feasibility report 50 cows

Feasibility Report of 50 dairy animals11-arid-97311-arid-94911-arid-95011-arid-95111-arid-953 2013Submitted to:Dr Fiaz Ahmed12/31/2013
Feasibility Report of 50 dairy animals


11-arid-973
11-arid-949
11-arid-950
11-arid-951
11-arid-953
2013
Submitted to:
Dr Fiaz Ahmed
12/31/2013



CONTENTS
1. Introduction
2. Brief description of project and products
2.1. Critical factor
2.2. Installed and operational capacities
2.3. Geographical potential for investment
2.4. Potential target and market
2.5. Project Economics
3. Project cost
3.1. Capital cost
3.1.1. Building cost
3.1.2. Equipment cost
3.2. Running cost or Operational cost
3.2.1. Feed cost
3.2.2. Land Rent
3.2.3. Maintenance
3.2.4. Building Depreciation cost
3.2.5 Equipment and machine disprisiation
3.2.5. Equipment and machines maintenance cost
3.2.6. Human Resources / Labor cost
3.2.7. Vaccination and medication cost
4. Income or Revenue Generation
4.1. Milk sale
4.2. Calf sale
4.3. FYM sale
5. Conclusion
6. Literature cited


INTRODUCTION
A dairy farm with a herd of 50 animals (25 cows and 25 buffaloes) needs a total investment estimated at Rs. 18.322 million out of which the capital cost of the project is Rs.13.08 million for animal purchase and building construction. The rest is used to meet the working capital requirement. The project is expected to achieve revenue of Rs. 6.283 million in the first year with projected IRR and Payback of project being 30% and 20 years respectively. The farm will provide employment opportunity to 6 individuals other than the owner /manager.
BRIEF DESCRIPTION OF PROJECT & PRODUCT
A dairy farm is proposed to be established on a rented land, with a constructed structure having total area of 9000 sq.ft. The proposed model involves 50 animals (25 cows and 25 buffaloes) to achieve milk production of 91500 liters by the end of first year. Milk will be primarily sold to bulk buyers at the rate of Rs.60 per liter with an annual price increase of 10%. However, the farm will also offer sale to domestic individual consumers.
2.1 CRITICAL FACTORS:
1-Background knowledge and related experience of the entrepreneur in dairy farm operations
2-Application of good husbandry practices such as;
Selection of dairy breed: good local dairy buffalo breeds namely Nili-Ravi and Kundi and cattle breeds such as Sahiwal, Red Sindhi, Tharparkar and Cholistani. Crossbred cattle may also be considered as crossbreeding is recommended for non-descript cattle with semen of local high producing breeds like Sahiwal, Cholistani, Red Sindhi etc. or exotic breeds like Holstein Friesian, Jersey etc.
Selection of good dairy animals with excellent body condition and udder health: average daily milk production of 10 liters or above for buffaloes and 12 liters or above for cows in 2nd or 3rd lactation, essentially with no disease history.
Housing should be dry, comfortable and airy with proper drainage of dung, urine and waste material.
Feeding: Animal should be fed 1 kg of concentrate feed per 3 liters of milk are produced, hence animal with 10 liters of milk production would be offered 3-3.5 kg of concentrate. Additionally, urea molasses blocks and salt blocks can help in better milk production.
Watering: Supply of clean drinking water in clean troughs i.e. 50 to 80 liters of water consumption/animal/day round the clock maintains the milk production capacity of the animal.
Breeding: Efficient and timely Artificial Insemination (AI) of good genetic worth is a key to success in good breeding programs of herd.
Disease management: Hygienic and clean milking twice a day (morning/ evening) lowers the chances of mastitis as udder health and hygiene is most important in dairy animals.
Follow the Female calf care and heifer management as it is very important in maintaining dairy farm production. Recommended vaccination schedule especially for Foot and Mouth Disease.
Selection of good productive animals and culling of uneconomical animal.
Record keeping for milk production, calving, AI, vaccination etc.
Proper storage of milk preferably at temperature of 4ºC and transported at 11ºC temperatures
2.3 INSTALLED & OPERATIONAL CAPACITIES
Production capacity is based on project size. The Pre-feasibility study suggests an initial herd size of twelve (50) animals which is economical to justify the overhead cost. Initially, herd mix of 50% cows and 50% buffaloes is recommended to obtain maximum milk production round the year. The dairy farm will have the capacity to produce 91,500 liters of milk per annum.
2.4 GEOGRAPHICAL POTENTIAL FOR INVESTMENT
Dairy farm is a viable business proposition for both rural and peri-urban areas of Pakistan. There is almost equal demand for milk in both developed and semi developed cities across the country, hence, from the demand point of view the said project offers good investment opportunities for small scale investment in al provinces of country.
2.4.1. POTENTIAL TARGET MARKETS
Domestic consumers, milk processors, dairy companies, milk collection companies and contractors are the major clients of dairy farms.
2.5 Project Economics
All the figures in the financial model have been calculated for 12 dairy animals consisting of cows and buffalos in equal proportion. The following table shows internal rates of return and payback period;
Description
Details
Internal Rate of Return (IRR)
34.28%
Payback Period (Year)
20
NPV
125,650,000
Returns on the scheme and its profitability are highly dependent on the efficiency of above mentioned critical factors. In case dairy farm project is not able to attain its target milk production or implement effective husbandry practices, it will not be able to cover the potential market and recover payments; hence, cost of operating the business will increase.
Project Cost
For our convenience we divide the cost into two parts;
Capital cost
Running cost
3.1. Capital Cost
Following operational requirements have been identified for the proposed business.
Table 3: Capital Investment for the Project
Capital Investment
Amount (Rs)



