Business Name:

Pure Cattle Farming

Business Address:
Kot Abdul Malik, Shahdra

Proprietors Name and Address:

1. Moin Ijaz 2. Mohsin javed 3. Waseem Ahmed 4. Ali Raza 5. Bilal Nasir Gujranwala Gujranwala Lahore Lahore Mureed K

Introduction:
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 SouthEast Asia. Examples of livestock species are: Cattle Buffalo Sheep Goats

You will know why dairy farming is a good business. Dairy Farming is a very hot topic in Pakistan. A lot of seasoned and would-be entrepreneurs have already jumped onto the Dairy Farming bandwagon in Pakistan, and even more so like to talk about getting into dairy farming. But have you asked yourself this question, why start a dairy farm?

Why Start A Dairy Farm

Yours truly have been working on the dairy farming project since June 2011. My interest was pretty much academic at first; just knowing how the business and the animals operate. It was after almost a year of travelling in and around Punjab, meeting countless number of people in the field, discussing and debating with some very qualified consultants and breeders, that I decided to dip my toes in this project.

We was interested in quite a few facts of Dairy Farming:

1. The Business Model: Dairy farming has a very unique business model, and no other business has the capability of multiplying its assets while still producing revenue. Remarkable.

2. The Current Situation: One of many lessons that Ali Murtaza has taught me is that you should get into a business where you think you can do better. Dairy farming, We knew, had a very, very large room for improvement. 3. A Very Solid Demand: A lot of businesses and entrepreneurs would consider a demand for something a good enough reason to get into any project. But for me, dairy farming is not only the demand of the market, but also a need. People need healthy, quality milk (and meat). It fits in with the idea of for-profit philanthropy where I stand a chance of actually helping people out, and earning prayers as well as profits. Now thats an inspiration! 4. Super Integration: This was not vertical integration as much as it was super integration. We already have two independent projects, one agriculture farming and the other is milk supply within Lahore, Alhumdulillah. The dairy farm has the potential of sitting in very nicely between the two, and providing wholesome integration. Although integration of any two businesses, much less three, is a pain in the neck (amongst other body parts), dairy farming provides me with the perfect long-term inspiration for working on these three projects!

Warning: Know This Before You Start Dairy Farming

Most of the things people say, they just say them without much thought. Theyd discourage you from doing anything different. This should not stop any half-decent starta from doing and starting different projects, of course. Having said that, following are the main points so far that should be considered when starting your own dairy farm:

1. It is a long term project.

There are no two ways about it. The time when you actually start seeing profits, IF a lot of things go right, is at least three years, usually five years. If you start taking out profits from it before three years, be prepared to inject more money in to it afterwards. But the upside to this remarkable business model is best explained by the following example that We frequently give to my friends and would-be entrepreneurs:

I start a shoe shop, selling shows. You start a dairy farm, selling milk. After three years, if both of us do well in our businesses, Id be richer than you. After six years, Id have five branches all over the city, and will still be richer than you. Ten years later, it wont matter how good I am doing, you will be much richer than me, in After 10 years, no business seem to even come close to the almost logarithmic growth of

Youd have great cash flows but you will find it hard to beat my retail outlets.

terms of assets, and most importantly, in terms of cash in hand.

a dairy farm. So if you can train yourself to actually think slow and steady, rather than fast and wobbly, then dairy farming is definitely something to consider.

2. The Most Important Factor is currently the Hardest

The hardest part of setting up a dairy farm is the procurement of good-quality, high-yielding, environment-hardened animals. This is also the most important activity for an owner of a dairy farm. You can go for imported cows, but We did not and We recommend that you dont either. A lot of people will tell you that you shouldnt because they are expensive. We want you to know that imported cows are not expensive. If you are paying 140,000 (PKR) for a cross-bred cow, then paying 180,000 for an imported cow does not make the cow expensive expensive, it just makes it relatively expensive. And your target is not to increase the number of heads, but to increase the number of liters of milk. So an imported cow averaging 25 to 30 liters per lactation is much better than a cross-bred cow averaging 14 to 18 liters per lactation. The ROI is just plain and simple and you should stop listening to people who tell you otherwise. But thats not the reason why you should not get imported cows. The number one problem with imported cows is that they are unable to withstand the blast of heat of the Pakistani summers. Setting up the right infrastructure is essential, but that is not the only thing that youd have to

look into. There is disease and the very little margin of error that the imported cows give to you and your management. We would suggest you do what We aer doing; find good-quality locally bred cows, make sure that your dairy farm shed and cooling infrastructure is very much in place and then run the farm for at least a year to gauge how well your infrastructure (shed, cooling etc) is handling your locally-bred cows. But that brings me back to the main point: finding high-quality locally bred cows is the hardest thing youd have to do. It is also the MOST IMPORTANT thing for any dairy farm. As I have repeated this repeatedly (!!), a dairy farms main function is to procure and breed good-quality cows. The milk (and meat) is a byproduct of that main function. So be prepared to hunt down good animals wherever you can find them. We remember travelling a total of 200 kms plus, by road, all over Punjab, in one week, just to see and meet cow breeders. We didnt pay half as much attention to the shed that I was constructing, or even the silage pits that were being prepared at the time, because purchasing the right animals is that one 20% activity that gives more than 80% of the result.

