Animal Husbandry

1.1 India is the largest milk producer in the world but only 20% of its milk production is being processed. Thus about 80% of the total production is still in the unorganized fold. In order to boost their milk procurement, many dairies have setup societies or collection centers in the rural areas. The society network has reduced the role of the unorganized ‘doodhiyas’ in milk procurement as also protected the interest of the producers in the villages. This has assured a remunerative price and market support to the producers.

1.2 The traditional system of milk collection in the Dairy Cooperative societies included mainly to accept milk by volumes, carrying out fat testing by Gerber method and entering the fat and SNF data manually in the registers. This at times resulted in unreliable data, possible malpractice leading to loss of fat & thereby eroding the confidence of the members

1.3 In order to avoid such issues, a unique system to automise milk procurement operations of village milk cooperative society was developed. The Automatic Milk Collection Station is an integrated unit, combining different functions of a milk collection center, such as measuring the weight, fat content & providing the price output of the milk poured in the center. The equipment also helps the milk co- operatives / milk collection centers in maintaining summary of milk collected and supplied together with the rate on a daily, monthly and yearly basis. This state-of-the-art equipment operates both on battery and main and is able to process and record 120-150 milk collections per hour. The system comprised of an Electronic Milk Weighing Unit, the Electronic Milk Tester and Data Processing Unit.

2. Objectives:
The financial assistance is extended for purchase of Automatic Milk Collection Stations with the following objectives.

1.   To increase the efficiency and accuracy of fat testing in milk

2.   To reduce the staff of the society/collection centre through automation.

3. Potential areas:
Keeping in view the ease of operation and efficiency in information management, Automatic Milk Collection Stations have been introduced by a number of Dairies across the country. The scheme has potential to finance Automatic Milk Collection unit in the societies/milk collection centres, which have an average membership of more than 150 milk producers and are procuring more than 400 to 500 litres of milk per day.

4. Beneficiaries:
Dairy Cooperative Societies of the Cooperative Milk Unions or Milk Collection Centres of private dairies.

5. Project Details:

a.Components: Automatic Milk Collection Station is a specially designed integrated unit which is a combination of several units i.e. Milk Weighing System, Electronic Milk Testing, Personal Computer with printer and battery.

b. Capacity: The capacity of Automatic Milk Collection Stations is to analyse 120 to 150 samples per hour.

c. Specifications: The broad specifications are as under:

i) Fat measurements : 0 - 13%
ii) Measuring capacity : 120 to 150 operations per hour.
iii) Power supply :   AC 220  to 240 watts 5O HZ

d. Equipment suppliers: The equipment is supplied by various agencies which are as follows: Vamendu Group, Sri Kamadhenu Electronics, Ahmedabad, Gujarat DODIA Himmatnagar, Gujarat Prompt, Baroda, Gujarat Capital Electronics Anand, in Gujarat and REIL Jaipur, Rajasthan

e. Processing: The sequence of operations require insertion of smart card/identity number, pouring of milk in a weighing container, collection of milk samples at the time of pouring, measurement of fat content and calculation of payment and printing of payment slip.

f. Advantages:

1.  Saving in quantity of sample milk

2.  Saving of chemicals and detergents

3.  Saving of expenditure on glassware

4.   Saving in stationery and time

5.   Saving in expenditure on staff.

6. Technical Collaboration:
Since the process is simple, no technical collaboration is envisaged for the project, however the Milk Unions/Private Dairy Plants would be providing guidance to the societies/collection centres in purchase and installation of Automatic Milk Collection Stations and also training of manpower in operations and maintenance.

7.Capital Cost:
The capital cost varies with the specifications and also the manufacturers. However, based on the information furnished by the manufacturers, an average unit cost of Rs.1.27 lakh including the cost of battery and service tax (12.35%) has been considered. The detailed unit cost is given in Annexure I.

8. Economics of the project:
Based on the various techno economic parameters furnished in Annexure I, the economics of the project has been worked out and presented in Annexure II. The items of income include saving in expenditure on staff, stationery, chemicals and detergents and glassware and also income from saving of sample milk, while the items of expenditure are the repairs and maintenance of the Automatic Milk Collection Stations. The activity is one of the eligible activity under GoI scheme for Venture capital fund for Dairy / Poultry.

9. Financial Analysis:
The cash flow analysis covering the Benefit Cost Ratio (BCR) Net Present Worth (NPW) and Internal Rate of Return (IRR) has been worked out for the project and presented in Annexure III. For the model under consideration, the BCR is 1.46:1 NPW is Rs 55727 and IRR is 35%. The entire bank loan can be repayable in seven years without any grace period after considering 60% of the surplus generated towards services the debt. Hence repayment has been fixed at 7 years for the model project.(Annexure IV)

10. Financial assistance:
Automatic Milk Collection Stations would be considered for refinance support by National Bank. Therefore all participating banks may consider financing this activity subject to their technical feasibility, financial viability and bankability.

11. Lending Terms:

11.1 Margin Money: The Milk Cooperative society or Milk collection centre should normally meet 25% of the project cost either out of their own resources or through subsidy.

11.2 Interest rate: Interest rate will be as determined by the financing bank.

11.3 Security: As stipulated by the RBI. 

11.4 Insurance: The financing bank may ensure that the society takes adequate insurance cover for the asset.

11.5 Repayment period: Depends upon the gross surplus generated, it may be upto 7 years without any grace period.

Annexure - I

Unit Cost and Technoeconomic parameters

ANNEXURE - II

Income and Expenditure - Automatic Milk Collection Station

ANNEXURE - III

Financial Analysis - BCR, NPW and IRR - Automatic Milk Collection Stations

ANNEXURE - IV

Repayment Schedule

ANNEXURE V

Special terms and conditions

The bank should ensure that:-

1. The Milk Union/Dairy will identify the milk societies/collection centres whose milk collection is above 400 litres per day for financing Automatic Milk Collection Units.

2. The Union/Dairy will guide the society/collection centre for the purchase and installation of Automatic Milk Collection unit.

3. The Milk Union/Dairy will train the secretary/worker of the Milk Cooperative Society/Collection Centre in the operation and maintenance of the Automatic Milk Collection Unit

4. The Union/Dairy will arrange to supply the required stationery and diluents to the milk cooperative society/collection centre.

5. The Milk Society/Collection Centre will enter into an annual service contract with the supplying firm from second  year onwards.

6. The milk society/collection centre will insure the Automatic Milk Collection Unit with the insurance companies, provided the insurance coverage is available.

7. The Union/Dairy will provide tie up arrangement for the repayment of bank loan.