Poultry Farm Business

(Feasibility Report)

Submitted to: Mujtaba Ali

Submitted by: KASHIF NASEER

BSEET01193019

naseerkashif03@gmail.com

+923016940070
1. INTRODUCTION .................................................................................................................. 2
2. PURPOSE OF THE DOCUMENT ......................................................................................... 3
3. EXECUTIVE SUMMARY ..................................................................................................... 3
4. BRIEF DESCRIPTION OF PROJECT & PRODUCT............................................................. 4
5. CRITICAL FACTORS ........................................................................................................... 4
6. INSTALLED & OPERATIONAL CAPACITIES ................................................................... 4
7. GEOGRAPHICAL POTENTIAL FOR INVESTMENT ......................................................... 4
8. POTENTIAL TARGET MARKET .................................................................................... 4
9. BROILER PRODUCTION PROCESS ............................................................................... 5
10. PROJECT COST SUMMARY ........................................................................................... 6
PROJECT ECONOMICS ................................................................................................... 6
PROJECT FINANCING ................................................................................................... 7
PROJECT COST ............................................................................................................... 7
SPACE REQUIREMENT ................................................................................................. 7
MACHINERY AND EQUIPMENT .................................................................................. 8
OFFICE EQUIPMENT & FURNITURE ............................................................................8
RAW MATERIAL REQUIREMENTS...............................................................................8
HUMAN RESOURCE REQUIREMENT ...........................................................................9
REVENUE GENERATION ...............................................................................................9
OTHER COSTS .................................................................................................................9
11. CONTACTS OF SUPPLIERS AND EXPERTS ................................................................ 10
12. ANNEXURE .................................................................................................................... 11
13. KEY ASSUMPTIONS ...................................................................................................... 12
14. REFRENCE ………………………………………………………………………………...13
15. CONCLUTION…………………………………………………………………………… 13
 1-INTRODUCTION
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 gathered
from various reliable sources; however, it is based upon certain assumptions which may differ from case to
case. The information has been provided on ‘as is where is’ basis without any warranties or assertions as to
the correctness or soundness thereof. Although, due care and diligence has been taken to compile this
document, the contained information may vary due to any change in any of the concerned factors, and the
actual results may differ substantially from the presented information. . The contained information
does not preclude any further professional advice. The prospective user of this
memorandum is encouraged to carry out additional diligence and gather any information
which is necessary for making an informed decision, including taking professional advice
from a qualified consultant / technical expert before taking any decision to act upon the
information.
2-PURPOSE OF THE DOCUMENT
The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in
project identification for investment. 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, marketing,
finance and business management.
The purpose of this document is to facilitate potential investors in broiler farm by providing
them a general understanding of the business with the intention of supporting potential
investors in crucial investment decisions.
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, and certain industrial norms 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 basis of any Investment Decision.

3-EXECUTIVE SUMMARY
Broiler meat is a rich source of protein with an ever growing demand. In broiler farming,
the Day Old Chicks (DOCs) of specific broiler strain e.g. Babcock, purchased from
reputed hatchery/ company are raised on specially formulated feed for a period of about
six weeks, with a turnover of six flocks per year. Both rural and semi-urban areas are
suitable for this business.
Success of broiler farm largely depends on good management practices. After brooding
and rearing period, birds are sold at farm gate on ‘Live Body Weight’ basis to traders or
transported to market. The farm gate price of live bird is determined on daily basis.
A conventional broiler farm of 10,000 birds is suggested in this pre-feasibility study as a
viable economic size to enter this business. The proposed business started in a rented
shed requires total estimated investment of Rs. 2.16 million with a staff of 03 persons.
This project is proposed to be started on 90% debt and 10% equity basis. The project’s
Internal Rate of Return (IRR), Net Present Value (NPV) and payback period are 51%,
4.96 million and 1.48 years respectively.
4- BRIEF DESCRIPTION OF PROJECT & PRODUCT
In the proposed broiler farm, the Day Old Chicks (DOCs) are raised on high protein and
energy feed in a conventional open housing system for a period of six weeks (All in-All out
system). The purpose built farm is acquired on rental basis.
After six weeks, the birds are sold on live body weight basis to traders, wholesale markets
or sold directly to the shopkeepers in the urban markets. With ever increasing demand for
white meat, broiler farming can be a profitable venture. Annually, six flocks of birds are
raised on the farm, depending on area climate.

