hasan cattle farm

Prepared by:Innovative Bz Development

OFFICERoom No: 03, 3rd Floor, Soleman Plaza

3/3B Purana PaltanDhaka-1000 Bangladesh

Contact: 88-02-7176307, 88-01710-962792Email: [email protected]

Prepared for:Limon International (Pvt.) Ltd.

HEAD OFFICEXXXXXXXXXXXXXXXXXXXX

Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 1 of 84

Pre Feasibility StudyDairy Farm

2500 Cattle

mailto:[email protected]

XXXX


CONTENT: Page NoEXECUTIVE SUMMARY 08

PROJECT GROWTH 09

DISCLAIMER 10

BANGLADESH AT A GLANCE 10

SECTOR SHARE GDP AT CURRENT & CONSTANT PRICE 11

GROSS DOMESTIC PRODUCT BY INDUSTRIAL SECTOR AT CONSTANT PRICE 11

MACRO ECONOMIC INDICATOR 13

CURRENT EXCHANGE RATE 14

CONTRIBUTION OF LIVESTOCK & POULTRY ON NATIONAL ECONOMY 14

LIVESTIOCK & POULTRY POPULATION IN BANGLADESH 14

PRODUCTION OF MILK, MEAT & EGG 15

LIST OF GOVERNMENT DAIRY FARMS AND COMMUNICATION NUMBERS 15

LIVESTOCK DEVELOPMENT POLICY/PROGRAM 16

LIVESTOCK ACT 16

DEVELOPMENT OF INFRASTRUCTURE 16

MAN POWER DEVELOPMENT IN LIVESTOCK SECTOR 16

DEVELOPMENT BUDGET 17

DEPARTMENTAL INSTITUTE 17

MANPOWER OF DEPARTMENT OF LIVESTOCK SERVICES 18

1 INTRODUCTION TO LIMON ENTERPRISE (PVT.) LTD 19

2 PURPOSE OF THE DOCUMENT 19

3 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT/LENDING 20

3.1 STRENGTHS 20

3.2 WEAKNESSES 21

3.3 OPPORTUNITIES 21


3.4 THREATS 21

4 PROJECT DESCRIPTIONS 22

4.1. PROJECT PROFILE 22

BACKGROUND 22

THE HISTORY OF THE SECTOR 24

RECENT DEVELOPMENTS 25

OTHER DEVELOPMENTS SINCE THE 1990s 25

TABLE 1: MILK PROCESSING CAPACITY, 2007 26

DAIRY SECTOR POLICY AND STRATEGY 26

SMALLHOLDER MILK PRODUCERS AND MARKETING MODELS 28

INFORMAL TRADITIONAL MARKETS MODEL 29

FIGURE 1: TRADITIONAL MARKET MODEL 29

MILK VITA COOPERATIVE MODEL 29

FIGURE 2: MILK VITA COOPERATIVE MODEL 30

PRIVATE ENTREPRENEUR MODEL 31

FIGURE 3: PRIVATE ENTREPRENEUR MODE 31

REPORT OF THE HOUSEHOLD-BASED L. STOCK AND POULTRY 2009 33

4.2. OPPORTUNITY RATIONALE 34

4.3. MARKET ENTRY TIMING 35

MILK FLOW CHART FOR BANGLADESH 36

MILK PRICE CHART FOR BANGLADESH 37

4.4. PROPOSED BUSINESS LEGAL STATUS 37

4.5. PROPOSED CAPACITY 37

4.6. PROJECT INVESTMENT 38

PROJECT FINANCING OPTION 39

PROJECT ECONOMICS VIABILITY EQUITY PROJECT 39

4.7. PROPOSED LOCATION 39


4.8. KEY SUCCESS FACTORS/PRACTICAL TIPS FOR SUCCESS 44

5 SECTOR & INDUSTRY ANALYSIS 44

5.1 MAJOR PLAYERS 44

5.2 HUBS OF DAIRY FARMING 45

6 MARKET INFORMATION 45

6.1 SECTOR CHARACTERISTICS 45

6.2 MARKET POTENTIAL 46

MARKET VALUE OF DAIRY & LIVESTOCK IN BANGLADESH 46

6.3 TARGET CUSTOMERS 47

7 FARM INPUTS 47

7.1 LAND 47

7.1.1. LAND REQUIREMENT 47

7.1.2. LAND LEASE 48

7.1.3. SUITABLE LOCATIONS 48

7.1.4. HERD MIX 48

7.3. ANIMAL BREEDING AND MATING SYSTEM 48

7.4. ANIMAL MARKETS 49

7.5. ANIMAL HOUSING 49

7.6. FARM MACHINERY 51

FARM EQUIPMENT 51

MISCELLANEOUS SUPPLIES RATE 51

7.7. FEED 52

7.7.1. RATION FOR DAIRY ANIMALS 52

DETAILS OF FEED INGREDIENTS AS RAW MATERIAL 52

7.7.2. MINERAL MIXTURE 52

7.7.3. FODDER CROP 53

TYPES OF DRY & GREEN ROUGHAGE 54


7.7.4. FODDER PRODUCTION ECONOMICS 54

7.7.5. DAILY FODDER REQUIREMENT 55

7.7.6. RICE STRAW (KHAR) 55

COST FOR GREEN FODDER PER ACRE 55

DAILY FEED REQUIREMENTS 56

7.8. MEDICATION 56

7.8.1. VACCINATION & MEDICINE 56

7.8.2. ARTIFICIAL INSEMINATION (AI) CHARGES 57

7.8.3. MANPOWER / LABOR REQUIREMENT 57

8 FARM OUTPUT 59

8.1. LACTATION PERIOD 59

8.2. MILK COMPOSITION 59

8.3. BREEDING STOCK DEVELOPMENT 60

8.4. INCREASE IN MILK YIELD 60

8.5. SALE PRICE 60

8.6. EVENING MILK 60

8.7. FARM REVENUES 60

8.8. MALE CALVES 61

9 OPERATION & MANAGEMENT 61

10 USEFUL TERMINOLOGY 61

11 FINANCIAL ANALYSIS 63

PROJECT INVESTMENT COST FOR THE FIRST YEAR 63

PROJECT DEPRECIATION COST PER YEAR 64

11.1 INITIAL CAPITAL COST DESCRIPTION 64

11.1.1 LAND 64

11.1.2 BUILDING / INFRASTRUCTURE 65

11.1.3 FURNITURE & FIXTURE 66


11.1.4 ANIMAL COST 67

11.1.5 FARM MACHINERY & EQUIPMENT COST 67

11.1.6 OFFICE VEHICLES 68

11.1.7 PRE OPERATING COST 68

11.2 INITIAL WORKING CAPITAL 69

11.2.1 ADMINISTRATIVE SALARIES FOR THE FIRST YEAR 69

11.2.2 LABOUR SALARIES 70

11.2.3 ELECTRICITY FOR FIRST YEAR 70

11.2.4 GAS CONNECTION 70

11.2.5 FUEL FOR VEHICLE 70

11.2.6 FODDER & MEDICINE INVENTORY 71

11.3 PROJECT REVENUE ASSUMPTION 73

SELLING ASSUMPTIONS FOR THE NEXT 10 YEARS 74

PROJECTED PROFIT / LOSS ACCOUNT FOR NEXT 10 YEARS 75

PROJECT GROWTH 76

INTERNAL RATE OF RETURN 75

11 CONCLUSION 75

12 ANNEXURE: 76

12.1 ANNEX-1: IMPORTANT MEASURE & SOME IDENTIFICATION 76

12.2 ANNEX-2: INFORMATION ABOUT AVAILABLE FOREIGN CATTLE BREEDS 79

12.3 ANNEX-3: DERIVATIVES FROM THIS FARM: YET NOT COMMERCIALLY CALCULATED WITH THIS PROJECT, WILL GIVE A GREAT RETURN, IF UTILIZE GAS AS INPUT FOR POWER PLANT 81


Precaution: Beware of Thief

Action: Caught into red handed


Executive Summary:Asking 100% Finance United States$ Sixty-Six million onlyProject investment cost for the first year:1 Initial Capital Cost:1.1 Land 52,607,200.001.2 Building / Infrastructure 8,039,000.001.3 Furniture & Fixture 57,000.001.4 Animals Cost

2,050,000.001.5 Machinery & Equipment 285,500.001.6 Office Vehicles 166,500.001.7 Pre Operating Cost 41,000.00Total Initial Capital Costs

63,246,200.002 Initial Working Capital:2.1 Administrative Salaries for the first year 150,500.002.2 Labor Salaries 283,750.002.3 Electricity for 1st year 112,000.002.4 Gas Connection 103,600.002.5 Fuel for vehicles (Petrol / Diesel / Gas) 13,625.002.6 Fodder & Medicine Inventory

1,037,674.002.7 Cash in Hand 20% as contingencies fund for sl. 2.1-2.6 340,230.00Total Initial Working Capital 2,041,379.00Total Project Cost

65,287,579.00(in words US$ Sixty-five million Two hundred Eighty-seven

thousand Five hundred Seventy-nine only)Projected Profit / Loss Account for Next 10 YearsSl No Particulars Total Amount 1 Sales /Revenue 219,548,003.25 2 Initial Working Capital 10% increase/year

32,534,323.89 (Included admin expenses, financial charges, etc.)

3 Gross Profit 187,013,679.36 4 Less Financial Charges (year end)

19,586,273.70 (3% Max for total project cost)

5 Net Profit Before Tax 167,427,405.66 6 Provision for Income Tax7 Net Profit/Loss After Taxes

167,427,405.66 8 Savings for Investment return 10%/yr 65,287,579.00 Profit / Loss after Investment return102,139,826.66


Project Growth:Sl No Particulars Increase %age1 Bull as meat production 46%/yr2 Milk From Heifer 21%/yr3 Milk From Local Cow 21%/yr4 Male Calf Sell 50% after 20% Mortality 5%/yr5 Female Calf Sell 50% after 20% Mortality

5%/yr6 Compost from Slurry 29%/yr7 Packing Material (Used) 10%/yr

Internal Rate of Return:

Total Investment US$ 65,287,570.00

Turnover after 10 years ending of the project cycle US$ 219,548,003.25

Average Internal Rate of Return/yr. 15.64%

Fixed asset price will increase 2 times or more, after 10 years as US$ 130,575,140.00

Pay Back Period (year) 6.39 years


DISCLAIMERThe 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 (poor sourcing of feed raw material, selection of cattle species, market fluctuation of fodder raw materials, political unrest, environmental disaster, poor operation and management, scarcity of un recovered diseases. etc.), and the actual results may differ substantially from the presented information. “Innovative Bz Development” 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. LIMON ENTERPRISE (PVT.) LTD. is the sole responsible for success or failure of the project for their skill on administration, management and operation of the project. In operation period, the management need to keep in touch with Bangladesh Livestock Research Institute (BLRI), located at Savar to collect update news in this sector.

DOCUMENT CONTROLPrepared by Innovative Bz Development, Dhaka 88-01710-962792

Issue Date June, 2011, Revised in June, 2011Issued By Contacted Consultant

Pre-Feasibility Study Dairy Farm (2500 Cattle)PREF-001/July, 2011/LI

Bangladesh At a Glance:1.1 GLOBAL POSITION

Location: Between 20034' and 26038' latitude and between 88001' and 92041 east longitudeBoundary: North: India, West: India, East: India & Myanmar, South: Bay of BengalTotal area of Bangladesh:Area Type Area (Sq Km) 2003-2004 Area (Sq Km) 2004-2005Total Area 147570 147570Land Area 36669 36669Forest Area 6418 6420River Area N/A N/ASource : Agriculture Statistics Wing, BBSSector Share GDP at Current & Constant price:

Industry Sector 2004 2005Current Constant Current Constant


Price Price Price Price1. Agriculture 20.14 22.17 19.50 21.77

1.1 Agri & Forestry 18.80 17.27 15.44 16.911.2 Crops and Horticulture 11.67 12.51 11.41 12.191.3 Animal Farming 2.44 2.95 2.42 2.931.4 Forest & Related Service 1.69 1.82 1.61 1.791.5 Fishing 4.35 5.00 4.06 4.86

2 Industry 27.22 28.31 28.05 29.012.1 Mining & Quarrying 1.14 1.14 1.14 1.142.2 Manufacturing 16.53 16.51 17.19 17.052.2.1 Large & Medium Scale 11.68 11.66 12.21 12.112.2.2 Small Scale 4.85 4.85 4.98 9.942.3 Construction 8.17 9.03 8.38 9.152.4 Power, Gas, Water Supply 1.38 1.64 1.35 1.65

3 Services 52.63 49.52 52.44 49.223.1 Transport & Storage, Communication

10.77 9.98 10.81 10.10

3.2 Wholesale & Retail 14.14 14.12 14.25 14.173.3 Hotel & Restaurant 0.71 0.68 0.71 0.693.4 Financial Intermediation 1.67 1.69 1.64 1.703.5 Real Estate, Renting & Business Activities

8.36 8.12 8.04 7.88

3.6 Public Admin & Defence 2.71 2.68 2.72 2.713.7 Education 2.47 2.44 2.46 2.473.8 Health & Social Work 2.28 2.25 2.24 2.263.9Community, Social & Personal Service

9.53 7.45 9.57 7.25

Source : National Accounts Wing, BBS.

Gross Domestic Product by Industrial Sector at Constant PriceFY 2005-Fy2006 (1995-96 Price) Million Taka (1US$ =70 Bd. Tk.)

