Feed Processing Plant
Feed Processing Plant
Feed Processing Plant
The success of livestock farming is largely dependent on the continuous supply of good quality nutritious feeds at
competitive price. Feed alone constitute about 60-70 per cent of total cost of production of livestock products.
Therefore, it needs more attention though other factors are also important for remunerative return from livestock
enterprises. The farmers used to feed the crop residues to the cattle and buffaloes, however, sheep and goat are
normally maintained on grazing/browsing with supplementary feeding of broken grains/other bypoducts. Therefore,
feeding of balanced concentrate feed to these animals was not common, because of low productivity and
unremunerative prices for the livestock products. The improved poultry is fed only with concentrated feed. The
requirement of food of animal origin like milk, meat and eggs is increasing at a faster rate due to increased
awareness about the significance of protective proteins for the maintenance of human health. The farmers realised
the importance and started rearing good quality and high productive animals/birds under stall fed conditions.
2.1 With the increased demand for livestock products for domestic consumption as well as export, the farmers
realised maintaining of quality animals with proper feeding and management. The proportion of crossbred animals or
improved strains of birds increased over the years. This has necessitated higher demand for balanced concentrate
feed. Presently, various milk unions, poultry corporations/ federations and private companies are supplying both cattle
and poultry feed of different qualities and forms (mash/ pellets/ crumbles) to the farmers. Large size poultry farm/dairy
farm owners, hatcheries and cooperative poultry units are normally manufacturing their own feed by installing the
necessary plant and machinery on the farm. Some of the farmers are still feeding broken grains, cakes, gur, salt,etc.
to dairy animals by mixing at home.
2.2 The compounded feed manufactured by CLFMA (Compounded Livestock Feed Manufacturers Association)
members during 1998-99 was 3.16 million tonnes. The feed production under organised sector since 1965 is given in
Annexure-I. The demand-supply position for various feeds is given in Annexure - II. The present supply is only half of
the total requirement. Moreover, the demand for small ruminants (goat and sheep) under stall fed conditions, rabbits
and pigs is not estimated. Considering their requirements, the gap is much more.
2.3 The feed production could not keep pace with the growth in various species of farm animals and poultry. To meet
the growing demand of processed and complete feeds for different class of animals, the unconventional feeds should
also be used in the rations through proper processing for removal of anti nutritional factors. Thus, it indicates that
there is a good scope for setting up feed processing plants of different capacities for production of various quality
feeds.
3.1 NABARD is an apex institution for all matters relating to policy, planning and operations in the field of agricultural
credit. It serves as a apex refinancing agency for the institutions providing investment and production credit. It
promotes development through formulation and appraisal of projects through a well organised Technical Services
Department at HO and Technical Cells at each of the ROs.
3.2 Loans from banks with refinance facility from NABARD are available for starting feed processing plants. For
obtaining the bank loan, the entrepreneurs/companies should apply to the nearest branch of the commercial or
cooperative or regional rural banks in their area in the prescribed application form which is available in the branches
of financing banks. The entrepreneurs are also required to submit a detailed project report for which they can also
take the help or guidance of the technical officers attached to the bank.
3.3 For feed processing plant with very large outlay, a detailed project reports will have to be prepared. The model
format for formulation of bankable project is given in para 4. Banks provide financial assistance for the following
purposes.
(a) Construction of factory building, godowns for raw materials as well as for finished products, office, canteen,
generator room, essential quarters,etc.
(b) Purchase of equipments such as grinder, feed mixer, pelletizer, elevators, feed packing units, etc.
(c) Miscellaneous equipments such as transformer, generators, weighing scales vehicles, etc.
(d) Margin money for working capital requirement for one cycle of operation.
The cost of land is not considered for loan. However, if land is purchased for establishing a feed processing plant,
land cost can be treated as party's margin money upto a maximum of 10 per cent of the total cost of project.
After the scheme is submitted to the Bank, it is examined for technical feasibility and economic viability.
(i) Availability of raw material such as grains, brans, oil cakes, mineral mixture, molasses, fish meal, vitamins, etc.
(iii) Infrastructure available for feed testing, procurement of raw material, marketing of different feeds, experience of
the entrepreneur.
(ii) Raw material cost, expenses on fuel, labour, transport commission to be paid and other overheads
(iii) Output costs i.e. quantity and sale price of different feeds, number and sale price of empty gunny bags.
