2010

Pre-Feasibility Study on Dairy Farm in Sindh

PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH

2010

DISCLAIMER
This Pre-Feasibility has been prepared by Sindh Board of Investment (SBI) and is for information purposes only. This report does not constitute an offer, invitation or inducement to invest in any sector or industry. Neither the information contained in this Pre-Feasibility nor any further information made available with the subject matter contained herein will form the basis of any contract. Any recommendations contained in this document must not be relied upon as investment advice based on the recipient's personal circumstances. In the event that further clarification is required on the words or phrases used in this material, the recipient is strongly recommended to seek independent legal or financial advice.

The material in this Pre-Feasibility is general information intended for recipients who understand the risks and opportunities associated with making investment in Sindh specifically in Dairy sector. It does not take account of whether an investment, course of action, or associated risks are suitable for the recipient.

This report does not purport to be comprehensive or to contain all the information on which a prospective investor can make an investment decision. The information contained herein is based on publicly available information and sources, which we believe to be reliable, but we do not represent it as accurate or complete. The recipient of this report must make his own investigation and assessment of the information presented herein. No representation, warranty or undertaking, express or implied, is or will be made or given and no responsibility or liability is or will be accepted by SBI or by any of its directors, officers, employees, agents or advisors, in relation to the accuracy or completeness of this Pre-Feasibility or any other written or oral information made available in connection with the information presented herein. Any responsibility or liability for any such information is expressly disclaimed.

PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH

2010

EXECUTIVE SUMMARY
Brief summary of project is as follows.

1. For the establishment of Dairy Farm in Sindh, this feasibility has been conducted.

2. The initial cost of the project is Rs. 124,447,500/-, including initial capital cost of Rs. 123,170,500 and initial working capital of Rs. 1,277,000/-.

3. Projected Revenues for the project for year 1, year 2, year 3, year 4 and year 5 is Rs. 36.06 million, 50.25 million, 62.7 million, 83.61 million and 107 million respectively.

4. Gross profit for year 1, year 2, year 3, year 4 and year 5 is Rs. 28 million, 40 million, 50.6 million, 68.7 million and 89.5 million respectively.

5. Payback period of the project is approximately 3.6 years.

6. Average Return on Investment is 19.28%. 7. The IRR of the project is 32.23%.

......... 26 5........................................................................................................................ 29 ANNEXURE N – PROJECTED CASH FLOW............................ 9 3.5 FEED COST ................................................................... 11 3.................................................................. 23 5....................4 MILK PRODUCTION & PROPOSED MILKING FREQUENCY .............................................................................................................. 24 5.................................................................................................................... 28 ANNEXURE M – BALANCE SHEET ..............................................................................................................................................................................................................................................1 THE PRODUCT: MILK ...........................7 THE PRICE..............................1 PROPOSED FINANCING MODEL ............................................................2 PROPOSED LOCATION ............7 5 ANIMAL COST .......................................................................... 12 COMPETITION ..................... 21 VEHICLE & TRANSPORTATION REQUIREMENTS . 20 4.......................................................... 19 4................................................. 20 HUMAN RESOURCE REQUIREMENTS ..........1........................................ 5 1..................................................................................................................................................6 VACCINATION AND ARTIFICIAL INSEMINATION COST ...2 Market Analysis ......4 4......................................................................................................................................2...........1 OBJECTIVES ................................ 25 5...............................AVAILABLE FOREIGN CATTLE BREEDS ......... 19 4.......AVAILABLE LOCAL CATTLE BREEDS ............................. 26 5.................................................................................... 5 SWOT ANALYSIS ........1........................................... 21 FURNITURE & EQUIPMENT COST ............................................... 20 SPACE & INFRASTRUCTURE COST ..................... 27 ANNEXURE L ...............................................2 DAIRY CATTLE BREED SELECTION FOR MILK PRODUCTION.........................................................................................1 3...................................................................................................................1 PROPOSED TARGET MARKET .......................................................................Demand & Supply for Milk .............................................................................................. 20 4....................5 4.. 32 ................................................Domestic and International Markets .............. 30 ANNEXURE R .....2 OPPORTUNITY RATIONALE .................. 31 ANNEXURE S .................3 SELECTION OF HERD SIZE & COMPOSITION.. 17 2 3 4 PROJECT COST ............................................................................................................ 21 PROJECT DYNAMICS ................................................................................6 4.................... 5 1........................................... 3 1 PROJECT BRIEF ...........................................PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 Table of Contents EXECUTIVE SUMMARY ..................... 7 LIVESTOCK SECTOR OVERVIEW ..... 23 5....................................................1 THE LAND...... 23 5................................3 4......................

efficient and effective utilization of dairy production and deployment of technologically advance infrastructure. Buffalo is the main source of milk in domestic dairy industry whereas cow is the main source of milk in international market.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 1 PROJECT BRIEF The proposed pre-feasibility is for establishment of Dairy Cattle Farm with increase per cow milk production through state of the art farm management facilities. Increase in milk production is due to increase in quantity of livestock population . 1. The project requires a unique mix of technology and herd composition that will make it possible for investor to achieve economies of scales and attain high rate of return on investment. Although per animal milk yield in lower than other countries. 1. processing and storage facilities have made it possible to preserve Milk and its value added products for longer period of time but in Pakistan. The objective of this feasibility is to provide a real time analysis of the market opportunity with factual data that will lead towards overall improvement in dairy sector of economy. Dairy sector possess potential of additional 3 billion liters of milk with a growth rate faster than any other sector of economy. Technologically advanced production. only around 3% of total milk production is processed and marketed through formal channels.2 OPPORTUNITY RATIONALE Milk is among the most important consumable and marketable commodities of the world with enormous demand in domestic and international market. Pakistan is the 3rd largest milk producing country in the world.1 OBJECTIVES This Pre-feasibility study aims at both financial and socio economic viability with in-depth financial analysis and sustainable socio economic benefits to establish small scale Dairy Cattle Farms in Sindh. The scope for export of value added derivatives of milk is also huge especially processed milk market share has increased considerably.

