Introduction Among the newer ventures in animal husbandry sector, rabbit rearing fits most appropriately in the countrys

programme of food, security, rural employment and equitable distribution of income. Most people nowadays due to its low cholesterol content prefer rabbit meat. Thus the contribution of rabbit farming to the nations health and economic welfare is rather unique. Rabbit farming has enormous potential to improve the socio-economic status of the large percentage of rural population. Rabbits gestation period is 30 days and there are five to eight young in a litter. A kit (baby rabbit) can be weaned at about 4 to 5 weeks of age. This means in one season a single female rabbit can produce as many as 800 children, grandchildren, and greatgrandchildren. A doe (female) is ready to breed at about 6 months of age, and a buck (male)at about 7 months. At 10 to 11 days after birth the baby rabbits' eyes will open and they will start eating on their own at around 14 days old Scope for Rabbit Farming and it's National Importance Rabbit farming is another livestock activity with great scope as it is relatively easy, rewarding and takes little space compared to other livestock activities. Rabbit farming can also provide a very valuable additional source of income in the hilly areas where opportunities of employment are very limited. Another important consideration is food production cycle, which shows that rabbit need not be in competition with man for it's food. For producing high quality woollens, blending with other fine quality fibres is essential, which are produced in limited quantity in our country. Small and marginal farmers in many parts of Kerala are rearing meat breeds of rabbits. Low capital investment, lesser of space requirement, ability to utilize various abundantly available foliage, easy handling, high prolificacy and quick returns make rabbit rearing an attractive venture. Many farmers start the venture as a part of contract farming also. Good quality breeding stock is not available to the farmers in sufficient quantity. Demand for meat is very high in the district vast majority of the population

are non- Vegetarians chicken, cattle and buffalo coming from Tamil Nadu is the main source of animal protein in the District. But it is not at all sufficient to meet the demand. Quality and health consciousness also increases the market prospects of rabbit meat. To produce good quality meat good quality breeding stock should be made available. The aim of this project is to provide livelihood to two entrepreneurs and to produce quality breeding stock of rabbits to the near by farmers. The Advantages of Rabbit Farming. Rabbits are highly prolific and a good female can produce 25 to 30 kits (young ones) per year. Rabbits are the best producers of wool on per kg body weight basis. They require 30 % less digestible energy to produce one kg of wool as compared to sheep. Rabbit wool is 6 8 times warmer than the contemporary sheep wool. It can be mixed with silk, polyester, rayon, nylon, sheep wool and other fibres to make good quality handlooms as well as hand knitted apparels. Rabbits consume a large amount of forage from diverse origins and hence, can be reared on roughages with very less quantity of costly concentrate feed. Rabbits can be fed with easily available leaves, waste vegetables, grains available in the home Rabbits can be reared in small groups (upto 50 nos.) in the kitchen garden / backyard of farmer's house with kitchen waste as feed. Family labour is adequate to take care of labour requirements of the unit. Initial investment cost is low. Quick returns i.e. within six months after the establishment of farm. Income generation at quarterly interval makes the repayment easy. Apart from providing wool, rabbits also provide income from sale of kits, meat, pelt and manure. Growth rate in broiler rabbits is very high. They attain 2 kgs at the age of three months

 Residual feed, together with rabbit manure is highly suitable for vermin compost which in turn provides excellent manure for fertilizing the agriculture fields. Rabbit meat is rich in poly unsaturated fatty acids and is categorized as white meat. With available small investment and in a small place rabbit farming gives more income Rabbits eat ordinary feed and convert them into a protein rich high quality meat. When compared to the other meats rabbit meat contain high protein (21%) and less fat (8%). So this meat is suitable for all age groups from adults to children Apart from meat production they can also be reared for hide and fur Rabbit farming gives an additional income as a part time job Technical Aspects
Farm buildings Site for the sheds will be selected suitably at an elevated area of the land in each members own land. Sheds will be constructed with locally available materials. Cages are made of 14. G wire mesh with 60 cm x 60cm x 45 cm for each adult rabbit. Automatic watering and feeding will be provided to ensure maximum comfort and easy management. Feeding Grasses like Napier, Congo signal and Guinea and legumes like cowpea, subabul and stylo will be grown. Adequate fodder availability will be ensured through proper fodder production and preservation. Kitchen and vegetable market waste will also be utilized. The commercially available rabbit feed will also be given. At 150g/ day to all rabbits which are kept in cages.

