Ap 1 Gc Policy Nov
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Policy on payment of Growing Charges to AP 1 Farmers
A. SCOPE:
The policy and procedures herein stated provides guidelines for the payment of Growing Charges to be calculated based on Standard Production Cost.
Earlier we have considered moving average methodology for calculating the Growing Charges whereas in this policy we have amended the methodology of calculating the growing charges based on Standard Production Cost.
The policy also provides guidelines for calculation of Market Rate Incentive and Grading of farmers
This policy shall be in force until it is duly withdrawn by or specifically superseded by another policy.
The terms and the rates fixed herein shall be changed from time to time which shall be adopted as amendments hereto.
B. EFFECTIVE DATE: This policy is effective from 20th Nov 2009 for the chicks placed there from.
C. OBJECTIVE:
The objective of this policy is to provide guidance for payment of growing charges to farmers for rearing of broiler birds.
D. APPLICABLE REGION:
The said policy is applicable to Andhrapradesh 1 region
E. GROWING CHARGES: Growing charges payable to a farmers for rearing of broiler birds is inclusive of basic growing charges and production incentives or penalties recoverable there from to be arrived at as follows ; The basic growing charges payable per Kg for rearing of broiler bird Rs 2.95 per kg
F. INCENTIVES OR PENALTIES: SUG/2009-10/CO/MD – 001-3 /dated 20/11/2009
Page 1 of 7
Policy on payment of Growing Charges to AP 1 Farmers
Method of Calculation of Incentives or Penalties 1. The incentives/penalties payable/recoverable to farmer for rearing of broiler bird shall be calculated based on either of the following methods :
Standard Production Cost Basis Market Rate Incentive
2.
Meaning & Basics : The calculation of production cost will be based on the following Input costs; Inputs Description Chick Cost Feed Cost Administration Cost Medicine Cost
3.
Per Per Per Per
UOM Day Old Chick kg of feed Bird Placing kg of LB
Amount Rs.14.00 Rs.19.00 Rs.1.50 Actual Expenditure
Standard production cost to be considered: The Standard Production Cost of Rs 44 per kg to be considered for the purpose of calculating the Growing Charges. Standard Production Cost includes Chick Cost, Feed Cost, Medicine Cost and Administration Cost and excludes Minimum Growing Charges.
4.
Incentives or Penalties : Standard production cost per kg of broiler Live Bird to be considered as described above. Incentives/Penalty shall be considered at the prescribed percentage of savings/excess in the production cost (comparing to standard cost) to the farmer.
Incentive / Penalty Pattern: Incentive/ Penalty shall be paid/ recovered from the basic growing charges towards savings/excess in production cost. The incentive is termed as follows:
A: Basic Production Incentive The incentives payable or penalties recoverable shall be on the difference between actual cost of the batch (to which incentives SUG/2009-10/CO/MD – 001-3 /dated 20/11/2009
Page 2 of 7
Policy on payment of Growing Charges to AP 1 Farmers
payable or penalties recoverable) and the standard cost (arrived at as herein stated). At the ratio’s stated hereunder It shall be ensured for payment of growing charges a minimum of Rs 2.00/- per kg of broiler bird at any point of time even after levy of penalties for increase in cost of production. Therefore in no case the penalties recoverable from farmers levied by which growing charges will reduce below Rs.2.00/- per kg of broiler bird. However Manager is having discretion to waive off the minimum growing charges in case of any discomfort with and or excess production cost spent by farmers
How to calculate the incentive/Penalties? Incentives or penalties shall be payable at the prescribed percentage on incremental savings/excess in the production cost compared to the standard production cost to the farmers as follows. Sl No
