Short answer: ROI is the net yearly gain from a project divided by the money put into it, shown as a percentage. In our 300-bird Kuroiler example, GH₵57,200 of money tied up returns about 25 per cent a year at a GH₵150 sale price, and about 5 per cent if the price falls to GH₵130. Compare the figure with what the same money would earn elsewhere, and recalculate after every batch.
Key takeaways
- ROI is the net yearly gain divided by everything tied up, including the working cash for one batch.
- Deduct depreciation on the house and fittings, or the return will look better than the farm earns.
- In the 300-bird example, a GH₵20 fall in the sale price cuts the yearly gain by about GH₵11,400.
- Feed per bird and mortality are the levers you control. Together they can add about 9 points of return.
- Compare the percentage with a bank deposit, then ask whether the extra return pays for the risk.
ROI is a percentage of what you tied up
Last season's profit tells you almost nothing until you divide it by what you put in. A farm that clears GH₵14,300 a year sounds respectable. Whether it is a good use of money depends entirely on how much money was locked into the house, the chicks and the feed before the first sale.
Return on investment asks one question: for every cedi tied up in the project, how many cedis come back each year as net gain? The method is short. Take the net yearly gain after depreciation, divide it by the total money invested, and multiply by 100. A net gain of GH₵14,300 on GH₵57,200 of money invested is 25 per cent.
ROI does not tell you how fast the money comes back, and it does not measure risk. Two farms can both show 25 per cent and be very different businesses. One has a steady buyer and low deaths. The other is one bad batch away from losing its house. The timing question is answered by payback, which the FAQ below explains. The risk question needs the sensitivity table later in this article.
What goes into the investment figure
The most common error is a short investment figure. People count the house and forget the cash they need to run the first batch. Set out each item on purpose, and decide now how you will treat it.
| Item | Include it? | Example (GH₵) | Why |
|---|---|---|---|
| House, fittings and water system | Yes | 24,000 | Money sunk into the farm, spread over the years it lasts |
| Working cash for one batch of chicks and feed | Yes | 33,200 | Money tied up until the first sale comes in |
| Your own labour | No, but record it separately | Not in the figure | Keeps the ROI about money, not your time |
| Interest on borrowed money | Yes, if you borrowed | Depends on the loan | It is a cost of using the money |
| Birds on the farm at year end | Yes, at cost | Varies | Stock still on the farm is part of what you tied up |
We include the working cash because the farm cannot start a batch without it, and you only get it back at the sale. Leave it out and the ROI looks much better than the farm is really doing. Counting it is the conservative choice, and it is the one we recommend. If you are borrowing for the house, the loans guide explains how lenders price the money, and the interest goes into this line.
The 300-bird Kuroiler setup used in this example
The example uses one house with 300 Kuroiler chicks per batch, two batches a year, and the assumptions below. Kuroilers are dual-purpose birds. They take longer to reach market than a broiler and eat more feed to get there. That trade-off matters for the return, so the feed figure is the one to check hardest. The Kuroiler guide covers the breed in more depth, and our Kuroiler and Noiler chicks page lists the from-price.
| Assumption | Figure | Basis |
|---|---|---|
| Chicks per batch | 300 | Chosen for this example |
| Chick price | GH₵11 each | Our from-price: six boxes of 50 at GH₵550, so GH₵3,300 |
| Mortality over the cycle | 5 per cent | Assumed, leaving 285 birds to sell |
| Feed to market weight | 8 kg per bird | Assumed for a dual-purpose bird |
| Feed price | GH₵11 per kg | Assumed; check your feed merchant's price |
| Sale price per bird | GH₵150 | Our mature cock figure, used as a stand-in for a bird at market weight |
| Batches per year | 2 | Assumed |
| House, fittings and water system | GH₵24,000 | Assumed, depreciated over five years |
Your buyer may pay more or less than GH₵150, and your own mortality and feed figures will differ. Replace every assumption with your records before you commit money. The arithmetic is the same either way.
