INVESTMENT PROPOSAL

COMMERCIAL SCALE GOAT FARMING

IN THE EASTERN PROVINCE

Ministry of Agriculture, Animal Production and Development,

Industries, Fisheries and Tourism
Eastern Province
Contact Information
Ministry of Agriculture, Animal Production & Development, Rural Industries Development,
Fisheries & Tourism, Eastern Province

Website: http://www.ep.gov.lk/minagriindex.asp

Email: minagriculture@ep.gov.lk

Mr. K. Pathmanathan, Secretary (+94)-026-3269976

Dr. R. Gnanasekar, Director Planning (+94)-026-2223076

Acknowledgements
The Ministry of Agriculture, Animal Production & Development, Rural Industries
Development, Fisheries & Tourism of the Eastern Province has developed this series of
investment proposals in consultation with several industry stakeholders. It wishes to thank all
relevant stakeholders and government institutions for sharing their valuable resources and
providing information that made the financial estimates possible. The Ministry wishes to thank
USAID and the USAID-supported VEGA FEG Program for the invaluable support rendered
towards the economic development of the Eastern Province, especially for encouraging large
scale investments and building capacity of human resources by providing technical assistance
since the end of the conflict.

This publication is made possible by the support of the American people through the United States Agency for
International Development (USAID). The contents are the sole responsibility of the Ministry of Agriculture, Animal
Production & Development, Rural Industries Development, Fisheries & Tourism of the Eastern Province and do not
necessarily reflect the views of USAID or the United States Government.

This publication was produced for review by the United States Agency for International Development. It was prepared
byMinistry of Agriculture, Animal Production & Development, Rural Industries Development, Fisheries& Tourism of the
Eastern Province.

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 ----------------------Hon. Minister’s Message
The agricultural sector is the backbone of Eastern Province
economy and the means of livelihood for most of our rural
population. Sustained agricultural growth is critical for uplifting the
living standards of our people as well as generating rapid economic
growth. However, in spite of the importance of the agricultural
sector, farming in our province has for many years been
predominantly a small scale, rain fed and poorly mechanized
activity of low production and productivity. In order to address these
challenges, my ministry launched several agricultural development
programmes and I am pleased to note that implementation of such development initiatives has
been largely successful. As a result, the agriculture sector surpassed the growth target and
presently contributes towards 23% of the provincial GDP.

It is noteworthy to mention that under the policy framework of the government the “Mahinda
Chinthana” the Eastern Provincial Council has accorded highest priority during the last five
years to realize the full potential of the agriculture sector in Eastern Province. In the recent
past Eastern Province agriculture has undergone remarkable modernization thanks to several
initiatives by the government and donor institutions and this has made spectacular
productivity gains possible through rapid improvement in yields. As the Minister of
Agriculture, Animal Production and Development, Rural Industries Development Tourism and
Fisheries, Eastern Province I encourage private and foreign investment in the development of
these sectors. New investment will pave the way for infusion of capital and technology and
improve productivity and value addition leading to increased production and prosperity in
Eastern Province. My ministry is presently involved in implementing proactive development
initiatives with commitment to inclusive development and creation of an investor friendly
environment.

These agriculture sector investment proposals are an outcome of series of workshops and
discussions we had with relevant stake holders i.e. Government institutions, private sector
agencies and non-governmental agencies. These proposals clearly spell out the available
potential and resources involving production, avenues for value addition and marketing of
agricultural produce and focus all efforts towards achieving excellence in agriculture through
private and foreign investments in Eastern Province.

I also would like to take this opportunity to put on record my appreciation to the United States
Agency for International Development (USAID) and its VEGA FEG Program for the assistance
provided to the Eastern Province through its various economic growth and technical
assistance interventions.

I wish to reaffirm the commitment of my ministry in creating an enabling environment for the
private and foreign investments and I urge all stakeholders to play their respective roles in
ensuring that the Eastern Province of Sri Lanka transforms itself as a most preferred
destination for investments.