5-CRITICAL FACTORS
 Background knowledge and related experience of the entrepreneur in broiler
farm operations.
 Application of good poultry husbandry practices such as timely feeding, watering,
lighting, vaccination, medication, temperature / humidity control and culling of
uneconomical birds to ensure flock’s best performance and higher efficiency in
disease-free environment.
 Awareness of supply and demand of chicken in the market as the price of chicken
meat fluctuates throughout the year.
 Efficient marketing of the project and bulk supply to wholesalers.

6-INSTALLED & OPERATIONAL CAPACITIES

In this pre-feasibility study, all the calculations have been based on a flock size of 10,000
birds. As six flocks are produced per year, hence total 60,000 birds are reared per annum.
There will be a lag time of two weeks for cleaning and disinfection (e.g. fumigation) on the
farm.
7- GEOGRAPHICAL POTENTIAL FOR INVESTMENT
Rural and peri-urban areas around major cities are suitable for setting up a broiler farm.
Setting up a farm at an isolated place will minimize the risk of disease. Proximity of the
farm to the city enables the farmer to establish links with the market for buying farm
inputs and selling of grown-up birds, swiftly. Sub- urban and rural areas around big cities
e.g. Lahore, Rawalpindi, Faisalabad, Hyderabad, Karachi, Peshawar and Quetta are
recommended for starting a broiler farm.
8- POTENTIAL TARGET MARKET
Marketing of chickens follow traditional channels of distribution. Generally, grown-up birds
are distributed in the market through market agents and intermediaries such as Arhti and
wholesalers.
In some cases, the middleman provides DOCs and other farm inputs (feed, vaccination,
medication etc.) to the broiler farmers under a contract to buy back mature birds from
them.Birds are transported to the urban market and are sold to retailers or market- street
poultry shops. Few poultry meat processing plants process raw poultry
meat into dressed chicken, quality cuts or other forms to the market. The integrated
processing units distribute frozen and dressed chicken packed in whole or cut-ups to the
consumer through retail shops under their brand names. Major domestic markets include
all major cities across the country including Karachi, Lahore, Peshawar and Quetta etc.
The wholesale and retail price of poultry meat is determined daily on consumer’s demand
and supply situation.
9- BROILER PRODUCTION PROCESS

 The broiler farming must begin with a clean and sanitized shed. The layout of
open conventional shed should be north-south to ensure clean, dry and well-
ventilated shed as this provides fresh air and carries off humidity.
 The entire building and all equipment should be properly disinfected and
fumigated. The equipment and walls of the shed should be checked for
cleanliness, disinfection and spraying before the arrival of DOCs. Disinfectants
can be prepared with Phenol, Potassium Permanganate, Carbolic Acid and
Formalin. A solution of Sodium Hydroxide/Caustic Soda with warm water can also
be used to clean the house.
 To sanitize the shed from germs and insects, it is fumigated with Formaldehyde
gas, produced by putting Formalin on Potassium Permanganate. The house should
be vacant and sealed for 30 minutes after the fumigation so that the gas
infiltrates in every corner.
 Litter is spread on the floor to prevent direct contact of birds with the floor.
Rice-husk and sawdust are generally used as litter. It should be dry and free of
moulds. Caked or moldy material should be removed and refilled with fresh
materials. Extensively wet and dusty litter should also not be used. Using new
litter for each flock is good for raising disease-free broiler birds.
 The DOCs should be procured from well reputed hatcheries and should be of
uniform size, active and bright eyed, having healed navel. The skin of shanks
should be shiny.
 The DOCs should arrive at the farm early in the morning so that the management
has a full day to observe them for any issue.
 Flushing should be done by offering 250 gm glucose per gallon of water as readily
available source of energy and to clear the digestive tract.
  Keep light at high intensity 20–22 hours per day for the first week. Closely
regulate temperature of shed.
Special attention should be given to temperature and relative humidity
maintenance in the shed. The temperature for brooders should be 99 F, encircled
by chick guard/sheets. The brooder is essential part of broiler farming, also
known as ’Artificial Mother’ as it provides necessary heat to DOCs shortly after
arrival till 7 days of age.
 Mostly, 24 hours light is provided during brooding and early growing period.
Initially, for first fifteen days, light intensity should be 40-60 watts per 200 sq. ft
of space which can be replaced by 15 watts bulb in the start of third week.
 Starter feed should be offered as a source of energy to chicks as it is easily
digestible and a good source of energy. Broilers are fed two types of ration i.e.
broiler starter (mash or crumb form) fed up to four weeks of age and then broiler
finisher (mash or crumb form) fed from fifth to sixth week. There are many feed
mills that prepare these formulated feeds.
 Feeding three or four times each day will stimulate feed intake and prevent
wastage. The desired Feed Conversion Ratio (FCR) is 2.20. Check regularly the
availability of water and feed for chicks.
 Follow the recommended vaccination schedule. Vaccination can be provided to
chicks through eye drops, drinking water and subcutaneous injections. Following
is a typical vaccination schedule for broiler birds;
TABLE 1: VACCINATION SCHEDULE FOR BROILER BIRDS

