East African Meat Processing LTD Business Plan

EAST AFRICAN MEAT PROCESSING LTD.
Business Plan Corporate Document

1.0
EXECUTIVE SUMMARY
1.1
Introduction
1.1.1
The Project
The project is a concept of EAST AFRICAN MEAT PROCESSING LTD an enterprise

based and operating out of Uganda in East Africa. The project entails the establishment
and operation of a modern abattoir in Ugandas Western cattle corridor. This modern
abattoir will have a starting capacity to slaughter and process 200 cattle and 2,000
goats/sheep per working day on a double shift basis. The plant will have a high level of
hygiene which will enable its production to be exported at a suitable time in the future.
Initially, live animals will be bought from the local markets and the processed meat will
all be sold on the domestic market.
Recovery of usable by-products will form an important part of the process and it is
expected that the quality of the by-products like skins/hides, offals, blood, heart,
kidneys will be superior to that obtained from the existing conventional
slaughterhouses.
In order to assure availability of live animals for the meat processing plant, it is
proposed to develop strong links with live animal traders as well as with the cattle
farmers in the areas surrounding the abattoir plant.
The total cost of the project is estimated to be at USD 16,622,500 and with a payback
period of approximately 3.80 years.
This study and business plan provides a detailed proposal and portfolio for the core
investor and project financiers.
1.1.2
The Company
EAST AFRICAN MEAT PROCESSING LTD is a limited liability company

incorporated in Uganda on ----------- 20---. The companys authorised share capital is UG
Shs. --------------/= divided into 100 shares of UG Shs. ------------/= each. The company
has 4 shareholders that are individuals with various business interests and
responsibilities.
EAST AFRICAN MEAT PROCESSING LTD. Business Plan Corporate Document

Table 1: Company Shareholding Structure
No.
Shareholder
1.
Mr. Ramez
2.
Mr. ABC
Shares held [UGS]

---------------
[%age]
---%
---------------
---%
3.
Mr. DEF
---------------
---%
4.
Mr. GHI
TOTAL
-----------------------------
---%
---%
4.
1.1.3 The Need

The 1999 Plan to Modernize Agriculture [PMA] to increase participation and uplift the
poor identified the Beef Industry could be used to: Create a structured platform for development of the cattle industry.
Provide a modern abattoir to satisfy both local and international standards.
To create a financially viable supporting industry around the cattle industry
which will provide local and foreign income.
1.1.4 The Vision
The Ugandan Government has embarked on development plans to reduce poverty
levels, with the following vision in mind: Reduce poverty in Uganda by 10% by 2017 and raise the standard of living of all
people by 2025.
Eradicate poverty through a profitable, competitive, sustainable and dynamic
agricultural and agro industrial sector.
The abattoir will meet the PMA criteria and provide benefits for the people of
Uganda.
1.1.5 Project Objectives
The proposed abattoir project, which includes commercial and national level
interventions to the beef industry, has the following objectives:
Poverty alleviation
Improve Public Health
Safeguard the environment
Earn Foreign Exchange
Job Creation
Create World Class Facility for the Domestic market and Export
Modernise Agriculture
Ensure returns for Stakeholders

1.1.6 Critical Success Factors
It is acknowledged that the envisaged project will not come together unless the
following factors are addressed:
Compliance with International Standards.
Local and regional markets must consume production.
Adequate off take available from the herd.
Location relative to DFZ to ensure efficiency.
Government support for the development of the livestock industry.
Operational efficiency of the abattoir.
Funding model with high commercial viability and robust financial returns for
the development of the abattoir plant to attract international project
development finance.
1.2
Market Survey
A preliminary survey of the available markets revealed the following factors:1.2.1
Beef consumption in Uganda is 6.0 kilogramme/capita well below 50

kilogramme/capita recommended by FAO.
Shortfall in current market for beef.
Local market consumption will increase and market share of abattoir meat will
increase based on quality and market preference.
Tallow and hides will provide foreign currency earning capacity.
Competition abattoir and butchers.
1.2.2
Regional
Dependent on increased meat production from Uganda.

Sheep and Goats opportunities in Middle East for meat.
In the short term the informal export in DR Congo and Rwanda for beef.
International approval will bring opportunities in South Africa
manufacturing quality beef.
1.2.3
The Vision
for
International
Exports only after 4 5 years of production on completion of the DFZ and

development of the herd quality.
3
There is a current shortfall in ACP quota. Uganda must negotiate its position to
access the European market.
China and Far East are potential markets and are being explored.
Middle East market for goat meat.
1.2.4
Domestic Market Demand
Present production does not satisfy the potential domestic market. Personal and
household incomes as well as per capita consumption are increasing. There is an export
potential to some of the neighboring countries where endemic diseases hinder the
keeping of improved beef and dairy and cattle for meat and milk production.
Local demand is met through the following outlets:
Primary [village] livestock markets. These are generally unhygienic.

Secondary livestock markets which exist around large urban centres.
Tertiary livestock markets which comprise of slaughterhouses and abattoirs.
There are two main abattoirs in Kampala:
- KCCA abattoir.
- Uganda Meat Industries abattoir.
The abattoirs are operated at 48% capacity and slaughter an average of 155 head per
day between them. Meat is of a low quality.
1.2.5
The Products Sales Pricing
Following research and based on information available the following selling prices have
been used in the calculation and forecasts:
Product
USD per kilogramme
UShs per kilogramme*
Goat and Sheep meat local
2.40
8,400
Hides
3.001
10,500
By-products - local
1.20
4,200
1.2.6
By-Products and Added-Value Products
The development of by-products facilities such as rendering will supply blood

meal, and animal oil into the stock feeds soap and oils business.
Price per hide/skin
Canning will allow value added use of the lower grade meat and will permit
export of this meat in canned form.
Tanning of hides will provide a semi-finished product, which will attract greater
value. However, the hide and tanning industry could create significant
downstream industry and employment.
Processed meat such as sausages for local and export.
1.3
Location
The site for the proposed goat and sheep abattoir will be at Lutente in Kalungu district
along the Mbarara Masaka Kampala highway.
Factors that have been considered in locating the site for the abattoir:
Proximity to suitable producer areas, transportation nodes and downstream and
supporting industries.
Availability of suitable land, utilities and veterinary services.
Access to skilled labour.
Livestock movement requirements.
Herd and DFZ development in other areas.
1.4
Plant Machinery and Equipment
EAST AFRICAN MEAT PROCESSING LTD will use standard European abattoir
plant machinery and equipment that meets with EEC and USDA standards. The
abattoir plant comprising of a slaughter line, meat processing and rendering plant will
have a starting daily input of 2,000 heads of goat and sheep per day expandable to a
maximum of 200 cattle and 2,000 heads of goat and sheep per day in about 5 years after
its first operation run - while operating 16 hours per day. The machinery and
equipment cost is USD 10,777,500 (CIF Kampala value including: Design/Supervision,
Consultants charges for Installation and Commissioning and a Training package).
1.5
Governments Role in Development
A major role is required on the part of Government in a number of areas to ensure the
success of the initiative.
Provide legal framework including legislative support.
Upgrade veterinary services to meet international standards.
Provide and maintain bulk infrastructure and utilities.
Maintain economic and political stability.
5

1.6
Financials
1.6.1
Overview
The following factors were taken into account in determining the financial viability of
the abattoir.
Commercial viability
Pricing Model
Capital Structure
Present Macro Economic Structure
Financial Controls
Capacity Utilisation
Management
1.6.2
Assumptions
The following general assumptions on the economy were used in the financial
modelling: Economic growth taken at an average of 6% p.a.
Exchange rate remains stable at an average of UG. Shs. 3,500 to USD 1.0
Inflation remains stable below 5% p.a.
One day supply in stocks, one month credit sales.
The abattoir will take 12 months to design and build.
1.6.3
Parameters
Abattoir operational for 52 weeks, running 7 days a week, and processing 2,000
heads of goats/sheep per day and later on 200 head of cattle per day.
Average carcass weight is 16.0 kilogrammes for goats and 20.0 kilogrammes for
sheep.
Average carcass weight of animals (cattle) processed of 208 kilogramme per
carcass.
Abattoir supplies only the local market for the 8 year financial modelling
period.
Sales will fetch USD 2.40 [UShs. 8,400] per kilogramme for goat/sheep meat on
the local meat market; USD 1.20 [UShs. 3,700] per kilogramme for by-products on
the local market; USD 3.00 [UShs 10,500] per goat/sheep hide/skins on the local
market.
6
For cattle, the abattoir will pay USD 320 for an animal yielding a 208
kilogrammes carcass, and USD 240 for an animal yielding a 150 kilogrammes
carcass.
For goats and sheep, the abattoir will pay USD 30 for a goat yielding a 16.0
kilogrammes carcass, and USD 40 for a sheep yielding a 20.0 kilogrammes
carcass.
Project Cost
USD 16,622,500
Project Financing
Equity
% of Total Cost
In-kind contribution
By EAST AFRICAN MEAT PROCESSING LTD
USD 3,320,000
Total
USD 3,320,000
19.97%
19.97%
Medium Term Loan

Loan
Total
80.03%
80.03%
Loans
USD 13,302,500
USD 13,302,500
Financials
Net Present Value @ 17%
Internal Rate of Return
Return on investment
Break-Even Point (BEP)
USD 12,243,020
35.91%
23% in Year 1
41.07%
Medium term Loan:

Interest rate
Term
Grace period
Currency
1.7
Market
8%
10 years
2 years
US Dollars
Conclusions
:
Short to medium term opportunities local and regional
markets.
Medium to long term opportunities international markets.
7

Animal and Public Health
Environmental
Infrastructure
Essentially in place but requires formalisation.
No major environmental constraints from a strategic point of

view. Site specific impacts can be dealt with.
Is essentially in place depending on location. This only requires
the necessary upgrades and extensions.
Valued Added Industries
Financial
:
There are a number of output ancillary
industries that will further enhance the viability of
this project.
Models developed show viability. See Schedules 01 14.
An abattoir constructed to international standards with an input of 200 cattle units per
day will be viable and will provide investors and stakeholders with a healthy return.
1.8
Recommendations
The Study indicates that the critical success factors of the project can be met therefore:
We recommend that the EAST AFRICAN MEAT PROCESSING LTD abattoir plant in
this study be given due consideration as a commercially lucrative and economically
feasible enterprise for financing and investment by the prospective financiers.

2.0
BACKGROUND OVERVIEW OF THE LIVESTOCK INDUSTRY IN

UGANDA
Uganda is a landlocked country surrounded by the Republic of Kenya in the East,

Sudan in the North, Rwanda and Tanzania in the South and by the Democratic
Republic of Congo in the West. This strategic location within the heart of Africa makes
Uganda the ideal choice for many investors and other businessmen seeking to access
the African market. The reform programme launched in 1987 has produced major
improvements in the economy with many transnational companies investing in various
sectors in the country. The economy has since been growing at an average rate of 6.3%
per annum. With the growth in manufacturing and exports in particular, the potential
for investment in the packaging sector still remains wide open.
2.1
Overview of the Livestock Industry
Livestock production in Uganda contributes 5.2% and 12.7% to total GDP and
agricultural GDP respectively. It is an integral part of the agricultural system of many
parts of the country. Mixed farming small holders and pastoralists own over 90% of the
cattle herd and 100% of the small ruminants and non-ruminant stock. Cattle are the
most important of all the livestock.
Livestock production has continued to grow, at a rate of over 4% per annum, in
response to increasing demand for milk and meat in the local market. Higher rates of
growth are envisaged as Government pursues its policies of modernizing and
commercializing agriculture.
2.2
Sector Policies, Development Strategy and Plans
The overall development strategy aims at maximizing the potential of Uganda's

livestock sub-sector by providing investment incentives to increase animal inventories
and related agribusiness, supporting the development of efficient livestock production
systems for increased productivity to meet the domestic demand, integrating
production into the main stream monetary economy, and generating a surplus for
export. This is outlined in the Livestock production and marketing strategy and the
sectoral development framework the Plan for Modernization of Agriculture [PMA].
The livestock development strategy focuses on the following:
Establishing an efficient livestock disease control system based on cost recovery.

Achieving self-sufficiency in meat, milk, poultry and other livestock products.
9
Promoting and developing industrial linkages for livestock products including

dairy, leather and meat processing.
Encouraging the export of livestock and livestock products.
Strengthening research in livestock breeding in order to upgrade the quality and
productivity of the present livestock breeds.
2.3
The Government Policy on Meat Production in Uganda
The Policy on Meat Production in Uganda is contained in The Draft Meat Policy
February, 2000 by MAAIF.
The Draft Meat Policy has been prepared as a result of recommendations given in the
Uganda Meat Production Master Plan Study [UMPMPS] and has been set within the
broad government policy framework.
The policy covers the production and processing aspects of all the species of Livestock,
the institutional and legal framework for its implementation all geared towards the
sustainable and efficient development of the Meat Industry.
In elaborating the policy on the development of the Meat Industry, strategies have been
prioritized to:
Make eradication of rural poverty as the over-riding objective.

Address food security issues.
Transform the Livestock Sub-sector especially the traditional small-holder sector
in order to produce for the market.
Diversify agriculture with higher valued livestock and livestock products in
order to increase the contribution of livestock sub-sector to the Agricultural and
national GDP.
Address the conservation of the natural resource base for sustainable meat
production.
The Draft Meat Policy [February 2000] address specific aspects like:
1.
2.
3.
4.
The broad Policy frameworks, objectives and strategies;

The Institutional Framework for Implementation of the Policy;
The Legal Framework for Policy Implementation;
The Funding of Meat Industry.
10

The overall objective of the meat policy is to provide for sustainable development of the
Meat Industry in order to overcome shortfalls in national meat supply and provide
surplus for export.
The Institutional Framework for implementation of the Meat Policy shall be the
responsibility of both the Public and Private Sectors.
Uganda Meat Authority shall be formed mainly for coordination and regulatory
functions. Some of the UMA activities/duties include:
Overseeing and coordinating the implementation of the Meat production Master

Plan;
Resource mobilisation;
Establishment and promotion of meat standards, exports and product quality;
Licensing and regulation of traders and processing of animals, meat products,
and hides and skins, etc.;
For Meat Policy implementation, a legal framework in form of a Meat Industry Act
shall be formulated and enacted by Parliament. There will be need to review the
existing laws to harmonize them with other regulations in the animal industry:
The Animal Disease Act.

The Cattle Traders Act.
The Animal Breeding Bill [Act].
The Grazing Act.
The Public Health Act and Meat Rules.
Hides and Skins Act.
Private Sector will play a leading role in financing the meat industry. The role of the
Public Sector will be mainly to facilitate the operations.
11

3.0
INTRODUCTION OF EAST AFRICAN MEAT PROCESSING LTD PROJECT

3.1
Company Legal Status
EAST AFRICAN MEAT PROCESSING LTD is a limited liability company

incorporated in Uganda on ----------- 20---. The companys authorised share capital is UG
Shs. --------------/= divided into 100 shares of UG Shs. ------------/= each. The company
has 4 shareholders that are individuals with various business interests and
responsibilities.
EAST AFRICAN MEAT PROCESSING LTD commissioned Afri-Consult Precision
Planning Limited (APPL) to prepare a feasibility study on the commercial prospects
and financial viability of setting up and operating a modern abattoir in South-Western
Uganda [one of the three major livestock-producing areas in the country] purposely to
produce beef and other beef by-products from the existing livestock off-take numbers
and market them on the domestic market through cold-chain distribution outlets in
Kampala City.
3.2
The Shareholders
Table 2: Company Shareholding Structure

No.
Shareholder
1.
Mr. Ramez
Shares held [UGS]

---------------
[%age]
---%
2.
Mr. ABC
---------------
---%
3.
Mr. DEF
---------------
---%
4.
Mr. GHI
TOTAL
-----------------------------
---%
---%
4.
3.3
The Project
EAST AFRICAN MEAT PROCESSING LTD with financial support deriving out of a
medium-term credit facility [amounting to USD 13,302,500] provided by an
international development finance institution has determined to set up, operate and
grow a modern abattoir in South-Western Uganda with the specific purpose of
producing a variety of livestock beef and beef by-products that will be exclusively sold
through temperature-controlled outlets on the domestic market.
This livestock beef and by-products production and marketing project primarily focuses
on the domestic market on the strength of its rapidly increasing consumer demand
trends for livestock products as well as the dire need for hygienically-prepared and
12

marketed beef and beef by-products produced by a modern abattoir of international
standards.
The beef and beef by-products will almost exclusively be marketed and sold in
Kampala on account of its having the highest consumption-per-capita of meat and meat
by-products in Uganda [being the countrys capital city] and at the same time
presenting the opportunity of being the most centralised and networked market locale.
However, the single most compelling factor that favours the establishment of the
proposed abattoir plant by EAST AFRICAN MEAT PROCESSING LTD is that there is
no single modern abattoir in Uganda at the moment. A growing number of Ugandan
consumers are willing to pay a premium for quality meat products. Many supermarkets
and eating-houses have specialized cuts on offer on their shelves and menus. Some of
these are imported. Internal trade relies on moving live animals over long distances to
Kampala, a practice that involves high costs and risks. Many local investors are looking
for external project financing and/or joint-venture capital to develop this area.
3.4
Project Cost and Financing
The total project cost is estimated at USD 16,622,500. Of the total amount USD
10,657,500 will be used to purchase new goat and sheep abattoir plant equipment
from overseas suppliers in Holland.
The project cost breakdown is given in Table 3.
The equity contribution by EAST AFRICAN MEAT PROCESSING LTD will be USD
3,320,000 which is 19.97% of the total project cost. The international development
finance institution medium term loan will amount to USD 13,302,500 which is 80.03%
of the total project investment cost.
13

Table 3:
S. No.
Project Cost Summary (USD)

Project Investment
Component
1.
Land
2.
%age
share
EAMPL2
Equity
Debt
Finance
Total
1.93%
320,000
320,000
Building and Structures
18.05%
3,000,000
3,000,000
3.
Abattoir Plant & Equipment
64.11%
10,657,500
10,657,500
4.
Spare Parts
3.91%
650,000
650,000
5.
Construction Cost
0.72%
120,000
120,000
6.
Vehicles/Trucks
9.78%
1,625,000
1,625,000
7.
Office Equipment + F&F
1.50%
250,000
250,000
8.
TOTAL PROJECT FUNDING
3,320,000
13,302,500
16,622,500
9.
%age of Total Project Funding
19.97%
80.03%
100.00%
100.00%
EAMPL: East African Meat Processing Limited
14

4.0
UGANDA INVESTMENT AUTHORITY
A meeting with the Ugandan Investment Authority (UIA) disclosed the fact that if an
industrial investment is approved and licensed by the UIA a range of incentives
would apply. These investment incentives are covered under the Income Tax Act
1997.These incentives are administered by the Uganda Revenue Authority as part of
the taxation system. The investment incentives are indicated in the following tables:
Table 4:
Capital Allowances
Initial allowances on plant and machinery
located in Kampala, Entebbe, Namanve, Jinja
and Njeru
50%
Initial allowances on plant and machinery located outside Kampala,

Entebbe, Namanve, Jinja and Njeru
75%
Start-up costs spread over the first 4 years
25%
Scientific research expenditure
100%
Training expenditure
100%
Mineral exploration expenditure
100%
Table 5:
Deductible annual allowances
Depreciable assets specified in 4 classes under declining balance method
Class 1 Computers and data handling equipment
Class 2
Automobiles, construction and earth

moving equipment
Class 3
35%
Buses, goods vehicles, tractor trailers, plant &

machinery
for farming, manufacturing
and mining
Class 4
40%
30%
Rail road cars, locomotives, vessels, office

furniture, fixtures etc.
20%
15

Table 6:
Other annual depreciation allowances
Industrial buildings, hostels and hospitals
Farming general farm works (declining balance

depreciation)
5%
20%
Uganda has a priority investment areas list. Investments are classified into priority
areas as indicated in Table 5 and are accorded additional benefits.
Table 7:
Priority Investment Areas
Crop processing
Education
Storage
Forestry and processing of forestry products
Fish processing
Electronics
Floriculture
Metal and metal products
Construction and building industry
Energy
Tourism Industry
Manufacture of building materials industry
Transport and communications
Pharmaceutical industry
Dairy an Dairy products
High-technology industry
Steel industry
Cotton and textiles
Edible oil
Mining industry
Ceramics industry
Manufacture of industrial spare parts
Meat processing
Iron and steel
Real estate development industry
Packaging industry
Financial services
Health care
Fruits and vegetables
16
Other incentives
In addition to the incentives listed in Tables 4-6, Uganda offers the following:
Import Duty Exemptions. Apply to motor vehicles, personal effects and plant and
machinery.
Duty drawback facilities. Allows exporters to claim taxes on inputs used to
manufacture exportable products.
Corporation tax. With the exception of mining there is a uniform corporation tax rate
of 30%, which allows the carry forward of losses. Practically this means, profits are
not taxable until, previous years losses are fully covered.
Investment Protection
Investment guarantees Uganda is a member of the Multilateral Investment
Guarantee Agency (MIGA) of the World Bank and VAT deferred payment
agreements.
Externalisation of funds Foreign investors are allowed to externalise funds for:
Loan repayment in a foreign country.
Payment of financial earnings to foreign personnel (e.g. on technical assistance
missions).
Payment of royalties or fees.
Payment of profits or proceeds on disposal of assets.
Protection against Compulsory acquisitions. Compulsory acquisition can only be
made in accordance with the contribution of Uganda. Should compulsory acquisition
take place, the investor must be compensated, based on fair market value of the
enterprise.
In order to derive benefit from the above-indicated range of incentives i.e. duty free
imports of capital equipment and duty drawback facilities, the new industrial
investment must have a clearly visible corporate identify so that profits from the new
project are visible and transparent. At the same time capital equipment imported for set
up of the industrial investment must be strictly identified by the taxation authority as
specifically designated for such purposes and all inputs used in the production process
regularly logged and valued in order to claim duty drawbacks. It will therefore be
necessary to establish EAST AFRICAN MEAT PROCESSING LTD as a discrete
corporate entity with its own legal and management structures and with its own
Memorandum and Articles of Association.
17