This provides huge opportunity with minimal competition for farmers to invest in dairy farming and milk processing sectors of the economy.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 in Pakistan from 716.2010 .7 million to 769 million in 20101. 1 Economic Survey of Pakistan 2009 . It is also required to introduce improved technological methods in dairy farming industry to increase per animal milk production and attain economies of scales.

Strengths        Livestock products i. technical skills. initiative and experience in modern dairy farming Adoption of traditional approach Post harvest milk losses are very high estimated at 40 kg per capita per year Obsolete equipment and technologies Opportunities       Increasing demand of value added dairy products Local and global dairy products needs are much higher than supply Govt. ranking 3rd in the world Dairy sector in Sindh is having low cost of production compare to competitive milk producing countries Ample human resource and manpower availability in dairy farming Sindhi culture is having long tradition of cattle and livestock rearing Large base of cattle for milk production Weaknesses           Relatively small dairy cattle milk production market Chronic lack of improved. unaware of basic farm management practices including record keeping. of Sindh & State Bank of Pakistan priority sector Commercially viable sector with great credit potential and absorption capacity Cooperatives can play a big role for development of dairy sector in Sindh Dairy sector provides raw material for food & leather industry Threats     Implementation of WTO will result in open & competitive commodity pricing Due to fear of default.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 2 SWOT ANALYSIS A SWOT analyses for establishing a dairy farm is given below. banker community has reluctance for lending loans High risks of diseases in live stock Defective and unorganized markets . farm/ market infrastructures & marketing information Nutrition is still a problem hampering the livestock productivity in general and milk production in particular Enormous production losses due to endemic diseases every year Poorly developed cold chain with inadequate number of milk chilling and processing centers Lack of education. Milk & Meat are major source of food. adapted dairy cows Unorganized sector. Dairy sector is having enormous potential for sizeable earnings Pakistan is having wide scope of Milk Production.e.

demand & supply in market Low saving. tax holidays 2010 . non-recognition of problems and monopoly of multinationals Lack of community organizations and out dated farm practices Lack of coordination towards common causes & goals Lack of awareness about economics. low holding capacity Non-availability of subsidy.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH         Imbalance between prices of inputs & outputs Rising trend of cost of production with higher rate of interest as compared to profit ratio Lack of media projection.

8% 4. February 20. Goat.”2 According to Livestock Census 2006. The News. Sheep. Livestock sector produces the following products:           Milk Beef Mutton Poultry Meat Wool Hair Bones Fat Eggs Skins This sector has shown steady progress in last few years. 52% of total cattle population of 2 Per Capita Meat Consumption Declines by 1.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 3 Livestock Sector Overview Livestock products constitute huge revenue potential.7%.9% 2.3% 15. Camel and Poultry.8% 2. Buffalo. 2010 . Detailed livestock growth percentage is shown in table below: Livestock Growth Percentage Year 2003‐04 2004‐05 2005‐06 2006‐07 2007‐08 2008‐09 2009‐10 Source: Federal Bureau of Statistics Livestock 2.1% Livestock population in Pakistan is mainly comprised of Cow.2% 3.5% 4. Around 47% of the rural households in Pakistan own livestock and 11% of their income come from livestock.

603.000 tonnes of Mutton.000 tonnes of Poultry Meat. 19.000 tonnes of Wool. 707. 11.000.839.600 tonnes of Hair.000 tonnes of Beef.3 Detailed comparison of increase in Livestock population in Pakistan is given in graph below: Livestock Population in Pakistan All Values are in Millions 700 600 500 400 300 200 100 0 23 20002001 24 20012002 25 20022003 26 20032004 26 20042005 27 20052006 28 20062007 29 20072008 29 20082009 31 20092010 292 330 346 353 372 23 22 433 477 518 23 24 24 562 30 31 32 33 34 610 Year Buffaloes Source: Ministry of Livestock and Dairy Development Poultry Cattle In 2009-2010. Zia-Ur Rehman . 713. Khan and Sohail Ahmad..655.400 tonnes of Bones. Livestock sector produces 36. J. Muqarrab A.299.7% in Sindh. 40. Department of Animal Breeding and Genetics.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 Pakistan resides in Punjab. 2008. 228.000 tonnes of milk.000 tonnes of Eggs and 47.100 tonnes of Fat. making Pakistan 3rd largest milk producing country in the world.000 tonnes of Skins in 2009-2010.400. 28(2): 95102. It also produces 1. 56. Pakistan Vet. University of Agriculture Faisalabad. 22. 20% in NWFP and 8% in Baluchistan. Genetic Resources and Diversity in Pakistani Cattle.800 tonnes of Blood. Sajjad Khan.4 3 M. 4 Ministry of livestock & Dairy Development: Figures are based on Inter census growth rate of Livestock census 1996 & 2006 .

