Model bankable project on poultry layer farming

Introduction

Poultry egg and meat are important sources of high quality proteins, minerals and vitamins to balance the human diet. Commercial layer strains are now available with traits of high egg production and high feed conversion efficiency. Superior germplasm of chicken have been developed by both public and private sectors which met the requirement of Indian Poultry Industry. Depending on the farm-size, layer (for eggs) farming can be main source of family income or can provide income and gainful employment to farmers throughout the year. Poultry manure has high manure value and can be used for increasing yield of all crops.

Scope for layer farming and its national Importance

Poultry is one of the fastest growing segments of the agricultural sector in India today. In the poultry industry, value added products utilizing poultry eggs, culled birds for human consumption have been developed. However only 6% of the eggs produced in the country are converted into processed egg products mainly for export.

The poultry sector in India has undergone a paradigm shift in structure and operation. This transformation has involved sizable investments in breeding, hatching, rearing and processing. Farmers in India have moved from rearing non-descript birds to rearing hybrids which ensures faster growth, good liveability, excellent feed conversion, high egg production and profits to the rearers. High quality chicks, equipment, vaccines and medicines are now available through both public and private players. Technically and professionally competent guidance is available to the farmers. The managerial practices have improved and disease and mortality incidences are reduced to a great extent. The industry has grown largely due to the initiative of private enterprises, government intervention, and considerable indigenous poultry genetic capabilities and adequate support from the complementary veterinary health, poultry feed, poultry equipment and poultry processing sectors.

Financial assistance available from banks

Loan from banks with refinance facility from NABARD is available for starting poultry farming. For poultry farming schemes with very large outlays, detailed project reports will have to be prepared. Banks provide financial assistance for the following purposes:

1. For construction of brooder/grower and layer sheds, feed store, quarters etc.
2. For purchase of poultry equipment such as feeders, waterers, brooders etc.
3. For creating infrastructure items for supply of electricity, feed, water etc.
4. For purchase of day old chicks or ready to lay pullets.
5. For meeting working capital requirement in respect of feed, medicines and veterinary aid etc. for the first 5 to 6 months (i.e. till the stage of income generation).

For high value projects, the borrowers can utilise the services of NABARD Consultancy Services (NABCONS) who are having wide experience in preparation of Detailed Project Reports.

Scheme formulation for bank loan

• A scheme can be prepared by the beneficiary after consulting local technical persons of State Animal Husbandry / Veterinary department, Poultry Corporation or private commercial hatcheries. If possible, they should also visit the progressive layer farms in the area and discuss the profitability of farming. A good practical training and experience on a layer farm will be highly desirable, before starting a farm.
• The project should include the following information on technical, financial and managerial aspects in detail.

Technical

1. Land and land development (Location, area, suitability, proximity to road, site map etc.)
2. Proposed capacity / farm size
3. Civil structures (sheds, feed mixing unit, egg room, godown / store room, office quarters, staff room etc.)
4. Equipments, Plant & Machinery – (Feeder, waterer, cages, feed grinder & mixer, Deep freezer, vaccinator, debeaker etc.)
5. Housing (capacity, Type- Deep litter / Cage, Area required, system of housing (1+2, 1+3, 1+1+2 etc.)
6. Chicks – (Strain, number of birds / batch strength, source of chicks, vaccination of chicks etc.)
7. Feeding (Feed requirement, source of feed, type of feed – chick, grower and layer mash, price of feed etc.)
8. Availability of utilities – Water, power & fuel
9. Veterinary aid and transportation arrangements
10. Production parameters (Egg production, Feed efficiency - FCR, Mortality etc.)
11. Flock projection chart
12. Marketing (Marketing of eggs / culled birds and other products / by-products – place of marketing, basis of payment (kg or no.), price per unit etc.)

Financial

1. Project cost - capital (land, building, chicks, plant and machinery etc.) and recurring costs
2. Funding pattern (Margin contribution, bank loan, etc.)
3. Techno-Economic assumptions
4. Income – expenditure statement
5. Cash flow analysis showing financial indicators (IRR, NPW, BCR and DSCR)
6. Analysis of ratios (DER, ROCE, current ratio, etc.)
7. Repayment schedule indicating repayment of principal and payment of interest

Managerial

Borrower's profile

1. Individual/Partnership/ Company/Corporation/ Co-operative Society/Others
2. Capability in managing the proposed business
3. Experience in the proposed activity or others
4. Financial soundness
5. Technical/Other special qualifications
6. Technical/Managerial Staff and adequacy thereof

Others

1. Name of the financing bank branch
2. Training facilities
3. Assistance available from State / Central Government
4. Regulatory clearances, if any etc.

Appraisal of the project

The project so formulated considering the above mentioned aspects should be submitted to the nearest branch of the bank for availing credit facility for establishment of the layer farm. The bank will then examine the project for its technical feasibility, financial viability and bankability.

Sanction of bank loan and its disbursement

After ensuring technical feasibility and financial viability, the loan is sanctioned by the bank. The loan is disbursed in stages viz., construction of sheds / other civil structures, purchase of equipment and machinery, recurring cost on purchase of chicks, feeds, medicines, etc. The end use of the loan is verified and constant follow up / monitoring is done by the bank.

Lending terms - General

Outlay: Outlay of the project depends on the local conditions, unit size and the investment components included in the project. Prevailing market prices / cost may be considered to arrive at the outlay.

Margin Money: Margin depends on the category of the borrowers and may range from 10% to 25%.

Interest Rate: Banks are free to decide the interest rates within overall RBI guidelines. However, for working out financial viability and bankability of model project, the rate of interest is assumed at 12.50% p.a.

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

Repayment period of loan: Repayment period depends upon the gross surplus from the project. The loan will be repaid in suitable monthly/quarterly installments usually within a period of seven to nine years with first year as grace period.

Insurance: The birds and other assets (poultry sheds, equipment) may be insured. Wherever necessary, risk/mortality fund may be considered in lieu of insurance.

To access a model project with 20000 layers (1:2 cage system), click here. This is indicative and the applicable input and output costs as also the parameters observed at the field level may be incorporated.

Source: NABARD