Evaluation and Impact Assessment of DPV

Chapter 1 INTRODUCTION BACKGROUND 1.1 The Dairy/Poultry Venture Capital Fund Scheme (DPV) was launched by the Department of Animal Husbandry, Dairying & Fisheries (DAH&D), Ministry of Agriculture, Government of India during 2004-05. The scheme, under which assistance can be provided to the rural beneficiaries under a schematic proposal through bankable projects, was aimed at bringing about structural changes in the unorganized dairy sector to address issues of quality, processing and marketing milk, and upgradation of traditional technology. Similarly, the scheme also envisages to address various issues in exploiting the potential in a considerable segment of the poultry sector which remains unorganized and is spread over in the form of small farms in far-flung areas, especially in the North Eastern States and Eastern states. Objectives of the Scheme 1.2 The main objective of the scheme is to create a venture capital fund for providing financial assistance to agricultural farmers/individual entrepreneurs and groups of all sections of unorganized as well as organized sector for the following purposes: To promote setting up of small dairy farms for milk production To bring structural changes in the unorganized sector; processing and marketing of pasteurized milk at village level To bring about upgradation of quality and traditional technology to handle milk on a commercial scale To boost the unorganized poultry sector in states where development is in primitive state and also to give incentive and create infrastructure facilities for export of poultry products by organized sector from advanced states Establishment of poultry and breeding farms with low input technology and also for other poultry species Setting up of poultry feed plant/laboratory

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Evaluation and Impact Assessment of DPV

Setting up of egg grading, packing and storing facility for promoting export Marketing of poultry products (specialized transport vehicles, cold storage, etc.)

1.3

The activities that could be funded under the scheme either individually or in combination and the maximum amount admissible are: Components under Dairy Sector 1. Establishment of small dairy farms upto 10 animal units (Buffalo and crossbred cows) for milk production - Rs.3.00 lakhs - only in nonoperation flood areas 2. Purchase of milking machines /milko testers / bulk milk cooling units (upto 2000 lit capacity) - Rs.15.00 lakhs 3. Purchase of dairy processing equipment for manufacturing indigenous milk products - Rs.10 lakhs 4. Establishment of dairy product transportation facilities including cold chain Rs.20.00 lakhs 5. Cold storage facilities for milk and milk products Rs.25.00 lakhs 6. Establishment of private veterinary clinics Rs.2.00 lakhs for mobile and Rs.1.50 lakhs for stationary clinics. Components under Poultry Sector 1. Establishing poultry breeding farms with low input technology birds and also for ducks/turkey/guinea fowl/Japanese quail/emu/ostrich etc Rs.30.00 lakhs 2. Establishment of feed godown, feed mill, feed analytical unit Rs.16.00 lakhs 3. Marketing of poultry products (specialized transport vehicle, cool room storage facilities and retention shed for birds, etc.) - Rs.25.00 lakhs 4. Egg grading, packing and storage for export capacity - Rs.80.00 lakhs 5. Retail poultry dressing unit (upto 300 birds per day) - Rs.5.00 lakhs 6. Egg/broiler carts for sale of poultry products - Rs.0.10 lakhs 7. Central grower unit (12,500 birds per batch and 4 batches per year) Rs. 20.00 lakhs.

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Evaluation and Impact Assessment of DPV

1.4

The eligible beneficiaries of the scheme include agricultural farmers/ individual entrepreneurs and groups of all sections of unorganized as well as organized sector, with preference to traditional sweet makers (Halwais) to improve quality and hygiene of their products. In poultry, preference is to be given to Pheriwalas, which will help generate self-employment for urban poor. Veterinary Science Graduates alone are to be considered for providing loan under the component of veterinary clinics. Implementation Period and Funding Pattern

1.5

The National Bank for Agriculture and Rural Development (NABARD) is the Nodal Agency for implementation of the scheme, which is being implemented by the Commercial Banks, Cooperative Banks and RRBs. The scheme was originally planned to be implemented during the X Plan period as an umbrella project under which individual schemes will be sanctioned. The borrowers are sanctioned assistance under the scheme based on appraisal of bankable projects submitted by them to the financing banks. The Banks are free to adhere to their own appraisal norms. However, they are to follow the checklist provided by NABARD to facilitate the compliance of the requirements of formulation/scrutiny/appraisal in respect of the scheme. It is also to be ensured that maximum number of units receives the benefit under the scheme and the spread of the proposals approved is not limited to one area/activity.

