AN ECONOMIC ANALYSIS OF PRODUCTION AND MARKETING OF BANANA IN INDIA

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1 American International Journal of Research in Humanities, Arts and Social Sciences Available online at ISSN (Print): , ISSN (Online): , ISSN (CD-ROM): AIJRHASS is a refereed, indexed, peer-reviewed, multidisciplinary and open access journal published by International Association of Scientific Innovation and Research (IASIR), USA (An Association Unifying the Sciences, Engineering, and Applied Research) AN ECONOMIC ANALYSIS OF PRODUCTION AND MARKETING OF BANANA IN INDIA M.Uma Gowri 1 and T.RShanmugam 2 1 Dr.M.Uma Gowri, Ph.D (Agrl.Economics), Senior Research Fellow, Department of Agricultural Economics, CARDS, Tamil Nadu Agricultural University (TNAU), Coimbatore, Tamil Nadu, INDIA. 2 Dr.T.R.Shanmugam, Ph.D (Agrl.Economics), Professor (Agricultural Economics), Department of Agricultural Economics, CARDS, Tamil Nadu Agricultural University (TNAU), Coimbatore, Tamil Nadu, INDIA. I. Introduction Banana ( Apple of Paradise ) is one of the oldest fruits known to mankind and also a rich source of energy (104 cal/100gram). It is highly nutritive and very delicious. The probable origin of this crop is Southeast Asia. It is also utilized in a number of forms of food, medicine, feed, fuel and individual applications. Banana is reported to be grown in 130 countries in the world with a total production of 79 million tones in However, production, as well as exports and imports of bananas, are highly concentrated in a few countries. India, China, the Philippines, Brazil and Ecuador alone produced more than 60 per cent of total world banana production. This concentration of banana production has increased over time although showing a different regional distribution. Banana is the largest produced and maximum consumed amongst the fruits cultivated in India. India ranks first amongst the banana cultivating countries of the world with an annual production share of per cent of the total harvest (2009). The important banana growing states are Maharashtra, Tamil Nadu, Andhra Pradesh, Kerala, Karnataka, Bihar and Gujarat. The present production of banana in the country however, is highly inadequate. It is estimated that, the present annual per capita consumption of banana in India is 50 kg per head which is very low compared with other progressive banana growing countries such as Jamaica, Congo, Ecuador, and Uganda. Thus, there is an immense scope of increasing banana production in the country. The post harvest losses in banana have been estimated in the range of per cent from harvesting to consumption stage. Storage is essential for extending the consumption period of fruits in general by regulating their supply to the market and also for transportation to long distances. Mature-green bananas can be stored for up to three weeks in ethylene-free air or up to six weeks in a controlled atmosphere at 14 C (Surendranathan, 2003). II. Objectives The specific objectives of the study are; To analyze the trends in banana area, production in India To examine the banana cultivation practices and its economics and To analyze price spread in banana marketing To suggest suitable policy options for increasing productivity of banana III. Methodology Primary and secondary data were collected. Primary data were collected from Sathyamangalam, Gobichettipalayam, Mettupalayam and Gandhipark covering Erode and Coimbatore districts of tamil nadu state in India. (A) Tools of Analysis In order to meet the objective of trends in banana area, production in India, compound growth rate was used. (B) Compound growth rate LnY= a+bt CGR(r) = [Antilog b-1]*100 (C) Total Cost of Cultivation To examine the economies of banana cultivation cost of cultivation were calculated. Cost of cultivation included variable and fixed costs. The method adopted for computing the different cost items is described below: C1. Variable Costs (a) Suckers/corms: Farm produced suckers were evaluated at the village level prices prevalent at the time of planting. For the purchased corms, the actual rates paid by the sample farmers were used. AIJRHASS ; 2015, AIJRHASS All Rights Reserved Page 234

