MODEL PROJECT REPORT for Broiler Farming on Contract system

PROJECT REPORT FOR  ESTABLISHMENT OF 9,000 COMMERCIAL  BROILERS PER CYCLE IN

DEEP LITTER SYSTEM OF HOUSING (ALL IN ALL OUT SYSTEM )

CHAPTER – I

HIGHLIGHTS OF THE PROJECT REPORT

A: ABOUT THE PROMOTER

Name of the farmer                                        : ..................................

Address                                                        : .....................................
                                                                     .....................................
Contact No.                                                  : .....................................
Date of Birth                                                 : ....................................
Educational Qualification                               : ...................................
Experience                                                     : ..................................

B: PROJECT PROFILE

1. Name of the Establishment                   : .................... Poultry Farms

2. Project Location                                : ..............................................
                                   ..............................................
 
1. Types of Birds                                            : Poultry (Broiler)
2. Name of Contract Farming Company         : Venkateshwara Hatcharies Limited
3. Unit Size                                                    : 9000 Birds
4. Product                                                      : Birds, Manure etc.
5. Cost of the Project                                      :
6. Bank Loan                                                  :
7. Margin Money                                             :
8. Financial Indicators
                        BCR at 15% DF                      :
                        NPW 15% DF (Rs)                  :
                        IRR (%)                                 :
                        DSCR                                    :
9. Interest Rate                                              : 12
10.Repayment                                               : 6 years

CHAPTER - II
INTRODUCTION
Poultry farming is an important source of subsidiary income to small / marginal farmers and
agricultural laborers. The manure from birds provides a good source of organic matter for
improving soil fertility and crop yields. Since agriculture is mostly seasonal, there is possibility of
finding employment throughout the year for many persons through poultry farming. With the
adequate infrastructural facilities especially for broiler production has become increasingly popular
in and around. The present demand in the area is more. It is increasing day by day and present
strength of the flock in the area is not in a position to meet the growing demand. Beside the
traders come from near by towns / cities at regular intervals to lift the produce. To take care of
the health hazards, adequate veterinary aid facilities are available in the nearby town through the
State Animal Husbandry Department dispensary.
OBJECTIVE
To meet the growing demand of Broilers, I intended to establish a Broiler farm initially with
Broilers which will be reared on deep litter system / cages. All inputs require for rearing of birds
are provided by contract farming company. After rearing all birds are marketed to the company
on contract basis.
LOCATION
The proposed unit will be located on a piece of land which is almost leveled and is well connected
to approach road, Electricity is available near the farm site. A tube well with electric motor pump
set is already existing in this land and this water will be used for proposed poultry farm and
adequate water of good quality is available in this tube well.
HOUSING
Provision has been made for the construction of a brooder cum grower house measuring at a rate
of 1 square feet per bird, Besides it, farm will have a small store room and servants quarter.
Construction of house will be pucka with asbestos roofing. The laying of pipeline for supply of
adequate water supply is also be done.
EQUIPMENT
Standard equipments are available from various equipment manufacturers located in the nearby
cities.
CHICKS
One day old commercial hybrid chicks are available from the hatcheries. In order to cover
transportation, hatchery is supplying 3% extra chicks. Chicks will be vaccinated against Rd and
Marek’s at source. Chicks will be purchased in lots at regular intervals.
FEED
Company will provide feeds require to birds on contract basis.
MEDICINE AND VETERINARY AID
The person who will be looking after the day-to-day management of the farm is conversant with
the use of medicines. In case of need, the sick birds will be taken to the disease investigation
laboratory located in town. For various operations like vaccination, medication etc. a poultry
specialist visits the area at regular intervals.

CHAPTER – III

MARKET POTENTIAL
The domestic broiler meat demand is growing at the rate of 15 – 18% on back of factors like
rising purchasing power, changing food habits and increasing urbanization. The growth is
supported by implementation of large scale contract poultry farming by integrated players. Overall
domestic poultry market size is estimated at Rs. 47000 crore with broiler meat. Globally India
ranks fourth in Broiler meat production with annual production of 2.9 million ton (MT).
Contract farming is billed to be veritable instrument to address many of the traditional ills
affecting the agriculture sector and the farmers. Under the contract growing agreement birds are
marketed to the company on the basis of growing charges. Thus, the farmer assumes the
production related risks and the price risk is transferred to the company. In India contract farming
has considerable potential where small marginal farmers can no longer be competitive without
access to modern technologies and support. Contract farming can fill this gap by providing the
farmers with quality inputs, technical guidance, management skills, credit as well as knowledge of
new improved technology. Pricing arrangement can significantly reduce the risk and uncertainty of
market place.