1.6

The funds provided by the DAH&D are kept with NABARD and act as a revolving fund from which the beneficiaries under the scheme are given Interest Free Loan (IFL) of 50 percent of the total cost of the project. Forty percent of the project cost is financed by the bank at interest rates applicable to agricultural loans. The balance 10 percent is to be raised by the borrower as his own contribution.

1.7

The financing banks are supposed to intimate NABARD about loans sanctioned under the scheme every fortnight to claim the IFL and final approval. The banks have to disburse the loan within 7 days of the approval of the State Level Review and Disbursement Committee (SLRDC), constituted to consider the projects approved by the financing banks and accord final sanction of release of the Interest Free Loan (IFL) portion of

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Evaluation and Impact Assessment of DPV

the assistance (the SLRDCs have since been replaced by Project Sanctioning Committees (PSCs) at NABARD). The SDLRC (now PSC) is also supposed to meet on a fortnightly basis so that the proposals are cleared without delay. The loan amount is to be released by the banks in instalments depending upon the progress of implementation of the project. 1.8 The allocation for the scheme during the Tenth Five Year plan was Rs. 25.00 crores. The total funds under the scheme were envisaged to be distributed among dairy and poultry activities with an overall ratio of 2:1. A provision of Rs.7.20 crores was made for the scheme during 2004-05. 1.9 Though the Scheme can be implemented in any part of India, states like Uttarakhand, Maharashtra, Uttar Pradesh, Karnataka, Tamil Nadu, Punjab, Madhya Pradesh, Orissa, Andhra Pradesh, Rajasthan and the North-Eastern states were chosen as thrust areas during 2004-05. It was also decided to make an allocation of Rs.2 crores out of Rs.7.20 crores for the North Eastern states. Recovery 1.10 Repayment period of loan will depend upon the cash flow and will be up to a maximum of seven years including grace period of two years. Any deficiency in repayment in the project will be the responsibility of the bank as the borrowers are to be identified and selected by them. The banks are to effect recovery of the entire loan amount (both banks portion and IFL) as per its procedures and return pro-rata of the recovery made to NABARD for crediting towards the revolving fund, on an annual basis. Interest Subsidy 1.11 The scheme provides for claiming 50 percent interest subsidy for borrowers who are prompt in repaying the loan. This subsidy is to be claimed by the financing banks from NABARD on yearly basis and credited to the borrowers loan account. Refinance Assistance

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Evaluation and Impact Assessment of DPV

1.12

NABARD provides 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.

Monitoring 1.13 The scheme envisages that a National level Joint Monitoring Committee headed by Joint Secretary, Dairy Development (Dept. of AH and Dairying, MoA, GoI) with representatives of NABARD, State Bank of India, UCO Bank, Punjab National Bank, Canara Bank and Indian Bank, and Secretaries of AH and Dairy Development of four State Governments on rotational basis, will formulate necessary guidelines for the implementation of the scheme and monitor the implementation of the scheme. NABARD is to closely monitor the units financed and will conduct periodic inspections to verify the utilization and study the working of the scheme. Besides, it is envisaged that the SLRDC will send bank-wise, activity-wise and district-wise statement to GoI and NABARD HO on a monthly basis. The participating banks are also expected to conduct periodic inspections of the units and provide feed back to the Joint Monitoring Committee on a consolidated basis and to the SLRDC on any deviation/misutilisation of funds. The beneficiary has to put up a signboard at the site indicating "DAH&D Assisted Project". On completion of the project, the participating bank should submit a completion certificate to DAH&D through NABARD. Role of various Agencies NABARD To administer the revolving fund and conduct fortnightly meeting of SLRDC along with financing banks and Animal Husbandry and/or Dairy Department of the concerned State. To scrutinize the claims of the bank and release the amount of IFL claimed To monitor the scheme on a regular basis and provide monthly reports to DAH&D, GoI.
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Evaluation and Impact Assessment of DPV

To plan for improvement and expansion of the scheme for future, based on the feed back To publicise the scheme at the district and state levels through organisation of Workshops and through Farmers Clubs, NonGovernmental Organizations and rural branches of financing banks.