Incremental Savings/ Excess Production Cost compared Standard Production Cost
in Incentive to Penalty
1
Upto Rs.1
+ / - 30%
2
From Rs.1.01 to 2.00
+ / - 40%
3
Above Rs.2
+/ - 50%
/
Practical Illustrations & Examples: Companies Inputs for Calculation 14.0 Chick Cost Per DOC 0 Per kg of 19.0 Feed Cost Feed 0 Administration Cost Per bird 1.50 Actu Medicine Cost Per Kg of LB als Std Production 44.0 Cost Per Kg of LB 0 Basic GC Per Kg of LB 2.95
Incentive
First 1Rs saving
30%
Next 1Rs saving
40%
SUG/2009-10/CO/MD – 001-3 /dated 20/11/2009
Page 3 of 7
Policy on payment of Growing Charges to AP 1 Farmers
Above 2Rs 50% saving If farmer Achieve the results FCR 1.85 1.83 Mortality % 5.00 4.85 Per Kg of Medicine Cost LB 0.65 0.62 Average Body Weight Kg / bird 2.00 2.00
Chick Cost Feed Cost Medicine Cost Administration Cost Actual Production cost Production Cost Saving
(Performance as below) 1.81 1.79 1.77 1.75 4.70 4.55 4.40 4.25
1.73 4.10
1.71 3.95
0.59
0.56
0.53
0.50
0.47
0.44
2.00
2.00
2.00
2.00
2.00
2.00
7.30 33.2 5
7.29 32.8 7
7.28 32.4 9
0.50
0.47
0.44
0.78 41.8 3
0.78 41.4 1
0.78 40.9 9
2.17
2.59
3.01
Outcome Farmers Actual Prodn Cost Per kg of LB 7.35 7.34 7.33 7.32 7.31 Per kg of 35.1 34.7 34.3 34.0 33.6 LB 5 7 9 1 3 Per kg of 0.65 0.62 0.59 0.56 0.53 LB Per kg of LB 0.79 0.79 0.79 0.78 0.78 Per kg 43.9 43.5 43.0 42.6 42.2 of LB 4 2 9 7 5 Per kg of LB 0.06 0.48 0.91 1.33 1.75 Farmers Growing Charge Income
Basic Growing Charge Incentive
Total Growing Charge For 5000 birds placed
30% 40% 50% Per Kg of LB Per Bird Rs per batch
2.95 0.02 0.00 0.00
2.95 0.15 0.00 0.00
2.95 0.27 0.00 0.00
2.95 0.30 0.13 0.00
2.95 0.30 0.30 0.00
2.95 0.30 0.40 0.09
2.95 0.30 0.40 0.30
2.95 0.30 0.40 0.51
2.97
3.10
3.22
3.38
3.55
3.74
3.95
4.16
5.94 282 03
6.19 294 51
6.44 307 03
6.76 322 71
7.10 339 34
7.47 357 66
7.89 378 43
8.31 399 27
Market Rate Incentive: The incentive is payable based on the selling price applicable to that farm on based on batch average sales realization. The incentive are payable in addition to basic growing charges and basic production incentive. Eligible Category: Only A, B and C category farmers are eligible for market rate incentive Minimum Selling Price (MP): The minimum selling price to qualify for market rate incentive is Rs. 50 per kg i.e. any selling price in excess of Rs 50 per kg only qualifies to avail market rate incentive.
How to calculate the incentive/Penalties? The incentive shall be payable at the rate 10 % based on the selling price in excess of the minimum selling price i.e., Rs 50 per kg subject to maximum of Rs 1 per kg SUG/2009-10/CO/MD – 001-3 /dated 20/11/2009
Page 4 of 7
Policy on payment of Growing Charges to AP 1 Farmers
Sl No
Selling Price per Kg
Incentive
1
Less than Rs 50 per Nil kg
2
From Rs 50.01 to Rs 10% for Selling price in excess of 60 per kg minimum Price. Suppose if the rate is Rs 57 per kg then incentive will be Re 0.70 per kg ( 10% of (Rs 50- Rs 57/-)
3
Maximum Ceiling of Maximum Ceiling of Mkt Rate Incentive incentive will be Rs.1/kg
Mkt
Rate
Illustration: DC Date
5-Dec-09 6-Dec-09 7-Dec-09 8-Dec-09
Age
39 40 41 42
Kgs Lifted
600 1200 1500 2000
Average Selling Price for 5300 the batch Average Market Incentive based on batch realization per kg
Sale Price ( Rs kg )
49 53 57 62 57.08
Total /
29400 63600 85500 12400 0 30250 0
0.71
Recoveries to be considered The recoveries to be considered are categorized as follows: 1. Early Chick Mortality 2. Abnormal Mortality 3. Shortage Recovery 4. Other Recovery
1.
Early Chick Mortality : if the first week mortality rate exceeds by 1.50% and the overall mortality rate exceeds by 5.00%, Rs.14.00 per birds for excess over 1.50% shall be recovered from
SUG/2009-10/CO/MD – 001-3 /dated 20/11/2009
Page 5 of 7
Policy on payment of Growing Charges to AP 1 Farmers
the farmers as first week mortality recovery.
