Bank Finance and Government Incentives for EMU farming?
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Sumukha Farms
Dec 7, 2010, 2:53:32 PM12/7/10
to EmuBangalore
Government scheme
Government of India has recently launched a new venture capital
funding scheme for poultry in which loan for 50% of the project cost
will be interest free for emu breeding farms, subject to a maximum
project cost of Rs.30 lakh.
If the loan account has not turned into a non performing asset account
and the repayments are regular with no over due, then the farmer is
eligible to claim for 50% interest subsidy on the portion of the bank
loan till repayment period.
Objectives
This facility is available for the following purposes:
emu breeding farms worth Rs. 30.00 lakhs,
establishment of feed go-downs, feed mixing units, and feed analytical
units worth of Rs.16.00 lakhs, and marketing of poultry products
(specialized transport vehicle, cold room, retention shed for birds
etc) worth of Rs. 25.00 lakhs.
Implementing agencies
NABARD is the nodal agency for the implementation of this scheme.
Several commercial banks, cooperative banks and regional rural banks
have implemented this scheme.
Sample cost estimate for breeding farm of 60 emu pairs
Emu Breeding Farm (60 pairs)
S. No. | Items of
investment
| Cost in Rs. (appx.)
1 | Emu shed, emu breeding pens, run of area with G.I. chain
link and M.S. gate | 400,000
2 | Feed godown
(storage)
| 100,000
3 | Store and
office
| 60,000
4 | Water supply, tank, well
etc.
| 110,000
5 | Labor
housing
| 25,000
6 |
Equipments
| 25,000
7 | Emu birds: 60 pairs – 3 months
old |
12,00,000
8 | Emu transport and
insurance
| 120,000
9 | Feed
cost
| 720,000
10 | Overhead cost 240,000
Grand Total (GTO) 30,00,000
Scheme funding/ Pattern of investment
Entrepreneur’s contribution: 10% of total outlay or margin money
Interest free loan: 50% of total outlay (through NABARD)
Bank loan: 40% of total outlay (interest as applicable to agriculture
loan)
NABARD would provide refinance to participating banks for 90% of the
amount financed by the banks as term loan. Rate of interest on
refinance will be decided by NABARD from time to time.
Permission from the State Forest Department
It is clarified by the Chief Conservator of Forests, State Government
of Maharashtra, Pune that emu is an exotic bird; and it has not been
included in any of the schedules of wildlife (protection) Act, 1972.
The provisions of Wild Life Protection Act, 1972 and rules made there
under are, thus, not applicable to these birds. As such no permission
from the State Forest Department is necessary for rearing, farming and
selling of these birds.
Procedure
To obtain a bank loan, farmers should apply to the nearest branch of a
Commercial, Cooperative or Regional Rural Bank in their area using the
prescribed forms which are available in the local branches of the
financing banks.
A detailed project report (DPR) along with necessary documents, such
as, layout, site plan, cost estimates of civil work, quotations of
equipments, training and/or experience certificate of the entrepreneur
if any, should be attached/enclosed with the loan application.
The project will be sanctioned by the bank after proper scrutiny, if
it
follows bank’s laid down procedures
is technically feasible & financially viable (bankable) and
meets the conditions prescribed under the scheme.
If the bank sanctions the loan proposal, then it will have to submit
its claim for venture capital fund (interest free portion) in the
prescribed format to the regional office of NABARD. NABARD will
carefully scrutinize the claim and if satisfied, it will release fifty
percent of the total outlay, i.e., the interest free portion of the
loan out of the revolving fund, to the bank .
The bank will release the entire loan amount in installments depending
on the progress of the implementation of the project. The bank will
affect recovery as per its prescription. Also, it will have to return
pro rata of the recovery made to NABARD for crediting the revolving
fund on an annual basis.
Repayment period of loan will depend upon the cash flow and will be up
to maximum of nine years including grace period of two years. For
assured repayment a tripartite agreement between the financing bank,
emu hatchery owner and the borrower shall be executed. The emu farmer
and the hatchery owner should execute a deed for buyback arrangement
of emu eggs etc.
Financial Analysis
From the cash flow analysis, it is observed that the Benefit Cost
Ratio (BCR) and the Internal Rate of Return (IRR) has been worked out
to approximately 1.35:1 and 35%, respectively for emu farming, based
on the average techno financial assumptions. The net income at present
varies from Rs. 35000 to Rs. 50000 per year/pair of emu.
