rabbit farm
TRANSCRIPT
Introduction
Among the newer ventures in animal husbandry sector, rabbit rearing fits most
appropriately in the country’s programme of food, security, rural employment and
equitable distribution of income. Most people nowadays due to its low cholesterol
content prefer rabbit meat. Thus the contribution of rabbit farming to the nation’s health
and economic welfare is rather unique. Rabbit farming has enormous potential to
improve the socio-economic status of the large percentage of rural population.
Rabbit’s gestation period is 30 days and there are five to eight young in a litter. A kit
(baby rabbit) can be weaned at about 4 to 5 weeks of age. This means in one season a
single female rabbit can produce as many as 800 children, grandchildren, and great-
grandchildren. A doe (female) is ready to breed at about 6 months of age, and a buck
(male)at about 7 months. At 10 to 11 days after birth the baby rabbits' eyes will open and
they will start eating on their own at around 14 days old
Scope for Rabbit Farming and it's National Importance
Rabbit farming is another livestock activity with great scope as it is relatively easy,
rewarding and takes little space compared to other livestock activities. Rabbit farming
can also provide a very valuable additional source of income in the hilly areas where
opportunities of employment are very limited. Another important consideration is
food production cycle, which shows that rabbit need not be in competition with man
for it's food. For producing high quality woollens, blending with other fine quality
fibres is essential, which are produced in limited quantity in our country.
Small and marginal farmers in many parts of Kerala are rearing meat breeds of
rabbits. Low capital investment, lesser of space requirement, ability to utilize various
abundantly available foliage, easy handling, high prolificacy and quick returns make
rabbit rearing an attractive venture. Many farmers start the venture as a part of contract
farming also. Good quality breeding stock is not available to the farmers in sufficient
quantity. Demand for meat is very high in the district vast majority of the population
are non- Vegetarians chicken, cattle and buffalo coming from Tamil Nadu is the main
source of animal protein in the District. But it is not at all sufficient to meet the
demand. Quality and health consciousness also increases the market prospects of rabbit
meat. To produce good quality meat good quality breeding stock should be made
available. The aim of this project is to provide livelihood to two entrepreneurs and to
produce quality breeding stock of rabbits to the near by farmers.
The Advantages of Rabbit Farming.
Rabbits are highly prolific and a good female can produce 25 to 30 kits (young
ones) per year.
Rabbits are the best producers of wool on per kg body weight basis. They require
30 % less digestible energy to produce one kg of wool as compared to sheep.
Rabbit wool is 6 – 8 times warmer than the contemporary sheep wool. It can be
mixed with silk, polyester, rayon, nylon, sheep wool and other fibres to make good
quality handlooms as well as hand knitted apparels.
Rabbits consume a large amount of forage from diverse origins and hence, can be
reared on roughages with very less quantity of costly concentrate feed. Rabbits can
be fed with easily available leaves, waste vegetables, grains available in the home
Rabbits can be reared in small groups (upto 50 nos.) in the kitchen garden /
backyard of farmer's house with kitchen waste as feed. Family labour is adequate
to take care of labour requirements of the unit.
Initial investment cost is low.
Quick returns i.e. within six months after the establishment of farm.
Income generation at quarterly interval makes the repayment easy.
Apart from providing wool, rabbits also provide income from sale of kits, meat,
pelt and manure.
Growth rate in broiler rabbits is very high. They attain 2 kgs at the age of three
months
Residual feed, together with rabbit manure is highly suitable for vermin compost
which in turn provides excellent manure for fertilizing the agriculture fields.
Rabbit meat is rich in poly unsaturated fatty acids and is categorized as white
meat.
With available small investment and in a small place rabbit farming gives
more income
Rabbits eat ordinary feed and convert them into a protein rich high quality
meat. When compared to the other meats rabbit meat contain high protein (21%)
and less fat (8%). So this meat is suitable for all age groups from adults to children
Apart from meat production they can also be reared for hide and fur
Rabbit farming gives an additional income as a part time job
Technical Aspects
Farm buildings
Site for the sheds will be selected suitably at an elevated area of the land in each members own
land. Sheds will be constructed with locally available materials. Cages are made of 14. G wire
mesh with 60 cm x 60cm x 45 cm for each adult rabbit. Automatic watering and feeding will be
provided to ensure maximum comfort and easy management.
