Animal Feed Mill

Pre-Feasibility Study
Animal Feed Mill

(Inclusive of Urea Molasses Block Preparation)
Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
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May, 2005
Pre-Feasibility Study Animal Feed Mill
DISCLAIMER ..................................................................................................................................................... 3
1 INTRODUCTION TO SMEDA .................................................................................................................. 4
2 PURPOSE OF THE DOCUMENT ............................................................................................................. 4
3 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT................................... 5

3.1 STRENGTHS ......................................................................................................................................................5
3.2 WEAKNESSES ...................................................................................................................................................5
3.3 OPPORTUNITIES ................................................................................................................................................5
3.4 THREATS ..........................................................................................................................................................6
4 PROJECT PROFILE .................................................................................................................................. 6
4.1 OPPORTUNITY RATIONALE................................................................................................................................6
4.2 PROJECT BRIEF .................................................................................................................................................9
4.3 VIABLE ECONOMIC SIZE ...................................................................................................................................9
4.4 MARKET ENTRY TIMING ...................................................................................................................................9
4.5 PROPOSED BUSINESS LEGAL STATUS ................................................................................................................9
4.6 PROPOSED CAPACITY .......................................................................................................................................9
4.7 PROJECT INVESTMENT ......................................................................................................................................9
4.8 PROPOSED LOCATION .....................................................................................................................................10
4.9 KEY SUCCESS FACTORS/PRACTICAL TIPS FOR SUCCESS ...................................................................................10
5 SECTOR & INDUSTRY ANALYSIS ....................................................................................................... 11
5.1 MAJOR PLAYERS ............................................................................................................................................11
5.2 HUBS OF ANIMAL FEED MILLS ........................................................................................................................11
5.3 LEGAL ISSUES REGARDING ANIMAL FEED AND UMB MILL .............................................................................12
6 MARKET INFORMATION...................................................................................................................... 13
6.1 SECTOR CHARACTERISTICS .............................................................................................................................13
6.2 MARKET POTENTIAL ......................................................................................................................................13
6.3 TARGET CUSTOMERS ......................................................................................................................................15
7 PRODUCTION PROCESS FLOW FOR COMPOUND FEED ............................................................... 15
7.1 RAW MATERIAL REQUIREMENT ......................................................................................................................15
7.2 CLASSIFICATION OF FEED INGREDIENTS: ..........................................................................................................16
7.2.1 Protein feedstuffs: ..................................................................................................................................16
7.2.2 Carbohydrate/energy feedstuffs: .............................................................................................................16
7.2.3 Mineral supplements: .............................................................................................................................16
7.2.4 Fats and oils: .........................................................................................................................................16
7.3 FEED FORMULA FOR CATTLE/BUFFALOES: ......................................................................................................17
7.4 PACKING COST ...............................................................................................................................................17
7.5 MACHINERY REQUIREMENT ............................................................................................................................18
8 RAW MATERIAL (UMB) ........................................................................................................................ 19
8.1 CLASSIFICATION OF FEED INGREDIENTS: .........................................................................................................19
8.1.1 Protein Sources:.....................................................................................................................................19
8.1.2 Carbohydrate Sources:...........................................................................................................................19
8.1.3 Mineral supplements: .............................................................................................................................19
9 PRODUCTION PROCESS OF UREA MOLASSES BLOCK (UMB) .................................................... 19
9.1 PROCESS FLOW OF UMB ................................................................................................................................20
1
PREF-85/May, 2005/Rev 1
Pre-Feasibility Study Animal Feed Mill
9.2 PREPARATION OF FEED INGREDIENTS ...............................................................................................................20

9.2.1 Molasses ................................................................................................................................................20
9.2.2 Urea ......................................................................................................................................................20
9.2.3 Salt ........................................................................................................................................................21
9.2.4 Cement or quicklime...............................................................................................................................21
9.2.5 Bran.......................................................................................................................................................21
9.2.6 Equipment for mixing:............................................................................................................................21
9.3 INTRODUCTION OF THE COMPONENTS ..............................................................................................................21
9.4 MOULDING .....................................................................................................................................................22
9.5 CUTTING THE BLOCKS.....................................................................................................................................22
9.6 DRYING .........................................................................................................................................................22
10 UTILIZATION OF UMB. ..................................................................................................................... 22
10.1 SPECIES OF LIVESTOCK ...................................................................................................................................23
10.2 FEEDING PERIOD .............................................................................................................................................23
10.3 MINIMUM ROUGHAGE REQUIREMENTS ............................................................................................................23
10.4 ADAPTATION OF ANIMALS ..............................................................................................................................23
10.5 FEEDING SYSTEM ............................................................................................................................................23
10.6 ESTABLISHING PRIORITIES ..............................................................................................................................24
10.7 MACHINERY REQUIREMENT ............................................................................................................................24
11 LAND & BUILDING ............................................................................................................................. 24
11.1 COVERED AREA REQUIREMENT ......................................................................................................................24
11.2 RECOMMENDED MODE ...................................................................................................................................25
12 HUMAN RESOURCE REQUIREMENT ............................................................................................. 26
12.1 UTILITIES REQUIRED ......................................................................................................................................26
13 FINANCIAL PROJECTIONS............................................................................................................... 27
13.1 PROJECT COSTS ..............................................................................................................................................27
13.2 PROJECTED INCOME STATEMENT ....................................................................................................................28
13.3 PROJECTED BALANCE SHEET ..........................................................................................................................29
13.4 PROJECTED CASH FLOW STATEMENT ..............................................................................................................30
14 USEFUL TERMINOLOGY .................................................................................................................. 31
Pre feasibility Study Animal Feed Mill
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. 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.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
DOCUMENT CONTROL
Do Document No. PREF-85
Prepared by SMEDA-Punjab
Approved by Provincial Chief Punjab
Issue Date May 2005
Issued by Library Officer
1 INTRODUCTION TO SMEDA
The 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.
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 finance, marketing, technology 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, 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.
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 processing of animal feed and urea
molasses blocks. 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 feed
milling and urea molasses block concept development, start-up, production, finance and
business management. The document also provides sectoral information, brief on
government policies and international scenario, which have some bearing on the project
itself.
This particular pre-feasibility is regarding “Animal Feed Mill with Urea Molasses Block
(UMB) Preparation” which comes under “Livestock and Agriculture ” sector. Before
studying the whole document one must consider following critical aspects, which form the
basis of any investment decision.
3 Crucial Factors & Steps in Decision Making for Investment

