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FEASIBILITY REPORT OF

TUNNEL FARMING IN PAKISTAN

ASSIGNMENT AE-707

SUBMITTED BY: NAILA HAFEEZ


2004-AG-1281
MSC (HONS)
AGRI.ECONOMICS
2ND SEMESTER

SUBMITTED TO: SIR MAQSOOD HUSSAIN


FEASIBILITY REPORT OF TUNNEL FARMING IN
PAKISTAN
INTRODUCTION:
The production of vegetables in the country is currently limited to certain
time periods during the year due to seasonal variations. However, due to the
invention of modern agriculture production and storage techniques, there is
an opportunity for growing a variety of vegetables in off-season as well. In
this regard, two options can be considered: first is to store vegetables under
an artificially created environment while the second best option would be to
grow them off-season by tunnel farming.
Tunnel farming involves constructing greenhouses-hut-like structures
swathed in plastic that serve as cocoons for growing tomatoes, lettuce,
peppers, carrots and bushels of other fruits and vegetables.
The main objective of tunnel farming is to shield the crops from the
elements and trap the heat of the sun, extending the growing season and
increasing production.
The tunnels provide a microclimate around the crops that essentially fools
them into thinking it is a different season than it really is,” agriculture
specialist explained.
They protect plants from extreme cold, wind, and rain, which can keep soil
wet for days and keep farmers from cultivating it and they exclude or reduce
pests and diseases. The main benefit is that the tunnels increase the
temperature when days lengthen as winter turns to spring, accelerating
plant’s growth and enabling them to mature weeks before their counterparts
outdoors. They also can keep the temperature up in the fall, extending the
growing season and the plant’s production for weeks after outside plants
have stopped producing. The tunnels can extend the growing season by up to
four months, with two months at each end.
One difficulty is keeping the tunnels warm enough through the winter. The
plants can actually freeze inside the tunnel, but the crop is not harmed as

long as it isn't harvested until it thaws. It’s also challenging to control high
temperatures when the sun shines. Owners regulate the temperature by
opening the tunnel doors, installing vents or lifting and lowering the sheets
of plastic. They have got to irrigate the plants, which do not get rain, but also
watch the humidity, which can promote disease. So, the biggest challenge is
the tremendous amount of management
Tunnels can be large or small. Many high tunnels are about 90 feet long and
20 feet wide, with wooden and aluminum frames. Unlike greenhouses,
tunnels are covered with plastic, lighted only by the sun, and lack automated
heating and cooling systems. The high tunnel growing unit, a simple
structure with little environmental control equipment, less expensive to
build. They cost much less than greenhouses to build, usually about $4,000.
Fruit & Vegetable Development Project (FDVP) of the Punjab Agriculture
department has installed 45 tunnels in six regions of the province. The
regions selected for tunnel farming included Lahore, Rawalpindi, Multan,
Sargodha, Toba Tek Singh and Rahim Yar Khan and the framers of 45
villages of these regions will be educated about cultivation of four
vegetables, cucumber, tomato, green chili and capsicum, during off-season.
The tunnels were set up over an area of 12 marla for education purposes
only while hybrid seeds would be used for cultivation as production of these
seeds was more than normal seeds. On the other hand, the production of
tunnel farming was 10 times more than normal farming, they added.
Previously, tunnel framing was continued in only 1500 acre land of the
province and now only in Okra and Sahiwal districts around 1500 acre land
was being used for this farming only.
So, vegetables tunnel farming has becoming a growing phenomenon in
Pakistan. High demand for the produce followed by high returns and
improved quality has motivated the farming community to enter into tunnel
farming business. However, it is felt that there is a demand for technical
know-how of this field in order for people to enter this business. The
immense potential for advisory / consultancy business in tunnel farming
cannot be ignored.
REVIEW OF LITERATURE:

Pakistan Horticulture Development and Export Board,2003: -


This is a pre-feasibility study of off season vegetables. The proposed project
is designed as a medium size farming unit spread over a land parcel of 25
acres capable to cultivate various off season vegetables such as tomato,
cucumber and chillies.
The total project cost was 13564000 Rs.
Net present value at 20% was 28402000 Rs.
Benefit cost ration was 2 times.