5.0
UGANDA BEEF SUB-SECTOR MARKET STUDY

5.1
Livestock Sector Overview
The livestock sector is an essential part of Ugandas agriculture and is of historical and
strategic importance to the countrys economy and her population. The sector
comprises cattle, goats, pigs, sheep and poultry as illustrated by the table below:
Table 8: Livestock Population Trend (000)
2008
2009
2010
2011
2012
YOY
growth
Cattle
11,409
11,751
12,104
12,467
12,841
3%
Sheep
3,410
3,513
3,621
3,730
3,842
3%
Goats
12,450
12,823
13,208
13,604
14,012
3%
3,184
3,280
3,378
3,479
3,584
3%
Pigs
Poultry
3%
37,437
38,557
39,714
40,905
42,133
Source: Adopted from UBOS 2011Statistical abstract. * 2008 are census statistics; 2009-2012
are based on a 3% growth rate assumed by UBOS.
As in 2012, the national livestock population is projected at 12.8 million cattle, 14
million goats, 3.8 million sheep, 3.6 million pigs and 42.1 million chickens. This reflects
a growth rate of 3 percent per annum- a rate believed to be lower than the growth in
demand for livestock products.
The 2008 livestock census indicated that at least 4.5 million families (70.8%) rear at least
one kind of livestock or poultry in Uganda. In terms of its contribution to the economy
the livestock sub-sector delivers 5 percent of total GDP and 18 percent of agricultural
GDP (UBOS, MOFPED 2011). Interestingly, while the growth of total agricultural
output has declined, livestock trends have maintained steady growth.
This study focuses on (i) Dairy (ii) Beef and (iii) Poultry sub sectors, as these were found
to be most attractive for investment. The piggery sector has been considered but found
to be too risky for investment due to the endemic presence of African swine fever in
Uganda. Goats and Sheep have limited investment potential due to their low per capita
consumption levels.
An introductory overview of the selected sub sectors is provided below
18

Cattle:
Over 1.7 million families depend to varying degrees on rearing cows for their
livelihoods. As much as 85 percent of the milk and 95 percent of beef consumed in
Uganda is from the indigenous cattle raised by this small scale subsistence farmer.
Ugandas cattle herds are 93.6 percent indigenous with the Ankole and Zebu/Nganda
breeds accounting for 30 percent and 70 percent respectively. The cattle herd also holds
just 0.8 percent of cattle as beef exotic/cross breeds and only 5.6 percent as dairy
exotic/cross breeds.
Figure 1: Cattle population by breed [2008]
Proportion
5.60%
0.80%
Indigenous Cattle
Beef Exotic
Dairy Exotic
93.60%
Source: UBOS 2008 livestock census

In terms of distribution, the eastern region (23%), Karamoja (Northeast) (20%) and
central region (19%) have the highest number of cattle followed by the south western
(16%) and the northern (14%) regions- although as we find, this population distribution
does not correlate directly to the productivity levels.3 The greatest concentration of
livestock is found in the "cattle corridor", (figure 2) extending from South-Western to
North Eastern Uganda. The major beef breeds held among commercial beef producers
are Boran, Bonsmara, Brahman, Boran x Ankol, Boran x Zebu and the Holstein crosses.
3For
example, the southwest with only 22% of cattle population produces 37% of total milk production,
while the northern region with 14% cattle population produces only11% of total milk production.
19

Figure 2: Uganda Cattle Corridor
Cattle farming, for both dairy and meat production, is the biggest livestock enterprise in
Uganda for both food production and income for households, and supports an
estimated 1.7 million households (UBOS 2008), most of whom are subsistence farmers.
The commercial rearing of cattle on beef or dairy ranches is relatively low, with only an
estimated 165 ranches operational (EU Beef Study 2012) - accounting for relatively small
volumes of both milk and beef presently.
Cattle enterprises have more recently been expanding due to a comprehensive
Government of Uganda national strategy plan for the livestock sector which
incorporates animal health, animal nutrition, training and delivery, research, and
20

enhanced marketing initiatives (FAO, 2005, MAAIF 2012)). Indeed productivity gains of
cattle enterprises have been recorded as increasing over the past years driven by
improvements in production systems and farm management techniques, but the
resultant production growth volumes still fall below the increasing demand for cattle
products.
Essentially cattle are raised as a mixed herd, with little specialization into beef or dairy
farming. Subsistence as well as large scale farmers look upon cattle as a source of
capital, and after that as a source of both milk and beef production. Among the
ranchers, however, there are a few isolated cases of rather successful specialized and
more commercial dairy and beef farms.
Goats:
Traditional goats are very good in the production of lean meat as they do not have a lot
of body fat. Of recent, there has been a cross-breeding of the local goats with imported
goats, especially Boer goats from South Africa to improve on the animal size and to
improve on the maturity gestation period. Traditional goats mature in a period of up to
18 months and have a body weight of up to 18 kg while Boer goats mature in a shorter
period (9 months) and have a body weight of more than 25 kg. This increase in the body
size means that farmers earn more from these animals. Even bee producers and
processors have a bigger beef array at their disposal for marketing. A good example of
the cross-breeding is the emergence of the Mubende breed as force to reckon with in the
goat sub-sector.
Table 9: Weight gains for goats
Weight gain of Mubende goats
and crosses with Boer
Boer x Mubende
Mubende
Weight (kg) at:
Birth
2.06
1.8
105 days
8.3
9.4
180 days
21.8
365 days
34.3
18.3
Source: MAAIF Strategy Study, 1999.

Sheep:
Sheep farming in Uganda for the production of meat is very low as there are many
traditional taboos against eating sheep meat. However, there has been an increase in the
farming that has also seen the importation of improved sheep from South Africa.
21

5.2
Production
Livestock production constitutes an important sub-sector of Ugandas agriculture,

contributing about 9 per cent of Gross Domestic Product and 17 per cent of Agricultural
Gross Domestic Product and is a source of livelihood to about 4.5 million people in the
country (UIA, 2009). It is an integral part of the agricultural system in many parts of the
country. Livestock contribute significantly to the welfare of the population at both
household and national levels. Livestock in Uganda play important roles in many
families, including raising household incomes, providing protein and acting as mobile
banks.
Livestock is predominantly used for supporting rural households (80 per cent owned by
smallholders) with herd size of 5-100. In economic value, cattle are considered the most
important livestock although other animals such as goats, sheep, pigs and poultry are
equally important. Cattle are the main source of meat in the country and are reared on
rangelands which occupy 84,000 km. The greatest concentration of livestock is found in
the "cattle corridor", extending from South-Western to North Eastern Uganda (Figure
3). This corridor covers the districts of Ntungamo, Mbarara, Mpigi, Kiboga, Luwero,
Apac, Lira, Soroti, Kumi, Mbale, Moroto, and KAtido (INFOTRADE, 2011).
The annual production of livestock products has recorded progressive growth since
2004. Beef production by 2008 stood at 200,743 MT, an 8 per cent increment from
147,552 MT in 2004 (MAAIF 2009). Beef production in Uganda uses predominantly
indigenous breeds (INFOTRADE, 2011) while improved cattle breeds are kept under
intensive management, mostly on small scale and medium sized dairy farms and zero
grazing unit. The indigenous breeds are mainly kept under extensive system. The
indigenous breeds are East African short horn zebu, long horned Sanga, Ankole,
Turkana, and Toposa. The indigenous breeds account for about 95 per cent of the
national herd/flock of which the Ankole (50 per cent) longhorn breed4 is most
dominant. Small numbers of exotic tropical beef breeds are found on commercial
ranches, most notably Boran and, to a lesser extent, the Bonsmara and their crosses with
indigenous breeds. In terms of distribution, the eastern region (23 per cent), Karamoja
(20 per cent) and central region (19 per cent) have the highest number of cattle followed
by the south western (16 per cent) and the northern (14 per cent) regions (Table 1). Beef
is also derived from culled dairy cattle breed such as Holstein, Guernsey, Jersey and
their crosses for milk production.
Ankole breed meat is also reported to have very low levels of cholesterol.
22

Figure 3: Major Livestock production districts in Uganda
Source: INFOTRADE (2011)

Table 10: Cattle population of Uganda
Type of cattle
Exotic
Indigenous
Total
Central
221,700
2,209,620
2,431,320
Eastern
141,860
2,345,610
2,487,870
Northern
9,800
1,631,030
1,640,830
Western
317,850
2,212,210
2,530,060
8,820
2,245,140
2,253,960
Karamoja
Uganda
700,030
10,643,610
11,643,640
Source MAAIF & UBOS (2009). The National Livestock Census Report 2008
Most of the beef production is the done on extensive production systems mainly located
in the cattle corridor system. Due to shortage of land, the pastoral system is gradually
23

transformed into the agro-pastoral as many pastoral households have had to settle and
inevitably introduce cropping. Where farmers have become sedentary, there is mixed
livestock and crop farming but crops constitute the major source of household food and
income. Ranching and dairy production are commercial oriented systems which are the
likely sources quality beef.
The pastoral system is mainly found in the north-eastern districts where population
density and rainfall are low. This implies that livestock owners have to move far away
from their homestead in search of pastures and water. Most of the livestock are of
Indigenous breeds of cattle, goats and sheep are also kept.
The production of beef in Uganda has varied over the years as shown in Figure 2. From
the graph it is evident that beef production is not increasing appreciatively compared to
the rate of growth of the human population and this is due to the constraints such as
animal diseases, poor feeding, use of poor breeds and breeding method.
A major study of meat production in Uganda was commissioned by the Ministry of
Agriculture, Animal Industry and Fisheries (MAAIF, 1998) which came up with a
number of findings relevant to this study. In terms of meat supply, the study analyzed
those constraints related to marketing and indicated that the off-take of livestock into
commercial channels is restricted by poor access to markets as well as inadequate
market infrastructure. Organized links in terms of roles and activities among
pastoralists, small-scale farmers, large-scale ranchers, companies and cooperatives are
practically non-existent.
Table 11: Meat Production in Uganda (Beef, Goat and Sheep) 2003 2013 in MT
Year
Cattle Meat
Goat Meat
Sheep Meat
2003
125,000
28,800
5,754
2004
135,000
28,800
7,602
2005
147,000
29,000
7,840
2006
160,000
29,870
8,064
2007
174,150
30,766
8,316
2008
169,950
31,689
8,568
2009
175,049
32,640
8,820
2010
180,300
33,619
9,072
2011
185,709
34,627
9,300
2012
191,280
35,100
9,400
2013
199,008
37,500
9,520
24

Figure 4: Meat Production in Uganda 2008-2013 (Thousands of Metric Tonnes)
Source: FAOStat (2015).

5.3
Consumption
There are different approaches to determine the actual per capita meat consumption,
either from the primary production side (minus exports plus imports), or from the
slaughter statistics, or from the consumer side according to a household survey.
Slaughter statistics is always incomplete as not all slaughters are recorded.
The turnoff rate (off take rate) for cattle in Uganda is estimated at 12 per cent (MPMPS,
1998) and an additional 3 per cent consumed at farm/household level. The demand for
livestock products, including beef has steadily been rising due to changes in social and
economic structure of the population, urbanization and population growth. The current
per capita availability of meat stands at 14.7 kg, of which beef constitutes 8.9 kg (Table
12), compared to 50 kg of meat recommended by FAO and WHO (Greenbelt Consult
Limited, 2006). This consumption is relatively low as shown by the table below.
According to the 1992/93 National Household Survey, the per capita consumption of
beef in rural areas is about half that found in urban areas.
25

Table 12: Meat Consumption in Uganda (2010)
Species
Total No.
Slaughtered
Equivalent
Weight of
Carcass
(tonne)
Full
"Carcass"
Weight (kg)
Human
Population
Per Capita
Consumption
(kg)
Beef
2,084,000
312,580
150.0
35,000,000
8.9
Pigs
1,885,000
113,100
60.0
35,000,000
3.2
Goat
2,750,000
32,100
11.7
35,000,000
0.9
648,000
9,072
14.0
35,000,000
0.3
37,500,000
48,750
332,622
1.3
35,000,000
1.4
14.7
Sheep
Poultry
Total
Source: FAOStat (2010).
Note: FAO calculates carcass weight and not meat without bones.
5.4
Marketing and Trade
Marketing of Livestock, livestock products and by-products plays a key role in

increasing farmers incomes, promoting food security, improving peoples welfare and
stimulating the growth of the animal industry and the national economy in general. At
farmer level, animals are purchased through direct negotiation with the producer either
at the farm or at the spot markets. There are no standards or weighing facilities to guide
the negotiation process. Price is determined from the physical attributes of the animal
and guessed meat yield. The animals are resold in the primary, secondary or tertiary
markets by cattle traders or intermediaries through direct negotiation. The prices
received therefore depend on the negotiation skills and experience of the farmer or
trader. Having market information is a vital tool for negotiation. However, for the most
part, the farmers are lacking in all these aspects and end up with lower than anticipated
price.
Costs incurred are in the form of labor for ferrying the animal and payment of token
market dues. Cattle traders normally interact with farmers in rural cattle markets to
procure cattle. Apart from the producer price, the traders incur transport costs to the
main urban areas and costs for waiting at the slaughter houses, such as (feed, food and
accommodation). Transport costs depend on the number of cattle on a truck.
Most of the livestock markets at primary and secondary level belong to the local
governments. However, in line with the government policy of liberalization and
privatization, they are tendered to the private sector for management and revenue
collection. The contractors pay a fee, collect the market levies, care for security and
26

cleanliness and, in principle, maintain the infrastructure. Movement permits are issued
at livestock markets.
Exports are limited because of the prevalence of diseases, lack of an export-standard
abattoir and the high demand of the national market (MAAIF, 2011). Access to export
markets of livestock and livestock products requires at times significant investments to
meet veterinary requirements largely intended to protect the importing countrys
animal and human populations. Furthermore, the exporting country must meet
additional product quality requirements with respect to production, marketing and
processing. Generally, compliance with international or regional standards is often
achieved by developing countries at a great cost.
Gaining access and maintaining presence in high value markets such as the EU market
is often costly as standards and expectations keep on growing due to consumer
pressure in the targeted high-value markets. Other growing beef markets such as the
Middle East and Asia may require that some international standards be met (as a
hygienic abattoir at minimum) although their national standards are sometimes less
exacting. Unfortunately the prices fetched are lower and the competition is strong.
Veterinary requirements of high value regional markets are in most cases bench-marked
on EU standards even though the prices are relatively lower.
At the export level, Ugandas performance in livestock and livestock products is still
dismal (Greenbelt Consult Limited, 2006). Presently, Uganda exports very small
quantities of live animals and hides and skins. Information on other products is not
readily available, presumably because of the minute quantities involved and
unrecorded informal cross-border trade. Nevertheless, Ugandas livestock export
earnings have grown in recent years from an estimated USD 5.75 million in 2004 to
about USD 10.4 million in 2008 (UIA, 2009). The Hides, skins and furskins are the major
export earners followed by dairy products and bird eggs, meat, live animals and meat
preparations. The major export markets for the products are Burundi, Democratic
Republic of Congo, Kenya, Rwanda, Southern Sudan and Tanzania. Southern Sudan is
the major destination for Ugandas meat products. Other potential export markets for
livestock and livestock products exist in the Middle East countries and the European
Union.
There seems to be increased informal and formal exports of meat products and live
animals from Uganda to regional markets. In addition, there are exports of processed
meat exported by Fresh Cuts to the UN troops in South Sudan, DRC and Somalia.
Trends in exports of bovine meat are indicated in Table 3. Data on livestock products
imports and exports is only available for products imported or exported through
27

gazetted customs border points (formal exports). Cross-border informal trade does not
appear in the official statistics. Uganda is not exporting as much as what is
commensurate with the large livestock population existing in the country. This is
because of the difficulties in complying with international sanitary and phytosanitary
standard requirements. These difficulties notwithstanding, Uganda is a net exporter of
livestock products (Table 13; Figure 5) and live animals internationally.
Table 13: Formal imports and exports of beef (2005-2010)
Year
Exports
Imports
Live animal
export value
Net trade
balance
tonne
USD
tonne
USD
USD
USD
2005
288.951
733,851
0.990
8,394
29,000
754,457
2006
124.320
323,101
0.596
820
28,000
350,281
2007
66.516
92,763
8.750
47,908
1,551,000
1,595,855
2008
50.071
50,004
4.906
9,112
1,822,000
1,862,892
2009
17.030
52,577
2.786
4,549
3,908,000
3,956,028
2010
240.464
818,778
3.637
12,727
3,985,000
4,791,051
2011
34.203
148,881
1.174
6,667
Source: UBOS (2012).
1,654,000
1,796,214
Figure 5: Beef trade balance (exports minus imports) in Uganda (2005-2010)
Source: compiled from data in Table 4.
28

5.5
Description of Value Chain and Processing
The traditional value chain starts at the farm gate when the farmer decides to sell an
animal. In that case he will either bring his cattle to an animal market or call a
middleman to buy the animal from the farm gate. Usually, there is a sort of negotiation
between the farmer and the buyer that includes assessment of the animal as a whole.
Middlemen collect animals at farm gate or animal markets and bring them by truck to
bigger cities or to the capital Kampala (MAAIF, 2011). Costs of that transaction include
the loading fee at animal markets, transportation, movement certificate from the local
veterinary and the lairage fee at the abattoir. Since bigger abattoirs and slaughter
houses form a sort of a stock exchange for life stock the middleman may either hire
slaughter men in order to slaughter the animal and sell the carcass or sell the animal life
to a person that then deals with the slaughter business.
Apart from abattoirs in and around Kampala there are a number of facilities in Uganda
where animals are slaughtered: At-the-farm slaughters, slaughters at village markets,
town slaughter slabs, and urban slaughter houses. There are three abattoirs in Kampala
that feed the capital market: City Abattoir (KCC), Ugandan Meat Packers Ltd. (UMI)
and Nsooba Slaughterhouse Ltd. Meat inspection is carried out in all Kampala abattoirs
even though with different approach and care. Kampala City Abattoir - serves also as
an animal market place. Live animals destined to slaughter can be sold when they are
still on the truck to another trader/middle man who offload them and keep them in the
holding facilities waiting for a butcher or another middle-man to buy them.
The animals slaughtered in the city abattoirs come mostly from the high concentration
cattle keeping districts of the cattle corridor. Live animals are transported to
metropolitan areas where they are slaughtered and beef is offered for sale largely in its
fresh state and consumers seem to prefer this type of beef. Animals are brought to the
abattoirs either by truck or on foot. Because of the long distances to the slaughter place,
the costs of transporting live cattle and the risk of disease spread are therefore relatively
high. At the abattoir, animals may be kept alive for 2 to 10 days before slaughtering,
depending upon demand for beef.
There are a number of small scale meat processing establishments producing meat
products for the local market. They are engaged in processing of beef to produce some
value added products. Ugandas meat processing industry consists currently of two
companies dominating the market for packaged retail cuts and processed beef. These
companies offers the full range of meat products (both from beef and pork, small
quantities of poultry meat): prime cuts, retail cuts plastic packed, sausages (hot dogs,
boiled sausages), ham, minced meat. One of these two processing companies is also
29

engaged in processed meat exports to the UN troops in DRC and Sudan on a
contractual basis. The quantity exported that way accounts for 50 per cent of the total
quantity of meat processed by the company.
Figure 6: Beef and live cattle marketing chain
Cattle Farmer
Village Middleman
Primary stock
market
Secondary stock
market
Tertiary stock
market
Cattle Trader
Local slaughter
slab
Wholesaler
Abattoir
Local Market
(Supermarket)
Processor
(wholesaler)
Live cattle export
Border
Source: constructed from description of marketing chain in Landell Mills LTD (2011).
5.6
SWOT Analysis
Strengths
Weaknesses
Existing tradition in cattle keeping

