VAE-511: LIVESTOCK ENTREPRENEURSHIP (1+0)

Introduction

 Livestock Entrepreneurship is an applied course which enables the Veterinary

graduates to start their own enterprise. The course primarily deals with the concept of
livestock Entrepreneurship, basic theories of Entrepreneurship, openings for
veterinarians in private/public sectors. Essential qualities needed for livestock
Entrepreneurship along with the modalities for starting a business is also discussed.
Different kinds of institutes which offer training programmes for Entrepreneurship
activities are also listed along with the details on How to prepare a livestock project?
Preparation of financial statements for livestock farm and finding out the worthiness
of the programme is discussed in detail. The topic on how to fulfill the expectation of
the clients would help the veterinarians to run their business successfully. The
importance of sustainable livestock production is also stressed in the course.

Expected outcome

 Instill confidence in the minds of veterinarians to start a new venture

 Highlight certain basic qualities which are essential for Livestock Entrepreneurship
 Prepare a livestock project.
 Evaluate the techno-economic feasibility of livestock projects.
 How to approach banks for loan and get them.
 How to prepare financial statements(Balance sheet, Profit and loss statement & Cash
flow statement) for the livestock farm.
 How to operate the farm successfully?- Where to stop the production- Shut down
point
 How to fulfill the expectation of the clients
 Importance of sustainable livestock production for the long term.

Expected improvement in the skill level

 Understanding the essential qualities required for Entrepreneur

 Identifying business opportunities in the livestock sector
 Preparing livestock projects for various livestock enterprises
 Assessing the feasibility of Livestock projects
 Identifying financial worthiness of the farm
 Operate above the profit level in livestock farms.
 Improvement in purchasing decisions for the livestock farm
 Marketing the products successfully.
 Improvement in business by satisfying the customer needs.
ENTREPRENEURSHIP

Learning objectives

After going through this unit the learner would know

 Who is an Entrepreneur?
 What is Entrepreneurship?
 Essential qualities of entrepreneurs
 Difference between an entrepreneur and a manager
 Different types of Entrepreneur

Learning outcome

 Improvement in the understanding of Entrepreneur and Entrepreneurship and their

basic qualities and different types of Entrepreneur

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
o Introduction of new product (Designer Egg, Crossbred cows, Hybrid fowls,
etc.)
o Introduction of methods of production (Slated floor rearing of Goat,
Integration in poultry farming, etc.)
o Developing new markets (Urban areas) and finding fresh source of raw
materials (animal waste recycling), and
o 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 overcome 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

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

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

enterprise. enterprise.

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

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

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

change agent who introduces new entrepreneur. Thus, a manager
or modified goods and services to translates others ideas into practice.
meet changing 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.
o Innovative: Innovative entrepreneur is one who assembles and synthesizes
information and introduces new combinations of factors of production.
o Imitative: Imitative entrepreneur is also known as adoptive entrepreneur. He
simply adopts successful innovation introduced by other innovators.
o 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.
o 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
o Empirical: He is an entrepreneur who hardly introduces anything revolutionary
and follows the principle of rule of thumb.
o Rational: The rational entrepreneur is well informed about the general economic
conditions and introduces changes which look more revolutionary.
o Cognitive: Cognitive entrepreneur is well informed, draws upon the advice and
services of expert’s scheme of enterprise.

 Classification on the Basis of Ownership

o Private: Private entrepreneur is motivated by profit and it would not enter
those sectors of the economy in which prospects of monetary rewards are not
very bright.
o Public Entrepreneurship: In the undeveloped countries Government will take
the initiative to start an enterprise where capital requirements are very high
and returns are less with longer pay back period .
 Classification Based on the Scale of Enterprise
o Small Scale: This classification is very popular in the developing countries. In
India, small scale enterprise is defined as an industrial undertaking in which
the investment in fixed assets in farm buildings/animals/plant and machinery
does not exceed Rs. 10 million. Investment limit in arm
buildings/animals/plantand machinery in respect of tiny enterprises is Rs. 2.5
million irrespective of location of the unit. Small entrepreneurs do not possess
the necessary talents and resources to imitate large scale production and
introduce revolutionary technological changes.(Broiler farms, Dairy farms
etc., in India are mainly on small scale).

