Pre-Feasibility StudyQUAIL FARMING (40,000 Birds) Small and Medium Enterprise Development Authority Government of Pakistan www.smeda.org.pk HEAD OFFICE 6th Floor, LDA Plaza, Egerton Road, Lahore. Tel: (042) 111-111-456, Fax: (042) 6304926-27
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[email protected] May,2009 Pre-feasibility Study Quail Farm (40,000 Birds) TABLE OF CONTENT 1. 2 INTRODUCTION TO SMEDA ............................................................................................. 4 PROJECT PROFILE ............................................................................................................. 4 2.1 2.2 2.3 2.4 2.5 2.6 3 PROJECT BRIEF ................................................................................................................ 4 FEATURES OF QUAIL MEAT AND EGGS .............................................................................. 5 PRESERVATION METHODS ................................................................................................ 5 OPPORTUNITY RATIONALE ............................................................................................... 6 TOTAL PROJECT COST ...................................................................................................... 6 PRODUCTION CAPACITY ................................................................................................... 6 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT.............. 7 3.1 3.2 3.3 3.4 STRENGTHS...................................................................................................................... 7 WEAKNESSES ................................................................................................................... 7 THREATS ......................................................................................................................... 8 OPPORTUNITIES................................................................................................................ 8 4 CURRENT INDUSTRY STRUCTURE................................................................................. 9 4.1 4.2 4.3 GLOBAL PERSPECTIVE ...................................................................................................... 9 LOCAL PERSPECTIVE ...................................................................................................... 10 MAJOR PLAYERS ............................................................................................................ 13 5 FARM MANAGEMENT...................................................................................................... 14 5.1 PROPOSED QUAIL FARM .................................................................................................. 14 6 7 8 MARKETING ...................................................................................................................... 15 PRODUCT............................................................................................................................ 15 LAND & BUILDING............................................................................................................ 16 8.1 8.2 8.3 8.4 SPACE REQUIREMENT ..................................................................................................... 16 RECOMMENDED MODE FOR ACQUIRING LAND ................................................................ 16 SUITABLE LOCATIONS .................................................................................................... 16 INFRASTRUCTURE REQUIREMENT ................................................................................... 16 9 10 MANPOWER REQUIREMENTS ....................................................................................... 17 TECHNOLOGY ................................................................................................................... 17 10.1 10.2 MACHINERY & EQUIPMENT REQUIREMENT ..................................................................... 17 MACHINERY SUPPLIERS .................................................................................................. 18 11 FINANCIAL FEASIBILITY................................................................................................ 18 11.1 11.2 11.3 11.4 PROJECT COST ............................................................................................................... 20 INCOME STATEMENT ...................................................................................................... 21 BALANCE SHEET ............................................................................................................ 22 CASH FLOW STATEMENT ................................................................................................ 23 12 KEY ASSUMPTIONS .......................................................................................................... 24 2 Pre-feasibility Study Quail Farm (40,000 Birds) DISCLAIMER The purpose and scope of this information memorandum is to introduce the subject matter and provide a general idea and information on the said area. All the material included in this document is based on data/information gathered from various sources and is based on certain assumptions. