GROWTH AND BUSINESS VIABILITY OF COLD STORAGE UNITS IN GUNTUR DISTRICT OF ANDHRA PRADESH. CHAITANYA BHAVANI B.Sc. (CA & BM)

Transcription

1 GROWTH AND BUSINESS VIABILITY OF COLD STORAGE UNITS IN GUNTUR DISTRICT OF ANDHRA PRADESH CHAITANYA BHAVANI B.Sc. (CA & BM) MASTER OF BUSINESS ADMINISTRATION (AGRIBUSINESS MANAGEMENT) 2014

2 GROWTH AND BUSINESS VIABILITY OF COLD STORAGE UNITS IN GUNTUR DISTRICT OF ANDHRA PRADESH BY CHAITANYA BHAVANI PESALA B.Sc. (CA&BM) THESIS SUBMITTED TO ACHARYA N. G. RANGA AGRICULTURAL UNIVERSITY IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (AGRIBUSINESS MANAGEMENT) CHAIRPERSON: Dr. SEEMA SCHOOL OF AGRIBUSINESS MANAGEMENT COLLEGE OF AGRICULTURE RAJENDRANAGAR, HYDERABAD ACHARYA N. G. RANGA AGRICULTURAL UNIVERSITY 2014 i

3 DECLARATION I, P.CHAITANYA BHAVANI, hereby declare that the thesis entitled GROWTH AND BUSINESS VIABILITY OF COLD STORAGE UNITS IN GUNTUR DISTRICT OF ANDHRA PRADESH submitted to the Acharya N.G. Ranga Agricultural University for the degree of Master of Business Administration in School of Agribusiness Management in the major field of Agribusiness Management is the result of the original research work done by me. I also declare that no material contained in the report has been published earlier in any manner. Place: Hyderabad Date: (P.CHAITANYA BHAVANI) I. D. NO. RMBA/12-03 ii

4 CERTIFICATE Ms. P.CHAITANYA BHAVANI has satisfactorily prosecuted the course of research and that thesis entitled GROWTH AND BUSINESS VIABILITY OF COLD STORAGE UNITS IN GUNTUR DISTRICT OF ANDHRA PRADESH submitted is the result of original research work and is of sufficiently high standard to warrant its presentation to the examination. I also certify that neither the project nor its part thereof has been previously submitted by him for a degree of any university. Date: (Dr.SEEMA) Chairperson iii

5 CERTIFICATE This is to certify that the thesis entitled GROWTH AND BUSINESS VIABILITY OF COLD STORAGE UNITS IN GUNTUR DISTRICT OF ANDHRA PRADESH submitted in partial fulfillment of the requirements for the degree of Masters of Business Administration of the Acharya N. G. Ranga Agricultural University, Hyderabad, is a record of the bonafide original research work carried out by Ms. P. CHAITANYA BHAVANI under our guidance and supervision. No part of the thesis has been submitted by the student for any other degree or diploma. The published part and all assistance received during the course of investigations have been duly acknowledged by the author of the thesis. Thesis approved by the Student Advisory Committee Chairperson Member Dr. SEEMA Professor & Head School of Agribusiness Management College of Agriculture Rajendranagar, Hyderabad Dr. P. RADHIKA Associate Professor School of Agribusiness Management College of Agriculture Rajendranagar, Hyderabad (SEEMA) Chairperson of the Advisory Committee Member Shri M.H.V.BHAVE Associate Professor & Head Department of Statistics & Mathematics College of Agriculture Rajendranagar, Hyderabad Date of final viva voce: iv

6 ACKNOWLEDGEMENTS I am pleased to place my profound etiquette to my Major Advisor and Chairperson of the Advisory Committee, Dr.Seema, Professor & Head, School of Agribusiness Management, College of Agriculture, Rajendranagar, Acharya N.G Ranga Agricultural University for her wise counsel, concrete suggestions, her inspiring, meticulous and affectionate guidance, constant help and persistent encouragement during the course of my study and prosecution of research work. I take it as a privilege and pride to have an opportunity of working under her inspiring spirit. I deem it my privilege in expressing my deep sense of reverence and gratitude and indebtedness to Dr. P. Radhika, Associate Professor, School of Agribusiness Management, College of Agriculture, Rajendranagar, Acharya N.G Ranga Agricultural University and member of Advisory Committee for her encouragement and guidance. I equally owe my deep sense of gratitude to Sri. M. H. V. Bhave Professor & Head, Department of Statistics and mathematics and member of my Advisory Committee for his invaluable guidance, suggestions and support during my course of study. It will be a great lapse on my part if I fail to extend my best regards to all my teachers and well-wishers who have contributed in building up my present status. I also thank to the staff of School of Agribusiness Management for their help during my thesis work. Language falls short of to express my undoubtfull gratitude, indebtedness, love and affection to my beloved and venerable parents Smt. K. Anjani Bai and Sri. K. Ram Gopal Singh, who constantly educated, guided and moulded me into the present position and whose boundless love, unparallel affection, dedicated efforts, encouragement and moral support is a constant source of motivation for me in shaping up my career It is time to surface out my genuflect love and affectionate gratitude to my sister K. Nikhita Singh and all my family members whose everlasting love and encouragement were my strongest assets during the course of my life with whose moral support I achieved this level of education. v

7 My acknowledgement would be incomplete and meaningless without thanks to my friends Praveen Babu, Arshiya, Zainab, and Vivek for their voluntary help, mood refreshing gossip which helped me in completing the thesis. I owe special thanks to the constant support and guidance extended to me in all possible ways by my seniors K.Sridevi and K.Uma Shankar with which this research work has been completed successfully. I take it as a special privilege to thank all the authorities and staff of ANGRAU, who provided me an opportunity to undertake the course and those who directly and indirectly helped me in all my endeavours. Date: Place: Hyderabad (P. CHAITANYA BHAVANI) I.D. NO. RMBA/12-03 vi

8 LIST OF CONTENTS CHAPTER NO. TITLE PAGE NO. I INTRODUCTION II REVIEW OF LITERATURE III MATERIALS AND METHODS IV RESULTS AND DISCUSSION V SUMMARY AND CONCLUSIONS LITERATURE CITED vii

9 LIST OF TABLES Table No. Title Page No 1.1 Capacity of cold storages of twenty largest country markets in the 3 world 1.2 Status of cold storage infrastructure in India State wise number of cold storages in India Installed capacity of cold storages Agency wise details of cold storage infrastructure created Commodity wise distribution of storage in refrigerated warehouses in 9 India 1.7 Cold storages assisted by National Horticulture Mission in Andhra 12 Pradesh 3.1 Salient features of Guntur district Educational status of the respondents Age group of the respondents Family size of the respondents Growth in cold storages in the selected market area over the period 46 from to Investment details of the selected large cold storage unit Investment details of the selected medium cold storage unit Investment details of the selected small cold storage unit Details of the storage cost of the large cold storage unit Cost & returns structure of large cold storage unit Details of the storage cost of the medium cold storage unit Cost & returns structure of medium cold storage unit Details of the storage cost of the small cold storage unit Cost & returns structure of small cold storage unit Financial feasibility analysis of cold storage units Pattern of chilli stored in the selected units Pattern of turmeric stored in the selected units 58 viii

