1st Draft

PRE-FESIBILITY STUDY

(Establishing Honey Farm for Medium Farmer of 100

Colonies)

PAKISTAN AGRICULTURE RESEARCH COUNCIL ISLAMABAD

MINISTRY OF NATIONAL FOOD SECURITY AND RESEARCH

Government of Pakistan

www.parc.gov.pk

January 2014

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Contents
LIST OF TABLES...................................................................................................................................ii

1. DISCLAIMER.......................................................................................................................................1

2. PURPOSE OF THE DOCUMENT.......................................................................................................2

3. INTRODUCTION TO SCHEME.........................................................................................................2

4. EXECUTIVE SUMMARY..................................................................................................................3

5. BRIEF DESCRIPTION OF PROJECT.................................................................................................3

6. CRITICAL FACTORS..........................................................................................................................4

7. OPERATIONAL CAPACITIES...........................................................................................................4

8. POTENTIAL TARGET MARKET......................................................................................................4

9. BREED SELECTION...........................................................................................................................5

10. PROJECT COST SUMMARY...........................................................................................................5

10.1 Project Economics.............................................................................................................................5

10.2 Project Financing...............................................................................................................................5

11. CONTACTS – SUPPLIERS, EXPERTS / CONSULTANTS............................................................7

12. ANNEXURES.....................................................................................................................................8

12.1 Income Statement……………………………………………………………………………………8

12.2 Cash Flow of the Project ……………………………………………………………………………9

13: KEY ASSUMPTIONS......................................................................................................................10

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LIST OF TABLES

Table 1: Project Economics 5

Table 2: Project Financing 5

Table 3: Project Cost 6

Table 4: Project Production Cost 6

Table 5: Project Gross Income 6

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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 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

 To raise awareness about the importance of beekeeping.

 To ensure the sustainability of project as livelihood.
 To workout feasibility on ground reality rather than paper work.

3. INTRODUCTION TO SCHEME

Beekeeping in the country is probably being practiced since the dawn of civilization. People are aware
about the high prestige of honey due to its medical properties and religious significance since old times.
Three species of indigenous honeybees; Apis cerana, Apis dorsata and Apis florea and one occidental
honeybee species; Apis mellifera are present in different ecological areas of the country. Country
embraces different climatic zones and ecologies, from sea level to lofty mountains with wide diversity in
kind of soils, temperature, sunshine, rainfall, wind velocity, altitude and also blessed with rich fauna and
flora. The flora includes citrus, acacia, clover, ber, loquat, shain, kalongi, mosquite, sheasham, sunflower
rape and mustard in different ecological areas in the country. Besides this 160,000 hectare of mangroves
plantation in the coastal belt is another potential honey source which is yet to be explored. Northern areas
of Pakistan are prime source of A. cerana. This species is confined to hills and foot-hills of Pakistan.

It is a profitable business in Pakistan. About 8,000 beekeepers are now rearing exotic species,
Apis mellifera in the modern beehives. In Pakistan, each of them is rearing 5 to 1000 honeybee colonies.
There are about 400,000 colonies of this honeybee species producing over 1200 metric tonnes honey
annually and about 27,000 families are being benefited from this activity. Beekeeping has emerged as
sustainable income generation activity in different ecological zones of Pakistan. Markets have been
established in the country for sale proceeds and export of quality honey. There are about 60 players are
performing in honey trade.

Congenial climate conditions and bee flora in the country provide excellent opportunities for the
expansion of beekeeping industry. Honeybee flora is present on vast areas in all the provinces including
Northern areas, FATA and AJK and can support more than 2000,000 honeybee colonies. With the
expansion of beekeeping industry several persons are getting self-employment as commercial beekeepers,
for their livelihoods.

Other than honey, products of the hive can enhance the income of beekeepers because process of
these products are comparatively higher than honey Royal Jelly Rs.30,000/-per kg, Pollen Rs.2000/-kg
Propolis Rs.1000/-kg, and beeswax Rs.1100/-kg in international market.

