CHAPTER1

INTRODUCTION:

1.1ABOUT DAIRY INDUSTRY: Dairy industry is of crucial importance to India. The

country is the worlds largest milk producer, accounting for more than 13% of worlds total milk production. It is the worlds largest consumer of dairy products, consuming almost 100% of its own milk production. Dairy products are a major source of cheap and nutritious food to millions of people in India and the only acceptable source of animal protein for large vegetarian segment of Indian population, particularly among the landless, small and marginal farmers and women. Dairying has been considered as one of the activities aimed at alleviating the poverty and unemployment especially in the rural areas in the rain-fed and drought-prone regions. In India, about three-fourth of the population live in rural areas and about 38% of them are poor. In 1986-87, about 73% of rural households own livestock. The total amount of milk produced has more than tripled from 23 million tonnes back in 1973 to 176 million tonnes 28 years later in 2011 in which the contribution of small dairy units is 58 million tonnes i.e. 33% of the total contribution. The tremendous rise in milk production is primarily the fallout of the dairy farming policy reflected in Operation Flood. Following the success of dairy farming policy, the Government has set up a dairy processing policy, reflected in the .Milk and Milk Products Order. In addition, the Government uses a variety of import restrictions to protect its domestic dairy market. In spite of having largest milk production, India is a very minor player in the world market. India was primarily an import dependent country till early 70s. Most of the demand-supply gaps of liquid milk requirements for urban consumers were met by importing anhydrous milk fat / butter and dry milk powders. But with the onset of Operation Flood Programme (19711996), the scenario dramatically changed and commercial imports of dairy products came to a halt except occasional imports of very small quantities. In the 1990s, India started exporting

surplus dairy commodities, such as butter and ghee etc to countries like Bangladesh, UAE, USA, and Philippines. Though Operation Flood also known as White Revolution started in India in the year 1971,it started very late in Assam in the year 2003 from the society called Kamdhenu Dugdha Utpadak Samabai Samiti,Nityananda,Pathsala which is still the no.1 milk producing society in Assam and later on spread in all the other places of the state. At present almost all the districts of Assam are involved in dairy farming and dairy units in places like Pathsala, Jorabat, Mangaldai etc. are doing very good business in dairy farming. Yet, their growth is very poor in comparison with the of dairy units in Gujrat. Hence more support from Govt. of Assam and Govt. of India and organizations like NABARD is required to fasten the growth of this dairy industry in Assam.

1.2About State Bank of India:

State Bank of India being the largest public sector bank in India was established in the year 1955 under the State bank of India Act 1955. State Bank of India is the largest banking and financial company in India by revenue, assets and market capitalization. It is a state owned corporation with its headquarters in Mumbai with more than 13000 home and 150 overseas branches and agents globally. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of Madras merged into the other two presidencies banks-Bank of Calcutta and Bank of Bombay-to the Imperial Bank of India, which in turn became the State Bank of India. The Government of India nationalized the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India.

State Bank of India's branches have covered a whole gamut of agricultural activities like crop production , horticulture , plantation crops, farm mechanization, land development and reclamation, digging of wells, tube wells and irrigation projects, forestry, construction of cold storages and Godowns, processing of agri-products, finance to agri-input dealers, allied activities like dairy , fisheries, poultry, sheep-goat, piggery refurbished second hand tractors,

loans against pledge of warehouse receipts, loans against produce stored by the farmer at his own premises, mulberry cultivation, rearing of silk worms etc.

1.3 Schemes Under Which Dairy Loans Are Granted in India: SBI DAIRY PLUS(SCHEME FOR FINANCING DAIRY SOCIETIES) This is SBIS
own scheme under which financial assistance is provided to dairy farmers for construction of shed, purchase of milch animals, milking machine, chaff cutter or any other equipment required for the purpose.

Loan amount:
100% of the cost for loans upto Rs 50000/ 90% of the cost for loans above Rs 50000/ with a maximum of Rs 5 lakhs as Term loan

WORKING CAPITAL: A working capital @ Rs.2500/- per animal per year may be Sanctioned for purchase of feed, fodder and medicine along with the term loan Security: Hypothecation of assets created out of bank finance for loans upto Rs 1 lakh. For loans Over Rs.1 lakh -Mortgage of landed property (or) third party guarantee Worth for loan amount (or) group guarantee of other 2 dairy farmers. Repayment: The loan is to be repaid in monthly installments over a period of 5 years. DAIRY SOCIETY PLUS - SCHEME FOR FINANCING DAIRY SOCIETIES Under this scheme Bank finances dairy societies for modernization of the societies and for creating infrastructures like o Construction of milk house or society office o Purchase of Automatic milk collection system o Purchase of transport vehicles.

o Purchase of Bulk chilling unit

Eligibility: o A grade milk societies Registered & affiliated to district milk union. o No adverse remarks in the audit report of previous 2 years. o Supplying 1000 litre/day to milk union. o Audited balance sheet for at least previous 2 years. o Earning pretax profits for the last two years.

Loan amount: Upto 85% of the cost or four times the average profit of previous 2 years with a maximum of Rs 10.00 lakhs.

Security: Hypothecation of assets. And Mortgage of landed property (or) Guarantee of milk union Repayment: The loan is to be repaid in monthly installments over a period of 5 years.

CHIEF MINISTERS EMPLOYMENT GENERATION SCHEME: - Under this scheme financial assistance is given to the unemployed people to initiate various profit generating activities. The farmers have to apply in the Veterinary Department, Govt. of Assam. After their approval the loan amount is disbursed from SBI. A subsidy upto 30 % is available to the borrower and SBI re-collects the subsidy from the Government of Assam.

SWARNA GRAM SWAROJ GAR YOJNA (SGSY): SBI grants financial assistance under this scheme too. Such loan is granted from the Block Development Office under Project Director District Rural Development Authority (P.D.D.R.D.A.).Here the subsidy available is upto 50%, it is implemented through the district rural development agencies. It is financed on 75:25 cost sharing basis between centre and state. SBI after disbursing the loan collects the subsidy amount from the Government.

