SMEDA Intensive Goat Breeding Farm | Livestock

Pre-Feasibility Study

Intensive Goat Breeding Farm

Small and Medium Enterprise Development Authority

Government of Pakistan

www.smeda.org.pk

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REGIONAL OFFICE SINDH

REGIONAL OFFICE

NWFP

REGIONAL OFFICE

BALOCHISTAN

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Tel: (081) 2831623, 2831702

Fax: (081) 831922

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Dec, 2009

Pre-feasibility Study Intensive Goat Breeding Farm

BAL-PREF-10/June, 2008

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DISCLAIMER

The purpose and scope of this information memorandum is to introduce the subject matter and

provide a general idea and information on the said area. All the material included in this

document is based on data/information gathered from various sources and is based on certain

assumptions. Although, due care and diligence has been taken to compile this document, the

contained information may vary due to any change in any of the concerned factors, and the

actual results may differ substantially from the presented information. SMEDA does not assume

any liability for any financial or other loss resulting from this memorandum in consequence of

undertaking this activity. Therefore, the content of this memorandum should not be relied upon

for making any decision, investment or otherwise. The prospective user of this memorandum is

encouraged to carry out his/her own due diligence and gather any information he/she considers

necessary for making an informed decision. The content of the information memorandum does

not bind SMEDA in any legal or other form.

DOCUMENT CONTROL

Document No. PREF-20

Prepared by SMEDA-Balochistan

Issue Date Dec, 2009

Issued by SMEDA-Balochistan



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Table of Contents

1 Purpose of the document............................................................................... 2

2 Project Profile................................................................................................ 2

2.1 Project Brief ................................................................................................................2

2.2 Opportunity Rationale..................................................................................................2

2.3 Market Entry Timing ...................................................................................................3

2.4 Proposed Business Legal Status ...................................................................................3

2.5 Proposed Product Mix .................................................................................................3

2.6 Production Capacity.....................................................................................................4

2.7 Project Investment .......................................................................................................4

2.8 Recommended Project Parameters ...............................................................................4

2.9 Suitable Location.........................................................................................................4

2.10 Key Success Factors/Practical Tips for Success ...........................................................4

2.11 Strategic Recommendations.........................................................................................5

3 CURRENT INDUSTRY STRUCTURE ...................................................... 5

3.1 World ..........................................................................................................................5

3.2 Asia .............................................................................................................................7

3.3 Pakistan .......................................................................................................................7

3.3.1 Province-wise distribution of breeds...................................................................10

3.3.2 Important Goat Breeds of Pakistan. ....................................................................11

3.4 Balochistan................................................................................................................12

3.4.1 Prevalent system of Livestock production in Balochistan ...................................13

3.4.2 Characteristics of Some Breeds Recommended for Goat Farming: .....................13

3.4.3 Feed Resources ..................................................................................................14

3.4.4 Problems and Issues faced by the Livestock Sector of Balochistan .....................15

3.4.5 Balochistan’s Contribution to the Sector ............................................................17

4 Market analysis ............................................................................................20

4.1 Marketing Channels...................................................................................................20

4.2 Wholesale Market Locations......................................................................................23

4.2.1 Mode of Transportation:.....................................................................................23

4.2.2 Special occasions of marketing: .........................................................................24

5 FARM PRODUCTION SYSTEM...............................................................24

5.1 Fodder Farm..............................................................................................................24

5.1.1 Farm Inputs........................................................................................................24

5.2 Goat Breeding............................................................................................................25

5.2.1 Area required for goat breeding farm .................................................................25

5.2.2 Human Resource required for goat breeding farm ..............................................25

5.2.3 Proposed Goat breeding practice ........................................................................25

5.2.4 Routine for feeding and milking.........................................................................26



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5.2.5 Diseases and Treatments ....................................................................................27

6 MACHINERY AND EQUIPMENT REQUIREMENTS...........................28

7 LAND AND BUILDING REQUIREMENT ...............................................28

7.1 Recommended Mode .................................................................................................29

8 PROJECT ECONOMICS ...........................................................................30

8.1 Project Cost ...............................................................................................................30

8.2 Project Returns ..........................................................................................................30

9 FINANCIALANALYSIS .............................................................................31

9.1 Projected Income Statement.......................................................................................31

9.2 Projected Balance Sheet.............................................................................................32

9.3 Projected Cash Flow Statement..................................................................................33

10 Key Assumptions ......................................................................................34

10.1 Breed Plan .................................................................................................................34

