Development of a Dairy and Livestock Complex in the Village of Purly, Tonshaevsky District, Nizhny Novgorod Region

At the moment, large farm and agricultural enterprises are main producers of dairy and meat products. However, the modern tendency speaks about the ability of newly created or significantly modernized enterprises and businesses, which are initially built on the basis of modern infrastructure and integration of the latest technologies, to develop effectively and dynamically, demonstrating high performance. It is creation of modern agricultural businesses that many target state and regional programs aim at; therefore, such companies and enterprises, having a sound business plan with justification of project implementation effectiveness, almost always can attract significant volumes of investments.

Experience of Intesco Group in development of financial models for agricultural businesses

Intesco Research Group Company, thanks to its extensive knowledge and many-year experience of successful work, has developed numerous business plans and financial models, the content of which was creation of modern agricultural production businesses. The given direction of our activity enjoys the greatest demand among business representatives from different regions of the country. A good example in this field is the experience of our cooperation with an initiator company, which has recently used the services of our analysts on developing a business plan for creation of a new modern dairy and livestock business for 7200 forage-fed cows, with the corresponding infrastructure in the village of Purly, Tonshaevsky district, Nizhny Novgorod region. In addition to analysis of the business development task, the aims of the business plan were developing a project implementation program and cost-efficiency justification of creation and organization of business activities.

Dairy and Livestock Complex Structure

According to the program, the dairy and livestock complex under development had to include the following facilities, built during implementation of the project:

• six farms, each for 1200 forage-fed cows, 950 of them are milking cows;
• a slaughter house (refrigerated slaughter house) for slaughtering and primary processing of culled animals, with the annual culling rate of up to 25%;
• a feeding station for young milking cows;
• modern equipment;
• machine and tractor fleet.

The basic revenue items were meat and milk sales at the initial stage and sales of heifers in 4 years since project initiation.

Investment Structure

Taking into account the scale of the project, its implementation required attracting significant investment in the volume of 2 789 601 000 rubles, with the following distribution:

Project Effectiveness Rates

Within the framework of calculating project effectiveness rates, Intesco Research Group analysts obtained the following values supporting project efficiency and profitability:

• net income – 16 155 635 000 rubles;
• net present value – 4 407 037 000 rubles;
• simple/discounted pay-back period – 6.15/7.23 years;
• profitability index– 3.17 units;
• internal rate of return – 32%;
• breakeven point – 41% or 129 314 000 rubles per quarter.

The specified values confirm project investment profitability, as well as return of investment based on the selected discount rate.

Aspects Having Impact on Dairy and Livestock Business Project Effectiveness

The following aspects influenced the conclusions about project implementation effectiveness:

• operational diversity of the business aiming at not only keeping heavy milking cows and milk production, but at their own cattle breeding, meat (beef) production and processing, as well as grain growing for feeding needs;
• use of modern equipment and infrastructure;
• organization of a well-balanced cattle diet with various mineral additives and the correct ratio of coarse and succulent food, which ensures a high yield level;
• even milk production throughout the year with introduction of the round-the-year free-stall housing system with single-type feeding variant. 

According to calculations, the average amount received should be: 17 thousand rubles per ton of milk, 180 thousand rubles per ton of meat, 200 thousand rubles per ton of heifer live weight.
 
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