What one batch costs to run
| Running cost | Working | GH₵ |
|---|---|---|
| Day-old chicks | 300 at GH₵11 | 3,300 |
| Feed | 300 birds at 8 kg at GH₵11 per kg | 26,400 |
| Medicines and vaccine handling | Assumed | 1,000 |
| Litter, power, labour and transport | Assumed | 2,500 |
| Running cost per batch | 33,200 |
Feed is close to four-fifths of the running cost in this example, which is normal for a bird that eats for longer. Every half kilogram of feed you save per bird is worth GH₵1,650 a batch, or GH₵3,300 a year across two batches. That is why feed gets the most attention in the levers section later on.
What one batch brings back
| Line | Working | GH₵ |
|---|---|---|
| Birds sold | 300 less 5 per cent | 285 birds |
| Sales | 285 at GH₵150 | 42,750 |
| Running cost | From the table above | 33,200 |
| Profit per batch | 42,750 less 33,200 | 9,550 |
| Profit for two batches | 9,550 times 2 | 19,100 |
| Depreciation on the house | 24,000 divided by 5 | 4,800 |
| Net yearly gain after depreciation | 19,100 less 4,800 | 14,300 |
Depreciation is the only line that does not leave the farm as cash this month. It is still a real loss of value, and it belongs in the figure. A farm that skips it will show a better return than it has earned, and the bill arrives when the roof or the drinker lines need replacing.
Working out the percentage, year by year
Divide the net yearly gain by the money tied up. 14,300 divided by 57,200 gives 0.25, or 25 per cent. The same farm over three years returns 42,900 against the same 57,200 invested.
| Year | Net gain after depreciation (GH₵) | Cumulative gain (GH₵) | Cumulative return on GH₵57,200 |
|---|---|---|---|
| 1 | 14,300 | 14,300 | 25.0% |
| 2 | 14,300 | 28,600 | 50.0% |
| 3 | 14,300 | 42,900 | 75.0% |
At the end of year three the farm has returned 42,900 against 57,200 invested. It has not paid back everything yet, and the house still has two years of its life left in the books. Read the cumulative column as the honest story. A single year's percentage can flatter a farm that is still recovering from its first year.
Mortality and price together: the table that changes the decision
Change one assumption at a time and the picture moves in a way that is easy to underestimate. Change two at once and the decision may flip. The table holds the house, the chick cost and the feed use fixed, and varies only the death rate and the sale price.
| Scenario | Mortality | Sale price (GH₵) | Profit per batch (GH₵) | Net yearly gain (GH₵) | Return on GH₵57,200 |
|---|---|---|---|---|---|
| Base case | 5% | 150 | 9,550 | 14,300 | 25.0% |
| More deaths | 10% | 150 | 7,300 | 9,800 | 17.1% |
| Lower price | 5% | 130 | 3,850 | 2,900 | 5.1% |
| Both at once | 10% | 130 | 1,900 | -1,000 | -1.7% |
In this example the price does more damage than the deaths. Doubling mortality from 5 to 10 per cent costs about GH₵4,500 a year. A GH₵20 fall in the sale price costs about GH₵11,400 a year. In the worst row the farm loses about GH₵1,000 a year after depreciation, even though it still sells 270 birds. The house is the fixed cost that keeps the loss from being smaller.
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Where the percentage moves fastest, without buying more birds
Two levers sit largely in your hands: feed per bird and deaths. Their effects are easy to work out.
- Feed per bird. Saving half a kilogram per bird in each batch adds GH₵3,300 a year, which is about 5.8 percentage points of return. Weigh the feed you put out each week against the birds in the house, and check the feed conversion against the feed conversion guide. The same principle applies to dual-purpose birds.
- Deaths. Cutting mortality from 5 to 3 per cent keeps six more birds per batch. At GH₵150 each that is GH₵1,800 a year, about 3.1 percentage points of return.
- Working cash. Buying feed in bulk can lower the cost per kilogram, but it ties up cash for longer. Only do it when the return on that cash beats what the same money would earn elsewhere.
Each lever looks small on its own. Together, better feed use and fewer deaths lift the base case from 25 per cent to about 34 per cent. That is the difference a careful batch record makes, and it costs no extra house or extra money.
