Khanya Eggs Business Plan — Unit Economics
The economics of a single egg: R0.82 of margin at Year 5, the full cost stack per egg, and how scale changes each component.
Unit Economics
Jump to section
- Overview & contents
- i. Important Notice
- 1. Executive Summary
- 2. The South African Egg Market
- 3. Avian Influenza: The Risk That Defines This Business
- 4. SWOT and Competitive Position
- 5. The Five-Stage Roadmap
- 6. The Funding Ladder
- 7. Flock Performance
- 8. Feed Strategy
- 9. Point-of-Lay Pullet Sourcing
- 10. Biosecurity
- 11. Route to Market and Pricing
- 12. Operations and People
- 13. Regulation and Compliance
- 14. Unit Economics
- 15. Capital Expenditure
- 16. Financial Projections
- 17. Break-Even
- 18. Sensitivity and the Grant Question
- 19. Risk Management
- 20. Implementation Roadmap
- 21. Returns
- 22. Key Performance Indicators
- 23. Key Assumptions
- 24. Conclusion
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Stage Capital Schedules
- C. Appendix C: Debt Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Funding Application Checklist
- F. Appendix F: Glossary
Everything reduces to the cost of producing one egg and the price it sells for.
|
Per egg sold, Year 5 |
Rand |
% of total revenue per egg |
|---|---|---|
|
Blended selling price |
2.81 |
94.0% |
|
Spent hen and manure income, apportioned |
0.18 |
6.0% |
|
Total revenue per egg |
2.99 |
100.0% |
|
Feed |
(0.97) |
32.4% |
|
Point-of-lay pullet |
(0.47) |
15.7% |
|
Vaccination and health |
(0.08) |
2.7% |
|
Packaging |
(0.13) |
4.3% |
|
Power, water and litter |
(0.07) |
2.3% |
|
Fixed cost absorbed |
(0.45) |
15.1% |
|
Total cost per egg |
(2.17) |
72.6% |
|
Margin per egg |
0.82 |
27.4% |
A margin of R0.82 per egg looks small until it is multiplied by 6.18 million eggs. That is the nature of the business: it makes money on repetition, not on any single sale, and it loses money the same way. Feed and the pullet together are R1.44 of the R2.17 total cost, 66.4 per cent, which is why Sections 8 and 9 exist as separate strategy sections rather than as line items.
14.1 How the per-egg economics move
|
Rand per egg |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Blended selling price |
2.77 |
2.78 |
2.75 |
2.75 |
2.81 |
|
Total revenue per egg |
2.94 |
2.95 |
2.92 |
2.92 |
2.99 |
|
Direct cost per egg |
(2.02) |
(1.91) |
(1.84) |
(1.78) |
(1.72) |
|
Gross margin per egg |
0.92 |
1.04 |
1.08 |
1.14 |
1.27 |
|
Fixed cost absorbed per egg |
(3.31) |
(1.44) |
(0.89) |
(0.61) |
(0.45) |
|
Margin per egg |
-2.39 |
-0.40 |
0.19 |
0.53 |
0.82 |
Fixed cost absorbed per egg falls from R3.31 in Stage 1 to R0.45 by Stage 5, a reduction of 86 per cent, entirely because the same broadly fixed overhead is spread across 6.18 million eggs instead of 87 000. That fall, rather than any improvement in gross margin per egg, is what turns a loss of R2.39 per egg in Year 1 into a margin of R0.82 by Year 5.