ENTREPRENEUR

 In Economics, output is considered to be created by the amalgamation of

factors of production such as Land, Labour, Capital and Organisation. For
their contribution in the production process, each factor is rewarded .
Land is paid in terms of rent and labour is rewarded with wage while
capital is paid in terms of interest. Organisation/Entrepreneur, combines
all these factors judiciously and also assumes risk and faces uncertainty in
the production process and for this activity they are paid in terms of
profit.
 An entrepreneur is a person who has possession of
an enterprise or venture and accepts significant accountability for the
inherent risks and the outcome. The word “Entrepreneur” is derived from
the French verb entrepredre. It means 'to undertake'. The term is used to
refer to anyone who undertakes the organization and management of an
enterprise involving independence and risk as well as the opportunity for
profit. According to J.B.Say, “An entrepreneur is the economic agent who
unites all means of production such as land, labour and the capital, thus
produces a product". According to Peter F. Drucker,
Entrepreneur searches for change, responds to it and exploits
opportunities. Innovation is the specific tool of an entrepreneur . Thus,
entrepreneur, in English, is a term applied to the type of personality who
is willing to take upon herself or himself a new venture or enterprise and
accepts full responsibility for the outcome. Entrepreneurs identify the
market opportunity and exploit it by organizing their resources efficiently
to accomplish an outcome which changes existing interactions within a
given sector. According to Joseph Schumepeter, “An entrepreneur in an
advanced economy, is an individual who introduces something new in the
economy a method of production not yet tested by experience in the
branch of manufacture concerned, a product with which consumers are
not yet familiar, a new source of raw material or of new markets and the
like”.
 The functions of entrepreneurship according to Schumepeter are
 Introduction of new product (Designer Egg, Crossbred
cows, Hybrid fowls, etc.)
 Introduction of methods of production (Slated floor rearing
of Goat, Integration in poultry farming, etc.)
 Developing new markets (Urban areas) and finding fresh
source of raw materials (animal waste recycling), and
 Making changes.
 To conclude, an entrepreneur is the person who bears risk, does
something innovative, unites various factors of production, exploits the
perceived opportunities in order to evoke demand, create wealth and
employment.

THE CONCEPT OF ENTREPRENEURSHIP

 Entrepreneurship is a process of identifying opportunities in the market

place, arranging the resources required to pursue these opportunities and
investing the resources judiciously to exploit the opportunities for long
term gains. It involves creating wealth by bringing together resources in
new ways to start and operate an enterprise.
 According to Higgins, “Entrepreneurship stood for the function of
foreseeing investment and production opportunities, raising capital,
hiring labour, arranging the supply of raw materials, finding site,
 introducing a new technique, discovering new resources or raw materials
and selecting top managers for day to day operations of the enterprise”.
 To conclude, entrepreneurship is set of activities performed by
the entrepreneur. Thus, entrepreneur proceeds entrepreneurship.

QUALITIES/CHARACTERISTICS OF
AN ENTREPRENEUR

Some of the essential qualities of entrepreneurs are as follows:

 Success and Achievement: The entrepreneurs are self determined to

achieve high goals in business, which strengthen them to oercome the
obstacles, suppress anxieties, repair misfortune and desire expedients, to
run a successful business.
 Opportunity Explorer:A common criterion among successful
entrepreneurs is their focus on opportunity rather than on resources,
structure or strategy.
 Integrity :Integrity and reliability are the glue and fiber that bind
successful personal and business relationships and make them endure.
 Optimistic and confident : As entrepreneurs, they often face obstacles and
down periods and during these difficulty days, their self confidence and
optimism only helps them to get out of the crisis.
 Risk Taker: Entrepreneur accepts risk. They select a moderate risk
situation, rather than gambling or avoiding risk. They understand and
manage risk willingly.
 Energetic: The extraordinary workloads and the stressful demands
entrepreneurs face place a premium on energy. Many of them, fine-tune
their energy levels by monitoring their diet, following a fitness regime and
knowing when to relax.
 Opportunity Explorer: Always entrepreneur identifies opportunities. He
seizes the opportunity with both hands and converts them into realistic
achievable goals. It may be in the form of new product, newer methods of
production or marketing strategies such as location.
 Perseverance: Entrepreneur makes efforts and works hard till the goal is
successfully accomplished. They are undeterred by uncertainties ,
extreme risks and difficulties coming in the way of achievement of final
goal.
 Facing Uncertainty: Achievement oriented people tend to successfully
tackle an unfamiliar situation. They go ahead with solutions for the
problems even when the guidelines are not available. It is more common
in the case of entrepreneurs, since they try to do newer things.
 Seek Feedback: Entrepreneurs are quick learners. Entrepreneur likes to
have prompt and immediate feedback of their performance to improve
upon continuously so as to cater to the ever changing consumers'
lifestyle.
 Independence: Entrepreneur likes to be their own master and wants to be
responsible for their own decision. An entrepreneur is a job giver and not
a job seeker and don't want to follow others or being dictated.
 Flexibility: Entrepreneur makes decisions time to time based on the
prevailing situations. Successful entrepreneur does not hesitate in
revising their decision. Entrepreneur is a person with open mind, not a
rigid person.
 Planner: Entrepreneur frames realistic business plans and sets goals and
follows them rigorously to achieve the objectives in a stipulated time
limit.They plan meticulously and execute it.Though the plans seems to be
out of the world, they have the vision and ability to achieve it.
 Self Confidence: Entrepreneur directs his abilities towards the
accomplishment of goals with the help of his strengths.
  Motivator: A distinguishing character which separates entrepreneur from
the rest of the flock is his ability to motivate his
workers. Entrepreneur influences and initiates people and makes them
think in his way and acts accordingly.They could improve the productivity
of their employees by their motivation.
 Stress Taker: Entrepreneur as a focal point will make many right
decisions which may involve lot of physical and emotional stress. While
decision making he keeps his cool even under tense situations.
 Self-starter: The ability to take the initiative, work independently and to
develop own ideas.
 Commitment - The willingness to make personal sacrifices through long
hours and loss of leisure time.More than any other factor, total dedication
in the work is the unique quality of an entrepreneur.
 Ability to move - As an entrepreneur, he should always move ahead as
success comes with overcoming setbacks.
 Vision - Entrepreneurs know the path and direction they have to travel.
They have clear vision of what their farms can be and go after it.
 Team work - Entrepreneurs always believe in team work and motivate it
among the workers.

DISTINCTION BETWEEN AN ENTREPRENEUR AND A

MANAGER

Point of Entrepreneur A Manager

Distinction

Goal An entrepreneur starts a venture by The main aim of a manager is to render

Managemen setting up a new enterprise for his his service in an enterprise already set
t personal gratification. He starts from the up by someone, to achieve the goal of
scrap and build it brick by brick . the firm. He merely run the business
efficiently which was built by some
other person.

Ownership Entrepreneur is the owner of enterprise. A manager is an employee in the

enterprise.

Risk Entrepreneur bears all risks and A manager being an employee does not
uncertainty involved in the enterprise. bear any risk or uncertainty involved in
the enterprise.

Rewards Entrepreneur, for his risk bearing role, A manager receives salary as reward
receives profits. It may fetch him greater for service rendered which is fixed at
returns or may be irregular and can at any particular period and regular, but
times be negative. can never be negative.

Innovation As an innovator he is called as change A manager executes the plans of

agent who introduces new or modified the entrepreneur. Thus, a manager
goods and services to meet changing translates others ideas into practice.
needs of the customer. He plans,
envisages the changes and implements
 them.

TYPES OF ENTREPRENEUR

 Clarence Danhof Classification: Clarence Danhof classifies entrepreneurs

into four types.
 Innovative: Innovative entrepreneur is one who assembles and
synthesizes information and introduces new combinations of
factors of production.
 Imitative: Imitative entrepreneur is also known as
adoptive entrepreneur. He simply adopts successful
innovation introduced by other innovators.
 Fabian: The Fabian entrepreneur is timid and cautious. He
imitates other innovations only if he is certain that failure to
do so may damage his business.
 Drone: His entrepreneurial activity may be restricted to just
one or two innovations. He refuses to adopt changes in
production even at the risk of reduced returns.
 Arthur H. Cole Classification: Arthur H. Cole classifies entrepreneurs as
 Empirical: He is an entrepreneur who hardly introduces
anything revolutionary and follows the principle of rule of
thumb.
 Rational: The rational entrepreneur is well informed about the
general economic conditions and introduces changes which
look more revolutionary.
 Cognitive: Cognitive entrepreneur is well informed, draws
upon the advice and services of expert’s scheme of enterprise.

LIVESTOCK ENTREPRENEURSHIP

 Entrepreneur associated to livestock farming / business, production of

raw materials related to livestock farms and livestock related processing
industries is considered as livestock entrepreneur.
 In other terms, a person who is linked directly or indirectly to the animal
husbandry or livestock sector is referred as livestock entrepreneur.

AVENUES OF LIVESTOCK ENTREPRENEURSHIP

 Livestock Farms
 The veterinarians can start their own livestock farms with
their vast technical knowledge; they can infuse scientific
management techniques in their own farms. In the WTO
(World Trade Organisation) era, GMP (Good Manufacturing
Practices) and SPS (Sanitory and Phytosanitory) measures
are of great importance for export of livestock commodities,
as the emphasis in international trade is on quality and food
safety. If veterinarians start their own scientifically
managed livestock enterprise, they can exploit this
opportunity. Further, practicing proven scientific
management techniques will improve productivity of
 animals that would lead to overall quantitative and
qualitative improvement of livestock sector.
 Feed Manufacturer (View animation)
 The veterinary graduates can start their own feed mill units
for various livestock and poultry species. Commercial feed
availability for various unconventional poultry species such
as Quail, Emu, Ostrich, etc. are far less than the demand.
Manufacturing feed for these species is a niche business as
their energy requirement is different from the existing
commercially available broiler or layer feed.
 Fodder Supplier
 The main constraint which hampers the growth of livestock
production is the inadequacy of nutritious fodder. As there
is more than 60% fodder deficit in India, veterinarians can
combine together, purchase fertile land and produce quality
fodder and supply them to the nearby livestock farmers.
They can also start seed / fodder banks in the potential
areas.

 Farm Equipments manufacturer / Dealer (View animation)

 Number of farm equipments are needed for livestock farms.
For example, in case of dairy farms, chaff cutter, milking
machine, feeding manager, etc. are needed. Poultry farmers
need debeaker, vaccinator, automatic feeder, waterer, etc.
Demand for farm equipments increases with the wide
adoptation of intensive livestock and poultry farming
system. The veterinarians can either start on their own or
they can act as dealer for these equipments.
 Dog breeder
 Dog breeding is an ever green field with potential
opportunities in urban areas. Dogs with good pedigree
record fetches good price and the veterinarians can readily
exploit this opportunity. Combining dog breeding with
veterinary consultancy services offer excellent earning
opportunity.
 Hatchery
 Though starting a hatchery requires higher investment, it
offers good return.
 Pet Animal / Large Animal/ Mobile Clinic:
 It is the widely practiced by the veterinarians which offer
them good earnings in both rural as well as urban areas.
 Livestock products processor (View animation)
 Value addition to the livestock products such as milk, egg,
meat, and fish have huge profit potential. Value of the
products get increased many folds during processing, and
thereby provide excellent returns. Veterinarians can start
milk parlour, where they can sell processed milk and milk
products like flavoured milk, goa, ice cream, etc. or meat
centre where fried chicken, chicken 65, mutton khima, etc.
could be sold. Marketing of these value added products
could be done in their own brand name and they can start
chain of parlours / hotels later.
 Farm consultant
 Livestock farm consultant is a lucrative avenue.
Veterinarians with skill and knowledge can earn well in
specialized dairy farms, stud farms, breeder farms,
hatchery, sheep / goat farms. After some years of
 experience in managing the farms, they can start their own
farms independently or with partnerships.
 Contract Farming
 Contract farming is a emerging system where the livestock
farmers are given all the inputs such as chicks/animals,
feed, medicines, technical inputs, etc. Farmers have to rear
the chicks/animals and the integrator will take care of the
marketing activities. Veterinarians can join together and
venture into contract farming. Being technical savvy would
help them in getting loans, maintaining farm business and
marketing the products.
 Leather Industry (View animation)
 Leather industry is so far unexplored by the Veterinarians.
It offers great profit potential. The skin and hide from
animals are usually purchased by the intermediaries in the
villages at a throw away prices and are sold to the
processors at a huge margin. The processors add value to
the raw skin and make products and export / sell them at a
very high price. The veterinarians can perform the role of
this intermediaries.
 Agents for by products utilization (View animation)
 The livestock feed manufacturers and pharmaceuticals
require several ingredients such as bone meal, fish meal,
blood meal etc. which they are getting from the agents at
contract basis. Here, veterinarians can make interventions.
They can make a tie-up and could meet the requirements of
feed manufacturers at a reasonable price and also can earn
money.
 Veterinary Pharmaceutical Industry (View animation)
 It is also a lucrative opportunity but needs huge investment.
After working some years in the pharmaceutical industry
and learning experience, veterinarians can initially start a
small one with fewer drugs which can be expanded later to
the needs of local farmers. From thereon, they can grow
slowly.

EMPLOYMENT OPPORTUNITIES FOR VETERINARIANS

 Apart from the above avenues, there are vast employment opportunities
available to the Veterinarians. Some of them are listed below:
 Government Veterinary Doctors
 Amul / Aavin milk plants – Manager / Doctors
 Meat Inspector – in Corporations
 Education – Assistant Professors in various Universities
 Insurance Companies – Technical Officers
 Eco-jobs such as Wild life ecologist, Conservation scientist
etc.,
 Central and State Civil Services
 Clinical data management-It is an emerging field which was
hitherto unexplored. There is a lot of demand for Veterinary
graduates in IT industry in clinical data management
domain.
 Private practice
 There is a greater demand for veterinarians in foreign
countries as farm consultant , scientists etc.,
 Scientists in ICAR and other government departments
  Researchers in Private, Central, State and International
research institutions
 Private sector jobs such as Veterinary /Technical
officer/Marketing executives in dairy, poultry, equine and
pharmaceutical sectors
 Extension Agents in NGO’s
 Military Service - Remount Veterinary Corps in Indian army
 Bank – Technical Officers
 Services for Livestock Business such as Transport, Cold
Storage, Quality Inspection and Certification etc.,

CLIENTS' EXPECTATIONS FROM VETERINARIANS

Introduction

 In the face of unprecedented competition, the veterinarian and his/her

team must provide their patients and clients the best scope of medical
and surgical care but also a variety of services and products. For some
veterinarians, these services and products are not considered to be
'ethical' or part of their responsibility. However in the eyes of the owners,
the veterinarian is the expert, so it is quite normal and 'expected' that he
or she would fulfill these needs. The 'animal doctor' is expected to
propose such services or products. However, it is well known that there is
a potential cultural conflict. Most veterinarians will mention that they
have not studied medicine and surgery to 'sell dog food, or shampoos'. In
such case, the barrier is the veterinarian, not the owner.

Expectations & needs

 There are several kinds of expectations. Those who are expressed or so-
called 'explicit' and those who are not expressed by the customers or so-
called 'implicit' expectations. It is quite important to know what are the
client's implicit expectations since by definition these will not be
mentioned by people. A perfect example is the fact that people expect the
personnel and staff in a veterinary clinic to have a 'professional medical
look' (white or medical types of clothes), if it is not the case, people may
be surprised or even upset, but they will not mention it. It is implicit for
them. Veterinarians specifically need to have a good understanding of
that category of expectations. Some classical implicit expectations of the
consumers include:
 Availability (no wait, flexible hours, easy access & parking,
sufficient stock, etc.)
 Patience (Clients expect their doctor to be patient with
them, allow sufficient time for them)
 Explanatory (Answering the questions calmly, not avoiding
them, clarify their doubts and explains even the minute
details)
 Transparency (prices should be clearly marked; invoices
should be itemized, etc.)
 Choice (various products and services, 'freedom of choice',
etc.)
 Environment (comfortable, neat, clean, odourless, friendly,
modern, etc.)
 Clarity of the offer (prices listed, estimations, badges, etc.)
 Services (various services adapted to their needs as pet
owners)
 Various surveys have shown that what clients were looking for in a
veterinarian was by order of importance his or her:
 kindness
 affordability
 availability
 patience to listen
 his or her competency
 approach
 Measuring client satisfaction in a practice can help maintain a more
stable, satisfied client base. Satisfaction will often be a measure of client
perception of quality. The highly satisfied client will feel they have
received a high quality service, whereas the dissatisfied client will be
disappointed by the quality of service.
 Client service is the ability to meet client requirements. Services are
experienced, and veterinarians, as service providers, are as much in
managing the client's experience as in providing technical expertise.
 "Any business that wants to succeed must be aware of its customer's
requirements. Failure to do so is a missed opportunity to satisfy client
needs and to maximize profits. Many practitioners are focused on the
medical and technical issues. They do not realize that their services do
not match necessarily what their clients expect and do not listen to them.

SOURCES OF BUSINESS OR PRODUCT IDEAS

 Market Expectations: Unfulfilled demand of a product will open the door

for new product. Supply and demand of various products and demand for
new products should also be analyzed. Eg. The introduction of diet cool
drinks such as diet coke with few calories for health conscious people is
an example of success of new idea. Likewise organic egg and designer
egg also offers wide scope.
 Import and Exports: The Government of India is encouraging exports and
various EXIM policy encourage entrepreneur to think about the new
options. There is huge demand exists for quality livestock products in
developed countries which could be utilized.
 Emerging new technology and scientific know how: Commercial
exploitation of indigenous or imported technologies and know how is
another source of project idea. Organic farming is a hot area which offers
ample scope for Indian livestock farmers.

