ADS-Dairy-Coimbatore district

AREA DEVELOPMENT SCHEME

DAIRY DEVELOPMENT IN COIMBATORE DISTRICT

National Bank for Agriculture and Rural Development

Tamil Nadu Regional Office

Chennai - 600 034

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Index

S.No. Content Page No.

1 Introduction 3
2 Forward and backward linkages 3
3 Selection of area 4
4 Selection of beneficiaries 4
5 Training/capacity building of beneficiaries 4
6 Techno-economic assumptions and project components 5
7 Partners in implementation, convergence of efforts and 6
support from State Government
8. Banking network & trends in credit flow 6
9. Project cost for each unit/activity 7
10. Financing Agencies 7
11. Physical and financial programme 8
12. Project profitability 10
13. Financial analysis 11
14. Sensitivity and SWOT analysis 11
15. Repayment period 12
16. Implementation strategy and monitoring mechanism 12
17. Conclusion 13

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Area Development Scheme for Dairy Development

1. Introduction

Agriculture continues to be the main activity of the rural populace of Coimbatore district with
around 33% of the workforce directly dependent on it. The gross cropped area and the net
sown area were 1.77 Lakh ha and 1.74 Lakh ha during 2015-16. The major perennial crops
raised in the district are Coconut (49 % of net sown area) and Tea (6.5% of Net Sown Area).
Other than these two crops, pulses, fresh fruits, spices and vegetables are the major groups
of crops raised in the district. The major annual crops raised in the district include sorghum,
banana, groundnut, paddy, maize and pulses.
In addition to agriculture, animal husbandry is the major activity which contributes
significantly in supplementing the income of small, marginal farmers and landless labourers
in generating gainful employment, self-employment to a substantial number of rural
population especially women and also plays a major role in the care and management of
livestock. It serves as a vital source for providing nutritious protein rich balanced food in the
form of milk, egg, meat and value added products. This activity also helps in promotion of
organic farming. Almost every household in rural areas of the district has either milch animal
or sheep/goat.
The rural poor have little access to agriculture land and thus there are limited opportunities
for them in crop production but they have better access to livestock sector, which contributes
significantly to agricultural growth and contributes to reducing incidence of poverty among
the rural population. The contribution of livestock sector to the Gross District Domestic
Product (GDDP) is 5.29% and that to the agriculture sector in 92% as per 2010-11 prices,
signifying the role of allied sector to the wealth of general economy. In view of the potential
for the activity and taking into account the need to provide livelihood opportunities to small
and marginal farmers, landless labourers and women, an Area Development Scheme
covering on Dairy Development has been prepared. The scheme envisages a total project
outlay of Rs.8.56 crore with credit flow from banks to be the order of Rs.7.66 crore. The total
milk produced in the district is 600 lakh litres in 2015-16.

2. Forward and backward linkages

2.1. Animal Husbandry Scenario in the State/district

Government of Tamil Nadu is implementing various programmes with the objective of

increasing the milk production in the state in order to achieve a “second White
Revolution” in the state.

“Tamil Nadu Vision 2023” envisages making Tamil Nadu the 'Numero Uno' State by
achieving a target of 11 per cent growth in Gross State Domestic Product (GSDP), for
which contribution of primary sectors like Agriculture and its allied sectors like Animal
Husbandry is inevitable. In Tamil Nadu, local pure breeds of white cattle like Kangayam,
Umblachery, Alambadi, Bargur and Pulikulam and Toda buffaloes are reared. Among
these, Kangayam breed cattle are reared in Western districts viz.,Tiruppur, Erode,
Coimbatore and Karur, Umblachery breed cattle in Eastern districts viz., Thanjavur,
Thiruvarur, Nagapattinam and Cuddalore, Alambadi breed cattle in Western districts
viz., Dharmapuri, Erode and Salem, Pulikulam breed cattle in Southern districts viz.,
Sivagangai, Madurai, Dindigul and Theni, Bargur breed cattle in Erode and Toda buffalo

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in the Nilgiris.
th
As per the 19 Livestock and Poultry Census, 24.6 lakh indigenous cattle, 63.54 lakh
exotic/crossbred cattle, 7.8lakh buffalo, 47.87 lakh sheep 81.43 lakh goats and 1173.49
lakh poultry are in Tamil Nadu. Tamil Nadu contributes 5.29% of milk production, 17.10%
of egg production and 8.80% of total meat production (including poultry meat) and ranked
9th in milk production, 2nd in egg production and 5th in meat production.