Breeds available for Meat

New Zealand White, Gray Giant, Soviet Chinchilla, White Giant

B C D

Breeding age of animals Number of animals per unit Breeding and rearing cycle 1. Ratio of males to females 2. Pregnancy Period 3. Kindling Percentage

6-8 months 100+20

1:5 About 30 days 80% i.e for every 100 does 80 will be pregnant

4. Average no. of young rabbits born per 6 kindle 5. Number of kindlings in a year 6. Female Rabbit (doe) bred again 7. Number of Bunnies obtained 4 7 days after weaning 80females 6 Bunnies 4 Kindligs - 1900 8. Mortality in Bunnies (30%) 9. Young Bunnies Available 10. Mortality in Adults 11. Average adult Body Weight 570 1900-560 = 1330 5- 10% 3- 3.5 Kg

12. Average live weight of Bunnies at 3 1 Kg months 13. Cage size 14. Concentrate required 15. Fodder requirement 16. Meat yield 360 Sq inch (adult) 120g/day 30g/day Young rabbit (1224

weeks)- 1 Kg Above (24 weeks) -2.5 Kg 17. Price of meat 18. Manure income Rs 220/ Kg Rs 3/- per animal

Financial Analysis
Table 2 Investment Cost Sl No 1 Capital investment A. Shed and Cages 1.Cost of construction of shed
(Two separate sheds each of 1000 ft2 to keep rabbits collected: 2x 50000 ) 2.Wire cages (cages to keep 60 rabbits in each shed) B. Daily use Article 50000 60000

Items

Cost (Rs)

100000

(Buckets ,wire brushes,blow lamps,feeders ,Waterers/nestboxes etc.) C. Cost of initial stock of rabbits (100 F+ 20 M adults) @ Rs. 600 each
Total capital investment (A+B+C)

72000

282000

Recurring expenditure for 1 year Cost of rabbit feed for 100+20 adult rabbits( 1200.15365Rs17/Kg) Cost of feeding for young ones (13300.0560 days Rs 17/Kg) Labour charge ( Own Labour) Water & Electricity charge Veterinary charge & medicine Advertisement Hiring charge for marketing rabbit Packing charge Total Recurring Cost Total Investment Cost 111690 68340 NIL 6000 6000 32000 60000 5000 288520 570520

Income for the 1 year Sale 1330 young rabbit of 12 weeks old of 2.5kg each @ Rs220/Kg Sale of manure 12 Kg/ adult/ year @ Rs 3/kg+ Sale of manure 1340kg /(young ones) /year Total Cost of production Recurring expenditure for 1 year Depreciation @ 10% on fixed amount Total Net profit for the first year Income Expenditure Net income Project Finance Project Cost (for loan purpose) Margin money @ 15% Loan Amount (85%) Interest Rate Repayment Period Grace Period =570520/= 85578/= 484942/= 12% = 6 years = 1 year = 739840/=334320/=405520/=288520/= 21000/=309520/= 8340/=739840/=731500/-

Table 3 Repayment schedule Year 1 2 3 4 5 6 80825.33 80825.33 80825.33 80825.33 80825.33 48494212/100 = 58193.04 (484942-80825.33)12/100 = 48494 (484942-280825.33)12/100 = 38795 (484942-380825.33)12/100=29095.92 (484942-480825.33)12/100=19397 139018.37 129319.33 119620.33 109921.25 100222.33 Principal Interest Total