Industrial Sector 2004-2005 2005-2006Value added

Sectoral Growth Rate

Value added

Sectoral Growth

RateI. Agriculture 530367 2.21 596003 4.49

1. Agriculture & Forestry

442298 1.80 462949 4.67

1.i. Crops & Horticulture 320339 0.15 333822 4.211.ii. Animal Farming 75434 7.23 80191 6.311.iii. Forest & Related

Services46525 5.09 48936 5.18

2.Fishing 128069 3.65 133054 3.89II. Industry 724890 8.28 794192 8.56

3. Mining & Quarrying

29090 8.38 31631 8.73

4. Manufacturing 422690 8.19 466860 10.45


4.i. Large & Medium Scale

298605 8.30 331563 11.04

4.ii Small Scale 124085 7.93 135297 9.045. Power, Gas, Water Supply

41915 8.90 45152 7.72

6. Construction 231195 8.31 250549 8.37III. Services 126564

16.36 134755

96.47

7. Wholesale & Retail Trade

361552 7.06 387812 7.26

8. Hotel & Restaurant

17509 7.12 18814 7.45

9. Transport 255522 7.92 276596 8.2510. Financial Institution

43380 8.92 46469 7.12

11.Real Estate, Renting & Business Activities

208009 3.65 215684 3.69

12. Pub. Administration & Defence

68604 8.02 74235 8.21

13. Education 62559 7.90 67552 7.9814. Health & Social Work

57682 7.40 61793 7.13

15. Community, Social & Personal Service

190824 4.05 198603 4.08

GDP @ producer price 2560898

5.93 2737754

6.91

Import Duty 108842 6.47 111225 2.19GDP @ constant Market

Price266974

05.96 284897

96.71


Macro Economic Indicators:

Categories Year2004-2005 2005-2006

GDP Growth Rate (1995-96 Prices) 5.96 6.71Per Capita GDP (Tk.) 27061 29986Per Capita GDP (US$) 441 456Per Capita GDP GNI (Tk.) 28443 31669Per Capita GDP GNI (US$) 463 482GDP at current market price (Bill. Tk.) 3707 4162GDP at constant market price (Bill. Tk.) 2670 2849GNI at current market price (Bill. Tk.) 3896 4395Consumption (Billion Tk.) 2965 3318Private 2760 3087Public 205 231Investment of Current Price (Billion Tk.) 909 1039Private 679 777Public 230 262Domestic Saving at Current price (Bill. Tk.)

742 843

National Saving at Current price (Bill. Tk.)

985 1108

Sectoral Share of GDP at Current price %age

Agriculture 2.21 4.49Industry 8.28 9.56Service 6.36 6.47

Memo Item: as % of GDPDomestic Saving as % of GDP 20.01 20.26National Saving % of GDP 25.84 26.61Investment as % of GDP 24.53 24.97Public Investment 6.21 6.30Private Investment 18.32 18.67Total Revenue Receipt as % of

GDP10.57 10.99

Tax Revenue 8.62 8.97Non Tax Revenue 1.96 2.02Foreign Exchange Reserve (Mllion US$ Yearly Average)

3023.60 2823.70

Exchange Rate (Tk/US$) 61.39 65.70


Current Exchange Rate: 1 USD = 74.775 BDT DAY RANGE: (74.775 - 74.775)Exchange Rates Updated: 2011-07-24 16:50 Web: http://usd.fxexchangerate.com/bdt/Note: The total project already calculated by 70 BD Taka, against 1US$

Table-1. Contribution of Livestock & Poultry on National Economy:

Growth of Livestock in National Economy 7.23%Contribution of livestock sector in National Economy 2.95%Role of livestock in Agricultural production 17.32%Cultivation of Land 75%Self Employment 25%Production of Livestock Products (crore) 15000 (Approx)Foreign exchange earning (only from hides & skins) 2003-04

4.31%

Rural Transport 50%Production of Organic Fertilizer 80 MMTFuel Supply 25%

Source: Economic Review-2006

According to the last statistics of Livestock and Poultry population for the year 1993-94, the number was 3 crore 52 lac and 12 crore 28 lac respectively. In 2006-07 the population of Livestock and Poultry raised to 4 crore 75 lac and 24 crore 60 lac respectively.

Table-2- Livestock & Poultry population in Bangladesh

Number (in million)Livestock/ Poultry

1993-94

2000-01

01-02 02-03 03-04 04-05 05-06 06-07March/07

Cattle 21.88 22.39 22.46 22.58 22.60 22.67 22.80 22.87Buffalo 0.68 0.92 0.97 1.01 1.06 1.11 1.16 1.21Goat 12.45 16.27 16.96 17.69 18.41 19.16 19.94 20.75Sheep 1.51 2.11 2.20 2.29 2.38 2.47 2.57 2.68Total Livestock

35.52 40.69 41.59 42.52 43.45 44.41 46.47 47.51

Chicken 97.04 142.68 152.24 162.44 172.63

183.45 194.82 206.89

Duck 25.76 33.83 34.67 35.54 36.40 37.28 38.17 39.08Total Poultry 122.8 176.51 186.91 197.98 209.0 220.73 232.99 245.97


http://usd.fxexchangerate.com/bdt/

The density of Livestock and Poultry population per unit of land is high in Bangladesh, compared to other countries of the world. From the year 1998-99, the production of milk, meat (beef, mutton and chicken) and egg were increasing on a regular basis with a lower increasing rate which has reached to a higher rate in the year 2005-06. Table -3 shows the production of livestock products for the last 9 years in our country.

Table-3- Production of Milk, Meat & Egg.

ProductionProduct Unit

(ton)93-94

98-9999-00 2000-01

01-02

02-03

03-04

04-05

05-06

06-07March/07

Milk Million T 1.39 1.66 1.70 1.74 1.78 1.82 1.99 2.14 2.27 1.635Meat Million T 0.49 0.66 0.70 0.75 0.78 0.83 0.91 1.06 1.13 0.7675Eggs MillionT 2404 3512 3793 4097 4424 4777 4780 5623 5422 3813

In order to continue the previous success it has taken initiative to strengthen the dairy sector. Taka 100 crore has already been distributed to 15 thousand registered private dairy farms as incentive. In addition to that, training program has been organized to reduce the feeds and forage scarcity through Animal Nutrition & Technology Transfer Project

The per capita consumption of milk, meat and egg has been increased significantly due to augmented production. During the year 2000-01, the per capita availability of milk, meat and eggs were 36 ml/day, 15 g/day and 31 number/year respectively, which has been increased to 45 ml/day, 22 g/ day and 39-number/ year in 2005-2006.

List of Government Dairy Farms and communication numbers:Name of the Govt. Farms Head of the Farm

Telephone noCentral cattle Breeding Farm, Savar, DhakaDeputy Director 02-7791766Govt. Dairy Farm, Tilagorh, Sylhet Assistant Director 0821-760537Govt. Dairy Farm, Rajabarihat, Rajshahi Manager

01674056323Govt. Dairy Farm, Talma, Faridpur Manager

01712890056Govt. Dairy Farm, Kashipur, Barishal Assistant Director 0431-61508Govt. Dairy Farm, Sherpur, Bogra Assistant Director

01718685552Govt. Dairy Farm, Hathazari, Ctg. Assistant Director

01830146187Govt. Buffalo Breeding farm, Fakirhat, Bagerhat Manager

01724132104


Livestock Development Policy/Program:

Tax holiday for the farmers.Rebate in electricity consumption @ 20% for the commercial/private farms.

25% cash incentive to export poultry and poultry products.

Tax free for equipment, drugs, vaccines used in the farms

Import restricted for poultry & poultry products from bird flu affected countries to keep the country free from bird flu.

Livestock Act:

Government has adopted and executed the following act-

Animal Quarantine Act -2005Animal Disease Prevention & Control Act-2005

Development of Infrastructure:

Sixty-four Districts Veterinary Hospital have been established in District head quarter for the expansion of modern veterinary services to the farmers. Technical supports are provided to poultry and dairy farm through evaluation of feeds, besides the modern veterinary services. The activity also includes determination of aflatoxin in animal feeds. Moreover, 464 Thana Veterinary Dispensary situated at Upazila level have been converted to Upazila Livestock Development Complex (ULDC). Three hundred twenty five ULDC are functioning and providing services that include training to small-scale dairy and poultry farmers and advice to farmers. The construction of the rest 139 ULDC is going on.

Man power Development in Livestock Sector:

Veterinary College at Chittagong, Sylhet, Barisal & Dinajpur has been established and educational session has been started. At least 200 veterinary graduates are graduating each year from Veterinary Colleges. Recently Chittagong Veterinary College has been converted to Veterinary and Animal Science University. Establishment of educational institution is a part of strengthening the transfer of livestock technology to the farmers through skilled manpower development.


Development Budget

Fiscal Year No. of Project Total Amount of Taka2005-06 12 (investment)

1 (technical) = 13 Nos.

Allocated – 4104 lacUtilized – 3547.48 lac(87% of the allocation)

Departmental Institute:


Manpower of Department of Livestock Services:

Approved Vacant Post Rem.


Divisional Livestock Offices 7District Livestock Offices 64District Veterinary Hospitals 63Upazilla Livestock Offices 460Upazilla Veterinary Dispensary 460Metropolitan Thana Livestock Office 9Central Cattle Breeding Station 1District Artificial Insemination Center 22Artificial Insemination Sub-center 460Artificial Insemination Point 634Cattle Improvement Farm 6Buffalo Breeding and Development Farm 1Goat Development Farm 5Pig Farm 1Central Poultry Farm 1Zonal Poultry Farm 2Poultry Farms 23Chick Rearing Farm 7Central Duck Farm 1Regional Duck Farm 3Central Veterinary Hospital 1National Zoo 1Regional Zoo 1Livestock Research Institute, Mohakhali 1Central Disease Investigation Laboratory 1Field Disease Investigation Laboratory 7Livestock Nutrition Laboratory 1Artificial Insemination Laboratory 1Officers Training Institute 1Veterinary Training Institute 2Livestock Training Institute 1Veterinary Collage 4

Cadre

Non Cadre TotalCadr

eNon Cadre Total

Class-IDirector General 1 - 1 - - - C.C.Director/Principal O.T.I. 4+1 - 5 1 - - C.C.Deputy Director/Equivalent

46 4 50 5 3 8

District Livestock Officer/Equivalent 191 6 197 27 5 32Upazila Livestock Officer/Equivalent 523 10 533 81 6 87Veterinary Surgeon/Equivalent

705 50 755 145 30 175

Total 1471 70 1541 254 44 303Class-II - - 4 - - 4Class-III - - 4600 - - 247Class-IV - - 2279 - - 20Total Manpower - - 8428 - - 574


1 INTRODUCTION TO LIMON ENTERPRISE (PVT.) LTD:

The Private Sector Entrepreneur, LIMON ENTERPRISE (PVT.) LTD was established with the objective to provide fresh impetus to the economy through the launch of an aggressive SME development. Since its inception in January 2011, LIMON ENTERPRISE (PVT.) LTD 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 developmentstrategy involved recommending changes in the regulatory environment by taking into consideration other important aspects including finance, marketing, technology and industrial development. LIMON ENTERPRISE (PVT.) LTD has so far successfully formulated strategies for sectors including, fruits and vegetables, poultry, fishery and dairy. Whereas, the task of SME development at a broader scale still requires more coverage and enhanced reach in terms of LIMON ENTERPRISE (PVT.) LTD ’s areas of operation. Along with the sectoral focus a broad spectrum of business development services is also offered to the SMEs by LIMON ENTERPRISE (PVT.) LTD. These services include identification of viable business opportunities for potential SME investors. In order to facilitate these investors / lenders, LIMON ENTERPRISE (PVT.) LTD provides business guidance through its consultant desk services as well as development of project profile 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 / lenders to make well-informed investment / lending decisions.

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 “Dairy Farm” which comes under “Livestock and


Agriculture” sector. Before studying the whole document one must considerfollowing critical aspects, that form the basis of any investment / lending decision.

3 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT / LENDING:

Dairy production is all-inclusive activity, related to animal care, reproduction, feeding, and management. It is defined as all those aspects and activities relating to rising of dairy animals during their various phases of life to get wholesome milk. Before making the decision, whether to invest in the dairy and livestock farming 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:

Back bone and main stay of economy. Provides raw material for food & Leather industry.Major source of food, i.e. Milk & Meat, including value added products.Source of Farm Yard Manure (FYM) for bio gas plant and organic fertilizer.Sizeable foreign exchanges earning through exports.Wide scope of Milk Production, ranking increasing in the world.Ample human resource employment sector.Stationed, Permanently located secured loaning sector.Contended nature. Low cost living standard.Full family involvement (directly and or indirectly), Devoted & Hardworking Sector.This could be accompanied by an inventory of strategic public- and private-sector stakeholders and followed by the development of an indicative investment program with a focused, time-bound national action plan containing realistic and measurable targets, such as raising milk and dairy products consumption from 18 kg to 25 kg by the year 2015

3.2 WEAKNESSES:

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 pedigree record keeping.Management of dairy farm is a challenging job.Nutrition on raw materials is still a problem hampering the livestock productivity in general and milk production in particular.Enormous production losses due to endemic diseases, like Anthrax, etc. every year.

3.3 OPPORTUNITIES:

Ministry of Fisheries and livestock from Govt. of Bangladesh, Board of Investment (BOI) & Bangladesh Bank Equity Entrepreneurship Development project priority sector.Meat & Dairy 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.Vast range of area of operation, more needs and scope of development.Value added dairy products are in demand.Massive migration of labor to cities can be checked / stopped.Corporate financing will become a niche in lending market.Cooperatives can play a big role for development in dairy sector like India, New Zealand and Australia.3.4 THREATS:

Implementation of WTO will result in open & competitive commodity pricing.Due to fear of default, banker community has reluctance for lending loans.High risks of diseases in live stock.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.

4 PROJECT DESCRIPTIONS:

4.1. PROJECT PROFILE:

Background

Bangladesh has a population of 140+ million people(BBS) & 160+ million, as per UNDP/FAO assessment; where, more than 80 percent of them, or approximately 15 million households, are located in rural areas. An estimated two-thirds of those households own livestock. Although population growth is slowing, there are still almost 1 000 people per sq km – the highest density than any country in the world (excluding small island-nations and city-states). The dwindling per capita land resource is one of the causes of persisting poverty in the county, according to contemporary human development reports from the United Nations Development Program (UNDP): More than half the population owns less than 0.5 acres; the bottom 40 percent possesses just 3 percent of the total land area; 48 percent live below the poverty line; and 30 percent consume less than 1 900 calories per day (the minimum desired level is 2 300 calories).

Agriculture generates two-thirds of total employment, contributes a quarter of total export earnings and provides food security to the increasing population. Crop production and animal husbandry are interdependent in the country’s mixed-farming system, with livestock performing multiple functions, including the provision of food, nutrition, income, savings, draught power, manure, transport and other social and cultural functions. With livestock, people who are poor and landless can still access common property resources, such as roadsides, open grazing areas and water bodies. Cattle are by far the most important farm animals; smallholders possess the majority of them, and they are directly linked to family income, nutrition and welfare. While animal husbandry is a part of mixed farming, the system of production is not well integrated, and maximum value is not always gained from the inputs and outputs. There is scope for basic improvements that can lead to greater integration and productivity.