Before making the decision, whether to invest in this project 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
 Investment in dairy and livestock sector is increasing day by day and quality feed is
a pre requisite in profitable dairy and livestock farming.
 Feed and Urea Molasses Blocks (UMB) formulation according to modern
techniques with proper utilization of locally available cheaper feedstuffs leads to
success in dairy and livestock farming hence for feed business too.
3.2 Weaknesses
 Limited availability of protein sources of standard quality due to low or static
production, processing technology, variable composition and adulteration.
 Comparatively poor nutrient composition of indigenous feed ingredients due to
differences in varieties and use of improper soil fertilizers.
 Improper use of pesticides, the residues of which result in poor feed utilization.
 Lack of proper storage facility. Due to this fact various agricultural products when
produced under quite high moisture content, thus liable to be affected with insect
damage, auto-oxidation and fungal contamination.
 Lack of nutritional data of indigenous fed ingredients particularly for amino acids,
energy, vitamins, minerals and by pass protein value especially in high producing
cattle/buffalo.
 Improper storage, transfer, grading, feed milling and mixing of feed ingredients
may also affect the quality of feed.
 Animal feed and urea molasses blocks (UMB) cannot be produced economically on
a small scale. Cost of labour for each batch and cost of overhead keep on
decreasing with the increasing production.
 There is no quality standards and quality control for UMB. The excess intake of
Urea may be fatal to livestock resulting in urea toxicity.
3.3 Opportunities
 The annual growth rate in livestock population of Pakistan was 3 percent (Economic
Survey of Pakistan, 2003-04) due to which there is demand for compound feed. The
increased productivity would require better feed utilization and increase in overall
feed availability both from fodder crops and formulated compound feed.
 The agro industrial by products can be better utilized in formulated compound feed.
 In order to meet the rapidly increasing demand for the various kinds of livestock
products (Milk & meats), the better rations with improved feed formula are needed to
get more meat and milk, for the same feed supplies. By increasing livestock numbers,
rather than their average weight, the feed requirements are much larger.
3.4 Threats
 Implementation of WTO. Open and competitive commodity pricing
 There is no feed ingredient quality control program as improper storage, transfer,
grading, feed milling and mixing of feed ingredients may also affect the quality of
feed.
 The prices of different feedstuffs vary through out the year. Improper storage of raw
material can affect its nutritional value.
 There is limited availability of protein sources of standard quality due to low or static
production, processing technology, variable composition and adulteration.
 Lack of proper labeling on product.
 Lack of awareness among dairy and livestock farmers to use compound feed & UMB
for the high production of their animals is a constant threat for feed mill business as
well.
4 Project Profile
4.1 Opportunity Rationale

Livestock production is an integral part of Pakistan'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/buffalo and 5
to 6 sheep/goats per family deriving 30 to 40 per cent of income from it1.
Pakistan's livestock population is supported by feed resources derived from the crops
sector, rangelands, grazing areas and agro industrial by-products. The type, availability and
utilization of these feed resources vary greatly in the country's different agro ecological
zones. In order of importance, the major feed resources are crop residues (46%), grazing
(27%), cultivated fodder (19%), cereal/legume grains and by-products (6%) and oil cakes,
meals and animal protein (2%). Most farmers (about 75%) have small land holdings on
which most of the livestock population is concentrated. The smallholders' priority is to
grow cereal grains for human consumption, but these also provide straw and stover for
their animals, which is low in protein and energy. In the case of wheat, the value of the
straw is around 60% of that of the grain. The nutrients available under the present pattern
of feed utilization do not meet the requirements of Pakistan's existing livestock population.
1
Source: Economic Survey of Pakistan, 2003-04
6
Table 4-1 Population of livestock (million)2

Species 1999-00 2000-01 2001-02 2002-03 2003-04(E3)
Cattle 22.0 22.4 22.8 23.3 23.8
Buffalo 22.7 23.3 24.0 24.8 25.5
Sheep 24.1 24.2 24.4 24.6 24.7
Goats 47.4 49.2 50.9 52.8 54.7
Table 4-2 Production of Livestock Products

Product 1998-99 1999-00 2000-01 2001-02 2002-03
Milk (Million Tones ) 24.877 25.566 26.284 27.031 27.811
Beef (Thousand 963 986 1010 1034 1060
tones)
Mutton(Thousand 633 649 666 683 702
tones)
There appear to be deficiencies of 24% of the Total Digestible Nutrients (TDN) and 39.4%
of Crude Protein (CP) requirements for livestock. There is a growing trend towards the
establishment of more intensive dairy cattle and buffalo production systems in peri-urban
areas of Pakistan. An estimated 40 million tones of crop residues are produced annually in
Pakistan, out of which 52.5 % and 22.0 % are contributed by wheat and rice respectively.
Traditionally, cereal straws are fed to cattle and buffalo year-round, but their proportion in
the ration increases during periods of feed scarcity. The major sources of supplementary
feed in Pakistan are by-products from cereal milling and oilseed production. Wheat bran,
rice bran and rice polishing are the main milling by-products. Cottonseed cake, rapeseed
cake and maize oil cake account for almost two-thirds of the total protein supplement used
to feed dairy animals.
Cultivated fodder is used as cut-and-carry feeds and may include berseem, oats, rape,
barley and sometimes wheat during the winter season and maize, sorghum and millet
during the summer season. Most of these crops are ready for harvesting about 2 to 3
months after sowing. Periods of scarcity occur in May-June. Fodder becomes available in
July and again in October- November. Of the total cultivated area, only 13% is devoted to
fodder crop production. Despite large increases in the ruminant population (62%) during
the past 20 years, the land devoted to fodder crops has declined by about 17%, with a
corresponding increase in land used for food grain production. This has further increased
the dependence of livestock on crop residues and by-products.
Animal feed mill with UMB preparation is an agro-based project in which locally
available feed resources rich in protein and carbohydrate are mixed according to nutritional
2
Source =Economic Survey of Pakistan, 2003-04
3
E = Estimated
7
formula in order to raise the livestock in such a manner that when fed to livestock, they get
nutritionally balanced feed according to their body needs. The process is done through
semi mechanized and with/ with out manual handling of different feedstuffs.
At present, Pakistan has 215 feed mills, but only few are preparing compound feed for
livestock. Generally, mixed compound feeds are prepared at home by farmers. Feed
accounts for almost 70% of total cost of production of milk or meat. Hence a balanced feed
will positively affect milk and meat production of livestock. The cake is a by-product from
oil mills and is a valuable raw material for animal feed. Since animal keeping is
worldwide, hence animal feeding is an important component.
Molasses is a thick, viscous material, which is a by-product of the sugar industry. Being a
concentrated by-product, it provides a range of trace minerals and a complete mixture of
vitamins. It is high in soluble carbohydrates. Although a cheaper source of energy, it is not
commonly used by farmers due to difficulty in handling. Molasses can be included in
ration by mixing it with other concentrates in the form of licks. Molasses increases the
palatability and consumption of poor quality roughage and is a good carrier for urea as
Non-Protein Nitrogen (NPN) source for livestock (ruminants).
Cereal brans are high in phosphorus, trace minerals and also a range of vitamins. In
addition they provide a slow release amino acid source from the relatively insoluble
proteins to the microbes.
General UMB Formula