 Social and Economic Trend: Social and economic status of people are
always dynamic in nature and offer wide opportunities.
An entrepreneur should observe such changes. For example, the demand
for processed/frozen livestock products such as cheese, frozen meat,
chicken burger, meat sausages, etc. is escalating in semi-urban and urban
areas which could be utilized by the entrepreneur.
 Product profile: An analytical study of the end products and by products
can throw light on new project idea. For example, by product of sugar
industry gave rise to one more large scale industry called paper industry.
Likewise poultry waste could be recycled and used.
 Changes in consumption pattern: Changes in consumption pattern of the
people in the home country and foreign countries also requires the
entrepreneurs attention. Eg. Increasing urbanization, rising per capita
income and changing lifesytle and food habits, has increased the demand
for livestock products which could be capitalised.
 Revival of sick: A sick unit gives ample investment opportunities in the
hands of dynamic entrepreneur. He can revitalize and turn a sick unit into
 a profitable one. Eg. Laxmi Mittal’s acquisition of sick steel units all over
the world and turning it to profitable enterprises by changing
management and processes
 Trade fairs and Trade journals: Magazine, journals, industries or trade
fairs offer wide scope for business opportunities.

IDENTIFYING A BUSINESS OPPORTUNITY

 An entrepreneur is an opportunity seeker. For the

potential entrepreneur his first-task is to explore, identify, and then select
an attractive business opportunity. A good business opportunity must be
capable of being converted into feasible projects.
 Two major characteristics of a business opportunity should be
highlighted.
 Good and wide market scope, i.e. gap between present or
likely demand and supply.
 An attractive, acceptable and reliable return on investment
(IRR).
 Business opportunity need to be analysed from the view point of
production, commercial, managerial, potential and prospective demand
for the product, technical viability, etc.

STEPS IN IDENTIFICATION OF BUSINESS

OPPORTUNITY

Identification of opportunity involves following steps.

 Preliminary study
 Selection of product or services
 Conducting a market survey
 Contact programmes to collect sufficient information about
proposed venture
 Succeeding in the market

RELIMINARY STUDY

 As soon as entrepreneur realizes a business opportunity, he has to

evaluate investment opportunities against a set of specific criteria to
select those project ideas which are commercially feasible. The criteria
are:
 Is the opportunity compatible with the promoter and society?
 Is opportunity compatible with government rules and
regulations ?
 Whether raw materials are easily available?
 What is the scope and size of the potential market? Who are
all the major buyers?
 Whether cost justifies the project?
 What are all the risks inherent in the project?
 SELECTION OF PRODUCT OR SERVICE

Entrepreneur should identify the product which he wishes to manufacture/produce.

While deciding about the product, following points should be considered.

 Potential demand for the product or service

 Estimated volume of demand for the product
 Assess potential of existing competitor and estimate about probable
competitors
 Study the scope for the future demand
 Infrastructural facilities- power, transport etc.
 Current status of technology and scientific development in the field
 Availability of resources such as raw material and required labour
 Government policies, rules and regualtions, controls
 Environmental impact
 Returns from the product
 Information regarding particular line of product
 Locational advantage of the product
 Whether the product belongs to an ancillary unit and serves as major
component for the parent industry. It provides a ready demand, hence
selection of this type of product entails easy marketability
 Availability of skilled and unskilled labour and their wages
 Characteristic of the proposed product to be produced.
 Consumer's response to the product/service and their preferences.

CONDUCTING A MARKET SURVEY

Market survey with reference to the availability of raw material, demand, marketing
and distribution and consumer behaviour should be conducted.

 Raw material availability

 Search for leading suppliers of raw material (feed and fodder)
and other materials required for producing the product
 Study the price policy of various suppliers and analyse impact
of price fluctuations on production
 Analyse availability pattern, transportation and storage
facilities (milk)
 Study local and outside source of raw materials and their
advantages and disadvantages
 Analyze the credit facilities, advance payments, terms and
conditions for suppliers.
 Demand
 Estimate the existing demand here and abroad
 Study the comparative demand structure of various
manufacturers
 Price structure of different brands
 Estimate the threshold price for various segments of
market(price discrimination)
 Identify untapped demand in the sector
 Forecast the future demand.
 Marketing and distribution
 Selection of best channel of distribution based on marketing
efficiency
 Advertising and publicity programme for the product
 Product positioning (Consumers' opinion about the product)
  Outstanding features of product or service
 Market features and practices- credit facility, minimum order,
incentives
 Business terms, commission, stocks, warehouse facilities.
 Consumer behavior
 Motivate buyers to buy new product
 Analyse the buyers purchasing power
 Conversion of latent demand into effective demand
 Analysis of consumption pattern to tap the major market share
 Understand the preference for durability, service, economy
 Understand consumer characteristics of different region and
produce and market accordingly.

INTRODUCTION

 Entrepreneurship is the act of being an entrepreneur. Entrepreneurs

assemble resources including innovations, finance and business acumen
in an effort to transform innovations into economic goods. This may result
in new organizations or may be part of revitalizing mature organizations
in response to a perceived opportunity. The most obvious form of
entrepreneurship is that of starting new businesses; however, in recent
years, the term has been extended to include social and political forms of
entrepreneurial activity.

THE SCHOOLS OF ENTREPRENEURIAL THOUGHT

Macro view

 The macro view of entrepreneurship presents a broad array of external

processes that are beyond the control of the individual entrepreneur.
 In macro view there are three schools of entrepreneurial thought
 The environmental school of thought,
 The financial/capital school of thought, and
 The displacement school of thought.
The Environmental School of Thought
 This school of thought deals with the external factors that affect a
potential entrepreneur’s lifestyle. These can be either positive or negative
forces in the molding of entrepreneurial desires.
 Here, the focus is on institutions, values, and customs that, grouped
together, form a sociopolitical environmental framework that strongly
influences the development of entrepreneurs.
 For example, if a middle manager experiences the freedom and support to
develop ideas, initiate contracts, or create and institute new methods, the
work environment will serve to promote that person’s desire to pursue an
entrepreneurial career.
 Another environmental factor that often affects the potential development
of entrepreneurs is their social group. The atmosphere of friends and
relatives can influence the desire to become an entrepreneur.
The Financial/Capital School of Thought
 This school of thought is based on the capital seeking process. The search
for seed and growth capital is the entire focus of the entrepreneur.
 Certain literature is devoted specifically to this process, whereas other
sources tend to treat it as one segment of the entrepreneurial process.
  The venture capital process is vital to an entrepreneur’s development.
This school of thought views the entire entrepreneurial venture from a
financial management standpoint.
The Displacement School of Thought
 The displacement school of thought focuses on the negative side of group
phenomena where someone feels “out of place” or is literally “displaced”
from the group.
 It holds that the group hinders a person from advancing or eliminates
certain critical factors needed for that person to advance.
 Due to such actions the frustrated individual will be forced into an
entrepreneurial pursuit out of his or her own motivation to succeed. The
individuals will not pursue a venture unless they are prevented or
displaced from doing other activities.
 Cultural awareness, knowledge of political and public policy, and
economic indoctrination will aid and improve entrepreneurial
understanding under the displacement school of thought. The broader the
educational base in economics and political science, the stronger the
entrepreneurial understanding. Three major types of displacement, i.e.
political, cultural and economic, illustrate this school of thought.

MICRO VIEW

 The micro view of entrepreneurship examines the factors that are specific
to entrepreneurship and are part of the internal locus of control. The
potential entrepreneur has the ability, or control, to direct or adjust the
outcome of each major influence in this view. Unlike the macro approach,
which focuses on events from the outside looking in, the micro approach
concentrates on specifics from the inside looking out.
The Entrepreneurial Trait School of Thought
 Many researchers and writers have been interested in identifying traits
common to successful entrepreneurs. This approach is based on the study
of successful people who tend to exhibit similar characteristics that, if
copied, would increase success opportunities for the followers. For
example, achievement, creativity, determination, and technical knowledge
are four factors that usually are exhibited by successful entrepreneurs.
Family development and educational incubation are also examined.
Certain researchers have argued against educational development of
entrepreneurs because they believe it inhibits the creative and
challenging nature of entrepreneurship. Other authors, however, contend
that new programs and new educational developments are on the
increase because they have been found to aid in entrepreneurial
development. The family development idea focuses on the nurturing and
support that exist within the home atmosphere of an entrepreneurial
family. This reasoning promotes the belief that certain traits established
and supported early in life will lead eventually to entrepreneurial success.
The Venture Opportunity Schools of Thought
 This school of thought focuses on the opportunity aspects of venture
development. The search for idea sources, the development of concepts,
and the implementation of venture opportunities are the important
interest areas for this school. Creativity and market awareness are viewed
as essential. Additionally, according to this school of thought, developing
the right idea at the right time for the right market niche is the essential
criterion to entrepreneurial success.
 Another development from this school of thought is based on corridor
principle. While exploring or formulating a concept, new pathways or
opportunities will arise that lead entrepreneurs in different directions.
The ability to recognize these opportunities when they arise and to
 implement the necessary steps for action are key factors. The maxim that
preparation meeting opportunity equals 'luck' underlies this corridor
principle. Proponents of this school of thought believe that proper
preparation in the interdisciplinary business segments will enhance the
ability to recognize venture opportunities.
The Strategic Formulation School of Thought
 George Steiner has stated that 'strategic planning' is inextricably
interwoven into the entire fabric of management; it is not something
separate and distinct from the process of management. The strategic
formulation approach to entrepreneurial theory emphasizes the planning
process in successful venture development.
 Ronstadt views strategic formulation as a leveraging of unique elements.
Unique markets, unique people, unique products, or unique resources are
identified, used, or constructed into effective venture formations. The
interdisciplinary aspects of strategic adaptation become apparent in the
characteristic elements listed herewith their corresponding strategies:
 Unique markets: Mountain versus mountain gap strategies,
which refers to identifying major market segments as well
as interstice (in-between) markets that arise from larger
markets.
 Unique people: Great chef strategies, which refers to the
skills or special talents of one or more individuals around
whom the venture is built (Venkateshwara Hatchery) .
 Unique products: Better widget strategies, which refers to
innovations that encompass new or existing
markets (Kentucky fried chicken -KFC) .
 Unique resources: Water well strategies, which refers to
the ability to gather or harness special resources (land,
labor, capital, raw materials) over the long term. Without
question, the strategic formulation school encompasses a
breadth of managerial capability that requires an
interdisciplinary approach.

INTRODUCTION

Once entrepreneurship is decided upon, there are three main routes

an entrepreneur may follow.

 Starting a new livstock business

 The entrepreneur can begin from scratch on all his own
ideas, as there are no existing problems or concerns from a
previous owner. He has the freedom to start the business in
his own way. However, the risk is higher and he has to
devote time, effort, and money—especially for start-up
expenses such as equipment, building, etc.
 Purchasing an existing livestock business
 Advantages of purchasing an existing business include
smaller start-up costs and building on the existing goodwill
or loyalty of established customers. This option is good if
the entrepreneur does not have a great deal of business
experience. Disadvantages might include inheriting existing
problems such as poor location, stiff competition,
fluctuating market, equipment problems, and poor
reputation.
 Taking over a family livestock business
 In this situation, an entrepreneur has the support and
training available from the family members, creating trust
 and togetherness that bonds the business as one entity.
Maintaining separate family and business relationships is
the biggest obstacle to overcome, making it difficult to get
away from the business. Personality conflicts, different
interests, changed values, and burn-out are a few reasons
that family-owned businesses don’t survive to the second
generation. A person who grows up in the family business
may be ready to spread his or her wings and explore new
career aspirations.

TYPES OF BUSINESS OWNERSHIP

 Key types of Business ownership are Sole Proprietorship, Partnership and

Corporate.
 Liability, taxes, and financing options will be the deciding factors when
choosing the appropriate business structure for an entrepreneurial
venture. Whether the business is organized as a partnership or as
a corporation could affect the management process, ability to receive a
loan and the type and cost of benefits the business can offer.

SOLE PROPRIETORSHIP

 Sole proprietorship is the easiest, oldest, and most popular form of

business to create. Sole proprietorship usually involves one person
owning and operating a business; the owner and business is the same
person. The owner is the only one responsible for the activities of the
business. This form of business is usually a service business that is
handled and operated by one person. Eg. Veterinary Consultants,
Auditors.
 The factors associated with the sole proprietorship, along with their
advantages and disadvantages, are as follows:
 Profits are taxed as income to the owner personally.
 Tax rate is lower than the corporate tax rate.
 Owner has complete control of the business.
 There is unlimited liability for company debts.
 Little reporting is required, and government regulation is
minimal.

Sole Proprietorship

Advantages Disadvantages

 easy and inexpensive  full liability for debts,

to create etc.
 one owner has  higher risk of losing
complete authority personal assets, such
over the business as car, home, etc.
 taxes are not separate  personal responsibility
 from the owner’s; for workers’ injuries
usually at a lower rate  no one to take over if
 no certificate of owner becomes sick
incorporation  difficult to obtain
 no bylaws, minutes, finances for business
stock shares  requires more money
 all profits go to owner invested by owner
 higher flexibility  temptation to mix
business money with
personal money
 only as successful as
the skills, abilities, and
talents of the owner
 business dies when
owner dies
 Normally, farmers are sole proprietors. They operate their farming
businesses as the owner or boss of the working operation. Any other
business owner who operates under the status of 'self-employed' also falls
within this category of sole proprietor, such as the local electrician,
plumber, and mechanic. Farmers do not have to apply for government
certificates or status because they are assuming full responsibility for the
business.
 The sole proprietorship is the oldest, simplest, and most common form of
business entity. It is a business owned by a single individual. For tax and
legal liability purpose, the owner and the business are one and the same.
The proprietorship is not taxed as separate entity. The earnings of the
business are taxed at the individual level, whether or not they are actually
in cash. There is no vehicle for sheltering income. For liability purposes,
the individual and the business are also one and the same. Thus, legal
claimants can pursue the personal property of the proprietor and not
simply the assets used in the business.

PARTNERSHIP

 Partnership involves two or more persons who unite in the operation and
management of a business venture. This type of partnership may be
established for legal or tax purposes. The prospect of becoming a partner
in a business can be an incentive to new employees. Most effective
partnership arrangements include professional service businesses, such
as accounting and law firms.
 Some aspects associated with the partnership form of business are as
follows:
 Business is subject to little government regulation.
 Business is relatively easier to establish.
 Formal partnership agreement is highly recommended to
address possible conflicts that could arise in future.
 Each partner is liable for all debts.
 All profits are taxed as income to the partners according to
the percentage of ownership.
 Business name must be registered with the Registrar of
Companies.
 A clearly written agreement containing the partnership terms is essential.
 Have a clear and realistic agreement that anticipates future incidents.
  Include a buy-sell agreement in which terms are provided for the
departure of one or more partners from death, disability, retirement, or
resignation.
 Consider carrying life insurance on each partner, so the partnership can
pay the remaining partner’s estate for the value of his or her interest in
the business.
Partnership

Advantages Disadvantages

 share ideas and skills  personality conflicts and

among partners relationship strains
 secure investment capital  liable for each other’s
more easily actions
 tax rates lower  difficulty in obtaining
than corporation financing
 more flexibility of  a partner’s bankruptcy may
ownership and income affect the other partners
 can’t sell business unless all
partners agree
Private Limited Company

Private limited company is a one

 Has a minimum paid-up share capital of Rs.1 Lakh or such higher capital
as may be prescribed; and
 By its Articles Association:
 Restricts the right of transfer of its share;
 Limits the number of its members to 50 which will not
include:-
 Members who are employees of the company;
and
 Members who are ex-employees of the
company and were members while in such
employment and who have continued to be
members after ceasing to be employees;
 Prohibits any invitation to the public to subscribe for any shares or
debentures of the company; and
 Prohibits any invitation or acceptance of deposits from persons other than
its members, directors or their relatives.
Public Limited Company

 The Company defined under section 3(1)(iv) of the Companies Act, 1956 is
a public company which-
 Is not a private company;
 Has a minimum paid-up capital of Rs. 5 lakhs or such higher
capital as may be prescribed;
 Is a private company but subsidiary of a public company.
Private Companies deemed to be Public Companies

 Certain private companies are deemed to be public companies by virtue of

section 43 A, viz.-
 When 25% or more of its paid-up share capital is held by
one or more body corporate;
 When its average annual turnover (during the last 3 years)
exceeds Rs. 25 crores;
  When it holds 25% or more of the paid-up share capital of
Public Company; or
 When it accepts or renews deposits from the public after
making an invitation by an advertisement.

