dairy in north east india

Presentation

on

Pre- Investment Feasibility Study

in the context

of

Development of Dairy Industry

in the

North Eastern Region24/10/01

Presentation

on

Pre- Investment Feasibility Study

in the context

of

Development of Dairy Industry

in the

North Eastern Region24/10/01

Genesis Fintec Limited

Genesis Fintec Limited Consulting & Advisory Services

GFL is a multi discipline as well as cross discipline consulting organisation rendering services in following principal functional areas :

Slide 1/2

Financial & Management Consulting

Project Consulting

Environment & Safety Management

Studies & Research

Position Name

Team Leader cum Dairy Expert

Dr. J. V. Parekh

Animal Husbandry

Dairy Market Expert

Environmental Expert

Field Investigator

Social Study Expert

Dr. R. M. Singh

Mr. Arun Bhargava

Dr. Ardhendu Mitra

Mr. Santosh Mondal

Ms. Madhumita Das Gupta

Survey Specialist & Statistician

Mr. Sukhendra Kr. Gupta


Slide 1/3

Finance & Project Specialists Mr. C.R. Sengupta

Project Engineer Mr. Avinash Singh

Finance & Project Specialists Mr. Abhay Mishra

Legal Expert Mr. Naresh Balodia

KEY PERSONNELExperience

Implementing Dairy Projects World Wide, World Bank Consultant

Ex UP State Animal Husbandry Department.Presently Practicing Consultant

15 Yrs. Exp. In Milk Product Marketing, Ex Consultant to Indo Swiss Project , Sikkim

EIA & Formulating EMP for World Bank, NHAI, Infrastructure Projects in India

Collection of Primary Data & Assistance Consultants with Data Collection from various Depts.

Social Sector Evaluation, Baseline Studies in various World Bank & ADB Projects in India

Qualitative & Quantitative Analysis of Primary Data and collation with secondary Data. Senior Consultant, World Bank, Ex Chief Technical Advisor Ex Director NSSFinancial Specialist, Expert in Bankable Projects Ex Executive Director IDBI, Ex Chairman UBI,

Project Planning, Plant Lay out, Design, Erection & Commissioning of Process Plants

Financial Analyst and preparation of DPR, CA.for 20 Yrs.

Company Law & Corporate Affairs Expert

Present Scenario-A Brief Over view Statewise Production


Source : Basic Animal Husbandry Statistics 1999, Min. of Agriculture, GoI.

Arunachal Pradesh

Assam

Manipur

Meghalaya

States

Mizoram

Nagaland

Tripura

Sikkim

44

Production1997-98 (‘000MT)

775

62

59

20

46

47

35

118

Per Capita Availability of Milk 1997-98

(gms/day)

82

79

78

64

84

40

191

/6 Genesis Fintec Limited

Low genetic potential of local breeds

Non-availability of feed which is imported from other States.

Poor collection & distribution network

Lack of micro-credit availability

Monpa & Tibeto Mongolian tribes in West Kameng & Tawang districts depend primarily on local Yaks

Veterinary Institutions are not functioning properly.

Present Scenario-A Brief Over view

ARUNACHAL PRADESH

Low cross-breed Cattle population.

Shortage of quality Feed & Fodder.

3 Milk unions (capacity 53000 litres per day ) -Guwahati >only active Union -Jorhat -Silchar - Others are Defunct / Underutilised.

Central Dairies (25000 LPD capacity) -2. One central dairy (Capacity 60000 LPD) under coop. sector.

Cooperative milk societies-297

Very low Milk Procurement & Lack of Organized Marketing.

Kamrup, Sibsagar, Nagaon, Jorhat, Morigaon, Barpeta, and Sonitpur are some of the potential districts for dairy development.

Urban pockets have good demand and farm- gate prices are attractive.


ASSAM


Animal Husbandry sector is underdeveloped

Department of Animal Husbandry and the state livestock federation are the only developmental agency working

There is one milk collection and marketing centre in Manipur.

Small operational holdings.

Low productivity of animals.

Although Cross breeds are available there is inadequate coverage for repeat breeding.

No feed Plants. Fed is brought from WB & Bihar resulting in high cost.

Taboos regarding milk consumption amongst some tribal groups.


MANIPUR


The Animal Husbandry sector is underdeveloped.

Poultry and Piggery are the major activities followed by the Dairy

Average milk yield of animals is too low.

Cross breeds are available and the State policy encourages cross breeding particularly with Jersey cows.