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. SMEDA does not assume any liability for any financial or other loss resulting from this memorandum in consequence of undertaking this activity. Therefore, the content of this memorandum should not be relied upon for making any decision, investment or otherwise. The prospective user of this memorandum is encouraged to carry out his/her own due diligence and gather any information he/she considers necessary for making an informed decision. The content of the information memorandum does not bind SMEDA in any legal or other form. 3 Pre-feasibility Study Quail Farm (40,000 Birds) 1. INTRODUCTION TO SMEDA The Small and Medium Enterprise Development Authority (SMEDA) was established with the objective to provide fresh impetus to the economy through the launch of an aggressive SME support program. Since its inception in October 1998, SMEDA had adopted a sectoral SME development approach. A few priority sectors were selected on the criterion of SME presence. In depth research was conducted and comprehensive development plans were formulated after identification of impediments and retardants. The all-encompassing sectoral development strategy involved recommending changes in the regulatory environment by taking into consideration other important aspects including financial aspects, niche marketing, technology up gradation and human resource development. SMEDA has so far successfully formulated strategies for sectors including, fruits and vegetables, marble and granite, gems and jewelry, marine fisheries, leather and footwear, textiles, surgical instruments, urban transport and dairy. Whereas the task of SME development at a broader scale still requires more coverage and enhanced reach in terms of SMEDA’s areas of operation. Along with the sectoral focus a broad spectrum of business development services is also offered to the SMEs by SMEDA. These services include identification of viable business opportunities for potential SME investors. In order to facilitate these investors, SMEDA provides business guidance through its help desk services as well as development of project specific documents. These documents consist of information required to make well-researched investment decisions. Pre-feasibility studies and business plan development are some of the services provided to enhance the capacity of individual SMEs to exploit viable business opportunities in a better way. This document is in the continuation of this effort to enable potential investors to make well-informed investment decisions. 2 2. 1 PROJECT PROFILE Project Brief The quail farming is a project of livestock sector, in which, the day old chicks (DOCs) are raised on high protein feed for a period of 28 days. Quail meat is the good source of animal protein available in the country as compared to broiler. The time required for rearing quail birds is lesser than that for large animals as well as broilers. The consumption of white meat is increasing due to growing health consciousness in the masses. Annually, 11 flocks of birds will be reared on the same premises of the farm. Quails are sold to traders and the whole seller markets in the urban areas. Quails meat is also sold directly to the hotels inside the country. This unit will work for the production of quails. These birds are marked for meat purpose to the common masses. The quail chicks will be purchased from private hatchery. A flock of 40,000 commercial broiler chicks will be bought monthly, 10,000 DOCs per week. The chicks will be set in brooding on litter floor providing specific requirement 7 days and then finishing phase from 21 days. The entire specific 4 Pre-feasibility Study Quail Farm (40,000 Birds) requirement will be met by temperature control, feeding and drinking system, which will be monitored by the concerned staff. After marketing of broiler at 28th day of age the quail house will be given 3 days for the preparation to receive the new flock. During this week, proper cleaning, washing, white washing, disinfection and fumigation will be performed prior to the arrival of the new flock. During flock rearing, strict measures for bio-security will be observed at the unit. In the last ten years, the little known Japanese quail [Coturnix Japanica] has been introduced to the Pakistan as an alternative avian species in the progressing of poultry industry to mitigate chronic protein deficiency among the Pakistani population. The Japanese quails are now contributing to broiler and layer type commercial quails. An exclusive quail market segment has lately been growing within the poultry meat sector to cater to the quality conscious meat consumers. Now, quail meat is not only regarded as a restaurant delicacy but is also consumed in quantity by the public due to its affordable prices. Approximately, one out of every ten broiler chicken consumers opts for quail. Domesticated quails differ from wild Coturnix Japanica, which are protected under the Wild Life (Protection) Act in Pakistan. The introduction of the Japanese quail has opened a new path and an alternative for poultry farmers. Quail has also been identified worldwide as a laboratory animal because of its salient characteristics that include rapid growth, early sex maturity, short generation interval and prolificacy in egg production. 2. 2 Features of Quail Meat and Eggs1 Quail meat is an ideal food and has no religious taboos. Japanese quails provide highly versatile muscle food. They are quickly replacing the chicken broiler due to high nutritive value and medicinal properties. Quail meat has less fat and fewer calories, forming an ideal food for health conscious consumers. Quail eggs and meat are renowned for being rich in vitamins, essential amino acids, unsaturated fatty acids and phospholipids, which are vital for human physical and mental development. Quail meat and eggs can be included in the diets of children, pregnant mothers and geriatric and convalescent patients. They are an essential part of the diet of socially and economically weaker sections of the society. 2. 