Beekeeping in the country has entered in gender sensitivity. Many women associations are doing
beekeeping in collaboration with ILO, AKRSP and NRSP i. Value-added products are prepared on small
scale by these groups. Additional income from products of the hive like pollen, Propolis and royal jelly
has also entered in the high scale beekeeping community. Beekeeping in the country has attained the
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status of income generation in rural areas of the country as well as in urban areas like Karachi, where
Pak. Beekeepers Society has established. Economics has been worked out for various categories of
beekeepers.

Beekeeping as it is found in the country is not a uniform procedure. Every aspect, from honey
hunting to small scale apiculture and even highly sophisticated migratory production system is found,
migration is a traditional element of the honey production system. Shifting of the colonies, cover distance
up to 500 km. Some highly skilled beekeeper may travel over 1000 km. This practice is rather expensive
for small-scale beekeepers. Large distant migrations tend to belong to a high-income group. Social strata
dealing with bees are rather heterogeneous

4. EXECUTIVE SUMMARY
The project of honey production, processing, packaging, marketing, value added products and technical
trainings envisages the farming of honeybees, extraction of honey followed by packaging, distribution or
supply to the consumer market, value addition of honey products and technical trainings of the farmers to
enhance their business. The proposed business will start with 100 colonies.
Honey Production is proposed to be located at areas where wild plantation and crop farming is
common. In Punjab, Chakwal, Gujarkhan, Attock, Sargodha, Duska are ideal places for honey bee
farming, while in Khyber Pakhtunkhwa, Karak, Kohat, Sawat and Bannu are most suitable. In
Balochistan Quetta, Ziarat velly, Nasirabad, and Qallat. In Sindh a few areas of Thatta, Sujawal, Mirpur
Khas, Hyderabad and Gularchi area respectively are suitable for honey production as per discussion with
experts.

5. BRIEF DESCRIPTION OF PROJECT

The basic Project requirement is to know the floral resources for successful beekeeping. These are
as below
1. CROPS (OIL SEEDS) (April-May, Oct-Nov)

1. Sarson & Toria (Brassica spp.)

2. Sunflower (Helianthus annus)
3. Safflower (Carthamus tinctorios l.)
4. Sesame (Sesamum indicum)
2. CROPS (FODDER) (15 May-15 June)

1. Berseem (Clovers)
2. Maize (Zea mays)
3. Alfalfa (Medicago sativa)
3. FRUIT TREES (March-April)

1. Almond, apple, apricot, peach,

pear & plum
2. Oranges (Citrus spp.)

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 3. Loquat (Eriobotrya japonica)
4. Litchi (Litchi chinensis)
4. FOREST PLANTS (January-November)

1. Phulai (Acacia modesta)

2. Shisham (Dalbergia-sissoo)

3. Garanda (Carissa opaca)

4. Euclyptus spp.
5. Mesquite (Prosopis spp.)
6. Ber (Ziziphus spp.)
7. Mangroves coastal area plants
5. MEDICINAL PLANTS (July-August)

1. Bhaiker (Justicia adhatoda)

2. Thymus
6. SHRUBS

1. Shain (Plectranthus rugosus)

2. Shain shobe (Pervoskia abrotrides)
7. VEGETABLES (15 April-15 June)

1. Cucurbits
2. Water melons, melons & cucumber
3. Radish, carrot, coriender seeds & onion seeds

6. CRITICAL FACTORS
 Networking with Honey consumers all over the country
 Consistent availability of floral sources
 Technology migratory beekeeping
 Location The proposed business can be done in cities /towns of Pakistan. The hives will
be kept on places with abundant supply of nectar-secreting and pollen bearing plants.

7. OPERATIONAL CAPACITY 100 bee colonies

8. POTENTIAL MARKETS Local markets in Karachi, Lahore and Islamabad an

enormous export market for Pakistani honey exists in Saudi Arabia, UAE, USA, Kuwait and
Jordan. PATCO Agro Tech Company of, Pakistan Agricultural Research Council (PARC) also
contributes in the marketing of honey and honey products to local marketing and also to the end
user.

9. BREED SELECTION Apis mellifera acclimatized during last 35 years.

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 10. PROJECT COST SUMMARY
A detailed financial model has been developed to analyze the commercial viability of Honey
Farm. Various cost and revenue related assumptions along with results of the analysis are
outlined in this section.
10.1 Project Economics
Information has been shared with different stakeholders; Government organizations,
technical/vocational institutes, bee keeping associations, progress beekeepers, pharmaceutical companies
and universities in Pakistan.