 Large Scale: In the developed countries large scale enterprises are in greater numbers.
They posses the necessary financial and managerial capabilities to initiate and
introduce new technical changes. The result is that the developed countries are able to
develop and sustain a high level of technical progress.(Layer farms in India have now
become large scale investment).
 MODULE-2: LIVESTOCK ENTREPRENEURSHIP

Learning objectives

After completing this unit the learner would be able to

 Understand Livestock Entrepreneurship

 Know various avenues of Livestock Entrepreneurship
 Identify different business opportunities available for Veterinarians

Learning outcomes

 Improvement in the idea about Livestock Entrepreneurship

 Knowledge about various avenues of Livestock Entrepreneurship
 Different kind of business opportunities available for Veterinarians

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
o 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)
o 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
o 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)
o 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
o 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
o Though starting a hatchery requires higher investment, it offers good return.
 Pet Animal / Large Animal/ Mobile Clinic:
o 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)
o 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
o 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
o 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)
o 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)
o 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)
o 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:
o Government Veterinary Doctors
o Amul / Aavin milk plants – Manager / Doctors
o Meat Inspector – in Corporations
o Education – Assistant Professors in various Universities
o Insurance Companies – Technical Officers
o Eco-jobs such as Wild life ecologist, Conservation scientist etc.,
o Central and State Civil Services
 o 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.
o Private practice
o There is a greater demand for veterinarians in foreign countries as farm
consultant , scientists etc.,
o Scientists in ICAR and other government departments
o Researchers in Private, Central, State and International research institutions
o Private sector jobs such as Veterinary /Technical officer/Marketing executives
in dairy, poultry, equine and pharmaceutical sectors
o Extension Agents in NGO’s
o Military Service - Remount Veterinary Corps in Indian army
o Bank – Technical Officers
o 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:
o Availability (no wait, flexible hours, easy access & parking, sufficient stock,
etc.)
o Patience (Clients expect their doctor to be patient with them, allow sufficient
time for them)
o Explanatory (Answering the questions calmly, not avoiding them, clarify their
doubts and explains even the minute details)
o Transparency (prices should be clearly marked; invoices should be itemized,
etc.)
o Choice (various products and services, 'freedom of choice', etc.)
o Environment (comfortable, neat, clean, odourless, friendly, modern, etc.)
o Clarity of the offer (prices listed, estimations, badges, etc.)
o 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:
o kindness
o affordability
o availability
o patience to listen
o his or her competency
o 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.

MODULE-3: IDENTIFYING BUSINESS OPPURTUNITIES

Learning objectives
After completing this unit the learner would

 Know various sources for identifying business opportunities

 Know the various steps in identifying different business opportunities
 Know major characters of business opportunity

Learning outcomes

 The learner would be able to identify various sources of business opportunities

 The learner would imbibe the necessary characters of business opportunity and
 How to conduct market survey

INTRODUCTION

 The entrepreneur gets information on investment opportunities from multiple sources

such as the magazines, internet, financial institutions, government, commercial
organisations, media, friends, relatives and so on. Selecting the best business
opportunity from the information collected requires ingenuity, skill and foresight on
the part of the entrepreneur.
 As an entrepreneur, he has to select feasible and rewarding opportunity to begin with.
For this purpose, he has to evaluate the ideas and understand gap between demand
and supply. Further, he has to perform the following activities:
o Studying government rules and regulations related to different business
opportunities.
o Extensive study of promising investment opportunity encompassing technical,
commercial, organisational, institutional and socio-cultural aspects.
o SWOT analysis of business potential (Strength, Weakness, Opportunities and
Threats).
o Market survey for the project.

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.
o Good and wide market scope, i.e. gap between present or likely demand and
supply.
o 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.

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

PRELIMINARY 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:
o Is the opportunity compatible with the promoter and society?
o Is opportunity compatible with government rules and regulations ?
o Whether raw materials are easily available?
o What is the scope and size of the potential market? Who are all the major
buyers?
o Whether cost justifies the project?
o 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

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

MODULE-4: CONCEPTS AND THEORIES OF SELF-EMPLOYMENT AND

ENTREPRENEURSHIP

Learning objectives

After completing this unit the learner would be able to

 Understand the different theories and concepts of self employment and

entrepreneurship
 Understand the different schools of entrepreneurial thought
 Understand different external factors which influences entrepreneurship
 Understand different intrinsic factors which create successful entrepreneur

Learning outcomes

 Knowledge about different theories and concepts of self employment and

entrepreneurship
 Idea about different schools of entrepreneurial thought and various external
and intrinsic factors which create successful entrepreneur

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
o The environmental school of thought,
o The financial/capital school of thought, and
o 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:
o 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.
o 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) .
o Unique products: Better widget strategies, which refers to innovations that
encompass new or existing markets (Kentucky fried chicken -KFC) .
o 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.

MODULE-5: CRITERIA FOR DEVELOPMENT OF ENTREPRENEURSHIP IN

LIVESTOCK SECTOR

Learning objectives

After completing this unit the learner would know:

 Different main routes an entrepreneur may follow in starting a business

 Various forms of business ownership
 What are all the advantages and disadvantages of Sole proprietorship, Partnership and
Corporation

Learning outcome

 Upgradation in the knowledge about various forms of business ownership, their merits
and demerits

INTRODUCTION

Once entrepreneurship is decided upon, there are three main routes an entrepreneur may
follow.

