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1st Draft

Pre-Feasibility Study
RURAL POULTRY FARMING OF HIGH EGG PRODUCING SCAVENGER POULTRY
BREED OF NARC
A PROPOOR SMALL SCALE INTERVENTION

PAKISTAN AGRICULTURE RESEARCH COUNCIL ISLAMABAD


MINISTRY OF NATIONAL FOOD SECURITY AND RESEARCH
Government of Pakistan
www.parc.gov.pk
January 2014

Contents
1. DISCLAIMER.......................................................................................................................................3
2. PURPOSE OF THE DOCUMENT.......................................................................................................4
3. INTRODUCTION TO SCHEME..........................................................................................................4
5. EXECUTIVE SUMMARY...................................................................................................................5
6. BRIEF DESCRIPTION OF PROJECT.................................................................................................5
7. CRITICAL FACTORS..........................................................................................................................5
8. INSTALLED AND OPERATIONAL CAPACITIES............................................................................6
9. GEOGHRAPHICAL POTENTIAL FOR INVESTMENT...................................................................6
10. POTENTIAL TARGET MARKET.....................................................................................................6
11. PRODUCTION PROCESS FLOW.....................................................................................................7
12. PROJECT COST SUMMARY............................................................................................................8
12.1: Project Economics............................................................................................................................8
12.2: Project Financing..............................................................................................................................9
12.3: Project Cost......................................................................................................................................9
12.4: Space Requirement...........................................................................................................................9
12.5: Machinery and Equipment.............................................................................................................10
12.6: Raw Material Requirements...........................................................................................................11
12.7: Human Resource Requirement.......................................................................................................12
12.8: Revenue Generation.......................................................................................................................12
13. CONTACTS SUPPLIERS, EXPERTS / CONSULTANTS...........................................................13
14. ANNEXURES...................................................................................................................................14
15: KEY ASSUMPTIONS......................................................................................................................15
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1. DISCLAIMER
This information memorandum is to introduce the subject matter and provide a general idea and
information on the subject. Although, the material included in this document is based on data /
information generated from experiments and field testing by a team of relevant scientists; however, it is
based upon certain assumptions which may differ from case to case. The contained information may
vary due to any change in any of the concerned factors, and the actual results may differ accordingly
from the presented information. The PARC and its employees do not assume any liability for any
financial or other loss resulting from this memorandum in consequence of under taking this activity.
The prospective user of this memorandum is encouraged to contact qualified consultant/technical
expert, especially designated focal person(s) of this enterprise for reaching to an informed decision.

2. PURPOSE OF THE DOCUMENT

The

purpose

of

this

document

is

to

facilitate

potential

investors

in

INTERVENTION FOR EMPOWERING POOR RURAL WOMEN BY REARING


HIGH EGG PRODUCING SCAVENGER POULTRY BREED by providing them
with a general understanding of the business, with the intention of
supporting potential investors in crucial investment decisions. The project
pre-feasibility may form the basis of an important investment decision and in
order to serve this objective, the document/study covers various aspects of
project concept development, start-up, production, finance, and business
management.

The need to come up with pre-feasibility reports for

undocumented or minimally documented sectors attains greater imminence


as the research that precedes such reports reveal certain thumb rules; best
practices developed by existing enterprises by trial and error, certain
industrial norms and well established research findings that become a
guiding source regarding various aspects of business set-up and its
successful management. Apart from carefully studying the whole document,
one must consider critical aspects provided later on, which form the basis of
investment decisions.

3. INTRODUCTION TO SCHEME
Prime Ministers Youth Business Loan Programme, for young entrepreneurs, with an allocated budget
of Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidized financing at 8% mark-up per
annum for one hundred thousand (100,000) beneficiaries, through designated financial institutions,
initially through National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL). Loans from
Rs. 0.1 million to Rs. 2.0 million with tenure up to 8 years inclusive of 1 year grace period, and a debt:
equity of 90: 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh,
Khyber Pakhtunkhwa, Balochistan, Gilgit-Baltistan, Azad Jammu & Kashmir and Federally
Administered Tribal Areas (FATA).

