The success of livestock farming is largely dependent on the continuous supply of good quality nutritious feeds at competitive price. Feed alone constitute about 60-70 per cent of total cost of production of livestock products. Therefore, it needs more attention though other factors are also important for remunerative return from livestock enterprises. The farmers used to feed the crop residues to the cattle and buffaloes, however, sheep and goat are normally maintained on grazing/browsing with supplementary feeding of broken grains/other bypoducts. Therefore, feeding of balanced concentrate feed to these animals was not common, because of low productivity and unremunerative prices for the livestock products. The improved poultry is fed only with concentrated feed. The requirement of food of animal origin like milk, meat and eggs is increasing at a faster rate due to increased awareness about the significance of protective proteins for the maintenance of human health. The farmers realised the importance and started rearing good quality and high productive animals/birds under stall fed conditions.
2.Scope for feed industry
2.1 With the increased demand for livestock products for domestic consumption as well as export, the farmers realised maintaining of quality animals with proper feeding and management. The proportion of crossbred animals or improved strains of birds increased over the years. This has necessitated higher demand for balanced concentrate feed. Presently, various milk unions, poultry corporations/ federations and private companies are supplying both cattle and poultry feed of different qualities and forms (mash/ pellets/ crumbles) to the farmers. Large size poultry farm/dairy farm owners, hatcheries and cooperative poultry units are normally manufacturing their own feed by installing the necessary plant and machinery on the farm. Some of the farmers are still feeding broken grains, cakes, gur, salt,etc. to dairy animals by mixing at home.
2.2 The compounded feed manufactured by CLFMA (Compounded Livestock Feed Manufacturers Association) members during 1998-99 was 3.16 million tonnes. The feed production under organised sector since 1965 is given in Annexure-I. The demand-supply position for various feeds is given in Annexure - II. The present supply is only half of the total requirement. Moreover, the demand for small ruminants (goat and sheep) under stall fed conditions, rabbits and pigs is not estimated. Considering their requirements, the gap is much more.
2.3 The feed production could not keep pace with the growth in various species of farm animals and poultry. To meet the growing demand of processed and complete feeds for different class of animals, the unconventional feeds should also be used in the rations through proper processing for removal of anti nutritional factors. Thus, it indicates that there is a good scope for setting up feed processing plants of different capacities for production of various quality feeds.
3.Financial assistance for feed industry
3.1 NABARD is an apex institution for all matters relating to policy, planning and operations in the field of agricultural credit. It serves as a apex refinancing agency for the institutions providing investment and production credit. It promotes development through formulation and appraisal of projects through a well organised Technical Services Department at HO and Technical Cells at each of the ROs.
3.2 Loans from banks with refinance facility from NABARD are available for starting feed processing plants. For obtaining the bank loan, the entrepreneurs/companies should apply to the nearest branch of the commercial or cooperative or regional rural banks in their area in the prescribed application form which is available in the branches of financing banks. The entrepreneurs are also required to submit a detailed project report for which they can also take the help or guidance of the technical officers attached to the bank.
3.3 For feed processing plant with very large outlay, a detailed project reports will have to be prepared. The model format for formulation of bankable project is given in para 4. Banks provide financial assistance for the following purposes.
(a) Construction of factory building, godowns for raw materials as well as for finished products, office, canteen, generator room, essential quarters,etc.
(b) Purchase of equipments such as grinder, feed mixer, pelletizer, elevators, feed packing units, etc.
(c) Miscellaneous equipments such as transformer, generators, weighing scales vehicles, etc.
(d) Margin money for working capital requirement for one cycle of operation.
The cost of land is not considered for loan. However, if land is purchased for establishing a feed processing plant, land cost can be treated as party's margin money upto a maximum of 10 per cent of the total cost of project.
3.4. Scrutiny of Scheme by the Bank:
After the scheme is submitted to the Bank, it is examined for technical feasibility and economic viability.
