Loan rescheduling & repayment moratorium will help lower income lost due to bird culling, dip in poultry product demand & price With the poultry industry reeling under the outbreak of Avian Influenza (bird flu) in several parts of the country, banking regulator Reserve Bank of India (RBI) has stepped in to extend relief to the sector. The central bank has proposed rescheduling of loans and a moratorium on repayments in a bid to bail out the poultry sector, which is dominated by hundreds of small scale units. "Keeping in view the loss of income that has occurred due to culling of birds as well as steep fall in demand for poultry products and their prices, banks may consider extending these facilities to poultry units,' the RBI said in a circular to banks. Poultry units in West Bengal and the North-East were severely hit by bird flu recently. It was also reported in Jharkhand. The RBI has asked banks to convert the principal and interest due on working capital loans (as also instalments and interest on term loans due for payment on or after the onset of bird flu, ie December 31, 2007) into term loans. "The converted loans may be recovered in instalments based on projected future inflows over a period of up to three years with an initial moratorium of up to one year (the first year of repayment may be fixed after the expiry of the moratorium period),' it said. The remaining portion of term loans may be rescheduled similarly with a moratorium period of up to one year, depending on the cash flow generating capacity of the unit. "The reschedulement/ conversion may be completed on or before April 30, 2008. Rescheduled loans may be treated as current dues,' the RBI said. "After conversion as above, the borrower will be eligible for fresh need-based finance.' Meanwhile, the poultry industry said the sector is suffering huge losses. "There are three major reasons in the light of which the Agriculture Ministry had made proposals to the Finance Ministry,' said Venky's (India) Ltd group head and GM (west zone) Pedgaonkar. "Firstly, during the first outbreak of bird flu in 2006, farmers had to suffer tremendous losses and went on without profits for six-seven months. Secondly in the last 6 months the prices of maize and soya have gone up 75 per cent, increasing input costs. And during the latest outbreak in West Bengal, farmers had to sell their products too cheaply.' "Even today, farmers are getting only Rs 26-Rs 27 per kg of broiler when the cost of production is Rs 36. An egg which costs Rs 1.60 to the farmer is getting him only Rs 1.15. Looking at this picture, the RBI's guidelines are a most welcome step,' he said.