AN ECONOMIC ANALYSIS OF PRODUCTION, MARKETING AND EXPORT PERFORMANCE OF POMEGRANATE IN KARNATAKA

Transcription

1 AN ECONOMIC ANALYSIS OF PRODUCTION, MARKETING AND EXPORT PERFORMANCE OF POMEGRANATE IN KARNATAKA Thesis submitted to the University of Agricultural Sciences, Dharwad in partial fulfillment of the requirements for the Degree of DOCTOR OF PHILOSOPHY IN AGRICULTURAL ECONOMICS By C. B. KOUJALAGI DEPARTMENT OF AGRICULTURAL ECONOMICS COLLEGE OF AGRICULTURE, DHARWAD UNIVERSITY OF AGRICULTURAL SCIENCES, DHARWAD JANUARY, 2012

2 ADVISORY COMMITTEE DHARWAD JANUARY, 2012 Approved by : Chairman : Members : (S. M. MUNDINAMANI) CHAIRMAN (S. M. MUNDINAMANI) 1. ((L. B. KUNNAL) 2. (B. L. PATIL) 3. (S. B. MAHAJANASHETTI) 4. (M. K. SHEIKH)

3 CONTENTS Sl. No. CERTIFICATE ACKNOWLEDGEMENT LIST OF TABLES LIST OF FIGURES LIST OF PLATES LIST OF APPENDICES 1 INTRODUCTION 2 REVIEW OF LITERATURE Chapter particulars 2.1. Growth in area, production and productivity of perennial crops 2.2. Costs and returns in establishment and cultivation of perennial crops 2.3. Financial feasibility analysis in perennial crops 2.4. Marketing costs and margins in fruits and other crops 2.5. Direction of Trade in export of fruits 2.6. Constraints in production, marketing and export 3 METHODOLOGY 3.1 Description of the study area 3.2 Sampling procedure 3.3 Nature and sources of data 3.4 Analytical tools and techniques used 3.5 Definition of terms and concepts used 4 RESULTS 4.1 General characteristics of the sample pomegranate farmers 4.2 Growth in area, production and productivity of Pomegranate 4.3 Investment pattern and maintenance cost in pomegranate orchards 4.4 Yield and return structure of pomegranate orchards in the study area 4.5 Financial feasibility of investment in pomegranate orchard 4.6 Marketing of pomegranate 4.7 Present status and export scenario of pomegranate 4.8 Direction of trade and changing pattern of exports during pre and post-wto periods. 4.9 SWOT analysis of pomegranate export 4.10 Problems faced in production, marketing and export of pomegranate Contd..

4 Sl. No. 5 DISCUSSION Chapter particulars 5.1 General characteristics of the sample farmers 5.2 Growth in area, production and productivity of Pomegranate 5.3 Investment pattern and maintenance cost in pomegranate orchards 5.4 Yield and return structure of pomegranate in the study area 5.5 Financial feasibility of investment in pomegranate orchard 5.6 Marketing of pomegranate 5.7 Present Status and export scenario of pomegranate 5.8 Direction of trade and changing pattern of exports during pre & post-wto periods 5.9 SWOT analysis of pomegranate export 5.10 Problems faced in production, marketing and export of pomegranate 6 SUMMARY AND POLICY IMPLICATIONS 6.1 Specific objectives 6.2 Methodology 6.3 Findings of the study 6.4 Policy implications REFERENCES APPENDICES

5 LIST OF TABLES Table No. Title 3.1 Land use pattern in the study area ( ) 3.2 Cropping pattern in the study area ( ) District-wise area, production and productivity of pomegranate in Karnataka during Taluk-wise area, production and productivity of pomegranate in Bagalkot District during Taluk-wise area, production and productivity of pomegranate in Koppal District during Distribution of sample pomegranate growers in the study area ( ) 4.1 General characteristics of sample farmers 4.2 Compound growth rates for area, production and productivity of pomegranate ( to ) 4.3 Investment pattern in pomegranate orchards Maintenance cost of pomegranate orchard during gestation period in Bagalkot District Maintenance cost of pomegranate orchard during gestation period in Koppal District Maintenance cost of pomegranate orchard during bearing period (4 th year onwards) in the selected districts 4.7 Yield and return structure of pomegranate in the selected districts 4.8 Cash flow analysis of pomegranate orchard in Bagalkot district 4.9 Cash flow analysis of pomegranate orchard in Koppal district 4.10 Financial feasibility of investment in pomegranate orchards 4.11 Preference of marketing channels by pomegranate growers in the study area 4.12 Marketing cost incurred by producer 4.13 Marketing costs incurred by the commission agent-cum-wholesaler 4.14 Marketing costs incurred by the retailer 4.15 Costs and margins in different channels of pomegranate marketing 4.16 Area and production of major pomegranate growing states in India during Export of pomegranate from India ( to ) 4.18 Compound growth rate of export of pomegranate from India ( to ) 4.19 Variation in export of pomegranate from India ( to ) 4.20 Transitional Probability Matrix of pomegranate export from India during Pre-WTO period ( to ) Contd..

6 Table No Title Transitional probability matrix of pomegranate export during post-wto period ( to ) Transitional Probability Matrix of pomegranate export during Overall period ( to ) Predicted and actual share of different countries in Indian pomegranate export during Strengths of pomegranate export as per the opinion of exporters 4.25 Weaknesses of pomegranate export as per the opinion of exporters 4.26 Opportunities of pomegranate export as per the opinion of exporters 4.27 Threats of pomegranate export as per the opinion of exporters 4.28 Problems faced in production of pomegranate by the growers 4.29 Problems faced in marketing of pomegranate by the farmers 4.30 Problems faced in export of pomegranate by the exporters

7 LIST OF FIGURES Figure No. Title 3.1 Map of Karnataka showing the study districts 3.2 Map of Bagalkot district showing the study area 3.3 Map of Koppal district showing the study area 4.1 Area and production of major pomegranate growing states of India ( ) 4.2 Actual share of different countries in Indian pomegranate export during 1988 to Predicted share of different countries in Indian pomegranate export during

8 LIST OF PLATES Plate No. Title 4.1 Popular pomegranate cultivars in the study area 4.2 Incidence of bacterial blight disease in pomegranate

9 LIST OF APPENDICES Appendix No Title Area, production and productivity of major horticultural crops in Karnataka during Area, production and productivity of pomegranate in Karnataka ( to ) Area, production and productivity of pomegranate in Bagalkot district ( to ) Area, production and productivity of pomegranate in Koppal district ( to ) The desirable fruit characters of fresh pomegranate for export purpose Grading of pomegranate based on size and shape for export purpose 7 Major country-wise export of pomegranates during