As per 19th Live Stock Census 2012, there are 2.59 lakh cross bred/indigenous cows and5,848
buffaloes are available in the district.

2.2. Infrastructure and linkage support

Animal Husbandry department in the district operates with two divisions. The district has
one polyclinic, one clinician veterinary centre, 12 veterinary hospitals, 87 veterinary
dispensaries, 2 mobile units and 26 sub centres. Mobile Veterinary Units manned by
Veterinary Assistant surgeons provide veterinary health services like vaccination, deworming
and breeding coverage like Artificial Insemination to livestock reared by farmers residing in
remote areas who face difficulties to reach veterinary institutions. The department also has
one animal disease intelligence unit at Coimbatore. Financial support from NABARD under
RIDF is being availed periodically to improve the veterinary infrastructure of the district.

3. Selection of the area

The banking plan proposes to cover two blocks in 2018-19, three in 2019-20, two in 2020-
21, three in 2021-22 and three blocks in 2022-23. Of the 12 blocks in the district, 7 blocks
to be covered in five years and all of them have presence of cooperative milk societies,
private dairy operators, availability of veterinary care, availability of quality animals,
availability of dry and green fodder, support from NGOs, FPOs, banks, conduct of tailor
made programmes through RSETI/TANUVAS etc.

4. Selection of beneficiaries

The target beneficiaries among farmers, individual entrepreneurs, members of

FCs/FPOs/VWCs, women members of SHGs, JLGs. Beneficiaries for 1+1 animal unit will
be covered both through individual financing and through JLG mode. Selection of
beneficiaries will be based on availability of area for growing green fodder / availability of
space for cattle shed, own farm dry fodder resources, concentrate feed sourcing etc.

5. Training/Capacity building of beneficiaries

Veterinary University Training and Research Centre (VUTRC), Saravanampatti extends

training facilities on scientific rearing of the dairy animals on a regular basis to farmers. In
addition to the VUTRC, Canara Bank RSETI conducts programmes on dairy farming for the
benefit of farmers through experts drawn from Animal Husbandry department, KVK,
VUTRC, Insurance companies. Further, promotional funds available under FSPF have been
utilized in the past to provide need based training programmes through VUTRC/ NGO on
clean milk production. Farmers Clubs through their Meet With Experts programmes also

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conduct training in milch animal rearing to the farmers. Such efforts will continue towards
strengthening the skills of farmers for selection of animals, rearing, feed and livestock
management.

6. Techno-economic assumptions& Project Components

Type of milch animals proposed Cross Bred Cows Cross Bred cows
No. of animals 1+1 5+5
Cost of animal (Rs./animal) Rs.37000 Rs.37000
Transportation cost/animal Rs.600 Rs.600
Average per day milk yield per milch 10 litres 1o litres
animal

Insurance 5% 5%
Veterinary aid/animal/year (Rs.) Rs.1000 Rs.1000
Cost of concentrate feed (Rs./kg) Rs.20 Rs.20
Cost of dry fodder (Rs./kg) Rs.2 Rs.2
Cost of green fodder (Rs./Kg) Re.1 Re.1
Equipment (Milk Can, tie chain etc) Rs.500 per animal Rs.500 per animal
Shed construction @ 65 sqft per animal Rs.150 per sft Rs.150 per sft
Labour cost 0 Rs.4000 p.m
Cost of electricity & water/ animal / year Rs.150 Rs.150
Margin 10% 25%
Repayment period 5 years 5 years
Rate of interest 12% 12%
Sale price of milk (Rs./litre) Rs.26 Rs.26
Sale price of gunny bag (Rs./bag) Rs.10 Rs.10
Other parameters Animals which are freshly calved will be financed Prompt
insemination of milch animals after calving (preferably in
second heat)