3 Preservation Methods The shelf life of quail eggs and meat can be enhanced by preserving the products as egg and meat packed in plastic pouches. Quail meat and eggs are easily perishable due to their high water content and bacteria, moulds or yeasts cause spoilage, supported by enzymes. The methods employed include deprivation of water and sometimes oxygen, excess of salt, increased acidity or extreme cold or heat. The modern quail meat will be welcomed as a meat variety of superior quality, tenderness and flavor. Considering the changing demands of avian meat consumers, 1 www.medallaquailfarm.multiply.com 5 Pre-feasibility Study Quail Farm (40,000 Birds) the industry is striving to produce quails weighing 200 grams at marketing age (28 days). This modern variety of quail can be used for the production of cutlets, fingers, noodles, soup powder and egg puff. It is not an exaggeration to state that quails will occupy a considerable portion of the poultry market in the days to come. 2. 4 Opportunity Rationale Broiler meat is the cheapest source of animal protein available in the country. The time required for raising broiler birds is lesser than that for big animals. The consumption of white meat is increasing due to growing health consciousness in the masses. According to the Agriculture Statistics of Pakistan the per capita consumption of poultry meat is increasing at a rate of 4% per annum. The existing daily availability of protein quantity per capita in Pakistan deriving from animal source including beef, mutton, poultry and fish combined amounts to 11 grams. This is far less than the recommended daily dietary protein allowance from animal source of 26 grams according to the World Health Organization standards. Figure 2-1: Daily Protein Consumption Recommended Daily Dietary Protein Allowance Vs Existing Availability 1991-2000 30 25 Grams 20 15 10 5 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Available per Day Recommend Daily Dietary Allowance 2. 5 Total Project Cost A Quail Farm with a population of 40,000 birds established in a purpose-built shed will need a capital investment of about Rs 2,410,905 million for construction and purchasing farm machinery and equipment. In addition to this, a sum of Rs 976,025 million is required as working capital, which will be used for purchasing day old chicks and raw material (feed & vaccines) etc. 2. 6 Production Capacity In this pre-feasibility study, all the calculations have been based on a flock size of 40,000 quails, with raising approximately 11 flocks per year. There will be a lag time of 3 days for cleaning and fumigation of the farm. 6 Pre-feasibility Study Quail Farm (40,000 Birds) 3 Crucial Factors & Steps in Decision Making for Investment Before making the decision, whether to invest in this project or not, one should carefully analyze the associated risk factors. A SWOT analysis can help in analyzing these factors which can play important role in making the decision. 3. 1 Strengths Quails have more immunity in their blood as compared to chicken therefore viral disease cannot affect them. There are also very less chances of bacterial diseases attack in them. Vaccination is not needed and the drugs usually given to chickens do not have to be added to quail feed or drinking water. For meat production, the time is even shorter. In 28 days quail meat is ready for market. A quail egg is hatched in just 16 days and the hen is ready to lay eggs after 41 days. Nutrition-wise, quail meat is a source of economical protein for malnourished children. It fulfills 28% protein requirement which is much higher than chicken which fulfills only 18% protein requirement. Quail meat is dry meat so it contains 0% cholesterol in it. It has less fat and fewer calories, forming an ideal food for health conscious consumers. Quail eggs and meat are renowned for being rich in vitamins, essential amino acids, unsaturated fatty acids and phospholipids, which are vital for human physical and mental development. Quail meat and eggs can be included in the diets of children, pregnant mothers and geriatric and convalescent patients. Quails can be farmed easily as Indo-Pak environment is very suitable for them. 11 flocks of quails are ready every year for market as compared to 6 flocks of chicken per year. Price of quail’s DOC & feed is lesser than price of chicken DOC & feed. Like this its profitability ratio is higher than chicken. Weaknesses Proper quail feed is not manufactured in Pakistan yet. Quails mortality rate is higher than chicken. Grand Parent technology is not introduced in Pakistan yet. It is required that government should take measures in developing breed or help in import of it, so that production could be increased & demand can be fulfilled inside the country. Quality quails should be produced for export purpose as quails which are produced in Pakistan are of less weight i.e. 150 grams and for export purpose quail weighing 250 to 300 grams is required. Quail demand would be less in summer but its production increases in summer. 7 3. 2 Pre-feasibility Study 3. 3 Threats Quail Farm (40,000 Birds) 3. 4 The cost of production in Pakistan is comparatively high. The structure of the industry is changing with many urban units moving to rural areas in an effort to lower the cost of production while the rural sector is becoming more commercial. Seasonal variation in demand remains a major problem that makes the rate fluctuation a normal process. In summer when there is less demand, production of quail is higher & in winter demand is more and production is less. Political instability can affect the business and because of it could be closed down. Opportunities Government has provided following incentives to increase livestock and poultry production in the country: Regulatory measures include allowing import of high yielding animals, semen and embryos for crossbreeding, expansion/improvement and modernization of laboratory facilities to diagnose and treat livestock diseases; introduction of mobile animal health service to provide diagnostic