SOCIAL

Presentation on
Financial Modeling of Non Farm Units
EMPOWERMENT &
ECONOMIC
DEVELOPMENT
SOCIETY
 About SEEDS(SOCIAL EMPOWERMENT AND ECONOMIC DEVELOPMENT SOCIETY)

 Based out of Delhi, genesis of SEEDS is from a remote village named

Duttalur in SPSR Nellore District, Andhra Pradesh

 Established in 2008 as a Not for Profit Organisation, registered as a

“Society” under Societies Registration Act, 1860

 Pioneered by a group of professionals from IL&FS Education

 Emphasis of our activities has been to develop models that can be

replicated in different areas and build long term rural partnerships
Vision and Mission of SEEDS

VISION is to bring about transformational change in the lives

of the people at the bottom of the pyramid

MISSION is to deliver sustainable solutions in Skills, Education,

Livelihoods, Agriculture and Health with a local area development
approach
About Project LEED

Project LEED (Local area Education and Economic Development) is an

initiative of SEEDS aimed at holistic development of an area through
Education and Economic Development initiatives that enhances the
standard of living of the people at the bottom of the pyramid

Approach
Identify The Leverage Drive The Replicate The
Build A Model Model
Gaps Partnerships Model
 Holistic development of schools through technological and non
technological interventions improving learning outcomes and
promoting

Employment to Providing access

the youth, to high quality
bridging the eye screening and
Skill Gaps awareness on the
through Skill same thereby
Development reducing the rate
Trainings of blindness in
rural areas

Thriving livelihoods of a rural households through a combination of farm

and non-farm interventions promoting entrepreneurship and leading to
enhanced levels of human development and empowerment
 Challenges of Indian Agriculture
 Declining Agricultural growth rate
 Shrinking net cultivable area
 Depleting natural resource base particularly water, both ground and surface
water
 Marginalization of land holdings - Declining farm size and income
 Deteriorating soil health
 Increased migration of farm laborers/ small and marginal farmers
 Climate change impact
 Escalating inputs cost
 Incomplete adoption of location specific cropping system
 Poor adoption of improved crop management practices
 Inadequate post harvest technologies, uncertain market prospects and linkages
Why Rural Non Farm Livelihoods?
Need for diversification
 declining contribution of Agriculture to overall economy from 27.36% in 1984-85 to 15.79% in 2013-14 with 1.05% dip
on an average annually

Decentralization of Economic Activities in Rural India

 Shift from dependency on agriculture: percentage of work force in Non Farm Activities increased from 17.5% in 1977-
78 to 32.5% in 2009-10 with annual increase of 2.8%

Potential stimulator for Sustainable Economic Growth of Rural Areas

 faster rate of growth compared to Farm Livelihoods

Supplementary Income to Rural Households

 diversify income basket and increase their net income

Reduce income inequalities and arrest rural-urban migration

 Scope for RURAL ENTREPRENEURSHIP
 the Need for focusing on Rural Entrepreneurship

• 93% of the Micro and Small Enterprises are unregistered of which more than 60% are located in
Rural India*

• Out of total number of Micro and Small Enterprise accounts with the banks, the accounts covered
under the Credit Guarantee Scheme are just 2.64% of total accounts*

• Lack of Exposure to new ideas • Inability to assess the market/risks

& Market forces • Start-up pitfalls
• Lack of domain skills • Lack of incubation support

Rural Entrepreneur

• Lack of Business Tools • Lack of Cash Flow

• Lack of knowledge on legalities • Lack of Institutional Finance
and compliances • Lack of access to capital
• Lack of Exposure to new ideas • Inability to assess the market/risks
& Market forces • Start-up pitfalls
• Lack of domain skills • Lack of incubation support

Rural
Entrepreneur

• Lack of Business Tools • Lack of Cash Flow

• Lack of knowledge on • Lack of Institutional Finance
legalities and compliances • Lack of access to capital
Proposed Solution

•Assessment of Market •Identification of Market

Linkages
• Dissemination of Knowledge
on Technical and Non Technical • Facilitating Value Chain
Components KNOWLEDGE Management

•Business Tools and its usage LINKAGES

•Entrepreneur Appraisal
•Performance Tracking –
Business, Finance
• Support Dealing with Red
Flags – Obstacles – for 6
months
•Business Planning – Lean
HANDHOLDING Startup, Size of Investment
SUPPORT/ FINANCE
INCUBATION •Tailor-made Finance
•Facilitation of Loans, Legal
compliances, licenses etc.,
Our Model : One Hectare Model