2 (b) (c) (d) (e) (f) (g) Farmyard manure: Farm produced manure was accounted for at the prices prevalent during the time of sowing, or at actual rates paid by the sample farmers, whenever purchased. Fertilizers and farmers were taken. Casual Labour: Casual Labour charges paid at the prevailing wage rates per day (eight hours) for men, women and bullock pair were considered. Family labour: Family labour was evaluated at the prevailing wage rates of hired labour at the village level. Women labour: Women labour was converted in to man day equivalents based on the ratio of wage rates between men plant protection chemicals: Costs of fertilizers and plant protection chemicals actually paid by the labour and women labour ( 0.60 man days) Interest on variable cost: the interest was computed at seven per cent, charged for the crop loan lending rate in the study area for a period of one year as most expenditure are incurred in the early period of the crop growth. C2. Fixed Costs (a) Depreciation charges: Depreciation charges on implements/machines were calculated using the straight-line method, i.e., by dividing the original cost of item (less salvage value) by the expected life of the item. (b) (c) (d) Land revenue: Land revenue at the rates levied by the government was considered and allocation of the cost was done in proportion to the area under the crop. Rental value of land: It was imputed by taking into account the prevailing rents in the study area per hectare per annum for banana. Interest on fixed investment: It was evaluated at the interest rate charged for the long term loans (12 per cent). C3. Returns (a) Gross returns: Per hectare gross returns was calculated based on what the sample farmers realized actually at the market prices for the quantum of the produce in rupees. (b) Net return over variable cost: It was calculated by taking into account the gross returns subtracting the variable costs. (c) Net return over total cost: It was calculated by taking into account gross returns subtracting the total costs. (d) Cost of production per quintal or ton or kg: This was calculated by dividing the total cost per hectare by the yield per hectare (quintal/tones/kg). (D) Price Spread Analysis Information was collected from the individual farmers and traders. The costs would include the transport, weighing, loading and unloading, packing, storage, spoilage, commission charges and other expenses incurred for marketing the produce. In the process of marketing of fruits, the difference between price paid by the consumer and that received by the banana producer for an equivalent quantity of banana was defined as Price Spread. Profits of the various market functionaries involved in moving the produce from the initial point of production till it reached the ultimate consumer were recorded. In general, Sum-of-Average Gross Margin method was used in the estimation of price spread. (E) Sum-of-Average Gross Margin Method The average gross margins of all the intermediaries were added to obtain the total marketing margin as well as the break up of the consumer s rupee. N MT = Σ [{ S i P i }] i=1 Q i Where, MT = Total Marketing Margin S i = Sale value of a product for i th intermediary P i = Purchase value paid by the i th intermediary Q i = Quantity of the product handled by the i th intermediary i = 1, 2, 3 N (Number of intermediaries involved in the market channel) IV. Results and Discussion Table 1. Compound growth rate Year Area Production Productivity AIJRHASS ; 2015, AIJRHASS All Rights Reserved Page 235

3 Compound growth rate of banana area was 1.88 in the year and it increased to 3.78 in the year and decreased to 2.20 in the year and increased to 5.80 in In the same way production of banana also increased from 1.13 in the year to 4.88 in the year , and decreased to 3.52 and shown an increasing trend from to Productivity of banana has shown an increasing trend from in the year to 3.77 in the year Trends in Area, Production and Productivity Area Prodn Pdv Table 2. Compound Growth Rate values for Area Production and Productivity in Tamil Nadu Year Area Production Productivity Compound growth rate of banana area in Tamil Nadu was in the year and it increased to 4.4 in the year and decreased to 2.76 in the year and increased to 9.65 in In the same way production of banana also increased from 9.49 in the year to 12.5 in the year , and decreased to 3.26 and shown an increasing tend to in the year Productivity of banana shown decreasing trend from 10.3 in the year to 0.5 in the year and increased to 1.8 in the year Table 3. Cost of Cultivation of banana (Rs/ha) S.No Particulars Nendran Kathali Poovan A Variable cost (86.52) (85.71) (85.22) 1 Planting material (3.11) (3.30) (3.30) 2 Labour (52.17) (49.15) (47.53) 3 Manures and Fertilizers (21.52) (18.14) (17.89) 4 Staking (8.62) (14.02) (15.30) 5 Plant protection chemicals (1.10) (1.10) (1.21) B Fixed cost (13.48) (14.29) (14.78) 6 Cost of cultivation (A+B)* (Rs./ha) (100) (100) (100) 7 Banana yield (tons/ha) Cost of production/kg Average price received (Rs/kg) Total income (Rs./ha) Net income (Rs./ha) AIJRHASS ; 2015, AIJRHASS All Rights Reserved Page 236

