PPT to Participants Webinar on Fin Dairy activities 23112021.pptx

Welcome to the Participants
Webinar on Financing Dairy
activities including milk
processing
Nov 23, 2021
College of Agricultural Banking,
Reserve Bank of India
PUNE

Webinar on Financing
Dairy activities including
milk processing
Dr A V Ravindraprasad
DGM/ MoF
CAB, RBI
 Dairy sector Overview
 Techno Financial appraisal
 Milk production (Milch Animals) financing
 Bulk Milk Cooling, Milk Processing (liquid milk)
 Value added products
Contents

Dairy-overview
Livestock sector contributes to around 28.36% of GVA in
Agriculture and 5.21% of total GVA in India.
( http://www.nddb.org)
Dairy activity is an integral part of agriculture.
80 million rural households are engaged in dairy sector.
Secondary source of income, liquidity and gainful employment to
small, marginal farmers and rural women.
Important vehicle for inclusive development
Milk has also emerged as the largest agri-produce, with value of
milk exceeding the combined value of food grains in India.
(https://indianexpress.com/article/india/with-20-of-agriculture-output-value-milk-overtakes-foodgrains-
4901882/)
Milk & Milk products share in the livestock sector 66.6%. In value
terms 7,72,705 crore (2018-19).
Economic importance
3

Export of Dairy products : 36,867.37 mt
worth Rs. 533.89 crore
Major Export Destinations:
UAE, Bangladesh, Egypt, Arab Republic, Nepal, Philippines,
Morocco and Pakistan.
Products Exported :
Butter Fresh, Butter MilK, Butter Oil, Fresh Cheese, Milk for Babies,
Skimmed milk powder, whole milk powder.
Economic importance contd..

130 128
176
217
281
299
322
0
50
100
150
200
250
300
350
Per Capita availability
(g/day)
Year

Top milk producing countries in the world (2018)
• India 187.7 million tonnes(198.4 in 2019-20)
• USA 98.7 million tonnes
• Pakistan 45.8 million tonnes
• China 35.6 million tonnes
• Brazil 34.1 million tonnes
• Germany 33.1 million tonnes
http://www.nddb.org
Dairy-overview (contd.,)

Region wise milk production in India
49%
21%
15%
9%
5% 1%
Share
North South West
Central East North East
State MMT Share (%)
UP 30.5 16%
Rajasthan 23.7 13%
MP 15.9 8.5%
AP 15.0 8%
Gujarat 14.5 7.7%
Punjab 12.6 6.7%
Maharashtra 11.7 6.3%
Haryana 10.7 5.7%
Bihar 9.8 5.3%
TN 8.3 4.4%
Dairy-overview (contd.,)

8
Source Source : Department of Animal Husbandry, Dairying & Fisheries, MoA&FW, GoI
The average daily milk yield for crossbred cattle in India is at 7.4 kg per day, which is
significantly lesser than the best of global standards — UK, US and Israel are at 25.6, 32.8
and 38.6 kg per day, respectively
Source : Business Line - Published on March 26, 2014. Indian Cow – May your yield increase-Yes bank
(https://www.thehindubusinessline.com/opinion/indian-cow-may-your-yield-increase / article 22995029.ece accessed on July 22,
2020)

Financing for different activities in dairy farming
• Establishment of dairy farms
•Small dairy
•Mini Dairy
•Commercial Dairy
• Cattle / Buffalo breeding farms/A.I.units
• Calf rearing
• Fodder cultivation
9

 Dairy Infrastructure - DEDS , DIDF, AHIDF
 Milking machines, milk testers
 Milk parlours or community milking centres
 Automatic milk collection centres
 Bulk milk coolers
 Milk tankers (Transport)
 Feed plant
 Milk processing units
• Retail outlets
• Veterinary hospitals/ dispensaries/ clinics/ Disease
diagnostic laboratories
Financing for different activities in dairy farming (contd.,)
10