5. EXECUTIVE SUMMARY
In livestock sector the poultry production has its own impact and value on the overall livestock market
and in the GDP contribution. By enhancing poultry production in the form of eggs and meat production
ultimately the per capita requirement of the protein in the country has been bridged markedly. Poultry
production is considered to be one of the most efficient and economical system of production of animal
protein. In Pakistan Poultry has been playing a vital role in bridging the gap between supply and
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requirement of animal protein food of high biological value. Our poultry production is mostly
dependent on exotic commercial lines but still our indigenous poultry at small scale level contribute
32% share to our national requirement of eggs and 15 % share to meat production. Our indigenous
poultry possesses bright prospects for future development in view of easy and abundant availability of
all the requisite inputs such as land, labor and feed resources in rural areas and lower cost of
production as compared to commercial poultry. The need is to improve our indigenous poultry breed
because the Indigenous chickens have the advantage of being well adapted to the local environmental
conditions (hot cold humid dry and rainy weather) and can live as a scavenger bird and can be reared at
a low cost. PARC has the initiative in this scenario that PARC has developed a new crossbred having
the ability to live as a scavenger bird and lay more eggs as compare to our pure indigenous poultry
breeds. As the conventional system is going on the women keep the local breed in backyard poultry
rearing system and sale eggs in the village and earn money for them. Here PARC intervention for
women empowering is, instead of rearing the pure indigenous breed that lays not more the 70-80 eggs
per year why one should not keep the newly developed high egg producing crossbred chicken that can
lay 170- 180 eggs in a year in the same backyard poultry rearing system. This kind of practical model
already been established in the National Agricultural Research Centre (NARC) and the 15 days old
high egg producing crossbred chick are being supplied to different areas of Pakistan. If the
entrepreneur is near by the federal territory then the chicks can be purchased from the NARC. The 15
days old high egg producing cross bred chick can be supplied to far for long areas of Pakistan at the
rate of rupees sixty only. Due to its good egg production in comparison with the desi or local breeds of
poultry, people love to rear this breed, and already PARC have a farmers list benefiting from our
crossbred. The poor rural women can purchase the chicks from NARC and will rare the chicks up to 6
months of age at partial feeding. Only 25% commercial feed will be given to chicks up to 6 months and
remaining feeding will be done by kitchen waste and by leaving the birds as a scavenger. At the age of
six months the cockerels from the flock will be sold out at the rate of Rs. 300/- per cockerel and the
hens will be kept for the egg production for next one year. The feeding will be increased during the
laying period up to sixty percent of total feeding. The eggs will be sold to the local market and the
women will start earning gradually. By keeping good quality chicks the poor rural women will earn
more than before she will be earning by having more eggs in one year. After one year the female hens
will be sold out at the rate of Rs. 100/= per bird and the new flock will be reared for next cycle. Further
breeding is discouraged in this system and cockerel sholud not keep with the hens to achieve the
objective of having good quality eggs and discouraging uneven breeding practice. This model of
rearing high egg producing chicks can be applied to all five provinces of Pakistan (Sindh, Punjab,
Balochistan and Khyber pakhtunknwa, Gilgit baltistan and AJK). This idea has been generated for a
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viable business because already the conventional rural poultry farming is practicing in rural area. By
doing this project one can earn better with less resources and better output. .
High egg producing chick production is considered for empowering women in rural poultry farming
business in this project pre-feasibility. This business is proposed to be located primarily in rural areas
of Pakistan. All the prospects of high egg producing crossbred chicks rearing, egg laying capacity,
disease resistance studies, climate resistance studies and marketing have been studied at Poultry
Research Section, Animal Products Improvement Program, Animal Sciences Institute (ASI), National
Agricultural Research Centre (NARC), Islamabad.

6. BRIEF DESCRIPTION OF PROJECT


Following key parameters must be addressed as per pre-feasibility study:
Techniques: The high egg producing crossbred chicks will be purchased from NARC and will the
chicks will be reared up to six months of age at partial feeding. Only 25% commercial feed will be
given to chicks up to six months and remaining feeding will be done by kitchen waste and by leaving
the birds as a scavenger. At the age of six months the cockerels from the flock will be sold out at the
rate of Rs. 300/- per cockerel and the hens will be kept for the egg production for next one year. The
feeding will be increased during the laying period up to sixty percent of total feeding. The eggs will be
sold to the local market and the women will start earning gradually. By keeping good quality chicks the
poor rural women will earn more than before.. After having the successful laying period of hens i.e
almost one year the female hens will be sold out at the rate of Rs. 100/= per bird and the new flock will
be reared for next cycle. Further breeding is discouraged in this system and the cockerel should not
keep with the hens to achieve the objective of having good quality eggs and discouraging uneven
breeding practice.
Location: The business can be initiated in any province (Sindh, Punjab, Balochistan, Khyber
Pakhtunknwa, Gilgit Baltistan and AJK) in hot or cold environment. It is preferable if the site is close
to main road reaching there for the easy transportation of chicks and feed bags to the site. The birds can
live as a scavenger but in early stage of life the care from the domestic and wild animal must be
provided to save the asset in the form of chicks. The site must be close to the living area so one can
easily watch the birds.
Product: The product in this business will be cockerels at 6-months of age which will be used for
meat purpose and then after 6-months the eggs from the laying hens. The eggs will be sold in the
market or in the rural area and this will be the main source of earning. This idea has been generated for
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a viable business because already the conventional rural poultry farming is practicing in rural area. By
doing this project one can earn better with less resources and better output.
Target Market: The target market is every one in that rural area or that particular place. People love
to eat desi cockerel in the villages so it can be sold at a good price.
Employment Generation: In this business the rural women who will own this business is the
manager and the workers. But as the business will grow up the workers can be accommodated in this
business.

