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hasan cattle farm

  1. 1. Prepared by: Innovative Bz Development OFFICE Room No: 03, 3rd Floor, Soleman Plaza 3/3B Purana Paltan Dhaka-1000 Bangladesh Contact: 88-02-7176307, 88-01710-962792 Email: Prepared for: Limon International (Pvt.) Ltd. HEAD OFFICE XXXX XXXX XXXX XXXX XXXX XXXX Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 1 of 87 Pre Feasibility Study Dairy Farm 2500 Cattle
  8. 8. Executive Summary: Asking 100% Finance United States$ Sixty-Six million only Project investment cost for the first year: 1 Initial Capital Cost: 1.1 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 Capital: 2.1 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 2.6 Fodder & Medicine Inventory 1,037,674.00 2.7 Cash in Hand 20% as contingencies fund for sl. 2.1-2.6 340,230.00 Total Initial Working Capital 2,041,379.00 Total 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 Years Sl 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 Tax 7 Net Profit/Loss After Taxes 167,427,405.66 8 Savings for Investment return 10%/yr 65,287,579.00 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 8 of 87
  9. 9. Profit / Loss after Investment return 102,139,826.66 Project Growth: Sl No Particulars Increase %age 1 Bull as meat production 46%/yr 2 Milk From Heifer 21%/yr 3 Milk From Local Cow 21%/yr 4 Male Calf Sell 50% after 20% Mortality 5%/yr 5 Female Calf Sell 50% after 20% Mortality 5%/yr 6 Compost from Slurry 29%/yr 7 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 9 of 87
  10. 10. DISCLAIMER The purpose and scope of this information memorandum is to introduce the subject matter and provide a general idea and information on the said area. All the material included in this document is based on data/information gathered from various sources and is based on certain assumptions. Although, due care and diligence has been taken to compile this document, the contained information may vary due to any change in any of the concerned factors (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 CONTROL Prepared by Innovative Bz Development, Dhaka 88-01710-962792 Issue Date June, 2011, Revised in June, 2011 Issued 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 200 34' and 260 38' latitude and between 880 01' and 920 41east longitude Boundary: North: India, West: India, East: India & Myanmar, South: Bay of Bengal Total area of Bangladesh: Area Type Area (Sq Km) 2003-2004 Area (Sq Km) 2004-2005 Total Area 147570 147570 Land Area 36669 36669 Forest Area 6418 6420 River Area N/A N/A Source : Agriculture Statistics Wing, BBS Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 10 of 87
  11. 11. Sector Share GDP at Current & Constant price: Industry Sector 2004 2005 Current Price Constant Price Current Price Constant Price 1. Agriculture 20.14 22.17 19.50 21.77 1.1 Agri & Forestry 18.80 17.27 15.44 16.91 1.2 Crops and Horticulture 11.67 12.51 11.41 12.19 1.3 Animal Farming 2.44 2.95 2.42 2.93 1.4 Forest & Related Service 1.69 1.82 1.61 1.79 1.5 Fishing 4.35 5.00 4.06 4.86 2 Industry 27.22 28.31 28.05 29.01 2.1 Mining & Quarrying 1.14 1.14 1.14 1.14 2.2 Manufacturing 16.53 16.51 17.19 17.05 2.2.1 Large & Medium Scale 11.68 11.66 12.21 12.11 2.2.2 Small Scale 4.85 4.85 4.98 9.94 2.3 Construction 8.17 9.03 8.38 9.15 2.4 Power, Gas, Water Supply 1.38 1.64 1.35 1.65 3 Services 52.63 49.52 52.44 49.22 3.1 Transport & Storage, Communication 10.77 9.98 10.81 10.10 3.2 Wholesale & Retail 14.14 14.12 14.25 14.17 3.3 Hotel & Restaurant 0.71 0.68 0.71 0.69 3.4 Financial Intermediation 1.67 1.69 1.64 1.70 3.5 Real Estate, Renting & Business Activities 8.36 8.12 8.04 7.88 3.6 Public Admin & Defence 2.71 2.68 2.72 2.71 3.7 Education 2.47 2.44 2.46 2.47 3.8 Health & Social Work 2.28 2.25 2.24 2.26 3.9Community, Social & Personal Service 9.53 7.45 9.57 7.25 Source : National Accounts Wing, BBS. Gross Domestic Product by Industrial Sector at Constant Price FY 2005-Fy2006 (1995-96 Price) Million Taka (1US$ =70 Bd. Tk.) Industrial Sector 2004-2005 2005-2006 Value added Sectoral Growth Rate Value added Sectoral Growth Rate I. Agriculture 530367 2.21 596003 4.49 1. Agriculture & Forestry 442298 1.80 462949 4.67 1.i. Crops & Horticulture 320339 0.15 333822 4.21 1.ii. Animal Farming 75434 7.23 80191 6.31 1.iii. Forest & Related Services 46525 5.09 48936 5.18 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 11 of 87