Z. A. Naseer Ahamed (Eng), M.P.C

Minister of Agriculture, Animal Production & Development,
Rural Industries Development, Fisheries & Tourism,Eastern Province

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 COMMERCIAL SCALE GOAT FARMING IN
THE EASTERN PROVINCE

Contents

Page No

The Eastern Province and Livestock Production…………………………………………. 01

Investment Opportunity for Establishment of Commercial Goat Breeding Farm…… 02

The Investment Proposal…………………………………………………………………… 03

Markets for Goats ………………………………………………………………………….. 05

Potential Locations for the Project………………………………………………………… 06

Investment Incentives……………………………………………………………………… 07

Procedure for Long Term Lease of State Lands………………………………………… 09

Useful Contacts……………………………………………………………………………… 11
 The Eastern Province and Livestock Production
The Eastern Province is one of the nine administrative provinces in Sri Lanka comprising 15%
of the total land area of the
country, 25% of the coastal belt
and 8% of the country’s
population. The land area is
9,361 sq km and inland water
resources to the extent of 635sq.
km totaling 9,996 sq. km. The
Province contributes 6% to the
national GDP. The total
agriculture sector accounts for
approximately 23% of the
provincial GDP in Eastern
Province compared with 12% for
the entire country.

The Eastern Province

contributes 20% to milk
production and 8% to meat
production in the country.
Approximately 70% of the
population is dependent on
agriculture and livestock for
their livelihoods. The
topography and agro climatic
conditions of Eastern Province
are ideal for livestock
development. Suitable farmland
and water are available as
unutilized resources in the
province. The necessary
manpower, both skilled and
unskilled, is available in
abundance. Scarcity of quality
breeding material was identified
as a major constraint in
developing this sector to its full potential. Therefore the establishment of commercial livestock farms
have been facilitated by the government and private sector as an urgent priority to meet demand
and to create self-employment opportunities in this province.

Public sector support in livestock rearing, veterinary extension services and increasing the supply of
breeding animals have been intensified to support the industry. The government is committed to
encouraging private sector and community participation in livestock production; value addition and
marketing; production of breeding material; and supply of feed ingredients such as maize, rice bran,
gingelly and coconut poonac. A high priority is accorded to the establishment of production units for
rural based animal feed resources. The development of a commercially viable private sector with
investment in modern livestock farming technology is vital to transform the present subsistence
level livestock production into commercial livestock production.

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 Investment Opportunity for the Establishment of a
Commercial Goat Breeding Farm
Sri Lanka has a goat population of around
785,000 of which 25% are found in the Eastern
Province. Goats are among the main meat
producing animals in Sri Lanka and mutton is
one of the choicest meats retailing at around
200% over the price of beef. There is huge
domestic as well as international demand. In
addition to local production Sri Lanka imports
around 360MT of mutton annually. Besides
meat, goats produce other products like milk,
skin and manure. Goat milk is valued higher
than cow’s milk with special demand from
asthmatics and those allergic to cow’s milk.
Goat Farming in the Eastern Province
Goat rearing is a popular livestock activity
in Eastern Province and has been the
traditional form of livestock production
among livestock farmers for several
decades Goat rearing is concentrated in
areas such as Kinniya, Muthur, Kuchchaveli,
Pottuvil, Alayadivembu, Thirukkovil, Kiran,
Chenkalady, Kokkaddichcholai and
Arayampathy. Availability of vast tracts of
scrub jungle areas and unutilized
manpower are useful resources in
developing this sector in Eastern Province.

Around 15% of the goat population is

reared for milk while the balance is kept
solely for meat. Jamnapari, Jamnapari
crosses and Sannen are the most preferred
breeds in Eastern Province. It is estimated
that there are about 194,160 goats and
around 16% of them are improved cross
breeds while the balance are of indigenous
type. Around 5,528kg of mutton and 461
litres of goat milk is produced in Eastern
Province per day. Scarcity of quality
breeding stock and goat diseases such as
tetanus, parasitism and goat paralysis are
factors, which restrain the growth of this
sector to its full potential
The majority of the commercial goat farms
operatewith positive net returns and goat
rearing has been found equally rewarding
under both intensive and semi intensive
systems of management. Intensification and
commercialization of goat farmingis important
because of shortage of resources for extensive
management. Use of improved technologies,
superior breeding materials, low cost feed and
fodder and innovative marketing of the produce
are an essential component for successful
commercial goat production.The significant
opportunity now is to invest in a commercial
goat breeding farm in the Eastern Province
where the demand for goat meat production is
high.

