Premier Quality Kenya Dairy Business Plan

Investor-ready zero-grazing dairy business plan: KES 27.3m project, 20 heifers to a 52-cow herd on 12 acres, Year 5 revenue KES 21.97m.

Premier Quality Kenya Dairy — Holstein herd in a zero-grazing milking parlour

Business Plan & Investment Proposal · Kenya

Dairy Farming Business Plan — Kenya, Zero-Grazing Model

Premier Quality Kenya Dairy Limited · The Fodder Block Is The Business. Everything Else Is Detail.

A commercial zero-grazing dairy enterprise in Kenya — from 20 in-calf heifers to a
52-cow milking herd on 12 acres, selling chilled raw milk to a licensed cooperative alongside breeding heifers and
composted manure. Total project cost of KES 27 345 000: KES 17.35 million promoter equity
and KES 10.0 million term debt at 15.5 per cent over ten years, with a three-year principal grace
period.

KES 27.3mTotal project cost

52 cowsMilking herd, Year 5

365 335 LLitres sold, Year 5

KES 39.40Cost per litre

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A dairy farmer does not set the milk price. The cooperative pays KES 48 a litre
and no amount of good management changes that, which leaves exactly one variable worth optimising: what it costs to
produce the litre. Premier Quality takes that from KES 68.20 in Year 1 down to KES 39.40 by Year 5, and
the mechanism is the twelve-acre fodder block — maize silage, Napier grass, desmodium and lucerne grown under a
registered fifteen-year lease. Feed falls from 71 per cent of milk revenue to 53 per cent because it is
grown rather than bought. That is why the plan calls the fodder block the business and everything else detail. The
herd build from 20 in-calf heifers to 52 milking cows runs at a loss for two years, which the three-year principal
grace period on the term loan is structured to carry.

The plan at a glance

Six measures that determine whether this dairy and its funding stand up.

KES 27.3mTotal project costKES 17.35m promoter equity and KES 10.0m term debt at 15.5% over ten years, with a three-year principal grace period.

12 acresFodder blockMaize silage, Napier grass, desmodium and lucerne under a registered 15-year lease. This is what sets the cost per litre.

KES 39.40Year 5 cost per litreAgainst a net milk price of KES 48. The 8.60 shilling gap is the entire margin, and it is earned in the fodder block.

53.2%Feed as a share of milk revenueDown from 71.0% in Year 1. Every point of improvement comes from growing feed rather than buying it.

52 cowsMilking herd at Year 5From 20 in-calf heifers, producing 365,335 litres a year into a licensed cooperative.

2.14xYear 5 debt service coverNegative in Years 1 and 2 — which is exactly what the three-year principal grace period exists to bridge.

The only number the farmer controls

What a litre costs to produce against what it sells for — and why only one of those two is a management decision.

KES 39.40Cost of producing a litreAt Year 5, down from KES 68.20 in Year 1. Feed falls from 71% of milk revenue to 53% because the fodder is grown on the farm, not bought at market.

against

KES 48.00Net price receivedWhat the cooperative pays. The price is set by the market; the cost is set by the fodder block — which is the only half the farmer controls.

Five years of trading

Revenue and EBITDA on the base case. Yield per cow and the feed cost are the two assumptions that matter most, and both are stressed in Section 12.

Revenue build, and the milking herd behind it

Revenue is litres sold plus breeding stock and manure. The milking herd grows from an average of 16 head to 52, taking litres sold from 83,147 to 365,335.

Year 1

KES 4.37m · 16 cows cows

Year 2

KES 8.46m · 28 cows

Year 3

KES 13.77m · 36 cows

Year 4

KES 18.11m · 45 cows

Year 5

KES 21.97m · 52 cows

EBITDA from Year 3, and the cost per litre driving it

Years 1 and 2 run EBITDA deficits of KES 1.65m and KES 0.74m while the herd builds. Cost per litre falls from KES 68.20 to KES 39.40 against a net milk price of KES 48 — that gap is the business.

Year 3

KES 1.80m · KES 44.40/L

Year 4

KES 3.69m · KES 41.40/L

Year 5

KES 5.23m · KES 39.40/L

Why this plan works the way it does

The fodder block sets the cost per litreTwelve acres of maize silage, Napier, desmodium and lucerne under a fifteen-year lease. Feed falls from 71% of milk revenue to 53% because it is grown rather than bought — that movement is the whole margin story.

Price is given; cost is earnedThe cooperative pays KES 48 a litre and the farmer cannot change that. What the farmer controls is producing a litre for KES 39.40 instead of KES 68.20, which is where every shilling of profit comes from.

Zero-grazing trades land for controlHousing 52 cows on 12 acres only works because feed comes to the animal. It raises capital cost and labour, and in return removes the grazing variability that undoes most smallholder dairies.

Two loss years, deliberately fundedEBITDA is negative in Years 1 and 2 and debt service cover is negative with it. The three-year principal grace period on the term loan exists precisely to carry the herd build.

Three revenue lines, not oneMilk is the bulk of it, but breeding stock, culls and composted manure add KES 4.43 million by Year 5 — a fifth of revenue from animals and by-products the herd produces anyway.

Financial snapshot

Four charts from the plan. The full set of twenty-four appears throughout the sections below.

Figure 8. The silage economics that decide the enterprise.

Figure 11. Feed as a share of milk revenue.

Figure 16. Cost of producing a litre against the net milk price.

Figure 19. Break-even in litres of milk.

Seventeen sections and five appendices. Every page carries full navigation, a section outline and links to the sections either side of it.

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Important Notice and Basis of PreparationBasis of preparation, data sources and forward-looking statement caveats. Please read first.

Appendices

Confidential. This document is provided for the purpose of evaluating an
investment in Premier Quality Kenya Dairy Limited and may not be reproduced or distributed without written consent. Projections are
forward-looking statements based on the assumptions registered in Section 16 and are not guarantees of future
performance.