Extensive rangelands well-suited for livestock
keeping and pasture production
Comparatively favourable climatic conditions
(bi-modal rainfall and no aridity)
Low prices of live animals at source
Generally low labour costs
30
Subsistence nature of production (irregular

selling of few and often old animals)
Low (meat) productivity of indigenous breeds
Lack of knowledge of specialized beef
ranching /farming for most smallholders
Poor and inhumane animal transport
Slow reaction to outbreaks and control of

Good domestic market for meat and meat
products
Existing export-quality processors
Multilateral and bilateral support (e.g. AfDB,
Norad)
Favourable foreign investment policy
Good veterinary faculty, skilled veterinary
professionals
Clear and reliable drug import and marketing
system
Opportunities
infectious animal diseases

Lack of a modern abattoir that can comply
with export standards
Market standards are not established (carcass
classification)
Weak linkages of primary production with
markets
Most of the population is not yet quality
conscious.
Threats
High demand in the region (Sudan, Kenya,

DRC, Middle-East and North Africa)
Fast growing local consumer market through
growth of population and per capita income
Exploitation of existing deficits of beef
products in the regional market (esp. Kenya)
using comparative advantages of EAC and
COMESA arrangements
Relatively
less
stringent
sanitary
requirements for regional export destinations
Increase carcass weight and productivity
through investments in modern production
techniques,
breeding
and
commercial
ranching systems
Investments in modern abattoirs
Investments in meat processing for fast
growing premium market
Upgrading of informal butcheries FMO risk
capital financing
PSI support (Netherlands) or other support
instruments
Potential cooperation with large NGO sector
in Uganda
Opportunities in animal feed and fodder
production
31
Poor enforcement of rules and regulations

Widespread sales of fake inputs like drugs
Weakness in infrastructure, utility supply
and access to remote production areas
Role of wildlife and pastoral animals in the
spread of animal diseases and zones
Competition of fodder production with food
and cash crop production
Natural disasters (droughts and conflicts in
Northern Parts)
Limited support from financial sector

5.7
The Product Sales
Following research and based on information available the following selling prices have
been used in the calculation and forecasts:
USD per kilogramme
UShs per kilogramme*
Goat & Sheep meat local
2.40
8,400
Hides/Skins (per unit)
3.00
10,500
By-products local
1.20
4,200
*USD 1 = UShs 3,500

5.8
By-Products and Added Value Products
The development of by-products facilities such as rendering will supply blood

meal, and animal oil into the stock feeds soap and oils business.
Canning will allow value added use of the lower grade meat and will permit
export of this meat in canned form.
Tanning of hides will provide a semi-finished product, which will attract greater
value. However, the hide and tanning industry could create significant
downstream industry and employment.
Processed meat such as sausages for local and export.
The integration of these products into the operation of the abattoir is a policy
decision. However, to allow the opportunities to develop will stimulate the
private sector and increase the linkage with the cattle industry.
5.9
Competitors
At present there exists a tertiary livestock market, which comprises a number a number
of small slaughterhouses and two small abattoirs.
There are two privately-owned abattoirs which are located adjacent to one another that
are the main source of most of the beef being retailed in Kampala City.
In the not-too-distant future, the new Government policy is that all livestock will be
slaughtered in their areas of origin and only the meat transported to Kampala.
32

The move is expected to reduce congestion in the city, lower the cost of transport,
prevent travel stress and injury to livestock, as well as improve the quality of meat.
The Egyptian firm Egypt-Uganda Food Security has invested $11 million in a modern
abattoir, located 32km north of Kampala near Bombo town in Luwero district, central
Uganda. The abattoir will process and package meat mainly beef both local and
export markets.
The Egypt-Uganda Food Security abattoir has the ability to slaughter 1,000 cows daily
and can hold up to 5,000 animals waiting to be slaughtered. It also has coolers, skinning
equipment and a processing plant as part of the standard equipment demanded by
Kampala City Council Authority and the Uganda National Bureau of Standards.
The Government of Uganda also plans to establish other abattoirs in Nakasongola,
Mpigi and Soroti.
The market that the new East African Meat Processing Limited world-class abattoir
will cater for is more focussed and competition is not considered to be a significant
threat.
5.10
Summary
1. The local market demand for competitively-priced quality goat and sheep meat has
good potential and will definitely support the abattoir during its formative years i.e.
Years 3 5 while it grows business and consolidates its position on the market. The
development of this market by promotion and awareness is essential.
2. The production of by-products will support local demand during the formative
years of the abattoir.
3. There is a good local demand for goats and increasing demand for sheep, which
may indicate the establishment of the proposed small stock (ruminant) abattoir.
33

6.0
BUSINESS PLAN
6.1
Market Background
Livestock production in Uganda contributes 5.2% and 12.7% to total GDP and
agricultural GDP respectively. It is an integral part of the agricultural system of many
parts of the country. Mixed farming small holders and pastoralists own over 90% of the
cattle herd and 100% of the small ruminants and non-ruminant stock. Cattle are the
most important of all the livestock.
Livestock production has continued to grow, at a rate of over 4% per annum, in
response to increasing demand for milk and meat in the local market. Higher rates of
growth are envisaged as Government pursues its policies of modernizing and
commercializing agriculture.
Ugandas competitive advantage as an investment destination for the meat industry is
supported by various investor friendly factors, which include availability of beef cattle,
stable political environment and market access to local and regional markets, among the
others.
Beef farming is very important in Uganda. Over 90% of beef cattle, goats and sheep in
Uganda are in the hands of subsistence farmers and pastoralists. Today, the population
of both beef and dairy cattle exceeds 12 million heads, while the population of goats
exceeds 14 million and sheep number almost 4 million head with large-scale livestock
farmers keeping animals both for commercial and subsistence purposes. The
distribution of beef cattle in Kenya is influenced by rainfall patterns. Most animals are
kept in the Western Axis in South-Western and Western Uganda, Luwero Axis in
Central Uganda and the Karamoja Axis in North-Eastern Uganda.
However, in spite of this big potential of the large livestock population, the meat
industry in Uganda still suffers from lack of capacity to supply quality meat products
for highly-end meat consumer market segments that in reality present the best potential
for rapid commercial gain and incremental domestic demand growth; the primary
reason for this has been the lack of corporate cattle farming and the absence of modern
state of the art abattoirs and meat processing plants.
Analysts and livestock marketing experts agree that there are massive opportunities for
a technically well-equipped abattoir plant in Uganda to tap into and network with a
whole range of domestic meat market retailers and wholesalers to cater for the demand
of quality beef products that is currently enjoying an upward trend in Uganda.
34

Considering this potential, there is no doubt that there is ample scope and opportunity
for EAST AFRICAN MEAT PROCESSING LTD to engage in specialized beef
production and marketing through the buildup of essential relationships to do good
business on the domestic meat market.
6.2
Objectives
From Year 2 to Year 10, EAST AFRICAN MEAT PROCESSING LTD projects to
produce 12,672 Metric Tonnes per annum by carcass weight of goat and sheep meat.
Goat and sheep carcasses, by-products and hides will respectively be priced as
indicated in Table 14 below:
Table 14: Monthly Projected Production of Goat & Sheep meat, by-products and
hides/skins
Abattoir outputs
Monthly
Production
[kilogrammes]
Ex-Abattoir Unit Total

Monthly
Price
Revenue [USD]
[USD/kilogramme]
1,056,000
2.40
2,534,400
By-products
211,150
1.20
253,380
Hides & skins (units)
60,000
3.00
180,000
Goat & sheep carcasses
TOTAL
6.3
1,327,150
2,967,780
Distribution
For the local (domestic) distribution of beef and beef by-products EAST AFRICAN
MEAT PROCESSING LTD will set up an urban cold-storage distribution network in
Kampala to begin with. This cold-chain distribution network will initially comprise of 4
refrigerated beef/goat/sheep meat selling outlets that will take reception of the meat,
grade it, store it and later on dispose it off to various meat distributors and retailers in
Kampala city. Kampala city represents the most strategic and commercially-viable entry
point for a first-time industrial producer in Uganda on account of having the biggest
concentration of consumers with the highest levels of disposable income for spending
on food and all sorts of consumer goods in Uganda today. According to projections
basing on the 2001 Uganda Population Census - it indicates that there are now more
than 2 million residents in Kampala city alone out of a country total population of 30.6
million inhabitants.
The objective of the distribution strategy will be to ensure maximum penetration and
circulation of the abattoirs beef and beef by-products in an effort to make them a choice
item of consumption on the basis of its hygienic and high quality standards, meat
product classification and grading standards, and competitive-pricing. There will have
35

to be a single minded focus on ensuring an adequate distribution system for meat and
meat by-products through the established cold-chain distribution network. All sales
will be on a cash basis.
6.3.1
Functional Description of the Cold Chain System
The Cold Chain System is an integrated system in which the meat is kept cold in the
chilled or frozen form in an unbroken link from the initial chilling/freezing of freshly
produced carcasses at the abattoirs throughout the stages of transport, storage,
distribution and retail sale to the storage of meat within the home of the consumer.
6.3.2
The Need for the Cold Chain System
The Cold Chain System ensures safer and better quality meat. Meat is a good medium
for bacteria growth. The Cold Chain System will keep the meat at the proper cold
temperature at all the stages from production to distribution to consumers. This
effectively controls the growth of spoilage and food poisoning bacteria as well as
slowing down quality deterioration from chemical changes in the meat.
6.3.3
Responsibility for the Cold Chain System
The Cold Chain System involves everyone in the meat processing and distribution
chain. Each party needs to understand its role and know the standards that should be
applied. Success depends on team effort and everybody needs to play his part. The
meat handlers at the abattoir, the meat cutting plants or the cold storage facilities, the
men who deliver the meat, the butchers at the retail outlets and the consumer all play a
part in ensuring that the freshness, quality and safety of meat is effectively maintained.
6.4
Marketing Support
For the EAST AFRICAN MEAT PROCESSING LTD abattoir project to take off in the
shortest possible time frame, a full scale advertising & promotion campaign shall be
instituted to support the launch of the product outputs and this campaign should form
an integral component of the overall Business Plan. The advertising should endeavour
to position the proposed abattoir product outputs as premium quality beef products
that are prepared under the best possible hygienic and meat-grading standards in
Uganda.
36

A number of marketing initiatives are proposed under this arrangement. These include
the establishment of a corporate identity and distinctive logo and an aggressive
marketing drive, which may include:
Advertising in the press
Advertising on radio/television
Website
Marketing office
Sales representatives
Leverage off associations with ranchers
Associations with Uganda Beef Producers Association
Associations with Ministry of Agriculture, Animal Industry and Fisheries
Appointment of Agents
The Business Plan includes a Sales and Distribution Cost of 7.5% of Turnover to
support the above activities.
The concept and techniques of advertising are not well developed in Uganda and a
more focused approach will be needed to ensure a successful introduction of the EAST
AFRICAN MEAT PROCESSING LTD range of beef products on the local market.
6.5
Investments
The investment in existing land and subsequent site development will amount to
USD 320,000. Investments in buildings and structures are projected to take up USD
3,000,000. Investment in abattoir plant machinery and equipment is foreseen at USD
10,657,500. Investment in abattoir plant spare parts will cost USD 650,000. Investment
in the plants operational facilitation vehicles and executive cars is to take up USD
1,625,000. Other complementary investments that compositely include: Construction
cost that will take up USD 120,000; and office equipment and furniture & fixtures that
will add up a further USD 250,000 giving a total figure of USD 16,622,500.
6.6
Financial Data
Details of the financial results are outlined in Section 12.0. They are very satisfactory
and justify the early execution of the proposed EAST AFRICAN MEAT
PROCESSING LTD abattoir plant project.
37

7.0
TECHNICAL ASPECTS
7.1
Process Description
7.1.1
Introduction
The slaughtering and meat processing process has been summarized in the diagram
below:
Figure 7: Slaughtering and Meat Processing Process
Lairage
Ante-mortem
Dirty Process
Slaughtering
and Bleeding
Skinning or
Scaling
Evisceration
Post-mortem
Clean Process
Rigor Mortis
Process
Chilling,
Hanging and
Passing
Delivery/Dispatc
h
38

The pre-feasibility study is based on development of a fully automated slaughterhouse
and meat processing plant. The facility can be divided into the following main areas:
Lairage (Holding Area) and offloading and inspection areas,

Separate mutton & beef slaughter, skin removal, cleaning etc areas,
Deboning area,
Chillers (0oC), Blast Freezer (-40oC) and Store (-20oC),
Packing area,
A separate By-products Floor & Chiller.
At the time of slaughter, animals should be healthy and physiologically normal.

Slaughter animals should be adequately rested. They should be rested, preferably
overnight, particularly if they have travelled for some times over long distances.
However, poultry are usually slaughtered on arrival as time and distances travelled are
relatively short Animals should be watered during holding and can be fed, if required.
The holding period allows for injured and victimized animals to be identified and for
sick animals to be quarantined.
The slaughter halls will be fully automated and will be equipped with the latest
machinery to maximize production, safety and hygiene. Slaughtering will be done
Muslim style where animals will be led into custom built slaughter box where the feet
will be automatically gripped. The box will be turned to lay the animal on its side
where a trained butcher will slaughter the animal according to the Islamic standards. At
next stage, the animal will be lifted onto the automated conveyor for further processing.
The animals hide will be removed by trained technicians with the help of an automated
de-hiding machine. Off-all removal will be done instantly and will immediately slide
into the off-all area via a stainless steel slide. The carcass will then be cut into the
desired number of pieces with state of the art saws which are sanitized after every
operation. Hydraulic lifts will be installed so that the technicians can perform all the
above duties with ease and in a hygienic manner.
Slaughterhouses have a dependable source of clean water, to maintain hygienic and
sanitary services in the plant. The water is well distributed in terms of point-location
inside the premises and must be hot, if possible, for hygienic washing of products and
facilities.
Reservoir or tanks are sometimes installed on the premises as a security against
shortages and breakdown of pumps. Drainage of water is one of the main
39

considerations in any slaughterhouse. All washings or wet cleaning must course over
the slaughter floor into a collecting drainage and empty eventually outside the building.
The floor should be designed to slope toward the main collecting drain, the latter in
turn to slope toward exterior connecting pipes. The walls must have a hard smooth
surface to prevent staining with blood and fat and hence facilitate cleaning; on the other
hand, the floor must be rough or grooved to forestall slipping.
Lighting is another important requirement of the slaughterhouse. Transparent insets are
also made in the roofing at vantage points to provide natural lighting or sky lighting.
Wide lintel windows (e.g. aluminum frame), covered with gauze to exclude insects, also
serve the same purpose, as well as provide ventilation.
The standard installation and equipment required in modern slaughterhouse are those
necessary to effect a rapid and hygienic conversion of livestock into meat. The following
is a standard list of equipment is used in meat processing.
Meat processing plant

Blast freezers and chillers
Deboning and vacuum packing machine
Waste water treatment plant
Laboratory equipment
Weighing scale
Conveyor/hooks
Trolleys
S.S hooks with bearing
Overhead mobile hook
Chiller Hooks
7.1.2
By-product and meat processing
Rendering
Rendering is a process that converts waste animal tissue into stable, value-added
materials. Rendering can refer to any processing of animal products into more useful
materials, or more narrowly to the rendering of whole animal fatty tissue into purified
fats like lard or tallow.
40

Offal
Offal also called variety meats or organ meats, refers to the internal organs and entrails
of a butchered animal.
7.2
Production Capacity
On the basis of an eight hour day the capacity of the abattoir is 2,000 heads of goat and
sheep per day and also 200 cattle a day when the abattoir starts taking cattle at a later
stage.
7.3
Special Considerations in the Construction of the Plant
For the success of the venture, it is important that the proposed abattoir plant complies
with international standards, some of these include:
The plant needs to designed, built, and equipped to meet international sanitary
standards. This applies particularly to layout and product flow, which
determines shapes and relative locations of processing areas.
All slaughtering and edible product handling needs to be carried out in a singlestorey having a smooth, flat, non-toxic, non-absorbent floorings and brick walls.
The walls need to be finished on the inside to give an impervious, washable
surface. Floor will be finished with non-slip and impact-resistant surface.
Inspection and work areas will be finished with standard level of illumination.
Mechanical ventilation which is required in all edible meat processing areas and
all openings will be screened.
Double self-closing doors to be provided from dressing floor to edible offal,
casing and skin department. Doors to be provided with buffer rail on both sides
for meat trucks to pass through.
All equipment that would come into contact with animal products shall be of
stainless steel. No wood will be used for any purpose within the production
areas for either edible or non-edible products. Washbasins and sterilizers will be
carefully located and access to the processing area should be confined to control
points using a strict hygiene routine.
Chiller rooms will be located adjacent to the main building and will be designed
to chill beef and mutton carcasses. Consequently, meat or cooling rails will be
fitted to internal support frames. Chillers will be designed to bring down carcass
temperature quickly so that the chiller can be vacated for the next days product.
The refrigerating plant will be as simple as possible without undue
sophistication. Reciprocating compressors and a two-stage ammonia system will
41
be involved. Each compressor will be of sufficient capacity to carry the entire

load.
The processing of inedible products will be carried out in a separate building
adjacent to the main building, having concrete floor with drains and brick walls.
Natural ventilation will be sufficient. The buildings required to house utilities
and provide storage for skins will be of similar construction as that of cleaning
room, engine, and maintenance and vehicle workshop.
Covered livestock pens will be provided only for one days stay. Pens will have a
concrete floor with a minimum slope of 1 in 50 towards an outside drain. It will
have sanitary curbs and water troughs. A standard suspect pen (for animals
suspected to diseased) and a race leading to the slaughtering floor will also be
provided.
Water will be delivered from a tube well delivering 27,000 litres per hour.
Provision has also to be made for an on-the-ground storage tank of 300,000 litres
and an overhead storage tank of 40,000 litres. To achieve the desired amount of
chlorination, a small automatic chlorine dosing unit will be installed.
7.4
Basic Conditions
7.4.1
Capacity
The proposed abattoir shall be designed to slaughter, chill and de-bone 720,000 goats
and sheep per year (2,000 goats and sheep/day x 360 working days) in an average
working day of 8 hours.
It should be planned for future extension of chilling and de-boning operations if/when
slaughtered volumes increase to include 72,000 cattle per year (200 cattle/day x 360
working days). Alternatively, carcass quarters would be sold to external de-boners.
Equipment and facilities designed for average carcass weight of 20 kilogramme sheep
and 16 kilogrammes goat each.
The capacity has been chosen after discussions and considerations of plant utilization,
market development, personnel training and non-complicated technical solutions.
7.4.2
Quality Standard
When building an integrated meat plant the end status of the operations has to be set
properly before beginning on the planning. That is because localities, machinery and
logistics have to be at the standards desired. Modifications and adjustments afterwards
will be more expensive and less effective.
42

Standard chosen for the proposed abattoir is tied to the EEC and USA regulations,
which are respected in meat trade and have a proven improvement in quality in
industries where it is used.
Where domestic standards are still non-existent it is therefore natural to choose
accepted norms like above. This standard will not only put pressure on the operating
plant, but also on the authorities that are involved.
7.5
Description of Operations
7.5.1
Area:
Lairage
400 sq. Metres
Material: Concrete floor and steel fences. Roofing material which gives good protection
against the elements.
Function: Reception, control and storing of animals for 1 days production. The animals
will have clean water supply in all pens. Special pen at the off-loading area for sick
animals and detention pens for ante-mortem inspection. All animals should be
thoroughly inspected first.
Manure will be collected in a container (skip) for transport or for anaerobic processing.
The flood surface shall be of non-slippery type.
7.5.2
Stunning/Bleeding Area
Area:
100 sq. Metres.
Material:
Building with material for easy cleaning and with good durability.
Machinery:
Chute to knocking box with moveable side wall and slide at the
bottom. Blood collecting system for hygienic collection of blood. The system is provided
with a chilling heat-exchanger for the blood.
Function:
Animal is locked in the box with a vertical pneumatic door. After stunning
from a platform at the front, the sidewall opens and the animal glides out on a sloping
plate/dry landing area. The hind leg is shackled and the hoist elevates it on to the rail
system. Blood is then collected with a tubular knife in which citrate is added to avoid
coagulation.
43

7.5.3
Area:
Clean Area Slaughter line
600 sq. Metres.
Material:
This are shall be of highly hygienic standard. Glazed tiles on walls and
non-slippery tiles on floor. The construction shall be designed to take the load of the
driven conveyor system.
Machinery:
Conveyor system carries the carcasses along the operation stations.
The operators are placed on pneumatic adjustable platforms to reach the right positions.
When the carcasses reach the inspection area, the correlation of all parts of each carcass
is guaranteed with conveyors. The slaughter-cycle follows the regulations mentioned
and washing/sterilizing units must be available at each station.
7.5.4
Area:
Machinery:
Carcass Chilling Area
800 sq. Metres.