CORPORATION

 A corporation is a business that is chartered or registered by the state

and that operates separately from the owner or owners. The advantages
and disadvantages of this business form are as follows:
Corporation

Advantages Disadvantages

 easier to raise money/capital  expensive to set up

(issuing shares of stocks) and organize
 limited liability of owners, only  profits taxed twice
owing for what is invested  extensive record
 better status for employees keeping and
(pensions/retirement, dividends) paperwork
 easier to change ownership
 Limited Liability Corporations are the most recent form of business,
combining the best of both worlds (partnerships and corporations).
 Advantages
 Limited liability of corporation members
 Not liable for company’s debts
 Tax advantages of a partnership
 Shareholders only taxed once
 Popular among professionals (doctors, lawyers, etc.)
 Owners risk only their investment
 Personal assets not at risk
 Corporations are legal entities comprised of persons who have obtained a
charter legally recognizing the corporation as a separate entity that has
its own rights, privileges, and liabilities that are separate from the
individuals that form the corporation. The Corporation can own assets,
borrow money, and perform business functions without directly involving
the owners.
 Most complex form of business corporation
 Comprised of three groups of people: shareholders,
directors, officers
 Subject to more regulations than sole proprietorships and
partnerships
 Earnings subject to double taxation (the corporation is
taxed and shareholder dividends are taxed)
 Limited liability
 Not a total protection from lawsuits
 The largest businesses in India, such as Venkateswara Hatcheries
Ltd , Suguna Chicken,TCS and Infosys are examples of Corporations.
They encompass such a wide array of businesses and involve so many
investors and stockholders that their liability and security are ensured.
 ESSENTIAL CRITERIA FOR DEVELOPMENT OF
ENTREPRENEURSHIP IN LIVESTOCK SECTOR

Entrepreneurship theory has been evolving over the last 20 years and is ever growing.
It is defined as a verifiable and logically coherent formulation of relationships, or
underlying principles that either explain entrepreneurship, predict entrepreneurial
activity or provide normative guidance (prescribing the right action in particular
circumstance). Entreprenuership is interdisciplinary and contains various approaches
that would increase one’s understanding of it. One way to examine these theories is
with a 'schools of thought’ approach that divides entrepreneurship into specific
activities. These activities may be within a 'macro view or a micro view', but all address
the conceptual nature of entrepreneurship.

 Creativity: Creativity and innovation are often used to mean the same
thing, but each has a unique connotation. Creativity is the ability to bring
something new into existence. Ideas usually evolve through a creative
process whereby imaginative people bring them into existence, nurture
them, and develop them successfully. The creative process for an idea
contains five stages – germination, preparation, incubation, illumination,
and verification.
 Germination: The manner in which an idea is germinated is a mystery.
Most ideas can be traced to an individual’s interest in or curiosity about a
specific problem or area of study.
 Preparation: After germination, creative people start on a conscious
search for answers. It may be a problem to solve - such as the
determination of people like Bharat Ratna C. Subramaniam and Dr. M.S.
Swaminathan to make India self sufficient in food and to help the Indian
farmers resulted in Green Revolution. If it is an idea for a new product or
service, then market research is the business equivalent.
 Incubation: Incubation is a stage of mulling it over while the subconscious
intellect assumes control of the creative process and may take time
depending upon the problem, individual, etc. This is a crucial aspect of
creativity because when we consciously focus on a problem, we behave
rationally to attempt to find systematic resolutions.
 Illumination: It is the fourth stage which occurs when the idea resurfaces
as a realistic creation. It may be triggered by an opportune incident, as in
the case of Alexander Flemming's discovery of Penicillin. This stage is
critical for entrepreneurs because ideas, by themselves, have little
meaning unless and otherwise they are converted into reality. It is the
recognition of idea as being feasible solution.
 Verification: It is a stage of development that refines knowledge into
application. This is often tedious and requires perseverance by an
individual committed to finding a way to harvest the practical results of
his or her creation. An idea may be good and useful, but if it lacks
applicability, it could not be executed.
 Innovation : Entrepreneurs innovate and is the specific instrument of
entrepreneurship which differentiates them from others. It is the act that
endows resources with a new capacity to create wealth and in fact creates
a resource. Successful entrepreneurs, whoever they may be or whatever
their aim may be, try to create value and to make a contribution. Still
successful Entrepreneurs aim high and not content simply to improve on
what already exists, or to modify it. They try to create new and different
values and it is the most important function of an entrepreneur, according
to Joseph Schumpter and is the core attribute of an entrepreneur. For an
innovator, the market is never too saturated. The entire world progress
based on innovation only.
 BASIC REQUIREMENTS FOR ENTREPRENEURIAL
INITIATIVES IN LIVESTOCK AND ALLIED SECTOR

Techno-Economic feasibility of the enterprises under different conditions

 A number of critical factors are important for new-venture assessment.

One way to identify and evaluate them is with a checklist. In most cases,
however, such a questionnaire approach is too general. The assessment
must be tailor-made for each activity.
 A new venture goes through three specific phase: pre start-up, start-up,
and post start-up. The pre start-up phase begins with an idea for the
venture and ends when the doors are opened for business. The start-up
phase commences with the initiation of sales activity and the delivery of
products and services and ends when the business is firmly established
and beyond short-term threats to survival. The post start-up phase lasts
until the venture is terminated or the surviving organizational entity is no
longer controlled by the entrepreneur.
 The pre start-up and start-up phases, are the critical segments for
entrepreneurs. During these two phases, five factors are critical:
 The relative uniqueness of the venture,
 The relative investment size at start-up,
 The expected growth of sales and/or profits as the venture
moves through its start-up phase,
 The availability of products during the pre start-up and
start-up phases, and
 The availability of customers during the pre start-up and
start-up phases.
New - venture idea checklist

 Basic feasibility of the venture

 Competitive advantages of the entrepreneur with reference to venture
 Customer interest in the product/service
 Production of the goods and services
 Marketing of the goods and services
 Staffing decisions in the venture
 Control of the venture
 Financing the venture
 Sustainability of the venture

INTRODUCTION

Technical Feasibility

 The evaluation of a new-venture idea should start with identifying the

technical requirements and the technical feasibility for producing a
product or service that will satisfy the expectations of potential
customers. The most important of these are:
 Functional design of the product and attractiveness in
appearance.
 Flexibility, permitting ready modification of the external
features of the product to meet the changing customer
demands or technological and competitive changes.
Adaptability to newer changes is an essential criterion for
the success of the product.
 Quality of the ingredients from which the product is made.
 Reliability, ensuring performance as expected under normal
operating conditions.
 Product safety, posing no potential dangers under normal
operating conditions to the customers.
 Reasonable utility-an acceptable rate of obsolescence.
 Ease and low cost of maintenance.
 Standardization which meets the regional standards and
which are good for the public health.
 SPECIFIC ACTIVITIES OF FEASIBILITY ANALYSIS

Technical Feasibility Market Feasibility Financial Feasibility Analysis of Organizational Competitive Analysis
Analysis Analysis Analysis Capabilities

 Standard  Market  Require  Personnel  Existing

quality potenti d requirement competitors
specificatio al financia s  Size,
ns  Market l  Required financial
 Technical plannin resourc skill levels of resources,
requiremen g es potential market
ts issues  Availabl employees entrenchme
 Product e  Managerial nt
developme financia requirement  Potential
nt l s reaction of
 Product resourc  Determinatio competitors
testing es n of to
 Plant individual newcomer
location responsibiliti  Potential
es new
competitors
 Scope for
future
expansion
 INTRODUCTION

 Projects are the cutting edge of development. Perhaps the most difficult
single problem confronting livestock administrators in developing
countries is implementing development programs. Much of this can be
traced to poor project preparation. Project preparation is clearly not the
only aspect of livestock development or planning. Identifying national
livestock development objectives, selecting priority areas for investment,
designing effective price policies, and mobilizing resources are all critical.
But for most agricultural/livestock development activities, careful project
preparation is the best available means to ensure efficient, economic use
of capital funds and to increase the chances of implementation on
schedule. Unless projects are carefully prepared in substantial detail,
inefficient or even wasteful expenditure is almost sure to result-a tragic
loss in nations short of capital.
 To formulate and analyze effective projects, those responsible must
consider many aspects that together determine how remunerative a
proposed investment will be. All these aspects are inter-related.
 All must be considered and reconsidered at every stage in the project
planning and implementation cycle.
 A major responsibility of the project analyst is to keep questioning all the
technical specialists who are contributing to the project plan to ensure
that all relevant aspects have been explicitly considered and allowed for.
 Project preparation and analysis is divided into six aspects: technical,
institutional – organizational – managerial, social, commercial, financial
and economic.

Approaches in preparation of Livestock Entrepreneurial project

 Different approaches are followed while preparing entrepreneurial

project on livestock.
 Based on the technical knowledge, past experience and guidance from the
subject matter specialist, the entrepreneur himself can choose the
activity, budget, location, etc. taking into account the resources available
with him and the market demand for the products.
 After choosing the activity, he can assess it's profitability by preparing the
entrepreneurial project.
 While preparing the livestock project , one has to analyze the project in
the above mentioned six dimensions.

TECHNICAL ASPECTS

 The technical analysis concerns the project inputs (supplies) and outputs
(production) of real goods and services. It is mostly concerned with the
standard and other qualitative aspects of the product.
 The technical analysis will examine the possible technical relations in a
proposed livestock project: the climate in the region of the project and
their potential for livestock production, the availability of water, both
natural (rainfall, and its distribution) and supplied (the possibilities for
developing irrigation, with its associated drainage works); the livestock
species suited to the area; the production supplies and their availability;
the potential and desirability of mechanization; and diseases prevalent in
the area and the kinds of vaccination that will be needed. On the basis of
these and similar considerations, the technical analysis will determine the
 potential yields from the livestock, the coefficients of production, and the
possibilities for further expansion. The technical analysis will also
examine the marketing and storage facilities required for the successful
operation of the project, and the processing systems that will be needed.
 It is extremely important, and the project framework must be defined
clearly enough to permit the technical analysis to be thorough and
precise.
 The other aspects of project analysis can only proceed in light of the
technical analysis.
 Good technical staffs are essential for this work; they may be drawn from
consulting firms or technical assistance agencies abroad.

INSTITUTIONAL - ORGANIZATIONAL - MANAGERIAL

ASPECTS

 A whole range of issues in project preparation revolves around the

overlapping institutional, organizational and managerial aspects of
projects, which clearly have an important affect on project
implementation. The socio-cultural patterns and institutions of those, the
project will serve must be considered.
 The organizational proposals should be examined to see that the project is
manageable. The analyst must examine the ability of the available staff to
judge whether they can administer such large-scale activities such
as dairy processing unit, integrated poultry complex (feed mill, hatchery,
layers unit and processing), etc. When managerial skills are limited,
provision may have to be made for training.

SOCIAL ASPECTS

 There is a greater need for analysts to consider the social patterns and
practices of the clientele a project will serve. More and more frequently,
project analysts are also expected to examine carefully the broader social
implications of the proposed investments. The project should not affect
the local sentiments of the region. Cattle rearing for beef marketing, pork
production, sales tanneries, etc. are some of the examples. If the social
aspect is not taken care of, the project may face severe opposition from
the local people, which could ruin the profitability of the project. Though
the project may be technically and economically feasible, it could not be
processed, if it affects the local people sentiments or their livelihood.

COMMERCIAL ASPECTS

 On the output side, careful analysis of the expected market for the
project’s production is essential to ensure that there will be an effective
demand at a remunerative price. Where will the products be sold? Is the
market large enough to absorb the new production without affecting the
price? If the price is likely to be affected, by how much? Is the product
meant for domestic consumption or for export? Does the proposed project
produce the grade or quality that the market demands? Since the product
must be sold at market prices, a judgment about future government price
supports or subsidies may also be considered. If the demand is not
 estimated or forecasted accurately, it may end in over production or
missed sale opportunities.
Financial aspects

The financial aspects of project preparation and analysis encompass the

financial effects of a proposed project on each of its various participants.
In livestock projects, the participants include farmers, private sector
firms, public corporations, project agencies, and perhaps the national
treasury.
 The farm budget becomes the basis for shaping the credit terms to be
made available. The analyst must judge whether farmers will need loans
to finance on-farm investment (and if so, what is the margin money the
farmers should invest from their own resources) or to meet some
production costs, and whether seasonal short-term credit should be
provided for working capital to finance inputs and pay for hired labor. In
long term projects , the analyst should judge whether the farmers have
adequate capacity to lead their life till the returns are expected or any
special financial arrangements need to be created. The analysis of farm
income will also be helpful in assessing the incentives for farmers to
participate in the project. What will be the probable level of change in
farm income? When it is expected? How likely are price changes or
fluctuations could affect farm income? What will be the effect of subsidy
arrangements on farm income, and what changes in government policy
might affect the income earned by farmers?
Economic aspects

 The economic aspects of project preparation and analysis require a

determination of the likelihood that a proposed project will contribute
significantly to the development of the farm economy and total economy
and whether it justifies using the scarce resources it required. The point
of view taken in the economic analysis is that of the society as a whole.
The financial and economic analyses are thus complementary-the financial
analysis takes the viewpoint of the individual participants and the
economic analysis that of the society.

ENTREPRENEURSHIP DEVELOPMENT THROUGH

TRAINING

 Studies on the entrepreneur have revealed that both cultural or social

factors and personality factors are related to entrepreneurial behaviour.
Entrepreneurs are more likely to emerge from permissive middle class
families.
 Closely-knit and extended families tend to discourage mobility, self-
reliance and initiative which are essential qualities of entrepreneurs.
Further more, children of parents with business-related occupations,
members of unstable families have been found to have greater
entrepreneurial propensity. Since there are cultural and personality
factors which bear upon entrepreneurial behaviour, entrepreneurship
development policies and programmes should be so devised that
individuals with latent potentials for entrepreneurship can be selected
and trained effectively to tap such potentials.
 It is in this regard that the training approach to entrepreneurship
development come to the fore. Experiences in entrepreneurship
development have led many to conclude that significant increase in
indigenous entrepreneurship can indeed by stimulated by a well-balanced
training programme, that is including appropriate selection of both
trainers and trainees, motivation and techniques of enterprise building
 and management. Training increases human productivity. Specifically, it
provides the entrepreneur with a better comprehension of his
environment as well as with a wider range of alternatives for decision-
making. Training further equips him for innovations. It therefore,
becomes a tool for entrepreneurship complementing direct assistance
such as environmental stimulation and government incentives.
 The training approach should addresses two broad categories of people:
 Those who are entrepreneurs in status whether by choice
or circumstance, and
 Those who are potential entrepreneurs but are
dysfunctionally engaged in non-industrial activities.
 Training the first group is directed at improving business performance
and raising aspiration levels higher, as indicated by greater readiness
(and success) in expanding existing businesses and taking the risks of
introducing change. Training the second group entails the convincing of
individuals of the social and economic advantages of industrial activity.
People in less developed areas need to understand their potential
contributions to society as they assume risks or break away from the
bonds of tradition.

MANAGEMENT / INTERPERSONAL SKILL & BUSINESS

COMMUNICATION

 One type of communication travels from individual to individual in face-to-

face and group settings. Such flows are termed interpersonal
communications, and the forms vary from direct verbal orders to casual,
nonverbal expression. Interpersonal communication is the primary means
of managerial communication.
 The problems that can arise when managers attempt to communicate with
other people can be traced to perceptual and interpersonal style
differences. Each manager perceives the world based on his background,
experiences, personality, frame of reference, and attitude.
Interpersonal Styles

 Interpersonal styles differ among individuals, and understanding these

differences is important for managerial and organizational performance.
Interpersonal style refers to the way in which an individual prefers to
relate to others.
Interpersonal Styles and communication

 The arena: The region most conducive to effective interpersonal

relationships and communications is termed the arena. Here, all the
information necessary to carry on effective communication is known to
both the sender (self) and the receivers (others).
 The blind spot: When relevant information is known to others but not
to the sender (self), a blind spot result. In this context, a person (self) is at
a disadvantage when communicating with others because he cannot know
the others’ feelings, sentiments, and perceptions. Consequently,
interpersonal relationships and communications suffer. The greater the
blind spot, the smaller the arena, and vice versa.
 The facade: When information is known to the self but unknown to others,
the person (self) may resort to superficial communications; that is, he may
present a façade. A façade is a false front. The façade area is particularly
damaging when a subordinate 'knows' and an immediate supervisor 'does
not know'. The façade, like the blind spot, diminishes the arena and
reduces the possibility of effective communication.
  The unknown: If neither party knows the relevant feelings, sentiments,
and information, each party is functioning in the unknown region. Such a
situation often is stated as 'I can’t understand them, and they don’t
understand me'. In this predicament, interpersonal communications are
sure to suffer.
Exposure and Feedback

 Interpersonal communication problems are the results of unsound

relationships. An individual can improve unsound relationships by
adopting two strategies-exposure and feedback.
 Exposure: Increasing the arena area by reducing the façade area requires
that one be open and honest in sharing information with others. The
unwillingness of companies to discuss salary matters is an example of
inadequate exposure.
 Feedback: When the self does not know or understand, more effective
communications can be developed through feedback from those who do
know. Thus, the blind spot can be reduced with a corresponding increase
in the arena.

NATIONAL INSTITUTE FOR ENTREPRENEURSHIP AND

SMALL BUSINESS DEVELOPMENT (NIESBUD)

 The National Institute for Entrepreneurship and Small Business

Development (NIESBUD) was established in 1983 by the Ministry of
Industry (now Ministry of Small Scale Industries), Govt. of India, as an
apex body for coordinating and overseeing the activities of various
institutions/ agencies engaged in Entrepreneurship Development
Particularly in the area of small industry and small business.
 The Institute which is registered as a society under Govt. of India
Societies Act (XXI of 1860). The policy, direction and guidance to the
Institute are provided by its Governing Council whose Chairman is the
Minister of SSI.

ENTREPRENEURSHIP DEVELOPMENT INSTITUTE OF

INDIA

 The Entrepreneurship Development Institute of India (EDI), an

autonomous body and not-for-profit institution, set up in 1983, is
sponsored by apex financial institutions, namely the IDBI Bank Ltd, IFCI
Ltd. ICICI Ltd and State Bank of India (SBI).
 The Institute is registered under the Societies Registration Act 1860 and
the Public Trust Act 1950. The EDI has been selected as a member of the
Economic and Social Commission for Asia and the Pacific (ESCAP)
network of Centres of Excellence for HRD Research and Training. EDI as
a member of the Network will have interactive access to information on
other 123 member institutions via Internet.
  EDI will also be invited to collaborate with ESCAP in the development and
delivery of a series of ESCAP HRD courses to train social development
personnel working to alleviate poverty in the region.

