PROJECT PROPOSAL

Unico Seedtech Company

A Research & Development VentureFor Hybrid Seed Production

By

Muhammad Boota

CONTENTS

Sr. Chapter Page

1 Introduction 3

2 Benefits of Hybrid Seed Production 4

3 Present Status of Hybrid Seed Production in Pakistan 7

4 Available Resources for Execution of the Project 8

5 Technical Strength of the Company 9

6 Company General Information 10

7 Research and Development Targets 11

8 Details of Executive and Technical Staff 13

List of Tables

No. Subject Page

1 Potential Seed Market of Pakistan 5

2 Import of Seeds (2009-10) 6

3 Hybrid Seed Production Targets 12

4 Cost of Hybrid Seed Production & Sale Receipts 12

5 Establishment Cost 14

6 Summary of Five Year Expenses 15

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7 Summary of Five Year Receipts 15

8 Five Year Phasing of Profit-Loss 15INTRODUCTION

Agriculture is still playing key role in economy of Pakistan; contributing 21.5% to GDP, ensuring jobs to 44% labor force, providing raw material for agro-based industries and potential source of boosting exports. Food security and rural poverty alleviation directly depend on increasing productivity in agricultural sector especially in the world scenario of upward trend in commodity price of cereals, sugar and edible oil.

Seeds and planting materials are carriers of most advance technologies and preset the potential of crop production. Per acre yield prospective of most crops show stagnation over the past decade and major intervention is needed to significantly improve crop productivity and overcome yield losses due to insect pests, diseases and due to abrupt heat waves.

Biotechnology and Hybrid Seed technology coupled with water-use efficiency is breaking the barriers of yield potential and yield losses. As is the world trend, farmers in Pakistan are also opting for use of biotech and hybrid seeds. However so far only few hybrids have been developed and formally released in Pakistan and that too are not competitive whereas no indigenously-developed biotechnology trait for crops has been developed or commercialized.

Farmers have to depend on imported hybrids and the import bill of seeds is increasing year by year and crossed Rs. 5.7 billion in the year 2009-10. Apart from high cost, the imported hybrids are not well adapted to local climate and sometimes result in crop failure. Therefore it is appropriate to encourage local seed industry for investment in breeding programs for local hybrid seed production with or without biotech traits.

The benefits of using hybrid seeds and import of hybrid and other seeds are detailed in coming pages to have a bird’s eye view of present odd situation of seed insecurity. Present project proposal aims at launching an efficient research and development program for

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evolving well adapted elite hybrids, production technologies and hybrid seed production of various crops with or without biotechnology traits.

Benefits of Hybrid Seed Production

1. Traditional breeding takes long time in combining beneficial traits available in two different varieties whereas hybrids instantly integrate such traits in one go, saving many years which are required for development of stable open-pollinated varieties.

2. High yields, good product quality, insect resistance, herbicide tolerance, disease resistance, heat and drought tolerance traits can be integrated through hybrid seed production if already available in different lines or varieties.

3. Studies indicate increase in yield from 20-100% due to hybrid vigor, depending upon genetic distance.

4. Hybrid Bt-crops with disease-resistance and herbicide tolerance traits will reduce cost of insecticides and weed-control to the tune of 50% and boost farmers’ yield and income by 20-50%.

5. Hybrid seeds provide inbuilt technology protection to the seed companies regardless of presence or absence of legal plant breeder’s rights.

6. Hybrid seeds will ensure uniform product quality for the benefit of processing and manufacturing industry.

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7. National goal of increasing yields of various crops to meet food, feed and industry needs can be realized through extensive use of hybrid seeds.

Table-1: Potential Seed Market of Pakistan(2009-10)

Crop SeedRequirement

(000 MT)

Seedavailability

PricePer kg(Rs.)