Overhead rail system with junctions for sorting and transporting.
Cooling System:
Involves cooling with an indirect brine cooling system. Brine to be
chilled with ammonia at central refrigeration station. Each chilling room is individually
temperature-controlled and monitored. A logging system saves hourly actual
temperatures for quality control and inspections.
Function:
After inspection, weighing and classification of the carcasses, (halves) are
transferred to the chillers. The chillers should have the capacity to store 3 days
slaughter (1,200 halves). The chillers are loaded one by one and then closed for the start
of a programmed cooling cycle. Cooling programs will specified to carcass weight and
quality norms. Chilling starts at approximately -120C and ends up after approximately
to +20C. The carcasses are taken out for deboning or external wholesale after 48 hours.
The chilling system consists of 6 + 1 chambers is smaller and is used for detention
purposes.
7.5.5
Area:
De-boning and Packing Department
600 sq. Metres
Equipment and Function: Rail system for the incoming quarters where the saw precuts are made. The quarters are then distributed to the manual de-boning stations with
44

cutting table, height adjustable hook holders and washing/sterilizer unit at each
working station. The de-boned products are then transferred by belt conveyors to the
end of each line. Products are sorted in trimmings, different cuts and bones. De-boned
cuts end up on rotating tables for sorting and packing. In the packaging area, there
should be installed a vacuum packing machine for 30 kilogramme packages.
Further specifications for the packaging system are to be solved together with the
responsible functions for Marketing and Distribution.
Connected directly to the packing area is where de-boned products are stored. To use
the chilled area as efficiently as possible, packages should be pullet handled by forklift
truck and placed in racks. The temperature has to be kept at +20C. Scales for pallet loads
and for separate packages play the role of control and the role of giving accurate
delivery weights.
Yield control is one of the most important factors to watch if a meat industry is to be
profitable. The delivery gates shall be equipped with flexible Hermetic Doors which suit
the fleet of trucks for distribution.
7.5.6
Administration, Information, Education, Staff and Sanitary

Facilities
These units are placed in a separate building in front of the Production Plant. The
sanitary part is roofed on top of the production areas. Personnel to different hygiene
areas must not cross each other. Laundry and changing rooms should be arranged in
direct connection to the sanitary system.
The size of information and education facilities have to be considered in relation to the
role of the centre for further development that the abattoir should play.
7.5.7
Heating Centre
Heating is mainly used for the heating of water.

For washing purposes, the water temperature is 450C. This has to be distributed to all
operation stations where it is needed.
For sanitation purposes, the temperature level of 600C is suitable. Pre-rinse is to be done
with cold water.
45

The highest temperature system with minimum 820C is used for sterilization of manual
tools and machineries and this sterilization shall be done each time a new carcass comes
to the operator or to the machine.
To guarantee correct temperature level, the temperature system must be designed as a
circulating system.
The abattoir is proposed to have a hot water boiler at 900C with a buffer tank to
equilibrate peak effect and to minimize the boiler capacity. Other water temperature
levels are blended in a shunt system.
The boiler should have burners for alternative fuels. Biogas, Propane and Heavy Fuel
Oil are the options. Steam is only needed at the offal-sterilizing cooker. The proposal is
that a separate small steam boiler shall be placed in connection of the cooker in order to
minimize losses and to use the biogas where it is produced.
7.5.8
Water Purification
Depending on incoming water, purification is to be designed accordingly. Some kind of

chlorination and automatic control of chlorine surplus is needed. Bad incoming water
would also need to pass through filters to take away metals and to make the water
softer. To secure water supply, a buffer tank (reservoir) is recommended. Water control
and logging of water control tests are very important factors to achieve, e.g. USA
approval.
7.5.9
Offal and Water Effluent Treatment
Condemned material and other inedible products have to be processed in a secure and
well-defined process. The most accepted process is to grind and cook the product under
pressure for a given time. This is a guarantee that all products are sterilized properly.
When the production volume increases, it is advisable to have two cookers where one is
to be loaded when the other is in the processing cycle. The backup capacity will also be
solved when using two cookers.
Normally such a plant is followed by pressers, centrifuges, filters, evaporators and a
mill to produce bone meal and technical fat. These plants are heavy in investment and
use a lot of energy. Taking into consideration the relatively high energy costs, the world
market with surplus meat/bone meal, and the controversy of using this protein source
for livestock feeding purposes - an alternative process is therefore proposed.
46

After the cooking process, the sterilized mixture is directly pushed into an anaerobic
digester by the over-pressure in the cooker.
The digester is a cistern with internal mixing facilities with a v-shaped bottom outlet for
bone particles, sludge outlet in the middle and a top outlet for produced biogas. The
size of the cistern should be designed to keep 30 40 days production. Contents from
stomach and casings could be treated directly in the digester for gas production.
One kilo (dry matter) could produce 400 600 litres of methane in the anaerobic
process. Depending on the temperature chosen, the bacteria for gas production are
either mezophilic (350C) or thermophilic (550C). The sludge which has been
anaerobically treated is a very good fertilizer and the ammonia content is very high.
The digester operation has to cooperate with farming operations in order for it to have
large enough cultivated land where the sludge produced can be spread. This land area
should be in the vicinity of the facility in order to minimize transportation costs.
Depending on the possibility of connecting the effluent flow to a treatment plant or not,
the internal treatment of effluent has to be designed accordingly. A complete treatment
plant includes screen, flotation and chemical flocculation. If additional treatment to
screening is needed it is recommendable to choose an integrated effluent treatment
plant. These units are well functioning and cost competitive in terms of investment. The
sludge from such a unit should be treated in the digester where especially the fat
content is converted to biogas.
47

Figure 8: Proposed Abattoir Layout Plan
Cooker,
Digester, effluent
Slaughter
Exp. area
Power Centre
Chillers
Lairage
De-boning
Delivery
Administration/Training
48

7.6
Slaughter House Equipment
The following tools will be used in slaughtering and meat processing
Meat processing plant

Blast freezers and chillers
Deboning and vacuum packing machine
Waste water treatment plant
Weighing scale
Conveyor/hooks
Trolleys
S.S hooks with bearing
Overhead mobile hook
Chiller Hooks
The following office equipment will be required:
Telephone with connection

Fax machine
Computers
Printers
Furniture and Fixtures
The plant will have the state of art slaughtering and storage facility.
7.7
Miscellaneous Abattoir Equipment
In addition the abattoir will require the following equipment and support facilities:
Chillers to hold 6 days pre-market kill.

20-ton chiller (for chilling green hides).
Refrigeration Plant.
Stand-by generator 150 KVA.
Laboratory Equipment.
Maintenance workshop including necessary equipment and tools.
Scales.
Vehicles.
Blast Freezer and edible offals with carton racks and pallets.
Skins, Casings and Rendering Departments containing deslimer, strippers.
49
Engine Room, Refrigeration Plant and stand-by generator.

Water Storage.
Amenities Block including washrooms, laundry, kitchen, and dining room,
Office Block with offices for General Manager, Chief Engineer, Veterinary
Surgeon, Accounts Marketing Manager, Veterinary Laboratory Technologist,
Cashier, Stores, etc.
7.8
Technical Staff Requirement for Slaughter House
As no modern fully automated slaughter house exists in Uganda, the project sponsors
will have to train local labour for its operation. Semi-skilled and unskilled labour with a
family tradition of working in the meat value chain are readily available in the area. In
addition, the required managerial staff are also readily available as are the veterinary
staff for checking the animals.
7.9
Transportation of Meat & Other Vehicles
It is anticipated that the transportation of goat and sheep meat for the local market will
be done in the Companys own refrigerated trucks/vans (15 units). The goat and sheep
meat will then be sold in Kampala City through the Companys own cold-chain
distribution outlets which have the provision for keeping the meat at the correct
temperature. The Companys vehicle fleet will also include 10 units of 4WD doublecabin pick-ups for inward transportation of other industrial consumables and outward
movement of hides and skins; 15 units of standard livestock transportation trucks; and
10 executive coupes for Company top level management.
Table 15: Type and Cost of Vehicles
S/No. Vehicle Type
No. of
Units
1
Executive Coupes
10
2
4WD D/Cabin Pick-Ups
10
Unit Cost
(USD)
15,000
Total Cost
(USD)
150,000
20,000
200,000
Livestock Trucks
15
35,000
525,000
Reefer Trucks
15
50,000
750,000
TOTAL
50
7.10
1,625,000
Utilities
Both water and mains power electricity are vital service utilities in the smooth running
of the proposed abattoir project.
50

Water: - a requirement of not less than 400,000 litres [400 cubic metres] per day of
operation will be met from the Masaka urban area water-supply network.
Electricity: - The proposed abattoir site at Lutente abuts on the Mbarara Masaka
Kampala highway with an overhead 132 KV power grid line from Jinja town [the
principal source of hydro-electric power generation in Uganda]. This 132 KV power
grid line which was extensively rehabilitated in 1996 by UETCL and the up grading of
the UEDCL sub-stations in the area adjacent to the site of the proposed plant will ensure
a stable and adequate power supply to the abattoir plant.
As a contingency power-supply measure to address abrupt or sudden and unexpected
power outages, a full load standby generator will be provided.
The total installed load of the plant will be to a maximum of 3,000 KVA, however the
actual demand would be around 1,000 KVA (approx. 15,000 KWH/day).
7.11
Plant Building Lay-out Costs
As per Schedule 02 a building plan layout for the proposed goat and sheep abattoir
plant is shown in Table 16 below. Budget cost estimates are indicated as follows:
Table 16: Building Lay-out Costs
S/No. Particulars
Area
Coverage [sq.
Metres]
Unit Cost
(USD)
Total Cost
(USD)
Holding Pens
400
400
160,000
Slaughter Process
600
400
240,000
Chilling Area
800
1,000
800,000
By-products Area
200
500
100,000
De-boning Area
600
1,000
600,000
Packaging
200
1,000
200,000
Terminal
200
500
100,000
Power Centre
300
1,000
300,000
Administration/Hygiene
300
1,000
300,000
10
Information/Education
200
1,000
200,000
TOTAL
3,800
51
3,000,000

8.0
ABATTOIR LOCATION
8.1
Location of the New Abattoir
Currently 60% of the cattle in Uganda are found in the Western and Southern parts of
Uganda. These are therefore the main catchment areas for animals. There are two main
axes to Kampala from the cattle catchment areas, namely the Western Axis and the
Luwero Axis just to the north of Kampala.
The selection of the abattoir site at Lutente in Kalungu district along the Mbarara
Masaka Kampala highway by EAST AFRICAN MEAT PROCESSING LTD was
decided upon after a detailed consideration of the following factors:
Proximity to suitable producer areas.

Proximity to transportation nodes for distribution and for livestock.
Transport of animals should be as short as possible to avoid quality losses and to
provide humane and careful handling of animals.
Livestock movement options e.g. on hoof, rail and road.
The market for beef products put out by the abattoir should be within easy reach
of the abattoirs location in order to minimize transport time and costs. This
mostly applies to products which cannot be preservable treated e.g. offals.
Availability of suitable land in terms of size, animal health, cost, etc.
Access to skilled labour source.
Availability of utilities such as electricity, water, sewer, telecommunications,
solid waste disposal, etc.
Proximity to farm lands for sludge and manure utilization as fertilizer.
Proximity to downstream and supporting industries.
Herd and DFZ development in other areas of Uganda.
Socio-economic effects.
Proximity to regional and export markets.
The proposed abattoir plant has a very close connection to the Kampala market. The
abattoir site is linked to Kampala by a 120 km all-weather road that takes a 2-hour drive
to deliver the products to market. The rationale used in the selection of this site is based
on the consideration that the plant must be as near as possible to the main cattle
production areas in South-Western Uganda in order to avoid incremental costs on the
main raw material inputs [cattle] to the abattoir plant, while at the same time being
close enough to Kampala area [where domestic demand is strongest] in order to move
the chilled quality carcasses and other by-products to market in a relatively short time
period [4 hours].
52

8.2
Lutente Site
The proposed site of approx. 237 acres is located at Lutente in Kalungu District along
the Mbarara Masaka Kampala highway. It is identified as being ideally located in
relation to accessibility, proximity to a UEDCL Sub-station, and NWSC water supply by
virtue of being close to Masaka town. The topography of the area is also suited to the
construction of a modern standard-sized abattoir plant. In addition, the size of the site is
such as to allow for future expansion beyond the present proposed abattoir plant.
The said industrial plot of land is fully owned by EAST AFRICAN MEAT
PROCESSING LTD with full land registration and legal mandates. The Title Deed
coordinates are: Buddu Block 948, Plot 11 at Lutente, Kalungu district.
53

9.0
HYGIENE STANDARDS
9.1
Criteria for Laboratory
In order to prevent contamination the plant will comprise of laboratory, where experts
will perform tests to enable them to testify to the meat being healthy for human
consumption.
The essential elements for a good laboratory that will stand the test should cover the
following areas:
Organization and Management

Quality Systems
Audit and review
Laboratory design
Sample handling
Equipment
Calibration
Methods of analysis
Quality control
Records and reports
9.2
Abattoir Buildings and Premises
Abattoirs and de-boning/cutting establishments must at all times be with the following:
The site should be properly fenced in such a way that the movement of man and
animal can be controlled.
Roadways and walkways on the premises shall be paved and drained.
Proper off-loading facilities should be available.
Facilities/premises should be available for all the operations which are taking
place within the establishment.
Proper ablutions and dining facilities for the personnel of different categories that
include meat-handling workers and non-meat handling workers should be
separated. Veterinary staff should have their own facilities.
There should adequate facilities for the disposal of non-edible offal, effluent and
waste.
There should be separate ablution, dining and office facilities for the veterinary
inspectorate personnel.
54

The facilities mentioned must be arranged in such a way as to ensure a proper
flow of product, avoiding back-tracking and mixing of clean and dirty
products and operations.
9.3
Basic Operations Requirements in the Abattoir
Animals should be off-loaded, handled, lairaged and stunned in a humane

manner.
The site and buildings shall be continuously kept clean and tidy.
Water of the required quality should be available under sufficient pressure
during the production time of the establishment.
Hot potable water at 820C or higher should be available during production time
for the sterilization of equipment and at approximately 400C for the washing of
hands, arms and aprons.
Hand-wash-basins and sterilizers should be available at suitable points
throughout the establishment. Disposable towels in dry areas and soap in all
areas shall be supplied at hand wash facilities during the production time.
Personnel should be issued daily and more often if necessary with suitable clean
protective clothing.
Personnel should wash their hands, arms and aprons at regular intervals or
directly after becoming contaminated with stomach or intestinal contents, pus,
bile, urine, etc., and wash their hands directly after visiting a toilet.
All edible products must be handled off the floor as far as possible.
Procedures and methods applied should ensure that contamination of edible
product is avoided at all times.
A detained room must be provided for at an appropriate location off the main
beef line.
An emergency slaughter gate should be provided for in the design.
A separate measles (C. Bovis) chiller must be provided for.
No wood or cartons should be allowed in a room or area where exposed meat is
handled or stored
Walls, floors, working surfaces and equipment must be kept clean at all times,
and equipment coming into contact with edible product must be sterilized
regularly.
Proper measures should be applied to exclude flies, birds and vermin from the
premises.
Workers handling clean material or working on the clean side of the abattoir
must refrain from enter dirty areas, or handling dirty areas, or handling
dirty product.
55

Beef, mutton and goat meat must be chilled directly after being passed as fit for human
consumption to a temperature not exceeding 5 7 degrees Celsius, and poultry meat to
a temperature of 8 10 degrees Celsius or less.
56

10.0
KEY FACTORS TO THE PROJECTS SUCCESS

10.1
Supply
One must foresee regular supply of cattle to the abattoir in order to limit the duration of
stabling. Depending on the case, the animals will be led to the slaughterhouse (with
weight loss if distance is long) or transported by truck or train (taking into
consideration the logistical infrastructure in the choice of a building site).
In the second case, foresee a period of stabling to reduce the consequences of stress.
10.2
Technology and Equipment
The conception is a matter for specialists familiar with the problems of construction, the
choice of techniques for production of fluid, process and work methods for slaughtering
lines, regulations, etc.
The choice of the building site for the abattoir must take into account local criteria (land,
geographic location, drainage) and sanitary standards.
These standards aim to separate the unclean system (evacuation of scraps, delivery of
live animals ......) from the clean system (carcasses cleaned and refrigerated offals
.......)
As for construction, one must underline the importance of the extra cost linked to the
exploitation of the abattoir and the equipment suspended from the secondary
framework. The secondary framework is closely linked to the equipment and rests
either on the principal framework of the building (90% of the cases) or on independent
posts attached to the floor (in cold rooms)
Required Fluids: cold water, sterilized hot water 450C, hot water 900C, compressed air,
cooling fluid (water with glycol or ammonia for above 00C cold).
Vapour: not necessary, except if one plans a secondary treatment of casings (cooking).
The majority of the calorific needs will be produced by recovery of heat from the cold
system.
Negative cold: the advantage of freezing must take into account the program and
standards of hygiene. To avoid overly complex installations, plan on an installation for
direct expansion with R22 of R502.
57

From the first conception of the slaughterhouse, one must foresee the range of animals
to be produced in order to eventually install an additional pig or sheep line. A sanitary
slaughterhouse is obligatory if it is conceived according to EEC standards. It comprises
one room for the manual slaughter of sick animals, another for sanitary carving, a
refrigerator for barred meat and another for seized meat.
10.3
Personnel
A training session in hygienic regulations is essential for all personnel (ensure in

particular that the meat is not exposed to or in the outside air while the trucks are being
loaded and that all the equipment and tiling are washed frequently). Personnel must
observe strict standards of personal hygiene.
10.4
Quality Control
The quality of the meat depends on the quality of the livestock.