2
The Investment Proposal
The total capital outlay for the establishment of a commercial goat breeder farm consisting
rear 2000 does and 100 bucks under semi intensive management system is LKR 28 million.
Annual operating costs will be in the region of LKR 5.6 million. It is envisaged that the investor
will lease 55ha of State land that has been identified for this purpose and develop it into a
modern goat breeder farm. Improved Jamnapari stud goats will be procured locally from state
breeder farms and private breeders and bred with local indigenous she-goats. The
investment will generate 3,570 kids per annum which will be marketed to farmers in the
Eastern Province. A two fold increase in milk and meat production could be achieved on first
generation offspring from this project. Kids born under this project will be reared separately
in a kid rearing unit and will be sold to farmers when they reach sexual maturity and become
suitable for breeding. The main objective is to produce and sell goat breeding material,
which have high production potential and suitable to Eastern Province agro climatic zone.
Jamnapari is the most suitable breed to be used in this cross breeding programme. The
capital and recurrent cost breakdown is shown in Table 1 and Table 2 below.

Table 1: Capital Cost of Goat Breeder Farm

Cost Element Value in LKR

1. a) Does - 2000 Nos. @ LKR 9350/- each 18,700,000
b) Bucks - 100 Nos. @ LKR8,150/- each 815,000
2.a) Shed for Does - 2000 Does @ 10sq.ft/animal x LKR 200/sq. ft 4,000,000
b) Shed for Bucks - 100 Bucks @ 20sq.ft/animal x LKR 200/sq. ft 400,000
c) Shed for Kids - 4000 Kids @ 4sq.ft/kid x LKR 200/sq. ft 3,200,000
3. Equipment 200,000
4. Establishment of fodder Unit 50 acres (3 seasons/ ac) 850,000
5. Wells (01 No) 100,000
6. Irrigation System 80,000
7. Building 200,000
Total Capital Cost 28,545,000

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 Table 2: Average Annual Operating Cost and Revenue

Description Total Value in LKR

Supplementary Feed Cost
For 2000 Does for 3 months (6.75kg/Month/ Doe) 1,012,500
For 100 Bucks for 3 months (7.5kg/ Month/ Buck) 56,250
For 4000 Kids for 3 months (3.75kg/ Month/ Kid) 1,004,063
2. Labour Cost (2 labour/ Unit) (11500/- per Month per Labour) 2,760,000
3. Veterinary Cost 340,800
4. Land Lease 412,500
5. Electricity and maintenance of irrigation system 25,000
Total Cost 5,611,113

Revenue Estimates
Sale of Young Bucks (1785 Nos. of 17 kg each @400/Kg) 12,138,000
Sale of Young Does (1785 Nos. of 15 kg each @460/Kg) 12,316,500
Sale of manure 400,000
Total Revenue Estimate 24,854,500

At current market rates young bucks may be sold at LKR400/kg and young does at LKR
460/kg. It is expected that the weight of the young animals will be 17kg per buck and 15kg
per doe. Based on these rates the investment will generate a payback in under two years with
an internal rate of return of 53%. Table 3 shows the investment ratios.

Table 3 Investment Ratios

Pay Back Period
2.28
NPV (LKR)
32,919,854
IRR 52.62%
ROI 109.98%
Present Value of Cost (LKR)
45,692,446
Present Value of Benefit (LKR) 78,612,300
Benefit Cost Ratio 1.72

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Markets for Goats
The demand for goats and goat meat is higher among Hindu and Muslim communities in Sri
Lanka where they are slaughtered in religious ceremonies. Especially during the Muslim
festival of Ramzan the demand for high quality goats increases significantly and price of
mutton is extremely high. Goat is the most widely consumed red meat, eaten by more than
70% of the world's population. Although considered a red meat, goat mutton is leaner and
contains less cholesterol and fat than both lamb and beef, and fewer calories than beef or
chicken. World cuisines best known for their use of goat include Middle East, North Africa,
India, Pakistan, Mexico, and Caribbean Islands. Cabrito (Capretto in Italy), or milk-fed baby
goat, is in much demand in star class hotels and restaurants. In 2011 Sri Lanka imported 363.8
MT of mutton valued at LKR 162.34Mn and exported 7.4 MT valued at LKR 4.1Mn.

