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PRE-FESIBILITY STUDY
ESTABLISHMENT OF BIOLOGICAL CONTROL LABORATORY FOR MANAGEMENT OF LEPIDOPTEROUS INSECT PESTS
PAKISTAN AGRICULTURE RESEARCH COUNCIL ISLAMABAD
MINISTRY OF NATIONAL FOOD SECURITY AND RESEARCH
Government of Pakistan
www.parc.gov.pk
January 2014
Contents
1. DISCLAIMER3
2. PURPOSE OF THE DOCUMENT3
3. INTRODUCTION TO SCHEME3
4. EXECUTIVE SUMMARY4
5. BRIEF DESCRIPTION OF TECHNOLOGY5
6. CRITICAL FACTORS7
7. INSTALLED AND OPERATIONAL CAPACITIES8
8. GEOGHRAPHICAL POTENTIAL FOR INVESTMENT8
9. POTENTIAL TARGET MARKET8
10. PRODUCTION PROCESS FLOW8
11. PROJECT COST SUMMARY8
11.1: Project Economics9
11.2: Project Financing9
11.3: Project Cost10
11.4: Space Requirement10
11.5: Machinery and Equipment11
11.6: Raw Material Requirements11
11.7: Human Resource Requirement11
11.8: Revenue Generation12
12. CONTACTS – SUPPLIERS, EXPERTS / CONSULTANTS12
13. ANNEXURES13
14: KEY ASSUMPTIONS14
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 under taking 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.
2. Purpose of the document
The central idea of this feasibility report is to provide basic information to investors for starting business in biological control of sugarcane borers. The Insect Pest Management Program (IPMP), Department of Plant and Environmental Protection (DPEP), National Agricultural Research Centre (NARC), Islamabad has the capacity to train the investors and their technicians to enable them to establish biological control laboratories for management of sugarcane borers. The investors will be able to produce parasitoids, provide services and sail products to farmers on commercial basis.
3. Introduction to scheme
Sugarcane is an important cash crop of Pakistan. It is damaged by a number of insects such as sugar cane borers (stem borer, top borer, Gurdaspur borer and root borers), pyrilla, scale insects, whitefly, mealy bugs, termites and mites. Sugarcane borers are the most destructive insect pests and cause 15-20% losses in yield and also reduce sugar recovery. For the last many years insecticides have been applied in different forms (aerial sprays and granular applications) to control these insect pests. Due to extensive and intensive use of pesticides human health and environmental degradation had been erupted. Moreover, insecticides application alone was unable to give economic control of insect pests in sugarcane crop. To overcome this problem biological control of insect pest is being used as one of the important alternatives. Taking into account the importance of biological control the Insect Pest Management Program (IPMP), National Agricultural Research Centre (NARC), Islamabad took the initiative to develop biological control program against sugar cane borers. Technologies for biological control i.e. mass-production of Trichogramma (an egg parasitoid of sugarcane borers) were developed at IPMP, NARC, and transferred to 08 sugar mills and 05 institutes all over Pakistan. Prior to biological control application each sugar mill used to provide granular insecticides of worth approx. 50-70 million rupees to farmers. Bio-control application has minimized the use of granular insecticides in sugar cane crop. Now sugar mills are providing bio-control, agents instead of granular insecticides. Every year more than 2000 farmers are being benefited by using bio-control agents to control sugarcane borers. Biological control is being applied on 20-25 thousand acres around each sugar mill.
4. Executive summary
The central idea of this feasibility report is to provide basic information to investors for starting business in biological control of sugarcane insect pests particularly chewing insects (borers). Sugarcane is an important cash crop of Pakistan. Sugarcane borers are the most destructive insect pests of the crop and cause 15-20% yield losses and also significantly reduce sugar recovery. For the last many years insecticides had been applied for their control. Due to extensive and intensive use of insecticides human health and environmental degradation had been erupted. Therefore, there is need to apply biological control (eco friendly) of insect pests as an alternative to chemical control. To cater the needs of sugarcane growers and sugarcane industry, entomologists at Insect Pest Management Program (IPMP), National Agricultural Research Centre (NARC), Islamabad, took initiative in the year 2000 to develop biological control laboratories. Trichogramma chilonis (an egg parasitoid), hereafter cited Trichogramma is considered as one of the most effective bio-control agent of lepidopterous insect pests. The technology for production of Trichogramma was developed at NARC. To make a bio-control program sustainable, technology of Trichogramma production was transferred to sugar mills and other institutes all over Pakistan. Bio-control laboratories established at sugar mills are now producing Trichogramma and selling it as a commercial product to sugarcane growers. Involvement of private sector in the business of biological control lead to the establishment of a sustainable control of sugarcane borers which shows that investment in biological control business is viable. Due to successful control of sugarcane borers by biological means, farmers are convinced to adopt biological control and demand for bio-control agents are increasing but the existing production facilities of bio-control agents at sugar mills are insufficient to cater the demands by farmers. Therefore, there is scope for the investors to produce bio-control agents on commercial basis, provide services and sale their products to farmers.