Veterinary control of livestock and carcasses.
General hygienic plan (including hygiene training for personnel).
Adequate pre-refrigeration of the carcasses (cooling is a key factor for the quality
and good preservation of meat in storage).
10.5
Distribution and Commercialization
Carefully monitor the cold chain and the duration of the forwarding of products to the
consumers. The slaughterhouse will supply meat carving units to distributors.
10.6
Financing
The abattoir is generally looked at as a public service, open to diverse users. The profit
of the slaughterhouse is calculated per head of slaughtered cattle. In this case, there is
no stock to foresee and the required working capital needs only to take into account
users terms of payment.
58

11.0
GOVERNANCE AND MANAGEMENT STRUCTURE

11.1
Governance Structure
It is proposed that a special purpose company be set up to establish and operate the
proposed abattoir unit.
Corporate Governance is a set of institutional and market-based mechanisms that
encourage controllers of a company to maximize the value of a company for its owners.
The conduct of the corporation is a three-way process involving the board of directors
representing the shareholders, top management and employees. At the core of
corporate governance is empowerment at all levels shareholders, the board and top
management. The law applicable to a company is the law of the country.
Principles and rules of corporate governance need to be laid down in the Articles and
Memorandum of Association (Incorporation) and the Regulations of Board of Directors.
The proposed governance structure is illustrated on the following page.
The business of EAST AFRICAN MEAT PROCESSING LTD is to be managed under
the directions of the Board of Directors. The Board will be responsible for establishing
broad corporate policies and for the overall performance of the company. The core
responsibility of the directors is to exercise their business judgement and to act in what
they reasonably believe to be in the best interests of the company.
The Boards Corporate Governance Committee is required to review the principles and
rules regularly in the light of prevailing best practices and it is required to forward
suggestions for improvement to the Board for approval.
The Boards Corporate Governance Committee is also responsible for considering
matters of corporate social responsibility and matters of significance in areas related to
corporate public affairs and the company employees and shareholders.
The Boards job should be to create and maintain a structure that will ensure harmony
and cooperation between management and the employees in pursuing the goals and
objectives of the organization rather than simply rubber-stamping the actions of
management.
The Boards Audit Committee will have two fundamental responsibilities; internally it
will oversee the annual external audit to ensure the accuracy and integrity of the
financial statements as required by legislation. It will also ensure that there are no
59

breakdowns in corporate governance rules and procedures, including the rules of
ethical conduct and internal control. The Audit Committee would also be the practical
monitor collecting information regarding corporate misconduct and encouraging those
with such information to come forward.
Figure 9: Proposed Governance Structure
The Company
Share Holders
Corporate
Governance
Structure
Board of
Directors/Chairman
Corporate Audit
Committee
Chief Executive Officer

Internal Auditor
Manager Quality
Assurance
Manager
Finance
11.2
Plant
Manager
Manager
Procurement
Manager
Marketing
Manager
HR &
Admin
Management Structure
The paramount duty of the Board of Directors is to select a Chief Executive Officer
(CEO) and to oversee the CEO and other senior management staff in the proper and
ethical operation of the company.
The Board would identify, and periodically update the qualities and characteristics
necessary for an effective CEO of the company. With these principles in mind, the
Board should periodically monitor and review the development and progression of
potential internal candidates against these standards.
The CEO will be in-charge of the day-to-day management of operations and will be
responsible for ensuring that the company and management functions are organized,
run and developed in accordance with the law, Articles of Association and decisions
taken by the Board, and the Annual General Meeting of the Shareholders.
60

The management structure, presented in Figure 5, comprises of various departments
including plant operations, procurement of cattle, sheep and goats for slaughter and
processing, quality assurance, human resource, finance, marketing & sales, internal
audit and field staff.
The structure is characterized by clear assignment of responsibilities as well as a
reduced number of interfaces.
The selected CEO will be responsible for delivering policy and performance for
customers, society, staff, suppliers and the business.
11.3
Live Animal Procurement & Transportation
This department will be responsible for purchasing live animals from the local animal
markets, the success of the project will hinge on this crucial function, as it will only be
successful in the long run if it is able to have a secure and regular supply of healthy
animals at competitive prices. In addition to the purchase of the animals, it will also be
ensured that the animals are not stressed during transportation. For this purpose, EAST
AFRICAN MEAT PROCESSING LTDs own transportation will be used. Each animal
purchased will be marked by the purchase team to ensure that it can be if required,
traced back to the supplier. As a control measure, all animals will be weighed and
checked to ensure that the correct rates have been paid for the animals purchased. In
addition a team will also visit the farmers to motivate them to raise steer calves for meat
and prices will be ensured so that the farmer can become a regular source of supply of
quality beef and mutton. The department will undertake activities to promote livestock
farming to ensure regular supply of live animals on the same pattern as has been done
by the dairy companies.
11.4
Plant Operations
A Plant Engineer with a degree in food processing will be appointed to run the meat
processing plant after proper training by the plant and equipment supplier. He will be
assisted by qualified and experienced staff including quality assurance staff headed by
a Food Technologist and a Veterinarian who will be responsible for certifying the
quality of meat after slaughter. Very high standards will need to be maintained, as the
only way to break into the highly competitive domestic market. In addition, the urban
consumers will also need to be assured about the quality before they can be expected to
shift from the warm meats that they are currently purchasing.
61

11.5
Marketing and Sales
A Marketing and Sales Manager will head the marketing and sales function; he will
have vast experience in the field of frozen food marketing. In addition, an Export
Manager will report to him as well as a Sales Manager who will be responsible for
looking after sales in urban areas. Initially only Kampala will be targeted. As there is no
comparable distribution model other than that followed by a poultry processing unit a
completely new distribution channel will need to be created. In addition an institutional
sales force will be developed which will sell directly to the larger customers like
Shoprite Supermarkets, Nakumatt Supermarkets, Tuskys Supermarkets, major
hospitals, major institutional buyers like the Ministry of Defence, hotels, large
restaurants, food caterers, etc.
Figure 10: Proposed Management Structure
CEO
Manager Quality
Assurance
Internal Auditor
Manager Plant Meat

Processing
Manager Live
Animal
Procurement
Finance
Manager
Manager
Technical
Support
Technical
Supervisors
Electrician
Accounts
Staff
Cold Storage
Technicians
Logistics
In-Charge
Veterinary
Doctor
62
Marketing
Manager
Export
Manager
Finance Staff
HR &
Admin.
Manager
Local Sales
Manager

11.6
Finance Department
The Finance Department will handle all financial matters in terms of billing, settlement
of invoices, negotiating and finalizing deals, effectively managing the huge amounts of
cash that a business like this generates, managing administrative expenses, etc.
Payment recovery and preparation of accounts in terms of quarterly, half yearly and
annual reports in line with audit requirements will be the other important
responsibilities of the Finance Department. The personnel required will include a
Senior Finance Manager assisted by Accountants and Assistant Accountants.
11.7
Human Resource and Administration
The Human Resource Department will focus on developing the human capital of
EAST AFRICAN MEAT PROCESSING LTD, keeping in mind the underlying
importance of human capital in modern business. The department will take a strategic
approach to human resource management for attainment of organizations strategic
objectives. A professional approach based on maximizing returns on investment
through development of farsighted policies to attract, train, and retain human capita
will be adopted. Additionally, the Department will determine compensations and
grievance handling procedures, set objectives, develop standards, appraise performance
and review results in order to meet the challenges of the present age.
The Administration and Logistics functions of EAST AFRICAN MEAT PROCESSING
LTD will also be handled by this Department. These will include security, sanitation
and hygiene, transport fleet, stores of spares, etc.
11.8
Training Needed
Training will be needed in the area of plant operation as well as processing of the meat
for the local market. As modern meat processing facilities are currently not available in
Uganda, experts having experience of working in the Middle Eastern countries will be
hired to provide training to the local staff who can then take over the operation.
63

Table 17: Management and Staff Costs
S/No. Description
Number
USD/Month
USD/Year
Senior Management Staff
5,000
60,000
Marketing Staff
10
8,000
96,000
Supply Chain
12
10,000
120,000
Lairage
40
10,000
120,000
Slaughterhouse
8,000
96,000
Cattle line
80
28,000
336,000
Goat/Sheep line
12
4,200
50,400
Quality Control Lab
10
4,000
48,000
Rendering
18
7,000
84,000
10
Admin/others
26
10,000
120,000
11
Waste management
TOTAL
20
238
8,000
102,200
96,000
1,226,400
64

12.0
FINANCIAL ANALYSIS
The financial projections for EAST AFRICAN MEAT PROCESSING LTD are
presented in the table and charts of the following sub-topics:
12.1
Important Assumptions
The financial plan depends on important assumptions most of which are illustrated in
the following Table:
The key underlying assumptions are:
We assume that the Ugandan economy grows at an average rate of 6% p.a. without any
major recession in the eight-year analysis period.
We assume that the exchange rate remains stable at an average of UShs. 3,500 to USD
1.0.
We assume that the Ugandan economy remains in a stable non-hyper inflationary rate
of below 5% p.a.
We assume a one-day supply in stocks and one-month credit sales period.
We assume that the proposed abattoir plant will take 8 months to design and build.
We assume that we will grow as managers during the process, this growth will manifest
itself as a flat line expense over the eight-year analysis period, leading to increased
annual cash flow.
We assume access to equity capital and financing sufficient to maintain our financial
plan as shown in the tables and schedules (appended).
We assume increase in popularity of goat/sheep meat and goat/sheep by-products put

out by the abattoir plant at the domestic market level.
65

Table 18: General Assumptions (In USD)
Period
Project Year
Constr
Start-Up
Full Capacity Production

3
10
Current Interest Rate
8.00%
8.00%
8.00%
8.00%
8.00%
8.00%
8.00%
8.00%
8.00%
Long-Term Interest Rate
8.00%
8.00%
8.00%
8.00%
8.00%
8.00%
8.00%
8.00%
8.00%
Corporate tax Rate
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
Sales on Credit %
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
10.00%
Other
Calculated Totals:
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Payroll Expense
1,226,400
1,287,720
1,352,106
1,419,711
1,490,697
1,565,232
1,643,493
1,725,668
1,811,951
Sales on Credit
3,664,716
3,847,952
4,040,349
4,242,367
4,454,485
4,677,209
4,911,070
5,156,623
5,414,455
Accounts Payable
2,357,625
2,474,952
2,598,145
2,727,498
2,863,318
3,005,930
3,155,672
3,312,902
3,477,993
Inventory
7,331,301
7,697,866
8,082,759
8,486,897
8,911,242
9,356,804
9,824,644
10,315,876
10,995,668
66

12.2
Break-even Analysis
The break-even analysis establishes a relationship between operation costs and

revenues. It indicates the level at which costs and revenue are in equilibrium. To this
end, the break-even point of the project including cost of finance when it starts to
operate at full capacity (Project Year 5) is estimated by using income statement
projection.
The projects commercial break-even level (profitability break-even) in Project Year 5 is
calculated below:
Table 19: Break-Even Analysis in Project Year 5 (In USD)
Items
Variable Cost
Fixed Cost
Cost of Sales
Total Cost
29,425,670
29,425,670
1,064,783
354,928
1,419,711
Utilities
533,812
177,937
711,749
Repairs & Maintenance
205,624
102,812
308,435
Sales & Distribution
707,061
353,531
1,060,592
Fuel, oil & grease
809,784
269,928
1,079,712
Cleaning
40,802
20,401
61,204
Packaging
89,331
29,777
119,108
Plant Insurance
88,683
44,342
133,025
Consumables & Contingencies
92,610
46,305
138,915
1,630,750
1,630,750
0
33,058,160
816,000
3,846,710
816,000
36,904,871
Salaries & wages
Depreciation
Financial Expenses
TOTAL
Sales Value of Production
Break-even Sales =
Break-even Sales =
= US$ 42,423,669
3,846,710
1 33,058,160
42,423,669
3,846,710
1 0.779
3,846,710
0.221
US$ 17,424,742
Capacity utilization required to Break-even = US$ 17,424,742 x 100 = 41.07%

US$ 42,423,669
Margin of Safety = 100% 41.07% = 58.93%
67

12.3
Introduction
For the purposes of this Study we have assumed a loan of USD 13,302,500 is made
available to the business.
The business plan tests the viability/profitability of the project against an interest rate
of 8.00%. Repayment will commence in Year 3 after a 2-year grace period.
The loan will cover the cost of abattoir plant and development of building
infrastructure and other civil works.
An exchange rate of UgShs 3,500 to USD 1 has been used for purposes of this document.
12.4
Goat/Sheep Meat Products and Throughput
The financial model has considered as a straight-line goat and sheep meat output
operation of 12,672,000 kilogrammes per annum from Year 2 to Year 10 of the project.
The combined goat and sheep meat and goat/sheep by-products abattoir plant will
intake cattle/goats/sheep and salt for 7 days per week for a cumulative total of 360
days per year.
12.5
Project Investment Cost and Financing Plan
The estimated total capital investment cost of the proposed EAST AFRICAN MEAT
PROCESSING LTD goat and sheep abattoir plant is put at USD 16,622,500. Out of this
total capital investment cost, USD 320,000 is for the existing land asset and site
development; USD 3,000,000 will be committed to development of buildings and civil
works; USD 10,657,500 will go towards purchase of assorted abattoir plant and
equipment plus plant and machinery for the associated animal waste by-product
processing industries; a further USD 650,000 is to be spent on spare parts for the
abattoir plant and machinery equipment; USD 1,625,000 will be used to purchase and
equip operational facilitation vehicles for the abattoir plants transport/distribution
operations; while the balance of USD 120,000 will be dedicated to coverage of abattoir
plant construction costs; a further USD 250,000 is to spent on acquisition of office
equipment and furniture and fixtures.
Project finances shall principally be raised through a medium-term loan totalling USD
13,302,500 [approx. 80% of Total Capital Investment Cost] and an equity-asset
contribution of USD 3,320,000 [approx. 20% of Total Capital Investment Cost]. The
medium-term loan will be secured by taking a first legal charge on the landed cost
value of the assorted abattoir plant equipment and machinery plus the cost of
acquisition and development of buildings and other related site infrastructure for which
it has been used to finance.
68

The sequestration of the abattoir plant project finances by investment category and
source are comprehensively detailed in Schedules 02/1 and 02/2. Table 18 below,
summarises the estimated project costs and financing plan respectively.
Table 20: Investment Schedule of the Goat & Sheep Abattoir Plant
No.
Item
Local
Foreign
Currency
Currency
[USD]
[USD]
A
1
Project Capital Investment

Land
Total [USD]
320,000
320,000
3,000,000
3,000,000
10,657,500
10,657,500
Spare Parts
650,000
650,000
Construction Cost
120,000
120,000
Vehicles/Trucks
325,000
1,300,000
1,625,000
250,000
4,015,000
0
12,607,500
250,000
16,622,500
B
1

Total Project Cost
Project Financing
Medium Term Financing
695,000
12,607,500
13,302,500
Equity Contribution
3,320,000
3,320,000
Total Financing
4,015,000
12,607,500
16,622,500
12.6
Goat/Sheep Stock and Throughput
The financial model has considered an abattoir production rate of 2,000 heads of
goat/sheep and 200 cattle units per day. The abattoir will process these numbers for 7
days per week, for 52 weeks per year [this equates to 720,000 goats/sheep and 72,000
cattle units per year]. These numbers are feasible.
The average Boer x Mubende goat weighs 30 35 kgs and yields a 16 kg carcass and 3.5
kilogrammes of by-product. The average sheep weighs about 32 kgs and yields a 20 kg
carcass and 3.5 kilogrammes of by-products.
The average head of cattle weighs 400 kilogrammes and yields a 208 kilogrammes
carcass. 41.6 kilogrammes of by-product are yielded off each head of cattle, and a hide
of approximately 30 kilogrammes.
69

12.7
Cost of Sales
The abattoir will buy goats, sheep and cattle from the farmers. A goat yielding a 16
kilogramme carcass currently costs USD 30. A sheep yielding a 20 kilogramme carcass
costs USD 40, and a cow yielding a 208 kilogramme carcass currently costs USD 238. It
will cost approximately USD 14 per animal to transport it to the abattoir.
12.8
Financial Performance
Summarised income and expenditure forecasts have been compiled and are set out in
Schedules 04, 08, 09 and 10 respectively. These projected financial figures are based on
the assumption that the abattoir plant is established and operating effectively.
Taxation has been provided at the company rate of 30% subject to possible incentives
that may be allowed by government. These incentives include allowances for plant and
machinery (75% for plant and machinery used in the operations situated outside the
major cities) and 20% on industrial buildings.
The effect of these allowances will not effect the forecast profitability reflected in the
financial tasks presented but will have a favourable effect on the cash flows in the early
years of the operation.
12.9
Basis of Preparation
The generation of cash is crucial in sustaining any business, but for the purposes of this
initial study the forecast profit and loss account have been prepared on the cash basis of
accounting.
For the purposes of illustration all receipts and payments have been reflected on a
cash basis.
12.10 The Vehicle
As an industrial/commercial venture of a high profile, it is imperative that the new
abattoir plant employs the most transparent, ethical and responsible manager to run the
business.
To this end, we would suggest the following governance mechanisms: -
70

A small but efficient Board of Directors be appointed to guide and control the company.
Only people who have the necessary time to devote to the business should be
considered.
Sound accounting and internal controls to be followed.
By running a business through a company the most efficient tax mechanism can be
planned and staff can be remunerated and employed on an incentives basis.
12.11 The Accounting System and Financial Control
A computerised accounting package will be acquired in order that the financial
condition of the business can be regularly monitored.
We see control over expenditure as a most important issue. The following methods of achieving
sound financial control will be implemented.
Annual operating budget to be approved.
Monthly management accounts to be prepared on a timely basis and any capital
expenditure and all major running expenditures will have to be approved by the Board.
Audit shall by a reputable firm of auditors with expertise in the industry that can offer
business solutions.
12.12 Security
In order to safeguard the assets of the business security measures shall include: Security fencing.
Security guards will be hired.
Stock taking of assets will be carried out on a regular basis.
Equipment will be insured.
71

Table 21: Summary of Financial Projections (In US$)
Year 1
Sales
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
36,647,160
38,479,518
40,403,494
42,423,669
44,544,852
46,772,095
49,110,699
51,566,234
54,144,546
Operating Profit
6,862,827
7,212,619
7,579,902
7,965,548
8,370,477
8,795,652
9,242,085
9,710,841
10,203,034
Tax
1,739,588
1,423,776
1,478,370
1,634,864
1,797,143
1,965,495
2,140,226
2,321,652
2,510,110
Net Profit / [Loss]
4,059,039
3,322,144
3,449,531
3,814,684
4,193,334
4,586,156
4,993,860
5,417,189
5,856,924
Gross Margin
30.60%
30.60%
30.60%
30.60%
30.60%
30.60%
30.60%
30.60%
30.60%
Operating Margin
18.73%
18.74%
18.76%
18.78%
18.79%
18.81%
18.82%
18.83%
18.84%
Net Margin
11.08%
8.63%
8.54%
8.99%
9.41%
9.81%
10.17%
10.51%
10.82%
Return on Investment
23.03%
18.85%
19.57%
21.65%
23.80%
26.02%
28.34%
30.74%
33.24%
2.13
2.52
3.03
3.72
3.88
4.89
6.43
9.04
14.33
Fixed Assets Turnover

Debt Coverage Ratio
2.44
2.27
2.49
2.73
3.01
3.34
3.71
4.15
Times Interest Earned Ratio
6.78
7.96
9.76
12.31
16.17
22.65
35.70
75.02
72

12.13 Summary and Results
Research indicates that the potential market for goat/sheep and goat/sheep meat byproducts is significant and increasing; both on the local and export fronts, but that
concentration on the local market is ultimately the more lucrative.
12.13.1
Working Capital Provisions
Working capital provisions have been computed basing on assumptions shown in

Schedules 04/1 and 04/2. The result shows that the Net Working Capital builds up
from USD 7,656,316 in the first year of operation (Year 2) to USD 11,413,371 by the
ninth year of operation (Year 10). This increase in working capital reflects the steady
growth character of the abattoir plant project as its able to access the market fast and
gain the confidence of the market. For more details - Schedules 04/1 and 04/2 refer.
12.13.2
Profitability
On a yearly basis the company is profitable from the first year. The investment outlay is
reasonably high (USD 16,622,500) although it is profitable. This is shown by:
An Internal Rate of Return (IRR) after tax of 35.91%.
A Net Present Value (NPV) of USD 12,311,874 at a discount factor of 17%.
30.6% right from the first year (Year 2) through the ninth year (Year 10) of abattoir plant
operations. The operating effectiveness of the company is reflected in the nine-year
business operational period operating margin of not less than 18% - Schedule 10 refers.
12.13.3
Liquidity
The abattoir plant project will require a medium-term credit financial injection in the
year of investment (i.e. First Year of Project) to procure capital equipment and other
essential operational inputs, commission the abattoir plant and finance working capital.
Basing on the forecast attainable levels of the abattoir plants operational output, the
project is shown to generate a strong cash flow position that spectacularly rises from a
deficit USD -6,087,702 in the first year of operation (Year 2) to a robust surplus figure of
USD 4,865,552 by the ninth year of operation (i.e. Year 10) Schedule 08 refers.
The company is able to comfortably cover its medium term debt obligations right from
the first year of operations. The Debt Service Coverage Ratio is 2.44 in Year 3 and the
73

Times Earned Ratio is 6.78 rising to 4.15 and 75.02 respectively in Year 10 Schedule
13 refers.
12.13.4
Leverage
The project has a sound capital structure with a debt to net worth ratio in the first year
(i.e. Year 2) of the project of 0.64 that progressively reduces to 0.04 by the ninth year (i.e.
Year 10) of the project when most of the principal debt and interests shall have been
fully discharged. The loan is therefore adequately secured and there shall be no
recourse to additional collateral or security provisions Schedule 13 refers.
12.14
Sensitivity Analysis
In order to test the viability of the abattoir, a number of key parameters used in the
financial model were subjected to a sensitivity analysis. These are summarized in Table
22 below:Table 22: Sensitivity Analysis (In USD)
Items
PAT
BEP
IRR
Payback
Base Case
3,814,684
41.07%
35.91%
3.80 Yrs
Increase in Operating Costs by 5%
3,638,548
42.65%
34.93%
3.88 Yrs
11,238,826
19.26%
75.12%
2.35 Yrs
Decrease in Raw Materials by 10%
5,874,480
31.25%
47.10%
3.35 Yrs
Increase in Raw Materials by 10%
1,754,887
59.89%
24.33%
5.05 Yrs
Selling Prices up by 25%
Key:
BEP:
IRR:
PAT:
Break-Even Point
Profit after Tax
74