 RASHTRIYA KRISHI VIKASH YOJNA (RKVY): A central Govt. scheme which provides upto 50% subsidy on different agricultural development programmes.SBI also grants Dairy loan under this scheme to farmers. The whole Loan amount is sanctioned by the Bank and it collects the subsidy amount from the Government.

REFINANCING SCHEMES PROVIDED BY NABARD:

DAIRY AND POULTRY VENTURE CAPITAL FUNDS :- This is a scheme from NABARD whereby a borrower can avail interest free loans (50% of the outlay) for initiating a Dairy or Poultry business. SBI grants such loans to dairy farmers and later avails the subsidy from NABARD.

DAIRY ENTREPRENUERSHIP DEVELOPMENT SCHEME (DEDS) This is another beneficial scheme refinanced by NABARD wherein a capital subsidy of 25% (33.33% for ST/SC) entrepreneurs is available. SBI has granted a huge amount of Dairy loan under this scheme.

CHAPTER 2

2.1 OBJECTIVS OF THE STUDY:

To study the current scenario of dairy business of the small dairy units in Mangaldai, Pathsala and Mirza. To study the various dairy loan schemes for small units provided by SBI. To study the impact of dairy loans on dairy farmers and the bank provided by SBI. To study the condition of Dairy units and identify reasons for failure if any. To study the problems of the dairy farmers in repaying the dairy loans.

2.2 CONCEPTUAL REVIEW: The following concepts are very important to understand to do the said project: Dairy firm: A dairy firm indicates the business of producing and selling milk from cows in the households. The owners of the firms are entitled for the dairy loans under different schemes upon their size of business i.e. total no. of productive cows, average production of milk per day etc. Dairy loan: A dairy loan is a kind of financial assistance provided to the owners of the dairy firm to grow and expand their dairy business. Various financial institutions like SBI, RRBS and other nationalized banks of their own and of NABARDs schemes, State Govt. and Central Govt. of India provide such loans to the dairy farmers. The loan amount varies with the size of the business as followed: Small units: With 1-10 productive cowsup to 5 lakhs. Medium units: With more than 10 to 20 productive cows up to20 lakhs.

Big dairy Industry: With more than 20 productive cowsmore than 20 lakhs. NON PERFORMING ASSET (NPA): An asset, including a leased asset, becomes nonperforming when it ceases to generate income for the bank. A non-performing asset (NPA) was defined as a credit facility in respect of which the interest and/ or installment of principal has remained past due for a specified period of time. With a view to moving towards international best practices and to ensure greater transparency, it has been decided to adopt the 90 days overdue norm for identification of NPAs, from the year ending March 31, 2004. Accordingly, with effect from March 31, 2004, a non-performing asset (NPA) shall be a loan or an advance where; Interest and/ or installment of principal remain overdue for a period of more than 90 days in respect of a term loan, The account remains out of order for a period of more than 90 days, in respect of an Overdraft/Cash Credit (OD/CC), The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted, Interest and/or installment of principal remains overdue for two harvest seasons but for a period not exceeding two half years in the case of an advance granted for agricultural purposes, and Any amount to be received remains overdue for a period of more than 90 days in respect of other accounts.

2.3 NEED FOR THE STUDY: Dairy farming is one of the crucial sectors of our economy and providing a very good contribution towards the Indian economy. Though Operation Flood also known as White Revolution started in India in the year 1971,it started very late in Assam in the year 2003 from the society called Kamdhenu Dugdha Utpadak Samabai Samiti,Nityananda,Pathsala which is still the no.1 milk producing society in Assam and later on spread in all the other places of the state. Great emphasis has been made to uplift this industry in the recent years. In India this is moreover a self-employment strategy initiated by the Government. Many schemes have been introduced by the Govt. under which an individual can start dairy farming. These schemes tend to provide financial assistance to start a new venture with subsidies during repayment of loans. State bank of India plays a significant role in disbursing dairy loans to the farmers. In the recent years SBI has granted huge amount of dairy loans to upgrade the rural economy of the country. But data reveals that the growth of the dairy business is not up to the mark and as a result large numbers of such loans have turned into NPA, i.e. they have not been paid back. Following table shows the total amount of dairy loan granted by SBI in Assam in the last 3 financial years:

Year

Total amount of loan granted in dairy(in crores rupees) 2009-2010 2010-2011 2011-2012 31.42 47.89 84.74

NPA (in crores rupees)

Percentage of NPA (%)

10.09 16.33 37.76

32.11% 34.11% 44.56%

The table clearly shows that although the amount of loan has increased over the 3 years, the amount of NPA has also risen. It is a major worry for SBI.

Thus the need of the study lies in finding out the following facts: The effects of dairy loans on the small dairy units. The degree of utilization of such loans. The reasons for non-payment of loans. Benefits to the borrowers. Benefit to the society and at last benefit to the countrys economy as a whole

2.4 SCOPE OF THE STUDY: The scope of the study includes conducting further surveys by taking a larger sample Size. It also includes scope for more elaborate study covering different factors to assess the impact in a better way. Through this study SBI will be able to understand the problems which lead to nonrecovery of its loan. Knowing the challenges faced by the farmers from this study, SBI may take effective course of action

2.5 RESEARCH METHODOLOGY:

Research methodology is the systematic solving of the research problem. That is how research is done scientifically. The research process I have used involves the following steps. Research design: The research design initially was be a form of exploratory study after which a descriptive research has been carried out. A structured questionnaire was administered during the field survey and personal interview with the people has also be done. Also depth interview with the president and secretary of the cooperative societies and the bank officials was done. Method of data collection: For the purpose of this study, data was collected almost entirely from primary sources as well as from secondary sources.

Sampling technique: The sampling technique for the survey was convenient sampling which has been used only in studying the borrowers. In case of bank officials and cooperative society being limited, the whole population has been studied. Techniques for analysis: Both qualitative and quantitative techniques have been used for this purpose. Qualitative helps to know the exact and depth meaning of the analysis while quantitative helps to know the position instantly by going through the figures. The quantitative analysis has been done on the computer using MS Excel.

Sample size: The sample size is 100.

10

2.6 HYPOTHESIS:

The quantum of Loan is not sufficient. Dairy farmers do not use scientific techniques of farming. The dairy business is growing at a very rapid rate in the areas covered under the study. There is good support from the bank officials in granting the loan to the farmers.