In 2006, the livestock sector contributed 3 percent of gross domestic product (GDP), or about 18 percent of agricultural GDP. When the indirect benefits of draught power and manure for fuel and fertilizer


are added to the direct economic output of meat, milk and hides, the value added of the livestock sub sector almost doubles, to about 6 percent of GDP. Livestock also provide a critical cash reserve and steady cash income for many marginal farmers who grow crops essentially for subsistence or who have little or no land at all. The national herd comprises: 23 million cattle, 1.2 million buffalo, 20 million goats and almost 3 million sheep. Milk production was 2.27 million tons in 2006, mainly produced by cows yielding, on average, 200–300 liters per 160/180-day lactation.

In the few specialized areas where cross-breeding has taken place, yields range from 1 000 to 3 000 liters over a 210/300-day lactation. Until quite recently, milk was a by-product of cattle, used largely for making traditional sweets and in tea. Per capita milk availability currently ranges from 40 to 50 g per day (14–18 kg per year). The gap between supply and demand is largely met by milk powder imports of about 20,000 tons annually, valued at some US$70 million. Imports represent 0.16 million tons of liquid milk equivalent annually, feeding some 6–7 percent of total consumption and accounting for an estimated 55 percent of the formal dairy market. Although there is no specific nutritional target in the country for milk consumption, the figure of 250 g per day (90 kg per year) often appears in national plans, implying an annual milk requirement of 12.8 million tons – more than five times current production.


The history of the sector

The first dairy plant was set up in 1946 by the National Nutrients Company in the then Indian subcontinent, at Lahirmonhanpur, now in Sirajganj district (northern Bangladesh). Following the partition of India in 1947, the Eastern Milk Products Company took over through an exchange of properties. Milk and dairy products marketing eventually started in 1952 under the brand name Milk Vita in the then East Pakistan. The cooperative accumulated huge losses, as did the only other dairy venture, Asto dairy in Dhaka, which began in the 1960s. By 1970, both dairies had virtually ceased trading.

Acute scarcity of milk following independence from Pakistan in 1971 prompted the Government to commission two dairy studies, with support from FAO and the Danish International Development Agency (DANIDA). The studies’ authors recommended establishing a sustainable cooperative dairy development program based on buying surplus milk from smallholder producers and combining the businesses of Asto and Milk Vita into the Eastern Milk Producers' Cooperative Union Ltd, which became Bangladesh Milk Producers Cooperative Ltd (BMPCUL) in 1980.

The Milk Vita Cooperative Dairy Complex was established in 1973 and operated until 1978 under the auspices of the Ministry of Local Government, Rural Development and Cooperatives, with support from FAO, DANIDA and UNDP. The cooperative model was largely adapted from the successful “Anand Pattern” Dairy Cooperative in India. Two dairy plants and three milk collection centers were built, and milk collection from smallholders started in 1976. The Government also established a small dairy at Savar in the mid 1970s, close to Dhaka, to provide government employees processed milk from its Central Cattle Breeding Station.

At Milk Vita, the gap between milk supply and demand was originally met by recombining butter oil and the skimmed milk powder (that DANIDA and the European Economic Community provided) into liquid milk. By the end of the 1970s, more and more village cooperatives had been established and annual milk collection from some 36 000 smallholders had rapidly built up to 15 million liters. But by the mid 1980s, Milk Vita had virtually collapsed, with less than 3 million liters of milk collected annually. The problem was attributed to unfair competition from imports flooding in from subsidized over-production in Europe. At that time, whole milk powder was retailing at less than 20 percent of its cost price in Europe and one-third of the cost of milk production in Bangladesh.


By the beginning of the 1990s, import taxes were imposed to counter the adverse impact of the cheaper imports. Also at that time and following the recommendations of the FAO technical assistance team, the Government withdrew from day-to-day management of the dairy cooperative. Professional managers took over, turning Milk Vita into a profitable business.

Recent developments

Fortuitously, the turnaround at Milk Vita coincided with a growing market for processed milk as urbanization accelerated. This encouraged other investors to adopt parts of the Milk Vita smallholder dairy model. The sector now engages many enterprises, as Table 1 indicates. In 1990, processors collected just 1 percent of the total milk production of 1.5 million tons (30 000 liters per day); by 2006, this had increased to 7 percent of 2.27 million tons (384 000 liters/day).

Other developments since the 1990s:

Government-sponsored investment incentives for a few medium- and large-scale farmers to purchase improved dairy animals; this initiative largely failed because the farmers were not well integrated into the dairy input supply and value chains and were unable to repay their loans.Cheap sweetened condensed milk is being produced from imported powder milk, sugar and vegetable oil by four large companies: Danish, Starship, Goalini and Kwality. The condensed milk has captured the lion’s share of the tea-drinking market, though it is not a dairy product because it contains vegetable oil. The business model of these companies is based on the continued availability of cheap (subsidized) milk powder from developed countries. They have been hugely profitable because they took advantage of low international commodity prices. It will be interesting to see how they adapt their business model to cope with the recent significant increases in prices.Foreign investors such as Arla Foods Denmark (Dano brand) and the New Zealand Dairy Board (Anchor brand) have imported milk powder in bulk for repacking.

Table 1: Milk processing capacity, 2007

Dairy (establishment year)

Average milk collection (liters/day)

Smallholdermilk suppliers


1. Milk Vita (1973) 200,000 150,000

2. Amomilk (1996) 10,000 5,000

3. Tulip Dairy(1998) 3,000 2,000

4 Arong–BRAC Dairy (1998) 80,000 7,0000

5. Bikrampur Dairy (1998) 10,000 6,000

6.Ultra–Shelaidah Dairy (1998) 10,000 4,000

7. Aftab (1998) 8,000 4,000

8. Pran (2001) 40,000 30,000

9. Grameen–CLDDP (1999) 7,000 6,000

10. Rangpur Dairy (2007) 8,000 7,000

11. Akij Group (2007) 4,000 500

12. Grameen Danone (2007) 1,000 From CLDDP

13. Savar Dairy (1974) 3,000 From own farm

14. Army Self-consumption From own farm

Total 384,000 284,500

Source: Khan.

Dairy sector policy and strategy

Following the establishment of Milk Vita, two dairy development studies were initiated in the 1980s as a preface to scaling up cooperative dairying elsewhere in the country. The Government and UNDP/FAO sponsored both studies. The first, in 1984, led to the National Cooperative Dairy Development Plan. The Chairman of the


Indian National Dairy Development Board (NDDB) orchestrated the second study, in 1987, which led to expanding the earlier plan into a formal strategy for dairy development in Bangladesh. The strategy proposed a regional approach, based on setting up four regional dairy cooperatives to collect milk from smallholder village cooperatives and process and market it safely and affordably to lower-income urban groups. The regional dairy cooperatives would be enveloped into a national dairy federation or a dairy development board. Detailed implementation programs were prepared but have remained shelved for more than two decades.

Current government policy for agriculture aims to provide an enabling environment and supportive role in moving from a predominantly state function to a more diversified and environmentally sustainable commercial venture. The strategic framework targets non-crop agriculture, such as fishery, poultry and livestock, for accelerated investment.

After an intensive stakeholder consultation process, the Directorate of Livestock Services (DLS) and the Ministry of Fisheries and Livestock (MOFL) drafted the National Livestock Policy in 2005. It was finalized in 2006 under the recently completed Grameen Bank/UNDP/FAO Community Livestock and Dairy Development Project (CLDDP). Although the DLS and the MOFL adopted the policy, it has yet to be approved by the Cabinet, due largely to the succession of interim governments and prevailing civil unrest since it was prepared. Although the policy contains no separate dairy component, the Milk Vita and Grameen–CLDDP dairying models are promoted as “models for early adoption”.

Once approved, the policy will have several more tough challenges:

implementation of the policy recommendations;acceptance of institutional reforms;establishment of regulatory frameworks and a legal body;enforcement of the laws and regulations;quality control assurance;collaboration with the private sector for veterinary services and simple diagnostic facilities.

The Government’s National Strategy of Accelerated Poverty Reduction (NSAPR, 2005) sets out ways and means for achieving two of the Millennium Development Goals (MDGs): halving poverty and halving under-nutrition by 2015. The strategy document states that while the livestock sector as a whole grew 3 percent during the 1990s, poultry has demonstrated the most impressive growth rate, at around 10


percent per annum since the mid 1970s. Growth in milk production generally has mirrored the general trend in the livestock sector, with low productivity a major limitation to sector development because production remains primarily for subsistence and is highly dispersed. With rapid urbanization and income increases, the demand for livestock products, such as meat, milk and eggs, will continue to rise. The strategy targets local milk production to replace imports, which currently range between 10 and 20 percent of annual consumption. The strategy promotes community-based organizations of production, processing and marketing to overcome the constraints. Smallholder milk producers thus are expected to play a key role in helping to achieve the target and, in so doing, helping Bangladesh to achieve the MDGs relating to poverty and nutrition.

The NSAPR includes a school lunch program to improve attendance and reduce the incidence of malnutrition as well as generating demand for local produce and catering services through backward and forward links. Community participation is a key driver. Currently, the United States’ Department of Agriculture funds a small scale milk program in Bangladesh, for which the US Company Land O’ Lakes imports milk and then recombines it with its milk powder. Although they enhance the nutrition intake of school-age children, school milk schemes using imported milk powder have limited sustainability and are less beneficial to livelihood development as those using locally produced milk.

Affordable and readily available cattle treatment and other development support provided by Milk Vita and Grameen-CLDDP have encouraged the expansion of milk producers. Still, even though the Government now generally recognizes smallholder milk production in its development strategy, the absence of a comprehensive national dairy policy may limit the growth of the sector. What has been achieved so far primarily relates to the influence of a milk collection system introduced by dairies, which has resulted in a fairer price system for producers. Initially, a government ministry set Milk Vita’s prices; but since becoming more independent in the early 1990s, Milk Vita has decided its own prices, in competition with the other dairies as well as imports.

Smallholder milk producers and marketing models:

Smallholder milk producers play a key role in dairy markets in Bangladesh. They supply all the domestic milk for the informal traditional market and three quarters of the formal processed market (Annex I provides an illustration of the various smallholder milk producers). Milk Vita and Grameen–CLDDP institutionally promote the


empowerment of smallholder dairy farmers, both men and women, in the value chain and business ownership/management process, which encourages their participation. Other processing dairies tend to focus on milk collection only.

Informal traditional markets model:

Smallholder milk producers sell milk directly to consumers or milk supplier/middlemen at local markets (Figure 1). The middlemen cater to the demand of sweetmeat shops, bakeries, consumers, more distant markets and vendors. They pay producers up to 50 percent less for their milk than other models, such as those described in the following sections. In many cases, the middlemen provide loans to smallholders with interest rates of up to 20 percent per month.

Figure 1: Traditional Market Model

Milk Vita Cooperative model:

The Milk Vita Cooperative model was adapted from the world-renowned Anand Model in India. It modestly started in the mid 1970s by providing 4 300 very poor, often landless, households in remote rural areas with a complete package of milk production-enhancing technologies, organizational skills and a milk collection-processing-marketing system. It has since grown into a successful commercial dairy enterprise, collecting from more than 100 000 smallholder members of some 1 200 primary village cooperatives and then processing and distributing the milk to all major cities in the country. In 2006, smallholder milk producers sold 75 million liters of milk surplus. They also earned patronage dividends from Milk Vita’s profits. The resulting increase in milking cow numbers and savings generated has helped cushion them against the devastating effects of severe flooding that regularly afflicts the country.

A novel aspect of the Milk Vita operation is its urban distributor cooperatives. These use locally fabricated “milkshaws” – an insulated


box mounted on a traditional three-wheeled-cycle rickshaw chassis – to deliver affordable pasteurized milk and dairy products to urban shops and consumers.

The Milk Vita model (Figure 2) created jobs, reduced collection and distribution costs and improved milk quality by cutting delivery times, especially in congested city areas. One off-farm job was created for every 35 liters of milk collected, processed and marketed, and more than half those jobs are in rural areas. Democratically elected milk producer and distributor cooperative members are now in the majority on Milk Vita’s board of directors. These achievements encouraged the Government to withdraw from the day-to-day management, enabling the board to hire professional managers, which led to improved performance and created a platform for further expansion to bring more poor people into the dairy value chain. Since the late 1990s, Milk Vita has invested more than $10 million to expand its milk collection, processing and marketing network and now delivers safe and affordable milk and dairy products to some 5 million low-income urban dwellers.

Figure 2: Milk Vita Cooperative Model

The benefits of the Milk Vita Cooperative model:

The model is a holistic, cow-to-consumer model.Milk production and productivity increase.

Household nutrition and incomes increase.


Communities are empowered through poor farmers’ participation in the organized cooperatives and through accountability of the Milk Vita board and management to its milk producer members.

Quantity of affordable and safely processed milk and dairy products for urban consumers is increased while the quality is enhanced.

Substantial off-farm employment is generated.

Milk Vita continues to be a flourishing venture and has many recent imitators that have set up similar enterprises to process and market 70 million liters of milk annually. However, these enterprises do not provide cattle development or productivity-enhancement support and technology to milk producers.

Private entrepreneur model:

Private dairies, some owned by non-government organizations (NGOs), such as the Bangladesh Rural Advancement Committee (BRAC), usually operate through milk supplier/middlemen (known as ghoshes or dudhwalas) in place of rural groups or cooperatives (Figure 3). They collect milk for a specific dairy, however, smallholders involved in the system do not receive any value-added benefit – only the basic price for their milk.

Figure 3: Private Entrepreneur Model

Livestock production is an integral part of Bangladesh's agriculture sector and plays a vital role in national economy. At present, livestock is contributing about 49.1% to the agricultural sector and 11.4 per cent to the GDP. Its net foreign exchange earnings in 2003-04 were 53


billion, which is about 11 percent of the overall export earnings of the country. The role of livestock in rural economy may be assessed by the fact that 30 to 35 million of the total rural population is engaged in livestock farming, having 2 to 3 cattle/Heifer and 5 to 6 sheep/goats per family deriving 30 to 40 per cent of income from it.


