ECONOMIC VIABILITY OF BUTTON MUSHROOM CULTIVATION IN HIMACHAL PRADESH, INDIA

Transcription

1 Indian J. Agric. Res.., 48 (2) , 2014 DOI: /j X AGRICULTURAL RESEARCH COMMUNICATION CENTRE ECONOMIC VIABILITY OF BUTTON MUSHROOM CULTIVATION IN HIMACHAL PRADESH, INDIA Arti Kangotra 1 and S.K. Chauhan* Department of Agricultural Economics, CSK Himachal Pradesh Agricultural University, Palampur , India Received: Accepted: ABSTRACT The study shows that more than one-half of sample mushroom growers had 6 to 7 years of experience and remaining upto 5 years and mostly belonged to middle aged class of years with matriculation and graduation level formal education. The business principles like knowledge, training prior adoption of activity, market survey, etc. were given due consideration and one-half of them started enterprise with small scale of 50 or even less number of spawned compost bags each weighing 20 kg with average unit investment of Rs 45,428. Majority (80%) of them could grow a single crop with average yield of 3.62 kg per spawned compost bag which increased with the size from 3.52 kg on small to 3.64 kg per bag on large units showing low cost of production on large units due to scale economies. The financial test ratios revealed greater economic feasibility and profitability of mushroom cultivation on large units on account of higher investment and better marketing linkages with suppliers by ensuring adequate and assured supply of produce. Inadequate supply of spawned compost bags, quality spawned compost material, lack of remunerative prices and incidence of diseases were reported the major constraints requiring immediate attention of policy makers. For improving productivity, the study recommended the adequate supply of quality spawned compost bags at the doorsteps of growers at appropriate time and reasonable prices in addition to encouraging them to grow at least two crops in a year. Sale of mushroom under co-operative ambit especially by small growers may help them in fetching better price. Key word: Break-even point, Button mushroom, Economic viability, Financial test ratios. INTRODUCTION The demand for mushroom is growing, because the nutritive value of mushroom has been rediscovered and recognized as a richer source of protein. Himachal Pradesh is a state of small valleys and hills where under controlled conditions of temperature and humidity, mushroom could be grown anywhere and throughout the year. This industry is developing fast as a subsidiary occupation for income as well as for creation of additional employment to the growers and their families, the retired persons and women both in rural and urban area of the state (Oberoi and Chauhan, 1988; Kapoor et al; 1987; Chauhan and Sood, 1992). Depending on the availability of manpower, infrastructure, raw material and market, planning for a small or large mushroom unit may be chalked out, yet it is crucial to determine the optimum output level which makes a farm viable. The economics of mushroom cultivation vary across regions and also have a bearing on the benefit-cost ratio. Keeping in view all these aspects, the present study was conducted in Kangra district of Himachal Pradesh wherein Indo-Dutch Mushroom Project and State Agricultural University have played key role in the popularization of mushrooms. The specific objectives of the study were: 1. To examine socio-personal characteristics, the initiatives undertaken prior activity and production and productivity levels of mushroom on varied size units, and 2. To analyse financial test ratios and break-even point of button mushroom production on different units. * Corresponding author s skchauhan1958@gmail.com 1 Nagrota Bagwan, Department of Agriculture, Shimla, Himachal Pradesh, India

