1. Introduction
Banks have been focussing mainly on financing of milch animals under various government sponsored programmes and dairy activities. Many bankers have felt that this has not led to any increase in milk production but has only ensured transfer of assets already created. The demand for good quality animals has gone up. It is high time that banks shift their focus to calf rearing and cattle breeding schemes so that better animals can be made available to the dairy sector. Calf rearing scheme has not been popular among farmers also for a number of reasons like its long gestation period, disbursement being made over a period of 2 ½ years in small amounts and unwillingness of the farmer to take up such a long term activity. Normally, when a cow is purchased under a bank loan, a calf at foot (of one month age) is also purchased along with the cow. Half of such calves are females and can be grown as quality cows if they are cross bred. Since borrowers are financed for a minimum of 2 cows with a gap of 6 months in between, most of the farmers will have at least one female cross bred calf which can be covered with the proposed scheme.
2. Selection of beneficiary and location:
Genuine farmers interested in dairy activity can be covered under the scheme. Cross breeding is popular throughout the country and in many places cross bred cows only are purchased under bank schemes. Even though dairying is a traditional activity in our country it is important that the banks ensure that the farmers are trained well in calf rearing before finance is made available. It is possible to finance calf rearing scheme as a separate activity also especially in areas where fodder production is well established. Cost of calf rearing can be brought down substantially , if fodder cultivation under irrigated condition is also financed along with this activity. Hilly terrain where regular milk collection is a problem is more suitable for this activity. In case of large farms, breeding schemes can be formulated where high quality semen is used over the animals with the help of liquid nitrogen storage flasks. However, even a small dairy farmer can be encouraged to go in for calf rearing as the space requirement and other help needed will be minimal for this activity. Under the present scheme a model is suggested for financing a single female calf wherever two animals are being financed to the farmer. The scheme can be suitably modified to finance the calf of the second animal is the female calf or enhanced if both calves are crossbred females.
3. Techno economic parameters of the Scheme:
(a) The performance of any individual animal is dependent on its genetic potential and the environment. Cross breeding has increased the yield potential of our cows but many of these cows are unable to express their full potential for milk production due to poor growth and nutrition.
(b) Growth phase of the cows is confined to the first two years of its life. It is important that the calf is given nutritious feed in the form of concentrates or fodder right from its 4th month of age. This will ensure good milk yielf when the calf becomes a cow. The age at which feeding starts naturally becomes important and it is recommended that right from the 4th month of age concentrate feed should be made available to he calf. If the animal is introduced into the feeding schedule after the 6 month of age the desired effect may not be to the full extent. The calf , depending upon its body weight/breed will consume around 1600 kgs of concentrate . This
amount can be substantially reduced if good quality fodder is available. On an average it is assumed that the calf will come to puberty around 20-24 months of age and will become a cow by calving for the first time around 28-38 month of age, if managed properly.
4. Capital Cost:
For a 2 animal dairy unit, additional provision towards feeding of the calf is the only item of expenditure given under the scheme. However, in case of large schemes , separate provisions like sheds for the calves, fodder cultivation, etc. can be considered. As a dairy farmer will have running relationship with the bank, disbursement of money towards concentrate feed requirement of the calf or disbursement in kind may not be a problem.A capital cost of Rs.Rs.33250 is indicated as per details enclosed and it can be suitable changed to suit local unit cost and requirements.
5.Economics of the Scheme:
Details of lactation cycle and cash inflow and expenditure are indicated in the following statement. It may be seen from the same that calf can be sold as a lactation cow during the third year and income can be used for repaying the loan. The IRR works out to be more than 50% and repayment schedule is also fixed for a period of 5 years by assuming that 60% of the income generated will be used towards repayment of principal and interest.
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 stages against creation of specific assets such as construction of sheds, purchase of equipments and animals. The end use of the loan is verified and constant follow-up is done by the bank.
7.Lending Terms - General
7.1 Unit cost
Each regional office (R.O.) Of NABARD has constituted a State Level Unit Cost Committee under the chairmanship of RO-in-charge and with the members from developmental agencies, commercial banks and cooperative banks to review the unit cost of various investments once in six months. The same is circulated among the banks for their guidance.
7.2 Interest Rate for ultimate borrowers
Banks are free to decide the rate of interest within the overall RBI guidelines. However for working out financial viabilility and bankability of the model project we have assumed the rate of interest as 12% p.a.
7.3 Margin Money
NABARD has defined the farmers into three different categories and where subsidy is not available the minimum down payment to be contributed by the beneficiaries are given in the following table.
Sr.No. |
Category of Farmer |
Beneficiary's Contribution |
A |
Small farmers |
5% |
B |
Medium farmers |
10% |
C |
Large farmers |
15% |
7.4 Security
Security will be as per NABARD / RBI guidelines issued from time to time.
7.5 Repayment Period of Loan
Repayment period depends upon the gross surplus generated. The loans will be repaid in suitable half yearly / annual instalments usually within a period of about 6-7 years with a grace period 30 months.
Scheme for financing heifer rearing along with a dairy unit
ASSUMPTIONS :
The beneficiary will be financed for 1+1 Dairy Unit (2 animals at 6 months interval). The calf of the first animal is assumed to be female and feed for its growth inclusive of pregnency is provided (4-28 months). If the record animal's calf is also female, the unit cost can be suitably enhanced to finance its growth also.
The calf is sold as first lactating animal during the third year. i.e. it will be impregnanted around 18-20months of age.
Provision of dry fodder to the calf will be additional requirement to be net by the farmer. |