Feeding
Grasses like Napier, Congo signal and Guinea and legumes like cowpea, subabul and
stylo will be grown. Adequate fodder availability will be ensured through proper fodder
production and preservation. Kitchen and vegetable market waste will also be utilized. The
commercially available rabbit feed will also be given. At 150g/ day to all rabbits which are
kept in cages.
A Breeds available for Meat New Zealand White, Gray
Giant, Soviet Chinchilla,
White Giant
B Breeding age of animals 6-8 months
C Number of animals per unit 100+20
D Breeding and rearing cycle
1. Ratio of males to females 1:5
2. Pregnancy Period About 30 days
3. Kindling Percentage 80% i.e for every 100 does
80 will be pregnant
4. Average no. of young rabbits born per
kindle
6
5. Number of kindlings in a year 4
6. Female Rabbit (doe) bred again 7 days after weaning
7. Number of Bunnies obtained 80females ×6 Bunnies × 4
Kindligs - 1900
8. Mortality in Bunnies (30%) 570
9. Young Bunnies Available 1900-560 = 1330
10. Mortality in Adults 5- 10%
11. Average adult Body Weight 3- 3.5 Kg
12. Average live weight of Bunnies at 3
months
1 Kg
13. Cage size 360 Sq inch (adult)
14. Concentrate required 120g/day
15. Fodder requirement 30g/day
16. Meat yield Young rabbit (12- 24
weeks)- 1 Kg
Above (24 weeks) -2.5 Kg
17. Price of meat Rs 220/ Kg
18. Manure income Rs 3/- per animal
Financial Analysis
Table 2 Investment Cost
Sl No Items Cost (Rs)
1 Capital investment
A. Shed and Cages
1.Cost of construction of shed
(Two separate sheds each of 1000 ft2 to keep rabbits
collected: 2x 50000 )
100000
2.Wire cages
(cages to keep 60 rabbits in each shed)
60000
B. Daily use Article
(Buckets ,wire brushes,blow lamps,feeders ,Waterers/nestboxes etc.)
50000
C. Cost of initial stock of rabbits (100 F+ 20 M adults) @ Rs. 600 each
72000
Total capital investment (A+B+C) 282000
2 Recurring expenditure for 1 year
Cost of rabbit feed for 100+20 adult
rabbits( 120×0.15×365×Rs17/Kg)
111690
Cost of feeding for young ones (1330×0.05×60 days× Rs
17/Kg)
68340
Labour charge – ( Own Labour) NIL
Water & Electricity charge 6000
Veterinary charge & medicine 6000
Advertisement 32000
Hiring charge for marketing rabbit 60000
Packing charge 5000
Total Recurring Cost 288520
Total Investment Cost 570520
Income for the 1 year
Sale 1330 young rabbit of 12 weeks old of 2.5kg each @ Rs220/Kg =731500/-
Sale of manure 12 Kg/ adult/ year @ Rs 3/kg+
Sale of manure 1340kg /(young one’s) /year = 8340/-
Total =739840/-
Cost of production
Recurring expenditure for 1 year =288520/-
Depreciation @ 10% on fixed amount = 21000/-
Total =309520/-
Net profit for the first year
Income = 739840/-
Expenditure =334320/-
Net income =405520/-
Project Finance
Project Cost (for loan purpose) =570520/-
Margin money @ 15% = 85578/-
Loan Amount (85%) = 484942/-
Interest Rate = 12%
Repayment Period = 6 years
Grace Period = 1 year
Table 3 Repayment schedule
Year Principal Interest Total
1
2 80825.33 484942×12/100 = 58193.04 139018.37
3 80825.33 (484942-80825.33)×12/100 = 48494 129319.33
4 80825.33 (484942-2×80825.33)×12/100 = 38795 119620.33
5 80825.33 (484942-3×80825.33)×12/100=29095.92 109921.25
6 80825.33 (484942-4×80825.33)×12/100=19397 100222.33
Table 4 Cost of Production
Sl No Particulars 1st 2nd 3rd 4th 5th 6th
1 Recurring
expenditure
288520 317372 349109 384019 422420 464662
2 Depreciation
@ 10 % on
fixed amount
