Calf Rearing Scheme

SCHEME
FOR
CALF REARING ACTIVITY
National Bank for Agriculture and Rural Development
Head Office, Mumbai
INDEX
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Particulars
Introduction
Selection of beneficiary and location
Techno economic parameters of the Scheme
Capital Cost
Sanction of Bank Loan and its Disbursement
Lending Terms - General
Farm Models and assumptions
Economics
ANNEXURES
Annexure - I
Farm model for financing heifer rearing
along with a dairy unit
Annexure - II
Farm model for rearing of 5 female calves
Annexure - III
Annexure - IV
Farm model for rearing of 8 female calves
Male buffaloe - Commercial Units (Model- II)Farm Model
Page No
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CALF REARING SCHEME
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1. Introduction
Majority of rural households depend on livestock farming for supplementary
income in India. Rearing livestock such as cows, buffaloes etc., not only
provides a subsidiary income to the families but also is a source of protein
in the form of milk and meat. Majority of livestock owning farmers are
either small and marginal or even land less. In view of its suitability for
combining with crop sub sector and sustainability as a household enterprise
with the active involvement of women, it is emerging as a very popular
supplementary avocation in the small farms. The sector is highly gender
sensitive and over 90 per cent of activities related to care and management
of livestock are carried out by family’s women folk. The sector has high
potential for alleviating poverty and unemployment in rural areas. As the
ownership of livestock is more evenly distributed with landless labourers,
small and marginal farmers, the progress in this sector will result in a more
balanced development of the rural economy, particularly in reduction of
poverty ratio.
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 and grading of local buffaloes are popular
throughout the country and in many places cross bred cows / graded
buffaloes 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 four models viz.,
(i) financing a single female calf wherever two animals are being financed
to the farmer (ii) financing calf rearing as a separate activity with 5 female
calves (iii) financing calf rearing as a separate activity with 8 female calves
and (iv) financing male buffaloe calves as a separate activity with 10 male
buffaloe calves have been formulated.
3. Techno economic parameters of the Scheme
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.
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 yield
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 18 -20
months of age and will become a cow by calving for the first time around
28-29 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
rearing of calves as a separate activity, 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. The details of capital cost for the four models are furnished
here below and the same can be suitably changed to suit local unit cost and
requirements.
Model
Activity
Capital cost (`)
(i)
Rearing of single female calf wherever two 124,000
animals are being financed
(ii)
Calf rearing as a separate activity with 5 120,000
female calves
(iii)
Calf rearing as a separate activity with 8 192,000
female calves
(iv)
Male buffaloe calves as a separate activity 87,000
with 10 male buffaloe calves
In respect of first three models, besides crossbred cows other milch animals
viz., indigenous descript milch breeds of cattle and of graded female
buffaloes may also be covered under the scheme.
5. 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 (or) the loan can be routed through Kisan Credit Card for those
farmers who have availed crop loans / Special Card. The end use of the
loan is verified and constant follow-up is done by the bank.
6. Lending Terms - General
6.1 Unit Cost
Each Regional Office (RO) 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 State
Level Unit Cost Committee may revise the Unit Costs once in six months (on an
ongoing basis).
6.2
Interest
Rate
for
ultimate
borrowers
Banks are free to decide the rate of interest within the overall RBI
guidelines. However for working out financial viability and bankability of
the model project rate of interest of 12% p.a. Has been assumed.
6.3 Margin Money
Beneficiary’s contribution towards margin money is kept as 10% of the
outlay (minimum) keeping in view the operational guidelines of the Dairy
Entrepreneurship Development Scheme (DEDS) and Scheme for Salvaging
and rearing of male buffaloe calves. In respect of commercial models
margin money requirement may be followed as per the operational
guidelines of that particular subsidy scheme.
6.4 Security
Security will be as per NABARD / RBI guidelines issued from time to time.
6.5 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 5 -7 years with a grace period 30 months.
7.
Farm Models and assumptions
(i) Farm model for financing single female calf rearing along with a
dairy unit with two cows
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 pregnancy is provided (4-28 months).
If the second 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 impregnated around 18-20 months of age.
Provision of dry fodder to the calf will be additional requirement to be
net by the farmer. The details are furnished in Annexure - I.
In case the beneficiary desires to rear more number of cows and female
calves the model can suitably modified with enhanced unit cost.
(ii) Farm model for rearing of 5 female calves
The beneficiary will be financed for purchase of 5 female calves. The
feed for its growth inclusive of pregnancy is provided (4-28 months). Of
the five calves, three calves ( same will be impregnated around 18-20
months of age) are sold as first lactating animals. The details are
furnished in Annexure - II.
(iii) Farm model for rearing of 8 female calves
The beneficiary will be financed for purchase of 8 female calves. The
feed for its growth inclusive of pregnancy is provided (4-28 months). Of
the eight calves, four calves ( same will be impregnated around 18-20
months of age) are sold as first lactating animals. The details are
furnished in Annexure - III.
(iv) Farm model for rearing of 10 male buffaloe calves
The beneficiary will be financed for purchase of 10 male buffaloe calves
in batches of 5 each. The feed for its growth including shed, etc., is
provided (8 months). The first batch of 5 calves will be sold in I year and
second and subsequent batches will be sold from II year onwards. The
details are furnished in Annexure - IV.
8.
Economics
The details of the economics of female calf rearing unit and male buffaloe
calf rearing units
along with technical and financial parameters/
assumptions are furnished in the Annexure I, II, III and IV. The IRR works
out to be more than 50%. Repayment schedule is fixed for a period of 5 - 7
years with a grace period for initial 2 years depending on the farm model
by assuming that 60% of the income generated will be used towards
repayment of principal and interest. The Benefit Cost Ratio (BCR) and
Internal Rate of Return (IRR) @ 15% Discount Factor for the four models are
as follows:
(i) Farm model for financing heifer rearing along with a dairy unit
Benefit Cost Ratio (BCR) @ 15% DF
:
Internal Rate of Return (IRR) @ 15% DF :
1.76 : 1
More than 50%
(ii) Farm model for rearing of 5 female calves
Benefit Cost Ratio (BCR) @ 15% DF
:
Internal Rate of Return (IRR) @ 15% DF :
1.58 : 1
52%
(iii) Farm model for rearing of 8 female calves
Benefit Cost Ratio (BCR) @ 15% DF
:
Internal Rate of Return (IRR) @ 15% DF :
1.07 : 1
30%
(iv) Scheme for rearing of 10 male buffaloe calves
Benefit Cost Ratio (BCR) @ 15% DF
: 1.3 : 1
Internal Rate of Return (IRR) @ 15% DF : More than 15%