BUTTER MAKING BUSINESS IN UGANDA
Introduction
This profile envisages the establishment of a plant that produces Butter. Butter is a spread made from solidified cream. Cream is taken from milk and then churned. Eventually Butter globules form, and start to clump together. Two products result at the end: Butter, and the liquid left over, which is called Butter milk.
Production Capacity
This plant will be capable of producing 400 kgs of Butter every day which will tantamount to 10400 kgs per month.
Production Process & Technology
Butter is made through the process of churning milk cream. The churning process breaks down a membrane around the Butterfat molecules, allowing them to adhere to each other, thus coagulating to form Butter. Butter forms in the final two minutes of the churning process. Salt used to be added to Butter as a preservative, slowing down the growth of bacteria in the Butter; today, it is added mostly as flavouring for those who are used to or prefer the taste of salted Butter.
Scale of Investment, Capital Investment Requirements
The total fixed capital investment cost of the project is estimated at USD 42,246.
Capital Investment Requirements in US$
| Item | Units | Qty | @$ | Amount $ |
| Delivery Van | No. | 1 | 6,000 | 6,000 |
| Milk Truck | No. | 1 | 12,000 | 12,000 |
| Cream Separator | No. | 1 | 2,000 | 2,000 |
| Butter Cutter | No. | 1 | 1,600 | 1,600 |
| Churning Machine | No. | 1 | 4,500 | 4,500 |
| Refrigerators | No. | 2 | 700 | 1,400 |
| Milk Tanks | No. | 2 | 400 | 800 |
| Total Amount | 31,000 |
Operating cost in us $ General Costs (Over heads)
| Item | Units | @ | Qty/ day | Prod. Cost/ day | Prod. Cost/ month | Prod. Cost/ Year |
| Direct Costs | ||||||
| Milk | Ltrs | 0.24 | 5,000 | 1,200 | 31,200 | 374,400 |
| Salt | Kgs | 0.4 | 20 | 8 | 208 | 2,496 |
| Sub total | 1,208 | 31,408 | 376,896 | |||
| Rent | 600 | 7,200 |
|---|---|---|
| Packaging | 200 | 2,400 |
| Labour | 1,000 | 12,000 |
| Utilities (Power &Water) | 1,000 | 12,000 |
| Repair & Maintenance | 500 | 6,000 |
| Fuel | 1,500 | 18,000 |
| Depreciation (Asset write off) Expenses | 645.3 | 7,750 |
| Sub – total | 5,445 | 65,350 |
| Total Operating Costs | 36,853 | 42,246 |
Project product cost and Price structure
| Item | Qty/day | Qty/yr | @ | Pdn Cost/yr | UPx | T/rev |
| Butter | 400 | 124,800 | 3.4 | 430,560 | 5 | 2,152,800 |
Profitability analysis
| Profitability Item | Per day | Per Month | Per Year |
|---|---|---|---|
| Revenue | 6,900 | 17,900 | 2,152,800 |
| Less: Production & Operating Costs | 135 | 3,521 | 42,246 |
| Profit | 6,765 | 14,380 | 2,110,554 |
Sources of Supply of Raw Materials
Milk which is the prime Raw material for Butter making will be supplied locally from milk collecting centres especially in western and central parts of Uganda.
Government Facilities and Incentives Available
The Government has tried to improve on the Transport and Communication Network, removed tax levy on agricultural products in a bid to promote Agro-processing industry in Uganda.