21000 21000 21000 21000 21000 21000
3 Interest @
12%
58193.04 48494 38795 29095.92 19397
Total 309520 396565 418603 443814 472515.9 505059
Table 5 Cash Flow Statement
Sl
No Particulars 1st year 2nd year 3rd year 4th year 5th year 6th year
Costs (Rs)
1 Capital cost 282000
2 Income 739840 776415* 812990 849565 886140 922715
3 Expenses 309520 396565 418603 443814 472515.9 505059
4 Profit 430320 379850 394387 405751 413624.1 417656
5 Depreciation 21000 21000 21000 21000 21000 21000
6 Profit after
depreciation&
before taxes
409320 358850 373387 384751 392624.1 396656
7 Tax
8 Profit after
depreciation &
taxes
409320 358850 373387 384751 392624.1 396656
9 Profit before
depreciation&
after taxes
430320 379850 394387 405751 413624.1 417656
*assuming that price of meat should increase by 5% in each year.
Capital Budgeting Techniques
1. Pay Back Period
Pay Back refers to the time period with in which the cost of investment can be covered by
revenue.
Pay Back Period = Investment ( initial)
Amount of cash flows (profit before depreciation & after tax)
Initial investment =570520
Here the annual cash flows are unequal. First year Rs 430420 is
recoverd. In the second year inflow generated is Rs 379850 and Rs 140100 of the initial
investment remains to be recoverd. Assuming that the cash flow occur evently during the
year,the time required to recover remaing out lay will be
Rs 140100/ Rs 379850×12 months = 4 months
Thus the Pay Back Period is 1 year and 4 months
2. Average Rate of Return
It considers the earning of a project during its entire economic life.
ARR = Average Income
Average Investment
Here the Average Income is computed by adding all the annual income after depreciation
and tax , and dividing them by the project’s economic life. Here the project enjoy the tax
deduction as it is a agri business unit. And average investment is the simple average of
the values of assets at the beginning and end of the useful life of the asset which, in most
of the cases ,would be zero.
Total cash inflow
( net earnings after depreciation and taxes) = 2315588
Average income = total cash flow
Projects life
= 2315588
6
= Rs 385931
Net Investment = Rs.570520
ARR = 385931
570520
= 67.64
3. Net Present value
This is one of the time adjusted group of techniques , and a sophisticated method of evaluating
profitable investment opportunities of a firm. It is scientific method of calculating present value
of cash flows,both inflow and out flow of an investment proposal,using a discount rate and
subtracting the present valueof out flows to find the Net Present Value.
NPV= ∑t=1
n
C t (1+k)t _ C0
Where C0 Initial cash out lay
K discount rate
Table 6 Computation of NPV @ 15 % discount factor
Year PV of Re 1 at 15%
(Rs)
Cash Flows PV of Cash Flows
1 0.869 430320 373948
2 0.756 379850 287166
3 0.657 394387 259112
4 0.571 405751 231683
5 0.497 413624 205571
6 0.432 417656 180427
Total 1537907
NPV = Cash Inflow- Cash Outflow
=1537907- 570520
= Rs. 967387
The Present Value of Cash Inflow (Rs. 1537907) is greater than that of Out Flow (Rs. 570520).
Thus it generates a positive Net Present Value of Rs. 967387. So the proposal adds to the wealth
of the owner, therefore it should be accepted.
4. Internal Rate of Return
It is the value of discount factor when the NPV is zero. The IRR is calculated either trial
and error method or plotting NPV against IRR.
