East African Meat Processing Ltd Business Plan

8/15/2019 East African Meat Processing Ltd Business Plan

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EAST AFRICAN MEAT PROCESSING LTD. Business Plan Corporate Document

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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 establishmentand operation of a modern abattoir in Uganda‘s 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 company‘s authorised share capital is UG

Shs. --------------/= divided into 100 shares of UG Shs. ------------/= each. The companyhas 4 shareholders that are individuals with various business interests and

responsibilities.


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Table 1: Company Shareholding Structure

No. Shareholder Shares held [UGS] [%age]

1. Mr. Ramez --------------- ---%

2. Mr. ABC --------------- ---%

3. Mr. DEF --------------- ---%

4. Mr. GHI ---------------

---%

4. TOTAL --------------- ---%

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


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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.

1 Price per hide/skin


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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 LTDUSD 3,320,000 19.97%

Total USD 3,320,000 19.97%

Loans

Medium – Term Loan

Loan USD 13,302,500 80.03%

Total USD 13,302,500 80.03%

Financials

Net Present Value @ 17% USD 12,243,020

Internal Rate of Return 35.91%

Return on investment 23% in Year 1

Break-Even Point (BEP) 41.07%

Medium – term Loan:

Interest rate 8%

Term 10 years

Grace period 2 yearsCurrency US Dollars

1.7 Conclusions

Market : Short to medium term opportunities – local and regional

markets.

Medium to long term opportunities – international markets.


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Animal and Public Health : Essentially in place but requires formalisation.

Environmental : No major environmental constraints from a strategic point of

view. Site specific impacts can be dealt with.

Infrastructure : Is essentially in place depending on location. This only requiresthe necessary upgrades and extensions.

Valued Added Industries : There are a number of output ancillary

industries that will further enhance the viability of

this project.

Financial : Models developed show viability. See Schedules 01 – 14.

An abattoir constructed to international standards with an input of 200 cattle units perday 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.


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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 andcommercializing 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 forexport. 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.


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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. The broad Policy frameworks, objectives and strategies;

2. The Institutional Framework for Implementation of the Policy;

3. The Legal Framework for Policy Implementation;

4. The Funding of Meat Industry.


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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.


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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 company‘s authorised share capital is UG

Shs. --------------/= divided into 100 shares of UG Shs. ------------/= each. The companyhas 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 inKampala City.

3.2 The Shareholders

Table 2: Company Shareholding Structure

No. Shareholder Shares held [UGS] [%age]

1. Mr. Ramez --------------- ---%

2. Mr. ABC --------------- ---%

3. Mr. DEF ---------------

---%

4. Mr. GHI --------------- ---%

4. TOTAL --------------- ---%

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


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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 country‘s capital city] and at the same timepresenting 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 lookingfor 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.


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

Component

%age

share

EAMPL2

Equity

Debt

Finance

Total

1. Land 1.93% 320,000 - 320,000

2. 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 100.00% 19.97% 80.03% 100.00%

2 EAMPL: East African Meat Processing Limited


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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 ofthe 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 40%

Class 2 Automobiles, construction and earth

moving equipment 35%

Class 3 Buses, goods vehicles, tractor trailers, plant &

machinery for farming, manufacturing

and mining 30%

Class 4 Rail road cars, locomotives, vessels, office

furniture, fixtures etc. 20%


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Table 6: Other annual depreciation allowances

Industrial buildings, hostels and hospitals 5%

Farming general farm works (declining balance

depreciation) 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


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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.


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5.0 UGANDA BEEF SUB-SECTOR MARKET STUDY

5.1 Livestock Sector Overview

The livestock sector is an essential part of Uganda‘s agriculture and is of histor ical and

strategic importance to the country‘s 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%

Pigs 3,184 3,280 3,378 3,479 3,584 3%Poultry 37,437 38,557 39,714 40,905 42,133 3%

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 inUganda. 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


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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.