Banks To identify, receive and sanction the projects received from the borrowers for various purposes identified under the scheme and disburse the loan amount within 7 days of approval by State Level Review and Disbursement Committee. To recover the loan amount as per repayment schedule and repay the amount recovered on the loan portion out of the revolving fund to NABARD on yearly basis. To provide feed back on implementation of the scheme at State and national level. To publicise the scheme at the district and state levels through organisation of Workshops and through Farmers Clubs, NonGovernmental Organizations and rural branches of financing banks. DAH&D To convene the meetings of the Joint Monitoring Committee regularly and review the implementation with NABARD and financing banks. At least one meeting will be held in each quarter. To plan and expand the scheme in future as per the feed back received from NABARD and financing Banks. To undertake field visits of projects on sample basis and make funds available as and when needed. THE STUDY 1.14 The present Evaluation and Impact Assessment Study of the Dairy/Poultry Venture Capital Fund Scheme was undertaken with the following Terms of Reference, suggested by DAH&D:

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Evaluation and Impact Assessment of DPV

To assess the perception and awareness among intended beneficiaries about the scheme To review the implementation of the scheme and identify the operational problems at all levels To assess the adequacy of financial outlay for various components To assess the benefits accrued under the scheme like employment generated, income generated, infrastructure setup, consumer satisfaction, and suggest measures to make the scheme more effective

To suggest the changes in the scheme to make it more effective and deliverable Role of NABARD in the implementation of the scheme To study the impact of the scheme on SC/ST/Women population To suggest the process for decentralization of implementation of scheme to put it on fast track To suggest new components along with cost sealing for consideration under the scheme To ascertain the status of repayment of loans by beneficiaries

Methodology 1.15 The study has been carried out mainly by analyzing primary data collected from beneficiaries of the scheme, officers of NABARD, financing banks, Milk Federations, Milk Unions and State Dairy Departments. Available and relevant secondary data was also analyzed to draw up conclusions. 1.16 Pretested, structured schedules were used for collecting data from the beneficiaries as well as non-beneficiaries of the scheme. Discussions were held with various officials mentioned above to have a better insight into the implementation of the scheme and the issues/challenges. Perusals of records in financing with the banks revealed vital information necessary on the implementation process. Field visits to the dairy/poultry farms and discussions information. Coverage beneficiaries yielded qualitative

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Evaluation and Impact Assessment of DPV

1.17

The Sampling Plan and the number of samples decided for the study is shown in Table 1.1. As indicated, data was envisaged to be collected from 410 respondent beneficiaries of the Scheme (341 beneficiaries and 69 non-beneficiaries), from 14 districts across 8 states. Table 1.1 Sample Respondents

Sl. No. 1 2 3 4 5 6 7 8

State

District

No. of Beneficiaries Dairy 5 20 150 40 20 16 6 0 2 10 12 4 25 21 331 Poultry 1 5

Non Beneficiarie s 4 1 5 10 25 4 0 4 2 1 1 3 5 4 69

Karnataka Maharashtra Rajasthan Bihar Uttar Pradesh Uttarakhand Mizoram Tripura 8 states

Bangalore Rural Tumkur Ahmednagar Satara Nasik Chittorgarh Saran Saharsa Azamgarh Shahjahanpur Dehradun Haridwar Aizwal West Tripura 14 districts

