Dairying is an important source of subsidiary income to small/marginal farmers and agricultural labourers. 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. The surplus fodder and agricultural by-products are gainfully utilised for feeding the animals. Almost all draught power for farm operations and transportation is supplied by bullocks. Since agriculture is mostly seasonal, there is a possibility of finding employment throughout the year for many persons through dairy farming. Thus, dairy also provides employment throughout the year. The main beneficiaries of dairy programmes are small/marginal farmers and landless labourers.
2. Scope for Dairy Farming and its National Importance.
The total milk production in the country for the year 2008-09 was estimated at 108.5 million metric tonnes and the demand is expected to be 180 million tonnes by 2020. To achieve this demand annual growth rate in milk production has to be increased from the present 2.5 % to 5% . Thus, there is a tremendous scope/potential for increasing the milk production through profitable dairy farming.
3.Financial Assistance Available from Banks/NABARD for Dairy Farming.
3.1. Loan from banks with refinance facility from NABARD is available for starting dairy farming.
For obtaining bank loan, the farmers should apply to the nearest branch of a commercial bank, regional rural bank or co-operative bank in their area in the prescribed application form which is available in the branches of financing banks.
3.2. For dairy schemes with very large outlays, detailed project 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. Cost towards 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 / 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 for 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, fodder, 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 a dairy farm is given as Annexure I.
5.Scrutiny of Schemes by banks.
The scheme so formulated should be submitted to the nearest branch of the bank. The bank's officer can assist in preparation of the scheme or 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 -
1. Unit Cost
2. Input cost for feed and fodder, 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 form, 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.
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
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.
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 in the scheme. The loan will be repaid in suitable monthly/quarterly instalments usually within a period of five to seven years.
The animals and capital assets may be insured annually or on long term master policy, where ever it is applicable.
A model project with 10 buffaloes 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.