STARTING A CREAM SEPARATION PLANT BUSINESS IN UGANDA

 STARTING A CREAM SEPARATION PLANT BUSINESS IN UGANDA

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
  1. Production is assumed for 312 days per year.
  2. Depreciation assumes 4 year life of assets written off at 25% per year for all assets.
  3. 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.

 

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