INDIAN INSTITUTE OF ENTREPRENEURSHIP

 With an aim to undertake training, research and consultancy activities in

the small industry sector focusing on entrepreneurship development, the
Indian Institute of Entrepreneurship (IIE) was established in the year
1993 at Guwahati by the erstwhile Ministry of Industry (now Ministry of
Small Scale Industry), Government of India as an autonomous national
institute.
 The policy direction and guidance is provided to the Institute by its Board
of Management whose Chairman is the Secretary to the Government of
India, Ministry of Small Scale Industries.

MINISTRY OF SMALL SCALE INDUSTRIES

Ministry of Small Scale Industries

 Ministry of Small Scale Industries is the nodal Ministry for formulation of

policy, promotion, development and protection of small scale industries in
India.
 The Ministry of Small Scale Industries (SSI) designs and implements the
policies through its field organizations for the promotion and growth of
small scale industries.
 The Ministry also performs the functions of policy advocacy on behalf of
small scale industries (SSI) sector with other Ministries/Departments.

SMALL INDUSTRIES DEVELOPMENT ORGANISATION

(SIDO)

 SIDO was established in 1954 on the basis of the recommendations of the

Ford Foundation. Over the years, it has seen its role evolve into an agency
for advocacy, hand holding and facilitation for the small industries sector.
 It has over 60 offices and 21 autonomous bodies under its management.
These autonomous bodies include Tool Rooms, Training Institutions and
Project-cum-Process Development Centres. SIDO provides a wide
spectrum of services to the small industries sector.
 These include facilities for testing, training for entrepreneurship
development, preparation of project and product profiles, technical and
managerial consultancy, assistance for exports, pollution and energy
audits, etc.
 SIDO provides economic information services and advises Government in
policy formulation for the promotion and development of SSIs.

THE NATIONAL SMALL

INDUSTRIES CORPORATION LIMITED (NSIC)
  The National Small Industries Corporation Ltd., an ISO 9001:2000
Company, was established in 1955 by the Government of India with a
view to promote, aid and foster the growth of Small Industries in the
country.
 NSIC continues to remain at the forefront of industrial development
throughout the country, with it's various programs and projects, to assist
the small scale sector in the country.
 The Corporation provides integrated Technology, Marketing and
Financial support to Small Scale Sector.

NATIONAL INSTITUTE FOR SMALL INDUSTRY

EXTENSION TRAINING (NISIET)

 The NISIET, since its inception in 1960 by the Government of India, has
taken gigantic strides to become the premier institution for the
promotion, development and modernization of the SME (Small and
Medium Scale Enterprises) sector.
 An autonomous arm of the Ministry of Small Scale Industries (SSI), the
Institute strives to achieve its avowed objectives through a gamut of
operations ranging from training, consultancy, research and education, to
extension and information services.

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA

(SIDBI)

 Small Industries Development Bank of India (SIDBI) was established in

April 1990 under an Act of Indian Parliament as the principal financial
institution for promotion, financing , development of industry in the small
scale sector and co-ordinating the functions of other institutions engaged
in similar activities.
 Since its inception, SIDBI has been assisting the entire spectrum of SSI
Sector including the tiny, village and cottage industries through suitable
schemes tailored to meet the requirement of setting up of new projects,
expansion, diversification, modernisation and rehabilitation of existing
units.

THE KHADI AND VILLAGE INDUSTRIES COMMISSION

(KVIC)

 The Khadi and Village Industries Commission (KVIC) is a statutory body

created by an Act of Parliament (No.61 of 1956 and as amended by Act
No. 12 of 1987). Established in April 1957, it took over the work of the
former All India Khadi and Village Industries Board. The broad objectives
that the KVIC has set before it are :
 The social objective of providing employment,
 The economic objective of producing saleable articles, and
 The wider objective of creating self-reliance amongst the
poor and building up of a strong rural community spirit.
 The KVIC is charged with the planning, promotion, organisation and
implementation of programs for the development of khadi and other
 village industries in the rural areas in coordination with other agencies
engaged in rural development wherever necessary.

INTRODUCTION

 Various government agencies are offering different training programmes

for different skill level for tapping, developing and harnessing the
entrepreneurial qualities of rural people so as to empower them.
 Khadi And Village Industries Commission (KVIC)
 Government of India has approved the introduction of a new credit linked
subsidy programme called Prime Minister’s Employment Generation
Programme (PMEGP) by merging the two schemes that were in operation
till 31.03.2008 namely Prime Minister’s Rojgar Yojana (PMRY) and Rural
Employment Generation Programme (REGP) for generation of
employment opportunities through establishment of micro enterprises in
rural as well as urban areas. PMEGP will be a central sector scheme to be
administered by the Ministry of Micro, Small and Medium Enterprises
(MoMSME).The main objective of the scheme is to generate employment
opportunities in rural as well as urban areas of the country through
setting up of new self-employment ventures/projects/micro enterprises.
 Self Help Groups
 SHG is a small group of rural poor, who have voluntarily come forward to
form a group for improvement of the social and economic status of the
members.
 It can be formal (registered) or informal.
 The concept underlines the principle of Thrift, Credit and Self Help.
 Members of SHG agree to save regularly and contribute to a common
fund.
 Community Based (SC, ST, BC) Development Programmes
 Some of the online programmes which provide material, videos and
clippings on Entrepreneurship include
http://etl.stanford.edu/,http://ecorner.stanford.edu/podcasts.html,
http://eclips.cornell.edu/entrepreneurs.do,
http://www.enterprisetoronto.com/ etc.,

Importance of Entrepreneurship Development Programmes

 Ensures availability of skilled manpower at all management levels

 Enhancing abilities, potential among entrepreneurs
 Increase efficiency
 Maintain and enhance product quality
 Minimise wastages in production process
 Minimise accidents on the job
 Reduce fatigue and increase speed of work
 Standardisation in industry and internal processes
Methods of Training

 Individual instruction
 Group instruction
 Lecture method
 Demonstration method
 Written instruction method
 Conference
 Meetings
 TRAINER'S TRAINING PROGRAMMES

 Enterprise Launching and Management

 EMT Accreditation Programmes
 Barefoot Managers
 Self-Employment / PMRY
 Project Formulation & Appraisal
 Planning & Organising EDPs

SMALL BUSINESS PROMOTER'S PROGRAMMES

 Entrepreneurship Orientation for Weaker Sections/DWACRA

Functionaries
 Grassroot Management Training
 Women Empowerment through Enterprise Development
 Orientation Programmes for Voluntary Organisations
 Small Business Development
 Micro-Enterprise for Women/SC/ST/Weaker Section
 TRYSEM/ISB Beneficiaries

DEVELOPMENT OFFICER'S ORIENTATION

PROGRAMMES

 DICs - Managers and General Managers

 SIDO Officers
 Voluntary Organisations
 Income - Generating Activities
 ITI/Vocational Institute Instructors and Principals
 KVIC
 Performance Improvement and Personal Effectiveness
 Techniques for Identification & Selection of Entrepreneurs

CONTINUING EDUCATION PROGRAMMES FOR SSI

ENTREPRENEURS

 Working Capital Assessment & Management

 Opportunity Identification & Guidance
 Managing & Controlling Small Business Accounts
 Marketing Strategies for small Entrepreneurs
 Managing Finance
 Creative Selling & Promotion for Small Enterprise
 Marketing Survey Methods
 TQM for Small Business
 Business Forecasting Techniques
 Export Marketing for SSI Entrepreneurs
 Accounting Business and Industry
 Strategic Management for Small Entrepreneurs
 Managing Finance SSI
 Effective Business Communication for Small Business Owners
 Leadership & Team Building Skills for Small Business Owners
  Computers for Small Entrepreneurs
 Opportunity & Support for Expansion, Diversification & Modernisation of
Small Enterprises
 Small Enterprise Management Assistants Programme (Barefoot
Managers)
 Enhancing Productivity & Improving Quality

INTERNATIONAL TRAINING PROGRAMMES

 Small Business Creation & Development for Women Entrepreneurs

 Development of Entrepreneurship & Entrepreneurial Skills
 Entrepreneurship for Small Business Trainers/Promoters
 Entrepreneurship Development for Business Entrants
 Micro-Enterprise Development
 Case Development
 Curriculum Development
 Entrepreneurship Development & Promotion of Income-Generating
Activities
 Business Advisors' Training Programmes
 Small Business Planning & Promotion
 Besides Institute conducts country-specific entrepreneurship/small
business development programmes (Already done for CIS, Nepal,
Bangladesh & Fiji) or for specific international organistions (Done for
UNIDO/ UNDP, ILO, Commonwealth Secretariat & USAID)

ENTREPRENEURSHIP DEVELOPMENT PROGRAMMES

AT STATE LEVEL

EDP training programmes are conducted by the State Governments under various wings
such as Women Development, SC/ST wings, Small and Medium Scale Industries, SHGs.
Broadly, they cover the same topics as listed above. Based on the local needs, minor
modifications are done to suit the local need.Generally, the EDPs are of two types (View
image)

 Target specific such as

 General
 Women
 Science & Technology Graduates
 School Leavers
 SC/OBC
 Ex-Servicemen (Veterans)
 Self-Employment (SEEUY, TRYSEM, PMRY etc.)
 Product/Process Oriented
 Leather
 Builders Hardware
 Food
 Plastics
 Chemicals
 Sports Goods
 Readymade Garments
 Electronics
 Information Technology etc.
Entrepreneurship Development Training Institutes and Training Programmes
offered in India
S.N Institute Training Programmes Durati Eligibi
o. offered on lity

1. National  Computer 3 days Gradua

Institute for hardware & to 3 te /
Entrepreneurshi networking months Diplom
p and Small  Entreprene dependi a
Business urship and ng upon holders
Development Skill the with
(NIESBUD), Developme progra adequa
NOIDA(nisebud. nt mme te
nic.in) Programme English
s in Knowle
Garment dge
drafting &
constructio
An apex body n
established by  Entreprene
Ministry of urship and
Industries, Govt. Skill
of India for Developme
coordinating, nt
training and Programme
overseeing the s in
activities of Mushroom
various cultivation
institutions/  Entreprene
agencies urship and
engaged in Skill
Entrepreneurshi Developme
p Development nt
Particularly in Programme
the area of small s in Room
industry and boys
small business.  ToT
Entreprene
urship
Developme
nt –
Capacity
building
under
SJSRY
 Entreprene
urship and
Skill
Developme
nt
Programme
s in Basic
Computer
Hardware
Training
Programme
 Entreprene
urship and
Skill
 Developme
nt
Programme
s in Mobile
repairing
 Entreprene
urship and
Skill
Developme
nt
Programme
s in sewing
operator
 National
workshop
on
Entreprene
urship and
skill
developmen
t for urban
poor
 Entreprene
urship and
skill
developmen
t on
Desktop
publishing
 Human
Resource
Developme
nt and
Entreprene
urship
Education
Training
(HRD-EE)
 Small
Business
Planning
and
Promotion
(SBPP)
 Business
Advisors’
Training
(BAT)
 Women and
Enterprise
Developme
nt (WED)
 Trainers
Training on
Entreprene
urship and
Promotion
of Income
 Generation
Activities
(TT-EPIGA)
 Entreprene
urship for
Small
Business
Trainers/Pr
omoters
(ESB-TP)
 Trainers
Training on
Sustenance
and Growth
of Self Help
Groups (TT-
SHSHG)

2. National Institute  Communica 8-12 Gradua

tion Skills weeks te /
of Micro, Small
in English Diplom
and Medium and a
Enterprises Promotion holders
(NIMSME), of Micro, with
Small and adequa
Hyderabad
Medium te
Enterprises English
(EPMSMEs) Knowle
(Formerly  Communica dge
National tion Skills
Institute of in English
Small Industry and
Extension Promotion
Training of Food
(NISIET)) Processing
Enterprises
(EPFPE)
 Communica
tion Skills
in English
and
Managing
Micro and
Small
Enterprises
(EMMSEs)
 Empowerm
ent of
Women
through
Enterprises
(EWE)
 Planning
and
Promotion
of Agro and
Food
Enterprises
 (PAFE)
 Tourism
and
Hospitality
Manageme
nt (THM)
 Enterprise
Developme
nt through
Micro
Finance
(EDMF)
 Intellectual
Property
Rights
(IPRs) and
Implication
s for SMEs
(IPRIS)
 Capacity
Building for
providing
Alternative
Livelihood
Opportuniti
es for Poor
(CBALO)
 Training
Methods
and Skills
for
Managers
(TMSM)
 Promotion
of Micro
Enterprises
(POME)

3. Entrepreneurshi  Governance 6 weeks Gradua

p Development & te with
Institute of Manageme adequa
India, Gandhi nt of Non- te
Nagar Profit English
Organizatio Knowle
(www.ediindia.org) ns dge
(NPOs)/NG
Os
 Use of
English
Language
in Business
Communica
tion
 ICT Skills
for Small
Enterprise
Operations
 Entreprene
 urial
Manageme
nt
 Entreprene
urship &
Small
Business
Promotion
 Business
Developme
nt Service
Providers
for Micro
Enterprise
and Micro
Finance
 Industrial &
Infrastructu
re Project
Preparation
& Appraisal
 Business
Research
Methods &
Data
Analysis

4. National  Microfinanc 4-12 Senior

Institute of e for weeks and
Rural poverty Middle
Development, alleviation level
Hyderabad  Participator manage
y rural rs/
(www.nird.org.in) developmen officers
t
 Manageme
nt of rural
drinking
water and
sanitation
projects
 Natural
resources
manageme
nt for
sustainable
rural
livelihood
 Geo
informatics
applications
in rural
developmen
t
 Strategies
for
sustainable
agriculture
 and rural
developmen
t
 Planning
for poverty
reduction
and
sustainable
developmen
t
 Information
Technology
for rural
developmen
t

INTRODUCTION

 A project is a specific plan or design presented for consideration.

 It is a location specific activity with specific objectives, time and cost
limitations and of non-repetitive nature.
 In banking, projects refers to an activity in which financial resources are
expended to create capital assets that produce benefits over an extended
period of time and which logically lends itself to planning, financing and
implementing as a unit whereas, UNIDO defines a project as a proposal
for an investment to create and or develop certain facilities in order to
increase the production of goods/services in a community over a certain
period of time.
 Projects are common term used by many to denote specific action plans.
 Project can be long term or short term, limited or comprehensive, single
sector concentrated or multi sector concentrated.
 Project Evaluation is a step-by-step process of collecting, recording and
organizing information about project results, including short-term outputs
(immediate results of activities, or project deliverables), and immediate
 and longer-term project outcomes (changes in behaviour, practice or
policy resulting from the project).
 Common rationales for conducting an evaluation are:
 response to demands for accountability;
 demonstration of effective, efficient and equitable use of
financial and other resources;
 recognition of actual changes and progress made;
 identification of success factors, need for improvement ;
 validation for project staff and partners that desired
outcomes are being achieved.

Importance

 Evaluating project results is helpful in finding answers to key questions

like
 What progress has been made?
 Whether the desired outcomes were achieved, if not why?
 Are there ways that project activities can be refined to
achieve better outcomes?
 Do the project results justify the project inputs?

DEFINITION

Project: can be defined thus as

 A scientifically evolved work plan

 Devised to achieve specific objectives
 Within specified time limit
 Consuming planned resources

IDENTIFYING THE PROJECT

 The first phase of project management is concerned with identifying the

project to achieve the desired objectives.
 The initial task coming under project identification is to find out the
sources of the project.
 Agencies like government organisations, international institutions like
WHO, World Bank, UNDP, Non Governmental Organisations can serve as
the better source of projects.
 Own Experience, Progressive farmers, successful entrepreneurs,
technical experts, Bankers, Media, National priorities and Thrust areas of
Development also serve sources for Identification of Projects.

PROBLEM FORMULATION AND STATEMENT OF THE

PROBLEM

 The crux of the project lies in the problem formulation process.

 The project team should have detailed understanding of the problem,
scope, intervention areas and the out come of the project to be
hypothesized.
 Based on a multi phased understanding and analysis, describe the
problem to be addressed and resolved.
 PROJECT PLANNING

 Project planning can be defined as a scientific and systematic process, in

which logical linkages are clearly established among various element of
projects. Successful implementation of the project lies on effective project
plan.
 Based on the anticipated goals and objectives the project planning shall
be made.
 The project plan is the blue print of the project.
 Effective planning gives proper direction in the implementation of the
project and it further helps in adequate monitoring and evaluation.
 For the implementation of plan, an activity chart has to be prepared.
 The activity chart consists of all the proposed activities in the
implementation process, including the start date, calendar for the entire
project, dates of monitoring and evaluation periods, finishing stages,
series of out puts, slack time and responsible person who is going to
coordinate the activities etc.

PROJECT BUDGET

 The project budgeting phase is in the project formulation phase.

 Two types of budgets are to be made.
 One is the cost category budget (materials, administration, capital;
expenditures etc) and the second is the activity budget.
 This project budget is to calculate the cost of each project inputs.
 The estimation of the project cost should be made on fairly realistic sense
of financial values.
 In the multi year projects the inflation rate also has to be anticipated in
advance.

