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Business Development Plan

for a Poultry Farm

By

Sulaiman Khan Mahsood

(BSEE-15-19)

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EXECUTIVE SUMMARY

Poultry farms started to commercialize in the 1960s in Pakistan. That time Government of
Pakistan took steps to encourage investors to invest in business by providing incentives. It
established institutions to form policies and strategies for the industry. With time, after
experiencing its ups and downs, industry got mature and now today it is one of the important
agriculture sector of Pakistan. It contributes 1.3% GDP to the national economy.

It is estimated that Pakistan has capacity to house 5000 sheds of which only 2500 are there (GOP
2014). Since white meat is the cheapest of all meats available, it has great demand and therefore
a profound potential for business. This demand is to keep on increasing considering Pakistan’s
burgeoning population. Moreover, Pakistan being a Muslim country can export guaranteed Halal
food to other Muslim nations. Furthermore, professional hatcheries and breeding grounds are
available to raise healthy chicks for the farms.

Considering this much big gap in the market between supply and demand, investing in such a
business could prove to be a lucrative venture. Business could be financed either through banks
or Government schemes. A case study from National Bank of Pakistan pertaining to set up of
poultry farm is used to estimate costs for the project. According to the estimate and ignoring
some assumptions, around 1 crore 80 lac rupees are required to set up a farm with 1000 birds
flock. This document does not factor in electricity cost which will change the capital requirement
of the project.

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Contents

OVERVIEW ....................................................................................................................................... 4

Brief History of Poultry Industry in Pakistan ................................................................................... 5

Present Scenario of the Poultry Industry in Pakistan ..................................................................... 6

Market Analysis ........................................................................................................................... 6

Potential Market ......................................................................................................................... 7

SWOT Analysis of a potential poultry farm ................................................................................. 9

Business Development Plan and Model ....................................................................................... 10

Financial Plan............................................................................................................................. 10

Land Acquisition and Building: .................................................................................................. 10

Equipment and Machinery Requirements ................................................................................ 11

Human Resource Requirement ................................................................................................. 11

Purchase of feed and Day Old Chicks ........................................................................................ 12

Summary of project initial capital requirement ........................................................................ 12

References .................................................................................................................................... 12

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OVERVIEW

This document gives an oversight on the evolution of poultry industry in Pakistan and provides
description of business development plan for a poultry farm. It is organized in the following three
core chapters:

 Brief History of Poultry Industry in Pakistan goes through evolutionary stages of the
industry in Pakistan.
 Present Scenario of the Poultry Industry in Pakistan explores the market of poultry
products and potential for business in it.
 Business Development Plan and Model gives out a crude business startup plan and cost
estimation.

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Brief History of Poultry Industry in Pakistan

It was in 1960s when poultry farming started to commercialize in Pakistan. Before 1963, poultry
farming was mainly used to fulfill household needs of meat and eggs. Native chickens were used
that had very little yield in terms of meat and eggs. In 1965, an improved breed of chicken was
introduced by University of Agriculture Faisalabad that was more resilient to the temperature of
the country, specifically in summer, and yielded more eggs. Meanwhile, Pakistan International
Airlines (PIA) established Pakistan’s first hatchery in Karachi with the collaboration of a Canadian
breeding farm. At the same time, Lever Brothers Pvt. Ltd. established the first commercial poultry
feed mill in the district Rahim Yar Khan in the Punjab province. After that, investors started to
invest money in poultry business mainly because of the demand of poultry in Pakistan and the
Government incentives. Income tax and Sales tax were exempted and import duties were
reduced. Federal Poultry Board was established in 1979 in order to establish an effective link
between industry and government. Poultry research institutes were established in 1978 in
Karachi and Rawalpindi. Pakistan Poultry Association was established in 1979 to promote
lobbying to uplift the status of the industry and farmers.