DomesticMarket

(Million Rs.)Wheat (OP) 1,100.0 22% 40 44,000.0Cotton (OP)Cotton(Bt-hybrid)

40.0 48% 100

1,000

4,000.0

40,000.0Paddy (Fine) 18.0 75% 35 630.0Paddy (Course)Paddy (Hybrid)

22.0 75% 60300

1,320.06,600.0

Maize (Hybrid) 30.0 37% 450 13,500.0Gram, Lentil,Mung, Mash,

50.0 2% 50 2,500.0

Sunflower(Hybrid)

3.0 52% 450 1,350.0

Canola (OP)Canola (Hybrid)Canola (HR-Hybrid)

0.7 75300

500

52.5210.0

350.0Rape/Mustard 1.3 50 65.0Potato 3,10.0 5% 60 18,600.0Vegetables(Hybrid)

5.5 49% 2,000.0

Summer Fodders(Hybrid)

45.0 300 13,500.0

Winter Fodders 28.0 100 2,800.0Sugarcane 4,120.0 5 20,600.0Fruit Plant Nurseries 300.0Vegetable CropPlug Nurseries 700.0

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Flower Seeds 100.0Flower Nurseries 500.0Others 200.0TOTAL 168,295.0

= 1,980 m $Acronyms: OP= Open-pollinated, HR= Herbicide-resistant

Table-2: IMPORT OF SEEDS(2009-10)

Sr. Crop Quantity (MT) Value (Million Rs.)

1 Alfalfa 526.800 72.9372 Barseem 484.000 30.0123 Grass 0.310 0.2134 Lucern 0.000 0.0005 Millet 1,581.055 126.7166 Sorghum 9,518.850 500.213

Fodders 12,111.015 730.091

7 Canola 57.025 28.0698 Sunflower 2,160.745 957.8809 Jatropha 1.000 0.132

Oilseeds 2,218.770 986.081

10 Corn 6,933.469 1,801.04111 Paddy 2,975.787 603.024

Cereals 9,909.256 2,404.065

12 Potato 7,535.900 544.649

All Crops 31,774.941 4,664.886

13 Vegetables 3,291.117 1,068.670

G. Total 35,066.058 5,733.556

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Present Status of Hybrid Seed Production in Pakistan

National Agriculture Research Center (NARC) of PARC, Ayub Agriculture Research Institute (AARI), Agriculture Research Institute, Tarnab and a private seed company (Al-seemi) previously attempted to develop elite hybrids of sunflower, maize and cotton but none could survive in market competition with imported hybrids due to various reasons.

Recently a renewed thrust has been observed at various research organizations to evolve competitive hybrids of various crops responding to high market demand and in most cases supported by the development projects. AARI has released one sunflower hybrid and one tomato hybrid, ARI, Tarnab has commercialized one maize hybrid and a private seed company has introduced one heat-tolerant maize hybrid. Now PARC is attempting to introduce Bt-cotton hybrids and some private seed companies are planning for hybrid rice seed in collaboration with Chinese counterparts. A MinFA project on facilitating vegetable seed production is in process of introducing few tomato hybrids.

However due to lack of legal protection of intellectual property rights in respect of breeding products – varieties and hybrids – the private sector is reluctant to invest in breeding programs in a big way. The other bottlenecks comprise slow progress in respect of integration of regional markets to broaden seed market and in respect of full operation of Plant-Treaty of FAO to facilitate access of private sector to elite local and world genetic resources which are badly needed for development of new competitive hybrids.

Despite all odds and difficulties, this project proposal envisages opening of novel avenues for development of high-value seed technologies, elite hybrids of various crops and a coherent hybrid

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seed production program through mobilizing professional talent pool in the market and enhanced private sector investment in development and dissemination of value-added seed products.

Availability of Resources for Execution of the Project

1. Technical Professionals : Experienced as well as young talented technical professionals are available in the market including plant breeders, plant biotechnologists, plant pathologists, seed technologists and other professionals which can be organized into a rational team.

2. Genetic Resources : Although Plant-Treaty of FAO is not fully operational, the vast genetic diversity in various crops is available in the country with public sector organizations, further enriched by seed imports from all corners of the world. Genetic resources from international centers will be collected under Material Transfer Agreement to incorporate desirable traits in the new intended hybrids.

3. Machinery & Equipment : All needed equipments and machinery related with lab work and seed processing etc are available in the market.

4. Size of Seed Market : Potential seed market in Pakistan is sizeable (detailed on page-5) and hopefully the Government will focus on integration of local market with regional seed markets and world seed market to sustain capital-intensive hybrid seed industry.

5. Farm Land : Research and development farms will be established at one or more places under long-term lease basis to ensure continuity of creative activities.

6. Financial Resources : Initial capital resources will be pooled by the founding partners of the company however outside investors will be invited, on reasonable business terms, to meet the high R&D cost. At commercial production stage Financial

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Institutions will be approached to handle short term liquidity circle.