Report of the Household-basedLivestock and Poultry 2009

ItemFigures (in ,000)

Weighted Figures1. Total number of household

28,7122. Household reporting cattle

10,399Percent of total household 36.22Number of cattle 26,828Number of male cattle 11,021Number of female cattle

15,806Average price per cattle

12,078 Tk.Household having working cattle 1,570Percent of total household 5.47Number of working cattle 2,720Average price per working cattle 16,344 Tk.Household engaged in fattening cattle 965Percent of total household 3.36Number of fattened cattle 1,241Average price per fattened cattle 15,694 Tk.Household having milking cattle 3,713Percent of total household 12.93Number of milking cattle 3,874Average price per milking cattle

19,012 Tk.Household having improved/cross breed cattle 649Percent of total household 2.26Number of improved/cross breed cattle 1,088Percent of total cattle 4.06Average price per improved/cross breed cattle 20,980 Tk.Household having improved/cross breed milking cattle 180Percent of total household 0.63Number of improved/cross breed milking cattle 200Ref: Bangladesh Bureau of Statistics http://www.bbs.gov.bd/WebTestApplication/userfiles/Image/Survey%20reports/Livestock_web.pdf

Dairy farming is an agro-based project, which comprises of two aspects: dairy production and dairy technology. Dairy production is an all-inclusive activity, related to dairy animal care, reproduction, feeding, management and is defined as all those aspects and activities


Survey

relating to raising of dairy animals during their various phases of life to get wholesome milk. Dairy technology relates to all aspects of processing milk to convert it into variousproducts. This conversion of milk into product is practicable only if it is economically viable. Dairy animals, mainly Heifers and cows are purchased from the animal markets or breeders located in peri-urban areas of cities like Savar, Sirajganj, Pabna and or making decision to collect from the hi-breeder from the India, Australia, New Zealand or Pakistan origin . Dairy animals are fed on protein sources (concentrate) along with plenty of green fodder. The latest innovation like Urea Molasses or Plant protein Concentration (PPC) will also be adopt for fattening of indigenous / exotic species for better production. Animals are milked twice a day i.e. morning and evening. The milk is sold at the farm or may be directly sold in the urban market. The milk price varies according to its quality and the season. Heifer milk is sold at Bangladeshi Taka 45-50 per liter at the farm gate and 55-60 in the urban market.

4.2. OPPORTUNITY RATIONALE:

Milk is among the most important consumable and marketable commodities of the world with enormous demand in domestic and international market. In Bangladesh cow is the main source of milk in international market.

Dairy production systems in Bangladesh are similar to those in India and Pakistan. However, milk production and yields (2.8 million tons ECM from cows and buffaloes, and 711 kg of ECM per cow/per day, respectively) are significantly lower than in India and Pakistan.

Most of the milk is consumed by farming households or sold on the informal market, and less than 20 per cent is delivered to formal milk processors. In 2005, per capita milk consumption stood at only 32 kg/year. Bangladesh is 85 per cent self-sufficient in milk and imports 0.4 million tons per annum.

Dairy sector possess potential of additional 3 billion liters of milk with a growth rate faster than any other sector of economy. The scope for export of value added derivatives of milk is also huge especially processed milk market share has increased considerably. Technologically advanced production, processing and storage facilities have made it possible to preserve Milk and its value added products for longer period of time but in Bangladesh, only below 2% of total milk production is processed and marketed through formal channels.


Although per animal milk yield in lower than other countries, Bangladesh is the 3rd largest milk producing under developing country in the world. It is also required to introduce improved technological methods in dairy farming industry to increase per animal milk production and attain economies of scales. This provides huge opportunity with minimal competition for farmers to invest in dairy farming and milk processing sectors of the economy.Ref: http://www.thecattlesite.com/articles/2526/a-summary-of-milk-production-across-the-world

4.3. MARKET ENTRY TIMING:

The demand of milk in summer is high as compared to winter. That’s why the animals in summer are sold at a bit higher prices as compared to winter. So the proposed business can be started before the onset of summer season. At the commencement of the proposed business, it is important that the entrepreneur must have good knowledge of the production and have contacts with the livestock breeders and farmers. The ability to work with people and animals, and efficient use of resources are important aspects in modern and commercial dairy farming. The implementation of stocking and rearing of meat producers bull / calf will be purchased for meat marketing will be minimum 3-6 months before from the peak time of Kurbani, Eid-ul-Azha, the prominent festival of Muslim peoples of the world.


Source: FAO Bulletin WEB: http://www.fao.org/docrep/011/i0588e/I0588E03.htm#fn4

Milk Flow Chart for Bangladesh


http://www.fao.org/docrep/011/i0588e/I0588E03.htm#fn4

Milk Flow Chart for Bangladesh

Milk Price Chart for BangladeshNote: for the cause of scarcity of the product, present market is too much higher than the milk price chart, stated as above, in context of the month July & year 2011

4.4. PROPOSED BUSINESS LEGAL STATUS:

The proposed legal structure of the business entity is partnership (Private limited company, segregated with shares). Although selection totally depends upon the choice of the entrepreneurs but this financial feasibility is based on Private Limited Company, will leads to the Public Limited Company.

4.5. PROPOSED CAPACITY:

The feasibility study suggests an initial herd size of 2,500 animals that is economical to justify the overhead cost. The farm size will increase till 10,000 animals within 10 years. Herds mix of 70% cows and 30% Heifers are recommended to get the maximum milk production round


the year. Heifers (Among the indigenous some types of cattle in different region of the country like Red Chittagong, Pabna, North Bengal Grey and Munshiganj Origin) with second lactation (calving) 8 heads Cows (Crossbred / Local)) with second lactation (calving) 17 heads. A cow, on average, yields 12-14 liters of milk a day over a lactation period of 285 days whereas a Heifer, on average, yields 10 liters a day over a lactation period of 305 days.

4.6. PROJECT INVESTMENT:

4.5. Project Investment

The total cost of the project is US$ 65,287,579.00 for the first year, out of which capital cost of the project is US$ 63,246,200.00 for purchasing the animals and constructing the building and the rest is used to meet the working capital requirement.

Project Investment Cost for the first year1 Initial Capital Cost1.1 Land 52,607,200.00 1.2 Building / Infrastructure 8,039,000.00 1.3 Furniture & Fixture 57,000.00 1.4 Animals Cost 2,050,000.00 1.5 Machinery & Equipment 285,500.00 1.6 Office Vehicles 166,500.00 1.7 Pre Operating Cost 41,000.00

Total Initial Capital Costs 63,246,200.00 2 Initial Working Capital2.1 Administrative Salaries for the first year 150,500.00 2.2 Labor Salaries 283,750.00 2.3 Electricity for 1st year 112,000.00 2.4 Gas Connection 103,600.00 2.5 Fuel for vehicles (Petrol / Diesel / Gas) 13,625.00 2. Fodder & Medicine Inventory 1,037,674.00


62.7 Cash in Hand

20% as contingencies fund for sl. 2.1-2.6S-total For 2.7 340,230.00 Total Initial Working Capital 2,041,379.00 Total Project Cost 65,287,579.00

The proposed pre-feasibility is based on the assumption of 100% debt and 0% equity. However this composition of debt and equity can be changed as per the requirement of the lender. The borrower has the capability to show maximum 20% land cost as equity US$ 10,929,716.00

Project Financing:Debt 100% financing from the lender US$ 65,287,579.00& or,Debt with reducing 20% land cost as US$ 54,357,863.00

Project Economics:Viability Equity Project IRR (%) 15.64%Pay Back Period (year) 6.39

4.7. PROPOSED LOCATION:

The proposed large scale farm is now in operation as small scale farm with 50 cattle / industry’s location is available at Pelaid Mouza, (mouza, a part of the Union), at Sreepur Upazilla under Gazipur District, adjacent to Dhaka, the Capital of Bangladesh. For the cause of land crisis, Sreepur also declared as Industrial Zone.

Sreepur Upazila at a glance: (GAZIPUR district) with an area of 465.24 sq km, is bounded by BHALUKA and GAFFARGAON upazilas on the north, GAZIPUR SADAR upazila on the south, KAPASIA upazila on the east, KALIAKAIR and SAKHIPUR upazilas on the west. Main rivers are Shitalakshya, Banar, Parulia, Kawraid, Dhaor.


http://www.banglapedia.org/httpdocs/HT/S_0032.HTM

http://www.banglapedia.org/httpdocs/HT/K_0036.HTM

http://www.banglapedia.org/httpdocs/HT/K_0078.HTM

http://www.banglapedia.org/httpdocs/HT/G_0066.HTM

http://www.banglapedia.org/httpdocs/HT/G_0003.HTM

http://www.banglapedia.org/httpdocs/HT/B_0453.HTM

http://www.banglapedia.org/httpdocs/HT/gazipur

Sreepur (Town) consists of one mouza. The area of the town is 14.61 sq km. It has a population of 16,766; male 52.86%, female 47.14%; density of population is 1148 per sq km. Literacy rate among the town people is 41.7%. It has one dakbungalow (Government Rest House).

Administration Sreepur thana was turn into an upazila in 1984. It consists of 9 union parishads, 81 mouzas and 186 villages.

Archaeological heritage Rajbari (residence) of the Chandal Rajas at Chinashukhania (c. Vedic period).

Historical events There is an opinion that Sreepur was named after Raja Sreepal. It is said that the local Bhuiyans fought at Karnapur to resist the Mughal advancement. Possibly Karnapur Fort and the adjacent tank bear witness to that incidence.

Marks of the War of Liberation Mass grave 2 (Sreepur College compound and Satkhamar).

Religious institutions Mosque 600, temple 5, church 2, tomb 4; noted of which are tomb of Shah Saheb at Sreepur, Satkhamar Darga and Akandabadi Mosque at Kewa.

Population 320530; male 51.13%, female 48.87%; Muslim 95.43%, Hindu 4.26%, Christian 0.11%, Others 0.20%; ethnic nationals: Santal, Koch, Rajbanshi and Mandi (50 families).

Literacy and educational institutions Average literacy 44%; male 42.5%, female 45.9%. Educational institutions: college 7, madrasa 34, secondary school 45, government primary school 105, non-government primary school 41, NGO operated school 44.

Newspapers and periodicals Sreepur Barta (extinct).

Culture organisations Club 10, public library 1, cinema hall 3, theatre group 6.

Main occupations Agriculture 55.7%, agricultural labourer 16.02%, wag labourer 2.67%, transport 2.16%, business 9.60%, service 4.22%, others 9.63%.

Land use Cultivable land 31454.27 hectares, fallow land 105.96 hectares, single crop 44.06%, double crop 49% and triple crop land 6.94%; land under irrigation 31.62%.


Land control Among the peasants, 33.06% are landless, 22.64% marginal, 31.5% intermediate, 12.8% rich.

Value of land Market value of first grade cultivated land about Tk 12000 per 0.01 hectare.

Main crops Paddy, wheat, potato, jute, mustard seed, ginger, turmeric, vegetables.

Extinct and nearly extinct crops Betel leaf, indigo.

Main fruits Jackfruit, papaya, pineapple, banana, mango, litchi, guava.

Fisheries, dairies and poultries Fishery 36, dairy 1, poultry 10, hatchery 4.

Communication facilities Roads: pucca 80 km, semi pucca 20 km and mud road 800 km.

Extinct and nearly extinct transports Palanquin, boat, bullock cart.

Manufactories Ice factory 5, saw mill 27.

Cottage industries Goldsmith 2, blacksmith 10, tailoring 50, welding 12.

Hats, bazars and fairs Hats and bazars are 31, most noted of which Sreepur, Maona, Barmi, Rajbari and Kawraid.


Map Source: LGEDFrom Wikimapia: http://www.wikimapia.org/#lat=24.2033375&lon=90.5291998&z=17&l=0&m=h


Project Location

For the cause of reserve forest as national park, plenty of fodder is available at that point. In addition with this remarkable feed and fodder mills are available, within 20 KM from the proposed / ongoing project.


Project location

4.8. KEY SUCCESS FACTORS/PRACTICAL TIPS FOR SUCCESS:

Commercial dairy farmers depend on land, labor and animals as the major resources. The thrust in modern dairy farming is on the increased use of capital and management. Successful dairy farming harnesses all available resources into productive and profitable unit. Dairy farming is highly complex as it includes breeding, management, feeding, housing, disease control and hygienic production of milk on farm. The judicial use of means and resources to achieve clearly defined goals is the key success factor in modern dairy farming i.e. the art of maximization and optimal utilization of resources and means for maximizing productivity and profits. The low yielder animals are uneconomical to keep, hence these should be culled. Theover all genetic improvement of all the dairy animals is necessary for improved milk production. It involves milking records at equal intervals, selection of bull from high producing mothers, progeny testing of breeding bull and then making extensive use of these bulls by well-organized Artificial Insemination (AI) program. Feeding dairy animals on nutritious and high yielding hybrid varieties of forages can be adopted. The surplus forage should be preserved as silage or hay. Other farm management practices include feeding for growth, lactation, pregnancy or maintenance, hygienic milk production, comfortable and ventilated barns, spraying/ wallowing of animals in summer, timely detection of heated, mating, with selected bull orAI service. If animals are bred within the 60-90 days of calving provided with clean surroundings, drinking water and feed according to the requirements, the over all performance of herd can be improved.Timely vaccination against Rinderpest, Black Quarter, Foot and Mouth Disease, Brucellosis along with the prevention of mastitis and parasitic control will also improve the over all performance of dairy herd. Hygienic milk production depends upon healthy animals, clean surroundings, clean hands of milkman and clean utensils.5 SECTOR & INDUSTRY ANALYSIS:

5.1 MAJOR PLAYERS:

Dairy farming is not an organized sector in Bangladesh. More than 90% of farming is done on subsistence level. There are very few progressive farmers, which are running the business of dairy farming in a professional manner. Milk processing was started in late 1970s, which is still facing challenges due to competition with the unprocessed milk. The processed milk has captured only 2% of the total milk market. Processed milk is not the consumer's preference due to high price differential. There are 28 milk-processing plants in the country, which were installed in mid 1980s to promote usage of processed milk. Most of these milk plants are closed due to lack of professional


management, inadequate milk supply and poor marketing campaign of the processed milk.

