ESTABLISHING A CREAM SEPARATION PLANT

• Manufacturing
• Dairy and Dairy Products

Introduction
Cream is a fat concentrate found in milk. Used in the manufacturing of butter and in making bakery products, cream separation can turn out to be a very lucrative business. The plant can be set up in rural
areas as long as utilities like electricity are available. The business idea aims at production of 150 liters of cream per day which translates into 46,800 litres annually. The Profit is estimated at $ 760 annually with a sales margin of 20%; the total capital investment for the project is $ 17,530.

Technology and production process
The equipments used include a cream separator, milk tanks and cream tanks. The process of separation of cream from, milk is done by a cream separator. In the process of cream separation, fat-rich portion is separated from the milk by a centrifugal action and collected separately through different outlets. The milk is put into the cream separator and the cream is automatically separated.

Market Analysis
Cream is used in production of Butter, Ice cream, and Baking Fats. There is a high demand for Milk Cream spread in Confectionary and Ice cream plants. Jesa Farm, Sameer Agric & Livestock, and GBK are among the key players in this sector.

Scale of Investment
1. Capital Investment Requirements

Capital Investment Item	Unit	Qty	Unit Cost	Amount
Milk Cream Separator	No	1	1,330	1,330
Cream Tanks	No	2	250	500
Milk Tanks	No	2	350	700
Building	No	1	15000	15,000
Total	17,530

 

 

 

2. Production and Operating Expenses

Cost Item	Units	Unit cost /day	Qty /day	Prod Cost /day	Prod Cost /month	Production Cost/Year1
Direct costs:
Milk	Litres	0.2	150	30	780	9,360
Sub-total					780	9,360
General costs (Overheads)
Labour	250	3,000
Utilities (Water and Electricity)	500	6,000
Selling and Distribution	100	1,200
Administrative expenses	100	1,200

 

Depreciation (Asset write off) Expenses
Plant and Machinery	53	633
Building	62.5	750
Sub-total	115	1,383
Total Operating Costs	1,845	22,143

Production is assumed for 312 days per year. Depreciation assumes 4 year life of assets written off at 25% per year for all assets. A production Month is assumed to have 26 days.

3. Project Production Costs and Price Structure

Item	Qty /day	Qty/yr	Unit Cost	Pdn cost /yr($)	Unit price	T/rev
Cream	150	46,800	0.5	9,360	0.7	32,760

 

4. Profitability Analysis Table

Profitability Item	Per day	Per Month	Per Year
Revenue	105	2,730	32,760
Less: Production and Operating Costs	70.96	1,845	22,143
Profit	34	885	10,617