7. Marketing Arrangements : Marketing of hybrid seed products will be preferably entrusted to well repute seed marketing companies.

Technical Strength of the Company

1. Founder partners of the company are seasoned and experienced professionals in various disciplines of breeding programs and hybrid seed production.

2. Technical team will be organized and strengthened to meet the challenging tasks of value-added seed industry through attracting available talent in the country.

3. Services of public sector technical facilities will be engaged under standard business agreements as will be required at different stages of the development programs.

4. Outsourcing of advance technologies will be worked out through joint ventures with international research centers and reputed foreign companies.

5. The company has managed to acquire proficiencies in following aspects;

a) Intellectual property regimes relevant to development and commercialization of elite hybrids and biotechnology traits.

b) Reverse breeding techniques for isolation of male-sterility traits, restorer systems, biotechnology traits, lines with best general combining ability and parent lines.

c) Fast track breeding systems based on multi generation per year under managed environment systems and added with rapid multiplication techniques.

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d) Diverse hybrid seed production technologies including use of chemical hybridizing agents, fruiting enhancer agents, transplanting techniques, tissue culture and other technologies.

e) Seed processing, packaging and seed storage systems for carry-over seed stocks.

Company General Information

1. Name of Company: Unico Seedtech Company

2. Brand Name: Unico Seeds

3. Head Office: Islamabad

4. Branch Offices: Hyderabad, Multan and Peshawar. Research Farm at Pind Dadan Khan.

5. Research Farms: Pind Dadan Khan

6. Contact addresses: H # 193, Margala Town Phase II, Islamabad. Cell # 03003003405 Email: msarwar80@hotmail.com

7. Date of commencement of the project: July 2011

8. Gestation period: 6 months

Company Pioneers

1. Dr. Akhlaq Hussain: D. Sc. (Plant Breeding & Genetics) Ex-Director General FSC&RD

2. Muhammad Boota: M. Sc. (Plant Breeding & Genetics) Ex-Director General FSC&RD

3. Aneela Sadaf: B. S. (Biotechnology & Genetics) Institute of Biotechnology & Genetics Sindh University, Jamshoro

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Note: After approval of the project proposal by the working group of MinFA, investors will be inducted in the project and registration of the company and brand name will be applied according to the terms of the capital investment.

Research & Development Targets

First Year

1. Establishment of head office2. Establishment of research farm with greenhouse3. Purchase of office, farm and greenhouse equipments4. Recruitment of professional and supporting staff5. Collection of elite germplasm of cotton and tomato6. Development of 30-50 hybrids of cotton and tomato each7. Preliminary evaluation of hybrids to select best performer8. Initial seed increase

Second Year

1. Establishment of branch offices2. Establishment of seed testing, tissue culture and biochemical labs3. Purchase of seed processing machinery4. Further recruitment of staff5. Collection of germplasm of cotton, tomato, sunflower and canola6. Field evaluation of cotton and tomato hybrids developed in Y17. Development of 30-50 hybrids of cotton and tomato each8. Preliminary evaluation of hybrids to select best performer9. Initial seed increase of selected cotton and tomato hybrids10. Breeding for development of inbred lines of sunflower and

canola

Third Year

1. Collection of germplasm of cotton, tomato, sunflower and canola2. Field evaluation of cotton and tomato hybrids developed in Y13. Development of 30-50 hybrids of cotton and tomato each4. Preliminary evaluation of hybrids to select best performer

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5. Initial seed increase of selected cotton and tomato hybrids6. Breeding for development of inbred lines of sunflower and canola7. Development of 30-50 hybrids of sunflower and canola each8. Preliminary evaluation of hybrids to select best performer9. Initial seed increase of selected sunflower and canola hybrids

Table-3: Hybrid Seed Production Targets

Sr. Crop 1st

Year 2nd

Year 3rd

Year4th

Year5th

Year

1 Cotton -R&D

-R&D

1.0MT

100MT

1,000MT

2 Tomato -R&D

-R&D

10kg

200kg

2,000kg

3 Sunflower

-R&D

-R&D

-R&D

1.0MT

100MT

4 Canola -R&D

-R&D

-R&D

1.0MT

100MT

Land Requirement(Acres)

5 5 5 110 1,100

Note: The project pioneers own 110 acres land for initial work up to 4th year; whereas in 5th year further 1,000 acres will be managed through marketing company for bulk hybrid seed production.