CAPITAL BUDGETING/PROJECT APPRAISAL/CAPITAL

EXPENDITURE DECISIONS

 Generally in livestock projects, the investments are made

during different time periods and the associated benefits are
spread overtime.
 These investments and returns are not comparable as such
without adjusting for their time value.
 Thus the time value of money has to be necessarily taken into
reckoning in the investment analysis of agricultural projects.
Capital expenditures are defined as investments to acquire fixed or long
lived assets from which a stream of benefits is expected. Such
expenditures represent an organization's commitment to produce and
sell future products and engage in other activities. The estimate of the
costs and benefits of a capital project should show the difference that
results from making the investment. The important information is the
change in cash flows as a result of undertaking the project, i.e. the
differential principle.

Approaches to Preparation of Entrepreneurial Project on Livestock

While formulating a livestock project several factors, such as, kind of

enterprise, amount of investment, availability of inputs and skilled
labour,market potential, veterinarian's availability and nearness, sale
price, scope for further expansion have to foreseen and worked out.
Apart from this, availability of bank loans, their requirements, technical
and financial detail would have to be sketched out. It starts from project
planning, cost estimation, modalities of formulating the project and also
availing the bank loans.

Fixed Investment Estimates

Fixed investments consist of all the costs necessary to bring

the project to full operation. These include the construction
of animal sheds, purchase of animals, purchase of equipment
costs, installation, training, commissioning, initial spoilage,
spare parts inventory, etc.
Working Capital Estimates

The analysis includes estimates of all investments required


for a project. The project may require increases (or
decreases) in cash, accounts receivable, accounts payable, or
inventory. These changes in working capital should be
included in the calculation as should the changes to these at
the end of the economic life of the project.
Economic Life

It is often difficult to estimate the life of a project (i.e., its

planning horizon). The criterion is the continued ability to
generate satisfactory cash flows or other intangible benefits.
The economic life of a project is the lesser of its physical life,
technological life or product-market life.
 Physical Life - Physical life represents the time taken for an
asset to become physically worn out so that it can no longer
be efficiently maintained and must be replaced.
 Technological Life -Technological life is the period of time
that elapses before an even newer machine or process
becomes available which would make the proposed machine
or process obsolete.
Market Estimates

 Market Study - A market study forecasts sales revenue

through the life of a project. It should describe fully all
 aspects of the company's position in the market and estimate
the degree of marketing risk associated with the venture. It
provides information on demand, supply and price trends in
the overall market, and specific forecasts of market share,
sales volume, net returns and selling costs, as well as what
competitors are or may be doing in the market place.
 Competitive Factors - The demand forecast should indicate
the competitors and their market share. The productive
capacity in existence and potentially available would then be
assessed in relation to the forecasted demand to show the
volume and timing of expansion needs. Competitors'
expansion possibilities and economics should also be
considered along with their product and technology life
cycles.
 Price Estimation - The estimation of price trends is frequently
the most difficult area of market forecasting. However,
analysis of the supply/demand balance and estimation of
competitors' economics can provide a guide. The elasticity of
demand in relation to the price may also be considered. A
careful study of the product life cycle is often needed since,
in the early development stages of a new product, the price is
often high; it falls as demand levels off at maturity, and then
declines further as new substitutes appear on the market.
Operating Cost Estimates

 Cost of feed and fodder, labour(Casual), health care charges,

electricity and other miscellaneous costs are usually
included.
Risk Analysis

 Risk exists in capital budgeting when more than one outcome

may occur. A quantitative evaluation of a capital expenditure
proposal requires that several predictions be made, often far
into the future. As a general rule, the risk associated with
achieving an expected cash inflow or outflow in a given year
increases as one moves further into the future as there are
more factors in the long term which cannot be foreseen but
which will affect cash flows.
Evaluation Techniques

 Several techniques are available to arrive at a financial decision

regarding a capital expenditure project. The project appraisal techniques
are broadly classified under two heads namely.,
 Undiscounted Measures
 Discounted Measures
 UNDISCOUNTED MEASURES

 They are the naïve (simple) methods of ranking agricultural projects. They
don't consider the time value of money and simply compare the cost and
returns and rank the project.
 The three important undiscounted measures are
 Pay back period
 Proceeds per rupee of outlay
 Average annual proceeds per rupee of outlay

PAY BACK PERIOD

 Payback period refers to the period of time required for the return on an
investment to 'repay' the sum of the original investment. For example, a
Rs.1000 investment which returned Rs.500 per year would have a two
year payback period. Shorter payback periods are obviously preferable to
longer payback periods, other things being equal.
 Payback period as a tool of analysis is often used because it is easy to
apply and easy to understand for most individuals.
 The payback period is considered a method of analysis with serious
limitations and qualifications for its use, because it does not properly
account for the time value of money , risk , financing or other important
considerations such as the opportunity cost.
 It is generally agreed that this tool for investment decisions should not be
used in isolation.
 Alternative measures of 'return' preferred by economists are net present
value and internal rate of return. An implicit assumption in the use of
payback period is that returns to the investment continue after the
payback period.
 There is no formula to calculate the payback period, excepting the simple
and non-realistic case of the initial cash outlay and further constant cash
inflows or constant growing cash inflows.
 Pay back period is a simple technique of ranking projects based on the
actual period of time in which one can get back total investment.
P = I/E

 where, P is the pay back period

 I is the total investment made in the project and
 E is the net cash revenues / net revenues per annum.

PROCEEDS PER RUPEE OF OUTLAY

Proceeds per Rupee of Outlay = Total Proceeds / Total Investment

AVERAGE ANNUAL PROCEEDS OF RUPEE OUTLAY

 This method is another method of choosing between the projects and

measured by the following formula:
Average annual proceeds of rupee = ( Total proceeds / Life span of project ) / Total
Investment
  The projects are estimated by the magnitude of the estimate.
 The major draw back of the undiscounted measures is that for the same
data of the project, we will get different rankings depending upon the
measure.
 Thus undiscounted measures are inconsistent and incompatible in
ranking.

DISCOUNTED MEASURES

 Here the cash flows which are accrued in the project are discounted with
an appropriate discount rate.They take into account of the time value of
money. A rupee does not have the same value over time.That is, its value
or purchasing power in terms of goods and services declines.
 Generally the existing interest rate is taken as discount rate for this
purpose.
 The discounted cash flows are the best estimates to measure the worth of
the projects.
 The three important discount rate measures are
 Net Present Worth (NPW)
 Benefit Cost Ratio (BCR)
 Internal rate of Returns (IRR)

NET PRESENT WORTH

 The Net Present Worth which is also called as Net Present Value (NPV) is
nothing but the present value/worth of the cash flow stream in the
project.
 The cash flow in the project is the difference between cash inflow and
cash outflow.
 The investments made in the projects are generally called costs or cash
outflows.
 The receipts that accrued during different time periods are called as cash
inflows or gross returns.
 The cash flows discounted with an appropriate discount rate will give the
net present worth of the project.

Bt is cash flows in tth year, Ct is cash outflows in tth year, t is 1 to 10 years that is life
span of the project.

 The choice criterion using NPW is that the project with positive NPW is
accepted for implementation and the project with negative NPW is
rejected.
 If he is to choose among different projects, the project with highest NPW
has to be chosen.

BENEFIT COST RATIO (BCR)

 BCR is worked out by dividing the present value of cash inflows by the
present value of cash outflows.
 If the BCR is more than one, that project is accepted and if BCR is less
than one the project is rejected.
  Among the different projects, the project with highest BCR is to be
selected.

INTERNAL RATE OF RETURNS (IRR)

 It is the rate of return per rupee invested in an agricultural project over

its life span.
 For example if the IRR is 30 per cent in a livestock project, it means that
this project gets an average annual return of Rs. 30/ per Rs. 100/ invested
in the project over its life span.
 It is the rate of return at which the present value of total cash flows in a
project is equal to zero. In other words, it is the discount rate at which the
NPW of the project is zero, i.e.

 For a project to be viable it should have a BCR of one or greater than one
at the opportunity cost of capital and a NPW of zero or greater than zero
at the opportunity cost of capital and the discount rate for IRR should be
greater than the opportunity cost.

SOURCES OF AGRICULTURE/ LIVESTOCK FINANCE

Finance for agriculture can be obtained from formal and informal sources

 Formal sources
 Credit co-operatives
 Commercial banks
 Government
 Regional Rural Banks
 Informal sources
 Money lender
 Friends and relatives
 Traders
 Landlords

3 R’s OF CREDIT

 To estimate the rationality of a loan, it is essential to know credit analysis.

 The considerations involved in credit analysis generally fall into three
groups:
 Returns
 Repayment capacity
 Risk bearing ability
 These are popularly known as the three R’s of credit.
Returns

 This R of credit has great significance for the creditor as well as the
borrower.
 It requires that both the borrower and the financier should be satisfied
with the returns from credit.
 The problem of determining the profitable use of capital is a part of
decision making and it involves selection of enterprises, determining the
 most economically optimum production techniques and determining the
size of each enterprise.
Repayment capacity

It is the test of economic feasibility.

It determines the amount the farmer will be able to spare for repayment
of loan.
 It is generally acceptable that if an investment is profitable, the loan can
be repaid without any difficulty.
Risk bearing ability

 Risk bearing ability implies the capacity to cope with an unexpected low
income and unpredictable expenses and losses due to the vagaries of
nature and other hazards such as diseases and price fluctuations.

3 C's OF CREDIT

 They are character, capacity and capital.

 Character implies the borrower’s moral qualities, such as honesty,
integrity and sense of responsibility which all influence the risk bearing
ability and repayment.
 Capacity signifies the potential of the borrower to repay the loan, when it
is due and depends upon his income.
 Capital reflects the net worth of the borrower (assets minus liabilities)
which also reflects his repayment and risk bearing ability.

METHODS OF REPAYMENT OF LOANS

Four methods are commonly used.

 Straight end repayment or lumpsum repayment

 The entire loan is paid on the expiry of the term but the
interest on the loan is paid each year.
 Partial repayment or variable repayment
 A part of the loan together with a part of the interest on the
loan is paid up every year.
 Amortized even repayment
 An equal amount is repaid every year.
 This includes a larger proportion of the principal and a
smaller amount of interest in each succeeding installment
of payment.
 The method of payment is suitable when income is likely to
flow at a constant rate throughout the period.
 The annual installment is arrived at through the formula
given.

Where,

I = Annual installment in Rs.

B = Principal amount borrowed in Rs.

n = Loan period in year.

i = Annual interest rate in fraction.

  Amortized decreasing repayment
 The amount of the principal remains constant and the share
of interest declines with every installment of repayment.
 Thus, the annual payment becomes smaller every
succeeding year.


FINANCIAL STATEMENT

Some of the financial statements useful to know the financial structure and position of
any livestock enterprise are listed below.

 Balance Sheet
 Profit and Loss Statement
 Cash Flow Statement

BALANCE SHEET

 A balance sheet is a summary statement of all the assets and liabilities of

a business at a given point of time.
 To be precise, it presents the net value of assets and liabilities in a
concise form at a given time and is usually prepared towards the end of
the financial year.
 Balance sheet is also known as Net Worth statement.
 In a typical Balance sheet, the assets are listed on the left hand side and
liabilities are listed on the right hand side.
 Apart from this, at the bottom of right hand side of balance sheet Net
worth or Equity is mentioned.
 Generally the left hand side values are equal or balances the right hand
side values and hence this statement is called as Balance sheet.

An Asset may be defined as a property which a farmer/firm owns. A Liability is the

amount of money owed by the farmer/firm to others. On the basis of liquidity,
assets/liabilities are classified into

 Current assets
 The assets which are used up in one production cycle and
which can be easily converted into cash.
 Eg. Cash on hand, accounts receivable, market securities,
inventories etc.,
 Medium term assets
 The assets which are used up in production process for
more than one year and upto 5 years.
 Eg. Animals, equipments etc.,
 Fixed assets
 The assets which are used up in production process over a
long period and which cannot be easily converted into cash.
 Eg. Land, buildings, machinery etc.,
 Current Liabilities
 They refer to short time commitments of the
business/farmer which has to be repaid within the current
year.
  Eg. Accounts payable, taxes payable, interest payable.
 Working/Medium term loans
 They refer to commitments of the business farmer which
could be deferred at present but the due falls in the next
season and their time period ranges from 1 – 5 years.
 Eg. Medium term loans for Animals or small machinery
such as chaff cutter loans etc.,
 Deferred Liabilities
 They refer to long term loans and other such commitments
which could be repaid over a period of 5-15 years.
 Eg. Long term loans for land, feed mill, hatchery etc., .
 Net Worth/Equity
 It is the difference between the total assets and total
liabilities in the business.
 The most liquid current asset is cash in hand and the least
liquid current asset is inventory.Eg. Milk can.
 The most liquid current liability is money at call and the
least liquid asset is long term loans.
Model of balance sheet

Assumptions

 An entrepreneur has a land of 2 acres, worth of Rs.500000/- He has khoa

producing unit worth of Rs.50000/- In his current account in Indian Bank
he has Rs. 25000/- Taxes payable for this year is Rs. 20000/- Wealth tax is
Rs. 5000/- He borrowed Rs. 10000/- from his neighbour. He has inventory
worth of Rs.30000/- He has ice cream mix unit worth of Rs. 100000/- He
has bank deposit of Rs.25000/- He bought loan from bank which must be
paid within 3 years. He also borrowed loan for land development of Rs.
200000/-.
Balance sheet of Dairy processing unit business as on -

Liabilities Amount in Assets Amount in

Rs. Rs.

Current Liability Current assets

1. Taxes payable 20000 1. Current account 25000

balance

2. Wealth tax 5000 2. Inventories 30000

3. Neighbour 10000 3. Bank deposit 25000

borrowing

35000 80000

Medium term liability Working assets

1. Bank loan 100000 1. Khoa unit 50000

2. Ice cream unit 100000

100000 150000

Long term Liability Fixed assets

1. Land development 200000 1. Land 500000

loan

200000 500000

Total Liability 335000 Total Assets 730000

Networth = Total Assets – Total Liability = Rs. 395000/-

TEST RATIOS

 The balance sheet is analysed by estimating various ratios to understand

the exact financial position and stability of the farm business.
 Current Ratio
 Current Ratio = Total current assets/ Total current
liabilities
 Current ratio indicates the capacity of the farmer to meet
immediate financial obligations (liquidity).
 A ratio of more than one indicates a favourable position of
the farm business.
 Intermediate or working Ratio
 Intermediate Ratio =Total current assets+Total
intermediate assets/ Total current liabilities+ Total
intermediate liabilities.
 Working ratio indicates the liquidity position of the farm
business over an intermediate period of time, ranging from
2 to five years.
 Here, there is time for the farmer to build up the farm
business to improve his liquidity position.
 The ratio should be more than one.
 Net Capital Ratio
 Net Capital Ratio= Total assets/ Total current liabilities.
 NCR indicates the solvency position of the farmers and
more than one indicates that the funds of the institutional
agencies are safe.
 A consistently increasing ratio over the years reveal the
sound financial growth of the farm business.
  Acid test ratio or Quick ratio
 Acid test ratio or Quick ratio= Cash receipts+Accounts
receivable+marketable securities available in more than
one year/ Total current liabilities.
 Indicates adequacy of cash and income surpluses to cover
all current liabilities during the period of one to two years.
 Current liability Ratio
 Current liability Ratio = Current liabilities/Owner’s equity
which indicates the farmer’s immediate financial
obligations against the net worth and a ratio of less than
one indicates a healthy performance of the farm business.
 Debt-equity Ratio (Leverage Ratio)
 Debt-equity Ratio = Total debts/Owner’s equity which
reflects the capacity of the farmer to meet the long term
commitments also.
 Equity-value Ratio
 Equity-value Ratio = Owner’s equity/Value of assets.
 Highlights the productivity gained by the farmer in relation
to the assets.

PROFIT AND LOSS STATEMENT (INCOME

STATEMENT)

 Profit and Loss statement is an important financial

statement employed to assess the performance of farm
business.
 It shows the operational efficiency of the farm business in
terms of receipts, expenses, profits and losses.
 Generally it is prepared by the entire farm for one
agricultural year.
 However, it may also be prepared over a period of time.
 So, we can know the trend in receipts and expenses which
indicates the success or failure of a farm business.
 Thus it contains basically three important items, namely.,
Receipts, Expenses and Net income.

Receipts

They include returns from all the enterprises in the farm.


It also includes the appreciation in the value of assets, gifts,

many other types of receipts etc.,.
 However the returns from the sale of capital assets such as
land, buildings, machinery, etc. are not counted as receipts.
Expenses

 All the expenses and the variable inputs are taken as

operational expenses which includes the interests on
working capital.
 The fixed expenses include, depreciation, interests on fixed

capital, rental value of owned land, land revenue, etc.
 The amount spent on the purchase of any capital asset does
not come under expenses.
Net Income

 It is calculated in three different ways.