 Starting a new livstock business

o 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
 o 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
o 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:
o Profits are taxed as income to the owner personally.
o Tax rate is lower than the corporate tax rate.
o Owner has complete control of the business.
o There is unlimited liability for company debts.
o Little reporting is required, and government regulation is minimal.

Sole Proprietorship
Advantages Disadvantages
 easy and inexpensive to create  full liability for debts, etc.
 one owner has complete authority  higher risk of losing personal assets,
over the business such as car, home, etc.
 taxes are not separate from the  personal responsibility for workers’
owner’s; usually at a lower rate injuries
 no certificate of incorporation  no one to take over if owner becomes
 no bylaws, minutes, stock shares sick
 all profits go to owner
 higher flexibility
 difficult to obtain finances for business
 requires more money invested by owner
 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:
o Business is subject to little government regulation.
o Business is relatively easier to establish.
o Formal partnership agreement is highly recommended to address possible
conflicts that could arise in future.
o Each partner is liable for all debts.
o All profits are taxed as income to the partners according to the percentage of
ownership.
o 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 among
partners
 secure investment capital more
easily
 tax rates lower than corporation
 more flexibility of ownership and
income
 personality conflicts and relationship
strains
 liable for each other’s actions
 difficulty in obtaining financing
 a partner’s bankruptcy may 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:
o Restricts the right of transfer of its share;
o 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-
o Is not a private company;
o Has a minimum paid-up capital of Rs. 5 lakhs or such higher capital as may be
prescribed;
o 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.-
o When 25% or more of its paid-up share capital is held by one or more body
corporate;
o When its average annual turnover (during the last 3 years) exceeds Rs. 25
crores;
o When it holds 25% or more of the paid-up share capital of Public Company; or
o 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 (issuing shares  expensive to set up and organize
of stocks)  profits taxed twice
 limited liability of owners, only owing for  extensive record keeping and
what is invested paperwork
 better status for employees
(pensions/retirement, dividends)
 easier to change ownership

 Limited Liability Corporations are the most recent form of business, combining the
best of both worlds (partnerships and corporations).
 Advantages
o Limited liability of corporation members
o Not liable for company’s debts
o Tax advantages of a partnership
o Shareholders only taxed once
o Popular among professionals (doctors, lawyers, etc.)
o Owners risk only their investment
o 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.
o Most complex form of business corporation
o Comprised of three groups of people: shareholders, directors, officers
o Subject to more regulations than sole proprietorships and partnerships
o Earnings subject to double taxation (the corporation is taxed and shareholder
dividends are taxed)
o Limited liability
o 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.

MODULE-6: ESSENTIAL CRITERIA FOR DEVELOPMENT OF

ENTREPRENEURSHIP IN LIVESTOCK SECTOR

Learning objectives

After completing this unit the learner would be able to

  Understand various important characteristics which are essential for livestock
entrepreneurship
 Understand various basic requirements required for entrepreneurial initiatives in
livestock and allied sector
 Understand different components which are essential before starting a business
 Understand the key components of feasibility study and their importance

Learning outcomes

 Knowledge about essential characteristics of Livestock Entrepreneurship

 Idea about the basic requirements required for entrepreneurial initiatives in livestock
and allied sector
 Knowledge about the key components of feasibility study and their importance
 How to prepare a feasibility study in Livestock sector

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:
o The relative uniqueness of the venture,
o The relative investment size at start-up,
o The expected growth of sales and/or profits as the venture moves through its
start-up phase,
o The availability of products during the pre start-up and start-up phases, and
o 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:
o Functional design of the product and attractiveness in appearance.
o 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.
o Quality of the ingredients from which the product is made.
o Reliability, ensuring performance as expected under normal operating
conditions.
o Product safety, posing no potential dangers under normal operating conditions
to the customers.
o Reasonable utility-an acceptable rate of obsolescence.
o Ease and low cost of maintenance.
o Standardization which meets the regional standards and which are good for the
public health.

KEY AREAS FOR ASSESSING THE FEASIBILITY OF A NEW VENTURE

SPECIFIC ACTIVITIES OF FEASIBILITY ANALYSIS

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

Standard quality Market Required Personnel Existing

specifications potential financial requirements competitors
resources
Technical Market Required skill levels Size, financial
planning Available of potential resources,
requirements issues financial employees market
resources entrenchment
Product Managerial
development requirements Potential
reaction of
Product testing Determination of competitors to
individual newcomer
Plant location responsibilities
Potential new
competitors

Scope for
future
expansion

MODULE-7: ASPECTS OF PROJECT PREPARATION AND ANALYSIS

Learning objectives
After completing this unit the learner would know:

 What is project?
 Different approaches in preparation of livestock entrepreneurial project
 Different components of project preparation and analysis
 Importance of training in entrepreneurship development
 Importance of interpersonal skills and business communication modes

Learning outcomes

 Knowledge about project and various approaches in preparation of livestock

entrepreneurial project
 Identify the various components of project preparation and analysis
 What is communication? and importance of communication skills

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:
o Those who are entrepreneurs in status whether by choice or circumstance, and
o 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.