10 4.17 Cost and returns structure of storage to farmer in cold storage unit Financial problems faced by the cold storage units Technical problems faced by the cold storage units General problems faced by the cold storage units Constraints of the farmers in utilizing cold storage service Constraints of the traders in utilizing cold storage service 66 ix

11 LIST OF ILLUSTRATIONS Figure Title Page No. No. 1.1 Share of public, co-operative and privately managed cold 9 storages in India 1.2 Sector wise Distribution of Cold Storages in Andhra Pradesh Commodity wise distribution of cold storages in Andhra 11 Pradesh 3.1 Map of Guntur District 33 x

12 LIST OF SYMBOLS AND ABBREVIATIONS & : And % : Per cent ANGRAU : Acharya N.G. Ranga Agriculture University BCR : Benefit Cost Ratio et al. : and other people etc. : and so on FC : Fixed Cost Ha : Hectare IRR : Internal Rate of Return i.e., : That is kg : Kilogram NPV : Net Present Value Rs. : Rupee t : Tonne t/ha. : Tonne per hectare viz. : namely xi

13 Author : P.CHAITANYA BHAVANI I.D. No. : RMBA Title of the thesis : GROWTH AND BUSINESS VIABILITY OF COLD STORAGE UNITS IN GUNTUR DISTRICT OF ANDHRA PRADESH Degree to which : MASTER OF BUSINESS ADMINISTRATION it is submitted Faculty : AGRICULTURE Department : AGRIBUSINESS MANAGEMENT Major Advisor : Dr. SEEMA Professor & Head School of Agri Business Management College of Agriculture Rajendranagar, Hyderabad University : ACHARYA N. G. RANGA AGRICULTURAL UNIVERSITY Year of submission : 2014 ABSTRACT A cold storage is a place where various items such as vegetables, fruits, medicines, meat etc. are stored so as to protect them from getting spoiled and thereby prolong their preservation period. Cold storage industry is popularly known as agricultural service oriented industry which serves as a vital link between the production and consumption of agricultural produce. The importance of cold storage is to achieve the twin objectives of price stabilization and fair prices to producers and consumers. The overall growth of the agricultural sector and its output has a close relationship with the level of investment made in agricultural infrastructure. The chilli crop is one of the prominent crops in Guntur district and is also vulnerable to the price fluctuations. Therefore, farmers in order to maintain the quality of the produce without any spoilage, stock the chillies in cold storages. The present study entitled Growth and business viability of cold storage units in Guntur district of Andhra Pradesh was studied with following objectives: xii

14 1. To study the growth in cold storage units in the Guntur district and in Andhra Pradesh. 2. To study the investment pattern, cost and returns, and financial feasibility of selected units. 3. To examine the types and pattern of different commodities stored in the selected units. 4. To analyze benefits accrued to the chilli farmers by stocking produce in the cold storages. 5. To identify the constraints faced by cold storage entrepreneurs and the users in the selected area. The research focuses on the growth in the number of cold storage units in the study area. This study plays an important role in assessing business viability and helps the investor to analyze feasibility of establishing cold storage unit. The study included estimation of investment cost of establishment, cost and returns and financial feasibility of cold storage units. The data was primarily collected through personal interview with the help of a pre-tested questionnaire designed especially for the purpose. Total cost for establishing and maintenance cost for cold storage and total returns were analyzed.the data was compiled, tabulated and analyzed using Net Present Value (NPV), Internal Rate of Return (IRR) and Benefit-Cost-Ratio (BCR). Pattern of storage of commodities was recorded in percentages. Benefits accrued to the farmers have been calculated. Constraints faced by the cold storage units, farmers and traders are analyzed through Garrett ranking and Likert scaling techniques. The compound growth rates for number of cold storages in Guntur district and Andhra Pradesh over period were found to be and The result of the study showed that there is more investment scope for cold storage units with positive Net Present Value i.e., Rs , Rs and Rs for large, medium and small cold storage units respectively. Benefit Cost Ratio was 1.61 for large cold storage, 1.80 for medium cold storage units and 1.55 for small cold storage units. The Internal Rate of Return being 110 per cent, 125 per cent and 104 per cent for large, medium and small cold storage units respectively. Chilli and turmeric are the major crops being stored in the cold storages in Guntur district. Chilli was stored in 18.7 lakh bags in the year , turmeric was stored in 0.59 lakh bags (each bag is equal to 50 kgs). The profit per bag to the farmers by storing in cold storage was Rs The major problem faced by the cold storage units are high cost of storage, heavy capital investment, fire risk and heavy competition as major problems. Farmers are facing the issues of delay in getting cold storage space, high cost of storage, risk of damage in utilizing the cold storage services. Traders face the problems of high cost of storage, price fluctuations of produce, inadequate and delay in getting the cold storage space. Keywords: Cold storage units, Chilli, Net Present Value (NPV), Internal Rate of Return (IRR), Benefit Cost Ratio(BCR), Garrett ranking, Likert scaling. xiii

15 CHAPTER I INTRODUCTION Preservation of food can occur under frozen or chilled temperatures. A cold storage is a place where various items such as vegetables, fruits, medicines, meat etc. are stored so as to protect them from getting spoiled and thereby prolong their preservation period. This task is accomplished by storing the products at their preservation temperature, humidity etc. A cold chain arrangement is required because of perishable nature of produce. It helps to maintain the quality and extend the shelf-life, if consumption is not meant immediately after harvest. In the absence of a cold storage and related cold chain facilities, the farmers are being forced to sell their produce immediately after harvest which results in glut situations and low price realization. Cold storage provides the vital link between production and consumption of perishable products. The conservation of perishables through cold storage helps in enhancing the marketing period of agricultural and horticultural produce and ensures availability to the consumer over an extended period. In the process, they ensure reasonable price to the farmers, who can sell their produce at the time when the prices become remunerative. Creation of storage facilities is expected to reduce perishability and enhance value addition. The overall growth of the agricultural sector and its output has a close relationship with the level of investment made in agricultural infrastructure. In fact empirical research has shown that there is a strong positive correlation between the level of infrastructure and the economic development. Investments made in the infrastructure results in a comparative advantage for the region, which results in a higher agricultural output and productivity. Availability and efficient use of the cold chain is much more evident in developed countries than in developing countries. Unreliability of the power supply, lack of proper maintenance, and inefficiency of utilization of cold storage and refrigerated transport facilities are among the reasons for failure of the cold chain in developing countries. 1