2.7 LIMITATIONS OF THE STUDY:

Self filling nature of questionnaire was a major limitation. A lot had to be left, to the understanding of the respondent as a result of which some responses though not incorrect, yet were not relevant completely. This was despite the fact that the instructions and routings to the questions were very clear. Geographical locations of the some units restricted the study. Due to havoc flood situation, some units in Pathsala and Mangaldai area couldnt be studied. Respondents might have been biased and did not give correct information.

11

CHAPTER3
ANALYSIS: 3.1 Analysis of Mirza:
3.1. A: Analysis of the literacy rate of the dairy farmers of Mirza: The following table shows the literacy rate of the dairy farmers of Mirza:
Qualification Illiterate Less than v H.S.L.C. H.S. Graduate Total Total no. of farmers 11 19 13 4 3 50 Percentage (%) 22% 38% 26% 8% 6% 100

8% 6% 26% 38% 22%

Illiterate

Less than v

H.S.L.C.

H.S.

Graduate

From the above table and the pie chart it is observed that most of the dairy farmers have qualification less than class 5 i.e. 38%,only 8% of the dairy farmers studied upto H.S. and only 6% of the dairy farmers have completed their graduation. Together 86% of the dairy farmers have studied only upto H.S.L.C. Thus we can say that the farmers of Mirza are very less educated.

12

3.1. B Experience of dairy farmers in Mirza:

Experience in years Nil Less than 5 Less than 10 Less than 15 Less than 20 Total

Total no. of farmers 8 14 19 6 3 50

Percentage (%) 16% 28% 38% 12% 6% 100%

Experience of farmers in dairy business in Mirza

6%

12%

16% Nil Less than 5 28% Less than 10 Less than 15 Less than 20

38%

From the above it is clear that most of the farmers have experience of less than 10 years in dairy business i.e. 38%.6% of them do not even have any prior experience in this field. Thus form the above findings we can say that the experience of the dairy farmers of Mirza is less.

13

3.1. C: Comparison of total no. productive cows with the total no. of cows in Mirza

Total no. of productive cows

Total no. of non-productive cows

Total no of cows

121 46.18%

141 53.82%

262 100%

46% 54%

Total no. of productive cows Total no. of nonproductive cows

The above table and the pie chart shows that more than half of the total cows i.e. 56% are non-productive. Thus it implies that the dairy farmers are incurring more cost on the nonproductive cows rather than gaining from the productive ones.

3.1. d: Analysis of the scenario of average production of milk in the region of Mirza:

Categories

Average daily production of milk(in litres)

Percentage (%)

Nil 0- 9 10-19 20-29 30-39 40-49 50-59 Total

5 13 18 7 4 3 0 50

10% 26% 36% 14% 8% 6% 0% 100%

14

Average daily production of milk(in litres) in Mirza

0% 8% 14% 6% 10% Nil 0- 9 26% 10 to 19 20-29 30-39 40-49 36% 50-59

From the above table and the pie chart it is clear that the average daily production of milk in Mirza is very low. Majority of the dairy farmers can produce milk only upto 9 litres per day.

3.1. e: Analysis of the most important constrain for the growth of the business for the Mirza:

Categories Non/less availability of raw materials Lack of finance/credit Lack of demand Lack of technology Lack of suitable premises/space Others Total

Total no of cases 3 16 0 9 5 17 50

Percentage (%) 6% 32% 0% 18% 10% 34% 100%

15

The most important constrains for the growth of the business in Mirza

6% 34% 32%

Non/less availability of raw materials Lack of finance/credit Lack of demand

10%

18% 0%

Lack of technology Lack of suitable premises/space

Here we can see that in majority of the cases others is the main constraint for the growth of business. In Mirza initially the dairy loans were granted through the co-operative society. Most of the member said that they did not got the full amount of money as the president and the secretary has withdrawn their money. 3.1. f: Comparison of the trend in the growth of dairy business in the last 3 years in Mirza:

Category Yes-Substantial increase Yes-Marginal increase No Marginal decrease No Substantial decrease Total

Total no 11 27 8 4 50

Percentage 22% 54% 16% 8% 100%

16

Trend in the growth of dairy business in Mirza in last 3 years

8% 22% 16% Yes-Substantial increase Yes-Marginal increase No Marginal decrease No Substantial decrease 54%

Here we can see that in case of majority of dairy farmers the business is growing at marginal rate in the last 3 years in Mirza. 3.1.g: Analysis of the problems in doing the dairy business in Mirza:

Category of the problems Diseases Cows died due to flood Low veterinary support Total

Total no of cases 30 0 20 50

Percentage (%) 60 0% 40% 100

Major problems in the dairy business in Mirza

Low veterinary support 40% Diseases 60%

Cows died due to flood 0%

From the above it is clear that in majority of cases diseases of cows is a major problem in doing the dairy business followed by lack of support from the bank officials in Mirza.

17

3.1.h: Analysis of the problems in repaying the loan in Mirza:

Category of the problems

Total no

Percentage (%)

Lack of support from the recovery agents and the bank officials Insurance claim not received Total

20 30 30

40 60 100

Problems in repaying the loan in Mirza

40% 60%

Lack of support from the recovery agents and the bank officials Insurance claim not received

Here we can see that lack non receipt of insurance claim from the insurance company is a major problem in repaying the loan in Mirza.

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3.2 ANALYSIS OF PATHSALA:

3.2 A: Literacy rate of the dairy farmers of Pathsala:
Qualification Illiterate Less than v H.S.L.C. H.S. Graduate Total Total no. of farmers 7 3 7 2 1 20 Percentage (%) 35% 15% 35% 10% 5% 100%

Qualification of the dairy farmers of Pathsala

10%

5% 35% Illiterate Less than v

35% 15%

H.S.L.C. H.S. Graduate

From the above table and the pie chart it is observed that 35% of the dairy farmers are illiterate and 15% have qualification less than class 5 i.e. half of the dairy farmer are qualified upto class v only.10% of the dairy farmers studied upto H.S. and only 5% of the dairy farmers have completed their graduation. Thus we can say that the literacy rate of the dairy farmers of Pathsala is very low.

