Pre-Feasibility :
Calve Fattening Farm
1.
INTRODUCTION
1.1
Project Brief
Beef
fattening project is an agricultural enterprise where young
calves of average ten to
fifteen months age are reared for a
period of three months (90days). The live-weight of the animal
is around 160 kilograms. Animals are fed on high protein
ration with a mixture of green fodder or silage.
The average daily weight gains vary between 0.6 - 1.2
kg depending on the feed nutrition, health and breed of
animal.
1.2
Opportunity Rationale
Meat
is still one of the few articles of food that reaches the
consumer anonymously But this situation will not continue to
exist in the years to come. The consumers are becoming more
health conscious and their concern about the origin and method
of production of every thing they eat is increasing every day.
At the same time, the consumers seem to have increasing doubts
about the image and reliability of meat and meat products that
are being sold in the market. This trend calls for additional
quality guarantees throughout the chain of production. An
obvious example in case of Pakistan is branding of poultry
meat.
1.3
Economic Size
On
average a herd of 90 animals can be kept for one quarter. The
production of calves then will be 360 animals per annum.
1.4
Proposed Capacity
90
animals for three months.
1.5
Total Project Cost
Rs
600,000 per quarter.
2
CURRENT INDUSTRY STRUCTURE
The
state of meat industry as a whole, from livestock farming to
marketing of beef and mutton is in the un-organized sector.
Livestock farming has remained least commercialized and
survives under subsistence conditions. Beef yield has remained
low due to the following constraints:
-
Animals
are kept for social rather than commercial reasons.
- Despite immense potential, breeding has not been done for
increasing productivity.
- Feeding methods are primitive with hardly any of the
feed management practices are being followed. Despite abundant
fodder production, there is always a shortage between seasons.
This shortage is met by "bhoosa"
(wheat straw) which has no nutritional value. Quality feed
concentrates from existing by-products are not being used
efficiently.
- Large-scale livestock farming has not been practiced
due to the total manual procedures adopted in feeding and herd
management. Reliability of manual labour is low especially in
view of illiteracy and poor farmer education on the subject.
Calve
Population (1000'Heads)
Year
|
Buffalo
|
Cattle
|
1997-98
|
3,472
|
3,284
|
1998-99
|
3,571
|
3,344
|
1999-00
|
3,674
|
3,844
|
Source:
Agri Statics 1999-2000
Meat
Production (1000 tons)
Year
|
Beef
|
Mutton
|
Poultry
|
1997-98
|
940
|
617
|
283
|
1998-99
|
963
|
633
|
310
|
1999-00
|
985
|
649
|
322
|
Source:
Agri Statics 1999-2000
3
MARKETING
Marketing
is the critical component for this project's success. The
demand for a quality animal is being driven by demand for
quality meat, which is increasing rapidly in urban areas
because of awareness about meat-related intestinal and
bacterial diseases. Marketing directly to the consumers
involves a separate intermediary business enterprise requiring
processing, packaging, marketing infrastructure etc. Apart
from the considerable investment in processing machinery and
marketing structures, such an enterprise requires its own
separate corporate and management entity.
Initially
the animals will be sold off at the farm to the contractors on
live weight basis. Later on this project can also go in to
direct marketing of live animals to the animal markets
situated in major cities within the proximity of the project
i.e. Lahore, Peshawar, Rawalpindi, Faisalabad and Sargodha
etc.
3.1
Total Market Size and Growth
The
total production of meat (beef, mutton and poultry) in
Pakistan during 1999-00 was
1,957,000 metric tons.
Meat demand is growing at almost 6% per annum while supply is
growing at 1.8%, according to the economic survey of Pakistan.
Thus there is a wide gap of 4.2%. This gap is likely to grow
in the prevailing circumstances. The deficit is being taken
care of through meatless days instead of increasing
production. The growing world meat market is presently valued
at US$81 billion per annum. Pakistan remains miles away from
this market primarily because of lack of supply and absence of
modern meat processing systems.
4
Farm Inputs
Land
is used
for growing fodder for the animals. Normally one acre of land
is sufficient for producing fodder for 6-8 calves. The
fertility of land is determines the cropping pattern for
fodder cultivation.
Lease
is a better option for a new investor. Land on lease is
available in rural areas for a period of 5-15 years. On an
average, a good agriculture land is available on Rs 5000 per
acre per year. A few years of lease rent in advance will have
to be paid up front.
Water
source is
necessary for animals at the farm and for irrigation purposes.
Power
is
required to run the tubewells and fodder chopping machines at
the farm.
Climate
of the site is also very important for determining the housing
requirement of the animals. Frost-free areas are suitable for
getting fodder crop in harsh winter seasons.
Feed
ration is
the fodder supplement for the animal-fattening farm.
Calves are fed on high protein feed, which is
formulated under a specific formula mix. The nutrients include
cotton seed cakes, corn gluten, wheat bran, cotton seed cake,
molasses, and choker. The quantity of feed per animal varies
according to the intake capacity of the animal.
Mineral
mixture is
used as a feed supplement with the feed.
Fodder
crops vary
according to the season. In winter, berseem, millet, and
lucern are grown and for summer, maize & hybrid sorghum
are recommended.