10 1. INTRODUCTION Agriculture forms the backbone of the Indian economy contributing per cent at prices during to the gross domestic product and providing livelihood support to about two-third of the country s population. In fact, it is the single largest private sector occupation. The diverse agro-climatic conditions in India are conducive for growth of tropical, sub tropical and temperate crops. Upland crops comprising coarse grains, pulses, root and tuber crops dominated the Indian agriculture in terms of both area and production of new seedfertilizer based technology favouring wheat and rice in the mid-sixties, the production of upland crops underwent a continuous decline as all the research and development efforts were largely directed to tap the potential of this new technology. Urbanization, growth in economy and availability of a greater variety of food items has diversified the consumption pattern in favour of milk, fruits and vegetables. In the next one and half decades, demand for milk and fruits would be more than two times the current demand. The ongoing economic reforms in India, International trade reforms and attempts to integrate the Indian economy with the global economy are likely to result in structural changes in India s farm economy. Non-cereal food products are likely to become important in increasing farm income and in attaining balanced regional development and nutritional stages. Importance of horticultural crops India, with its wide variability of climate and soil, has good potential for growing a wide range of horticultural crops such as fruits, vegetables, potato, tropical tuber crops, ornamental crops, medicinal and aromatic plants, spices and plantation crops etc. Since the mid sixties, the government identified horticulture crops as a means of diversification for making agriculture more profitable through efficient land use, optimum utilization of natural resources and creating skilled employment for rural masses, especially women folk with the past efforts rewarding. Globalization of agricultural trade, self sufficiency in food grain production and advent of new technology has given way to diversification in Indian agriculture towards exportoriented high unit value horticultural crops. Horticultural development had not been a priority area, in India until the post-1993 period, when focused attention was given to horticultural development through creation of infrastructure for cold storage, refrigerated transportation, processing, packaging and quality control. Later in , the setting up of the National Horticulture Mission (NHM) by Government of India, promoted this sector on a large scale. The foreign trade policy also emphasized on boosting agricultural exports and recognized that growth and promotion of exports of horticultural products was important for the country. Horticulture crops cover only million hectares (7.20 m ha under vegetables and 5.51 m ha under fruits) i.e., per cent of total cultivable area but contribute 28 per cent of the agricultural gross domestic product (Mittal, 2007). India is the world s second largest producer of fruits (57.73 million tons) and vegetables ( million tons) and contributes and 10 per cent of vegetables and fruits, respectively in the world. About per cent of fruits and vegetables produced in India are consumed domestically, two per cent of them are being processed and only one per cent being exported while post harvest losses account to per cent of the stored fruits (Economic Survey, ). The domestic demand for fruits and vegetables during 1995 to 2020 AD, is expected to grow at an average annual rate of 4.1 and 3.6 per cent, respectively. India is gradually emerging as an important domestic consumer and exporter of fruits and vegetables. Horticultural crops provide raw materials to several ancillary industries. The importance of fruits in human diet is universally recognized, because they are the chief sources of vitamins, minerals, salts, carbohydrates, protein, fats, acids etc and many fruits possess specific medicinal properties. Along with these, orchards help in maintaining ecological balance and production of fruits contributes to the health, happiness and prosperity of the people. It is commonly stated that standard of living of people of a country can be judged by its per capita production and consumption of fruits. Further, it is a well known fact that man cannot live on cereals alone. Nutrition experts advocate consumption of at least 120 grams of fruits per head per day in addition to cereals, pulses, milk, vegetable, eggs, etc. On the contrary, the per capita consumption of fruits in India is only 46 grams per day.

11 Therefore, in order to bridge the gap between demand and supply positions of fruits, there is a need to enhance the total production and productivity through the adoption of modern production technologies. Fruits and vegetables are labour intensive crops and help in generating additional income and employment opportunities through production, packaging, processing and marketing of raw as well as value added products. The average labour requirement for fruit production is 860 man days per hectare per annum as against 143 man days for cereal crops. Crops like grape, banana and pineapple generate much larger employment, roughly from man days per hectare per annum. There has been, in the recent years, a sudden spurt in the exports of fresh and processed fruits and vegetables, the environment which has been made conducive by the recent trade liberalization policy and increased plan investments on horticulture development. Summarizing the importance of fruit farming, it can be stated that it supplies nutritious food, higher income, round the year employment, and aesthetic touch to the life. It promotes the development of natural resources, higher yields, better returns from land, enhances the land value, creates a better purchasing power among the people and consequently adds to the general prosperity of the nation. Over the years, horticulture has emerged as an indispensable part of agriculture in India. It offers a wide range of choice to the farmers for diversification. Pomegranate cultivation and its importance Pomegranate (Punica granatum L.) belongs to family Punicaceae and is a favorite table fruit of the tropical and sub-tropical regions of the world. Pomegranate cultivation was started since ancient time. The fruit is native of Iran and extensively cultivated in Mediterranean countries like Spain, Egypt, Iran, Burma, China and India. In India, pomegranate is cultivated in the states of Maharashtra, Gujarat, Karnataka, Tamil Nadu, Uttar Pradesh, Haryana and Andhra Pradesh. The most promising cultivars grown in India are Alandi, Dholka, Kabul, Kandhari, Muskat red, Vellode, Ganesh, G-137, Jyoti, Mridula, Phule Araktha and Bhagwa. The area and production of pomegranate in India during was 1,27,160 hectares, 8,20,970 metric tons respectively. Maharashtra accounts for maximum area (about 98,900 ha) particularly in Ahmednagar, Solapur, Satara, Sangali, Pune and Wardha districts. Karnataka state occupied the second position in area (15400 ha) under pomegranate cultivation during The major pomegranate growing districts are Koppal, Bagalkot, Bellary, Tumkur, Chitradurga and Raichur. Important varieties grown in Karnataka are Kesar (Bhagwa), Araktha (Mrudula), Ganesh, Jyoti, G-137 and Rubi. The pomegranate is very much liked for its cool, refreshing juice and also for its medicinal properties. The juice is having sweet acidic taste. Fruits are mainly used for desert purpose. The fresh fruit is of exquisite quality while its processed products such as bottled juice, syrups and jelly are highly appreciated. The juice is considered useful for patients suffering from leprosy. Nutritionally, the fruit is most delicious and nourishing. Its barks and rinds are used for control of dysentery or diarrhea. The rind is also used as dyeing material for cloth. The low quality fruit after removal of skin/ shell is dried and used as Anar Dana. Several processed products are also prepared like juice, concentrates, syrups and jelly. The fruit juice easily ferments and is commonly used for the production of wine. The juice of wild pomegranate is used in the manufacture of citric acid and sodium citrate for medicinal purpose. The fruit is known best for curing the chronic stomach ailment. The pomegranate seed contains oil which has a potential for industrial use. Tannin occurs in all parts of the tree, which is successfully used alone or mixed with synthetic tannins for tanning leather. Pomegranate fruit contains 12 to 16 per cent digestible glucose and fructose. Acidity ranges between 1.5 to 3.00 per cent. A well ripe fruit has 68 percent edible protein. It contains moisture (78%), protein (1.6%), carbohydrate (14.5%), fibre (5.1%), mineral matters (0.7%) and fat (0.1%). It also contains phosphorus, oxalic acid, magnesium, calcium and boron at the rate of 70, 14, 12, 10 and 0.3 mg/100 gm respectively. Further, it also contains the vitamins like thiamine, riboflavin, nicotic acid, vitamin C at the rate of 0.06, 0.1, 0.3 and 20 mg/100 gm respectively. It gives energy of 65 calories/100 gm.