5
Potential Locations for the Project

The following locations in

the Eastern Province have
the necessarylocational
advantages to establish a
commercial goat farm
investment.

Trincomalee District:
Kuchchaveli,
Kinniya,
Muttur,
Eachchilampattu

Batticaloa District:
Vaharai,
Valaichenai,
Chenkalady
Kiran

Ampara District:
Thirukovil
MahaOya
Padiyathalawa
Damana

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Investment Incentives
Government incentives are available in the agriculture sector for farming associated with advanced
technology, distribution, collection & marketing, storage, cold rooms, ice plants, animal husbandry
and out grower schemes, plant & nursery, pre/post harvest management, cultivation of plants of any
description. Table 4 below shows the current investment incentives available for new companies.

Table 4: Investment Incentives for Investors under BOI Regulations

Investment Category Minimum Investment Tax Holiday
Small investment LKR 25 Million 04 Years
Medium scale investment LKR 50 – 100 Million 04 Years
LKR 100 – 200 Million 05 Years
LKR Over 200 Million 06 Years
Large scale Investment LKR 300 – 500 Million 06 Years
LKR 500 – 700 Million 07 Years

LKR 700 – 1,000 Million 08 Years

LKR 1,000 – 1,500 Million 09 Years
LKR 1,500 – 2,500 Million 10 Years
Above LKR 2,000 Million 12 Years

Sri Lanka scores well on the World Bank Ease of Doing Business Index ranking 81 out of 189 countries
surveyed and is far ahead of comparative countries in the region.

Sri Lanka 81

Maldives 95

Pakistan 107

Nepal 108

Regional Average South Asia 121

Bangladesh 129

India 132

0 20 40 60 80 100 120 140

Source: World Bank, Doing Business Report 2013

Figure 2 below charts the procedure for application for Board of Investment approval.

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 Figure 2: Investment Approval Process

BOI Approvals

Application Submission for BOI

Approval

Assigning of a
Project Officer to
Letter of Acknowledgement of
Guide the Investor
Business Activity Opening of
Bank A/C S/A
(Optional)

Incorporation of Company Preliminary Clearance (If applicable only)

(Department of Registrar of Company)
• For the project Activity
• Rules of Origin Certificate
• Import/ Export License

• Site Approval
(Engineering Initial Environment Examination (IEE)/
Approvals Dept- Environmental Impact Assessment (EIA)
BOI) (If applicable)
• Environmental
Clearance Formal Letter of Approval
(Environment Dept. Sourcing of raw materials
BOI/ CEA) (If applicable)

Collect the Draft

Agreement
(Legal Dept- BOI) Signing of BOI Agreement Preliminary Planning Clearance for the
(Section 17 Projects) Building (If applicable only)

Opening of
Bank A/C
(FCBU/SIA)
Development Permit
(If applicable only)
Commence Implementation
(Within the specified
Import (duty free items)/ Export period)
- BOI Approval Registration for VAT/ TIN Utilities
(IFC Unit/ Engineering) (Inland Revenue Dept) Electricity:
- Registration Import Export Registration - Ceylon Electricity
(Investor Services Dept - BOI (Sri Lanka Customs)
Board
Water:
- National Water
• Recommendation for Work Permit & Work Permit & Residence
Supply &Drainage
Residence Visa Visa (Ministry of Defense &
Dept. of Immigration & Board
(Investor Facilitation Unit - BOI
Emigration Telecommunication:
- SLT/ Private

Certificate of Conformity (COC)

Environment Protection License Certificate of
(EPL) Conformity
(COC)
(If applicable only)

Commence Commercial Operation

SIA : Securities Investment Account
FCBU : Foreign Currency Banking Unit
Source : Board of Investment * for details please refer infrastructure
8 brochure
* residence visa can be obtained at any stage of
the process
Procedure for Long Term Lease of State Lands
Lease permits are granted under State Land Ordinance No.8 of 1947. Lands are leased to people and
institutions for a 30 year of period for residential, agricultural or commercial purposes. The leasing
period can be extended to 50 years for special projects. Upon the success of the initial lease a
request may be made for the extension of the period of lease. These permits can be transferred and
mortgaged with prior approval of the Land Commissioner.