Cattle feed deficit state - shortage estimated at 40%.

High cost of feed

Lack of marketing infrastructure.


MEGHALAYA


The animal husbandry sector is relatively underdeveloped

Piggery and Goatery are the major activities followed by the poultry and dairy

Low productivity of animals & Non availability of improved / purebred animals.

Vet Institutions network is not working effectively.

Shortage of feed and fodders and high cost of feed.

Lack of marketing infrastructure.

Poor Intra state connectivity.

Scarcity of water & steep mountainous terrain.

Taboos regarding milk consumption amongst some tribal groups.


MIZORAM


Animal Husbandry sector is relatively underdeveloped. Piggery & Goatery are major activities.

Vet Institutions are not properly equipped.

Huge deficit in Feed & fodder - resulting in regular imports.

Milk consumption has gained ground in last decade

KOMUL the only organised Milk procurement & marketing organisation has a milk processing plant of 10000 litres per day capacity. However, procurement is only 1800 lpd.

About 46 dairy cooperatives are in operation

About 2000 ltrs of Milk is distributed in Dimapur and Kohima.

Mountainous territory.


NAGALAND


Livestock rearing is major household allied activity. About 80-90% households keep cattle.

Cross breeding has been quite successful with 50% of the Cattle population being crossbred.

Dept. of Animal Husbandry & Sikkim Milk Union are the development agencies working for Dairy development.

Two Schemes under Integrated Dairy Development Program are in operation.

5 Milk Processing Units with a combined capacity of around 23000 LPD are in place.

Feed & fodder shortage is estimated at 50% and is made up by imports from other States.


SIKKIM


Animal Husbandry sector is underdeveloped

Non availability of improved / purebred animals.

The state has one milk processing plant and chilling centre with a capacity of 10000 litres per day capacity .

A milk union has started functioning with jersey cows and upgrading of Reang tribal buffalo with Murrah breed.

Regular import of feed ingredients as well as compounded feed from West Bengal and Bihar.


TRIPURA


Scene-I Keeping 2/3 Cattle of local breed is a regular domestic activity in NE

region. Inconsistent Quality of Milk Low Productivity of animals Limited presence of Organised Milk Production Very limited presence of Organised Milk Collection & Distribution Activity Very few Dairy Processing Plants Very high ratio of non-descript animals

Scene-II Climate is congenial for Animal Husbandry Demand of Milk & Milk product > Supply Demand is growing day by day Pasteurs offering natural feed resources About 61 species of grass and 160 species of fodder trees are

available in the region Transformation of local type in to high yielding stock is possible by

cross breeding

Both the scenes are contradictory but present in NE

Slide 2/1


BACKGROUND OF THE STUDY

Immediate Objectives leading to Wider Objectives

To Examine the Techno Economic Viability of Dairy Project in NE

To provide basic information on Business Opportunity in Dairy Sector

to:

• Economic development of NE through Direct & indirect Employment

Opportunity

• Attracting Investors

Genesis Fintec LimitedSlide3/1

Immediate Objectives Wider Objectives

Government Agencies

Banks & Financial Institutions

Entrepreneurs & Investors

OBJECTIVES OF STUDY

.

.

.

Genesis Fintec LimitedSlide 4/1

Field Investigation + Input of Consulting Organisation

Out put to Clients i.e NEDFi

Field & Market related information

Pre - Investment Feasibility Report

Technical/ Technological Input.

Project Profiles

Legal, Financial & Commercial Input

Report on Model Dairy Farms

Measurement of production & productivity level of animals

Status of organised Dairy farming

Identification of different marketing channels and price spreadAnalysis and projection of demand & supply of milk and milk products

Assessment of HRD needs

Suggestion on regulatory requirements

Estimation of Cost & Means of Finance ( Suggested)

Assessment of required Infrastructure

Assessment of financial viability

Socio - Environmental factors

Identification of the number & suitable locations for Dairy farming& Milk Processing

Suggestions on Model Farming

Status of milk processing units

CONCEPT OF STUDY

/1


Analysis of Demand & Supply of Milk and Milk Products

Identification of no. and location of:• Dairy Farms• Milk Processing Units

Assessment of requirements & Suggestions on Support Facilities

The whole of North Eastern Region

GEOGRAPHIC SCOPE

Arunachal Pradesh

Assam Manipur Meghalaya

Mizoram Nagaland

Sikkim Tripura

SCOPE OF STUDY

SUBJECTIVE SCOPE

District Level

Data to be collected on following parameters

Present Status of Organised Dairy Farming Projects

Analysis of Data of last

5 years

Analysis of Demand Supply Gap

Using Statistical Methods


SCOPE OF STUDYAnalysis of Demand & Supply Position

Slide 5/2

Milk Production & Productivity of animals

Present status of Milk Processing Units

Projection for next 10 years

• Identification of different marketing channels

Farmer’s share in Consumer’s Rupee

This would help us in assessing what measures be taken to ensure an increase in the Rural farmer’s share.

