Poultry Broiler Farming / Layer Farminig
 
 
1. Introduction
Poultry meat is an important source of high quality proteins, minerals and vitamins to balance the human diet. Specially developed varieties of chicken (broilers) are now available with the traits 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 is of high fertilizer value which can be used for increasing yield of all crops.
The advantages of broiler farming are
  • Initial investment is a little lower than layer farming.
  • Rearing period is 5-6 weeks only
  • More number of flocks can be taken in the same shed.
  • Broilers have high feed conversion efficiency i.e. the amount of feed required for unit body weight gain is lower in comparison to other livestock.
  • Faster return from the investment
  • Demand for poultry meat is more compared to sheep/goat meat

2. Scope for broiler farming and its national importance
India has made considerable progress in broiler production in the last three decades. The broiler production has sky rocketed at an annual growth rate of about 10% and stands at about 2.3 million metric tons of chicken meat (FAO 2005). The population of broiler poultry as per 2004-05 census is 199.73 million. Today India is the fifth largest producer of broiler meat in the world. Despite this achievement the annual per capita consumption in India is only 1600 grams of poultry meat as against the world average of 5.9 kg of meat.

 
 
Recommended per capita consumption of chicken meat by National Institute of Nutrition is 11 Kg.

Owing to the considerable growth in broiler industry, high quality chicks, equipment, vaccines and medicines, technically and professionally competent guidance are available to the farmers. The management practices have improved and disease and mortality incidences are reduced to a great extent. Many institutions are providing training to entrepreneurs. Increasing assistance from the Central/ State governments and poultry corporations is being given to create infrastructure facilities so that new entrepreneurs are attracted to 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.
 
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 servantís 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.
8.4 Security:
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.
 
Annexure I

Format for preparation of Project report
Poultry -  Commercial Broiler Farm

 
1. GENERAL
i) Nature and objectives of the proposed scheme
ii) Details of proposed investments
iii) Specification of the project area
iv) Name of the financing bank branch
v) Status of beneficiary: (Individual)/Partnership/ Company/Corporation/ Co-operative Society/Others
vi) Borrowers profile
(a) Capability
(b) Experience
(c) Financial soundness
(d) Technical/Other special qualifications
(e) Technical/Managerial Staff  and adequacy thereof

2. TECHNICAL ASPECTS:
a) Location, Land and Land Development:
i) Location details of the project
ii) Total area of land and it's cost
iii) Site map
iv) Particulars of land development, fencing, gates etc.

b) Civil Structures:
Detailed cost estimates along with measurements of various civil structures
- Broiler Sheds
- Store room
- Dressing room
- Office room
- Quarters for staff
- Others

c) Equipment/Plant and machinery:
(i) Feeders
(ii) Waterers
(iii) Generator
(iv) Feed grinder and mixer
(v) Debeaker
(vi) Vaccinator
(vii) Fridge/Deep Freezer
(viii) Dressing equipment if necessary
(ix) Truck/van/jeep (Price quotations for the above equipment)

d) Housing:
i) Type of housing - Deep Litter/Slat/Environment controlled)
ii) Area required (sft./bird)

e) Birds:
i) Proposed strain
ii) No. of birds to be purchased
iii) Source of purchase
iv) Cost of birds (Rs. per bird)
v) Vaccination of purchased birds
vi) Proposed programme of replacement

f) Production parameters:
i) Average body weight (kg.)
ii) Feed efficiency (kg. of feed/ kg body weight gain)
iii) Mortality (%)

g) Flock Projection Chart:

h) Feeding:
i) Source of availability - Purchased or own feed manufacturing
ii) If purchased
a) Place of purchase
b) Brand
c) Cost (Rs./kg)
- Starter
- Finisher
iii) If manufactured on farm
a) Capacity of feed grinder and mixer
b) Source of raw materials
c) Feed formula
d) Cost of production (Rs./kg)
- Starter
- Finisher
iv) Requirement (kg/bird)
- Starter
- Finisher
i) Veterinary aid
i) Source
ii) Location
iii) Distance (km.)
iv) Availability of labour and other staff
v) Type of facilities available
vi) If own arrangements are made
a) Employed a veterinary doctor/stock man /consultant
b) Periodicity of visit
c) Amount paid (Rs.)
vii) Expenditure per bird per cycle (Rs.)

j) Electricity
i) Source SEB / Other
ii) Approval from electricity board
iii) Connected load
iv) Problems of power failure
v) Arrangements for generator

k) Water
i) Source
ii) Quality of water
iii) Availability of sufficient quantity for drinking and cleaning
iv) If investment has to be made, type of structure, design and cost
l) Marketing of broilers
i) Source of sale
ii) Place of disposal
iii) Distance (km)
iv) Basis of payment (number or weight)
v) Price realised - (Rs. per kg live weight or live bird)
vi) Periodicity of payment

m) Marketing of other products
i) Manure - Qty./bird, price per unit (Rs./Q)
ii) Empty gunny bags - Number and cost/bag

n) Beneficiary's experience

o) Comments on technical feasibility

p) Government restrictions, if any
 
3. FINANCIAL ASPECTS :
 
i) Project Cost
 

Sr. No.

