Micro leasing – Concept , Practice & Experiences

Sanjeev Kumar Adviser – The Goat Trust

Livestock Micro leasing

Shared goat farming had been a way of acquisition of livestock related asset strategy in rural areas especially with socially and economically poor families. In most part of the country some form of lending productive asset exists. Goat farming had been one such area where asset had been most often acquired by poor families through leased by resource rich person of same village or nearby village.

Concept

1. Purchase through own savings – Normally people purchase small goats or 1 to 3 goats and keep it over a period of time to increase herd size.

  2. Goat as gift from relatives especially to women

by her parents - In some cases goats are received as gift from parents and women rear and increase its progeny to develop a herd.

  3. Leasing or Batai system – This is the prevalent

system after direct purchase to acquire goat as asset

Existing System of Goat as asset building

Goat farmers did not have pressure of monthly repayment, as the cash flow from goat farming did not allow monthly repayment, goat farmers find leasing helps them as repayment pressure is not to be managed.

Risk of mortality (which is significant in the area and estimated 23% annual) remains with lessor and lease can easily manage the risk.

If production of goats gets delayed due to adverse climatic or management condition, both parties have to bear the loss.

Micro leasing Vs Micro credit

Leasing is used a power equation between haves and have n’ts.

Asset is not backed by support services like breeding health, making production low.

Quality of goats leased has been reported as inferior as person leased out only low quality goats.

There is no written rules and agreement so very often lesser decides division in produce in their benefit as they are powerful and have social upper hands.

There is no means to get out of this system till one production cycle is completed

Problems in Traditional system

1. Have proper system and place to take quality goat/livestock on lease

2. No Monthly installment or repayment in cash stress making operation easy.

3. Risk of mortality or no production is with leasing organization hence risk is minimised.

4. Have access to preventative health care and improved knowledge services.

5. Can start without any investment and later on be a owner of herd.

6. Can earn in terms of body weight gain even if she rears for smaller period.

7. Can any time return the goat and get out of it.

Advantages to client (Farmer)

Promoters have advantages of asset ownership, making operation less risky and repayment assured.

Goat farmers are invariably poor so target clients gets automatically selected

Promoter gets reward in high productivity of goats thus more production ensures more reward i.e higher return

Less investment in keeping financial records and human involvement in cash collection and deposit.

Focus of team can be on services and not cash collection thus ideal for development focused organization

Micro leasing can sustain with lower number of clients as business in whole value chain of input supply, services and trade and marketing of goats and goat products can be taken care and corresponding profits are generated.

Breed and quality livestock can be promoted without subsidizing the program.

Promoting organisation can have assured commitment to large trader/institutional buyer as per kids’ availability forecast/projections.

Advantages to Promoting organisation

Gets technically trained and knowledge helps in improving productivity making higher incentives possible

Can gain incentives in input supply, services and goat marketing

May start their own enterprise as this business is viable on smaller scale and fund requirement is gradual rather than one time.

Performance is easily traceable and community and employer both can easily be aware about staff performance

Working with a banking process is a socially respectable and with experience can manage more clients

If return invested in the business, it grows very fast even if started with a small grant/loan

High replicability but very limited availability of experienced professionals so staff can easily get recognized as expert by other agencies and programs making high employability.

Advantages to staff

Leasing of quality goats and poultry birds Livestock asset based credit limit  ( based on

existing herd strength for feeding, housing improvement)- Livestock Credit Card

Community Insurance services Product – One pregnant goat (3 months) in

beginning (testing phase) + 2 goats after 5 months of first goat

The financial products of bakari bank

Door step preventative and first aid health services through Pashu sakhies

Price estimation through periodic live body weight measurement

Training on improved practices Exposure for potential clients Pro poor Technology demonstration with key

farmers Linkage with input supplier Facilitation in collectivization of marketable

surplus (live animals, milk)

Non Financial product & services

Identifying 10 to 15 villages in cluster having requisite number of goat farmers and having willingness to participate in strengthening value chains of goat business.

Feasibility assessment through making a household surveys of goat population, current problems

Identify and train Bakari Bank Sakhies and build their capacities Strengthen existing Goat rearers SHGs or Goat rearers group

(GRGs) , formation and facilitation through village level support centers ( defined as regular meeting and financial and non financial service planning & monitoring center)

Training and exposure of potential clients Setting data collection system to grade goats, select promising

bucks and facilitate culling of inferior goats Planning and facilitation of leasing products and non financial

services

Basic Steps of setting a Bakari Bank

Total Member for goat trained – 112 Total goat clients – 49 (Total coverage 62) Total duck clients – 22 (includes Rice duck

farmer last year) Kids born in first 6 months – 1.9 kids per goat Kids returned as on date – 22 Kids leased in field – over 45 Mortality of kids – 8% Mortality of goats in field – 5% Total sales of Input – Rs 54000

The Goat Trust pilot phase Experiences- 9 Months

Training of organization staff and or entrepreneurs on micro leasing concept and operational process

Sharing of process manuals with training modules and training tools

Data collection, monitoring system and analytics to make decisions

Software to manage micro leasing operation Quarterly on site visit for hand holding support and

problem solving Audio visuals for program promotion Design and concept of community Livestock business

center management to augment business and link marketing of goats and goat products

Professional support cost for one year support – 1.0 Lakh

The Goat Trust support

Thank You