Business Daily from THE HINDU group of publications
Monday, Jul 09, 2007
ePaper
Business Daily from THE HINDU group of publications Monday, Jul 09, 2007 ePaper |
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Agri-Biz & Commodities
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Contract Farming
R. Balaji Chennai, July 8 Hatsun Agro Product Ltd, the Rs 600-crore private sector dairy, has signed up with SBI to provide loans to dairy farmers for a contract farming programme. According to Mr R.G. Chandramogan, Chairman and Managing Director, the agreement provides for the bank to extend over Rs 58 crore in loans, initially, to dairy farmers identified by Hatsun Agro. Hatsun Agro procures 1.5 million litres milk a day from over one lakh farmers. The agreement with the bank provides for a three-way arrangement, with the bank providing loans to small farmers and Hatsun deducting the repayment on the milk price paid to farmers. The objective, according to Mr Chandramogan, is to bring dairy farming into mainstream farming activity and improve the quality and quantity of milk supplies. The loan would assist small and marginal farmers to whom dairy farming is a supplementary activity, and promote standalone dairy units that can be run on a scientific basis. Hatsun Agro has created a viable business model for such dairy units, he said. The average farming household keeps one or two cows to augment their income. But they depend on private sources of credit support, where interest costs can be 10-15 per cent a month. The agreement with the bank provides for loan assistance of Rs 15,000-20,000 at nine per cent a year, he said. Also, Hatsun Agro will support establishment of standalone dairy farms. Farmers with five acres can set up a dairy unit with 30 milch cows, feed for which will come from the fodder crop cultivated on the land. Hatsun Agro has roped in an expert in dairy farming from New Zealand for supporting this programme. The loan assistance would be beneficial to Hatsun in expanding its milk procurement and marketing. The bank and the company are interested in expanding the agreement, Mr Chandramogan said. Hatsun procures and markets milk under the Arokya and Komatha brand names. It is a market leader in ice cream through its flagship brand, Arun Icecreams. The company has launched a range of dairy products, including ghee, paneer, butter and curd.
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