1st Draft
Pre-Feasibility Study
RURAL POULTRY FARMING OF HIGH EGG PRODUCING SCAVENGER POULTRY
BREED OF NARC
A PROPOOR SMALL SCALE INTERVENTION
PAKISTAN AGRICULTURE RESEARCH COUNCIL ISLAMABAD
MINISTRY OF NATIONAL FOOD SECURITY AND RESEARCH
Government of Pakistan
www.parc.gov.pk
January 2014
Contents
1. DISCLAIMER.......................................................................................................................................3
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2. PURPOSE OF THE DOCUMENT.......................................................................................................4
3. INTRODUCTION TO SCHEME..........................................................................................................4
5. EXECUTIVE SUMMARY...................................................................................................................5
6. BRIEF DESCRIPTION OF PROJECT.................................................................................................5
7. CRITICAL FACTORS..........................................................................................................................5
8. INSTALLED AND OPERATIONAL CAPACITIES............................................................................6
9. GEOGHRAPHICAL POTENTIAL FOR INVESTMENT...................................................................6
10. POTENTIAL TARGET MARKET.....................................................................................................6
11. PRODUCTION PROCESS FLOW.....................................................................................................7
12. PROJECT COST SUMMARY............................................................................................................8
12.1: Project Economics............................................................................................................................8
12.2: Project Financing..............................................................................................................................9
12.3: Project Cost......................................................................................................................................9
12.4: Space Requirement...........................................................................................................................9
12.5: Machinery and Equipment.............................................................................................................10
12.6: Raw Material Requirements...........................................................................................................11
12.7: Human Resource Requirement.......................................................................................................12
12.8: Revenue Generation.......................................................................................................................12
13. CONTACTS – SUPPLIERS, EXPERTS / CONSULTANTS...........................................................13
14. ANNEXURES...................................................................................................................................14
15: KEY ASSUMPTIONS......................................................................................................................15
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1. DISCLAIMER
This information memorandum is to introduce the subject matter and provide a general idea and
information on the subject. Although, the material included in this document is based on data /
information generated from experiments and field testing by a team of relevant scientists; however, it is
based upon certain assumptions which may differ from case to case. The contained information may
vary due to any change in any of the concerned factors, and the actual results may differ accordingly
from the presented information. The PARC and its employees do not assume any liability for any
financial or other loss resulting from this memorandum in consequence of under taking this activity.
The prospective user of this memorandum is encouraged to contact qualified consultant/technical
expert, especially designated focal person(s) of this enterprise for reaching to an informed decision.
2. PURPOSE OF THE DOCUMENT
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The purpose of this document is to facilitate potential investors in INTERVENTION FOR
EMPOWERING POOR RURAL WOMEN BY REARING HIGH EGG PRODUCING SCAVENGER
POULTRY BREED by providing them with a general understanding of the business, with the
intention of supporting potential investors in crucial investment decisions. The project pre-
feasibility may form the basis of an important investment decision and in order to serve this
objective, the document/study covers various aspects of project concept development,
start-up, production, finance, and business management. The need to come up with pre-
feasibility reports for undocumented or minimally documented sectors attains greater
imminence as the research that precedes such reports reveal certain thumb rules; best
practices developed by existing enterprises by trial and error, certain industrial norms and
well established research findings that become a guiding source regarding various aspects
of business set-up and it’s successful management. Apart from carefully studying the whole
document, one must consider critical aspects provided later on, which form the basis of
investment decisions.
3. INTRODUCTION TO SCHEME
Prime Minister’s Youth Business Loan Programme, for young entrepreneurs, with an allocated budget
of Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidized financing at 8% mark-up per
annum for one hundred thousand (100,000) beneficiaries, through designated financial institutions,
initially through National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL). Loans from
Rs. 0.1 million to Rs. 2.0 million with tenure up to 8 years inclusive of 1 year grace period, and a debt:
equity of 90: 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh,
Khyber Pakhtunkhwa, Balochistan, Gilgit-Baltistan, Azad Jammu & Kashmir and Federally
Administered Tribal Areas (FATA).
