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Project Subject: Buffalo Milk Dairy

Unit Size: 100 Buffalos


Breed: Murrah
PROJECT EXECUTIVE SUMMARY
1.1 PROJECT BRIEF
Dairy production is an all-inclusive activity, related to animal care,
reproduction, feeding, and management. It is defined as all those
aspects and activities relating to raising of dairy animals during their
various phases of life to get wholesome milk. The proposed project is to
be in the vicinity of Manshera. Livestock production is an integral part of
Pakistan's agriculture sector and plays a vital role in the national
economy. At present, livestock contributes about 49.1% to the
agricultural sector and 11.4 per cent to the GDP. Its net foreign exchange
earnings in 2003-04 were 53 billion, which is about 11 percent of the
overall export earnings of the country. The role of livestock in the rural
economy may be assessed by the fact that 30 to 35 million of the total
rural population is engaged in livestock farming, having 2 to 3
cattle/buffalo and 5 to 6 sheep/goats per family deriving 30 to 40 per
cent of income from it The main product of the dairy farm will be milk
which will be sold on daily basis, the production of milk will be 156,300
Liters, and the annual sales will touch Rs 4 million with 50 adult animals.
The initial total investment is of Rs 5,128,691. The Project can be
completed in 03 months time. The best quality animals are readily
available in the Mansehra region and can be transported to the project
easily. The market is readily accessible. Eight persons will be employed
at the farm, while more jobs will be created indirectly with the farm.
1.2 FINANCIAL SUMMARY
Sales Rs 4 Million per annum Gross Profit Margin 36% Net Profit
Margin before tax 12% Internal Rate of Return 51% Foreign
collaboration sought Joint Venture Loan Market access Sub contracting
Buy back arrangement Equipment purchase Management expertise
Technical expertise Marketing expertise Technology transfer Joint R&D
Other :- Studies Available Feasibility study Other Specify Project
description Date: 25 October 2007 2 2. PROJECT RATIONALE Dairy
farming is an agro-based project, which comprises of two aspects: dairy
production and dairy technology. Dairy production is an all-inclusive
activity, related to dairy animal care, reproduction, feeding, and
management and is defined as all those aspects and activities relating to
raising of dairy animals during their various phases of life to get
wholesome milk. Dairy technology relates to all aspects of processing
milk to convert it into various products. This conversion of milk into
product is practicable only if it is economically viable. Dairy animals,
mainly buffaloes and cows are purchased from the animal markets or
breeders located in peri urban areas of cities like , Islamabad, Lahore,
Okara, Sahiwal, Sheikhupura, Bahawalpur, Multan, Sargodha and
Faisalabad. Dairy animals are fed on protein sources (concentrate) along
with plenty of green fodder. Animals are milked twice a day i.e. morning
and evening. The milk is sold at the farm or may be directly sold in the

urban market. The milk price varies according to its quality and the
season. Buffalo milk is sold at Rs 24-26 per liter at the farm gate and Rs
20-22 in the urban market. Cow milk is sold at Rs 21-23 per liter at the
farm and Rs. 28-30 in the urban markets. The demand and supply both
have shown increasing trend over the last decade. The demand for good
quality milk is high. The table below shows this trend. Population of
livestock (million) Species 2002-03 2003-04 Cattle 23.3 23.8 Buffalo
24.8 25.5 Sheep 24.6 24.7 Goats 52.8 54.7 Production of Livestock
Products Product Milk (million tones) 27.031 27.811 Beef (000, tones)
1034 1060 Mutton (000, tones) 683 702 Dairy farming is considered the
backbone and mainstay of economy. It provides raw material for food &
leather industry. The produce is a major source of food, i.e. milk and
meant. The byproducts of dairy farming such as farmyard manure (FYM)
are not only environment friendly but also provide valuable earnings.
Sizeable foreign exchanges earnings are also possible through export of
its various products. The project is largely labour intensive thereby
providing ample opportunities for human resource employment. In the
rural North of Pakistan this sector is unorganized and unaware of basic
farm management practices. Although dairy farming can be rewarding in
several ways the management of a dairy farm is a highly challenging job.
3. MARKET OPPORTUNITY Pakistan is the fifth largest milk producer in
the world. Milk production in year 2003-04 was about 27.81 million tons.
Raw milk is used for drinking and tea making purpose. In rural areas,
milk is used to make desi ghee (clarified butter) , yogurt, whey (lasi) and
butter. Rural as well as the urban households are the major consumers of
milk. 3 Existing livestock population in NWFP is 18.3 million. The
provincial economy is primarily agrarian with a limited industrial base.
General studies and surveys indicate that this project can obtain a good
market response and healthy earnings. The overall market value of
livestock in Pakistan in 2003-04 is as follows The daily milk intake of
Manshera and surrounding areas is0.020 million liters respectively. The
demand for milk increases during summers as the consumption of whey
(lassi) rises due to hot weather. Ghee is obtained by heating the milk to
evaporate water and removing the curd. Liquid butter oil with 93% fat
content and a much smaller volume results. It is easy to store and
resists spoilage even at tropical temperatures. The ghee from buffalo
milk is white and that from cow milk yellow. Dahi or curd (similar to
yogurt) is another popular product. If not refrigerated it must be
consumed within 24 hours. Khoya is a popular sweet. It is prepared by
condensing the milk to about 20% fat. Sugar and some spices are added
in order to obtain desirable flavors. It is a high value product however it
also has a relatively short shelf life. Milk processing companies use milk
as a raw material to formulate different types of milk i.e. pasteurized
milk, UHT treated milk, condensed milk, skim milk & milk powder, etc.
Different value added products like yogurt, ice cream, butter and cheese
are also prepared from the raw milk. The processed milk quality and
market share has increased considerably over the last five years and
provides numerous opportunities to the dairy farm investor to benefit
from it. 4. BUSINESS PLAN The good quality lactating adult animals will