12 Pomegranate is a sub-tropical fruit. It can adapt itself to a wide range of climatic conditions and can grow up to 1800 meters above mean sea level. The fruit tree grows well in semi-arid climate where cool winter and hot dry summer prevail. The tree requires hot and dry climate during the period of fruit development and ripening. The optimum temperature for fruit development is 38 C. The tree cannot produce sweet fruits unless the temperature is high for a sufficiently long period. Under tropical and sub-tropical climate, it behaves as an evergreen or partially deciduous tree. Under humid conditions, the sweetness of fruit is adversely affected. Therefore, it is considered that pomegranate is a hardy tree and can thrive well under drought conditions, though yield is low. The plant bear well only under irrigation in areas of low temperature, the tree behaves as deciduous in nature and sheds its leaves during winter months. It is also rated as winter hardy fruit tree. The crop is not very particular about its soil requirement. It can be grown on diverse types of soil. The deep loamy or alluvial soils are ideal for its cultivation. It can tolerate soils which are loamy and slightly alkaline. It can thrive well on comparatively poor soils where other fruits fail to grow. This can also be grown in medium and black soils. It is rated as salthardy fruit plant. The pomegranate starts fruiting in the third year after planting and continues for about 15 years. Economic yield is generally obtained after third year of planting. To regulate flowering, water is withheld for about two months in advance of the normal flowering season. After two months, manures and fertilizers are applied and light irrigation is given. Three to four days later, heavy irrigations at normal intervals are followed. The tree readily responds to this treatment by producing new growth and blooms and bears a good crop. A full grown pomegranate has a tendency to bear flowers and fruits throughout the year. To obtain higher fruit yield during a particular period, plants are given a resting period by which the natural tendency of the tree is altered with artificial means. It is done by withholding of water for about two months in advance of normal flowering, root exposure and also use of chemicals. By adopting such methods flowering can be induced in June-July (Mrig bahar) coinciding with the break of monsoon, February-March (Ambe bahar) and September-October (Hasth bahar). These practices are known as bahar treatment. Export of pomegranate The pomegranate fruit has very good potential for exports due to its large use of decoration, use of fresh kernels (arils) for garnishing and for consumption as fresh fruit because of its nutritive value. India is the largest producer of pomegranates but export from India during was less than 5 per cent of the total production compared to Spain and Iran which exports 65 to 75 per cent and 15 per cent, respectively of their production. To increase exports, it is necessary to improve the quality at various stages from production, post-harvest, processing and handling, storage and till it reaches the customers. Karnataka state is emerging as one of the leading states in the field of horticulture. The state has shown a good potential for growing fruits in the state. Mango, Banana, Sapota, Citrus, Grapes and Pomegranate are main fruit crops of the state. The geographical area of Karnataka state is lakh hectares of which an area of lakh hectares comes under the cultivable area, constituting per cent of the geographical area during the year The total horticultural crop area in the state was 18 lakh hectares. Of the total, per cent of the total horticultural crop area was occupied by fruit crops in the state. The total area under pomegranate in Karnataka during was 14,996 hectares. Of the total, 8,026 hectares are found in Bagalkot and Koppal districts (53.52% of the state total area). Suitable soil and climatic conditions are responsible for concentration of pomegranate crop area in these two districts. Further, major portion of pomegranate is being exported from Koppal and Bagalkot districts of Karnataka. In view of this, the present study has been undertaken in these two selected districts of Karnataka during Scope of the study Production is indispensable since there is no accurate farm business data on its cost of production, input requirements, marketing and export of fruit. This information would be of great help to the pomegranate growers in general and Bagalkot and Koppal districts in particular for making decisions related to pomegranate enterprise.

13 The information will be of immense use to the farm financial institutions. Any investment proposal should be viewed from the point of view of its technical and financial feasibilities. Technical feasibility is taken care of by the possibilities of establishing a plantation in conformity with the agro-climatic, ecological, soil and technological options. Financial feasibility tests focus on the capability of the project to generate income to the investor s expectation from the investment proposals. In the production of pomegranate, marketing plays a vital role. When the cultivators grow this crop primarily for markets, they will be interested to know the crop which will be profitable at the price at which the produce would be sold. Pomegranate is one of the important fruit crop grown in Karnataka. This crop is characterized by high productivity per unit area with higher return, potential for employment generation and export and comparatively low requirement of water. In view of this, a detailed study on the economic analysis of production, marketing and export performance of pomegranate in Karnataka was undertaken with the following specific objectives: Specific objectives 1. To estimate the growth in area, production and productivity of pomegranate in Karnataka. 2. To estimate the costs and returns of pomegranate orchards. 3. To study the financial feasibility of investment in pomegranate orchard. 4. To workout costs and margins under different channels of pomegranate marketing. 5. To assess the present status and strategies of pomegranate export from India. 6. To document the constraints associated with production, marketing and export of pomegranates. Hypothesis 1. There is a steady growth in area, production and productivity of pomegranate in the study area. 2. Pomegranate production is a profitable enterprise 3. Investment in pomegranate orchard is financially feasible. 4. There is a direct relationship between the net price received by farmer and costs and margins of various marketing agencies of pomegranate marketing. 5. There is scope for export of pomegranate fruits. 6. There are constraints in production, marketing and export of pomegranates. Practical utility Outcomes of this study will be helpful to pomegranate growers and agencies who are engaged in production and export of pomegranate for designing future policies. The study will also provide necessary feedback to pomegranate producers and exporters, since fruit quality requirements of importing countries varies from country to country. The study will be useful to scientists and students as guidelines for evolving certain varieties, standardizing norms, guiding the farmers in export oriented practices for pomegranate production and trade. Findings of the study will be of immense use to the farm financial institutions. Information on production, marketing and export constraints will be useful to policy makers for encouraging the domestic production in order to enhance exports. Limitations of the study Constraints on time and resources of the researcher forced to select only two districts for the study. Hence, results are largely applicable to those areas only where similar conditions prevail. The personal interview method of data collection requires the respondents to recall from their memories about cultural operations of pomegranate cultivation. Hence, the findings may be subjected to errors in memories of respondents. The study on marketing would be complete when the fruits distribution can be traced upto the ultimate consumer. However, in this study, the costs incurred and returns realized by producer-seller, commission agent-cum-wholesaler and retailer were traced in channel-i, but the channel-ii and III were traced only upto the level of distant wholesaler and exporters. Since the fruits are sent out of state and also other countries for marketing to consumers.

14 The average price realized during the study year was calculated and used in converting production figures from quantities to value terms, although the prices realized differ from farmer to farmer every year. Presentation of the study The study is presented in six chapters. The first chapter-i encompasses the introduction, scope, objectives and practical utility of the study. Chapter-II presents a critical and concise review of the available research literature relating to the topic under study. Chapter-III covers the sources of data and methodology used in the study. Chapter-IV is devoted to present the main findings of the study through tables. Chapter-V discusses comprehensively the results of the study. Chapter-VI provides summary and policy implications. At the end, list of literature referred for the study has been presented.