MODULE-8: NATIONAL LEVEL ENTREPRENEURSHIP DEVELOPMENT

INSTITUTES

Learning objectives

After completing this unit the learner would know

 Various entrepreneurship development institutes in India and their role in developing

entrepreneurs

Learning outcome

 The learner would know about different entrepreneurship development institutes in

India and their role in developing entrepreneurs

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 :
o The social objective of providing employment,
 o The economic objective of producing saleable articles, and
o 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.

MODULE-9: ENTREPRENEURSHIP DEVELOPMENT TRAINING

PROGRAMMES

Learning objectives

After completing this unit the learner would know

 Various government agencies which offer different training programmes for

entrepreneurship
 Importance of Entrepreneurship Development Programmes and different methods of
training
 Trainer's training programmes available
 Small business promoter's programmes
 International training programmes available for entrepreneurs
 Various Entrepreneurship Development Training Institutes and Training Programmes
offered in India

Learning outcomes

 Improvement in knowledge about various government agencies which offer different

training programmes for entrepreneurship and their importance
 Idea about trainer's training programmes available
 Small business promoter's programmes
 International training programmes available for entrepreneurs

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

o General
o Women
o Science & Technology Graduates
o School Leavers
o SC/OBC
o Ex-Servicemen (Veterans)
o Self-Employment (SEEUY, TRYSEM, PMRY etc.)
 Product/Process Oriented
o Leather
o Builders Hardware
o Food
o Plastics
o Chemicals
o Sports Goods
o Readymade Garments
o Electronics
o Information Technology etc.

Entrepreneurship Development Training Institutes and Training Programmes offered

in India

S.No Institute Training Programmes Duration Eligibility

. offered

1. National Institute for  Computer hardware 3 days to 3 Graduate /

Entrepreneurship and & networking months Diploma
Small Business  Entrepreneurship depending holders
Development (NIESBUD), and Skill upon the with
NOIDA(nisebud.nic.in) Development programm adequate
Programmes in e English
Garment drafting & Knowledg
construction e
 Entrepreneurship
An apex body established and Skill
by Ministry of Industries, Development
Govt. of India for Programmes in
coordinating, training and Mushroom
overseeing the activities of cultivation
various institutions/  Entrepreneurship
agencies engaged in and Skill
Entrepreneurship Development
Development Particularly Programmes in
in the area of small Room boys
industry and small  ToT
business. Entrepreneurship
Development –
Capacity building
under SJSRY
 Entrepreneurship
and Skill
Development
Programmes in
Basic Computer
Hardware Training
Programme
 Entrepreneurship
and Skill
Development
Programmes in
Mobile repairing
 Entrepreneurship
and Skill
Development
Programmes in
sewing operator
 National workshop
on Entrepreneurship
and skill
development for
urban poor
 Entrepreneurship
and skill
development on
Desktop publishing
 Human Resource
Development and
Entrepreneurship
Education Training
(HRD-EE)
 Small Business
Planning and
Promotion (SBPP)
 Business Advisors’
Training (BAT)
 Women and
Enterprise
Development
(WED)
 Trainers Training
on Entrepreneurship
and Promotion of
Income Generation
 Activities (TT-
EPIGA)
 Entrepreneurship
for Small Business
Trainers/Promoters
(ESB-TP)
 Trainers Training
on Sustenance and
Growth of Self Help
Groups (TT-
SHSHG)

2. <object id="ieooui"  Communication 8-12 Graduate /

classid="clsid:38481807- Skills in English weeks Diploma
CA0E-42D2-BF39- and Promotion of holders
B33AF135CC4D"></objec Micro, Small and with
t> Medium Enterprises adequate
(EPMSMEs) English
National Institute of Micro,  Communication Knowledg
Small and Medium Skills in English e
Enterprises (NIMSME), and Promotion of
Hyderabad Food Processing
Enterprises
(EPFPE)
(Formerly National  Communication
Institute of Small Industry Skills in English
Extension Training and Managing
(NISIET)) Micro and Small
Enterprises
(EMMSEs)
 Empowerment of
Women through
Enterprises (EWE)
 Planning and
Promotion of Agro
and Food
Enterprises (PAFE)
 Tourism and
Hospitality
Management
(THM)
 Enterprise
Development
through Micro
Finance (EDMF)
 Intellectual Property
Rights (IPRs) and
Implications for
 SMEs (IPRIS)
 Capacity Building
for providing
Alternative
Livelihood
Opportunities for
Poor (CBALO)
 Training Methods
and Skills for
Managers (TMSM)
 Promotion of Micro
Enterprises (POME)

