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superseded the technological boundaries of today.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.

Aggressively driving towards a culture of doing away with the consuming

of powdered milk & inject the nutritional values of Fresh Milk to the
minds of people and making it available, thus resulting in the
encouragement of a cottage industry, booming for self sustainability.

Diversify the Farm Plan prioritizing to Livestock and coupled to

Agriculture utilizing it’s resources converting to Food Processing and Bio
Fuel. A revitalized Agri Business Sector could be a key factor for life style
improvements.
PROPOSED PROJECT

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.

Following farms will be considered under this project

1. Polonnaruwa Cluster ( Welikanda, Polonnnaruwa,Kandakaduwa)

2. Puttalam /Anuradhapura Cluster ( Kottukachchiya, Oyamaduwa and

Parasangaswewa)

3. Kandy Cluster ( Haragama, Mahaberiyatanne)

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

The broader action plan to develop this cluster is as follows.

1. Growing of pasture in an area of 500 ha in the cluster. This should be facilitated

with ready supply of water because water constraints have 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.
2. Commencing a dairy unit starting with a pedigreed stock of 500 neat cattle and
250 buffalos.
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
eastern province. This will be helpful to improve the income and livelihood of the
poor farmers living in the eastern province and this goes in line with the objectives
of the Nagenhira Navodaya Development Plans
4. Introducing an electric fence around the boundary to ensure safety of the animals
and the properties.
5. Cultivate maize for animal feed
6. Growing of the perennial crops such as coconut, cashew as they are ideal for the
conditions prevailing in the area. Additionally, Ipil Ipil (Leuceana leucocephala)
and Gliricidia could be planted as hedges or at recommended spacing to get large
amount of bio mass which could be used for formulation of feed for livestock.
Further Soya Bean and Ginger also could be grown in this cluster and after oil
extraction; the residue can be used as an animal feed.
7. Growing of intercrops e. g. grapes and banana in between perennial crops..
8. Growing of teak in the periphery of the land to obtain long term benefits i.e.
timber.
9. Introduction of Greenhouse to cultivate bell pepper, and other cash crops for
export market
10. Rearing of inland fish in pond and lakes of the farms to generate additional
income and to ensure protein food security in the region
11. Introduce .full automatic milking machines to maximize the yield, necessary
storing facilities to minimize the wastage and assure hygienic conditions
12. The target will be to increase the milk production up to 6000 lts per day and to
implement state of the art packing and other products plant
13. As a socially responsible entity it is proposed to enhance worker living conditions
in order to maximize worker productivity and thereby enhance profitability

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

Presently Kottukachchiya, Oyamaduwa and Parsangaswewa 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 for this cluster is proposed as follows.

1. Development of diary with crossbreed animals of 1000 neat cattle

2. Development of pasture lands
3. To introduce poultry (50,000 birds) as layers and hatchery with a capacity of
20,000 eggs
4. Cultivate maize and soya been as poultry feed ingredients and introduce a feed
mill with a capacity of 10 tons per day
5. Introducing an electric fence around the boundary
6. Growing of the perennial crops such as coconut, cashew as they are ideal for the
conditions prevailing in the area. Additionally, Ipil Ipil (Leuceana leucocephala)
and Gliricidia could be planted as hedges or at recommended spacing to get large
amount of bio mass which could be used for formulation of feed for livestock
7. Introduce Goats 250 nos Jamnapari Goats
8. Growing of teak in the periphery of the land for obtaining long term benefits i.e.
timber
9. Introducing the Greenhouse to cultivate cash crops for export market
10. Rearing of inland fish in pond and lakes of the farms to generate additional
income and to ensure protein food security in the region
11. Introduce .full automatic milking machines to maximize the yield, necessary
storing facilities to minimize the wastage and assure hygienic conditions
12. Our target to increase the milk production up to 5000 lts per day and to implement
state of the art packing and other products plant
13. 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 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.

The following proposals are made in respect of this farm.

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.

2. The funding requirements of the operations as well as the capital

development will be the responsibility of the NLDB. However the managing
agent will assist the NLDB in raising finances.

3. The status co of employees of the NLDB attached to the respective farms

will remain unchanged. The employees that are to be brought in by the
managing agent in mostly at the higher managerial levels including the
“Chief Executive Officer” will be seconded to the intended operation and
their costs will be charge against the collective revenue of the proposed
clusters.

4. The Managing Agent will be entitled to a profit share of a minimum 50%

after charging all expenses.

Option two

1. Same as option one

2. The funding requirements will be made if necessary by the private

sector partner for both operational and capital development. This will be
brought in the form preferably of “secured debentures” to be issued by the
NLDB which will carry a coupon rate of AWDR plus 5%, redeemable
within a period of five years from the issue. The debentures to be issued
shall have floating charges over the immovable properties of the clusters
concerned if the value of those properties is adequate to cover the value of
the debentures.

3. Same as option one

4. The Managing Agent will be entitled to a profit share not less than 75% after

charging all expenses.

Option three

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.

4. A management fee of 3% of revenue is applicable for the private sector

partner under this option. The relevant management personnel of the private
sector partner will be seconded to the new entity.
5. Both the NLDB and the private sector partner will be entitled to dividends
declared in proportion to their respective holdings.

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.