Model Bankable Scheme on Indigenous Cow

Dairying is an important source of subsidiary income to small/marginal farmers and agricultural labourers. Dairying has become an important secondary source of income for millions of rural families and has assumed the most important role in providing employment and income generating opportunities particularly for marginal and women farmers. It is estimated that about 70 million rural households in India own livestock of one species or the other. Women constitute about 69% of workforce engaged in livestock sector. The resource-poor small and marginal farmers and landless labourers own majority of the livestock resources. Hence sustainable development of the livestock sector would lead to more inclusive development and empowerment of women.

The manure from animals provides a good source of organic matter for improving soil fertility and crop yields. The gobar gas from the dung is used as fuel for domestic purposes as also for running engines for drawing water from well.

As per the National Livestock Policy, 2013, is aimed at increasing livestock productivity and production in a sustainable manner, while protecting the environment, preserving animal bio- diversity, ensuring bio-security and farmers’ livelihood. This objective would be achieved by promotion conservation of animal bio-diversity; conservation and genetic improvement of important indigenous breeds of livestock.

Scope for Indigenous dairy farming and its Importance

The total milk production in the country for the year 2015-16 was at 155.50 million metric tones. Per capita daily milk availability in India is 337 gm as against recommended allowance of 250 gm.

The average productivity (per day milk yield) of cross bred, indigenous cows and buffaloes in India was 7.02 Kg, 2.36 Kg and 4.89 Kg (Basic Animal Husbandry Statistics, Ministry of Agriculture, GoI). Although the productivity of indigenous cattle is less as compared to cross bred animals, rearing of indigenous breeds is observed to be more profitable due to their merits viz better disease resistance, more suitability for low input management system, better survival in local environment, suitable for draught work, etc. Moreover, resource poor small and marginal farmers in India are rearing indigenous animals traditionally without much difficulty.

Financial Assistance Available from Banks/NABARD for Indigenous Cow Farming

• Loan from banks with refinance facility from NABARD is available for starting dairy farming. For obtaining bank loan, the beneficiaries should apply to the nearest branch of a commercial, co-operative or Regional Rural Bank in their area in the prescribed application form which is available in the branches of financing banks.
• For any dairy scheme with very large outlays, detailed reports will have to be prepared. The items of finance would include capital asset items such as purchase of milch animals, construction of sheds, purchase of equipments The feeding cost during the initial period of one/two months is capitalised and given as Term Loan. Facilities such as cost of land development, fencing, digging of well, commissioning of diesel engine/pumpset, electricity connections, essential servants’ quarters, godown, transport vehicle, milk processing facilities etc. can be considered for loan. Cost of land is not considered for loan.

Scheme Formulation for bank loan

• A Scheme can be prepared by a beneficiary after consulting local technical persons of State Animal Husbandry Department, DRDA, Dairy Co-operative Society / Union / Federation /commercial dairy farmers. If possible, the beneficiaries should also visit progressive dairy farms and government / military / agricultural university dairy farms in the vicinity and discuss the profitability of dairy farming. A good practical training and experience in dairy farming will be highly desirable. The dairy co-operative societies if existing in the villages would provide all supporting facilities particularly marketing of fluid milk. Nearness of dairy farm to such a society, veterinary aid centre, artificial insemination centre should be ensured. There is a good demand for milk, if the dairy farm is located near urban centre.
• The scheme should include information on land, livestock markets, availability of water, feeds, fodders, veterinary aid, breeding facilities, marketing aspects, training facilities, experience of the farmer and the type of assistance available from State Government, dairy society/union/federation.
• The scheme should also include information on the number and types of animals to be purchased, their breed, production performance, cost and other relevant input and output costs with their Based on this, the total cost of the project, margin money to be provided by the beneficiary, requirement of bank loan, estimated annual expenditure, income, profit and loss statement, repayment period, etc. can be worked out and shown in the Project report. A format developed for formulation of project report for Cattle farming is given in Annexure I.