 Net Cash Income
 This is worked out by reducing total
cash expenses from the total cash
receipts.
 Net Operating Income
 It is calculated by reducing the total
operational expenses from the gross
income.
 Net Farm Income
 It is worked out by deducting total
fixed expenses from the net operating
income.
 Of the three types of net incomes, net farm income is the best
measure and is most frequently used for assessing the
performance of farm business.
Last modified: Tuesday, 24 April 2012, 10:38 AM

CASH FLOW STATEMENT

 This is also known as cash flow summary or cash flow budget or flow of
funds statement.
 Cash flow statement is a summary of cash inflows and cash outflows of a
business organization in a particular period, say a season or a year.
 It is usually prepared for the future, hence the name cash flow budget.
 The merit of this particular statement is that, it helps to assess the time at
which the funds are required for farming and other allied enterprises,
sources from which these can be raised, the purpose for which the loan is
required, the need of sale and purchase of capital assets, the time and
quantum of repayment, etc.
 Cash flow statement is prepared at the beginning of the agricultural year
and checked every quarterly.
 For convenience, quarterly checks are made
 Cash Receipts
 Cash Balance
 Total Operating Sales
 Total Capital Sales
 Non-farm income
 Borrowings
 Total
 Cash Expenses
 Operating Expenses
 Capital Investment
 Family Living Expenses
 Payment of Previous year’s Debts
 Payment of ST Loans and Installments on Investment Loans
  Total
 Cash Balance is the difference between Cash Receipts and Cash Expenses
Advantages of Cash Flow Budget

 It is a summary of all the financial matters of the farmer in a

comprehensive report.
 This helps
 to estimate the total credit needs (Short term, Medium term
and Long term) of the farmer along with time and quantum;
 to plan the repayment schedule,
 in making purchases and sales at the appropriate time
thereby helping to minimize the credit dependence, so that
the farmers can keep limits to avoid wastages
 to keep ready input requirements well in advance so that
the last minute rush can be avoided
 to know the farm household’s expenditure pattern and
enable the farmer to exercise a check on farm costs,
 the farmer in preparing the farm business plans for the
ensuing years,
 the banker for revising the scale of finance, rescheduling
loans, etc., and
 finally, as a tool of financial control to the farmer.

BREAK EVEN ANALYSIS

 In any business, there is a point where total costs become equal to total
revenues and that point is called as Break Even Point and the
corresponding output is known as Break Even Output (BEO).
 This means that at this point, the business is making no profit/no loss.
 Break even point is the minimum point of average total cost.
 A farmer must produce atleast this amount of product to cover the total
cost of production.
 Whatever is produced above this point will be the profit for the farmer.
 The point where the farmer recoups his investment is the Break Even
Point.
There are two approaches to measure the Break Even Point:

 Linear Approach
 Here the sale price of output remains constant for all the
output sales.
 Here the total cost curve and the total revenue curve are
linear that is these two curves are straight lines, where the
total revenue curve cuts the total cost curve in the Break
even point and the corresponding output is known as Break
even output .
Break Even Point = Total Fixed Cost/(Selling Price
per Unit of Output – Variable Cost per Unit of Output)

 Margin of safety
 The margin of safety of a farmer is the difference between
its normal capacity and break even output.
 Margin of safety indicates the shock absorbing capacity of
the farmer in times of risk and uncertainty.
 In other words it reflects the financial strength of the
enterprise.
 Margin of safety = Normal capacity – Break even output
  Margin of safety in monetary terms = Revenue of the total
output – Revenues from Break even output.
 Curvilinear approach
 Here the total revenue changes over the period of time,
since the price changes, one output sales to the other.
 Generally the curvilinear approach is used for perennial
crops and also in business where the gestation period is
very long.
Shut down point

 Shut down point is the minimum point of average variable cost.

 A farmer must produce atleast this amount so that he will be able to cover
the variable cost of production.
 If the total revenue curve goes below this point, it is better to close the
business instead of incurring losses.
 So this point is called as Shut down point.

SCHEME

 The needy livestock farmer visits the banks in the local area and enquire
with the bank manager about the livestock projects and after having
discussion with him, he visits the technical expert.
 A scheme can be prepared by a beneficiary after consulting local
technical persons of State animal husbandry department, DRDA, SLPP,
etc. livestock co-operative society/union/federation/commercial livestock
farmers.
 If possible, the beneficiaries should also visit progressive livestock
farmers and government/military/agricultural university livestock farm in
the vicinity and discuss the profitability of livestock farming.
 A good practical training and experience in livestock farming will be
highly desirable.
 The livestock co-operative societies established in the villages as a result
of efforts by the Livestock Development Department of State Government
and National Livestock Development Board would provide all supporting
facilities particularly marketing of fluid milk.
 Nearness of livestock farm to such a society, veterinary aid centre,
artificial insemination centre should be ensured.
 There is a good demand for milk, if the livestock farm is located near
urban centre.
 The scheme should include information on land, livestock markets,
availability of water, feeds, fodders, veterinary aid, breeding facilities,
marketing aspects, training facilities, experience of the farmer and the
type of assistance available from State Government, livestock
society/union/federation.
 The scheme should also include information on the number of and types
of animals to be purchased, their breeds, production performance, cost
and other relevant input and output costs with their description.
 Based on this, the total cost of the project, margin money to be provided
by the beneficiary, requirement of bank loan, estimated annual
expenditure, income, profit and loss statement, repayment period, etc.
can be worked out and shown in the Project report.

SCRUTINY OF SCHEMES BY BANKS

  The scheme so formulated should be submitted to the nearest branch of a
bank.
 The bank's officers would assist in preparation of the scheme for filling in
the prescribed application form.
 The bank will then examine the scheme for its technical feasibility and
economic viability.
Technical Feasibility

Nearness of the selected area to veterinary/breeding/milk collection

centre and the financing bank's branch.
 Availability of good quality animals in nearby livestock market.
 Availability of training facilities.
 Availability of good grazing ground/lands.
 Green/dry fodder, concentrate feed, medicines, etc.
 Availability of veterinary aid/breeding centres and marketing facilities
near the scheme area.
 Capability of the owner and employees such as technical knowledge and
skill.
Economic Viability

 Unit cost of livestock .

 Input cost for feeds and fodders, veterinary aid, breeding of animals,
insurance, labour and other overheads.
 Output costs, i.e. sale price of livestock products, manure, gunny bags,
young ones, other miscellaneous items etc.
 Income-expenditure statement and annual gross surplus.
 Cash flow analysis
 Repayment schedule (i.e. repayment of principal loan amount and
interest).
 Other documents such as loan application forms, security aspects, margin
money requirements, etc. are also examined.
 A field visit to the scheme area is undertaken for conducting a techno-
economic feasibility study for appraisal of the scheme.
 Break Even Point, Investment Analysis (particularly, IRR), Payback
period, Marketing process.

SANCTION OF BANK LOAN AND ITS DISBURSEMENT

 After ensuring technical feasibility and economic viability, the scheme is

sanctioned by the bank.
 The loan is disbursed in kind in 2 to 3 stages against creation of specific
assets such as construction of sheds, purchase of equipments and
machinery, purchase of animals and recurring cost on purchase of
feeds/fodders for the initial period of one/two months.
 The end use of the fund is verified and constant follow-up is done by the
bank.

LENDING TERMS

 Each Regional Office (RO) of NABARD (www.nabard.org) has constituted

a State Level Unit Cost Committee under the Chairmanship of RO-in-
charges and with the members from developmental agencies, commercial
 banks and cooperative banks to review the unit cost of various
investments once in six months.
 The same is circulated among the banks for their guidance.
 These costs are only indicative in nature and banks are free to finance any
amount depending upon the availability of assets.
Margin Money

 NABARD had defined farmers into three different categories and where
subsidy is not available the minimum down payment as shown below is
collected from the beneficiaries.
S.No Category of Level of predevelopment return Beneficiary's
. Farmer to resources Contribution

1 Small Farmers Upto Rs.11000 5%

2 Medium Rs.11001 - Rs.19250 10%

Farmers

3 Large Farmers Above Rs. 19251 15%

Interest Rate

 As per the RBI guidelines the present rate of interest to the ultimate
beneficiary financed by various agencies are as under :

S.N Loan CB's SLDB/SCB

o. Amou and
nt RRB's

1 Upto 12% As determined by SCB/SLDB subject to minimum 12%

and
inclusiv
e of
Rs.250
00
2 Over 13.5% As determined by SCB/SLDB subject to minimum 12%
Rs.
25000
and
upto
Rs. 2
lakhs

3 Over As As determined by SCB/SLDB subject to minimum 12%

Rs. 2.0 determin
lakhs ed by  Security will be as per NABARD/RBI
the guidelines issued from time to time.
banks Repayment Period of Loan

 Repayment period depends upon the gross

surplus in the scheme.
 The loans will be repaid in suitable
monthly/quarterly installments usually
within a period of about 5 years.
 In case of commercial schemes it may be
extended upto 6-7 years depending on
cash flow analysis.
Insurance

 The animals may be insured annually or on

long term master policy, where ever it is
applicable.
 The present rate of insurance premium
for scheme and non scheme animals are
2.25% and 4.0% respectively.
Security

INTRODUCTION- LIVESTOCK INSURANCE

 Livestock farming involves numerous risks – natural, social and human.

  The uncertainty of livestock yields as a result of death of animals is one of
the basic risks that every farmer has to face.
 Risks are simply future issues that can be avoided or
mitigated and risk is always a probability issue whereas
uncertainty is the lack of complete certainty, that is, the
existence of more than one possibility. The true
outcome/state/result/value is not known.
 The individual farmer with limited resources is seldom able to face such
risks, and this result in disastrous losses.
 Livestock insurance, exists in many countries as an institutional response
to nature induced risk.
 The importance of risk mitigation cannot be overstated as far as Indian
farmers are concerned.
 In India, agriculture and allied activities such as animal
husbandry continues to be the main source of livelihood for
millions of households.
 A large majority of producers are small farmers.
 Livestock for their feed depends on the fodder production which depends
on the monsoon which has been uneven.
 Apart from this, there is widespread incidence of diseases, drought, floods
and fluctuations in market prices of livestock products which makes it a
risky venture.
 A recent example is the incidence of Bird flu which resulted
in a huge loss to the poultry industry.
 In this juncture, livestock insurance plays a vital role for maintaining the
sustainability of the production.
 A concrete step for introducing crop insurance at the national level was
taken only in October 1965 and livestock insurance was started after that
in late 70’s.
Present status of Livestock Insurance

 For promotion of the livestock sector, it has been felt that along with
providing more effective disease control and improvement of genetic
quality of animals, a mechanism of assured protection to the farmers and
cattle rearers needs to be devised against eventual losses of such animals.
 In this direction, the Government has approved a new centrally
sponsored scheme on Livestock Insurance.A Centrally
sponsored scheme of livestock insurance is being implemented in all the
States with
twin objectives: providing protection mechanism to the farmers and cattle
rearers against any eventual loss of their animals due to death; and
demonstrating the benefits of insuring livestock to the people. The
scheme, which was introduced in 100 selected districts on pilot basis
during 2005-06, has now been extended to 300 selected districts covering
all states. The scheme benefits farmers and cattle rearers
having milch cattle and buffaloes. In 2010-11, Rs. 20.12 crore has been
released up to December 2010 and 20.63 lakh animals were insured from
2006-07 to 2009-10.

TYPES OF INSURANCE IN LIVESTOCK SECTOR

 Livestock insurance in India is a multi-agency programme.

 General Insurance Corporation (GIC) along with its
subsidiaries – United India Insurance Company Ltd., New
India Assurance Company Ltd., Oriental Insurance
Company Ltd., and National Insurance Company Ltd., is
 carrying out livestock insurance. The insurance market was
liberalized only in the year 2000. After this, understanding
the volume of business, private sector (BASIX-Royal
Sundaram) have also entered into the market. The type of
insurance, procedure, claim details, etc. are listed below.
 Cattle Insurance
 Under this insurance, animals are covered against death
due to diseases or accident (including
fire/lightning/famine/flood cyclone) surgical operation,
strike, riot, civil commotions risk.
 Generally there are three types in it:
 Cattle insurance,
 Foetus (Unborn Calf Insurance) and
 Calf heifer rearing insurance.
 Sheep and Goat Insurance
 This scheme is also governed under Market Agreement.
 Policy provides indemnity to indigenous cross-bred and
exotic sheep and goat against death due to accident
(including fire, lightening, flood, cyclone, famine, strike, riot
and civil commotion) and disease.
 Earthquake and landslide covers are also provided.
Standard and common exclusions apply as per Cattle Policy.
 Animals are identified by means of small brass buttons ear
tags.
 Animals under scheme category enjoy certain benefits in
premium rate and claim procedure.
 Pig, Horse, Donkey, Yak, Mule insurance etc., are also available.
 Poultry/Duck Insurance
 The cover is available to the poultry/duck farm owned by
the farmers.
 Insurance covers all types of exotic and cross breed poultry
birds and ducks against death due to accident (including
fire, lightning, famine, riot and strike and civil commotion)
or diseases as per Poultry Insurance Policy.
 Animal Driven Cart Insurance
 This insurance covers carts, tongas and coaches drawn by
buffaloes, bulls, bullocks, horse, mule, donkeys and camels
and also the animals pulling it. T.P. liability and death,
disablement of the driver as per Animal driven cart
Insurance policy.

CATTLE INSURANCE

 The scheme covers the following animals, whether indigenous, exotic or

cross-bred.
 Milch Cows and Buffaloes
 Calves / Heifers
 Stud Bulls
 Bullocks (Castrated Bulls) and Castrated Male Buffaloes
 Animals within a specified age group are accepted under the Standard
Insurance Scheme.
 Sum insured under the policy will be the market value of the animal.
 Indemnity under the policy will be the sum insured or market value prior
to illness whichever is less. The indemnity is limited to 75% of sum
insured in case of a PTD claim.
 The basic premium rate per annum is 4% of the sum insured. Long term
policies are also issued with long term discounts.
  The premium rates under the policy are concessional for covering animals
under government subsidized schemes.
 Group discounts are also available.
Insurance Coverage

The policy shall give indemnity for death due to.


 Accident (due to fire, lightning, flood, inundation, storm,
hurricane, earthquake, cyclone, tornado, tempest and
famine).
 Diseases contracted or occurring during the period of the
policy.
 Surgical Operations.
 Riot and Strike.
 The policy can also be extended to cover PTD on payment of extra
premium;
 Permanent total disability which, in the case of milch cattle
result in permanent and total incapacity to conceive or yield
milk.
 PTD which in the case of stud bulls results in permanent
and total incapacity for breeding purpose.
 In case of bullocks, calves / heifers and castrated male
buffaloes results in permanent and total incapacity for the
purpose of use mentioned in the proposal form.
Documents to Effect Insurance Coverage

 Proposal form
 Veterinary health certificate from a qualified veterinarian giving the age,
identification marks, health, and market value of the animal in the
prescribed format.
Identification of Animal

 All insured animals should be suitably identified by natural identification

marks and color should be clearly noted in the proposal form and
Veterinarian's Report.
 Ear tags made of suitable material are applied to the ear of the animals
and the code number is entered into the Veterinary Health Certificate.
 Photographs of animals may be insisted in case of high value animal.
Claim Procedure

 In the event of death of an animal, immediate intimation should be sent to

the insurers and the following requirements should be furnished:
 Duly completed claim form.
 Death certificate obtained from qualified Veterinarian on
Company's form.
 Postmortem examination report if required by the
Company.
 Ear tag applied to the animal should be surrendered. The
condition of 'No Tag- No claim' will be applied if the tag is
not surrendered.
 Claim procedure for PTD claim
 A certificate from the qualified veterinarian to be obtained.
 The animal will be inspected by the company's Veterinary
Officer also.
 Complete chart of treatment, medicines used, receipts, etc.
should be submitted.
 Admissibility of claim will be considered after two months
of Veterinary Doctor / Company Doctor's report.
 The indemnity is limited to 75% of sum insured.
 SHEEP AND GOAT INSURANCE

Highlights

 All indigenous, crossbred and exotic sheep and goat will be covered under
the Scheme.
Scope

The policy provides indemnity against death of sheep and goats due to
accident including fire, lightning, flood, cyclone, famine, earthquake,
landslide, strike, riot or diseases contracted or occurring during the
period of insurance.
Sum Insured

 The market value of sheep and goats varies from breed to breed, from
area to area and from time to time.
 The examining veterinarian's recommendations is considered as the
proper guide for acceptance of insurance as well as for settlement of
claims.
 Sum insured will not exceed 100% of market value.
Claim Procedure

 In the event of death, immediate intimation should be given to the

Company and the Insured should furnish the following documents and
required information.
 Duly completed claim form.
 Death certificate from a veterinarian on Company's form
 Post-mortem examination report, if required by the Company.
 Ear tag wherever applicable.

POULTRY INSURANCE

Highlights

 This is a comprehensive insurance scheme applicable to poultry farms

consisting of layer birds, broiler birds and parent stock (Hatchery) which
are exotic and crossbred.
 All birds in a farm should be covered. After issuing policy, if additional
birds are introduced in the farm, immediate notice to be given to insurer
otherwise claim will be repudiated.
 The scheme is applicable to poultry farms consisting of minimum number
of birds as specified.
The scheme is available for insuring birds in the following age groups

Broilers  1 day to 8 weeks

 1 day to 6 weeks

Layers  1 day to 20 weeks

 21 weeks to 72
weeks
 1 day to 72 weeks

Hatchery Birds (Parent  1 day to 72 weeks

 Stock)

 The premium rates are applicable on per cent basis which are applicable
to the peak value of birds in the applicable categories.
 The sum insured is the peak value and for broilers it is Rs 45 and for
layers Rs 75. There is a week wise valuation table in-built in the policy
which is applied for calculating indemnity. In case of parent ,stock the
same is negotiable.
 The policy is charactersied by excess and final indemnity is restricted to
80% (60% in case of Gumboro).
 The scheme is characterized by No claim discounts as well as good
feature discount.
Insurance Coverage

 The policy shall provide indemnity against death of birds due to accident
(including fire, lightning, flood, cyclone, storm, tempest, earthquake,
strike, riot, act of terrorism) or diseases contracted or occurring during
the period of insurance subject to the exclusions.
How to Effect Insurance

 Proposal form.
 Veterinary Health Certificate from a qualified veterinarian.
 All birds in the farm should be covered. Farm should follow standard
package of practices, vaccination schedule, deworming and debeaking.
 Farm should maintain essential records as per insurers specifications.
Claim Procedure

 In the event of death of birds, immediate intimation should be given to the

Company and the Insurer should be supplied with the following
documents and required information:

 Duly filled in claim form.