5. EXECUTIVE SUMMARY
In livestock sector the poultry production has its own impact and value on the overall livestock market
and in the GDP contribution. By enhancing poultry production in the form of eggs and meat production
ultimately the per capita requirement of the protein in the country has been bridged markedly. Poultry
production is considered to be one of the most efficient and economical system of production of animal
protein. In Pakistan Poultry has been playing a vital role in bridging the gap between supply and
requirement of animal protein food of high biological value. Our poultry production is mostly
dependent on exotic commercial lines but still our indigenous poultry at small scale level contribute
32% share to our national requirement of eggs and 15 % share to meat production. Our indigenous
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poultry possesses bright prospects for future development in view of easy and abundant availability of
all the requisite inputs such as land, labor and feed resources in rural areas and lower cost of
production as compared to commercial poultry. The need is to improve our indigenous poultry breed
because the Indigenous chickens have the advantage of being well adapted to the local environmental
conditions (hot cold humid dry and rainy weather) and can live as a scavenger bird and can be reared at
a low cost. PARC has the initiative in this scenario that PARC has developed a new crossbred having
the ability to live as a scavenger bird and lay more eggs as compare to our pure indigenous poultry
breeds. As the conventional system is going on the women keep the local breed in backyard poultry
rearing system and sale eggs in the village and earn money for them. Here PARC intervention for
women empowering is, instead of rearing the pure indigenous breed that lays not more the 70-80 eggs
per year why one should not keep the newly developed high egg producing crossbred chicken that can
lay 170- 180 eggs in a year in the same backyard poultry rearing system. This kind of practical model
already been established in the National Agricultural Research Centre (NARC) and the 15 days old
high egg producing crossbred chick are being supplied to different areas of Pakistan. If the
entrepreneur is near by the federal territory then the chicks can be purchased from the NARC. The 15
days old high egg producing cross bred chick can be supplied to far for long areas of Pakistan at the
rate of rupees sixty only. Due to its good egg production in comparison with the desi or local breeds of
poultry, people love to rear this breed, and already PARC have a farmers list benefiting from our
crossbred. The poor rural women can purchase the chicks from NARC and will rare the chicks up to 6
months of age at partial feeding. Only 25% commercial feed will be given to chicks up to 6 months and
remaining feeding will be done by kitchen waste and by leaving the birds as a scavenger. At the age of
six months the cockerels from the flock will be sold out at the rate of Rs. 300/- per cockerel and the
hens will be kept for the egg production for next one year. The feeding will be increased during the
laying period up to sixty percent of total feeding. The eggs will be sold to the local market and the
women will start earning gradually. By keeping good quality chicks the poor rural women will earn
more than before she will be earning by having more eggs in one year. After one year the female hens
will be sold out at the rate of Rs. 100/= per bird and the new flock will be reared for next cycle. Further
breeding is discouraged in this system and cockerel sholud not keep with the hens to achieve the
objective of having good quality eggs and discouraging uneven breeding practice. This model of
rearing high egg producing chicks can be applied to all five provinces of Pakistan (Sindh, Punjab,
Balochistan and Khyber pakhtunknwa, Gilgit baltistan and AJK). This idea has been generated for a
viable business because already the conventional rural poultry farming is practicing in rural area. By
doing this project one can earn better with less resources and better output. .
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High egg producing chick production is considered for empowering women in rural poultry farming
business in this project pre-feasibility. This business is proposed to be located primarily in rural areas
of Pakistan. All the prospects of high egg producing crossbred chicks rearing, egg laying capacity,
disease resistance studies, climate resistance studies and marketing have been studied at Poultry
Research Section, Animal Products Improvement Program, Animal Sciences Institute (ASI), National
Agricultural Research Centre (NARC), Islamabad.
6. BRIEF DESCRIPTION OF PROJECT
Following key parameters must be addressed as per pre-feasibility study:
• Techniques: The high egg producing crossbred chicks will be purchased from NARC and will the
chicks will be reared up to six months of age at partial feeding. Only 25% commercial feed will be
given to chicks up to six months and remaining feeding will be done by kitchen waste and by leaving
the birds as a scavenger. At the age of six months the cockerels from the flock will be sold out at the
rate of Rs. 300/- per cockerel and the hens will be kept for the egg production for next one year. The
feeding will be increased during the laying period up to sixty percent of total feeding. The eggs will be
sold to the local market and the women will start earning gradually. By keeping good quality chicks the
poor rural women will earn more than before.. After having the successful laying period of hens i.e
almost one year the female hens will be sold out at the rate of Rs. 100/= per bird and the new flock will
be reared for next cycle. Further breeding is discouraged in this system and the cockerel should not
keep with the hens to achieve the objective of having good quality eggs and discouraging uneven
breeding practice.
• Location: The business can be initiated in any province (Sindh, Punjab, Balochistan, Khyber
Pakhtunknwa, Gilgit Baltistan and AJK) in hot or cold environment. It is preferable if the site is close
to main road reaching there for the easy transportation of chicks and feed bags to the site. The birds can
live as a scavenger but in early stage of life the care from the domestic and wild animal must be
provided to save the asset in the form of chicks. The site must be close to the living area so one can
easily watch the birds.