Table 7 Cash Flow at Different Discount Rates
Year Annual Cash Flows
(EBDAT)
68 % Discount Rate 69 % Discount Rate
PVF PV (Rs) PVF PV (Rs)
1 430320 0.595 256040.4 0.591 254319.1
2 379850 0.354 134466.9 0.350 132947.5
3 394387 0.210 82821.27 0.207 81638.11
4 405751 0.125 50718.88 0.122 49501.62
5 413624 0.074 30608.18 0.072 29780.94
6 417656 0.044 18376.86 0.042 17541.55
Total 573032.5 565728.8
Internal Rate of Return,
IRR = LDR + (HDR-LDR)×(Present value at LDR- Initial Investment)
Present value at LDR- Present value at HDR
LDR= Lower Discount Rate = 68%
HDR= Higher Discount Rate = 69%
Present Value at LDR = Rs. 573032.5
Present Value at HDR = Rs. 565728.8
= 68 + (69-68) ×(573032.5-570520)
573032.5 - 565728.8
IRR = 68.34 %
Here the IRR is greater than th required rate of return
5. Profitability Index
The ratio of present value of expected future benefits discounted at a required rate of
return to an initial cash outflow is expressed as Profitability Index.
PI(Gross) = Present Value of Cash Inflows
Present value of cash out flow
= 1537907
570520
= 2.69
PI (Net) = Net Profit or PI(Gross) -1
Initial cash outlay
= 2.69 - 1
= 1.69
Here the profitability index obtained is 2.69 which is greater than 1.
Table 8 Investment Criteria
Particulars
Pay Back Period 1year 4 months
ARR 67.64%
NPV 967387
IRR 68.34%
PI (Gross) 2.69
PI (Net) 1.69
In this project proposal the Pay Back Period is 1year and 4 months.by the time the project can
pay back its initial investment. A Pay Back Period not greater than 40% of the life of the project
is desirable. Here the Pay Back Period is less than the desirable Pay Back Period. So the project
can be accepted. ARR obtained is 67.64 % which indicates that, for the investment of every
Re.1, there will be a return of Rs0.64. the NPV obtained is Rs 967387,which is a positive value.
It indicates that the Present Value of Cash Inflow is greater than Present Value of Cash Outflow.
So the project can be accepted. IRR obtained for the project is 68.34 % , which is higher than the
minimum required rate of return. In this project profitability ratio is greater than 1. From all the
above results it can be concluded that the project is a feasible one.
SENSITIVITY ANALYSIS
Sensitivity Analysis is a technique for investigating the impact of changes in the project’s
variables and the base case (most probable outcome scenario). Typically only adverse changes
are considered in sensitivity analysis. It analyses the effects of changes in key variables on the
project’s NPV and IRR, the two most widely using measures of project worth.
For the project the key variable identified for sensitivity analysis is feed cost. The idea is that
freeze all variables except the key variable(feed cost) and check how sensitivly the NPV and IRR
are changing.
Table 9 Investment Cost
Sl. No Items Total cost (Rs)
1 Capital cost 282000
2 Recurring Expenditures
Cost of rabbit feed for 100+20 adult rabbits
( 120×0.15×365×Rs18.7*/Kg)
124859
Cost of feeding for young ones (1330×0.05×60 days× Rs
18.7/Kg)
74613
Labour charge – ( Own Labour) NIL
Water & Electricity charge 6000
Veterinary charge & medicine 6000
Advertisement 32000
Hiring charge for marketing rabbit 60000
Packing charge 5000
Total Recurring Cost 308472
Total Investment Cost 590472
Investment cost
Margin money
Bank finance
Interest rate
Grace period
Repayment period
590472
88570
501902
12 %
1 year
6 years
*cost of feed increased by 10%. It means cost of feed changes from Rs 17 to Rs18.7
Table 10 Repayment Schedule
Year Principal Interest @ 12% Total (Rs)
1
2 83650 501902×12/100 = 60228 143878
3 83650 (501902-83650)×12/100 = 50190 133840
