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Goat Farming Investment Proposal SL EP
Goat Farming Investment Proposal SL EP
(+94)-026-3269976
(+94)-026-2223076
Acknowledgements
The Ministry of Agriculture, Animal Production & Development, Rural Industries
Development, Fisheries & Tourism of the Eastern Province has developed this series
of
investment proposals in consultation with several industry stakeholders. It wishes
to thank all
relevant stakeholders and government institutions for sharing their valuable
resources and
providing information that made the financial estimates possible. The Ministry
wishes to thank
USAID and the USAID-supported VEGA FEG Program for the invaluable support rendered
towards the economic development of the Eastern Province, especially for
encouraging large
scale investments and building capacity of human resources by providing technical
assistance
since the end of the conflict.
This publication is made possible by the support of the American people through the
United States Agency for
International Development (USAID). The contents are the sole responsibility of the
Ministry of Agriculture, Animal
Production & Development, Rural Industries Development, Fisheries & Tourism of the
Eastern Province and do not
necessarily reflect the views of USAID or the United States Government.
This publication was produced for review by the United States Agency for
International Development. It was prepared
byMinistry of Agriculture, Animal Production & Development, Rural Industries
Development, Fisheries& Tourism of the
Eastern Province.
i
----------------------Hon. Minister’s Message
The agricultural sector is the backbone of Eastern Province
economy and the means of livelihood for most of our rural
population. Sustained agricultural growth is critical for uplifting the
living standards of our people as well as generating rapid economic
growth. However, in spite of the importance of the agricultural
sector, farming in our province has for many years been
predominantly a small scale, rain fed and poorly mechanized
activity of low production and productivity. In order to address these
challenges, my ministry launched several agricultural development
programmes and I am pleased to note that implementation of such development
initiatives has
been largely successful. As a result, the agriculture sector surpassed the growth
target and
presently contributes towards 23% of the provincial GDP.
It is noteworthy to mention that under the policy framework of the government the
“Mahinda
Chinthana” the Eastern Provincial Council has accorded highest priority during the
last five
years to realize the full potential of the agriculture sector in Eastern Province.
In the recent
past Eastern Province agriculture has undergone remarkable modernization thanks to
several
initiatives by the government and donor institutions and this has made spectacular
productivity gains possible through rapid improvement in yields. As the Minister of
Agriculture, Animal Production and Development, Rural Industries Development
Tourism and
Fisheries, Eastern Province I encourage private and foreign investment in the
development of
these sectors. New investment will pave the way for infusion of capital and
technology and
improve productivity and value addition leading to increased production and
prosperity in
Eastern Province. My ministry is presently involved in implementing proactive
development
initiatives with commitment to inclusive development and creation of an investor
friendly
environment.
These agriculture sector investment proposals are an outcome of series of workshops
and
discussions we had with relevant stake holders i.e. Government institutions,
private sector
agencies and non-governmental agencies. These proposals clearly spell out the
available
potential and resources involving production, avenues for value addition and
marketing of
agricultural produce and focus all efforts towards achieving excellence in
agriculture through
private and foreign investments in Eastern Province.
I also would like to take this opportunity to put on record my appreciation to the
United States
Agency for International Development (USAID) and its VEGA FEG Program for the
assistance
provided to the Eastern Province through its various economic growth and technical
assistance interventions.
I wish to reaffirm the commitment of my ministry in creating an enabling
environment for the
private and foreign investments and I urge all stakeholders to play their
respective roles in
ensuring that the Eastern Province of Sri Lanka transforms itself as a most
preferred
destination for investments.
ii
COMMERCIAL SCALE GOAT FARMING IN
THE EASTERN PROVINCE
Contents
Page No
01
02
03
05
06
Investment Incentives………………………………………………………………………
07
09
Useful Contacts………………………………………………………………………………
11
The Eastern Province and Livestock Production
The Eastern Province is one of the nine administrative provinces in Sri Lanka
comprising 15%
of the total land area of the
country, 25% of the coastal belt
and 8% of the country’s
population. The land area is
9,361 sq km and inland water
resources to the extent of 635sq.
km totaling 9,996 sq. km. The
Province contributes 6% to the
national
GDP.
The
total
agriculture sector accounts for
approximately 23% of the
provincial GDP in Eastern
Province compared with 12% for
the entire country.