  12. 12. 2.Fishing 128069 3.65 133054 3.89 II. 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 9.04 5. Power, Gas, Water Supply 41915 8.90 45152 7.72 6. Construction 231195 8.31 250549 8.37 III. Services 1265641 6.36 1347559 6.47 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 8.25 10. 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 7.98 14. 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 2.19 GDP @ constant Market Price 2669740 5.96 2848979 6.71 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 12 of 87
  13. 13. Macro Economic Indicators: Categories Year 2004-2005 2005-2006 GDP Growth Rate (1995-96 Prices) 5.96 6.71 Per Capita GDP (Tk.) 27061 29986 Per Capita GDP (US$) 441 456 Per Capita GDP GNI (Tk.) 28443 31669 Per Capita GDP GNI (US$) 463 482 GDP at current market price (Bill. Tk.) 3707 4162 GDP at constant market price (Bill. Tk.) 2670 2849 GNI at current market price (Bill. Tk.) 3896 4395 Consumption (Billion Tk.) 2965 3318 Private 2760 3087 Public 205 231 Investment of Current Price (Billion Tk.) 909 1039 Private 679 777 Public 230 262 Domestic 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 4.49 Industry 8.28 9.56 Service 6.36 6.47 Memo Item: as % of GDP Domestic Saving as % of GDP 20.01 20.26 National Saving % of GDP 25.84 26.61 Investment as % of GDP 24.53 24.97 Public Investment 6.21 6.30 Private Investment 18.32 18.67 Total Revenue Receipt as % of GDP 10.57 10.99 Tax Revenue 8.62 8.97 Non Tax Revenue 1.96 2.02 Foreign Exchange Reserve (Mllion US$ Yearly Average) 3023.60 2823.70 Exchange Rate (Tk/US$) 61.39 65.70 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 13 of 87
  14. 14. Current Exchange Rate: 1 USD = 74.775 BDT DAY RANGE: (74.775 - 74.775) Exchange Rates Updated: 2011-07-24 16:50 Web: Note: The total project already calculated by 70 BD Taka, against 1US$ 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 MMT Fuel 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 06-07 March/07 Cattle 21.88 22.39 22.46 22.58 22.60 22.67 22.80 22.87 Buffalo 0.68 0.92 0.97 1.01 1.06 1.11 1.16 1.21 Goat 12.45 16.27 16.96 17.69 18.41 19.16 19.94 20.75 Sheep 1.51 2.11 2.20 2.29 2.38 2.47 2.57 2.68 Total Livestock 35.52 40.69 41.59 42.52 43.45 44.41 46.47 47.51 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 14 of 87
  15. 15. 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 39.08 Total Poultry 122.8 176.51 186.91 197.98 209.0 220.73 232.99 245.97 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. Production Product Unit (ton) 93- 94 98-99 99-00 2000- 01 01-02 02- 03 03- 04 04- 05 05- 06 06-07 March/07 Milk Million T 1.39 1.66 1.70 1.74 1.78 1.82 1.99 2.14 2.27 1.635 Meat Million T 0.49 0.66 0.70 0.75 0.78 0.83 0.91 1.06 1.13 0.7675 Eggs 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 no Central cattle Breeding Farm, Savar, DhakaDeputy Director 02-7791766 Govt. Dairy Farm, Tilagorh, Sylhet Assistant Director 0821-760537 Govt. Dairy Farm, Rajabarihat, Rajshahi Manager 01674056323 Govt. Dairy Farm, Talma, Faridpur Manager 01712890056 Govt. Dairy Farm, Kashipur, Barishal Assistant Director 0431-61508 Govt. Dairy Farm, Sherpur, Bogra Assistant Director 01718685552 Govt. Dairy Farm, Hathazari, Ctg. Assistant Director 01830146187 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 15 of 87
  16. 16. Govt. Buffalo Breeding farm, Fakirhat, Bagerhat Manager 01724132104 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 16 of 87
  17. 17. 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 -2005 • Animal 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. Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 17 of 87
  18. 18. 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 Taka 2005-06 12 (investment) 1 (technical) = 13 Nos. Allocated – 4104 lac Utilized – 3547.48 lac (87% of the allocation) Departmental Institute: Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 18 of 87