Salt DCP
5% 3%
Cement
7%
Molasses
Rice/Wheat
50%
Bran
25%
Urea
10%
As the name suggests, Urea Molasses Blocks (UMB) are lick blocks containing urea,
molasses, vitamins and minerals. The feeding of the blocks is a convenient and
inexpensive method of providing a range of nutrients required by both the rumen microbes
and the animal, which may be deficient in the diet. The main justification for using the
blocks depends on their convenience for packaging, storage, transport and ease of feeding.
Urea contains 46% nitrogen, which is equivalent to 287% crude protein and is rapidly
digested by ruminants. Urea provides the small amount of extra nitrogen required, for
utilization of the dry matter, in addition to that present in the forage. The UMB, therefore,
provides the nutrient requirements of both the microbes and the host animal. The
ingredients are designed to provide a wide rage of nutrients to cover all potential
deficiencies. But the UMB should be fed only in limited quantities. The UMB is designed
in such a way that animals can only lick it but not chew it. Because by chewing the animals
8
will eat more urea per unit of time than they can handle and can result in urea toxicity in
the animals
4.2 Project Brief

The proposed project will be producing 1 ton of compound animals feed per hour and 25
Urea Molasses Block (UMB) per hour. This feed and UMB will be supplemented to
livestock in addition to green fodder ad libitum (Freely available to animals) for high
production. Different formulae may be used to prepare compound feed such as calf
fattening formula and dairy animal formula etc. to facilitate the customers nationwide. The
proposed business will be manufacturing compound animal feed and Urea Molasses Block
(UMB) for meeting the demand of dairy and livestock farmers.
4.3 Viable Economic Size

Animal feed and UMB Mill can be designed with a wide range of processing capacity and
product mix depending upon the demand, according to availability of feed stuffs and their
storage capacity. However, it is suggested that the smallest viable economic unit should
have a capacity of preparing 1 ton of compound feed per hour (i.e., 16 tons in 2 shifts, each
of 8 hrs) and 200 UMB in 8hrs. The project in this pre feasibility study has an annual
production capacity of 4800 tons of compound animal feed and 60,000 UMB.
4.4 Market Entry Timing

Compound animal feed and UMB is used in all class of livestock throughout the year that
the demand never gets affected with seasons. So the proposed business can be started at
any time of the year. 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
farmers.
4.5 Proposed Business Legal Status

The proposed legal structure of the business entity is either sole proprietorship or
partnership. Although selection totally depends upon the choice of the entrepreneur but this
financial feasibility is based on a Sole Proprietorship.
4.6 Proposed Capacity

This pre feasibility suggests production of 4,800 tons of animal feed and 60,000 UMB
annually. However the proposed project will be started with an initial year capacity of
85%. This production capacity justifies the running cost of the project.
4.7 Project Investment

The total cost of the project is Rs.10, 681,113.
Table 4-3 Project Costs

Capital Investment 5,820,649
Working Capital Requirement 4,860,463
Total Investment 10,681,113
The proposed pre-feasibility is based on the assumption of 50% debt and 50% equity.
However this composition of debt and equity can be changed as per the requirement of the
investor.
Table 4-4 Project Financing

Debt 50% 5,340,556
Equity 50% 5,340,556
Total project Investment 10,681,113
Table 4-5 Viability

IRR 24%
NPV @20% 1,486,523
Pay Back Period (year) 3
4.8 Proposed Location

Feed mill should be in an area where there is more product demand e.g. near the areas
where dairy and livestock farming is already being done. These areas include:
 Karachi
 Lahore
 Rawalpindi
 Multan
 Faisalabad
 Sahiwal
 Jhang
 Okara
 Bahawalpur
 Sargodha
 Gujranwala etc.
4.9 Key Success Factors/Practical Tips for Success

The feed industry should aim at fully utilizing all low cost feed ingredients available in
country such as molasses, urea, by products of edible oil and grain milling industries,
minerals and vitamins. There is a need to launch programs in following areas to achieve
the desired targets.
10
 Establishment of Animal feed mill with UMB preparation in feed ingredients surplus
areas such as sugar mills & oil mills to fully utilize the molasses, oil cakes and other
by-products of milling industries to prepare cheaper feed.
 Introduce the use of urea molasses block feeding for meeting the protein, energy and
mineral requirement of the animal. (This is marketing aspect of the UMB)
 Formulate the nutritionally balanced but cheaper formula for feeding animals. This is
called Least Cost Ration Formulation.
 The farmers having large number of animals (more than 100 animals) can prepare
compound feed and UMB on their own farms (Optional) but Animal feed and UMB
Mill is an independent enterprise and should not be linked with livestock farming.
5 SECTOR & INDUSTRY ANALYSIS
5.1 Major Players

There are few numbers of animal feed mills, which are in operation both in organized
sector and informal sector in Pakistan. Livestock sector is utilizing many different feed
resources of varying quality and availability. Most small-scale farmers base their livestock
enterprises on the use of crop residues, resulting in a low output of milk and meat per
animal. The need to make better use of crop residues has prompted considerable research
and many promising technologies are now available. New avenues for research and policy
development may lie in the adjustment of livestock types and numbers, increased
production of fodder, the tapping of new or non-conventional feed resources, and the
strategic movement of fodder.
Animal feed industry has not yet developed to any sizeable extent in Pakistan. The feed
industry is presently working only 60 percent of its installed capacity. This is hardly
enough to satisfy the domestic demand. But as the unutilized capacity is available with the
existing mills, they can easily increase their capacity. Only some sporadic efforts have
been made to undertake cattle feed industry on commercial lines and with limited success.
However, these are made available at reasonable prices to our cattle farmer.
5.2 Hubs of Animal Feed Mills

