Increasing intervention of Private sector in Livestock farming through

linkages with SHGs-NGOs

D.Thirunavuukarasu, P.Thilakar and B.Mohan
Krishi Vigyan Kendra, Namakkal.
ABSTRACT
In the context of globalization the Concept of Self Help Groups (SHGs),
Micro enterprises and Micro finanancial institutions (MFIs) are being
promoted as one of the remedies to alleviate poverty; promotion of equity
and empowerment of unprivileged sections. Initially developmental
agencies were in the forefront of promoting the concept of Self Help
Groups. Currently there is increased interest of private financial institutions
and Multi nationals. The untapped financial service market in rural has
been attracting financial institutions including foreign financial investors. Till
to date the majority of the rural community depend upon money lenders for
their financial needs. Organized finance sector (Public and Private banks)
has poor reach with the rural community. In order to over come the issue
organized sector needed an ideal partnership. For these NGOs was
enwrapped as partner which has better reach with the rural community.
The linkage with NGOs and mobilization of rural people as SHGs
facilitated externalization of some of the credit activities, supervision and
repayment of borrowers, reduced transaction cost and increased margins.
In addition prompt repayment, mobilization of savings and expansion of
business was resulted. This resulted in increased penetration of organized
banking sector into unorganized markets. In recent years the
collectiveness of SHGs and their linkages with NGOs, financial institutions
are being tapped by other sectors too. Livestock is one of the major micro
enterprise activities being carried out by SHG members. More than 40 %
of micro finance portfolio goes for dairying. Linking of corporate houses
engaged in dairy sector with NGOs / MFI /SHGs are in pipeline. Godrej
Agrovet, cattle feed company linked with Spandana, an NGO cum MFI.
The feed company sells its feeds on credit basis through the MFI. Another
MFI namely Basix, acts as franchise for selling livestock micro insurance
policies of Royal Sundaram alliance general insurance company. The
NGO Pradhan in Uttar Pradesh has formed 67 goat rearing SHGs /
Commodity Interest Groups (CIGs). These groups are facilitated with
forward and backward linkages. Private bank ICICI has established Centre
for Microfinance at Chennai. One of its mandates is to focus research on
formation of strong network of potential partners in dairy sector involving
MFIs. These all shows gradual increase of corporate role in livestock
sector through SHGs. These kinds of linkage are sure to create new
markets for the financial institutions and other private companies engaged
in the sector. This will facilitate corporate business penetration at bottom of
pyramid and reap huge returns. Similarly new extension policy advocates
group formation and linking them to agro-retail industries. In Livestock
sector these kinds of events are less but over a span of time likely to be
predominant.