Sheep Farming

1. Introduction
Sheep with its multi-facet utility for wool, meat, milk,
skins andmanure,formanimportant component of rural
economy particularly in the arid, semi-arid and
mountainous areas of the country. It provides a
dependable source of income to the shepherds through
sale of wool and animals. The advantages of sheep
farming are:
a. Sheepdonotneedexpensivebuildingstohousethemandontheotherhandrequireless labour than
other kinds of livestock.
b. Thefoundationstockarerelativelycheapandtheflockcanbemultipliedrapidly.
c. Sheepareeconomicalconverterofgrassintomeatandwool.
d. Sheep will eat varied kinds of plants compared to other kind of livestock. This makes
themexcellent weed destroyer.
e. Unlikegoats,sheephardlydamageanytree
f. The production of wool, meat and manure provides three different sources of income to the
shepherd.
g. The structure of their lips helps them to clean grains lost at harvest time and thus convert
waste feed into profitable products.
h. Mutton is one kind of meat towards which there is no prejudice by any community in India
and further development of superior breeds for mutton production will have a great scope in
the developing economy of India.

2. ScopeforSheepFarminganditsNational Importance

The country has 71.6 million sheep as per 2012-13 annual report of Animal Husbandry Department
and ranks sixth in the world. The contribution of sheep through export of meat is 8 percent of thetotal
export value of agricultural and processed food products. Sheep skin in the form of leather and leather
products is also exported. Sheep make a valuable contribution to the livelihood of the economically
weaker sections of the society. Amongst the livestock owners the shepherds are the poorest of the lot.
3. Financialassistanceforsheepfarming

Loan from banks with refinance facility from NABARD is available for starting sheep farming. For
obtaining bank loan, the farmers should apply to the nearest branch of a Commercial, Co-operative or
Regional Rural Bank in their area in the prescribed application form which is available in thebranches
of financing bank. The Technical officer attached to or the Manager of the bank can help / give
guidance to the farmers in preparing the project report to obtain bank loan. For sheep development
schemes with very large outlays, detailed reports will have to be prepared. For
highvalueprojects,theborrowerscan utilisetheservicesofNABARDConsultancyServices(NABCONS)
who are having wide experience in preparation of Detailed Project Reports.

4. SchemeFormulation

A scheme can be prepared by a beneficiary after consulting local technical persons of State Animal
HusbandryDepartment,DRDA,SheepDevelopmentCorporation,SheepCo-operativesociety/ union
/ federation and commercial farmers. If possible, the beneficiaries should also visit progressive sheep
farmers and government / agricultural university Sheep farms in the vicinity and discuss the
profitability of sheep farming. A good practical training and experience in sheep farming will be
highly desirable. The sheep co-operative societies established in the villages as a result of efforts by
the Animal Husbandry/Sheep Development Department of State Government / Sheep Development
Board would provide all supporting facilities, particularly marketing of live animals and wool.

5. RequirementsofaGoodProject

Theprojectshouldincludethefollowinginformation on technical,financial and managerialaspectsin

detail based on type of unit and capacity.

Technical:

a. Nearnessoftheselectedareatoveterinarycentresandwoolcollectioncentreandthefinancing bank's
branch
b. Availabilityofgoodqualityanimalsinnearbylivestockmarkets
c. Sourceoftrainingfacilities.
d. Availabilityofgoodgrazingground/lands.
e. Availabilityofgreen/dryfodder,concentratefeed,medicinesetc.
f. Availabilityofveterinaryaidandmarketingfacilitiesneartheschemearea.
Financial:

a. UnitCost-TheaveragecostofSheepunit.
b. Inputcostforfeedandfodder,veterinaryaid,insurance,etc.
c. Outputcostsi.e.salepriceofanimals,penningetc.
d. Income-expenditurestatementandannualgrosssurplus.
e. Cashflow analysis.
f. Repaymentschedulei.e.repaymentofprincipalloanamountandinterest.

6. Appraisaloftheproject

Theproject so formulated consideringthe above mentioned aspectsshould besubmitted to the nearest

branch of the bank for availing credit facility for establishment of the sheep farm. The bank will then
examine the project for its technical feasibility, financial viability and bankability.