services at the door steps of farmers, duty free import of veterinary dairy and livestock machinery/equipment, not manufactured in the country. Government has allowed import of Incubators, Brooders, Evaporation cooling pads, cooling system, Grain storage silos for poultry, poultry equipments, milk and meat processing machinery/equipment (not manufactured locally), at zero percent custom duty. Private sector has imported milk and meat processing machinery/equipment worth of Rs 285 million2 during July-March, 2007-08. In order to reduce input costs in poultry production, poultry vaccines, feed additives, coccidiostats, Growth promoters premixes, Vitamin premixes, Fish feed, Zinc sulphate, Copper sulphate used in poultry feed has been zero-rated. Sales tax exemption has been allowed to un-cooked poultry meat; processed milk, yogurt, cheese flavored milk, and butter cream. In addition, poultry, vaccines, feed additives and coccidiostats used in poultry feed manufacturing have been allowed at zero percent custom duty. It’s a daily kitchen item and in few areas in Pakistan like Multan, quail meat and eggs are consumed on daily basis. If Grand Parent breed’s technology is imported by the help of Government than meeting demand inside the country and exports could be started easily. 2 Incentive to livestock promotion, Economic Survey 2007-2008 8 Pre-feasibility Study Quail Farm (40,000 Birds) 4 4. 1 CURRENT INDUSTRY STRUCTURE Global perspective There has been an increasing pressure on the livestock sector to meet the growing demand for high-value animal protein. The world’s livestock sector is growing at an unprecedented rate and the driving force behind this enormous surge is a combination of population growth, rising incomes and urbanization. Annual meat production is projected to increase from 218 million tones in 1997-1999 to 376 million tones by 20303. As diets become richer and more diverse, the high-value protein that the livestock sector offers improves the nutrition of the vast majority of the world. Livestock products not only provide high-value protein but are also important sources of a wide range of essential micronutrients, in particular minerals such as iron and zinc, and vitamins such as vitamin A. For the large majority of people in the world, particularly in developing countries, livestock products remain a desired food for nutritional value and taste. Table shows trends in per capita consumption of livestock meat in different regions and country groups. Table 4-1: Per capita consumption of live stock meat in different regions & company group4 Regions World Developing countries Near east & north Africa Sub- Saharan Africa* Latin America & the Caribbean East Asia South Asia Industrialized countries Transition countries * Excluding South Africa Meat ( kg per year ) 1964-1966 1997-1999 24.2 36.4 10.2 25.5 11.9 21.2 9.9 9.4 31.7 53.8 8.7 37.7 3.9 5.3 61.5 88.2 42.5 46.2 2030 45.3 36.7 35.0 13.4 76.6 58.5 11.7 100.1 60.7 In Spain there is a biggest quail farm producing 1.5 to 2.0 million birds daily. Most of the demand of Quail birds comes from Middle East countries. Poultry meat is supplied chiefly by chickens and turkeys, although quails, duck’s, geese, guinea fowl etc & other fowl contributes therefore poultry meat is economical and quick and easy to prepare and serve. Also it has a number of desirable nutritional properties. 3 4 WHO, Global & regional food consumption pattern. WHO, Global & regional food consumption pattern. 9 Pre-feasibility Study Quail Farm (40,000 Birds) Nutritionally people eat poultry meat for its high content of high quality protein and its low fat content. Quail and chicken meat is slightly higher in protein and slightly lower in fat than beef and other red meats. Additionally protein is rich source of al the essential amino acids. Table 4-2: Approximate composition (per 100 gm edible protein)5 Species Quail Broiler Turkey Duck 4. 2 Water 74.3 74.6 72.5 70.8 Proteins 13.1 12.1 13.7 12.8 Lipid 11.1 11.1 11.9 13.8 CHO 1.4 1.2 1.1 1.4 Minerals 1.1 1.0 0.8 1.2 Cholesterol 0 75mg 0 0 Local perspective Livestock accounts for 52.2 percent of agricultural value added, contributes 11 percent to GDP and affects the lives of 30 – 35 million people in rural areas6. It is highly labour intensive and if proper attention is given to this sector, it will not only absorb more rural workforce but also help alleviate rural poverty in Pakistan. Realizing its importance to rural poverty reduction, the government has started giving some attention only during the last two years. It is in this perspective that livestock development policy and poultry development policy have been put in place. Poultry sector is one of the most vibrant segments of agriculture sector of Pakistan. This sector generates employment (direct/indirect) and income for about 1.5 million people. Poultry meat contributes 19 percent of the total meat production in the country. The current investment in Poultry Industry is about Rs 200 billion. Poultry sector has shown a growth of 8-10 percent annually.7 More than 70 per cent production cost for poultry is incurred in feed prices. Poultry feed prices have gone up by 22 per cent in 2007-2008. In coming days, it is expected that feed prices would increase further. Wheat and rice are the two major poultry feed ingredients. Wheat contributes about 50 per cent in the manufacturing of various types of poultry feeds for layers, broilers and breeders while rice is the major ingredient. Soybean constitutes 25 per cent of the poultry diet. Its price has increased by 100 per cent in one year.8 The production of domestic/rural & commercial and rural poultry and products for last three years is given below: 5 6 www.pakissan.com (poultry industry & poultry products- basic for good nutrition) Economic