2 Vol. 48, No. 2, 2014 MATERIALS AND METHODS The study is based on data collected from 70 mushroom growers grouped as small (upto 150 spawned compost bags) and large (> 150 spawned compost bags) on the basis of number of spawned compost bags placed on their units using cube-root cumulative frequency (3 f ) method. The primary data on relevant aspects were collected on pre-tested structured schedules in March, Standard farm management techniques were applied to achieve the objectives. The net returns were arrived at by deducti ng total cost from gross returns. The financial viability of mushroom units was examined by applying the following financial tests ratios: Capital Turnover Ratio = Total Returns Total Fixed Investment Gross Ratio = Total Cost Total Returns Operating Ratio = Operating Cost Total Returns Rate of Return on Capital = Net Returns Total Fixed Investments The Break- Even Point (BEP) was computed for physical and monetary value as follow: TFC BEP (Physical units) = P y AVC BEP (Monetary units) = TFC/ (1 AVC/P y ) where, BEP = Break-even point in terms of physical units of production and compost bags TFC = Total fixed cost in rupees P y = Price of mushroom output in rupees per kg AVC = Average per unit variable cost of mushroom production in rupees AVC = TVC / MO where, MO = Total mushroom output in kg and TVC = Total variable cost in rupees Margin of safety (MOS) = Total output output at BEP Margin of safety percentage = (BEP output/ Volume (MOS %age) of output)* 100 RESULTS AND DISCUSSION Mushroom production in H imachal Pradesh: Mushroom cultivation practised by both public and private entrepreneurs has witnessed an increase in 135 its production from 2945 tonnes in to 7377 tonnes in in the state (Table 1). Major part of mushroom production came from private entrepreneurs showing growth rate of over 10 per cent p.a, however, the state as a whole recorded compound growth rate of 9.97 per cent p.a. Socio personal profile of mushroom growers: Knowledge regarding the personal characteristics of the respondents is very important as this influence the decision-making process in running the farm business to a great extent. It is in this context that some salient features about the distribution of the heads of the sample households according to their age, education and farming experiences are presented in Table-2. It can be visualized from Table-2 that in all about 87 per cent of the growers were in the age group of upto 60 years of age whereas 13 per cent of them were above 60 years of age. As far as their education status is concerned, over 70 per cent had education upto matriculation level and 29 per cent above matriculation. As regards the experience in mushroom growing, more than one-half (51.43%) had adopted this enterprise during the last five years and per cent had 5 to 7 years experience. TABLE 1: Trend and growth of mushroom production in Himachal Pradesh Year Production (in tonnes) Under project Private units Total (3.62) (96.38) (4.74) 3074 (95.26) (2.80) (97.20) (2.25) (97.75) (2.05) 4604 (97.95) (1.15) (98.85) (3.76) (96.24) (1.79) (98.21) (1.52) (98.48) (1.39) (98.61) Compound growth rates (% p.a.) Source: Directorate of Horticulture, Shimla

3 136 INDIAN JOURNAL OF AGRICULTURAL RESEARCH TABLE 2: Socio- personal profile of sample mushroom growers (%) Sr. Unit Unit size size No. 1 Age Up to 60 yrs Above 60 yrs Education Up to matriculation Above matriculation Experience in mushroom growing Up to 5 years Above 5 years to 7 years Initiatives on mushroom production: In estimating the costs and returns structure from commercial technical activity it is equally important to examine the initiatives undertaken by the adopters. The mushroom production activity in fact is low investment indoor activity but requiring high skill knowledge and innovation. All the sample growers had acquired training on mushroom cultivation prior adopting the profession on commercial lines (Table 3). Before starting any enterprise market assessment is also a pre-requisite and in this activity in particular, about 29 per cent growers in small category and double of this percentage in large category had conducted potential market survey in estimating demand for their mushrooms. Over one-half (58%) of the sample growers started this venture initially with 50 or less spawned compost bags whereas over 40 per cent TABLE 3: Initiatives undertaken by growers in mushroom production activities No. Per cent No. Per cent No. Per cent Got training prior starting mushroom production Conducted market survey for demand Acti vity started with upto compost bags More than 50 compost bags Utilization of first lot Consumed at home and offered as gift Consumed at home and sold in the market Feedback about quality of produce Excel lent Very good Good Fair High level of satisfaction What tempted you to grow second crop Better marketability Better price Frequency of mushroom consumption at home Daily Weekly Monthly Getting regular advice from mushroom experts Facing problem of disease & insects Investment (Rs/unit) - 36,958-55,011-45,428 Major items (%) Minor items (%)

