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Proposals For Development of Non-Profitable Livestock Farms of The NLDB
Proposals For Development of Non-Profitable Livestock Farms of The NLDB
PREFACE
Sri Lanka, rich in it’s soil fertility levels and varied of Agro climatic
conditions has enormous potential for sustainable growth in the Livestock &
Farming.
Country’s heritage of the yesteryear revolved around Agriculture and
Agriculture based industries.
The parameters of irrigation systems in technical terms prevailed then,
superseded the technological boundaries of today.
The NLDB is blessed with considerable wealth of public assets. If these assets
are able to be re-engineered and put to good use, that would immensely
contribute towards the national policy of Mahinda Chinthana in driving
away the food crisis envisaged. The key is to make the right decisions &
choices of our public investments, to find ways to Harness and Channel
Market Forces. People Need To Be Conscious Of What They Throw
Away And Where They Throw It away.
The proposed project will be under public private partnership (PPP) with NLDB
with certain mechanisms for participation by a Private Company described as
alternative options later in this memorandum. Whatever the participatory
mechanism proposed under few options, shall ensure continuity for well over thirty
years since the return on investments of this nature is essentially long term.
4. Weerawila Farm .
Reasons for clustering the farms are for better administration, management control
and to sharing of human and capital resources in a more effective manner.
1. Polonnnaruwa Cluster
Presently Polonnaruwa and Welikanda farms are operative and not making any profits for
the last few years as the financials revealed. We will not implement any action plan for
the Kandakaduwa farm as at present since it is occupied by the Sri-Lanka Army, if this
could be cleared it could be developed as one of the best dairy under Polonnnaruwa
cluster
In order to implement the above development plan for this cluster is need of significant
investment of around of at least Rs 100 million within period of eight years and to ensure
turning around the cluster within second year of operation.
2) Puttalam , Anuradhapura Cluster
The implementation of the above development plan for this cluster will cost around Rs 75
million within period of eight years will ensure to make the profits after one year of
successful operation
3) Kandy Cluster
Presently Haragama, Mahaberiyatanne farms are under operation but not making profits
for the last few years. However we found that these farms have great potential for
improvement and within a short period they can be converted in to profitable units.
The broader action plan proposed for this cluster is listed down below.
1. Growing of pasture in an area of 100 ha in the cluster. Water could be taken from
the Mahaweli River.
2. Improve the dairy unit starting with a European breeds stock of 200 neat cattle and
buffalos herd.
3. Setting up a oil mill to extract coconut oil and the residue poonac will be used as
cattle feed..
4. Growing of Mahogany and Tuna in the periphery of the land for obtaining long
term benefits i.e. timber.
5. Introducing the Greenhouse to cultivate bell pepper, and other cash crops for
export market
6. Introduce full automatic milking machines to maximize the yield, necessary
storing facilities to minimize the wastage and assure hygienic conditions
7. The target is to increase the milk production up to 2500 lts per day
8. As a socially responsible entity it is proposed to enhance worker living conditions
to maximize worker productivity and thereby enhance profitability
The implementation of the above development plan for this cluster the private partner will
invest Rs 50 million within a period of eight years and ensure operational profits after one
year of successful operation
4) Weerawila Farm
Presently farm is under operation but not making profits for the last few years. However
we found that this farm too has great potential for improvement and within a short period
they can be converted in to profitable units.
1. Construct ponds to collect and retain rain water in the farm to assure irrigation to
pasture field area of 100 ha in the farm. This should be facilitated with ready
supply of water because water deficit has become a serious issue in the location
and there is a necessity for digging up agricultural/deep wells and adoption of
sprinkler or drip irrigation system to supplement water. Presently there is a wind
mill with constructed with an overhead tank that could supply water through
gravity
2. Commencement of a dairy unit starting with a MURRAH buffalo stock of 200 .
3. Introducing a hatchery for producing chicks and it could supply chicks at a
reasonable price for individual farmers as well as medium scale farms in the
southern province.
4. Cultivate Coconut and Cashew and dragon fruit
5. Growing of intercrops e. g. Banana and Papaya in between perennial crops..
6. Growing of teak in the periphery of the land for obtaining long term benefits i.e.
timber.
7. Introduce .full automatic milking machines to maximize the yield, necessary
storing facilities to minimize the wastage and assure hygienic conditions
8. The target will be to increase the milk production up to 1500 lts per day.
9. As a socially responsible entity it is proposed to enhance worker living
conditions to maximize worker productivity and there by enhance profitability
The implementation of the above development plan for this farm will need an investment
of Rs 30 million within a period of eight years and it will ensure the profitability with the
second year of operation.
GENERAL OBSERVATIONS AND RECOMMENDATIONS
We observed that almost all the farms are running under capacity mainly due to the fact
that their true potential is not captured by providing required input to the farm. It is
essential that investments be made to make them run in their full capacity for making
them financially viable and sustainable. In addition to financial investments, the most
important factor is the provision of qualified supporting staff to all farms and assists them
with proper managerial and marketing strengths to run the individual farm in each cluster
effectively and profitably.
We are confident that by introducing financial investments and technology into these
farms, we could convert all these farms into profitable units within a reasonable period.
It has to be mention specifically here that the private sector partner propose to establish
training centers in each cluster or farm as the case may be to train the own farm staff as
well as the educated youth from the vicinity in order to enhance productivity and to
establish a pool of prospective qualified and skillful bank of employable human resource.
As indicated in the discussions held with the secretary to the ministry of livestock
development and the senior officials of the ministry and the NLDB this memorandum
will only offer conceptual and broader frame work and action plans envisaged by the
private sector partner and if the proposals are accepted in principle the partner will
elaborate to a greater extent the action plans with its own resources and with the
employment of foreign and local consultants. The final more detailed informative report
shall consist of complete set of projected financial statements to facilitate the evaluation.
OPTIONAL BUSINESS MODELS OF PARTICIPATION
IN THE PPP
Option one
1. The private sector partner will act strictly as a “Managing Agent” to the
nine farms to be carved out. Managing Agent will bring the managerial
expertise.
Option two
4. The Managing Agent will be entitled to a profit share not less than 75% after
1. All immovable and movable assets of the nine farms earmarked will be leased
out to a totally new entity still totally owned by the NLDB for 35 years. Thus
the ownership of the properties is always with the NLDB but it is leased to
the new entity. Even the farm level liabilities both current and long term will
be taken over by the new entity. Initially the entire issued shares of this entity
are owned by the NLDB (the 100%). But as a when the private sector partner
brings in investment for operations and capital development the NLDB will
dispose it shares to the private sector partner to a maximum extent of 49%.
2. If the fund requirements exceeds the value of 49% of the share capital the
excess funds needed may be brought in as Redeemable Debentures as
explained under option two.
3. The present NLDB employees will have the option of either remain with
NLDB or to join with the new entity.
CONCLUSION
As indicated earlier this document shall only be considered as the conceptual frame work
of the proposal and offer broader outlines of the action plans envisaged. This is expected
to be studied extensively by the Ministry of Livestock Development and NLDB senior
management. The final proposal by the private sector partner will be made on the basis of
the acceptance of the business model and the broader action plans. The final proposal
shall be extensive covering all aspects of operations including the financial projections.