Marketing Channels

Farmer'sshare

Other share


SCOPE OF STUDYAnalysis of Demand & Supply Position

Slide 5/3

Rural Farmer IM

1IM 2

IM 3

Consumer

+ %

+ %

+ %

Data Collected from various sources

Data related to District level

To assess present situation & future development of

Milk pocket areas

To consider :• Hinterland for fodder• Feeding,

Breeding & Management • Availability of

other facilities


SCOPE OF STUDY Identification of Farms & Milk Processing Units

Slide 5/4

To assess No. & location of viable

Dairy Farms

Include information on:Requirement of Food

Regulations & Standards

Requirement of Clearances

Identify no., location & Capacity of

Milk Processing Plants

5 Project Profiles

To consider :• Scale of

operation • Suitability of

animal Breed• Market & Marketing Channel• Investment

required• Man power

needed• Model of Dairy Farm

SCOPE OF STUDY Assessment of Requirements of Support Facilities

Unorganized

Small Rural Farmers

Organized Dairy Farms

Procurement through Middlemen or Co-operatives

Processing Unit

T T T T T T T T

Livestock

Market

Veterinary Inputs

Breeding/Artificial Insemination

Animal Feed

Transportation

Storage & Preservatio

n

Grazing land

H R D & BASIC INFRASTRUCTURE

T T T T T T T T

Assess the need

With Inputs on• Costs & viability• Mode of financing• Policies &

programs to be framed

A report on Model Dairy Farm

Suggest solutions in tune with ground situation in the Pre Investment Feasibility Report

+


Consumer

Genesis Fintec LimitedSlide 6/1

Past Studies

Interaction with NEDFi

Final Report

Proposed Study

Draft Report

Pre - Investment Feasibility

Project Profile

Project Report of Model Farm

Assessment

Findings

APPROACH

Methodology for Preparation of Reports

METHODOLOGYMethodology an overview

Methodology for Field Investigation & Desk Research

Methodology for Consultant's Input

Slide 6/2


Collection of data

Published Data

Plan the Survey

Authentic secondary

sourcesCase Studies

• Scrutiny• Validation• Processing • AnalysisTo emerge with

Projections

Dairy Unions & Federations

To be supplemented

by sample surveys at

Producer level(Primary Data)

Formulate Data Set

Taking into account - Type of Breed

- Production- Productivity level- Type of Milk- Size - Marketing System- Profitability Level - Availability of surplus milk- Seasonality Factors

Key Persons : Dairy Expert Survey Specialist & Statistician


METHODOLOGY Methodology for Field Investigation & Desk Research

Slide 6/3

METHODOLOGY

Methodology for Field Investigation & Desk Research

Slide 6/4

The Proposed Guideline for Study & Survey in NE Region :-

Primarily based on Secondary Data to be collected from various Agricultural Statistics Authorities (ASAs) including :-

Directorate of Economics & Statistics of various State Governments Directorate of Economics & Statistics, Ministry of Agriculture, Govt. of India Department of Animal Husbandry & Dairy of various States National Sample Survey Organisation District Industrial Centres Veterinary Centres & Sub Centres Frozen Semen Banks State Milk Federation & Milk Unions Office of the Registrar of Co-operatives of each State National Dairy Development Board Indian Council for Agricultural research NABARD

This would be supplemented by collection of Primary Data through Sample Surveys


Following would be considered in course of the study

Recommendations of National Statistical Commission (NSC) for “Livestock Number”

Scheme of Animal Integrated Sample Survey for estimation of Major Livestock Products, Govt. of India

Findings of NSSO on Periodic household enquires by the NSSO relating to Livestock

Key Persons : Entire Team


METHODOLOGYMethodology for Consultant's Input

Slide6/5

Assess Supply

position of Milk & make

future projections

Assess present availability of

& future development of Support Facilities

Assess viable no. & locations of

Dairy Farms

Identify no. and location

of viable Milk Processing

Units

With application of statistical

tools

After considering grazing requirements, suitability of breeds, marketing channels