15 2. REVIEW OF LITERATURE This chapter reviewed the research work done related to the objectives of the study. With respect to economics, marketing and export of fruit crops, a very few studies have been conducted. However, numbers of studies have been conducted in the country on production and marketing of plantation crops. In this chapter, reviews relevant to the present study and even for the other perennial crops are reviewed and presented under the following subheadings. 2.1 Growth in area, production and productivity of perennial crops 2.2 Costs and returns in establishment and cultivation of perennial crops 2.3 Financial feasibility analysis in perennial crops 2.4 Marketing costs and margins in fruits and other crops 2.5 Direction of Trade in export of fruits 2.6 Constraints in production, marketing and export 2.1 Growth in area, production and productivity of perennial crops Indiradevi et al. (1990) computed the trends in area, production and yield of banana in Kerala state. Quadratic function was fitted to explain the trend in a period of 17 years ( ). The study revealed that banana production in the state showed an increasing trend (94.57%) because of the intensive cultivation practices and favourable price factors for banana. The study also indicted that the main determinant of production of banana in Kerala state during seventies was area (extensive cultivation), while it was yield (intensive cultivation) in the eighties realizing the fact that banana cultivation had become productivity oriented in the recent years. Handiganur (1995) studied the growth rates of area, production and productivity of grapes in Bijapur district from to Growth rate analysis had showed an increase of 0.6 per cent in area, 2.80 per cent in production and two per cent in productivity of grapes in Karnataka state. The increase in production and productivity was due to the use of improved cultural practices, increased use of manures, fertilizers and plant protection chemicals. Saraswat (1997) conducted a study on production and marketing of apple in Himachal Pradesh. The study found that, in Himachal Pradesh the area under apple has increased at a compound growth rate of 4.71 per cent per annum while the production increased at 8.34 per cent per annum during to The study revealed that the average productivity per hectare of apple orchards was 1,285 standard boxes of each 18 kg. More (1999) studied the growth rate in area, production and productivity of banana in Nanded and Parbhani districts and Maharashtra state as a whole. In Nanded district, production had shown higher growth rate (21.04 %). The higher growth in production was contributed mainly by significant increase in area coupled with productivity. The growth rate of productivity was high (1.43 %) in Maharashtra state as a whole as compared to Nanded (1.40 %) and Parbhani (0.90 %) districts. It was due to use of improved cultural practices, higher use of manures and fertilizers, more use of other inputs and also increased yield levels in other districts of the state. Mahesh et al. (2000) studied the performance of Indian tea with regard to growth in quantity, value and unit value of export for the period to using the exponential growth model. The results revealed that the export quantity of Indian tea exhibited a negative growth rate of 1.15 per cent per annum, whereas the export value and unit price recorded comparatively higher annual growth rates at 8.82 per cent and 7.65 per cent per annum respectively. Angles (2001) assessed the growth performance of turmeric in important south Indian states over the periods from India to by using the exponential growth functions of the form Y t = ab t. He reported that the growth rates in area, production and productivity of turmeric in Andhra Pradesh, Tamil Nadu and Karnataka registered a positive and significant growth. While the growth rate of area was negative (-0.02%) in Kerala, the production and productivity of turmeric recorded a positive and significant growth.

16 The growth rates in area (2.07 %), production (6.57 %) and productivity (3.78 %) of turmeric in India were positive and significant. A negative growth rate of area was found (- 0.02%) in Kerala due to production of turmeric in small patches whereas, the plantation crops such as rubber, coconut etc., dominated and they were more profitable than turmeric. The other main problem was the labour requirement, wherein around 50 per cent of the cost of cultivation was spent on labour in turmeric production. But the labour availability was scarce and labour wage was very high. Hence, the farmers opted for plantation crops where there was no need of more labour throughout the year. As a consequence, the area under turmeric was reducing year after year. Bhosale et al. (2004) studied the export potential of grapes in India. The compound growth rates of country wise quantity exported were estimated from to The export of Indian grapes increased at the rate of 2.60 per cent per annum. A significant growth both in quantity and average price realized for the export of grapes was noticed in countries such as UK, Netherlands, Sri Lanka and Germany. Hyma Jyothi and Raju (2005) studied the growth in export of tea and coffee from India. For the study the data for thirty years were considered ( to ). The quantity of tea exports from India during the period exhibited a negative growth rate of 0.61 per cent per annum whereas the export earnings and unit value of exports registered a high annual growth rate of 8.96 and 9.66 per cent per annum respectively. Ramchandra (2006) studied the growth rate in area, production and productivity of sapota in Dharwad and Belgaum districts of Karnataka from to Growth rate in area (3.73 %) and production (4.77 %) of sapota were found to be highest in Dharwad district. Whereas, Belgaum district registered per cent in case of area, per cent in production and per cent in productivity. On the contrary, higher growth rates were observed in the case of the State as a whole, with a positive growth rate in area (4.54%) and negative growth in both production (-1.98%) and productivity (-6.24 %) of sapota. Saraswat and Rane (2006) conducted a study on production and marketing of peach fruit in Rajgarh area of Sirimour district in Himachal Pradesh. For the detailed study 50 farmers were randomly selected. The compound growth rate with respect to area and production showed that the area under peach increased at the rate of 4.31 per cent per annum. The highest area under peach was recorded in Sirimour district, whereas Mandi district registered the highest growth rate of production in the state i.e., 9.32 per cent per annum. The district wise production scenario indicated that there were variations. Out of 12 districts only 4 districts have registered a positive growth in production i.e., Solan (22.55 %) followed by Una, Bilapur and Mandi. Kareemulla et al. (2007) conducted a study on production and marketing of Indian Gooseberry Aonla in Pratapgarh district of Uttar Pradesh. He reported that the area occupied by aonla based farming system shown a growth rate of 4.02 per cent during the period The production of aonla increased from 47,329 to 82,690 tons in the at a growth rate of 5.2 per cent and the average productivity increased from 5.7 to 6.5 tons per hectare. Keerthi (2008) calculated the growth rates of area, production and productivity of pineapple from 1994 to 2004 for Shimoga district as well as for Karnataka State. The growth rate analysis revealed an increase of 3.95 per cent in area, 5.29 per cent in production and 1.31 per cent in productivity of pineapple in Shimoga district, whereas, growth rates for Karnataka State as a whole were 0.43 per cent, per cent and per cent respectively in that order. The increase in area was found to be the highest in Shimoga district followed by Karnataka State as a whole. On the contrary, the growth in production and productivity was considerably more in Karnataka State as compared to Shimoga district. As far as the variation in area, production and productivity of pineapple was concerned, it was less in Shimoga district as compared to the State as a whole. Rauf et al. (2010) worked out the compound growth rate of area, production and productivity of apple in various districts of Jammu and Kashmir. The study reported that the area under apple showed a steady growth in all the districts except in Solan district.