• Product: The product in this business will be cockerels at 6-months of age which will be used for
meat purpose and then after 6-months the eggs from the laying hens. The eggs will be sold in the
market or in the rural area and this will be the main source of earning. This idea has been generated for
a viable business because already the conventional rural poultry farming is practicing in rural area. By
doing this project one can earn better with less resources and better output.
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• Target Market: The target market is every one in that rural area or that particular place. People love
to eat desi cockerel in the villages so it can be sold at a good price.
• Employment Generation: In this business the rural women who will own this business is the
manager and the workers. But as the business will grow up the workers can be accommodated in this
business.
7. CRITICAL FACTORS
The commercial viability of the proposed project depends on the following factors:
• Rural women can run this business in a better way so women in this business idea are
critical.
• More successive business can be run in the areas where the temperature does not go very
high and very low.
• Selection of the good variety or breed of the poultry for egg and meat production.
• Very hot humid weather is not preferable as the egg storage will be critical.
• Farm should have strong market linkages for effective disposal of produce.
8. INSTALLED AND OPERATIONAL CAPACITIES
This pre-feasibility suggests that one should have one only 400 sq. ft. area for keeping 200 poultry
birds and 36 sq. ft. for feed storage. In this business the installed capacity depends on the rural women
setup if the sheds are already constructed then the installed capacity will be according to that shed
space but according to the pre-feasibility it has been suggested only 400 sq. ft. for 200 birds. If you one
have the installed capacity for 400 birds then no matter the entrepreneur can adjust the operational
capacity according to the need or the loan he/she is applying for. For Installed capacity may more than
the operational capacity and for the suggested feasibility only 36 sq. ft. is required. The rooms can be
constructed with low cost material. The material of the construction should be used in a way that it
should be re-useable and cheaper in price. Only the technical thing is the shed should be well
ventilated. The major cost in this enterprise will be the construction of the production area, feed store.
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9. GEOGRAPHICAL POTENTIAL FOR INVESTMENT
Any geographical location is the potential site for the rural poultry or backyard poultry farming,
especially for empowering women. Preferable areas are where the climate is relatively stable. The
extreme weather areas are less preferable as the labor increases in extreme cold and hot weather.
Regions of Balochistan, Punjab, Sindh, Khyber Pakhtunkhuwa, Gilgit Baltistan and AJK all are
preferable sites for the business.
10. POTENTIAL TARGET MARKET
The target market is every one in that rural area or that particular place. People love to eat desi cockerel
in the villages so it can be sold at a good price. When the production process increase the supply of
cockerels and eggs can be spread to the nearest cities and around.
11. PRODUCTION PROCESS FLOW
The high egg producing crossbred chicks will be purchased and reared up to six months of age at
partial feeding. Only 25% commercial feed will be given to chicks up to six months and remaining
feeding will be done by kitchen waste and by leaving the birds as a scavenger. At the age of six
months the cockerels from the flock will be sold out and the hens will be kept for the egg production
for the next one year. The feeding will be increased during the laying period up to sixty percent of total
feeding. The eggs will be sold to the local market and the women will start earning gradually. After
having the successful laying period of hens i.e almost one year the female hens will be sold out and the
new flock will be reared for next cycle. Further breeding is discouraged in this system and the cockerel
should not keep with the hens to achieve the objective of having good quality eggs and discouraging
uneven breeding practice.
12. PROJECT COST SUMMARY
A detailed financial model has been developed to analyze the hatching eggs in hatcheries and chick
production at small scale benefitting the local population of that particular area through Prime
Minister’s Small Business Loan Scheme. Various cost and revenue related assumptions, along with
results of the analysis, are outlined in this section.
12.1: Project Economics
All figures in the financial model have been calculated for 38400 day old chicks. The following table
shows internal rates of return and payback period.
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Table 1. Project Economics
Description Details
Net Present Value (NPV) 101203
Benefits Cost Ratio (BCR) 1.31
Internal Rate of Return (IRR) 28%
Payback Period (years) 3.8
Factors that influence the profitability of this business is good farm management, quality of inputs,
good marketing practice and environmental factors.
Following requirements have been identified for operations of the proposed business.
Table 2. Total Project Cost
Capital Investment Amount (rupees)
Construction of shed 30000
Equipments 4762
Total Capital Cost 34762
The results in the tables show that the net present value, internal rate of return and benefit cost Ratio.
Returns on the business and its profitability are highly dependent on experience, suitable location and
good technical practices. The project will not be able to cover the potential demand of consumers and
recover payments, if these factors are not efficiently managed and will also lead to increased operating
cost.
12.2: Project Financing
Following table provides details of the equity required and variables related to bank loan;
Table 2: Project Financing
Description Details
Total own equity (0%) 11111
Bank Loan 100000
Markup to the Borrower(%age/annum) 8%
Tenure of the loan 8
Total own equity (0%) 11111.2
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12.3: Project Cost
Following requirements have been identified for operations of the proposed business.
