Pre-Feasibility Study
RURAL POULTRY FARMING OF HIGH EGG PRODUCING SCAVENGER POULTRY BREED OF NARC
A PROPOOR SMALL SCALE INTERVENTION
PAKISTAN AGRICULTURE RESEARCH COUNCIL ISLAMABAD
MINISTRY OF NATIONAL FOOD SECURITY AND RESEARCH
Government of Pakistan
January 2014
Contents
1. DISCLAIMER
2. PURPOSE OF THE DOCUMENT
3. INTRODUCTION TO SCHEME
5. EXECUTIVE SUMMARY
6. BRIEF DESCRIPTION OF PROJECT
7. CRITICAL FACTORS
8. INSTALLED AND OPERATIONAL CAPACITIES
9. GEOGHRAPHICAL POTENTIAL FOR INVESTMENT
10. POTENTIAL TARGET MARKET
11. PRODUCTION PROCESS FLOW
12. PROJECT COST SUMMARY
12.1: Project Economics
12.2: Project Financing
12.3: Project Cost
12.4: Space Requirement
12.5: Machinery and Equipment
12.6: Raw Material Requirements
12.7: Human Resource Requirement
12.8: Revenue Generation
13. CONTACTS – SUPPLIERS, EXPERTS / CONSULTANTS
14. ANNEXURES
15: KEY ASSUMPTIONS
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 under taking 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.
2. PURPOSE OF THE DOCUMENT
The purpose of this document is to facilitate potential investors in INTERVENTION FOR EMPOWERING POOR RURAL WOMEN BY REARING HIGH EGG PRODUCING SCAVENGER POULTRY BREEDby providing them with a general understanding of the business, with the intention of supporting potential investors in crucial investment decisions. 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, finance, and business management. 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, certain industrial norms and well established research findings 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 the basis of investment decisions.
3. INTRODUCTION TO SCHEME
Prime Minister’s Youth Business Loan Programme, for young entrepreneurs, with an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidized financing at 8% mark-up per annum for one hundred thousand (100,000) beneficiaries, through designated financial institutions, initially through National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL). Loans from Rs. 0.1 million to Rs. 2.0 million with tenure up to 8 years inclusive of 1 year grace period, and a debt: equity of 90: 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Gilgit-Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).
5. EXECUTIVE SUMMARY
In livestock sector the poultry production has its own impact and value on the overall livestock market and in the GDP contribution. By enhancing poultry production in the form of eggs and meat production ultimately the per capita requirement of the protein in the country has been bridged markedly. Poultry production is considered to be one of the most efficient and economical system of production of animal protein. In Pakistan Poultry has been playing a vital role in bridging the gap between supply and requirement of animal protein food of high biological value. Our poultry production is mostly dependent on exotic commercial lines but still our indigenous poultry at small scale level contribute 32% share to our national requirement of eggs and 15 % share to meat production. Our indigenous poultry possesses bright prospects for future development in view of easy and abundant availability of all the requisite inputs such as land, labor and feed resources in rural areas and lower cost of production as compared to commercial poultry. The need is to improve our indigenous poultry breed because the Indigenous chickens have the advantage of being well adapted to the local environmental conditions (hot cold humid dry and rainy weather) and can live as a scavenger bird and can be reared at a low cost. PARC has the initiative in this scenario that PARC has developed a new crossbred having the abilityto live as a scavenger bird and lay more eggs as compare to our pure indigenous poultry breeds. As the conventional system is going on the women keep the local breed in backyard poultry rearing system and sale eggs in the village and earn money for them. Here PARC intervention for women empowering is, instead of rearing the pure indigenous breed that lays not more the 70-80 eggs per year why one should not keep the newly developed high egg producing crossbred chicken that can lay 170-180 eggs in a year in the same backyard poultry rearing system. This kind of practical model already been established in the National Agricultural Research Centre (NARC) and the 15 days old high egg producing crossbred chick are being supplied to different areas of Pakistan. If the entrepreneur is near by the federal territory then the chicks can be purchased from the NARC. The 15 days old high egg producing cross bred chick can be supplied to far for long areas of Pakistan at the rate of rupees sixty only. Due to its good egg production in comparison with the desi or local breeds of poultry, people love torear this breed, and already PARC have a farmers list benefiting from our crossbred. The poor rural women can purchase the chicks from NARC and will rare the chicks upto 6 months of age at partial feeding. Only 25% commercial feed will be given to chicks upto 6 months and remaining feeding will be done by kitchen waste and by leaving the birds as ascavenger. At the age of six months the cockerels from the flock will be sold out at the rate of Rs. 300/- per cockerel and the hens will be kept for the egg production for next one year.The feeding will be increased during the laying period up to sixty percent of total feeding.The eggs will be sold to the local market and the women will start earning gradually. By keeping good quality chicks the poor rural women will earn more than before she will be earning by having more eggs in one year. After one year the female hens will be sold out at the rate of Rs. 100/= per bird and the new flock will be reared for next cycle. Further breeding is discouraged in this system and cockerel sholud not keep with the hens to achieve the objective of having good quality eggs anddiscouraging uneven breeding practice. This model of rearing high egg producing chickscan be applied to all five provinces of Pakistan (Sindh, Punjab, Balochistan and Khyber pakhtunknwa, Gilgit baltistan and AJK).This idea has been generated for a viable business because already the conventional rural poultry farming is practicing in rural area. By doing this project one can earn better with less resources and better output. .