4 From the above table, it could be inferred that for all the three varieties namely Nendran, Kathali and Poovan, the cost of labour and manures and fertilizers were found to be comparatively higher. It could also be observed that the net income earned by the farmers was higher in Nendran compared to other varieties. The cost of staking for the variety Kathali was found to be much higher than Nendran and Poovan varieties. It could also be inferred that the sample farmers spent the least on the plant protection chemicals for all the varieties. The cost of production of Nendran and Kathali per kg was found to be higher i.e. Rs.4.28 and Rs.4.16 respectively and it was Rs.3.76 for Poovan. The gross income and net income realized for Nendran was considerably higher as a result of higher yield obtained even as the cost of cultivation per hectare remained around rupees one lakh per hectare for all varieties. V. Marketing Channel and Price Spread (A) Different Market Channels for selling Banana The analysis of price spread in different market channels of sale of banana are presented in Tables 9 to 11. The results would reveal that the following channels were in prevalent in the study area. Channel 1: Producer Commission agent Wholesaler Retailer Consumer Channel 2: Producer Wholesaler Retailer Consumer Channel 3: Producer Pre harvest contractor Wholesaler Retailer Consumer Table 4. Channel 1(Rs/tons) Particulars Nendran Per cent Kathali Per cent Poovan Per cent Producer Gross price received Sorting/Grading Loading/ unloading Transport cost Commission Charges Weighing charges Spoilage loss Marketing cost Net price received Wholesaler (through commission agent) Purchase price Transport cost Weighing charges Spoilage loss Marketing cost Margin Sale price Retailer Purchase price Sorting/Grading Transport cost Spoilage loss Marketing cost Margin Sale price AIJRHASS ; 2015, AIJRHASS All Rights Reserved Page 237

5 Price paid by the Consumer Price Spread Table 5. Channel 2 (Rs/tons) Particulars Nendran Per cent Kathali Per cent Poovan Per cent Producer Gross price received Sorting/Grading Packing Loading/ unloading Transport cost Weighing charges Spoilage loss Marketing cost Net price received Wholesaler (Directly) Purchase price Transport cost Weighing charges Spoilage loss Marketing cost Margin Sale price Retailer Purchase price Sorting/Grading Transport cost Spoilage loss Marketing cost Margin Sale price Price paid by the Consumer Price Spread Table 6. Channel 3 (Rs/tons) Particulars Nendran Per cent Kathali Per cent Poovan Per cent Producer Price received by producer Pre harvest Contractor Purchase price Harvesting Sorting/Grading Loading/ unloading Transport cost AIJRHASS ; 2015, AIJRHASS All Rights Reserved Page 238

6 Weighing charges Spoilage loss Marketing cost Margin Sale price Wholesaler Purchase price Transport cost Weighing charges Spoilage loss Marketing cost Margin Sale price Retailer Purchase price Sorting/Grading Transport cost Spoilage loss Marketing cost Margin Sale price Price paid by the Consumer The results of the analysis are presented in table 9 to 11. From the tables, it could be observed that in channel 1 for all the varieties, the commission charges incurred by the producers were found to be around five per cent of the gross price received by them. The net price received by the farmers was found to be higher for Nendran in channel 2 (Rs.9214) compared to channel 1 (Rs.8278). Since producers sold to pre harvest contractor in channel 3, the net price received by the farmers for Nendran (Rs.8200), Kathali (Rs.6875) and Poovan (Rs.6576) was lower when compared with channel 1 and channel 2. The net price received by the producers in channel 2 was observed to be comparatively higher for all the three varieties than that of channel 1 and channel 3. The cost incurred by wholesalers for the loading/unloading, transport and weighing were fond to be higher for Nendran (Rs.471.1) followed by Poovan (Rs.486) in channel1 and channel 3, respectively. Whereas the cost spent by the retailers was observed to be higher for Poovan (Rs ) in channel 2 and followed by Nendran (Rs ) in channel 1. The net price received by the producers was found to be higher in channel 2 compared than other two channels. The analysis would thus reveal that, if the producers directly sold the produce to wholesaler rather than to pre harvest contractor or local traders, or through commission agent generally, they would get more profit. Conclusion Improved technologies needed to enable farmers to grow more banana on limited land with reduced Cost of cultivation. The cost and returns analysis reveals that higher net returns was realized in Nendran variety. Varieties suitable for export, higher yield potential and better quality will help increase average yields. Higher price fluctuations can be avoided by going for proper storage facilities, monitoring, controlling movement of banana. Proper measures to be taken for stabilizing the price fluctuation, which will improve standard of living of farmers. References [1] Apte.D.P., Transport and Marketing Costs of Banana and Onion, Agricultural Marketing, 2(3), pp.19-25, [2] Babhulkar. N.N., Marketing of Banana in Thane District of Maharastra, The Bihar Journal of Agricultural Marketing, 4(2): pp.20-22, 1998 [3] Bagde, N.T., V.N. Autkar, and C.A. Vyawahare, Dynamics of Marketing of Selected Fruits in Nagpur, The Bihar Journal of Agricultural Marketing, 4(1): pp , AIJRHASS ; 2015, AIJRHASS All Rights Reserved Page 239

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