First Draft

PRIME MINISTER YOUTH LOAN SCHEME

PRE-FEASIBILITY STUDY

VEGETABLES NURSERY RAISING

PAKISTAN AGRICULTURE RESEARCH COUNCIL ISLAMABAD

MINISTRY OF NATIONAL FOOD SECURITY AND RESEARCH

Government of Pakistan

www.parc.gov.pk

January 2014

Contents
1 DISCLAIMER...................................................................................................................................4
2 PURPOSE OF DOCUMENT..............................................................................................................4
3 INTRODUCTION TO SCHEME..........................................................................................................4

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4 EXECUTIVE SUMMARY...................................................................................................................4
5 BRIEF DESCRIPTION OF PROJECT AND PRODUCT...........................................................................5
5.1 Techniques:............................................................................................................................5
5.2 Location:................................................................................................................................6
5.3 Product:.................................................................................................................................6
5.4 Target Market:.......................................................................................................................6
5.5 Employment Generation:.......................................................................................................6
6 CRITICAL FACTORS.........................................................................................................................6
7 INSTALLED AND OPERATIONAL CAPACITY FOR VEGETABLE NURSERY RAISING..............................7
8 GEOGRAPHICAL POTENTIAL FOR INVESTMENT.............................................................................7
8.1 Potential Target Markets........................................................................................................7
9 PRODUCTION PROCESS FLOW.......................................................................................................7
10 Project Cost and Benefit Summary............................................................................................8
10.1 Project Economics..................................................................................................................8
11 Annex.......................................................................................................................................12

LIST OF TABLES

Table 1 Crops targeted for the plant nursery.........................................................................................6

Table 2 Capacity of Farm operation on 0.5 acres of land......................................................................7
Table 3 Utilization of land.....................................................................................................................8
Table 4 Project Economics....................................................................................................................8
Table 5 Total Project Cost......................................................................................................................8
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Table 6 Space requirement and its cost..................................................................................................8
Table 7 List of Machinery& Equipments and its cost............................................................................9
Table 8 List of Furniture & Fixture and its cost.....................................................................................9
Table 9 Operational & Maintenance cost...............................................................................................9
Table 10 Human Resource Requirement its cost..................................................................................10
Table 11 Project financing...................................................................................................................10
Table 12 Revenue of the Project..........................................................................................................10
Table 13 Key Assumption....................................................................................................................10
Table 14 FINANCIAL STATEMENT in PKR.....................................................................................11

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 undertaking 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.
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2 PURPOSE OF DOCUMENT
The purpose of this document is to facilitate potential investors in vegetable nursery raising
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 it’s 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 Minister’s 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).

4 EXECUTIVE SUMMARY
In Pakistan, vegetables (excluding Potato) are grown on a total area of 253653
hectares during 2011-12 (GOP, 2011-12) with a production of 3110619 tones which is about
2.30 % of total crop area. Vegetables are comparatively rich source of vitamins and minerals,
which are essential for the maintenance of good health and resistance against diseases.
Vegetable yield per unit area is very low in Pakistan. One of the reasons of low yield is non-
availability of quality seedlings of high yielding varieties/hybrids. Vegetable seedlings available
in the market are of inferior quality.
After successful experimentation at Vegetable Programme, Horticulture Research Institute
(HRI), National Agricultural Research Centre (NARC), Islamabad, t he technology of raising healthy
seedling by using peat moss substrate and compost in multipot trays and getting early and
late cucurbit crops by raising early & late seedlings had been found very beneficial. However,
it needs scale up to reach maximum of beneficiaries of the community. The production of
vegetable seedling can be successfully carried in peri-urban and vegetables growing areas of Sindh,
Punjab, Balochistan, Khyber Pakhtunkhwa, Gigit Baltistan and Azad Jammu & Kashmir.

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 In Pakistan, cucurbit crops: vegetable marrow, bitter gourd, cucumber, muskmelon,
long melon, water melon, bottle gourd and sponge gourd etc are being grown over a larger
area. Mostly the farmers are growing cucurbits in the normal growing season (mid February
to mid March) by sowing of seeds and when such vegetables are harvested, the markets are
flooded with these vegetables and the growers sometimes not even getting back their cost
of production. Whereas the prices of the early season cucurbits are always two to three
times higher than their normal season. Early crop by 20-25 days can fetch better price than
the normal. Nursery of cucurbit crops can be raised in polythene bags under very simple and
low cost protected structures like walk-in tunnels. Seedlings of the desired cucurbits are
raised in the first week of January up to mid of January and 40-60 days old seedlings are
transplanted in the open field from mid February to first week of March. This technology is
very effective for producing early crops of cucurbits especially in central and Northern
Punjab, Balochistan, Khyber Pakhtunkhwa, Gigit Baltistan and Azad Jammu & Kashmir.