16 The storage of agricultural products is necessary for following reasons: a) Agricultural products are seasonally produced and required for consumption throughout the year. To ensure continuous flow of goods in the market from time of production to time of consumption. b) It is necessary to protect the quality of perishable and semi-perishable products from deterioration. c) Storage helps in the stabilization of prices by adjusting demand and supply. d) The storage of some farm commodities is necessary either for their ripening and improvement in quality like mango, banana, sapota, papaya etc. e) Storage provides employment and income through price advantage. f) A cold storage facility accessible to farmers will go a long way in removing the risk of distress sale and ensure better returns. 1.1 WORLD SCENARIO Total capacity of refrigerated warehouses is estimated at 458 million cubic meters worldwide in 2010, of which 310 million cubic meters is public warehouses (for hire). The largest cold storage industries are in the USA, India, and China. Two large emerging markets- India and China posted remarkable growth in cold storage warehousing. More than 68 per cent of the growth in global capacity is in these two markets. In terms of volume of warehousing added, India and China account for 133 million cubic meters (m3) of new capacity. India s industry is characterized by a large number of smaller warehouses and in terms of total capacity (at 105 million m3 as of 2010) is larger than China. China s growth has been rapid (14 per cent compound annual growth) but more moderate than India. The total capacity in China of 61 million m3 includes approximately 7 million m3 of private warehouses. Private warehouses are 12 per cent of the total capacity in China. Of the reported capacity of refrigerated warehouses in China, none are government-owned. In India, there are relatively few public refrigerated warehouses, less than half a million m3. Government-owned refrigerated warehouses comprise 4 million m3 or 4 per cent of the capacity in India. (Victoria, 2012) 2

17 Table 1.1 Capacity of cold storages of twenty largest country markets in the world. S.No Country Capacity in Million Cubic Meters 1 USA India China 61 4 Japan 34 5 Germany 22 6 Russia 16 7 Netherlands 13 8 France 9 9 Spain 8 10 Bangladesh 8 11 South Korea 7 12 Canada 7 13 Australia 6 14 Brazil 6 15 Great Britain 6 16 Mexico 4 17 Chile 4 18 Italy 4 19 Trin. & Tobago 2 20 Belgium 2 (Source: Victoria, 2012) 3

18 1.2 INDIAN SCENARIO India is the largest producer of fruits and second largest producer of vegetables in the world. In spite of that, per capita availability of fruits and vegetables is quite low because of high post harvest losses in perishables and semi-perishables. Post harvest technology adds value to the agricultural products. Storage is an important marketing function, which involves holding and preserving goods from time they are produced until they are needed for consumption. Storage function adds time utility to the product. The first cold storage was set up in Calcutta in 1892, but the growth in industry was sluggish up to The sector needed large scale improvement in quantitative as well as qualitative aspects. The basic requirements for maintaining quality and safety of horticultural perishables (fruits, vegetables, herbs, ornamentals) between harvest and consumption sites are the same in developing and developed countries. However, the extent of adoption of the specific harvesting and postharvest handling technologies varies greatly among countries and within each country, depending on scale of operation, intended markets, and the return on investment (cost/benefit ratio) of each technology. Although labor costs are lower in developing countries, labor training, productivity, and management are generally better in developed countries. The cold chain has become an integral part of the supply chain of perishable items. Recent studies have shown a critical absence of a strong and dependable cold chain in developing economies like India which needs to be filled up and therefore: a) It makes possible the even placement of perishable commodities in the market. b) It helps in the prices stabilization of perishable commodities by removing the gluts occurring in the production season. c) It helps in widening the market of the products by lowering marketing costs, and by lowering the price of perishables to consumers, and ensures that products are available throughout the year d) Cold storage facilities have made it possible for consumers to live in greater comfort. 4

19 Table 1.2 Status of cold storage infrastructure in India state wise (lakh MT) Sl.No. State Cold storage capacity requirement Present available capacity Gap 1 Andhra Pradesh Assam Bihar Chhattisgarh Gujarat Haryana Himachal Pradesh Jammu & Kashmir Jharkhand Karnataka Kerala Maharashtra Manipur Meghalaya Mizoram Madhya Pradesh Nagaland Orissa Punjab Rajasthan Tamil Nadu Tripura UP & Uttaranchal West Bengal Total Source: National Stock Exchange & Directorate of Marketing and Inspection,

20 The statistics of Table 1.2 indicates that the states of Uttar Pradesh, Uttaranchal, West Bengal, Tamil Nadu, Maharashtra, Bihar etc. have the maximum requirement of cold storages. The availability figures match up to certain extent with the requirement in the states of Uttar Pradesh and Uttaranchal. There also exists a huge gap for the states of West Bengal, Tamilnadu, Maharashtra, Bihar etc. Table 1.3 State wise number of cold storages in India. States/ UT s Andaman AP Arunachal Assam Bihar Chandigarh Chhattisgarh Delhi Gujarat Goa Haryana HP J&K Jharkhand Kerala Karnataka Lakshadweep Maharashtra MP Manipur Meghalaya Mizoram Nagaland

21 Table 1.3 (cont.). Orissa Pondicherry Punjab Rajasthan Sikkim Tamilnadu Tripura UP& UK WB India Source: Table 1.3 indicates that total number of units existing across the states in India upto The states of Uttar Pradesh and Uttarakhand registered highest number of units followed by West Bengal, Maharashtra, Punjab, Gujarat, Bihar, Andhra Pradesh, Karnataka etc. Table 1.4 Installed capacity of cold storages Cold storage development in India from the year 2009 to 2012 is shown in the table given below. Year No. of Cold Storages Installed capacity In lakh MT (cumulative) Source : Directorate of Marketing and Inspection,

22 Of the lakh MT cold storage capacity, nearly lakh MT has been created between on account of interventions by National Horticulture Board (NHB), National Horticulture Mission (NHM), Horticulture Mission in North East and Himalayan States (HMNEH), Agricultural and Processed Food Products Export Development and Authority (APEDA), Ministry of Food Processing Industries (MoFPI) and Department of Animal Husbandry and Fisheries (DAHD). Table 1.5 Agency wise details of cold storage infrastructure created ( ) Name of Scheme Number of new cold storages infrastructure Capacity created lakh MT Govt. Subsidy Rs. in crore NHM ,25.91 NHB ,64.08 HMNEH NCDC MoFPI ,46.71 APEDA Total 1, ,59.33 Source: Directorate of Marketing and Inspection

23 Figure 1.1 Share of public, co-operative and privately managed cold storages in India (in metric tonnes) 936, , Private Cooperative Government (Source: Victoria, 2012) Out of the total storage capacity created, 2,34,06,745 metric tonnes is owned by private sector, metric tones by co-operatives and 1,07,042 by the government. Table1.6 Commodities wise distribution of storage in refrigerated warehouses in India Milk & Multipurpose Fruits & Meat & Milk Potatoes Vegetables Fish Products Others Total No. of units 2,862 1, ,381 Capacity MT ,644,659 96, ,496 68,230 26,524 24,450,652 Capacity Cubic meters , , , ,053 79,233,158 % of capacity utilised (Source: Victoria, 2012) 9