3. Finding the right people

Finding the right person to manage your dairy farm is also something to pay VERY close attention to. Stealing milk is very easy. If you do not trust the person who is managing the farm, then thats a losing proposition. You should pray that God helps you find that person. You can also start with a solid attitude of trust, of reward and of accountability. I can write quite a few things on how to deal with people, because that is ALL of this is about, but suffice it to say for now, that one of the hardest things to do in dairy farming just like in any other business is to find the right people to manage and carry your dairy farm forward. Details of whos who and how many people should do what activity, those things are not the scope of this article and may be covered/posted later, God willing.

Finding technical help like that of vets and professional consults for animal feeding
etc is NOT a problem, especially here in Pakistan. That is again one of the benefits of dairy farming, that the infrastructure that only a government can provide, is ALREADY IN PLACE in Pakistan. Sure there are problems, but it is good enough for you to not complain and get some work done. This is just a rundown of my thoughts on dairy farming and some just some of the pitfalls that you should look out for. By Gods Grace, my dairy farm has been operational for a about 4 months now and I am happy that I have started this business.

Business Activity:
We, the team of young and aggressive entrepreneurs would like to propose a Cattle Farming Project. Dairying is an important source of subsidiary income to small entrepreneurs and agricultural laborers. Getting milk from the animals and sell milk to the general public as well as to the near market is the main activity of the business. Animals are milked twice a day i.e. morning and evening. The milk is sold to the public, at the farm or may be directly sold in the urban market. The milk price varies according to its quality and the season. Buffalo & Cow milk would be sold to the milk collection companies, to the general public as well as to the farm round about Rs. 50 per liter. The demand of milk in summer is high as compared to winter. Thats why the animals in summer are sold at a bit higher prices as compared to winter. Annual growth rate in milk production is being increasing day by day. Thus, there is a tremendous scope for increasing the milk production through profitable dairy farming.

Aims:
The basic aim of the business is to provide the income for the support of the day to day financial activities and provide the employment opportunities to the local poor people.

Objectives:

Sales of Rs.20, 00,000 in the first year. Gross Profit Margin of 15% Net Profit Margin of 10% Drawings Rs. 50,000 aprox every year. To raise fund for paid up capital.

Market Size and Growth:

According to area of the business there are small competitors are available in the locality that have the same business. But we have the competitive edge in our business according to the size of the business. Because we have a lot of animals to meet the demands and competitors have fewer animals than us this is the main reason for getting the competitive edge in the business. From the competitive edge we have seen a remarkable increment in the popularity or growth in the business in the market. Because of the many animals we have enough milk to meet the locality needs and wants and we also sell the milk to the other near urban areas to gain the market share and earn the name.

Competitors:
Name Ali Ahmad Strengths Old Entrepreneur Sold milk at cheap rate Provide good quality of milk Sold accurate milk Weaknesses Not Focus on cleanliness Fewer animals to meet the needs Not accurate measuring of milk Fewer animals to meet the needs Poor Location

Jamal Din

Our Business:
Name Strengths Focus on cleanliness Sold milk at market price Provide good quality of milk Sold accurate milk Provide good service Good Location Weaknesses Little bit high price than other competitors

Competitive Advantage:
The main competitive advantage of our business is to provide the good quality milk to the customers and with the good service. The main focus in the business is on the cleanliness of the environment so that customer delights from our business and from this we have the more opportunities to grow and capture the customers and market share.

Proposed Customers:
We want to attract the general public of the locality and those are our main customers. The milk will be sold on farm door through Contractors, Gawalas or people around that area and then deliver it to the nearby city through the contractors. Following are some of the target clients for our business. Local people Gawalas Milk Collection Companies Contractors

Advertising and Promotions Strategy:

Very limited advertising in local area and as well as in the near market to catch the customers.

Price:
The price of our product is little bit high than other competitors because we have providing good service and pure quality milk to the customers and most important fact of little high price is that we maintain neat and clean environment than other dont focus on cleanliness. The milk price varies according to its quality and the season. Buffalo & Cow milk would be sold to the milk collection companies, to the general public as well as to the farm round about Rs. 50 per liter.

Promotion:
To gain the market share and to gain the customers we are spending little bit on advertising so that everyone comes to know our existence in the market.

Place:
The place of our business is so good. We have a lot of space for the animals and have separated area for the animals. At the business point there is a road from where we can easily sell the milk to near urban areas, milk collection companies that is the biggest strength of our business.

Equipment:

Chaff cutter Calf Feeder Maize Cutter Water Pump Feed grinder and mixer Milk cans

Key people and Job Functions:

Mr. Bilal Nasir and Mr. Mohsin Javed are the proprietors of the business and there is also a supporting staff is working with us to overcome the problems of the business and every person performs his duties according to the instructions of the proprietors of the business.