Survey of Pakistan 2007-2008 7 Economic Survey of Pakistan 2007-2008 8 Economic Survey of Pakistan 2007-2008 10 Pre-feasibility Study Table 4-3: Domestic / Rural & Commercial Poultry 9 Type Domestic poultry Cock Hens Chicken Eggs Meat Duck, drakes & ducklings Eggs Meat Commercial poultry Layers Broilers Breeding stocks Day old chicks Eggs Meat Total poultry Day old chicks Poultry birds Eggs Poultry meat Million No’s = = 000 Tons Million No’s = = = = 000 Tons Units Million No’s = = = = 000 Tons Million No’s = 000 Tons 2005-2006 Quail Farm (40,000 Birds) 2006-2007 74.02 8.84 34.84 30.34 3484 96.54 0.67 29.85 0.91 24.82 370.70 7.25 387.20 6682 456.95 387.20 477 10197 554 2007-2008 75.11 9.08 35.47 30.57 3547 98.45 0.67 29.85 0.91 26.56 407.77 7.61 425.92 7136 501.30 425.92 518 10712 601 72.95 8.61 34.23 30.12 3423 94.67 0.70 31.14 0.95 23.20 337.00 6.90 352.00 6258 416.55 352.00 441 9712 512 The government has allowed import of vaccines, feed additives and coccidiostats used in poultry feed manufacturing at zero per cent customs duty but it is not sure that these incentives would positively affect feed prices. Though this industry is a source of food and employment for million of people, but is facing a major impediments in its progress in the form of heat stress. Pakistan is a tropical country and during summer the temperature reached up to 40oC. Even the average temperature remains well beyond the higher side of thermo neutral zone for the greater part of the year. Their business is also adversely affected for four long months due to severe environment. During this period they have to either continue their flock compromising with poor performance in feed intake, growth rate, weight gain, FCR in broilers quails along with mortality or they have to totally close their 9 MINFAL (Livestock Wing) 11 Pre-feasibility Study Quail Farm (40,000 Birds) business to avoid all these risks. This situation creates severe shortage of poultry meat which is the cheapest and easily available source of animal protein. The generation line of broiler comes from pure line, which is imported. This produces grand parents for parent stocks and parent stock end up in producing the final product. The farmers get day old broiler quails from hatcheries. These hatcheries maintain their breeder farms, or in some cases, purchase their hatching eggs from breeder farms. These breeder farms depend on producers of parent stock. Poultry feed mills are the major player in the poultry industry, which produce a specific formula feed mix. Poultry feed consists of rich protein elements like grains, gluten, blood meal, fishmeal and soybean meal. The major component of cost of production of chicken meat accounts for feed cost. The poultry meat production has showed a growing trend over the past few years after a dip in 1997 due to the ban imposed on wedding dinners. The meat production trend of chicken meat, beef and mutton from the year 1995-2006 is presented below. Figure 4-1: Meat Production Trends10 1400 1200 (000, Tons) 1000 800 600 400 200 0 1995 1996 1997 1998 1999 Beef 2000 2001 2002 2003 2004 2005 2006 Mutton Poultry Meat The per capita poultry meat production stood at only 7 kg as compared with 41 kg in the developed countries. The annual consumption of eggs, at 60-65 per head, was way below the average for developed markets, which stood at over 300, meaning there was still great scope for the home market to increase its consumption levels.11 10 11 Agricultural Statistics of Pakistan 2005-2006 Ministry of Fisheries and Livestock 12 Pre-feasibility Study Quail Farm (40,000 Birds) Table 4-4: Population of domestic poultry birds by Administrative units12 Administrative units NWFP Punjab Sindh Balochistan Pakistan Number of poultry birds 27,695,116 25,905,928 14,135,540 5,911,304 73,647,888 From last 30 yrs people are doing quail farming in Pakistan. They have also formed an association named ‘All Pakistan Quail Breeder & Traders Association’. Quail breeder company give imported breed to 50 poor families which are working as breeders and take eggs from them, after that they either sell the eggs or DOCs in the market or they process the DOC into adult quail and sell its meat in the market In Pakistan 1.0 to 1.5 million quail farming is done in total out of which 0.4 to 0.5 million quail farming is done Lahore. There are about 3,000 quail farms in Pakistan out of which 250 breeding and hatchery farms are in Lahore. DOCs is easily available in market for Rs. 5 in summer and Rs. 6 in winters. Quail eggs are also easily available in the market. There are lots of breeds of quail but the breeds which are most popular in Pakistan are: Coturnix Japanica (It gives one egg daily and its production & hatchability is more) Giant Quail Washington ( It has maximum quantity of meat in it) In Pakistan 50,000 to 100,000 birds are consumed daily. In summer consumption is less and in winter consumption is more. Major clients in Lahore are Pearl Continental, Avari Hotel, Village, Ziafat, Zenith, Metro, Food Street, Tolinton Market, Supreme Court, Aiwan-e- Saddar & various 4 and 5 Star Hotels.13 4. 3 Major Players Name of Business & Suppliers Sadat Quail Breeding Farms & Hatchery Mr. Syed Asad Ali Rizvi Jumbo quail farm Prof. Dr. Muhammad Akram Addresses of Suppliers Near Sozo Water Park, Jallo, Lahore – 54000, Pakistan Ph no. 042-5069105, 042-6582013 Mob: 0300-4727214 ART Centre, UVAS Ferozpur Kasur Road, Lahore Mob: 0300-4238270 Major players of Quail farm industry are: 12 13 www.statpak.gov.pk All Pakistan Quail Breeder & Traders Association. President, Syed Asad Ali Rizvi 13 Pre-feasibility Study Gold Pak Poultry, Breeding Farms & Hatcheries Mr. Shahzad Ahmed Zafar Breeding Farm Mr. Zafar Neela quail breeding farm & hatchery Mr. Kaleem Quail Farm (40,000 Birds) 4-A Faisal Park, Main Road, P.O, Baghbanpura, Lahore ph no. 042-6862812, 042-6815967 Karachi Mob: 0300-2017668 Joda pull, Lahore Mob: 0321-4664093 5 Farm management Farm input required for a shed includes farm equipment (drinkers, feed trays, brooders, and feeders), electronic fixtures and other consumer items (feed, vaccines & medicines, rice-husk or saw-dust, water, electricity, etc.). 