24 1.3 ANDHRA PRADESH SCENARIO Andhra Pradesh is the second largest producer of fruits and vegetables in India and it produces more of chillies, turmeric and oil palm than any other state. There are a total of 119 cold storage units in the state with an installed capacity of 3,28,677 million tonnes which is shared by co-operatives (9 per cent), private sector (84 per cent) and the public sector (7 per cent). The cold storage capacity rose from 63,735 million tonnes in 1990 to the present levels of 3,28,677 millon tonnes ( ). Cold storage capacity created in the state is mainly concentrated in Guntur district and Hyderabad city which together accounts for 43 per cent of the total capacity in the state. Guntur district is well known for its commercial crops like chillies, tobacco and cotton etc. The district is one of the agriculturally advanced districts in the state. Agricultural economy of the district witnessed many changes. Guntur district occupies the foremost place in the state for cultivation in both food and non-food crops. Paddy, jowar, bajra, blackgram, greengram, redgram, cotton, chillies, turmeric, tobacco are the main crops grown in the district. The reputation of Guntur chillies is well known throughout the world. The chilli crop is one of the prominent crops in Guntur district and is also vulnerable to the price fluctuations. Therefore, farmers in order to maintain the quality of the produce without any spoilage, stock the chillies in cold storages. The business viability of the cold storage units depends upon its optimum utilization, regular and continuous supply of power. 10

25 Fig 1.2 Sector wise Distribution of Cold Storages in Andhra Pradesh Private sector Co-operative sector Public sector 269 Source: agriexchange.apeda.gov.in (2010) From the figure 1.4, it can be inferred that the cold storages owned by the private sector are majority with 269 in number whereas the co-operative sector and public sector own nominal number of cold storages 11 and 10 respectively. Fig 1.3 Commodity wise distribution of cold storages in Andhra Pradesh Potato Multipurpose Fruits & Vegetables Meat & Fish Milk & Milk Products Others Source: agriexchange.apeda.gov.in (2010) 11

26 From the figure 1.5, it can be inferred that majority of the cold storages are predominantly multi-purpose in storage with 212 in number, 11 for fruits and vegetables, 44 in number for meat and fish, 15 for milk and milk products and 8 for others. Table 1.7 Cold storages assisted by National Horticulture Mission in Andhra Pradesh. S.no Districts Total 1 Anantapur Chittoor Guntur Kadapa Krishna Kurnool Prakasam Vizag Vizianagaram Karimnagar Khammam Mahbubnagar Medak Nizamabad Ranga Reddy Warangal Total Source: National Horticulture Mission data base There has been increase in the number of cold storage units assisted by National Horticulture Mission over a period of time. The increase is substantiated in the districts of Guntur, Prakasham, Khammam and Rangareddy. 12

27 MAJOR CHALLENGES Power supply The major issue faced by cold storage facility providers is power supply. Insufficient and irregular power supply causes problem for the operators and hence disturbs the entire cold chain. Another challenge is lack of logistic support which is must in today s scenario. The government should give subsidy on power and supply should be made uninterrupted and continuous for running a cold storage. Availability of skilled human resources is big challenge Need of individual teams for technical, administration and operations. Technical team would run the cold storage plant and maintain the desired temperature levels and ensure that the product is preserved safe. The administration staff will take care of invoicing, inventory tracking, banking and accounting. Plant operations team will physically handle stock movement and inventory management. Rising real estate cost A fully integrated cold storage facility of international standards, with one million cubic feet of storage space, will require an area of approximately an acre, which is a huge investment. Location for cold storage Cooling units are not mobile units, so the location of such units becomes a key constraint as there are very few parcels of large land spaces available in India. Lack of proper infrastructure The cold chain industry in India is very fragmented, with players not having the strength to invest in the technology needed to build high quality cold storage or to invest in reefer trucks. Other major challenges which make cold chains more complex are inadequate logistics infrastructure, poor road connectivity, inadequate IT systems and inefficient transport providers. Uneven distribution of capacity The majority of cold storages in India have been established in states like Uttar Pradesh, Maharashtra, Gujarat, Punjab, Andhra Pradesh and West Bengal. But the establishment of such cold storages needs to be more geographically diverse. The cold storages present in 13

28 India can cater to single commodities only. Different commodities require different temperature conditions, resulting in poor capacity utilization and low financial viability. Cold storage industries are popularly known as agricultural service oriented industry which serves as a vital link between the production and consumption of agricultural produce. The importance of cold storage is to achieve the twin objectives of price stabilization and fair prices to producers and consumers. Concerted efforts are also been made to expand or increase cold storage capacity in our country, but efforts to study their performance and viability are very much lacking. Therefore an attempt has been made to understand the viability of such businesses with the following objectives in cold storage establishments. 1.5 OBJECTIVES OF THE INVESTIGATION 1) To study the growth in cold storage units in the Guntur district and in Andhra Pradesh. 2) To study the investment pattern, cost and returns, and financial feasibility of selected units. 3) To examine the types and pattern of different commodities stored in the selected units. 4) To analyze benefits accrued to the chilli farmers by stocking produce in the cold storages. 5) To identify the constraints faced by cold storage entrepreneurs and the users in the selected area. 1.6 SCOPE OF THE STUDY The study was conducted in Guntur district of Andhra Pradesh. The study mainly concentrates on initial investment pattern, cost and returns, business viability and constraints involved in cold storage operations. The study shows the benefits received by the farmers by stocking their produce in cold storage units. Three types i.e. large, medium and small scale cold storage units have been taken into consideration. The study throws light on different problems faced by the cold storage units in maintenance and farmers/traders in stocking their produce in the cold storage units. 14

29 1.7 LIMITATIONS OF THE STUDY The study pertained to the owners of the private cold storage units who were generally suspicious of the motives of any investigation because of fear of taxation. Therefore, the investigator had to face certain drawbacks in ascertaining the accuracy of some data. Great care was taken in eliciting the required information as accurately as possible. This study was confined to a particular region and to specific units and hence conclusions drawn are applicable only to such units where similar conditions exist. The present study was undertaken in Guntur district of Andhra Pradesh. Both qualitative and quantitative data were collected from various cold storage units, farmers and traders in a very limited period of time and for a limited sample size. Hence, generalization of the results has to be attempted carefully. 1.8 STRUCTURE OF THE THESIS WORK The study is presented in five chapters as follows. I. Introduction: The importance of the study, problem setting and objectives are covered. II. Review of Literature: The available and relevant literature is thoroughly reviewed. III. Materials and Methods: The methodology adopted in sampling, data collection, analytical tools used and methods of evaluation are explained. IV. Results and Discussion: The results of the study and the discussion evolved from the study are presented under this sub head. V. Summary and Conclusions: Summary and conclusions of the study are presented under this section. 15