2.
Abnormal Mortality Recovery in respect of abnormal mortality shall be made at the following rates, based on the recommendation by the respective Line Supervisors and Branch In charges.
3.
Sl No
Age of the birds
Amount per Bird
1
Age 8 to 14 days
Rs.27 / Bird
2
Age 15 to 21 days
Rs.37 / Bird
3
Above 21 days
Rs.63 / Bird
Shortage Recovery Recovery – Mortality Criteria Rate of Recovery Early Chick Mortality Rs.14.00 per birds shall be recovered for 1st week mortality exceeds excess over 1.50% mortality in the first week 1.5% and overall mortality and 5% mortality during the batch. exceeds 5% Abnormal Mortality Age 8-14 - Rs.27 per bird as recommended by line Age 15-21 - Rs.37 per bird supervisor and branch in charge Age above 21 - Rs.63 per bird Shortage Recovery Higher of Average Realization or Production In case of any shortage in final Cost for the batch count Any shortage in birds noticed and/or reported on final count, the recovery for the shortage birds reported will be calculated at higher of average realization or production cost of that batch.
4.
Other Recovery Manager is having discretion to recover from farmers in case of any discomfort with and or excess production cost spent by farmers. This SUG/2009-10/CO/MD – 001-3 /dated 20/11/2009
Page 6 of 7
Policy on payment of Growing Charges to AP 1 Farmers
recovery will be subject to the maximum amount of growing charges due to the farmers.
G Grading of Farmers: The grading of farmers is based on the farmers production cost for that batch. The production cost will be calculated based on above illustration. Farmer’s production cost per KG
Grade of the farmer
If Less than Rs.42.00 per kg
“A”
Above Rs.42.01 and up to Rs. 43.00 /kg
“B”
Above Rs.43.01 and up to Rs. 44.00 /kg
“C”
Above Rs.44.01 and up to Rs. 45.00 /kg Above Rs.45.01 and up to Rs. 46.00 /kg
“D” “E”
Above Rs.46.00 /kg
“F”
-SignedG B.Sundararajan Joint Managing Director
SUG/2009-10/CO/MD – 001-3 /dated 20/11/2009
Page 7 of 7
A. SCOPE:
The policy and procedures herein stated provides guidelines for the payment of Growing Charges to be calculated based on Standard Production Cost.
Earlier we have considered moving average methodology for calculating the Growing Charges whereas in this policy we have amended the methodology of calculating the growing charges based on Standard Production Cost.
The policy also provides guidelines for calculation of Market Rate Incentive and Grading of farmers
This policy shall be in force until it is duly withdrawn by or specifically superseded by another policy.
The terms and the rates fixed herein shall be changed from time to time which shall be adopted as amendments hereto.
B. EFFECTIVE DATE: This policy is effective from 20th Nov 2009 for the chicks placed there from.
C. OBJECTIVE:
The objective of this policy is to provide guidance for payment of growing charges to farmers for rearing of broiler birds.
D. APPLICABLE REGION:
The said policy is applicable to Andhrapradesh 1 region
E. GROWING CHARGES: Growing charges payable to a farmers for rearing of broiler birds is inclusive of basic growing charges and production incentives or penalties recoverable there from to be arrived at as follows ; The basic growing charges payable per Kg for rearing of broiler bird Rs 2.95 per kg
F. INCENTIVES OR PENALTIES: SUG/2009-10/CO/MD – 001-3 /dated 20/11/2009
Page 1 of 7
Policy on payment of Growing Charges to AP 1 Farmers
Method of Calculation of Incentives or Penalties 1. The incentives/penalties payable/recoverable to farmer for rearing of broiler bird shall be calculated based on either of the following methods :
Standard Production Cost Basis Market Rate Incentive
2.
Meaning & Basics : The calculation of production cost will be based on the following Input costs; Inputs Description Chick Cost Feed Cost Administration Cost Medicine Cost
3.
Per Per Per Per
UOM Day Old Chick kg of feed Bird Placing kg of LB
Amount Rs.14.00 Rs.19.00 Rs.1.50 Actual Expenditure
Standard production cost to be considered: The Standard Production Cost of Rs 44 per kg to be considered for the purpose of calculating the Growing Charges. Standard Production Cost includes Chick Cost, Feed Cost, Medicine Cost and Administration Cost and excludes Minimum Growing Charges.