17 2.2 Costs and returns in establishment and cultivation of perennial crops Subrahmanyam (1987) studied the costs and returns of mango orchards in Karnataka. It was observed that on an average, the establishment of mango orchard required Rs per ha. The maintenance cost of mango orchards was only Rs. 200 per ha. The gross return from a hectare of mango orchard was Rs 1200 in Karnataka. As indicated by the study the pay back period was 11 years. Internal rate of return was 30 per cent and B.C ratio was 2.00 indicating that the investment was profitable. Thomas and Gupta (1987) studied the economics of banana cultivation in Kottayam district of Kerala. The study revealed that the expenditure on manures and fertilizers followed by labour cost were the major items of cost of cultivation of banana. They found that an amount of more than Rs per ha could be gained as profit by undertaking banana cultivation. Raikar (1990) studied production and marketing of cashew in Karnataka. The study revealed that the per hectare annual maintenance cost of cashew plantation was higher on small size (Rs 1,674.17) plantations compared to large size plantation (Rs 1,303.65). The per hectare gross returns over maintenance cost was highest (Rs ). The gross returns were Rs 3, for the overall size group of plantation. The net return over total cost was found to be Rs 1,487.42, Rs and Rs 1, on small, large and over all size groups of plantations, respectively. Hiremath (1993) in his study on economics of production and marketing of lime in Bijapur district, Karnataka revealed that the per ha cost of establishment for the four year gestation period was Rs. 56, in small, Rs. 49, in medium and Rs. 47, in large orchards. The intercrops reduced the establishment cost by 58.82, and per cent in three size group of orchards, respectively. The per hectare cost of cultivation (8 th to 30 th year) was high in medium (Rs. 12,454.34) followed by large (Rs. 1,203.76) and small orchards (Rs. 11,399.60). The average yield of lime was , bags in small, medium and large orchards, respectively. Senthilnathan and Srinivasan (1994) estimated the costs and returns of Poovan cultivar banana production over a period of three years. With the per hectare total cost of cultivation of Rs. 1,24,668.11, the gross income obtained was Rs. 2,86, and there by the net income worked to be Rs. 1,62, The study clearly showed the high profitability of variety Poovan banana with a high returns cost ratio of 2.3:1 in the study area. Shah (1996) studied the production and marketing pattern of grapes in Maharashtra. The study showed sharp increase in per acre annual gross maintenance cost as well as returns of grapes orchards. In general about 67 per cent of the gross maintenance cost of grape production was spent on various production related operations and the remaining 33 per cent owed it to investment on various marketing functions. The profitability in grape cultivation was found to be considerably high in the state of Maharashtra. Maurya et al. (1996) studied the profitability of banana production in Hajipur district of Bihar state, India during based on a sample of 60 banana growers selected from five villages in this district. The study revealed that banana production was the most profitable crop production activity in this area, as it provided a net income of Rs. 29,749 per ha with a total expenditure of Rs. 21,607 and gross income of Rs. 49,959. Chitra et al. (1997) in the study on economics of ber production in and around Hyderabad city of Andhra Pradesh found that the total costs of establishment in the first year were Rs.7913 per hectare. The total cost incurred during the maintenance was Rs per hectare. The total cost of production worked out to Rs. 16,737 per hectare. The results of the study indicated that the profits were relatively higher in ber cultivation. Rao and Ramanna (1997) conducted a study on profitability of mango cultivation in drought prone areas of Andhra Pradesh. The result of economic analysis indicated that the investment on mango garden in the region was profitable. The establishment cost per hectare of mango garden during first four years was Rs. 3748, Rs. 2029, Rs and Rs. 2452, respectively. The annual maintenance cost, i.e., from fourth year onwards worked out to be Rs per hectare.

18 The cost of production per hectare of a mango garden was Rs. 17,828 and the gross returns realized from the output of mango worked out to Rs. 22,083 per hectare. The net returns obtained from the output were Rs. 16,194 per hectare. More (1999) studied the economics of production and marketing of banana in Marathwada region of Maharashtra state. The independent variables included in the function were land, labour, machine power, farmyard manure, nitrogen, phosphorus, potash, capital, irrigation and bullock labour. The dependent variable was yield of banana. The coefficients of multiple determinations were 73, 67 and 85 per cent, respectively for the three categories of farmers. Land and capital had significant influence on yield in all the three categories of farmers and others were non-significant. Mali et al. (2001) studied the economics of production and marketing of banana in Jalagaon district of Western Maharashtra. They found that the per hectare cost of cultivation of banana worked out to Rs. 1,33,477. The gross returns per hectare of banana were Rs. 2,14,867 and the net returns were Rs. 81,390. Shivanand (2002) studied the cost and return structure in banana in North Karnataka and concluded that cultivation of banana in the study area is highly profitable and on an average banana growers obtained net returns of Rs 85,260 per hectare per year which was about Rs 2, 61,726 for cycle of three years period. Sundaravardarajan and Ramanathan (2003) estimated the establishment cost of cashew plantation for the first year at Rs. 7690, Rs and at Rs for marginal, small and large farmers, respectively. The maintenance cost of cashew plantations in the case of marginal farms were Rs. 4059, Rs. 4410, Rs. 4, 910, Rs.5385, Rs. 841 Rs Rs and Rs for second, third, fourth, fifth, sixth, seventh, eight, ninth year respectively and in case of large farms the maintenance cost were Rs. 5040, Rs. 5250, Rs. 5764, Rs. 6145, Rs 6558, Rs Rs. 7438, and Rs respectively in that order. The input output ratio per ha were 1.43, 1.55 and 1.83 for respective farms. Umesh et al. (2005) observed that the establishment cost of cashew was Rs per hectare in all the varieties studied during the first three years. The maintenance cost per ha from fourth year onwards varied from Rs 5881 to Rs 8254 in Chintamani 1, Rs to Rs in Ullal 4, Rs to Rs in Ullal- 3 and Rs to 7229 in ullal-1 at the net returns of cashew orchard per ha being fairly high were in the order of Rs , Rs , Rs and Rs in Chintamani 1, Ullal 4, Ullal-3 and Ullal- 1. Rane and Bagade (2006) studied economics of production and marketing of banana in Sindhudurg district of Maharashtra. The study revealed that the per hectare cost at cost C in Dodamarg and Sawantadi tahsil were Rs lakhs and Rs lakh, respectively. In Dodamarg tahsil banana was grown as a sole crop where per hectare cost of cultivation was Rs lakh and in Sawantadi tahsil the per hectare cost was Rs lakh. The benefit cost ratio in Dodamarg tahsil and Sawantadi tahsil were 2.20 and 2.33 respectively. The average benefit cost ratio of banana cultivation was Naphade and Tingre (2008) in their study on economics of production and marketing of guava in Buldhana districts of Maharashtra, collected primary data from sixty farmers of five tahsils of Buldhana district. The selected guava growers were classified into three groups based on the age of guava orchard. Simple tabular analysis and standard cost concepts were employed to work out cost of cultivation of guava. The per hectare cost of establishment and cost of cultivation were found to be Rs. 34,333 and Rs. 22,502 respectively. The study revealed that the profit was increasing with the age of orchard. Ravikumar (2009) studied the cost and returns in pomegranate orchards in Karnataka and found that the cost of establishment per ha was Rs. 1,90, and Rs. 1,89, of which material cost constituted and per cent and maintenance cost and per cent in Challakere and Hiriyur taluks respectively. The net present value of investment for the orchards in Challakere and Hiriyur taluk were Rs. 4,75, per ha and Rs.4,45, respectively at 9.5 per cent discount rate for pomegranate enterprise.