There are hardly a couple of industrial units in Punjab, which are exclusively producing
compound animal feed. If we look at the development of animal feed industry in the
country, it is revealed that this industry, so vital for the growth of livestock sub-sector of
agriculture is still in a bad shape. A number of poultry feed mills of varying capacities
have been established across the country, their main concentration being in the Punjab and
Sindh provinces. A few of these poultry feed mills are also occasionally engaged in
preparing compound animal feeds. The feed industry in the country made a start on
scientific and commercial lines in the early sixties. But it remained confined to the
manufacture of poultry feeds. Messrs Lever Brothers (a foreign-based company) were the
pioneer in this industry. The Feed Technology Units at NARC and Larkana produced 345
tones of cattle feed and 6000 Urea Molasses Blocks which were sold to livestock farmers
in year 2002-03.
11
The quality of various types of feeds produced by different mills has wide variations. It is
felt that the quality of feed in general is deteriorating. This, on the other hand, is disturbing
the economics of the producers and is hampering the growth and development of the
industry.
The deterioration in quality is due to:
 Non-availability of good quality protein ingredients
 Shortage of coarse grains (constituting about 50 percent of total ingredients)
 Non-existence of quality control of end products.
As a matter of fact feed mills regulate their production schedule according to the effective
demand from the livestock farms. They do not produce in excess of ready demand as the
shelf life of feed ranges from 2 to 3 months only. Even the ready demand fluctuates
periodically with the change in weather and feed prices.
As there are no specified quality standards followed by feed mills and as they produce
average quality feed, there are no wide variations in their selling prices of the same type of
feed. However, there are some differences in prices of feeds produced by mills located in
different regions, mainly due to difference in raw material prices.
Some of the poultry feed mills, which have the requisite machinery and equipment also
occasionally, produce cattle feed. But the total quantity thus produced is very small. The
cattle feed industry in the country is not developed scientifically and commercially due to
ignorance of livestock owners about the utility of concentrated feeds and therefore they
resort to cheaper conventional feed stuffs.
Moreover, the livestock population is scattered in small herds over vast areas making its
commercial distribution a difficult job. This is also a limiting factor in popularizing the use
of mill-made livestock feed in the country. However, cattle feed may be manufactured for
export market.
In Turkey, which is a major feed-producing country, two mills are primarily manufacturing
for export and filling contracts with Middle East to the extent of 100,000 tones of
compound feed annually.
5.3 Legal Issues Regarding Animal Feed and UMB Mill

Compound feed is packed in bags of approximately 50 Kgs per bag capacity. The label
includes following information:
1) Brand name
2) Date of manufacture
3) Particulars of feed additives
4) Nutritive composition of compound feed
On the other hand, one UMB may be of 5 kgs weight with above information provided on
it. It is to be noted that misbranding and adulteration is prohibited according to ‘ The
Punjab Animal Compound Feed and Feed Stuff Ordinance, 2002’.
12
6 MARKET INFORMATION
6.1 Sector Characteristics

The size of this sector is still growing. Animal feed mills have been set up around the areas
where the livestock are kept in abundance. Few of the feed mills are as follows:
 National Feeds Limited, Lahore
 Punjnad Feeds pvt. Limited, Okara
 Vanda Pvt. Ltd, Sheikhupura
 Kahoot Feeds, Chalkwal
 Hafiz Vanda, Okara
 Al hafiz Feed Mill, Faisalabad
 Asia Feeds Pvt. Ltd., Multan
 Lahore Cattle Feed, Rehman Dairies, Lahore
6.2 Market Potential

Feed is a major cost (about 70%) in livestock and dairy farming. The processing and
manufacturing of feed along with the efficient use of feed by cattle also contribute to the
cost of feed. The demand for compound feed and Urea Molasses Blocks (UMB) is
increasing day by day with the increase in awareness among farmers. The trend for
concentrate feeding to livestock is changing from the conventional concentrate feeding to a
formulated compound feed. Now a days, compound feed is used by many livestock and
dairy farmers to get the maximum potential in terms of milk and meat. Compound feed and
UMB are very beneficial as both provide all essential nutrients to the animal. The markets
for animal feed need to be created within the country.
Today, about 3800 feed mills manufacture more than 80 percent of the world’s industrial
feed. The world’s 10 largest feed manufacturers produce less than 65 million tones per
year - less than 11 percent of global feed output. So, the global feed industry still remains
broadly based with many locals and regional commercial feed companies as well as
specialized firms. The European Feed Manufacturers' Federation (FEFAC) calculated that
its members in the European Union, which produce some 120 million tones of
compounded feed annually, accounts for approximately a quarter of all feed consumed by
livestock in Western Europe which is approximately 1000 million tones annually.
13
Table 6-1 Global feed Manufacture4

Year Manufactured feed
(million tons)
1996 597
1997 605
1998 575
1999 586
2000 591
2001 597
Table 6-2 Top 10 feed producing countries5

Country Feed production
(million tones)
USA 142
China 58
Brazil 35
Japan 23
France 23
Canada 20
Mexico 20
Germany 18
Spain 17
Netherlands 18
Table 6-3 Global Output of Feed6
Region Output
(million tones)
Asia 132.0
Latin America 65.5
European Union 116.5
Non-EU Europe 48.5
Middle East/Africa 24.0
North America 160.0
Total 546.0
4
Source: Feed International 2002 World Feed Panorama Survey (2001 data)
5
Source: Feed International 2002 World Feed Panorama Survey (2001 data) and The US Census
Bureau
6
Source: Feed International 2002 World Feed Panorama Survey (2001 data)
14
6.3 Target Customers

This pre feasibility study suggests that compound feed bags and UMB will be sold to
livestock farmers. Following are some of the target clients for a manufacturer of compound
feed.
 Dairy farmers
 Calf fattening farmers
 Sheep farmers
 Goat farmers
The price of compound feed per kg and that of one UMB should be lower than that of
simple cakes so that farmer could feel it economical. The cheaper the product, more will be
its use in livestock feeding. To avoid risk of price fluctuations, the feed ingredients should
be stored in season of availability.
7 PRODUCTION PROCESS FLOW FOR COMPOUND FEED

The compound feed preparation process requires:
a) high accuracy and precision of weighing
b) feed ingredient handling and processing
c) mixing
d) packing
e) labeling
Figure 7-1 Process Flow Diagram
Feed Feed Analysis in Acceptance of Separators and Crushing by

ingredients laboratory feed conveyors hammer mill
(Trucks) ingredients
Conditioning Mixer Dosage bin

Packing
Storage or Hoppers (separate for each
Exit (Molasses,
feed ingredient)
Minerals)
A liquid storage and a direct-weight system for adding fat, molasses, and water is required.
Grain processing is done through hammer mill grinding. Mixed feed is delivered in bags or
bulk load out to livestock farms.
7.1 Raw Material Requirement

Cattle are ruminant animals with four compartment stomach, capable of utilizing fibrous
feedstuffs (forages, roughage, and by product feeds) and Non-Protein Nitrogen (NPN)
source like urea that humans cannot utilize. By producing a high-quality protein from these
15
resources otherwise unusable by humans, cattle make a positive contribution to human

nutrition in terms of meat and milk.
7.2 Classification of feed ingredients:

Feeds or feedstuffs are composed of several distinctly different groups of substances,
known as nutrients e.g. proteins, carbohydrates, fats, minerals, vitamins and water. These
have definite functions in body. For intelligent ration formulation, nutrients, nutrient
composition and palatability of feedstuffs are important. These feedstuffs are grouped as
follow,
7.2.1 Protein feedstuffs:

Common protein feedstuffs from plant origin are residues of oilseed after expeller or
solvent extraction or products of wet milling of maize in starch making process. Nutritive
value of protein feedstuffs depend upon their available amino acid composition, toxic
materials and the changes brought during processing if any.
 Rape seed cake/meal

 Canola meal
 Cotton seed cake/meal
 Sunflower cake/meal
 Corn gluten meal (30 or 60%)
 Sesame cake/meal
 Urea
 Milk by products
 Maize oil cake
7.2.2 Carbohydrate/energy feedstuffs:

These are the products with less than 20%crude protein and 18% crude fiber.
 Molasses
 Rice polish
 Corn by products such as, Corn glutens; Corn steep liquor and enzose.
7.2.3 Mineral supplements:

 Salt (white/black)
 Bone meal
 Dicalcium phosphate (DCP)
7.2.4 Fats and oils:

This source of energy can be obtained from meat processing industry, refining of vegetable
oils or vegetable oils itself.
16
7.3 Feed Formula for Cattle/Buffaloes:

These feed ingredients when mixed according to feed formula will provide adequate
energy according to type, breed and physiological status of animal.
Table 7-1 Details of Raw Material

Material Percentage Input in Cost Total Cost (Rs.)
Input Tones (Rs./Kg)
Cottonseed cake/ 15% 648 9
Maize grain 5,832,000
Corn gluten 20% 864 6 5,184,000
Rice Polish 20% 864 7 6,048,000
Wheat straw/ Rice 22% 950 6
bran 5,702,400
Molasses 15% 648 3 1,944,000
Urea 2% 86 10 864,000
Salt 2% 86 2 172,800
DCP 2% 86 14 1,209,600
Vegetable Oil 2% 86 49 4,233,600
Total 100% 4,320 31,190,400
Wastage 1% 43 311,904
Total Quantity of 101% 4,363 31,502,304
raw material to be
used
Note: There are seasonal fluctuations in the prices, hence the formula has to be changed
accordingly keeping the feed cost as low as possible to compete the market. The
information useful here is the composition of the feed ingredients. The feed mill owner
can hire a technical person to formulate a least cost ration, as formulation of ration is a
technical job.
The basic feed ingredients can be procured from local mandies.
7.4 Packing Cost

A 50 kg bag is sold in the market for compound feed which is easily available at a price of
Rs. 25. Cost of bags for the first year is approximately Rs. 2,160,000.
17
7.5 Machinery Requirement

Following machinery will be required for the proposed project.
Table 7-2 Machinery Details (Animal feed)7

Description Number Cost (Rs.) Total Cost (Rs.)
Hammer mill 16’’ with electric motor 25 1 70,000 70,000
HP
Elevator 25 ft @ Rs 2400/-per ft. with 1 60,000 60,000
electric motor 3HP
Elevator 20 ft. @ Rs 2400/-per ft. with 2 100,000 200,000
electric motor 3HP
Elevator 23 ft. @ Rs 2400/-per ft. with 2 55,200 110,400
electric motor 3HP
Mixer one ton capacity with electric motor 1 150,000 150,000
20 HP
Molasses Mixer with electric motor 10 HP 1 8,000 8,000
Molasses Pump with electric motor 3 HP 1 5,000 5,000
Molasses pipe line 1 10,000 10,000
Hoppers one ton 1 22,000 22,000
Molasses tank concrete 10 by 8 by 7 1 30,000 30,000
Separator 7 by 4 sq. ft. 1 70,000 70,000
Blower 12’’ 1 22,000 22,000
Cyclone 1 25,000 25,000
Air lock 1 10,000 10,000
Receiving in let (houdees) with shoots 2 40,000 80,000
Weighing scale, 100 kg 1 4,000 4,000
Bag closer or Sewing machine 1 5,000 5,000
Trolleys , drum , bins etc 3 3,000 9,000
Total Cost of Machinery 890,400
7
Source: National Feeds Ltd., 19 Km, Sheikhupura –Faisalabad Road, Feroz Wattawan
18
8 RAW MATERIAL (UMB)
8.1 Classification of Feed Ingredients:
8.1.1 Protein Sources:

For urea molasses blocks (UMB), these are;
 Cotton seed cake/meal
 Corn gluten meal (30 or 60%)
 Urea
8.1.2 Carbohydrate Sources:

These are the products with less than 20% crude protein and 18% crude fiber.
 Molasses
 Corn by products such as corn cobs no; other corn by products
8.1.3 Mineral supplements:
 Salt (white/black)
 Bone meal
 Dicalcium phosphate (DCP)
 Calcium oxide (CaO)
These feed ingredients when mixed according to UMB formula will provide adequate
energy to livestock. The formula for a UMB is not a fixed one. It has to be changed from
time to time keeping in view the cost of ingredients used in the formula. And the cost of
feed ingredient is never static.
9 PRODUCTION PROCESS OF UREA MOLASSES BLOCK (UMB)

A standard UMB consists of:
a) Molasses 30-50 %
b) Urea 5-10 %
c) Rice/wheat/maize bran 15-25 %
d) Salt 5-7 %
e) Lime or cement 5-7 %
f) DCP 2-4 %
g) Minerals 1-2 %
The manufacture of UMB is done in advance of their proposed use. If they are to be used
as a supplement during the dry season, when the quality of forage is very low, their
19
production should start before this period in order to have sufficient numbers of blocks
available when required. But in view of the hygroscopic nature of the components, as well
as of the blocks, it is better not to start production before the onset of the dry season and
use it maximum after 3 months of their manufacturing.
9.1 Process Flow of UMB