Economic life of milch animal 5-6 lactation

6.1. Lactation chart for Cross Bred Cows

S. No. Particulars Years

I II III IV V VI
1 Lactation Days
a) First batch 270 300 300 290 265 265
b) Second batch 180 265 265 265 265 265
Total 450 565 565 555 530 530

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2 Dry Days
a) First batch 95 65 65 75 100 100
b) Second batch 0 100 100 100 100 100
Total 95 165 165 175 200 200

6.2. Feeding schedule and cost of feeding

Sl. Particulars Lactation Period Dry Period
No. Quantity Cost per Quantity Cost per
(Kg) day (Rs.) (Kg) day (Rs.)
I Concentrate Feed 5 100 2 40
I Green Fodder 25 25 15 15
III Dry Fodder 5 10 5 10

Total concentrate feed consumed (Kgs.) (1+1)

During During
Year Lactation Dry Total No. of bags
1 2250 190 2440 49
2 2825 330 3155 63
3 2825 330 3155 63
4 2775 350 3125 63
5 2650 400 3050 61
6 2650 400 3050 61

7. Partners in implementation, convergence of efforts and support from State

Government
To sustain India’s status as the highest milk producer, under National Dairy Plan, selection
of bulls possessing superior milk production traits is very important. With this objective,
Progeny Testing Programme has been included in the National Dairy Plan-I which is being
funded by the World Bank. As Tamil Nadu has a high population of Crossbred Jersey Cows,
the State has been chosen for this programme at a total outlay of Rs.39.28 crore.
The various components covered under the National Mission for Protein Supplements
(NMPS) are Dairy, Goatery, Piggery and Fisheries. Under the Dairy Development
component, projects will be funded for expansion of animal husbandry and dairy
development activities with priority given to improving productivity of milch animals
through measures such as productivity improvement programme, improving nutritional
balance of animal feed concentrate, fodder development activity and improving milk
procurement, processing and marketing infrastructure in the identified area of
implementation.

8. Banking network and trends in credit flow

The district has a banking network of 969 branches of various banks which includes 146
PACCS covering 12 blocks in the district.

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The Ground Level Credit Flow for the sector has been as under: (Rs. lakh)

2014-15 2015-16 2016-17 2017-18

Target Achievement Target Achievement Target Achievement Target
2282.52 2674.11 2703.05 2866.16 3027.09 3118.23 3390.71

9. Project cost for dairy unit: (Amount in Rupees)

Sl. Items Specifications Physical Unit Cost Total
No. Units (Rs.) cost for
1+1 unit
(Rs.)
1 Land levelling and fencing Lumpsum 5000
2 Cost of animals 10 37000 74000
Transportation cost of
3 animals 10 600 1200
4 Cost of construction of shed 65 sft / animal 10 150 19500
5 Cost of store cum office 200 sft 1 300
6 Equipments (milking pails, 10 500 1000
cans and tie chains)
7 Insurance 5% 10 1850 3700
Fodder cultivation expenses
@ Rs. 5000/ acre for one
8 season 2 acres 2 5000
8a Miscellaneous 600
9 Total cost 9 105000
Margin Money(25%/10% of
10 total cost) 10 11000
Bank loan (75%/90% of
11 total cost) 11 94000
12 Bank loan for first batch 12 59000
13 Bank loan for second batch 13 35000

