Economics of Poultry Broiler Farming Why do broiler farming?

Poultry meat is an important source of high quality proteins, minerals and vitamins to balance the human diet. Specially developed breeds of chicken meat (broiler) are now available with the ability of quick growth and high feed conversion efficiency. Depending on the farm size, broiler farming can be a main source of family income or can provide subsidiary income and gainful employment to farmers throughout the year. Poultry manure has high fertilizer value and can be used for increasing yield of all crops. i) The advantages of broiler farming are ii) Initial investment is a little lower than layer farming iii) Rearing period is 6-7 weeks only iv) More number of flocks can be taken in the same shed v) Broilers have high feed conversion efficiency i.e. least amount of feed is required for unit body weight gain in comparison to other livestock. vi) Faster return from the investment vii) Demand for poultry meat is more compared to sheep/Goat meat. Scope for broiler farming and its national importance India has made considerable progress in broiler production in the last two decades. High quality chicks, equipments, vaccines and medicines are available. Technically and professionally competent guidance is available to the farmers. The management practices have improved and disease and mortality incidences are much reduced. Many institutions are providing training to entrepreneurs. The broiler population has increased from 204.33 million in 1981 to 843 million in 2003. Poultry meat contributes 4.8% of total value from livestock sector (1999-200). Increasing assistance from the Central/ State governments and poultry corporations is being given to create infrastructure facilities so that new entrepreneurs take up this business. Broiler farming has been given considerable importance in the national policy and has a good scope for further development in the years to come. Financial assistance available from Banks/NABARD for broiler farming NABARD is an apex institution for all matters relating to policy, planning and operations in the field of agricultural credit. It serves as an apex refinancing agency for the institutions providing investment and production credit. It promotes development through formulation and appraisal of projects through a well organized technical services department at the Head Office and technical cells at each of the Regional Offices. Loan from banks with refinance facility from NABARD is available for starting broiler farming. For obtaining bank loan, the farmer should apply to the nearest branch of a commercial or cooperative or regional rural bank in their area in the prescribed application form which is available in the branches of financing bank. The technical officers attached to or the manager of the bank can help or give guidance to the farmers in preparing the project report to obtain bank loan. 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 equipments. Cost of one day old chicks, feed, medicine and labour cost for the first 7 weeks period for the first cycle, are also considered. Facilities such as land development cost, fencing, water and electricity, essential servants quarters, godowns, transport vehicles, broiler dressing, processing and cold storage facilities can also be considered for providing loan. Cost of land is not considered for loan. However, if land is purchased for starting a broiler farm, its cost can be

treated as partys margin money upto 10% of the total cost of project. Scheme formulation for bank loan A scheme can be prepared by the beneficiary after consulting local technical persons of State veterinary 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 after attaining 6-7 weeks of age, a regular and constant demand for broiler meat and nearness of the farm to the market should be ensured. The scheme should include information on land, water and electricity facility, marketing aspects, training facilities and 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 loans, estimated annual expenditure, income and profit and the repayment of loan and interest. Requirements of good project The bank officers also can 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 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) Facilities and infrastructure available for supply of inputs, veterinary aid, marketing, training/experience of the beneficiary B. Financial viability this would briefly include: (a) Unit cost and loan requirement (b) Input costs for chicks, feed, veterinary aid, labour and other overheads (c) Output costs i.e. sale of broiler for meat, 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 forms, security aspects, margin money requirements etc. are also examined. A field visit to scheme area is undertaken for conducting technoeconomic feasibility study for appraisal of the scheme. 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, such as 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. Lending terms General: 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 co-operative banks to review the unit cost of various investments once in six months. The same is circulated among the banks for their guidance. These costs are only indicative in nature and banks are free to finance any amount depending upon the quality of

investment. Margin Money: NABARD has defined farmers into three different categories and where subsidy is not available the minimum down payment as shown below is collected from the beneficiaries. Sr. No. a) b) c) Category of Farmer Small farmers Medium farmers Large farmers Beneficiarys Contribution 5% 10% 15%

Interest Rate: Banks are free to decide the interest rates within overall RBIguidelines. However, for working out financial viability and bankability of model project, we have assumed rate of interest as 12% p.a. Security: Security will be as per NABARD/RBI guidelines issued from time to time. 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 5-6 years. Insurance: The birds and other assets (poultry sheds, equipment) may be insured. Whereever necessary Risk/Mortality fund may be considered in lieu of poultry insurance. ECONOMICS OF BROILER FARMING Techno-economic parameters S. No. Particulars No. of birds (per week) Rearing period (weeks) No. of batches per cycle No. of batches introduced: I year (on considering 3 months construction period) II year onwards No. of batches sold: I year (on considering 3 months construction period + rearing period) II year onwards 500 6-7 8 40 52

33 52

Space requirement per bird (sq. ft.) Investment Costs A. 1. a. b. c. d. e. Capital costs

2, 80, 000 Building and shed construction costs: Cost of shed (1 sq. ft./bird, total 4000 sq. ft. @ Rs. 70/sq. ft.) Store room (200 sq. ft. @ Rs. 150/sq. ft.) Labour quarter (150 sq. ft. @ Rs. 150/sq. ft.) Slaughter room (100 sq. ft. @ Rs. 150/sq. ft.) Barbed wire fencing (750 rft @ Rs. 15/rft) Water supply system Well boring (13 ft. diameter and 33 ft. deep) Water tank (5000 lits. @ Rs. 2/lt.) Electric motor (3 hp), pump, pipe, etc. Electric fitting (4% of cost of building) Equipment Feed and water pails (Rs. 10/bird for 4000 birds) Total 30, 000 22, 500 15, 000 11, 250

2. a. b. c. d. 3. a.

20, 000 10, 000 12, 000 13, 210

40, 000

4, 53, 960

B. 1. 2. 3. 4.

Recurring expenditures Cost of day-old chick (4000 chicks @ Rs. 15/chick) Feed costs for 4080 chicks (3.2 Kg/bird @ Rs. 7/Kg) Misc. costs (Vety. aid, medicines, vaccines, insurance, etc.) Labour (1 labour @ Rs. 1800/labour) Total investment (A+B) Bank loan Bank loan (rounded) 60, 000 91, 392 20, 400 10, 800 6, 36, 552 4, 77, 414 4, 77, 500

Cash flow statement

S. No. A. 1. 2. a. b. c. d.

Years Particulars Costs Capital investment Recurring expenditures Cost of chicks Feed cost Misc. costs Labour charges Total costs 3, 00, 000 4, 27, 472 95, 110 10, 800 12, 87, 342 3, 90, 000 5, 94, 048 1, 32, 600 10, 800 11, 27, 448 3, 90, 000 5, 94, 048 1, 32, 600 10, 800 11, 27, 448 4, 53, 960 I II V VI

B.

Benefits Sale of birds (1.5 Kg/broiler @ Rs. 95/Kg) Sale of manure (Re 1/broiler) Sale of empty gunny bags (Rs. 12/bag, 13.3 bags per ton of ration) Depreciated value of sheds and buildings (@ 5% per annum) Depreciated value of equipments (@ Rs. 10/annum) Value of closing ctock Total benefits Net benefits 15, 60, 000 25, 000 15, 60, 000 25, 000

9, 90, 000 16, 500

9, 746

13, 544

13, 544

2, 43, 250

10, 16, 246 -2, 71,

15, 99, 544 4, 72, 096

16, 000 1, 16, 667 19, 49, 461 8, 22, 033

096