Entrepreneurship idea and Business plan

INTRODUCTION

Project Brief:

Dairy farming is an agro-based project. Buffaloes & cows are

raised for milk production purpose. High milk yielding animals are purchased from

the animal markets or breeders located in Sahiwal, Multan and Faisalabad etc.

Dairy animals are fed on a high protein diet (concentrate) along with green

fodder. Animals give milk 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. Buffalo milk is sold at Rs 55-65 per liter at

the farm gate and Rs 65-70 in the urban market. Cow milk is sold at Rs 45-50 per

liter at the farm gate and Rs 5o-55 urban market. Milk prices are lower in the

winter and higher in the summer.

Opportunity Rationale:

Dairy farming is a profitable business for small

landholders. More than 70% farmers hold less than 5 acres of land. Fodder can be

grown on this land to feed the dairy animals. Land is cultivated and irrigated at

appropriate times and inputs like seed and fertilizer are used to maximize

production. Dairy farming is one of the best ways to effectively utilize land and

human resource. Land used for growing fodder yields higher returns as compared

to land used for traditional cropping.

Ideology:

Our ideology is developed as Dairy Farming consist on (milking cows) one

of the best generation of cows through across the world (freisan ,cholistani

,sahiwal,jersey and Australian cross).

Name of business:

Khan dairy farm is located at kahror pacca (lodhran) south Punjab Pakistan.

khan dairy farm wants to improve Quality and purity of dairy farming and dairy

products in kahror pacca.

Product:

Product variety:

Khan dairy farm will have to produced different dairy products

for local markets as well as multinational companies. Products list is design by

khan dairy farm which are manufactured in khan organization.

Main products:

1 Milk

2 Dairy Animals

Supported products:

Khan dairy farm gives most

priority on dairy pure milk and best cow’s

generation. There is a grand problem in Arban as

well as Rural areas is availability of pure milking to

fulfill people requirement on time and best

pricing. So khan dairy farm wants to provide pure

dairy milk in market and household on time.

1 Waste dairy product(Gobber)

2 Bio gas

3 Electricity

Khan dairy farm as a supplier:

Target Market:

Khan farm want to provides manufacturing and services in

dairy product (Dairy Animals , Bio gas , goober waste products ,Milk , electricity

and Butter ) in Rural areas , nearest cities as well as Nestle Pakistan and Engro pak

dairy organization in Pakistan.

Local market:

Khan dairy farm provides pure dairy milk to local market of kahror

pacca as well as to multinational organizations. Khan dairy farm makes his own

milking point for saving pure milk. Milk provided by khan farm through milking

van to local market and house to house contracts. Khan dairy farm also provide

calling services to market to market as well as house to house on time with some

extra charges of providing service. khan dairy sell out extra animals(dairy cows

and bulls) to farmers and bulls are sold for every EID and local farmer’s needs.

Butter provided to local market and local store through marketing planning. Bio

gas produces by khan dairy farm to fulfill his farm requirement and Electricity

manufacturing. Khan farm produce electricity to fulfill his farm requirement as

well as extra electricity provided to nearest community. Remaining waste

products after production of bio gas provide to agriculture farmers in kahror

pacca.

Package for local markets:

Milk:

Khan farm sell out his dairy milk to local market and

household system arrange by management of farm on every

“Evening” through his Khan milk point in kahror pacca by

milking van service and by hand selling system.

Dairy Animals:

Khan dairy farm will sell his extra Dairy animals to

local as well as others farmers to promote their dairy productions

and maintains his dairy animals as Quantity.

Mega Market:

Khan dairy farm also provide dairy milk to mega or multinational

companies like Nestle (pvt) and Engro Pakistan.

Nestle.Pakistan:

An agreement creates between khan dairy farm and Nestle Pakistan

is that khan dairy farm provides milk to Nestle Pakistan first three

days of “morning” milking stock. Khan dairy farm provides good stock

of milk to Nestle Pakistan and Nestle Pakistan provides good

payment per litter on weekly base and also provide doctorate and

wanda facilities to khan dairy farm.

Engro Pakistan:

Khan dairy farm makes an agreement with Engro

Pakistan to provide milking stock on last four days of every week

“morning” with good payment per litter on weekly base received

with wanda and machinery packages mention by Engro Pakistan.

khan farm also received advance from engro foods for his farm and

marketing.

It is most honorable for khan farm that engro foods developed big

Bio gas plant for khan farm to makes contract with Engro foods. This

bio plant control khan farm electricity needs and extra electricity

provide to nearest village with standard bill.

Khan dairy farm as a customer:

Khan dairy farm busy some of basic equipments

and dairy animals feeds. These needs buy from different sources and companies.

Engro and Nestle Pakistan provide some basic needs for khan farm.