Daily
fodder requirement
per animal changes with the weight gain of the animal
Wheat
straw/turi is
used as roughage component of animal feed.
Its price varies between Rs 15 to Rs 30 per 40 kg through out
the year with lowest price during wheat threshing season in
early May.
Ancillary
Structures: Building
for office, feed mixing plant, stores for feed stuff / raw
material, concentrate feeds, hay, straw, equipment, molasses
pits and silage pits are required at feedlot facility.
Feedlot
means feeding of the animal on a special feed formula of
concentrates for a fixed period of time. Feedlots are mainly
used for the fattening of the calves for beef production.
Standard practice of a feedlot operation is done through
feeding calves (age 10-15 months) for 90 days. Feedlot
operations are common in countries with formal agricultural
economies. The details of the feedlot operations are outlined
below:
4.1.1
Procurement
of Calves
The
enterprise will purchase calves on live weight basis with
average age of ten to fifteen months from the rural areas or
animal mandies. The purchase price of the animal will depend
on the health characteristics of the animal and thus will vary
between Rs 20 to Rs 25 per kilogram. On average, the animal
weight at purchase time will be around 160 kg.
Agreements
will be made with contractors for regular supply of animals to
the farm. By the time the first lot of animals arrive, all
infrastructure and feeding system will be ready i.e. fodder
crop, water, sheds, electricity and manpower etc.
Synchronization
of these activities is critical: These will depend upon timely
provision of funds which must be made available before the
growing season.
4.1.2
Calve Quarantine
A
quarantine yard will be made for new animal handling,
weighing, marking and vaccination etc. The newly purchased
animals will get the de-worming medication and other necessary
vaccinations in this yard. Only the disease free animals will
proceed to the feedlot from the quarantine sheds. Quarantine
arrangements will minimize the chances of disease spread in
the main farm by ensuring that the new animals do not carry
any germs before they are taken to the main sheds. This
seven-day period will also be helpful in acclimatizing the new
animals before they enter the main feedlot sheds. The behavior
of the animal will be watched during these seven days and then
its requirement of feed will be calculated accordingly before
sending it to the main feedlot.
4.1.3
Calve Feeding - feedlot
Feed
management is one of the most critical factors in meat
production. This project will use Total Mixed Rations (TMR),
which is based on a mixture of green fodder and supplementary
nutrients. Feed tables will be developed and applied for
optimization of locally available feed materials to obtain the
best nutrient/cost ratio. The daily feed given to the calves
will be equal to 3% of their body weight. This feed will
include 67% fodder and 33% concentrate mixture. The
concentrate mixtures are high protein rations specifically
constituted for weight gaining. These rations will include
different grains (corn, wheat, gram etc) and mineral mixtures.
The feasibility is based on an average weight gain of 0.8
kilogram on daily basis. Our local breeds have a natural
tendency to gain weight as the trials conducted by the Punjab
Livestock department have shown the weight gain daily to be up
to 1.1 kg per day.
4.1.4
Feedlot
Housing sheds
The
building comprises sheds for housing animals and the necessary
ancillary facilities like stores, vaccination yards etc
Animal
sheds should be located with long axis north to south, to get
direct sunlight and yet face away from the direction of
prevailing winds, whenever possible. Tree plantation can be
carried outside the pen to provide natural shades and these
trees will also act as windbreakers.
Apart
from providing sufficient floor space in animal houses, care
will be taken to provide manger and water troughs in such a
way that all animals in the pen have free access to these.
Feeding
/ watering space specification:
|
Units
|
Drinking
Space per animal (sq. ft)
|
.064
|
Total
manger length in a pen for 100 animals(ft)
|
196
|
Total
water trough length in a pen for 100 animals(ft)
|
19.6
|
Width
of manger / water trough(ft)
|
1.96
|
Depth
of manger / water trough(ft)
|
1.3
|
Height
of the inner wall of the manger / water trough (ft)
|
1.6
|
Dimensions
of water troughs will be the same as that of feed mangers and
water will be available round the clock. Generally all the
animals may feed at the same time in a pen, but not all
animals drink water simultaneously. Thus, while the length of
the mangers should be sufficient to provide feeding space for
all the animals in the pen, it will suffice if the length of
water troughs is sufficient for about 10 percent of the
animals in the pen.
5
MANPOWER REQUIREMENTS
One
person can handle 25 calves easily for feeding and other
management.
Five
persons will be required to look after the animal-fattening
farm.
6
FARM MACHINERY
6.1
Farm Equipment
Farm
supplies
|
Qty
|
Rate
|
Rs.
|
Feed
manger
|
10
|
600
|
6,000
|
Toka
machine/fodder chopper
|
|
12,000
|
12,000
|
Water
pump
|
1
|
6,000
|
6,000
|
Generator
(petter engine - 20HP)
|
1
|
20,000
|
20,000
|
Cart(Donkey
drawn)
|
1
|
10,000
|
10,000
|
Electrical
fixtures(lighting, etc)
|
|
|
5,000
|
Grand
total
|
|
|
58,000
|
7
LAND & BUILDING
7.1
Total Land Required (Area)
In
feed lot operations animals are kept in closed pens and fed on
high protein diet. Fodder is only given as roughage part of
the feed. Fodder grown on an acre can sustain 6 animals. About
15 acres of land is required to grow fodder for feeding 90
animals.