Table 1: Project Economics

Description Medium (100 Colonies)

IRR 34 %

Payback Period (yrs) 2

Net Present Value (NPV) 5,541,023.62

10.2 Project Financing

Following table provides details of the equity required and variables related to bank loan.

Table 2: Project Financing

Description Medium (100 Colonies)

Total Equity (@ 10%) Rs. 141875

Bank Loan (@ 90%) Rs. 1276875

Markup to the Borrower (%age/annum) 8%

Tenure of the Loan (Years) 8

Grace Period (Year) 1

Table 3: Project Cost

Number of Apis mellifera colonies Medium (100 Colonies)

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Capital cost
Standard Langstroth bee hive (with bees) @ Rs.7500/- per hive 750000
Comb foundation press 25000
Honey extractor 50000
Nucleus hives @ Rs.1000/- 100000
Pollen traps @ Rs.500/- 5000
Miscellaneous tools (bee veil, hive tool, smoker, tent etc.) 12500
Total 942500

Table 4: Project Production Cost

Production cost Medium (100 Colonies)
Transportation of colonies (migration) 25000
Supplemental feeding 12 kg sugar per colony@ Rs.60/- per kg 72000
Depreciation on equipment @10% per annum 94250
Rent of stores 25000
Rent of apiary sites in the form of honey (obligatory) 10000
Bee Attendants @ Rs.8000/- per month + food 192000
Miscellaneous expenses (chemicals/medicines) 10000
Total 428250

Table 5: Project Gross Income

Gross Income Medium (100 Colonies)

Quality  Honey 25 kg @ Rs.250/- per kg (different sources 10 kg 'ber’

1425000
@ Rs.800/- per kg (Farm gate price)
Royal jelly from selected colonies 35000
Beeswax 250gm per hive @ Rs.500/- per kg 12500
Pollen (surplus) 250 gm per colony @ Rs.1000/- per kg 25000
Nucleus hive @ Rs.3000/- 300000
Total 1797500
Net Income 1369250

11. CONTACTS – SUPPLIERS, EXPERTS / CONSULTANTS

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 1. Dr. Elizabeth Stephen

HBRI, NARC, ISLAMABAD

Ph: 051-8443773

Email elizabethwcamphor@yahoo.co.uk

2. Saddique Munawar

HBRI, NARC, ISLAMABAD

Ph: 051-8443774

m_s_munawar@live.com

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12. ANNEXURES
Income Statement
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Ye
1,506,17 1,656,79 2,004,71 2,205,19 2,425,71 2,668,28
Sales (Revenues) 1,369,250 5 3 1,822,472 9 1 0 1 2,935,109 3,228
Quality  Honey 25 kg @ Rs.250/- per kg
(different sources 10 kg 'ber’ @ Rs.800/- per
kg (Farm gate price) 1425000 1496250 1571062.5 1649615.62 1732096 1818701 1909636 2005118 2105374 22106
Royal jelly from selected colonies 35000 36750 38587.5 40516.875 42543 44670 46903 49249 51711 54296
Beeswax 250gm per hive @ Rs.500/- per kg 12500 13125 13781.25 14470.3125 15194 15954 16751 17589 18468 19392
Pollen (surplus) 250 gm per colony @
Rs.1000/- per kg 25000 26250 27562.5 28941 30388 31907 33502 35178 36936 38783
Nucleus hive @ Rs.3000/- 300000 315000 330750 347288 364652 382884 402029 422130 443237 46539
Total Income 1797500 1887375 1981743.7 2080830.93 2184872.4 2294116.1 2408821.9 2529263.0 2655726.16 27885
Transportation of colonies (migration) 25000 27500 30250 33275 36602.5 40262.75 44289.025 48717.92 53589.72 58948
Supplemental feeding 12 kg sugar per
colony@ Rs.60/- per kg 72000 79200 87120 95832 105415.2 115956.72 127552.39 140307.63 154338.39 16977
Depreciation on equipment @10% per
annum 94250 103675 114042.5 125446.75 137991.42 151790.56 166969.62 183666.58 202033.24 22223
Rent of stores 25000 27500 30250 33275 36602.5 40262.75 44289.025 48717.927 53589.72 58948
Rent of apiary sites in the form of honey
(obligatory) 10000 11000 12100 13310 14641 16105.1 17715.61 19487.171 21435.8881 23579
Bee Attendants @ Rs.8000/- per month + 192000 211200 232320 255552 281107.2 309217.92 340139.71 374153.68
food 411569.05 45272
Miscellaneous expenses 10000 11000 12100 13310 14641 16105.1 17715.61 19487.171
(chemicals/medicines) 21435.88 23579
102,150 102,150 90,702 78,338 64,985 50,563 34,988 18,167 0 0
Interest on Loan
530400 573225 608885 648339 691986 740264 793659 852705 917992 100
Total Cost
Gross Profit 838,850 932,950 1,047,908 1,174,133 1,312,733 1,464,927 1,632,051 1,815,576 2,017,117 2,218,
714,55 838,75 974,92 1,124,2 1,287,9 1,467,3 1,664,1
Operating Income (Profit-Cost) 597,450 0 6 5 17 04 82 85 1,879,995 2,07
683,09 790,82 907,73 1,035,9 1,176,4 1,330,9 1,495,5
Net Income (Operating Income-Tax) 577,705 5 4 6 28 96 48 94 1,672,131 1,83

