25

6056.25

Less TVC
Unit

Unit cost

Total cost

Variable cost
fingerlings

3f/m2

600 1.00

feeds and hormones

1,000.00

600
1,000

Fertilizers (LAN)

25 25

CaC03

45 45

Labour

Water

300 1,800
300

Transport

200

TVC

3,970

Gross Margin

2,086

BEP

16.39

BEY (Kg)

158.80

Is fish farming enterprise viable in Swaziland?

The gross margin indicates that the fish farming is viable. A farmer can earn about E2,086 per
cycle from 600 fingerlings. The breakeven yield is 158.80kg per cycle and breakeven price is
E16.39 per kilogram. The farmer should note that this margin can be obtained under good
aquaculture practices.

Market opportunities
The market for fish is available in the country. There is also a need to do some marketing
research by the farmers before venturing into this enterprise.

9. Gross Margin for 20 Bee


Hives Enterprise (TOP BAR)
Units
Income
2 Harvest per year

YIELD
(Kg)
720

Start Up Costs

Quantity

19.5
Cost/Uni Quantity
t
500
18
250
4
750
1
150
1
80
1
110
1
62
1
438
1
1933
1

Hive Boxes
Trap Box
Bee Suits
Gum Boots
Gloves
Hive Tool
Bee brush
Smoker
Training
Variable Costs
Transport
Labour Costs
Total costs

Year
1

Year
Year 2
1
19.89
1.11
734.5
41.03
1

Year
2

1404 1404
0
0
Total Total
cost
cost
9000
0
1000
0
750
0
150
0
80
0
110
0
62
0
438
0
1933
0
300
500
1432
3
-283

Gross Margin

BEP 1st Year (E/kg)


BEY (Kg/Enterprise)

E/unit

300
500
800
1324
0

Gross margin
(Langstroth)

for

20

Bee

Hives

Yield(Kg)

E/unit

1000

19.5

Quantit
y

Year
1 Year
(income) 2(income)

Income
2 Harvest per year

19500

19500

E/Unit

Unit

Total
costs

Total costs

Langstroth Boxes

850

18

15300

Trap Box

350

1400

Bee Suits

750

750

Gum Boots

150

150

Gloves

80

80

Hive Tool

110

110

Bee brush

62

62

Smoker

438

438

Training

1933

1933

Transport

300

300

Labour Costs

500

500

Total

21023

800

Gross Margin

-1523

18700

Start Up Costs

Variable Costs

BEP 1st
(E/kg)

Year

Year 1

Year 2

21.023

0.8

BEY
(Kg/Enterprise)

1078.10

41.03

Is Apiculture viable in Swaziland?


The gross margin indicates that beekeeping enterprise is viable, but in the first year profit is
not realized. In the second year of production the farmers will start to realise profit. A farmer
has to start-up with 20 bee hives. A farmer can earn E13, 240.00 profit in the second year
when using the Swazi Top Bar and E187s, 00.00 when using the Langstroth.

Market Opportunities
The market for honey is available in Swaziland. There is also a need to form linkages by
farmers in order to facilitate proper supply to the market.

For more information contact:


National Agricultural Marketing Board (NAMBoard)
Encabeni Markets, Nokwane
Tel: 2518 6040/2
Fax: 2518 5211
Email: info@namboard.co.za
Website: www.namboard.co.sz
The Livestock Marketing Unit
Ministry of Agriculture
P.O.Box 162
Mbabane
Tel: 2404 2731/9
Livestock Extension Section
Tell: Hhohho- 2404 5776
Manzini- 2505 9147/89
Lubombo- 2343 5630
Shiselweni- 2207 8326

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