(a) Technical Feasibility: This would briefly include:
(i) Availability of raw material such as grains, brans, oil cakes, mineral mixture, molasses, fish meal, vitamins, etc.
(ii) Feed formulation and technical norms
(iii) Infrastructure available for feed testing, procurement of raw material, marketing of different feeds, experience of the entrepreneur.
(b) Financial Viability: This would briefly cover:
(i) Project outlay, sources of funds and loan requirement
(ii) Raw material cost, expenses on fuel, labour, transport commission to be paid and other overheads
(iii) Output costs i.e. quantity and sale price of different feeds, number and sale price of empty gunny bags.
(iv) Income Expenditure statement and annual gross surplus
(v) Cash flow analysis - Benefit Cost Ratio(BCR), Net Present Worth (NPW) and Internal Rate of Return (IRR)
(vi) 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 techno economic feasibility study for appraisal of the scheme.
3.6. Sanction of Bank loan and its disbursement:
After ensuring its technical feasibility and financial viability, the scheme is sanctioned by the Bank. The loan is disbursed in two or three stages against construction of various civil structures, purchase of plant and machinery, miscellaneous fixed assets and margin money for working capital requirements. Constant follow up and supervision of the scheme is done by the Bank.
3.7. Lending terms
i) Unit Cost:
The Unit Cost depends upon the capacity of the feed mixing unit, type of feeds to be manufactured and also the infrastructure required.
ii) Margin Money:
In case if the feed mixing unit is integral part of the commercial poultry or dairy scheme, the down payment is based on the category of beneficiary. However, in respect of feed processing plant of larger size, the margin money is normally 25 per cent of the total cost of the project.
iii) Interest Rate:
It depends upon the RBI guidelines and also the individual banks. The present rate of interest for Rs.2.00 lakhs and above is linked to primary lending rates of banks which varies with the type of investment, beneficiary and also the credit rating.
Security will be as per RBI guidelines issued from time to time.
v) Repayment period of loan:
It depends upon the gross surplus generation in the scheme. The loan will be repaid in suitable monthly or quarterly instalments usually within a period of 5-7 years. Wherever required, the grace period is also considered.
The building and other assets such as poultry sheds, equipments may be insured against natural calamities.
4.Format of bankable project for feed plants
It should cover the name of the company, location of plant, activities, products, capacity of plant and project outlay
4.2 Company :
It should cover the location of registered office, date of formation, registration and authorised share capital. It should also cover the date of incorporation and commencement of business, the objectives, areas of operation, subscribed share capital.
4.3 Promoters and their background:
Name and address of promoters, their background, experience and net worth.
4.4 Management of the company:
Persons looking after the day to day management, their background, experience,etc. should be covered.
4.5 Project profile:
i) Land and location:
This should cover the area of land, location of the plant, distances from nearby town, availability of approach roads, power and water supply and other communication including schools, banks, hospitals,etc.
ii) Civil Structures:
Name of the Architect, type of structures proposed, drawings and detailed cost analysis of various civil structures along with the present position of implementation may be indicated. The technical specifications of civil structures are given in Annexure - III.
iii) Plant and Machinery:
The major plant and machinery (imported and indigenous separately), sources of supply, specifications and quotations for various items of equipment need to be given. List of major suppliers of feed plant machinery is given in Annexure - IV.
iv) Technical collaboration:
The name of the technical collaborators for monitoring and marketing of the products along with their addresses and the type of collaborations should be indicated. Technical collaboration fee/royalty to be paid should also be indicated.
v) Manufacturing process:
It should cover the manufacturing process of feed (mash/ pelleted feed) in the form of flow chart, proportion of various feeds to be manufactured and the composition of the different feeds.
vi) Infrastructural facilities:
a) Raw Material:
The feed ingredients (grains, cakes, brans, fish meal, molasses, vitamins, minerals,etc.), source and method of procurement, basis of price fixation, agreements if any for regular supply of raw material may be indicated. BSI standrads for feed ingredients are given in Annexure - V. Average nutritive values of common feed ingredients and the reasonable levels for their inclusion are given in Annexure - VI and VII respectively.
b) Packing material :
The type of packing material required (jute/plastic bags), source of supply, capacity and price of bag, approximate quantity required per month and method of purchase need to be furnished.