10.2 Revenue Assumption Rs. .........................................................................................35

10.3 COGS........................................................................................................................35


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BAL-PREF-20/Dec, 2009

Introduction to SMEDAThe Small and Medium Enterprise Development Authority (SMEDA) was established with the

objective to provide fresh impetus to the economy through the launch of an aggressive SME

support program.1

Since its inception in October 1998, SMEDA had adopted a sectoral SME development

approach. A few priority sectors were selected on the criterion of SME presence. In depth

research was conducted and comprehensive development plans were formulated after

identification of impediments and retardants. The all-encompassing sectoral development

strategy involved recommending changes in the regulatory environment by taking into

consideration other important aspects including financial aspects, niche marketing, technology

upgradation and human resource development.

SMEDA has so far successfully formulated strategies for sectors including, fruits and vegetables,

marble and granite, gems and jewelry, marine fisheries, leather and footwear, textiles, surgical

instruments, urban transport and dairy. Whereas the task of SME development at a broader scale

still requires more coverage and enhanced reach in terms of SMEDA’s areas of operation.

Along with the sectoral focus a broad spectrum of business development services is also offered

to the SMEs by SMEDA. These services include identification of viable business opportunities

for potential SME investors. In order to facilitate these investors, SMEDA provides business

guidance through its help desk services as well as development of project specific documents.

These documents consist of information required to make well-researched investment decisions.

Pre-feasibility studies and business plan development are some of the services provided to

enhance the capacity of individual SMEs to exploit viable business opportunities in a better way.

This document is in the continuation of this effort to enable potential investors to make well-

informed investment decisions.

1 For more information on services offered by SMEDA, please visit our website: www.smeda.org.pk


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11 PPUURRPPOOSSEE OOFF TTHHEE DDOOCCUUMMEENNTT

The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in

project identification for investment. The project pre-feasibility may form the basis of an

important investment decision and in order to serve this objective, the document/study covers

various aspects of project concept development, start-up, and production, finance and business

management.

22 PPRROOJJEECCTT PPRROOFFIILLEE

The project is related to setting up a Fully Intensive Goat Breeding Farm in promising areas of

Balochistan. The document highlights all the marketing, management, and financial aspects

required for the establishment and successful running of the project.

22..11 PPrroojjeecctt BBrriieeff

The farm will serve as breeding and rearing farm for goats. The project can be established in

promising areas for goat breeding where abundance of fresh water is available. The proposed

farm will ensure the breeding of disease free animal as it will overcome the disadvantage of

bringing the diseases from the animal markets (Mandi).

The project will attain a completely new breed through the cross of the female local goats with

the crossed male goats, like Kamori etc. By this, after two breeding cycles the project will

develop its own breed that is most suitable to the local environment.

The total project investment is Rs. 4.78 million with a Project Internal Rate of Return (IRR) of

28 %. The total project investment would be paid back in approximately 4.15 years.

22..22 OOppppoorrttuunniittyy RRaattiioonnaallee

The widening demand and supply gap makes the goat farming to be a profitable venture. The

livestock owners having some fixed land base should be encouraged to undertake intensive

farming which in the beginning would be little expensive but with the current lucrative price

structure of meat throughout the country coupled with its developing exports potentials, would

prove profitable enterprise. With the switching over to fully-intensive farming which would

warrant availability of quality breed, stall/ supplementary feeding, non-conventional and

economical feeding techniques and improved genetic material, the livestock farming can become

a cost effective enterprise with its down stream positive effects in the farming community. The

country can thus also be benefited with increased productivity of animal protein.

The selection and development of proper breed is most suitable as per the environment of the

area whereas the nutrition is the most important factor to be considered. Though the people are

aware of the best breeds but still the conventional farm practices put constraints to the same.

Instead of looking for a best cross breed via continuous cycles, they do not give much attention

to utilizing only those animals for breeding that can provide the best results. Also nutrition is a

serous limiting factor in the livestock industry of Balochistan with the result that many animals

arrive at the market in less than optimal body condition with body weight on the lower end.

There is a dire need to ensure feed availability round the year with proper protein contents for


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increasing livestock productivity rather then its numbers. Such a situation directs to adopt non–

conventional feed preparation and feeding techniques like treatment of wheat/ rice straws and

other crop residues with urea or ammonia, molasses bocks, silage making ,concentrate mixtures

with low cost formulae, feed lots, semi – intensive farming and ewe flushing etc. such techniques

have already been tested and demonstrated to the farmers under different projects.