High egg producing chick production is considered for empowering women in rural poultry farming business in this project pre-feasibility. This business is proposed to be located primarily in rural areas of Pakistan. All the prospects of high egg producing crossbred chicks rearing, egg laying capacity, disease resistance studies, climate resistance studies and marketing have beenstudied at Poultry Research Section, Animal Products Improvement Program, Animal Sciences Institute (ASI), National Agricultural Research Centre (NARC), Islamabad.
6. BRIEF DESCRIPTION OF PROJECT
Following key parameters must be addressed as per pre-feasibility study:
• Techniques: The high egg producing crossbred chicks will be purchased from NARC and will the chicks will be reared up to six months of age at partial feeding. Only 25% commercial feed will be given to chicks up to six months and remaining feeding will be done by kitchen waste and by leaving the birds as a scavenger. At the age of six months the cockerels from the flock will be sold out at the rate of Rs. 300/- per cockerel and the hens will be kept for the egg production for next one year. The feeding will be increased during the laying period up to sixty percent of total feeding. The eggs will be sold to the local market and the women will start earning gradually. By keeping good quality chicks the poor rural women will earn more than before.. After having the successful laying period of hens i.e almost one year the female hens will be sold out at the rate of Rs. 100/= per bird and the new flock will be reared for next cycle. Further breeding is discouraged in this system and the cockerel should not keep with the hens to achieve the objective of having good quality eggs and discouraging uneven breeding practice.
• Location: The business can be initiated in any province (Sindh, Punjab, Balochistan, Khyber Pakhtunknwa, Gilgit Baltistan and AJK) in hot or cold environment. It is preferable if the site is close to main road reaching there for the easy transportation of chicks and feed bags to the site.The birds can live as a scavenger but in early stage of life the care from the domestic and wild animal must be provided to save the asset in the form of chicks. The site must be close to the living area so one can easily watch the birds.
• Product: The product in thisbusiness will be cockerels at 6-months of age which will be used for meat purpose and then after 6-months the eggs from the laying hens. The eggs will be sold in the market or in the rural area and this will be the main source of earning. This idea has been generated for a viable business because already the conventional rural poultry farming is practicing in rural area. By doing this project one can earn better with less resources and better output.
• Target Market: The target market is every one in that rural area or that particular place. People love to eat desi cockerel in the villages so it can be sold at a good price.
• Employment Generation: In this business the rural women who will own this business is the manager and the workers. But as the business will grow up the workers can be accommodated in this business.
7. CRITICAL FACTORS
The commercial viability of the proposed project depends on the following factors:
•Rural women can run this business in a better way so women in this business idea are critical.
•More successive business can be run in the areas where the temperature does not go very high and very low.
•Selection of the good variety or breed of the poultryfor egg and meat production.
•Very hot humid weather is not preferable as the egg storage will be critical.
•Farm should have strong market linkages for effective disposal of produce.