Approach to Financing…
•Small to commercial units
•Cluster/Area based approach- under utilised
processing plants
•Dairy POs/PCs: Production, processing and
marketing
•SHG federations: IGA: MACS/SRCS
•Contract farming - Milk processors/Farmers-Tie up
•Integrated farming- Vermi-compost/ Calf Rearing

Financing Hi-tech projects in Dairy sector
• Commercial dairy with environment control housing system and retail
outlets
• Setting up of dairy processing plant
• Scope for financing (i) milking parlor unit/ mobile milking unit (ii) modern
feed plants/extruded feed plants, (iii) silage and baling of fodder units (iv)
setting up of private veterinary dispensaries

Major issues in Dairy
•1. Less adoption of scientific management automation helps
in reducing operational cost and improving milk quality as well as productivity. collaborative and
innovative dairy farming models have a critical role to play
•2. Breed / efficient breeding practices (AI services
cover only 25 per cent of dairy animals)/ Insufficient
veterinary services / artificial insemination facilities.
(Currently due to unavailability of trained manpower and lack of mobility (veterinary service
requirements are normally on short notice and require attendance in a limited time window at farm
doorstep), the services provided are not able to create desired impact.
• 2. Shortage of fodder and feed(The current deficit of green fodder and
concentrates is 34 per cent. Further, there is a supply demand gap for quality forage seeds as well.)
•4. Marketing – issues in remunerative price paid to
farmers
13

Major issues in Dairy contd…
•Low yield
•Lack of fodder and feed
•Lack of scientific management and breeding
practices
•lack of veterinary services / artificial
insemination facilities
•Marketing – issues in price paid to farmers

Dairy Value Chain – Financing Different Activities
 Foundation Stock
 Frozen semen banks
 Multiplication of progeny
 Cattle / Buffalo breeding farms
 A.I.units
 Calf rearing
 Establishment of dairy farms
 Mini Dairy
 Commercial Dairy

Dairy Financing – Different schemes –
contd.
 Feed and Fodder
 Production of fodder seeds
 Establishment of feed plants
 Fodder cultivation
 Animal Health
 Production of vaccines / animal health
products
 Disease diagnostic laboratories
 Veterinary hospitals/ dispensaries/ clinics

Dairy Financing – Different schemes –
contd.
 Dairy Infrastructure
 Milking machines
 Construction of milk houses/Milk Parlour
 Purchase of milkotesters / automatic milk
collection centres
 Bulk milk coolers
 Purchase of milk tankers
 Processing
 Retail outlets

Dairy Value Chain Financing modes
• Integrated units – Production and processing.
• Contract farming – Production by farmers and
processing by anchor agency – Cluster approach

Integrated Dairy Development – cluster basis
S.No Component Unit Cost No of
units
Total outlay Margin Bank Loan
1 Milch animals 0.530 1900 1007.00 100.70 906.30
2 Fodder cultivation 0.200 300 ha 60.00 0.00 60.00
3 Lay inseminator 1.500 2 3.00 0.30 2.70
4 Calf rearing* 7.121 65 462.87 46.29 416.58
5 Bulk milk coolers -
2000 litres
10.00 5 50.00 12.50 37.50
6 Mini refer tankers 18.00 1 18.00 4.50 13.50
7 Feed mixing unit 30.00 1 30.00 7.50 22.50
8 Milk processing unit 175.00 1 175.00 43.75 131.25
9 Biogas units 0.12 300 36.00 3.60 32.40
10 Vermicompost units 0.04 500 20.00 2.00 18.00
1861.87 221.14 1640.73

Project cost of different actvities
Type of Project TFO
Heifer rearing Rs. 5.30 lakh for 20 calf
unit.
Vermi compost only with dairy unit Rs.22000/-