19 Jyoti Kachroo et al. (2010) worked out the costs and returns in ber cultivation in Jammu district of Jammu and Kashmir State. The study reported that the per acre total establishment costs of ber were Rs. 9137, Rs and Rs in the case of marginal, small and medium orchards with an average of Rs per acre. Similarly, the per acre returns per year from ber orchards were Rs. 5854, Rs and Rs for marginal, small and medium orchards with an average of Rs per acre. 2.3 Financial feasibility of investment Mallareddy (1989) studied the financial feasibility of investment in sweet orange plantation in Prakasam district, Andhra Pradesh and reported that the per acre net present value for the entire life of the project was found to be Rs. 11,83.43 in case of small orchard, Rs. 27, in large orchard and Rs. 16, in average orchard. The benefit cost ratio at 12 per cent discount rate was 1.28 in small orchard, 2.04 in large orchard and 1.47 in average orchard. The payback periods were eight, seven and eight years in small, large and average orchards, respectively and internal rate of returns was 14.70,21.24 and per cent in same order. Raikar (1990) studied the financial feasibility of investment in cashewnut orchard in Karnataka and reported that per ha. NPV was found to be Rs in case of small orchard, Rs in large orchard and Rs in average orchard. The B:C ratio at 12 per cent discount rate were 2.87, 2.25 and 2.49 for small, large and average orchards. The payback period was 8.90, 9.38 and 9.18 years in small, large and average orchards, respectively. The internal rate of return was found to be 20.22, and per cent in small, large and average orchard respectively. Hugar et al. (1991) examined the economic potentiality and viability of guava cultivation under scientific management. The study revealed that the net present worth was Rs. 73,804 per hectare. The benefit cost ratio, internal rate of returns and payback period were found to be 3.88, per cent and 6 years, respectively. Azad and Sikka (1993) applied project evaluation measures to study economic viability of cultivation of fruits like apple, peach and plum. The net present value was Rs.26,237 for apples, Rs. 89,222 for peaches and Rs. 1,17,137 for plums. The internal rate of return was 32, 36 and 47 per cent, respectively. The benefit cost ratios were 1.36, 3.87 and 5.10 in that order. Hiremath (1993) estimated the cost and returns at a discounted rate of 12 per cent and estimated the financial feasibility measures namely NPV, BCR, IRR and back period for cultivation of lime in Bijapur district. At normal cost and returns, NPV was Rs. 1,16,183, Rs. 1,34,793 and Rs. 1,38,263 for small, medium large gardens, respectively. The BCR was 3.06, 3.74 and 3.93 for small, medium and large gardens, respectively. IRR was about 25.82, 27.65, per cent and PBP was about 7.00, 6.61 and 6.40 years for small, medium and large gardens, respectively. Chitra et al. (1997) used project evaluation technique to assess the financial feasibility of investment in ber cultivation in and around Hyderabad city of Andhra Pradesh. The study reported that, the payback period in ber cultivation was 4.42 years, Benefit Cost Ratio was 5.25, Net Present Value was Rs. 12,061 and the IRR was per cent. The results of the study indicated that even though ber cultivation required relatively higher initial investment compared to other fruit crops, the economic indicators clearly showed that the investment in cultivation of ber was economically viable. Patil et al. (2000) evaluated the feasibility of investment in teak plantation in Nagpur forest circle of Maharashtra state, employing project evaluation techniques. The benefit cost ratio, net present value, profitability index, payback period and internal rate of returns at 12 per cent discount rate were 5.77, Rs. 1,02,275, 9.49, 9 years and per cent, respectively. While the corresponding figures at 15 per cent discount rates were 4.19, Rs. 52,003, 6.30, 9 years and per cent. This indicated that all the parameters of economic feasibility test turned out to be favourable, thereby justifying investment in teak plantations which was found to be economically viable proposition.

20 Pawan et al. (2002) conducted a study on cost-benefit analysis of ber cultivation in Rohtak district of Haryana by a randomly selecting 30 ber growers. Feasibility of investments in ber cultivation was evaluated by employing four indicators viz., Net Present Value, Internal Rate of Return, Benefit Cost Ratio and Payback Period. The result of the study indicated that ber cultivation was intensive with an IRR of 22.5 per cent. The NPV and BCR at a discount rate of 14 per cent were Rs. 26,346 and 1: 1.22 respectively. The investment in ber orchard was a payback period of 7 years. Liberal credit facilities, adequate and timely supply of inputs particularly good quality planting materials, efficient marketing system etc. were suggested to make ber cultivation a successful venture. Goswami and Challa (2007) conducted a study on economic analysis of smallholder rubber plantations in West Garo Hills district of Meghalaya. The results of the study revealed that per hectare cost of establishment was Rs. 22, whereas the maintenance cost was Rs. 19, They reported that discounted net cash flow technique was very appropriate for investments of the depreciating type and the results of the study showed that the NPV, B: C ratio, IRR and Pay Back Period of the plantation were Rs. 55,014.11, 2.14, per cent and 9.14 years, respectively. Jyoti Kuchroo et al. (2010) in their study on the economic viability of ber cultivation in Jammu district revealed that the net present value of ber orchard was found to be Rs. 3951, the internal rate of return was per cent, benefit-cost ratio was 1.5 and the pay back period was 6.7 years and concluded that the ber cultivation was economically viable. Bhat et al. (2011) conducted a study on economic appraisal of Kinnow production and its marketing under North-Western Himalayan Region of Jammu during the year The study revealed that the total establishment cost was Rs. 12,707 and the overall returns per acre from Kinnow orchards were Rs The net present value, internal rate of return, benefit-cost ratio and pay back period were Rs. 7929, per cent, 1.52 and 7.60 years respectively. 2.4 Marketing costs and margins in fruits and other crops Senthilnathan et al. (1994) conducted a study on production and marketing of poovan Banana in Trichirapalli district and analyzed the profitability in marketing of banana through regulated market. It was observed that the return to cost ratio of raising poovan Banana was 2.3: 1. The price spread analysis indicated that the producer s share in consumer rupee was highest (71.06 percent) when the crop was marketed through regulated market. Saraswati (1996) studied the marketing cost of orange in Kangra and Sirmour districts of Himachal Pradesh. The major components of marketing costs were picking, grading, packing, transportation, commission charge and state tax. The costs of marketing per basket incurred by the orchardists on these items depended mainly on the distance of market from the production area and the charges levied by the intermediaries. The orchard owners of Kangra district incurred a marketing cost of Rs , 29.75,22.19 and in Ambala, Chandigarh, Pathankot and Jammu markets, respectively whereas for those of Sirmour district the same was worked out to be Rs , 25.46, 23.48, and in Dehradun, Jagdhari, Saharanpur, Ambala and Chandigarh markets respectively. Singh (1996) studied the marketing of citrus fruits in Rajouri district of Jammu and Kashmir by surveying 60 citrus growers in the region and identified two channels of marketing namely, Channel-I: (producer pre-harvest contractor retailer consumer) and Channel- II: (producer retailer consumer). The producer s share in the consumer s rupee was found to be highest (75%) in channel-ii as compared to channel-i (35.71 %). Pujari (1998) studied the marketing of pomegranate and ber in Sholapur district of Maharashtra. He found that marketing cost of pomegranate and ber were Rs and Rs per kg, respectively. The price spread between minimum and maximum prices were Rs and Rs in the case of pomegranate and ber, respectively. Shellikeri and Mundinamani (1999) estimated price spread in marketing of grapes in Bijapur district, Karnataka. The producer s share in the consumer s rupee was found to be per cent in channel-i (producer pre-harvest contractor retailer consumer) and per cent in channel-ii (producer commission agent cum wholesaler retailer consumer) which clearly indicated the efficiency of the latter.