601 1.000 1. 1.498 1.5% of total national export.449 1.4% of national GDP during 2009‐10.284 27.655 00 1 00 2 00 3 00 4 Beef Source: Economic Survey of Pakistan 2010 Livestock accounted for 53.034 1.8% as compared to previous year. J.010 1.624 31.060 666 683 702 554 720 739 566 578 590 603 29.000 20.5 It also comprised of 8.811 28.1 THE PRODUCT: MILK Raw milk is used to prepare processed milk and various value added products. Agri.000 25.6 Gross value addition of livestock at current factor cost has also increased from Rs.087 1.115 1.549 1.996 34. 1.000 All Values in 000 Tonnes 35.970 32.5 billion (2009‐10) showing lift of 17. 45(2).160 36.537.304.6 billion (2008‐09) to Rs.438 26. Some of them are as follows:      Pasteurized Milk UHT Treated Milk Condensed Milk Skim Milk Milk Powder 5 6 Economic Advisor’s Wing 2008 Pak..064 35.000 15. Sci.”7 3.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 Year-wise livestock production of Pakistan is given below: Yearwise Livestock Production of Pakistan 40.000 30.2008 7 Economic Survey of Pakistan 2009-2010 00 5 20 05 -2 00 6 20 06 -2 00 7 20 07 -2 00 8 20 08 -2 00 9 20 09 -2 01 0 20 00 -2 20 01 -2 20 02 -2 20 03 -2 20 04 -2 Year Milk Mutton .031 27. Vol.2% of agriculture value added and 11.000 5.000 10.299 1.

Dairy Consumption in the World 290 280 282 270 258 254 248 242 263 276 All Values are in Billion Litres 270 260 250 240 230 220 2005 2006 2007 2008 2009 2010 2011 2012 Source: Tetra Pak Dairy Index. 8 Tetra Pak Dairy Index.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH       Ghee Liquid butter Yogurt Ice Cream Butter Cheese 2010 3. 2009 Year Worldwide dairy consumption will continue to grow at a compound annual growth rate of 2.1. global consumption of milk and other liquid dairy products (excluding soy and dairy alternatives) reached an all-time high of 258 billion litres in 2008 whereas including soy milk and other dairy alternatives.1 Market Analysis .Demand & Supply for Milk Developing Markets contribute greatly in the milk production and consumption markets of the world.8 Chilled and Ambient RTD are most valuable milk products in international market. consumption becomes 280 billion litres. Brief overview of local and international market conditions. Projected dairy consumption in 2012 is 282 billion litres. Issue 1 . such as rice.2% until 2012. demand and supply is given below: Demand for Milk in Domestic and International Market According to Tetra Pak index. nut and seed-based milks.June 2009 .

9 94. The global average per capita milk consumption is 82. Top ten per capita cow’s milk and cow's milk products consumers are defined in chart below: Top Ten Per Capita Cow's Milk and Cow's Milk Products Consumers in 2006 Country Finland Sweden Ireland Netherlands Norway Spain Switzerland United Kingdom Australia Canada Milk (In Litres) 183.1 112.8 122.8 51.2 72.5 129.3 96.9 32.1 24.3 95.0 20.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 Year Wise Dairy Demand in the World 100.0 2005 2006 2007 2008 2009 2010 2011 2012 28.1 76.3 94.2 40.7 30. 2009 China is the world’s leading market in consumption of flavored milk.5 26.7 .8 62.9 145. Buffalo is the main source of milk in local industry whereas Cow is mainly used for milk production in international market.8 78.8 76.2 106.1 kg per annum.7 76.1 29.7 77.1 Year Loose Powder Chilled Ambient RTD Source: Tetra Pak Dairy Index.7 119.0 60.0 66.0 All Values are in Billion Litres 93.5 111.6 55.9 116.8 59.0 80.9 76.1 69.4 76.2 94.2 95.7 97.6 99. liquid cultured milk and soy milk with compound annual growth rates over the last three years.0 0.7 77.2 27.2 25.8 48.

299 12.3 36 32.279 36 739 808 Source: Ministry of Livestock and Dairy Development Milk and milk equivalents are having second highest level of per capita consumption in Pakistan with almost double of global average i.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH In Pakistan. October 2007 Per Capita Consumption 246 kg 132 Kg 86 Kg 108 Kg Supply for Milk in Domestic and International Market Detailed statistics of world annual milk production is shown below. daily human milk consumption in 2009-2010 was 36.064 11.29 million tones: 2010 Milk Human Consumption (All values are in 000 tons) Item Milk (Human Consumption) Cow Buffalo Sheep Goat Camel 2007-08 34.160 11. World Milk Production Rank 1 2 3 4 5 Country India United States Pakistan China Germany Production (billion kg/y) 114.4 79.985 21.3 percent.550 20. 158.437 22.622 36 719 798 2009-10 36.5 28. Province wise per capita consumption is as follows: Province Wise Per Capita Milk Consumption Province Sindh Punjab NWFP Baluchistan Source: Consultancy Report. The annual per capita consumption of milk at national level is 190 liters.e.5 .3 kg registering an increase of 2.991 35 700 787 2008-09 35.

