1         DISCLAIMER

This information memorandum is to introduce the subject matter and provide a general idea and information on the subject. Although, the material included in this document is based on data / information generated from experiments and field testing by a team of relevant scientists; however, it is based upon certain assumptions which may differ from case to case. The contained information may vary due to any change in any of the concerned factors, and the actual results may differ accordingly from the presented information. The PARC and its employees do 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 contact qualified consultant/technical expert, especially designated focal person(s) of this enterprise for reaching to an informed decision.

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2         PURPOSE OF DOCUMENT

The purpose of this document is to facilitate potential investors in vegetable nursery raisingby providing them with a general understanding of the business, with the intention of supporting potential investors in crucial investment decisions. 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, production, finance, and business management.  The need to come up with pre-feasibility reports for undocumented or minimally documented sectors attains greater imminence as the research that precedes such reports reveal certain thumb rules; best practices developed by existing enterprises by trial and error, certain industrial norms and well established research findings that become a guiding source regarding various aspects of business set-up and it’s successful management. Apart from carefully studying the whole document, one must consider critical aspects provided later on, which form the basis of investment decisions.

3         INTRODUCTION TO SCHEME

Prime Minister’s Youth Business Loan Programme, for young entrepreneurs, with an allocated budget of Rs. 5.0 Billion for the year 2013-14, is designed to provide subsidized financing at 8% mark-up per annum for one hundred thousand (100,000)beneficiaries, through designated financial institutions, initially through National Bank of Pakistan (NBP) and First Women Bank Ltd. (FWBL). Loans from Rs. 0.1 million to Rs. 2.0 million with tenure up to 8 years inclusive of 1 year grace period, and a debt: equity of 90: 10 will be disbursed to SME beneficiaries across Pakistan, covering; Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Gilgit-Baltistan, Azad Jammu & Kashmir and Federally Administered Tribal Areas (FATA).

4         EXECUTIVE SUMMARY

In Pakistan, vegetables (excluding Potato) are grown on a total area of 253653 hectares during 2011-12 (GOP, 2011-12) with a production of 3110619 tones which is about 2.30 % of total crop area. Vegetables are comparatively rich source of vitamins and minerals, which are essential for the maintenance of good health and resistance against diseases. Vegetable yield per unit area is very low in Pakistan. One of the reasons of low yield is non-availability of quality seedlings of high yielding varieties/hybrids. Vegetable seedlings available in the market are of inferior quality.

After successful experimentation at Vegetable Programme, Horticulture Research Institute (HRI), National Agricultural Research Centre (NARC), Islamabad, the technology of raising healthy seedling by using peat moss substrate and compost in multipot trays and getting early and late cucurbit crops by raising early & late seedlings had been found very beneficial.However, it needs scale up to reach maximum of beneficiaries of the community. The production of vegetable seedling can be successfully carried in peri-urban and vegetables growing areas of Sindh, Punjab, Balochistan, Khyber Pakhtunkhwa, Gigit Baltistan and Azad Jammu & Kashmir.

In Pakistan, cucurbit crops: vegetable marrow, bitter gourd, cucumber, muskmelon, long melon, water melon, bottle gourd and sponge gourd etc are being grown over a larger area. Mostly the farmers are growing cucurbits in the normal growing season (mid February to mid March) by sowing of seeds and when such vegetables are harvested, the markets are flooded with these vegetables and the growers sometimes not even getting back their cost of production. Whereas the prices of the early season cucurbits are always two to three times higher than their normal season. Early crop by 20-25 days can fetch better price than thenormal. Nursery of cucurbit crops can be raised in polythene bags under very simple and low cost protected structures like walk-in tunnels. Seedlings of the desired cucurbits are raised in the first week of January up to mid of January and 40-60 days old seedlings are transplanted in the open field from mid February to first week of March. This technology is very effective for producing early crops of cucurbits especially in central and Northern Punjab, Balochistan, Khyber Pakhtunkhwa, Gigit Baltistan and Azad Jammu & Kashmir.

5         BRIEF DESCRIPTION OF PROJECT AND PRODUCT

Following key parameters must be addressed as per pre-feasibility study:

5.1       Techniques:

The technology comprises of cost-effective techniques of raising of seedlings of economically useful vegetable crops that have been developed and standardized by Research Institutes. The techniques involve;

a)      Making/Using compost,

b)      Preparation of potting medium,

c)      Use of tunnel, use of shade nets,

d)      Raising seedlings in multipot trays and polythene bags

e)      Use of supplementary nutrition if required

f)       Hardening of seedlings etc.

g)      Packing

This technique ensures that a large number of seedlings can be raised in minimum space under optimized and controlled conditions. The seeds or cuttings are planted in plastic bags filled with a specially prepared potting medium. The bags have holes in the bottom. The potting medium has to be porous should also have all the plant nutrients. Ideally, compost, is used as media.