Scrutiny of Schemes by banks

The scheme so formulated should be submitted to the nearest branch of bank. The bank’s officers can assist in preparation of the scheme for filling in the prescribed application form. The bank will then examine the scheme for its technical feasibility and economic viability.

Technical Feasibility – this would briefly include –

1. Nearness of the selected area to veterinary, breeding and milk collection centre and the financing bank’s
2. Availability of good quality animals in nearby livestock market
3. Availability of training
4. Availability of good grazing ground/lands.
5. Availability of Green/dry fodder, concentrate feed, medicines
6. Availability of veterinary aid / breeding centres and milk marketing facilities near the scheme area.

Economic Viability – this would briefly include –

1. Unit Cost
2. Input cost for feeds and fodders, veterinary aid, breeding of animals, insurance, labour and other
3. Output costs i.e. sale price of milk, manure, gunny bags, male/female calves, other miscellaneous items etc.
4. Income-expenditure statement and annual gross
5. Cash flow
6. Repayment schedule (i.e. repayment of principal loan amount and interest).

Other documents such as loan application forms, security aspects, margin money requirements etc. are also examined. A field visit to the scheme area is undertaken for conducting a techno- economic feasibility study for appraisal of the scheme.

Sanction of Bank Loan and its Disbursement

After ensuring technical feasibility and economic viability, the scheme is sanctioned by the bank. The loan is disbursed in kind in 2 to 3 stages against creation of specific assets such as construction of sheds, purchase of equipments and machinery, purchase of animals and recurring cost on purchase of feeds/fodders for the initial period of one/two months. The end use of the funds is verified and constant follow-up is done by the bank.

Lending terms – General

• Outlay

Outlay of the project depends on the local conditions, unit size and the components included in the project. Prevailing market prices may be considered to arrive at the outlay.

Margin Money

Margin depends on the category of the borrowers and range from 5 to 25%.

Interest Rate for ultimate borrower

Banks are free to decide the rates of interest within the overall guidelines. However, for working out the financial viability and bankability of the model projects we have assumed the rate of interest as 12 % p.a.

Security

Security will be as per NABARD/RBI guidelines issued from time to time.

Repayment period of loan

Repayment period depends upon the gross surplus in the scheme. The loan will be repaid in suitable monthly/quarterly instalments usually within a period of five to seven years.

Insurance

The animals and capital assets may be insured annually or on long term master policy, where ever it is applicable.

A model project with 2 Indigenous cow unit is given as Annexure II. This is indicative and the applicable input and output costs as also the parameters observed at the field level may be incorporated

Annexure I

FORMAT FOR PROJECT REPORT PREPARATION DAIRY FARM

GENERAL

1. Nature and objectives of the proposed scheme
2. Details of proposed investments
3. Specification of the project area
4. Name of the financing bank branch
5. Status of beneficiary:
   (individual/Partnership/Company/Corporation/Co-operative Society / Others)
6. Details of borrowers profile

• • Capability
  • Experience
  • Financial Soundness
  • Technical/Other special Qualifications
  • Technical/Managerial Staff and adequacy thereof

TECHNICAL ASPECTS

• Location, Land and Land Development:
• • Location details of the project
  • Total Area of land and its cost
  • Site map
  • Particulars of land development, fencing, gates,
• Civil Structures:
  Detailed cost estimates along with measurements of various civil structure