5. 1 Proposed quail farm This unit will work for the production of quails. The quail chicks will be purchased from private hatchery. A flock of 10,000 day old quail chicks will be bought every week. The chicks will be set in brooding on litter floor providing specific requirement during 28 days. The entire specific requirement will be met by feeding and nipple drinking system, which will be monitored by the concerned staff. After marketing of quails at 28th day the quail house will be given 3 days for the preparation to receive the new flock. During these days, proper cleaning, washing, disinfection and fumigation will be performed prior to the arrival of the new flock. During flock rearing, strict measures for bio-security will be observed at the unit. The following practices starting from arrival to marketing of quail will be performed under the supervision of an expert by which Quail farmers can protect there flocks from 80% diseases and can improve there farm management: Sanitation and disinfection program will be strictly followed during and after the completion of one flock. Drinkers should be washed daily and feed trays should be washed atleast once in a week. Quail chicks should be given enough space according to their age as less space could give rise to different complexities. Feed should not be stored for long time as it would lose its nutrition & there is a chance that feed would get fungal and by eating such feed poisonous matter starts penetrating inside the quail chick. Quail chicks should be kept in separate place from adult quails as there is chance that different diseases could be transferred from adult quails to quail chicks. By keeping them separate, quail chicks immunity would increase with the passage of time. If same worker is employed to take care of chicks and adult quails then that worker should start his daily work from chicks to adult flocks so that their would be lesser chances of diseases spread among flocks. On quail farm it should be strictly prohibited for employees to keep there own quails or any other birds so that disease spread should be controlled. 14 Pre-feasibility Study Quail Farm (40,000 Birds) 6 MARKETING The marketing of chickens follows the traditional channels of distribution. Generally, broilers are distributed in the market through middlemen (Arti) and wholesalers. The role of Arti is to identify a farm and negotiate the price. In some cases, the middleman provides Day Old Chicks and other farm inputs (feed, etc.) to the broiler farmers and then agrees to buy back the mature birds from them. Birds are transported to the urban market and are sold to retailers or market-street poultry shops. Birds are sold on live-weight basis. The time spent in getting broilers from the farm to the retail shop is brief. Although collection and handling of birds has improved with the use of loader vehicles, but it is an established fact that greater the distance between the poultry producer and consumer, more complicated is the marketing system including their collection, handling and transportation to the consumer or processing plants. The processing plant produces dressed quail (slaughtered and cleaned). However, a very small amount of dressed quail is available in the local retail market. The integrated processing units distribute frozen and dressed quail packed in whole or cut-ups to the consumer through retail shops under their brand names. Most of the demand comes from Multan, Karachi, Gujranwala, Lahore & Islamabad. The trick in marketing is quick availability of market information of quail supply and demand, which will determine the selling price. 7 PRODUCT This project will generate revenue from sale of quails. Assumptions used for the product mix are as follows: Table 7-1: Product Mix Product Quail Avg. Live Weight 110 grams Sales Price per bird Rs. 17 Table 7-2: Production Assumptions: Number of Flocks per year Number of Birds per Flock Number of Sheds Time required per Flock (Days) Lag time required per Flock (Days) Total Annual Production Capacity Average weight per bird (gms) Shed Space Required per Bird (Sq.ft.) Sale price growth rate Production capacity utilization 15 11.25 40,000 8 28 3 450,000 110.00 0.14 10% 100% Pre-feasibility Study Quail Farm (40,000 Birds) 8 8. 1 L AND & B UI L DI NG Space Requirement The land requirement for this proposed project is 1.5 kanals which would cost Rs.300,000. Details for civil works are as follows: Table 8-1: Infrastructure Details Description Shed Space - Ground Floor Feed Store Rooms for Guard and Workers Office block Wash rooms Pavement/driveway Grounds Total Building Infrastructure 8. 2 Area (sq.ft.) 5,600 150 120 120 75 320 1,916 8,301 Cost (Rs. / sq.ft.) 250 250 300 500 500 Total 1,400,000 37,500 36,000 60,000 37,500 1,571,000 Recommended Mode for Acquiring Land It is recommended that the proposed project should be started on a purchased land. 8. 3 Suitable Locations Most suitable location for opening quail farm is Punjab & Sindh. Quail farms should not be opened in cold areas. Suburban and rural areas around the major cities of the country are also suitable for setting up a poultry farm. Setting up a farm at an isolated place will minimize the risk of disease. Proximity of the farm to the city enables the farmer to have a quick communication with the market for the purchase of Day Old Chicks, farm inputs (feed, etc.), and selling of mature birds. 