The
Eastern
Province
contributes
20%
to
milk
production and 8% to meat
production in the country.
Approximately 70% of the
population is dependent on
agriculture and livestock for
their
livelihoods.
The
topography and agro climatic
conditions of Eastern Province
are
ideal
for
livestock
development. Suitable farmland
and water are available as
unutilized resources in the
province.
The
necessary
manpower, both skilled and
unskilled,
is
available
in
abundance. Scarcity of quality
breeding material was identified
as a major constraint in
developing this sector to its full potential. Therefore the establishment of
commercial livestock farms
have been facilitated by the government and private sector as an urgent priority to
meet demand
and to create self-employment opportunities in this province.
Public sector support in livestock rearing, veterinary extension services and
increasing the supply of
breeding animals have been intensified to support the industry. The government is
committed to
encouraging private sector and community participation in livestock production;
value addition and
marketing; production of breeding material; and supply of feed ingredients such as
maize, rice bran,
gingelly and coconut poonac. A high priority is accorded to the establishment of
production units for
rural based animal feed resources. The development of a commercially viable private
sector with
investment in modern livestock farming technology is vital to transform the present
subsistence
level livestock production into commercial livestock production.
1
Investment Opportunity for the Establishment of a
Commercial Goat Breeding Farm
Sri Lanka has a goat population of around
785,000 of which 25% are found in the Eastern
Province. Goats are among the main meat
producing animals in Sri Lanka and mutton is
one of the choicest meats retailing at around
200% over the price of beef. There is huge
domestic as well as international demand. In
addition to local production Sri Lanka imports
around 360MT of mutton annually. Besides
meat, goats produce other products like milk,
skin and manure. Goat milk is valued higher
than cow’s milk with special demand from
asthmatics and those allergic to cow’s milk.
2
The Investment Proposal
The total capital outlay for the establishment of a commercial goat breeder farm
consisting
rear 2000 does and 100 bucks under semi intensive management system is LKR 28
million.
Annual operating costs will be in the region of LKR 5.6 million. It is envisaged
that the investor
will lease 55ha of State land that has been identified for this purpose and develop
it into a
modern goat breeder farm. Improved Jamnapari stud goats will be procured locally
from state
breeder farms and private breeders and bred with local indigenous she-goats. The
investment will generate 3,570 kids per annum which will be marketed to farmers in
the
Eastern Province. A two fold increase in milk and meat production could be achieved
on first
generation offspring from this project. Kids born under this project will be reared
separately
in a kid rearing unit and will be sold to farmers when they reach sexual maturity
and become
suitable for breeding. The main objective is to produce and sell goat breeding
material,
which have high production potential and suitable to Eastern Province agro climatic
zone.
Jamnapari is the most suitable breed to be used in this cross breeding programme.
The
capital and recurrent cost breakdown is shown in Table 1 and Table 2 below.
Value in LKR
18,700,000
815,000
4,000,000
400,000
3,200,000
3. Equipment
200,000
100,000
6. Irrigation System
80,000
7. Building
200,000
28,545,000
3
Table 2: Average Annual Operating Cost and Revenue
Description
1,012,500
56,250
1,004,063
2,760,000
3. Veterinary Cost
340,800
4. Land Lease
412,500
25,000
Total Cost
5,611,113
Revenue Estimates
Sale of Young Bucks (1785 Nos. of 17 kg each @400/Kg)
12,138,000
12,316,500
Sale of manure
400,000
24,854,500
At current market rates young bucks may be sold at LKR400/kg and young does at LKR
460/kg. It is expected that the weight of the young animals will be 17kg per buck
and 15kg
per doe. Based on these rates the investment will generate a payback in under two
years with
an internal rate of return of 53%. Table 3 shows the investment ratios.