30 Chapter II REVIEW OF LITERATURE For a research work to be carried upon, the previous works done give an insight into the background and provides a set of directions to the present research problem. Collection of literature should be done to understand various related aspects of the issue. The analysis of the collected studies gives way to further understanding of the problem and identifies the aspects needed to be focused upon and would help the researcher to organize the research on proper lines and bring about refinement in the study. The reviews have been presented under the following headings Studies on growth trend Investment pattern, cost and returns, and financial feasibility of agribusiness units Types and pattern of different commodities stored in cold storage units Benefits to the farmers due to access to cold storage units Constraints faced by cold storage entrepreneurs and the users Studies on growth trend. Gundewadi (2013) in his study on role and performance of cold storages in Indian agriculture indicated that the growth of cold stores in Central region, South region, East region, North region and West region increased by 6 per cent, 7 per cent, 33 per cent, 47 per cent and 7 per cent during the period from 1955 to 2008 which is not uniform region wise and state wise. The consequence of this trend is keen and unhealthy competition in certain parts of the country and no adequate storage facilities in other parts of the country. Paul et al. (2013) examined the trends in area, production and productivity of groundnut in Andhra Pradesh over a period of to Compound growth rates of area, production and productivity were estimated by fitting semi log trend equation. Decomposition of output growth of groundnut was examined by fitting component analysis model. The study analyzed that area, production and productivity had decreased during the study period i.e to The compound growth rates 16

31 of area production and productivity of ground nut over the period shows negatively non significant. The study also confirms the magnitude of variability in production of ground nut. The synchronized movements in area and productivity both was responsible for low instability/variability in ground nut of Andhra Pradesh. Further, the study conducted a decomposition analysis to determine the contribution of different components to the growth rate. The decomposition analysis revealed that in the total production of groundnut was completely due to the change in area under the crop as the yield and interaction effects were very small. Kulkarni et al. (2012) studied the growth trends in area, production and export of onion from India for the period of to The quantity of onion exported from India to different countries has increased from million kg in to million kg in with an increase in the export value from Rs crores to Rs crores. The study utilizes the secondary data collected from different sources like Export statistics for Agro and Food products, APEDA 2010, Department of Horticulture, Bangalore and the information was also accessed from the official websites of Agricultural Processed Products Export Development Authority (APEDA) and Food and Agricultural Organisation (FAO). The data collected pertained to the. Tabular analysis was used to work out the percentages for easy comparison. The growth rate and instability analysis was used to study the growth in area, production, productivity and export of onion. The share of export in the production has also increased from 7.27 per cent ( thousand tones) during 2000 to per cent ( thousand tones) in Prasad et al. (2012) conducted a study to assess the growth rates in area, production and productivity of maize crop in the Telangana region of Andhra Pradesh, India, using the data from 1969 to The future projections of area, production and productivity of Maize in Telangana by 2014 AD were calculated. The projection values were thousand hectares and thousand tonnes in 2014 AD as per the compound function. In case of productivity S-curve function was found to be the best fitted model for projection purpose with projection value of kg/ha in 2014 AD. The results revealed that the Maize production in Telangana region of Andhra Pradesh may reach to thousand tonnes in 2014 AD. 17

32 Sendhil (2012) analyzed the production and export performance of onions in India over a period of time in view of the onion crisis of 1998 and The analysis shows a significant growth achieved in the onion economy both in domestic and export markets particularly after 1998 and the subsequent developments in the policy arena. Growth in area, production and productivity was more pronounced after 2003 due to the implementation of Vishesh Krishi Upaj Yojana (2004). Growth in export quantity and value also showed an increasing trend over the years and was more pronounced after 1998 due to reduction in the minimum export price. But the high growth was not without high degree of instability, indicating unpredictability in production and associated risk. Chandran (2011) estimated the growth rates of area, production and yield of potato in India including its major producing states Kernel Weighted Local Linear Regression Smoother, a non-parametric regression technique was used for this purpose. The temporal and spatial structural changes of cost of cultivation and remunerative ability of potato cultivation were also analyzed. During the last 58 years, overall potato yield 1.5% at national level. After achieving spectacular growth during the seventies, the yield growth started to decline and in the recent past it became negative. Production also behaved similarly and reached a plateau. Cost of cultivation increased over the years. Farm harvest prices fluctuated greatly over the years leading to uncertainty of return from potato cultivation. During the last decade, share of seed in total cost of cultivation decreased in UP and Bihar and that of manure-fertilizers and machinery increased in all the states. Though the Himachal farmers received consistent good return over the years but West Bengal, UP and Bihar farmers incurred losses in many years when all the costs were considered. There is an immediate need to arrest the declining trend of yield. Concerted efforts to develop high yielding varieties with multiple disease-pest resistance, better post-harvest management technologies like latest innovative tools of biotechnology, agribusiness, etc should be adopted to make potato cultivation a profitable enterprise. Mehta and Karwasra (2009) observed the pattern of growth in Haryana agriculture by estimating the trends in area, production and productivity of major crops of the state. The study was carried out from the secondary data for a period of 20 years from to The period was divided into period-i from to , period-ii from to and an overall period of 20 years from to The results 18

33 of the study revealed that the area under rice, wheat, total cereals, total food grains, oilseeds, sugarcane and cotton had increased while that of jowar, bajra, maize, barley, gram and pulses had decreased. The growth rates in terms of yield were positive for most of the crops except for jowar, gram and oilseeds. Crops viz., rice, wheat, bajra, total cereals, total foodgrains, oilseeds, sugarcane and cotton had positive growth in production but crops jowar, barley, gram and pulses had negative growth. Gudmewad et al. (2008) examined the trends in area, production and productivity of oilseed crops grown in Nanded district, Marathwada region, Maharashtra, India, over a period of 22 years from to ; and the variability in different oilseed crops over the period. The period of 22 years was divided into two parts: the 1st period covered to , and the 2nd period covered to Linear and compound growth rates were worked out to determine the trends in area, production and productivity over the years under study. Coefficients of variation were worked out for all crops and sub-periods to determine the relative development and fluctuations. The productivity of kharif and rabi sunflower showed a significant growth in Nanded district. The growth rates of production and productivity of total oilseeds in Nanded district were significant. In general, productivity and production trends for major oilseed crops were not encouraging even during the post-globalization period, i.e. after Hence, it can be concluded that the impact of globalization was not observed during the study period in Nanded district. Malik et al. (2008) analyzed the annual Compound Growth Rate (CGR) of vegetable production in Haryana, for the period to Study revealed that the annual Compound Growth Rates of area, production and yield were 11.44, and 1.74 per cent for onion; 9.32, 7.27 and per cent for tomato; 14.52, and 5.74 per cent for cauliflower; 19.97, and 2.94 per cent for chillies; 6.69, 7.38 and 0.64 per cent for okra and 2.82, -0.87, and per cent for potato, respectively. Overall, the annual growth rate for vegetable crops in the state was positive. Bhullar (2005) studied the trends in production of dry chillies in India and found that Andhra Pradesh, Karnataka, Maharashtra and Orissa put together account for 75 per cent of the total Indian production. Punjab state occupied 3.10 per cent of area and was ranked eighth during , which decreased substantially to only 0.46 per cent in