SWOT Analysis
Strengths, Weaknesses, Opportunities and Threats analysis can be helpful in decision making for investment in dairy industry.

Strengths

1 2 3 4 5 6 7 8

Important sector for national economy by providing raw material for food & leather Major source of milk & meat for food requirements of increasing population Export prospects for foreign exchanges earning. Business expansion scope of Milk Production due to demand and supply gap. Big sector for human resource employment. Secures sector for financing for banks. Huge scope for milk and meat processing industry. Source of Farm Yard Manure to increase the soils fertility and biogas energy.

industry.

Weaknesses
1 2 breeds. 3 4 5 6 7 8 9 10 11 High cost of American Holstein cows due to high transport cost. Weak institutional support to farmers for establishment of dairy sector. Sector is unorganized and unaware of basic farm management practices. Problem in marketing of products due to production in remote areas. Unavailability of services organizations to provide technical services to the farmers. Lack of marketing information and infrastructures. Lack of proper planning keeping in mind the future multiplication of off-springs. Unavailable of high quality feed and concentrate and lack in silage preservation Unavailability of national support to endemic diseases that cause losses every year. At national level, lack of dairy knowledge, research and extension facilities. Lack of commercially viable local breeds of animal to compete with the international

knowledge.

Opportunities
1 2 Govt. of Pakistan & Sate Bank of Pakistan has realized the importance of this sector Better alternate for industrial groups for diversification in the business. and is supportive.

3 supply. 4 5 6 7 8

Increasing population in cities is demanding more by-products i.e. 30% higher than Commercially viable sector with great credit potential and absorption capacity. High scope of development due to vast range of aligned areas of business. High scope of value addition in dairy products. Villages dairy businesses can provide the employment to labor that will ultimately Corporate financing in dairy sector can set an example for other agri. corporate

reduce the population load on cities. financing.

Threats
1 2 3 4 5 6 7 8 9 10 11 12 Lack of institutional support can cause a setback in the growth of this sector Low farm yields and inferior quality farm future breeds Irregular payment to banks against loans or defaults can cause banks for loaning. Unorganized marketing systems. Delayed establishment of processing industry can flush the milk in market. Imbalance between prices of inputs & outputs. High rate of interests with rising trend in cost of production. Lack of implementation of the latest farm management techniques. Lack of high quality semen and embryos and embryos transplant facilities. Lack of awareness about economics, demand & supply in market. Low saving, low holding capacity. Non-availability of subsidy, tax holidays.

Financial Highlights:
Project Investment:
The total cost of the business is Rs. 11,40,000. Account Head Land Building/Infrastructure Water Pump Maize Cutter Construction of Shed Animal Cost Cost of Chaff Cutter Misc Expenses Capital Cost Turnover: Rs. 18,00,000 Profit: Rs. 1,50,000 before drawings Break-even Point: Rs. 16,43,930 Source of funds: Own funds Rs.10,00,000 Total Cost (Rs) 2,00,000 10,000 30,000 40,000 20,000 8,00,000 30,000 10,000 11,40,000

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Forecast Profit and Loss Account:

Business: AH Cattle Farming Period: 1st Jan, 2010 to 31st Dec, 2010 Sales of Milk Direct Cost: Wages 50,000 Light/Heat 20,000 Total Direct Cost Gross Profit Fixed Cost: Animals Cost 8,00,000 Land 2,00,000 Building Cost 10,000 Water Pump 30,000 Maize Cutter 40,000 Construction of shed 50,000 Cost of chaff cutter 30,000 Cost of feed 4,00,000 Misc Expenses 20,000 Total Fixed Cost Net Profit Less: Drawings Profit Retained in Business 18,00,000 (A)

70,000 17,30,000

(B)

15,80,000 1,50,000 50,000 1,00,000

Break Even Point = (15,80,000 * 18,00,000) / 17,30,000 = 16,43,930 Rs

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Cash Flow Statement: Month Sales: Volume Value Receipts: Cash Sales Credit Sales Capital Introduce Total (A) Payments: Food Exp Wages/ Salaries Advertising Transport Repairs Total (B) Cash Balances: Cash Flow (A-B) Opening Balance Closing Balance Jan 10 10 40 50 10 5 3 5 5 28 22 22 Feb 10 10 10 10 5 2 5 22 (12) 22 10 Mar 15 15 15 10 5 1 5 21 (6) 10 4 Apr 15 15 15 15 5 5 5 30 (15) 4 (11) May 15 15 15 15 5 5 25 (10) (11) (21) June 20 20 20 15 5 5 25 (5) (21) (26) July 25 25 25 15 5 10 30 (5) (26) (31) Aug 30 30 30 20 5 10 35 (5) (31) (36) Sep 30 30 30 25 5 10 40 (10) (36) (46) Oct 30 30 30 25 5 15 10 55 (25) (46) (71) Nov 35 35 35 25 5 15 5 50 (15) (71) (86) Dec 35 35 35 25 5 15 45 (10) (86) (96) Total 270 270 40 310 210 60 5 90 25 390

(96)

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