be purchased; their milk giving ability will be optimized by giving them


quality feed and taking proper care. The profitability of the project will be
maximized by selling both to the end consumers as well as to the
wholesalers. 4.1 PRODUCT SALES The product for sales are given for
ready reference as well the expected sales at full capacity is also worked
out in the table below. Milk/Cow/Day 14 Ltrs Milk/Buffalo/Day 10 Ltrs
Wet Cows as % Total no. of Cows 80% Wet Buffalos as % Total no. of
Buffalos 70% No. of Days in Year 365 Days Sale Price of developed
progeny Cow 60,000 Rs. 4 Buffalo 70,000 Rs. Female calf (cow) older
then one year 20,000 Female calf (buffalo) older then one year 20,000
Sale Price/Culled cow 30,000 Rs. Sale Price/Culled Buffalo 30,000 Sale
Price/Low yielder cow 16,000 Rs. Sale Price/Low yielder buffalo 20,000
Sale Price/Male calf 4,000-5,000 Rs Sales at 100% are Rs 4 Million.
Animal Non lactative lactative Production of milk per days Liter of milk
per animal per day annual Qt of milk Sale price per liter Amount cows
5.00 30.00 285 14 119,700 26.00 3,112,200 buffaloes 3.00 12.00 305
10 36,600 22.00 805,200 156,300 3,917,400 Sale male calves 17.00
4,859 82,600 Total 4,000,000 4.2 RAW MATERIALS The main material
required at farm are cattle feed, Dry & Green roughage, water and
medicines. The cost of feed are detailed below. Daily Feed Requirements
Animal Daily Requirement (kg) Cost/kg Amount Cow Green Fodder 40.00
0.10 4.00 Dry Roughage 5.00 2.00 10.00 Concentrate 3.18 10.00 31.78
Total 45.78 Buffalo 8 Green Fodder 50 0.10 5.00 Dry 5 2.00 10.00
Concentrate 3.18 10.00 31.78 Total 46.78 5 4.3 PRODUCTION PROCESS
Dairy animals, mainly buffaloes and cows are purchased from the animal
markets or breeders located in peri urban areas of cities like , Islamabad,
Lahore, Okara, Sahiwal, Sheikhupura, Bahawalpur, Multan, Sargodha and
Faisalabad. Dairy animals are fed on protein sources (concentrate) along
with plenty of green fodder. Animals are milked twice a day i.e. morning
and evening. The milk is sold at the farm or may be directly sold in the
urban market. The milk price varies according to its quality and the
season. Buffalo milk is sold at Rs 20-22 in the urban market. Cow milk is
sold at Rs. 18-20 in the urban markets. 4.4 DISTRIBUTION CHANNELS It
is suggested that milk will be sold on farm door through contractors,
gawalas or people around that area or may be pasteurized at farm by the
farmer and then deliver it to the near by city. Following are some of the
target clients for a dairy farmer. 1. Local people 2. Gawalas 3. Milk
collection companies 4. Contractors 4.5 HUMAN RESOUCE REQUIRMENT
One farm manager and seven workers are required at the farm, their
salaries are given below Description No. Salary/month/Person Annual
Salary (Rs) Farm Manager 1 10,000 120,000 Workers 7 3,000 252,000
Total Labor Cost 8 372,000 5. PROJECT FINANCIALS 5.1 OPERATIONAL
DATA The dairy farm will house 50 animals in the first year, however if
expansion is required the total number will be increased to 100 animals
from own production in later years. 5.2 FIXED COST The initial
investment in terms of capital cost is Rs 4,355,011 and includes the
items detailed below. ASSEST Total Cost (Rs) Building/Infrastructure
956,161 Machinery & equipment 191,850 Animal Cost 3,207,000 Total
Capital Cost 4,355,011 6 5.3 WORKING CAPITAL The investment in the