7.2
Recommended Mode for Acquiring Land
Land
lease is a better option for starting a livestock farming
business. Once the business takes off, land can be purchased
later on.
7.3
Suitable Locations
The
suitable location for a fettering farm would be where costs of
fodder growing are lesser, labour is cheap. Sites in rural
areas are most suitable for this project. Only thing should be
kept mind that, the village is connected with the roads for
transportation of animals to the animal markets.
7.4
Animal Housing
Building Space
|
Sq.
ft
|
Rs/sq.
ft
|
Shed
Space
|
990
|
90
|
Open
Paddock
|
1980
|
40
|
Other
Construction
|
400
|
150
|
Total
construction cost
|
|
243,300
|
7.5
Infrastructure Utilities / Requirements
¨
Road
¨
Electricity
¨
Water
¨
High
speed diesel
¨
Urine drains
¨
Dung pits
¨
Water pond
8
PROJECT COST
Total
cost of the project of one lot is Rs 600,000 per quarter .
8.1
Fixed Investment
8.1.1
Building
Rs 244,000
8.1.2
Machinery
Rs 58,000
8.1.3
Animal cost
Rs 331,000
8.1.4
Total Fixed Investment
Rs 301,000
8.1.5
Working capital
Rs 200,000
8.1.6
Total project Cost
Rs 600,000
9
FINANCIAL ANALYSIS
9.1
Costing
9.1.1
Average sale price/kg
Rs 30/Kg
9.1.2
Average unit contribution margins Rs 7/Kg
9.1.3
Fixed
cost per kg
Rs 0.6/Kg
9.1.4
Variable cost per kg
Rs 22.9/Kg
9.1.5
Total product
cost per unit (variable + fixed)
Rs 23.41
9.2
Break Even
9.2.1
Break even sales(Vol.)
24 heads
9.2.2
Break even capacity
27%
9.3
Profit & loss statement
Total
sales / quarter
9.3.1
Gross profit
Rs 142,714
9.3.2
Salaries
Rs 23,760
9.3.3
Depreciation
Rs 8,110
10
REGULATIONS
Animal
fattening farm can be started in rural and peri urban areas.
There is no requirement of getting license from the
government.
Price
Control Regulations
There
is no price regulation governing the trade in live animals.
However, such trade is indirectly regulated by the price
controls imposed on mutton and beef. The Commissioner of a
district fixes the maximum price of beef and mutton that can
be charged by any retailer in the district.
11
KEY SUCCESS FACTORS
¨
Animal
breed
The
success of the fattening farm is dependent on the breed of
animal. The breed characteristics effect the weight gaining
ability of the animal. Only selected breeds giving good beef
should be kept at the farm for fattening. Under good nutrition
conditions the calves of Sahiwal, Baghnari and crossbred gains
good weight. Calves attaining about 800 grams daily weight are
categorized among good breeds.
¨
Selling
price
Selling
price is another limiting factor for the determination of the
profitability of this business.
In Pakistan, the beef business is controlled by the
informal sector. The are no organized markets for the beef
sale and purchase. It is is in the hands of a community called
butchers or Kassab.
After
feeding animal in feedlots, only the premium price can make
the operations profitable. Only fetching good price can
justify the costs incurred on rearing animal in feed lots.
The
selling price of fattened animal should be higher than the
average animals because of its higher meat recovery and good
quality.
To
avoid the risk of price fluctuations, certain buy back
agreements with institutional buyers will be a good approach
for the success of this business. Linking the project with the
live animal export or beef exports will assure good returns on
the business.
¨
Animal
Availability
A
good quality animal is difficult to collect from one market.
For the fattening purpose, the supply side of the animal must
be given priority and some agreement with the sellers should
be made for the regular supply of animal at the time of animal
induction. Contract
should be made with the suppliers to supply the 10-15 months
old animals on pre-decided prices.
¨
Animal
health
Animal
disease effects the feed conversion ability of the calves kept
at the farm.
Some
times severe disease attack may cause the mortality of the
animals. To control these threats, proper vaccination and
medication must be done.
Hygienic
conditions should be assured at the farm by adopting proper
sanitation and drainage techniques.
12
THREATS FOR THE BUSINESS
¨
Mortality
Losses
Sudden
death of animals due to epidemic disease or gaseous
inflammation in the intestinal tract.
¨
Competition
with Informal
sector
Butchers,
who don't pay premium price for the good quality animals,
dominate our country's beef markets.
Note:
The proposed project is based
on certain assumptions, prices and regional considerations.
The mentioned figures and numbers are estimated and may vary
with the change of any of locations.
July
27, 2001 Version II
Small
and Medium Enterprise Development Authority
GOVERNMENT OF PAKISTAN
43-T, Gulberg II, Lahore 54660, Pakistan.
UAN: 111 111 456 Fax: 575 3545 & 575 3587
http://www.smeda.org.pk
|