3. Integration in Broiler Farming:
There is a growing trend of integration in broiler farming. In the early nineties, contract farming for broilers was introduced and in 1995 it spread all over Tamilnadu. Between 1995 and 2000, it spread to Karnataka. It gathered momentum and spread its wings to Maharashtra, Andhra Pradesh in the years 2001 & 2002 and after that, it gained inroads into West Bengal and Gujarat. The spread is due to built in strengths in integration system. Integrators will take care of all aspects of production, right from raising of grandparent and parent flocks, production of day old chicks for rearing, manufacturing and supply of concentrate feed, providing veterinary services and wholesale marketing of birds. Under integration all the previous profit centres of the broiler industry viz. chick selling, feed selling, hatching, medicine supply, transportation have become cost centres for the integrators who work as a single entity and distribute the benefits among the farmer, consumer and the integration company themselves. Under contract farming, poultry farmers invest only for poultry sheds / equipment on their existing land. The Integrator supplies chicks, feed, medicines, provides technical guidance and takes entire production after 5-6 weeks. The contract farmers are paid growing charges as per agreed rates. This has eliminated the middlemen. Farmer is benefiting from the lesser investment and production cost and also higher productivity which is achieved as a result of integration. However, the farmer may be at a disadvantage if the number of batches supplied in the year by the integrator is less.
4. Financial assistance available from Banks/NABARD for broiler farming
For poultry farming schemes with very large outlays detailed project reports are required to be prepared. The items of finance would include construction of broiler sheds and purchase of equipment, cost of one day old chicks, feed, medicine and labour cost for the first cycle. Cost towards land development, fencing, water and electricity, essential servant’s quarters, godowns, transport vehicles, broiler dressing, processing and cold storage facilities can also be considered for providing loan. Cost of land is usually not considered for loan.
5. Scheme formulation for bank loan
5.1 A scheme can be prepared by the promoter after consulting local technical persons of State Veterinary / Animal Husbandry department, Poultry Corporation or private commercial broiler hatcheries. If possible, they should also visit the progressive broiler farmers in the area and discuss the profitability of farming. A good practical training and experience on a broiler farm will be highly desirable, before starting a broiler farm. As broilers have to be sold within 35 to 40 days of age, regular and constant demand for broiler meat and nearness of the farm to the market should be ensured.
5.2 The scheme should include information on land, water and electricity facility, marketing aspects, training facilities, expertise of entrepreneurs and the type of assistance available from State government, Poultry Corporations, local hatcheries. It will also include data on proposed capacity of the farm, total cost of the project, margin money to be provided by beneficiary and requirement of bank loan, estimated annual expenditure, income and profit and the repayment of loan and interest.
A format developed for project report preparation for a commercial broiler farm is given in Annexure -I
6. Appraisal of the project
The bank officers can also assist in preparation of the scheme or filling in the prescribed application form. The scheme so formulated should be submitted to the nearest branch of the bank.
The bank will then examine the scheme for technical feasibility and economic viability.
A. Technical feasibility - this would briefly include:
(a) Suitability of climate and potentiality of the area
(b) Technical norms including schedule for replacement of flocks
(c) Infrastructure and other facilities available for supply of inputs, veterinary aid, marketing etc., and training/experience of the beneficiary
B. Financial viability - this would briefly include:
(a) Unit cost and loan requirement
(b) Input cost for chicks, feed, veterinary aid, labour and other overheads
(c) Output cost i.e. sale of broilers, manure and other miscellaneous items.
(d) Calculation of annual gross surplus (income-expenditure)
(e) Cash flow analysis
(f) 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 scheme area is undertaken for conducting techno - economic feasibility study for appraisal of the scheme.
7. Sanction of Bank loan and its disbursement
After ensuring technical feasibility and financial viability, the scheme is sanctioned by the bank. The loan is disbursed in kind in 2 or 3 stages, against the creation of specific assets, construction of sheds, 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 is done by the bank.
8. Lending terms - General:
8.1 Outlay :
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.
8.2 Margin Money :
Margin depends on the category of the borrowers and range from 5 to 25%.
8.3 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, we have assumed rate of interest as 12% p.a.
Security will be as per NABARD / RBI guidelines issued from time to time.
8.5 Repayment of loan :
The loan repayment is determined, on the basis of gross surplus generated in the scheme. Usually the repayment period of loan for broiler farming is 6 to 8 years.
8.6 Insurance :
The birds and other assets (poultry shed, equipment) may be insured. Wherever necessary Risk/Mortality fund may be considered in lieu of poultry insurance.