 Vet. P.M. Report for sample birds.
 Daily records of mortality, feeding, etc.
 Purchase invoices for the birds.
 Any other point to substantiate the loss like photographs,
medical bills, etc. as and when required.
 In case of alarming death/outbreak of epidemic nature, immediate notice
within 12 hours should be given to the Company and all birds should be
segregated and produced to the representative of the Company or to any
person authorised by the Company for inspection.
 Daily mortality details should be sent to the Company on weekly basis
failing which report will be treated as nil for that particular week.
 Delay in reporting of the claim should be avoided and if there is delay for
more than three days the claim would be treated as non-standard.
 In case of doubtful claims/ farms for which claim ratio is adverse,
Technical Report from an expert may be insisted for settlement of claim.

PROCUREMENT MANAGEMENT

 Procurement is the acquisition of goods and/or services at the best

possible total cost of ownership, in the right quality and quantity, at the
 right time, in the right place and from the right source for the direct
benefit or use of companies, individuals, or even governments, generally
via a contract.
 Procurement covers the act of buying goods and services whereas
acquisition is a much wider concept than procurement, covering the
whole life cycle of acquired systems.
 Simple procurement may involve nothing more than repeat purchasing.
Complex procurement could involve finding long term partners – or even
'co-destiny' suppliers.
 Economic analysis methods such as cost-benefit analysis or cost-utility
analysis could be applied for purchasing decisions, when the data is
accurate and available.

Characteristics of Major Categories to be procured under Direct and Indirect Procurement

Feature Raw Material and Maintenance, Repair and Operating Capital Goods and
s Production Goods (MRO) Supplies Services

Quantity Large Low Low

Frequen High Relatively high Low

cy

Value Industry specific Low High

Nature Operational Tactical Strategic

Example Feed, Fodder, Spare parts in feed machines and Milking machine, Feed
s Medicines equipments. Example for Milking chaffer Computers,
machine, Feed chaffer, Hatcher etc., Hatcher etc.,

 Direct procurement is seen in manufacturing settings only.

 Direct procurement directly affects the production process of
manufacturing firms.
 It comprises a wide variety of goods and services, from standardised low
value items like office supplies and fuels to complex and costly products
and services like milking machine and consulting services of Veterinary
Experts.

PROCUREMENT SYSTEMS

Procurement Systems

 Another common procurement issue is the timing of purchases.

 Just-in-time (JIT) is a system of timing the purchases of consumables such
as straw, fodder in quantities to meet daily procurement needs. In this
system, inventories will not be maintained.
 Just-in-time is commonly used by Japanese companies but widely adopted
by many global manufacturers from the 1990s onwards.
 PROCUREMENT PROCESS

 Procurement may also involve a bidding process i.e, Tendering.

 A company may want to purchase a given product such as Chaff cutter or
service such as Vaccination of birds.
 Then the farmer or Company is required to state the product/service
desired and make the contract open to the bidding process.
 They may have ten submitters that state the cost of the product/service
they are willing to provide.
 Then, the farmer or Company will usually select the lowest bidder.
 If the lowest bidder is deemed incompetent to provide the desired
product/service, they will go far the next best price, and is competent to
provide the product/service.

PROCUREMENT STEPS

 First, details about the suppliers capable of fulfilling the requirements

have to be gathered.
 Contact has to be established with the identified suppliers for further
details such as price, quantity etc.,
 Then discussions and negotiations with the suppliers would be
undertaken for price, availability, quality etc.,
 After, finalization of the deal, the product/services would be delivered and
details such as shipment, delivery, and payment for the suppliers are
completed, based on contract terms had been fulfilled.
 The farmer/company would then utilize the products/services and would
also evaluate the products/services.
 Finally, renewal of contract would be established based on the
performance of products.

QUALITY MANAGEMENT

 Quality management consists of three main components: quality control,

quality assurance and quality improvement.
 Quality management is focused not only on product quality, but also the
ways to achieve it.
 Quality management therefore uses quality assurance and control of
processes as well as products to achieve more consistent quality.

ORIGIN

 Customers recognize that quality is an important attribute in products

and services.
 Suppliers recognize that quality can be an important differentiator
between their own offerings and those of competitors (quality
differentiation is also called the quality gap).
 In the past two decades this quality gap has been greatly reduced
between competitive products and services.
  This is partly due to the contracting (also called outsourcing) of
manufacture to countries like India and China, as well internationalization
of trade and competition.

QUALITY IMPROVEMENT

There are many methods for quality improvement. Each company or country or
production system follows different approaches based on their own needs.
ISO 9004 :2000 — Guidelines for performance improvement.

 ISO 15504 -4: 2005 — Information technology — Process assessment —

Part 4: Guidance on use for process improvement and process capability
determination.
 QFD — Quality Function Deployment, also known as the House of Quality
approach.
 Kaizen — Japanese for change for the better; the common English usage
is continual improvement.
 Zero Defect Program — created by NEC Corporation of Japan, based upon
Statistical Process Control and one of the inputs for the inventors of Six
Sigma.
 Six Sigma — 6σ, Six Sigma combines established methods such as
Statistical Process Control , Design of Experiments and FMEA in an
overall framework.
 PDCA — Plan, Do, Check, Act cycle for quality control purposes. (Six
Sigma's DMAIC method (Design, Measure, Analyze, Improve, Control)
may be viewed as a particular implementation of this.)
 Quality circle — a group (people oriented) approach to improvement.
 Taguchi methods — statistical oriented methods including Quality
robustness, Quality loss function and Target specifications.
 The Toyota Production System — reworked in the west into Lean
Manufacturing .
 Kansei Engineering — an approach that focuses on capturing customer
emotional feedback about products to drive improvement.
 TQM — Total Quality Management is a management strategy aimed at
embedding awareness of quality in all organizational processes. First
promoted in Japan with the Deming prize which was adopted and adapted
in USA as the Malcolm Baldrige National Quality Award and in Europe as
the European Foundation for Quality Management award (each with their
own variations).
 TRIZ — meaning "Theory of inventive problem solving"
 BPR — Business process reengineering , a management approach aiming
at 'clean slate' improvements (That is, ignoring existing practices).
 HACCP - Hazard Analysis and Critical Control Points

QUALITY STANDARDS

 The International Organization for Standardization ( ISO ) created

the Quality Management System ( QMS ) standards in 1987. They were
the ISO 9000:1987 series of standards comprising ISO 9001:1987, ISO
9002:1987 and ISO 9003:1987; which were applicable in different types of
industries, based on the type of activity or process: designing, production
or service delivery.
 The standards are reviewed every few years by the International
Organization for Standardization. The version in 1994 was called the ISO
 9000:1994 series; comprising of the ISO 9001:1994, 9002:1994 and
9003:1994 versions.
 The ISO 9004:2000 document gives guidelines for performance
improvement over and above the basic standard (ISO 9001:2000). This
standard provides a measurement framework for improved quality
management, similar to and based upon the measurement framework for
process assessment.
 The Quality Management System standards created by ISO are meant to
certify the processes and the system of an organization, not the product
or service itself. ISO 9000 standards do not certify the quality of the
product or service.
 In 2005 the International Organization for Standardization released a
standard, ISO 22000, meant for the food industry. This standard covers
the values and principles of ISO 9000 and the HACCP standards. It gives
one single integrated standard for the food industry and is expected to
become more popular in the coming years in such industry.

STANDARDS

A Standard specifies what basic quality a product must have to be

consistent with the established characteristics.
 Standards are set with regard to the shape, size, colour, flavour,
composition, weight, etc.
 A technical standard may be developed privately or unilaterally, for
example by a corporation, regulatory body, military, etc.
 Standards can also be developed by groups such as trade unions, and
trade associations.
 Standards organizations often have more diverse input and usually
develop voluntary standards: these might become mandatory if adopted
by a government, business contract, etc.
Geographic levels

When a geographically defined community needs to solve a community-wide

coordination problem , it can adopt an existing standard, or produce a new one. The
main geographic levels are:

 National standard: by National Standards Organizations.

 Regional standard: Example- CEN standards.
 International standard: Example- ISO and ASTM International .
 Standards often get reviewed, revised and updated.
 It is critical that the most current version of a published
standard be used or referenced.
 The originator or standard writing body often has the
current versions listed on its web site.

STANDARDISATION FACILITIES IN INDIA

 Directorate of Marketing and Inspection has a set up for quality

certification of agricultural produce through the net work of 22 Regional
Agmark Laboratories at different places in the country with Central
Agmark Laboratory, Nagpur as the apex laboratory.
 250 technical persons are working in these laboratories.
  These laboratories have been established to formulate standards and
conduct physical and chemical analysis of agricultural and allied
commodities in accordance with APGM Act 1937.
Central Agmark Laboratory has the following specialized commodity divisions for
carrying out research and standardization work more efficiently.

 Agricultural Products (Foodgrains)

 Spices and Essential Oils
 Oils and Fats
 General Chemistry
 Livestock Products including microbiology
 Toxicology
The main functions of Central Agmark Laboratory are:

 To work as apex laboratory for challenged sample under APGM Act 1937.
 To evolve/standardize methods of analysis/tests of agricultural and allied
commodities and meat products.
 To advise on technical matters to various quality control agencies and
State Government Grading Laboratories, in relation to grading of various
agricultural commodities, food under Agmark.
 Formulation of specifications for new commodities for bringing under the
purview of Agmark.Revision of specifications of various agricultural, allied
products, meat products etc. periodically.
 Training to the personnel engaged in the analysis of various commodities
under Agmark.
 To create awareness with regard to grading, standardisation and quality
of various agricultural and food products.
The Regional Agmark Laboratories are engaged in analysis of agricultural and food
commodities for evaluating the quality of the product.

 The main activities of Regional Agmark Laboratories are as follows:

 Analysis of commodities covered under Agmark.
 Technical advice to approved grading laboratories
 Training of Grading chemists of the private approved lab.,
State Grading Lab and other similar organization.
 Associate with Central Agmark Laboratory, in collaborative
studies/research/standardization work of various agricultural,
food and livestock products.
 To organize awareness programmes in grading,
standardisation and quality control.
AGMARK

Quality Grading and Certification for : Export and Domestic Trade


Farm Level Grading : Grading at Producer's Level.

Quality Certification Mark : AGMARK

Acts as : Third Party Guarantee to Quality Certified.

Legal Backup : Agricultural Produce (Grading and Marking ) Act, 1937 as

amended in 1986.
AGRMARK Grades given for the following livestock products

 Animal casings
 Bristles
 Creamery butter
 Ghee
 Goat hair
 Hides
 Raw meat (chilled or frozen)
 Skins
 Table eggs and
  Wool

PACKAGING

Packaging is a marketing necessity - consumer require explanation, assurance,

encouragement, confidence, praise, under keen competition customer needs an
effective means to recognize a difference and establish preference that will ensure
repeat purchase. The package should have some of the following components.

 attract immediate attention

 build consumer confidence
 tell true product story at a glance
 be clean and sanitary
 should have protective seal
 be convenient to use
 should look like a good value to the consumer

Importance of packing

Packaging and package labeling have several objectives

 Physical protection
 Barrier protection
 Grouping
 Providing information
 Building value
 Safety
 Usability
 Portion control
Packaging types

 Primary packaging is the material that first envelops the product and
holds it. This usually is the smallest unit of distribution or use and is the
package which is in direct contact with the contents. Eg. : Aluminum foil
covering milk sweets
 Secondary packaging is outside the primary packaging – perhaps used to
group primary packages together.
 Tertiary packaging is used for bulk handling , warehouse storage
and transport shipping. The most common form is a palletized unit
load that packs tightly into containers .

RETAIL MARKETING

 Retailing consists of the sale of goods or merchandise from a fixed

location, such as a department store, egg shop, meat shop, or by post, in
small or individual lots for direct consumption by the purchaser.
 Retailing may include subordinated services, such as
delivery. Purchasers may be individuals or businesses /
organisations (Institutional Buyers).
 In commerce , a 'retailer' buys goods or products in large quantities from
manufacturers or importers, either directly or through a wholesaler and
then sells smaller quantities to the end-user.
 Retailers are at the end of the supply chain.
  Manufacturing marketers see the process of retailing as a necessary part
of their overall distribution strategy.
 The term 'retailer' is also applied where a service provider services the
needs of a large number of individuals, such as a public utility, like
electric power.
Marketing Channel

 Marketing channel is defined as a path through which a product moves

from producer's farm gate to consumer plate.Marketing of agri and
livestock commodities is different from manufactured or industrial goods.
Most of the agri / livestock products are perishable in nature and the
period of perishability varies from a few hours to few months. Most of the
farmers are landless , marginal or small . Therefore the produce of
individual is very less. Lastly, most of the farm products are processed
before they are used, purchased and consumed by the ultimate
consumers.
 Selling of perishable products like fruits, vegetables, and livestock
products (milk, meat, and egg) require fast movement of the commodities
from the producers to the ultimate consumers. Marketing channel can be
defined as a path through which product moves from producer to
consumer. Hence, a short channel of distribution will be an effective tool
to reach the target consumers. However, distribution of products having
lower unit value and high turn over like eggs involves a large number of
middlemen.
 The channels of distribution serve as a network, which creates value for
the consumer by generating possession, time and place utilities. There
are number of middleman and merchants, including Government and co-
operative agencies, who act as links between the producers and
consumers.
The possible visible channels of distribution for Milk is given below:

TRANSFER MECHANISM

There are several ways in which consumers can receive goods from a retailer:

 Counter service
 Delivery (commerce)
 Direct marketing
 Online shopping
 Door-to-door
 Self-service

RETAIL PRICING

 The pricing technique used by most retailers is cost-plus pricing, which

involves adding a markup amount (or percentage) to the retailer's cost.
 Another common technique is suggested MRP (Maximum retail price),
which simply involves charging the amount suggested by the
manufacturer and usually printed on the product by the manufacturer.

DISCOUNT STORES

 Discount stores are outlets developed by firms to sell their products,

usually at reduced prices.
 DESTINATION STORE

 A destination store is one that customers will initiate a trip specifically to

visit, sometimes over a large area.
 These stores are often used to 'anchor' a shopping mall or plaza,
generating foot traffic, which is capitalized upon by smaller retailers.
 Eg. Trade fair, Exhibitions.

INTRODUCTION

 Sales operations are a set of business activities and processes that help a
sales organization run effectively, efficiently and in support of business
strategies and objectives.
 Sales operations may also be referred to as Sales Ops, Sales Support or
Business Operations.

BENEFITS

 Helpful in making decisions

 Quality improvement
 Improvement in productivity
 Improvement in sales performance
 Address workers issues
 Improve employee morale
 Increased profit

SALES MANAGEMENT

 Sales management is the process of achieving an organization's sales

goals in an effective and efficient manner through planning, staffing,
training, leading and controlling organizational resources.
 Revenue, sales, and sources of funds fuel organizations and the
management of that process is the most important function.

SALES MANAGEMENT PROCESS

 Conception - What will be offered?

 Planning - How to improve sales?
 Execution - When and at what pace and scale?
 Control - How will feedback and contingencies be acted upon?
 Feedback - How to integrate and reply back activity to activity? This
model is cyclical and continuous process.
 MARKETING OF SERVICES

 Services marketing is marketing based on relationship and value. It may

be used to market a service such as that of veterinary service or a product
like egg.
 Marketing a service-based business is different from marketing a goods-
based business. There are several major differences, such as
 Services are intangible
 Service marketing may be based on the value of the
individual
 Services of different types can’t be compared quantitatively
 Services could not be returned
Service

 A service is the action of doing some activity for someone or some

organisation. It is largely intangible (i.e. not material).
 A product is tangible (i.e. material) since one can touch it, feel it and own
it.
 A service tends to be an experience that is consumed at the point where it
is purchased, and cannot be owned since it quickly perishes.
A person could go to a dairy farm one day and have excellent service, and then return
the next day and have a poor experience. So often marketers talk about the nature of a
service as:

 Inseparable - from the point where it is consumed, and from the provider
of the service.
 Intangible - and cannot have a real, physical presence as does a product.
For example, livestock insurance may have a certificate, but the financial
service itself cannot be touched i.e. it is intangible.
 Perishable - in that once it has occurred it cannot be repeated in exactly
the same way. For example, once a Veterinarian has offered treatment for
some diseases, it is over and you can not store his services and re-utilise
them at a later stage.
 Variability- since the human involvement of service provision means that
no two services will be completely identical. For example, for the same
disease different Veterinarians would offer different treatments and the
same Veterinarian may offer different treatments for the same disease
during different stages and different periods of time.
 Right of ownership - is not taken to the service, since you merely
experience it. For example, a Veterinarian may treat your pets, but you do
not own the service of the Veterinarian or his medicines. You cannot sell
it on once it has been consumed, and do not take ownership of it.
 SUSTAINABLE LIVESTOCK PRODUCTION

Introduction

 Livestock play a vital role in rural economy.