Figure 3: Procedure for Lease of State Lands

Applicant Survey
Superintendent
15
Lease
Indenture Reques 9 Charging of rental &
1 handing over physical 8 Survey
possession
Requisition
Land
Registry 14 Divisional Secretary

2 7
Recommendation Valuation
13 6 Calling
Lease Approvals
Indenture
PLC Valuation
Department
3
Recommendation
Diagram
Land Commissioner
General

10
4 5 Preparation of
Recommendation Approval Lease

Secretary to the Ministry

of Lands/ Minister of
Lands
12 Lease
11 Leases for
Indenture
Signature

Presidential Secretariat

Source: Land Commissioner General’s Department

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 Conditions for granting state lands on long term lease for the special promotion projects

1. Special Promotion Projects are:

i. Approved cabinet project
ii. A project approved by the board of investment
iii. A project approved by the ministry of industries
iv. A project with a special patronage of any state affiliated institution

2. General documents which the applicant should submit

i. Request
ii. Project Report.
iii. Project Approved by Board of Investment/ Ministry of Industry/ the other institution
iv. Registration of company.
v. If a joint venture, the details of the directory (the details under the form 48 of the
company registration Act).
vi. Affidavits as per format issued by the Divisional Secretary, which affirms that the
properties belong to them, are within the limit of 50 Acres.

3. General conditions applied to the lessees

i. Term of lease is thirty years (30).
ii. This will be extended up to 50 years under the special approval of the cabinet.
iii. Rental must be annually paid.
iv. The amount of lease will be quinquennially revised by 50%.
v. The Land cannot be used for any purpose for which the land was obtained.
vi. The land must be maintained in a proper state of development.
vii. No sub-leasing, mortgage and vesting can be done without due permission.
viii. Special conditions which could be stipulated by the other institution.
ix. Actions could be taken in order to cancel the lease indenture on the occasion of
violating the conditions.

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 Useful Contacts

Ministry of Agriculture, Animal Production & Department of Animal Production and Health
Development, Rural Industries Development, P. O. Box 13,
Fisheries & Tourism Getambe,
Eastern Province Peradeniya
Kanniya Road Sri Lanka
Varothayanagar Tel : +94 81 2388184, 2388189,2388337
Trincomalee Fax: +94 81 2388619
Sri Lanka E -mail: dgdaph@sltnet.lk
Tel : +94 26 2222441 Website: www.daph.gov.lk
Fax: +94 11 2222025
E -mail: minagriculture@ep.gov.lk
Website: www.ep.gov.lk Department of Forest Conservation
82, “Sampathpaya”
Rajamalwatta Road,
Battaramulla
Department of Animal Production and Health
Sri Lanka
Eastern Province
Tel : +94 11 2866631- 2
Inner Harbour Road
Fax: +94 11 2866633
Trincomalee
Sri Lanka
Tel : +94 26 2221008
Fax: +94 262222566 Department of Registrar of Companies
400, D R WijewardenaMawatha
Colombo 10
Board of Investment
Sri Lanka
Level 24 &26 West Tower
Tel : +94 11 2689208, 2689209
World Trade Centre
Fax: +94 11 2689211
Echelo Square
E -mail: registrar@drc.gov.lk
Colombo 01
Sri Lanka
Tel : +94 11 2434403
Fax: +94 11 2447994
E -mail: infoboi@boi.lk
Website: www.investsrilanka.com

Ministry of Livestock and Rural Community

Development
45, St. Michael’s Road,
Colombo 03
Sri Lanka
Tel : +94 11 2541369, 2338278
Fax: +94 11 2328117
E -mail: secretary@livestock.gov.lk
Website: www.livestock.gov.lk

Central Environmental Authority

104, DenzilKobbekaduwaMawatha
Battaramulla
Sri Lanka
Tel : +94 11 2872359
Fax: +94 11 2872608
E -mail: dg@cea.lk
Website: www.cea.lk

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