Item

Physical Unit and Specification

Cost  (Rs.)

  Capital Costs    
       
       
  Total Capital Costs(A)    
  Recurring Costs    
       
       
  Total Recurring Costs (B)    
  Total Project Cost (A+B)    
 
ii) Down payment/margin/subsidy (Indicate source & extent of subsidy)
iii) Financial viability ( comment on the cash flow projection on a farm model / unit and enclose the same ) Particulars :
a) Internal Rate of Return (IRR):
b) Benefit Cost Ratio (BCR) :
c) Net Present Worth (NPW) :
iv) Financial position of the borrowers (to be furnished in case of corporate bodies/partnership firms)
a) Profitability ratio
i) Gross Profit ratio
ii) Net Profit ratio
b) Debt equity ratio
c)Whether Income tax & other tax obligations are paid upto date
d) Whether audit is upto date (enclose copies of audited
financial statements for the last three years)
v) Lending Terms :
a) Rate of interest
b) Grace period
c) Repayment period
d) Nature of Security
e) Availability of Government guarantee wherever necessary

4. INFRASTRUCTURE FACILITIES:
a) Availability of technical staff with bank/implementing authority for monitoring
b) Details of
i) technical guidance
ii) training facilities
iii) Government support/ extension support
c) Tie-up arrangements with marketing agencies for loan recovery :
d) Insurance : Type of policy, Periodicity, Rate of premium
 

Annexure II

ECONOMICS OF A COMMERCIAL BROILER UNIT

 
A. Project Cost
 

Capital Cost

 

Construction of shed

120000

Cost of equipment

16000

Total

136000

Recurring Expenditure

 

Cost of day old chicks

21000

Cost of feed

57222

Medicines, labour, miscellaneous charges

8670

Insurance of birds

525

Insurance of sheds and equipment

687

Total

88104

Grand Total (A+B)

224104
or say 224000

Margin (15%)

33600

 

 

Bank Loan

190400
 
B. Techno Economic parameters
 

Number of birds

1000

Batch strength

1000

Birds purchased per batch

1050

Birds considered for recurring expenditure

1020

Birds considered for selling

1000

Floor space per bird ( s.ft)

1

Cost of construction of shed (Rs. per sft)

120

Cost of equipment (Rs. per bird)

16

Cost of day old chick (Rs. per bird)

20

Feed requirement per bird ( Kg)

3.3

Cost of feed (average price Rs. per kg)

17

Medicines, vaccines, labour and misc. charges

8.50

Insurance per bird (Rs. per bird)

0.50

Insurance of sheds and equipment (Rs. per Rs.1,000/-)

5.05

Live weight of bird (Kg per bird)

1.6

Sale price (Rs. per kg)

60

Value of manure per bird sold (Rs. per bird)

0.50

Sale price of gunny bags (Rs. per bag)

10

Margin (%)

15

Interest on bank loan (% p.a)

12

Rearing period

6 weeks

Cleaning period of shed

2 weeks

Flock Chart


Years

1

2-8

No. of batches

7

7

Rearing weeks

40

42

Batches sold

6

7

 
C. Income and Expenditure Statement
 

Years

1

2-7

8

Income

     

Sale of birds

576000 672000 672000

Sale of manure

3000 3500 3500

Sale of gunny bags

2992 3142 3142

Total

581992 678642 678642

Expenditure

     

Cost of chicks

147000 147000 147000

Cost of feed

381480 400554 400554

Cost of medicines & misc. charges

57800 60690 60690

Insurance of birds

3675 3675 3675

Insurance of sheds and equipment

687 687 687

Total

590642 612606 612606

Surplus

79454* 66036 66036

* Capitalised recurring expenditure excluded while arriving at the surplus

 
D. Calculation of NPV, BCR & IRR
 

Years

1

2-7

8

Capital Cost

136000    

Recurring Cost

590642 612606 612606

Total Costs

726642 612606 612606

Income

581992 678642 678642

Residual value of shed

   

72000

Total Benefit

581992 678642 750642

Net Benefit

-144650 66036 138036

Disc cost at 15% DF

2848122    

Disc benefit at 15% DF

2984778    

NPW at 15% DF

136656    

BC Ratio

1.05

   

IRR

43.77%

   
 
E. Repayment Schedule
 

Year

Loan

Gross surplus

Interest

Principal

Total repayment

Net surplus

1

190400

79454

22848

24824

47672

31782

2

165576

66036

19869

19753

39622

26414

3

145823

66036

17499

22123

39622

26414

4

123700

66036

14844

24778

39622

26414

5

98922

66036

11871

27751

39622

26414

6

71171

66036

8541

31081

39622

26414

7

40090

66036

4811

40090

44901

21135