 The combination of livestock and crop farming enables complementarity
through productive utilisation of farm by-products and conservation of
soil fertility, thus increasing rural farm income.
 Apart from providing food products like milk, egg and meat, livestock
sector generates productive employment and valuable supplementary
income to the vast majority of rural households, majority of whom are
small and marginal farmers and landless labourers.
 Growing human population, increasing urbanisation, rising domestic
incomes and changing lifestyles in the country have led to increasing
demand for livestock products.
 Livestock like cattle (bulls and cows), buffaloes, sheep and goat are an
integral part of India’s socio-economic life. Animal husbandry is a part of
agricultural economy. It directly supports about five per cent (20 million)
of our population. India has two per cent of the geographical area and
accounts for 15 per cent of livestock population (400 million). Cows and
buffaloes comprise 56.5 per cent of world population.India ranks first,
second, third and fifth in buffalo, cattle and goat, sheep and poultry
population in the world, respectively (Economic Survey of India, 2008-09).
 It has been estimated in official reports that capacity of land to support
grazing is 31 million, whereas the population, which grazes, is 90 to 100
million. It has also been calculated that fodder required for total
population is 1800 million tons (MT) per annum whereas the total fodder
available is 900 MT.
 For sustainable rural livelihood, resource poor farmers have to overcome
technical, economic and social constraints to take benefit of increasing
demand of livestock products and compete with commercial producers.
There are indications that this can be done in developing countries by
complete understanding of the different production systems evolved over
a period of time and introduction of improved and appropriate
technologies eliminating the constrained faced by the farmers.
Importance of Livestock

 Livestock sector employs over 11 million rural poor and women in

principal status and eight million in subsidiary status, which is about 5
per cent of total working force in the country. According to estimates of
CSO (2009), the value of output from livestock and fisheries sector
together was about Rs. 2, 82,779 crore during 2007-08, which is 31.6 per
cent of the value of output from agricultural and allied sectors. The
contribution of these factors in the total GDP during 2007-08 was 5.21 per
cent.
 During 2009-10, the country produced 112.5 million tonnes of milk 59.8
billion eggs, 43.2 million kg of wool and 4.0 million tonnes of meat from
the organized sector (Economic Survey of India, 2010-11).
 The livestock and fisheries sector contributed over 4.07 per cent to the
total GDP during 2008-09, which is 29.7 per cent of the value of output
from agricultural and allied sectors.
 The livestock sector is one of the fastest growing parts of the agricultural
economy, the FAO report underlines. Globally, livestock contributes 15
percent of total food energy and 25 percent of dietary protein. Products
from livestock provide essential micronutrients that are not easily
obtained from other plant food products.
Livelihoods

Strong demand for animal food products offers significant opportunities

for livestock to contribute to economic growth and poverty reduction. But
many smallholders are facing several challenges in remaining competitive
with larger, more intensive production systems. FAO recommends that
smallholders should be supported in taking advantage of the
opportunities provided by an expanding livestock sector and in managing
the risks associated with increasing competition.
Environment and Eco Jobs

 There is a need to enhance the efficiency of natural-resource use in the

livestock sector and to reduce the environmental footprint of livestock
production. It has to be ensured that continued growth in livestock
production does not create undue pressure on ecosystems, biodiversity,
land and forest resources and water quality and does not contribute to
global warming. Market-based policies, such as taxes and fees for natural-
resource use or payments for environmental services, would encourage
 producers to ensure that livestock production is carried out in a
sustainable way. Livestock can play an important role in both adapting to
climate change and mitigating its effects on human welfare, FAO said. To
realize the sector's potential to contribute to climate change mitigation
and adaptation based on enhanced capacities to monitor, report and
verify emissions from the livestock production new technologies will need
to be developed.
 A Eco/green job, also called a green-collar job is, according to the United
Nations Environment Program "work in agricultural, manufacturing,
research and development (R&D), administrative, and service activities
that contribute(s) substantially to preserving or restoring environmental
quality. Specifically, but not exclusively, this includes jobs that help to
protect ecosystems and biodiversity; reduce energy, materials, and water
consumption through high efficiency strategies; de-carbonize the
economy; and minimize or altogether avoid generation of all forms of
waste and pollution. In 2007 the United Nations Environment Program
(UNEP), the International Labor Organisation (ILO),and the International
Trade Union Confederation (ITUC) jointly launched the Green Jobs
Initiative. The International Employers Organisation (IEO) joined the
Initiative in 2008. Now, Corporate Social Responsibility (CSR) is also
stressed in rejuvenating the environment and they are also contributing
both qualitatively and quantitatively in improving the environment.
Sustainable livestock production strategies

 Proper management and nutrition are essential to the health and well
being of domestic animals; particularly livestock species that are
expected to maintain a high level of production while relying on livestock
owners to meet all their physiological and behavioral needs. As livestock
production becomes more intensified, the need to ensure that
management and nutrition do not limit only to animal health or
productivity increases. Best management practices have to be followed in
biosecurity management of livestock and also in handling livestock
manure.
 Management and nutrition are also central to the prevention and control
of many infectious and noninfectious diseases besides high-level
production performances. Although infectious diseases require the
presence of a specific infectious organism(s), the mere presence of the
causal microbe is not usually sufficient to assure that disease will develop.
Other environmental and host factors influence whether the infected
animal develops clinical disease or has reduced productivity as a result of
the infection.
 The most effective method of preventing infectious disease is to eradicate
and exclude the organism(s) causing the disease. Often, this is impossible
or impractical. It becomes necessary to control the infectious disease by
minimizing circumstances that favor the spread of the infectious agent,
mitigating the environmental circumstances that contribute to
development of the disease in the presence of the infectious agent, and
minimizing circumstances that increase the host’s susceptibility.
 Proper nutritional management is essential to animal health and
productivity and thereby reduce the uses of scarce resources which are
essential for sustainability. Nutrition plays a significant role in influencing
the animal’s susceptibility to disease as well as in managing certain
diseases . Rations/diets must be formulated to provide for the basic
physiologic needs (Eg. energy, protein, fats, carbohydrates, vitamins,
minerals) of the animal and to ensure optimal growth and productivity.
 Loss of biodiversity is the major threat to the global eco-system.
 Watershed management can partly take care of such ill-effects, which
consists of conservation of soil, biomass and water resources,
 development of reclaimable areas, introduction of improved crop
production practices, etc.
Sustainable production measures

 Many different management practices can improve a livestock operation’s

production efficiency and reduce greenhouse gas emissions. Improved
livestock management reduces atmospheric concentrations of carbon
dioxide through the mechanism of soil carbon sequestration on grazing
lands.
 As plants grow, they remove carbon dioxide from the atmosphere. Even
though grazing cattle harvest a large portion of the plant material,
through good management residues accumulate and increase the amount
of organic matter in the soil. Some of this organic matter will remain in
the soil or plant root system for long periods of time instead of being
released back into the atmosphere as carbon dioxide. Some of the most
effective practices include
Improving grazing management

 Soil testing, followed by the addition of proper amendments and

fertilizers
 Supplementing cattle diets with needed nutrients
 Developing a preventive herd health program
 Providing appropriate water sources and protecting water quality
 Improving genetics and reproductive efficiency
Livestock Waste Management

Livestock waste contains many microorganisms such as bacteria, viruses,

and protozoa. Some of these microorganisms do not cause sickness in
animals or humans. However, some others are pathogens, meaning they
are capable of causing disease in animals and/or humans. Irrespective of
the size of their farms, all livestock producers have an important role in
limiting pathogen movement from their operation to the environment.
Waste management provide livestock producers to control pathogens in
their production system. The Best Management Practices (BMPs) are
pertaining to animal management and housing, dietary modifications,
production management, land application of manure, and the chemical
and biological treatment of stored manure.
Animal Husbandry and Green House Gases

 The two major green house gases produced by animal husbandry are
methane and nitrous oxide. Their concentrations have increased
considerably over the past 120 years. In this period the atmospheric CH4
concentration has more than doubled and the N20 concentration has
risen by more than 30 per cent. One source of CH4 in animal husbandry is
the fermentation of feed in the stomach of ruminants and non-ruminants.
Due to their ability to digest cellulose, ruminants account for the greater
share in the production of CH4. Another source of CH4 associated with
animal husbandry is the decomposition of animal wastes. These mainly
consist of organic material, which produces CH4 when decomposed under
anaerobic conditions. The source of nitrous oxide due to animal
husbandry is the decomposition of animal wastes. Any further
intensification of animal husbandry will increase the amount of animal
waste, making a further increase in N20 emissions likely.

INTERVENTIONS FOR SUSTAINABLE LIVESTOCK

 PRODUCTION

 Policy instruments fall into three main groups: (a) price policies, (b)
institutional policies, and(c) policies promoting technological change.
Price policies are the responsibility of national governments, although
they may be influenced by international agencies, such as customs
unions,the World Bank or the WTO. However, national and local
governments, private individuals or associations, development agencies
and Non-Government Organizations introduce institutional and
technological changes.

 Price policies can be categorized into (i) trade policy, (ii) exchange rate
policy, (iii) tax and subsidy policy, and (iv) direct interventions such as
floor and fixed prices. Trade policy, from a developing country’s
perspective, should include continued pressure, through international
fore such as the WTO, on developed countries to reduce tariffs and other
barriers aimed at supporting their own producers. However,
greater benefits might be achieved by reducing levels of protection for
industrial s ectors within the developing countries, as such protection
raises input costs and effectively taxes agricultural producers. Taxes,
subsidies and governments’ direct market interventions have usually
failed to bring lasting benefits. There remains a case for limited use of
subsidies for disaster relief and to promote the use of new inputs, such as
vaccines or drugs. Alternatively moderate taxes on livestock producers
might be used to recover costs of providing public goods such as disease
control or eradication programmes.
 Policies for the promotion of appropriate institutions have a major impact
on livestock development. The authors of a review of about 800 livestock
development projects found that most had failed to bring about significant
sustainable improvements in livelihoods of the poor.
 Institutional development is also needed for the provision of credit,
animal health services and genetic material. The introduction of new
technology must be accompanied by the strengthening of the institutional
framework required for its implementation. The other key area, where
institutional
change is essential for the success of livestock development, is that of
marketing, including transport, processing and selling. As marketing
activities exhibit economies of scale, large commercial operations are
most likely to be cost-effective. Unfortunately, in negotiating contracts
with such companies, small-scale producers are in a weak position,
lacking market power and information on patterns of supply, demand and
prices. Thus in promoting institutional development, there is a need for
dissemination of market information, and encouragement of co-operative
group action and participation by small-scale producers to strengthen
their bargaining position.
 Technological change may be promoted by supporting research and
development and the dissemination of information to farmers. Public
funding for agricultural research, and particularly for livestock research,
has declined over recent decades. Since much research output provides
public goods it is unlikely to receive adequate funding from the private
sector. The decline in public sector funding should therefore be reversed.
 An appropriate institutional framework must be developed to integrate a
farmer participatory systems approach with science-based adaptive and
applied research, depending on collaboration between producers, and
natural and social scientists. The national research organizations must
take responsibility for research prioritization, ensuring that it is
appropriate for relative resource availability, taking into account the
 needs of the poor, and coordinating donor assistance. To improve food
security in a sustainable manner, developing countries will often require
an investment in their agricultural research system at a level of 1 percent
of the value of agricultural output over the short term and 2 percent in
the long term.
 Areas of research deserving attention include animal and veterinary
public health measures, improvements in forage crops and utilization of
crop by-products, and improvements in husbandry and management of
production systems. Local breed improvement is a slow process and
crossbreeding with, or adopting, exotic breeds generally more easily
achieve increases in production. Technical research has to be
complemented by socio-economic research into the institutional
framework for the allocation of natural resources, credit, and labor hire,
the delivery of inputs and the processing and marketing of livestock
products. Research is needed to describe and analyze the strengths and
weaknesses of existing institutions and to propose and test alternatives
for improvement. In addition, socio-economists are needed to contribute
to the research prioritization process, by assessing likely costs
and benefits of proposed research projects.
Conclusions

 Human progress depends on the judicious utilization of animals and

nature’s resources in a balanced way.
 In sheer self-interest, proper animal care is a must.
 Massive and intensive campaigns are required to create awareness
among farmers that better animal care would lead to tangible
economic benefits to them by way of increased income.
 This can only be achieved through better technology inputs and
management.
 The enormous economic benefits, arising from improvement in
productivity, would adequately justify the investment required for
modernizing the existing system.
 Thus modernization and management of the livestock sector will pave the
way for sustainable development and protection of the Environment.

FINANCIAL CAPITAL VS REAL CAPITAL

 Financial capital refers to the funds provided by lenders (and investors) to

businesses to purchase real capital equipment for producing
goods/services.
 Real capital comprises physical goods that assist in the production of
other goods and services such as milking machine, chaff cutter etc., .
 Financial capital is provided by lenders for a price: interest.
 Furthermore, financial capital, or economic capital, is any liquid medium
or mechanism that represents wealth , or other styles of capital.
 It is, however, usually purchasing power in the form of money available
for the production or purchasing of goods, etcetera.
 Capital can also be obtained by producing more than what is immediately
required and saving the surplus.
 Financial capital may be subcategorized as
 Economic or productive capital necessary for production
 Signaling capital which signals a company's financial
strength to shareholders, and
 Regulatory capital which fulfills capital requirements.
 ADVERTISING

 Advertising is a form of communication that typically attempts to

persuade potential customers to purchase or to consume more of a
particular brand of product or service.
 Mass production necessitated mass consumption, and this in turn
required a certain homogenization of consumer tastes for final products.

CHARACTERISTICS AND OBJECTIVES

OF ADVERTISING

The important features of Advertising are as follows

 Paid form of public presentation and expressive promotion of ideas

 Aimed at masses
 Manufacturer has the control over what goes into advertisement
 Pervasive and impersonal medium
Objectives of Advertising
 Maintain demand for well-known goods
 Introduce new and unknown goods
 Increase demand for well-known goods/products/services
 Penetration of newer market
 Create awareness

FUNCTIONS AND ADVANTAGES OF

SUCCESSFUL ADVERTISING

 Task of the salesman made easier

 Maximize sales
 Publicity
 Brand building
 Create awareness
 Persuade buyers
 Introduction of new product
 To capture newer market
 Enable market leadership
 To face competition
 To inform changes
 To counteract to competitors advertisement
 To enhance goodwill

REQUIREMENTS OF A GOOD ADVERTISEMENT

 Attract immediate attention (awareness)

 Able to impress the audience within the stipulated time
 Focus on its own strength and it's comparative advantage
 Stimulate interest
 Create a desire
 Bring about action

TYPES OF ADVERTISING

 Commercial advertising media can include wall paintings, billboards,

street furniture components, printed flyers and rack cards, radio, cinema
and television adverts, web banners, mobile telephone screens, shopping
carts, web popups, skywriting, bus stop benches, human billboards,
magazines, newspapers, town criers, sides of buses, banners attached to
or sides of airplanes ("logojets"), in-flight advertisements on seatback tray
tables or overhead storage bins, taxicab doors, roof mounts and
passenger screens, musical stage shows, subway platforms and trains,
elastic bands on disposable diapers, stickers on apples in supermarkets,
shopping cart handles (grabertising), the opening section of streaming
audio and video, posters, and the backs of event tickets and supermarket
receipts.
 Any place an "identified" sponsor pays to deliver their message through a
medium is advertising.
Covert advertising
 Covert advertising is when a product or brand is embedded in
entertainment and media.
 For example, in sports events such as foot ball matches and cricket
matches players wear the logos of companies in T-shirts, Bats etc.,.
Television commercials
 The TV commercial is generally considered the most effective mass-
market advertising format, as is reflected by the high prices TV networks
charge for commercial airtime during popular TV events.
 The majority of television commercials feature a song or jingle that
listeners soon relate to the product.
Celebrity advertising
 This type of advertising focuses upon using celebrity power, fame, money,
popularity to gain recognition for their products and promote specific
stores or products.
Global advertising
 Advertising has gone through five major stages of development: domestic,
export, international, multi-national, and global.
  For global advertisers, there are four, potentially competing, business
objectives that must be balanced when developing worldwide advertising:
building a brand while speaking with one voice, developing economies of
scale in the creative process, maximising local effectiveness of ads, and
increasing the company’s speed of implementation.

DECIDING ADVERTISING BUDGET

Approaches to setting the advertising budget

Method - 1 : Fixed percentage of sales

 In markets with a stable, predictable sales pattern, some companies set

their advertising spend consistently at a fixed percentage of sales.
 This policy has the advantage of avoiding an 'advertising war' which could
be bad news for profits.
 However, there are some disadvantages with this approach.
 This approach assumes that sales are directly related to advertising.
Method - 2 : Same level as competitors

 This approach has widespread use when products are well-established

with predictable sales patterns.
 It is based on the assumption that there is an 'industry average' spend
that works well for all major players in a market.
 A major problem with this approach (in addition to the disadvantages set
out for the example above) is that it encourages businesses to ignore the
effectiveness of their advertising spend – it makes them “lazy”.
Method - 3 : Task

 The task approach involves setting marketing objectives based on the

“tasks” that the advertising has to complete.
 These tasks could be financial in nature (Eg. achieve a certain increase in
sales, profits) or related to the marketing activity that is generated by the
campaigns. For example:
 Numbers of enquiries received quoting the source code on the
advertisement
 Increase in customer recognition / awareness of the product or brand
(which can be measured)
 Number of viewers, listeners or readers reached by the campaign
Method - 4 : Residual

 The residual approach, which is perhaps the worst of all, is to base

the advertising budget on what the business can afford – after all other
expenditure.
 There is no attempt to associate marketing objectives with levels
of advertising.
 In a good year large amounts of money could be wasted; in a bad year,
the low advertising budget could guarantee a further low year for sales.