34 Production-wise, Punjab accounted for 4.61 per cent of production during , which fell to 0.74 per cent during There has been significant improvement in the productivity of chillies in Andhra Pradesh at 1945 kg per ha, followed by Punjab at 1688 kg per ha, Rajasthan at 1064 kg per ha, and Arunachal Pradesh at kg per ha and Gujarat 786 kg per ha during the study period. Gaddi et al. (1999) calculated compound growth rates of area, production and yields of nine oilseed crops in India for the period to Crops covered are: groundnut, sunflower, safflower, castor seed, sesame, niger seed, rapeseed-mustard, linseed and soya bean. The instability of area, production and yields of oilseed crops and the contribution of area and yields towards production are studied. Positive and significant growth rates are observed for area and production of all the oilseed crops except safflower and linseed: growth rate was negative and non-significant for safflower but significant for linseed. Growth rates of yield were positive and significant for castor, sesame, linseed and rapeseed-mustard. Area and production of sunflower and soya bean were highly unstable when compared to other oilseed crops. Area was found to be the major contributor to the production of sunflower and soya bean, whereas yield was the major contributor to the production of castor and sesame. Barman and Pandey (1998) studied the growth trends and variability in area, production and productivity of rice crops grown in three seasons (summer, autumn, winter) in Assam, India for the period The linear and compound growth rates indicated that the highest growth rates in terms of area and production were for summer rice, whereas the highest growth rates in productivity were for winter rice. Winter rice was found to be the most stable crop in terms of area and production and autumn rice in terms of productivity. Varghese et al. (1998) computed compound growth rate to know the trends in production and arrivals of cereals in Rajasthan. They revealed that the compound growth rate of production and arrivals of major agricultural commodities in the state during the period to increased at the same compound rate of 2.85 per cent per annum. In case of total pulses, the production in the state over the years has been declining at the rate of 0.93 per cent per annum, whereas that of market arrivals has been declining at the rate of 0.3 per cent per annum. For oilseed crops, market arrivals have been at a lower 20

35 rate of per cent per annum as compared to production growth of per cent per annum. Sharma et al. (1997) examined the situation of cold storage of potatoes in Bihar, with regard to cold storage capacity and requirements at district and state level, seasonal wholesale price fluctuations and profitability of cold storing potatoes. Profitability analysis by month indicates that farmers can substantially increase income by means of cold storage. In view of the cold storage deficit (43 per cent in 1993) in Bihar, it is recommended that the state should immediately take suitable measures to increase cold storage capacity by t and regulate an annual growth rate of t in the future Investment pattern, cost and returns, and financial feasibility of agribusiness units. Mote et al. (2013) attempted to analyze costs and returns from silk cocoon production in Marathwada Region of Maharashtra. The economic analysis of data revealed that the average cost of silk cocoon production varied as per farm size group. It was high Rs. 97,029 in farm size group I(<0.40 ha.) followed by Rs. 86,882 in farm size group II (0.41 to 0.80 ha.) and Rs.77,129 in farm size group III (>0.8Iha.). The cost analysis in cocoon production has shown that mulberry leaf production alone shares about 46 per cent of the total cost followed by human labour which shares about 23 per cent in all the land holding groups. The average returns per hectare for different farm size group has been Rs. 1,21,782, Rs. 1,08,937 and Rs. 94,557 for the Group I, II and lil, respectively. The net returns for the different farm size groups were Rs. 24,753, Rs. 22,055 and Rs. 20,431 for the group I, II and Ill, respectively. This has indicated that although the sericulture activity is quite profitable to the farming community in Marathwada region the same can also be made more attractive and profitable in other parts of state and country as well. Ashwini (2007) conducted a study on investment profile, cost and returns and financial feasibility of cold storage units. The study revealed that cost of installation of buildings occupied major share followed by machinery. Evaluation pattern of investment noticed that at 4% rate of interest, all the units had shown positive NPVS, and at 12% rate 21

36 of interest, only unit-ii was found positive, and the total variable cost was high when compared to total fixed cost. Shivashankar et al. (2006) conducted a study in Hubli-Dharwad (Karnataka, India) on agriculture implements manufacturing units. These units procured raw material on an average of tonnes valued at Rs lakhs at a cost of Rs per tonne. It has maintained on an average tonnes and tonnes of raw materials and work in process inventory levels. On average, the total fixed capital investment in agriculture implements manufacturing units was 19.6 lakhs. The proportion of working capital (56.06%) was higher than the fixed capital (43.94%). Killedar et al. (2004) analyzed the capital requirement, operating cost, and profitability of a cooperative chilli-powder-making unit in Kolhapur district, Maharashtra, India. The data used in the analysis pertain to the year Results reveal that: (1) the total capital investment of the processing unit was Rs ; (2) the total cost for one year was Rs , consisting of a variable cost of Rs and a marketing cost of Rs ; and (3) the total gross returns during the year studied was Rs , while the total profit was Rs Siddaram (2004) studied the investment pattern in the processing units. It clearly showed that plant, machinery and equipments formed major component of investment accounting for per cent of investment followed by building and civil structures (33.35 per cent) cost of land (9.02 per cent) and infrastructure facilities to the extent of 6.69 per cent. The investment on plant, machinery and equipments was Rs lakhs followed by building and civil structures at Rs lakhs and cost of land to the extent of Rs lakhs. Investment on infrastructure facilities, office and fixtures and miscellaneous fixed assets contributed to an extent of 7.51 per cent, envisaging total investment of Rs lakhs in the co-operative processing unit. Investment on infrastructure facility structures, office fixtures and miscellaneous fixed assets contributed to an extent of 7.49 per cent, envisaging total investment of Rs lakhs in private processing unit. Manjunath (2003) compared the private and public sector fruit and vegetable processing units in Bangalore district of Karnataka. He indicated that capital investment was higher on plant and machinery (80.58 per cent) in private sector whereas in public sector, it was per cent. 22

37 Joshi et al. (1999) studied the capital investment in the home cottage, small and large scale mango pulp making units in South Konkan region. In these, the fixed capital accounted to the tune of Rs.1.0 lakh, Rs.1.6 lakh, Rs.1.8 lakh and Rs.20.7 lakhs, respectively. The working capital accounted for Rs lakhs, Rs lakhs, Rs. 4.3 lakhs and Rs lakhs, respectively. Singh et al. (1998) in their study on storage and its effects on economics of potato marketing in Farukabad district of Uttar Pradesh computed storage costs of potato including fixed and variable costs. The storage cost of potato was Rs per quintal. The fixed and variable costs accounted for and per cent, respectively. Veena (1996) studied the economics of cold storage in Karnataka. The results of the study revealed that the annual cost per tonne of stored produce was highest in the public sector (Rs ) followed by co- operative sector (Rs ) and lowest in private sector units (Rs ), of which the share of over head cost accounted to 80 per cent in all types of cold storages. It was also observed that among the overhead costs, establishment cost accounted for larger share of 25 to 29 per cent. However, it was highest in the public sector i.e., per cent. The other overhead costs were interest (15.46%), depreciation (12.67 to 14.45%), others (9.47 to 10.51%). Operating cost accounted for about 20 per cent of the total cost of all types of units. Though, there was not much variation in the cost structure of all units, only private units were able to earn a profit and other two sectors were under loss. However, the losses in both sectors were attributed to high overhead cost and poor capacity utilization. Chatha et al. (1993) estimated the storage costs and economics of storage of potato in Punjab. The results of the study indicated that cold storage of potato was economical throughout the year. The cold storage capacity available in the state exceeded the actual requirements. However, the dearth of cold storage was felt due to faulty locations as well as due to ignorance of farmers about the space available in a particular cold storage. It was also reported that only one third of the potato farmers, especially large farmers availed the cold storage facilities and the majority of farmers did not use this facility due to weak financial position, price uncertainty and risk of damage. The increased cold storage capacity in the state did not have much impact on seasonal price fluctuations of potato in the state. 23