The requirements are:
a) Accuracy and precision of weighing (the standard scale should be OK)
b) ingredient handling and processing
c) premixing of salts
d) mixing
Figure 9-1 Process Flow of UMB
Urea-molasses blocks (UMB) may be manufactured either on a small or on a larger scale

depending on the number of uses and the expected length of the feeding period. Whatever
scale of production is applicable the method of manufacture will be the same; the
difference being the quantities of feed ingredients and the implements used in the
manufacturing process. Our experience shows that blocks weighing 5 kg are most
appropriate for feeding dairy cattle under smallholder situations. Assuming a daily intake
of around 700 g/cow, each block will last for 7 days. Therefore, blocks can be replaced
once a week on a specific day, making it a regular activity for the farmer.
9.2 Preparation of feed ingredients
All components should be weighed out before mixing. A standard volume or weight can be
adopted for each component which would correspond with the weight of the block desired.
9.2.1 Molasses
For the molasses no preparation is necessary apart from measuring the quantity. Even if
handling the molasses is a little difficult it should not be diluted with water. When ordering
molasses from the sugar factory specify 'undiluted' molasses and check the BRIX value
when the molasses is received. Molasses can be stored in the same tank as that used for
transporting it. If the quantity of blocks manufactured is large enough, it might be
preferable to have two tanks in order to avoid running out of stock.
9.2.2 Urea
The introduction of urea in the form of lumps in the mixture must be avoided in order to
eliminate chances of urea toxicity in livestock. It may be necessary to crush the lumps,
either by hand or by passing the urea through a hand mill and sieve.
20
9.2.3 Salt
As with the urea it is better to avoid lumps. The salt could be mixed with cement and then
water added to improve the setting of the blocks.
9.2.4 Cement or quicklime
Cement should be mixed with water and salt. The quantities are:
3-4 liters of water
2.5 kg of salt per 10 kg of cement.
If quicklime is used it should be finely ground and it's reaction to the addition of water
tested.
9.2.5 Bran
Bran does not need any preparation. However, bran is replaced by another fiber source
such as peanut hulls or straw, these materials should be ground before mixing. Experience
show that sometimes coarse grinding of fibrous material gives a better consistency to the
block than fine grinding, especially if polishing are being included.
9.2.6 Equipment for mixing:
According to the rate of production foreseen and the level of investment, different types of
mixers can be used. If adequate labor is available and only few blocks (say 150-200 UMB)
are needed then manual mixing is possible. With 2 laborers, approximately 200 blocks of 5
kg each could be made over a period of 8 hours shift. However, for producing larger
numbers of blocks, a concrete mixer is recommended. The cylinder of this concrete mixer
should turn horizontally and as slowly as possible, to avoid the molasses, which is highly
viscous, sticking to the side of the mixer. Spillage of the mixture should also be avoided.
For bigger units it is recommended that a horizontal paddle mixer is installed (the ribbon
mixer used in feed manufacture is not suitable) with one or two axles and a discharge
valve.
9.3 Introduction of the components
It has been found that the order of introduction of the components plays an important role
in the mixing process. The recommended order is as follows:
 Molasses
 Urea
 Salt, minerals etc.
 Cement or quicklime
 Bran
Following this order a homogenous mixture of the urea, salt and gelling agent in the
molasses is assured. Any other components (e.g., minerals, and drugs) to be included are
21
introduced together with the salt. When using a concrete mixer the bran must be introduced
in small quantities at a time, in order to ensure a homogenous mix. After a few minutes,
when the mixture appears homogenous like peanut butter, the mixer is emptied (e.g. into
wheelbarrows if large-scale production is being undertaken) and transported to the molding
area.
9.4 Molding
Moulds are necessary to set the blocks in an acceptable shape. Once set, the frame can be
removed for reuse and to allow the drying process to continue. Moulds can be of different
types. The size of the mould(s) will depend on the preferred size of the block(s). The one
recommended by the FAO is made out of 4 wooden planks with slots sawn in order to be
able to assemble the frame easily. The dimensions of the frame can vary depending on the
expected rate of production and size of blocks. The most appropriate for small scale
manufacture of blocks are frames made out of a number of wooden planks with slots cut
out to enable easy assembly and removal. Each compartment measures 12 x 10 x 8 inches.
It can hold a urea-molasses block weighing 4.5-5.0 kg. This type of mould is most suitable
when drying and storage area is limiting. Since the frames are removable they can be re-
used as soon as the urea-molasses mixture has started setting-in. Small plastic containers
have been used successfully in Indonesia for preparing urea-molasses blocks. They
produce blocks with acceptable solidity and are suitable for use in small units. An
advantage of this type of mould is that the block can be offered to the animal while it is in
the plastic container and once the block has been consumed the container can be re-used.
9.5 Cutting the blocks
Turning out and cutting is necessary when using large moulds. The board can be taken
away the day after molding in order to facilitate drying. The cutting will take place later
with a flat spade. The spade should be wetted in a bucket between each cut to avoid the
mixture from sticking to it. With small plastic moulds, the blocks can be offered to animals
while in the mould or the blocks may be removed simply by turning the containers upside
down and tapping on the bottom of the container.
9.6 Drying
After removal of the moulds and cutting up, blocks are arranged on a drying area. Blocks
must not be exposed to direct sunlight, but placed under a shade with good ventilation.
After 24 to 72 hours the blocks are dry enough to be transported.
10 UTILIZATION OF UMB.
Some important guidelines towards the optimum utilization of UMB as supplements for
forage based diet are described below. Urea molasses blocks should not be fed alone but
only as a supplement. It requires a minimum amount of roughage to ensure that the
animals are not over fed and thereby avoid urea toxicity.
22
10.1 Species of livestock
Since the blocks contain urea, therefore, these must only be fed to ruminants (buffalo,
cattle, goats and sheep) and never to mono gastric (Single Compartment Stomach) species
like chicken, donkeys, horses, pigs, and rabbits or to young, especially pre-ruminant
calves, kid and lambs.
10.2 Feeding period
The aim of the UMB is to improve the utilization of low quality roughage, especially
during and at the end of the dry season, when livestock are often dependent on crop
residues or low quality dry season grazing, which are low in crude protein and high in
fiber. Therefore, the production and distribution of UMB should be limited to these critical
periods. There is no advantage in offering blocks when green forage is available, as during
the wet and early dry seasons. To avoid wasting resources these should not be made
available at these times.
10.3 Minimum Roughage Requirements
Since Urea Molasses Blocks are supplements, therefore, these should not be fed alone. A
minimum quantity of roughage is needed to ensure that the animals do not consume too
much urea, possibly leading to urea toxicity. One should remember that the purpose of the
block is to improve the utilization of roughage and not to substitute it.
10.4 Adaptation of animals
The full daily ration of the block (e.g. ± 700 g/day per adult cow) should not be offered as
soon as the feeding period starts but should be built up to over a period of at least 7-10
days. This is particularly important when animals have suffered a degree of underfeeding,
as intake can be more rapid than usual. Animals not used to urea and also eating rapidly are
the most likely to suffer from urea toxicity. After the adaptation period, animals will adjust
their intakes to around those recommended, i.e., cattle: 700 g/day & small ruminants: 100
g/day. An easy way to restrict intake during the adaptation period is to limit the amount of
time the blocks are accessible to an animal. A thumb rule is to offer UMB for one hour per
day (about 200 g for cattle and 30 g for sheep/goat) during the first 3-4 days, then 3 hours
per day (about 400 g for cattle and 60 g for sheep/goat) during the next 4-6 days.
Thereafter, UMB along with ample supply of drinking water can be offered to them 24 hrs
a day.
10.5 Feeding system
The distribution of the UMB should be done according to the livestock management
system. Blocks can be offered to the animals in the evening when they are in their sheds.
23
10.6 Establishing priorities