Table-4: Cost of Hybrid Seed Production & Sale Receipts

Sr. Crop 3rd Year

M. Rs.

4th Year

M. Rs.

5th Year

M. Rs.Cost Sale Cost Sale Cost Sale

1 Cotton 0.2 1 20 100 200 1,000

2 Tomato 0.4 1 8 20 80 200

3 Sunflower

- - 0.2 0.4 20 40

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4 Canola - - 0.2 0.3 15 30

Total 0.6 2 28.4 120.7 315 1,270

Detail of Executive & Technical Staff

1. Managing Director – 1

2. Director Breeding Program - 1

3. Director Production - 1

4. Director Processing - 1

5. Director Marketing – 1

6. Director Finance and Administration - 1

7. Crop Breeder – 4

8. Plant Pathologist – 1

9. Seed Technologist – 1

10. Biotechnologist – 2

11. Agronomist – 1

Supporting Staff

12. Seed Processing Managers – 3

13. Field Managers – 4

14. Chemical Managers – 2

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15. Accountants – 2

16. Assistants – 5

17. Drivers – 10

18. Others - 20Five Year Phasing of Expenses

Table-5: Establishment Cost(Figures in ‘000’ Rs.)

Sr. Post No. Y1 Y2 Y3 Y4 Y5 Total

1 Managing Director

1 2,400 2,400 2,400 2,400 2,400 12,000

2 Director Breeding

1 1,200 1,200 1,200 1,200 1,200 6,000

3 Director Production

1 - - - 1,200 1,200 2,400

4 Director Processing

1 - - - 1,200 1,200 2,400

5 Director Marketing

1 - - 1,200 1,200 1,200 3,600

6 Director F&A 1 1,200 1,200 1,200 1,200 1,200 6,0007 Crop Breeder 4 2,400 2,400 2,400 2,400 2,400 12,0008 Plant

Pathologist1 600 600 600 600 600 3,000

9 Seed Technologist

1 600 600 600 600 600 3,000

10 Biotechnologist 2 1,200 1,200 1,200 1,200 1,200 6,00011 Agronomist 1 600 600 600 600 600 3,00012 Seed

ProcessingManager

3 240 240 240 720 720 2,160

13 Field Manager 4 240 240 240 960 960 2,64014 Chemical

Manager2 240 240 240 480 480 1,680

15 Accountant 2 240 240 240 480 480 1,68016 Assistants 5 360 360 360 900 900 2,88017 Driver 5 240 240 240 600 600 1,92018 Others 20 420 420 420 1,680 1,680 4,620

Total 56 12,180 12,180 13,380 19,620 19,620 76,980

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Table-6: Summary of Five Year Expenses(Figures in ‘000’ Rs.)

Sr. Item Y1 Y2 Y3 Y4 Y5 Total

1 Establishment 12,180 12,180 13,380 19,620 19,620 76,9802 Civil Works 1,000 1,000 3,000 - - 5,0003 Machinery &

Vehicles2,500 2,500 6,000 - - 11,000

4 Operating Cost 500 500 1,000 2,000 2,000 6,0005 Seed Production

Cost - - 600 28,400 315,000 344,000

Total Capital Cost 17,180 15,180 23,980 50,020 336,620 442,9806 Interest @ 15% 2,577 2,577 3,597 7,503 50,493 66,447

Grand Total 17,757 17,757 27,577 57,523 387,113 509,427

Table-7: Summary of Five Year Receipts

(Figures in ‘000’ Rs.)Sr. Item Y1 Y2 Y3 Y4 Y5 Total

1 Receipts from Sale of Hybrid Seed

- - 2,000 120,700 1,270,000 1,392,700

2 Royalty on Hybrids Provided to others

- - - 5,000 5,000 10,000

3 Technical ServicesProvided to others

- - - 2,000 5,000 7,000

4 Other Receipts (other farm products etc)

- - - 1,000 2,000 3,000

Grand Total - - 2,000 128,700 1,282,000 1,412,700

Table-8: Five Year Phasing of Profit-Loss

(Figures in ‘000’ Rs.)Sr. Item Y1 Y2 Y3 Y4 Y5 Total

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1 Total Receipts

- - 2,000 128,700 1,282,000 1,412,700

2 Total Expenses

17,757 17,757 27,577 57,523 387,113 509,427

Profit/Loss (-)17,757

(-)17,757

(-)25,577

(+)71,177

(+)894,887

(+)903,273

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