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Livestock Development Project Investment Proposal by TARDA

TARDA seeks investments to establish integrated livestock projects across different sites to enhance beef and dairy production. The proposal includes breeding farms, feedlots, abattoirs, and other facilities to optimize value chain processes. The investment thesis focuses on meeting market demand for meat and milk in Kenya and the broader East African region, with expected annual revenues and EBITDA once operational. Partnerships are sought for various development areas, such as building breeding farms and irrigation systems. Geographical coordinates for the investment sites include Emali, Masinga, Kiambere, and Tana Delta.

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Livestock Development Project Investment Proposal by TARDA

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  1. INTEGRATED LIVESTOCK DEVELOPMENT PROJECT INTEGRATED LIVESTOCK DEVELOPMENT PROJECT BY TARDA BY TARDA

  2. Table of Contents 1) Executive Summary 2) The Proposed Investment 3) Investment Thesis 4) Location of the Investment 5) Financial Projections: Performance & Returns 6) Key Concerns & Observed Risks and their mitigations 7) Key Ask 8) Appendices

  3. 1) Executive summary TARDA is looking for investments in large cattle farms to boost productivity in beef and dairy value chains. The livestock integrated project is a vertical integrated projects comprising of irrigated agriculture schemes to produce fodder, silage production, cow farms for the production of both milk and calves, feedlots for the viable finishing of beef cattle and industrial facilities for secondary production to optimise value addition through the whole chain, such as milk processing business units / cooperatives and abattoirs. A feasibility study done in 2015 looked at the suitability of each of the proposed TARDA lands for the project in (Masinga 2000 Ha, Kiambere 5000 Ha ,Emali 659Ha and Tana delta 4000 Ha). The feasibility focused on key areas in terms of water availability, environmental impact, topography and specially the existing local communities and their current activities. The Masinga and Kiambere farms will provide breed farms for calves and heifer’s production, Emali a modern abattoir and factory processing centre for meat and milk location to serve the venture. In Tana Delta the report proposes modernization of the livestock tradition for beef cattle and goats for meat, where there is potential to become a larger livestock hub . which has been earmarked as the most viable The report indicated specialization in each sites according to its maximum potential to benefit TARDA as the owner of the land and the surrounded communities along the dams.

  4. 2) Proposed Investment 2) Proposed Investment Seeking Investors and private sector partners to invest USD 130 integrated crop-livestock farms in Tana and Athi Rivers Basin. An investment of USD USD 113 113 Mn Mn is sought to develop 11,000 hectares of land surrounding Tana Basin, while USD USD 17 17 Mn Mn is sought to develop 659 hectares of land within the Athi Basin. 130 Mn Mn in 2 Total Total investment investment: : USD 130 USD 130 Mn USD Investment Areas Investment Areas Masinga Masinga Kiambere Kiambere Tana Tana Delta Delta Emali Emali Total Total Irrigation Irrigation 638,260,000 2,127,330,000 998,590,000 3,764,180,000 Dry land cultivation Dry land cultivation 371,750,000 371,750,000 Breeding farm Breeding farm Projects for Projects for communities communities 339,160,000 339,160,000 339,160,000 189,850,000 1,207,330,000 6,370,000 9,010,000 9,010,000 6,370,000 30,760,000 Feedlots Feedlots 527,640,000 1,887,060,000 1,887,060,000 - 4,301,760,000 Abattoir Abattoir 1,172,100,000 1,172,100,000 1,172,100,000 3,516,300,000 Total Total 1,511,430,000 1,511,430,000 5,534,660,000 5,534,660,000 4,405,920,000 4,405,920,000 1,740,070,000 1,740,070,000 13,192,080,000 13,192,080,000

