Introduction
Cream is a fat concentrate found in milk used in the manufacturing of butter and in making bakery products. Cream separation can turn out to be a very lucrative business.
The plant can be set up in rural areas as long as utilities like electricity are available. The business idea aims at production of 150 liters of cream per day, which translates into 46,800 litres annually. The Profit is estimated at $ 16,080 annually with a net profit 37% and the payback period is expected to be 3 years 7 months the total capital investment for the project is $ 17,400.
Technology and production process
The equipments used include a cream separator, milk and cream tanks. The process of separation of cream from, milk is done by a cream separator. In the process of cream separation, the fat-rich portion is separated from the milk by a centrifugal action and collected separately through different outlets. The milk is put into the cream separator and the cream is automatically separated.
Capital Investment Requirements
| Capital Investment Item | Unit | Qty | @ | Amount |
| Milk Cream Separator | No | 1 | 1,000 | 1,000 |
| Cream Tanks | No | 2 | 350 | 700 |
| Milk Tanks | No | 2 | 350 | 700 |
| Building | No | 1 | 15000 | 15,000 |
| Total | 17,400 |
Production and Operating Expenses
| Cost Item | Units | @/day | Qty/ | Pdn Cost/ | Pdn Cost/ | Production |
| day | day | month | Cost/Year1 | |||
| Direct costs3: | ||||||
| Milk | Litres | 0.4 | 150 | 60 | 1560 | 18,720 |
| Sub-total | 1560 | 18,720 | ||||
General costs (Overheads)
| Labour | 250 | 3,000 |
|---|---|---|
| Utilities (Water and Electricity) | 333 | 4,000 |
| Selling and Distribution | 41.67 | 500 |
| Administrative expenses | 12.5 | 150 |
Depreciation (Asset write off) Expenses
| Plant and Machinery | 53 | 600 |
|---|---|---|
| Building | 312.5 | 3750 |
| Sub-total | 1003 | 12,000 |
| Total Operating Costs | 2,563 | 30,720 |
- Production is assumed for 312 days per year.
- Depreciation assumes 4 year life of assets written off at 25% per year for all assets.
- A production Month is assumed to have 26 days.
Project Production Costs and Price Structure
| Item | Qty /day | Qty/yr | @ | Pdn cost /yr($) | UPX | T/rev |
| Cream | 150 | 46,800 | 0.7 | 30,720 | 1 | 46,800 |
Profitability Analysis Table
| Profitability Item | Per day | Per Month | Per Year |
|---|---|---|---|
| Revenue | 150 | 3,900 | 46,800 |
| Less: Production and Operating Costs | 98 | 2,560 | 30,720 |
| Profit | 52 | 1,340 | 16,080 |
Market Analysis
The cream is used in topping cakes, pastries and soups etc. Therefore, this product has good demand both in urban and rural areas. Supply for bakeries and confectioneries, is recommended for the product to capture a portion of the market.
Sources of supply of equipment
Milk can be got from: Mbarara, Kyenjojo, and Ngoma and Nakasongola districts. The machinery can be imported from USA.
Government Facilities and Incentives
The government is encouraging any value added agricultural produce.