38 Rajendran (1987) opined that establishment of cold storages in general appeared to be economically unsustainable. It was observed from the study that 55 per cent of the project cost was involved in building materials and civil works. Machinery and power costs accounted for 22 and 36 per cent, respectively. He concluded that to make the project viable, reduction in installation cost and working cost were necessary Types and pattern of different commodities stored in the cold storage units. Acharya and Agarwal (2009) stated potato is the main product which is stored in the cold storage. Out of the total capacity utilization, 88 per cent is used for storing potato. Commodity wise potato occupies the major share followed by multipurpose 8.0 per cent, miscellaneous 1.2 per cent, fish 0.9 per cent, milk and milk products 0.7 per cent, fruits and vegetables 0.4 per cent, meat and fish 0.4 per cent, meat 0.1 per cent respectively. Vijaykumar and Patil (2007) conducted a study on the profile of different commodities stored and composition of users group, i.e both farmers and traders, in 4 cold storage units in Hyderabad district (Andhra Pradesh, India), using simple tabular analysis. The data is summarized with the help of statistical tools such as averages and percentages to obtain meaningful results. The results reveal that apple, orange, grapes, plum fruits, chilli, jaggery [sugarcane], tamarind, turmeric, dhaniya [Coriandrum sativum], dry fruits, butter, ice cream, processed cheese, meat products and milk and milk products were the major essential commodities that were stored in the cold storage units with varied temperatures, relative humidity and duration of storage operated almost throughout the year to meet supply and demand. The major commodities were stored in the selected cold storage units to its full capacity during February, March, April and May; in the remaining months the units were not fully utilized because their supply into the market was low, i.e., lean period. Fruits such as apple, orange, grapes and plums were stored for 1-3 months. The other commodities were stored for more than 3 months, wherein these commodities consumption requirements were spread over longer periods. Dahiya et al. (1994) investigated the pattern of cold storage capacity utilization and the economic viability of cold storage for potatoes in Meerut district, Uttar Pradesh, India. A total of 97 potato growers were interviewed. Cold storage was found to be economically 24

39 viable at the tariff rates fixed by the government, and farmers made a net profit of Rs 12 per quintal through cold storage of potatoes. Korakandy (1994) stated that the availability of cold storage facilities helped in increasing the percentage of fish utilized in fresh form and extended the market. The pattern of utilization of marine fish in Kerala shows that 55 per cent is occupied in fresh form, per cent in dry form, per cent in frozen form and 3.60 per cent in the form of fish meal. Bhatnagar (1985) reported that as high as per cent of total installed cold storage capacity in India is exclusively used for potato storage. The existing cold storage capacity has been created in the private sector which owns per cent of the cold stores and per cent of cold storage capacity. The public and co-operative sectors put together hold remaining per cent of the total capacity and most of them were under utilizing their installed capacity. Author opined that diversified utilization of cold storage facilities is necessary for improving the viability of cold storages Benefits to the farmers due to access to cold storage units. Asokhan and Arindam (2012) examined the impact of cold storage use on potato growers. Sample of 120 farmers were considered for the study. Five impact dimensions like personal, social, economic, farm improvement and income/saving were taken for study. The study revealed their self esteem, risk bearing ability, entrepreneurship behavior have improved due to cold storage use. Chetti et al. (2012) studied on various conditions of packing of chilli in cold storages. Vacuum packaging has been found to be a superior technology in preserving the quality of whole chillies upto 24 months when compared to jute bags where chilli can be stored only for a short period. Various quality parameters- total extractable colour, oleoresin content, capsicin content were very high in vacuum packaging giving good price to the farmer on the product. Minten et al. (2010) conducted a study in Bihar state of India where the number of cold storages has increased drastically driven by the government subsidies. Farmers of both levels wealthier and small farmers got benefitted from the establishment of cold storages. Wealthy farmers participate directly in using cold storages and commercialization of 25

40 potatoes. Small farmers are benefited indirectly through the higher prices during the harvest period and cheaper storage of seed potatoes. Ezekiel (2003) analyzed the costs and benefits of cold storing potatoes at degrees C with CIPC treatment. Data were obtained during 2001 and 2002 from 10 and 12 commercial cold stores, respectively. Results revealed that cold storage was beneficial to farmers, cold storage owners and traders. In a few cases, there was a loss due to a fall in potato prices in July-August. Profits were higher when the potatoes were sold to processors and were lower when sold in the market. Singh et al. (1998) in their study on storage and its effects on economics of potato marketing in Farukabad district of Uttar Pradesh computed the net price spread in potato marketing in pre and post-storage period. It showed that the producer s share in the consumer s price was higher (17.59%) when the potato grower sold it in the off season after storing in cold storage. It was mainly due to the higher price during off-season. Against this, during pre-storage period the producers share in the consumer s rupee was per cent because of low harvest price Constraints faced by cold storage entrepreneurs and the users. Reddy (2012) focused on the problems of red chilli growers and cold storage units in Guntur region as it is the hub of cold storage units. Some of the problems faced by the units are severe power shortage, increase in power tariff from Rs.4.50 to Rs.6 per unit, refusal for rise in the rental charges despite the fact of increase in the maintenance charges and the reluctance of the insurance companies for paying the compensation mentioning no good reasons and creating gap between growers and storage units. Chourasia and Goswami (2009) in their study on efficient design, operation, maintenance and management of cold storage indicated higher energy consumption and storage losses as the major problems. The storage losses for potato cold stores accounted for 3-10 per cent due to poor management and operations. Ashwini (2007) focused on the scenario in the cold storage industry in India in general and Andhra Pradesh in particular, which is moderately encouraging. The study revealed that the existing units have been facing a number of problems. But unfortunately, there is no common national or state body to look after the interest of the cold storage industry to give a proper direction for well balanced development of this industry. As a 26