5.2 HUBS OF DAIRY FARMING:

The development of urban or pert-urban commercial dairy farms is something new in livestock production. Metropolitan cities like Dhaka, Rajshahi, Sylhet, Khulna, Chittagong, Barisal, Bogra etc. are the major markets of milk. Hence, dairy farms established in peri urban areas of these cities fulfill a very few, the daily need of these cities.6 MARKET INFORMATION:

6.1 SECTOR CHARACTERISTICS:

The size of this sector is still growing. Commercial Dairy farms have been set up in peri urban areas. Few of the leading commercial dairy farms are listed as follows with their establishment year:

1. Milk Vita (1973)

2. Amomilk (1996)

3. Tulip Dairy(1998)

4. Arong–BRAC Dairy (1998)

5. Bikrampur Dairy (1998)

6. Ultra–Shelaidah Dairy (1998)

7. Aftab (1998)

8. Pran (2001)

9. Grameen–CLDDP (1999)

10. Rangpur Dairy (2007)

11. Akij Group (2007)

12. Grameen Danone (2007)

13. Savar Dairy (1974)

14. Army Dairy


6.2 MARKET POTENTIAL:Bangladesh is the 3rd largest milk producer now against the FAO Statistics for under developing countries of the world. Milk production in year 2003-04 was about 27.81 million tons. Raw milk is used for drinking and tea making purpose. In rural areas, milk is used to make desi ghee, yogurt, whey (lassi) and butter. Rural as well as the urban households are the major consumers of milk.Figure 6-1 Market Value of Dairy & Livestock in Bangladesh(Source: Agricultural Statistics of Bangladesh, 2003-04)The daily milk intake of major cities like Dhaka, Chittagong is 2-3 million liters and 4 million liters respectively. The demand for milk increases during summers as the consumption of whey (lassi) rises due to hot weather. Ghee is obtained by heating the milk to evaporate water and removing the curd. Liquid butter oil with 93% fat content and a much smaller volume results. It is easy to store and resists spoilage even at tropical temperatures. The ghee from Heifer milk is white and that from cow milk yellow. Dahi or curd (similar to yogurt) is another popular product. If not refrigerated it must beconsumed within 24 hours. “Sandesh” is a popular sweet. It is prepared by condensing the milk through citrus compound, after lifting butter from the milk. Sugar and some spices are added in order to obtain desirable flavors. It is a high value product however it also has a relatively short shelf life. Milk processing companies use milk as a raw material to formulate different types of milk i.e. pasteurized milk, UHT treated milk, condensed milk, skim milk, chocolate milk & milk powder, etc. Different value added products like yogurt, ice cream, butter and cheese are also prepared from the raw milk. The processed milk market has increased its share in quality conscious consumers. The processed milk has achieved 4% share in Dhaka’s milk market during the last two decades. The milk market is growing at a growth rate of 4.5% annually with increase in milk consumption. Metropolitan cities are the major markets for the sale of milk. Milk can be sold at farms or directly to milk centers in the urban market. Goala’s collect milk from farmers in villages and deliver it at the consumer’s doorstep. Milk collection networks of different processing companies also collect milk directly from the farm and transport it to the processing facilities.Note: Sandesh, the sweet desert. Goala, the retailer milkman.

Market Value of Dairy & Livestock Products in Bangladesh (year 2003-04) Taka 362 BillionMilk 58% Meat 28% Other Livestock Products 14%


6.3 TARGET CUSTOMERS:

This pre feasibility study suggests that milk will be sold on farm door through contractors, goalas or people around that area or may be pasteurized at farm by the farmer and then deliver it to the near by city. Following are some of the target clients for a dairy farmer.1. Local people2. Gawalas3. Milk collection companies4. ContractorsThe cost of production per liter of raw milk should be lower than its sale price so that farmer could feel it economical.7 FARM INPUTS:

7.1 LAND:

7.1.1. Land Requirement:

Initially about 126 acres of land is required for a dairy farm project of animals starting from 2500 animals to a target herd size of 10000 animals in a period of 10 years. The area of fodder production can be minimized if farmer distributes the land in different fodder plots according to different growing seasons i.e. in a rotation annually. Majority of this land would be used for growing green fodder for the animals. The other part would be used for building sheds for the animals to protect them from severity of the weather. Table 7.1.1 Land RequirementsDescription Area (Acres)Shed for Cows 6Open Paddock for Cows 12Shed for Heifers 3Open Paddock for Heifers 6Shed for Calves 4Open Paddock for Calves 7Shed for Calves (older than one year) 4Open Paddock for Calves (older than one year) 6Stores for fodder, concentrate & machine room 4Utensils & milk storage 1Servant Room, Wash room 3Water Pond 7Land for fodder 63 acresTotal Land Requirement 126 acresNote: Though the proposed farm has 100 acres of own land, so, fodder cultivation practice will not be arranged for the first couple of years. Instead of this integrated vegetable cultivation will be practiced for better turnover, through over the project cycle.


7.1.2. Land Lease:

Lease is a better option for a new investor. Land on lease is available in rural areas for a period of 5-15 years. Advance rent for a few years will be charged initially. Good high agriculture land is available with an annual rent of US$450 per acre.

7.1.3. Suitable Locations:

Peri urban and rural areas where water is available to irrigate the crops are suitable locations for establishing a dairy farm. Sreepur, the proposed land is very feasible for source of fodder, for the cause of national reserve forest, is adjacent to this project location

7.1.4. Herd Mix:

The ideal mixed herd should consist of 70% cows and 30% Heifers for the viability of a farm. The cows are comparatively high yielder as compared to Heifers. This means that there will be 1700 cows and 800 Heifers in a mixed herd. Artificial insemination will be applied for the best achievement; will lead to appoint consultant / expert for this issue.

7.3. ANIMAL BREEDING AND MATING SYSTEM:

Breeds of Cows Local: Red Chittagong, Pabna, North Bengal Grey and Munshiganj Origin will cross through artificial insemination Exotic species: Jersey, Holstein Fresien are the sperm donar

The Holstein cow originated in Europe. The major historical development of this breed occured in Netherland and more specifically in the two northern provinces of North Holland and Friesland. Holsteins are most quickly recognized by their distinctive color markings and outstanding milk production. Holsteins are large, stylish animals with color patterns of black and white or red and white. Holstein heifers can be bred at 15 months ofage, when they weigh about 325 kgs body weight between 24 and 27 months of age. Holstein gestation is approximately nine months. The normal productive life of a Holstein is six years. The Jersey breed originated on the Island of Jersey, a small British island in the English Channel off the coast of France. The breed was known in England as early as 1771 and was regarded very favorably because of its milk and butterfat production. Adaptable to a wide range of climatic and geographical conditions, outstanding Jersey herds are found from Denmark to Australia and New Zealand, from Canada to South America and from South Africa to Japan. They are excellent grazers and perform well in intensive grazing programs. They are more tolerant of heat than


the larger breeds. With an average weight of 350kgs, the Jersey produces more milk. per kg of body weight than any other breed. The color in Jerseys may vary from a very light gray or mouse color to a very dark fawn or a shade that is almost black. Both the bulls and females are commonly darker about the hips and about the head and shoulders than on the body. Australian Friesian breed is being developed in Australia by the Queensland Government for use in the tropical areas. The breed was evolved using the Sahiwal from Pakistan, and the Australian Holstein-Friesian. Since the 1960’s when research work began on this breed, notable progress has been achieved towards the objective of combining tick resistance and heat tolerance with reliable milk production and fertility. Ithas now been extensively tested in the tropical and sub-tropical areas of Australia. Milk quality is good - protein level is 3.4 percent and butterfat is approximately four percent. These animals are available at an average price of US$ 1500-3000 per animal.

7.4. ANIMAL MARKETS:

Animal markets (Gorur Hat), Government and private livestock farms are the main sources for purchasing milk animals. Animal markets are situated in different places in Bangladesh, that includes Gabtali-Dhaka, Khajura & Patkel Ghata-Jessore, Kalaia-Patuakhali etc. These markets operate on daily basis, twice in a week, or once in a month. There are different contractors available in the markets, those help locating the proper animals, called as “faria”-the broker. These contractors work on commission basis and the commission rate charged may vary from 1-2% against the animal price.

7.5. ANIMAL HOUSING:

Sheds of the animals should be airy with protection of the animals from extreme temperatures and strong winds. The animal housing should be facilitated with drinking water for animals. There should be proper drainage system to keep hygiene at the farm. It consists of a built up animal shed, a brick soling paddock for animals, calving pens in which pregnant animals are kept separated from other animals before calving, one room for milk storage, one room for storing farm equipment and one for compound feed storage. The animals can be dehorned, as they are easier to handle in barns and cause less accidental injury to neighboring animals, handlers, walls and adjacent trees also.

Space RequirementDescription Sq ftShed space for a cow/Heifer 40Open Paddock for a cow/Heifer 80


Shed for a calf 40Open paddock for a calf 80Shed for a calf (older than one year) 26Open Paddock for a calf (older than one year) 40Stores for fodder & concentrate plus machine room 3600Utensils & milk storage 6000Servant room, wash room 1200Water pond 400

Table 7-4 Total Infrastructure CostDescription Sq.ft Rate/Sq.ft Total CostShed for Cows 840 150 126,000Open Paddock for Cows 1,680 5 8,400Shed for Heifers 320 150 48,000Open Paddock for Heifers 640 5 3,200Shed for Calves 460 150 69,030Open Paddock for Calves 708 5 3,540Shed for Calves (older than one year)

275 150 41,278Open Paddock for Calves (older then one year)

459 5 2,293Stores for fodder, concentrate & machine room

440 150 65,959Utensils & milk storage 147 150 21,986Servant Room, Wash room 366 200 73,288Water Pond 761 20 15,216Total Infrastructure Cost 70,966 478,191

7.6. FARM MACHINERY:

The pre-feasibility suggests, hiring tractor for land preparation to grow fodder crops. Only few farm equipment like fodder chopper, water pumps, milk utensils will be purchased.

Farm EquipmentCalf feeder, Teat Dip Cup, Toka machine (chef cutter), Water pump, Generator (Cummins, FGWilson, Energypac, etc), Deep Tube Well (8” Dia)

Miscellaneous Supplies RateFreezer, Mule Cart, Ceiling Fans, Exhaust Fans, Miscellaneous farm utensils, Electrical fixtures(lighting, etc), etc.

Description QuantityChains 2600Milking Buckets 200


Electric Cuffing Machines with Implements 10Milking Cans 25 liter 800Deep Freeze 20 CFT 30Essential Industrial tools & Spares (L.S.) 1Compressor Water pumps 2HP 6Deep Tube-well 8" Dia 1Milk Machine (Vacuum line system) 2Milk Cooling Unit / Chiller 10000 litre/hour 2Farm tractor & Trailer 1Calf feeder 30Teat Dip Cup 30Straw / Wheat / Maize Cutter 5Generator 1200KV (Cummin, FG Wilson, Energypac, Volvo, etc. 1Heavy Duty Ventilation Fans 2HP 25Testing lab (L.S.) 1

***Total space requirement has been rounded off.***As the capital cost will be budgeted for 10 years, therefore the initial machinery and equipment cost has been calculated on the basis of 10 year machinery requirement.

7.7. FEED:

7.7.1. Ration for Dairy Animals:

The ration is allowance of nutritionally balanced feed in 24 hours. It includes green fodder and concentrate to increase animal productivity. Wheat straw is also used as dry roughage along with green fodder. About 1 kg of concentrate is required for the production of 2.5-3 liters of milk. These feed ingredients when mixed according to feed formula will provide adequate energy according to energy and protein requirements of animal in production.

Details of Feed Ingredients as Raw Material

Sl. No. Items Ration/ milch cow Unit

1

Straw

3.00 Kg.

2 Grass 10.00 Kg.3 Rice Bran 2.00 Kg.4 Oil Cake 0.45 Kg.5 Salt 0.05 Kg.

6 Molasses .25 Kg.


0

7 Wheat Bran 1.00 Kg.8 Pulses Bran 0.50 Kg.9 Urea 0.05 Kg.

10 Vitamin Premix 0.05 Kg.Total for 1-10 17.35 Kg.

11 Medicine 100.00 Tk.12 Vaccine 100.00 Tk.13 Packing Material 2.00 Tk.

Total for 11-13 202.00 Tk.

The below estimation is calculated as per yearly requirement/cow-calf-beef basis

The concentrate feed price will be variable at the project operation time, in context of scarcity and availability in the market. Perhaps, a least cost feed formulation will be adopted at the time of operation and also change the formula, as per demand.

7.7.2. Mineral Mixture:This is used as a feed supplement. It includes a mix of minerals (magnesium, iron, sodium and salts). Mineral mixtures are good source of energy and increase the animal productivity to give milk.

7.7.3. Fodder Crop:Fodder is grown at the land, which is acquired on lease or owned by the entrepreneur. Due to increased demand, improved forage crops such as multi-cut oats, berseem, lucerne, Sorghum-Sudan grass hybrids, mott grass, sorghum, maize, Napier and millet have been developed. These have become very popular in irrigated areas such as Jessore, Kushtia, Magura, Chittagong Hill area, Sylhet, and Jamuna Rivers Island. Details of fodder cultivars released by Research Institutions in Bangladesh are given in Annex 3 (Table 13-4). Average forage yields in Bangladesh are extremely low compared to yields obtained on research institutes and from well-managed farms and fields. These are very low as compared to their potential, with 22.8 tons per hectare a recent estimate. (Reference: FAO Statistical Databases)

Although improved varieties and technology are available, they have been slow to reach the dairy farms. Recent medium scale on-farm work has indicated that yields can be enhanced two to three fold by using available improved varieties and appropriate agronomic techniques. In an area where land and irrigation are the major limiting factors to enhancing fodder production, intensification is the only way to meet the needs for forage. Intensive and economical forage production per unit area per season would be the best choice. Also efforts should be made to produce and provide sufficient quantities of seed of multicut forage varieties and hybrids like mott grass to commercial dairy farms. The fodder yield (except multi cut Mott Grass which yield 100-150 tons/ acre in 4 to 6 cuttings per year) varies between 10 tons to 40


tons per acre depending upon the fertility of land, quality of seed and application of fertilizer.