1 3 10

1.18

Additional Samples for Poultry Sector: Subsequent to the discussions on the Draft Report on the Study, it was decided by the Ministry to cover atleast 10 more units under the poultry sector to ensure more representative data for the analysis. It was also decided that these additional samples be covered from Tamil Nadu, Karnataka and Andhra Pradesh as indicated in Table 1.2. Table 1.2 Additional Sample Units under Poultry Sector

Sl. No. 1

State Tamil Nadu

District Namakkal Coimbatore

Sample Size 5

2 3

Karnataka Andhra Pradesh 3 states

Bangalore Urban Chikamagalur Mahabubnagar Medak 6 districts

2 3 10

Component/Type of Unit to be covered Poultry Breeding, Poultry Feed Mill, Marketing of Poultry Products and Retail Poultry Dressing Feed Mixing and Retail Poultry Dressing EMU Breeding and Poultry Feed Mill

1.19

Thus, the total sample size for the Study was increased to 420. During field study, it was observed that in Karnataka, loans under the scheme

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Evaluation and Impact Assessment of DPV

have

not

been

sanctioned

to

individual

farmers/entrepreneurs

in

Bangalore Rural and Tumkur, the two districts included in the original sample for the Study. Hence, the Schedules designed for collecting data from individual beneficiaries could not be filled up in these districts (25 beneficiaries, 5 non-beneficiaries), limiting the total number of respondents (including non-beneficiaries) to 390. However, in order to gather qualitative information from Bangalore Rural and Tumkur, discussions were organized with groups of farmers under some of the Dairy Cooperative Societies (DCS) in both the districts, which have been provided with different milk/dairy equipment by the respective Milk Unions, utilizing the loan availed under the DPV Scheme. About 50 dairy farmers participated in these discussions at the various DCS in the two districts. 1.20 In the additional states and districts suggested, 15 additional poultry units were covered instead of the total number of 10 units suggested. Thus, data was collected in the structured schedule from a total number of 395 respondents (excluding about 50 farmers who participated in discussions at the DCS in Bangalore Rural & Tumkur). Details are shown in Table 1.3. Table 1.3 Total Number of Respondents
Sl. No. 1 2 3 4 5 6 7 8 State District No. of Individual Beneficiaries # Dairy Poultry (5) (20) 150 1 40 20 5 16 6 0 2 10 12 1 4 25 3 21 306 10 3 2 5 1 2 9 Non Beneficiarie s (4) (1) 5 10 25 4 0 4 2 1 1 3 5 4 64

Karnataka Maharashtra Rajasthan Bihar Uttar Pradesh Uttarakhand

Mizoram Tripura 8 states Additional Samples 1 Tamil Nadu 2 3 Karnataka Andhra Pradesh

Bangalore Rural Tumkur Ahmednagar Satara Nasik Chittorgarh Saran Saharsa Azamgarh Shahjahanpur Dehradun Haridwar Aizwal West Tripura 14 districts Namakkal Coimbatore Bangalore Urban Chikamagalur Mahabubnagar

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TOTA L Note: Figures in paranthesis show originally envisaged number of sample; data in structured schedules could not be filled from them since no assistance was availed by individuals, hence not added in the total # - excluding about 50 farmers who participated in discussions at the DCS in Bangalore Rural & Tumkur

3 states 10 states

Medak 6 districts 20 districts

Evaluation and Impact Assessment of DPV 2 15 306 25 64

ORGANISATION OF THE REPORT 1.21 The report is organized in five Chapters. Following this introductory Chapter which discusses major aspects of the scheme, the terms of reference for the study, its coverage, methodology and sampling, the second Chapter gives an overview of the performance of the scheme on a national basis, and in the eight states and 14 districts covered in the study. Chapter 3 discusses the various aspects of implementation of the scheme in the selected states and districts in terms of the provisions in the guidelines for implementation and the issues/challenges at the field level. An analysis of the results of the field survey among the beneficiaries and non beneficiaries of the scheme is presented in the fourth Chapter. The last Chapter discusses the conclusions from the study and gives suggestions for improvement. An Executive Summary is also included in the beginning of the Report.

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