41 result, the development of this industry has taken place quantitatively but development has retarded qualitatively and there seems to be no way out of this situation unless a new approach is evolved to encourage the industry. Maheshwar and Chanakwa (2006) conducted their study on the gaps in the cold chain such as poor infrastructure, insufficient cold storage capacity, unavailability of cold stores in close proximity to farms, poor transportation infrastructure, etc. This results in instability in prices, farmers not getting remunerative prices, rural impoverishment resulting in farmers' frustrations and suicides. Operating costs for Indian cold storage are over $60 per cubic metre per year compared to less than $30 in the West. Energy expenses make up approximately 28 per cent of the total expenses for Indian cold storage compared to 10 per cent in the West. These factors make setting up cold storage difficult, unviable and uneconomical. Approximately per cent of the losses can be reduced by transporting the freshly harvested fruits and vegetables in refrigerated containers thus closing this gap in the cold storage chain. Kshirsagar (2005) conducted a study on non- availability of post-harvest infrastructure (PHI) in India leading to enormous losses valued at more than 30 billions of rupees annually although it is the second largest producer of fruits and vegetables in the world. In order to promote and establish PHI, reduce post-harvest losses and facilitate domestic and overseas trade in horticultural products, the National Horticulture Board (NHB) had initiated the Soft Loan Schemes in , providing soft loan up to rupees 10 millions with 4 per cent service charge to various organizations to set up the PHI projects in many states of India. The study finds that farmers faced tremendous problems in using PHI facilities such as harvesting, pre-cooling, cold storage, grading, packing, transport, and marketing. It has critically examined the magnitude of problems faced by member and nonmember farmers while using each of these facilities in their area. The resentment of problem was more among the non-member farmers. Chourasia et al. (2001) conducted their study on one of the most important problems in Indian potato cold storage industry is high energy consumption. Energy consumption in potato cold storage depends on a number of factors and the most important ones are the design and operation of the components refrigeration system, constructional features of the cold stores, quality of the potato stored, storing operation, etc. An in-depth 27

42 analysis of these factors could help in developing strategies towards reducing energy consumption in potato cold stores. Singh and Singh (1994) examined the following factors viz., (1) acreage and production of fruits and vegetables in Punjab; (2) cold storage facilities; (3) factors conducive to the growth of cold storage (4) factors constraining the growth of cold storage and (5) future prospects for cold storage. The study was conducted during 1993/94 in three districts (Jalandhar, Hoshiarpur and Ludhiana) representing a concentration of cold storage facilities. Data were collected from a sample of five small, 13 medium and seven large cold storage units. The current cold storage capacity is much lower than actual requirements, particularly in the potato growing belt. The rent for cold storage should be periodically revised to enable cold storage owners to run their cold stores efficiently. 28

43 Chapter III MATERIAL AND METHODS To accomplish the objectives of the study, it is mandatory to follow a systematic approach so as to investigate the problem and interpret the results in a scientific manner. This chapter presents the description of the study area, nature and method of data collection, sampling procedure and analytical tools and techniques applied in attaining the objectives of the study from the primary and secondary data collected. This chapter is presented under the following sub headings. 3.1 Description of the study area. 3.2 Sampling design. 3.3 Nature and sources of the data. 3.4 Analytical techniques employed. 3.5 Concepts and terms used in the study. 3.1 Description of study area Location and Geographical Area Guntur is one of the 9 Coastal districts of Andhra Pradesh. It is located between and North latitude and and East longitude. It is bounded by Krishna & Nalgonda districts on the North, by Prakasam and Mahabubnagar districts on the West, by Prakasam district on the South and by Krishna district, and the Bay of Bengal on the East. The district has a coastline of 42 kms. The total geographical area of the district is sq km, which forms 4.12 per cent of the total State s area. Guntur district lies at an elevation of 33m from sea level Topography Guntur district comprises mainly of plains and the Nallamalai hill ranges in Palnad area. The highest peak in this hill range is Swamikonda (605m high).the Ethipothala water falls are located in these ranges, near Macherla. Krishna is the main river, which traverses 250 km in the district, irrigating an area of nearly 5 lakh Ha. Chandravanka, Naguleru and Gundlakamma are the 3 major rivulets. The soils are mainly red gravel (24 per cent), black 29

44 cotton (70 per cent) and sandy alluvial (6 per cent). Major food crops grown are paddy, jowar, bajra, black gram, bengalgram, redgram, and sugar cane, cotton, tobacco, chillies, turmeric, castor, sunflower, groundnut, and lemon, mango, banana, sapota, coconut and vegetables. Guntur houses the largest chilli market in the country Demography According to 2011 census, Guntur district has a population of 4,889,230, roughly equal to the Central African Republic or the US state of Alabama. This gives it a ranking of 22nd in India (out of a total of 640). The district has a population density of 429 inhabitants per square kilometre (1,110 /sq mi). Its population growth rate over the decade was 9.5 per cent. Guntur has a sex ratio of 1003 females for every 1000 males, and a literacy rate of per cent. Guntur district has a population of 4,889,230 of which 2,441,128 are males and 2,448,102 are females as of Climate and rainfall The district suffers from hot climate, the summer especially being extremely dry. The year may be divided into four seasons. December to February : Dry and Cool Winter Season March to May : Summer Season June to September : South-West Monsoon Season October to November : Post Monsoon or Retreating Monsoon Season The average rainfall in the district is 830 mm. The rainfall generally decreases from east to the west. The rain is experienced mostly by both south-west monsoon and the retreating monsoon. October is the rainest month of the year. On the average there are 47 rainy days in a year. The highest rainfall recorded was 386 mm at Sattenapalli on 19th of November, Soils The Soils of Guntur district are broadly divided into 4 types as follows 1. Red Gravelly Soils: These soils are essentially found over the area covered by the Archaean formation which occupy the major portion of the district. Macherla and Vinukonda ranges mostly have red gravelly soils. 30

45 2. Black Cotton Soils: These are present generally in the deltaic area on the banks of the Krishna and also in northern parts of Satenapalli and Macherla range, where these are derived by the weathering of the limestone. These have formed due to the former existence of large and thick forest when moist climate prevailed. 3. Sandy Alluvial Soils: These are found along the sea coast and in the area covered by some of the Gondwana rocks. Kankar or calcareous nodules occur in the soils at several places in the district. 4. Saline Swampy Soils: These are present in the areas where tidal waves penetrate into the coast. These are characterized by mangrove vegetation. Repalle, Kothapalem, Sarlagondi and Nizampatnam have these soils. 31

46 Table 3.1 Salient features of Guntur district Sl. No Particulars Unit Statistics 1 Geographical data i) Latitude 16 18' N ii) Longitude 80 29' E iii) Geographical area sq kms, Administrative units i) Mandals Number 57 ii) Total Villages Number Population A Sex-wise i) Male Number ii) Female Number B Rural Population Number Agriculture A Land utilization i) Cultivable area sq.kms ii)non Agriculture Land " iii) Cultivable waste land " iv) Permanent pastures " v) Barren and uncultivable land " B Forest Livestock A i)cattle Number 1,32,662 ii)buffaloes Number 12,00,174 B Other Livestock iii) Goats Number 2,82,696 iv)sheep Number 7,43,

47 Fig: 3.1 Map of Guntur District 33