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 12.1 Income Statement
12.2 Cash Flows of the project
Years Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Net Profit 577,705 683,095 790,824 907,736 1,035,928 1,176,496 1,330,948 1,495,594 1,672,131 1,833,875
Depreciation 94,250 94,250 94,250 94,250 94,250 94,250 94,250 94,250 94,250
Inventory (247,500) (27,225) (29,948) (32,942) (36,236) (39,860) (43,846) (48,231) (53,054) (58,359) 641,951
Income Tax 19,745 31,455 47,932 67,189 88,288 111,407 136,433 168,590 207,864 243,545
Cash from Operations
(247,500) 570,225 778,853 900,064 1,032,939 1,178,606 1,338,307 1,513,401 1,705,381 1,915,886 2,813,621
Inflow / Outflow
Mark-up Paid 102,150 102,150 90,702 78,338 64,985 50,563 34,988 18,167 0 0
Net Cash from Operations
(247,500) 468,075 676,703 809,362 954,601 1,113,622 1,287,744 1,478,413 1,687,214 1,915,886 2,813,621
Inflow / Outflow
Owners Equity 141,875
Principal Repayment - 143,102 154,551 166,915 180,268 194,689 210,264 227,086 (0) (0)
1,276,87
Long Term Loan
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Cash from Financing 1,418,75 143,10 154,55 210,26 227,08
166,915 180,268 194,689
Inflow / Outflow 0 - 2 1 4 6 (0) (0)
(942,50
Cash from Investment
0)
Net Cash from Investing (2,837,50 468,07 819,80 963,91 1,121,51 1,293,89 1,482,43 1,688,67 1,914,30 1,915,8 2,813,
Activities 0) 5 5 3 6 0 4 7 0 86 621
Net Cash (2,837, (2,369,42 (1,549,62 (585,70 535,80 1,829,69 3,312,1 5,000,8 6,915, 8,83
Inflow / Outflow (K+N+Q) - 500) 5) 0) 7) 8 8 32 09 109 0,995
(2,837,50 (2,369, (1,549,62 (585,70 535,80 1,829,69 3,312,13 5,000,8 6,915,1 8,830, 11,64
Opening Balance
0) 425) 0) 7) 8 8 2 09 09 995 4,616

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13. Key Assumptions

Particulars Assumption
Sales Price Growth Rate 5 % per year
Capacity Utilization Growth Rate 10 % per year
Increase in Cost of Raw Materials 10 % per year
Increase in Staff Salaries 10 % per year
Increase in Utilities (Electricity / Water / Gas) 10 % per year
Debt / Equity Ratio 90 : 10
Depreciation
Plant Building 10 % per annum
Machinery 10 % per annum
Office Furniture & Equipment 10 % per annum
Loan Period 8 Years (inclusive of 1 year grace period)
Loan Installments Annually

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