Type of Project TFO
Milking machines / Miko testers/
BMCs upto 2000 lit.
Rs.20.00 lakh
Dairy Proc Equip for ind. milk
products
Rs. 13.20 lakh
Dairy Product Transportation, Cold
chain
Rs. 26.50 lakh
Cold storage for milk and milk prod. Rs. 33.00 lakh

Type of Project TFO
Private Veterinary Clinics - Mobile Rs.2.60 lakh
Private Veterinary Clinics –
Stationary
Rs.2.00 lakh
Dairy Marketing outlet / Parlour Rs. 1 lakh

Common terms used in technical appraisal
• Calf:
• Young one below the age of six months is called calf.
• Heifer:
• Female calf six months to first calving.
Calving:
animal giving birth to a calf.
Calving interval:
The period between two successive calving is calving interval.
• Lactation period:
The period after conception in which the animal produces
milk.
• Dry period:
The period after lactation in which the animal does not
produce milk.
Dairy-Technical Appraisal
25

Dairy: Production parameters – checklist
Buffaloes Indig cows C.B.Cows
Age at 1st calving
(months)
45-50
(about 4 yrs)
36-40
(about 3.5 years)
28-32
(about 3 years)
Lactation Yield
(Kg)
2000 - 2700 1200 - 1500 3000 - 4800
Lactation period
(days)
270 240 300
Dry period
(days)
120 110 90
Calving Interval
(months)
16 16 14
Avg milk yield
(per day)
08-10 ltr/day 5-6 ltr/day 10 to 16 ltr/day
Dairy-Technical Appraisal (Contd.,)
26

Technical aspects to be seen during appraisal
• Promoter & Location
• Selection of breed /
• Purchase of good quality animals / production
parameters
• Housing – Shed construction
• Farm equipment
• Feed and Fodder resources
• Water / power
• Health / Breeding / veterinary facilities
• Marketing potential and infrastructure
27
Financial Appraisal

28
Beneficiary
• Location
•Well drained,
•Connected to milk procurement network
•availability of clean drinking water, electricity.
• Climate
A temperature of 10 to – 34 o C is congenial for dairy
development.
• Interest and aptitude
• Experience in dairying.
• Training

Space:
Adults- 40 /60 sqft,
Heifers- 30 sqft,
Calves- 20 sqft
+ open space
• Space required (covered / Open)
• Milch animals – 60 / 150 sqft
• Dry animals – 40 / 100 sqft
• Pregnant / calving animals – 100 / 200 sqft.
• Calves - 20 / 50 sqft.
• Heifers – 30 / 100 sqft.

Dairy farm equipment
General equipment:
 Milk pails or milk cans feeding utensils, iron baskets for collection and
disposal of dung, brooms, feed bins, cow tie chains, etc.
 Chaff cutters / fodder farm implements.
Specific equipment:
 Milking machines / milking parlours
 Feed trolleys, tractor and trolley, feed grinder and mixer, diesel
generators
 Bulk milk coolers, transport vehicles, milk chiller rooms, deep freezers,
 Cooling systems: sprinklers, foggers or fan and pad system.
Proper quotations for equipment and machinery
31

Dairy: Feeding schedule
 Feeding accounts for 60%-70% of total cost of production.
 Cows – 2.0-2.5 kg / Buffaloes – 2.5 to 3.0 kg DM/100 kg BW
 Mini Dairy / Commercial Dairy farms- own fodder
arrangements (1 acre for- 6-7 animals: Reduces cost)
 Low cost feeding practices (Hydroponics, Azolla)
During Lactation During Dry period
Green fodder in
kg/day
25 20
Dry fodder kg/day 5 6
Concentrate feed in
kgs
1.0 kg for
maintenance + 1 kg
for every 2.5 kg of
milk produced
1
32

Dairy : Water , power
 Water source:
 Availability of water & electricity : Potable water 100
ltr/day for adult Tube well or bore well Over-head water
tank, pipe lines,
 Electricity :
 Required for lighting , operation of dairy equipment, chaff cutter
 Pumping , storage and distribution of water
33

