Part 5 of 9 · Section 8, steps 6–8
Revenue, Break-Even and the Cash Cycle
Break-even is 82.6% of planned output. And the farm funds R498 102 per cycle before a single rand arrives — which is why profitable poultry farms still fail.
Step 6Calculate revenue
Revenue = kilograms sold × price per kilogram
126 060 kg × R40.00 = R5 042 400
| Revenue line | Annual | Basis |
|---|---|---|
| Live bird sales | 5 042 400 | 126 060 kg at R40.00/kg |
| Manure and litter sales | 33 000 | Sold to crop farmers after each cleanout |
| Total revenue | 5 075 400 | — |
If you sell multiple products — whole birds, portions, wings, offal — model each stream separately with its own volume and price. A single blended revenue figure hides the fact that different products have very different margins and very different customers.
Step 7Calculate the break-even point
Break-even birds = fixed costs ÷ (selling price per bird − variable cost per bird)
R1 696 000 ÷ (R88.00 − R52.16) = R1 696 000 ÷ R35.84 = 47 318 birds
The farm must sell 47 318 birds a year before it earns anything. Roughly 5.0 of the 6 annual cycles exist purely to pay fixed costs.
| Break-even measure | Value | Interpretation |
|---|---|---|
| Contribution per bird | R35.84 | Selling price less variable cost |
| Break-even saleable birds | 47 318 | Annual sales needed to cover fixed costs |
| Break-even birds placed | 49 547 | Adjusted back for mortality |
| Equivalent cycles | 4.95 of 6 | How many of your cycles simply pay overheads |
| Break-even as % of capacity | 82.6% | Capacity utilisation required |
| Margin of safety | 17.4% | How far output can fall before losses begin |
| Break-even selling price | R81.76 per bird | Below this price the farm loses money |
| Break-even price per kg | R37.16 | The floor for any price negotiation |
Step 8Model the working capital and cash cycle
Cash goes out for roughly 80 days before it comes back in. The working capital line in the funding schedule is R952 058, sized to cover roughly one and a half cycles of variable cost plus a buffer.
| Timing | Event | Cash flow | Running |
|---|---|---|---|
| Day −14 | Deposit paid on chicks and first feed order | (139 469) | (139 469) |
| Day 0 | Chicks placed, starter feed delivered | (109 582) | (249 051) |
| Day 14 | Grower feed delivered | (119 544) | (368 595) |
| Day 25 | Finisher feed delivered | (129 507) | (498 102) |
| Day 35 | Birds sold and delivered | — | (498 102) |
| Day 80 | Customer payment received (45-day terms) | 845 900 | 347 798 |
