Model Bankable Scheme on Indigenous Cow

Scope of Indigenous dairy farming and its Importance

The average productivity (per day milk yield) of cross bred, indigenous cows and buffaloes in India was 7.61 Kg, 3.73 Kg and 6.19 Kg (2017-18 statistics). 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

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 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.

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 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.

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 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.

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 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 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.

Training

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

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

Source: NABARD