Table 4 Cost of Production Sl No 1 Particulars Recurring expenditure 2 Depreciation @ 10 % on fixed amount 3 Interest 12% Total 309520 396565 418603 443814 472515.9 505059 @ 58193.04 48494 38795 29095.92 19397 21000 21000 21000 21000 21000 21000 1st 288520 2nd 317372 3rd 349109 4th 384019 5th 422420 6th 464662

Table 5 Cash Flow Statement Sl No Particulars Costs (Rs) 1 2 3 4 5 Capital cost Income Expenses Profit Depreciation 282000 739840 309520 430320 21000 776415* 812990 396565 379850 21000 418603 394387 21000 849565 443814 405751 21000 886140 472515.9 413624.1 21000 922715 505059 417656 21000 1st year 2nd year 3rd year 4th year 5th year 6th year

Profit

after 409320

358850

373387

384751

392624.1

396656

depreciation& before taxes 7 8 Tax Profit after 409320 358850 373387 384751 392624.1 396656

depreciation & taxes 9 Profit before 430320 379850 394387 405751 413624.1 417656

depreciation& after taxes *assuming that price of meat should increase by 5% in each year. Capital Budgeting Techniques 1. Pay Back Period Pay Back refers to the time period with in which the cost of investment can be covered by revenue. Pay Back Period = Investment ( initial) Amount of cash flows (profit before depreciation & after tax) Initial investment =570520 Here the annual cash flows are unequal. First year Rs 430420 is recoverd. In the second year inflow generated is Rs 379850 and Rs 140100 of the initial investment remains to be recoverd. Assuming that the cash flow occur evently during the year,the time required to recover remaing out lay will be Rs 140100/ Rs 37985012 months = 4 months Thus the Pay Back Period is 1 year and 4 months

2. Average Rate of Return It considers the earning of a project during its entire economic life. ARR = Average Income Average Investment

Here the Average Income is computed by adding all the annual income after depreciation and tax , and dividing them by the projects economic life. Here the project enjoy the tax deduction as it is a agri business unit. And average investment is the simple average of the values of assets at the beginning and end of the useful life of the asset which, in most of the cases ,would be zero. Total cash inflow ( net earnings after depreciation and taxes) Average income = 2315588 = total cash flow Projects life = 2315588 6 = Rs 385931 Net Investment = Rs.570520

ARR

385931 570520

= 67.64 3. Net Present value This is one of the time adjusted group of techniques , and a sophisticated method of evaluating profitable investment opportunities of a firm. It is scientific method of calculating present value of cash flows,both inflow and out flow of an investment proposal,using a discount rate and subtracting the present valueof out flows to find the Net Present Value. NPV= Where C0 K (1+k)t _ C0 Initial cash out lay discount rate

Table 6 Computation of NPV @ 15 % discount factor Year PV of Re 1 at 15% (Rs) 1 2 3 4 5 6 Total 0.869 0.756 0.657 0.571 0.497 0.432 430320 379850 394387 405751 413624 417656 373948 287166 259112 231683 205571 180427 1537907 Cash Flows PV of Cash Flows

NPV = Cash Inflow- Cash Outflow =1537907- 570520 = Rs. 967387

The Present Value of Cash Inflow (Rs. 1537907) is greater than that of Out Flow (Rs. 570520). Thus it generates a positive Net Present Value of Rs. 967387. So the proposal adds to the wealth of the owner, therefore it should be accepted.

4. Internal Rate of Return It is the value of discount factor when the NPV is zero. The IRR is calculated either trial and error method or plotting NPV against IRR.

