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Tuesday, Dec 19, 2006

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Suguna Poultry, SBI in pact for contract farming

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To fund existing & new farmers in Coimbatore co's fold

Expansion plans
Suguna plans to double its current 15 lakh chicken production per week by 2010.
To raise average size of its contract farm from 5,000 birds to 10,000 bird farms
Eyes contract farming in maize

Coimbatore , Dec. 18

State Bank of India has signed a memorandum of understanding (MoU) with Suguna Poultry Farm Ltd (SPFL), a major integrated broiler producer and marketer, for financing the contract poultry farming run under the latter's fold.

The MoU was signed by the Managing Director of Suguna Poultry, Mr B. Soundarajan, and Mr K.J. Taori, General Manager in the Agri-business unit of State Bank of India, Mumbai.

It will facilitate extending bank credit for the existing as well as new poultry farmers in contract with the Coimbatore-based Suguna Poultry through a central arrangement on a tailor-made scheme. This will obviate the need for farmers going for independent loan proposals and the connected hassles, SBI officials said.

To double output

At present, about 12,000 poultry farmers across seven States are associated with the poultry firm'sbroiler production value chain. Suguna is planning to double its current 15 lakh chicken production per week by 2010.

To meet this growth, the company is expected to bring in an aggregate of about 6 crore sq ft poultry farm area additionally. Mr Soundarajan said SPFL wanted to raise the average size of its contract farm from the present 5,000 birds to 10,000 bird farms. Hence, the need for a centralised funding arrangement through SBI, which would enable assisting the existing as well as new farmers coming into its fold. Incidentally, this is the first MoU entered into by SBI at a corporate level for the poultry sector. SPFL expects that the doubling of contract farm volume will lead to enhancing broiler farmers' income from the current average of Rs 15,000 a month to Rs 30,000.

Maize farming

Suguna is also set on entering in a big way into contract cultivation of maize, the key poultry feed input whose demand is surging along with the poultry sector growth in the last couple of years.

"SBI as in the case of financing Suguna-model poultry contract farming, will be willing to take part in financing the maize contract farming," Mr Taori said during the brief interaction with the presspersons soon after the signing of the MoU with SPFL.

Maize contract farming besides scaling up integrators operations in terms of lower cost of production will benefit consumers through lower-end cost, the SBI official said.

The poultry contract farm expansion envisaged by Mr Soundarajan is expected to result in a credit demand of about Rs 600 crore over the next three years or so, including Rs 100 crore for setting up additional breeder farms by SPFL.

"With the rise in the GDP growth with which the demand for protein is also set to expand, the broiler sector is also expected to post a higher growth of 20 per cent over the next few years as against the recent past trend of 12-13 per cent growth," said Mr Soundarajan.

SBI's present credit exposure in poultry sector is in the Rs 300-400 crore band and its exposure in Tamil Nadu is around Rs 150 crore. The bank is also seeking to enhance its financial assistance to poultry sector.

More Stories on : Poultry | Public Sector Banks | Contract Farming | State Bank of India

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