ICI Pakistan:

khan dairy farm buys most of his farm needs

for dairy animals wanda from ICI Pakistan(PVT). Khan

dairy farm made direct contract with ICI Pakistan with

concession basis. Due to that contract khan dairy farm

decrease his dairy feed expenses.

Seeds:

Khan dairy farm buys best and multi cut seeds of sergodha company.

Because Sergodha co has better quality of all winter and summer seeds whose

give high average of production of fodder and gives more energy to animals

finally produce better production of milk for all time.

Summer Winter Makai (SG-2002) Barsaim (SG-2001)

Sada Bahar (SG-2002) Jawi (SG-2011)

Lucern (SG-2001) Also used Lucern (SG-2001)

Business Capacity:

The feasibility khan dairy farm herd size of 50 dairy

animals, which is economical to justify the overhead cost. The farm size will

increase to 180 animals within 5 years. Khan dair farm has cows is recommended

as jerrsey and local bread milk has more fat (4-5%) and Freisen and australian

cross cow milk (3.5%).khan farm has friesen, australian and jerrsey cross with

(calving) 37 heads Cows. (Cholistani /Sahiwal) with second lactation (calving) 13

heads. A cow on average, yields 16 liters of milk a day over a lactation period of

305 days.

Total Project Cost:

The total cost of the project is Rs 6 million, out of which

capital cost of the project is Rs 5 million for purchasing the animals and

constructing the building and the rest is used to meet the working capital

requirement. It is a flexible project which can be enhanced and developed with

change in market situation.

Description Total cost

Shed for cows 400,000

Shed for calves 50,000

Mixed cross cows (50*80,000)Average 4,000,000

Machinery 500,000

Other infrastructure 100,000

Food & servant saved 450,000

total 6,000,000

CURRENT INDUSTRY STRUCTURE:

Dairy farming is not an organized sector in

Pakistan. There are about four million dairy farmers in Punjab province only.

More than 90% of farming is done on subsistence level. There are very few

progressive farmers, which are running the business of dairy farming in a

professional manner. Milk processing was started in late 1970s, which is still

facing challenges due to competition with the unprocessed milk. The processed

milk has captured only 2% of thetotal 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.

Marketing Strategy:

Khan dairy farm tried to make one of the best marketing

plans and strategies to developed his ideology and business improvement in

effectiveness as well as profitability. Metropolitan khan farm is ti makes the major

markets for the sale of milk. Milk can be sold at khan farm is directly to milk

centers in the urban market like nestle and engro food .khan farm delivers milk

from his farm in villages ,kahror pacca city and deliver it at the consumer’s

doorstep. The selling price of milk varies according to its demand and supply.

Price of cow milk is normally sold at Rs 45-55 per liter at the farm.

Total Market Size and Growth:

Pakistan is the fifth largest milk producer in the world.

Milk production is 25 million tons from 8 million animal heads. Raw milk is used

for drinking and tea making purpose. In rural areas, milk is used to make desi

ghee, yogurt, curd milk (lasi) and butter. Rural as well as the urban households

are themajor consumers of milk. Milk is also used to make Khaoya and different

types of sweets. The demand for milk is increased during summers as the

consumption of cured milk (lasi) rises due to hot weather Milk processing

companies use milk as a raw material to formulate different types of milk i.e.

pasteurized milk, UHT milk, condensed milk, skimmed milk, milk powder, etc.

Different value added products like yogurt, ice cream, butter and cheese are also

produced from the raw milk. The processed milk market has increased its share in

quality conscious consumers. The milk market is growing at a growth rate of 4.5%

annually with increase in milk consumption. So khan farm can be increase in

business for future because dairy progress and growth increase in future and

demand also increase.

FARM INPUTS:

Land:

Land Requirement

About 10 acres of land is required for a khan dairy farm

project of 50 animals. Majority of this land would be used for growing fodder for

the animals. The other part would be used for building a shed for the animals for

protecting them from hostilities of the weather.

Description Area (Acres)

Shed for Cows 0.05

Open area for Cows 0.45

Shed for Calves 0.02

Open area for Calves 0.08

Shed for Calves (older less than one year) 0.01

Stores for fodder, sailage & machine room 0.50

Utensils & milk storage 0.02

Servant Room, Wash room 0.87

Land for fodder 08

Total Land Requirement 10

Land:

Khan farm has his own land in kahror pakka at Rind jada. This personal land will

be used for khan dairy farm project. This agriculture land is available for lease

acccording to market for annual rent is Rs 30,000-35,000 per acre.

Suitable Locations:

Suburban and rural areas, where sweet ground water is

available to irrigate crops are suitable locations for a dairy farm and it create

positively impact on dairy animals. So khan dairy farm select Suburban area like

kahror pacca.