13.0
PROJECT ECONOMICS
13.1
Jobs Creation
The EAST AFRICAN MEAT PROCESSING LTD abattoir plant project will create 238
direct employment opportunities and thousands in indirect jobs through the interlinked
induced activities.
The net employment effect is generally expected to grow in tandem with the
establishment of the abattoir plant project and the consolidation of its business/
marketing position within the local and export market frameworks.
The throughput of the medium-scale abattoir plants goat/sheep meat and goat/sheep
by-products on the local market will definitely induce a positive beneficial growth
impact on other inter-related areas that will lead to the creation of more jobs for a broad
category of both skilled and semi-skilled labour.
As a measure of national economic benefit, the calculation below gives an indication of
the investment to jobs created ratio (Over the 10-year financial analysis period).
Investment to Jobs Created Ratio (IJCR)
$16,622,500 = USD 69,842/job.
238
13.2
Government Revenue
The EAST AFRICAN MEAT PROCESSING LTD abattoir plant project is vested with a
sustainable and financially sound income-generating base that will yield substantial
revenue for the Government Treasury in the form of Corporate Income Tax (CIT) and
personal income taxes paid out annually. Financial analyses in Schedules 09 and 11
show its Corporate Income (taken at 30% of gross income) to build up incrementally
from USD 1,739,588 in Year 2 of the project to a high of USD 2,510,110 in Year 10 of the
Project.
This totals out to an impressive USD 17,011,225 paid out by the enterprise [EAST
AFRICAN MEAT PROCESSING LTD] to the Government Exchequer through the first
eight years [seven business operational years] of the Projects life. Practically, this
translates to an annual average tax pay out of USD 1,890,136.
75

The project management however generally expects to surpass these corporate tax
revenue projections by exceeding the stated sales projections and thus make bigger
Corporate Income Tax revenue cheques to Government a feasible and practical reality.
13.3
Development
An abattoir can be conceived as a tool for both economic development and sanitary
control of a line of breeding slaughtering marketing of meat.
The processing of by-products permits development of various induced activities:
working of leather, processing of casings, carcass disposal [tallow, gelatine], blood
meal.
A meat carving unit can associate itself with an abattoir if the market demands
elaborate and semi-elaborate products.
13.4
Value Added
The value added as a percentage of gross sales is an average 18.39% for the first five
business years of the project (Year 2 Year 6) and is calculated in Table 23 below.
Table 23: Value Added
Description
Year 2
Year 3
Year 4
Year 5
Year 6
Value of Production (Sales)

Less Intermediate Input:
36,647,160
38,479,518
40,403,494
42,423,669
44,544,852
Raw Materials
25,419,000
26,689,950
28,024,448
29,425,670
30,896,953
614,836
645,578
677,856
711,749
747,337
Abattoir Plant Overheads
2,391,072
2,510,626
2,636,157
2,767,965
2,906,363
Depreciation
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
Total Intermediate Inputs:
30,055,658
31,476,904
32,969,211
34,536,134
36,181,404
Value Added
Value Added as a %age of
Output
6,591,502
7,002,614
7,434,283
7,887,534
8,363,448
17.99%
18.20%
18.40%
18.59%
18.78%
27,695
29,423
31,236
33,141
35,141
Utilities
Value Added per Worker
13.5
Conclusion
The economic analysis of the medium-scale goat and sheep abattoir plant project
carried out in the foregoing sections positively indicates this investment to have a
strong and sound commercial viability and also qualifies it as a valuable economic asset
to the nation with numerous visible and other intangible potentialities.
76

14.0
PROJECT IMPLEMENTATION SCHEDULE

14.1
General
It is expected that it will take approximately 12 months to have this project put into
operation from the day funds for its execution are secured. The preparatory stage which
involves the eventual approval for funding is assumed to take 3 months from the date
of its final submission to project financiers by the project promoters.
14.2
Project Stage
Once funds for the project are secured, initial work envisaged will involve detailing of
project building designs, appointment of contractors for the development of the site and
buildings. This work is expected to take one [1] month.
This would be followed by the building construction phase expected to be completed in
nine [9] months.
Identification of equipment suppliers and making of orders will have already been
initiated once the erection of building structures has got underway. It is expected that
once construction work has completed at least 50% of its schedule, firm orders for
equipment will be made by opening Letters of Credit in favour of the identified
substantive suppliers abroad.
Delivery of equipment is expected to take some 3 months after the opening of Letters of
Credit. Throughout the project time all preparations for procurement and delivery of
local materials will be made.
Equally important will be the arrangement for the supply of raw materials [including
cattle and salt] to the abattoir. To this end, EAST AFRICAN MEAT PROCESSING
LTD will launch a concerted effort to identify the most resourceful and pricecompetitive local cattle markets, farmers and farmers groups, as well as large-scale
ranchers in the Western cattle axis who can be contracted in the mid-term to supply
regular and consistent deliveries of animals to the abattoir on a sustained basis.
The General Manager of the plant will be recruited once civil works are complete and
equipment is about to be shipped. He would at this stage be sponsored on a study tour
to visit similar abattoir plant establishments in Kenya, Botswana, Namibia or South
Africa for at least two weeks to familiarise and acquaint himself with abattoir plant
processes and functions and then use the knowledge so acquired to run the EAST
77

AFRICAN MEAT PROCESSING LTD goat and sheep abattoir plant as efficiently and
competently as possible.
The abattoir plant equipment suppliers technicians and consultants will supervise the
installation which is expected to last one [1] month. Staff recruitment will also be done
at this stage of equipment installation ready for the start of operations.
An electrician is expected to be part of the installation work force so that he is able to
follow up issues promptly and effectively.
78

Figure 11: PROJECT IMPLEMENTATION SCHEDULE
Activity
Duration
1. Acquisition of Project Funds
Months
0
Period in Months
1
2. Project Bldg Design + Appointment

of Contractors
3. Infrastructure/Site development
4. Identification of Equipment
Suppliers/
Opening of LCs and Order of Equipmt
5. Shipment and Delivery of Abattoir

Plant Equipment & Machinery
6. Installation of Abattoir Plant Eqpmt
7. Arrangements for Raw Material

Supplies
8. Build up of administration,
recruitment & training of staff
and labour
9. Commissioning of Plant
10. Commencement of Commercial

Production
79
10
11
12
13
14
15
16
17
18
19
20
21
22
23

15.0
ENVIRONMENTAL IMPACT ASSESSMENT

15.1
i.
Abattoir Site
Location:
a. It is proposed that the abattoir be located within the FMD [DFZ] to meet
future requirements of the international market. Our suggested site is in
south-western Uganda in the new district of Kalungu at Lutente along the
Mbarara Masaka Kampala highway.
b. The location of the proposed abattoir in a designated DFZ outside of the
capital city Kampala will enable it to take in animals from cattle farmers
operating both within the DFZ and the areas outlying the DFZ but which may
be more distant from the existing slaughterhouses in Kampala.
c. The location of the proposed abattoir will be in a relatively isolated area
without immediate settlements in the surroundings.
d. The location of the abattoir will be near enough to livestock ranches and
animal concentration routes. Our suggested site is on the main highway to
Kampala which ensures ease of delivery.
e. The abattoir will be readily accessible to the local market.
ii.
Water Supply
a. There is an adequate source of water at the proposed abattoir site. The
abattoir will be connected to a municipal water supply system or to a private
source with adequate capacity.
b. An onsite purification plant will be an additional necessity for the abattoir
plant activities.
iii.
Wastewater Management for Environmental Pollution Control

a. Design of the abattoir and its operation should minimize the amount of
wastewater produced and the amount of solids contained therein.
b. Because of substantial wastewater discharges, this abattoir shall have a
functional wastewater handling and treatment facility, which will be either
through connection to the municipal sewer or on-site treatment facilities
(Please, refer to APPENDIX I: PREVENTION OF WASTE PRODUCTS
AND TREATMENT OF WASTE-WATER).
80

iv.
Solid Waste Management

a. A solid waste management system shall be in place to handle the solids
generated at the abattoir.
v.
Public health concerns, occupational safety and hygiene

a. The handling of meat in the abattoir shall be in conformity with international
public health guidelines.
b. National and international standards for consumer meat products shall be
met.
c. Facilities and environmental management will ensure the above.
vi.
Feedlots
a. There will be adequate holding area for the temporary handling of animals
before slaughtering.
b. The large number of cattle contained in the relatively small area, and the
volumes of liquid and solid wastes produced are potential environmental
problems that will need to be dealt with (Please, refer to APPENDIX I:
PREVENTION OF WASTE PRODUCTS AND TREATMENT OF WASTEWATER).
vii.
Non-beef products
a. This proposal includes the provision of a feed mill to take care of the blood,
offal, fats, bones, horns and other by-products, protecting the environment
and at the same time generating revenue for the plant.
b. It is proposed that hides will be sold off to the operational tanneries in the
country.
15.2
Other Considerations
(i)
The availability of a ready supply of livestock should be accompanied by

proper livestock farming methods so as to prevent overgrazing of the land and
related consequences like land degradation.
(ii) The effect of highly contaminated rainwater runoff from the abattoir
[especially the feedlots] on the environment should be taken into account in the
design.
81

(iii) In farmlands, any use of manure for pasture should take into account the
management of runoff so as to control the level of nitrates and other nutrients
into the environment.
(iv) The design and operation of the proposed abattoir plant and ancillary
facilities shall be in accordance with national and international guidelines and
regulations (i.e. UNIDO/EU/USDA abattoir design specifications and
standards).
(v) The need for application of water utility and waste discharge permits, as
necessary, as per the prevailing water use regulations.
82

16.0
CONCLUSION AND RECOMMENDATIONS

16.1
Conclusions
KEY ASSUMPTIONS:Viability is dependent on:

1. Support of the industry and stakeholders [Farmers, Retailers, Consumers, etc.,
and Government, Support Services, etc.]
This will demonstrate that EAST AFRICAN MEAT PROCESSING LTD is
determined to move forward with the Project and would facilitate and encourage
funding;
2. The establishment of a FMD DFZ and that veterinary services are capable of
implementing necessary animal and public health controls within a reasonable
period of time;
3. Improvement of the herd quality within a 3 5 year period to maximize more
lucrative meat export markets;
There is a significant cattle and small ruminant stock population to supply the abattoir
with cattle/goat/sheep meat for local consumption and export. In the longer term herd
quality will improve [3 5 years] and export markets will become more viable and
profitable;
Service supports are essentially in place but need further development and upgrading;
The market would initially be Local and Regional for low grade and manufacturing
type beef. This will require a marketing focus. Regional markets also exist for
sheep/goat meat;
Environmental requirements can all be complied with in the development of the
abattoir.
16.2
Recommendations
Section 12.0 of this Business Plan [Financial Analysis] and the Financial Models in
Schedules 01 14 provide the definitive business plan for this abattoir project. The
83

outcome of these, based on information provided by the specialist studies in the other
sectors has determined that the EAST AFRICAN MEAT PROCESSING LTD abattoir
plant is extremely viable from a financial and commercial standpoint, and it is further
recommended that an early decision to facilitate it with the requisite credit facility be
taken such that implementation of the project follows the fastest possible track for the
benefit of the project promoters, the financiers and the Ugandan economy at large.
84

Schedule 01: ASSUMPTIONS AND PROJECT SUMMARY RESULTS
Number of Weeks a Year
Operational for 52 weeks [360 days] per year
Number of Animals Throughput
Throughput of 2,000 goats and sheep per day
Throughput of 200 cattle units per day
Carcass Weight of Animals
Carcass weight of 16.0 kilogrammes per goat
Carcass weight of 20 kilogrammes per sheep
Carcass weight of 208 kilogrammes per cow
Lairage
Lairage expense has been calculated based on estimated of feed consumed by animals.
Table 24: Lairage Expenses
Lairage Expense
Cost (USD/Animal)
Feed cost Cow
0.80
Feed cost Goat/Sheep
0.30
Lairage expense of USD 0.216 million is estimated for the first year of operation and is
expected to rise to USD 0.319 million at an increase rate of 5% per year.
Input /Output Factors
-
Raw material input factors:
Abattoir Inputs
Heads of goat
Heads of sheep
Salt
Monthly Input Unit

Cost Monthly
Cost
[Units/Month]
[USD/Unit]
[USD/Month]
36,000
30/Goat
1,080,000
24,000
40/Sheep
960,000
0.833 MT
300/MT
250
Maximum capacity utilisation (%):
- 100%
Shifts per day
-2
85

-
Hours per shift
-8
Maximum processing time (hrs/day)
- 16
Years to reach maximum output:
- Year 2
Optimum output (MT of goat & sheep meat/Month)
Utility Services
Service Requirements:Water
Electricity
-
- 1.056 MT
- 16,290 cubic metres/month

- 8,574 kWhours/day
Utility Costs:-
Water (2015/2016 Rates)

* First 500m3 per month
- UShs. 3,376/= [USD 1.00]
* 501-1500m3 per month - UShs. 3,376/= [USD 1.00]
* Over 1500m3 per month - UShs. 2,698/= [USD 0.80]
Electricity Rates
* Retail tariff Unit Charge per kWh
* Fixed monthly charge per consumer
per month
*Maximum demand charge per KVA
per month
- UShs. 473/= [USD 0.135]

- UShs. 23,520/= [USD 6.72]
- UShs. 5,880/= [USD 1.68]
Working Capital
- One week of goat/sheep abattoir plant inputs including:Salt [for drying of hides & skins].
Variable Costs
These are estimated at USD 29.60 per 7 heads of goat/sheep and include:
Processing materials [salt]
Fuel
Slaughtering Fees
Water and electricity
Cleaning
Sundry
Packaging
86

Fixed Costs
These include the following:
Salaries [Labour Costs]

USD 782,400 [Year 2]
Salaries [Management/Administration]
USD 444,000 [Year 2]
Maintenance and repair
USD 266,438
Annual Depreciation USD
1,630,750 [Refer to Schedule 05]
Physical contingencies/other 3% of Sales
Sales and Distribution

Estimated at 7.5% of turnover
Revenue Assumptions
Abattoir outputs
Monthly
Production
[kilogrammes]
Goat & sheep carcasses

By-products
Hides & skins (units)
TOTAL
Ex-Abattoir Unit Total

Monthly
Price
Revenue [USD]
[USD/kilogramme]
1,056,000
211,150
60,000
1,327,150
2.40
1.20
3.00
2,534,400
253,380
180,000
2,967,780
Financial Assumptions
Project Life
Debt: Equity
Interest Rate on Long Term Debt
Debt Tenure
Debt Payments per Year
Grace Period
Exchange Rate
Continuous
80:20
8%
10 Years
1
2 Years
UShs. 3,500 = USD 1
Inflation Rate
Assume Uganda remains a non-hyperinflationary economy
[below 5% p.a.] over the eight year analysis period.
87

Schedule 02/1:
Initial Project Investment Costs (In USD)
Item Description
Cost in USD
Land (Slaughter House)
120,000
Land for lairage
200,000
Building and structures
3,000,000
Meat Processing Plant with ETP
3,500,000
Blast freezer, Chillers
2,850,000
Deboning & Vacuum Packing
2,100,000
WWTP (Wastewater Treatment Plant)
1,000,000
150,000
Generator (2.5 MV)
350,000
Back-up Generator (1.5 MV)
150,000
Weighing scales (Lairage)
10,000
Tractor for Lairage
20,000
RO (Reverse Osmosis) Plant
2,500
Miscellaneous Equipment
200,000
Sub Station
40,000
SAP and Business Automation
100,000
Furniture & Fixture
150,000
Vehicles/Trucks
1,625,000
Spare Parts
500,000
Sub-Total
16,067,500
Rendering
Plant & Machinery
285,000
Construction Cost
120,000
Spare Parts
150,000
Total including rendering
16,622,500
88

Schedule 02/2:
S. No.
Source and Structure of Project Financing (In USD)
Project Investment
Component
1.
Land
2.
%age
share
EAMPL5
Equity
Debt
Finance
Total
1.93%
320,000
320,000
18.05%
3,000,000
3,000,000
3.
64.11%
10,657,500
10,657,500
4.
Spare Parts
3.91%
650,000
650,000
5.
Construction Cost
0.72%
120,000
120,000
6.
Vehicles/Trucks
9.78%
1,625,000
1,625,000
7.
1.50%
250,000
250,000
8.
TOTAL PROJECT FUNDING
3,320,000
13,302,500
16,622,500
9.
%age of Total Project Funding
19.97%
80.03%
100.00%
100.00%
EAMPL: East African Meat Processing Limited
89

Schedule 03: Loan and Interest Service Schedule (In USD)
Section
LOAN AMOUNT
(USD)
Year
Loan Repayment
Interest
Years
13,302,500
1
10
Total
1,064,200
1,064,200
952,000
816,000
680,000
544,000
408,000
272,000
136,000
5,936,400
1,402,500
1,700,000
1,700,000
1,700,000
1,700,000
1,700,000
1,700,000
1,700,000
13,302,500
90

Table 04/1: Calculation of Working Capital: I Minimum Requirements of Current
Assets and Liabilities
(a) Accounts receivable:
(b) Inventory:
Raw Materials:
Labour Costs:
Abattoir Plant Operations:
Machinery & vehicle maintenance:
Work in progress:
Finished products:
Cash-in-hand:
(d) Accounts payable:
30 days at production costs minus depreciation and

interest
30 days
90 days
60 days
180 days
9 goat and sheep purchases + lairage costs + salt +
slaughter fees + utilities + labour costs + fuel, oil &
grease + maintenance & repair + cleaning +
packaging + sales & distribution + salaries & wages
(admin. & management) + consumables stores &
other miscellaneous expenses
slaughter fees + utilities + labour costs + fuel, oil &
grease + maintenance & repair + cleaning +
packaging + sales & distribution + salaries & wages
(admin. & management) + consumables stores &
other miscellaneous expenses
15 days, see separate calculations at the bottom of this
schedule
slaughter fees + utilities + fuel, oil & grease + cleaning
+ packaging + sales & distribution + plant insurance +
consumables stores & other miscellaneous expenses.
N.B.: All the local cost price factors for the abattoir plant costs/inputs, utilities and
working capital are indicated US dollars for the ease of computational and financial
analysis.
91

Table 04/2: Calculation of Working Capital: Annual Production Cost Estimates in USD
ACCOUNT HEAD
YEAR
FINANCIAL YEAR OF OPERATION

1
10
Operating Costs USD)

Goats and Sheep
24,480,000
25,704,000
26,989,200
28,338,660
29,755,593
31,243,373
32,805,541
34,445,818
36,168,109
216,000
226,800
238,140
250,047
262,549
275,677
289,461
303,934
319,130
3,000
3,150
3,308
3,473
3,647
3,829
4,020
4,221
4,432
Slaughter Fees
720,000
756,000
793,800
833,490
875,165
918,923
964,869
1,013,112
1,063,768
Utilities
614,836
645,578
677,856
711,749
747,337
784,704
823,939
865,136
908,393
Labour Costs
782,400
821,520
862,596
905,726
951,012
998,563
1,048,491
1,100,915
1,155,961
Fuel, oil & grease
932,695
979,330
1,028,297
1,079,712
1,133,697
1,190,382
1,249,901
1,312,396
1,378,016
Maintenance & Repair
266,438
279,760
293,748
308,435
323,857
340,050
357,052
374,905
393,650
52,870
55,514
58,289
61,204
64,264
67,477
70,851
74,393
78,113
Packaging
102,890
108,035
113,436
119,108
125,063
131,317
137,882
144,777
152,015
Sales & Distribution
916,179
961,988
1,010,087
1,060,592
1,113,621
1,169,302
1,227,767
1,289,156
1,353,614
Salaries (Mgmt & Admin)
444,000
466,200
489,510
513,986
539,685
566,669
595,002
624,753
655,990
Plant Insurance
133,025
133,025
133,025
133,025
133,025
133,025
133,025
133,025
133,025
Consumables & Contingencies
120,000
126,000
132,300
138,915
145,861
153,154
160,811
168,852
177,295
29,784,333
31,266,899
32,823,592
34,458,121
36,174,376
37,976,443
39,868,614
41,855,393
43,941,512
Financial Costs (US$)

Interest on Medium Term Loan
1,064,200
1,064,200
952,000
816,000
680,000
544,000
408,000
272,000
136,000
Depreciation
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
Total Financial Costs
2,694,950
2,694,950
2,582,750
2,446,750
2,310,750
2,174,750
2,038,750
1,902,750
1,766,750
32,479,283
33,961,849
35,406,342
36,904,871
38,485,126
40,151,193
41,907,364
43,758,143
45,708,262
Lairage
Salt
Cleaning
Cost of Sales
Total Production Costs
92