The proposed business can be started with the total cost estimate of Rs. 20,5552 including fixed investment of Rs. 540,700. Given the cost assumptions, net present value (NPV) and internal rate of return (IRR), benefit cost ratio (BCR) and payback period are Rs. 259705, 34%, 1.39, and 3.03 years respectively.
5. Brief description of technology
The technology consists of mass rearing chamber of Sitotroga (Fictitious host of Trichogramma). Mass rearing chamber is made of tin sheets having two parts. The upper part is rectangular and measuring 37x37x50 cm while lower part tapers downwards and has opening measuring 3x3 cm. Below to this opening adult collection box is attached. Open top is screened with iron gauze and covered with wooden frame. The trays measuring 36x30x5 cm are also made of tin sheets. Five trays filled with wheat grain are placed in each chamber. The adults of Sitotroga are released in chambers. At temperature of 26-28° C and relative humidity 50 -60%, the development of larvae of Sitotroga is completed in 29- 35 days. Emerged moths fall directly into the adult collection/oviposition box. When sufficient host eggs are available daily then rearing of Trichogramma is initiated. First gum is spread uniformly on pieces of ivory card (5x6 cm) and eggs of Sitotroga are sprinkled. Afterwards these egg cards are placed in a glass jar containing Trichogramma adults at least for 24 hours. After 24 hours these egg cards are removed, because they are parasitized and placed fresh cards in it. Parasitized eggs can be kept in cold storage at least for two weeks without losses. They are released in field as per requirement.
Flow chart for the production of Trichogramma
Bio-product (Trichogramma card) developed at NARC
6. Critical factors
· Knowledge intensive business: The person should be well trained and should get intensive knowledge of this technology before starting this business. In addition, intensive management and planning, record keeping, and patience will also be required.
· Mites infestation in host culture (Sitotroga cereallela): Sitotroga cereallela is used as a host culture for mass rearing of Trichogramma sp. Mites infestation in S. cereallela is a very common problem which causes mortality of S. cereallela. Mortality of host culture can undermine mass production of Trichogramma sp.
· Sex ratio of Trichogramma sp.: Rearing without adopting standard protocols may yield more number of Trichogramma males than females. It will adversely affect the mass production of Trichgramma sp.
· Fecundity of factitious host insect (Sitotroga cereallela) and egg parasitoid (Trichogramma sp.): Low fecundity of hosts insects and parasitoids will decrease the mass production of parasitoids.
· Continuous electricity supply for mass rearing facility: Uninterrupted supply of electricity is required to maintain optimum environment (temperature, humidity, photo period) for successful production of parasitoids and hosts, otherwise culture of host insects and parasitoids will be lost. For continuous electricity supply, a powerful energy backup (generator) will be required. However, if it fails to work due to any reason, again the system will be disturbed and cause mortality.
· Mortality of bio-control agents due to polluted environment caused by pesticide spray: Insecticides do pollute the environment which will cause the mortality of parasitoids in the field.
· Regular monitoring of parasitoids and pests: The farmers using Tricho cards should visit and monitor his crop and parasitoid cards regularly. If necessary, should replace the cards so that parasitoids should remain available in the field.
· Frequent releases of Tricho cards: Tricho cards should be applied in the field at 10 days interval regularly, so that Trichogramma sp. presence in the field didn’t allow to build up population of pests.
· Effective marketing: The person involved in bio-control business should contact the farmers in different areas to convince them for biological control and sale of bio-control agents (Tricho cards). Liaison with sugar mills may be useful to reach out farmers and sail of Tricho cards.
7. Installed and operational capacity of bio-control laboratory
This pre-feasibility suggests that the proposed bio-control laboratory has the capacity to produce 180000 Tricho cards that will be sufficient for management of sugar cane bores in 1000 acres for one year.
8. Geographical potential for investment
Sugarcane growing areas of Punjab, KPK and Sindh province.
9. Potential target market
Farmers involved in agriculture will be the main clients. The above mentioned areas are suitable. The investor has to work hard for marketing as doing by pesticides companies.
10. Production process flow
Active period for the production of Tricho cards will be 6 months that is period of sugar cane borers infestation in the field. Rest of the period will be utilized for the management of host and parasitoid culture.
11. Project’s cost and benefit summary
A detailed financial model has been developed to analyze the commercial viability of bio-control laboratory under the Prime Minister’s Loan Scheme. Various cost and revenue related assumptions, along with results of the analysis, are outlined in this section.
11.1. Project economics
The following table shows internal rate of return and payback period.
Table 1: Project economics
Description
Detail
Internal rate of return
34%
Net Present Value
Rs. 2,597,056
BCR
1.39
Payback period (years)
3.026
The cost incurred on the project is returnable from the profit in 3.03 years. The positive internal rate of return IRR i.e. 34% and net present value NPV Rs. 2597056 shows the viability of the project.