Small and Medium Enterprise Development Authourity,2007: -


This is a Pre-feasibility study off season vegetable farming (low tunnel).The
proposed project is designed as a medium size farming unit spread over a
land parcel of 7.5 acres capable to cultivate various off season vegetables
such as tomato, cucumber and chillies by using low tunnel technology.
The total project cost was 1182770 Rs.
The project returns was :
Project Internal rate of return 32.49%.
Net present value 636750 Rs.
Pay back period (years) 3.35.

Sardar Shahid Fareed,2007: -


This is a project on investment opportunity profile for off season vegetable
farming in NWFP. The proposed project was in the vicinity of Manshera.
The project area was about 15 acres. The vegetables under study in this
project were tomato, cucumber and brinjal.
Financial Summary: -
Sales Rs 3 Million
Gross Profit Margin 44%
Net profit Margin 12%
Internal Rate Of Return 61%
Net Present Value (14%) 1593717
MATERIALS AND METHODS: -
The proposed project is designed as a medium size farming unit spread over
a land parcel of 7.5 acres capable to cultivate various off season vegetables
such as tomato, cucumber and capsicum by using low tunnel technology.

Net Present Value (NPV):-


The basic criterion of this assessment is that an investment is said to be
worthwhile, when the money received from an investment is at least equal to
the money invested. The decision rule of this technique is to accept those
projects which have a positive or zero net present value & reject those
investments which have a negative net present value. The present value of an
investment is the sum of its net discounted future cash flows:

∑ At
t=0 (1+r)t

Where “ At” is the project cash flow (either positive or negative) in time
(takes on value from year 0 to n. Where n represents the point in time when
the project comes to the end of its life). “r” is the annual rate of discount or
the time value of money (which is here assumed to remain a constant over
life of the project).

Internal Rate Of Return (IRR) : -


The internal rate of return (IRR) is known as the rate of discount, normally
applied to calculate an investment’s cash flow. It is estimated such that the
present value (NPV) of net income stream becomes zero. The decision rule
in this approach is to accept that investment having an IRR greater than or
equal to the market rate. Simply IRR is the value of “r” which satisfies the
following expression:


∑ At = 0
t=0 (1+r)t

Benefit Cost Ratio:-


This is the ratio obtained when the present worth of the benefit stream is
divided by the present worth of the cost stream.Benefit cost ratio greater
than 1indicates that the present worth of the benefits at that discount rate
has been exceeded the present worth of the costs,and we would have
recovered our initial expenditure .
PROJECT COST:

Cost per unit


Description Number (Rs) Total cost
Rotavator 1 30000 30000
Ridger 1 12000 12000
Soil Leveler/ Scraper 1 12000 12000
Spray Machines & Farm Tools 1 50000 50000
Peter Engine 1 20000 20000
Total cost of tools & equipment
cost - - 124000
Tractor & Cultivator 1 350000 350000
Total cost of vehicle - - 350000
Total cost of tools, equipment &
vehicle - - 474000
Monthly Annual
Salary per Salary
Description Number person (Rs) (Rs)
Farm Manager 1 6000 72000
Labor 8 4600 441600
Guard 1 5500 66000
Total 579600
INFRASTRUCTURE
REQUIRMENT
Agriculture land (acre) 7.5
Price Per Total
Description Number Unit (Rs) Cost (Rs)
Mild Steel, Red Oxide painted
(Kg/Acre) 600 40 24000
Plastic string 25 100 2500
Total cost in (Rs/Acre) - - 26500
Plastic Cost (Kg/Acre) 135 140 18900
Plastic Mulch 40 150 6000
Plastic Cost (Kg/Acre) - - 24900
Total cost in (Rs/Acre) - - 51400
Pre operational expenses - - 77770
Total - - 1182770
RESULTS:
COMPUTATION OF INTERNAL RATE OF RETURN