21 Shah (2000) studied marketing pattern of grapes in Maharashtra. The following channels were found in marketing of grapes in the domestic market. Channel-I: Producer Forwarding Agent Wholesaler Channel-II: Producer Commission Agents Wholesaler Channel-III: Producer Wholesaler Channel-IV: Producer Pre Harvest Contractor Wholesaler Srivastava and Mishra (2001) studied the price spread in marketing of mango in Varanasi district of Uttar Pradesh and identified two channels in marketing of mango. (1). Producer harvest contractor wholesaler retailer consumers. (2). Producer wholesaler retailer consumers. The producer s share in the consumers rupee was per cent when the mango was marketed to distant market at Calcutta (channel I) against per cent in the case of sale of mango in local markets (channel II). Comparatively higher returns in channel II was observed than channel I. The marketing cost incurred in performing different market activities in channel I was Rs. 56 and Rs. 23 in channel II. Uma et al. (2004) studied price spread in following four marketing channels of coffee in Visakhapatnam District of Andhra Pradesh. 1) Channel I: Producer Commission agents Wholesalers Retailer cum Roaster Consumer. 2) Channel II: Producer Girijan Co-operative society Wholesalers Retailer cum Roaster Consumer. 3) Channel III: Producer Girijan Co-operative society Retailer cum Roaster Consumer. 4) Channel IV: Producer Girijan Co-operative society Exporter Terminal market. The producer s share in consumer rupee was maximum in channel IV (43.06) followed by channel II (38.09) and channel I (34.46). Among the four channels, marketing efficiency was found to be high in Channel III by per cent. Namasivayam and Paul (2006) studied the price-spread in marketing of coconut in Theni district of Tamil Nadu. They identified the following three marketing channels: 1) Channel-I: Producer Pre Harvest Contractor Commission Agents Wholesalers Retailers Consumers 2) Channel-II: Producer Commission Agents Wholesalers Retailers Consumers 3) Channel-III: Producer Wholesalers Retailers Consumers Among the three channels of marketing, channel III was found to be most popular, as maximum quantity (47 per cent) of produce was marketed through this channel and also the producer s share in consumer s rupee was maximum (58.7) followed by channel-ii (58.32) and channel-i (50.20). The marketing efficiency was higher in channel-ill (3.17) followed by channel-ii (2.87) and channel-i (2.81). Grover and Singh (2007) studied the comparative economic of sesamum and its major competing crop, viz., Paddy. The results showed that the total vaiable cost per ha on sample farm was Rs. 4,517 in sesamum and Rs. 17,357 in paddy crops. Gross income was Rs in sesamum and Rs. 32,924 in paddy, while returns over the variable costs were Rs and Rs. 15,567 respectively. The benefit cost ratio was 1.36 in sesamum and 1.90 in paddy crop. Naphade and Tingre (2008) studied the price spread in marketing of guava in Buldhana district of Maharashtra. They identified three channels of guava marketing. 1) Producer Wholesaler Retailer Consumer 2) Producer Retailer Consumer 3) Producer Consumer

22 The result of the study observed that the price spread in channel-i was Rs. 170, in channel-ii it was Rs. 113 and for channel-iii, it was Rs. 70. Marketing of guava was mostly done by channel-i. Anchal and Sharma (2009) conducted a study in the sub mountainous region of Gurdaspur district of Punjab and identified the following three channels for marketing of litchi. 1. Producer Pre-harvest contractor Retailer Consumer (Local market) 2. Producer Pre-harvest contractor Retailer (through commission agent) Consumer (Amritsar market) 3. Producer Pre-harvest contractor (wholesaler) Retailer (through commission agent) Consumer (Delhi market) Of the three channels, the first one was found to be the most efficient as the producer could get as high as per cent of the consumer s rupee. The price spread was Rs for local market, Rs. 1,126 for Amritsar market and Rs for Delhi market. Kerutagi (2009) conducted a study on sapota marketing in Belgaum and Dharwad districts of Northern Karnataka. He identified the following two channels of sapota marketing. i) Producer Commission agents Retailers Consumers ii) Producer Pre-harvest contractor cum wholesaler Retailers Consumers The producer s share in consumer s rupee in channel-l was higher (59.58 per cent) than in channel-ii (48.14 per cent). Similarly, the price spread in channel-i was Rs (26.32 %), in channel-ii it was Rs. 4,000 (42.11 %) indicating higher efficiency of channel-i. Kumar and Singh (2010) estimated the price spread in following four channels of mango marketing in Lucknow district of U.P. i) Producer (local) Pre-harvest contractor (local) Commission agent (Lucknow) Wholesaler (New Delhi) Retailer (New Delhi) Consumer (New Delhi) ii) Producer (local) Pre-harvest contractor (local) Commission agent (Lucknow) Retailer (Lucknow) Consumer (Lucknow) iii) Producer (local) Pre-harvest contractor (local) Wholesaler (Lucknow) Retailer (Lucknow) Consumer (Lucknow) iv) Producer (local) Pre-harvest contractor (local)) Retailer (Lucknow) Consumer (Lucknow) Among the four channels, channel-iv was the most efficient one from the point of view of the producers as well as the consumers as the producers got as high as per cent of the consumer s rupee and remaining 54 per cent was incurred on different marketing costs or the margin by the pre-harvest contractor/ retailer. Thus, the price spread was found to be minimum in local markets and maximum in distant markets. 2.5 Direction of trade in export of fruits Jalajakshi (1994) analysed the changing pattern of shrimp export between two periods, Period I from 1970 to 1980 and period II from 1980 to The study revealed that during period I, India could not retain its previous market share in European Economic Community (EEC) countries. Nearly 90 per cent of India's share was diverted to Japan and seven per cent to the UK. However, in period II, India could retain its previous market share in EEC countries due to the gradual acceptance of tropical shrimps in these countries. Nagaraja (1997) analysed the direction of trade of the Indian horticultural commodities exports by employing a first order Markov process which helped in identifying the gains and losses in export value. It revealed that the other fresh fruit, vegetables and processed fruits and vegetable export retained their share of 56.7 per cent and obtained 68.5 per cent and 24 per cent of onion and garlic respectively. Whereas, grapes, onion and mango juice sustained their original share of 59.8 per cent, 19.4 per cent and 49 per cent, respectively.