Based on the above facts, this pre-feasibility for goat farm consisting of 377 goats using stall

feeding with intensive animal health coverage has been prepared for interested entrepreneurs as a

guidance tool.

22..33 MMaarrkkeett EEnnttrryy TTiimmiinngg

Demand and supply fluctuates during the year depending upon Eid-ul Azha and winter season. If

the farmer is targeting Eid for sale of its young stock, It is suggested that female stock ready for

breeding is purchased at least 12 to 14 Months before the next Eid. Normally best time for the

impregnation of a goat is during the months of March, April, May and October. As it takes

around 5 Months for giving birth, therefore kids born have sufficient feed, and prove to be a

healthy stock.

Peak Season: supply and demand for goats and sheep are at peak before Eid-ul Azha, due to

mass slaughter for Qurbani. A large Number of middlemen come to markets from Punjab,

Quetta, Sindh and other areas to buy stocks and transport them to their areas.

Another season with higher supply and demand is the months of November and December. In

these months lambs and kids become adult, gain weight and no more depend on their mothers,

and producers bring them to market for sale. Thirdly, Nomad and other livestock breeders want

to sell their surplus stock because it is very difficult to breed them in winter.

Off-peak Season: June and July is off-peak season for livestock supply and demand because

February, March and April are reproductive season for goats and sheep and newly born lambs

and kids depend on mother. Moreover, consumption of meat decreases during summer. In this

season, goats and sheep are also used for milking purpose.

22..44 PPrrooppoosseedd BBuussiinneessss LLeeggaall SSttaattuuss

The business can be started as sole proprietorship or partnership because of great potential

involved. Furthermore, comparatively fewer complications are involved in forming,

administering and running the sole proprietorship or partnership businesses.

22..55 PPrrooppoosseedd PPrroodduucctt MMiixx

The farm would focus on the breeding and rearing of young male stock for marketing to the goat

fattening farms. The kids after attaining the age of 7 Months, will be sold to the farm owners and

domestic buyers interested in the fattening of goats. Additionally the raw materials produced

would be extra green fodder which would be sold in local markets to other livestock farmers.

Once the farm has been established surplus female stock of breeding age i.e after ten months

could also be sold in market since it brings a better price as compared to young females of non

breeding age.


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22..66 PPrroodduuccttiioonn CCaappaacciittyy

The farm will start production with 110 adult females for production which will increase to 146

adult females. The over all farm size at this capacity would be around 377 animals including

Young Male and Female Progeny and Female stock of breeding age. The number of adult

breeding females has been kept limited because very large herd would be difficult to manage.

22..77 PPrroojjeecctt IInnvveessttmmeenntt

The total project investment is Rs 4.78 Million which includes working capital of Rs. 0.17 and

capital cost of Rs 4.6 Million. It is assumed that the project would be totally equity financed.

22..88 RReeccoommmmeennddeedd PPrroojjeecctt PPaarraammeetteerrss

Table No. 1

Max Capacity

Human

Resource Technology/Machinery Location

146 Adult breeding

Females 3 Local MadeCentral and Southern

Districts of

Balochistan

Financial Summary

Total Cost IRR NPV Pay Back Period

Cost Of Capital

(WACC)

Rs. 4.78 M 28 % 3,175,236 4.15 Years 16%

22..99 SSuuiittaabbllee LLooccaattiioonn

The suitable areas to establish sheep farm are northern, Southern and central Balochistan.

22..1100 KKeeyy SSuucccceessss FFaaccttoorrss//PPrraaccttiiccaall TTiippss ffoorr SSuucccceessss

Livestock is one of the Major Strength of Balochistan. It is an integral part of the rural

Traditional Farming is in practice in the province for Centuries.

There is a great demand of livestock especially in Middle Eastern countries.

Northern and central Balochistan have the ideal climate for razing our local species of Goat

and Sheep.

Fully intensive farming is relatively economical with better results.

Fully intensive breeding farm has lesser chances of diseases in the animal, as only the

parent breed is purchased one time at the start of project.

Availability of Trained Labour for Farming

Local Availability of Raw material and own green fodder at almost 1/3 of the market rate


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22..1111 SSttrraatteeggiicc RReeccoommmmeennddaattiioonnss

Establishment of the farms in areas where cheap land is available, but still not very far from

the animal markets.