7. SanctionofBankLoanandits Disbursement

Afterensuringtechnicalfeasibilityandeconomicviability,thescheme willbesanctionedbythebank. The

loan is disbursed in stages against creation of specific assets such as construction of sheds, purchase
of equipments and animals. The end use of the loan is verified and constant follow-up is done by the
bank.

8. LendingTerms-General

Outlay:
Outlayoftheprojectdependsonthelocalconditions,unitsizeandtheinvestmentcomponents included in the
project. Prevailing market prices / cost may be considered to arrive at the outlay.
MarginMoney:
Margindependsonthecategoryoftheborrowersandmayrangefrom10%to 25%.
InterestRate:
Banks are free to decide the interest rates within overall RBI guidelines. However, for working
outfinancial viability and bankability of model project, the rate of interest is assumed at 12.00% p.a.
Security:
SecuritywillbeasperRBI/NABARDguidelinesissuedfromtimeto time.
Repaymentof loan:
The loan repayment is determined, on the basis of gross surplus generated in the project. Usually the
repayment period of loan for sheep farming is 6 to 8 years.
 Insurance:
Theanimalsandotherassets(shed,equipment)maybeinsured.

9. EconomicsofSheepFarming
Amodeleconomicsforsheepfarmingwithaunitsizeof100sheepisgivenbelow.Thisisindicative and the
applicable input and output costs and the parameters observed at the field level may be incorporated.

A. Project Cost

AmountinRs.
I LandandBuilding Cost
1 Landfencingandpartitioning
a [email protected] RFt.in5 rows 12750
b Gates 5000
Total 17750
2 Civilstructures
[email protected],20sq.ftforramand4Sq.ftforkid 100 152000
ewes,4 rams and assuming 120 lambs maximum
(10*100)+(20*4)+(4*110)=1520Sqft @Rs.100persq.ft

Total 152000
3 Equipment
a Firstaidequipments 1000
Feedersand waterers 10400
Total 11400
II Animals
a Ewes100@Rs4500peranimal-9-12 monthsage 450000
b [email protected] monthsage 22000
Total 472000
III WorkingCapital
a Feed
Adultfemale 77315
Adultmale 3093
Kids 12600
Medicines 6800
Insurance 18720
TotalofIII 118528
TFO 771678
BankLoan 578758.2
MarginMoney 192919
 B. Techno-economicParameters

SL.No. Parameters
1 Costofoneyear Ram(inRs.) 5500
2 CostofoneyearEwe(inRs.) 4500
3 Costofmalelamb(inRs.) 4500
4 Costoffemalelamb(inRs.) 4000
5 Adultmortality 5%
6 Lamb mortality 15%
7 Cullingrateamongewes 20%
8 Costofconcentratefeed(inRs.) 12.00/kg
9 Insurance 4%
10 Salepriceofadultewe(in Rs.) 4500
11 Salepriceofadultram(in Rs.) 5000
12 Lambing 80%
13 Rateofinterest 12%
14 Interlambingperiodin months 9
15 Medicinecost/year(inRs.)
Doe/ewe/buck 50
Kid 20
16 Costofskinof deadanimal(inRs.)
Adult 150
Kid 100
17 Incomefrommanure(in Rs.)
Adult 75
Kid 25

Feedconsumptionin Kg Green Dry Concentrate Costper animal

Ewe 547.5 365 11.2 773.15
Ram 547.5 365 8.4 739.55
Malelamb 54 22.5 9 157.5
Femalelamb 54 22.5 9 157.5
Costoffeed 0.5 1 12
Year Batch Noofanimalsinbeginingof No of NoofDeaths Noofanimals Nooflambs Totaldisposed Noofanimalsretainedatthe
the year lambsborn culled sold end of the year

Adults Lambs Adults Lambs Adults Adults Lambs Adults Lambs

M F M F M F M F M F M F M F M F M F M F M F
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