10. Financing Agencies

Sl.
Block Name of the Bank
No.
1 Kinathukadavu South Indian Bank, Indian Bank, Central Bank of India, Canara
Bank, PACCS
Pallavan Grama Bank, Canara Bank, Indian Overseas Bank,
2 Annur Syndicate Bank, Tamilnad Mercantile Bank, Indian Bank, State
Bank of India, PACCS
Allahabad Bank, Indian Overseas Bank, Indian Bank, Canara
3 Sultanpet
Bank, State Bank of India, PACCS
4 Sulur Indian Bank, Indian Overseas Bank, Canara Bank, PACCS
5 Thondamuthur Indian Bank, Indian Overseas Bank, Canara Bank, PACCS
Indian Bank, Indian Overseas Bank, Canara Bank, State Bank of
6 S S Kulam
India, ICICI Bank, Pallavan Grama Bank, PACCS
7 Anamalai Indian Bank, Indian Overseas Bank, Canara Bank, PACCS

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11. Physical and financial programme

Bank-wise physical and financial programme for five years is as under:
11.1 First year 2018-19
Sl. Name of the Bank Small Dairy Units (1+1)
Block
No.
Unit No. of Bank
2018-2019 TFO Margin
Cost Units Loan
Indian Bank 105000 10 1050000 940000 110000
Central Bank of India 105000 10 1050000 940000 110000
Canara Bank 105000 10 1050000 940000 110000
1 Kinathukadavu
South Indian Bank 105000 10 1050000 940000 110000
PACCS 105000 20 2100000 1880000 220000
Total 60 6300000 5640000 660000
Pallavan Grama Bank 105000 10 1050000 940000 110000
Canara Bank 105000 20 2100000 1880000 220000
IOB 105000 20 2100000 1880000 220000
TMB 105000 10 1050000 940000 110000
2 Annur
Syndicate Bank 105000 20 2100000 1880000 220000
PACS 105000 20 2100000 1880000 220000
Total 105000 100 10500000 9400000 1100000
Sub Total(18-19) 160 16800000 15040000 1760000

11.2. Second year 2019-2020

Sl. Name of the Bank Small Dairy Units (1+1)

Block
No. Unit No. of Bank
TFO Margin
2019-2020 Cost Units Loan
Allahabad Bank 105000 10 1050000 940000 110000
Indian Bank 105000 10 1050000 940000 110000
IOB 105000 5 525000 470000 55000
3 Sultanpet Canara Bank 105000 10 1050000 940000 110000
SBI 105000 5 525000 470000 55000
PACCS 105000 10 1050000 940000 110000
Total 50 5250000 4700000 550000
IOB 105000 10 1050000 940000 110000
Indian Bank 105000 10 1050000 940000 110000
4 Sulur PACCS 105000 20 2100000 1880000 220000
Canara Bank 105000 10 1050000 940000 110000
Total 50 5250000 4700000 550000
IOB 105000 10 1050000 940000 110000
Indian Bank 105000 10 1050000 940000 110000
5 Thondamuthur Canara Bank 105000 10 1050000 940000 110000
PACCS 105000 20 2100000 1880000 220000
Total 50 5250000 4700000 550000
Sub Total(19-20) 150 15750000 14100000 1650000

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11.3. Third year 2020-2021

Sl. Name of the Bank Small Dairy Units (1+1)
Block
No. Unit No. of Bank
TFO Margin
2020-2021 Cost Units Loan
IOB 105000 10 1050000 940000 110000
Indian Bank 105000 10 1050000 940000 110000
6 Annur Syndicate Bank 105000 10 1050000 940000 110000
Canara Bank 105000 10 1050000 940000 110000
Pallavan Grama Bank 105000 10 1050000 940000 110000
SBI 105000 10 1050000 940000 110000
PACCS 105000 20 2100000 1880000 220000
Total 80 8400000 7520000 880000
IOB 105000 5 525000 470000 55000
Indian Bank 105000 5 525000 470000 55000
ICICI Bank 105000 10 1050000 940000 110000

7 S S Kulam SBI 105000 5 525000 470000 55000

Canara Bank 105000 5 525000 470000 55000
Pallavan Grama Bank 105000 5 525000 470000 55000
PACCS 105000 10 1050000 940000 110000