7% over the same period. In 2008.7 8.1 2010 India ranks first in the world.5 26. Annual Milk Production in Pakistan is given below: Pakistan Annual Milk Production 35 45000 40000 36 36 All Values in 000 Tons 35000 30000 25000 20000 15000 10000 5000 0 2007-08 700 14.9 12. milk consumption in India was up more than 2.6 8.2 12 11.3 13.7% with packed milk growing by a compound annual growth rate of 4.5 billion litres.231 27.2 9. with 189.437 787 26.6 10.848 719 14.982 798 2008-09 739 15.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Russia Brazil France New Zealand United Kingdom Ukraine Poland Netherland Italy Turkey Mexico Australia Egypt Argentina Canada 28.”9 U.S. both in total milk production and total milk consumption.5 8.5 11 10. Over the past four years milk consumption in India has risen by a compound annual growth rate of 2.6% from 2007 to nearly 51. Issue 1 .7 billion pounds produced in 2008.June 2009 .2 24.546 808 2009-10 Year Camel Cow Goat Buffalo Sheep Source: Ministry of Livestock and Dairy Development 9 Tetra Pak Dairy Index. cows' milk production is the largest of any individual country in the world.028 27.2 17.

480 56% Supply 43.10 Domestic Milk Supply & Demand Gap in 2003 Domestic Milk Supply & Demand Gap in 2020 Gap. To meet this gap.800 89% Gap 55. over 90 percent of the milk is collected and marketed unprocessed through informal channels by a multi tiered layer of intermediaries. The Statistics Division lists the product only as ‘Milk and Milk Food for Infants’.520 11% Supply 27. Participation for Sustainable Dairy Development. In local market. Consultancy Report. Therefore primary dairy product in domestic market is raw milk. In local market. Only 3%-5% of total milk production goes into processing industry for value added production. Although local milk supply is increasing but the Gap between supply and demand has gradually widen over the years. Local consumers are price conscious due to rising inflation and high poverty levels. October 2007.Pakistan . CFC/FIGMDP/16FT. Improved Market Access and Smallholder Dairy Farmer. Lessons Learned Study . dairy products worth Rs.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 Due to high local demand. both demand and supply of milk have shown increasing trend over the last decade. During July 2006 to November 2007.430 44% Supply Gap Source: Livestock Department. yogurt. 2320. powdered milk is imported every year.6 million) were imported in Pakistan. Government of Sindh Supply Gap 10 Umm e Zia. 3. Local demand for milk increases during summers as the consumption of whey (lassi).42 million ($38. Urban demand for milk in Pakistan is estimated at 9-12 million litres whereas urban supply of milk constitutes only 5% to 15% of the total milk production of the country. and ice cream rises due to hot weather. milk produced in Pakistan is mainly used for local consumption in the form of raw milk.

11 Top 10 dairy companies in the world produced 22. 2009 IFCN Dairy Report 2009 .Domestic and International Markets Milk is a cashable commodity.23% 6.1. climatic changes in New-Zealand/Australia and high rate of growth in Asian milk consumption. Gulf has long been an important business partner of Pakistan. Dairy farming is common in rural areas of Pakistan therefore major production of milk is from rural areas.2 COMPETITION . World largest importer of dairy products is Japan whereas New Zealand is the world largest dairy export nation with bulk of international trade in the form of processed dairy products such as milk powder. Dairy sector remains informal and disorganized resulting in fewer profits for the farmers and gap in supply and demand. Household herd size in rural areas is defined in table below: Household Herd Size in Pakistan Household Percentage 51% 28% 14.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 3. It is extremely important to understand that milk production is not related to milk import in international market because some of high milk producers are high milk consumers as well. Low fats and no preservatives products are also getting increase popularity and demand in international market.72% Animal Count 1-4 5 to 10 11 to 50 more than 50 Source: Livestock Census held in 2006 The comparative value of milk in Pakistan is 60% higher than both wheat and cotton together.4% of total dairy products supply in the world. importing up to 90 per cent of the country's dairy and agricultural produce. In Pakistan. Huge losses are faced by farmers due to improper transportation and unavailability of interconnected cold chains etc. Internationally global milk supply is contracting due to EU Quota restrictions.12 Dairy companies are introducing innovative products in organic and functional dairy sector. 11 12 Pakistan Veterinary Journal. Dairy market in world provides huge potential for milk value added products.

there are more than 25 dairy processing plants operating in the country. Some major market players are as follows:         Nestle Pakistan Tetra Pak Engro Foods Millac Foods Noon Pakistan Limited Prime Dairies ShakarGunj Foods Royal Dairy .PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 Currently.

000 1.000 3.750 .500 35.500 240.000 1.750 62.000 63.028.614.500.000 144.000 17.000 123.628.000 90.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 4 PROJECT COST Initial cost of the project has been estimated as follows.000 60.277.223.000.200.000 2. Project Cost Description Initial Capital Cost Land Building/Infrastructure Furniture Animals Machinery & equipment Office vehicles Pre-operating cost Total Capital Costs Initial Working Capital Administrative Salaries for 3 months Labor Salaries for 3 months Electricity (for 3 months) Gas (for 3 months) Petrol (for 3 months) Fodder Inventory Cash in Hand Total Working Capital Total Project Cost 3.500 Total Cost 4.000 200.447. Project Financing Model (Debt to Equity Ratio) Borrowing Equity 50% 50% 62.170.223.000 124.1 PROPOSED FINANCING MODEL The proposed pre-feasibility is based on the assumption of 50:50 debt equity ratios.000 240.000 500.

