Chicken Economics

It was all a dream, that started while I put another handful of nshima (corn flour dough) with cabbage into my mouth.  After dinner when I was forced to tighten my belt by one more notch I came to the realization that I needed more protein. Then I thought, "Why don't I raise female flightless birds and eat their unfertilized offspring (also known as chicken eggs)".  After performing a market analysis I realized that I could sell as many as 30 eggs a day just to the surrounding community and make a little profit and protein at the same time.  This would require about 40 chickens (to sell to the community and for personal consumption) .  Through dlilagent frugal living I was able to save 1,000,000 Zambian kwacha ($200.00).  I spent 400,000kw on infrastructure development, 100,000kw on initial food supplies for employees (chicken feed) then 500,000kw on 10 employees (chickens).  The chickens are received at 17 weeks of age and must be feed 5 weeks before they start producing eggs.

To keep operating costs at a minimum I produce my own chicken feed. Chicken feed is about 60% corn which I am able to buy from local farmers at 15,000kw ($3.00) for 25kg. The rest of the components can be bought from town. Producing my own feed saves me about 25,000kw ($5.00) per month.  My savings would be even greater except as a small producer I don't have the economies of scale on my side, meaning long term storage of feed ingredients purchased in bulk can be a problem.

Once egg production has started for every 10 chickens there should be on average about 9 eggs every day.  Each egg I sell for 800kw (15 cents) meaning that if I don't eat or give away any of my eggs I can make an income of about 7200kw ($1.50) every day.  However I spend about 2500kw every day on feed and other operating costs. So I can make a daily profit of 3700 kw (80 cents). Once egg production starts it will continue for at least 1 year, maybe a little more depending on the chicken. After which each chicken can be sold or consumed as meat.  So after 365 days of egg production the total profit would be 1,350,500kw, which is just enough to remake the initial capital investment of 1,000,000kw.  It must be noted that the 400,000kw of infrastructure spending at the begining is a onetime investment. If the buisness is continued the following year then this investment will not be needed again.  Also the economics of scale would greatly increase the profit margin due to savings in feed production and in infrastructure.

The question must now be put to myself, why didn't I purchase 40 chickens to fulfil my initial market analysis (which I have recently confirmed to be an underestimate, infact I think there is a market for even 80 to 90 eggs per day).  The answer to this question is 2 fold. First the answer is that I wasn't frugal enough, I took a trip to South Africa in December. However I stand by this frivolous travel expenditure and say that it was worth every kwacha.  The second is answer is that risk and uncertainty generated fear in myself and my potential investors.  Will the chickens die or get stolen? Do I have what it takes to be a farmer? If I had another year in Zambia I would reinvest every penny and some more to fulfil my estimates as to the demands of the market.  But that's the slow progression of buisness.  Maybe someday I will make millions...of Zambian kwacha.