3.2. B: Experience of dairy farmers in Pathsala:

Experience in years Nil Less than 5 Less than 10

Total no. of farmers 0 2 6

Percentage (%) 0% 10% 30%

19

Less than 15 Less than 20 Less than 40 years Total

0%

10
2 20

50%
10 100%

Experience of dairy farmers in Pathsala

0% 10% 10% 30% 50% Nil Less than 5 Less than 10 Less than 15 Less than 20 0% Less than 40 years

From the above it is clear that most of the farmers have experience of less than 10 years in dairy business i.e. 38%.6% of them do not even have any prior experience in this field. Thus form the above findings we can say that the experience of the dairy farmers of Mirza is less.

3.2.C: comparison of total no. productive cows with the total no. of cows in Pathsala:

Total no. of productive cows

Total no. of non-productive cows

Total no of cows

67 45.27%

81 54.73%

148 100%

20

45% 55%

Total no. of productive cows Total no. of nonproductive cows

The above table and the pie chart shows that more than half of the total cows i.e. 55% are non-productive. Thus it implies that the dairy farmers are incurring more cost on the nonproductive cows rather than gaining from the productive ones.

3.2.D: Analysis of the scenario of average production of milk in the region of Pathsala:

Categories

Average daily production of milk(in litres)

Percentage (%)

Nil 0- 9 10-19 20-29 30-39 40-49 50-59 60-69 Total

1 2 2 1 9 2 0 3 20

5% 10% 10% 5% 45% 10% 0% 15% 100

21

Average daily production of milk(in litres) in Pathsala

10 8 6 4 2 0

Average daily production of milk(in litres)

From the above table and the graph it is clear that the average daily production of milk in Pathsala is relatively better than that of Mirza. Majority of the cows can produce upto 30-39 litres of milk everyday. 3.2.E: Analysis of the most important constrain for the growth of the business in Pathsala:

Categories Non/less availability of raw materials Lack of finance/credit Lack of demand Lack of technology Lack of suitable premises/space Others Total

Total no of cases 1 2 2 12 3 o 20

Percentage (%) 5% 10% 10% 60% 15% 0% 100%

Here we can see that in majority of the cases lack of technology is the main constraint for the growth of business. They do not use the like milking machine and do not have the electric fans in the places where the cows are kept.

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3.2.F: Analysis of the trend in the growth of dairy business in the last 3 years in Pathsala:

Category Yes-Substantial increase Yes-Marginal increase No Marginal decrease Total

Total no 7 10 3 20

Percentage 35% 50% 15% 100%

Trend in the growth of dairy business in Pathsalain last 3 years

3, 15% 7, 35% Yes-Substantial increase 10, 50% Yes-Marginal increase No Marginal decrease

Here we can see that in case of majority of dairy farmers the business is growing at marginal rate in the last 3 years in Pathsala.

3.2. G: Analysis of the problems in doing the dairy business in Pathsala:

Category of the problems Diseases Cows died due to flood Low veterinary support Total

Total no 4 2 14 30

Percentage (%) 20% 10% 70% 100

23

Main problems in dairy business in Pathsala

20% 10% 70% Diseases Cows died due to flood Low veterinary support

From the above it is clear that in majority of cases low veterinary support is a major problem in doing the dairy business in Pathsala.

3.2.H :Analysis of the problems in repaying the loan in Pathsala:

Category of the problems

Total no

Percentage (%)

Lack of support from the recovery agents and the bank officials Insurance claim not received No problems Total

8 10 2 20

40% 50% 10% 100

Problems faced by farmers in repaying the loan in Pathsala

10% Lack of support from the recovery agents and the bank officials Insurance claim not received No problems

40% 50%

Here we can see that non receipt of the insurance claim from the insurance company is a major problem in repaying the loan in Pathsala.

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3.3 ANALYSIS OF MANGALDAI:

3.3. A: Qualification of the dairy farmers in Mangaldai:

Qualification Illiterate Less than v H.S.L.C. H.S. Graduate Total

Total no. of farmers 2 2 16 8 2 30

Percentage (%) 6.67 % 6.67 % 53.33 % 26.67 % 6.67 % 100

Qualification of dairy farmers of Mangaldai

7% 27%

6%

7% Illiterate Less than v H.S.L.C. 53% H.S. Graduate

From the above table and the pie chart it is observed that most of the dairy farmers have qualification upto H.S.L.C only and i.e. 53%, 27% of the dairy farmers studied upto H.S. and only 7% of the dairy farmers have completed their graduation.

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3.3. B: Experience of dairy farmers in Mangaldai:

Experience in years Nil Less than 5 Less than 10 Less than 15 Less than 20 Total Total no. of farmers 0 11 16 1 2 30 Percentage (%) 0% 37% 53% 3% 7% 100%

Experience of the farmers in Mangaldai (in years)

3% 0% 7% 37% Nil Less than 5 53% Less than 10 Less than 15 Less than 20

From the above it is clear that most of the farmers have experience of less than 10 years in dairy business i.e. 53%.Thus from the above findings we can say that the dairy farmers of Mangaldai are less experienced in the field of dairy farming.

3.3. C: Comparison of total no. productive cows with the total no. of cows in
Mangaldai:

Total no. of productive cows

Total no. of non-productive cows

Total no of cows

74 47.13%

83 52.87%

157 100%

26

47% 53%

Total no. of productive cows Total no. of nonproductive cows

The above table and the pie chart shows that more than half of the total cows i.e. 53% are non-productive. Thus it implies that the dairy farmers of Mangaldai are incurring more cost on the non-productive cows rather than gaining from the productive ones,

3.3. D: Analysis of the scenario of average production of milk in the region of

Mangaldai:

Categories

Average daily production of milk(in litres)

Percentage (%)

Nil 0- 9 10-19 20-29 30-39 40-49 50-59 Total

3 7 5 5 6 2 2 30

10 23.32 16.67 16.67 20 6.67 6.67 100

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Average daily production of milk(in litres)

no.of dairy farmers 8 7 6 5 4 3 2 1 0 Nil Average daily production of milk(in litres) 0- 9

10 to less 20-29 30-39 40-49 50-59 than 20 5 5 6 2 2

From the above it is clear that the average daily production of milk in Mangaldai is low. Majority of the cows can produce upto 0-9 litres of milk. Although a good no. of dairy farmers can produce 30-39 litres of milk from their cows everyday.