Table 7 Cash Flow at Different Discount Rates Year

Annual (EBDAT) Cash Flows 68 % Discount Rate

69 % Discount Rate PVF 0.591 0.350 0.207 0.122 0.072 0.042 PV (Rs) 254319.1 132947.5 81638.11 49501.62 29780.94 17541.55 565728.8

PVF 0.595 0.354 0.210 0.125 0.074 0.044

PV (Rs) 256040.4 134466.9 82821.27 50718.88 30608.18 18376.86 573032.5

1 2 3 4 5 6

430320 379850 394387 405751 413624 417656 Total

Internal Rate of Return, IRR = LDR + (HDR-LDR)(Present value at LDR- Initial Investment) Present value at LDR- Present value at HDR LDR= Lower Discount Rate = 68% HDR= Higher Discount Rate = 69% Present Value at LDR = Rs. 573032.5 Present Value at HDR = Rs. 565728.8

= 68 + (69-68) (573032.5-570520) 573032.5 - 565728.8 IRR = 68.34 %

Here the IRR is greater than th required rate of return

5. Profitability Index The ratio of present value of expected future benefits discounted at a required rate of return to an initial cash outflow is expressed as Profitability Index. PI(Gross) = Present Value of Cash Inflows Present value of cash out flow = 1537907 570520 = 2.69 PI (Net)
=

Net Profit Initial cash outlay = 2.69 - 1 = 1.69

or PI(Gross) -1

Here the profitability index obtained is 2.69 which is greater than 1. Table 8 Investment Criteria Particulars Pay Back Period ARR NPV IRR PI (Gross) PI (Net) 1year 4 months 67.64% 967387 68.34% 2.69 1.69

In this project proposal the Pay Back Period is 1year and 4 months.by the time the project can pay back its initial investment. A Pay Back Period not greater than 40% of the life of the project is desirable. Here the Pay Back Period is less than the desirable Pay Back Period. So the project can be accepted. ARR obtained is 67.64 % which indicates that, for the investment of every Re.1, there will be a return of Rs0.64. the NPV obtained is Rs 967387,which is a positive value. It indicates that the Present Value of Cash Inflow is greater than Present Value of Cash Outflow.

So the project can be accepted. IRR obtained for the project is 68.34 % , which is higher than the minimum required rate of return. In this project profitability ratio is greater than 1. From all the above results it can be concluded that the project is a feasible one.

SENSITIVITY ANALYSIS
Sensitivity Analysis is a technique for investigating the impact of changes in the projects variables and the base case (most probable outcome scenario). Typically only adverse changes are considered in sensitivity analysis. It analyses the effects of changes in key variables on the projects NPV and IRR, the two most widely using measures of project worth. For the project the key variable identified for sensitivity analysis is feed cost. The idea is that freeze all variables except the key variable(feed cost) and check how sensitivly the NPV and IRR are changing.

Table 9 Investment Cost Sl. No 1 2 Capital cost Recurring Expenditures

Cost of rabbit feed for 100+20 adult rabbits ( 1200.15365Rs18.7*/Kg) Cost of feeding for young ones (13300.0560 days Rs 18.7/Kg) Labour charge ( Own Labour) Water & Electricity charge Veterinary charge & medicine Advertisement Hiring charge for marketing rabbit Packing charge Total Recurring Cost Total Investment Cost 74613 NIL 6000 6000 32000 60000 5000 308472 590472 124859

Items

Total cost (Rs) 282000

Investment cost Margin money Bank finance Interest rate Grace period Repayment period

590472 88570 501902 12 % 1 year 6 years

*cost of feed increased by 10%. It means cost of feed changes from Rs 17 to Rs18.7

Table 10 Repayment Schedule Year 1 2 3 4 5 6 83650 83650 83650 83650 83650 50190212/100 = 60228 (501902-83650)12/100 = 50190 (501902-283650)12/100 = 40152 (501902-383650)12/10=30114 (501902-483650)12/100=20076 143878 133840 123802 113764 103726 Principal Interest @ 12% Total (Rs)