Animals:

Cow Breeds:

khan dairy farm wants to improve his dairy milk per litter

production so farm has to decided buy pure sahiwal and cholistani cows as well as

best cross breeds of freisan, australian and jersey with average prices of Rs 80,000

per cow.

Animal Breeding:

Animal breeding is done to improve progeny. This can also

be used for reducing calving intervals. Animal breeding through artificial

insemination (AI) like (freisan, australian and jersey) will result in better herd

management, which in turn, would lead to higher milk yields. Cost of AI is Rs. 300

per animal for cows.

Animal Markets:

Animal markets (mandies), Government and private livestock

farms are the main sources for purchasing milk animals. Animal markets are

situated in different places in Punjab, which includes Sheikupura, Okara, Sahiwal,

Arifwala, Muridke and Jhelum. These markets operate on rotational basis in a

week, or once a month. There are different contractors available in the market

who help locating the proper animals. These contractors work on commission

basis and the commission rate charged may vary from 1-2% of the animal price.

Animal Housing:

There is no hard and fast rule for the designing of sheds for

animals. It 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. It consists of a built up animal shed, a brick soling

waking area for animals, one room for milk storage and another for storing farm

equipment.

Total Infrastructure Cost:

Description Sq.ft Rate/Sq.ft Total Cost

Shed space for a cow 800 250 200,000 Open Paddock for a cow 1100 5 5,500 Shed for a calf 400 150 60,000 Open paddock for a calf 550 5 2,750 Shed for a calf (older less than one year) 200 150 30,000 Open Paddock for a calf (older less than one year) 300 5 1,500 Stores for fodder & sailage plus machine room 500 150 75,000

Description Sq/ft

Shed space for a cow 39 Open Paddock for a cow 80 Shed for a calf 26 Open paddock for a calf 40 Shed for a calf (older less than one year) 36 Open Paddock for a calf (older less than one year) 60 Stores for fodder & sailage plus machine room 12 Utensils & milk storage 04 Servant room, wash room 10

Water pond 14

Utensils & milk storage 200 180 36,000

Servant room, wash room 400 110 44,000

Water pond 1200 20 24,000

Mix infrastructure cost 71,250

Total Infrastructure Cost 550,000

Farm Equipment:

Farm supplies No. Rs

Toka machine (fodder cutter) 1 15,000

Water pump 1 12,000

Generator (Peter engine–20HP) 1 50,000

Loading pickup (van) 1 350,000

Freezer 1 45,000

Ceiling Fans 10 8,000

Calf feeder 10 2,000

Additional investment required 18,000

Total cost 500,000

Feed:

Feed Ration

This is given along with fodder to increase animal productivity. This

ration feed includes cotton seed cakes, corn gluten, wheat bran, molasses, choker

and the best for animals is combination of these things like wanda. About 1 kg of

wanda is required for the production of 3 liters of milk. The concentrate feed

price is Rs 30 per kg. How much wanda is given to dairy animals you get more

ratio of liters of milk.

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. These mixtures are very useful for animals in

summer.

Fodder Crop

Fodder is grown at the land, which is acquired on lease or owned

by the entrepreneur. Only good nutritional fodder crops are suggested to be

grown. Fodder corps of berseem, millet, and lucern are grown in winter season,

while maize, makai and multi cut sadabahar are sown in summer. The fodder yield

varies between 600 tons to 1,100 tons per acre depending upon the fertility of

land.

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. According to estimates, buffalo consumes 40-55 kg fodder

daily while cow consumes about 30-40 kg.

Wheat Straw/Turi:

This is used as the roughage component of animal feed. Its

price varies between Rs 70-90 per 40 kg throughout the year, the lowest being

during the wheat-threshing season in early May. Wheat straw is used during

winter season.

Daily Feed Requirement:

Animal Daily Requirement (kg) Cost/kg Amount

Green Fodder 50 1.05 52.5

Dry(winter) 4 2 8

Wanda 2(av) 30 60

Total 120.5

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 approximately Rs. 250 for both cow and buffalo

per year.

Labor Requirement:

For a dairy enterprise, manpower is required for

performing different activities at the farm e.g. feeding, milking, etc. One mature

person can handle eight milk animals easily. Six farm workers are recommended

for handling 50-animals. A supervisor cum farm manager can be hired to look

after all the farm activities. The supervisor should have passed the primary level

of education so that he can handle the administration & account matters at the

dairy farm.

Description No. Salary/month Annual Salary

Farm Manager(S.worker) 1 7,000 7000

Workers 5 5,000 25,000

Doctor 5,000

Total Labor Cost 37,000

FARM OUTPUT:

The lactation period is the period during which the animals

provide milk. These animals are called wet animals. Generally the lactation days

of cows are 305 days. For calculation, the feasibility has taken 77% of the total

number of cows as wet cows. The calving interval in a cow has 15-18 months. But

it depends on feed available to dairy animals in a farm.