3.3. E: Analysis of the most important constrain for the growth of the business in
Mangaldai:

Categories Non/less availability of raw materials Lack of finance/credit Lack of demand Lack of technology Lack of suitable premises/space Others Total

Total no of cases 3 14 0 7 6 0 30

Percentage (%) 10 46.67 0 23.33 20 0 100

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The most important constraint for the growth of dairy business in Mangaldai
0% 20% 10% Non/less availability of raw materials Lack of finance/credit Lack of demand 47% Lack of technology 0% Lack of suitable premises/space

23%

Here we can see that in majority of the cases lack of credit is the main constraint for the growth of business.

3.3. F: Analysis of the trend in the growth of dairy business in the last 3 years in
Mangaldai:

Category Yes-Substantial increase Yes-Marginal increase No Marginal decrease Total

Total no 13 13 4 30

Percentage 43.33% 43.33% 13.34% 100%

29

13% 44% Yes-Substantial increase 43% Yes-Marginal increase No Marginal decrease

Here we can see that in case of majority of dairy farmers the business is growing at marginal rate in the last 3 years in Mangaldai.

3.3. G: Analysis of the problems in doing the dairy business in Mangaldai:

Category of the problems Diseases Cows died due to flood Low veterinary support Total Total no 13 10 7 30 Percentage (%) 43.33% 33.33% 23.34% 100%

Main problems in dairy business in Mangaldai

23% 44% Diseases Cows died due to flood 33% Low veterinary support

From the above it is clear that in majority of cases diseases of cows is a major problem in doing the dairy business followed by low veterinary support in Mangaldai.

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3.3. H: Analysis of the problems in repaying the loan in Mangaldai:

Category of the problems Total no Percentage (%) Lack of support from the recovery agents and the bank officials Insurance claim not received Total 16 14 30 53.33% 46.67% 100%

47% 53%

Lack of support from the recovery agents and the bank officials Insurance claim not received

Here we can see that lack of support from the bank officials is a major problem in repaying the loan in Mangaldai.

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3.4. OVERALL ANALYSIS OF MIRZA, PATHSALA AND MANGALDAI:

3.4. A: Literacy rate of the dairy farmers:

Mirza (in %) Illiterate Less than v H.S.L.C. H.S. Graduate Total

22 38 26 8 6 100

Pathsala (in %)
35 15 35 10 5 100

Mangaldai (in %)
7 6 53 27 6

100

Literacy rate of dairy farmers

60 50 40 30 20 10 0 Illiterate Mirza Less than v H.S.L.C. H.S. Pathsala Graduate Mangaldai

From the above table and the graph it is observed that most of the dairy farmers have qualification upto H.S.L.C , and a very less no. of dairy farmers have completed their studies upto graduation.

32

3.4. B: Experience of the respondents in the field of dairy farming in Mirza,

Pathsala and Mangaldai:

Experience ( in years)
Nil Less than 5 Less than 10 Less than 15 Less than 20 Less than 25 Less than 30

Mirza (in %)
16 28 38 12 6

Pathsala (in %)
0 10 30 0 50

Mangaldai (in %)
0 37 53 3 7 0

0 0 100

0 10 100

0 100

Total

Experience of dairy farmers

60 50 40 30 20 10 0 ( in years) Nil Less Less Less Less Less Less than 5 than 10 than 15 than 20 than 25 than 30 Pathsala Mangaldai

Mirza

From the above it is clear that majority of dairy farmers has experience of less than 10 years in the field of dairy farming.

33

3.4 C: Comparison of total no. productive cows with the total no. of cows(in %):

Mirza Productive cows (in %) Nonproductive cows (in %) Total 55 45

Pathsala 47

Mangaldai 46

53

54

Total

Total

60 50 40 30 20 10 0 Mirza Pathsala Mangaldai Non-productive cows (in %) Productive cows (in %)

Here we can see that most of the cows are unproductive and the ratio of productive cows to unproductive cows in similar in all the three areas.

34

3.3.D: Analysis of the scenario of average daily production of milk:

Mirza(in %)
Nil 0- 9 10-19 20-29 30-39 40-49 50-59 60-69

Pathsala(in %) 10 26 36 14 8 6 0 0 5 10 10 5 45 10 0 15

Mangaldai(in %) 10 23 17 17 20 7 6 0

45 40 35 30 25 20 15 10 5 0 Nil 0- 9 10 to 20-29 30-39 40-49 50-59 60-69 19 litres

Mirza Pathsala Mangaldai

From the above it is clear that average daily production of milk is highest in Pathsala and lowest in Mirza.

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3.4.E: Analysis of the most important constrains for the growth of the business

Categories
Non/less availability of raw materials Lack of finance/credit Lack of demand Lack of technology Lack of suitable premises/space Others

Mirza(in %)
6

Pathsala(in %)
5

Mangaldai(in %)
10

32 0 18 10

10 10 60 15

47 0 23 20

100

100 100

60 50 40 30 20 10 0 Mirza Pathsala Mangaldai

Here we can see that lack of technology is the major constraint in the growth of dairy business in all the areas and it is highest in Pathsala.

3.4. F: Analysis of the trend in the growth of dairy business in the last 3 years:
Category Yes-Substantial increase Yes-Marginal increase No Marginal decrease

Mirza(in %) 22 54 16

Pathsala(in %) 35

Mangaldai(in %) 43 44 13

50 15

36

No Substantial decrease Total

8
100

0
100

0
100

60 50 40 30 20 10 0 Mirza Pathsala Mangaldai

From the above it is clear that the dairy business is growing at a marginal rate in all the areas in the last 3 years.

3.4. G: Analysis of the problems in doing the dairy business:

Category of the problems Diseases Cows died due to flood Low veterinary support Total

Mirza
60 0 40 100

Pathsala
20 10 70 100

Mangaldai
44 33 23 100

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70 60 50 40 30 20 10 0 Mirza Pathsala Mangaldai Diseases Cows died due to flood Low veterinary support

From the above it is clear that low veterinary support is the major problem in doing the dairy business in all the three areas and it is highest in Pathsala.