8. 4 Infrastructure Requirement Quail farming needs to be handled tactically, right from the selection of the site to the final stage when the birds are sold. The farm should be located at a place where transportation of birds and feed can be handled easily. The entrepreneur should make sure that the following things are available at the farm site before setting up the farm: Electricity connection Drinking quality water 16 Pre-feasibility Study Quail Farm (40,000 Birds) 9 MANPOWER REQUIREMENTS The personal needed for the farm is as under: Table 9-1: Actual Human Resource Description Supervisor Houseman Watchman Total No. 1 2 3 6 Salary per month 15,000 6,500 7,000 28,500 Total Salary 15,000 13,000 21,000 49,000 10 TECHNOLOGY 10.1 Machinery & Equipment Requirement Various types of farm equipment are needed for feeding, drinking and handling the birds. List of farm equipment, which will be needed, is as under: Table 10-1: Machinery Details Description DOC Drinker (40 drinkers, small, 1 ltr. Capacity) Feeders (40 feeders) Brooders Feed Grinders Adult Drinkers (25, 4ltr.) Buckets Total Machinery Cost Desert cooler Exhaust fan Generator set -3000 watts Fire extinguisher Total Machinery & Equipment Required Erection & installation Contingencies Total Machinery & Equipment Required (incl. Erection & Installation etc.) Unit Unit Cost Amount (PKR) 16,000 4,800 96,000 10,000 40,000 12,000 178,800 48,000 20,000 25,000 25,000 296,800 2,968 2,968 302,736 320 320 240 1 200 240 8 8 1 1 1% 1% 50 15 400 10,000 200 50 6,000 2,500 25,000 25,000 17 Pre-feasibility Study 10.2 Machinery Suppliers Rayvet Incorporation Mr. Hanif Rajput Mob: 0333-4211435 Quail Farm (40,000 Birds) Table 10-2: Office Equipment Description Computer Printer Telephone Sets Total Table 10-3: Office Furniture & Fixture Description Furniture Air Conditioners Total Qty. 1 1 Unit Rate 25,000 30,000 Total Cost 25,000 30,000 55,000 Qty. 1 1 2 Unit Rate 25,000 10,000 1,000 Total Cost 25,000 10,000 2,000 37,000 11 Financial Feasibility Total investment required for the project is Rs. 3,386,930 million. Equity portion of this investment will be 50%, i.e. Rs. 1,693,465. Debt required for the project is 50% i.e. 1,693,465. Table 11-1: Total Investment Investment Land Building/Infrastructure Machinery & equipment Furniture & fixtures Office equipment Pre-operating costs Working Capital Total Investment Table 11-2: Debt-Equity Split Initial Financing Debt – 50% Equity – 50% Total 18 Rs. In actual 1,693,465 1,693,465 3,386,930 Rs. 300,000 1,571,000 302,736 55,000 37,000 145,169 976,025 3,386,930 Pre-feasibility Study Table 11-3: Financial Viability Quail Farm (40,000 Birds) Project Internal Rate of Return (IRR) Payback Period (yrs) Net Present Value (NPV) 47% 2.93 6,115,524 19 Pre-feasibility Study Quail Farm (40,000 Birds) 11.1 Project Cost Capital Investment Land Building/Infrastructure Machinery & equipment Furniture & fixtures Office equipment Pre-operating costs Total Capital Costs Working Capital Raw material inventory* Cash Total Working Capital Total Investment Initial Financing Debt Equity * Raw material inventory based on per/flock approx. Rs. in actuals 300,000 1,571,000 302,736 55,000 37,000 145,169 2,410,905 Rs. in actuals 476,025 500,000 976,025 3,386,930 Rs. in actuals 1,693,465 1,693,465 20 Pre-feasibility Study Quail Farm (40,000 Birds) 11.2 Income Statement Revenue Cost of sales Cost of DOC Cost of Feed Operation costs 1 (direct labor) Medication & Disinfection Direct Exlectricity Operating costs 5 (direct gas) Total cost of sales Gross Profit General administration & selling expenses Administration expense Administration benefits expense Electricity expense Water expense Gas expense Travelling expense Communications expense (phone, fax, mail, internet, etc.) Office vehicles running expense Office expenses (stationary, entertainment, janitorial services, etc.) Professional fees (legal, audit, consultants, etc.) Depreciation expense Amortization of pre-operating costs Subtotal Operating Income Other income (interest on cash) Earnings Before Interest & Taxes Interest expense on long term debt (Project Loan) Interest expense on long term debt (Working Capital Loan) Subtotal Earnings Before Tax Tax NET PROFIT/(LOSS) AFTER TAX Year 1 8,100,000 Year 2 8,865,000 Year 3 9,706,500 Year 4 10,632,150 Year 5 11,650,365 Year 6 12,770,402 Year 7 14,002,442 Year 8 15,357,686 Year 9 16,848,454 Year 10 18,488,300 2,475,000 3,237,300 336,000 225,000 225,000 6,498,300 1,601,700 2,598,750 3,399,165 369,600 236,250 247,500 6,851,265 2,013,735 2,728,688 3,569,123 406,560 248,063 272,250 7,224,683 2,481,817 2,865,122 3,747,579 447,216 260,466 299,475 7,619,858 3,012,292 3,008,378 3,934,958 491,938 273,489 329,423 8,038,185 3,612,180 3,158,797 4,131,706 541,131 287,163 362,365 8,481,163 4,289,239 3,316,737 4,338,292 595,244 301,522 398,601 8,950,396 5,052,046 3,482,574 4,555,206 654,769 316,598 438,461 9,447,608 5,910,078 3,656,702 4,782,967 720,246 332,427 482,307 9,974,650 6,873,805 3,839,537 5,022,115 792,270 349,049 530,538 10,533,510 7,954,790 252,000 7,560 60,000 18,000 24,000 120,000 2,520 2,520 4,050 118,024 29,034 637,707 963,993 14,629 978,621 173,431 95,771 269,202 709,419 106,413 603,006 277,200 8,316 66,000 19,800 26,400 132,000 2,772 2,772 4,433 118,024 29,034 686,750 1,326,985 31,702 1,358,687 146,315 80,761 227,076 1,131,611 237,638 893,973 304,920 9,148 72,600 21,780 29,040 145,200 3,049 3,049 4,853 118,024 29,034 740,697 1,741,120 56,315 1,797,435 113,802 62,815 176,617 1,620,818 405,204 1,215,613 335,412 10,062 79,860 23,958 31,944 159,720 3,354 3,354 5,316 118,024 29,034 800,038 2,212,254 90,392 2,302,646 74,929 41,359 116,288 2,186,358 546,589 1,639,768 368,953 11,069 87,846 26,354 35,138 175,692 3,690 3,690 5,825 118,024 29,034 