If a farmer has a limited number of blocks available, he must also establish an order of
priority for feeding his animals. Priority should be given to pregnant, lactating cows and
draught animal.
10.7 Machinery Requirement

Following machinery will be required for the preparation of UMB.
Table 10-1 Machinery Details (UMB)8

Description Number Cost (Rs.) Total Cost (Rs.)
Mixer Machine 1 25,000 25,000

Molasses Pump 1 5,000 5,000
Molasses Pipeline 1 10,000 10,000
Motor 1 5,000 5,000
Donkey Pump 1 5,000 5,000
Flat Spades 4 700 2,800
Moulds with Branding Details 7 700 4,900
Molasses Mixer 1 5,000 5,000
Trolleys, drums, bins 3 9,000 27,000
Molasses Tank 1 30,000 30,000
Total cost 119,700
11 LAND & BUILDING

The required space for animal feed and UMB Mill is 8246 Sq. feet (approximately 37
Marlas). Cost of land in the proposed areas is taken to be Rs. 50,000 per Marla.
11.1 Covered Area Requirement

Building for the proposed project comprises of two major blocks i.e. office block and
factory block. Areas and construction cost for the said blocks are listed in the table below:
8
Source: Green Sand Frame, Jhang
24
Table 11-1 Covered Area Details

Factory Block Sq. Ft. Construction Total Cost (Rs.)
Cost /Ft.
Plant Hall 30x50 1500 300 450,000
Plant Hall for Urea Molasses Blocks 30x40 1200 300 360,000
Meals Store 30x25 750 250 187,500
Store house for Urea Molasses 75x30 2250 150 337,500
Blocks
Processed Feed 30x25 750 300 225,000
General Store 40x30 1200 300 360,000
7650 1,920,000
Office Block
Office Block 14x16 224 500 112,000
Bath room 6x6 36 500 18,000
Staff quarters (2 rooms) 14x12 336 350 117,600
x2
596 247,600
Total Construction Cost 8246 2,167,600

Land Required (Marlas) 37
Kanals 2
Land Cost per Marla
50,000
Total Land Cost 1,832,444
TOTAL COST OF LAND AND BUILDING 4,000,044.44
11.2 Recommended Mode

It is recommended to purchase land on preferred locations provided already in this pre
feasibility.
25
12 Human Resource Requirement

Table 12-1 Human Resource Requirement
Employee No. of No. of Monthly Annual Salary
Designation Employees Shifts Salary (Rs.) (Rs.)
Production Manager 1 1 40,000 480,000
Production In charge 1 2 15,000 360,000
Laborers 2 3 3,000 144,000

Mechanic/Electrician 1 1 6,000 72,000
Guard 2 1 3,000 72,000
Accounts Officer 1 1 7,000 84,000
Total 1,212,000
12.1 Utilities Required

 Electricity
 Telephone
26
13 FINANCIAL PROJECTIONS
13.1 Project Costs

ANIMAL FEED & UMB MILL
Project Cost
Land and Building 4,000,044
Plant and Machinery 1,010,100
Furniture and Fixture 70,000
Vehicles 650,000
Pre operating Expenses 40,000
Erection and Installation ( 5% of total machinery Cost) 50,505
Fixed Assets 5,820,649
Initial working Capital 4,860,463
Total Project Costs 10,681,113

Financing
Debt 50% 5,340,556

Equity 50% 5,340,556
Total Financing 10,681,113
Project Returns
IRR % 24%
Pay Back period Yrs. 3
NPV Rs. 1,486,523
27
13.2 Projected Income Statement

ANIMAL FEED MILL
Projected Income Statement Rs. (1000)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Sales
Sales of Feed 40,800 47,520 50,160 50,160 50,160 50,160 50,160 50,160 50,160 50,160
Sales of UMBs 2,550 2,700 2,850 2,850 2,850 2,850 2,850 2,850 2,850 2,850
43,350 50,220 53,010 53,010 53,010 53,010 53,010 53,010 53,010 53,010
Cost of Sales
35,760 38,960 42,478 43,806 45,183 46,613 48,098 49,639 51,241 52,906
Gross Profit 7,590 11,260 10,532 9,204 7,827 6,397 4,912 3,371 1,769 104
Operating Expenses 890 976 1,069 1,172 1,285 1,401 1,538 1,688 1,852 2,033
Operating Profit 6,700 10,285 9,462 8,032 6,541 4,996 3,375 1,683 (84) (1,930)
Less:
Financial expenses 609 481 352 224 96 - - - - -
Profit Before Taxation 6,091 9,804 9,110 7,808 6,445 4,996 3,375 1,683 (84) (1,930)
Income Tax 2,007 3,306 3,063 2,608 2,131 1,623 1,056 464 - -
Net profit After Taxation 4,084 6,498 6,046 5,200 4,314 3,372 2,319 1,219 (84) (1,930)
Retained earnings - 4,084 10,582 16,628 21,828 26,143 29,515 31,833 33,052 32,969
Profit transferred to balance sheet 4,084 10,582 16,628 21,828 26,143 29,515 31,833 33,052 32,969 31,039
28
13.3 Projected Balance Sheet

ANIMAL FEED MILL
Balance Sheet Rs. (1000)
Capital and Reserves Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Share Capital 5,341 5,341 5,341 5,341 5,341 5,341 5,341 5,341 5,341 5,341 5,341
Retained Earnings 0 4,084 10,582 16,628 21,828 26,143 29,515 31,833 33,052 32,969 31,039
5,341 9,425 15,922 21,969 27,169 31,483 34,855 37,174 38,393 38,309 36,380
Long Term Loan 5,341 4,272 3,204 2,136 1,068
Current Liabilities
Current portion of long term liabilitites 1,068 1,068 1,068 1,068 1,068
Tax Payable 2,007 3,306 3,063 2,608 2,131 1,623 1,056 464 - -
Accounts Payable 233 1,571 1,710 1,842 1,895 1,950 2,006 2,064 2,124 2,185 1,903
233 4,646 6,085 5,973 5,571 5,148 3,629 3,120 2,588 2,185 1,903
10,914 18,343 25,211 30,078 33,807 36,632 38,485 40,294 40,981 40,495 38,283
Fixed Assets
Fixed Assets 5,781 5,438 5,095 4,752 4,409 4,066 3,723 3,380 3,038 2,695 2,352
Pre-operating expenses 40 32 24 16 8 0 0 0 0 0 0
5,821 5,470 5,119 4,768 4,417 4,066 3,723 3,380 3,038 2,695 2,352
Current Assets
Raw Material Inventory 4,463 4,867 5,292 5,450 5,614 5,782 5,956 6,134 6,318 6,508 -
RM Inventory UMBS 187 198 209 209 209 209 209 209 209 209 -
Finished Goods Inventory - 4,419 4,819 5,239 5,396 5,558 5,725 5,897 6,074 6,256 6,444
FG Inveentory UMBs - 186 196 207 207 207 207 207 207 207 207
A/C Receivable - 2,168 2,511 2,651 2,651 2,651 2,651 2,651 2,651 2,651 2,651
Cash/Bank 443 1,036 7,065 11,553 15,313 18,158 20,013 21,815 22,484 21,969 26,630
5,093 12,873 20,092 25,310 29,390 32,565 34,761 36,913 37,943 37,800 35,931
10,914 18,343 25,211 30,078 33,807 36,632 38,485 40,294 40,981 40,495 38,283
- - - - - - - - - - -
29
13.4 Projected Cash Flow Statement