3.4. H: Analysis of the problems in repaying the loan

Category of the problems

Mirza (in %)

Pathsala (in %)
40 40

Mangaldai (in %)
53

Lack of support from the recovery agents and the bank officials Insurance claim not received No problem Total

60

50 10

47 0 100

100

100

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60 50 40 30 20 10 0 Mirza Pathsala Mangaldai Lack of support from the recovery agents and the bank officials Insurance claim not received No problem

Here, we can see that due to non receipt of insurance claim and lack of support from the bank officials the farmers are facing problems in repayment of their loan dues in all the three areas.

3.4. I: Comparison of NPA of Mirza, Pathsala and Mangaldai:

Place

Total amount of Total amount Loan Disbursed (In Rupees) repaid to bank (In Rupees) 11,87,364 45,98,936 24,69,685 82,55,985

NPA (In Rupees)

NPA (%)

Mirza Pathsala Mangaldai Total

54,21,750 99,76,000 78,69,685 2,32,67,435

42,34,386 53,77,064 54,40,000 1,50,51,450

78.10 53.90 68.62 64.69

Note: The above data are collected from Mirza, Pathsala Mangaldai SBI Branches.

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NPA (%)
78.1 80 70 60 50 40 30 20 10 0 Mirza Pathsala Mangaldai NPA (%) 53.9 68.62

From the above it is clear that the percentage of NPA is highest is Mirza and it is lowest in Pathsala.

3.4. J: Comparison of average daily production of milk and average turnover per
farmer in Mirza, Pathsala and Mangaldai:

Mirza Milk production(in litres) Turnover(in rupee) Total No. of respondent 852 25560 50

Pathsala 591 14875 20

Mangaldai 578 14625 30

From the above table it is clear that the total turnovers of the farmers of the places are as follows: In Mirza = (Total daily average production of milk*selling price of milk per litre)

= (852*RS. 30/litre)
= RS.25560 Hence, daily average turnover per farmer = daily turnover total no. of farmers = 25560 50 =RS.511.20 In Pathsala = (Total daily average production of milk*selling price of milk per litre)

= (571*25/litre +20*RS. 30/litre)

=RS. 14875

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Hence, daily average turnover per farmer = daily turnover total no. of farmers = 14875 20 =RS.743.75 In Mangaldai = (Total daily average production of milk*selling price of milk per litre)

= (35*RS. 25/litre+543*30/litre)
=RS. 17165 Hence, daily average turnover per farmer = daily turnover total no. of farmers = 1716530 =RS.572.17

Thus the daily turnover of the dairy farmers in Mirza, Pathsala and Mangaldai are show in the following table:

Mirza Rs.511.20

Pathsala Rs. 743.75

Mangaldai Rs. 572.17

800 700 600 500 400 300 200 100 0 511.2

743.75 572.17

Mirza

Pathsala

Mangaldai

The above graph shows that the daily turnover of a dairy farmer in Pathsala is highest and that of a farmer of Mirza is lowest.

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SWOT analysis of SBI DAIRY LOAN SCHEME Hence from the above study a SWOT analysis of SBI DAIRY LOAN can be done as follows: Strengths Large coverage of customers The concept of financial inclusion is achieved Beneficial for the dairy farmers in starting and expanding their dairy business Huge contribution towards the change of standard of living of the dairy farmers and their families No mortgage is required for getting the loan under SBI DAIRY PLUS Scheme. So poor farmers can avail this loan easily. Weaknesses Lengthy process of approving the loan and disbursement of money Higher rate of interest and monthly installments as compared to United Bank of India and Assam Gramin Vikash Bank which makes it difficult for the borrowers to repay the loan while their business is not running smoothly Poor efforts from the recovery team in case of recovery of money from the borrowers. Very less follow up and monitoring from the marketing team for recovery of the unpaid amount which is a major reason for NPA of such loans. Lack of insurance support from the bank results in more discrepancies among the borrowers and the bank officials. The unfavourable behavior from the bank officials is another reason why the loan borrowers afraid of visiting the branch, asking about new schemes and rude behavior from the clerical staff especially the tellers results that the borrowers dont want to go to the branch and pay their installments

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Opportunities

Threats

SBI has a huge coverage in both rural and urban areas. So it is possible to cover large no. of customers through such dairy loan which will in return help in maximizing the profit as well as market share of SBI.

More flexibility in the repayment and settlement process of unpaid amount of loan in case of the competitor banks like united Bank of India and Assam Gramin Vikash Bank has become and major concern for the bank as people now a days are taking more dairy loans from such banks

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CHAPTER 4:
4.1 FINDINGS:

KEY FINDINGS: The major findings and points of intervention that emerges from the study are:

Illiteracy is a common characteristics among the Dairy farmers pertaining to which they fail to understand the simple Banking terms and rules. Moreover they do not like to visit banks as opening an account involves a huge set of documentation and being illiterate they feel helpless.

In many cases it has been found that the dairy loan borrowers have never read the MOU which was signed between the bank and their society. As it is printed in English, the semi-literate farmers also failed to understand the terms and condition mentioned in it. They have just put their signatures without understanding the conditions of borrowing loans.

There is a presence of informal money lenders in the market also known as Pathanis. Farmers find it easy to borrow money from them as it does not involves lengthy documentation process and regular visit to banks. Though the rate of interest charged is very high compared to other financial institutions they find it hassle free and access to money is very quick.

A major number of cows are unproductive as of now. The reasons were increase in dry period due to repeat breeding and disease outbreak; normally there is a dry period of 120 days in a year.