4.
Incentives or Penalties : Standard production cost per kg of broiler Live Bird to be considered as described above. Incentives/Penalty shall be considered at the prescribed percentage of savings/excess in the production cost (comparing to standard cost) to the farmer.
Incentive / Penalty Pattern: Incentive/ Penalty shall be paid/ recovered from the basic growing charges towards savings/excess in production cost. The incentive is termed as follows:
A: Basic Production Incentive The incentives payable or penalties recoverable shall be on the difference between actual cost of the batch (to which incentives SUG/2009-10/CO/MD – 001-3 /dated 20/11/2009
Page 2 of 7
Policy on payment of Growing Charges to AP 1 Farmers
payable or penalties recoverable) and the standard cost (arrived at as herein stated). At the ratio’s stated hereunder It shall be ensured for payment of growing charges a minimum of Rs 2.00/- per kg of broiler bird at any point of time even after levy of penalties for increase in cost of production. Therefore in no case the penalties recoverable from farmers levied by which growing charges will reduce below Rs.2.00/- per kg of broiler bird. However Manager is having discretion to waive off the minimum growing charges in case of any discomfort with and or excess production cost spent by farmers
How to calculate the incentive/Penalties? Incentives or penalties shall be payable at the prescribed percentage on incremental savings/excess in the production cost compared to the standard production cost to the farmers as follows. Sl No
Incremental Savings/ Excess Production Cost compared Standard Production Cost
in Incentive to Penalty
1
Upto Rs.1
+ / - 30%
2
From Rs.1.01 to 2.00
+ / - 40%
3
Above Rs.2
+/ - 50%
/
Practical Illustrations & Examples: Companies Inputs for Calculation 14.0 Chick Cost Per DOC 0 Per kg of 19.0 Feed Cost Feed 0 Administration Cost Per bird 1.50 Actu Medicine Cost Per Kg of LB als Std Production 44.0 Cost Per Kg of LB 0 Basic GC Per Kg of LB 2.95
Incentive
First 1Rs saving
30%
Next 1Rs saving
40%
SUG/2009-10/CO/MD – 001-3 /dated 20/11/2009
Page 3 of 7
Policy on payment of Growing Charges to AP 1 Farmers
Above 2Rs 50% saving If farmer Achieve the results FCR 1.85 1.83 Mortality % 5.00 4.85 Per Kg of Medicine Cost LB 0.65 0.62 Average Body Weight Kg / bird 2.00 2.00
Chick Cost Feed Cost Medicine Cost Administration Cost Actual Production cost Production Cost Saving
(Performance as below) 1.81 1.79 1.77 1.75 4.70 4.55 4.40 4.25
1.73 4.10
1.71 3.95
0.59
0.56
0.53
0.50
0.47
0.44
2.00
2.00
2.00
2.00
2.00
2.00
7.30 33.2 5
7.29 32.8 7
7.28 32.4 9
0.50
0.47
0.44
0.78 41.8 3
0.78 41.4 1
0.78 40.9 9
2.17
2.59
3.01
Outcome Farmers Actual Prodn Cost Per kg of LB 7.35 7.34 7.33 7.32 7.31 Per kg of 35.1 34.7 34.3 34.0 33.6 LB 5 7 9 1 3 Per kg of 0.65 0.62 0.59 0.56 0.53 LB Per kg of LB 0.79 0.79 0.79 0.78 0.78 Per kg 43.9 43.5 43.0 42.6 42.2 of LB 4 2 9 7 5 Per kg of LB 0.06 0.48 0.91 1.33 1.75 Farmers Growing Charge Income
Basic Growing Charge Incentive
Total Growing Charge For 5000 birds placed
30% 40% 50% Per Kg of LB Per Bird Rs per batch
2.95 0.02 0.00 0.00
2.95 0.15 0.00 0.00
2.95 0.27 0.00 0.00
2.95 0.30 0.13 0.00
2.95 0.30 0.30 0.00
2.95 0.30 0.40 0.09
2.95 0.30 0.40 0.30
2.95 0.30 0.40 0.51
2.97
3.10
3.22
3.38
3.55
3.74
3.95
4.16
5.94 282 03
6.19 294 51
6.44 307 03
6.76 322 71
7.10 339 34
7.47 357 66
7.89 378 43
8.31 399 27
Market Rate Incentive: The incentive is payable based on the selling price applicable to that farm on based on batch average sales realization. The incentive are payable in addition to basic growing charges and basic production incentive. Eligible Category: Only A, B and C category farmers are eligible for market rate incentive Minimum Selling Price (MP): The minimum selling price to qualify for market rate incentive is Rs. 50 per kg i.e. any selling price in excess of Rs 50 per kg only qualifies to avail market rate incentive.
