Page 45 - BANKING FINANCE JUNE 2016
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ARTICLE
velopment as on end of 2013-14 is Rs 1770.63 crores
which is only 5.63 % of the total refinance given by
NABARD under agricultural and allied activities sector.
The study conducted by NABARD indicates that so far,
banks have disbursed loans mainly for the scheme for
purchase of milch cattle. Banks have lot of opportunities
under this sector for financing and they can provide loan
to diversified needs/components of this sector other than
purchase of milch animals . Though the contribution of dairy
sector in agriculture is sizable ,lending under this sector
is meager . Despite of good lending potential, banks have
not fully tapped this sector for financing.
The cooperative dairies process 90% of the collected milk Value Chain
as liquid milk whereas the private dairies process and sell
only 20% of the milk collected as liquid milk and 80% for The financing opportunities in dairy sector through the
other dairy products with a focus on value-added products. entire value chain by including production ,transport,
The small rural milk producers have several problems bulking & cooling, processing and distribution & market-
which includes small herd strength , shortages of green and ing as shown hereunder can be explored :
dry fodder , low productivity of animals, non availability of
timely inputs for breeding and heath care of animals ,dis- Small and large scale Feeds and vet input
mal transportation facilities, lack of suitable education/ Dairy farmer Suppliers
training for skill development for new viable and sustain-
able technology, inadequate finances, poorly developed cold Veterinary,Transport A.I
chain infrastructure and lack of proper marketing support services etc
for their produce.
The average output of Indian cow is only one seventh of Milk collection and bulk- Primary processors and
its American counterpart. Indian breeds of cows are con- ing agents /middleman mini diaries
sidered inferior in terms of productivity. As a result, the
supply side lacks in elasticity that is expected from it. Dairy processing firms Milk distributors and Re-
tailers
Opportunities and Strategies for Financ-
ing Dairy Sector by Banks Export
Exponential growth in demand and supply of milk and Banks have been disbursing loans mainly for the scheme
milk products continue to emerge. Lending to dairy sec- for purchase of milch cattle. Banks should diversify and
tor continues to be a major components under agricul- provide loans for all activities of dairy industry particularly
tural financing next to agriculture farm lending. Govern- breeding of animals and processing and marketing of milk
ment is striving to expand the milk production to 180-200 and milk products. Banks need to diversify and provide
million tones by 2021-22 to meet the growing demand. loans for following important components of dairy busi-
ness :
However, data on refinance disbursement by NABARD
for dairy sector is maintained . As per annual report of
NABARD on Sector-wise disbursement of refinance , the
refinance given by NABARD to Banks under Dairy de-
BANKING FINANCE | JUNE | 2016 | 45
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