Terms: “Bhusi / Kura / rice bran”, a by-product of rice / wheat harvesting used as dry roughage for livestock and dairy animals

The available cattle feeds in Bangladesh can be grouped into agro-industrial by-products which include agricultural crop residues such as straws, sugarcane tops, bagasse etc; by-products from agro industries e.g. molasses, oil-cakes, pineapple wastes, shrimp waste, etc; and milling by-products such as brans. Green roughage include non-cultivated indigenous grasses grown on road side, embankment, bunds etc; leaves of the jack fruit and mango tree, ipil ipil, etc; and aquatic plants such as water hyacinths, dhol kalmi, azolla, duck weed etc. Cultivated fodder includes both perennials, such as Napier, Para, German, Splendida, Andropogon, and Gamboo grasses; and seasonal crops such as maize, cowpea, khesari, oat, sunhemp, etc.

Table 7-7 Types of Dry & Green roughage

Principal Fodder: straws, sugarcane tops, bagasse etc;

By-products from agro-industries: molasses, oil-cakes, pineapple wastes, shrimp waste, etc;

Milling by-products: brans.

Green roughage: include non-cultivated indigenous grasses grown on road side, embankment, bunds etc; leaves of the jack fruit and mango tree, ipil ipil, etc;

Aaquatic plants such as water hyacinths, dhol kalmi, azolla, duck weed etc.

Cultivated fodder: includes both perennials, such as Napier, Para, German, Splendida, Andropogon, and Gamboo grasses;

Seasonal crops such as maize, cowpea, khesari, oat, sunhemp, etc.(Reference: BLRI, Bangladesh & FAO Statistical Databases)

7.7.4. Fodder Production Economics:

The comparative economicfeasibility of various foragecrops produced under variousfarming systems is shown in


following tableEconomics of forageProduction under improvedProduction system perhectare in Bangladesh.


Item Forage CropMaize Sorghum Napier, Para/GermanSplendida,

Andropogon Gamboo grasses

Land preparation 12.31 11.32 11.32 10.17 10.17 8.72

Seed & Sowing 13.95 8.00 23.25 14.53 14.53 14.53Fertilizer 20.34 20.34 58.13 29.06 29.06 26.16Irrigation Land 8.72 8.72 11.62 12.79 8.72 5.81Revenue/rent 20.34 20.34 52.32 72.67 72.67 21.80Harvesting/TP 21.80 20.34 40.69 34.88 43.60 34.88

Total expenditure 97.46 89.06 197.33 174.10 178.75 111.90

Yield (Kilos) 80,000 79,750 160,000 102,500 103,750 115,000

Price/kg US$ 1.00 1.00 1.00 1.50 1.50 1.25Variable Costs: Seeds, fertilizers, land preparation, irrigation, harvesting, Transport etcSource: FAO Statistical Databases (2002)

7.7.5. Daily Fodder Requirement:

There is no fixed fodder requirement for the animals but a rule of thumb says that an animal needs daily fodder equal to 9%-10% of its body weight (3% of live body weight on Dry Matter Basis). According to estimates, Heifer consumes 50-55 kg fodder daily while cow consumes about 40-45 kg.

7.7.6. Rice Straw (Khar):

Rice straw is major, typical, and very popular dry roughage. It is always chaffed, and is the main or even only major dry roughage used on almost all the dairies. Traditional threshing methods break the straw into short pieces, bhoosa, and modern mechanical threshers have been designed to break the straw. Often sources of rice straw are far from urban dairies of rainfed areas, sometimes in other provinces. In all urban dairies visited rice straw was bought at US$ 1.00 (+/-10% as veriable) per kilo (76 BD tk. per mound) or even more; in the harvest season, however, in places where it is produced, it is available at US$ 0.004-0.011 per kilogram. In recent years baling units have been


installed in North Bengal & also southern region of Bangladesh; bales are transported to major cities, and even to Bagha bari, Sirajganj, Munshiganj, Trishal, Bhaluka, where the major farms are available.

Cost for Green Fodder per Acre

Practice Cost (US$)Fertilizer 17.44Cultivator cost 11.62Seed 11.62Irrigation 17.44Total Cost 58.12

Daily Feed Requirements

Animal Daily Requirement (kg) Cost/kg AmountCowGreen Fodder 40.00 0.10 4.00Dry Roughage 5.00 2.00 10.00Concentrate 3.18 10.00 31.78Total 45.78

HeiferGreen Fodder 50 0.10 5.00Dry 5 2.00 10.00Concentrate 3 10.00 31.78Total 46.78***** This ration is variables; in context of least cost feed formulation, environmental factor (seasonal change), etc.**** The fodder cost does not include the land cost it is given in a separate head of land lease cost / purchase.

7.8. MEDICATION:

7.8.1. Vaccination & Medicine:

Vaccination & medicine is required to prevent any disease outbreak in the animal herd. Each new animal will be vaccinated before entering into the farm. It will cost US$5-8, in context of market availability and scarcity for both cow and Heifer per year. Vaccines are produced at Veterinary Research Institute, BLRI, Savar. The vaccines are provided to the Government Farms and Hospitals on payment. Farmers can also obtain these vaccines on payment according to prescribed schedule from the registered vaternary doctors. Technical guidance is also provided to the farmers. Farmers can have their animals vaccinated from the field Veterinary Hospitals and Centers.


The Government of Bangladesh have been producing twelve different types of livestock and poultry vaccine to immune them so that they can be able to resist some diseases. From the year 2001-2002 to 2005-06 a total dose of 112.38 crore vaccine were produced and distributed. At present (Upto March/07) the stock of vaccine is 1.57 crore doses.

7.8.2. Artificial Insemination (AI) Charges:

Artificial Insemination is an important and successful program for Livestock Improvement. Semen is collected from the bulls reared in the Central Cattle Breeding Station at Savar and other 22 Districts Artificial Centers, where the semen is processed as diluted and frozen semen for the use to run the extension work on Artificial Insemination Program. A total number of 1670 A.I. Sub-Centers and A.I. points are in operation to run the Artificial Insemination Program by using both diluted and frozen semen. Table-3 shows the number of cows inseminated from the year 2002-03 to 2006-07 (upto March/ 07).

Year Number of cows (in lac)

2002-2003 12.282003-2004 13.182004-05 14.332005-06 16.092006-07 (upto March/07) 12.47

Artificial Insemination (AI) charges will be US$0.50-1.00 per animal for both cow and Heifer. There are three Semen Production Units (SPU) in Bangladesh, which works under Directorate of Fisheries and Livestock, Dhaka, Bangladesh. For A.I. Services is available on 64 districts of Bangladesh, the farmers are charged US$0.50/per insemination for local cattle and Heifer and US$1.00 for imported breed. Besides use of semen at the local level, it is also supplied to the sister concerns and abroad, the third world countries of the world. Semen of various breeds is also available with the Private entrepreneurs and veterinary doctors.

7.8.3. Manpower / Labor Requirement:

For a large scale dairy enterprise, manpower is required for performing different animal husbandry practices at the farm e.g. feeding, watering, milking and care of animals etc.


One skilled & experienced person can handle eight- fifteen milk animals easily. 100 skilled and 50 day labors are recommended for handling 2500+ animals. Well experienced Director Finance, General Manager, Asst. General Manager, Farm Manager, Deputy Farm Manager, Marketing Manager, Sales Executive, Assistant Manager, Chief Accountant, Store Keeper, Accountant Assistant, Veterinary Doctor, Veterinary Assistant, Farm Supervisor post also created for the smooth operation of the proposed farm. Farm manager can be hired to monitor & supervise all the farm activities. The FM will be well educated as M. Sc. with B.Sc. (Honors) degree in Animal Husbandry (AH), so that he can handle the total farm administration & account matters at the proposed dairy farm.

Proposed Manpower & Labor Requirements is stated as followsDesignation Person/s

Managing Director 1Director Finance 1General Manager 1Asst. General Manager 1Farm Manager 1 Deputy Farm Manager 1Marketing Manager 1Sales Executive 6Assistant Manager 1Chief Accountant 1P.S. to MD 1Receptionist 1Computer Operator 1Store Keeper 1 Accountant Assistant 1Veterinary Doctor 1Veterinary Assistant 1Farm Supervisor 25Skilled Labour 100Day Labour 50Office Peon 2Total Manpower 199

8 FARM OUTPUT:

8.1. LACTATION PERIOD:

The lactation period is the period during which the animals yield milk. These animals are called wet animals. Generally the lactation period of cows is 280 days and that of Heifers is 305 days. For calculation, the


feasibility has taken 80% of the total number of cows as wet cows and 70% of the total number of Heifers as wet Heifers. The calving interval (The interval between two calvings) in a Heifer is about 18-20 months, while cow has15-16 months. The average milk yield of Heifers is estimated at 1500 to 2300 liters per lactation.

8.2. MILK COMPOSITION:

Heifer milk contains less water, more total solids, more fat, slightly more lactose, and more protein than cow's milk. It seems thicker than cow's milk because it generally contains more than 16% total solids compared with 12-14% for cow's milk. The butterfat content is usually 6-8%. Cow's milk butterfat content is usually between 3% and 5%. Because of its high butterfat content, Heifer milk has considerably higher energy value than cow's milk. Phospholipids are lower but cholesterol and saturated fatty acids are higher in Heifer milk. Studies have shown that this does not adversely affect the digestibility. Because of the high fat content, the Heifer's total fat yield per lactation compares favorably with that of improved breeds of dairy cattle. Normally the protein in Heifer's milk contains more casein and slightly more albumin and globulin than cow's milk. The mineral content of Heifer milk is nearly the same as that of cow's milk except for phosphorus, which occurs in roughly twice the amount in Heifer milk. Heifer milk tends to be lower in salt. Heifer milk lacks the yellow pigment carotene, precursor for vitamin A, and its whiteness is frequently used to differentiate it from cow's milk in the market. Despite the absence of carotene, the vitamin A content in Heifer milk is almost as high as that of cow's milk. Apparently the Heifer converts the carotene in it's diet directly to vitamin A. The two milks are similar in B complex vitamins and vitamin C, but Heifer milk tends to be lower in riboflavin.

8.3. BREEDING STOCK DEVELOPMENT:

The proposed farmer will raise breeding stock, both future breeding bull and future dairy animals at his own farm by selecting good offsprings of high producers. The first generation (F1) will be capable of giving milk after 3 years in case of cows and 4 years in case of Heifers.

8.4. INCREASE IN MILK YIELD:

The milk yield will be improved as aResult of appropriate breedingsystems discussed earlier. Lowyielding animals are sold in themarket. On an average, cows are


productive for 7 to 8 years whileHeifers are productive for 8 to 9years.

8.5. SALE PRICE:

Near the urban market, the selling price of Heifer’s & Cows milk will be Bangladeshi Taka 50 in wholesale market and retail as 52. ( as on date 01 August, 2011)

8.6. EVENING MILK:

Milk must be stored in a freezer with a capacity of 25000 liters at the farm premises, if milk distribution is not possible at the evening and after, it will be preserved through chilling system, till morning.

8.7. FARM REVENUES:

Farm revenue will increase with the passage of time, as the milk production & beef fattening, will increase with the growth in herd size as well as its quality.


8.8. MALE CALVES:Male calves will be sold (50%) at thefarm sooner after birth against US$150 to 200 per animal. Rest of themalso will be reared in separately for meat / beef production. (first couple of years, before farm, alreadycompacted by the milk producing cows.9 OPERATION & MANAGEMENT:

Will be finalize, after approval of the loan amount for set up of this project, within the grace period.10 USEFUL TERMINOLOGY:

BreedAnimals that, through selection and breeding, have come to resemble one another and pass those traits uniformly to their offspring.

Compound feedAny ground mixture of ingredients intended for feeding the animals. It includes a concentrate mixture accordingly to formula.

DehorningThe process of removal of horns (in adult animal) or horn buds (in young calves). The process may be done by mechanical or chemical means.

FeedstuffsAny substance of nutritive and biological value used in production of compound feed.

HeiferThe term refers to young female bovine that reaches puberty age and is ready to breed.

Home Mixed FeedFeed prepared on farm.

Oil seed CakeMass 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, maize oil cake etc.RationAmount of balance feed supplied to the cattle, within 24 hours


11 FINANCIAL ANALYSIS:


Project Investment Cost for the first year1 Initial Capital Cost Total Amount1.1 Land 52,607,200.00 1.2 Building / Infrastructure 8,039,000.00 1.3 Furniture & Fixture 57,000.00 1.4 Animals Cost 2,050,000.00 1.5 Machinery & Equipment 285,500.00 1.6 Office Vehicles 166,500.00 1.7 Pre Operating Cost 41,000.00

Total Initial Capital Costs 63,246,200.00 2 Initial Working Capital2.1 Administrative Salaries for the first

year150,500.00

2.2 Labor Salaries 283,750.00 2.3 Electricity for 1st year 112,000.00 2.4 Gas Connection 103,600.00 2.5 Fuel for vehicles (Petrol / Diesel /

Gas)13,625.00

2.6 Fodder & Medicine Inventory 1,037,674.00 2.7 Cash in Hand 20% as contingencies

fund for sl. 2.1-2.6340,230.00

Total Initial Working Capital 2,041,379.00

Total Project Cost 65,287,579.00

Project Depreciation Cost per year1 Initial Fixed &

Working CapitalTotal Amount Depreciatio

n % Amount

1.1 Land 52,607,200.00

5 2,630,360.00

1.2 Building / Infrastructure

8,039,000.00 10 803,900.00

1.3 Furniture & Fixture 57,000.00 20 11,400.00

1.5 Machinery & Equipment

285,500.00 20 57,100.00

1.6 Office Vehicles 166,500.00 20 33,300.00

2.1 Administrative Salaries for the first

year

150,500.00 5 7,525.00

2.2 Labor Salaries 283,750.00 5 14,187.50

2.5 Fuel for vehicles (Petrol / Diesel / Gas)

13,625.00 5 681.25

2.6 Fodder & Medicine Inventory

1,037,674.00 5 51,883.70

Depreciation Cost (1st

year end)3,610,337.4

5

1 Initial Capital Cost1.1 Land

Description Unit (Acre) Unit Cost Total Amount in US$

Land requirement for 2500 Cattle

400.00 131,518.00 52,607,200.00

With Partial Fodder production land, Bio Gas Plant, Administrative Building, Fodder Store, Milk StoreS-total For 1.1 52,607,200.00


1.2 Building / Infrastructure

Cons

truct

ion

Deta

il

Spac

e/an

imal

Anim

al un

it

Total

Sp

ace

Rate/

sftin

US$

Tota

l Am

ount

in U

S$

Adm

inistr

ative

Offi

ce

1

6,000

.00

20.00

120,0

00.

