Role of institutional finance in poultry development
Poultry industry provides employment to two million persons with a turnover of about Rs.22000 crore. India ranks fourth in the world with an annual egg production of 40000 million eggs and nineth in broiler production with an annual output of 1200 million broilers. Poultry is one of the fastest growing sectors in the country with an annual growth rate of 12 to 15% in broilers and 5 to 7% in egg production. India has adequate parent stock, hatcheries, equipment manufacturers, etc. required for our poultry industry. For all these achievements, institutional finance from banks also played a major role along with other factors like enterprising farmers, favourable policies of the Government, availability of quality inputs and ever increasing domestic demand for poultry products. During the last three decades poultry production has transformed itself from production by the masses to production for the masses because of high investment cost and inability to withstand wild fluctuation in feed and product prices by small farmers. Many small layer units have closed down or gone for expansion. Today layer units of 100000 birds and above under cage system are common. Poultry units for exclusive export oriented production, complete automatic feeding and watering system and cold storage with grading and packing facilities are getting more and more attention from the farmers because of export advantage, the country enjoys. The cost of egg production in our country is very low which gives a competitive edge in international market.
The current poultry meat production of India is about 1.6 million tons amounting to Rs.8000 crore but export is negligible. Recent bird flu crisis has provided opportunity for our poultry industry to accelerate exports of poultry meat especially in view of clean chit given by World Health Organization and the Office Internationale Des Epizootics(OIE) to Indian industry. To exploit this opportunity we may require more investments in processing, preservation and marketing with cold chain facilities and other infrastructure. We may have to improve quality of our products by adoption of better technology and reduce cost of production. Better veterinary inspection, disease screening and certification facilities are required at major airports. Export is also an option to stabilize the domestic price for poultry products especially in view of wild swings in domestic demand and price. According to a study of Rabo India Finance Pvt.ltd. further growth in poultry industry hinges on consolidation, boosting poultry demand, integration with global markets and direct procurement of maize from farmers. Already broiler production under contract with integrators is gaining more and more acceptances of farmers because of its inherent advantage of risk minimization by way of assured market / income and reduced cost of production. As a result of improvement in competitiveness of poultry meat, today India has made a beginning in dressed chicken exports to Gulf countries besides normal exports of table eggs, hatching eggs, frozen eggs, egg powder, live poultry (one day old chicks), poultry equipments and machinery. As of 2002-03, poultry exports from the country has touched Rs.1,565 million although there is a potential to increase it to Rs.3 to 4 billion.
2. Institutional finance for poultry development
The credit provided by banks along with refinance support extended by National Bank for Agriculture and Rural Development (NABARD) has played a pivotal role for the poultry development in the country. Out of total credit of Rs.2928 crore disbursed for animal husbandry sector in 2003-04, about 20% is for poultry sector. Banks invariably have financed for all segments of poultry industry viz., commercial broiler / layer farms, associate hatcheries with parent stock farms, pure line breeding farms, grand parent farms with hatcheries, SPF egg production units, processing plants, feed plants etc. The refinance support extended by NABARD for poultry sector in the country during last 5 years is given below.
As an apex institution for all matters pertaining to policy, planning and operation in the field of agricultural credit, NABARD provides not only refinance assistance to banks for their lending to poultry sector but also involved in credit planning, co-financing, capacity building of officers of financial institutions, transfer of technology, conduct of studies and support to research projects of relevance. Co-financing, the new direct lending arm of NABARD is specifically meant for projects in sunrise technologies as well as in thrust areas where credit is not flowing. NABARD through its subsidiary, NABCONS, is providing consultancy services to farmers, banks and Government on payment of fees. From its Rural Infrastructure Development Fund, NABARD is also assisting State Governments to strengthen rural infrastructure including infrastructure required for animal husbandry sector.
3. Credit opportunities
The per capita egg consumption in the country is 42 against 180 recommended by National Institute of Nutrition. Similarly per capita poultry meat consumption is only 1.5 Kg per year, which is one of the lowest in the world. The above factors along with increasing population under middle income group and increasing amount spent by them on new economy products like milk, eggs, meat, fruits and vegetables indicate huge potential for development of the sector. Besides export opportunities are also opening up for all poultry products. Hence the credit demand from this sector is expected to increase continuously in the coming years. However the demand for credit in future will be more for those investments which ensure production in line with global standards, reduction in cost of production and improve production efficiency. Some such areas requiring specific attention of credit institutions are given below.
For exploiting the credit opportunities indicated above, especially those with focus on exports, the following suggestions are given for consideration by Government.
Policy changes - Extension of freight subsidy for which is available for other meat to poultry meat exports by APEDA.
Often, poultry industry is quoted as example of success of private sector in agriculture with industry friendly policies of Government. NABARD and Banks played yeoman service in development of this sector with credit support. But the coming years are going to be more challenging for the industry. New export market thrown open because of bird flu scare and implementation of WTO agreements should be exploited fully by the industry not only for short term profit but also for long term advantage and stabilizing domestic prices. Banks also will extend all the necessary credit support to the industry for achieving this as in the past.
Note : The views expressed in this paper are that of author only and not necessarily that of the organization, he represents.
Dairy / Poultry Venture capital fund
I. Poultry sector components for financing under Venture capital fund
II. Districts selected for poultry investments
|Source : IPSACON-2005|