Premier Quality Kenya Dairy Business Plan — Key Assumptions

Every yield, price, feed, capital and funding assumption behind the model, stated so a funder can test each one independently.

Key Assumptions

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16.1 Herd, yield and price
16.2 Cost, capital and funding
16.3 Assumptions most in need of independent verification

16.1 Herd, yield and price

Assumption	Year 1	Year 5	Basis
Land under fodder	12 acres	12 acres	Six acres maize for silage, four Napier, two desmodium and lucerne, under a registered 15-year lease
Heifers purchased	20	0 (10 in Year 4)	42 head bought across Years 2 to 4 at KES 200 000 each
Average milking herd	16 head	52 head	Phased purchase plus home-bred replacements entering from Year 3
Young stock behind the herd	18 head	72 head	Reared on the same fodder block; the reason forage is sized against the whole herd
Average yield per cow per day	17 litres	23 litres	Lactation average, not peak. Break-even is approximately 18.0 litres
Days in milk	305	305	Against 60 days dry; 83.6% of the year in milk
Calving interval	13.5 months	13.5 months	Realistic under good Kenyan management
Litres sold	83 147	365 335
Farmgate price	KES 50 a litre	KES 50 a litre	Below the KES 52 announced from 1 August 2026; held flat as a conservatism
Cooperative deduction	4%	4%	Chilling, transport and levies; net realised price KES 48
In-calf heifer sale price	KES 195 000	KES 195 000	Within the KES 140 000 to 260 000 market range

16.2 Cost, capital and funding

Assumption	Value	Basis
Forage fed per cow per day	45 kg fresh weight	Plus approximately 20 kg for young stock
Home-grown silage cost	KES 4.20 a kilogram	Fully costed including land, labour and inputs
Purchased silage cost	KES 7.50 a kilogram	Conservative against a reported market range of KES 8 to 10
Share of forage self-grown	90%	Break-even is approximately 22.4%
Dairy meal	6.75 kg a cow a day at KES 47 a kilogram	KES 3 290 for a 70 kg bag
Minerals, salt and additives	KES 22 a cow a day
Permanent labour	KES 1.08m rising to KES 1.98m	Four workers rising to seven, plus the herd manager
Land lease	KES 300 000 a year	Registered 15-year family lease, carried in overhead
Fixed capital expenditure	KES 8 900 000	Housing, water, milking, cooling, feed store, forage equipment, fodder establishment, fencing and manure handling
Herd at inception	KES 4 000 000	20 in-calf heifers at KES 200 000
Herd build, Years 2 to 4	KES 8 400 000	42 in-calf heifers at KES 200 000
Working capital	KES 5 600 000	Sized to hold cash above zero through the Year 4 trough
Contingency	KES 445 000	5% of fixed capital expenditure
Total project cost	KES 27 345 000
Promoter equity	KES 17 345 000	63% of the funding structure
Term debt	KES 10 000 000	37%; ten years at 15.5% with a three-year principal grace
Depreciation	KES 742 500 a year	Fixed assets only, over lives of five to twenty years. Biological assets are not depreciated
Corporate tax	30% with indefinite loss carry-forward	No tax falls within the projection period
Debtor days	21 days	Cooperative payment cycle
Creditor days	30 days
Feed and forage inventory	60 days	Conserved silage carried through the dry season

16.3 Assumptions most in need of independent verification

Assumption	Modelled	Verification required	Consequence if wrong
Home-grown silage cost	KES 4.20 a kilogram fully costed	A costed fodder budget for the specific site: land preparation, seed, fertiliser, labour, harvesting and ensiling	The single most important number in the plan. At purchased cost Year 5 turns to a KES 1.02m loss
Fodder block yield	Enough to supply 90% of 1 380 tonnes from 12 acres	Agronomic assessment of soil, rainfall and irrigation capacity for two maize crops plus Napier and legume	If the block supplies less, the herd must be smaller. Buying the shortfall destroys the margin
Dry-season water yield	Sufficient for the herd and fodder irrigation	Independent borehole test through a full dry season, plus the WRA authorisation	The second silage cycle fails and with it half the forage argument
Average yield per cow	23 litres a day at maturity, lactation average	Milk records from comparable units in the chosen county, and the genetics of the heifers actually purchased	The largest financial sensitivity. Break-even is 18.0 litres
Cooperative price and deduction	KES 50 gross, 4% deduction, KES 48 net	A signed supply agreement with the named cooperative, confirming price, deduction and payment cycle	Break-even is KES 41.20. Headroom exists but a sustained shortfall requires a smaller herd
In-calf heifer market depth	42 head bought and surplus sold at KES 195 000	Direct enquiry with breeders, county restocking programmes and the cooperative	Purchases cost more or sales realise less. Roughly 20% of Year 5 revenue is exposed
Term facility and grace period	KES 10m at 15.5% with three years’ principal grace	Written approval before any capital is committed	Cover in Year 3 is 0.89 times without the grace and the facility breaches on its first test
Registered land lease	15 years at KES 300 000 a year	Registered title and lease, with the family arrangement documented	The debt is not securable and the funding application fails at credit

The list is ordered by consequence. The first three are the fodder argument, and they determine whether the enterprise described in this plan exists at all; a promoter with a limited diligence budget should spend it there before anything else. The next three determine the return within a range. The last two determine whether the project is financeable on the terms assumed, and both can be settled with paperwork rather than fieldwork.

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