4 growers placed more than 50 spawned compost bags. Quality of the produce ultimately determines the shape of business growth curve of any activity. In this enterprise, at the overall level, the feedback about the quality of their first crop was of highly satisfactory level. Better market price and increasing consumers acceptability for the produce, inspired particularly the large growers to raise second crop of mushroom. As far as the home consumption is concerned, more than 70 per cent growers consumed weekly and per cent were consuming only once in a month. The susceptibility of this crop to disease outbreak and insect attack is evident from a very high proportion (two-third) of growers reporting this problem. It can also be viewed from the Table that at overall level per unit investment on major and minor items was per cent and per cent of the total investment of Rs 45,428. On all units, iron racks accounted for highest (25.31) percentage of farm investment which varied from per cent on small to per cent on large units. Air-conditioner, cooler, blower, etc. were the other important items of investment. Inputs use, production and average yield: The yield of mushroom is highly variable and depends upon the quality of compost, the strain of the spawn used and the proper management of the crop. Table 4 shows use of spawned compost bags, mushroom production and yield realized per unit of spawned compost bags on sample mushroom units raising single and double crop in a year. It is evident from the table that the average yield per spawned compost bag was the highest of 3.72 kg on large units taking a single crop followed by 3.58 kg again on the large units raising two crops in a year. The table clearly shows that the average yield of mushroom was found increasing with the size of units due to better use of technology like maintaining relative Vol. 48, No. 2, 2014 TABLE 4: Compost bags, mushroom production and productivity on sample units Unit size Sample mushroom growers (No.) Compost bags placed on units taking single crop (No.) Compost bags placed on units taking two crops (No.) Compost bags placed on all units for all crops (No.) Mushroom production on units raising single crop (kg) Mushroom production on units raising two crops (kg) Total mushroom production (kg) Average yield of mushroom on units raising single crop (kg/bag) Average yield of mushroom on units raising two crops (kg/bag) Average yield of mushroom on all units (kg/bag) humidity, the temperature, proper ventilation, heating, cooling, proper spacing between bags, timely spraying and proper casing. However, on the whole the average yield of button mushroom was as high as 3.62 kg per compost bag slightly varying from 3.52 kg on small to 3.64 kg on large units. Similar results were reported by Meena et al. (2009) and Singh et al. (2010). Economic viability: The financial test ratios for a single and double crop of button mushroom indicating the economic viability for different units are shown in Table 5. The capital turnover ratios on units raising two crops were 2.64, 2.69 and 2.67 for small, large and overall units, respectively indicating the total return per unit of rupee invested on fixed assets, whereas the corresponding figures of gross ratios for raising two crops were 0.79, 0.56 and It can be observed that large mushroom units were more economical since the total cost per unit of total returns was lowest. The operating ratios which were worked out by dividing operating costs by total returns were found to be more favourable due to low value of 0.19 on large than small units (0.41). Similarly, the findings for one crop of button mushroom have revealed more or less the same pattern. The capital turnover ratio was 2.60 and rate of return on capital was 0.84 at the overall level. Again the values for large category were higher than smaller one for different financial ratios and the rate of return on capital was also found to be higher in case of large than small units. These results clearly explain that the mushroom business activity was financially sound on large units raising single or double crop than small units. Thus, these economic ratios clearly indicated the economic feasibility and profitability of mushroom cultivation on large scale. Similar results regarding the economic viability of button mushroom were also reported by Kanwar (1986).

5 138 INDIAN JOURNAL OF AGRICULTURAL RESEARCH TABLE 5: Financial test ratios for button mushroom production Small Large Overall One crop of button mushroom Capital turnover ratio Gross ratio Operating ratio Rate of return on capital Two crops of button mushroom Capital turnover ratio Gross ratio Operating ratio Rate of return on capital Break- even analysis: Break-even analyses presented in Table 6 reveals that small units producing 253 kg mushrooms valued at Rs 19,125 did not gain or lose under given inputs cost and output price structure. However, the large units producing just 170 kg of mushrooms were at no profit-loss situation due to their low variable cost of production. At the overall level the break-even output in physical terms was achieved at 191 kg of mushroom production. The break-even analysis shown in physical terms reveals that small and large units would be at no profit-loss situation if they manage at least 79 and 47 compost bags on their units, however, at the overall level the number of spawned compost bags giving no profit no loss was 54. The growers who resorted to raising a single crop in a year their break-even point was obtained almost at same level of compost bags. Both small and large units raising single or double crop had also achieved their margin of safety. The results further show that large growers could fetch better price (almost 50% higher than small growers) for their produce on account of better production and marketing technology. Secondly the large growers could maintain assured supply for longer period because of getting two crops. Problems faced by mushroom growers: Table 7 reveals that inadequacy of compost bags at appropriate time followed by non availability of quality spawned compost and incidences of disease were the major problems reported by mushroom growers. The nearby public units preparing spawn compost could not meet the demand of growers. As much as 43 per cent of the growers reported that in relation to costs incurred they did not receive remunerative price for the mushroom crop. However, very few growers reported the incidence of insect-pests. Similar constraints were also reported by Paul et al (2001). CONCLUSION AND RECOMMENDATIONS: In Himachal Pradesh the contribution of private sector mushroom units increased from per cent in to more than 98 per cent in and likewise total mushroom production in the state witnessed an annual compound growth rate of 9.97 per cent over this period with highest of per cent per annum on private sector units. Majority of sample mushroom growers preferred to acquire knowledge, undergo training and conduct market survey prior its adoption and onehalf of them started activity from small scale. The average investment made was one and half times more on large units than small with an overall average of Rs 45,428. Majority of sample units raised a single crop of button mushroom with average yield of 3.62 kg per spawned compost bag which increased with the unit size. The large units incurred low cost on mushroom production as compared to small due to scale economies; resultantly, the mushroom business activity turned up financially sound on large units raising any number of crops than small units. The major constraints faced by mushroom growers included the inadequate timely supply of spawned compost bags when needed, non availability of quality compost material, lack of remunerative prices and incidence of diseases. For improving productivity and reducing cost of production, the study recommended the adequate supply of spawned compost bags at the doorsteps of growers at the appropriate time and reasonable prices in addition to encouraging them to grow at least two crops in a year.

