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June, 2005
Pre-Feasibility Study Calf Fattening Farm (Feedlot System)
1 INTRODUCTION TO SMEDA..........................................................................................................4
PREF-17/June, 2005/Rev 2
Pre-Feasibility Study Calf Fattening Farm (Feedlot System)
10FINAICIAL ANALYSIS................................................................................................................... 24
10.1 PROJECTED INCOME STATEMENT ...............................................................................................24
10.2 PROJECTED CASHFLOW STATEMENT ..........................................................................................25
10.3 PROJECTED BALANCE SHEET .....................................................................................................26
11KEY ASSUMPTIONS ...................................................................................................................... 27
12ANNEXURE 1................................................................................................................................... 29
13ANNEXURE 2................................................................................................................................... 31
14ANNEXURE 3................................................................................................................................... 33
15ANNEXURE 4................................................................................................................................... 34
PREF-17/June, 2005/Rev 2
Pre-Feasibility Study Calf Fattening Farm
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. The prospective user of this memorandum is encouraged to carry out
additional diligence and gather any information he/she feels necessary for making an
informed decision.
DOCUMENT CONTROL
Document No. PREF-24
Revision 2
Prepared by SMEDA-Punjab
Issue Date March 2002
Revised In June 2005
Issued by Library Officer
PREF-24/June, 2005/Rev 2
Pre-Feasibility Study Calf Fattening Farm
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 finance, marketing, technology 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, 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.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk.
2 PURPOSE OF THE DOCUMENT
The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs
to facilitate investment and provide an overview about dairy and livestock farming. The
project pre-feasibility may form the basis of an important investment decision and in
order to serve this objective, the document covers various aspects of dairy and livestock
concept development, start-up, production, finance and business management. The
document also provides sectoral information, brief on government policies and
international scenario, which have some bearing on the project itself.
This particular pre-feasibility is regarding “Calf Fattening Farm” which comes under
“Livestock and Agriculture” sector. Before studying the whole document one must
consider following critical aspects, which form the basis of any investment decision.
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Pre-Feasibility Study Calf Fattening Farm
3.1 Strengths
Back bone and main stay of economy. Provides raw material for food & Leather
industry.
Major source of food, i.e. Meat.
Source of Farmyard Manure (FYM).
Sizeable foreign exchanges earning through exports.
Ample human resource employment sector.
Stationed, Permanently located secured loaning sector.
Contended nature. Low cost living standard.
Full family involvement, Devoted & Hardworking Sector.
3.2 Weaknesses
Animals are kept for social rather than commercial reasons.
There is no registered beef breed in Pakistan.
Low or lack of interaction with farmers. Poor information about each other. Lack of
extension services.
Lack of education and initiative in farmer, traditional approach due to lack of skills
and management.
Unorganized sector, unaware of basic farm management practices.
Remote area, lack of farm to market approach & transportation.
Non-availability of communication services.
Lack of farm/ market infra structures & marketing information.
Lack of record keeping on farm.
No or low application of research work and record keeping.
Management of livestock farm is a challenging job.
Nutrition is still a problem hampering the livestock productivity in general and meat
production in particular
Enormous production losses due to endemic diseases every year.
3.3 Opportunities
Govt. of Pakistan & Sate Bank of Pakistan priority sector.
Meat and meat products needs are much higher than supply.
Ample opportunities are available in the Banking Sector.
Commercially viable sector with great credit potential and absorption capacity.
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3.4 Threats
Implementation of WTO will result in open & competitive commodity pricing.
Due to fear of default, baker community has reluctance for lending loans.
High risks of diseases in live stock. Animals are subject to serious diseases that may
lead to mortality.
The formal meat market not growing due to the government regulation of price fixing
as Municipal Corporation fixes the meat prices in the urban markets.
The fixed prices are not likely to be viable for selling the quality meat.
Butcher market not ready to pay the premium prices for the fattened animal.
Defective and unorganized markets.
Imbalance between prices of inputs & outputs.
Rising trend of cost of production with higher rate of interest as compared to profit
ratio.
Lack of media projection, non-recognition of problems and monopoly of
multinationals.
Lack of community organizations and out dated farm practices.
Lack of coordination towards common causes & goals.
Lack of awareness about economics, demand & supply in market.
Low saving, low holding capacity. Increasing level of poverty.
Non-availability of subsidy & tax holidays.
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4 PROJECT PROFILE
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grams. There is a shortage of beef in the country. This shortage is being observed through
meat-less days. If the calf fattening projects are carried out in the country then the
domestic demand of beef could be fulfilled. As the fattened animals have higher meat
contents (55%) as compared to grazing animals (48%).