Disease outbreak is a common phenomenon in the areas surveyed. The farmers have to face a hard time as some of the diseases are very dangerous and have killed the cows or made them unproductive. The common disease found were:

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FMD (FOOT and MOUTH DISEASE): It is an epidemic kind of disease which infects the foot and mouth of a cattle. It results in complete damage of the cattle or may lead to death. Medication does not help in curing this; the only way is to vaccine the cattle properly at regular intervals prior to the occurrence of the disease. BQ (BLACK QUARTER):- It is an acute infectious and highly fatal, bacterial disease of cattle. Buffaloes, sheep and goats are also affected. It is soil-

borne infection which generally occurs during rainy season. The disease spreads through Ingestion of contaminated feed and Contamination of wounds. It results in Fever (106-10SF) Loss of appetite, difficult breathing and Recumbence (prostration) followed by death within 12-48 hrs. ANTHRAX: It is most common in wild and domestic herbivores, in acute anthrax of cattle there is an abrupt fever, respiratory or cardiac distress, convulsions, and death. Often, the course of disease is so rapid that illness is not observed and animals are found dead. The body temperature may reach 107F (41.5C), rumination ceases, milk production is materially reduced, and pregnant animals may abort. Primary survey suggests that Lack of green fodder is a major constraint in doing Dairy business. Acute shortage of feed concentrate and green fodder is the root cause of the poor performance as the genetic potentiality of an animal cannot be exploited fully in the absence of proper nutrition. Again due to lack of space for cultivation most of the farmers purchase it from grass sellers who procure it from far flung areas and sells at a high price. Insurance claim not received is a common problem to all the dairy farmers. The insurance company does not provide actual claims and at times prolongs the process. There have been cases where the farmers have not received any claim since the last 2 years. There is a very low co-operation from the Bank in

45

getting the claims. Moreover SBI has tie up with New India Assurance Company Limited which provide the insurance coverage of the animals for 1 year only and the premium amount is adjusted from the loan amount. So the farmers will have to renew for the second year at their own cost. Most of the farmers are not aware of this fact. As a result they do not get any claim for the cows died. A large number of Loan borrowers have defaulted in retuning the money back to SBI, as the dairy loans are granted to them without any mortgage. When interviewed it was known that there are a number of willful defaulters. There economic condition was good enough to repay the loan but have defaulted willingly. In Mirza the NPA figure is highest and it is 78.10%, and the overall NPA in Mirza, Pathsala and Mangaldai is 64.69% which is a major reason to worry for the bank. When the Banks data were analyzed it was known that the Loan outstanding amount exceeds the borrowed amount as of now. There was a rumor in the villages that the Central Government has waived off the Dairy Loans pertaining to a year which changed the mind of many farmers. The Govt. had once waived off the loans disbursed as KCC (Kishan credit card) in the year 2008 which the farmers thought were applicable to dairy too. There is a low support facility from the Veterinary Departments of the state. In Pathsala the support from the veterinary Department is very low as compared to that of in Mirza and Mangaldai. Free medicines and vaccines are less available in those areas and a call to a doctor costs minimum of Rs.500 to a farmer. Repeat breeding is a major problem found in the primary survey. It requires at least 3-4 services after which a cow gets conceived. Artificial insemination turns out to be a costly affair for the farmers as a single service is not fruitful. When interviewed the farmers, it was known that the quality of semen provided by Assam Veterinary department is not of superior quality. One of the root causes for repeat breeding was found to be the inferior quality of fodder used. The fodders other than green grass were of low quality which affected the health of cattle resulting in disease. There is lack of modern technologies/ facilities in the units required to match the growing demand. While interviewing the president and the other members

46

of Kamdhenu Dugdha Utpadak Samabai Samiti in Pathsala it was revealed that due to insufficient storage facilty in their Bulk Milk Cooler they cannot supply more milk to places like Guwahati and other places of Barpeta, Kmrup District. The samiti has tie up with Purabi Dairy, Guwahati , but till the time people from Purobi dairy reaches their place for collection of milk,a large quantity of milk got damaged. The samitis current Bulk Milk Cooler has a capacity improve operational efficiencies. Bulk milk coolers or milking machines are not availay of 2000 litres of milk and the society produces 5000 litres of milk every day. Hence a bigger Bulk Cooler is required to be provided to the samiti which is presently the no.1 Milk producing co operative society in Assam. Recurrence of flood have caused high incidence of parasitic diseases especially in Pathsala and Mangaldai. It has also been found from the field survey that harmful drugs are being used by cattle dealers to raise milk production at the point of sale. Drugs like oxytocin is injected which increases the milk output but after some point of time it falls. The farmers were misguided by the cattle dealers at the time of purchase. It has been known that there is no compound feed manufacturer in the whole of the N.E. India. As a result the utilization of non-conventional feed resources could not be maximized. When interviewed the farmers revealed about non-receipt of subsidy from the government. The subsidy loans provided by NABARD and other agencies are not able to reach these small dairy farmers. .

47

4.2 RECOMMENDATIONS: There should be proper veterinary support to the dairy farmers from the State and
District Veterinary department. They should supply sufficient amount of medicines and the govt. doctors should visit the dairy units frequently. It will be better if the Govt. of India introduces a new service called dial -up toll free number for dairy farmers like the 104 services in Assam so that the dairy farmers can take advise from the doctors for any kind of diseases of the cows from anywhere and in anytime. There should be a special provision to impart frequent training to dairy farmers in the areas such as animal health care, disease control, care and management of animal breeding, feeding and clean milk production. Primary study reveals that majority of the Dairy farmers have acquired experience in this field through hereditary practices. As a result, they are unable to apply new technology for increasing production and skill up gradation which ultimately affect the profits. So the state government should take effective step for providing training in entrepreneurship development, skill upgradation and updating technology, to these entrepreneurs and other unemployed youth in this field free of cost. The Veterinary Department should improve the quality of semen for breeding of the cows because repeat breeding is a major problem for the cows and the dairy business in all the areas studied.

The dairy farmers should adopt new technologies rather than using the old traditional
way of production and storage of milk. There should be proper use of electrical fans in the places where the cows are kept. Moreover technologies like milking machine should be used rather than doing it manually and Bulk Milk Cooler should be installed at all the main places where the milk production is more. It will help in storing the milk upto 6 hours. The Govt. of Assam should provide a bigger 5000 litre Bulk Milk Cooler Machine to Kamdhenu Dugdha Utpadak Samabi Samiti at Pathsala to reduce their damage of milk per day. Marketing of milk is a problem in Pathsala. So the dairy society should try to make the products of curd, cream etc from the damaged milk and market in the nearby places. It will reduce their wastage. The loan application form and the MOU and the other all related documents should be in both English and local languages for understanding of both illiterate and literate farmers.