  19. 19. Manpower of Department of Livestock Services: Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 19 of 87 Divisional Livestock Offices 7 District Livestock Offices 64 District Veterinary Hospitals 63 Upazilla Livestock Offices 460 Upazilla Veterinary Dispensary 460 Metropolitan Thana Livestock Office 9 Central Cattle Breeding Station 1 District Artificial Insemination Center 22 Artificial Insemination Sub-center 460 Artificial Insemination Point 634 Cattle Improvement Farm 6 Buffalo Breeding and Development Farm 1 Goat Development Farm 5 Pig Farm 1 Central Poultry Farm 1 Zonal Poultry Farm 2 Poultry Farms 23 Chick Rearing Farm 7 Central Duck Farm 1 Regional Duck Farm 3 Central Veterinary Hospital 1 National Zoo 1 Regional Zoo 1 Livestock Research Institute, Mohakhali 1 Central Disease Investigation Laboratory 1 Field Disease Investigation Laboratory 7 Livestock Nutrition Laboratory 1 Artificial Insemination Laboratory 1 Officers Training Institute 1 Veterinary Training Institute 2 Livestock Training Institute 1 Veterinary Collage 4
  20. 20. Approved Vacant Post Rem. Cadre Non Cadre TotalCadre Non Cadre Total Class-I Director 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 32 Upazila Livestock Officer/Equivalent 523 10 533 81 6 87 Veterinary Surgeon/Equivalent 705 50 755 145 30 175 Total 1471 70 1541 254 44 303 Class-II - - 4 - - 4 Class-III - - 4600 - - 247 Class-IV - - 2279 - - 20 Total Manpower - - 8428 - - 574 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 20 of 87
  21. 21. 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 development strategy 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 21 of 87
  22. 22. 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 consider following 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 22 of 87
  23. 23. 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. Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 23 of 87
  24. 24. • 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 24 of 87
  25. 25. 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. Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 25 of 87
  26. 26. 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 26 of 87
  27. 27. 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. Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 27 of 87
  28. 28. • 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) Smallholder milk 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 28 of 87
  29. 29. 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: Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 29 of 87
  30. 30. • 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 30 of 87
  31. 31. 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 31 of 87
  32. 32. 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. Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 32 of 87
  33. 33. 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: Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 33 of 87
  34. 34. 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. Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 34 of 87
  35. 35. Report of the Household-based Livestock and Poultry 2009 Item Figures (in ,000) Weighted Figures 1. Total number of household 28,712 2. Household reporting cattle 10,399 Percent of total household 36.22 Number of cattle 26,828 Number of male cattle 11,021 Number of female cattle 15,806 Average price per cattle 12,078 Tk. Household having working cattle 1,570 Percent of total household 5.47 Number of working cattle 2,720 Average price per working cattle 16,344 Tk. Household engaged in fattening cattle 965 Percent of total household 3.36 Number of fattened cattle 1,241 Average price per fattened cattle 15,694 Tk. Household having milking cattle 3,713 Percent of total household 12.93 Number of milking cattle 3,874 Average price per milking cattle 19,012 Tk. Household having improved/cross breed cattle 649 Percent of total household 2.26 Number of improved/cross breed cattle 1,088 Percent of total cattle 4.06 Average price per improved/cross breed cattle 20,980 Tk. Household having improved/cross breed milking cattle 180 Percent of total household 0.63 Number of improved/cross breed milking cattle 200 Ref: Bangladesh Bureau of Statistics %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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 35 of 87 Survey