The basic idea of our ONE HECTARE model is to provide the farmers with a sustainable source of
income by engaging them NFAs (non-farm activities). The key component here is to enhance the
productivity of one hectare land by using it for the purpose of NFA other than agriculture alone.
Our Approach
The model is to

• Create diversified income basket with a combination of anchor activities

complemented by ancillary activities to meet long term livelihoods and
manage risks

• Create avenues for long-term asset-based income generation through perennial

tree crop plantation (e.g., teak, bamboo etc)

• Optimizing land utilization through intercropping with commercial and

compatible crops

• Create Immediate income earning opportunity through:

• Ancillary activities involving minimal investment and maintenance but yielding
in better outcomes (such as backyard poultry, Goatery etc.,)

• Homestead cultivation of horticulture crops including vegetables, fruit crops

(such as banana, pineapple, etc) fishery, and rearing of animals

 Anchor activity and Ancillary Activities for a farm are chosen based on various factors that include geography, demography, market
potential- forward and backward linkages etc., Therefore they may differ from one area to other while the unit economics might remain
the same. An anchor activity in one cluster/geography could be an ancillary activity in an other cluster/geography

 While it may be impractical for a small and marginal farmer to take care of multiple anchor units, focusing on a single anchor unit with
few ancillary units would be suggestible
Components
Goatery Unit

Flower and Fruit crops Kitchen Garden

Fodder grass Bamboo/Teak/Others

as a fencing plant

Vermi-compost Unit Dairy Unit

Bio-Gas Unit Backyard Poultry

Source of funds to meet Expenditure

SUBSIDY AVAILABLE BANK LOAN CONTRIBUTION

Project
COMPONENT Cost % AMOUNT % AMOUNT % AMOUNT

DAIRY 344600 25% 86150 85% 292910 15% 51690

GOATERY 370400 25% 92600 75% 277800 25% 92600
POULTRY 226700 0 0 85% 192695 15% 34005
VERMI COMPOST 95000 25.26% 24000 85% 80750 15% 14250
FODDER 30000 66.66% 20000 0 0 100% 30000
BIO GAS 25000 28.40% 7100 85% 21250 3750

TOTAL 10,91,700 21.05% 229850 79.28% 865405 20.72% 226295

Dairy Unit
Objective: To set up a dairy farm with two animals (buffaloes) as a part of integrated farm unit using
the available resources to enhance monthly income of a small/marginal farmer

Fertilizer to crops

Bio Gas Generation

 Financials

Capital Cost
Shed Cost for Buffaloes 40000 NPV ₹ 129,786.04
shed cost for calves @ one calf per each buffalo 16000
Total cost of animals 240000
IRR 25%
cost of dairy appliances @ 1000/buffalo 4000
cost of one chaff cutter 25000
Total capital cost 325000

Operating Cost
Cost of feed for first set of animals for one month 6600
cost of insurance for first set of animals 6000
cost of fodder cultivation for first season 4800
cost of vaccination for first set of animals 2200
Total operating cost 19600

Total cost of the project 344600

own contribution @15% 51690
bank loan @85% 292910
 Goatery Unit

Objective: To set up a stall fed goatery farm with 6 goats ( 1male + 5 female) as a part of an integrated
farm unit using the available resources to enhance monthly income of a small/marginal farmer

Benefits of the unit Challenges:

• Choicest meat with high domestic • Lack of in-time proper vaccination

demand • Poor feeding for goat kids
• Less maintenance & inexpensive • Lack of scientific info on
• Limited space requirement commercial stall fed goat rearing
• Can provide for Milk, meat, fibre, • Lack of organised market
carrying packs, and even fuel from • Lack of scientific feeding practices
their ruminants

Note:
 Investing in a breed such as Boer (male) though expensive will yield better returns in short period of time ; Cost per kg of a Boer
breed male will range from ₹ 1500 to ₹ 2000/-
 Female goats are retained for at least two years to allow maximum breeding
Financials

Capital Cost
Cost of construction of adult shed 63000 NPV 208204.1347
Cost of construction of kids shed 37620 IRR 23%
Equipment cost 5250
Cost of does 140000
Cost of bucks 8000
Total 253870

Operating Cost
Labour Wage 72000
Cost of insurance 5920
cost of concentrate feed for adults 17010
cost of concentrate feed for kids 4500
Fodder cultivation cost 6000
Dry fodder cost 9000
vaccination cost 2100
Total 116530