(v) Cash flow analysis - Benefit Cost Ratio(BCR), Net Present Worth (NPW) and Internal Rate of Return (IRR)
(vi) Repayment Schedule i.e. Repayment of principal loan amount and interest
Other documents such as loan application forms, security aspects, margin money requirements,etc. are also
examined. A field visit to scheme area is undertaken for conducting techno economic feasibility study for appraisal of
the scheme.
After ensuring its technical feasibility and financial viability, the scheme is sanctioned by the Bank. The loan is
disbursed in two or three stages against construction of various civil structures, purchase of plant and machinery,
miscellaneous fixed assets and margin money for working capital requirements. Constant follow up and supervision
of the scheme is done by the Bank.
i) Unit Cost:
The Unit Cost depends upon the capacity of the feed mixing unit, type of feeds to be manufactured and also the
infrastructure required.
In case if the feed mixing unit is integral part of the commercial poultry or dairy scheme, the down payment is based
on the category of beneficiary. However, in respect of feed processing plant of larger size, the margin money is
normally 25 per cent of the total cost of the project.
It depends upon the RBI guidelines and also the individual banks. The present rate of interest for Rs.2.00 lakhs and
above is linked to primary lending rates of banks which varies with the type of investment, beneficiary and also the
credit rating.
iv) Security:
It depends upon the gross surplus generation in the scheme. The loan will be repaid in suitable monthly or quarterly
instalments usually within a period of 5-7 years. Wherever required, the grace period is also considered.
vi) Insurance:
The building and other assets such as poultry sheds, equipments may be insured against natural calamities.
4.1 Introduction:
It should cover the name of the company, location of plant, activities, products, capacity of plant and project outlay
4.2 Company :
It should cover the location of registered office, date of formation, registration and authorised share capital. It should
also cover the date of incorporation and commencement of business, the objectives, areas of operation, subscribed
share capital.
Name and address of promoters, their background, experience and net worth.
Persons looking after the day to day management, their background, experience,etc. should be covered.
This should cover the area of land, location of the plant, distances from nearby town, availability of approach roads,
power and water supply and other communication including schools, banks, hospitals,etc.
Name of the Architect, type of structures proposed, drawings and detailed cost analysis of various civil structures
along with the present position of implementation may be indicated. The technical specifications of civil structures are
given in Annexure - III.
The major plant and machinery (imported and indigenous separately), sources of supply, specifications and
quotations for various items of equipment need to be given. List of major suppliers of feed plant machinery is given in
Annexure - IV.
The name of the technical collaborators for monitoring and marketing of the products along with their addresses and
the type of collaborations should be indicated. Technical collaboration fee/royalty to be paid should also be indicated.
v) Manufacturing process:
It should cover the manufacturing process of feed (mash/ pelleted feed) in the form of flow chart, proportion of various
feeds to be manufactured and the composition of the different feeds.
a) Raw Material:
The feed ingredients (grains, cakes, brans, fish meal, molasses, vitamins, minerals,etc.), source and method of
procurement, basis of price fixation, agreements if any for regular supply of raw material may be indicated. BSI
standrads for feed ingredients are given in Annexure - V. Average nutritive values of common feed ingredients and
the reasonable levels for their inclusion are given in Annexure - VI and VII respectively.
b) Packing material :
The type of packing material required (jute/plastic bags), source of supply, capacity and price of bag, approximate
quantity required per month and method of purchase need to be furnished.
c) Utilities:
* Power: The total power requirement of the unit, source of power supply, position of power supply in the area and
stand by arrangements made by the company, whether permission is obtained or applied to the State Electricity
Board for power connection.
* Water: The source of supply, quantity available vis-a-vis daily requirement and arrangements made for supply of
water.
* Fuel : The requirement of coal, diesel and gas, source of supply, adequacy of availability and cost of material may
be mentioned.
* Transportation: The mode of transportation of raw material as well as feed, whether owned or hired vehicles,
availability of vehicles and cost per kilometer.
* Laboratory : Whether the company is planning to set up a laboratory for testing the raw material as well as feed,
specification of laboratory equipment, quality and cost, the proposed tests to be carried out and the adequacy of man
power for carrying out these tests.
The type of measures proposed for controlling the air pollution inside the unit and also for the employees of the
company.