  36. 36. is defined as all those aspects and activities 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 various products. 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 36 of 87
  37. 37. 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: 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. Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 37 of 87
  38. 38. Source: FAO Bulletin WEB: Milk Flow Chart for Bangladesh Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 38 of 87
  39. 39. Milk Flow Chart for Bangladesh Milk Price Chart for Bangladesh Note: 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 39 of 87
  40. 40. 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 year 1 Initial Capital Cost 1.1 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 Capital 2.1 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 2.6 Fodder & Medicine Inventory 1,037,674.00 2.7 Cash in Hand 20% as contingencies fund for sl. 2.1-2.6 S-total For 2.7 340,230.00 Total Initial Working Capital 2,041,379.00 Total Project Cost 65,287,579.00 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 40 of 87
  41. 41. 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. 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). Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 41 of 87
  42. 42. 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%. Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 42 of 87
  43. 43. 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. Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 43 of 87
  44. 44. Map Source: LGED From Wikimapia: Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 44 of 87 Project Location
  45. 45. 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. Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 45 of 87 Project location
  46. 46. 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. The over 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 or AI 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 46 of 87
  47. 47. 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) Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 47 of 87
  48. 48. 10. Rangpur Dairy (2007) 11. Akij Group (2007) 12. Grameen Danone (2007) 13. Savar Dairy (1974) 14. Army Dairy Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 48 of 87
  49. 49. 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 be consumed 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 Billion Milk 58% Meat 28% Other Livestock Products 14% Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 49 of 87
  50. 50. 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 people 2. Gawalas 3. Milk collection companies 4. Contractors The 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 Requirements Description Area (Acres) Shed for Cows 6 Open Paddock for Cows 12 Shed for Heifers 3 Open Paddock for Heifers 6 Shed for Calves 4 Open Paddock for Calves 7 Shed for Calves (older than one year) 4 Open Paddock for Calves (older than one year) 6 Stores for fodder, concentrate & machine room 4 Utensils & milk storage 1 Servant Room, Wash room 3 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 50 of 87
  51. 51. Water Pond 7 Land for fodder 63 acres Total Land Requirement 126 acres Note: 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 51 of 87
  52. 52. 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 of age, 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. It has 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. Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 52 of 87
  53. 53. 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 Requirement Description Sq ft Shed space for a cow/Heifer 40 Open Paddock for a cow/Heifer 80 Shed for a calf 40 Open paddock for a calf 80 Shed for a calf (older than one year) 26 Open Paddock for a calf (older than one year) 40 Stores for fodder & concentrate plus machine room 3600 Utensils & milk storage 6000 Servant room, wash room 1200 Water pond 400 Table 7-4 Total Infrastructure Cost Description Sq.ft Rate/Sq.ft Total Cost Shed for Cows 840 150 126,000 Open Paddock for Cows 1,680 5 8,400 Shed for Heifers 320 150 48,000 Open Paddock for Heifers 640 5 3,200 Shed for Calves 460 150 69,030 Open Paddock for Calves 708 5 3,540 Shed for Calves (older than one year) 275 150 41,278 Open Paddock for Calves (older then one year) 459 5 2,293 Stores for fodder, concentrate & machine room Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 53 of 87