000 300.000 35.000 10.000 250.400 800 1.000.000 350.000 300.500.000 24. 4.000 900.2 PROPOSED LOCATION The proposition is to establish small scale commercial dairy farms on 5 acres of land.000 7. 4.000 . The proposed location of the project is in Bhambore.050.3 ANIMAL COST Initial animal cot is given in table below: Animal Cost Per Unit Cost 100.000.100 700 400 600 500 800 Total Cost 26.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 4.000 near Bhambore.000 6.500.000 24.1 year) Servant Room Stores for fodder.500 800 3000 60 160 750 38. concentrate & machine room Office Room Overhead Water Tank 1000 Gallon Underground Water Tank 1000 Gallon Caffing Machines Utensils & Milk storage Wash Room Covered Area 15 40 150 4 4 5 Sq ft 100 50 20 30 150 200 3000 Quantity Required 240 128 40 50 10 4 Total Space Required 24.000 Type Calf (1 year) Heifer Cow Total Quantity 10 40 70 120 Total Cost Year 0 1.000 4.1 THE LAND 3 acres of Land is leased at Rs.000 64.000 2.920 400 400 900 Rate/ Sq ft 1.000 40.500 1. 3.088.2. Thatta in Sindh.000 40.400.000 560.100 1.400.040.000 1.000.4 SPACE & INFRASTRUCTURE COST Space & infrastructure required for the project is as follows: Space Requirement Item Shed along with free stall for cows Milking Sheds for cows Cage for Calves (upto 15 days) Calves shed (15 days .000 675.

500 13 1 acres = 43.200.000 Description Farm Manager Technician Clerks/Compounder Guards Farm Labor Annual Salary (Rs) 360. Furniture Cost Item Quantity Chains 175 Milking Buckets 50 Electric Caffing Machines with Implements 4 Milking Cans 300 Office equipments Water pumps 8 Total Rate 300 200 25.000 1.000 2. Human Resource Requirements Qty Salary/Month/Person 1 30.000 2.000 16.000 1 12.000 63.000 450.000 1. 3 acres of land is equals to 130.000 4.000 1.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH Uncovered Area Total land 91.500 10.000 100.628.7 FURNITURE & EQUIPMENT COST Furniture & equipment required for the project is given in tables below.940.760 13 130.000 Total Cost 52.028.560 sq feet.000 4.000 Amount 800. .5 HUMAN RESOURCE REQUIREMENTS Human Resource required for the project is as follows.000 250 4.000 2 10.400.680 2010 22.000 252.680 sq ft.000 576.200.000 3 7. Item Car Shehzore Total Qty 1 1 2 Initial Vehicle Cost Per Unit 800.000 1.500 2.400.6 VEHICLE & TRANSPORTATION REQUIREMENTS Transportation requirements for the project are as follows.000 120.000.000 144.000 1.000 6 8.

000 495.500 100.000 100.000 150.000 450.000 .000 150.000 1.000 1.800.614.000 200.000 17.000 7.000 200.400.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 Farm Machinery & Equipment Cost Capacity Farm Supplies Rate (No.000 400.1000 Litres Farm tractor Calf feeder Teat Dip Cup Maize Cutter Generator Tube Well Heavy Duty Ventilation Fans Testing lab Total Farm Equipment Cost 1. of Animal) Milking machine (Vacuum Line System) Milk Cooling Unit .000 1.000 500.200 350 200.000 500 5 100 Qty 8 3 1 10 20 2 1 1 330 1 Total Cost (Rs) 14.000 500.000 12.350.

7 power of body weight.700 3.000 to over 10. Milk Production Capacity: Certain breeds produce more milk than others.2 DAIRY CATTLE BREED SELECTION FOR MILK PRODUCTION Selection of Cattle breed for farm is extremely important due to the following reasons:   Lactation Period: Lactation period for various breeds differ that will have direct impact on farm revenues.500 6. Comparative analysis of milk production capacity for various cattle breeds is given below:  Comparative Analyses of Dairy Cattle Breeds Breed Ayrshire Jersey Guernsey Brown Swiss Shorthorns Australian Friesian Sahiwal Sahiwal Milk Yield (Kg/Y)14 6.000 5. however. which is an approximation of the surface area of the cow (metabolic body size).000-5000 2. .PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 5 Project Dynamics 5. Rather. different breeds produce within a range of around 2. but milk yield does not vary in direct proportion to body weight.1 PROPOSED TARGET MARKET This pre feasibility study suggests that raw milk will be sold on farm gate to following target clients:       Local people Gawalas Milk collection companies Contractors Milk processors Dairy Companies 5.000 kg of milk per annum.180 6. A cow which is twice as large as another usually produces only about 70% instead of 100% more milk. Size of Cow: Large cows generally produce more milk than small cows.270 Lactation Period 310 305 305 280 300 14 Milk yield increases (at a decreasing rate) until about the 8th year of age and then decrease at an increasing rate.200 5. it varies by the 0.