4 83650 (501902-2×83650)×12/100 = 40152 123802
5 83650 (501902-3×83650)×12/10=30114 113764
6 83650 (501902-4×83650)×12/100=20076 103726
Table 11 Cost of production
Sl
No
Particulars 1st year 2ndyear 3rdyear 4thyear 5thyear 6thyear
1 Cost of feed
(adults+young)
199472 219419 241360 265496 292045 321249
2 Other
Recurring
Expenditure
109000 110900* 121990 134189 147607 162367
3 Depreciation @
10 % on fixed
amount
21000 21000 21000 21000 21000 21000
4 Interest @ 12% 60228 50190 40152 30114 20076
Total 329472 411547 434540 460837 490766 524692
*10% increase in recurring expenditure from 2nd year onwards
Table 12 Cash Flow Statement
Sl
No Particulars 1st year 2nd year 3rd year 4th year 5th year 6th year
Costs (Rs)
1 Capital cost 282000
2 Income 739840 776415 812990 849565 886140 922715
3 Expenses 329472 411547 434540 460837 490766 524692
4 Profit 410368 364868 378450 388728 395374 398023
5 Depreciation 21000 21000 21000 21000 21000 21000
6 Profit after
depreciation&
before taxes
389368 343868 357450 367728 374374 377023
7 Tax
8 Profit after
depreciation &
taxes
389368 343868 357450 367728 374374 377023
9 Profit before
depreciation&
after taxes
410368 364868 378450 388728 395374 398023
Calculation of NPV and IRR
NPV= ∑t=1
n
C t (1+k)t _ C0
Where C0 Initial cash out lay
K discount rate
Table 13 Computation of NPV @ 15 % Discount Factor
Year PV of Re 1 at 15%
(Rs)
Cash Flows(EBDAT) PV of Cash Flows
1 0.869 410368 356609.8
2 0.756 364868 275840.2
3 0.657 378450 248641.7
4 0.571 388728 221963.7
5 0.497 395374 196500.9
6 0.432 398023 171945.9
Total 1471502
NPV = cash inflow – cash out flow
=1471502- 590472
= Rs 881030
Here the NPV obtained is lesser than the original case, so it implies that NPV is sensitive to the
changes in the cost of feed.
Internal Rate of Return
Table 14 Cash Flow at Different Assumed Discount Rates
Year Annual Cash Flows
(EBDAT)
62 % Discount Rate 63 % Discount Rate
PVF PV (Rs) PVF PV (Rs)
1 410368 0.617 253313.6 0.613 251759.5
2 364868 0.381 139029.1 0.376 137328.5
3 378450 0.235 89015.06 0.230 87386.77
4 388728 0.145 56439.84 0.141 55067.51
5 395374 0.089 35435.05 0.086 34361.34
6 398023 0.055 22020.04 0.053 21221.82
Total 595252.7 587125.4
Internal Rate of Return,
IRR = LDR + (HDR-LDR)×(Present value at LDR- Initial Investment)
Present value at LDR- Present value at HDR
LDR= Lower Discount Rate = 62%
HDR= Higher Discount Rate = 63%
Present Value at LDR = Rs. 595252.7
Present Value at HDR = Rs. 587125.4
= 62+ (63-62) ×(595252.7-590472)
595252.7 - 587125.4
IRR = 62.5 %
Here the IRR obtained is 62.5% which is lower than the IRR obtained before increasing
the cost of feed by 10%. The IRR has reduced to an extent of 5.84 % and it implies that
the IRR is sensitive to the changes in cost of feed.
The project envisages rearing of 100+20 rabbits with an objective of selling 1330 young
rabbits per year after considering the mortality. The proposed farm will be located in
pettah which is a place where there will not be any difficulty for obtaing inputs and
marketing the outputs. It shows the technical feasibility of the project. Economic analysis
is done using the tools such as Pay Back Period, Average Rate of Return, Net Present
Value, Internal Rate of Return and Profitability Index revealed that the project is
economically viable. In order to identify the risk involved in the project, the sensitivity
analysis has also been done. The variable selected for Sensitivity Analysis was cost of
feed, as the chance of variability in the cost of feed is very high in rabbit farming. It could
be inferred from the analysis that the NPV and IRR were very sensitive to change in cost
of feed.