Total Project Cost 370400

Margin money @25% 92600
Bank loan @75% 277800
 Backyard Poultry Unit
Objective: To set up a back yard poultry unit with 300 Kadaknath chickens as a part of an integrated farm unit using the
available resources to ensure average monthly income of ₹ 8000 per month for a rural entrepreneur

Benefits of the unit Challenges:

• Semi-intensive/ Free range • Sufficient hover and floor space
• Lean and Tasty meat with high • Maintaining humidity, ventilation
domestic demand • Lack of scientific info on commercial stall
• Income through sale of eggs/Domestic fed rearing
purpose maintaining nutrition value • Securing birds from dogs/cats
• Less maintenance & minimum • Lack of organized market
investment • Lack of proper vaccination leading to high
• Limited resources and feed required mortality
• Handsome returns • Proper sanitization of the area for every 8
to 10 days

Role of Entrepreneur
• Room or shed of atleast 50 sft- 150 sft
• Provide on time vaccination and feed
• Sanitize the area prior to the cycle
• Clean the feeding equipment daily
• Regular Supervision of birds
• Spending half an hour every day
• Repayment of loan from 4th month
Financials

Capital Cost
NPV 171535.5332
shed construction cost 90000
IRR 37%
fencing cost 2000
cost of equipment 9000
Total 101000
Recurring Cost
Labour cost 72000
cost of chicks 21000
cost of feed 31500
cost of vaccination 1200
Total 125700

Total cost of project 226700

own contribution@15% 34005
Bank loan @85% 192695
 Kitchen Garden
Objective: To set up a kitchen garden with 4 to 5 varieties of vegetables that includes leafy vegetables in a
limited space available primarily for the sustenance of a farmer

Benefits of the unit Challenges:

• Fresh and Organic Vegetables for • Selection of unsuitable varieties at
consumption unsuitable time
• Minimum investment, year round • Under and over watering
availability • Fertilizing errors
• Saves money incurred on kitchen • Lack of knowledge on transplantation
vegetables • Weed growth
• Supplements food budget and provides • Sizing of the beds
balanced nutrition • Seed to Seedling in controlled atmosphere

 Most efficient, practical and sustainable way to overcome Micronutrient malnutrition by integrating the usual rural
based diets (cereals and legumes) with fruits and vegetables
 Investment for setting up a kitchen garden will be very minimal and is intended to cater to the domestic consumption
of the farmer family
 Any additional production could be used for selling the same in the nearby shandy/store on a daily basis
 While considering interest and cultural integrity of a rural family, combination of leafy and fruit vegetables would be
ideal for a farmer considering the nutrition requirements of a healthy family
 Fruit and Orchid Crops
Objective: To plant suitable varieties of fruit and flower plants in one fourth of a hectare land that
provides sustainable income to the farmer thereby enhancing his income

Benefits Challenges:
• Organic fruits and flowers • Disasters such as Cyclone/ floods etc.,
• Minimum investment • Availability of water
• High and regular rate of returns • Fertilizing errors
• Availability of natural fertilisers and • Lack of knowledge on transplantation
pesticides minimise the costs • Weed growth
• Intercropping amongst fruit crops • Seed to Seedling in controlled atmosphere
yielding in additional income

 Appropriate spacing of at least 3 metres need to be provided between each fruit plant. If there are mango plants,
spacing should be at least 6 metres
 Intercrops assumed are ridge gourd and bitter gourd in this case ; Can be chosen based on the geography and climatic
conditions
 Seed to Seedling to plantation process to be done in controlled conditions- Application of technology for keeping it
organized may be considered
 Fruit or any orchid crops are to be chosen considering the climatic conditions, storage, market available and
perishability period
Financials – Fruit and Orchid plants
 Fencing Plants- Bamboo/Teak
Objective: To fence the one hectare farm with plants such as Bamboo that not only acts as a shield to the
farm but provide decent income to the farmer over a period of time

Benefits of the unit Challenges:

• Minimal investment and inexpensive to • Choosing the appropriate variety

maintain (clumping bamboo) based on geography
• Stronger and harder than wood fence and climatic conditions
• Flexible to be used for aesthetic • Over density – needs appropriate placing-
purposes also could be an Invasive threat to neighboring
• Requires low inputs of fertilizers yards
• Its high Nitrogen consumption mitigates • Grafting and cutting when required
water pollution • Fertilizing
• Domestic requirements and profits on • Lack of scientific knowledge on
sale maintenance, extraction and sale