* Power: The total power requirement of the unit, source of power supply, position of power supply in the area and stand by arrangements made by the company, whether permission is obtained or applied to the State Electricity Board for power connection.
* Water: The source of supply, quantity available vis-a-vis daily requirement and arrangements made for supply of water.
* Fuel : The requirement of coal, diesel and gas, source of supply, adequacy of availability and cost of material may be mentioned.
* Steam: Quantity required, source and capacity of boiler.
* Transportation: The mode of transportation of raw material as well as feed, whether owned or hired vehicles, availability of vehicles and cost per kilometer.
* Laboratory : Whether the company is planning to set up a laboratory for testing the raw material as well as feed, specification of laboratory equipment, quality and cost, the proposed tests to be carried out and the adequacy of man power for carrying out these tests.
vi) Pollution Control:
The type of measures proposed for controlling the air pollution inside the unit and also for the employees of the company.
vii) Man power:
It should cover the technical skill and unskilled labourers required, their availability and source, method of recruiting them and also their salary structures/wage rates should be mentioned.
4.6 Marketing and business prospects:
a) The product mix, capacity of the plant, year-wise capacity utilisation and actual quantity of products produced per year.
b) Areas of marketing of the product and strategies i.e. Talukas, district or state-wise quantities proposed for sale, methods of sale, agencies/contractors, method of transportation of products, incentives or commission proposed to be paid, expenditure on publicity and brand name should be indicated. It should also cover the proposed marketing network in terms of staff and material.
c) Market survey for raw materials as well as for the products to be sold covering the demand/supply position, other sources of supply of products, the average price of products for the last 4-5 years and also the potential for selling the products should also be covered.
4.7 Socio-economic benefits: The number of villages, farmers and number of animals benefited and also number of persons employed either directly or indirectly in this activity.
4.8 Schedule of Implementation:
The proposed implementation schedule of the scheme may be indicated starting from purchase of land till commercial production.
4.9 Swot Analysis:
The strengths, weaknesses, opportunities and threats should be discussed separately.
4.10 Project cost:
Area of land, cost of land and conversion charges
ii) Site and land development:
It should cover the land levelling, fencing/compound wall, internal roads, drainage,etc. The specifications, unit cost and the total cost should be furnished.
iii) Civil structures:
The civil structures comprises of factory building, raw material and finished products godowns, office, laboratory, quarters, garage, canteen, etc. Detailed plan lay outs along with cost estimates certified by the Engineer should be given.
iv) Plant and machinery:
Imported/indigenous components, major suppliers, quantities, unit cost and the total cost of the plant and machinery including the misc. equipments should be given. The quotations along with the specifications is required to be enclosed.
v) Electrical system:
Covering transformer, diesel generators, internal and external electrification and also the deposits to be paid to the State Electricity Boards. The specifications of transformer as well as generators along with the quotations should be furnished. With reference to electrification - the break up is required to be given.
vi) Water supply and other utilities:
Source of water, specifications and expenditure on water supply system, cost of boilers for steam generation,etc.
Number and cost along with justification on requirement of the various vehicles, price quotations from the dealers along with specifications should be furnished.
viii) Pre-operative and preliminary expenses:
The item wise cost and justification should be given.
Percentage of contingencies and its reasonableness
x) Margin money for working capital:
The margin money for working capital may be worked out taking into account the requirements of various raw material, packing material, fuel,etc., finished products and sundry debtors for one cycle of operation.
