MODEL BANKABLE SCHEME ON INDIGENOUS COW

Project on Indigenous Cow Rearing

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 biodiversity, 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.

 

 

2. 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.

 

3. Financial Assistance Available from
   Banks/NABARD for Indigenous Cow
   Farming.

3.1. 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.

3.2. 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 etc. 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.

 

 

4. Scheme Formulation for bank loan.

4.1 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 /

 

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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.

4.2 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.

4.3 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 description. 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.

 

5. 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.

 

(A) Technical Feasibility – this would briefly include –

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

 

(B) Economic Viability – this would briefly include –

 

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1. Unit Cost
2. Input cost for feeds and fodders, veterinary aid, breeding of animals, insurance, labour and other overheads.
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 surplus.
5. Cash flow analysis.
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 technoeconomic feasibility study for appraisal of the scheme.

 

6. 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.

 

7. Lending terms – General

7.1 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.

 

7.2 Margin Money:

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

 

7.3 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.

7.4 Security

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

 

7.5 Repayment period of loan

 

 

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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.

 

7.6 Insurance

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

 

7.7 Training

For training entrepreneur may contact NDRI, Karnal , Email id – ndribnq@kar.nic.in Phone No. +91-80-225715399, 25711119

7.8 Project Preparation

Preparation of Project entrepreneur may contact CEO, Nabcons, Rajendra Place, New Delhi. Contact No. 011-41539355

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

1. GENERAL
2. i) Nature and objectives of the proposed scheme ii) Details of proposed investments

iii) Specification of the project area

 

1. iv) Name of the financing bank branch

 

 

 

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1. v) Status of beneficiary:

(individual/Partnership/Company/Corporation/Co-operative Society / Others)

1. vi) Details of borrowers profile

(a) Capability

(b) Experience

(c) Financial Soundness

(d) Technical/Other special Qualifications

(e) Technical/Managerial Staff and adequacy thereof

2. TECHNICAL ASPECTS :
3. a) Location, Land and Land Development :
4. i) Location details of the project
5. ii) Total Area of land and its cost iii) Site map
6. iv) Particulars of land development, fencing, gates, etc.
7. b) Civil Structures :

Detailed cost estimates along with measurements of various civil structure

– Sheds

– Store room

– Milk room

– Quarters, etc.

1. c) Equipment/Plant and Machinery :
2. i) Chaff cutter
3. ii) Silo pit

iii) Milking machine

1. iv) Feed grinder and mixer
2. v) Milking pails/milk cans vi) Biogas plant

vii) Bulk coolers

viii)Equipment for manufacture of products

1. ix) Truck/van (price quotations for the above equipments)

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1. d) Housing :
2. i) Type of housing
   ii) Area requirement

– Adults

– Heifers (1-3 years)

– Calves (less than 1 year)

1. e) Animals :
2. i) Proposed species
   ii) Proposed breed
   iii) Source of purchase
   iv) Place of purchase
3. v) Distance (km.)
4. vi) Cost of animal (Rs.)
5. f) Production parameters :
6. i) Order of lactation
7. ii) Milk yield (ltrs. per day) iii) Lactation days
8. iv) Dry days
9. v) Conception rate
   vi) Mortality(%)

– Adults

– Young stock

1. g) Herd projection (with all assumptions) :
2. h) Feeding :
3. i) Source of fodder and feed – Green fodder

– Dry fodder

– Concentrates

1. ii) Fodder crop rotations

– Kharif

– Rabi

 

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– Summer

iii) Fodder cultivation expenses
iv) Requirement and costs :
Quantity required (kg./day)

 

Cost(Rs. / Kg)      Lactation Green Fodder

Dry Fodder
Concentrates

1. i) Breeding Facilities :
2. i) Source :
3. ii) Location :

iii) Distance (km.) :
iv) Availability of semen :

1. v) Availability of staff :
2. vi) Expenditure per animal/year
3. j) Veterinary Aid :
4. i) Source
   ii) Location

iii) Distance (km.)

1. iv) Availability of labour and other staff
2. v) Types of facilities available
   vi) If own arrangements are made –
3. a) Employed a veterinary doctor/stockman/consultant
4. b) Periodicity of visit
5. c) Amount paid/visit (Rs.)

vii)Expenditure per animal per year (Rs.)

1. k) Electricity :
2. i) Source
3. ii) Approval from SEB iii) Connected load

 

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Dry Period            Young Stock

 

1. iv) Problems of power failure
2. v) Arrangements for generator
3. l) Water :
4. i) Source
5. ii) Quality of water

iii) Availability of sufficient quantity for drinking, cleaning and fodder production iv) If investment has to be made, type of structure, design and cost

1. m) Marketing of milk :
2. i) Source of sales
   ii) Place of disposal
   iii) Distance (km.)
3. iv) Price realised – (Rs. per liter of milk)
4. v) Basis of payment
5. vi) Periodicity of payment
6. n) Marketing of other products :
7. i) Animal – age

– place of sale

– price expected

1. ii) Manure – Qty./animal Price/unit (Rs.)

iii) Empty gunny bags

– Number

– Cost/bag (Rs.)

