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PRE-FESIBILITY STUDY
OFF SEASON VEGETABLE PRODUCTION
(HIGH TUNNEL)
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Contents
1. DISCLAIMER...............................................................................................................................3
2. PURPOSE OF DOCUMENT..........................................................................................................4
3. INTRODUCTION TO SCHEME......................................................................................................4
4. EXECUTIVE SUMMARY...............................................................................................................4
5. BRIEF DESCRIPTION OF PROJECT AND PRODUCT.......................................................................6
6. CRITICAL FACTORS......................................................................................................................6
7. INSTALLED AND OPERATIONAL CAPACITY FOR OFF SEASON VEGETABLE FARMING...................7
8. GEOGRAPHICAL POTENTIAL FOR INVESTMENT..........................................................................7
9. POTENTIAL TARGET MARKETS....................................................................................................7
10. PRODUCTION PROCESS FLOW................................................................................................7
11. PROJECT COST AND BENEFIT SUMMARY...............................................................................8
11.1 Project Economics.................................................................................................................8
11.2 Project Financing...................................................................................................................9
11.3 Project Cost............................................................................................................................9
11.4 Space Requirement..............................................................................................................10
11.5 Machinery and Equipments.................................................................................................10
11.6 Operational and Maintenance Cost.................................................................................10
11.7 Human Resource Requirement..........................................................................................11
11.8 Revenue Generation...........................................................................................................11
12. KEY ASSUMPTION................................................................................................................12
13. FINANCIAL ANALYSIS............................................................................................................13
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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 undertaking 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.
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2. PURPOSE OF DOCUMENT
The purpose of this document is to facilitate potential investors in Off Season
Vegetable Production-High tunnelby 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).
4. EXECUTIVE SUMMARY
Growing out-of-season crops in controlled atmosphere inside polythene tunnel is called
Tunnel Farming. It was first introduced by William Fredrick 2600 years before. High
tunnels, also known as hoop houses, are relatively simple polyethylene-covered
unheated structures. It covered with one or two sheets of plastic and two layer offering
better insulation and consequently more cold protection. It gives maximum yield of
crops and makes easy soil preparation, picking and spraying due to its width and height.
It’s much suitable for tomatoes, cucumber and sweet pepper.
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Vegetable Production under high tunnel is considered for Business in this project pre-
feasibility. This business is proposed to be located primarily in all temperate and sub
tropical areas of the country. All aspects of tunnel farming i.e. selection of suitable crop
for tunnel farming, nursery raising for off season crop, their nutritional requirement, all
crop management practices and different necessary measures for productivity
improvement has been studied at Vegetable Crops Research Programme, Horticultural
Research Institute (HRI),National Agricultural Research Centre (NARC), Islamabad. After
successful experimentation, this technology is declared technically feasible for
commercial vegetable farming. The technology of tunnel farming is in the phase of
extension to the farmers. Farmers are already practicing this technology at their farms.
The tunnel farming can be successfully carried in Punjab, KhyberPakhtunkhwa and
some parts of Balochistan. The project can be started at an area of one acre with eight
tunnels of 30ft x 100 ft(3000 sq.ft) each per acre. Total cost estimate is Rs.1.542 million,
with fixed investment of Rs.0.685 million and working capital amounting to Rs.0.857
million. Given the cost assumptions, Net Present Value (NPV), Internal Rate of Return
(IRR), Benefit Cost Ratio (BCR) and payback period are Rs. 2,117,799,32%, 1.53 and
3.15 years respectively.
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• Techniques: Different methods and techniques are used for off-season vegetable
farming. However, keeping in view the economical, technical
andmanagerial factors, high tunnel off season vegetable farming is
suggested for the proposed project
• Location: The business can be successfully carried in Punjab, KhyberPakhtunkhwa
and some parts of Balochistan.
• Product: Year round vegetable consumption is increasing in Pakistan due to changing
food habits. Off season tunnel farming is the only way to fulfill this objective.
• Target Market: In addition to local consumption in the country, there is an enormous
export potential.
• Employment Generation: The proposed project will provide direct employment to
seven individuals. Financial analysis shows the profitability of proposed
business within first year of its operation.
6. CRITICAL FACTORS
The commercial viability of the proposed project depends on the following factors:
Any person who is planning to adopt this technology should have some practical
knowledge about farming.
Land that is being utilized for off-season vegetable farming should be tested
which will help in determining the quality of land for agriculture purposes.
Farmer should ensure that the plant they are planning to grow must have the
ability to self-pollinate under the plastic sheet.
Selection of the seed is most important factor because this determines the
productivity of the crop.
Vegetables, which are in demand, should be cultivated, this will help in earning
higher profit margins.
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8. GEOGRAPHICAL POTENTIAL FOR INVESTMENT
The proposed location for establishment of the tunnel farming will primarily be
temperate and sub tropical areas.
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Sowing& Picking Period Of Off -Season Vegetables
Following are sowing and picking periods of selected off-season vegetables in their
respective normal growing seasons:
Table 1: Sowing and picking period for the selected off--season vegetables
Tomato 29-21
Cucumber 24-18
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11.1ProjectEconomics
The following table shows the Net Present Value (NPV), Benefit Cost Ratio (BCR),
Internal Rate of Return (IRR) and payback period.
Table 3.Project Economics
Description Details
Net Present Value (NPV) 2,117,799
Returns on the scheme and its profitability are highly dependent on theentrepreneur
having some practical knowledge about agriculture & farming,selection of fertile land,
selection of best seed, cultivating the in-demandvegetables and selection of right time
for vegetable cultivation.
11.2Project Financing
Following table provides details of the equity required and variables related to bank
loan;
Table 4: Project Financing
Description Details
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11.3 Project Cost
Following is the space requirement for the construction of Eight Tunnels for the Project.
Following table provides a list of machinery and tunnel farm equipment required for
Off-Season Vegetable Farming (High Tunnel).
Table 7.Machinery&EquipmentCost
Description Quantity Unit Price Total (Rs.)
(No) (Rs.)
Tube Well and Channels including 01 250,00 250,00
boring & motor
Electricity connections 20,000 20,000
Total 45,000
Following table provides list of Consumable Requirement for off season vegetable
farming.
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Table 8.Operational & Maintenance Cost
Description No. Unit Price Total
Plastic Cost 120000
The table below provides details of human resource required to manage basic tunnel
farm. The staff salaries are estimated according to the market trends. However, these
requirements and pay scales may vary area to area.
11.8Revenue Generation
Final product of tunnel farming is vegetable that will generate revenue. The proposed
crop mix is tomato, cucumber and sweet pepper and the average capacity of farm is
35000, 40000 and 8000 kg per acre with sale price as per market Rs. 50, Rs. 40 &Rs. 50
respectively.
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Table 10. Revenue and production of the project
Land Utilization Production Total
Sale Price
Vegetable Quantity Production Amount
(Acre) Rs./Kg
(Kgs/Acre) Quantity (kgs)
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13. FINANCIAL ANALYSIS
Present
Capital R&M/ Installment Income afer Present Discount
Years Variable Cost Total Cost Benefits Cash Flow Value
Cost Depreciation /Year Installment Value Cost Factor
Benefit
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