• Assumptions
• Phases of Rebuilding and Funding Requirements
• Summary of Funding Requirement

Assumptions

1. Licenses for pig farming will be granted in States where suitable parcels of land are available and in areas close to demand.
2. Freehold land for pig farming purpose be acquired for this purpose.
3. Reorganization and rebuilding of pre-crisis herd size will be done in phases as disease control situation stabilizes and demand rebounds.
4. Land Cost and The distribution of usage:
• A fair land cost for a PFA in a state is estimated to be between RM18, 000 to RM75, 000 per hectare. For PFA to be viable, we have to seek land that cost within this range. IFSB owns the land.
• The common services areas including the feed mill and the waste treatment system. These common services and facilities will be managed by IFSB.
5. Cost of  two types of farms:
1. Integrated farms:
• Cost of breeder averaging RM770 each(males and females)and
• The cost to feed the pigs – averaging around RM220 per porker produced.
2. Specialized farms:
• If a contract farmer were to “rear the weaners up to marketing”, the cost of feeds alone will be around RM170/- each – here another specialized farmer produces the “weaners” to be supplied to the contract farmer.
6. Rental  cost of the farm facilities including land and dwelling for the farmers. The cost for infrastructures and facilities vary from anything RM600 to as high as RM1, 000 per SPP. (or RM6,000 to RM10,000 per sow).  There are two major factors to explain this: -
1. The type and quality of the barns and pens facilities can vary from probably RM400 to RM700 per SPP.
2. The cost of the land with infrastructure and the waste management system can also vary from RM200 to as high as RM350 per SPP.
• The cost worked out (Table 3) comes to around RM797 per SPP without on site abattoir, and RM852 per SPP with on site abattoir
7. Price of Porker:
1. In 1998, the average ex-farm price per kg of a 90 kg live pig was RM4.08 or RM360 per porker.
2. Note: 1998 was a good year for farmers really.  After this episode, when consumption picks up, the price could be good, as there could be some shortage.
8. Farming Density and Cost of waste management systems:
1. Land based waste management system 600 pigs per hectare.  Land based system could cost around RM50 to RM60 per SPP only – Excluding land cost.
2. High-tech waste system, 1000 pigs per hectare.  A“high-tech” system could cost about RM150 to RM200 per SPP.

Phases of Rebuilding and Funding Requirements

Phase I:
 

1.	Upgrading of SPP insitu (Table I):	RM 60 million
2.	IFSB resettling sub standard farms	RM 320 million

(as per Sunflower Project Proposal 1.0 with revised figures for on site abattoirs)

Phase 1 will have a SPP of 1.5 million with an annual production of 2.3 million porkers.

Phase II:

1. When the Nipah virus situation stabilizes, an additional annual production of 500,000 to bring domestic market production up to 2.7 million, needs another SPP of 323,000. Additional capital of RM 274 million needed. Using same capital to loan ratio of 1 to 1, additional RM137 million required.
2. When export market reopens, to produce 1 million porkers for overseas demand, a SPP of 650,000 will be needed. Additional capital of RM 553 million. Using same capital to loan ratio of 1 to 1, additional RM 277 million required.

Summary of Funding Requirement

1.  Financial Assistance for Disease Control

A.	Pay for the shortfall of RM150 for the 900,000 animals culled	135 million
B.	Pay for the shortfall of RM150 for 300,000 animals (20% of the remaining herds of 1.5 m)** ** Actual to be determined when Screening exercise completed.	45 million
	This part of the loan to be repaid by collection of levy by NSPC	180 million

2.  Soft loan to help substandard farms upgrade insitu: 60 million

3.  Soft loan to help substandard farms relocate: 160 million

(Half of this capital to be raised from farmers from the retained financial assistance (120 million) and new capital (RM40 m). Affected farmers have a chance to become shareholders in one IFSB. They need NOT become contract farmers. They can sell their shares to farmers who want to farm. Detail rules to be drawn up in part two of the Sunflower Project).

4.  Soft loan to help rebuild herd for domestic demand RM137 million, with capital of RM137 million raised from the private sector or other investors.

5. Soft loan to help rebuild herd for export market RM277 million, with capital of  RM277 raised from private investors.

Notes: No 2-5: soft loans are to be repaid from the profits of IFSBs.   It can be expected that such funding requirement will be needed in stages over a 3-5 years of rebuilding period.
 

Table 1:  Estimated Cost For “in-situ” Additional Facilities to Carry Out Waste Management (Refer: Executive Summary of The Sunflower Project and incorporating input from DVS)
 

State	Estimated SPP	Estimated Cost @ RM100/SPP
Penang	53,412	5.34 million
*Perak	100,000	10.00 million
Selangor	200,000	20.00 million
Melaka	102,000	10.20 million
*Johore	137,204	13.70 million
Total	592,616	59.24 million

*Farms in Perak,Johore and Penang are not mentioned in the Sunflower Project. Udpated numbers from DVS's recent nationwide screening exercise.

Therfore, if the contract “porker”farmer produces 500 porkers per batch (five months cycle), his operating capital is around RM125,000. Individual farmers can lease their own collateral to secure this working capital or take out a short-term loan/soft loan for this amount.

Notes: All figures and interest rate computation are estimates only. They need to be further verified as we developed Part II of this project.

  

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