& other facilities

Consider requirement of

• Food regulations &

Standards• Clearances

from authorities

To consider model of Dairy Farming

( Cooperative , Private, Corporate)

Assess Demand

Supply Gap & make future

projections

Consider • Suitability &

Adaptability of Technology

• Product Mix

Market related information

Measurement of production and productivity of milk

Analysis of demand and Supply gap

Marketing Channels and Price spread

Technological / Technical Input (Social & Environmental factors)

Regulatory requirements

Pre- investment Feasibility study

Report

Project Profiles

Report on Model Dairy Farm

Own Inputs

Field Investigation

Desk Research

Key Persons : Entire Team


METHODOLOGY Methodology for Preparation of Reports

Slide 6/6

Financial Input


Dairy Development in

NE Region

Dairy Development in

NE Region

Constraints and Road Map towards Solutions

Slide 7/1

Dairy Development in NE Constraints

Genesis Fintec LimitedSlide 7/1/1

• Poor Cattle Population• Very high ratio of non -descript animals• Mostly indigenous stock - few

cross breeds• Low Productivity• Limited presence of Organized

milk production • Inconsistent Quality

Production

• Lack of grazing pastures • Poor Feeding, Breeding & Management• Inadequate manpower &

Training facilities• Lack feed & fodder

Support Facilities

• Lack of Organized Milk Distribution

network• Absence of organized markets• Inadequate packing & Storage• Poor TransportationProcurement

• Very limited presence of organized

milk collection system• Taboos amongst some Tribal

groups• Non availability of Storage & Preservation Facilities• Inaccessibility in some places

Distribution

• Limited presence of Organized Milk Processing activity

• Lack of Basic Infrastructure

Processing


The Possible Road Map

Dairy Development in NE

Through activation & augmentation of:

1) Collection system 2) Breeding, Feeding & Management facilities 3) Captive/satellite Dairy Farms which would act as Catalysts

To be set up by:• Processing Units• Cooperative Society Movement • Private Enterprise

Through Market Force to be created by :

• Private & cooperative sector sector Milk Processing Units

• Marketing Networks

set up by Private Sector / Cooperative

Push Mechanism Pull Mechanism

To galvanize Dairy Industry

The Possible Road Map


Pull & Push mechanism to operate simultaneously from that point.

Integration of Government Support, Private Investment and Community Participation


Attract Private sector Investment in identified Processing units to create the initial pull.

The key areas to be dealt with :-

Dairy farming

Milk Processing & Marketing

Support Facilities for Dairying


Key Areas


Collection & Bulk cooling

Dairy Development in NE Key Areas

Genesis Fintec LimitedSlide 7/ 1/ 1

•Setting up of satellite Dairy Farms by Milk Processing Units to galvanize dairy farming•Setting up of Organized Dairy farms•Veterinary Inputs•Availability of Cattle

Dairy Farming

Feeding, Breeding & Management facilities set up /aided by :-•Processing units through Satellite Dairy Farms

•Cooperatives•Local groups of entrepreneurs aided

by Micro Credit of Banks•Govt. agencies

Support Facilities

•Setting up of viable Milk Processing Units at locations thrown up by the Study•Setting up of Marketing Networks organized on a Private / Co-operative level

Collection & Bulk Cooling

•Collection system / Network initiated or set up by Processing Unit i.e. Backward Linkage by Processing Units•Attempt to activate co-operative movements considering the relevant socio-environmental factors•Setting up of chilling centres based on study results

Milk Processing & Marketing

Measures which may be taken under each area


Market Analysis

Projects & Locations Identification

Infrastructure & Support Facilities

Socio- Environmental Factors

Investment Analysis



Dairy Development in NE Market Analysis

STATES Demand (Recommen

ded per capital

consumptio

*Estimated population in the year

1997

Per capita availiblity of Milk in

gm/day (1997-98)

Gap in MT/day

Gap in the State

'000MT

Arunachal Pradesh 220 969861 118 98,92 36Assam 220 25144386 82 3470 1267Manipur 220 2060913 79 291 106Meghalaya 220 1990945 78 283 103Mizoram 220 773546 64 121 44Nagaland 220 1356868 84 185 67Tripura 220 3093032 40 557 203Sikkim 220 455450 191 13 4,8

Total NE 5018,92 1830,8

* Population Estmation on base year of 1991 Census and Growth @ 2.03/annum

220 gms recommended by the Nutritional Advisory Committee of the Indian Council of Medical Research

Demand Supply Assessment

Extent of Business Opportunity


Market Analysis

Present opportunity in the NE region is primarily in Fluid Milk segment

The demand for fluid milk is constantly growing.