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Feeding meat animals on nutritious compound feed along with green fodder can be
adopted. Other farm management practices include comfortable and ventilated barns,
drinking water and feed according to the requirements. Timely vaccination against
Rinderpest, Black Quarter and Foot & Mouth Disease. The prevention of internal and
external parasites will also improve the over all performance of herd. The absence of calf
weaning program is a shortcoming to the development of beef industry. Too many young
male calves are slaughtered quite young due to high cost of milk required to feed them.
Those left are generally underfed and stunted thus unable to achieve the normal growth.
A suitable plan could provide animals of 100-150 kgs of weight, which could be raised to
the desired market demand.
An efficient program aim at moving the calves from liquid to dry feed as quickly as
possible if calf fattening is integrated with dairy farming. High quality calf starter feed
with digestibility, palatability and composition should be fed free of choice from the third
day of birth. Quality of diet is the key to a successful early weaning system. Weaning
could be started once the consumption reaches 800 grams a day, which would provide
healthy and thrifty calves. The changing of this system by small farmers and peri-urban
dairy farm entrepreneurs will be a long and difficult process to which some incentives are
essential. Another option is to buy feeder calves from the cattle markets.
Attention must be given to the selection of animals. Once the calves are purchased and
placed in pens, farmers would face many technical problems affecting the success of their
operation. It will be worthwhile to get technical assistance from the livestock
professionals and experts. It is advisable to purchase fattening rations initially from the
public or private sector feed mills. Once the experience is gained and practices are
established, feed processing equipment, such as the grinder-mixers can be installed as per
capacity of the farm.
5 SECTOR & INDUSTRY ANALYSIS
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4
Source: Agricultural Statistics of Pakistan, 2002-03
5
Source: Agricultural Statistics of Pakistan, 2002-03
6
Source: Agricultural Census of Pakistan, 2000
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The countries can also be grouped by the percentage of the beef herd in the total cattle
herd, a situation that is reflected in the typical farms:
Milk Countries: with the beef herd as < 25 percent of the total are Poland, Pakistan,
Hungary, Czech Republic and Germany.
Mix Countries: with a share between 25 and 75 percent of the beef herd of the total
are Austria, France, Ireland and Spain.
Beef Countries: with > 75 percent of the beef herd of the total are U.S., Brazil,
Australia, Argentina and Uruguay.
6 MARKET INFORMATION
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Large-scale livestock farming has not been practiced due to the total manual
procedures adopted in feeding and herd management. Reliability of manual labour is
severe especially in view of illiteracy and poor farmer education on the subject.
Other
Livestock Meat
Products 28%
14%
Milk
58%
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7 FARM INPUTS
7.1 Land
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where the local buffalo breed is used for both milk and beef production. (IFCN Beef Report
2004).
The Calves of different breeds (7-8 months of age) can be used for fattening purpose at
an average body weight of 80-100 kgs for 90-120 days. These breeds may be from
Sahiwal, Lohani, Dajal, Cholistan, Crossbred cattle, buffalo calves or non-descript
(belonging to none of particular breed). Experiments carried out on Livestock Production
Research Institute, Bahadurnagar, Okara shows that cost of meat production for
Cholistani and Crossbred calves is relatively cheaper than Sahiwal, Dajal, Non-descript
and buffalo calves fed on the same Total Mixed Ration (TMR).
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but not all animals drink water simultaneously. The following figure shows the animal
housing layout for calf fattening farm.
Water Trough
Open paddock Fodder Fodder Open paddock
Manger Manger
Gate Gate
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7.5 Feed
7
A byproduct of wheat harvesting used as dry roughage for livestock and dairy animals
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Table 7-9:Daily Feed Requirements for One Fattened Calves in 120 Days
Fattening Body Weight Feed Daily Feed Cost Daily Fodder Cost
Days (Kgs.) Requirement/ Day (Rs.) (Rs)
1 80 4 20 0.80
30 103 5 26 1.03
60 127 6 32 1.27
90 151 8 38 1.51
120 175 9 44 1.75
Total Feed Cost 3,828 153
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to the feedlot from the quarantine sheds. Quarantine arrangements will minimize the
chances of disease spread in the farm by ensuring that the new animals do not carry any
disease before they are taken to the main sheds. This seven-day period will also be
helpful in acclimatizing the new animals before they enter the main feedlot sheds. The
behavior of the animal will be recorded during these seven days and then its requirement
of feed will be calculated accordingly before sending it to the main feedlot.