Health and breeding Management
Health Management : Dairy framer’s experience or
hiring of professionals
Availability of labour
Availability of veterinary extension services for disease
prevention / control and
Artificial Insemination services for producing good
breed calves.
For commercial farms: availability and hiring of
veterinary doctors
34

Marketing aspects
Availability of good market / procurement network
 Milk price
 Milk collection centres
 Dairy processing units
 Tie up with hotels
 Setting up of own dairy outlets
36

Financial Appraisal
A. Project Cost Estimate
Funding Arrangements
B. Cash Flow Statement
Calculation of [BCR, NPV, IRR]
C. Repayment Schedule
Calculation of Debt Service Coverage Ratio
--------------------------------------------------------------------------------------
D. Projected Balance Sheet
F. Financial Ratios for assessing the organisation capacity
(BEP,Fixed Assets Coverage Ratio (FACR) and Interest
Coverage Ratio)
G. Working capital assessment

Project Cost Components
• Capital costs
 Milch animals
 Housing for animals
 Equipment
 Water supply arrangement
etc
• Recurring costs to be included in
the project cost
 Fodder cultivation
 Insurance of shed and animals
 Concentrate cost for first batch
for first month ( small units only)
 Veterinary aid and breeding
charges
Dairy-Financial Appraisal (A)
40

Cash Flow
Income
Sale of milk
Sale of calves
Sale of gunny bags
Sale of manure
Expenditure
Cost of feeding
During lactation
During dry period
Veterinary aid and breeding
charges
Labour wages
Electricity and water expenses
Insurance
Dairy-Financial Appraisal (B)
41

42
Case Study of Commercial Dairy

43
Case Study of Commercial Dairy

MODEL PROJECT FOR COMMERCIAL DAIRY (50+50) – Cross Bred COWS
II. Investment cost
SN Items Unit Phy. units Unit Cost
Total Cost
(Rs)
specificati
ons (Rs. / unit)
1
Cost of animals
Transport No.
10
10
60000
500
600000
5000
2 Insurance No. 2 2040 4080
3
Conc. Feed (for first animal
for 30 days) Kg 135 15.0 2025
4 Misc. cost Lumpsum 1895
Total cost 110000
Margin money (15% of total
cost) 16500
Bank loan (85% of total
cost) 93500
Dairy-Financial Appraisal (contd.,)
44

MODEL PROJECT FOR COMMERCIAL DAIRY (50+50) – Cross Bred COWS
II. Investment cost
SN Items Unit Phy. units Unit Cost
Total Cost
(Rs)
specificati
ons (Rs. / unit)
1
Cost of animals
Transport No.
10
10
60000
500
600000
5000
2 Insurance No. 2 2040 4080
3
Conc. Feed (for first animal
for 30 days) Kg 135 15.0 2025
4 Misc. cost Lumpsum 1895
Total cost 110000
Margin money (15% of total
cost) 16500
Bank loan (85% of total
cost) 93500
45

46

47

IV CASH FLOW ANALYSIS (Contd.,)
S.No Particulars Years
I II III IV V VI
II BENEFITS:
a) Sale of Milk 104650 131100 132250 132250 131100 126500
b) Sale of Gunny bags 428 545 549 549 545 531
c) Sale of manure 4500 6000 6000 6000 6000 6000
d) Closing stock value 20400
Gross Benefit 109578 137645 138799 138799 137645 153431
III Net benefits -53234 59941 60796 60796 59941 76921
IV DF @ 15%: 0.870 0.756 0.658 0.572 0.497 0.432
V
DISCOUNTED COSTS
AT 15%: 141575 58755 51288 44598 38633 33077
VI
DISCOUNTED
BENEFITS 95285 104079 91262 79358 68434 66332
AT 15%
VII NPV @15%: 136825
VIII BCR @ 15%: 1.37 : 1
IX IRR 36%
48