  5. 3) Investment Thesis 3) Investment Thesis The abattoir at the Kiambere site will have the capacity to produce > > 500 of of meat meat annually annually that feeds into an unmet need in Kenya – an Mn Mn potential potential consumers consumers with potential to reach more consumers in East Africa. . In addition to meat production, both sites have an estimated annual capacity of > >1 1 Mn Mn litres litres of of milk, milk, > >800 800 breeding breeding cows feed feed for sale to local community. 500, ,000 market of 000 tons of > >15 tons 15 an urban urban market >500,000 tons 500,000 tons of meat meat annually annually of production DM tons tons of cows and and > >32 32, ,000 000 DM of The large-scale farm is expected to generate annual revenue and EBITDA of USD 48 48 Mn Mn and and USD USD 17 17 Mn Mn once it is fully operational. The estimated IRRs for developing irrigation schemes for fodder production at the Masinga site are 35% and 14%, respectively. USD USD 48 Mn in USD 48 Mn in annual annual revenue revenue Kiambere site and Seeking partners to support 5 5 areas including building and operating (1) an (2) a a breeding breeding farm farm for capacity of 4000 calves (4) ) an 500 sheep head (5) a dairy of infrastructure infrastructure development an irrigation irrigation system cows and followers (3) an abattoir abattoir with daily capacity of 100 cattle head and dairy production production unit unit with daily capacity of 5000 L/day. areas of development and system for fodder production a a feedlo feedlot with carrying and operation operation Driven Driven by P Private rivate P Partnerships artnerships by P Public ublic for 500 500 cows

  6. 4) Location of the Investment GEOGRAPHICAL GEOGRAPHICAL COORDINATES COORDINATES Emali Emali: :  2.0797° S, 37.4731° E Masinga Masinga: :  0.8895° S, 37.5944° E Kiambere Kiambere: :  0.6845° S, 37.7930° E Tana Tana Delta Delta: :  2.2695° S, 40.1107° E

  7. 5) Financial Projections: Performance & Returns 1. 2. Rain fed cultivation, and not irrigation, will be used for fodder production Equity IRR only calculated for irrigation scheme Source: TARDA feasibility study for integrated livestock

  8. OPPORTUNITY & VALUE PROPOSITION Market size Market Market trends expectations expectations trends and and growth growth Kenya’s demand for meat and dairy products is projected to rise quickly Consumption of milk and meat inKenya, 1000 tons Local production is rising slowly Local production of milk and meat inKenya, 1000 tons Livestock remains a key sector of Kenya’s economy, contributing up to 12% of the country’s Gross Domestic Product (GDP) with the expected demand projected further. 2021 2022 2023 2024 2024 2025 E 2025 4,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 4,000 surge to in 3,500 push 3,000 2,500 The nomad pastoralists, mainly found (ASALs), form 70% of the population in the country that keeps livestock. Growth in demand is driven by an expanding middle class with higher disposable income 2,000 1,500 1,000 500 0 0 Milk Meat Milk Meat 5.6% 6.9% 3.0% -1.3% CAGR Source: FAO

  9. Kiambere Dam site Kiambere site offers 5000 hectares for cattle grazing, breeding and meat and dairy processing which is 43% of priority TARDA sites Embu County County: 5,000hectares Size ofland: Key financial metrics West East Overview of project 2,000hectares 3,000hectares Initial investment ~USD 50 Mn Total land encircling the Kiamberedam reservoir 5000 hectares Irrigation for fodder production 1 Annual revenue ~USD 41 Mn Wateringpoints 2 Grazing and grasslandregeneration 3 Annual EBITDA ~USD 15 Mn 3000 hectares East of dam targeted for irrigation 4 Feedlot for 4000cattle Equity IRR1 ~35% 5 Breeding farm for 500cows Payback period <6 years Feed mill for 5 -10t/day 6 Enablers Enablers: :  Proposed site encircles Kiambere Dam reservoir which has a capacity of 585 Mn Mn cubic cubicmeters meters  Existing irrigation infrastructure  Large livestock community ~67,000 catte 2000 hectares West ofdam targeted for agro- processing units Milk collection buffertank 7 585 Dairy processingplant 8 population in the Abattoir for 100 cattle/dayand 500 goats/sheep per day 9 1. Equity IRR only calculated for irrigation scheme Source: TARDA feasibility study for integrated livestock

  10. Competitive Advantage Kiambere Kiambere Dam Land ownership – 7,000ha Proposed site encircles Kiambere Dam reservoir which has a capacity of 585 585 Mn Mn cubic cubic meters meters Existing irrigation infrastructure. Large livestock population in the community ~67,000 cattle Dam: : Masinga Masinga Dam Land Ownership: - 3,000ha Situated near Masinga Dam reservoir reservoir with ~5 Mn cubic meters of water. Proximity to Nairobi ~151km Ready market for surplus fodder and breeding cattle Dam: :