Uganda‘s 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]

93.60%

5.60% 0.80%

Proportion

Indigenous Cattle

Beef Exotic

Dairy Exotic

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 Ankolé, 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.


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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


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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 importedgoats, 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.


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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

Karamoja 8,820 2,245,140 2,253,960

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


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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 8,5682009 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


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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.


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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

Sheep 648,000 9,072 14.0 35,000,000 0.3

Poultry 37,500,000 48,750 1.3 35,000,000 1.4

Total 332,622 14.7

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 people‘s 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 pricesreceived 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 andaccommodation). 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


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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 tomeet veterinary requirements largely intended to protect the importing country‘s

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 theMiddle 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, Uganda‘s 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 notreadily available, presumably because of the minute quantities involved and

unrecorded informal cross-border trade. Nevertheless, Uganda‘s 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 Uganda‘s meat products. Other potential export markets for

livestock and livestock products exist in the Middle East countries and the EuropeanUnion.

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


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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 1,862,8922009 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 1,654,000 1,796,214

Source: UBOS (2012).

Figure 5: Beef trade balance (exports minus imports) in Uganda (2005-2010)

Source: compiled from data in Table 4.


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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 Ugandawhere 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. Uganda‘s 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


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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

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

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

Cattle Farmer

Village Middleman

Primary stockmarket

Cattle Trader

Abattoir

Local slaughterslab

Secondary stockmarket

WholesalerTertiary stockmarket

Live cattle export

Processor(wholesaler)

Border

Local Market(Supermarket)


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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

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.

Opportunities 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 beefproducts 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 fodderproduction

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 thespread 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


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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 beslaughtered in their areas of origin and only the meat transported to Kampala.


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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. Thedevelopment 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.


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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.

Uganda‘s 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 livestockfarmers 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 primaryreason 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.


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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

Price[USD/kilogramme]

Total Monthly

Revenue [USD]

Goat & sheep carcasses 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

TOTAL 1,327,150 2,967,780

6.3 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 projectionsbasing 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 abattoir‘s 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


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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 thechilled 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. Thiseffectively 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, themen 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”.


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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 USD3,000,000. 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 plant‘s 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.


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7.0 TECHNICAL ASPECTS

7.1 Process Description

7.1.1 Introduction

The slaughtering and meat processing process has been summarized in the diagrambelow:

Figure 7: Slaughtering and Meat Processing Process

Lairage

Ante-mortem

Slaughteringand Bleeding

Skinning orScaling

Evisceration

Post-mortem

Deliver Dis atc

Rigor MortisProcess

Chilling,

Hanging and

Dirty Process

Clean Process


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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 andsanitary 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


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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-addedmaterials. 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.


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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 single-

storey 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 day‘s product.

The refrigerating plant will be as simple as possible without undue

sophistication. Reciprocating compressors and a two-stage ammonia system will


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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 cleaningroom, engine, and maintenance and vehicle workshop.

Covered livestock pens will be provided only for one day‘s 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 ofchlorination, 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 goatsand sheep per year (2,000 goats and sheep/day x 360 working days) in an averageworking 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.


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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 operatingplant, but also on the authorities that are involved.

7.5 Description of Operations

7.5.1

Lairage

Area: 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 day‘s 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 providedwith 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.


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7.5.3 Clean Area Slaughter line


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 thedriven 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

Carcass Chilling Area


Machinery: 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 De-boning and Packing Department

Area: 600 sq. Metres

Equipment and Function: Rail system for the incoming quarters where the saw pre-

cuts are made. The quarters are then distributed to the manual de-boning stations with


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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 hygieneareas 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.


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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.


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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 fromstomach 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 areashould 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.


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Figure 8: Proposed Abattoir Layout Plan

Cooker, Slaughter Exp. areaDigester, effluent Power Centre

Chillers

Lairage

De-boning

Delivery

Administration/Training


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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

Laboratory equipment

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

Documents

East African Meat Processing Ltd Business Plan