7. CRITICAL FACTORS
The commercial viability of the proposed project depends on the following factors:

Rural women can run this business in a better way so women in this business idea are
critical.

More successive business can be run in the areas where the temperature does not go very
high and very low.

Selection of the good variety or breed of the poultry for egg and meat production.

Very hot humid weather is not preferable as the egg storage will be critical.

Farm should have strong market linkages for effective disposal of produce.

8. INSTALLED AND OPERATIONAL CAPACITIES


This pre-feasibility suggests that one should have one only 400 sq. ft. area for keeping 200 poultry
birds and 36 sq. ft. for feed storage. In this business the installed capacity depends on the rural women
setup if the sheds are already constructed then the installed capacity will be according to that shed
space but according to the pre-feasibility it has been suggested only 400 sq. ft. for 200 birds. If you one
have the installed capacity for 400 birds then no matter the entrepreneur can adjust the operational
capacity according to the need or the loan he/she is applying for. For Installed capacity may more than
the operational capacity and for the suggested feasibility only 36 sq. ft. is required. The rooms can be
constructed with low cost material. The material of the construction should be used in a way that it
should be re-useable and cheaper in price. Only the technical thing is the shed should be well
ventilated. The major cost in this enterprise will be the construction of the production area, feed store.

9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT


Any geographical location is the potential site for the rural poultry or backyard poultry farming,
especially for empowering women. Preferable areas are where the climate is relatively stable. The
extreme weather areas are less preferable as the labor increases in extreme cold and hot weather.
Regions of Balochistan, Punjab, Sindh, Khyber Pakhtunkhuwa, Gilgit Baltistan and AJK all are
preferable sites for the business.

10. POTENTIAL TARGET MARKET


The target market is every one in that rural area or that particular place. People love to eat desi cockerel
in the villages so it can be sold at a good price. When the production process increase the supply of
cockerels and eggs can be spread to the nearest cities and around.

11. PRODUCTION PROCESS FLOW


The high egg producing crossbred chicks will be purchased and reared up to six months of age at
partial feeding. Only 25% commercial feed will be given to chicks up to six months and remaining
feeding will be done by kitchen waste and by leaving the birds as a scavenger. At the age of six
months the cockerels from the flock will be sold out and the hens will be kept for the egg production
for the next one year. The feeding will be increased during the laying period up to sixty percent of total
feeding. The eggs will be sold to the local market and the women will start earning gradually. After
having the successful laying period of hens i.e almost one year the female hens will be sold out and the
new flock will be reared for next cycle. Further breeding is discouraged in this system and the cockerel
should not keep with the hens to achieve the objective of having good quality eggs and discouraging
uneven breeding practice.

12. PROJECT COST SUMMARY


A detailed financial model has been developed to analyze the hatching eggs in hatcheries and chick
production at small scale benefitting the local population of that particular area through Prime
Ministers Small Business Loan Scheme. Various cost and revenue related assumptions, along with
results of the analysis, are outlined in this section.

12.1: Project Economics


All figures in the financial model have been calculated for 38400 day old chicks. The following table
shows internal rates of return and payback period.
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Table 1. Project Economics


Description
Details
101203
1.31
28%
3.8

Net Present Value (NPV)


Benefits Cost Ratio (BCR)
Internal Rate of Return (IRR)
Payback Period (years)

Factors that influence the profitability of this business is good farm management, quality of inputs,
good marketing practice and environmental factors.
Following requirements have been identified for operations of the proposed business.
Table 2. Total Project Cost
Capital Investment
Construction of shed
Equipments
Total Capital Cost

Amount (rupees)
30000
4762
34762

The results in the tables show that the net present value, internal rate of return and benefit cost Ratio.
Returns on the business and its profitability are highly dependent on experience, suitable location and
good technical practices. The project will not be able to cover the potential demand of consumers and
recover payments, if these factors are not efficiently managed and will also lead to increased operating
cost.