Schedule 04/3: Calculation of Working Capital: Working Capital Requirements in USD
X
Minimum
days
Coefficient
of
of coverage
turn-over
30
12
2,482,028
2,605,575
2,735,299
2,871,510
3,014,531
3,164,704
3,322,384
3,487,949
3,661,793
a) Cost of Sales
30
12
2,118,250
2,224,163
2,335,371
2,452,139
2,574,746
2,703,483
2,838,658
2,980,590
3,129,620
b) Salaries & Wages
90
306,600
321,930
338,027
354,928
372,674
391,308
410,873
431,417
616,985
c) Plant Operations
60
325,535
341,812
358,903
376,848
395,690
415,475
436,249
458,061
480,964
d) Maintenance & Repair
180
133,219
139,880
146,874
154,218
161,929
170,025
178,526
187,453
196,825
e) Work-in-Process
40
741,283
778,347
817,264
858,127
901,034
946,085
993,390
1,043,059
1,095,212
f) Finished Products
45
3,706,414
3,891,734
4,086,321
4,290,637
4,505,169
4,730,427
4,966,949
5,215,296
5,476,061
C. Cash-in-hand (from V below)
15
24
200,612
208,149
211,387
214,029
217,087
220,581
224,533
228,965
233,903
D. Current assets
10,013,941
10,511,589
11,029,445
11,572,436
12,142,860
12,742,088
13,371,561
14,032,791
14,891,364
30
12
-2,357,625
-2,474,952
-2,598,145
-2,727,498
-2,863,318
-3,005,930
-3,155,672
-3,312,902
-3,477,993
7,656,316
8,036,638
8,431,301
8,844,938
9,279,542
9,736,158
10,215,889
10,719,890
11,413,371
380,322
394,663
413,638
434,603
456,617
479,731
504,001
693,482
Item
Requirements (USD)
Full-Capacity
2
10
I. Current Assets
A. Accounts receivable
B. Inventory
II. Current Liabilities

A. Accounts payable
III. Working Capital
A. Net Working Capital
B. Increase in Working Capital
IV. Total Production Costs
32,479,283
33,961,849
35,406,342
36,904,871
38,485,126
40,151,193
41,907,364
43,758,143
45,708,262
Less:
Raw Materials
25,419,000
26,689,950
28,024,448
29,425,670
30,896,953
32,441,801
34,063,891
35,767,086
37,555,440
Conversion Costs
614,836
645,578
677,856
711,749
747,337
784,704
823,939
865,136
908,393
Depreciation
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
15
24
4,814,697
4,995,571
5,073,288
5,136,702
5,210,085
5,293,938
5,388,784
5,495,172
5,613,679
200,612
208,149
211,387
214,029
217,087
220,581
224,533
228,965
233,903
V. Required Cash Balance
93

Schedule 05: Fixed Assets and Depreciation Allowances (In USD)
1
10
Initial
Dep
Dep
Dep
Dep
Dep
Dep
Dep
Dep
Dep
Value
Allowance
Allowance
Allowance
Allowance
Allowance
Allowance
Allowance
Allowance
Allowance
3,000,000
150,000
150,000
150,000
150,000
150,000
150,000
150,000
150,000
150,000
Plant Machinery & Equipment
11,307,500
1,130,750
1,130,750
1,130,750
1,130,750
1,130,750
1,130,750
1,130,750
1,130,750
1,130,750
Office Equipment and F&F
250,000
25,000
25,000
25,000
25,000
25,000
25,000
25,000
25,000
25,000
Vehicles/Trucks
1,625,000
325,000
325,000
325,000
325,000
325,000
325,000
325,000
325,000
325,000
TOTALS
16,182,500
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
Project Year
Asset
Building and structures
94

Schedule 06: Change in Total Investment Costs in USD
Period
Year
Construction
Full Capacity
2
10
Total
1. Fixed Investment Costs
16,622,500
18,247,500
a) Initial fixed investment costs
16,622,500
16,622,500
1,625,000
1,625,000
2. Pre-operational expenses
150,000
150,000
3. Start-up Inventory
850,000
850,000
7,656,316
380,322
394,663
413,638
434,603
456,617
479,731
504,001
693,482
11,413,371
17,622,500
7,656,316
380,322
394,663
413,638
2,059,603
456,617
479,731
504,001
693,482
30,660,871
b) Replacement
4. Working Capital increase

Total Investment Costs
95

Schedule 07: Change in Total Assets in USD
Period
Year
Construction
Full Capacity
2
10
Total
1. Fixed Investment Costs
16,622,500
18,247,500
a) Initial fixed investment costs
16,622,500
16,622,500
1,625,000
1,625,000
2. Pre-operational expenses
150,000
150,000
3. Start-up Inventory
850,000
850,000
10,013,941
497,649
517,856
542,991
570,424
599,228
629,473
661,230
858,572
14,891,364
17,622,500
10,013,941
497,649
517,856
542,991
2,195,424
599,228
629,473
661,230
858,572
34,138,864
b) Replacement
4. Current Assets increase

Total Assets
96

Schedule 08: Projected Cashflow Table in USD
Period
Year
Const
Full Capacity
10
*Sal val
Total
17,622,500
36,647,160
38,479,518
40,403,494
42,423,669
44,544,852
46,772,095
49,110,699
51,566,234
54,144,546
421,714,767
17,622,500
17,622,500
36,647,160
38,479,518
40,403,494
42,423,669
44,544,852
46,772,095
49,110,699
51,566,234
54,144,546
404,092,267
-17,622,500
-42,734,862
-35,787,823
-37,604,619
-39,284,776
-42,679,742
-42,917,967
-44,879,113
-46,943,076
-49,278,994
16,114,371
383,619,101
-17,622,500
-10,013,941
-497,649
-517,856
-542,991
-2,195,424
-599,228
-629,473
-661,230
-858,572
16,114,371
-29,784,333
-31,266,899
-32,823,592
-34,458,121
-36,174,376
-37,976,443
-39,868,614
-41,855,393
-43,941,512
-18,024,493
328,149,283
a) Interest
-1,064,200
-1,064,200
-952,000
-816,000
-680,000
-544,000
-408,000
-272,000
-136,000
-5,936,400
b) Repayments
-1,402,500
-1,700,000
-1,700,000
-1,700,000
-1,700,000
-1,700,000
-1,700,000
-1,700,000
4. Corporate tax
-1,739,588
-1,423,776
-1,478,370
-1,634,864
-1,797,143
-1,965,495
-2,140,226
-2,321,652
-2,510,110
-17,011,225
5. Dividends 4% on equity
-132,800
-132,800
-132,800
-132,800
-132,800
-132,800
-132,800
-132,800
-132,800
-1,195,200
-6,087,702
2,691,695
2,798,875
3,138,893
1,865,110
3,854,128
4,231,587
4,623,159
4,865,552
16,114,371
38,095,666
-6,087,702
-3,396,007
-597,132
2,541,761
4,406,870
8,260,998
12,492,585
16,114,371
17,115,744
21,981,295
38,095,666
Costs (US Dollars)

A. Cash inflow
1. Financial resources total
2. Sales revenue total
B. Cash outflow
1.
Total
assets
schedule
including replacements
2. Operating Costs
3. Debt Service
C. Surplus / deficit
D. Cumulative cash balance
*Salvage values. Land: 3,320,000; 1/2 of buildings: 1,500,000; Working Capital: 11,413,371
97
-13,302,500

Schedule 09: Projected Cashflow Table and Calculation of Present Value in USD
Year
10
*Sal val
Total
-17,622,500
Construction
Investment Costs
-17,622,500
Net Profit after Tax
4,059,039
3,322,144
3,449,531
3,814,684
4,193,334
4,586,156
4,993,860
5,417,189
5,856,924
39,692,859
Depreciation
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
14,676,750
1,064,200
1,064,200
952,000
816,000
680,000
544,000
408,000
272,000
136,000
5,936,400
-17,622,500
6,753,989
6,017,094
6,032,281
6,261,434
6,504,084
6,760,906
7,032,610
7,319,939
7,623,674
16,114,371
58,797,880
0.8772
0.7695
0.675
0.5921
0.5194
0.4556
0.3996
0.3506
0.3075
0.2697
0.2076
-15,458,457
5,197,194
4,061,538
3,571,714
3,252,189
2,963,260
2,701,658
2,465,633
2,250,881
2,056,105
3,345,343
Interest Add back

Mid-term Loan
NET CASH FLOWS
Discount Factors at 14%
PV at 14%
NPV at 14%
16,407,059
16,407,059
Discount Factors at 17%

PV at 17%
0.8547
0.7305
0.6244
0.5337
0.4561
0.3898
0.3332
0.2848
0.2434
0.208
0.152
-15,061,951
4,933,789
3,757,073
3,219,428
2,855,840
2,535,292
2,252,734
2,002,887
1,781,673
1,585,724
2,449,384
NPV at 17%
_
12,311,874
12,311,874
Internal Rate of Return = 35.91%

NPV at 14% = $16,407,059
NPV at 17% = $12,311,874
98

Schedule 10: Projected Income Statement in USD
Year
10
Sales
36,647,160
38,479,518
40,403,494
42,423,669
44,544,852
46,772,095
49,110,699
51,566,234
54,144,546
Raw Materials
25,419,000
26,689,950
28,024,448
29,425,670
30,896,953
32,441,801
34,063,891
35,767,086
37,555,440
GROSS PROFIT
11,228,160
11,789,568
12,379,046
12,997,999
13,647,899
14,330,294
15,046,808
15,799,149
16,589,106
(excl. Raw Materials)
4,365,333
4,576,949
4,799,145
5,032,451
5,277,422
5,534,642
5,804,723
6,088,308
6,386,072
OPERATING PROFIT
6,862,827
7,212,619
7,579,902
7,965,548
8,370,477
8,795,652
9,242,085
9,710,841
10,203,034
Medium-Term Loan (@ 8% p.a.)
1,064,200
1,064,200
952,000
816,000
680,000
544,000
408,000
272,000
136,000
Less: Annual Repayments
1,402,500
1,700,000
1,700,000
1,700,000
1,700,000
1,700,000
1,700,000
1,700,000
NET PROFIT BEFORE TAX
5,798,627
4,745,919
4,927,902
5,449,548
5,990,477
6,551,652
7,134,085
7,738,841
8,367,034
Corporation Tax 30%
1,739,588
1,423,776
1,478,370
1,634,864
1,797,143
1,965,495
2,140,226
2,321,652
2,510,110
NET PROFIT
4,059,039
3,322,144
3,449,531
3,814,684
4,193,334
4,586,156
4,993,860
5,417,189
5,856,924
Accumulated Net Profit (Loss)
4,059,039
7,381,182
10,830,713
14,645,397
18,838,730
23,424,886
28,418,746
33,835,935
39,692,859
Net Profit Margin
0.1108
0.0863
0.085
0.090
0.094
0.098
0.102
0.105
0.108
0.306
0.306
0.306
0.306
0.306
0.306
0.306
0.306
0.306
Less: Operating Costs
Less: Accrued interest on
Gross Profit Margin

Rate of Return on Investment
23.03%
18.85%
19.57%
21.65%
23.80%
26.02%
28.34%
30.74%
33.24%
Operating Profit Margin
0.187
0.187
0.188
0.188
0.188
0.188
0.188
0.188
0.188
99

Schedule 11: Projected Balance Sheet in USD
CAPITAL EMPLOYED:
YR.1
YR.2
YR.3
YR.4
YR.5
YR.6
YR.7
YR.8
YR.9
YR.10
Share Capital
3,320,000
3,320,000
3,320,000
3,320,000
3,320,000
3,320,000
3,320,000
3,320,000
3,320,000
Retained Earnings
4,059,039
7,381,182
10,830,713
14,645,397
18,838,730
23,424,886
28,418,746
33,835,935
39,692,859
Shareholder's Equity/Deficit
7,379,039
10,701,182
14,150,713
17,965,397
22,158,730
26,744,886
31,738,746
37,155,935
43,012,859
13,302,500
13,302,500
11,900,000
10,200,000
8,500,000
6,800,000
5,100,000
3,400,000
1,700,000
20,681,539
24,003,682
26,050,713
28,165,397
30,658,730
33,544,886
36,838,746
40,555,935
44,712,859
Long-Term Liabilities
EMPLOYMENT OF CAPITAL:
Building & Structures
`
3,000,000
2,850,000
2,700,000
2,550,000
2,400,000
2,250,000
2,100,000
1,950,000
1,800,000
1,650,000
10,657,500
9,591,750
8,526,000
7,460,250
6,394,500
5,328,750
4,263,000
3,197,250
2,131,500
1,065,750
250,000
225,000
200,000
175,000
150,000
125,000
100,000
75,000
50,000
25,000
1,625,000
1,300,000
975,000
650,000
325,000
1,625,000
1,300,000
975,000
650,000
325,000
LONG-TERM ASSETS:
13,966,750
12,401,000
10,835,250
9,269,500
9,328,750
7,763,000
6,197,250
4,631,500
3,065,750
CURRENT ASSETS:
10,136,613
15,141,834
18,765,608
22,439,395
24,873,299
29,331,817
34,205,169
39,509,337
45,261,101
Accounts Receivable
2,482,028
2,605,575
2,735,299
2,871,510
3,014,531
3,164,704
3,322,384
3,487,949
3,661,793
Stock (Inventory)
7,331,301
7,697,866
8,082,759
8,486,897
8,911,242
9,356,804
9,824,644
10,315,876
10,995,668
Bank Balance and Cash
200,612
208,149
211,387
214,029
217,087
220,581
224,533
228,965
233,903
Other Current Assets
122,672
4,630,244
7,736,163
10,866,958
12,730,439
16,589,728
20,833,607
25,476,545
30,369,738
CURRENT LIABILITIES:
3,421,825
3,539,152
3,550,145
3,543,498
3,543,318
3,549,930
3,563,672
3,584,902
3,613,993
Accounts Payable
2,357,625
2,474,952
2,598,145
2,727,498
2,863,318
3,005,930
3,155,672
3,312,902
3,477,993
Liabilities
1,064,200
1,064,200
952,000
816,000
680,000
544,000
408,000
272,000
136,000
NET CURRENT ASSETS:
6,714,789
11,602,682
15,215,463
18,895,897
21,329,980
25,781,886
30,641,496
35,924,435
41,647,109
20,681,539
24,003,682
26,050,713
28,165,397
30,658,730
33,544,886
36,838,746
40,555,935
44,712,859
Abattoir Plant Equip. & Machinery

Office Equipment F&F
Vehicles/Trucks
Current Portion of Long-term
TOTAL CAPITAL
100

Schedule 12: Calculation of Payback Period in USD
YEAR/ITEM
10
Net Profit
4,059,039
3,322,144
3,449,531
3,814,684
4,193,334
4,586,156
4,993,860
5,417,189
5,856,924
Interest
1,064,200
1,064,200
952,000
816,000
680,000
544,000
408,000
272,000
136,000
Depreciation
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
1,630,750
"Profit"
6,753,989
6,017,094
6,032,281
6,261,434
6,504,084
6,760,906
7,032,610
7,319,939
7,623,674
Amount paid
back from
"profits"
Balance of
total
Investment
-17,622,500
6,753,989
-10,868,511
6,017,094
-4,851,418
6,032,281
1,180,863
6,261,434
7,442,297
6,504,084
13,946,380
6,760,906
20,707,286
7,032,610
27,739,896
7,319,939
35,059,835
10
7,623,674
42,683,509
Year
Pay Back Period = 3.80 YEARS
101

Schedule 13: Business Ratios/Ratio Analysis
Construct
Period
Year
Sales Growth
Full Capacity
3
5%
10
5%
5%
5%
5%
5%
5%
5%
Percent of Total Assets

Accounts Receivable
10.30%
9.46%
9.24%
9.06%
8.81%
8.53%
8.22%
7.90%
7.58%
Inventory
30.42%
27.95%
27.31%
26.77%
26.05%
25.22%
24.32%
23.37%
22.75%
Other Current Assets
0.51%
16.81%
26.13%
34.27%
37.22%
44.72%
51.57%
57.72%
62.84%
Total Current Assets
42.05%
54.98%
63.40%
70.77%
72.72%
79.07%
84.66%
89.51%
93.66%
Long-term Assets
57.95%
45.02%
36.60%
29.23%
27.28%
20.93%
15.34%
10.49%
6.34%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Current Liabilities
14.20%
12.85%
11.99%
11.18%
10.36%
9.57%
8.82%
8.12%
7.48%
Long-term liabilities
55.19%
48.30%
40.20%
32.17%
24.85%
18.33%
12.62%
7.70%
3.52%
Total Liabilities
69.39%
61.15%
52.19%
43.34%
35.21%
27.90%
21.44%
15.82%
11.00%
Net Worth (Total Capital)
85.80%
87.15%
88.01%
88.82%
89.64%
90.43%
91.18%
91.88%
92.52%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Total Assets
Percent of Revenues
Revenues
Gross Margin
30.64%
30.64%
30.64%
30.64%
30.64%
30.64%
30.64%
30.64%
30.64%
Management / Administration
2.13%
2.13%
2.13%
2.13%
2.13%
2.13%
2.13%
2.13%
2.13%
Net Profit (after Interest & Tax)
11.08%
8.63%
8.54%
8.99%
9.41%
9.81%
10.17%
10.51%
10.82%
Current
2.96
4.28
5.29
6.33
7.02
8.26
9.60
11.02
12.52
Quick
8.14
9.48
Main Ratios
0.82
2.10
3.01
3.94
4.50
5.63
6.84
Total Debt to Total Assets
55.19%
48.30%
40.20%
32.17%
24.85%
18.33%
12.62%
7.70%
3.52%
Pre-tax Return on Net Worth
28.04%
19.77%
18.92%
19.35%
19.54%
19.53%
19.37%
19.08%
18.71%
Pre-tax Return on Assets
24.06%
17.23%
16.65%
17.19%
17.51%
17.66%
17.66%
17.53%
17.31%
$153,980
$161,679
$169,763
$178,251
$187,163
$196,521
$206,347
$216,665
$227,498
Business Vitality Profile

Revenue per Employee
102

Schedule 13: Business Ratios/Ratio Analysis (continued)
Additional Ratios
10
Net Profit Margin
11.08%
8.63%
8.54%
8.99%
9.41%
9.81%
10.17%
10.51%
10.82%
Return on Equity
28.68%
31.04%
24.38%
21.23%
18.92%
17.15%
15.73%
14.58%
13.62%
1.48
1.48
1.48
1.48
1.48
1.48
1.48
1.48
1.48
Activity Ratios
Accounts Receivable Turnover
Collection Days
30
30
30
30
30
30
30
30
30
Inventory Turnover
3.34
3.34
3.34
3.34
3.34
3.34
3.34
3.34
3.29
Accounts Payable Turnover
1.09
1.09
1.09
1.09
1.09
1.09
1.09
1.09
1.09
Payment Days
30
30
30
30
30
30
30
30
30
Total Assets Turnover
1.52
1.40
1.36
1.34
1.30
1.26
1.22
1.17
1.12
Fixed Assets Turnover
2.13
2.52
3.03
3.72
3.88
4.89
6.43
9.04
14.33
Debt to Net Worth
0.64
0.55
0.46
0.36
0.28
0.20
0.14
0.08
0.04
Current Liability to Liability
0.26
0.27
0.30
0.35
0.42
0.52
0.70
1.05
2.13
2.44
2.27
2.49
2.73
3.01
3.34
3.71
4.15
$8,036,638
$8,431,301
$8,844,938
$9,279,542
$9,736,158
$10,215,889
$10,719,890
$11,413,371
6.78
7.96
9.76
12.31
16.17
22.65
35.70
75.02
0.66
0.72
0.73
0.75
0.77
0.79
0.82
0.86
0.89
Debt Ratios
Debt-Service Coverage Ratio
Liquidity Ratios
Net Working Capital
Interest
Coverage
[Times
Interest Earned Ratio - TIE]
$7,656,316
_
Additional Ratios
Assets to Revenue
Current Debt / Total Assets
4.42%
3.86%
3.22%
2.57%
1.99%
1.47%
1.01%
0.62%
0.28%
Acid Test
0.82
2.10
3.01
3.94
4.50
5.63
6.84
8.14
9.48
Sales/Net Worth
1.77
1.60
1.55
1.51
1.45
1.39
1.33
1.27
1.21
103

Schedule 14: Sensitivity Analysis (In USD)
Items
PAT
BEP
IRR
Payback
Base Case
3,814,684
41.07%
35.91%
3.80 Yrs
Increase in Operating Costs by 5%
3,638,548
42.65%
34.93%
3.88 Yrs
11,238,826
19.26%
75.12%
2.35 Yrs
Decrease in Raw Materials by 10%
5,874,480
31.25%
47.10%
3.35 Yrs
Increase in Raw Materials by 10%
1,754,887
59.89%
24.33%
5.05 Yrs
Selling Prices up by 25%
Key:
BEP:
IRR:
PAT:
Break-Even Point
Profit after Tax
104