Government of India has recently launched a new venture capital
funding scheme for poultry in which loan for 50% of the project cost
will be interest free for emu breeding farms, subject to a maximum
project cost of Rs.30 lakh.
If the loan account has not turned into a non performing asset account
and the repayments are regular with no over due, then the farmer is
eligible to claim for 50% interest subsidy on the portion of the bank
loan till repayment period.
Objectives
This facility is available for the following purposes:
emu breeding farms worth Rs. 30.00 lakhs,
establishment of feed go-downs, feed mixing units, and feed analytical
units worth of Rs.16.00 lakhs, and marketing of poultry products
(specialized transport vehicle, cold room, retention shed for birds
etc) worth of Rs. 25.00 lakhs.
Implementing agencies
NABARD is the nodal agency for the implementation of this scheme.
Several commercial banks, cooperative banks and regional rural banks
have implemented this scheme.
Sample cost estimate for breeding farm of 60 emu pairs
Emu Breeding Farm (60 pairs)
S. No. | Items of
investment
| Cost in Rs. (appx.)
1 | Emu shed, emu breeding pens, run of area with G.I. chain
link and M.S. gate | 400,000
2 | Feed godown
(storage)
| 100,000
3 | Store and
office
| 60,000
4 | Water supply, tank, well
etc.
| 110,000
5 | Labor
housing
| 25,000
6 |
Equipments
| 25,000
7 | Emu birds: 60 pairs – 3 months
old |
12,00,000
8 | Emu transport and
insurance
| 120,000
9 | Feed
cost
| 720,000
10 | Overhead cost 240,000
Grand Total (GTO) 30,00,000
Scheme funding/ Pattern of investment
Entrepreneur’s contribution: 10% of total outlay or margin money
Interest free loan: 50% of total outlay (through NABARD)
Bank loan: 40% of total outlay (interest as applicable to agriculture
loan)
NABARD would provide refinance to participating banks for 90% of the
amount financed by the banks as term loan. Rate of interest on
refinance will be decided by NABARD from time to time.
Permission from the State Forest Department
It is clarified by the Chief Conservator of Forests, State Government
of Maharashtra, Pune that emu is an exotic bird; and it has not been
included in any of the schedules of wildlife (protection) Act, 1972.
The provisions of Wild Life Protection Act, 1972 and rules made there
under are, thus, not applicable to these birds. As such no permission
from the State Forest Department is necessary for rearing, farming and
selling of these birds.
Procedure
To obtain a bank loan, farmers should apply to the nearest branch of a
Commercial, Cooperative or Regional Rural Bank in their area using the
prescribed forms which are available in the local branches of the
financing banks.
A detailed project report (DPR) along with necessary documents, such
as, layout, site plan, cost estimates of civil work, quotations of
equipments, training and/or experience certificate of the entrepreneur
if any, should be attached/enclosed with the loan application.
The project will be sanctioned by the bank after proper scrutiny, if
it
follows bank’s laid down procedures
is technically feasible & financially viable (bankable) and
meets the conditions prescribed under the scheme.
If the bank sanctions the loan proposal, then it will have to submit
its claim for venture capital fund (interest free portion) in the
prescribed format to the regional office of NABARD. NABARD will
carefully scrutinize the claim and if satisfied, it will release fifty
percent of the total outlay, i.e., the interest free portion of the
loan out of the revolving fund, to the bank .
The bank will release the entire loan amount in installments depending
on the progress of the implementation of the project. The bank will
affect recovery as per its prescription. Also, it will have to return
pro rata of the recovery made to NABARD for crediting the revolving
fund on an annual basis.
Repayment period of loan will depend upon the cash flow and will be up
to maximum of nine years including grace period of two years. For
assured repayment a tripartite agreement between the financing bank,
emu hatchery owner and the borrower shall be executed. The emu farmer
and the hatchery owner should execute a deed for buyback arrangement
of emu eggs etc.
Financial Analysis
From the cash flow analysis, it is observed that the Benefit Cost
Ratio (BCR) and the Internal Rate of Return (IRR) has been worked out
to approximately 1.35:1 and 35%, respectively for emu farming, based
on the average techno financial assumptions. The net income at present
varies from Rs. 35000 to Rs. 50000 per year/pair of emu.
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