  11. TARDA estimates that the initial investment for developing an integrated irrigated crops and livestock farming system in Kiambere is USD 50 Mn Payback period(years) Major Activity Projectedannual revenue (USDMn) CapitalExpense (USD Mn) Description Revenuestream      Watersupply Powersupply Road rehabilitation Sale of surplus maizesilage Sale of surplus lucernehay Irrigation System 3,1 19 6      Purchasing cows Buildings and infrastructure Equipment Vehicles Sale of breeding heifers, fattened steers andbreeding bulls Breeding Farm n/a 0.4 3      Buildings and infrastructure Equipment Utilities Vehicles Sale of cattle Feeding Lot – 4,000 cattle 6 17 10       Buildings and infrastructure Equipment Utilities Vehicles Sale of meat cuts Sale of debonedand processed meats 2 Abattoir 11 25 Total 50 41 <6 Source: TARDA feasibility study for integrated livestock

  12. Masinga Dam site Masinga offers the best access to the Nairobi market combined with low initial investment MachakosCounty County: 2,000 hectares Size ofland: Overview of project Key financial metrics Phase1 Phase2 Total landnext to Masinga dam reservoir 2000 hectares Irrigation for fodder production 1 Initial investment ~USD 17 Mn Wateringpoints 2 Annual revenue ~USD 7 Mn Grazing and grasslandregeneration 3 Annual EBITDA ~USD 2 Mn 151kM Distance to Nairobi, economichub of Kenya Feedlot for 1000cattle 4 Equity IRR1 ~14% Breeding farm for 500cows 5 Payback period <10 years Feed mill for 5 -10t/day 6 2 phases Initial focuson irrigation and breeding,then dairy processing Milk collection buffertank 7 Enablers:  Situated near Masinga reservoir with ~5 Mn cubic meters of water  Close to Nairobi ~151km  Ready market for surplus breeding cattle Dam reservoir Dairy processingplant 8 fodder and Abattoir 9 1. Equity IRR only calculated for irrigation scheme Source: TARDA feasibility study for integrated livestock

  13. TARDA estimates that the initial investment for developing an integrated irrigated crops and livestock farming system in Masinga is USD 17 Mn Major Activity Projectedannual revenue (USD Mn) Payback period(years) CapitalExpense (USD Mn) Description Revenuestream      Watersupply Powersupply Road rehabilitation Sale of surplus maizesilage Sale of surplus lucernehay Irrigation System 6.3 6 2      Purchasing cows Buildings and infrastructure Equipment Vehicles Sale of breeding heifers, fattened steers andbreeding bulls Breeding Farm n/a 3 0.4 Feeding Lot – 1000 cattle      Buildings and infrastructure Equipment Utilities Vehicles Sale of cattle 10 5 3     Buildings and infrastructure Equipment Cooling vehicles Sale of pasteurized milk and dairy products including yoghurt, soft cheese andbutter DairyFarm 3 4 2 17 7 Total <10 Source: TARDA feasibility study for integrated livestock

  14. Financial performance Socio-economic benefits Key financial metrics Key impact metrics (by 2025) Kiambere Masinga Kiambere Masinga Annual output capacity1 960 2,250 >1,700 tons slaughtering weight of feedlot cattle >500,000 tons processed meat Job creation 104,000 60,000 Small- holder farmers reached ~ USD 41 Mn ~ USD 7 Mn Annual revenue (~ KES 4.6 Bn) (~ KES 710 Mn) ~ USD 15 Mn (~ KES 1.6 Bn) ~ USD 2 Mn (~ KES 234 Mn) EBITDA Project results in farmershaving increased access to:  More productive heifers Cheap fodder for feedingcattle Market to sell their cattle andmilk ~ 35% ~ 14% Equity IRR2   1. 2. Weight of cattle output from slaughterhouse/feeding lot and breeding farm Equity IRR only calculated for irrigation scheme Source: TARDA feasibility study for integrated livestock

  15. The Managing Director Tana and Athi Rivers Development Authority (TARDA) Email: info@tarda.go.ke Tel: 020 3341788/2 Invest in Kenya

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