4.11 Sources of Finance:
The total project cost and source of funds (equity/public issue, subsidy, loan,etc. should be furnished.
4.12 Techno economic parameters:
Should cover the capacity of the plant, yearwise capacity utilisation, quantity of feed manufactured, commission on sale of feed, transportation charges, power and fuel charges, packing material charges, salaries and wages, marketing expenses and other overheads. The procurement prices of various ingredients as well as the sale price of various brands of feed should be indicated.
4.13 Economics of the project and cash flow analysis:
Considering the capacity utilisation and also the various techno economic parameters, the income and expenditure streams have to be worked out to arrive at the gross profit. From the cash flow analysis, the Benefit Cost Ratio (BCR), Net Present Worth (NPW) and Internal Rate of Return (IRR) of the project may be worked out to establish the economic/financial viability of the project.
4.14 The model economics for feed plant with a capacity to manufacture 100 MT per day are given in statements 1-10 as per the requirements sepcified in previous paragarphs.
4.15 Documents and clearances required:
Site Plan, structural drawings,quantities and detailed cost analysis of various civil structures certified by an Architect, Price quotations and specifications for various items of plant and machinery, Approval from State Electricity Board for load connection, NOC from Panchayat, approval from Inspector of Factories, Registrar of Copy Rights, approval for brand registration, Registration of Company, Memorandum of Articles of Association, Registration of Unit under SSI (If applicable), permission for procurement of molasses, agreement between the Company and the collaborator for technical assistance and market survey report.
5.Information sources and training facilities
Further reference list of books/periodicals on cattle and poultry feeds is given in Annexure - VIII. The addresses of training centres on feed formulation and quality control are given in Annexure - IX.
6.Checklist for financing cattle/poultry feed projects
(To be completed by the Executive/Officers of the Bank forwarding the Scheme)
1. Articles of Association and Memorandum of
the Company/Corporation ------------
2. Balance Sheets and profit and loss statements
for last 2-3 years for the existing companies ------------
3. Profile of Directors of Company ------------
4. Project cost and sources of funds ------------
5. In case of consortium, names of banks participating
in consortium ------------
6. Details of site, availability of land, electricity and water -----------
7. Availability of raw materials - Feed ingredients'
source of supply and costs -----------
8. Capacity of the feed plant per shift, no. of shifts
and capacity utilisation over years -----------
9. Type of feeds and quantities proposed to be manufactured -----------
10. Market survey report for raw material as well as
finished products ------------
11. Marketing strategy and net work for the sale of feed ------------
12. Technical and other man power requirement
availability and their salary structure ------------
13. Techno economic parameters for working
out the economics of the project ------------
14. Cash flow and profitability statement ------------
15. Break even point and income generation ------------
16. Arrangements for working capital requirements ------------
17. Undertaking from State Govt. for meeting the
deficit if any and also for repayment of loan
and interest if it is a corporation activity ------------
18. Licenses/approvals/permissions required
from the concerned departments -----------
19. Site plan of the area -----------
20. Detailed drawings and cost estimates for all items
of civil works signed by qualified engineers. ------------
21. Detailed specifications and cost of utilities ------------
22. Detailed specifications of each of equipment/
machinery and its cost based on market data/quotations ------------
23. Detailed list and cost of imported items
of equipment and license for import ------------
24. Implementation schedule and the mode of
execution of work i.e. Departmentally/
labour contract/turnkey basis -----------
Annexure - I
Growth pattern in production of compounded feeds by CLFMA members
Cattle and other Feeds
% to total
% to total
* April to March of the years indicated
Annexure - II
Demand for cattle and poultry feeds and supply by CLFMA members
Population in millions
Feed in million tonnes
Estimated cattle population :
Animals in milk
Animals in milk
Cattle feed requirement
Animals in milk
Animals in milk
A. Total cattle feed requirement
B. Total poultry feed
C. Total of cattle and
poultry feed requirement
(A + B)
Supply of livestock feed
from CLFMA members
Technical Requirements of Civil structures
1. Site Plan
A detailed site plan indicating the following information should be furnished:
- Area of the land
- Boundary conditions and approach road
- Layout, location of various existing and proposed
structures indicating with different colours (preferably)
2. Drawings and rate analysis
Structural and Architectural drawings of each item of civil constructions, measurement sheet, abstract of measurement and estimate of work rates approved in the schedule of rates, current market rates and analysis of rates applied to site conditions should be provided.