initial working capital is of Rs 292,680 Raw material inventory 72,680


Upfront land lease rental 140,000 Cash 80,000 Working Capital
Requirement 292,680 5.4 OVERHEAD COSTS In the first year following
overhead cost are estimated. Admin and Selling Salaries 372,000 Misc
Expenses 43,000 Land lease Rent Expenses 540,000 Office expenses
7,440 Professional fees (legal, consultants, etc.) 14,180 976,620
Particulars/Content of the Report
1. Introduction: General information about subject (e.g. dairy/poultry etc)
2. Scheme/Project: Main highlights of project/scheme.
3. Scope & objectives of the project: Main & secondary objectives/goals
4. Development initiatives of Govt. Depts. (Vety. AH, Dairy, Poultry etc.),
Corporations, Board, Coops, NGOs, State Agril. /Vety. University, KVKs etc.
5. Backward Linkages (related to project subject)
a. Details of borrowers profile/Background of company: name, age, address, land
holding, cropping pattern, (education, experience & training- related to project
subject).
Status of beneficiary: (individual/ Partnership/ Company/
Corporation/ Co-operative Society/ PPP/ NGO/ Board/ Others).
b. Site/Location of project: Connectivity/Proximity, Survey No., Village, Distt,
etc. land area in acre/hectare, approach to site, land development, fencing,
bore well etc.
c. Suitability of climate (Metrological data): season wise avg. temperature,
rainfall & humidity etc.
d. Financing Bank & branch location: Name, address & Contact No. etc.
e. Water supply: well, water tank, motor, pump & pipeline etc.
f. Power supply: Electricity/LPG/ DG set connection availability
g. Veterinary aid & breeding facility: Hospital/ dispensary, AI/Natural breeding,
vaccination etc., Place & distance from project site.
h. Manpower requirement: availability of trained & experienced, Technical /
Non technical & labors etc
i. Housing: sheds, quarters, godown etc. with their No. & size/area available on
the farm suitable for project.
j. Equipments & machinery with their No. & size/capacity related to project
already available on site.
6. Forward Linkages
a. Availability of Livestock & poultry birds: cow/buffalo/sheep/goat/chicks etc. List
of livestock markets/fairs, supplying agencies, Govt./University Breeding farms
etc.

b. Availability of Feed & fodder: dry, green & concentrates etc. cropping pattern &
fodder cultivation etc. List the markets/ authorized suppliers of feed & fodder
etc.
c. Livestock & poultry farming system: Give details of housing pattern/system etc.
d. Availability of vety. aid (Medicine & Vaccines): location of dispensary/hospital
etc.
e. Marketing of end products: name & place of market for milk, Eggs, broilers,
culled animals, young one, manure etc. price to be realized. Specific marketing
strategy, if any.
f. Arrangement for effluent treatment/disposal (if required)
1.STEP- Social, Technical, Economic & Political analysis (in case of very big
project)
2.SWOTStrengths, Weaknesses, Opportunities & Threats analysis (in case of
big project)
3.Stake Holder Primary, Secondary & Key stake holder analysis (in case of
big project)
4.Environmental & Socio-economic aspects (in case of very big project)
5.Schedule of project implementation (in case of big project)
6.Project Outlay: Total Financial Outlay (TFO) = Fixed cost & Recurring cost at
a glance (Item wise)
7.Project Economics: Financial Analysis (Benefit Cost Ratio (BCR), Net Present
Worth (NPW), Internal Rate of Return (IRR), etc.
8.Repayment of loan: amount & No. of installments per month/quarter/
annum, moratorium/grace period if any etc.
9.Lending terms: Term loan, Cash Credit (CC Limit), Margin money & its
sources, Rate of Interest, Security, Hypothecation, Insurance etc.
10.Other Financial Assistance: Refinance/ Subsidy (NABARD/ Govt.) etc.
17. Records & registers to be maintained.
18. Conclusion
19. List of Statements/ Annexure
a. Project Cost in details with items of Investment, bank loan, margin etc.
b. Techno- financial norms/assumptions.
c. Herd projection charts: Lactation/Kidding/lambing/flock/poultry housing
schedule/kindling/ farrowing etc.
d. Working capital requirement (in case of big projects)
e. Income/ Expenditure Statement
f. Cash flow analysis: BCR, NPW, IRR and (DER, DSCR etc.)

g. Sensitivity analysis
h. Repayment Schedule & adjustment of back ended subsidy if any.
20. List of attachments/ enclosures
a. Site/layout plan (Maps)
b. Detail cost estimates of civil work from Regd. Civil Engg.
c. Quotations for equipments & machinery from reputed suppliers/dealers
d. Well water test report (potable water)
e. A copy of training/experience certificate, if any.
f. NOC from different agencies (e.g. pollution control, Municipal Corp.) if
applicable
g. State Electricity Board approval for connection.
h. A copy of contract farming agreement if any.
i. Quotation for supply of livestock & chicks from reputed supplier/hatchery.
j. Quotation for supply of feed & fodder, concentrate if any.
k. Prevention of Food Adulteration Act License. (In case of food processing-milk
& Meat) and other licenses as applicable.
l. Any other documents as & when asked by the financing agency/bank.
m. Subsidy application form duly filled in, if any (to be finalized & signed by
the bank officials)