I 4 100 0 0 40 40 0 5 6 6 0 0 0 0 0 5 6 6 4 95 34 34
II 4 95 34 34 43 43 0 5 6 6 0 0 33 20 0 5 39 26 5 104 37 37
III A 5 104 37 37 47 47 1 5 7 7 0 0 36 25 1 5 43 32 6 111 40 40
B 6 111 40 40 50 50 0 0 7 7 2 10 39 20 2 10 46 27 5 121 43 43
IV 5 121 43 43 54 54 0 6 8 8 1 20 42 23 1 26 50 31 5 115 46 46
V 5 115 46 46 52 52 1 6 8 8 0 20 45 25 1 26 53 33 5 110 44 44
VI C 5 110 44 44 50 50 0 6 7 7 0 0 44 34 0 6 51 41 5 114 43 43
D 5 114 43 43 51 51 0 0 8 8 2 20 42 30 2 20 50 38 4 107 43 43
VII 4 107 43 43 48 48 0 5 7 7 1 0 42 40 1 5 49 47 5 105 41 41
C. Cashflowstatement

Years
Expenditure 1 2 3 4 5 6 7
Costoffeed inRs.
Sheep
Femaleadult 77315 73449.25 166227.25 93551.15 88912.25 173185.6 82727.05
Maleadult 3092.6 3092.6 8504.65 3865.75 3865.75 7731.5 3092.6
Lambs 12600 13466.25 30476.25 17151.75 16301.25 31752 15167.25
Costof medicinesforadults 5200 4950 11300 6300 6000 11700 5550
Costof medicinesforkids 1600 1710 3870 2178 2070 4032 1926
Wagesand salaries 0 0 0 0 0 0
Insurance 18720 17820 19620 22680 21600 20700 19980
InterestonCash credit 0 0 0 0 0 0 0
CapitalisedCost 118527.6
Total 0 114488.1 239998.15 145726.65 138749.25 249101.1 128442.9

Income
Saleofkids in Rs.
Malelamb 0 148500 337500 189000 202500 387000 189000
Female lamb 0 80000 180000 92000 100000 256000 160000
Saleof culls
Male 0 0 10000 5000 0 10000 5000
Female 0 0 45000 90000 90000 90000 0
Saleof skins 1950 1995 3832.5 2541 2565 3849 2247
Saleof manure 7800 9125 10025 11600 11300 10825 10475
Insuranceclaims 0 0 0 0 0 0 0
Total 9750 239620 586357.5 390141 406365 757674 366722
Grossprofit 9750 125131.9 346359.35 244414.35 267615.75 508572.9 238279.1
Capital Expenditure 771677.6
Salvagevalue 719000
Netprofit -761927.6 125131.9 346359.35 244414.35 267615.75 508572.9 957279.1
DF 0.869 0.756 0.658 0.571 0.497 0.432 0.375
PWof Benefits15%DF 8472.75 181152.72 385823.24 222770.51 201963.41 327315.17 407145.75
PWof Costs at 15 %DF 670587.8344 86553.004 157918.78 83209.917 68958.377 107611.68 48166.088
BCRat15% 1.418344633
NPW at 15
IRR 0.336055467 % 511637.86
IntrateonTL 0.12

Cashaccrual 9750 125131.9 346359.35 244414.35 267615.75 508572.9 238279.1

Loan amount 578758.2 578758.2 578758.2 428758.2 328758.2 228758.2 0

Interest 34725.492 69450.984 69450.984 51450.984 39450.984 27450.984 0
Repayment
Interest 0 104176.48 69450.984 51450.984 39450.984 27450.984 0
Principal 0 0 150000 100000 100000 228758.2 0
Total 0 104176.48 219450.98 151450.98 139450.98 256209.18 0
Cashafterrepayment 9750 20955.424 126908.37 92963.366 128164.77 252363.72 238279.1
DSCR 1.2011531 1.5782994 1.6138182 1.9190668 1.9849909

AvgDSCR 1.65946567
Sensitivityanalysis
Totalcosts 0 114488.1 239998.15 145726.65 138749.25 249101.1 128442.9
TotalBenefits 8775 215658 527721.75 351126.9 365728.5 681906.6 330049.8
Capitalcost 771677.6
Salvagevalue 719000
Net profit -762902.6 101169.9 287723.6 205400.25 226979.25 1151805.5 201606.9
IRR 0.304711445