Set the figure against what the same money could earn
A 25 per cent return sounds strong until you put it beside the alternatives. Check the current rates on a fixed deposit at your bank, and on government treasury bills, using the rates in force when you decide. Then compare the poultry figure with the risk. A farm can lose money in a bad batch, and a deposit cannot. A reasonable farmer asks the farm for a higher return than a deposit gives, to be paid for the disease risk, the price risk and the hours spent on the birds.
If the 57,200 is money you cannot afford to lose, the downside matters more than the percentage. Write the comparison on the same sheet as the ROI, so that the decision is made with both in front of you. The feasibility study guide sets out how to test a plan like this before you build, and the break-even guide covers the batch-level sum that feeds into it.
A high percentage can still be a poor deal
The base case shows 25 per cent and the worst case shows a loss, and the gap between them is one bad batch and a dip in the market. A figure built on the best price of the year is not the same as one built on the average price you actually received. Plan on the average of your last three batches, and treat the best price as a bonus.
Risk also sits in the timing. The house costs its money up front, and the first sale comes only at the end of the cycle, after the feed has gone in week by week. A bad first batch can use up the working cash before the second one starts. Keep a reserve of at least one batch's running costs before you begin, so that one poor batch cannot end the whole plan.
A checklist before you calculate ROI on a poultry project
- List every cost of the project, including the house, fittings, water supply and any power connection.
- Add the working cash needed for one batch of chicks and feed, and count it as money tied up.
- Decide the depreciation life of each fixed item, and work out the yearly charge.
- Enter mortality and feed-per-bird figures from your own records, not from a brochure.
- Use the average sale price from your last few batches, and run a worse-price case beside it.
- Calculate the net yearly gain after depreciation, and divide it by the money tied up.
- Compare the percentage with a deposit rate, and with how much a bad year you can carry.
- Recalculate after every batch, and swap the assumptions for the actual figures.
The checklist is the same whether you are buying a house or adding a batch of birds. Only the list of assumptions changes. If the numbers hold for your farm, place the order through the order form, and confirm the chick price in writing with WhatsApp +233 24 915 1503 before you pay. Questions about batches and delivery are answered on our FAQ page.
Questions farmers ask
What is a good ROI for a poultry farm?
There is no single number. A good figure beats what the same money would earn with little risk, after you have allowed for disease, price swings and bad batches. Check current deposit and treasury bill rates before you decide. Poultry should pay a premium over those rates for the risk it carries, and the sensitivity table shows how quickly that premium can disappear.
Is ROI the same as profit margin?
No. Profit margin is profit as a share of sales, so it shows how much of each cedi of sales you keep. ROI is profit as a share of the money you put in, so it shows how hard that money is working. A farm can have a thin margin and a good ROI if it turns its stock quickly, and a fat margin with a poor ROI if the house is expensive and idle for much of the year.
Should I include my own time in the ROI?
Keep it out of the ROI figure and show it separately. ROI measures what the money earns. If you do not pay yourself, the profit looks higher than the business you are really running. Write down what you would pay someone to do your work, then decide whether the figure left over still justifies the money.
What is payback, and how is it different from ROI?
Payback is the time it takes for cumulative gains to equal the money invested. ROI is the return each year, as a percentage. In the example, cumulative gains reach the GH₵57,200 invested at the end of year four, when the house has one year of life left. Payback tells you how long the money is at risk, and ROI tells you how well it worked while it was.
Does ROI include loan interest?
It should, if you borrowed the money. Interest is the cost of using someone else's money, so it comes off the net gain before you divide. If you used your own savings, count the interest you could have earned on them instead, using the deposit rate you checked. Be consistent, and note on the sheet which method you used.
Why do you depreciate the house?
Because it wears out. A house bought for GH₵24,000 and used for five years loses value every year, and the profit line should show that loss. Leaving depreciation out makes the farm look more profitable than it is and hides the bill for the roof you will one day need to replace.
How often should I recalculate ROI?
After every batch, using the actual mortality, feed used and price achieved, and again whenever a major cost moves. A figure that was right in January can be badly out by December. The point of the sheet is to replace assumptions with records, so the next decision is based on what actually happened.