V Repayment schedule
Bank Loan (Rs) 93500
Interest Rate (%) 12
Repayment period
Capital recovery factor -
5
0.277410
( in Rs.)
Year Income Expenses*
Gross
surplus Equated
Net
surplus
annual
installment
I 109578 52811 56767 25938 30829
II 137645 77704 59941 25938 34003
III 138799 78003 60796 25938 34858
IV 138799 78003 60796 25938 34858
V 137645 77704 59941 25938 34003
DSCR = 298241 / 129690 = 2.30
*Expenses excludes capitalized recurring cost during first year
49

Lactation chart. (LD-300, DD-90)
Year Lactation days Dry days Total
LD DD
Batch I Batch II Batch I Batch II I II
I 270
5
180 90 - 455 90
II 295 90
185
70 90 570 160
III 300 115
160
20
45
90 575 155
IV 300 140
135
45
20
90 575 155
V 295 165
110
70 90 570 160
VI 5 90

Lactation chart. (LD-300, DD-90)
Year Lactation days Dry days Total
LD DD
Batch I
(1
animals)
Batch II
(1
animals)
Batch I Batch II I II
I 270
5
180 90 0 455 90
II 295 90
185
70 90 570 160
III 300 115
160
20
45
90 575 155
IV 300 140
135
45
20
90 575 155
V 295 165
110
70 90 570 160

The composition of milk (g/100g) of different species:
Species Water Fat Casein Lactose Ash
Whey
protein
Cow 87.3 4.4 2.8 4.6 0.7 0.6
Buffalo 82.2 7.8 3.2 4.9 0.8 0.6
Sheep 82.0 7.6 3.9 4.8 0.9 0.7
Goat 86.7 4.5 2.6 4.4 0.8 0.6
Human 87.1 4.6 0.4 6.8 0.2 0.7
52

Milk processing & Milk products
Processing technology Products
Pasteurisation, Homogenisation
& Standardisation
 Whole Milk, Skimmed Milk,
Standardised Milk (Toned Milk)
 Cream separation – Thick cream, Half
cream/ Coffee cream;
Fermentation Yoghurt, Butter milk, sour cream
Curd (indigenous)
Cream processing for Anhydrous
milk fat
Butter & Dairy spread
Ghee (Indigenous)
Coagulation i.e., (concentration
of solids both fat and protein)
Cheese
Drying of milk & whey Milk powder, Whey powder
Frozen products Ice cream
Protein concentration Casein

Indigenous Milk
Products
The inherent properties of buffalo milk like high total solids
content, superior whiteness and viscosity render it eminently
suitable for the manufacture of traditional (indigenous) milk
products like khoa, dahi, paneer, kheer, payasam, malai, kulfi
and ghee, butter.
Cow milk on the other hand yields a soft coagulum making
it suitable for preparing sandesh, rasagolla, chumchum and
rasamalai.

various processes and building blocks
• Collection and reception of milk
• Heat exchangers
• Centrifugal separators
• Homogenisers
• Membrane technology
• ………………………………
Service systems:
• Water
• Heating system – steam
• Cooling system
• Refrigeration
• Electric power
• Evaporators
• Deaerators
• Pumps
• Pipes, Valves & Fittings
• Tanks
• Automation – Sensors &
Controllers for regulation
55

Designing a processline
56
Aspects to be considered when a process line is designed.
• Product-related – concerning the raw material, its
treatment and the quality of the end product
• Process-related – concerning plant capacity, selection of
components and their compatibility, degree of process
control, availability of heating and cooling media, cleaning
of processing equipment, etc.
• Economic – that the total cost of production to meet the
stipulated quality standards is as low as possible
• Legal – legislation stipulating process parameters as well as
choice of components and system solutions