12.2: Project Financing


Following table provides details of the equity required and variables related to bank loan;
Table 2: Project Financing
Description
Total own equity (0%)
Bank Loan
Markup to the Borrower(%age/annum)
Tenure of the loan
Total own equity (0%)

Details
11111
100000
8%
8
11111.2

12.3: Project Cost


Following requirements have been identified for operations of the proposed business.
Table 3: Project Cost
Capital Investment
Construction of Room
Equipments
Total Capital Cost
Initial Working Capital

Amount(Rs.)
30000
4852
34852
76260

12.4: Space Requirement


The space required for this small scale business is only one 400 sq. ft. room for the brooding of the
chicks. For feed storage 36 sq. ft. room is sufficient. Room for the worker depends on the availability
of the space in the farm. The rooms can be constructed with low cost material. The material of the
construction should be used in a way that it should be reuseable and cheaper in price. Only the
technical thing is the rooms should be well ventilated. The major cost in this enterprise will be the
construction of the brooding room, feed store, workers room and other raw material required for the
brooding.

12.6: Raw Material Requirements


The detail of raw material required is given below.
Table 8: Raw Material Requirement
Description
Purchase of fertilized Eggs
Vaccination and medication
Total Feed Cost per Bag
Marketing
Total raw Material(variable cost) Rs

Total cost/Rs
12000.00
200.00
53750.00
8000
76350

12.8: Revenue Generation


The revenue generation through eggs sales and sale of male birds is given below. The price of the male
bird will be Rs. 200 per bird with increase by 10% every year however the price of eggs will be Rs. 8
with 5 % growth rate.
Table 10: Revenue Generation
10

Year
Eggs sale
Sale of male
bird

No.
8100

Sale
Price(Rs./Unit)
8.00

First Year Production


64800

120

200

23940

First Year

12.9: Other Costs


Working Capital Requirements: It is estimated that an additional amount of approximately Rs. will
be required as cash in hand to meet the initial working capital requirements during operations. The
requirement is based on the utilities, salaries. All expanses are estimated on increase in 10% on yearly
basis.
Table 11: Total Working Capital
Description
Utilities
Management cost

Years
1
1

Yearly Charges(Rs.)
76800
24000

13. CONTACTS SUPPLIERS, EXPERTS / CONSULTANTS


DR. Farrukh Saleem
APIP/Poultry Research Section, ASI, NARC, ISLAMABAD
Ph: 051-8443861
Email:drfarrukhrana@yahoo.com

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14. ANNEXURES
14.1: Cash Flow of the Project
Years
Purchase of
chicks
Vaccination
and
medication
Total Feed
Cost
Feed for
productive
hens (after
selling male)
management
cost
Electricity*tel
ephone utility
bills
Marketing
cost

10

12000

12600

13230

13892

14586

15315

16081

16885

17729

18616

200

210

221

232

243

255

268

281

295

310

26250

27563

28941

30388

31907

33502

35178

36936

38783

40722

27500

28875

30319

31835

33426

35098

36853

38695

40630

42662

24000

26400

29040

31944

35138

38652

42517

46769

51446

56591

2400

2640

2904

3194

3514

3865

4252

4677

5145

5659

1200

1320

1452

1597

87550

105153

110285

115757

1757
12159
5

1933
12782
6

2126
13447
9

2338
14158
7

2572
14918
5

2830
15731
1

Total Cost
Revenue from
male birds
sale( Rs)
Sale of
Eggs(No)
Price (RS/Egg)
Revenue for
eggs sale(RS)

111112

23940

26334

28967

31864

35051

38556

42411

46652

51318

56449

8100
8

16200
8

16200
9

16200
9

64800

136080

142884

150028

88740

162414

171851

181892

16200
10
15753
0
19258
0

16200
10
16540
6
20396
2

16200
11
17367
6
21608
8

16200
11
18236
0
22901
3

16200
12
19147
8
24279
6

57261
19207

61566
19207

66135
19207

111112

1190
8000
109922

-52661

8906

75041

70985
19207
14602
6

76136
19207
22216
2

81609
19207
30377
0

87425
19207
39119
6

93610
19207
48480
6

16200
12
20105
2
25750
1
10019
0
19207
58499
6

111112

-6810

38054

42359

46928

51778

56929

62401

68218

74403

80983

Total Revenue
Net Benefit
Installments
Cumulative
Income after
the
installment

111112

12

Present value
cost
Present value
of Revenue
Discount
Factor

87550

97364

94552

91892
144392

89376
14155
2

86996
13881
3

84745
13617
2

82615
13362
7

80600
13117
5

78695
12881
5

88740

150383

147335

0.93

0.86

0.79

0.74

0.68

0.63

0.58

0.54

0.50

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15: KEY ASSUMPTIONS


Description
Interest Rate
Loan Tenure
Grace Period
Debt Equity Ratio
Sale Price Growth Rate of eggs
Sale Price Growth Rate of male birds
Repair and Maintenance Rate
Increase in management
Increase in Input Prices

8%
8 Years
1 Years
90:10
5%
10%
5%
10%
5%

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