Age in Days Disease Vaccination Procedure

Infectious Bronchitis Aerial spray or eye
1 day IB-Vaccine
Disease (IBD) drops
5 days Newcastle Disease (ND) ND-Vaccine (Lasota) Eye drops
Infectious Bursal IBD Vaccine
8 days Eye drops
Disease (IBD) (Gumboro)
Hydro Pericardium HPS- Hydro Vaccine
17-18 days Sub-cut injection
Disease
Infectious Bursal IBD Vaccine
21-22 days In drinking water
Disease (IBD) (Gumboro)
IBD+ND IBD+ND Vaccines
25-26 days In drinking water

 Mortality losses should be kept below 8% by timely prophylactic measures

(vaccination, medication, disinfection etc.). The New Castle Disease and Gumboro
are extremely dangerous diseases that can eradicate the entire flock.
10- PROJECT COST SUMMARY
A detailed financial model has been developed to analyze the commercial viability of
broiler farm (10,000 birds) under the Prime Minister’s Youth Business Loan scheme.
Various cost and revenue related assumptions along with results of the analysis are
outlined in this section.
The projected Income Statement, Cash Flow Statement and Balance Sheet are attached
as appendix.
PROJECT ECONOMICS
The following table shows Internal Rate of Return, Net Present Value and payback period;
Description Details
Internal Rate of Return (IRR) 51%
Payback Period (yrs) 1.48
Net Present Value (NPV) Rs.4,955,546

PROJECT FINANCING

Following table provides details of the equity required and variables related to bank loan;
TABLE 3 - PROJECT FINANCING
Description De tails

Total Equity (10%) Rs. 215,529

Bank Loan (90%) Rs. 1 ,939,761

Mark up to the Borrower (%age/annum) 8% Tenure

Loan (Years) 8
of the
e Period (Year) 1
Grac
PROJECT COST

Following requirements have been identified for operations of the proposed business;
TABLE 4: CAPITAL INVESTMENT FOR THE PROJECT

Capital Investment Amount (Rs.)

Machinery & equipment 152,239
Furniture & fixtures 10,000
Office equipment 3,000
Pre-operating cost 144,625
Total Capital Cost 309,864
Raw material inventory 1,505,382
Upfront building rent 240,044
Cash in hand 100,000
Initial Working Capital 1,845,426
Total Project Cost 2,155,290

SPACE REQUIREMENT

Following table shows calculations for project space requirement;

TABLE 5: SPACE REQUIREMENT

Space Requirement Space (Sq.ft)

Management building 100
Shed space 10,000
Feed store 180
Room for workers 144
Pavement/ Boundary walls 104
Total Area 10,528
The rental cost is calculated at approximately Rs. 20,000 per month.
MACHINERY AND EQUIPMENT

Following table provides list of machinery and equipment required for broiler farm in open
shed conventional housing system;
TABLE 6: LIST OF MACHINERY AND EQUIPMENT

Capacity Cost Total

Description Quantity
Birds/unit Rs/unit Rs.
Brooder 500 20 1,000 20,000
Chick guard 200 50 150 7,500
Small waterers 50 182 90 16,380
Small feeding trays 50 182 90 16,380
Large automatic waterers 140 70 300 21,000
Large round feeders 130 80 300 24,000
Buckets 6 500 3,000
Manual balance 1 2,000 2,000
Exhaust fans 4 1,000 4,000
DOC shifting boxes 10 1,800 18,000
Drum heaters 4 2,000 8,000
Miscellaneous 1 5,000 5,000
Installation 6,979
Total Machinery &
152,239
Equipment

OFFICE EQUIPMENT & FURNITURE

Table 7: Office Equipment & Furniture

Description Quantity Cost (Rs.) Amount (Rs.)

