🐄 Dairy Farming — NABARD Model Bankable Project
NABARD model project for 10 Graded Murrah Buffaloes with a total capital cost of ₹6.54 lakh, 25% margin money, 5-year repayment, and 30% IRR. Key reference for IBPS AFO and NABARD Grade A exams on livestock finance.
Dairy farming provides year-round employment to small and marginal farmers. NABARD's model bankable project standardises the financial framework banks use to appraise dairy loans — every figure here is a potential MCQ.
- India holds 57.3% of the world's buffalo population and 14.7% of cattle population
- Total milk production: 127.9 million tonnes (end of 11th Plan, 2011-12)
- Demand projected at 180 million tonnes by 2020 — growth rate needs to rise from 2.5% to 5%
Project Overview
The model unit has 10 Graded Murrah Buffaloes purchased in 2 batches of 5. Staggered purchase ensures continuous milk income — when Batch 1 enters dry period, Batch 2 is lactating. This rotating batch logic is the commercial rationale behind the project design.
Feed cost for the first 1–2 months is capitalised and disbursed as a term loan. Cost of land is not financed by the bank.
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Dairy farming provides year-round employment to small and marginal farmers. NABARD's model bankable project standardises the financial framework banks use to appraise dairy loans — every figure here is a potential MCQ.
- India holds 57.3% of the world's buffalo population and 14.7% of cattle population
- Total milk production: 127.9 million tonnes (end of 11th Plan, 2011-12)
- Demand projected at 180 million tonnes by 2020 — growth rate needs to rise from 2.5% to 5%
Project Overview
The model unit has 10 Graded Murrah Buffaloes purchased in 2 batches of 5. Staggered purchase ensures continuous milk income — when Batch 1 enters dry period, Batch 2 is lactating. This rotating batch logic is the commercial rationale behind the project design.
Feed cost for the first 1–2 months is capitalised and disbursed as a term loan. Cost of land is not financed by the bank.
Financial Structure
| Component | Amount (Rs.) |
|---|---|
| Cost of 10 animals (@ ₹50,000 each) | 5,00,000 |
| Transportation (@ ₹1,000/animal) | 10,000 |
| Cattle shed construction | 60,000 |
| Calf shed | 24,000 |
| Chaff cutter + equipment | 60,000 |
| Total Capital Cost | 6,54,000 |
| Margin Money (25%) | 1,63,500 |
| Bank Loan (75%) | 4,90,500 |
NOTE
Margin money for dairy ranges from 10% to 25% based on borrower category. The NABARD model uses 25% — this is a common MCQ asking "what is the margin money range for dairy?"
Technical Parameters
| Parameter | Value |
|---|---|
| Breed | Graded Murrah Buffalo |
| Milk yield | 10 litres/day/animal |
| Lactation period | 270 days |
| Dry period | 150 days |
| Floor space (adult) | 50 sq ft/animal |
| Floor space (calf) | 20 sq ft/calf |
| Milk selling price | ₹26/litre |
| Insurance premium | 5% per annum on animal cost |
| Interest rate | 12% per annum |
Daily feeding cost per animal (lactation): Concentrate ₹60 + Green fodder ₹25 + Dry fodder ₹8 = ₹93/day
NOTE
Exam trap: Graded Murrah has 270 lactation days and 150 dry days. Indigenous cows have 270 lactation but only 120 dry days. Mixing these up is the most common error in livestock MCQs.
Income & Repayment
| Year | Milk Sales (Rs.) | Gross Surplus (Rs.) | Net Surplus after Repayment |
|---|---|---|---|
| 1 | 4,29,000 | 1,78,660 | 21,700 |
| 2 | 5,85,000 | 2,15,140 | 69,952 |
| 3 | 5,85,000 | 2,15,140 | 81,724 |
- Repayment period: 5 years
- Interest rate: 12% per annum
- BCR: 1.08 at 15% discount factor
- IRR: 30%
IRR of 30% comfortably exceeds the 12% borrowing cost, confirming strong financial viability. The lower Year 1 income reflects the staggered batch start — by Year 2 both batches are fully productive.
Sources & References
Primary source for this lesson is NABARD's official Model Bankable Projects portal.[1] Lesson-specific report copy used for this topic.[2]
References
2 sources • [1] [2]
References
Used for: Official NABARD portal for model bankable project documents and updates.
Used for: Reference copy used in this lesson for project parameters and worked figures.
The figures in this lesson reflect the cost norms and technical parameters as published in the NABARD document. Actual costs may vary by state, season, and year of implementation. Always refer to the latest NABARD circular for current norms.
Summary Cheat Sheet
| Concept / Topic | Key Details / Explanation |
|---|---|
| Unit size | 10 Graded Murrah Buffaloes purchased in 2 batches of 5 |
| Staggered purchase rationale | Ensures continuous milk income — when Batch 1 is dry, Batch 2 is lactating |
| Total Capital Cost | ₹6,54,000 (animals ₹5 lakh + transport ₹10,000 + shed ₹60,000 + calf shed ₹24,000 + equipment ₹60,000) |
| Margin Money | 25% = ₹1,63,500 |
| Bank Loan | 75% = ₹4,90,500 |
| Breed | Graded Murrah Buffalo |
| Milk yield | 10 litres/day/animal |
| Lactation period | 270 days |
| Dry period | 150 days (vs 120 days for indigenous cows — common exam trap) |
| Floor space | Adult: 50 sq ft/animal; Calf: 20 sq ft/calf |
| Milk selling price | ₹26/litre |
| Daily feeding cost (lactation) | Concentrate ₹60 + Green fodder ₹25 + Dry fodder ₹8 = ₹93/day/animal |
| Insurance premium | 5% per annum on animal cost |
| Interest rate | 12% per annum |
| Repayment period | 5 years |
| BCR | 1.08 at 15% discount factor |
| IRR | 30% (well above 12% borrowing cost) |
| India buffalo population | 57.3% of world total; cattle: 14.7% of world total |
| Milk production (2011-12) | 127.9 million tonnes; demand projected at 180 million tonnes by 2020 |
| Feed capitalisation | Feed cost for first 1–2 months is capitalised and disbursed as term loan; land cost not financed |
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