Following subsequent years up till now, the poultry industry has seen significant growth and has
contributed significantly to the growth of the economy. However, the industry has also seen bad
days. Disease problems, relatively high prices of poor quality feed and a limited supply of feed
ingredients being the major reason. Hydro Pericardium Syndrome (HPS) appeared in 1990 and
caused a huge damage to broiler and broiler breeder flocks. Gumboro appeared in 1991-and
adversely effected broiler, layer and parent flocks. While the industry was trying to adjust itself
from the earlier HPS and Gumboro attacks, another outbreak of Avian Influenza in Murree and
Abbottabad in 1995 occurred in the parent flocks and caused up to 80% mortality. The
emergence of these diseases opened new avenues in the industry. New industry for the import
of vaccines started to take shape. New institutions were developed to tackles disease issues.

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Present Scenario of the Poultry Industry in Pakistan

Market Analysis
Poultry is one the most important sector of agriculture industry in Pakistan by providing
employment to 1.5 million people. There is capacity of 5,000 Environmental Control Houses in
Pakistan and currently 2,500 houses are working, out of which 75% (1,875) are in Punjab and
remaining 25% (625) are in other provinces. The current investment on poultry industry is above
Rupees 200 billion and about 1.3 % of GDP is produced by it.

Most of the farms in industry produce boiler meat. It is the cheapest source of animal protein
available in Pakistan. Broiler birds are reared in lesser time than any other source of animal
protein. Day Old Chicks are raised on high protein feed for about six weeks in Controlled
Environment. Approximately, six flocks of birds could be reared on the same premises of the
farm. Day Old Chicks are purchased from private hatcheries and mature in brooding, on rice-husk
or saw-dust providing specific requirement during first four weeks and then grown-up for grand
growth since sixth week to attain about two kg weight. In controlled environment the
temperature, feed and drinking system is operated automatically and monitored by the trained
staff. The broiler house is given 15 days for the preparation to receive the new flock after
marketing of broiler about at age of six weeks. Prior to the arrival of the new flock proper
cleaning, washing, white washing, disinfections and fumigation is performed with recommended
chemicals. During flock, strict measures for bio-security are observed at the unit. Broilers are fed
with high nutrition feed mix produced by feed mills. Poultry feed consists of rich protein elements
like canola meal, rapeseed meal, sunflower meal, soyabean meal, feather meal and rich energy
elements like grains, gluten, etc. The major component of cost of production of chicken meat
accounts for feed cost.

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Following is the market channel for broilers:

Figure 1 Marketing channel for broilers

The role of middleman is to identify a farm and negotiate the price. In some case he provides Day
Old Chicks and other farm inputs (feed, etc.) to the broiler farmers and then agrees to buy back
the grown up birds from them.

Potential Market
Even poultry industry shows excellent potential and growth over the years, per capita availability
of poultry meat in Pakistan is still 5 kg meat and 51 eggs per year, compared to developed
countries where these figures are 41 kg meat and 300 eggs. According to the World Health
Organization (WHO), the average daily requirement for animal protein in Pakistan is only 17 g,
out of this 17 g the share of proteins from poultry is just 5 g, causing a gap of 10 g per person per
day. If calculated on an annual basis, bearing in mind the present population of Pakistan (200
million), this gap is 730,000 tons of meat. Considering this, the poultry sector has the potential
to fill this gap.

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Moreover, human population in Pakistan is increasing at a rate of 2.03% per annum. There exists
a strong correlation (89.0%) between the human population and poultry growth in Pakistan. The
more population is going to increase demand of meat, and to cater the demand a cheap source
of meat is required which poultry is.

Furthermore, when compared to beef and mutton, poultry production has increased its share in
the total meat pool of the country. In 1971, the market share of beef was 61%, mutton was 37%,
and poultry meat a mere 2-2.5%. In 2010 the market share of poultry meat had increased to 25%,
whereas beef and mutton had reduced to 55% and 20% respectively. The increase in poultry has
increased competition in the market but still the industry is growing annually.

As poultry is sold as halal meat from a Muslim country abroad, the Pakistani industry has
potential regarding the export of value added meat products. In previous years Pakistan's poultry
sector has shown a little activity regarding the export of processed poultry products. In the year
2010-11, it earned Rupees 1.08 billion in exports, but in the next year (2011-12) this decreased
to Rupees 0.365 billion. The main markets for Pakistani chicken products are Afghanistan, Iran,
Turkey, Bahrain, Vietnam and Hong Kong. It still has the scope for exporting value added
products, eggs from breeder stocks and day old broiler chicks but this needs to be realized to
maximize its potential.