How to calculate the incentive/Penalties? The incentive shall be payable at the rate 10 % based on the selling price in excess of the minimum selling price i.e., Rs 50 per kg subject to maximum of Rs 1 per kg SUG/2009-10/CO/MD – 001-3 /dated 20/11/2009
Page 4 of 7
Policy on payment of Growing Charges to AP 1 Farmers
Sl No
Selling Price per Kg
Incentive
1
Less than Rs 50 per Nil kg
2
From Rs 50.01 to Rs 10% for Selling price in excess of 60 per kg minimum Price. Suppose if the rate is Rs 57 per kg then incentive will be Re 0.70 per kg ( 10% of (Rs 50- Rs 57/-)
3
Maximum Ceiling of Maximum Ceiling of Mkt Rate Incentive incentive will be Rs.1/kg
Mkt
Rate
Illustration: DC Date
5-Dec-09 6-Dec-09 7-Dec-09 8-Dec-09
Age
39 40 41 42
Kgs Lifted
600 1200 1500 2000
Average Selling Price for 5300 the batch Average Market Incentive based on batch realization per kg
Sale Price ( Rs kg )
49 53 57 62 57.08
Total /
29400 63600 85500 12400 0 30250 0
0.71
Recoveries to be considered The recoveries to be considered are categorized as follows: 1. Early Chick Mortality 2. Abnormal Mortality 3. Shortage Recovery 4. Other Recovery
1.
Early Chick Mortality : if the first week mortality rate exceeds by 1.50% and the overall mortality rate exceeds by 5.00%, Rs.14.00 per birds for excess over 1.50% shall be recovered from
SUG/2009-10/CO/MD – 001-3 /dated 20/11/2009
Page 5 of 7
Policy on payment of Growing Charges to AP 1 Farmers
the farmers as first week mortality recovery.
2.
Abnormal Mortality Recovery in respect of abnormal mortality shall be made at the following rates, based on the recommendation by the respective Line Supervisors and Branch In charges.
3.
Sl No
Age of the birds
Amount per Bird
1
Age 8 to 14 days
Rs.27 / Bird
2
Age 15 to 21 days
Rs.37 / Bird
3
Above 21 days
Rs.63 / Bird
Shortage Recovery Recovery – Mortality Criteria Rate of Recovery Early Chick Mortality Rs.14.00 per birds shall be recovered for 1st week mortality exceeds excess over 1.50% mortality in the first week 1.5% and overall mortality and 5% mortality during the batch. exceeds 5% Abnormal Mortality Age 8-14 - Rs.27 per bird as recommended by line Age 15-21 - Rs.37 per bird supervisor and branch in charge Age above 21 - Rs.63 per bird Shortage Recovery Higher of Average Realization or Production In case of any shortage in final Cost for the batch count Any shortage in birds noticed and/or reported on final count, the recovery for the shortage birds reported will be calculated at higher of average realization or production cost of that batch.
4.
Other Recovery Manager is having discretion to recover from farmers in case of any discomfort with and or excess production cost spent by farmers. This SUG/2009-10/CO/MD – 001-3 /dated 20/11/2009
Page 6 of 7
Policy on payment of Growing Charges to AP 1 Farmers
recovery will be subject to the maximum amount of growing charges due to the farmers.
G Grading of Farmers: The grading of farmers is based on the farmers production cost for that batch. The production cost will be calculated based on above illustration. Farmer’s production cost per KG
Grade of the farmer
If Less than Rs.42.00 per kg
“A”
Above Rs.42.01 and up to Rs. 43.00 /kg
“B”
Above Rs.43.01 and up to Rs. 44.00 /kg
“C”
Above Rs.44.01 and up to Rs. 45.00 /kg Above Rs.45.01 and up to Rs. 46.00 /kg
“D” “E”
Above Rs.46.00 /kg
“F”
-SignedG B.Sundararajan Joint Managing Director
SUG/2009-10/CO/MD – 001-3 /dated 20/11/2009
Page 7 of 7
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