Doing a Poultry Farm Feasibility Study in Ghana

What a feasibility study answers, and what it does not

A feasibility study asks whether the idea can work at all. It does not ask how to run the farm day to day, and it does not design the bank pack. Those come later, in the business plan and the day-to-day records.

Most people skip the study because they are excited. We understand that. We still see farmers who spend most of their money on a house before they have spoken to a single buyer, and then discover the market pays less than they assumed. A few weeks of checking costs very little next to a shed full of birds nobody wants at the price you need. If you want a rough sense of the house size your numbers imply, the house size calculator is a useful first step.

Give yourself a clear end point. At the end of the study you should have one of three answers: go, go with changes, or no-go for now. A study that ends in “we will see” has not finished.

Test the demand with buyers, not with friends

Friends will say they would buy your chickens. Strangers with money will tell you what they actually buy. Ring or visit fifteen buyers in your area. Include a restaurant or two, a few chop bars, some households that buy in quantity, and at least one trader who sells at a market. Ask them the same questions every time and write the answers in a notebook.

1. What do you buy now: live birds, dressed birds, or eggs?
2. How many do you need in a normal week, and how many at Christmas or Sallah?
3. What weight and size do you want, and what do you reject?
4. What did you pay last month, and who did you buy from?
5. What would make you switch supplier, and would you pay in advance for a reliable order?

When you have the answers, count only the buyers who would sign up for a fixed weekly quantity. A buyer who says “maybe” is not demand. Treat the signed orders as your real market and everything else as upside. Once you know the box sizes, the day-old chicks page shows what each order contains, so the buyer numbers translate directly into chick numbers.

Walk the site with a checklist, not a good feeling

A nice piece of land can still be a bad site for birds. Walk it with a list and fill it in on the spot. Take photographs and measurements, and talk to the neighbours before you commit. If the site is some distance from the farm, check how the delivery works: we confirm the delivery cost before payment, and the same question applies to every supplier you ask.

• Power: is there a connection, how often does it go off, and where would a generator sit?
• Water: is there a reliable source, and what is the flow when every tap in the area runs at once?
• Road: can a feed lorry and a chick van reach the house in the rainy season, not just in the dry?
• Neighbours: how far is the nearest flock, and does smell or noise from your house reach their homes?
• Land and permits: who owns the land, and what does the district assembly and the veterinary office require for a poultry house on that site?
• Drainage: will water sit around the house after a heavy storm?

Ask the permit question early. Requirements differ by district, and an answer you get from a neighbour is not the same as an answer from the office that will check your house.

Get three quotes for every big cost, and name the blind spots

The study is only as good as its costs. For each big item, get three written quotes, note the terms, and check what each one leaves out. A cheap quote for a house that excludes the floor, the drains or the wiring is not cheap.

Chick quotes from us are on the prices page, and the Sasso and broiler pages set out what each line includes. Write down any quote you could not get. An unknown cost is a risk you have not priced yet, and you should give it a figure anyway, even a deliberately high one.

A worked break-even for 500 broiler chicks

Break-even is the number of birds you must sell to cover every cost in the cycle. It is simple arithmetic once the costs are on paper:

Break-even chicks = fixed costs per cycle ÷ contribution per placed chick

Contribution per placed chick is what each chick brings in after the costs that move with it. Here is the example, with every number labelled as an assumption you should replace with your own.

• Chick cost: GH₵20, the Ross 308 starting price, confirmed at order
• Feed: 4.5 kg per bird across the cycle, at an assumed GH₵10 per kg, so GH₵45
• Other running costs: litter, vet and power per bird, an assumed GH₵6
• Mortality: 8 percent of chicks placed, an assumed figure
• Sale price: GH₵90 per bird, an assumed figure from the buyer calls
• Fixed costs per cycle: labour GH₵1,050, power and fuel GH₵1,200, house and equipment repayments GH₵2,000, total GH₵4,250

Work it through. Each chick placed costs GH₵71 in chick, feed and running costs. Each sold bird brings GH₵90, but only 92 of every 100 placed chicks reach sale, so each placed chick brings in GH₵82.80. The contribution is GH₵11.80 per placed chick. Break-even is GH₵4,250 ÷ GH₵11.80, which is about 361 placed chicks. The 500-chick flock therefore clears GH₵1,650 in the cycle on these assumptions. That is a modest margin, and it is the point of the exercise: a small change moves it a long way.