3. Entrepreneurship  Governance & 6 weeks Graduate

Development Institute of Management of with
India, Gandhi Nagar Non-Profit adequate
Organizations English
(www.ediindia.org) (NPOs)/NGOs Knowledg
 Use of English e
Language in
Business
Communication
 ICT Skills for Small
Enterprise
Operations
 Entrepreneurial
Management
 Entrepreneurship &
Small Business
Promotion
 Business
Development
Service Providers
for Micro
Enterprise and
Micro Finance
 Industrial &
Infrastructure
Project Preparation
& Appraisal
 Business Research
Methods & Data
Analysis

4. National Institute of Rural  Microfinance for 4-12 Senior and

Development, Hyderabad poverty alleviation weeks Middle
 Participatory rural level
 (www.nird.org.in) development managers/
 Management of officers
rural drinking water
and sanitation
projects
 Natural resources
management for
sustainable rural
livelihood
 Geo informatics
applications in rural
development
 Strategies for
sustainable
agriculture and rural
development
 Planning for
poverty reduction
and sustainable
development
 Information
Technology for
rural development

MODULE-10: PROJECT EVALUATION

Learning objectives

 After completing this unit the learner would understand

o Importance of project evaluation
o Various sources of funding available for starting a project
o Project need analysis - beneficiaries (target group), problem, solutions, and
decisions
o Project planning and budget estimates

Learning outcomes

 How to evaluate a project?

 Sources of funding available for starting a project
 Identifying the beneficiaries (target group), problem, solutions, and decisions
associated with project and
 How to workout budget for a project?

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:
o response to demands for accountability;
o demonstration of effective, efficient and equitable use of financial and other
resources;
o recognition of actual changes and progress made;
o identification of success factors, need for improvement ;
o 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

o What progress has been made?
o Whether the desired outcomes were achieved, if not why?
o Are there ways that project activities can be refined to achieve better
outcomes?
o 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.

PROJECT NEED ANALYSIS

 The aspects included under project need analysis are the beneficiaries (target group),
problem, solutions, and decisions.
 The problem should exhibit the necessity of immediate intervention.
 The focus should be to identify the beneficiaries (target group).
 The solutions should solve the original problem.
 The decision to take up the project lies on how these three aspects problem, solutions
and beneficiaries are important to project intervention.

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.

MODULE-11: INVESTMENT ANALYSIS

Learning objectives

After completing this unit the learner would understand

 Different methods of evaluating a project

 Undiscounted measures and their usefulness in evaluating a project
 Importance of discounted measures
 Estimation of Net Present Worth and it’s importance
 Benefit Cost Ratio and it’s usefulness.
 Finding out the earning rate of the project- Internal rate of Return and it’s significance

Learning outcomes

 How to evaluate a project?

 What are all the different methods available to evaluate a project?
 What are all the undiscounted measures and their usefulness
 Discounted measures and their importance
 How to estimate, NPW, BCR and IRR of a project?
 Interpretation of NPW, BCR and IRR

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
o Pay back period
o Proceeds per rupee of outlay
o 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
o Net Present Worth (NPW)
o Benefit Cost Ratio (BCR)
o 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.

MODULE-12: FINANCIAL RESOURCES

Learning objectives

After completing this unit the learner would understand

 Formal and Informal sources for getting finance for livestock business
 Credit analysis – 3 R’s of Returns and 3 C’s of Credit
 Different ways of repaying a loan amount

Learning outcomes

 Knowledge about formal and informal sources of Livestock finance

 Idea about 3 R’s of Returns and 3 C’s of Credit
 How to repay the loan based on the income of the project

SOURCES OF AGRICULTURE/ LIVESTOCK FINANCE

Finance for agriculture can be obtained from formal and informal sources

 Formal sources
o Credit co-operatives
o Commercial banks
o Government
o Regional Rural Banks
  Informal sources
o Money lender
o Friends and relatives
o Traders
o 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:
o Returns
o Repayment capacity
o 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

o 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
o A part of the loan together with a part of the interest on the loan is paid up
every year.
 Amortized even repayment
o An equal amount is repaid every year.
o This includes a larger proportion of the principal and a smaller amount of
interest in each succeeding installment of payment.
o The method of payment is suitable when income is likely to flow at a constant
rate throughout the period.
o 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

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

MODULE-13: FINANCIAL ANALYSIS OF ACCOUNTS

Learning objectives

After completing this unit the learner would understand

 Financial analysis of accounts

 Different methods of analyzing the financial position of a business
 Balance sheet and usefulness of test ratios
 Profit and loss statement (Income statement) and it’s importance
 Preparing Cash Flow Statement
 How to identify the no loss - no gain point (Break Even Point) in the livestock
production and produce above that point

Learning outcomes

 Knowledge about Financial Statement

 Idea about financial analysis of accounts
 How to analyze the financial position of a business
 Balance sheet and usefulness of test ratios
 Profit and loss statement (Income statement) and it’s importance
 How to prepare Cash Flow Statement
 How to identify the no loss - no gain point (Break Even Point) in the livestock
production and produce above that point
 Where to stop the business?

