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Livestock production is an integral part of Pakistan's agriculture sector and plays a vital
role in national economy. At present, livestock is contributing about 52.2% to the
agricultural sector and 11 per cent to the GDP *. Pakistan is geographically located close
to the Middle East and South-East Asia. Both of these regions are deficient in livestock
products and depend upon import from other countries. The livestock industry in most of
the developed world is highly subsidized.

The role of livestock in 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.

According to our surveys dairy animals, mainly buffaloes and cows can be purchased
from the animal markets or breeders located in suburban areas of 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.

The objective of this project is to do a preliminary study on the feasibility of a Dairy

Farm and try to assess the profitability of this business with a fixed investment.

2. Key Success Factors

Commercial dairy farmers depend on land, labor and animals as the major resources. The
thrust in modern dairy farming is on the increased use of capital and management.
Successful dairy farming harnesses all available resources into productive and profitable

unit. Dairy farming is highly complex as it includes breeding, management, feeding,
housing, disease control and hygienic production of milk on farm.

The optimal utilization of resources and means can maximize productivity and profits.
This also depends on selection of the right kind of animal. The low yielder animals are
uneconomical to keep and hence these can be sold onwards as a source of meat. The
overall improvement of all the dairy animals is necessary for improved milk production.

It involves keeping all records of milking and others statistics. Feeding animals on
nutritious and high yielding varieties of forages will be adopted. The surplus forage will
be preserved as silage or hay. Other farm management practices include feeding for
growth, lactation, pregnancy or maintenance, hygienic milk production, comfortable and
ventilated barns, spraying/ wallowing of animals in summer, timely detection of heated,
mating, with selected bull or AI service. If animals are bred within the 60-90 days of
calving provided with clean surroundings, drinking water and feed according to the
requirements, the overall performance of herd can be improved.
Timely vaccination against various diseases like Foot and Mouth and Black Water along
with the parasitic control will also improve the overall performance of dairy herd.

The main idea is to develop a dairy farm with clean and healthy animals, clean
surroundings and clean hands of the milkman and clean utensils.

3. SWOT Analysis

Dairy production is all-inclusive activity, related to animal care, reproduction, feeding,

and management. It is defined as all those aspects and activities relating to rising of dairy
animals during their various phases of life to get wholesome milk. Before making the
decision, whether to invest in the dairy and livestock farming or not, one should carefully
analyze the associated risk factors. A SWOT analysis of the project is given below: -

3.1 Strengths
• Concentrated production.
• Favorable breeding backgrounds.
• Relatively cheap farmland.
• High domestic consumption.
• Good milk quality.
• Major source of food, i.e. Milk & Meat
• Ample human resource employment sector.

3.2 Weaknesses
• High production costs.
• Low levels of bulk feed production.
• Poor management level in quite a few cases.
• Lack of education and initiative.
• Unorganized sector, unaware of basic farm management practices.
• No or low application of research work and pedigree record

3.3 Opportunities
 Govt. of Pakistan & Sate Bank of Pakistan priority sector.
 Dairy products needs are much higher than supply.
 Commercially viable sector with great credit potential and
absorption capacity.
 Value added dairy products are in demand.

3.4 Threats
 High risks of diseases in live stock.
 Imbalance between prices of inputs & outputs.
 Rising trend of cost of production with higher rate of interest as
compared to profit ratio.
4. Market Potential *

Pakistan is the fifth largest milk producer in the world *. Milk production in year 2007-08
was about 42.19 million tons*. Raw milk is used for drinking and tea making purpose. In
rural areas, milk is used to make desi ghee, yogurt, whey (lasi) and butter. Rural as well
as the urban house holds are the major consumers of milk.

• Pakistan: 170 million people, high milk consuming tradition

• Irrigable land in Pakistan –20 million hectares
• Fodder cultivated in 2.8 million hectares, i.e. only 14%
• Fodder yield very low -24 Tones/hectare (Australia approx 70 Tones/hectare)
• Animal herd 47 million heads, though average size 3 head
• Cheap farm labor.

The demand for milk increases during summers as the consumption of whey (lassi) rises
due to hot weather. 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.

5. Target Customers

Our business proposal is solely

based on providing 100% original
and un-adulterated milk direct to
the consumer at a rate of Rs.70 per

6. Capacity

The initial plan will have the following details :

6.1 Total Animals 20

Buffaloes (NiliRavi, Kundi) 16

Cows 4

6.2 Average Milk

Cow 20 liters of milk a day

Buffalo 12 liters of milk a day

6.3 Diet

Green fodder Rs. 150-200 / 40kg

Balanced diet with oil seed cake Rs. 1200 / 40kg
Weed straw Rs. 400 / 40kg

6.4 Vaccination (Twice a year – per animal)

Foot and mouth Rs. 200

HS Rs. 200
Blackwater Rs. 200

6.5 Workers Required

2 workers @ Rs.7000 per month

7. Proposed Business

The proposed business entity will be a partnership between the three co-authors of this

8. Proposed Location

A location close to the outskirts of Islamabad has been selected near the area Chak
Shahzad. Readily built dairy farm is available on rent of Rs. 20,000/-

9. Project Investment

S.No. Description Amount Quantity Total

1 Site / Location (Rent pm) 00 12 240,000
2 Shed for animals 00 1 500,000
3 Workers room 00 1 250,000
4 Fodder store 00 1 250,000
5 Animal Cost (Cows) 00 4 400,000
80,0 1,280,00
6 Animal Cost (Buffaloes) 00 16 0
7 Vaccine (for one year) 00 20 24,000
8 Workers (@ 7000 pm) 00 2 168,000
9 Delivery Driver 00 1 84,000
10 Delivery Van 00 1 400,000
11 Utensils & Milk Storage 00 1 50,000
12 Freezer 00 1 25,000
13 Water Pump / Boring 00 1 20,000
14 Operating Cash 00 1 250,000

Total 00

10. Project Output

Output Per Per Sale No of Total Total
S.No. Day Day Price Animals (Litres) Amount
1 Cow 20 60 4 80 4,800
2 Buffalo 12 70 16 192 13,440

Total per day 272 18,240

Total per
month 8160 547,200

11. Data Analysis

Total Investment : Rs. 1.0 Million each (Three investors)

12. Project WBS
No. of
S.No. Activity Days
1 Search for SITE 3
2 Selection of SITE 2
3 Contract with owner 1
4 Construction of Animal Shed 10
5 Construction of Worker Room 5
6 Construction of Fodder Store 5
7 Purchase of water pump 5
8 Boring for Water 0.5
9 Installation of Water Pump 0.5
10 Hiring of workers / driver 3
11 Purchase of utensils 0.5
12 Purchase of freezer 0.5
13 Purchase of animals 6
14 Purchase of delivery van 1
15 Contract with fodder provider 1
Contract with Vet for animals vaccine and periodic
16 check. 1
17 Start production / selling. 0

Total Days 45

13. Project Network Diagram

4 5 6
12 133 15
( ( (
2 2 1
) ) )

10 17
1 2 3

7 8 9

11 14 16
( ( (
1 5 3
) ) )

Critical Path :

1 (3)  2 (2)  3 (1) 4 (10) 5 (5)  6 (5)  12 (0.5)  13 (6)  15 (1)  17 =

33.5 Days

14. Conclusion

1. The Official Website of The Small And Medium Enterprises Development Authority - SMEDA
(, accessed on 18/01/2011 at 4:30 pm.