11.2. Project financing
The following table provides details of the equity required and variables related to bank loan;
Table 2: Project financing
Description
Details
Total Equity (10%)
200645
Bank Loan (90%)
1805805
Markup to the Borrower (%age/annum)
8%
Tenure of the Loan (Years)
08
Grace Period (Years)
01
Table 3: Project capital cost
Capital Cost
Quantity
Amount (Rs.)
Air Conditioner (2000 BTU) Reversible
1
125000
Refrigerator 18 Cu.Ft
1
60000
wooden or angle iron rack
1
10000
Rearing Chamber @10000/chamber (for 12 Chambers)
12
120000
Electric Aspiration (LG blower)
1
12000
Sieve for cleaning grain
1
300
Sieve messh No. 80 (separating eggs from starch)
2
1600
Table lamp
1
800
Large Pan (5 KG capacity)
1
1000
Humidifire
1
10000
Generator
1
100000
Motorcycle
1
50000
Capital Cost Total
490700
11.3. Space requirement
The total operation of producing Trico cards requires one room of 12x12 area and a store room of 8x8. Rent for the whole area is given as 50000 for the first year.
Table 4: Space requirement
Description
Amount (Rs.)
Rent of 1 room (12x12 ft.) and store (8x8 ft.)
50000/year
11.4. Raw material requirements
Following raw material is required for one year
Table 5: Raw material requirement
Raw material
Amount Rs.
Plastic oviposition jars @ 50/jar
5000
Wheat (15kg/chamber) (37.5/kg)
15000
Muslin Cloth (Rs. 25/m)
500
Rubber bands (150/packet)
300
Starch @ 60/kg
1200
plastic plates @ 30/plate
3000
Nose mask
400
Plastic or aluminium bowls @ 60/bowl
3000
Egg storing plastic vials (@ 50/vail)
2500
Tissue papers
3000
plastic bag
500
Glass jars 5 liters
7500
piece of making ivory sheets for making cards
10000
Gum
1000
Honey
450
Forcep
900
Brushes
400
Plastic jars
3000
paper clips
400
sitotroga eggs sprinkling vials
500
water cooler for transportation
7200
Electricity expenses
240000
shipment charges @ 15000/month
180000
Diesel for generator @ 20000/month
360000
Miscellaneous Expenditure
20000
Total
865750
11.5. Human resource requirement
Total number of skilled human resource is 4. Two laboratory technicians are required whose salary will be @ 15000/month. Two labors will be hired @ 10000/month.
Table 6: Human resource requirement
Description
Amount Rs.
Laboratory technician salary @15000/month
360000
Labor @ 10000/month
240000
Total
600000
11.6. Total cost and revenue generation in first year
Table 7: Revenue Generations
Rs.
Total number of Tricho cards
Sale price
Cost
Total Revenue
Profit first year
180000
12
2055520
2160000
104480
12. Contacts
Dr. Ehsan ul Haq, Insectary-Biological Control Labs., IPMP, NARC, Islamabad,
Tel.: +92-51-8443493, +92-3025100119
13. Useful links
Federal
· Web: www.parc.gov.pk
· Insectary-Biological Control Labs., IPMP, NARC, Islamabad
Punjab
Biological control Laboratories at
· Ramzan Sugar Mill, Chiniot
· Shah Taj Sugar Mill, Mandi Bahauddin
· Phalia Sugar Mill, Phalia
· Pattoki Sugar Mill, Pattoki
· Tanlianwala Sugar Mill, Tandlianwala
· Layyah Sugar Mill, Layyah
· Department of Entomology, University of Agriculture, Faisalabad
· Nuclear Institute of Agriculture and Biology (NIAB), Faisalabad
· IPM station, PARC, Bahauddin Zakariya University, Multan
· Biological Control Labs, Agriculture Department Punjab at Sheikhupura and Toba Tek Singh
Khyber Pakhtun Khawa
· Sugar Crops Research Institute, Mardan
· Department of Plant Protection, KPK University, Peshawar
Sindh
· Nuclear Institute of Agriculture (NIA), Tandojam
· Central Cotton Research Institute, Sakran
1
14. Annexure
years
Investment
Total Variable Cost
Total cost (Rs)
Benefits
Cash Flows
DF
PVC
PVB
Installment
Income After Loan Payment
0
2006450
2006450
0
-2006450
1
1564820
1564820
2160000
595180
1.000
1564820
2160000
144464
450716
2
1716395
1716395
2376000
659605
0.926
1589255
2200000
346845
312760
3
1883128
1883128
2613600
730473
0.857
1614478
2240741
346845
383628
4
2066533
2066533
2874960
808427
0.794
1640481
2282236
346845
461582
5
2268280
2268280
3162456
894176
0.735
1667253
2324500
346845
547331
6
2490201
2490201
3478702
988501
0.681
1694789
2367546
346845
641656
7
2734314
2734314
3826572
1092258
0.630
1723081
2411389
346845
745413
8
3002838
3002838
4209229
1206391
0.583
1752127
2456045
346845
859546
15. Key assumptions
Description
Debt Equity Ratio
90:10
Interest rate
8%
Grace Period
1 year
Sales Growth rate
10%
Increase in salaries
10%
General inflation
10%