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
o The assets which are used up in one production cycle and which can be easily
converted into cash.
o Eg. Cash on hand, accounts receivable, market securities, inventories etc.,
 Medium term assets
o The assets which are used up in production process for more than one year and
upto 5 years.
o Eg. Animals, equipments etc.,
 Fixed assets
o The assets which are used up in production process over a long period and
which cannot be easily converted into cash.
o Eg. Land, buildings, machinery etc.,
 Current Liabilities
o They refer to short time commitments of the business/farmer which has to be
repaid within the current year.
 o Eg. Accounts payable, taxes payable, interest payable.
 Working/Medium term loans
o 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.
o Eg. Medium term loans for Animals or small machinery such as chaff cutter
loans etc.,
 Deferred Liabilities
o They refer to long term loans and other such commitments which could be
repaid over a period of 5-15 years.
o Eg. Long term loans for land, feed mill, hatchery etc., .
 Net Worth/Equity
o It is the difference between the total assets and total liabilities in the business.
o The most liquid current asset is cash in hand and the least liquid current asset
is inventory.Eg. Milk can.
o 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 Rs. Assets Amount in Rs.
Current Liability Current assets
1. Taxes payable 20000 1. Current account balance 25000
2. Wealth tax 5000 2. Inventories 30000
3. Neighbour borrowing 10000 3. Bank deposit 25000
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 loan 200000 1. Land 500000
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
o Current Ratio = Total current assets/ Total current liabilities
o Current ratio indicates the capacity of the farmer to meet immediate financial
obligations (liquidity).
o A ratio of more than one indicates a favourable position of the farm business.
 Intermediate or working Ratio
o Intermediate Ratio =Total current assets+Total intermediate assets/ Total
current liabilities+ Total intermediate liabilities.
o Working ratio indicates the liquidity position of the farm business over an
intermediate period of time, ranging from 2 to five years.
o Here, there is time for the farmer to build up the farm business to improve his
liquidity position.
o The ratio should be more than one.
 Net Capital Ratio
o Net Capital Ratio= Total assets/ Total current liabilities.
o NCR indicates the solvency position of the farmers and more than one
indicates that the funds of the institutional agencies are safe.
o A consistently increasing ratio over the years reveal the sound financial
growth of the farm business.
 Acid test ratio or Quick ratio
o Acid test ratio or Quick ratio= Cash receipts+Accounts receivable+marketable
securities available in more than one year/ Total current liabilities.
o Indicates adequacy of cash and income surpluses to cover all current liabilities
during the period of one to two years.
 Current liability Ratio
o 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)
o 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
o Equity-value Ratio = Owner’s equity/Value of assets.
o 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.

o Net Cash Income
 This is worked out by reducing total cash expenses from the total cash
receipts.
o Net Operating Income
 It is calculated by reducing the total operational expenses from the
gross income.
o 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.

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
 o Cash Balance
o Total Operating Sales
o Total Capital Sales
o Non-farm income
o Borrowings
o Total
 Cash Expenses
o Operating Expenses
o Capital Investment
o Family Living Expenses
o Payment of Previous year’s Debts
o Payment of ST Loans and Installments on Investment Loans
o 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
o to estimate the total credit needs (Short term, Medium term and Long term) of
the farmer along with time and quantum;
o to plan the repayment schedule,
o 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
o to keep ready input requirements well in advance so that the last minute rush
can be avoided
o to know the farm household’s expenditure pattern and enable the farmer to
exercise a check on farm costs,
o the farmer in preparing the farm business plans for the ensuing years,
o the banker for revising the scale of finance, rescheduling loans, etc., and
o 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
 o Here the sale price of output remains constant for all the output sales.
o 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
o The margin of safety of a farmer is the difference between its normal capacity
and break even output.
o Margin of safety indicates the shock absorbing capacity of the farmer in times
of risk and uncertainty.
o In other words it reflects the financial strength of the enterprise.
o Margin of safety = Normal capacity – Break even output
o Margin of safety in monetary terms = Revenue of the total output – Revenues
from Break even output.
 Curvilinear approach
o Here the total revenue changes over the period of time, since the price
changes, one output sales to the other.
o 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.