Telephone 1 3,000 3,000
Furniture and fixture Lump sum 10,000 10,000
Total 13,000

RAW MATERIAL REQUIREMENTS

Following table shows raw material requirement for the proposed project;
TABLE 8: COST OF MATERIAL
Values
Total Rate
Description Unit (Rs. per
units (Rs./ Unit)
year)
*Day Old Chicks (DOC) Per DOC 60,000 35 2,100,000
Total feed required per birds
@ 2.2 FCR Per Bird *56,304 178.2 10,033,372
(Incl. 2% extra DOCs)
Vaccination, medication and
Per Bird *56,304 8 450,432
Disinfection
(Incl. 2% extra DOCs)
Direct Electricity Cost Per bird 2.25 *56,304 126,684
Litter & Spray
(Saw dust or rice husk) Per Flock 6 14,000 84,000
* 2% extra chicks provided by DOC supplier to cover the transportation mortality, hence total birds to
consume feed and vaccination/ medication would be 56,304 per annum after 8% mortality loss.

HUMAN RESOURCE REQUIREMENT

Table 9: Human Resource Requirement

Monthly Salary per

Description No. of Employees
Employee (Rs.)
Owner / Farm manager 1 30,000
Farm Labor 2 12,000
Total Staff 3

Two semi skilled workers are needed to look after the general poultry husbandry
operations at the farm. In addition, owner would act as farm manager. The salaries are
estimated to increase at 10% annually.
REVENUE GENERATION
Table 10: Revenue Generation
Sale Price First Year Revenue in
Description Unit
Rs. Production First Year Rs.
Broiler birds (1.8-2.0 Per
261 56,304 14,695,344
kg) after 6 weeks bird
Other revenues (litter, Per
8 56,304 450,432
empty feed bags etc.) bird
Total Revenue 15,145,776

OTHER COSTS

An essential cost to be borne by the farmer is electricity expense which is estimated to be

Rs. 2.25 per bird. The fixed electricity cost for rest of the area is estimated to be Rs. 800
per month. Average vaccination and medication cost per bird is taken at Rs.8.00 per bird.
 11- CONTACTS OF SUPPLIERS AND EXPERTS
TABLE 11: LIST OF SUPPLIERS AND CONSULTANTS
Feed Suppliers DOC Suppliers
Supreme Feeds (Pvt.) Ltd. Big Bird Poultry Breeders (Pvt.) Ltd.
Head Office: 176-Shadman 1 Lahore. 2-A,Ahmed Block, New Garden Town
Ph: 042-37522104-7 Lahore
Ph: 042-35835373-4
Ghazi Brothers Hi-Tech Poultry Breeders (Pvt.) Ltd.
Ghazi House, D-35, KDA Scheme, No. 1, 1-A, Shadman Chowk Jail Road, Lahore
Miran Muhammad Shah Road, Karachi Ph: 042-37564503
Ph: 021-111250365
Asia Feed (Pvt.) Ltd. Islamabad Poultry Breeding Co.
359 Shamsabad Colony, Humayun Road D-98, Satellite Town, Murree Road
Multan. Rawalpindi.
Ph: 061-6224414 Ph: 051-4427139
Fast Poultry Feeds Jadeed Farms (Pvt.) Ltd.
12-KM Near Nai Sabzi Mandi Jhang 6- Allied Commercial Plaza, Murree Road,
Road, Faisalabad. Chandni Chowk Rawalpindi.
Ph: 041-2577171-2 Ph: 051-4851280-84
Rustum Feeds Sadiq Poultry Pvt Ltd
Flat No.6, 1st Floor, United Center SB Plaza, 48-C, Satellite Town, Chandni
Shamsabad, Murree Road, Rawalpindi Chowk, Rawalpindi
Ph: 051-4455362 Ph: 051-111-505-050
Machinery & Equipment Suppliers Consultants

Biovet (Pvt.) Ltd. Prof. Dr. M. Akram

97-A, Jail Road Lahore Ph: 042-37534508
Eastern Veterinary Services
4- C Chouburji Center, Near Venus
Cinema, Multan Road, Lahore.
Ph: 042-37417649-50
Department of Poultry Production,
Uni. Of Veterinary and Animal Sciences
(UVAS), Lahore
Ph: 042-99211461
Dr. Abdul Rehman
Director, Poultry Research Institute,
Shamsabad, Murree Road, Rawalpindi
Ph: 051-9290163-5