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SWOT Analysis of a potential poultry farm

 Lack of Captial
 High Demand  Inexprience
 Lack of investment partners
 Readily vaccines available for  Lack of Relations with
known diseases. Industry
 Cheap meat relatively
 Government incentives

 Well established suppty chain


from breeders

 Export to Muslim Countries  Emerging Competitors


 Fill the gap of demand in local  New Diseases
market  Price Fluctuations
 Envoironment control Sheds
 Sheds required in Balochistan,
KPK and Sindh.

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Business Development Plan and Model

Financial Plan
There are three ways the farm could be financed: either to invest money from your own pocket,
either apply to some Government scheme, and either get a loan from the bank.

In case of financing from your own pocket, even though you are not bound to pay some other
entity or person and get to keep all profits, but there is also a downside. All the risk is on you and
in case of an upset it’s very hard to recover financially. So it is not wise to invest all money yourself
but rather find a partner to invest with.

Second, in case of a government scheme, PML-N Government introduced youth loan scheme in
which young people with business ideas were facilitated financially and professionally. Pitching
your business model there could also get you initial capital free of interest to start off.

Finally, you can go to bank for credit. Most of the sheds are started in Pakistan on loan basis.
90% loan and 10% equity.

Land Acquisition and Building:


Most of the poultry farms, excluding big companies, buy land on lease for farming. It is not a best
practice since the rent on land could prove to be quite expensive. It is highly recommended to
buy your own land with the initial capital. Rural areas around the major cities of the country are
the suitable areas for setting up a poultry farm. Nearness of the farm to the city make easy access
to market for the purchase of Day Old Chicks, feed, etc. and selling of broilers. Since land value
varies from place to place, we will assume 1 acre to be about 1,500,000 rupees. We will require
land no more than 1 acre. Following is the estimate of building and land requirement:

Description Cost( Rs.)


Land 1,500,000
Building 14,697,600
Furniture and Fixture 35,000
Office Equipment 30,000

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Total Cost 16,262,600

Equipment and Machinery Requirements


In Controlled Environment Farm, inputs including farm equipment like drinkers, feed trays,
brooders, and feeders are required. Following is the estimated cost taken from the feasibility
study of NBP on poultry farm:

Description Cost (Rs.)


Main Feed line System 85,000
Feed Pan system 524,170
Nipple Drinking System 337,470
Ventilation System 308,700
Pad cooling system 142,296
Motor for air inlet 26,000
Controlling Equipment 45,000
Heating system 250,000
Total cost 1,718,636

Human Resource Requirement


To look after the feeding, vaccination and cleaning operations at the farm skilled workers are
required. Estimate for wages are also taken from study by NBP.

Description Number Salary per month


(Rs.)
Supervisor 1 10,000
Houseman 2 11,000

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Electrician 1 8,000
Watchman 2 11,000
Cleaner 1 5,500
Total 7 45,500

Purchase of feed and Day Old Chicks


This will be considered as a requirement for working capital.

Description Cost per unit Cost per 1000 units (Rs)


Day old Chick 35 35000
Feed 178.2 178,200
Vaccination, medication 8 8000
and disinfection
Litter & Spray 6 6000

Total Cost 227.2 227,200

Summary of project initial capital requirement


Description Cost (Rs.)
Land and Building 16,262,600
Equipment and machinery 1,718,636
Feed and DOCs 227,200 per flock cycle
Human Resource 45,500 per month
Total 18,253,936

References

 Dr. Nasir Mahmood Nasir, Poultry Farming Controlled Environment (35,000 Birds),
National Bank of Pakistan prefeasibility study, 2010.

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 Small and Medium Enterprises Development Authority Ministry of Industries &
Production Government of Pakistan, Pre-Feasibility Study (Broiler Farm), December 2013.
 H. Anwar Ahmed, An overview of poultry industry in Pakistan, Research Gate Publication,
2015.

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