1. o) Beneficiary’s experience :
2. p) Comments on technical feasibility :
3. q) Government restrictions, if any :
4. FINANCIAL ASPECTS :
5. i) Project Cost

 

 

 

 

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Sr. No.	Item	Physical Unit and Specification	Cost  (Rs.)
	Capital Costs
	Total Capital Costs(A)
	Recurring Costs
	Total Recurring Costs (B)
	Total Project Cost (A+B)

1. ii) Down payment/margin/subsidy (Indicate source & extent of subsidy):

iii) Financial viability (comment on the cash flow projection on a farm model/unit and enclose the same.)

Particulars :

1. a) Internal Rate of Return (IRR) :
2. b) Benefit Cost Ratio (BCR) :
3. c) Net Present Worth (NPW) :
4. iv) Financial position of the borrowers (to be furnished in case of corporate bodies/partnership
   firms)
5. a) Profitability Ratio :
6. i) GP Ratio
7. ii) NP Ratio
8. b) Debt Equity Ratio :
9. c) Whether Income Tax & other tax obligations are paid upto date :
10. d) Whether audit is upto date (enclose copies of audited financial statements for the last three
    years)
11. vi) Lending Terms :
12. i) Rate of Interest :
    ii) Grace Period :

iii) Repayment Period :
iv) Nature of Security :

1. v) Availability of Government guarantee wherever necessary :

 

 

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4. INFRASTRUCTURAL FACILITIES :
5. a) Availability of technical staff with bank/implementing authority for monitoring
6. b) Details of –
7. i) technical guidance
   ii) training facilities

iii) Govt. support /extension support

1. c) Tie-up arrangements with marketing agencies for loan recovery
2. d) Insurance –

– Type of policy

– Periodicity

– Rate of premium

1. e) Whether any subsidy is available, if so amount per unit
2. f) Arrangements for supply of green fodder and cattle feed

 

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Annexure II

. Model Unit Cost and Economics of a 2 Indigenous cow unit

 

1. Project Cost

Amt Rs

 

Cost of milch animals including transportation cost                                            62000

Cost of equipment                                                                                      2000

Capital cost                                                                                                                  64000

 

Cost of concentrate feed for first batch for first month                                           1080

Insurance of milch animals                                                                           3000

Recurring cost                                                                                                               4080

Total cost                                                                                             68040

or Say                                                                                                                          68100

 

Margin (10%)                                                                                            6800

Bank Loan                                                                                             61300

 

1. Techno economic parameters

Breed of Animal                                                                                      Indigenous

(Gir, Sahiwal, Graded)

No. of Animals                                                                                              2

Cost of Animals (Rs.)                                                                                31000

Transportation Cost/Animal (Rs.)                                                                    1000

Average Milk Yield (litres)                                                                                 4

Cost of equipment per animal (Rs.)                                                                  1000

Insurance premium (% per annum)                                                                        5

Veterinary aid/animal/ year (Rs.)                                                                      300

Cost of concentrate feed (`Rs./kg)                                                                      18

Cost of dry fodder (`Rs./kg)                                                                               2

Misc expenses/animal/year (Rs.)                                                                     200

Margin (%)                                                                                                 10

Rate of interest (%)                                                                                      12

Repayment period                                                                                          6

Selling price of milk/litre (Rs./ litre)                                                            27

Lactation days                                                                                           270

Dry days                                                                                                 120

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

 

 

 

 

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Feeding Schedule Per Day

 

	Lactation Days			Dry Days
	Price (Rs)	Qty. (kg)	Cost Per Day  (Rs)	Qty. (kg)	Cost Per Day (Rs)
Conc. Feed	18	2	36	1	18
Green Fodder	0	20	0	15	0
Dry Fodder	2	3	6	4	8
Total			42		26

 

Lactation Chart

 

Years	1	2	3	4	5
Lactation Days	425	510	515	515	530
Dry Days	120	220	215	215	200

 

1. Economics

Amt Rs

 

Particulars	1	2	3	4	5
Sale of Milk	45900	55080	55620	55620	57240
Total	45900	55080	55620	55620	57240
Cost of feeding during lactation	17850	21420	21630	21630	22260
Cost of feeding during dry period	5040	9240	9030	9030	8400
Veterinary aid and breeding charges	450	600	600	600	600
Insurance charges	3100	3100	3100	3100	3100
Total	26440	34360	34360	34360	34360
Surplus	19460	20720	21260	21260	22880

 

1. Calculation of BCR and IRR

 

	1	2	3	4	5$
Capital Costs	64000
Recurring Cost	26340	34260	34260	34260	34260
Total Costs	90340	34260	34260	34260	34260
Benefit	45900	55080	55620	55620	57240
Net Benefit	-44440	20820	21360	21360	22980
PW Costs @ 15%	163610
PW Benefits @ 15%	178392
NPW	14782
B.C. Ratio	1.09:1
I.R.R. (%)	>33%

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

 

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1. Repayment schedule

 

Year	Loan Outstanding	Gross Surplus	Interest	Principal	Total Repayment	Surplus
1	61300	19560	7356	10000	17356	2204
2	51300	20820	6156	11000	17156	3664
3	40300	21360	4836	12500	17336	4024
4	27800	21360	3336	13500	16836	4524
5	14300	22980	1716	14300	16016	6964

 

 

DISCLAIMER

The views expressed in this model project are advisory in nature.
NABARD assume no financial liability for anyone using this project report for any purpose. The actual costs and returns will

have to be taken on a case by case basis considering the specific
requirements of projects.