COLLEGE OF CO-OPERATION BANKING & MANAGEMENT

FINANCING OF AGRICULTURE AND AGRI BUSINESS

BANK 2205

CASE STUDY ON LOAN SCHEME FOR (APICULTURE) BEE KEEPING

Visit To: STATE BANK OF TRAVANCORE PATTIKKAD BRANCH, TRICHUR

SUBMITTED TO: DR.M.A.LIZY

SUBMITTED BY: SRUTHY.P.C 2008-05-112

njhjkhkjhh

INTRODUCTION
Kerala State was contributing a major share of honey produced in India till 1990s. The Indian honey bee Apis cerana indica was used for commercial beekeeping in the State. The catastrophic outbreak of a dreadful disease to Indian honeybees wiped out 95 per cent of the then existed bee colonies leading to near decimation of

commercial beekeeping in the State. The All India Co-ordinated Research Project (AICRP) on Honeybees and Pollinators has developed TSBV tolerant nucleus colonies of Indian honeybee A. cerana indica by selective breeding, multiplied and distributed to the beekeepers through the select bee breeders. The advanced high tech method standardized by the centre has been disseminated to the beginners in beekeeping, beekeepers, bee breeders, women self-

help groups and unemployed youth through various field oriented training programmes. The centre is offering beekeepers orientation training to the beginners in beekeeping and refresher training on beekeeping to the stake holders. Earnest efforts are being made to rejuvenated the beekeeping industry through technical guidance to the beekeepers and bee breeders and also by handling classes to the

public. It is estimated that there are about 6 lakh bee colonies at present in the State. The State Horticulture Mission Kerala is

implementing various projects under yield enhancement through bee pollination in horticultural crops through Kerala Agricultural University, Horticorp and Khadi Board. The role of honeybees in pollination to ensure food safety is also conveyed to the public through trainings and various mass media programmes. The advanced technologies developed by the University on bee

management imparted to beekeepers helped to enhance the average yield of honey from 2-3 Kg to 20-25 Kg per colony making the industry a profitable one in Kerala. Hence large numbers of new farmers are taking up this industry. The concerted efforts of all those who involved in the industry helped to provide employment potential to the unemployed rural youth and women and thus explored the potential of beekeeping in the State As a part of our practical course, Financing of Agriculture and Agribusiness, we have visited State Bank of Travancore, Pattikkad branch, Thrissur district. I have selected the scheme

for financing of bee keeping(branding &trading ) . The Bank is providing loans for short term crops and also for farming activities such as poultry, piggery, sericulture etc. at a reasonable rate of

interest. The main purpose is to finance for cultivation of seasonal crops and other productive purposes. The Bank is providing term loan to the bee keeping farmers

PURPOSE OF LOAN
Loans are provided for the following purposes like purchase of (1) (2) (3) (4) (5) bee hives Honey extractor Smoker gloves and other equipment and carrying stock of unprocessed honey

ELIGIBILITY
The farm should be with in the area of operation of the bank The borrower should be a farmer The borrower should be a major

 Credit worthy or reliable person The production should be economically viable

DOCUMENTS REQUIRED
Possession certificate to make sure the ownership of the land Latest tax payment receipt Non-encumbrance certificate from registrars office Title deed To give legal backing to the agreement reached with the prospective customer, the following documents, among others, are duly executed between the Bank and the applicant and the stamping fees charged to the applicant. Heads of Agreement Contract of Indemnity Promissory Notes Mortgage deeds and other legal documents assessed on the basis of the total amounts involved

SECURITY
In all cases, the applicant will be required o provide security and/or collateral for the loan. The may take several forms, depending on the terms and conditions, nature and size of the facility granted.

Cash collateral in blocked account Group executive guarantee Personal guarantee Stocks, bonds and bills Life policies Indemnities Immovable properties

Assignments

MARGIN
Up to Rs.50, 000, margin is nil.Above Rs.50, 000 margins is 15% to 30% depending on the purpose and quantum.In our case, the loan amount is Rs.10, 00,000 and margin is 30%. i.e, the Bank will be giving only 70% of the loan amount.

CALCULATION OF LOAN AMOUNT

Loan amount applied for sanction = 10,00000 Margin = 30%

= 1000000*30/100 = 300000 So the loan amount = 1000000 - 300000 = 700000

TABLE 1.1; INTEREST RATE OF TERM LOAN

SCHEMES

AND REVISED INTEREST RATE (BPLR-12.75%) 11.00% p.a 12.00% p.a 12.75% p.a 13.75 % p.a 14.75% p.a

REVISED LIMIT Up to Rs.50000/1.75% below BPLR Above Rs.50000 up to .75 below BPLR Rs.2 lakhs Above Rs.2 lakhs up Same as BPLR to Rs.5 lakhs Above Rs.5 lakhs up 1% above BPLR to Rs.25 lakhs Above Rs.25 lakhs 2% above BPLR

REPAYMENT
The repayment period works out to 5 years including it months grace period. Yearly payment includes principal amount and interest. For example in the first year the farmer has to pay principal amount of Rs.140000 along with the interest of that year. Total amount to be repayed along with interest include Rs.754600 in this model. If there is any failure to repay the loan by the farmers the banks charges a penal interest of 2 percentage.
TABLE 1.2 BEE KEEPING PROJECT FILE FOR FIVE YEARS A i) ii) iii) iv) v) vi) vii) viii) COST OF PRODUCTION ( IN RS ) Cost of unprocessed honey Cost of sugar Labour Migration & Disease control Rent, Electricity etc Depreciation Insurance Miscellaneous Expenses 4562000 750000 1068000 105000 50000 525000 50000 25000

vii) viii) B

TOTAL COST Margin(minimum 15%) Bank loan SALES

(30%)

7135000 300000 700000 9484000

TABLE 1.3; REPAYMENT SCHEDULE

YEAR I Year II year III year IV year V year TOTAL PRINCIPAL AMOUNT 140000 140000 140000 140000 140000 700000 INTEREST @ 13% 18200 14560 10920 7280 3640 54600 TOTAL AMOUNT 158200 154560 150920 147280 143640 754600

ESTIMATION OF PROJECT
Income from sales Total expenditure incurred = 9484000 = Total expense + Interest at 13% =7135000 +54600 =7189600 So profit = 9484000 7189600

= 2294400

Here the business is carrying on a large scale basis .So there is profit as large amount ie,Rs 2294400

CONCLUSION
From this case study it is very clear that there is profitability in the Bee keeping business.Because bee keeping business gaining its importance day by day .Honey is an inevitable ingredient of ayurvedic medicine. At present the ayurvedic medicine manufactures are solely depending on various agencies working outside for their requirement. At present various individuals and firms are engaged in production and sales of bee and honey. About 280 ayurvedic manufacturing units are working in Thrissur district. To maintain quality, natural honey is needed to them. Naturally these manufactures are forced to buy honey and bee locally.