• • Sheds
  • Store room
  • Milk room
  • Quarters,
• Equipment/Plant and Machinery:
  • Chaff cutter
  • Silo pit
  • Milking machine
  • Feed grinder and mixer
  • Milking pails/milk cans
  • Biogas plant
  • Bulk coolers
  • Equipment for manufacture of products
  • Truck/van (price quotations for the above equipment’s)
• Housing:
  • Type of housing
  • Area requirement
    • Adults
    • Heifers (1-3 years)
    • Calves (less than 1 year)
• Animals:
  • Proposed species
  • Proposed breed
  • Source of purchase
  • Place of purchase
  • Distance (km.)
  • Cost of animal (Rs.)
  • Production parameters:
  • Order of lactation
  • Milk yield (ltrs. per day)
  • Lactation days
  • Dry days
  • Conception rate
  • Mortality(%)
    • Adults
    • Young stock
• Herd projection (with all assumptions):
• Feeding:
  • Source of fodder and feed – Green fodder
    • Dry fodder
    • Concentrates
  • Fodder crop rotations
    • Kharif
    • Rabi
    • Summer
  • Fodder cultivation expenses
  • Requirement and costs:

Quantity required (kg./day)

• Breeding Facilities:
  • Source:
  • Location:
  • Distance (km.):
  • Availability of semen:
  • Availability of staff:
  • Expenditure per animal/year
• Veterinary Aid:
  • Source
  • Location
  • Distance (km.)
  • Availability of labour and other staff
  • Types of facilities available
  • If own arrangements are made –
    • Employed a veterinary doctor/stockman/consultant
    • Periodicity of visit
    • Amount paid/visit (Rs.)
    • Expenditure per animal per year (Rs.)
• Electricity:
  • Source
  • Approval from SEB
  • Connected load
  • Problems of power failure
  • Arrangements for generator
• Water:
  • Source
  • Quality of water
  • Availability of sufficient quantity for drinking, cleaning and fodder production
  • If investment has to be made, type of structure, design and cost
• Marketing of milk:
  • Source of sales
  • Place of disposal
  • Distance (km.)
  • Price realised – (Rs. per liter of milk)
  • Basis of payment
  • Periodicity of payment
• Marketing of other products:
  • Animal
    • age
    • place of sale
    • price expected
• Manure – Qty./animal
  • Price/unit (Rs.)
• Empty gunny bags
  • Number
  • Cost/bag (Rs.)
• Beneficiary’s experience:
• Comments on technical feasibility:
• Government restrictions, if any:

FINANCIAL ASPECTS

• Project Cost
• Down payment/margin/subsidy (Indicate source & extent of subsidy):
• Financial viability (comment on the cash flow projection on a farm model/unit and enclose the)

Particulars:

• • Internal Rate of Return (IRR):
  • Benefit Cost Ratio (BCR):
  • Net Present Worth (NPW):
• Financial position of the borrowers (to be furnished in case of corporate bodies/partnership firms)
  • Profitability Ratio:
    • GP Ratio
    • NP Ratio
• Debt Equity Ratio :
• Whether Income Tax & other tax obligations are paid upto date:
• Whether audit is upto date (enclose copies of audited financial statements for the last three years)
• Lending Terms:
• Rate of Interest:
• Grace Period:
• Repayment Period:
• Nature of Security:
• Availability of Government guarantee wherever necessary:

INFRASTRUCTURAL FACILITIES

• Availability of technical staff with bank/implementing authority for monitoring
• Details of-
  • technical guidance
  • training facilities
  • support /extension support
• Tie-up arrangements with marketing agencies for loan recovery
• Insurance –
  • Type of policy
  • Periodicity
  • Rate of premium
• Whether any subsidy is available, if so amount per unit
• Arrangements for supply of green fodder and cattle feed

Annexure II

Model Unit Cost and Economics of a 2 Indigenous cow unit

• Freshly calved animals in 2^nd or 3^rd lactation are purchased in two batches at an interval of 4 to 6 months.
• Cost of rearing calves not considered as it will be nullified by their sale value or retention value. Green fodder grown on field bunds is considered for feeding of animals.
• Value of manure not taken into account

Feeding Schedule Per Day

 Lactation Chart

 Economics (Amount Rs)

Calculation of BCR and IRR (Amount Rs)

*Salvage value of animals and residual value of other capital assets not taken into account

Repayment schedule (Amount Rs)