Milk Composition:

Cow milk is relatively lower in fat contents, which is 3-4%

and is higher in solids i.e. 7.5%.

Progeny Development:

The proposed farmer will develop his own progeny for

quality animals. The first progeny will be capable of giving milk after 3 years in

case of sahiwal and cholistani cows while Quality of cross breeds capable of giving

milk after 2 years. But it depends on feed which is given to dairy animals.

Increase in Milk Yield:

The milk yield will be improved as a result of controlled

breeding. The feasibility has taken this increase as 12% in cows for the first four

progenies. After that, it remains constant in the later years. Low yielding animals

are sold in the market. On an average, cows are productive for 7 to 8 years while.

Khan dairy farm improved milk yield from Animals due to providing best and

standard feeds and environment.

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2000

4000

6000

8000

10000

2013 2014 2015 2016

Productivity

Sale Price:

Khan dairy farm provides milk to different market on different rates.

Because khan dairy farm provides different services to different markets,

household and mega markets.

Sale Market Rate/Per kg

Nestle & Engro food 45-50

Near Markets 50

Van sevices 55-60

Evening Milk:

Milk can be stored in a freezer

with a capacity of 500 liters at the farm if milk is

not sale in the evening. Remaining evening milk is

store in freezer than provide to mega market as

Nestle and Engro Pakistan.

Farm Revenues:

Khan dairy Farm revenue will increase with the passage of

time, as the milk production will increase with the growth in herd size.

Milking increasing yield

year 1

year 2

year 3

year 4

Male Calves and cows:

Male calves will be sold at the end of year for Rs 35,000-45,000

per animal. They can also be reared in separately for beef production. khan farm

also sale pregnancy cows for Rs 80,000-130,000.

Financial Analysis:

Income Statement:

Year 1 Year 2 Year 3 Year 4 Year 5

Revenue on sale of milk

Other revenue

12,680,739

1,190,000

13,394,881

1,309,000

15,343,694

1,439,900

16,878,063

1,583,890

18,565,869

1,742,279

Total Revenues 13,870,739 15,257,812 16,783,594 18,461,953 20,308,148

Cost of sale

Cost of goods sold

Medicine, Vaccination Charges

Direct electricity & fuel charges

3,190,000

30,000

275,000

3,445,200

31,500

275,000

3,720,816

33,075

275,000

3,981,273

34,728

275,000

4,259,962

36,465

275,000

Total cost of sale 3,495,000 3,751,700 4,028,891 4,291,001 4,571,427

Gross Profits 10,375,739 11,506,112 12,754,703 14,170,952 15,736721

General administration & selling expenses

Salary expenses

Land expenses

Depreciation expenses

Maintenance expenses

490,000

400,000

200,000

320,000

539,000

480,000

200,000

345,600

592,900

576,000

200,000

373,248

652,190

691,200

200,000

403,107

717,409

829,440

200,000

435,356

Wanda expenses 200,500 230,575 265,161 304,935 350,675

Profit 8,765,239 9,710,937 10,747,394 11,919,520 13,203,841

Other Mix expenses 1200,000 1,320,000 1,452,000 1,597,200 1,756,920

Tax 0 0 0 0 0

Net Profit 7,565,239 8,390,937 9,295,384 10,322,320 11,446,921

Projected Balance Sheet:

Year 1 Year 2 Year 3

Assets:

Current assets:

Cash & Bank

Raw material inventory

Prepaid annual land lease

Total current assets

450,000

250,000

300,000

1,000,000

950,000

300,000

300,000

1,550,000

1,350,000

350,000

400,000

2,100,000

Fixed assets:

Building

Animals

Monitory loss

Net Animals values

Machinery & Equipments

550,000

4,000,000

(175,000)

3,825,000

500,000

540,000

5,500,000

(305,000)

5,195,000

545,000

515,000

7,000,000

(250,000)

6,750,000

545,000

Total Fixed assets: 4,875,000 6,280,000 7,810,000

Intangible assets 50,000 100,000 120,000

Total assets: 5,925,000 7,973,000 10,030,000

Liabilities & Shareholders' Equity:

Long term debt

2000,000

1500,000

500,000

Shareholder equity

Paid up capital

Mortality loss

Retained earning

2000,000

(175,000)

4,100,000

2000,000

(305,000)

6,278,000

2000,000

(250,000)

8,280,000

Total liabilities & Equity 5,925,000 7,973,000 10,030,000

Our vision:

Our vision is to improve purity of milk and quality of dairy farming in

kahror pacca. Our broad vision to makes khan dairy farm one of the best private

dairy farm in Punjab Pakistan.

References:

1. Small and Medium Enterprise Development Authority Government of Pakistan of dairy farming.

2. Environmental controlled poultry farm by SMEDA.