Building/ Infrastructure
4,946,500
Cows and Buffalos
6,375,000
Machinery and Equipment
1,758,000
Total Capital Cost
13,079,500
Cash in hand

Total Project Cost


Space Requirement and Housing cost
The area has been calculated on the basis of space requirement for shed area, open paddock, servant rooms and stores. Following table shows calculations for project space requirement;
Table 4: Space Requirement
Description
Area sq. ft.
Shed for cows
1000
Open paddock for cows
2000
Shed for buffalos
1000
Open paddock for buffalos
2000
Stores for fodder,concentrate and machine
200
Utensils and milk storage room
200
Servant room, wash room
100
Silage bunker

Calf shed
750
Open area for calf
1500
Total
8750
Total investment in building and infrastructure is calculated to be approximately Rs 4,946,500
3.1.2 Machinery and Equipment
Following table provides list of machinery and equipment required for the proposed dairy farm:
Table 5: List of Machinery and Equipment
Description
Unit rate (Rs.)
Quantity
Cost (Rs)
Tractor trolley
900000
1
900,000
Tube well
200000
1
200,000
Chaff cutter
40000
1
40,000
Forage cutter
250,000
1
250,000
Bull cart
160,00
1
16,000
Calf Feeder
1,200
10
120,00
Teat Dip Cup
350
10
3,500
Water Pump
20,000
1
20,000
Freezer
22,000
1
22,000
Total


1,463,500
In addition to above, other equipment, such as fodder cutter, water pump and some buckets etc. are required.
Running cost
3.2.1 Feed cost
Following tables show raw material requirement to run the proposed dairy farm;
Table 6: Feeding Requirements for Cows
Description
Kgs per animal per day
Rs per Kg
Amount (Rs.)
Forage
40
2
80
Silage
25
6
150
Concentrate
4.62
35
161.70
Total


391.70

Table 7: Feeding Requirements for Buffaloes
Description
Kgs per animal per day
Rs per Kg
Amount (Rs.)
Forage
40
2
80
Silage
25
6
150
Concentrate
5
35
175
Total


405

3.2.2. Rent Cost:
Land required for 50 animals is about 16 acre and per acre rent is approximately 15,000
Rent per year = 240,000
3.2.3. Building Depreciation:
It is about 5% of total Building cost
Building depreciation cost: 2,47,325
3.2.4 Equipment and Machinery Depreciation:
It is 10% of total cost = 637,500
3.2.5 Maintenance cost:
@ 2% of housing cost = 127,500
3.2.6. Maintenance of equipment:
@ 3% of equipment cost =52,740
3.2.7. Human Resource Requirement
6 milkmen will be required for milking and taking care of animals, whereas owner / manager will look after the overall business operations.
Cost of Human resources = 768,000
3.2.8. Vaccination /medication
3000 per animal is required for vaccination and medication so total cost is about 150,000
Total running cost =5,242,365
Revenue Generation /Income
Table 8: Revenue Generation
Description
Units
Annual
Production
Rate
(Rs/Unit)
Annual Revenue (Rs)
Milk Sales
Litters
91,500
60
5,490,000
Calf Sales

25
25000
625,000
FYM
Trolley (50mons)
67 Trolleys
2500
167,500
Total Revenue



6282500

Conclusion:
Profit from the above feasibility is 1,057,635 annually. This can be increased by different strategies .If we have our own land for harvesting the fodders . Secondly, if we avoid middle man or have own enterprises for sale of Milk and Beef or sale our goods through auction.
Literature cited
www.smeda.org.pk
www.parc.com.pk

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