5 BRIEF DESCRIPTION OF PROJECT AND PRODUCT

Following key parameters must be addressed as per pre-feasibility study:

5.1 Techniques:
The technology comprises of cost-effective techniques of raising of seedlings of economically
useful vegetable crops that have been developed and standardized by Research Institutes.
The techniques involve;
a) Making/Using compost,
b) Preparation of potting medium,
c) Use of tunnel, use of shade nets,
d) Raising seedlings in multipot trays and polythene bags
e) Use of supplementary nutrition if required
f) Hardening of seedlings etc.
g) Packing
This technique ensures that a large number of seedlings can be raised in minimum space
under optimized and controlled conditions. The seeds or cuttings are planted in plastic bags
filled with a specially prepared potting medium. The bags have holes in the bottom. The
potting medium has to be porous should also have all the plant nutrients. Ideally, compost, is
used as media.

5.2 Location:
The business of healthy seedling can be initiated in Sindh, Punjab, Balochistan, Khyber Pakhtunkhwa
and Gigit Baltistan, whereas the technology of early and late seedlings of cucurbits can be
successfully carried in central and Northern Punjab, Balochistan, Khyber Pakhtunkhwa, Gigit
Baltistan and Azad Jammu & Kashmir.

5.3 Product:
The crops targeted for the plant nursery include the following:

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 Table 1 Crops targeted for the plant nursery

Structures Summer Rainy season Winter

(November- February) (June –July) (August - October)

Multipot Tomato, chili, pepper, Cauiflower,tomato, chili, Cauliflower, cabbage,

trays brinjal pepper, brinjal broccoli, lettuce
Polythene Cucurbits including Cucurbits including Off season vegetable
bags/glass gourds, pumpkin, gourds, pumpkin, nursery including
vegetable marrow Luffa, vegetable marrow Luffa, tomato, cucumber,
melons etc. melons etc. pepper etc.
Beds Onion

The exact choice may vary depending on the situation. Viability of nurseries depends on
market condition

5.4 Target Market:

Following are some of the areas which could be identified as major existing market of
vegetable nursery;
I. Kitchen gardeners
II. Farms in peri urban areas
III. Vegetable growers

5.5 Employment Generation:

The proposed project will provide direct employment to four individuals. Financial
analysis shows the profitability of proposed business within first year of its operation.

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

 Any person who is planning to adopt this technology should have some practical
knowledge about nursery
 Use of high quality hybrid/recommended varieties seeds.
 Having and maintaining fertility of compost.
 Cost efficiency through better management.
 Timely control of pests, diseases and exercise of preventive measures.
 Maintenance & control of internal temperature & humidity in the tunnel.
 Timely irrigation and fertilization.
 Farm is required to maintain the record of production and management practices for
successful marketing and traceability.

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

7 INSTALLED AND OPERATIONAL CAPACITY FOR VEGETABLE

NURSERY RAISING
This pre-feasibility suggests a farm operation on 0.5 acres of land with following capacity
Table 2 Capacity of Farm operation on 0.5 acres of land

Seedlings Quantity
Cucurbit 50,000
Tomato, chili (Summer) 50,000
Cauliflower etc. (Winter) 50,000
Onion in open areas 2,000,000
Off season seedlings 60,000

8 GEOGRAPHICAL POTENTIAL FOR INVESTMENT

This technique ensures that a large number of seedlings can be raised in minimum space
under optimized and controlled conditions. Poly tunnels used for protection against frost
and used for nursery raising of summer vegetables (November to February) and similar
structure will be used for protection against heat during summer (June to August) for early
cauliflower, cabbage etc.

8.1 Potential Target Markets

The market for seedlings and planting material produced includes kitchen gardeners,
farmers of peri urban area and vegetable growers. The vegetable nursery project will be
based on the demand for the selected crops to be produced by end users. In addition to
local households the proposed vegetable nursery will include a marketing programme to
promote sales of seedlings and planting materials to farmers in the project area. The
marketing plan will include the development of a sales brochure and flyers describing the
supply and price lists of planting material by the nursery. Other elements in the marketing
programme will include limited print media advertising, sales calls, and public relations.