48

SBI should reduce the rate of interest on dairy loans and there should be more flexibility in repayment and settlement of dues from the borrowers. The marketing and recovery team should frequently monitor the dues of the dairy loans and it should be done within every 3 months. The insurance company should expand the tenure to 3 years to cover the maximum damage of cows. It will be very much effective for the farmers as they either do not know about the renewal of their insurance of cows.

49

CHAPTER5:
5.1 CONCLUSION:
Globalization and Liberalization are the Mantras of the new economy today, which is now on the fast track. Industrial production is rapidly moving forward. The dairy industry is no exception. There is no doubt that there is tremendous scope for the growth of the dairy industry in the new millennium. The dairy business is growing in Pathsala .But due to diseases, flood and low support from the bank, insurance company and veterinary department the growth of this business in Mangaldai and Mirza is very static. If there is proper support from the Govt. of India and SBI the dairy business will improve in those areas. Only after that the concept of financial inclusion and White Revolution will be better achieved in those areas. As a result of this the dairy industry of Assam will also be able to contribute more towards the Indian Economy.

50

BIBLIOGRAPHY
http://www.statebankofindia.com/ www.nabard.org/

51

6 ANNEXURE:
QUESTIONNAIRE
I am doing a study on The Current Scenerio of Small Dairy Units In Mangaldai, Pathsala And Mirza under The State Bank Of India Dairy Loan Scheme in your area, so I seek your valuable time and co-operation in this concern. Kindly fill up the questionnaire with appropriate data to make the study successful. Name of the borrower: Address: Age: Less than 20 years Qualification: Illiterate 20-39 years Less than class v 40-59 years H.S.L.C. 60 and above H.S Graduate

1. Total no. of cows in the house . 2. How many cows are there which are productive? ............................................. 3. Are you a member of any co-operative society? Yes No If yes please specify the name of the society: 4. Experience in this field?( in years) Nil less than 5 5-9 10-14 15-19 20-24 25-29 5. Average daily production of milk? (in liters) Nil 0-9 10-19 20-29 30-39 40-49 50-59 60 and above 6. How do you sell milk? Directly to customers through co-operative society others Please specify if others: 7. What is the selling price of milk per liter? (in rupees) Less than 15 15-19 20-24 25-29 30 and above 8. What is your most important constraint for the growth of your Enterprise? Non-availability/less availability of raw materials Lack of finance/credit Lack of demand Lack of appropriate technology Lack of suitable premises/space No problem

Any other problem (specify): .. 9. Have you taken any dairy loan? Yes No (if yes please specify the loan amount). (I) If yes, did you face any problem when bank loan was sought? Yes No

52

(ii) If yes, type of problem faced: a) Insistence on fixed collateral b) Non-cooperation by banking authorities c) Complicated lending procedure d) Other harassment/problems 10. How was the loan granted? Directly b) through co-operative society c)others 11. Did you receive the entire Loan amount? Yes No (if no please specify the amount received below) 12. Have you fully paid your Loan amount? Yes No (if no please specify the amount to be paid below)

13. Do you need Credit?

Yes

No

14. Are you able to get adequate amount of credit from financial institutions? Yes No If No How do you solve this problem? (a) Going to informal credit sector (b) Reducing business turnover (c) Any other (specify) 15. If credit is available to you as desired, do you think that your sales will expand in future? Yes No 16. Are you able to sale all your output produced? Yes No If No, what are the problems in marketing your products? (Elaborate) ....................................................................................................................... 17. Do you feed green fodders? Yes No If yes please specify the source: . If no specify the other kind of food:

18. Has your sales increased over the last three years? a. Yes Substantial increase b. Yes Marginal increase c. Remains constant d. No Marginal decrease e. No Substantial decrease
19. Distance of the unit from SBI branch?(in kms) Less than 5 5-9 10-14 14-19 20 and above 20. Distance of the unit to Veterinary. Dispensary/A.I. center?(in kms) Less than 5 5-9 10-14 14-19 20 and above

53

21. What problems did you face while repaying the loan? ....................................................................................................................................................... ....................................................................................................................................................... .......................................................................................................................................................

Thank You

54

Special activities in SIP

An awareness camp was organized with the help of bank officials at Mangaldai. An interaction session with more than 10 dairy farmers was done in the SBI ,Pathsala Branch An awareness cum recovery camp was organized at SBI,DRISHTEE CSP centre at Rampur, Mirza

55

WEEKLY ACTIVITY REPORT

Prepared by: ABDUL QUAYYUM ROLL NO: 01/D/2011 SIP in STATE BANK OF INDIA

Week

ACTIVITIES UNDERTAKEN

1 Results awaiting for SBI Results were declared and selected for the SIP, asked to report to the concerned HR Manager on 8th May. After completion of all the formalities like signing the agreement and Dalil, finally got the project on 10th May. The organizational guide was allocated on the same day and I reported to Karabi Maam and informed her about the project. Made the questionnaire for 2 the study and survey was started from Mirza. Organized an awareness cum recovery camp on 16th May at Rampur SBI DRISHTEE CSP Centre 3 and met the dairy farmers. Went to Mirza and survey was done in Nahira, Mirza and 12 more dairy farmers were 4 surveyed Survey of dairy farmers at Mirza was completed 30th May. Total of 50 dairy farmers were 5 surveyed from Mirza Reported to the Chief Manager, Mangaldai Branch and survey was started. An awareness camp was organized at Jharubari, Mangaldai and interacted with 13 dairy farmers in the 6 camp. Survey at Mangaldai was completed on16th of June and total of 30 dairy farmers were interviewed. On 18th June reported to the Chief Manager of Pathsala Branch and the survey was stared there. 7

Survey in Pathsala was completed and total of 20 dairy farmers were interviewed only due to heavy flood in the region. Reported to the organizational guide and informed about the 8 survey.

Note : The organizational guide did not allocate any work weekly wise. He allowed me to plan my survey as per my own choice and asked me to complete it within 30th June.

56