Let’s face it, starting a pig farm requires a lot of capital but if we want to do business, we probably do it because we want to make a lot of money. So why then do we have to spend as much as GH¢ 100,000 over a year to raise around 45 pigs if we intended to make money in the first place. Don’t you think that would be counterintuitive? Sure, not necessarily everyone is starting a pig farm because they want to make a lot of money – some people are already pretty rich but they are only considering pig farming as a way to diversify their investment portfolio.
Granted pig farming is capital intensive, we still cannot ignore its immense profit potential. For instance, if we manage to sell 40 pigs as stated in a previous article in our first year we stand the chance of making GH₵ 6,650 profit – this doesn’t sound like much but remember that the estimate for the sale of a single pig we used was GH₵ 12 per pound. Now if we manage to sell our pigs for GH₵ 15 per pound and increase the number of pigs sold to 50 in year 2, we stand the chance of making around GH₵ 23,312.50 in profit. Assuming we maintain the same number of pigs sold for three more years and also, our expenses remain the same, we get to make GH¢ 69,937.50 in additional profit.
Judging from our estimates you can see that we are projecting a combined profit for the first five years at GH¢ 99,900.00.
Since we have established that we can make a profit of almost GH¢ 100,000.00 in 5 years, can we now celebrate? No! Let’s not be overexcited yet. Remember, we need to invest GH¢ 100,000 to achieve all this.
So now you may be asking, “how can I raise all this money?” Well, this is where you need to be a little creative. Below, we highlight some strategies through which you can raise the needed capital for your pig farm.
- Look for business partners: It would be very difficult if not impossible for an individual to raise GH¢ 100,000.00 on his own but when groups of 3 or 4 people put their heads together and decide to start this particular venture, things become much bearable for each partner. For instance, if 4 individuals decide to split the startup capital equally, each person would have to contribute GH¢ 25,000 which is well within the reach of most well-paid workers such as doctors, lawyers, engineers and to some extent, teachers in Ghana.
- Raise funds on your own: Usually, this point should be number one because, of course, whenever you want to start a business, you should strive to first run it with your own money before you set out for others. However, the startup capital involved with this kind of farm is such that it would be more favourable to enter a partnership. Partnerships are not without their problems, however. There could easily be disagreements or friction among partners. To avoid any potential disagreements, you may have to be very patient if you want to go solo. For instance, if you earn GH¢ 2,000 a month and you save GH¢ 500 out of that, it will take you more than 16 years to raise capital to start a pig farm that will sell 40 pigs in a year. Now, instead of waiting for 16 years, you could rather start with 1 sow and 1 boar so that you may produce 10 pigs for sale within a year – this kind of farm would probably require GH¢ 30,000 to start. This new starting capital could be raised by you in 5 years instead of you trying to wait for 16 years. You may even cut the time needed to raise this new capital to 2 and a half years if you save GH¢ 1,000 of your monthly income instead of GH¢ 500. In short, if you are going to raise money on your own, start with a smaller number of pigs and gradually expand your farm as the years go by.
- Go for a bank loan: You remember in the previous point, we mentioned that it would take you five years to raise GH¢ 30,000 if you saved GH¢ 500 per month. Now, instead of waiting for 5 years to raise GH¢ 30,000 you can go straight to the bank and take the amount upfront and pay them GH¢ 500 per month until the loan’s principal is repaid. Sounds good right, you don’t have to wait for 5 years to raise the capital but aren’t we forgetting something? The issue is loans are not for free. Assuming the bank charges 20% interest per annum, you’ll be obligated to pay GH¢ 6,000 per year in addition to the principal meaning at the end of the 5 years, you would have paid GH¢ 60,000 in total to the bank. Now compared to raising the money on your own, you get to receive ready cash when you get a bank loan but notice that you would have to pay double the startup capital to the bank in 5 years.
- Look for investors: There are many wealthy individuals around who are looking to invest some of their money into promising ventures. Since pork is one of the top protein sources consumed by millions of people, pig farming is a very lucrative venture and more and more people are becoming aware of this. If you manage to draft a very professional business plan you can start pitching your idea to potential investors, however, count yourself lucky if you send proposals to a hundred people and only five of them show any interest. If you plan on seeking investment, keep in mind that you are going to face many rejections so don’t give up.
Conclusion
Depending on whether you are going to receive external capital or not should influence your decision on how big you should start your farm. From the article, it is very advisable that if you want to start a relatively big operation, you should look for partners who can share the startup capital burden with you. However, if you don’t happen to find any investors or are not interested in dealing with partners, you should aim to start as small as possible but expand gradually as the years go by.
Pkom 