8. INSTALLED AND OPERATIONAL CAPACITIES
This pre-feasibility suggests that one should have one only 400 sq. ft. area for keeping 200 poultry birds and 36 sq. ft. for feed storage. In thisbusiness the installed capacity depends on the rural women setup if the sheds are already constructed then the installed capacity will be according to that shed space but according to the pre-feasibility it has been suggested only 400 sq. ft. for 200 birds. If you one have the installed capacity for 400 birds then no matter the entrepreneur can adjust the operational capacity according to the need or the loan he/she is applying for.For Installed capacity may more than the operational capacity and for the suggested feasibility only 36 sq. ft. is required. The rooms can be constructed with low cost material. The material of the construction should be used in a way that it should be re-useable and cheaper in price. Only the technical thing is the shed should be well ventilated. The major cost in this enterprise will be the construction of the production area, feed store.
9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT
Any geographical location is the potential site for the rural poultry or backyard poultry farming, especially for empowering women. Preferable areas are where the climate is relatively stable. The extreme weather areas are less preferable as the labor increases in extreme cold and hot weather. Regions of Balochistan, Punjab, Sindh, Khyber Pakhtunkhuwa, Gilgit Baltistan and AJK all are preferable sites for the business.
10. POTENTIAL TARGET MARKET
The target market is every one in that rural area or that particular place. People love to eat desi cockerel in the villages so it can be sold at a good price. When the production process increase the supply of cockerels and eggs can be spread to the nearest cities and around.
11. PRODUCTION PROCESS FLOW
The high egg producing crossbred chicks will be purchased and reared up to six months of age at partial feeding. Only 25% commercial feed will be given to chicks up to six months and remaining feeding will be done by kitchen waste and by leaving the birds as a scavenger. At the age of six months the cockerels from the flock will be sold outand the hens will be kept for the egg production for the next one year. The feeding will be increased during the laying period up to sixty percent of total feeding. The eggs will be sold to the local market and the women will start earning gradually. After having the successful laying period of hens i.e almost one year the female hens will be sold outand the new flock will be reared for next cycle. Further breeding is discouraged in this system and the cockerel should not keep with the hens to achieve the objective of having good quality eggs and discouraging uneven breeding practice.
12. PROJECT COST SUMMARY
A detailed financial model has been developed to analyze the hatching eggs in hatcheries and chick production at small scale benefitting the local population of that particular area through Prime Minister’s Small Business Loan Scheme. Various cost and revenue related assumptions, along with results of the analysis, are outlined in this section.
12.1: Project Economics
All figures in the financial model have been calculated for 38400 day old chicks. The following table shows internal rates of return and payback period.
Table 1. Project Economics
Description / DetailsNet Present Value (NPV) / 101203
Benefits Cost Ratio (BCR) / 1.31
Internal Rate of Return (IRR) / 28%
Payback Period (years) / 3.8
Factors that influence the profitability of this business is good farm management, quality of inputs, good marketing practice and environmental factors.
Following requirements have been identified for operations of the proposed business.
Table 2. Total Project Cost
Capital Investment / Amount (rupees)Construction of shed / 30000
Equipments / 4762
Total Capital Cost / 34762
The results in the tables show that the net present value, internal rate of return and benefit cost Ratio. Returns on the business and its profitability are highly dependent on experience,suitable location and good technical practices. The project will not be able to cover the potential demand of consumers and recover payments, if these factors are not efficiently managed and will also lead to increased operating cost.
12.2: Project Financing
Following table provides details of the equity required and variables related to bankloan;
Table 2: Project Financing
Description / DetailsTotal own equity (0%) / 11111
Bank Loan / 100000
Markup to the Borrower(%age/annum) / 8%
Tenure of the loan / 8
Total own equity (0%) / 11111.2
12.3: Project Cost
Following requirements have been identified for operations of the proposed business.
Table 3: Project Cost
Capital Investment / Amount(Rs.)Construction of Room / 30000
Equipments / 4852
Total Capital Cost / 34852
Initial Working Capital / 76260
12.4: Space Requirement
The space required for this small scale business is only one 400 sq. ft. room for the brooding of the chicks. For feed storage 36 sq. ft. room is sufficient. Room for the worker depends on the availability of the space in the farm. The rooms can be constructed with low cost material. The material of the construction should be used in a way that it should be reuseable and cheaper in price. Only the technical thing is the rooms should be well ventilated. The major cost in this enterprise will be the construction of the brooding room, feed store, worker’s room and other raw material required for the brooding.