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approach for the success of this business. Linking the project with the live animal export
or beef exports will assure good returns on the business. Near the urban market and
especially around Eid-ul-Azha, the selling price of beef is Rs. 100-105 per kg live body
weight.
9 USEFUL TERMINOLOGY
Cake
Mass resulting from the processing of seeds, which is rich in protein and is used as a
source of feed for livestock, e.g. cottonseed cake.
Calf
Young animal of dairy origin between seven and 120 days of age.
Compound feed
Any ground mixture of ingredients intended for feeding the animals. It includes a
concentrate mixture accordingly to formula.
Dressing percent
Dressing percent is important because it reflects the amount of carcass in relation to the
animal’s live weight. Dressing percent is calculated by using the following formula:
Dressing % = Hot Carcass Wt. x 100
Live Animal Wt.
Dressing percent is affected by the fill, finish, muscling, sex, type, and if the animal is
pregnant or not. Normal Range is 55-67% for young fattened calves.
Fat Thickness
The primary estimate of fatness is fat thickness at the 12th rib. It is used to assess total fat
on the carcass. (Average: 0.5 inches)
Feedstuffs
Any substance of nutritive and biological value used in production of compound feed.
Home Mixed Feed
Feed prepared on farm of the owner.
Live Weight
Cattle have a wider range of market weights than other species due to differences in type
and maturity.
Ration
Amount of balance feed in 24 hours
Weaning Calf
Young animal of between five and nine months coming from the cow-calf enterprise and
being reared by a suckling cow until weaning. The term is used to indicate a difference of
calves from dairy herds, referred to as ‘dairy calves’.
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10 FINAICIAL ANALYSIS
Gross Profit 568,095 762,236 982,658 1,232,332 1,514,544 1,832,927 2,191,493 2,594,681 3,047,388 3,555,029
OPERATING EXPENSE
Payroll (Admin) 120,000 126,000 132,300 138,915 145,861 153,154 160,811 168,852 177,295 186,159
Administrative & Factory Overheads 6,658 7,324 8,056 8,862 9,748 10,723 11,795 12,975 14,272 15,699
Depreciation 59,000 59,000 59,000 59,000 59,000 59,000 59,000 59,000 59,000 59,000
Mortality loss 28,080 29,484 30,958 32,506 34,131 35,838 37,630 39,511 41,487 43,561
Total 213,738 221,808 230,314 239,283 248,740 258,715 269,237 280,338 292,054 304,420
Operating Profit 354,357 540,428 752,344 993,049 1,265,804 1,574,212 1,922,257 2,314,342 2,755,334 3,250,609
NON-OPERATING EXPENSE
Financial Charges on Long-term Loan 5,451 5,430 5,408 5,387 5,365 5,343 5,321 5,298 5,275 5,252
Financial Charges on Running Finance 26,126 27,432 28,804 30,244 31,756 31,756 31,756 31,756 31,756 31,756
Land Lease 43,533 43,533 43,533 43,533 43,533 43,533 43,533 43,533 43,533 43,533
Total 75,110 76,395 77,746 79,164 80,655 80,633 80,610 80,588 80,565 80,542
PROFIT BEFORE TAX 279,247 464,033 674,598 913,885 1,185,149 1,493,579 1,841,646 2,233,755 2,674,769 3,170,067
Tax 22,906 61,508 114,150 194,860 289,802 397,753 519,576 656,814 811,169 984,523
PROFIT AFTER TAX 256,341 402,525 560,449 719,025 895,347 1,095,827 1,322,070 1,576,940 1,863,600 2,185,543
Retained Earnings beginning of year 0 256,341 658,866 1,219,314 1,938,340 2,833,687 3,929,513 5,251,584 6,828,524 8,692,124
Retained Earnings end of year 256,341 658,866 1,219,314 1,938,340 2,833,687 3,929,513 5,251,584 6,828,524 8,692,124 10,877,668
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Financing activities
Long term debt principal repayment (1,803) (1,824) (1,846) (1,867) (1,889) (1,911) (1,933) (1,956) (1,979) (2,002)
Addition to long term debt 467,193
Addition to running finance 186,615 9,331 9,797 10,287 10,802 11,342 11,909 12,504 13,129 13,786 (289,501)
Issuance of share 653,808
Cash provided by/ (used for) financing activities 1,307,615 7,527 7,973 8,441 8,934 9,453 9,998 10,571 11,173 11,807 (291,503)
Total 1,121,000 313,538 459,700 617,603 776,158 952,458 1,152,915 1,379,137 1,633,985 1,920,621 2,242,542