It should cover the technical skill and unskilled labourers required, their availability and source, method of recruiting
them and also their salary structures/wage rates should be mentioned.
a) The product mix, capacity of the plant, year-wise capacity utilisation and actual quantity of products produced per
year.
b) Areas of marketing of the product and strategies i.e. Talukas, district or state-wise quantities proposed for sale,
methods of sale, agencies/contractors, method of transportation of products, incentives or commission proposed to
be paid, expenditure on publicity and brand name should be indicated. It should also cover the proposed marketing
network in terms of staff and material.
c) Market survey for raw materials as well as for the products to be sold covering the demand/supply position, other
sources of supply of products, the average price of products for the last 4-5 years and also the potential for selling the
products should also be covered.
4.7 Socio-economic benefits: The number of villages, farmers and number of animals benefited and also number of
persons employed either directly or indirectly in this activity.
The proposed implementation schedule of the scheme may be indicated starting from purchase of land till
commercial production.
i) Land:
It should cover the land levelling, fencing/compound wall, internal roads, drainage,etc. The specifications, unit cost
and the total cost should be furnished.
Imported/indigenous components, major suppliers, quantities, unit cost and the total cost of the plant and machinery
including the misc. equipments should be given. The quotations along with the specifications is required to be
enclosed.
v) Electrical system:
Covering transformer, diesel generators, internal and external electrification and also the deposits to be paid to the
State Electricity Boards. The specifications of transformer as well as generators along with the quotations should be
furnished. With reference to electrification - the break up is required to be given.
Source of water, specifications and expenditure on water supply system, cost of boilers for steam generation,etc.
vii) Vehicles:
Number and cost along with justification on requirement of the various vehicles, price quotations from the dealers
along with specifications should be furnished.
ix) Contingencies:
The margin money for working capital may be worked out taking into account the requirements of various raw
material, packing material, fuel,etc., finished products and sundry debtors for one cycle of operation.
The total project cost and source of funds (equity/public issue, subsidy, loan,etc. should be furnished.
Should cover the capacity of the plant, yearwise capacity utilisation, quantity of feed manufactured, commission on
sale of feed, transportation charges, power and fuel charges, packing material charges, salaries and wages,
marketing expenses and other overheads. The procurement prices of various ingredients as well as the sale price of
various brands of feed should be indicated.
Considering the capacity utilisation and also the various techno economic parameters, the income and expenditure
streams have to be worked out to arrive at the gross profit. From the cash flow analysis, the Benefit Cost Ratio
(BCR), Net Present Worth (NPW) and Internal Rate of Return (IRR) of the project may be worked out to establish the
economic/financial viability of the project.
4.14 The model economics for feed plant with a capacity to manufacture 100 MT per day are given in statements 1-
10 as per the requirements sepcified in previous paragarphs.
Site Plan, structural drawings,quantities and detailed cost analysis of various civil structures certified by an Architect,
Price quotations and specifications for various items of plant and machinery, Approval from State Electricity Board for
load connection, NOC from Panchayat, approval from Inspector of Factories, Registrar of Copy Rights, approval for
brand registration, Registration of Company, Memorandum of Articles of Association, Registration of Unit under SSI
(If applicable), permission for procurement of molasses, agreement between the Company and the collaborator for
technical assistance and market survey report.
Further reference list of books/periodicals on cattle and poultry feeds is given in Annexure - VIII. The addresses of
training centres on feed formulation and quality control are given in Annexure - IX.
in consortium ------------
11. Marketing strategy and net work for the sale of feed ------------
Annexure - I
Growth pattern in production of compounded feeds by CLFMA members
Annexure - II
Demand for cattle and poultry feeds and supply by CLFMA members
Population in millions
Annexure -III
Technical Requirements of Civil structures
1. Site Plan
Structural and Architectural drawings of each item of civil constructions, measurement sheet, abstract of
measurement and estimate of work rates approved in the schedule of rates, current market rates and analysis of
rates applied to site conditions should be provided.
The type of development, earth work and the cost should be given.Care should be taken to limit the cost by
assessing the area - requirement for various construction works.
3.2 Fencing
Fencing can be of barbed wire with angle iron/ R.C.C./ Stone/ Wooden poles or chain link or boundary wall. The
prevailing cost of these fences/wall may be considered.