Run it again with bad numbers before you believe the good ones

The base case is never the risk. The risk is the case where feed rises, the market dips and a few more birds die than you planned. Change one number at a time and see what it does to the cycle.

Look at the feed row. A 15 percent rise in feed takes most of the margin away, and the flock stops breaking even at all with 500 chicks. This is why feed is the number to watch, and why you should know your supplier’s next price before you place the order. The sale price row is the same story from the other side. The cheapest way to protect a flock is to have buyers who have agreed a price for the cycle.

Name the risks in advance and price them

A risk you have named is one you can plan for. A risk you have not named is one you will meet at the worst moment. Write a short list of the things that can stop the cycle and what you will do about each.

• Power: dumsor cuts that last longer than a night. Plan the generator and the fuel, and decide which fans run first.
• Harmattan: dust and cold nights from December to February. Plan the litter, the house closure and the feed storage for those weeks.
• Rains: flooding around a low house and roads that close. Keep a week of feed on site and a route for delivery that does not depend on one bridge.
• Disease: a sudden outbreak in your area. Agree a vet plan now, and keep biosecurity written down from the first day.
• Buyers: a major customer who stops ordering. Keep at least two buyers who take fixed quantities.

Put a rough cost on each risk, even a guess, and add it to the fixed costs. The mistakes beginners make with power and water are the ones that most often turn a risk into a loss. A study that ignores risk is a sales brochure with a spreadsheet attached.

A pilot box of 50 is the cheapest real test you can run

Before you build anything, you can test the model with one box. A box of 50 Ross 308 chicks at GH₵20 each costs GH₵1,000. Raise them in a small brooder or a spare room that you can keep clean, and keep the records exactly as you would for a large flock. Our minimum order is one box of 50, so the pilot is also a real purchase, not a pretend one.

Compare the pilot with the model line by line. Did the feed used match the 4.5 kg per bird? How many died, and when? What weight did they reach at sale? A pilot that is within about 10 percent of the model gives you confidence to scale. A pilot that is far off tells you where the model is wrong, which is exactly what you paid it to find out.

Keep the batch record that comes with the chicks, and read the vaccine list closely. It tells you what has already been done at the hatchery, so your vet can plan the rest without repeating it. To place a pilot order, start from the order form or write to +233 24 915 1503.

The go, no-go and go-with-conditions rules

Decide the rules before you look at the final numbers. It is far easier to stick to a line you wrote in advance than to move it after you have fallen in love with the idea. Here is the set we would use on a broiler project of this size.

1. Demand: signed orders cover at least 60 percent of the planned flock for each cycle.
2. Margin: the flock clears break-even with at least a fifth to spare, using the feed and sale price in your pessimistic row.
3. Money: you can fund two cycles of costs from savings or agreed credit, without the new house depending on sales that have not happened yet.
4. Site: power, water, road and permits are confirmed in writing or from the office, not from a neighbour.
5. Pilot: the pilot box landed within about 10 percent of the model on feed, deaths and weight.

If all five pass, go. If three or four pass, go with conditions, and name the failed item and the date you will recheck it. If two or fewer pass, the answer is no for now. Stopping is a sound decision, and it costs far less than a failed house. If the answer is go and the money has to come from a lender, our note on funding and loans lists what they will ask to see.

Mistakes that spoil the study itself

The study fails in a few predictable ways. Watch for these while you work.

• Costing the chicks and nothing else. The chick is the cheapest thing that will go wrong for you.
• Using the best cycle you ever heard about as the average. Ask for the bad cycles too.
• Keeping the assumptions in your head. Write each one down with its source, so you can check it later.
• Forgetting the time value of your money. The cash spent on the house is cash you cannot use for feed.
• Stopping the study at the first good result. The point of the study is to find the weak spot, so keep going until you have found it.

If the study says go, the next document is the business plan, and our guide to writing one for a Ghana farm shows how to lay it out. The honest numbers on whether poultry pays are in is poultry farming profitable in Ghana, and it is worth reading both before you talk to anyone who lends money. For the first-cycle chick count, see how many day-old chicks to start with, and check the FAQ for the questions that come up most.

Questions farmers ask