Investing activities
Capital expenditure (1,121,000)
Cash (used for)/ provided by investing activities (1,121,000)
Net Cash 0 313,538 459,700 617,603 776,158 952,458 1,152,915 1,379,137 1,633,985 1,920,621 2,242,542
Cash balance brought forward 0 0 313,538 773,238 1,390,841 2,166,999 3,119,457 4,272,373 5,651,510 7,285,494 9,206,116
Cash carried forward 0 313,538 773,238 1,390,841 2,166,999 3,119,457 4,272,373 5,651,510 7,285,494 9,206,116 11,448,657
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Current Assets
Cash 0 313,538 773,238 1,390,841 2,166,999 3,119,457 4,272,373 5,651,510 7,285,494 9,206,116 11,448,657
Stocks and Inventory 186,615 195,946 205,743 216,030 226,832 238,173 250,082 262,586 275,715 289,501 0
Total 186,615 509,483 978,981 1,606,871 2,393,831 3,357,631 4,522,455 5,914,096 7,561,210 9,495,617 11,448,657
Gross Fixed Assets 1,121,000 1,121,000 1,121,000 1,121,000 1,121,000 1,121,000 1,121,000 1,121,000 1,121,000 1,121,000 1,121,000
Less: Accumulated depreciation 0 59,000 118,000 177,000 236,000 295,000 354,000 413,000 472,000 531,000 590,000
Net Fixed Assets 1,121,000 1,062,000 1,003,000 944,000 885,000 826,000 767,000 708,000 649,000 590,000 531,000
Total Assets 1,307,615 1,571,483 1,981,981 2,550,871 3,278,831 4,183,631 5,289,455 6,622,096 8,210,210 10,085,617 11,979,657
Current Liabilities
Running Finance 186,615 195,946 205,743 216,030 226,832 238,173 250,082 262,586 275,715 289,501 0
Total 186,615 195,946 205,743 216,030 226,832 238,173 250,082 262,586 275,715 289,501 0
Long-term liabilities
Long-term Loan 467,193 465,389 463,565 461,719 459,852 457,963 456,052 454,119 452,163 450,184 448,182
Total 467,193 465,389 463,565 461,719 459,852 457,963 456,052 454,119 452,163 450,184 448,182
Equity
Paid-up Capital 653,808 653,808 653,808 653,808 653,808 653,808 653,808 653,808 653,808 653,808 653,808
Retained Earnings 0 256,341 658,866 1,219,314 1,938,340 2,833,687 3,929,513 5,251,584 6,828,524 8,692,124 10,877,668
Total 653,808 910,148 1,312,673 1,873,122 2,592,147 3,487,494 4,583,321 5,905,391 7,482,332 9,345,932 11,531,475
Total Liabilities And Equity 1,307,615 1,571,483 1,981,981 2,550,871 3,278,831 4,183,631 5,289,455 6,622,096 8,210,210 10,085,617 11,979,657
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11 KEY ASSUMPTIONS
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12 ANNEXURE 1
Bloating Difficult breathing due to air Avoid grazing early in Mustard (Sarson) oil &
(air trapped in trapped in stomach, animal morning especially on turpentine oil mixed
stomach) may die due to suffocation fodder with dewdrops. with chloral hydrate
mixed in drinking
water.
Dysentery Diarrhea, smelling feces, Avoid excessive intake of Calcium carbonate,
weakness milk especially in magnesium carbonate
newborn kids. and bismuth carbonate
Avoid wheat straw or stiff dissolved in water OR
feed during dysentery entox tablets OR
nimkol with
sulfademadine (4-5 cc).
Offer rice groule to
affected animals
Internal Parasites
Liver flukes Weakness, off feed, jaundice No grazing around Zanil or Carbon tetra
in severe cases, swelling on stagnant water chloride OR nilzan
joints plus, oral
administration
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Round Worms Weakness, diarrhea, anemia, Fecal samples should be Systamax or rental, oral
hair fall from body coat examined for administration
roundworms.
Ectoparasites
Flies/ ticks/ Irritation on body coat, Cleanliness in sheds, Apply sulfur oil,
maggots sometimes holes in skin, loss Spray of DDT in shed tetmasol or ecoflax on
of hair from body coat wounds and dipping of
whole herd with a 0.15
% solution of negavan.
Table 12-1 List of vaccines and their prices at Veterinary Research Institute,
Ghazi Road, Lahore.
Vaccines/Sera/Antigens Packing With Bottles Price
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13 ANNEXURE 2
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14 ANNEXURE 3
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15 ANNEXURE 4
Different Breeds of Buffaloes and Cows
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