Table 11 Cost of production Sl No 1 Cost of feed 199472 (adults+young) 2 Other Recurring Expenditure 3 Depreciation @ 21000 10 % on fixed amount 4 Interest @ 12% Total 329472 60228 411547 50190 434540 40152 460837 30114 490766 20076 524692 21000 21000 21000 21000 21000 109000 110900* 121990 134189 147607 162367 219419 241360 265496 292045 321249 Particulars 1st year 2ndyear 3rdyear 4thyear 5thyear 6thyear

*10% increase in recurring expenditure from 2nd year onwards

Table 12 Cash Flow Statement Sl No Particulars Costs (Rs) 1 2 3 4 5 6 Capital cost Income Expenses Profit Depreciation Profit 282000 739840 329472 410368 21000 776415 411547 364868 21000 343868 812990 434540 378450 21000 357450 849565 460837 388728 21000 367728 886140 490766 395374 21000 374374 922715 524692 398023 21000 377023 1st year 2nd year 3rd year 4th year 5th year 6th year

after 389368

depreciation& before taxes 7 8 Tax Profit after 389368 343868 357450 367728 374374 377023

depreciation & taxes 9 Profit before 410368 364868 378450 388728 395374 398023

depreciation& after taxes

Calculation of NPV and IRR

NPV= Where C0 K (1+k)t _ C0 Initial cash out lay discount rate

Table 13 Computation of NPV @ 15 % Discount Factor Year PV of Re 1 at 15% (Rs) 1 2 3 4 5 6 Total 0.869 0.756 0.657 0.571 0.497 0.432 410368 364868 378450 388728 395374 398023 356609.8 275840.2 248641.7 221963.7 196500.9 171945.9 1471502 Cash Flows(EBDAT) PV of Cash Flows

NPV = cash inflow cash out flow =1471502- 590472 = Rs 881030 Here the NPV obtained is lesser than the original case, so it implies that NPV is sensitive to the changes in the cost of feed.

Internal Rate of Return Table 14 Cash Flow at Different Assumed Discount Rates Year
Annual (EBDAT) Cash Flows 62 % Discount Rate

63 % Discount Rate PVF 0.613 0.376 0.230 0.141 0.086 0.053 PV (Rs) 251759.5 137328.5 87386.77 55067.51 34361.34 21221.82 587125.4

PVF 0.617 0.381 0.235 0.145 0.089 0.055

PV (Rs) 253313.6 139029.1 89015.06 56439.84 35435.05 22020.04 595252.7

1 2 3 4 5 6

410368 364868 378450 388728 395374 398023 Total

Internal Rate of Return, IRR = LDR + (HDR-LDR)(Present value at LDR- Initial Investment) Present value at LDR- Present value at HDR LDR= Lower Discount Rate = 62% HDR= Higher Discount Rate = 63% Present Value at LDR = Rs. 595252.7 Present Value at HDR = Rs. 587125.4 = 62+ (63-62) (595252.7-590472) 595252.7 - 587125.4 IRR = 62.5 %

Here the IRR obtained is 62.5% which is lower than the IRR obtained before increasing the cost of feed by 10%. The IRR has reduced to an extent of 5.84 % and it implies that the IRR is sensitive to the changes in cost of feed.

The project envisages rearing of 100+20 rabbits with an objective of selling 1330 young rabbits per year after considering the mortality. The proposed farm will be located in pettah which is a place where there will not be any difficulty for obtaing inputs and marketing the outputs. It shows the technical feasibility of the project. Economic analysis is done using the tools such as Pay Back Period, Average Rate of Return, Net Present Value, Internal Rate of Return and Profitability Index revealed that the project is economically viable. In order to identify the risk involved in the project, the sensitivity analysis has also been done. The variable selected for Sensitivity Analysis was cost of feed, as the chance of variability in the cost of feed is very high in rabbit farming. It could be inferred from the analysis that the NPV and IRR were very sensitive to change in cost of feed.