  54. 54. 440 150 65,959 Utensils & milk storage 147 150 21,986 Servant Room, Wash room 366 200 73,288 Water Pond 761 20 15,216 Total 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 Equipment Calf feeder, Teat Dip Cup, Toka machine (chef cutter), Water pump, Generator (Cummins, FGWilson, Energypac, etc), Deep Tube Well (8” Dia) Miscellaneous Supplies Rate Freezer, Mule Cart, Ceiling Fans, Exhaust Fans, Miscellaneous farm utensils, Electrical fixtures(lighting, etc), etc. Description Quantity Chains 2600 Milking Buckets 200 Electric Cuffing Machines with Implements 10 Milking Cans 25 liter 800 Deep Freeze 20 CFT 30 Essential Industrial tools & Spares (L.S.) 1 Compressor Water pumps 2HP 6 Deep Tube-well 8" Dia 1 Milk Machine (Vacuum line system) 2 Milk Cooling Unit / Chiller 10000 litre/hour 2 Farm tractor & Trailer 1 Calf feeder 30 Teat Dip Cup 30 Straw / Wheat / Maize Cutter 5 Generator 1200KV (Cummin, FG Wilson, Energypac, Volvo, etc. 1 Heavy Duty Ventilation Fans 2HP 25 Testing 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. Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 54 of 87
  55. 55. 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. 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: Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 55 of 87 0
  56. 56. 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, Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 56 of 87
  57. 57. 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 economic feasibility of various forage crops produced under various farming systems is shown in following table Economics of forage Production under improved Production system per hectare in Bangladesh. Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 57 of 87
  58. 58. Item Forage Crop Maize Sorghum Napier, Para/German Splendida, 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 14.53 Fertilizer 20.34 20.34 58.13 29.06 29.06 26.16 Irrigation Land 8.72 8.72 11.62 12.79 8.72 5.81 Revenue/rent 20.34 20.34 52.32 72.67 72.67 21.80 Harvesting/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 1.25 Variable Costs: Seeds, fertilizers, land preparation, irrigation, harvesting, Transport etc Source: 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 58 of 87
  59. 59. 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 17.44 Cultivator cost 11.62 Seed 11.62 Irrigation 17.44 Total Cost 58.12 Daily Feed Requirements Animal Daily Requirement (kg) Cost/kg Amount Cow Green Fodder 40.00 0.10 4.00 Dry Roughage 5.00 2.00 10.00 Concentrate 3.18 10.00 31.78 Total 45.78 Heifer Green Fodder 50 0.10 5.00 Dry 5 2.00 10.00 Concentrate 3 10.00 31.78 Total 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 59 of 87
  60. 60. 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 12.28 2003-2004 13.18 2004-05 14.33 2005-06 16.09 2006-07 (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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 60 of 87
  61. 61. 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 follows Designation Person/s Managing Director 1 Director Finance 1 General Manager 1 Asst. General Manager 1 Farm Manager 1 Deputy Farm Manager 1 Marketing Manager 1 Sales Executive 6 Assistant Manager 1 Chief Accountant 1 P.S. to MD 1 Receptionist 1 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 61 of 87
  62. 62. Computer Operator 1 Store Keeper 1 Accountant Assistant 1 Veterinary Doctor 1 Veterinary Assistant 1 Farm Supervisor 25 Skilled Labour 100 Day Labour 50 Office Peon 2 Total 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 62 of 87
  63. 63. 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 a Result of appropriate breeding systems discussed earlier. Low yielding animals are sold in the market. On an average, cows are productive for 7 to 8 years while Heifers are productive for 8 to 9 years. 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: Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 63 of 87
  64. 64. 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. Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 64 of 87
