The total milk production in the country for the year 2008-09 was estimated at 108.5 million metric tonnes and the demand is expected to be 180 million tonnes by 2020. To achieve this demand annual growth rate in milk production has to be increased from the present 2.5 % to 5% .  Thus, there is a tremendous scope/potential for increasing the milk production through profitable dairy farming.

3.1. Loan from banks with refinance facility from NABARD is available for starting dairy farming
For obtaining bank loan, the farmers should apply to the nearest branch of a commercial bank, regional rural bank or co-operative bank in their area in the prescribed application form which is available in the branches of financing banks.

3.2.  For dairy schemes with very large outlays, detailed project reports will have to be prepared
The items of finance would include capital asset items such as purchase of milch animals, construction of sheds, purchase of equipments etc. The feeding cost during the initial period of one/two months is capitalised and given as term loan. Cost towards land development, fencing, digging of well, commissioning of diesel engine/pumpset, electricity connections, essential servants' quarters, godown, transport vehicle, milk processing facilities etc. can be considered for loan. Cost of land is not considered for loan.

4.1 A Scheme can be prepared by a beneficiary after consulting local technical persons of State Animal Husbandry Department, DRDA, Dairy Co-operative Society / Union / Federation / commercial dairy farmers. 
If possible, the beneficiaries should also visit progressive dairy farms and government / military / agricultural university dairy farms in the vicinity and discuss the profitability of dairy farming. A good practical training and experience in dairy farming will be highly desirable.

The dairy co-operative societies, if existing in the villages would provide all supporting facilities particularly for marketing of fluid milk. Nearness of dairy farm to such a society, veterinary aid centre, artificial insemination centre should be ensured. There is a good demand for milk, if the dairy farm is located near urban centre.

4.2 The scheme should include informations
The scheme should include information on land, livestock markets,availability of water, feeds, fodder, veterinary aid, breeding facilities, marketing aspects, training facilities, experience of the farmer and the type of assistance available from State Government, dairy society/union/federation.

4.3 The scheme should also include information on the number and types of animals to be purchased, their breed, production performance, cost and other relevant input and output costs with their description. 
Based on this, the total cost of the project, margin money to be provided by the beneficiary, requirement of bank loan, estimated annual expenditure, income, profit and loss statement, repayment period, etc. can be worked out and shown in the Project report. A format developed for formulation of project report for a dairy farm is given as Annexure I.

After ensuring technical feasibility and economic viability, the scheme is sanctioned by the bank. The loan is disbursed in kind in 2 to 3 stages against creation of specific assets such as construction of sheds, purchase of equipments and machinery, purchase of animals and recurring cost on purchase of feeds/fodders for the initial period of one/two months. The end use of the funds is verified and constant follow-up is done by the bank.

7.1 Outlay
Outlay of the project depends on the local conditions, unit size and the components included in the project. Prevailing market prices may be considered to arrive at the outlay.

7.2 Margin Money:
Margin depends on the category of the borrowers and range from 5 to 25%.  

7.3 Interest Rate for ultimate borrower :
Banks are free to decide the rates of interest within the overall guidelines. However, for working out the financial viability and bankability of the model projects we have assumed the rate of interest as 12 % p.a

 7.4 Security
Security will be as per NABARD/RBI guidelines issued from time to time.

7.5 Repayment period of loan
Repayment period depends upon the gross surplus in the scheme.  The loan will be repaid in suitable monthly/quarterly instalments usually within a period of five to seven years.

7.6 Insurance
The animals and capital assets may be insured annually or on long term master policy, where ever it is applicable. A model project with 10 buffaloes is given as Annexure II. This is indicative and the applicable input and output costs as also the parameters observed at the field level may be incorporated.

1. General
i) Nature and objectives of the proposed scheme
ii) Details of proposed investments
iii) Specification of the project area
iv) Name of the financing bank branch
v) Status of beneficiary:(individual/Partnership/Company/Corporation/Co-operative Society / Others)
vi) Details of borrowers profile
(a) Capability
(b) Experience (c) Financial Soundness
(d) Technical/Other special Qualifications
(e) Technical/Managerial Staff and adequacy thereof
    2. Technical aspects :
a) Location, Land and Land Development :

i) Location details of the project
ii) Total Area of land and its cost
iii) Site map
iv)Particulars of land development, fencing, gates, etc.

b) Civil Structures :

Detailed cost estimates along with measurements of various civil structures

- Sheds
- Store room
- Milk room
-Quarters, etc.

c) Breeding Facilities :

i) Source :
ii) Location :
iii) Distance (km.) :
iv) Availability of semen :
v) Availability of staff :
vi) Expenditure per animal/year

d) Veterinary Aid :

i) Source
ii) Location
iii) Distance (km.)
iv) Availability of labour and other staff
v) Types of facilities available
vi) If own arrangements are made - a) Employed a veterinary doctor/stockman/consultant b) Periodicity of visit c) Amount paid/visit (Rs.)
vii) Expenditure per animal per year (Rs.)

e) Electricity :

i) Source
ii) Approval from SEB
iii) Connected load
iv) Problems of power failure
v) Arrangements for generator

f) Water :

i) Source
ii) Quality of water
iii) Availability of sufficient quantity for drinking, cleaning and fodder production
iv) If investment has to be made, type of structure, design and cost

g) Marketing of milk :

i) Source of sales
ii) Place of disposal
iii) Distance (km.)
iv) Price realised - (Rs. per liter of milk)
v) Basis of payment
vi) Periodicity of payment

h)Marketing of other products :

i) Animal - age
- place of sale
- price expected
ii) Manure - Qty./animal
Price/unit (Rs.)

iii) Empty gunny bags
- Number
- Cost/bag (Rs.)

i) Beneficiary's experience :

j) Comments on technical feasibility :

k) Government restrictions, if any :

l) Water :

m) Water :

n) Water :

3. Financial Aspects :
i) Project Cost

Sr. No.	Item	Physical Unit and Specification	Cost  (Rs.)
1	Capital Costs
2	Total Capital Costs(A)
3	Recurring Costs
4	Total Recurring Costs (B)
	Total Project Cost (A+B)

ii) Down payment/margin/subsidy (Indicate source & extent of subsidy):

iii) Financial viability (comment on the cash flow projection on a farm model/unit and enclose the same.)

Particulars :
a) Internal Rate of Return (IRR) :
b) Benefit Cost Ratio (BCR) :
c) Net Present Worth (NPW) :

iv) Financial position of the borrowers (to be furnished in case of corporate bodies/partnership firms)

a) Profitability Ratio :
i) GP Ratio
ii) NP Ratio
b) Debt Equity Ratio :
c) Whether Income Tax & other tax obligations are paid upto date :
d) Whether audit is upto date (enclose copies of audited financial statements for the last three years)

v) Lending Terms :

i) Rate of Interest :
ii) Grace Period :
iii) Repayment Period :
iv) Nature of Security :
v) Availability of Government guarantee wherever necessary :

4. Infrastructural Facilities :
a) Availability of technical staff with bank/implementing authority for monitoring

b) Details of -
i) technical guidance
ii) training facilities
iii) Govt. support /extension support

c) Tie-up arrangements with marketing agencies for loan recovery

d) Insurance -
- Type of policy
- Periodicity
- Rate of premium

e) Whether any subsidy is available, if so amount per unit

f) Arrangements for supply of green fodder and cattle feed