34% heifer and 58% cows are recommended to get maximum production life and milk production round the year.3 SELECTION OF HERD SIZE & COMPOSITION    The Pre-feasibility study suggests an initial herd size of 120 animals.188 1.500 326 365 265 165 305 300 2010 5. Herds mix of 8% calves. better fertility. which is economical to justify the overhead cost. better adapted to heat-stress and other stressful conditions. The Cattle breed for the project have been selected according to target market requirements.660 1.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH Frieswal Holestein-Friesian Red Sindhi Cholistani Tharparkar/White Sindhi Kankrej 4.808 9000 to15. Thorough studies have been conducted to select dairy breed for the farm. Detailed herd composition is given in table below:   Herd Composition and Size Item Year 1 Year 2 Year 3 Calf (4 months -1 year) 10 30 33 Heifer 40 10 30 Cow15 70 110 120 Lactating cow16 110 120 150 No of female calves (0-4 months)17 51 55 69 No of male calves (0-4 months) 51 55 69 Total Animal 222 261 323 Less Calves Sold 71 78 97 Total Herd Size 150 184 225 Year 4 35 33 150 184 85 85 388 119 269 Year 5 42 35 184 218 101 101 462 141 321 15 16 Calving Interval is taken as 13 months. along with overall economic performance. Holstein has been selected as the proposed breed for the project.385 1900 1. 17 Calves sex ratio probability is 50:50 . Combination of herd is selected because mature cows produce about 25% more milk than 2-year-old heifers. It is a key assumption fro this feasibility that 80% of lactating cow will produces calves after insemination. The farm size will increase to about 320 Cattle within 10 years.

000 63. It points to a need for increasing the milking frequency to 3 times per day.390 96.200 2. 13 or 14 month cycles are more appropriate for high production cows.778.738 53.908 135.300 914 3. Milk replacer is feed based on dried milk powder and reconstituted using hot water. until.100 300 3. Year wise projected milk production is given below:   Milk Production Year Year 1 Year 2 Year 3 Year 4 Year 5 Item Heifer Cow19 Heifer Cow Heifer Cow Heifer Cow Heifer Cow Milk in Litres Per Day 1.000 1. The cow is then bred. Local farmers milked cows twice a day.4 MILK PRODUCTION & PROPOSED MILKING FREQUENCY In dairy farming.323 Milk in Litres Per Year 144.000 990.000 99.454 124. animals are milked thrice a day.415 108.169 66. and milking ceases.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 5.042 5.262 972.026.395 1.000 29.999 1. High production cows are more difficult to breed at a one year interval.122. dairy cow is the milk producing machine Dairy cows produce milk when they give birth to calves. one year after the birth of her previous calf.392.653.230 Milk Used by Calves18 48. most young stock subsists on commercial milk replacer after few days of their birth due to economic advantages.662 1. It is extremely important to understand dairy cow lifecycle because it has direct impact on revenues. In dairy farms. a calf will only be consuming around 6 litres per day. a cow will calve again.000 9.662 1.     A cow will produce large amounts of milk over its lifetime.189. Milk replacer is cheaper than cow milk. the cow is 'dried off'.415 31. Production declines steadily afterwards.231 Total Milk Production Per Year 774.000 1. at 8 weeks.000 109. Therefore in the proposed project.514 1.000 36.681.080.511 Milk in Litres Per Month 36.774 Milk for Sale 725. The long interval between milking might not be optimal for the welfare of high yielding cow.455 18 A day old calf can only drink around 2 litres of milk per day.000 27. Production levels peak at around 70 days after calving.908 135.831 1.996 1.473.666 81.000 29.250 165.600 997 4.785 1. About sixty days later.000 630. at about 305 days after calving. . 19 Per day milk production per cow is taken as 30 litres.

520.785.380.903 7.760 8.793 Amount Per Year 2.202.202 6.153.000 338.278.050 10.000 2.464 401.105 13.000 8.400 11.515 13. Detailed table for vaccination and artificial insemination is given below: 20 7% Inflation Rate is taken for cost estimation .512 Concentrate Year 1 Year 2 Year 3 Year 4 Year 5 Cost Per Cow Per Day20 70 75 80 86 92 Rate (In Rs) 120 150 184 218 261 Total Per Day 8.064 10.897.435.416.160.179.350 512.491 315.871 4.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 5.6 VACCINATION AND ARTIFICIAL INSEMINATION COST Vaccination Cost for a single cow would be Rs 1500/.722 18.093 Concentrate Amount Per Month 180.816.930 Total Per Month 252.650 561.680.332.496 5.618.5 FEED COST Dairy cattle will feed on protein sources (concentrate) along with plenty of green fodder. According to estimates cow consumes about 40-45 kg of fodder daily.098 Total Feed Cost Year Year 1 Year 2 Year 3 Year 4 Year 5 Amount 4.087 441.610 5.270 14.per cow.730 23.378 17. Feed cost for proposed project is given below: Grass/ Hay Year 1 Year 2 Year 3 Year 4 Year 5 Cost Per Cow Per Day 50 54 57 61 66 Qty 120 150 184 218 261 Grass/Hay Amount Per Day 6.000 3.568 4.000 6.890 717.910 Total Per Year 2.000 241.889 3.whereas cost of artificial insemination is estimated at Rs 4000/.