Total 45 4725000 4230000 495000

Sub-Total(20-21) 125 13125000 11750000 1375000

11.4. Fourth year 2021-2022

Sl.
Block Name of the Bank Small Dairy Units (1+1)
No.
Unit No. of
TFO Bank Loan Margin
2021-2022 Cost Units
South Indian Bank 105000 10 1050000 940000 110000
Indian Bank 105000 10 1050000 940000 110000
Kinathukada
8 Canara Bank 105000 10 1050000 940000 110000
vu
Central Bank of
105000 1050000 940000 110000
India 10
PACCS 105000 20 2100000 1880000 220000
Total 60 6300000 5640000 660000
Allahabad Bank 105000 10 1050000 940000 110000
Canara Bank 105000 10 1050000 940000 110000
9 Sultanpet IOB 105000 10 1050000 940000 110000
Indian Bank 105000 10 1050000 940000 110000
SBI 105000 10 1050000 940000 110000
PACCS 105000 20 2100000 1880000 220000
Total 70 7350000 6580000 770000
IOB 105000 10 1050000 940000 110000
Indian Bank 105000 10 1050000 940000 110000
Syndicate Bank 105000 10 1050000 940000 110000
10 Annur Canara Bank 105000 10 1050000 940000 110000

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Pallavan Grama
105000 1050000 940000 110000
Bank 10
SBI 105000 10 1050000 940000 110000
PACCS 105000 10 1050000 940000 110000

Total 70 7350000 6580000 770000

Sub-total(21-22) 200 21000000 18800000 2200000

11.5. Fifth year 2022 - 2023

Name of the
Sl. Small Dairy Units (1+1)
Block Bank
No.
Unit No. of Bank
TFO Margin
2022-2023 Cost Units Loan
IOB 105000 10 1050000 940000 110000
Indian Bank 105000 10 1050000 940000 110000
11 Canara Bank 105000 20 2100000 1880000 220000
Anamalai
PACCS 105000 10 1050000 940000 110000

Total 50 5250000 4700000 550000

Indian Bank 105000 10 1050000 940000 110000
Canara Bank 105000 10 1050000 940000 110000
12 Annur Pallavan Grama
105000 1050000 940000 110000
Bank 10
Syndicate Bank 105000 20 2100000 1880000 220000
PACCS 105000 20 2100000 1880000 220000
Total 70 7350000 6580000 770000
Central Bank of
105000 1050000 940000 110000
India 10
Canara Bank 105000 10 1050000 940000 110000
13 Kinathukadavu South Indian bank 105000 10 1050000 940000 110000
Indian Bank 105000 10 1050000 940000 110000
PACCS 105000 20 2100000 1880000 220000
Total 60 6300000 5640000 660000
Sub-total(22-23) 180 18900000 16920000 1980000
Grand Total(5 years) 105000 815 85575000 76610000 8965000

12. Project Profitability

Economics for two animal unit

Years
1 2 3 4 5 6
Sale of milk 117000 146900 146900 144300 137800 137800
Sale of gunny bags 490 630 630 630 610 610
Total 117490 147530 147530 144930 138410 138410
Cost of feeding during lactation 60750 76275 76275 74925 71550 71550
Cost of feeding during dry period 6175 10725 10725 11375 13000 13000
Vet aid and breeding charges 2000 2000 2000 2000 2000 2000
Labour charges
Elec & misc 300 300 300 300 300 300

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Insurance 3500 3500 3500 3500 3500

Total 69225 92800 92800 92100 90350 90350
Surplus 48265 54730 54730 52830 48060 48060

13. Financial Analysis

Financial Analysis for two animal unit

Amount Rs.
Year 1 2 4 4 5 6
Capital Cost 105000
Recurring cost 69225 92800 92800 92100 90350 90350
Total Cost 174225 92800 92800 92100 90350 90350
Total income 117490 147530 147530 144930 138410 138410
Net Benefit -56735 54730 54730 52830 48060 48060
PW cost @ 15% 419327 `
PW benefit @ 15% 522239
NPW 102913
BC Ratio 1.25
IRR 91%

14. Sensitivity Analysis & SWOT analysis

14.1. Sensitivity analysis

By assuming 5% increase in cost and 5% decrease in benefits, NPV, BCR and IRR will be as
given in the following table :

Sensitivity Analysis for 1+1 animal unit Amount in Rs.