MODULE-14: SCHEME FORMULATION FOR BANK LOAN

Learning objectives

After completing this unit, the learner would understand:

 How to approach banks for getting loans for starting a livestock project
 Bank requirements for getting a loan
 Different lending terms followed by banks for livestock projects
 Importance of livestock insurance
 Various insurance policies available for cattle, sheep, goat and poultry

Learning outcomes
  The student would know how to approach banks for getting loans for starting a
livestock project and what are all the bank requirements for getting a loan and how to
get loan from banks
 Idea about different kinds of insurance policies available for cattle, sheep, goat and
poultry

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 to Beneficiary's
Farmer resources Contribution

1 Small Farmers Upto Rs.11000 5%

2 Medium Farmers Rs.11001 - Rs.19250 10%

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.No. Loan Amount CB's and SLDB/SCB

RRB's

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

inclusive of minimum 12%
Rs.25000

2 Over Rs. 25000 13.5% As determined by SCB/SLDB subject to

and upto Rs. 2 minimum 12%
lakhs

3 Over Rs. 2.0 As determined As determined by SCB/SLDB subject to

lakhs by the banks minimum 12%

 Security will be as per NABARD/RBI

guidelines issued from time to time.

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.
o In India, agriculture and allied activities such as animal husbandry continues
to be the main source of livelihood for millions of households.
o 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.
o 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.

o 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
o 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.
o Generally there are three types in it:
 Cattle insurance,
 Foetus (Unborn Calf Insurance) and
 Calf heifer rearing insurance.

 Sheep and Goat Insurance

o This scheme is also governed under Market Agreement.
o 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.
o Earthquake and landslide covers are also provided. Standard and common
exclusions apply as per Cattle Policy.
o Animals are identified by means of small brass buttons ear tags.
o 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
o The cover is available to the poultry/duck farm owned by the farmers.
o 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

o 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.
o Milch Cows and Buffaloes
o Calves / Heifers
o Stud Bulls
o 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.

o Accident (due to fire, lightning, flood, inundation, storm, hurricane,
earthquake, cyclone, tornado, tempest and famine).
o Diseases contracted or occurring during the period of the policy.
o Surgical Operations.
o Riot and Strike.
 The policy can also be extended to cover PTD on payment of extra premium;
o Permanent total disability which, in the case of milch cattle result in
permanent and total incapacity to conceive or yield milk.
o PTD which in the case of stud bulls results in permanent and total incapacity
for breeding purpose.
o 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:
o Duly completed claim form.
o Death certificate obtained from qualified Veterinarian on Company's form.
o Postmortem examination report if required by the Company.
o 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
o A certificate from the qualified veterinarian to be obtained.
o The animal will be inspected by the company's Veterinary Officer also.
o Complete chart of treatment, medicines used, receipts, etc. should be
submitted.
o Admissibility of claim will be considered after two months of Veterinary
Doctor / Company Doctor's report.
o 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 Stock)  1 day to 72 weeks

 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:
o Duly filled in claim form.
o Vet. P.M. Report for sample birds.
o Daily records of mortality, feeding, etc.
o Purchase invoices for the birds.
o 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.

MODULE-15: PROCUREMENT MANAGEMENT

Learning objectives

After completing this unit the learner would understand

 Concept of Procurement
 Difference between procurement and Acquisition
 Procurement system and process
 Steps in procuring
 Importance of Quality management
 Different methods of Quality Improvement
 Quality standards – ISO
 Standards – AGMARK
 Concept of retail marketing

Learning outcomes

 Knowledge about procurement and difference between procurement and Acquisition

 Steps involved in procuring and Procurement system and process
 Knowledge about Quality management and different methods of Quality
Improvement
 ISO and AGMARK
 Idea about retail marketing

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

Features Raw Material Maintenance, Repair and Capital Goods and

and Production Operating (MRO) Supplies Services
Goods

Quantity Large Low Low

Frequency High Relatively high Low

Value Industry specific Low High

Nature Operational Tactical Strategic

Examples Feed, Fodder, Spare parts in feed machines and Milking machine,
Medicines equipments. Example for Milking Feed chaffer
machine, Feed chaffer, Hatcher Computers, Hatcher
etc., 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 .
o Standards often get reviewed, revised and updated.
o It is critical that the most current version of a published standard be used or
referenced.
o 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:

o Analysis of commodities covered under Agmark.
o Technical advice to approved grading laboratories
o Training of Grading chemists of the private approved lab., State Grading Lab
and other similar organization.
o Associate with Central Agmark Laboratory, in collaborative
studies/research/standardization work of various agricultural, food and
livestock products.
o 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.
o 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.
 MODULE-16: SALES OPERATION

Learning objectives

 After completing this unit the learner would understand:

o What is sales operation and it’s benefits?
o Sales management process and how to plan for it?
o Concept of marketing the services
o Sustainable livestock development and it’s implications
o Difference between financial capital and real capital

Learning outcomes

 Improvement in knowledge about sales operation and it’s benefits and how to manage
sales process sucesssfully
 How to successfully market the services
 Importance of sustainable livestock production
 How to produce sustainably without damaging environment

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.