9 PRODUCTION PROCESS FLOW

Possible utilization of land is given in Table:
Table 3 Utilization of land

Seedling Jan. Feb. March April May June July Aug. Sep. Oct. Nov. Dec.
Plan
Summer **** +++ ++++= ++++ +++ +++
July +++ +++ +++
Winter +++ +++ +++ +++
Off season +++ +++ +++ +++

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10 Project Cost and Benefit Summary
A detailed financial model has been developed to analyze the commercial viability of
vegetable nursery raising under the Prime Minister’s Small Business Loan Scheme. Various
cost and revenue related assumptions, along with results of the analysis, are outlined in this
section.

10.1 Project Economics

The following table shows internal rates of return and payback period.

Table 4 Project Economics

Description Details
Net Present Value (NPV) Rs. 3662745
Benefits Cost Ratio (BCR) 1.35
Internal Rate of Return (IRR) 29%
Payback Period (years) 3.49

Factors that influence the profitability of nursery management, quality of inputs and
environmental factors.

a. Project Cost

Following requirements have been identified for operations of the proposed business.

Table 5 Total Project Cost

Capital Investment Amount (rupees)
Capital Cost (one time investment) 440,000
Pre-Operating Cost
Initial Working Capital 15,28,500
Total 1,968,500

b. Space Requirement
Table 6 Space requirement and its cost
Cost Rs./ Uni Area Total Cost
Space Requirement No./Quantity (Sq. ft.) (Rs.)
Store (120 sq ft) 100000 1 120 100,000
Tunnel structure 240000 1 570 240,000
Open area for nursery
raising ---- ---- 0.5 acres 15,000
Capital Cost 355000
c. Machinery and Equipments

Table 7 List of Machinery& Equipments and its cost

Machinery No./Quantity Unit Price Total Cost
(Rs.) (Rs.)
Spray pump 1 10000 10000
Autoclave/Sterlization unit 1 5000 5000
Pipe (ft) 200 20 4000
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 Water tank (300 gallon) 1 10000 10000
Tools for nursery 10 500 5000
Sieve etc. 1 1000 1000
Total Cost 35000

d. Furniture and Fixture

Following table provides list of Furniture and Fixture required for nursery project.

Table 8 List of Furniture & Fixture and its cost

Description Quantity Unit Price
(Nos)
Furniture and Fixture Lump sump 50000 50,000
Total 50,000

e. Operational and Maintenance cost

Following table provides list of Consumable Requirement for Inland Fish Farm.

Table 9 Operational & Maintenance cost

Description Nos. Unit Total
Price
Farm Yard manure (Trolley) 5 2000 10000
Agric. Waste (Trolley) 5 500 2500
Approximately Seed for all vegetables 1 200000 200000
Pesticides/Fertilizers 2 14000 28000
Multipot trays 2000 100 200000
Poly glass/tubes 70000 2 140000
Plastic sheet 50000 1 50000
Shading net 60000 1 60000
Utilities (Electricity etc.) 12 8000 96000
Land Rent 50000
Other 20000
Total 856,500

f. Human Resource Requirement

The table below provides details of human resource required to manage basic fish farm. The
staff salaries are estimated according to the market trends. However, these requirements
and pay scales may vary area to area.
Table 10 Human Resource Requirement its cost

Description No. of Employees Salary/person/ month Total salary per year

Field Manager 1 20000 240000
Field 4 10800 432000
man(Permanent)
Total 672000

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 g. Project Financing
Following table provides details of the equity required and variables related to bank loan;

Table 11 Project financing

Description Details
Total Equity (10%) Rs. 196,850
Bank loan (90%) Rs.1,771,650
Mark up to borrower (per annum) 8%
Tenure of Loan (Years) 8%
Grace Period (years) 1

h. Revenue Generation
Table 12 Revenue of the Project

First Time
Product Unit Sales Price (Rs./Unit) Revenue (Rs)
Cucurbit 50,000 10 500000
Tomato, chili (Summer) 50,000 5 250000
Cauliflower etc. (Winter) 50,000 5 250000
Onion in open areas 2,000,000 0.2 400000
Off season seedlings 60,000 10 600000
Total Sales Revenue 2,000,000

Table 13 Key Assumption

Particulars Assumption
Sales Price Growth Rate 8% per year
Increase in cost of raw material 5% per year
Increase in utilities 5% per year
Increase in land rent 10% per year
Debt/Equity Ratio 90:10
Loan Period 8 years
Grace Period 1 year
Loan Installments Monthly
Financial charges (interest rate) 8%

Concerned Scientist

Dr. Ghulam Jellani,

PSO/ P.L (Vegetable)

Programme on Vegetable Crop

Horticulture Research Institute

National Agricultural Research Centre

Park Road, Islamabad

Tel: +92-51 9255061, +92-51 9255012

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Fax: +92-51 9255034

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11 Annex

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