Line Diagram of a Process line
57

EQUIPMENT REQUIRED
• Silo tanks for storing the raw milk.
• Plate heat exchanger for heating and cooling, a holding tube and a
hot water unit.
• Centrifugal clarifier (as only whole milk is to be treated, a
centrifugal separator is not needed in this example).
• Intermediate storage tank for temporary storage of processed milk.
• Pipes and fittings for connecting main components and
pneumatically operated valves for controlling and distributing the
product flow and cleaning fluids.
• Pumps for transportation of milk through the entire milk treatment
plant.
58

EQUIPMENT REQUIRED CONTD…
• Control equipment for control of capacity, pasteurization
temperature and valve positions.
• Various service systems:
– Water supply
– Steam production
– Refrigeration for coolant
– Compressed air for pneumatically operated units
– Electric power
– Drain and waste water.
59

Components of a complete Pasteuriser
1. Balance tank
2. Feed pump
3. Flow controller
4. Regenerative preheating sections
5. Centrifugal clarifier
6. Heating section
7. Booster pump
8. Holding tube
9. Hot water heating system
10. Regenerative cooling sections
11. Cooling sections
12. Flow diversion valve
13. Control panel
• A Temperature transmitter
• B Pressure gauge
61

Animal Husbandry Infrastructure Development Fund
• Components of the AHIDF
• Dairy Processing
• Meat Processing
• Animal Feed
Manufacturing

Dairy Infrastructure Development Fund
(DIDF)
Total Outlay: 11,184 crore (NABARD Loan: 8004 cr, Beneficiary
contribution: 2001 cr, NDDB & NCDC 6 cr each, GoI interest
subvention 1167 cr
Objectives:
• The scheme focuses on creation, modernisation and expansion
of processing infrastructure and manufacturing facilities for
value added products.
• The Project also focusses on setting up of milk chilling infra
and installation of electronic milk adulteration testing
equipment.
63

Dairy Infrastructure Development Fund
(DIDF)
DIDF implementation period: upto 2022-23
Project period(individual): 10 years including two years
moratorium
Therefore, Repayment period upto 2030-31
Implementing agencies: NDDB & NCDC
Eligible end borrowers: Milk Unions, State Dairy federations,
Multi-state milk cooperatives, Milk producing companies, NDDB
subsidiaries
Progress: 40 projects sanctioned in 11 states
64

Recap - Quiz
1. Which is the stage of lactation considered most desirable for
purchase of animals in financing a dairy project?
2. What is the approximate Lactation period and Dry period of Cross
breed Cow?
3. What is the ratio of covered space and open space in Dairy
housing?
4. (a) Dairy financing is to be done preferably in how many batches?
and (b) with how many months gap?
7. Which component occupies max portion in maitenance cost of dairy
animal?
65

Compiled by
Dr A V Ravindraprasad
DGM/ MoF
CAB, RBI
References
1. National Code of Practices for Management of Dairy Animals in India, ICAR-
National Dairy Research Institute, Karnal.
2. NABARD Model projects
3. National Bureau of Animal Genetic Resources, ICAR, Karnal
4. National Dairy Development board, Anand, Gujarat.
5. http://www.ncap.res.in/upload_files/policy_paper/pp14/chapter2.html
6. https://www.nabard.org/pdf/issue6td-8.pdf
7. http://www.cwc.nic.in/iso_data_bank/FINANCIAL_ASPECTS.pdf
8. http://agritech.tnau.ac.in/banking
66
Thank You
9866249602
avravindraprasad@rbi.org.in

PPT to Participants Webinar on Fin Dairy activities 23112021.pptx

Recommended

Recommended

More Related Content

Similar to PPT to Participants Webinar on Fin Dairy activities 23112021.pptx

Similar to PPT to Participants Webinar on Fin Dairy activities 23112021.pptx (20)

Recently uploaded

Recently uploaded (20)

PPT to Participants Webinar on Fin Dairy activities 23112021.pptx