Table 3 Investment Ratios
Pay Back Period
2.28
NPV (LKR)
32,919,854
IRR
52.62%
ROI
109.98%
45,692,446
78,612,300
1.72
4
Markets for Goats
The demand for goats and goat meat is higher among Hindu and Muslim communities in
Sri
Lanka where they are slaughtered in religious ceremonies. Especially during the
Muslim
festival of Ramzan the demand for high quality goats increases significantly and
price of
mutton is extremely high. Goat is the most widely consumed red meat, eaten by more
than
70% of the world's population. Although considered a red meat, goat mutton is
leaner and
contains less cholesterol and fat than both lamb and beef, and fewer calories than
beef or
chicken. World cuisines best known for their use of goat include Middle East, North
Africa,
India, Pakistan, Mexico, and Caribbean Islands. Cabrito (Capretto in Italy), or
milk-fed baby
goat, is in much demand in star class hotels and restaurants. In 2011 Sri Lanka
imported 363.8
MT of mutton valued at LKR 162.34Mn and exported 7.4 MT valued at LKR 4.1Mn.
5
Potential Locations for the Project
The following locations in
the Eastern Province have
the
necessarylocational
advantages to establish a
commercial
goat
farm
investment.
Trincomalee District:
Kuchchaveli,
Kinniya,
Muttur,
Eachchilampattu
Batticaloa District:
Vaharai,
Valaichenai,
Chenkalady
Kiran
Ampara District:
Thirukovil
MahaOya
Padiyathalawa
Damana
6
Investment Incentives
Government incentives are available in the agriculture sector for farming
associated with advanced
technology, distribution, collection & marketing, storage, cold rooms, ice plants,
animal husbandry
and out grower schemes, plant & nursery, pre/post harvest management, cultivation
of plants of any
description. Table 4 below shows the current investment incentives available for
new companies.
Table 4: Investment Incentives for Investors under BOI Regulations
Investment Category
Small investment
Medium scale investment
Large scale Investment
Minimum Investment
LKR 25 Million
LKR 50 – 100 Million
LKR 100 – 200 Million
LKR Over 200 Million
LKR 300 – 500 Million
LKR 500 – 700 Million
Tax Holiday
04 Years
04 Years
05 Years
06 Years
06 Years
07 Years
08 Years
09 Years
10 Years
12 Years
Sri Lanka scores well on the World Bank Ease of Doing Business Index ranking 81 out
of 189 countries
surveyed and is far ahead of comparative countries in the region.
Sri Lanka
81
Maldives
95
Pakistan
107
Nepal
108
121
Bangladesh
129
India
132
0
20
40
60
80
100
120
140
Figure 2 below charts the procedure for application for Board of Investment
approval.
7
Figure 2: Investment Approval Process
BOI Approvals
Assigning of a
Project Officer to
Guide the Investor
Letter of Acknowledgement of
Business Activity
Opening of
Bank A/C S/A
(Optional)
Incorporation of Company
(Department of Registrar of Company)
• Site Approval
(Engineering
Approvals DeptBOI)
• Environmental
Clearance
(Environment Dept.
BOI/ CEA)
Collect the Draft
Agreement
(Legal Dept- BOI)
Opening of
Bank A/C
(FCBU/SIA)
Development Permit
(If applicable only)
Commence Implementation
(Within the specified
period)
Utilities
Electricity:
- Ceylon Electricity
Board
Water:
- National Water
Supply &Drainage
Board
Telecommunication:
- SLT/ Private
Certificate of
Conformity
(COC)
(If applicable only)
Applicant
15
Lease
Indenture
Land
Registry
Reques 9
1
Divisional Secretary
14
2
Recommendation
7
Valuation
Calling
6
Approvals
13
Lease
Indenture
Valuation
Department
PLC
3
Recommendation
Diagram
Land Commissioner
General
4
Recommendation
5
Approval
Survey
Requisition
Lease
Indenture
11
Leases for
Signature
Presidential Secretariat
10
Preparation of
Lease
Conditions for granting state lands on long term lease for the special promotion
projects
1. Special Promotion Projects are:
i.
Approved cabinet project
ii.
A project approved by the board of investment
iii.
A project approved by the ministry of industries
iv.
A project with a special patronage of any state affiliated institution
10
Useful Contacts
Eastern Province
Kanniya Road
Varothayanagar
Trincomalee
Sri Lanka
Tel : +94 26 2222441
Fax: +94 11 2222025
E -mail: minagriculture@ep.gov.lk
Website: www.ep.gov.lk
Board of Investment
Level 24 &26 West Tower
World Trade Centre
Echelo Square
Colombo 01
Sri Lanka
Tel : +94 11 2434403
Fax: +94 11 2447994
E -mail: infoboi@boi.lk
Website: www.investsrilanka.com
11