CHAPTER - IV
SWOT ANALYSIS
STRENGTHS
Poultry has the potential to meet the protein requirements of a nation where malnutrition is
rampant, since both eggs/broilers are a good source of protein.
Helps to augment the income of the rural masses. Thus improve the socio-economic status of
rural population.
Poultry is one of the most efficient converters of plant products / waste in to edible food that can
in some measure tackle the problem of malnutrition especially in a country like India.
Unlike other meat (beef, pork) which have religious taboos, chicken is widely accepted in India
and is cheaper than goat / sheep meat.
Poultry litter has high manure value and can be used in agriculture activities.
It has tremendous potential to create non-farm employment and check migration from rural to
urban areas.
Generates relatively quick returns with low investment requirements.
OPPORTUNITIES
Present per capita meat consumption in India is increasing day by day, therefore there is large
scope for poultry farming.
Besides this, India has also great potential market.
The increasing awareness of the need for the balanced nutrition has led to changes in the eating
habits.
WEAKNESS
Poultry farming is labor intensive.
A peculiar feature of the poultry industry is that it is highly fragmented.
Low growing charges coupled with the cost of making investments in the infrastructure such as
sheds, feeders, breeders, waterers, heating and cooling systems result in a low income for
farmers.
The stringent mortality norms (only a 5% mortality is permitted in most integration contracts,
else the farmer gets penalized and is offered a lower rate) leaves the farmers in a vulnerable
position and with no avenue to voice their grievances.
THREATS
Natural calamities.
If adequate death precautions are not taken infectious / contagious diseases can be spread. The
recent avian flu has spread a wave of panic across the globe. The other aspects that have dragged
the poultry industry are the recent SARS and Ebola.
Shortage in major feed ingredient i.e., maize, which constitutes more than 50% of feed rations.
Therefore even a small increase in costs can wipeout the profits.
 ANNEXURE - I
ECONOMICS IN BROILER FARMING - TECHNO ECONOMIC NORMS

1 No. of birds per batch 9000

2 Rearing period (weeks) 6

3 No. of batches per year 6

4 No. of batches sold per year 6

5 Space requirement per bird (sft) 1

6 Cost of construction of shed (Rs./sft) 150

7 Store Room (sft) 200

8 Cost of construction of Store room Existing

9 Labor quarter (sft) 150

10 Cost of construction of Labor quarters Existing

11 Cost of electrification (as % of civil costs) 4

12 Equipment cost (Rs/bird) 24

13 Mortality in 6 weeks (%) 4

14 Cost of Day Old Chicks (Rs/chick) Contract Company supply

15 Supply for free chicks (%) 4

16 Feed requirement (kg/bird) 3.2

17 Feed cost (Rs/kg) Contract Company supply

18 Expenditure on labor (Rs/batch i.e. 2 months) 18000

19 Cost of medicines, vaccine etc Contract Company supply

20 Cost of litter (Rs/bird) 2

21 Average body weight of birds (kg/bird) 2.2

22 Sale price of Broilers (Rs./kg body weight) (Contract Company) 4.5

23 Sale price of bird (Rs/bird)  (Contract Company) 9.45

24 Income from Manure (Rs/bird) 1

25 No. of gunny bags (per ton of feed) 20

26 Income from gunny bags (Rs./bag) 10

27 Depreciation on sheds (%) 5

28 Depreciation on equipment (%) 10

29 Margin Money (%) 45

30 Interest rate (%) 14

31 Repayment period (years) 6

32 Grace period years (years) 0.5

33 Construction period (months) 3

34 Rest period for broiler sheds (days) 10 - 15

ANNEXURE - II
ECONOMICS OF BROILER FARMING – INVESTMENT COST

S.No. Particulars Specifications Units Unit cost Rs Total cost Rs

1 Sheds and other structures

a) Broiler Shed 1sft per bird 9000 sft 150 1350000

b) Store Room 200 sft Existing

c) Labor quarter 150 sft Existing

2 Water supply system

a) Digging of Tubewell Existing

b) Water tanks 2 No.s 1000 ltrs each 6000 each 12000

c) Electric motor pump set Existing

d) Electrical installations/ 4% of civil 54000

equipment costs

3 Equipments

a) Feeders and Waterers Cost per bird 9000 22 198000

b) Foggers 150 38 5700

c) Sprinklers 30 75 2250

d) Brooders 10 1000 10000

4 Capitalization of recurring

expenses for one batch

a) Chick cost Contract company

b) Feed cost Contract company

 c) Medicine, vaccine etc Contract company

d) Litter 5 Tonns 2200 11000

e) Labor cost per batch 9000 /month 2 18000

f) Power charges per batch 15000

5 Total Financial Outlay (TFO) 1676000 1680000

6 Margin Money @ 45% of TFO 776000

7 Bank loan @ 55% of TFO 900000

ANNEXURE - III
ECONOMICS OF BROILER FARMING – FLOCK PROJECTION CHART
Year No. of batches introduced No. of batches sold

I 6 6

II 6 6

III 6 6

IV 6 6

V 6 6

VI 6 6

ANNEXURE - IV
ECONOMICS OF BROILER FARMING – CASH FLOW ANALYSIS
S.No. Particulars I Year II to V Years VI year

I COSTS

A Capital Cost 1632000 0 0

B Recurring costs

a Cost of chicks 0 0 0

b Cost of Feed 0 0 0

c Misc expenses 0 0 0

d Litter 66000 66000 66000

e Labor charges 108000 108000 108000

f Power bill 90000 90000 90000

II BENEFITS

A Sale of birds (Rs 4.5 /kg) 507600 507600 507600

B Sale of Manure 54000 54000 54000

C Sale of gunny bags 34500 34500 34500

D Depreciation value of

i Sheds 405000

ii Equipment incl water pump 158400

E TOTAL Benefits 596000 596000 1159000

NET Benefits -1300000 332000 332000

NPV

a) Cost

b) Benefits

c) NPW

d) BCR

e) IRR

ANNEXURE - V
ECONOMICS OF BROILER FARMING – REPAYMENT SCHEDULE

Year Loan outstanding Gross surplus Interest @14% Principal Tot Repayment Surplus

I 900000 332000 126000 100000 226000 106000

II 800000 332000 112000 120000 232000 100000

III 680000 332000 95200 139800 235000 97000

IV 541000 332000 75800 159200 235000 97000

V 382000 332000 33500 200000 233500 98500

VI 182000 332000 25500 182000 207500 124500

TOTAL 468000 901000 1369000 623000