865,314 2,746,866 135,836 2,882,702 28,452 15,705 44,157 2,838,546 709,636 2,128,909 405,849 12,175 96,631 28,989 38,652 193,261 4,058 4,058 6,385 118,024 908,083 3,381,156 201,591 3,582,747 3,582,747 895,687 2,687,060 446,433 13,393 106,294 31,888 42,517 212,587 4,464 4,464 7,001 118,024 987,066 4,064,980 290,048 4,355,028 4,355,028 1,088,757 3,266,271 491,077 14,732 116,923 35,077 46,769 233,846 4,911 4,911 7,679 118,024 1,073,948 4,836,130 396,601 5,232,731 5,232,731 1,308,183 3,924,548 540,184 16,206 128,615 38,585 51,446 257,231 5,402 5,402 8,424 118,024 1,169,518 5,704,287 523,708 6,227,994 6,227,994 1,556,999 4,670,996 594,203 17,826 141,477 42,443 56,591 282,954 5,942 5,942 9,244 118,024 1,274,645 6,680,145 691,696 7,371,841 7,371,841 1,842,960 5,528,881 21 Pre-feasibility Study Quail Farm (40,000 Birds) 11.3 Balance Sheet Year 0 Assets Current assets Cash & Bank Accounts receivable Raw material inventory Total Current Assets Fixed assets Land Building/Infrastructure Machinery & equipment Furniture & fixtures Office equipment Total Fixed Assets Intangible assets Pre-operation costs Total Intangible Assets TOTAL ASSETS Liabilities & Shareholders' Equity Current liabilities Accounts payable Total Current Liabilities Other liabilities Long term debt Total Long Term Liabilities Shareholders' equity Paid-up capital Retained earnings Total Equity TOTAL CAPITAL AND LIABILITIES Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Rs. in actuals Year 10 259,210 476,025 735,235 300,000 1,571,000 302,736 55,000 37,000 2,265,736 145,169 145,169 3,146,140 716,030 665,753 524,818 1,906,601 300,000 1,492,450 272,462 49,500 33,300 2,147,712 116,135 116,135 4,170,449 1,397,441 697,192 578,611 2,673,244 300,000 1,413,900 242,189 44,000 29,600 2,029,689 87,101 87,101 4,790,034 2,356,874 763,212 637,919 3,758,006 300,000 1,335,350 211,915 38,500 25,900 1,911,665 58,068 58,068 5,727,738 3,669,233 835,835 703,306 5,208,374 300,000 1,256,800 181,642 33,000 22,200 1,793,642 29,034 29,034 7,031,049 5,386,533 915,720 775,395 7,077,648 300,000 1,178,250 151,368 27,500 18,500 1,675,618 8,753,266 8,052,888 1,003,593 854,873 9,911,354 300,000 1,099,700 121,094 22,000 14,800 1,557,594 11,468,948 11,283,673 1,100,254 942,497 13,326,423 300,000 1,021,150 90,821 16,500 11,100 1,439,571 14,765,994 15,156,382 1,206,581 1,039,103 17,402,065 300,000 942,600 60,547 11,000 7,400 1,321,547 18,723,612 19,757,452 1,323,540 1,145,611 22,226,603 300,000 864,050 30,274 5,500 3,700 1,203,524 23,430,127 26,355,634 1,452,195 27,807,829 300,000 785,500 1,085,500 28,893,329 1,452,675 1,452,675 1,693,465 1,693,465 3,146,140 531,133 531,133 1,375,945 1,342,845 1,693,465 603,006 2,296,471 4,170,449 559,954 559,954 1,118,000 1,039,635 1,693,465 1,496,979 3,190,444 4,790,034 590,449 590,449 809,596 731,232 1,693,465 2,712,593 4,406,058 5,727,738 622,724 622,724 440,864 362,499 1,693,465 4,352,361 6,045,826 7,031,049 656,895 656,895 (78,364) 1,693,465 6,481,270 8,174,735 8,753,266 693,085 693,085 (85,933) 1,693,465 9,168,331 10,861,796 11,468,948 731,429 731,429 (93,501) 1,693,465 12,434,602 14,128,067 14,765,994 772,067 772,067 (101,070) 1,693,465 16,359,150 18,052,615 18,723,612 815,154 815,154 (108,638) 1,693,465 21,030,146 22,723,611 23,430,127 757,044 757,044 (116,206) 1,693,465 26,559,027 28,252,492 28,893,329 22 Pre-feasibility Study Quail Farm (40,000 Birds) 11.4 Cash Flow Statement Year 0 Operating activities Net profit Add: depreciation expense amortization expense Accounts receivable Raw material inventory Accounts payable Cash provided by operations Financing activities Change in long term debt Issuance of shares Cash provided by / (used for) financing activities Investing activities Capital expenditure Cash (used for) / provided by investing activities NET CASH (476,025) (476,025) 1,452,675 1,693,465 3,146,140 (2,410,905) (2,410,905) 259,210 Year 1 603,006 118,024 29,034 (665,753) (48,793) 531,133 533,551 (76,730) (76,730) 456,821 Year 2 893,973 118,024 29,034 (31,438) (53,794) 28,821 939,355 (257,945) (257,945) 681,410 Year 3 1,215,613 118,024 29,034 (66,021) (59,308) 30,494 1,267,837 (308,403) (308,403) 959,434 Year 4 1,639,768 118,024 29,034 (72,623) (65,387) 32,275 1,681,092 (368,733) (368,733) 1,312,359 Year 5 2,128,909 118,024 29,034 (79,885) (72,089) 34,171 2,158,164 (440,864) (440,864) 1,717,300 Year 6 2,687,060 118,024 (87,873) (79,478) 36,191 2,666,355 2,666,355 Year 7 3,266,271 118,024 (96,661) (87,624) 38,343 3,230,784 3,230,784 Year 8 3,924,548 118,024 (106,327) (96,606) 40,638 3,872,709 3,872,709 Year 9 4,670,996 118,024 (116,959) (106,508) 43,087 4,601,071 4,601,071 Rs. in actuals Year 10 5,528,881 118,024 (128,655) 1,145,611 (58,110) 6,598,182 6,598,182 23 Pre-feasibility Study Quail Farm (40,000 Birds) 12 Key Assumptions Table 12-1: COGS Details: Description DOC (Day Old Chicks) (Rs.) Feed Conversion Ratio (FCR) i.e. Feed required to gain 1 Kg weight (Kgs.) Feed required per 1000 birds (50 Kgs bags) Feed Requirement/bird/day - Kg Vaccination. Medication and Disinfection Cost per Bird (Rs.) Feed Price per Bag (50 Kgs) Cost of Feed per Kg – Rs. Sales Price Rs. / bird Table 12-2: Other Assumptions Bird Mortality %age Administration benefits expense Traveling expense Communication expense Office expenses (Misc.) Professional fees (legal, audit, consultants, etc.) Building depreciation rate Machinery & Equipment depreciation rate Office Equipment depreciation rate Furniture & Fixtures depreciation rate 0.0% 3.0% 1.0% 1.0% 1.0% 0.05% 5% 10% 10% 10% % of COGS % of administration expense % of administration expense % of administration expense % of administration expense % of revenue % of Building Cost % of Machinery & Eqp. Cost % of Office equipment Cost % of Furniture & fixture Cost 5.5 2.73 6.00 0.01 1.00 1,200 24.00 17.00 24