ANIMAL FEED MILL
Cash Flow Statement Rs. (1000)
Operating activities Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Net profit - 4,084 6,498 6,046 5,200 4,314 3,372 2,319 1,219 (84) (1,930)
Amortization (Pre-operational Expenses)- 8 8 8 8 8 - - - - -
Depreciation - 343 343 343 343 343 343 343 343 343 343
Raw Material Inventory (4,463) (404) (425) (159) (164) (168) (173) (179) (184) (190) 6,508
Raw Material Inventory UMBs (187) (11) (11) - - - - - - - 209
Finished Goods Inventory - (4,419) (400) (420) (157) (162) (167) (172) (177) (182) (188)
Finished Goods Inventory UMBs - (186) (11) (11) - - - - - - -
Accounts receivable - (2,168) (344) (140) - - - - - - -
Accounts payable 233 1,338 139 131 53 55 56 58 60 62 (282)
Tax Payable - 2,007 1,300 (243) (456) (477) (507) (567) (592) (464) -
Cash provided by operations (4,418) 593 7,097 5,556 4,828 3,913 2,924 1,802 669 (515) 4,661
Financing activities
Long term debt principal repayment (1,068) (1,068) (1,068) (1,068) (1,068) - - - -
Addition to long term debt 5,341
Owner's investment 5,341
Cash provided by/ (used for) financing activities
10,681 - (1,068) (1,068) (1,068) (1,068) (1,068) 0 0 0 0
Investing activities
Capital expenditure -5821
Cash (used for)/ provided by investing
-5821
activities 0 0 0 0 0 0 0 0 0 0
Net Cash 443 593 6,029 4,488 3,759 2,845 1,856 1,802 669 (515) 4,661
Cash balance brought forward 0 443 1,036 7,065 11,553 15,313 18,158 20,013 21,815 22,484 21,969
Cash carried forward 443 1,036 7,065 11,553 15,313 18,158 20,013 21,815 22,484 21,969 26,630
30
14 Useful Terminology
Feed stuffs
Any substance of nutritive and biological value used in production manufacture of
compound feed.
Feed grade
Specific product adequately tested to prove its safety for feeding purpose
Grinding
Process by which a feedstuff is reduced in particles by impact sheaving or attrition
Ration
Amount of balance feed in 24 hours
Meal
Ingredient ground in small particles for usage by animal
Compound feed
Any ground / pelleted/ crumbled/ mixture intended for feeding the animals. It includes
a concentrate mixture accordingly to formula. It should not be adulterated or
misbranded. It is accordingly to growth, reproduction and production status of animal.
Automatic Feed Mill

The establishment in which feed is carried out by automatic machinery, electrically
operated with / without manual involvement.
Semi Automatic Feed Mill

The establishment of feed preparation carried out automatically with machinery and
manual involvement.
Home Mixed Feed

Feed prepared for herds maintained on farm of owner.
Cake
Mass resulting from the processing of seeds in order to remove oils, fats or other
liquids.
BRIX Value
Level of sugar in molasses
31
Urea Toxicity
Sick condition of animal due to excessive intake of urea.
Hygroscope:
A compound or product that absorbs moisture from environment.
Monogastric Animals:
The animals that have single compartment stomach
32

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Pre-Feasibility Study

Animal Feed Mill

Small and Medium Enterprise Development Authority

1 INTRODUCTION TO SMEDA .................................................................................................................. 4

2 PURPOSE OF THE DOCUMENT ............................................................................................................. 4

3 CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT................................... 5

9.2 PREPARATION OF FEED INGREDIENTS ...............................................................................................................20

Approved by Provincial Chief Punjab

Issue Date May 2005

Issued by Library Officer

2 Purpose of the document

3 Crucial Factors & Steps in Decision Making for Investment

4.1 Opportunity Rationale

Table 4-1 Population of livestock (million)2

Table 4-2 Production of Livestock Products

General UMB Formula

4.2 Project Brief

4.3 Viable Economic Size

4.4 Market Entry Timing

4.5 Proposed Business Legal Status

4.6 Proposed Capacity

4.7 Project Investment

Table 4-3 Project Costs

Table 4-4 Project Financing

Table 4-5 Viability

4.8 Proposed Location

4.9 Key Success Factors/Practical Tips for Success

5 SECTOR & INDUSTRY ANALYSIS

5.1 Major Players

5.2 Hubs of Animal Feed Mills

5.3 Legal Issues Regarding Animal Feed and UMB Mill

6.1 Sector Characteristics

6.2 Market Potential

Table 6-1 Global feed Manufacture4

Table 6-2 Top 10 feed producing countries5

6.3 Target Customers

7 PRODUCTION PROCESS FLOW FOR COMPOUND FEED

Figure 7-1 Process Flow Diagram

Feed Feed Analysis in Acceptance of Separators and Crushing by

Conditioning Mixer Dosage bin

7.1 Raw Material Requirement

resources otherwise unusable by humans, cattle make a positive contribution to human

7.2 Classification of feed ingredients:

7.2.1 Protein feedstuffs:

 Rape seed cake/meal

7.2.2 Carbohydrate/energy feedstuffs:

7.2.3 Mineral supplements:

7.2.4 Fats and oils:

7.3 Feed Formula for Cattle/Buffaloes:

Table 7-1 Details of Raw Material

7.4 Packing Cost

7.5 Machinery Requirement

Table 7-2 Machinery Details (Animal feed)7

8 RAW MATERIAL (UMB)

8.1 Classification of Feed Ingredients:

8.1.1 Protein Sources:

8.1.2 Carbohydrate Sources:

8.1.3 Mineral supplements:

9 PRODUCTION PROCESS OF UREA MOLASSES BLOCK (UMB)