APPENDIX I:
PREVENTION OF WASTE PRODUCTS AND TREATMENT OF

WASTE-WATER
By-products and solid waste

At slaughterhouses usually, everything produced by or from the animal, except dressed
meat, is considered as by-product. These by-products are either 'edible' or 'inedible'.
The variety of by-products is enormous, as can be seen in the diagram in Figure 12
which shows a few of the by-products of the meat industry. Ockerman and Hansen
(1988) offer an extensive introduction to the use of by-products. There is a large number
of publications on the use of animal by-products (National Renderers Association, 1990;
Scaria, 1988; Kreis, 1978; Davis, 1985; Skrede, 1979; Mann, 1982; Pearson and Dutson,
1988; Pearson and Dutson, 1992).
In many countries, all the waste that is unsuitable for human consumption is processed
by rendering companies as animal feed, glue etc. In large slaughterhouses, screening
devices through which waste water has to flow prior to being treated, remove large
solids such as hair, paunch manure, pieces of viscera and meat, dirt, and other
materials. Some of these solids have an economic value and are rendered so as to
produce a salable product. Materials of little economic value may be dumped at a
landfill, spread out on the land or treated together with the solids from biological
treatment processes. It is claimed by Ockerman and Hansen (1988) that in the animal
processing industry about 1% of protein is lost to the sewer and that it is of economic
importance to recover as much of this protein as possible. If half of the protein were
recovered this would be worth about $400 million (1987 dollars).
In developing countries, some or all of these products are dumped as solid waste
without any further processing or composting, or they are washed away. This causes
pollution in the form of bad smell and potential water pollution, leading to health
hazards. If solid waste is dumped, the possibility of using this waste is lost. Solid waste
can also be handled by using the waste as fertilizer after composting. During the
process of composting considerable quantities of nitrogen are lost in the form of
ammonia. According to Kumar (undated), slaughterhouse wastes are ideally suited for
fermentation. An important advantage of handling animal waste by fermentation is the
low loss of nitrogen if the liquid is handled properly (see Table 25). Kumar (undated)
investigated a number of other important avenues (Kumar, undated). Of the produced
sludge, the dark solid portion which settles at the bottom (about 10 %), was found to be
rich in protein, fat fiber and also vitamin B12. It was free from parasites and probably
free of salmonella as well. Such part of the slurry can be utilized as feed material or
manure.
105

The remaining part of the sludge, the liquid component, can be used as irrigation water,
or for fish and algae cultures. If not used in time a major part of the nitrogen from the
liquid will be lost as a result of volatilization.
106

Figure 12: By-Products of the Meat Industry
Live
animal
Manure
e.g. biogas
Slaughtered
Meat
e.g. steak
By-products
Edible
Non-edible
Intestinal contents
e.g. biogas/fertilizer
Pharmaceuticals
e.g. insulin
Hide
e.g.
leather
Bone
e.g.
bonemeal,
soup
Blood
e.g. blood
meal/bloodpu
dding
Human
food
Animal feed dried
Sterilization
by heat
e.g. tankage
Chilled
e.g. oxtail
Heated
e.g. tongue
Chemically
treated
e.g. tripe
107
Further
processed
Cured and/or
sausage
Frozen
e.g. liver
Dried e.g.
gelatin
Dried
e.g. blood

Table 25:
Destination of solid waste and utilization of nitrogen
Destination solid waste
Utilization of nitrogen
a: Dumped
100% loss of nitrogen
b: Composting
fertilizer
Large quantity of nitrogen lost
c: Anaerobic treatment:
1: Solid part
2: Liquid part
a: irrigation water
b: fish culture
c: algae culture
Animal feed small nitrogen losses

Small nitrogen losses possible if diluted
quickly with water
Sludge:
In western countries the larger part of solid waste out of the slaughterhouses consists of
sludge from the wastewater treatment plants. In the Netherlands sludge, including the
sludge of the slaughterhouses and meat processing industries, may probable no longer
be used as fertilizer in the future because of Dutch environmental rules, which however
are still heavily debated. One argument is that this kind of sludge is being
discriminated as a fertilizer only because in the Netherlands a surplus of organic
fertilizers exists. The environmental rules may lead to (financial) problems because the
sludge has to be considered as waste to be disposed of which has the consequence that
after obligatory dewatering, it must be brought to a dumping-ground.
In principle there are no objections against using the sludge from slaughterhouses as
fertilizer, provided it does not contain toxic compounds.
Prevention of waste production
Practices as discussed in this section are generally called 'housekeeping practices'. The
quality of overall cleaning-up practices determines to a large extent the total waste load
produced. It has been established that the waste load decreases with a decrease of the
water being used (see e.g. the comparison in Table 26).
The following slaughter process actions may contribute to waste (water) reduction.
BOD data are from several slaughterhouses and from literature reported by Barnes et.al
(1984). BOD values are values of the untreated final wastewater.
108

Red meat:
- As much blood as possible should be collected and processed. Indirect heating can
reduce the amount of wastewater (and thus the waste load), compared with direct
heating from 1.3 to 0.3 kg BOD per ton of LWK.
- Paunch can be handled in different ways (Barnes et al, 1984):
1. dumping in full into the sewer, which leads to a waste load of 2.5 kg BOD per ton of
LWK
2. wet dumping (washing out and screening the wet slurry on gross solids); estimated
waste load of 1.5 - 2 kg BOD per ton of LWK;
3. dry dumping (dumping for subsequent rendering or disposal as solid waste without
needless water flushing): estimated waste load of 0.2 kg BOD per ton of LWK;
4. whole paunch handling (removal of the entire paunch, intact, for rendering or disposal
as solid waste):
a: after washing, an estimated waste load is produced of 0.6 kg BOD per ton of LWK
(paunches are marketable as pet food);
b: washing and bleaching lead to an estimated waste load of 1 kg BOD per ton of
LWK (paunches are marketable as tripe).
- Dry animal pen clean-up reduces the amount of wastewater. If the pens are covered,
no rain or snow water can enter, which reduces the amount of wastewater
- Hog hair, recovered from the de-hairing process, can be disposed as solid waste,
washed and baled for direct marketing, or hydrolysed by pressure cooking for
marketing as a feed supplement.
- Heads and lungs should be rendered;
- Intestines may be rendered directly, hashed and washed prior to rendering, or
processed for further use (in the case of hog intestines). Large hog intestines may be
used as sausage casings or as surgical sutures.
- Tank-water (from the rendering process) can be evaporated.
This will reduce the waste load from 2 to 0.5 - 1 kg BOD per ton of LWK. Evaporation
on the other hand consumes energy which will lead to CO2 production.
109

Table 26: Slaughter process: Waste prevention
Air:
Water:
Solid Waste:
Meatpacking:
Air:
Water:
Solid Waste:
Intestine handling:
Air:
Water:
Solid Waste:
Utility-processes:
Air:
Water:
- mainly energy saving

- dry animal pen clean-up
- dry transport (poultry-slaughterhouse)
- less loss of blood
- more dry cleaning
- fast separation of meat and water
- improve de-fatting-process waste water
- increases when waste water prevention increases (manure, fat)
- mainly energy saving
- separate meat and water as much as possible
- more dry cleaning
- improve de-fatting-process waste water
- application of steam-tunnels or high pressure systems for cooking
meat
- increases when waste water prevention increases (fat)
- energy-saving
- application of dry rendering
- keep paunch manure separated as much as possible
- increases when waste water prevention increases (manure, fat)
- improve efficiency chilling-machines and chilling practices (keep
doors close, repair leakages)
- use as less (warm) water as possible during cleaning-up *:e.g.
waste water purification, chilling, cleaning-up
Treatment of wastewater
Main wastewater problems
The problems of the wastewater from the slaughterhouses, tanneries and dairies result
from the discharge of:
a: large amounts of BOD (slaughterhouses, tanneries and dairies).
BOD-problems can be handled, as already mentioned, by biological wastewater
treatment.
b: high values of NKj (slaughterhouses).
NKj can be lowered by oxidation of organic compounds (proteins) followed by
nitrification: conversion of ammonium (NH4+) into nitrate (NO3-). To reduce the
eutrophication potential of the wastewater, nitrate must be removed. This can be
achieved by de-nitrification: conversion of nitrate (NO3-) into nitrogen (N2).
110

c: chromium (tanneries).
Chromium can be handled by precipitation reactions, these are simple processes.
There are basically two types of biological wastewater treatment systems: aerobic and
anaerobic systems. In Tables 27 and 28 the characteristics and the (dis)advantages of
these systems are mentioned.
Table 27: Biological wastewater treatment systems
Applicability
Aerobic system
(BOD, mg/l)
BOD-removal:
NH3-conversion:
NO3-removal:
(100 - 2000 mg/l)

93 99%
95%
90%*
Anaerobic system
Low, medium and high
strength
(250 - > 100,000 mg/l)
90%
Low
high
*: depends on BOD load
In view of the high BOD-load in the wastewater of tanneries, dairies and

slaughterhouses, anaerobic systems seem to be appropriate wastewater purification
systems. Simple anaerobic systems may achieve 50 % of BOD-purification (Table 27),
while high-rate anaerobic systems may result in 90 % of BOD purification (Table 28).
Anaerobic systems do not remove such nutrients as ammonium-nitrogen. If liquid and
slurry are used as fertilizer this does not need to pose specific problems. Nutrient
removal systems should be applied only if water authorities set limits for the discharge
of nutrients. As in most countries this is not the case, there are no reasons for industry
to make high investment costs for tertiary treatment.
111

Table 28: Advantages and disadvantages of aerobic and anaerobic wastewater
treatment systems
System
Advantage
Disadvantage
Anaerobic
possible production of energy optimal process temperature is
about 300C
low need for land
post-treatment
for
BODremoval is often required
power failure or shutdown

will not affect the system
no energy consumption
low production
sludge
Aerobic
of
excess
low process temperature
energy need for aeration
end-treatment of wastewater
high need for land

power failure or shutdown will
affect the entire system
post-treatment
for
further
nutrient removal is often
required
high production
sludge
of
excess
Source: Hulshoff Pol, 1993.
General:
The processes that may be used for the treatment of wastewater produced by the
industries mentioned in this report do not differ very much from each other. In general,
these systems are applied to a large extent in developed countries. In developing
countries adoption rates are much lower. Especially for these latter countries, treatment
methodologies and technologies should be cheap, efficient and easy to operate.
Important differences of wastewater treatment in the different industries will be
mentioned.
As mentioned before, the primary action to reduce pollution by wastewater discharge is
efficient water management. According to EPA (1974) this can reduce the load of
wastewater about 5 fold. After a thorough search for ways to reduce water use and
wastewater production, the wastewater that is inevitably produced can be treated in
different ways as discussed below.
Usually wastewater produced during the day has a variable composition. For the
optimal performance of most treatment system it is necessary that the load is rather
112

constant and that the plant is fed with a rather constant wastewater flow. Wastewater is
therefore collected in equalization or balance tanks.
Most treatment plants follow the following steps.
Preliminary treatment: This type of treatment includes screening, skimming and settling
which can lead to the recovery of by-products, grease and fat and removal of coarse
solids. For an optimal performance and to avoid overload of the screening devices, it is
important that large amounts of produced solids such as (hog)hair, feathers etc. are
collected during the processing itself as discussed in part 2. For developing countries,
the salt laden tannery effluent from the soaking process can be collected in solar
evaporations pans, possibly pretreated with coagulant, after which salt can be
recovered. In case of chrome tanning effluents, the wastewater that contains chromium
should not be allowed to become mixed with other types of wastewater: it must be
collected separately. Depending on the quality of the composite effluents, neutralizing
chemicals like lime alum, ferric chloride etc. should be added for an effective
precipitation of chromium and removal of suspended solids in the sedimentation
process. From this material chrome can be recovered or dumped separately.
Primary treatment: This involves separation of solids in a settling tank (primary clarifier),
or by flotation. The settleable solids and up to 60% of the suspended solids
corresponding to approximately 35% of the BOD, can be eliminated during the primary
treatment. Subsequently the solids may be treated by anaerobic sludge digestion. This
produces biogas and solids that are suitable for soil conditioning and fertilization.
Primary treatment is a essential activity that needs to be undertaken for a proper
application of various secondary treatment systems. In case of aerobic secondary
treatment, a further function of this step is the reduction of electric energy required for
aeration.
Secondary treatment: This usually consists of biological treatments by means of high rate
anaerobic treatment systems, anaerobic (lagoons) suitable for high organic loads, or
aerobic (lagoons) suitable for low organic loads, activated sludge, oxidation ditch or a
combination. Present research is mainly focused on low energy demand and low
volume treatment systems and optimum process control. Usually, a combination of
high rate anaerobic treatment and aerobic activated sludge is required to meet effluent
quality demands. Removal efficiencies reached with these kinds of combination are up
to 98-99%.
Depending on the operational conditions, removal efficiencies for slaughterhouses
range from 70 to more than 99% for BOD and grease and from 80 to more than 97% for
113

Suspended Solids (SS). The process performance depends strongly on the amounts of SS
that can be removed in the primary treatment phase.
Tertiary treatment: This includes chemical-physical methods such as adsorption,
stripping, coagulation, sedimentation, chlorination as well as biological methods like
slow sand filtration and maturation ponds. This post-treatment serves to remove
nutrients such as phosphorus, sulphide, suspended solids, remaining BOD as well as
pathogens. Another method of wastewater treatment is that of irrigation on land. Before
wastewater is applied on land, toxic compounds such as chromium, salt sulphide, etc.
have to be removed. Small amounts of nitrate and phosphate however may serve as
fertilizers. The BOD5 value is usually not allowed to be higher than 300 mg/l.
At present, this kind of wastewater treatment is carried out mainly in developing
countries. The method is cheap, rather easy to perform, does not require highly
sophisticated techniques and can be applied because of the usually low pollutional
strength of the produced wastewater.
Economic considerations
The costs of wastewater treatment are a factor of major importance for the selection the
appropriate treatment system. Estimates should be made of the investment costs and
the expected annual costs. The investment costs are largely determined by construction
costs, the costs of land and the required degree of removal of pollutants. The annual
costs will depend on the price of the energy and chemicals required for the operation of
the plant, the discharge fees and the capital costs on investment. A problem for the
estimation of the costs of treatment plants is that prices are rapidly changing. Cost
estimates should therefore be referenced to an index. From a comparison of the costs of
6 treatment systems (stabilisation ponds; aerated ponds; high rate anaerobic treatment +
ponds; high rate anaerobic treatment + trickling filters; activated sludge process; and
oxidation ditch; DHV, 1993) it can be concluded that high rate anaerobic treatment +
post treatment of the effluent offers a very economic and effective solution.
The relatively high initial costs are compensated for by the low costs of energy and
maintenance, which results in low running costs and a limited need for land. Costs of a
stabilization pond, high-rate anaerobic treatment plant + post-treatment in a pond and
an activated sludge process for the sewage treatment plant for a town of 50,000
inhabitants (producing about 550 ton BOD and about 135 ton N) given as a reference,
are: resp. around 3,5.106, 2.106 and 2.106 USD for investment costs and running cost
resp. around 400,000, 300,000 and 430,000 USD on an annual basis. In this calculation it
is assumed that electricity costs are 0.10 USD per kWh, sludge disposal costs 10 USD
per 1000 kg and that the price of land is 25 USD per m2. Lagoons will become more
economical if land costs are below 10 to 20 USD/m2. Wastewater from slaughter
114

houses, tanneries, and the dairy industry are more heavily loaded with pollutants than
sewage. This will have the effect that anaerobic processes are more competitive than
aerobic processes owing to the much lower energy costs of anaerobic treatment.
Taiganides (1987) gives an overview of relative cost indices and ranking for various
treatment systems. According to him, the selection of the treatment system has to be
undertaken on the basis of economic costs, environmental considerations, and the
technical complexity of the system. Both the initial investment and the operating costs
of the system must be taken into consideration. However, environmental and technical
aspects cannot be quantified. Therefore subjective rankings must be used. Table 29
indicates that aerobic ponds are the least desirable method of concentrated wastewater
treatment in places where productive land is to be used for construction of the ponds.
Anaerobic lagoons are the least expensive and are used more often than any other
treatment in the management of wastewater from feedlots. However, they are not
recommended as a permanent solution.
Table 29: Cross-comparison of different wastewater treatment systems
Treatment Type
Initial Cost
indexb
Operating
Land Area
Energy Ecology Index
b
Cost
index
rankingc
rankingc
b
index
a
1. Anaerobic lagoons
1
1
20
1
6
2. Aerobic ponds
6
4
300
2
5
a
3. Aerated lagoons
6
13
3
4
4
4. Oxidation ditches
8
16
9
3
3
5. Physical/biological
25
40
10
5
2
6. Physical/biological/chemical
50
70
2
6
1
a Exclusive of land acquisition costs. It is assumed that land used in the construction of the treatment
plant is owned by the feedlot.
b Index is the ratio of the treatment cost to that of the least cost treatment. Thus, the least cost
treatment would have an index of 1. An index of 6 means 6 times more expensive than the least cost
treatment in that category.
c Ranking is a judgment ranking of the six potential systems ranked in order of preference from 1 to 6.
The ranking is not on the basis of cost, nor does a ranking of 6 means it is 6 times less desirable than
that ranked 1 in the same category.
d Index/rank is a combination of cost rations and judgment rankings reflecting the author's
preference based on technical, economic, and ecological feasibility of the system.
115

APPENDIX II:
2010 NEW UGANDA DISTRICT MAP
Source: Ministry of Local Government Website - http://molg.go.ug/2010/08/04/latest-map-of-ugandajuly-2010/
116

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Business Plan Corporate Document

The project is a concept of EAST AFRICAN MEAT PROCESSING LTD an enterprise

EAST AFRICAN MEAT PROCESSING LTD is a limited liability company

EAST AFRICAN MEAT PROCESSING LTD. Business Plan Corporate Document

Shares held [UGS]

1.1.3 The Need

Improve Public Health

Safeguard the environment

Earn Foreign Exchange

Ensure returns for Stakeholders

EAST AFRICAN MEAT PROCESSING LTD. Business Plan Corporate Document

Local and regional markets must consume production.

Adequate off take available from the herd.

Location relative to DFZ to ensure efficiency.

Government support for the development of the livestock industry.

Operational efficiency of the abattoir.

A preliminary survey of the available markets revealed the following factors:1.2.1

Beef consumption in Uganda is 6.0 kilogramme/capita well below 50

Dependent on increased meat production from Uganda.

Exports only after 4 5 years of production on completion of the DFZ and

EAST AFRICAN MEAT PROCESSING LTD. Business Plan Corporate Document

Domestic Market Demand

Primary [village] livestock markets. These are generally unhygienic.

The Products Sales Pricing

USD per kilogramme

UShs per kilogramme*

Goat and Sheep meat local

By-Products and Added-Value Products

The development of by-products facilities such as rendering will supply blood

Price per hide/skin

EAST AFRICAN MEAT PROCESSING LTD. Business Plan Corporate Document

Plant Machinery and Equipment

Governments Role in Development

EAST AFRICAN MEAT PROCESSING LTD. Business Plan Corporate Document

EAST AFRICAN MEAT PROCESSING LTD. Business Plan Corporate Document

Medium Term Loan

Medium term Loan:

EAST AFRICAN MEAT PROCESSING LTD. Business Plan Corporate Document

Essentially in place but requires formalisation.

No major environmental constraints from a strategic point of

Valued Added Industries

Models developed show viability. See Schedules 01 14.

EAST AFRICAN MEAT PROCESSING LTD. Business Plan Corporate Document

BACKGROUND OVERVIEW OF THE LIVESTOCK INDUSTRY IN

Uganda is a landlocked country surrounded by the Republic of Kenya in the East,

Overview of the Livestock Industry

Sector Policies, Development Strategy and Plans

The overall development strategy aims at maximizing the potential of Uganda's

Establishing an efficient livestock disease control system based on cost recovery.

EAST AFRICAN MEAT PROCESSING LTD. Business Plan Corporate Document

Promoting and developing industrial linkages for livestock products including

The Government Policy on Meat Production in Uganda

Make eradication of rural poverty as the over-riding objective.

The broad Policy frameworks, objectives and strategies;

EAST AFRICAN MEAT PROCESSING LTD. Business Plan Corporate Document

Overseeing and coordinating the implementation of the Meat production Master

The Animal Disease Act.

EAST AFRICAN MEAT PROCESSING LTD. Business Plan Corporate Document

INTRODUCTION OF EAST AFRICAN MEAT PROCESSING LTD PROJECT

Company Legal Status

EAST AFRICAN MEAT PROCESSING LTD is a limited liability company

Table 2: Company Shareholding Structure