Introduction
The 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 the production of 150 liters of cream per day, which translates into 46,800 liters annually. The Profit is estimated at NGN 20,392,800 annually with a net profit of 37% and the payback period is expected to be 3 years 7 months the total capital investment for the project is NGN 9,417,000
Technology and production process
The equipment used includes 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 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 (CBN exchange rate -$1 to 415.33 NGN) as of 22nd April 2022.
| Capital investment item | Units | Qty | Cost in
NGN |
Cost in USD |
| Milk Cream seperator | No. | 1 | 275,000 | 662.124 |
| Milk Tanks | No. | 1 | 300,000 | 722.317 |
| Cream Tanks | No. | 1 | 200,000 | 481.545 |
| Store | No. | 1 | 50,000 | 120.386 |
| Total cost of machinery | 825,000 | 1,986.372 |
Production and operating costs
| Cost Item | Units | @
NGN |
Qty/
day |
Pdn cost/ month in NGN | Pdn cost/ year
In NGN |
Pdn cost/ year
In USD |
| MIlk | liters | 27,000 | 150 | 702,000 | 8,424,000 | 20,282.667 |
| Sub-total | 702,000 | 8,424,000 | 40,616.007 |
General costs (overheads)
| Cost Per Month
NGN |
Cost Per Year
NGN |
Cost Per Year
USD |
|
| Utilities(water and power) | 2000 | 24,000 | 57.751 |
| Labour | 5000 | 60,000 | 144.377 |
| Rent | 2000 | 24,000 | 57.751 |
| Distribution costs | 5000 | 60,000 | 144.377 |
| Sub –total | 14000 | 168,000 | 404.254 |
| Total Operating Costs | 716,000 | 8,592,000 | 41,020.261 |
- 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 product costs and Price structure
| Item | Qty /day | Qty/yr | @ | Pdn cost /yr
NGN |
Pdn cost /yr
USD |
TR
In NGN |
TR
In USD |
| Cream | 150 | 46,800 | 1500 | 17,047,200 | 41,020.261 | 37,440,000 | 90,090.957 |
Profitability Analysis
| Profitability Item | Per day | Per month | Per Year
NGN |
Per Year
USD |
| Revenue | 225,000 | 5,850,000 | 70,200,000 | 169,022.223 |
| Less production and operating Costs | 27,000 | 702,000 | 8,424,000 | 20,282.667 |
| Profit | 65,900 | 1,699,400 | 20,392,800 | 148,739.556 |
Market Analysis
The cream is used in topping cakes, pastries, 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: farms. The machinery can be imported from the USA.