00

Gues

t Ho

use &

tem

porar

y staff

m

edica

l ch

eckin

g ce

nter

1

3,000

.00

25.00

75,00

0.00

Cattle

Me

dical

Cente

r 25

indivi

dual

cham

ber 1

2,500

.00

20.00

50,00

0.00

Shed

sp

ace

for

a cow/

Heife

r 40

1750

70,00

0.00 15

.00

1,050

,000

Open

Pa

ddoc

k for

a

cow/

Heife

r 80

1750

140,0

00.

00

15.00

2,100

,000

Shed

for

a calf

40

1400

56,00

0.00 15

.00

840,0

00.

00

Open

pa

ddoc

k for

a ca

lf

80

1400

112,0

00.

00

15.00

1680

000.

0

Shed

for

a

calf

(olde

r tha

n on

e ye

ar)

26

500

13,00

0.00 18

.00

234,0

00.

00

Open

Pa

ddoc

k for

a c

alf

(olde

r tha

n on

e ye

ar)

40

500

20,00

0.00 18

.00

360,0

00.

00


1.2 Building / Infrastructure (Cont.)Construction Detail Space /

animalAnimal unit

Total Space

Rate/sftin US$

Total AmountIn US$

Stores

for

fodde

r &

conc

entra

te

plus

mac

hine

room

1200

0

1

12,00

0

15.00

180,0

00

Uten

sils &

m

ilk

storag

e wi

th f

ull

tiles

2000

0

1

20,00

0

30.00

600,0

00

Serva

nt

room

, wa

sh

room

2000

0

1

20,00

0

30.00

600,0

00

Wate

r po

nd

1500

0

1

15,00

0

10.00

150,0

00

S-to

tal

For 1

.2

489,

500

8,03

9,00 0

1.3 Furniture & Fixture Figure in US$Description Budget Unit Total AmountNote: Decoration with all modern equipment & facilitiesManaging Director 15,000.00 1.00 15,000.00 Director Finance 10,000.00 1.00 10,000.00 General Manager 5,000.00 1.00 5,000.00 Asst. General Manager 2,000.00 1.00 2,000.00 Farm Manager 2,000.00 1.00 2,000.00 Deputy Farm Manager 1,500.00 1.00 1,500.00 Marketing Manager 1,500.00 1.00 1,500.00 Human Medical Doctor's room

2,000.00 1.00 2,000.00

Sales Executive 500.00 6.00 3,000.00 Assistant Manager 1,000.00 1.00 1,000.00 Chief Accountant 1,500.00 1.00 1,500.00


P.S. to MD 3,000.00 1.00 3,000.00 Receptionist 2,000.00 1.00 2,000.00 Computer Operator 1,000.00 1.00 1,000.00 Store Keeper 500.00 1.00 500.00 Accountant Assistant 1,000.00 1.00 1,000.00 Veterinary Doctor 2,000.00 1.00 2,000.00 Veterinary Assistant 500.00 1.00 500.00 Farm Supervisor 100.00 25.00 2,500.00 S-total For 1.3 57,000.00

1.4 Animals CostInitial Animal Cost is given in the table below:Type Quantity Per Unit

Cost in US$

Total Amount

Calf (1 year) for meat production

750 400.00 300,000.00

Gravid Heifer for milk production

875 1,200.00 1,050,000.00

Gravid Local Cow for cross breed

875 800.00 700,000.00

S-total For 1.4 2,050,000.00

1.5 Machinery & EquipmentFurniture & equipment required for the project is given in tables below.Farm Machinery & Equipment CostFarm Supplies Rate(US$) Capacity

(No. of Animal)

Qty Total Cost (US$)

Chains 10.00 2600 26,000.00 Milking Buckets 12.00 200 2,400.00 Electric Caffing Machines with Implements

500.00 10 5,000.00

Milking Cans 25 liter 20.00 800 16,000.00 Deep Freeze 20 CFT 1,000.00 30 30,000.00 Essential Industrial tools & Spares L.S.

5,000.00 1 5,000.00

Compressor Water pumps 2HP

500.00 6 3,000.00

Deep Tubewell 8" Dia 3,000.00 1 3,000.00 Milk Machine (Vacuum line system)

21,000.00 2 42,000.00

Milk Cooling Unit / Chiller 10000 litre/hour

40,000.00 2 80,000.00


Farm tractor & Trailer 12,000.00 1 12,000.00 Calf feeder 15.00 10 30 450.00 Teat Dip Cup 5.00 30 150.00 Straw / Wheat / Maize Cutter

2,500.00 100 5 12,500.00

Generator 1200KV 40,000.00 1 40,000.00 Heavy Duty Ventilation Fans 2HP

200.00 100 25 5,000.00

Testing lab L.S. 3,000.00 1 3,000.00 S-total For 1.5 285,500.00

1.6 Office VehiclesTransportation requirements for the project are as follows.Initial Vehicle CostDescription Qty Per Unit

(Avg.) Amount (US$)

Car 3 30,000.00 90,000.00Pickup Van 3 25,000.00 75,000.00Rickshaw Van, on firm transportation

10 150.00 1,500.00

S-total For 1.6 16 166,500.00


1.7 Pre Operating CostDescription Amount Survey, Plan, Drawings 3,000.00 Work Supervision 20,000.00 Feasibility Report 2,000.00 Promotional Expenses & Legal Affairs 5,000.00 Technical & Consultant Fee 10,000.00 Expenses for Start up Production (Trial) 1,000.00 S-total For 1.7 41,000.00

2 Initial Working Capital2.1 Administrative Salaries for the first year

Human Resource required for the project is as followsNote: 14 man month (MM) = 12 financial month X 2 festival bonusDescription No. Salary/

monthMM Total

Amount $Managing Director 1 2,000.00 14 28,000.00 Director Finance 1 1,200.00 14 16,800.00 General Manager 1 1,000.00 14 14,000.00 Asst. General Manager 1 800.00 14 11,200.00 Farm Manager 1 700.00 14 9,800.00 Deputy Farm Manager 1 600.00 14 8,400.00 Marketing Manager 1 500.00 14 7,000.00 Sales Executive 6 200.00 14 16,800.00 Assistant Manager 1 500.00 14 7,000.00 Chief Accountant 1 800.00 14 11,200.00 P.S. to MD 1 300.00 14 4,200.00 Receptionist 1 200.00 14 2,800.00 Computer Operator 1 100.00 14 1,400.00 Store Keeper 1 100.00 14 1,400.00 Accountant Assistant 1 150.00 14 2,100.00 Veterinary Doctor 1 300.00 14 4,200.00 Veterinary Assistant 1 150.00 14 2,100.00 Office Peon 2 75.00 14 2,100.00 S-total For 2.1 150,500.0

0

2.2 Labor SalariesLabor RequirementsDescription No. Salary/

monthMM Total

Amount $


Farm Supervisor 25 150 14 52,500.00Skilled Labour 100 100 14 140,000.00Day Labour (Daily Basis) 50 5

365 Days 91,250.00

S-total For 2.2 175 283,750.00

2.3 Electricity for 1st yearDescription Amount Mont

hTotal Amount

Electricity Connection Fee from Palli Bidyut L.S. 100,000.00Monthly Bill 1,000.00 12 12,000.00S-total For 2.3 112,000.0

02.4 Gas Connection

Description Monthly Bill Month TotalGas Connection Fee from Petrobangla

L.S. 100,000.00

Monthly Bill 300.00 12 3,600.00S-total For 2.4 103,600.00

2.5 Fuel for vehicles (Petrol / Diesel / Gas) In US$Description Amoun

tUnit Total

AmountGas Conversion for car unit

600.00 3 1,800.00

Gas Conversion for pick up unit

900.00 3 2,700.00

Gas for Car 10.00

365 3,650.00

Gas For Pickup 15.00

365 5,475.00

S-total For 2.5 13,625.00 2.6 Fodder & Medicine InventoryThe annual requirement of raw & other materials for the project will be as underDetail Feed consumption with daily ration to yearly total consumption, including approximate cost of feed material

Sl. N

o.

Item

s

Ratio

n/ m

ilch

cow

Milc

h Co

w

Ratio

n/ c

alf

Calv

es N

os.

Ratio

n/ b

eef

Beev

es N

os.

Tota

l req

./ da

y

Annu

al re

q.

Pric

e/ M

T

Tota

l Pric

e

Total→→ Grand total↓↓

1750 nos.

1400 nos 750 nos in MT in MT US$ US$

Calculation 3X no. of milch cow 5X no. of calf 7X no. of beef

=4+6+8 =9X365 =10X11

1 2 3 4 5 6 7 8 9 10 11 12


1

Stra

w

3 Kg

.

5,25

0Kg

1Kg.

1400

Kg.

3 Kg

.

2250

Kg.

8.90

0

3248

.50

30

9745

5

2

Gra

ss

10 K

g.

17,5

00Kg

5 Kg

.

7000

Kg.

5.5

Kg.

4125

Kg.

28.6

25

1044

8.1

30

3134

44

3

Rice

Bra

n

2 Kg

.

3,50

0 Kg

0.2

Kg.

280

Kg.

1.25

Kg.

937.

5 Kg

.

4.71

8

1721

.89

150 25

8283

4

Oil C

ake

0.45

Kg.

787.

5 Kg

0.15

Kg.

210

Kg.

0.4

Kg.

300

Kg.

1.29

8

473.

59

75

3551

9

5

Salt

0.05

Kg.

78.7

5 Kg

0.01

Kg.

14 K

g.

0.04

3

31.8

8 Kg

.

0.12

5

45.4

9

180

8188

6

Mol

lase

s

0.25

Kg.

437.

5 Kg

0.1

Kg.

140

Kg.

0.33

Kg.

247.

5 Kg

.

0.82

5

301.

13

220 66

247

7

Whe

at B

ran

1 Kg

.

1,75

0 Kg

0.5

Kg.

700

Kg. -

2.45

0

894.

25

190 16

9907

8

Pulse

s Br

an

0.5

Kg.

875

Kg.

0.15

Kg.

210

Kg. -

1.08

5

396.

03

120 47

523

9

Urea

0.04

5 Kg

.

33.7

5 Kg

.

0.03

4

12.3

2

150

1848

10

Vita

min

Pre

mix

0.00

2 Kg

.

3.5

Kg.

0.00

1Kg.

1.40

Kg.

0.00

2 Kg

.

1.50

Kg.

0.00

6

2.34

8000

1868

8

S-S-

Tota

l for

1-

10

17.2

5Kg.

30,1

82Kg

7.11

Kg.

9955

.4 K

g

10.5

7 Kg

.

7927

Kg.

48.0

65

1754

3 Kg

.

1017

102K

g


11

Med

icine

100

Tk.

175,

000T

k.

50 T

k.

7000

0Tk.

100

Tk.

7500

0Tk.

3200

00.0

0

@70

/$

4571

12

Vacc

ine

100

Tk.

175,

000

Tk.

50 T

k.

7000

0Tk.

100

Tk.

7500

0Tk.

3200

00.0

0

@70

/$

4571

13

Pack

ing

Mat

eria

l

L.S

300

,000

Tk.

2000

00Tk

.

3000

00Tk

.

8000

00.0

0

@70

/$ 1142

9

Sub-

Sub-

Tota

l fo

r 11-

13

650,

000T

k.

340,

000T

k

450,

000T

k.

1,44

0,00

0Tk.

@70

/$ 20,5

71

Sub Total for 2.6 1,037,674.04The above Sl. No. 11-13 estimation is calculated as per yearly requirement/cow-calf-beef basis

2.7 Cash in Hand 20% as contingencies fund for Serial No 2.1 to 2.6

S-total For 2.7 340,230.00 Total Initial Working Capital

2,041,379.00

Total Project Cost 65,287,579.00

10.4 Revenue AssumptionsSalesSelling Assumptions Unit

Type

Prod.

No of C/B Days Per Unit Cost

Total Amount

/day Cows in US$ in US$Bull as meat production 1

750 1 750.00 /bull 562,500.00

Milk From Heifer 16

875 365 0.68 /liter 3,474,800.00

Milk From Lacal Cow 10

875 365 0.68 /liter 2,171,750.00

Male Calf Sell 50% after

1 350

1 200.00 /calf 70,000.00


20% MortalityFemale Calf Sell 50% after 20% Mortality 1

350 1 200.00 /calf 70,000.00

Compost from Slary 10

2,500

365 0.026316 /kg 240,133.50

Packing Material (Used) 1

2,500.00

365.00 0.10 /bag 91,250.00

Grand Total6,680,433.5

0

Selling Assumptions for the next 10 years

Sl No Particulars

Increase %age/yr Ye

ar 1

Year

2

Year

3

Year

4

Year

5

Year

6

Year

7

Year

8

Year

9

Year

10

Tota

l afte

r 10

yr

1

Bull as meat production (46%

incr/yr.) 46%

562,

500

821,

250

1,19

9,02

5

1,75

0,57

6

2,55

5,84

1

3,7

31,5

28

5,44

8,03

2

7,95

4,12

6

11,6

13,0

25

16,9

55,0

16

52,5

90,9

23

2

Milk From Heifer (21%

increase/yr.) 21%

3,47

4,80

0

4,20

4,50

8

5,0

87,4

54

6,15

5,82

0

7,44

8,54

2

9,0

12,7

36

10,9

05,4

10

13,1

95,5

47

15,9

66,6

12

19,3

19,6

00

94,7

71,0

323

Milk From Local Cow(21%

incr./yr.) 21%

2,17

1,75

0

2,62

7,81

7

3,1

79,6

59

3,84

7,38

7

4,65

5,33

9

5,6

32,9

60

6,81

5,88

1

8,24

7,21

7

9,97

9,13

2

12,0

74,7

50

59,2

31,8

95

4

Male Calf Sell 50% aftter 20%

Mortality(+5%/yr) 5%

70,0

00

73,5

00

77,

175

81,0

33

85,0

85

89,

339

93,8

06

98,4

97

103,

421

108,

592

880,

452

5

Female Calf Sell 50% aftter 20%

Mortality (+5%/yr) 5%

70,0

00

73,5

00

77,

175

81,0

33

85,0

85

89,

339

93,8

06

98,4

97

103,

421

108,

592

880,

452

6

Compost from Slurry (incr.