On demand supply equilibrium of fluid milk, demand for value added products to rise

Nature of Market Opportunity


Dairy Development in NE Projects & Location Identification

AProjected Supply

from Rural Farmer ( Next 10 Yrs

Projection)

BProjected Supply from Organised

Dairy Farm ( Next 10 Yrs

Projection)

Processing Unit

CDemand Supply Gap Forecast for

10 Yrs. ( In a defined

Area)

Capacity of Viable Processing Unit to be determined by way of match making between A + B and C . The balance need would be fulfilled by D if required.

DCaptive/

Satellite Dairy farms to provide

the balance Supply


Dairy Development in NE Projects & Location Identification

Project Opportunities lie in the areas of :-1. Organized dairy Farming2. Milk ProcessingLocation identification made through the study would hold the key to success.

Factors to be considered for Identification & Location of Projects:- Geographical, Topographical & Climatic Parameters Milk Production & Availability Milk Transportation & Collection Milk Utilisation Status Packaging Distribution Methods Utilities availability Social & Environment Impact Plant Organisation

Other Considerations Milk & Milk Product Order Recommended Standard of Bureau of Indian Standards Norms of NDDB Prevention of Food Adulteration Act Standards of Weight & Measures (Packaged Commodity) Rules 1977 Agreement on Agriculture, WTO DMI Norms, GoI Industrial Policy of respective States


Dairy Development in NE Infrastructure & Support Facilities

VETERINARY INSTITUTIONSArunachal

PradeshAssam

ManipurMeghalaya

Mizoram Nagaland

TripuraSikkim

Vet Hospitals 8 25 5 7 2 4 9 12Vet DisPensary 134 137 136 107 126 87 44 23Key Village Centers 30 25 3 5 3 2 3A.I Centers/ Regional/Sub centres 120 415 99 78 104 68 156 34

ICDP 11 1 1 1 1

Frozen Semen Bank 3 1

DAIRY FARMSFEEDING & BREEDING FARMSBreeding Farms 9 8 2 5 5 6 2 2Fodder Production /Demo Farms 5 4 3 5 6 1 9Bull Rearing Farm 2

DAIRY DEVELOPMENTCOLLECTION & MARKETINGMilk Collection & Maktg. Centres 2 1 105Chilling Centers 18 6 1Milk Union 3 1 1MILK PROCESSING UNIT NA 3 1 1 1 1 1 5

Present Scenario

• Cattle Feed Plants• Veterinary & Animal Husbandry Centres• Distribution of Fodder seeds• Breeding farms & Insemination Centres • Supply of Crossbreed Animals• Supply of equipment


Opportunities for Private Entrepreneurs & Cooperatives may lie in :-

Support facilities

Collection & Bulk Cooling

• Setting up Cooling centres• Collection / Procurement agents network• Transportation business (tankers)

To examine the possibilities of activating this push mechanism by encouraging Micro Credit from Banks.


Marketing of Milk

• Distributors & Agents network

Study would include :Assessment of Present status of Infrastructure & Support facilities Indications of requirements of Support facilities & Infrastructure to activate and augment the Dairy activity.



Dairy Development in NE Socio-Environmental Factors

Environmental Impact Assessment & related action Plan

Social Impact Assessment & Action Plan

Study to undertake

These studies are crucial to :-• Determine the ideal model for Dairy farms • To identify the best ways to activate the Co-operative movement

keeping in view the cultural & environmental factors.

Genesis Fintec Limited.Slide 7/3/4

Dairy Development in NE Investment Analysis

Investments in identified Viable Units :-

o Dairy Farmso Milk Processing units

Investment Requirement for Support Facilities

Investment required for Milk Producers’ participation in the integrated Dairy Development Programme

Investment for Marketing & distribution network

Considerations for Assessment of Investment over a period of 10 years :

/1

Major Market Pull must come from the investment by Private sector/ Cooperatives in the areas of Milk Processing as well as Marketing .

Major Push must come from the activation of collection network byPrivate sector and Cooperatives.

Push to Local Entrepreneurship in the area of support facilities tocome from encouragement of Micro Credit.

Dairy Development has to be done through integration of pull &push mechanism.

Identified Projects & Business Opportunitiesto show strong businesssense to Entrepreneurs.


Concluding Remarks