3. Development and Construction works
3.1 Land Development
The type of development, earth work and the cost should be given.Care should be taken to limit the cost by assessing the area - requirement for various construction works.
Fencing can be of barbed wire with angle iron/ R.C.C./ Stone/ Wooden poles or chain link or boundary wall. The prevailing cost of these fences/wall may be considered.
Normally, Water Bound Macadam (WBM) roads are adequate. Normal road width of 15 to 20 ft. is sufficient. The total length, width and the height of the road alongwith the prevailing cost may be furnished.
3.4 Civil Structures:
i) Godown : For raw material and finished products. Normally, the raw material godown with a capacity to hold ingredients for a period of 45 days is considered. For storing 200 kg. of raw material, roughly one sq.ft. area is required. Similarly, in case of finished products(feed) also, for storage of one week production the godown may be considered.
ii) Silos : The silos for storage of grains may also be considered in case of large size plants. The silos may be of cement or aluminium or steel structure.
iii) Factory Building: Depending upon the capacity of the plant, the factory building area may also be considered. Normally, for a 10 tonne per day capacity plant, an area of 600 sq.ft. is sufficient. In case of automatic plants, higher areas may be considered which includes the ingredient bins, elevators and control panel areas,etc.
iv) Laboratory: For proximate analysis of ingredients as well as finished product it is essential to have own laboratory in case of large size processing plants. An area of 500-600 sq.ft. may be considered for such laboratory purpose.
v) Office Building : It depends upon the number of staff to be positioned in office for a plant with a capacity to handle 100 tonnes per day, an office area of 800-1000 sq.ft. is approximately sufficient.
vi) Store Room : It depends upon the capacity of the plant. A separate store may be considered for other equipments and vitamins, growth promoters,etc.
vii) Generator Room : 200-400 sq.ft. area for a generator is sufficient.
viii) Security Post: A Security Post at the entrance is essential to control the movement of trucks as well as the mobility of staff.
Manager : Plinth area of 700-800 sq.ft. area is adequate for the purpose.
Supervisor: A maximum plinth area of 400 sq.ft. may be considered.
Labour and other staff: 200 sq.ft. area is adequate.
The quarters are normally considered only for the essential staff who are required to be on the site/plant.
x) Weigh bridge : For the weighment of ingredients and the finished products, a weigh bridge is essential at the entrance.
xi) Raw Material drying area: For drying of the grains to reduce the moisture levels to the extent required for a longer time. The drying area depends upon the capacity of the plant and the quality of grains to be stored.
4. Minor Irrigation Structures
Source of water and the expenditure on MI structures like well, motor, pipeline, water tanks,etc. may be considered.
Annexure - IV
List of major suppliers of Feed Plant Machinery
Ashok Engineering Works
Behind Satkar Hotel,
Poona-Bangalore Road, Hubli 580 020
Khare Engineering Industries
C -17, Industrial Estate Coop.Society
Miraj 416 410
B I Industries 22-1-1040/9,
Derulshafa Main Road
Hyderabad 500 024
Kiran Engineering Works
G T Road, Batala - 143 505, Punjab
B K Allied Industries
G T Road, Near Water Tanks
Khanna - 141 401, Punjab
Paragon Enterprise Industries
27,GIDC Industrial Estate
Baroda Dist. Gujarat
Buhler (India) Ltd. 209,
T V Industrial EstateS K Ahire Marg, Worli, Mumbai 400 028
Baroda 390 010
893/4, GIDC Industrial Estate Makarpura, P B No.802
Baroda 390 010
Plot No.2007, Phase IV
GIDC Estate Vatva,
Ahmedabad 382 445
Forms and Gears
L -3 , Industrial EstateGuindy,
Madras 600 032
Shakti Engineering Works
G T Road, Batala 143 505, Punjab
Hard case Engineering Works Ltd. 5-3-325, Lalaji Meghaji Compound
M G Road,
Secunderabad - 3
Spectoms Engineering Pvt Ltd.