6 Vol. 48, No. 2, 2014 TABLE 6: Break-even analysis for button mushroom (Rs /100 bags basis) Small Large Overall One Crop of button Mushroom Total fixed cost 11,321 16,944 14,081 Total variable cost 12,182 9,826 11,136 Total cost 23,503 26,770 25,217 Actual output selling price (Rs/ kg) Volume of mushroom output (kg) Total revenue (Rs) 28,320 44,640 37,332 Average variable cost (Rs/ kg) Break-even output (mushroom in kg) Break-even output in monetary value (Rs) 19,866 21,726 20,068 Margin of safety (in kg) Margin of safety (%age) Break-even point (No. of compost bags) Two crops of button mushroom Total fixed cost 11,321 16,944 14,081 Total variable cost 12,953 9,019 10,851 Total cost 24,274 25,963 24,932 Actual output selling price (Rs/ kg) Volume of mushroom output (kg) Total revenue (Rs) 27,370 44,750 37,128 Average variable cost (Rs/ kg) Break-even output (mushroom in kg) Break-even output in monetary value (Rs) 21,494 21,220 19,894 Margin of safety (in kg) Margin of safety (%age) Break-even point (No. of compost bags) TABLE 7: Main problems encountered in mushroom production (Multiple response no.) Inadequate supply of compost bags in relation 31(79.48) 24(77.42) 55(78.57) to demand at appropriate time Non availability of quality spawned compost bags 20(51.28) 22(70.96) 42(60.00) Incidence of disease 21(53.85) 16(51.61) 37(52.85) Non remunerative prices 18(46.15) 12(38.70) 30(42.85) Incidence of insect-pest 0(0.00) 4(12.90) 4(12.90) Note: Figures in parentheses are percentages of total The policy interventions also include promotion of farmers cooperative marketing societies and or farmer s organizations in fetching remunerative price for the crop and tackling the problem of surplus produce through valueaddition. REFERENCES Chauhan S.K. and Sood R P. (1992). Economics of production and marketing of mushroom in Kangra district, H.P. Indian Journal of Agricultural Marketing 6(1): Kanwar. L.S. (1986). Economics of mushroom cultivation in Solan district of Himachal Pradesh. M Sc Thesis, Department of Agricultural Economics, CSK Himachal Pradesh Krishi Vishvavidyalaya, Palampur, India: Kapoor. P., Guleria J., Sharma R.K. and Tewari S.C. (1987). Economics of button mushroom cultivation case study of mushroom farms in Himachal Pradesh. Agricultural Situation in India 42(9): Meena. K.N., Pant. D.C. and Upadhyay B. (2009). Production and marketing of mushroom in Udaipur district of Rajasthan. Indian Journal of Agricultural Marketing 23(2): Oberoi. R.C. and Chauhan. S.K. (1988). Grow mushrooms for profit. Indian Farmer s Digest 21(1): Paul N, Punjabi, N.K. and Paul, S. (2001). Constraints of mushroom Cultivation. Agricultural Extension Review 13(2): Singh R, Bishnoi D.K. and Singh, A. (2010). Cost benefit analysis and marketing of mushroom in Haryana. Agricultural Economics Research Review 23(1):