5.2       Location:

The business of healthy seedling can be initiated in Sindh, Punjab, Balochistan, Khyber Pakhtunkhwa and Gigit Baltistan, whereas the technology of early and late seedlings of cucurbits can be successfully carried in central and Northern Punjab, Balochistan, Khyber Pakhtunkhwa, Gigit Baltistan and Azad Jammu &  Kashmir.

5.3        Product:

 The crops targeted for the plant nursery include the following:

Table 1  Crops targeted for the plant nursery

The exact choice may vary depending on the situation. Viability of nurseries depends on market condition

5.4        Target Market:

Following are some of the areas which could be identified as major existing market of vegetable nursery;

        I.            Kitchen gardeners

      II.            Farms in peri urban areas

    III.            Vegetable growers

5.5       Employment Generation:

The proposed project will provide direct employment to four individuals. Financial analysis shows the profitability of proposed business within first year of its operation.

6         CRITICAL FACTORS

The commercial viability of the proposed project depends on the following factors:

·         Any person who is planning to adopt this technology should have some practical knowledge about nursery

·         Use of high quality hybrid/recommended varieties seeds.

·         Having and maintaining fertility of compost.

·         Cost efficiency through better management.

·         Timely control of pests, diseases and exercise of preventive measures.

·         Maintenance & control of internal temperature & humidity in the tunnel.

·         Timely irrigation and fertilization.

·         Farm is required to maintain the record of production and management practices for successful marketing and traceability.

·         Farm should have strong market linkages for effective disposal of produce.

7          INSTALLED AND OPERATIONAL CAPACITY FOR VEGETABLE NURSERY RAISING

This pre-feasibility suggests a farm operation on 0.5 acres of land with following capacity

Table 2  Capacity of Farm operation on 0.5 acres of land

8          GEOGRAPHICAL POTENTIAL FOR INVESTMENT

This technique ensures that a large number of seedlings can be raised in minimum space under optimized and controlled conditions. Poly tunnels used for protection against frost and used for nursery raising of summer vegetables (November to February) and similar structure will be used for protection against heat during summer (June to August) for early cauliflower, cabbage etc.

8.1       Potential Target Markets

The market for seedlings and planting material produced includes kitchen gardeners, farmers of peri urban area and vegetable growers. The vegetable nursery project will be based on the demand for the selected crops to be produced by end users. In addition to local households the proposed vegetable nursery will include a marketing programme to promote sales of seedlings and planting materials to farmers in the project area. The marketing plan will include the development of a sales brochure and flyers describing the supply and price lists of planting material by the nursery. Other elements in the marketing programme will include limited print media advertising, sales calls, and public relations.

9         PRODUCTION PROCESS FLOW

Possible utilization of land is given in Table:

Table 3 Utilization of land

10     Project Cost and Benefit Summary

A detailed financial model has been developed to analyze the commercial viability of vegetable nursery raising under the Prime Minister’s Small Business Loan Scheme. Various cost and revenue related assumptions, along with results of the analysis, are outlined in this section.

10.1  Project Economics

The following table shows internal rates of return and payback period.

Table 4 Project Economics

Factors that influence the profitability of nursery management, quality of inputs and environmental factors.

a.      Project Cost

Following requirements have been identified for operations of the proposed business.

Table 5 Total Project Cost

b.      Space Requirement

Table 6 Space requirement and its cost

c.       Machinery and Equipments

Table 7 List of Machinery& Equipments and its cost

d.      Furniture and Fixture

Following table provides list of Furniture and Fixture required for nursery project.

Table 8 List of Furniture & Fixture and its cost

e.      Operational and Maintenance cost

Following table provides list of Consumable Requirement for Inland Fish Farm.

Table 9 Operational & Maintenance cost

f.        Human Resource Requirement

The table below provides details of human resource required to manage basic fish farm. The staff salaries are estimated according to the market trends. However, these requirements and pay scales may vary area to area.

Table 10 Human Resource Requirement its cost

g.      Project Financing

Following table provides details of the equity required and variables related to bank loan;

Table 11 Project financing

h.      Revenue Generation

Table 12 Revenue of the Project

Table 13 Key Assumption