29%/yr.) 29%

240,

133

309,

772

399

,606

515,

491

664,

984

857

,830

1,10

6,60

0

1,42

7,51

5

1,84

1,49

4

2,37

5,52

7

9,73

8,95

7


7Packing Material

(Used) 10%

91,2

50

100,

375

110

,412

121,

453

133,

599

146

,959

161,

654

177,

820

195,

602

215,

162

1,45

4,28

9

Grand Total for sell/yr1-yr10

6,68

0,43

3

8,21

0,72

2

10,

130,

507

12,5

52,7

97

15,6

28,4

77

19,

560,

693

24,6

25,1

94

31,1

99,2

20

39,8

02,7

10

51,1

57,2

44

219,

548,

003

Projected Profit / Loss Account for Next 10 Years

Sl. N

o

Parti

cula

rs

Year

1

Year

2

Year

3

Year

4

Year

5

Year

6

Year

7

Year

8

Year

9

Year

10

Tota

l Am

ount

1

Sale

s

6,68

0,43

3

8,21

0,72

2

10,1

30,5

07

12,5

52,7

97

15,6

28,4

77

19,5

60,6

93

24,6

25,1

94

31,1

99,2

20

39,8

02,7

10

51,1

57,2

44

219,

548,

003

2

Initi

al

Wor

king

Ca

pita

l (In

clud

ed

adm

in

expe

nses

, fin

anci

al

char

ges,

etc

.) 10

% in

cr.

2,04

1,37

9.00

2,24

5,51

6.90

2,47

0,06

8.59

2,71

7,07

5.45

2,98

8,78

2.99

3,28

7,66

1.29

3,61

6,42

7.42

3,97

8,07

0.16

4,37

5,87

7.18

4,81

3,46

4.90

32,5

34,3

23

3

Gros

s Pr

ofit

4,63

9,05

4

5,96

5,20

5

7,66

0,43

8

9,83

5,72

2

12,6

39,6

94

16,2

73,0

32

21,0

08,7

66

27,2

21,1

50

35,4

26,8

33

46,3

43,7

79

187,

013,

679

4

Less

Fi

nanc

ial

Char

ges

(yea

r end

) (3

% M

ax

for t

otal

pr

ojec

t co

st)

1,95

8,62

7

1,95

8,62

7

1,95

8,62

7

1,95

8,62

7

1,95

8,62

7

1,95

8,62

7

1,95

8,62

7

1,95

8,62

7

1,95

8,62

7

1,95

8,62

7

19,5

86,2

73

5

Net P

rofit

Be

fore

Tax

2,68

0,42

7

4,00

6,57

8

5,70

1,81

1

7,87

7,09

4

10,6

81,0

67

14,3

14,4

05

19,0

50,1

39

25,2

62,5

23

33,4

68,2

06

44,3

85,1

52

167,

427,

405

6

Prov

isio

n fo

r Inc

ome

Tax Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil

Nil


7

Net

Prof

it/Lo

ss

Afte

r Tax

es

2,68

0,42

7

4,00

6,57

8

5,70

1,81

1

7,87

7,09

4

10,6

81,0

67

14,3

14,4

05

19,0

50,1

39

25,2

62,5

23

33,4

68,2

06

44,3

85,1

52

167,

427,

405

8

Savi

ngs for

Inve

stm

ent r

etur

n 10

%/y

r

6,52

8,75

7

6,52

8,75

7

6,52

8,75

7

6,52

8,75

7

6,52

8,75

7

6,52

8,75

7

6,52

8,75

7

6,52

8,75

7

6,52

8,75

7

6,52

8,75

7

65,2

87,5

79

Prof

it / L

oss

afte

r Sav

ings

of

In

vest

men

t re

turn

(3,8

48,3

30)

(2,5

22,1

79)

(826

,946

)

1,34

8,33

6

4,15

2,30

9

7,78

5,64

7

12,5

21,3

81

18,7

33,7

65

26,9

39,4

48

37,8

56,3

94

102,

139,

826


Project Growth:Sl No Particulars Increase %age1 Bull as meat production 46%/yr2 Milk From Heifer 21%/yr3 Milk From Local Cow 21%/yr4 Male Calf Sell 50% after 20% Mortality 5%/yr5 Female Calf Sell 50% after 20% Mortality 5%/yr6 Compost from Slurry 29%/yr7 Packing Material (Used) 10%/yr

Internal Rate of Return:

Total Investment US$ 65,287,570.00 Turnover after 10 years ending of the project cycle US$ 219,548,003.25

Average Internal Rate of Return/yr. 15.64%

Fixed asset price will be increase 2 times or more, after 10 years as US$ 130,575,140.00

Pay Back Period (year) 6.39 years

Conclusion:

The IRR indicates an excellent return for this project. In Bangladesh, there have no tradition to decrease the price for any products. So the proposed farm’s Meat and Milk will bring good revenue.

Fixed asset price will be increase 2 times or more, after 10 years as US$ 130,575,140.00. Though the Pay Back Period is within 6.39 years, If the farm product price will increase 10%, within the trial production for this farm will be a revised pay back period is within 4 years (assumed). In addition with this information that the consulting farm strongly recommended to produce value added product from the meat and milk, will introduce this farm to the international audience and through export, a minimum 10% incentive will also give an excellent return for this project.


11 ANNEXURE 1 important measure & some identification

Table 11-1:Vital Statistics of Cattle & HeifersParametersRectal Temperature 101.5 degrees F (38.5 degree C)Heart Rate 60-70 beats/minuteRespiratory Rate 30 breaths/minute

Table 11-2:Traits of Farm Animals Parameters Heifer CattleAge at puberty 40 months or 3 yr,4 months 24-28 monthsEstrous duration 25 hrs 17 hrsEstrous cycle length 21 days 21 daysGestation length 315+_5 days 282+_5 daysDry period 5-6 months 8-9 monthsService period 4-5 months 2-3 monthsAge at first calving 3 to 3.5 yr. 2.5 to 3 yr.Calving interval 1.5 yrs 1 yr. 3 months

Table 11-3:Common Diseases of Livestock Infectious DiseasesDisease Symptoms Preventive measures MedicationAnthrax Fever, grinding of teeth, release of blackish blood from naturalopenings, which doesn’t clot. Vaccination in February. Dead animal should beburied in 6 feet deep pit without any postmortem. Antibiotic therapy

Foot and mouth Disease Excessive salivation, Pustules on lips, tongue and between the cleft of hooves, staggering gait weakness due to inability ofingestion. FMD vaccine after every 4 months especially before the onset of rainy season. FMD Serum, cleaning of pustules by potassium permanganate solution, cleaning of hooves by phenyl solution

Non Contagious DiseasesIndigestion Loss of appetite, watering from mouth, stiffening of rumen,bloating, severe pain in stomach 5 grams Stomach powder (mixed in feedor dissolved in water) twice a day Bloating (air trapped in stomach) Difficult breathing due to air trapped in stomach, animal may die due to suffocation Avoid grazing early in morning especially on fodder with dewdrops. Mustard (Sarisa) oil & turpentine oil mixed with chloral hydrate mixed in drinking water.

Dysentery Diarrhea, smelling feces, weakness Avoid excessive intake of milk especially in newborn kids. Avoid wheat straw or stiff feed during dysentery


Calcium carbonate, magnesium carbonate and bismuth carbonate dissolved in water OR entox tablets OR nimkol with sulfadiazine (4-5 cc). Offer rice groule to affected animals

Internal ParasitesLiver flukes Weakness, off feed, jaundice in severe cases, swelling on jointsNo grazing around stagnant water Zanil or Carbon tetra chloride OR nilzan plus, oral administration Round Worms Weakness, diarrhea, anemia, hairfall from body coat Fecal samples should be examined for roundworms.Systamax or rental, oral administration

EctoparasitesFlies/ ticks/ maggots Irritation on body coat, sometimes holes in skin, loss of hair from body coat Cleanliness in sheds, Spray of DDT in shed Apply sulfur oil, tetmasol or ecoflax on wounds and dipping of whole herd with a 0.15 % solution of negavan.

Table 11-4: Vaccination Schedule

Name of Disease Name of Vaccine Qty administered (ml) Time for Vaccination Duration of Immunity Preventive Measures

Foot & Mouth Disease (FMD) Foot & Mouth Vaccine 5 ml Start of spring 4 months Should be given 4 months prior to the expected symptoms of disease.

Anthrax Anthrax spore vaccine 0.5 ml March-April or monsoon season One year Every year vaccination should be done every year.

Rabies (Bowla Pun) Anti rabies vaccine 10 ml According to need One year Vaccine should be used right after preparation.

Hemorrhagic Septicemia (HS) HS vaccine 5-10 ml Start of Spring 4 months Should be given 4 months prior to the expected symptoms of disease.

Table 11-5: Daily Milk Production

Sr. no No. of animals Milk prod Remarksa. Morningb. Evening

Total


Table 11-6: Details of Purchase / Sale of product/byproduct (Feed and fodder's, medicines, ingredients, animal, etc.)Sr. no Particulars Quantity Per unit rate Total cost Remarks1.2.

Table 11-7: Calving & Calf DisposalId.No:Date of birth:Dam No.:Sire No.:Sex of calf:Wt. of calf at birth:Disposal Date:Remarks:

Table 11-8: Reproduction PerformaBrand NoDate of birthDam NoDate of 1st heatHistory sheetSr. noParticulars1st calving2nd calving3rd calving4th calving5th calving

1. Service(Date/Sire No.)

Table 11-9: Conception RecordDate of Pregnancy Diagnosis------------------------------------Result------------------------------------------------------Date of conception-------------------------------------------Excepted date of calving--------------------------------------Actual date of calving-----------------------------------------Sex of calf-------------------------------------------------

Table 11-10: Reproductive HealthDisorder----------------------------------------------------


Treatment--------------------------------------------------Follow-up---------------------------------------------------

Table 11-11: Individual Milking RecordSr. no Order of calving Cow No. Date of calving Weekly recordingMorningEveningDate when driedDays in milk TotalMilk yield

Annexure 2 - AVAILABLE FOREIGN CATTLE BREEDS

1. HOLSTEIN FRIESIAN:-

1.1. This breed is from Holland 1.2. Holsteins are black and white, and each has a unique pattern. 1.3. It can perform well in coastal and delta areas. 1.4. A Holstein calf weighs 80-110 lbs. at birth. 1.5. A mature Holstein cow weighs 1,300-1,500 lbs. 1.6. Milk yield - 7200-9000 kgs 1.7. This is by far the best diary breed among exotic cattle regarding milk yield. On an average it gives 25 litres of milk per day whereas a cross breed H.F. cow gives 10 - 15 litres per day.

2. JERSEYS:

2.1. Jerseys vary from dark brown or fawn, and sometimes are splashed with white. 2.2. Well acclimatized especially in the hot and humid areas 2.3. A Jersey calf weighs around 60 lbs. at birth. 2.4. A mature Jersey cow weighs 900-1,000 lbs. 2.5. Cows are milked for an average of 3-4 years 2.6. Age at first calving is 26-30 months 2.7. Calving interval is 13-14 months 2.8. Dairy milk yield is found to be 20 litres whereas cross bred jersey, cow gives 8-10 litres per day.

3. BROWN SWISS:

3.1. Produces the second largest quantity of milk per annum, around 9000kg.


3.2. The milk contains on average 4% butterfat and 3.5% protein, making their milk excellent for production of cheese. 3.3. The Brown Swiss is known for a long gestation period, immense size, large furry ears, and an extremely docile (though some would say lethargic) temperament. 3.4. It is quite a resilient breed of cattle; they are hardy and capable of subsisting with little care or feed. 3.5. They are resistant to the heat, cold and many other common cattle problems.

4. AYRSHIRE COW:

4.1. The average mature Ayrshire cow weighs 1000-1300 pounds. 4.2. They are known for low somatic cell counts, ability to convert grass into milk efficiently, and hardiness. 4.3. The breed's strong points are desired traits of easy calving and longevity.

5. GUERNSEY:

5.1. The milk of these cows is known for their rich quality. 5.2. The beta carotene present in Guernsey cows makes their milk slightly golden in color. 5.3. Weight of an adult Guernsey cow is around 1000 pounds. 5.4. Farmers prefer this cow for qualities like high efficiency of milk production, longevity, and lesser problems related to calving. 5.5. Guernsey's produce their high quality milk while consuming 20 to 30 percent less feed per pound of milk produced than larger dairy breeds. 5.6. They are also known for having a lower projected calving interval and have a younger average age of first calf heifers than the larger breeds. 5.7. The productive life of Guernsey cows is lowest.


Annexure 3: Derivatives from this farm: yet not commercially calculated with this project, will give a great return, if utilize gas as input for power plant.

Biogas

Biogas, a cheap secondary renewable energy, is a gaseous fuel obtained from biomass by the process of anaerobic digestion or fermentation. Biogas fermentation is the process by which organic materials such as human or animal excreta, domestic wastage, agricultural wastage etc, are degraded, by huge quantities of various microbes of different functions, under anaerobic conditions, to yield methane (about 55-70% content), carbon dioxide (about 30-45% content) and low amount of other gases in the end. Biogas can be used as a vehicle fuel or for generating electricity. It can also be burned directly for cooking, heating, lighting, process heat and absorption refrigeration. Cattle dung, agricultural residue, poultry dropping, water hyacinth, human excreta may be used as raw materials for biogas plants. A typical biogas plant consists of a digester in which the slurry (dung mixed with water) is fermented; an inlet tank used to mix the feed and let it into the digester; a gas holder/ dome in which the generated gas is collected; an outlet tank to remove the spent slurry; distribution pipelines to take the gas into the kitchen.

Nos. of Cow: 2500Total amount of excreta: 25,000 Kg/dayGas production per day: 925.00 m3

Design volume of Digester: 2,116.40 m3


Dimensions of Bio-gas unit in meter

Inlet Chamber Fermentation Chamber Hydraulic Chamber Slurry Collection Pit

tit 0.100 D 16.791 HH1 3.758 Ds 2.500

Hin 0.325 f1 3.358 HH2 2.090 Hs 436.483

Lin 12.695 f2 2.099 HH3 4.627 tfb 0.225

R 8.395 DH1 12.521

R1 12.173 DH2 0.900

R2 17.840 DH3 0.600

H 6.716 Sh1 11.621

H1 2.090 Sh2 0.300

H2 4.627 Sh3 0.600

H3 2.165 Sh4 0.750

Tfc 0.150


Documents

hasan cattle farm