Dr. Fawwad Ahmad

Faculty of Animal Husbandry, University of
Agriculture, Faisalabad
Ph: 041-9920161-70
 12- ANNEXURE
INCOME STATEMENT

Statement Summaries
Income Statement

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Revenue 15,145,776 16,615,310 18,231,798 20,009,935 21,965,885 24,117,430 26,484,130 29,087,500

Cost of goods sold 13,082,489 14,390,738 15,829,811 17,412,793 19,154,072 21,069,479 23,176,427 25,494,070
Gross Profit 2,063,287 2,224,573 2,401,987 2,597,142 2,811,813 3,047,951 3,307,703 3,593,431

General administration & selling expenses

Utilities expense 9,665 10,631 11,694 12,864 14,150 15,565 17,121 18,833
Professional fees (legal, audit, etc.) - - - - - - - -
Depreciation expense 16,524 16,524 16,524 16,524 16,524 16,524 16,524 16,524
Amortization expense 28,925 28,925 28,925 28,925 28,925 - - -
Mortality 523,300 575,630 633,192 696,512 766,163 842,779 927,057 1,019,763
Subtotal 1,189,257 1,303,638 1,429,456 1,567,857 1,720,098 1,858,638 2,042,849 2,245,482
Operating Income 874,030 920,935 972,530 1,029,285 1,091,715 1,189,313 1,264,854 1,347,948
Earnings Before Interest & Taxes 874,030 920,935 972,530 1,029,285 1,091,715 1,189,313 1,264,854 1,347,948

Interest expense 160,999 147,396 129,518 110,155 89,186 66,476 41,881 15,244
Earnings Before Tax 713,031 773,539 843,013 919,130 1,002,530 1,122,838 1,222,973 1,332,704

Tax 31,303 38,531 48,952 60,369 72,879 90,926 105,946 122,405

NET PROFIT/(LOSS) AFTER TAX 681,728 735,008 794,061 858,760 929,650 1,031,912 1,117,027 1,210,299

Balance brought forward 681,728 1,416,736 2,210,797 3,069,557 3,999,208 5,031,120 6,148,147
Total profit available for appropriation 681,728 1,416,736 2,210,797 3,069,557 3,999,208 5,031,120 6,148,147 7,358,446
Balance carried forward 681,728 1,416,736 2,210,797 3,069,557 3,999,208 5,031,120 6,148,147 7,358,446

13- KEY ASSUMPTIONS

TABLE 12: PRODUCTION ASSUMPTIONS
Production capacity utilization 100%
Maximum capacity utilization 100%
Number of birds per flock 10,000
Extra Chicks supplied by DOC supplier (2%) 200
Number of flocks per year 6
Mortality rate 8%
Annual production (birds) 60,000
Time required per flock (days) 42
Lag time between the flock (weeks) 2
 Table 13: Revenue Assumptions

Sales price per bird (1.8 Kg approx) 261

Average weight per bird (kg) 1.8-2.0

Table 14: Expense Assumptions

Day Old Chicks (DOC) in Rs. 35

Feed Conversion Ratio (FCR) 2.20
Average feed requirement/bird/day (kg) 0.09
Cost of feed (in Rs/kg) 45
Feed cost per bird (Rs.) 178.2
Cost of feed bag (Rs. per 50 Kgs Bag) 2,250
Vaccination cost per bird in Rs. 8
Spray cost per flock 6,000

14-REFRENCES:
1- Ministry of National Food Security & Research, www.mnfsr.gov.pk
2- Poultry Research Institute (PRI), Rawalpindi, Tel: 051-9290162, 9290173,
www.poultry.punjab.gov.pk
3- Veterinary Research Institute (VRI), Ghazi Road, Lahore Cantt., Tel. 042-99220140
4- Agribusiness Support Fund (ASF), Lahore, www.asf.org.pk
5- Pakistan Agricultural Research Council (PARC), Park Road, Islamabad Tel. 051- 9203966,
www.parc.gov.pk
6- Federation of Pakistan Chambers of Commerce and Industry (FPCCI)

15- CONCLUTION:

Raising a home chicken flock can be a good experience and a source of enjoyment. As a family project,
it teaches about living beings and responsibility. The home chicken flock also can be an excellent source of low-cost, high-quality
poultry products. This publication should provide the basic tools to start a successful flock.