SALES PLANNING
  An essential sales leadership role is to establish a sense of purpose or vision and clear
direction to reach there.
 A key element of a business’ strategic 12-month plan is to answer the question:
“Where will all the sales come from?” The sales plan isn’t a guesstimate.
 It takes its direction from the marketing strategy and is based on thorough research
and a considered positioning of the company within the market place.
 Sales planning involves predicting demand for the product and demand on the sales
assets (machines, people, or a combination of both).
o Failure to plan always means lost sales and sometimes over production.
o Planning insures that when a consumer wishes to purchase the product, the
product is available, but it also means opportunities for additional sales are
presented and the sales assets are available to exploit these opportunities.It is
making available the product at right place at right time and at right price.
o Planning should allow for meeting increased customer demand for more
products, services and/or customization as the business is growing, but also
react quickly when demand decreases.
o Sales planning improves efficiency and decreases unfocused and
uncoordinated activity within the sales 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
o Services are intangible
o Service marketing may be based on the value of the individual
o Services of different types can’t be compared quantitatively
o 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
theVeterinarian 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
o Economic or productive capital necessary for production
o Signaling capital which signals a company's financial strength to shareholders,
and
o Regulatory capital which fulfills capital requirements.

MODULE-17: ADVERTISING

Learning objectives

After completing this unit the learner would know

 What is advertising ?
 Characteristics of advertising and it’s objectives
 Role of advertising in marketing the products
 Important features of sound advertising
 Different types of advertising and deciding the advertising budget
Learning outcomes

 Improvement in the idea about advertising, it's objectives and characteristics

 How to influence purchaser's decision by advertising
 Knowledge about various types of advertising and
 How to workout the advertising budget

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.

REFERENCES

 Acharya S,S. and N.L. Agrawal (2004). Agricultural Marketing In India 4ed. Oxford
& IBH Publishing Co. Private Limited, New Delhi.
 http://agmarknet.nic.in/
 http:// www. edi india.org/ http://gicofindia.com/
 Hisrich, R.D., M.P. Peters and D.A. Shepherd (2006). Entrepreneurship. Tata
McGraw-Hill Publishing Company Limited, New Delhi.
 http://iie.nic.in/
 Kuratko, D.F and R.M. Hodgetts (2007). Entrepreneurship in the New Millennium.
South-Western Cengage learning. New Delhi.
 http://www.nabard.org/
 http://www.nationalinsuranceindia.com/
 http://www.newindia.co.in/
 http://niesbud.nic.in/
 http://www.nsic.co.in/
 http://www.orientalinsurance.org.in
 Price Gittinger, J. Economic analysis of agricultural projects, second Edition (1994).
Published for Economic Development Institute of the World Bank. The Johns
Hopkins University Press, Baltmore and London.
 http://www.sidbi.com/
 Subba Reddy, S., and P. Raghu Ram. (1996).Agricultural Finance and Management.
Oxford & IBH Publishing Co. Private Limited, New Delhi.
 Subba Reddy, S., P. Raghu Ram, T.V. Neelakanta Sastry and I. Bhavani Devi.
Agricultural Economics. Oxford & IBH Publishing Co. Private Limited, New Delhi.
 Sustainable Livestock Development (2008). National Institute of Agricultural
Extension Management (MANAGE),Rajendranagar, Hyderabad – 500 030, Andhra
Pradesh, India.
 http://www.manage.gov.in/pgdaem/students/studymaterial/manage205B/managebook
205B-block1.pdf.
 www.uiic.co.in

ACKNOWLEDGEMENT

 I, the course content developer for the course VAE-511: Livestock

Enterpreneurship (1+0), gratefully acknowledge the help and support rendered by
 the Co-Teacher of this module, Dr.R.John Christy, Assistant Professor, Division of
Animal Husbamdry, Faculty of Agriculture, Annamalai University,
Chidambaram, and
 the external peer reviewers - Dr.S.D.Sivakumar, Professor, Dept. of Agricultural
and Rural Management, TNAU, Coimbatore-641003 and Dr.
B.Ganeshkumar, Senior Scientist, National Centre for Agricultural Economics and
Policy Research, IASRI campus, PUSA, New Delhi-110012
 in perfecting the e-Contents and in fine tuning the e-Contents by providing inputs,
texts, visuals, etc., respectively, deserve appreciation.
 Dr.M.Prabu,
Associate Professor,
Dept. of Livestock Business Management,
Madras Veterinary College,
Chennai – 600 007.
<font color="#0000ff">mprabu23@gmail.com</font>