S.No. Year 1 2 3 4 5 6
1 Income after 5% decrease 111616 140154 140154 137684 131490 131490
Expenditure after 5%
2 increase 182936 97440 97440 96705 94868 94868
3 NET BENEFITS -71321 42714 42714 40979 36622 36622
4 Discounting Factor 15%
5 NPV of Cost 440293
6 NPV of Benefits 496127
7 Net Present Worth (NPW) 55834
8 BCR 1.13
9 IRR 50%

Assuming an increase in cost as well as reduction in income, the project is sustainable.

14.2. SWOT analysis

I. Strengths: a) Doubling of farmers income can be achieved through this activity
b) Availability of forward and backward linkages in the district
II. Weaknesses: a) Drought situation in the district hence availability of green fodder
is less

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b) Inadequate awareness among the farmers on scientific dairy farming

III. Opportunities: a) Growing demand for milk from consumers due to awareness
b) Good road connectivity expands the market
IV. Threats: a) Fall in prices of skimmed milk powder, fall in demand for by products of
milk can adversely affect the sector
b) Weak monsoons adversely affect the milk production and thereby milk
procurement.

15. Repayment Period

Repayment period is presented in the following table:

Loan Repayment for two animal unit (Amount Rs.)
Year Loan O/s Gross Interest Principal Total Surplus
surplus repayment
1 94000 48265 11280 18000 29280 18985
2 76000 54730 9120 19000 28120 26610
3 57000 54730 6840 20000 26840 27890
4 37000 52830 4440 20000 24440 28390
5 17000 48060 2040 17000 19040 29020

16. Implementation strategy and Monitoring Mechanism

The Plan has been prepared based on the discussions with various stakeholders like
Department of Animal Husbandry, VUTRC,NGOs, FPOs, Farmers’ Clubs, SHGs etc. The
Plan will be placed before the DCC for its perusal and approval. A block level Sub-committee
will be constituted comprising select members of BLBC, representatives of NGO/ FPOs/ FCs
/ VUTRC or Dept of AH to ensure successful implementation of the plan. The stake holders
will play the following roles.

NABARD to create awareness about the centrally sponsored scheme in the district through
Farmers Clubs, NGOs, FPOs, Dairy Cooperatives, PACCS, etc. Department of Animal
Husbandry, RSETI and VUTRC will provide need based training to beneficiaries on scientific
management of animals, clean milk production, feed management, fodder development,
azolla cultivation, value addition in milk products and vermicomposting. Department will
provide veterinary aid facilities including Artificial insemination.
NGOs, FPOs, Farmers Clubs and Dairy Cooperatives will identify suitable beneficiaries and
pose to the Block level Sub – Committee for approval.
Banks to finance eligible clients. To ensure prompt repayment, the block level committee
shall review the progress. The NGOs / FPOs / FCs / Dairy Societies will play an active role in
ensuring prompt repayment by the borrowers.
NGOs/ FPOs / FCs to form dairy JLGs through FCs, sensitise farmers on the concept of JLGs,
role of leaders, Group/individual savings, ensure prompt repayment of bank loans.
Viable milk routes and milk collection centres in the potential blocks will be provided by the
Milk Producers’ Cooperative Societies. Wherever required, private dairies will be roped in.

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17. Conclusion
The district possesses capabilities to enhance milk production through better milk
productivity and the Area Development Scheme will pave way for focused growth through
institutional credit. Government on its part has been strengthening strategies towards cattle
health, availability of feed and fodder, timely availability of vaccination and disease
forecasting and in skilling farmers for better animal management. These efforts would
certainly help in increasing household income of farmers as also overall contribution of allied
sector to growth of agriculture and the GDP of the Nation.

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