 11 feet spacing to be maintained between each plant and around 180 such bamboo plants can be planted along the
border of a one hectare farm
 3 to 4 years for the plants to mature and give shoots that can be cut
 Feed to Livestock: Fodder Grass, Hydroponics, Azolla

Objective: To grow multiple varieties of fodder grass, set up a hydroponics and azolla unit catering to the
food security and nutritious needs of the livestock ( Buffaloes and Goats)

FODDER GRASS: An ideal and HYDROPONICS: Soil less AZOLLA : Sustainable feed substitute
indigenous way of preparing the feed cultivation for livestock
for the animals with the least expenses  Saves water  Most economic and efficient with
possible high protein and mineral content
 No weeds to deal with; microbe
4 varieties of Fodder Grass free growth  Easily digestible owing to high
 Rhodes  Less space, higher yields protein and low lignin content
 Mulato  Root zone aeration and adequate  Improves the nutritious state of
 Co 3 porosity of medium ensured livestock- increase in their weight
 Capital intensive- but yields rich  Maintenance of temperature and
 Co 4
dividends in short time PH is critical
SUBSIDIES AND LOANS

 Subsidy is available only on hydroponics unit. The cost was Rs.30000 and a subsidy of Rs.20000 can
be availed

ITEM AMOUNT SUBSIDY BANK LOAN CONTRIBUTION

CAPITAL 30000 20000 0 10000(33.33%)

EXPENDITURE
(hydroponics unit)
 Bio Gas Unit
Objective: To set up a Bio-Gas unit that converts the dung from the livestocks into energy (clean cooking
fuel) that can be used for cooking in the kitchen

Benefits of the unit Challenges:

• Cost effective • Sufficient ventilation
• Clean Cooking Fuel • Maintaining adequate positive pressure
• Saves money incurred on cooking • Precautions during repair
• Reliable, portable and easy to • Social constraints and psychological
maintain prejudices
• Environment friendly- makes use of • Untreated refuse and organic wastes-
methane threat to health
• Connected to stove and valve to
control the heat
Financials

• The cost of purchasing gas is

around Rs.6240 a year

• By installing this unit that cost

could be avoided and the unit
would start paying back after 4
years 6 months approximately
 Vermi-Compost Unit
Objective: To convert vegetable waste collected in the available area to generate natural fertilizer of
highest quality which can further be used for the orchid plants, vegetables and flowers grown in the farm

Benefits Challenges:
• 100% natural plant fertilizer • Declining worm population in the
• Nutrients are very easily absorbed bed
by the roots of plants • Wrong selection of earthworm
• Not easily flushed from the soil species
because of the worm mucus that it • Maintenance of adequate moisture
contains and pH of bedding materials
• plants have a longer duration to • Psychological constraints in handling
obtain the nutrients and get the waste
maximum benefit

Comparison of N P K composition in basic manures

# N (%) P(%) K(%)

Vermi-compost 1.68- 2.2 1.06- 1.5 1.57-1.6

Farmyard manure 1.1 – 1.5 0.7 – 0.8 0.6 – 0.7

Bacterial compost 1.2-1.5 0.7 – 0.9 0.6 – 0.7

Financials of a Vermi-Compost unit
Subsidies and loans available

 Subsidy of 25% (35% for SC, ST) is available on the capital expenditure
 MUDRA SISHU loan can be taken at an interest rate varying from 1%-12% depending upon the terms

ITEM AMOUNT SUBSIDY BANK LOAN CONTRIBUTION

CAPITAL 95000 23750 40000 31250 (33%)

expenditure
Opportunities and Challenges of the Model
Opportunities
 Integration of more than two livelihood
interventions on the same piece of land
would yield better results
 Improves the economic conditions of
resource constrained farmers and enable
them to become rural entrepreneurs
 Livestock improvement, increasing per unit
profitability and integration
 Soil health improvement by promoting
organic production system, IPM, mass
composting, encouraging use of homemade
bio-pesticides, bio-fertilizers etc.,
 Enhanced availability of water, reduced soil
erosion, land degradation by in-situ
conservation of nature
Challenges
 Promoting and spreading the widespread
adoption of the model
 Radical rethinking of agricultural education,
extension and research
 Agriculture professionals and farmers require
orientation and training that emphasizes
holistic concepts, institutional behavior,
cooperation, and respect for nature, local
farming systems and indigenous knowledge
 Critical factors: Institutional support such as
Bank linkages and government subsidies
 Emphasis on Lab to Land initiative- plugging
the gaps in education-research- extension
 Capital: Ineffective institutional support, lack
of organised backward and forward linkages
THANK YOU