Table 3: Project Cost
Capital Investment Amount(Rs.)
Construction of Room 30000
Equipments 4852
Total Capital Cost 34852
Initial Working Capital 76260
12.4: Space Requirement
The space required for this small scale business is only one 400 sq. ft. room for the brooding of the
chicks. For feed storage 36 sq. ft. room is sufficient. Room for the worker depends on the availability
of the space in the farm. The rooms can be constructed with low cost material. The material of the
construction should be used in a way that it should be reuseable and cheaper in price. Only the
technical thing is the rooms should be well ventilated. The major cost in this enterprise will be the
construction of the brooding room, feed store, worker’s room and other raw material required for the
brooding.
12.6: Raw Material Requirements
The detail of raw material required is given below.
Table 8: Raw Material Requirement
Description Total cost/Rs
Purchase of fertilized Eggs 12000.00
Vaccination and medication 200.00
Total Feed Cost per Bag 53750.00
Marketing 8000
Total raw Material(variable cost) Rs 76350
12.8: Revenue Generation
The revenue generation through eggs sales and sale of male birds is given below. The price of the male
bird will be Rs. 200 per bird with increase by 10% every year however the price of eggs will be Rs. 8
with 5 % growth rate.
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Table 10: Revenue Generation
Sale
Year No. Price(Rs./Unit) First Year Production
Eggs sale 8100 8.00 64800
Sale of male First Year
bird 120 200 23940
12.9: Other Costs
• Working Capital Requirements: It is estimated that an additional amount of approximately Rs. will
be required as cash in hand to meet the initial working capital requirements during operations. The
requirement is based on the utilities, salaries. All expanses are estimated on increase in 10% on yearly
basis.
Table 11: Total Working Capital
Description Years Yearly Charges(Rs.)
Utilities 1 76800
Management cost 1 24000
13. CONTACTS – SUPPLIERS, EXPERTS / CONSULTANTS
DR. Farrukh Saleem
APIP/Poultry Research Section, ASI, NARC, ISLAMABAD
Ph: 051-8443861
Email:
[email protected] 11
14. ANNEXURES
14.1: Cash Flow of the Project
Years 0 1 2 3 4 5 6 7 8 9 10
Purchase of
chicks 12000 12600 13230 13892 14586 15315 16081 16885 17729 18616
Vaccination and
medication 200 210 221 232 243 255 268 281 295 310
Total Feed Cost 26250 27563 28941 30388 31907 33502 35178 36936 38783 40722
Feed for
productive hens
(after selling
male) 27500 28875 30319 31835 33426 35098 36853 38695 40630 42662
management cost 24000 26400 29040 31944 35138 38652 42517 46769 51446 56591
Electricity*teleph
one utility bills 2400 2640 2904 3194 3514 3865 4252 4677 5145 5659
Marketing cost 1200 1320 1452 1597 1757 1933 2126 2338 2572 2830
Total Cost 111112 87550 105153 110285 115757 121595 127826 134479 141587 149185 157311
Revenue from
male birds
sale( Rs) 23940 26334 28967 31864 35051 38556 42411 46652 51318 56449
Sale of Eggs(No) 8100 16200 16200 16200 16200 16200 16200 16200 16200 16200
Price (RS/Egg) 8 8 9 9 10 10 11 11 12 12
Revenue for eggs
sale(RS) 64800 136080 142884 150028 157530 165406 173676 182360 191478 201052
Total Revenue 88740 162414 171851 181892 192580 203962 216088 229013 242796 257501
Net Benefit -111112 1190 57261 61566 66135 70985 76136 81609 87425 93610 100190
Installments 8000 19207 19207 19207 19207 19207 19207 19207 19207 19207
Cumulative -111112 -109922 -52661 8906 75041 146026 222162 303770 391196 484806 584996
Income after the
installment -111112 -6810 38054 42359 46928 51778 56929 62401 68218 74403 80983
Present value
cost 87550 97364 94552 91892 89376 86996 84745 82615 80600 78695
Present value of
Revenue 88740 150383 147335 144392 141552 138813 136172 133627 131175 128815
Discount Factor 1 0.93 0.86 0.79 0.74 0.68 0.63 0.58 0.54 0.50
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15: KEY ASSUMPTIONS
Description
Interest Rate 8%
Loan Tenure 8 Years
Grace Period 1 Years
Debt Equity Ratio 90:10
Sale Price Growth Rate of eggs 5%
Sale Price Growth Rate of male birds 10%
Repair and Maintenance Rate 5%
Increase in management 10%
Increase in Input Prices 5%
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