The milk price varies according to its quality and the season. returning to below 20 US-$/100 kg at the beginning of 2009. Cow milk is sold at Rs.316.000 50.2 US-$/100 kg milk in the period 1996-2009. 4000/23 IFCN Dairy Report 2009 24 Inflation Rate per year is taken as 7% for price determination. The historical high in 2007 was followed by a rapid decrease of the milk prices.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 Vaccination and Artificial Insemination Cost Year Year 1 Year 2 Year 3 Year 4 Year 5 Vaccination Cost 21 332.540 65.308 391.500 53. 1500/Per Cow Artificial Insemination cost is estimated as Rs. milk is mainly consumed in two ways i.769 873.500 Year 3 48 57.7 THE PRICE  In Pakistan.846 734.627 Artificial Insemination (AI)22 440.308 871.245 57.000 480.000 601.540    21 22 Per Cow vaccination Cost is estimated as Rs. Price for both varies greatly because packed milk goes through more stages of production and price of milk increases by one rupee per litre at every stage of sale. loose and packed.846 1.e.870 581.252 61. Detailed proposed pricing for this project is depicted in Table below: Price 24 Item Farm gate price per liter milk Per unit price of male calves Per unit price of female calves Year 1 42 50.252 Year 5 55 65.23 This prefeasibility suggests that milk will be sold at the farm or may be directly sold in the urban market.657 Total Cost 772.964 693. The world milk price ranged between 13.245 Year 4 51 61.000 Year 2 45 53.716 1.734 1.8 and 46. .846 483.567. 42 per liter at the farm gate.085.284 5. Growing demand for dairy products in Asia is driving global milk prices.

071.814.642 3.151 Year 5 107.538 Year 2 50.125.709.771.308 28.853 15.073.812.646.771 36.758 .926 40.263 68.633.940 E F G J K Operating Profit Less Financial Charges Net Profit Before Tax Provision for Income Tax Net Profit/Loss After Taxes L-4 2.030.765.871 12.552 2.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 Annexure L All Values are in Rs Projected P/L Account for Next 5 Years S No A B C D Particulars Sales Less Cost of Goods Sold Gross Profit Less Operating Costs Administrative Expense Details L-1 L-2 Year 1 36.746.822 Year 3 62.589.401.756.814.834 35.659.030.821.946.390 58.762.633 10.957 4.277.127 73.157.936 5.760 4.959.260 12.018 Year 4 83.788 10.897 9.655 78.517.612 L-3 10.233.654 27.885.652.016 10.920.905 18.523.830 25.702.178 10.242 50.352.734.853.891 47.828.505.270 29.509.290.807.264 17.431.414 14.256.750 17.618.525 18.292 89.691 10.061.846 7.376 39.941.748 9.235 53.986.855 23.

592 666.050.000 49.750 62.598.988.550.224.258 60.103 80.000 977.203.000 200.746.483.500.614.631 51.000 18.191.750 124.633 93.000 58.000 60.447.385 3.800 50.971.955.000.184 3.457 57.016 121.457 11.447 313.654.457.000 1.250 31.279.000 35.000 87.142 150.800 1.687.500 166.254.812.326.700 880.302.158 4.977.050 47.191.000 1.975.073.615.142 3.481.258 12.252.139.385 42.000 17.922.940 213.731.422.000 35.326.045.030.816.500 210.000 4.847.465.500.223.390.905.000.522 35.400 12.119.000 77.000 116.691 160.200 14.500 124.000 54.250.615.500 161.050.825 521.120 3.375.000 42.938 120.320.467.338 258.580 3.866.210.377.000.250 175.000 42.498.406 3.388.252.847.000 35.508 132.628.000 1.725.500 3.231 9.650 56.598.725.000 150.500.223.656 39.045.600 440.470.750 10.329.028.064 9.000 68.053.000 814.962 10.385 93.472.000.514.500.174.746.174.000 73.380 10.750 258.656 234.900 1.827.000 17.100 37.000 113.457.760.000 2.151.000 160.223.767 410.403.447.543.580 160.652.217.750 132.772 1.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 Annexure M – Balance Sheet Item Current Asset Cash & Bank Inventory Pre-Operating Expense Animal surplus of animals Net Value of Animals Total Current Assets Fixed Asset Land Furniture Building/Infrastructure Machinery & Equipment Vehicle Total Fixed Assets Total Assets Liabilities & Shareholders' Equity Current liabilities Accounts payable Total Current Liabilities Long Term Debt Shareholders' equity Paid-up capital Gain/ (Loss) on revaluation of animals Retained Earnings Total Equity TOTAL CAPITAL AND LIABILITIES 62.000 23.550 218.755 40.941.950 44.508 3.250.800 7.000 36.955.870 47.758 72.500 62.750 12.080 51.500 35.300.000 47.830 11.897 11.064 45.000 39.254.200.349 210.223.522 62.481.120 121.243 11.000.406 72.380 50.500 63.158 175.295.774.550 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 .300.000.774.000 1.349 4.600 9.543.500 39.000 82.975.830 54.