3.3 Roads
Normally, Water Bound Macadam (WBM) roads are adequate. Normal road width of 15 to 20 ft. is sufficient. The total
length, width and the height of the road alongwith the prevailing cost may be furnished.
i) Godown : For raw material and finished products. Normally, the raw material godown with a capacity to hold
ingredients for a period of 45 days is considered. For storing 200 kg. of raw material, roughly one sq.ft. area is
required. Similarly, in case of finished products(feed) also, for storage of one week production the godown may be
considered.
ii) Silos : The silos for storage of grains may also be considered in case of large size plants. The silos may be of
cement or aluminium or steel structure.
iii) Factory Building: Depending upon the capacity of the plant, the factory building area may also be considered.
Normally, for a 10 tonne per day capacity plant, an area of 600 sq.ft. is sufficient. In case of automatic plants, higher
areas may be considered which includes the ingredient bins, elevators and control panel areas,etc.
iv) Laboratory: For proximate analysis of ingredients as well as finished product it is essential to have own laboratory
in case of large size processing plants. An area of 500-600 sq.ft. may be considered for such laboratory purpose.
v) Office Building : It depends upon the number of staff to be positioned in office for a plant with a capacity to handle
100 tonnes per day, an office area of 800-1000 sq.ft. is approximately sufficient.
vi) Store Room : It depends upon the capacity of the plant. A separate store may be considered for other equipments
and vitamins, growth promoters,etc.
viii) Security Post: A Security Post at the entrance is essential to control the movement of trucks as well as the
mobility of staff.
ix) Quarters:
Manager : Plinth area of 700-800 sq.ft. area is adequate for the purpose.
The quarters are normally considered only for the essential staff who are required to be on the site/plant.
x) Weigh bridge : For the weighment of ingredients and the finished products, a weigh bridge is essential at the
entrance.
xi) Raw Material drying area: For drying of the grains to reduce the moisture levels to the extent required for a longer
time. The drying area depends upon the capacity of the plant and the quality of grains to be stored.
Source of water and the expenditure on MI structures like well, motor, pipeline, water tanks,etc. may be considered.
Annexure - IV
MG
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Puru
shott
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Estat
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Road
Baro
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India
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Plot
No.1
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GIDC
1. Animal feeds and feeding stuffs,
19. Par boiled rice bran as livestock feed ingredient IS:9867 - 1981
Annexure - VI
35.0
85
3.7
3.3
Zea
mays
cake
20
15.0
82
3.6
3.1
10
Helia
nthus
spp
Sunfl
ower
26
22.0
70
3.1
2.7
11
Reasonable levels of inclusion of various
Breeding Farms,
------------------------------------------------------------------------------------------------------------------
No.
------------------------------------------------------------------------------------------------------------------
2. Animal Nutrition and Feeding Practices S K Ranjhan Vikas Publishers, New Delhi
Book Distri-
butors
darshanivihar
New Delhi
New Delhi
10
Dicalci
um
Phosp
hate
11.26
10.00
112.60
10.00
112.60
10.00
112.60
11
Salt
Pure
4.00
5.00
20.00
5.00
20.00
4.00
16.00
12
Poultry
Minera
l
Mixtur
Pure
4.00
4.00
16.00
4.00
16.00
12
Poultr
y
Miner
al
Mixtu
re
2.00
30.00
60.00
30.00
60.00
13
Shell
Grit/
Marbl
e Grit
1.40
0.00
0.00
0.00
0.00
14
Sr.
No.
Feed
Ingred
ient
Cost
(Rs./K
g)
Propo
rtion
(Kg)
Value
(Rs.)
Deoile
d
Cakes
(cotton
seed,
sunflo
wer,
corngl
uten,
etc.)
8.00
150
1200.0
0
Cereal
s
(maize
,
jowar,
sorghu
m
broken
(Rs. in lakhs)
286.8
3
318.7
0
Margi
n
mone
y on
worki
ng
capit
al
55.77
63.74
71.70
79.67
IIncre
ment
al
margi
n on
worki
ng
capit
al
7.97
7.96
7.97
Statement 4 : Capital cost of the Project
B
ANK
LOA
N
51.16
Statement 6 : Techno-economic parameters
(WDM) - % :
Buildings
10.00
Machinery
25.00
Vehicles
33.00
22
Income tax
rate ( % )
44.00
23
Interest rate
on term loan
(%)
(Rs.in Lakhs)
*The value is a notional figure to arrive at Average DSCR through computerised formula for any number of years i.e
upto 10 years
49.19
25
39.29
9.82
1.52
11.34
26
29.47
9.82
1.14
10.96
27
19.65
9.82
0.76
10.58