  65. 65. 8.8. MALE CALVES: Male calves will be sold (50%) at the farm sooner after birth against US$ 150 to 200 per animal. Rest of them also will be reared in separately for meat / beef production. (first couple of years, before farm, already compacted 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: Breed Animals that, through selection and breeding, have come to resemble one another and pass those traits uniformly to their offspring. Compound feed Any ground mixture of ingredients intended for feeding the animals. It includes a concentrate mixture accordingly to formula. Dehorning The process of removal of horns (in adult animal) or horn buds (in young calves). The process may be done by mechanical or chemical means. Feedstuffs Any substance of nutritive and biological value used in production of compound feed. Heifer The term refers to young female bovine that reaches puberty age and is ready to breed. Home Mixed Feed Feed prepared on farm. Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 65 of 87
  66. 66. Oil seed Cake Mass resulting from the processing of seeds, which is rich in protein and is used as a source of feed for livestock, e.g. cottonseed cake, maize oil cake etc. Ration Amount of balance feed supplied to the cattle, within 24 hours 11 FINANCIAL ANALYSIS: Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 66 of 87 Project Investment Cost for the first year 1 Initial Capital Cost Total Amount 1.1 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 Capital 2.1 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 2.6 Fodder & Medicine Inventory 1,037,674.00 2.7 Cash in Hand 20% as contingencies fund for sl. 2.1-2.6 340,230.00 Total Initial Working Capital 2,041,379.00 Total Project Cost 65,287,579.00
  67. 67. Project Depreciation Cost per year 1 Initial Fixed & Working Capital Total Amount Depreciation % Amount 1.1 Land 52,607,200.00 5 2,630,360.0 0 1.2 Building / Infrastructure 8,039,000.00 10 803,900.0 0 1.3 Furniture & Fixture 57,000.00 20 11,400.00 1.5 Machinery & Equipment 285,500.00 20 57,100.0 0 1.6 Office Vehicles 166,500.00 20 33,300.0 0 2.1 Administrative Salaries for the first year 150,500.00 5 7,525.0 0 2.2 Labor Salaries 283,750.00 5 14,187.50 2.5 Fuel for vehicles (Petrol / Diesel / Gas) 13,625.00 5 681.2 5 2.6 Fodder & Medicine Inventory 1,037,674.00 5 51,883.7 0 Depreciation Cost (1st year end) 3,610,337.45 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 67 of 87 1 Initial Capital Cost 1.1 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 Store S-total For 1.1 52,607,200.00
  68. 68. 1.2 Building / Infrastructure ConstructionDetail Space/animal Animalunit TotalSpace Rate/sftinUS$ TotalAmountinUS$ Administrativ eOffice 1 6,000.00 20.00 120,000.00 GuestHouse &temporary staffmedical checking center 1 3,000.00 25.00 75,000.00 Cattle Medical Center25 individual chamber 1 2,500.00 20.00 50,000.00 Shedspace fora cow/Heifer 40 1750 70,000.00 15.00 1,050,000 Open Paddockfora cow/Heifer 80 1750 140,000.00 15.00 2,100,000 Shedfora calf 40 1400 56,000.00 15.00 840,000.00 Open paddockfora calf 80 1400 112,000.00 15.00 1680000.0 Shedfora calf(older thanone year) 26 500 13,000.00 18.00 234,000.00 Open Paddockfora calf(older thanone year) 40 500 20,000.00 18.00 360,000.00 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 68 of 87
  69. 69. 1.2 Building / Infrastructure (Cont.) Construction Detail Space/ animal Ani mal unit Total Space Rate/sft inUS$ Total Amount In US$ Storesfor fodder& concentrate plusmachine room 12000 1 12,000 15.00 180,000 Utensils& milkstorage withfulltiles 20000 1 20,000 30.00 600,000 Servant room,wash room 20000 1 20,000 30.00 600,000 Waterpond 15000 1 15,000 10.00 150,000 S-totalFor 1.2 489,500 8,039,000 1.3 Furniture & Fixture Figure in US$ Description Budget Unit Total Amount Note: Decoration with all modern equipment & facilities Managing 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 69 of 87
  70. 70. 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 Cost Initial 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 & Equipment Furniture & equipment required for the project is given in tables below. Farm Machinery & Equipment Cost Farm 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 Pre-Feasibility Study Dairy Farm (2500 Cattle) PREF-001/Aug, 2011/LI Page 70 of 87