INCREME PRESENT
GROS NTAL DISCOUNT DISCOUNT DISCOUNT PRESENT WORTH PRESENT
S GROSS CASH FACTOR FACTOR. FACTOR. WORTH AT WORTH
YEAR COST PROFIT FLOW 20% 32.49% 55% AT 20 % 32.49% AT 55%
-
1 11.82 4.16 -7.66 0.83333333 0.75477395 0.64516129 -6.383333 5.7815684 -4.941935
2 3.2 6.59 3.39 0.69444444 0.56968371 0.41623309 2.354167 1.9312278 1.4110302
3 3.12 6.8 3.68 0.57870370 0.42998242 0.26853748 2.12963 1.5823353 0.9882179
4 3.02 7.18 4.16 0.48225309 0.32453953 0.17324999 2.006173 1.3500844 0.7207199
5 2.9 7.52 4.62 0.40187757 0.24495398 0.11177418 1.856674 1.1316874 0.5163967
6 2.86 7.9 5.04 0.33489798 0.18488488 0.07211238 1.687886 0.9318198 0.3634464
7 2.69 8.28 5.59 0.27908165 0.13954629 0.04652411 1.560066 0.7800638 0.2600698
8 2.54 8.68 6.14 0.23256804 0.10532590 0.03001556 1.427968 0.6467011 0.1842955
9 2.34 9.1 6.76 0.19380670 0.07949725 0.01936488 1.310133 0.5374014 0.1309066
10 2.25 9.53 7.28 0.16150558 0.06000245 0.01249347 1.175761 0.4368179 0.0909524
TOTAL 36.74 75.74 39 4.19247209 2.89319036 1.79546642 9.125124 3.5465704 -0.2759

IRR=55%

COMPUTATION OF NET PRESENT WORTH

PRESENT DISCOUNT PRESENT


GROSS DISCOUNT WORTH GROSS FACTOR WORTH
YEAR COST FACTOR 14% AT 14 % PROFIT 14% AT 14 %
1 11.82 0.877192982 9.80701754 4.16 0.87719298 3.6491228
2 3.2 0.769467528 2.46229609 6.59 0.76946753 5.070791
3 3.12 0.674971516 2.10591113 6.8 0.67497152 4.5898063
4 3.02 0.592080277 1.78808244 7.18 0.59208028 4.2511364
5 2.9 0.519368664 1.50616913 7.52 0.51936866 3.9056524
6 2.86 0.455586548 1.30297753 7.9 0.45558655 3.5991337
7 2.69 0.399637323 1.0750244 8.28 0.39963732 3.308997
8 2.54 0.350559055 0.89042 8.68 0.35055905 3.0428526
9 2.34 0.307507943 0.71956859 9.1 0.30750794 2.7983223
10 2.25 0.26974381 0.60692357 9.53 0.26974381 2.5706585
total 36.1 5.216115646 22.2643904 75.74 5.21611565 36.786473
NET PRESENT WORTH =36.78-22.26

=14.52

COMPUTATION OF BENEFIT COST RATIO:

BENEFIT COST RATIO=36.78/22.26

=1.65
REFERENCE:

• Merle H.Jensen, Alan J.Malter. Protected agriculture. pp 93.


• Steve Mitchell, David Bain Bridge, University of California.
Sustainable Agriculture For California. pp 167.
• Harrison C.H. Tending the garden state. pp 156,157.
• Zahid Baig (2007), Off season vegetables and fruits: farmers to be
trained in tunnel technology.
• Pakistan horticulture development and export board, 2003. Pre-
feasibility study Off-season vegetables. Document No. PREF-002
• Small and Medium Enterprise Development Authority (SMEDA),
2007. Pre-feasibility study off-season vegetable farming (Low tunnel).
Document No. PREF-55
• Farid S.S.(2007). Investment opportunity profile for off season
vegetable farming in NWFP. .(www.unido.org/fileadmin/ext-media)

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