Baroda 390 018
Phase IV Plot No.1305/1,
GIDC Industrial EstateNaroda, Ahmedabad 382 330
Sri Guru Siddheshwar Engineering Works, Karwar Road,
Average Nutritive Values of common feed ingredients (Dry Matter basis)
Zea mays cake
(ANIMAL PROTEIN SOURCE)
Annexure - VII
Reasonable levels of inclusion of various
Feed Ingredients in Poultry feeds
Level in diet (%)
20 - 35
Maize (yellow or white)
Less than 10
Pearl millet or Bajra
30 - 40
40 - 50
Sorghum (white with low tannins)
25 - 35
Sorghum (milo or coloured)
Less than 10
45 - 50
MILLING BYPRODUCTS OF CEREAL GRAINS
Hominy feed, Maize bran, Maize grit
Less than 10
5 - 15
Rice bran, deoiled rice bran
10 - 20
25 - 40
Salseed meal, deoiled
3 - 5
Tapioca chips, flour
10 - 20
PROTEINOUS FEEDS (VEGETABLE SOURCE)
Coconut cake, Cottonseed cake
Groundnut cake, expeller
Groundnut cake, solvent extracted
Less than 5
Linseed cake, hot water treated
Mustard cake, rape cake, niger cake
Less than 10
Safflower cake, decorticated
Sunflower cake, decorticated
Sesame cake or til cake, expeller
Soyabean meal, heat treated
30 - 40
Sunflower cake, decorticated
PROTEINOUS FEEDS (ANIMAL SOURCES)
Fish meal, 45% protein
Fish meal, 55 - 60% protein
6 - 8
Fish scrap, fish solubles (dried)
Feather meal, hydrolysed
Silkworm pupae meal
Skim milk powder
Animal and vegetable fats
3 - 5
Distillers dried grains and solubles
Leguminous fodders leaf meal
Penicillin mycellium wastes
Some minor seeds like that of Lathyrus, Kasani, Dhaincha etc. and cakes like water washed neem seed kernel cake, mahua seed cake and other processed feeds may be used as replacement for similar feeds at 5 to 10 % levels.
Annexure - VIII
List of Training Centres on Feed Formulation and Quality control
1. Central Avian Research Institute,
Izatnagar - 243 122 (Uttar Pradesh)
2. Harayana Agricultural University
College of Animal Sciences, Hissar - 125 004
3. Regional Feed Analytical Laboratory
Govt. of India, CPBF Campus
Industrial Area, Chandigarh 160 002
4. Govt. of Maharashtra Feed Analytical Laboratory
C/o. Wool Research Centre, Sheed Breeding Farms
Gokhalinagar, Pune 411 016.
5. Regional Feed Analytical Laboratory
Govt. of India, C/o. Central Poultry
Aarey Milk Colony, Mumbai 400 065.
6. B V Rao Institute of Poultry Management & Technology
Urlikanchan, Pune, Maharashtra
7. Central Poultry training Institute
Govt. of India, Hessarghatta
Bangalore 560 088
8. TAPCO Feed Analytical Labs
No.2, Chamiers Road, Nandanam
Chennai 500 035
9. ICAR Research Complex for North East Region
Bishnupur, Shillong 793 004
10. Orissa University of Agriculture and Technology