The farming should be done on scientific grounds taking care of Vaccination, Medicine etc.

Healthy and attractive local female without horn should be selected, as it has better

characteristics compatible with the local environment.

Healthy and quality male stock should be selected for breeding.

New feeding techniques including concentrate feeding and preparation of urea molasses

blocks, wheat straw treatment should be used for better results.

Well-trained/experienced staff adding in the efficiency of the farm.

33 CCUURRRREENNTT IINNDDUUSSTTRRYY SSTTRRUUCCTTUURREE

33..11 WWoorrlldd

The income of people, meat prices, health consciousness, culture, and religious beliefs are the

factors that may shape the demand of meat within a specific country. Through out the world

ethnic groups mainly contribute to the demand of meat. For example a country with higher

number of immigrants will exhibit a society of mixed and diversified ethnic groups. Many of

these groups have some festivals during which the demand of meat is enormously affected. The

world average per capita consumption of meat is around 2.5 pounds. The following describes

information used by New Zealand in describing the types of products that they attempt to deliver

to international markets (M. Miller 1999, Pinkerton 1995):

Taiwan. Taiwanese consumers prefer skin-on carcasses with dress weights between 22 to 35

pounds. Goat meat in this market must be extremely lean with strong flavor. Demand in Taiwan

peaks between June and the Chinese new year when most religious celebrations are held (the

Chinese new year changes from year to year).

Malaysia. Consumers in Malaysia desire both skin-on and skin-off carcasses. Skin-on carcasses

must weigh between 30 and 35 pounds. Skin-off carcasses should weigh between 30 and 44

pounds. Malaysian consumers also require a lean meat. Skin-off product is used in wet dishes,

curries, and stews. Skin-on product is used in traditional Chinese recipes. Malaysian consumers

prefer intact male carcasses and prefer to slaughter their own animals.

Italy and Greece. The Italian and Greek markets prefer younger goats with carcass weights

between 15 and 20 pounds (kids between 8 and 16 weeks old). Depending on the time of season,

consumers may be more flexible in their weight preferences. Consumers from these areas buying

for Easter and Christmas prefer even lighter kids (In terms of liveweight the animal should weigh

between 18 to 28 pounds (carcass weight 9 to 14 pounds). Kids fitting this weight range will

normally be somewhere between 4 and 12 weeks of age).

Singapore. Consumers in Singapore prefer skin-off carcasses with heavier dressing weights (up

to 55 pounds). A lean product is preferred for use in wet dishes and curries.


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Caribbean (West Africa). The Caribbean market is a sensitive market requiring skin-off, frozen

carcass between 24 and 40 pounds. Other products used include 4 to 6 pound packages of cubed,

bone-in pieces from older less conditioned goats. Given acceptable prices, there also seems to be

some demand for 6 way cuts (carcass divided into two legs, two loins, and two forequarters).

Specific information about position of cuts can be found in Miller’s “The NSW Goat Meat

Industry” (1999). Jamaicans are a main buyer of mature bucks.

Korea. Goat meat consumption in Korea is based on religious and medicinal beliefs concerning

the meat. Korean customers require a skin-on carcass, but specific characteristics (weight,

leanness, etc.) vary depending on the final purpose.

Latino. Latino consumers use larger goats with less condition throughout the year. Consumption

is extremely sensitive to price for these animals. In addition, Latino consumers demand Cabrito

(milk fed kids between the age of 4 and 10 weeks weighing between 15 and 25 pounds). Cabrito

is used for special occasions and as such is less sensitive to pricing.

Table 3. Religious Holidays, Significance and Meat Preferences Holiday Religious Significance Meat Specification

Christian

Christmas

Easter

Palm Sunday

Good Friday

Celeberate the birth of Hazrat Issa (Al.S.)

Celeberate the Resurrection of Hazrat Issa (Al.S.)

The Sunday preceding Easter Sunday. Palm Sunday is a day that many christian churches commemorate Jesus entry into Jerosalem

Also known as Easter Friday. A day Christians remember as to be the crucification (as per their point of view) of Jesus

Milk fed kids, but hard to get because it required out of season breeding. Quality control not as important as is the case with Easter Milk fed kids with relatively light colored meat, 3 months old or younger. Kids weighing less than 20 lbs are disappointing to buyers due to low meat to bone ratios and high carcass drying losses. Slight price penalties for kids weighing over 40 lbs. acceptable weights generally range from 20 to 50 lbs with 25 lbs considered optimum by buyers

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