177.731) (4.483.000 17.223.000 (111.281) 0 0 0 (3.812.601 35.652) 44.224.767 40.941.750 40.000 (174.320 42.238.047) (60.731) 0 0 0 (4.053.654.988.988.547.655.281) (3.065.656 1.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 Annexure N – Projected Cash Flow Item Operating activities Net profit Add: Depreciation expense Amortization expense Raw material inventory Cash provided by operations Financing activities Change in long term debt Change in short term debt Add: land lease expense Land lease payment Issuance of shares Cash provided by / (used for) financing activities Investing activities Capital expenditure Cash (used for) / provided by investing activities NET CASH Cash balance brought forward Cash available for appropriation Dividend Cash carried forward 0 1.000) 19.500 0 0 0 (2.633 9.750 40.814 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 .500) (123.988.592 0 166.767 0 73.656 0 18.601.447.654) 0 0 0 (3.500) 1.815.170.750 40.767 113.000 (96.053.789 47.547.000 (144.758 9.750 40.447 73.000 18.767 113.266.000 (123.170.652.656 42.303.547.000 1.825 0 113.483.483.815.177.853) 0 0 0 (2.853) (2.160.656 24.875) 57.000) (60.217.444.073.217.547.654.384.940 9.655.825 52.238.750 (2.447 30.224.549.000 (79.938) 27.445 23.016 9.592 0 0 62.654.447 0 42.000) 10.030.217.750 124.058 73.217.948.691 9.053.047) 62.569.508 17.654) (3.504.547.791 18.223.165) 33.825 166.948.750 40.

1.3.AVAILABLE LOCAL CATTLE BREEDS Pakistan is home tract of some of the finest breeds of cattle. 4. All the indigenous cattle of Pakistan belong to zebu (humped type) cattle (Bos Indicus). Mainly found in Tharparkar and surrounding areas 3. SAHIWAL: 1. 1. 3. KANKREJ: 4.1. THARPARKAR: 2.1. There are 15 recognized breeds of cattle in the country which constitute 43% of the total cattle population.1. Mainly found in Punjab Milk yield Under village condition is 1350 kgs whereas under commercial farms is 2100 kgs Age at first calving -32-36 months Calving interval – 15 month 2. 4. 4.25 Brief introduction of available local Cattle breeds in the region is given below for herd selection.4.3.2. 1.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 Annexure R .4. 1. 2008 . Mainly available in Punjab Milk yield Under village condition is 1100 kgs whereas under commercial farms is 1900 kgs 4. RED SINDHI: 3.1.2.2. Mainly found in Southwestern part of Tharparkar Milk yield Under village condition is 1300 kgs whereas under commercial farms is 3600 kgs Age at first calving -36 to 42 months Calving interval – 15 to 16 months 25 Genetic Resources and Diversity in Pakistani Cattle.

4. It can perform well in coastal and delta areas.1. Milk yield . 1.AVAILABLE FOREIGN CATTLE BREEDS 1.1. 5. large furry ears. 1. This breed is from Holland Holsteins are black and white. A mature Jersey cow weighs 900-1. 1.1.6. HOLSTEIN FRIESIAN:1. cow gives 10 .7.1.4. 2. 2.2. at birth. Weight of an adult Guernsey cow is around 1000 pounds. GUERNSEY: 5. ability to convert grass into milk efficiently. Guernsey's produce their high quality milk while consuming 20 to 30 percent less feed per pound of milk produced than larger dairy breeds. 4. around 9000kg.3. 3. Farmers prefer this cow for qualities like high efficiency of milk production.000 lbs. 1. cold and many other common cattle problems. 3. The beta carotene present in Guernsey cows makes their milk slightly golden in color. longevity. at birth. making their milk excellent for production of cheese.4. 4.8.3. and hardiness. The milk contains on average 4% butterfat and 3. The milk of these cows is known for their rich quality. The average mature Ayrshire cow weighs 1000-1300 pounds.PRE-FEASIBILITY STUDY ON DAIRY FARM IN SINDH 2010 Annexure S . BROWN SWISS: 3. 5. 3.F. The breed's strong points are desired traits of easy calving and longevity. they are hardy and capable of subsisting with little care or feed.2.7.4. 2. 1. Jerseys vary from dark brown or fawn. 2. The productive life of Guernsey cows is lowest.1. Cows are milked for an average of 3-4 years Age at first calving is 26-30 months Calving interval is 13-14 months Dairy milk yield is found to be 20 litres whereas cross bred jersey. The Brown Swiss is known for a long gestation period. Produces the second largest quantity of milk per annum. AYRSHIRE COW: 4. 2.6. They are known for low somatic cell counts. cow gives 8-10 litres per day.2. They are resistant to the heat.5.3. and sometimes are splashed with white.300-1. They are also known for having a lower projected calving interval and have a younger average age of first calf heifers than the larger breeds. 3. 2. . A Holstein calf weighs 80-110 lbs.2. On an average it gives 25 litres of milk per day whereas a cross breed H. 5. A mature Holstein cow weighs 1.6. 2.5% protein. 5.5. 5. 1. 5. and lesser problems related to calving. 5. and each has a unique pattern.7200-9000 kgs This is by far the best diary breed among exotic cattle regarding milk yield.3. 2. JERSEYS: 2. and an extremely docile (though some would say lethargic) temperament. Well acclimatized especially in the hot and humid areas A Jersey calf weighs around 60 lbs.5.500 lbs.2. 4.3. 3.15 litres per day.5.7. immense size. It is quite a resilient breed of cattle.

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