23 Mandanna et al. (1998) revealed that the USSR, the largest market for Indian un manufactured tobacco, had a high degree of loyalty for Indian tobacco during the period to , but it diminished substantially during the period to The markets of Western Europe, Asia and the Middle East have taken the place of the USSR. Srinivasamurthy and Subramanyam (1999) analyzed the direction of onion trade by using Markov chain during the year to The major gainer among importers of Indian onion over a period of time was Malaysia, having a transfer probability of from Saudi Arabia and from UAE. Sri Lanka, in addition to having high probability of retention of its own share, was also likely to gain from Saudi Arabia with a moderate probability and gain of Balappa Shivaraya (2000) studied the changes in trade directions of exports of selected vegetable using Markov chain analysis. The results of the study revealed that UAE and Malaysia were the loyal markets for Indian onion. In the case of potato, Sri Lanka and Nepal were found to be the most loyal markets whereas Bangladesh and Nepal were the most stable importers of Indian fresh tomatoes. Desai (2001) observed that Japan was one of the most stable countries, among major importers of Indian fresh mango as reflected by its high probability of retention (1.00). In the case of mango pulp, other countries had the highest probability of retention (42.90%) followed by Saudi Arabia (24.00%) while Netherlands, UK, Kuwait and UAE were unable to retain their share as reflected by their probability of retention of zero. The transitional probabilities estimated for mango slices in brine showed that UK was the most stable country among major importers of Indian mango slices in brine as reflected by its high probability of retention (0.782). Sujatha et al. (2003) studied the instability of mangoes from India dividing the study period into pre and post-wto period. The study revealed that the instability was higher in the post-wto period than the pre-wto period. The export earnings were highly unstable in overall period compared to the pre-wto period. Sidhu (2005) analyzed the export performance of chilli that India exports only 5 to 8 per cent of its output due to high domestic consumption and low international demand for our chillies in the developed countries such as North America and European countries. Despite being low, exports of chilli were also highly fluctuating from year to year. During , the average yearly exports were estimated as 58,653 tons against 4096 tons by The export grew at the rate of 12 per cent per annum during to Savadatti (2006) employed Markov chain model to analyze the direction and changing pattern of export of Basmati rice for the period to The results revealed that there are five major countries importing Indian Basmati Rice, namely Saudi Arabia, Kuwait, UK, USA and UAE accounted for 80 to 90% in They concluded that export would likely to be concentrated in Saudi Arabia and Kuwait in the future. Kumar et al. (2007) analyzed the total mango export and it was estimated to be mt during the years & mt by The country needs to prepare a strategy to ease out the supply side constraints to meet the growing market demand. It was estimated that during the major mango export destinations were, Saudi Arabia (56.71 %) and Bangladesh (21.37%). The same in the long run i.e., years , would be UAE (49.46%), others (20.71 %), Saudi Arabia (13.72%), Bangladesh (11.36%). 2.6 Constraints in production, marketing and export Bhandari (1990) found that high yields in coffee have not benefited growers, mainly because of the slump in prices in the world market during 1988 and prices thrash to its lowest level in more than three decades, characterized by confusion and an uncertainty in international coffee trade. It gave an additional shock to the Indian growers to continue the coffee cultivation. Ramegowda (1991) reported that the majority of the coffee growers were in medium crisis management group followed by low and high crisis management group. Majority of marginal & small coffee growers were in low crisis group while large coffee growers clustered in high crisis management group.

24 Umapathi et al. (1994) studied the quality characteristics of cotton in Karnataka and found that colour, staple length and fineness have significant positive effects on the price of cotton kapas. The cotton with higher staple length had a higher demand and the study concluded that price and quality characteristics are closely related. Gunjate (1997) reported problems in cashew plantation management at Regional Fruit Research Station, Vengurla, Maharashtra. He observed that some problems in cashew plantation management were non-availability of right kind of inputs, inadequate funds, nonavailability of suitable farm equipments and machinery, non-availability of qualified and experienced personnel. The prophylactic sanitary measures recommended were found to be quite effective against stem and root bores. Mahesh (2000) studied the constraints in the tea exports using the Garrett's ranking technique. The results revealed that the lack of superior quality fronts in international market (phyto-sanitary measures), lack of export promotional measures, and existence of non- tariff barriers were the main constraints faced by the exporters in the export. Besides, exim policy curbing teas imports, lack of infrastructural facilities, packaging and processing technologies were other constraints in the tea exports. Sujatha et al. (2003) examined the constraints in the export of mangoes and found that export marketing required a sound and organized supply mechanism. Irradiation machines are required to provide quality mangoes. Careless packaging and the problems of spongy tissue and infestation by fruit fly and stone weevil lowered the quality. Alagumani (2005) studied risks involved in tissue cultured and sucker propagated banana in Theni district of Tamil Nadu and reported that the risk in cultivation of banana using tissue culture plantlets was lower than that of sucker propagated banana production. The constraints in tissue culture banana production were high cost of tissue culture plantlets and few farmers also expressed problem in marketing of big size bunches obtained from tissue culture banana. Brij Bala (2006) conducted a study on marketing systems for apple in hills, problems and prospects (A case study of Kullu district, Himachal Pradesh). He surveyed 120 apple growers and reported many constraints faced by the growers such as lack of road facility unawareness, inadequate storage facility, delayed payment and lack of market intelligence. Naphade and Tingre (2008) conducted a study in Buldhana district of Maharashtra to find out the problems faced by the guava growers. The major problems faced by the growers were lack of market information (40 %), high market commission charges (38.33 %), lack of appropriate grading (36.67 %) and other problems noticed were lack of processing units, lack of storage facilities and high transportation costs etc. Kerutagi et al. (2009) conducted a study in Belgaum and Dharwad district of Northern Karnataka to identify the constraints in sapota marketing. The study revealed that the major problems in sapota marketing were lack of storage facility (94.44 per cent), collection of higher commission charges (83.33 per cent), higher transportation cost due to lack of nearer markets and non availability of proper market information.

25 3. METHODOLOGY In this chapter the description of the study area, the sampling procedure, nature and sources of data, the statistical tools and techniques employed for analyzing the data are presented under the following headings. 3.1 Description of the study area 3.2 Sampling procedure 3.3 Nature and sources of data 3.4 Analytical tools and techniques used 3.5 Definition of terms and concepts used 3.1 Description of the study area Karnataka Karnataka is the eighth largest state in India with an area of 1,91,791 sq.km., occupying 7.75 percent of the total geographical area of the country, bounded by Andhra Pradesh in the east, Maharashtra and Goa in the West coast and Tamil Nadu and Kerala in the South and Arabian sea in the west. Karnataka state is situated between 11º31 and 18 º48 North latitudes and 74º12 and 78º40 East longitudes and lies in the West Central part of the Deccan peninsular India. Its length from North to South is 700 kms, and from East to West is 400 kms. As per the 2001 census, Karnataka is the eighth largest state in India with a total population of about 5.27 crores. The population density of state was about 275 persons per sq. kilometer. Karnataka state accounts for 5.14 per cent of the country s total population in 2001 as against 5.34 per cent in The state has 30 districts with 176 taluks and 29,404 villages. Karnataka is situated in tropical zone and enjoys warm climate throughout the year. The mean temperature ranges from 21.5ºC to 31.7ºC, the maximum and minimum temperatures being 42ºC and 14ºC respectively. The average temperature in the state is about 24ºC. In general, the climatic condition is favourable for crop production. The normal rainfall of the state ranges from as low as 569 mm to as high as 4029 mm. Average annual rainfall of the state is 1354 mm. The major part of the rainfall of the state is received from the South-West monsoon, which commences in the first week of June and continues till the end of September. Major part of the state has red soils. Laterite soils are found in the hilly and coastal regions of the western parts. The northern part of the state has got deep black to black soils and red to red loamy soils. Karnataka is a progressive state in the field of modern horticulture in the country. The diverse agro-ecological conditions prevailing in Karnataka has made it possible to grow different types of horticultural crops such as fruits, vegetables, flowers, spices, plantation crops, root and tuber crops, medicinal and aromatic crops etc. The area under horticultural crops during in the state was lakh hectares which accounts for about 9.45 per cent of the total geographical area, forming about per cent of the total cultivable area. Out of lakh hectares of horticultural cropped area, 7.87 lakh hectares is under plantation crops (43.72%), 4.21 lakh hectares under vegetables (23.39%), 3.18 lakh hectares under fruits (17.67%), 2.43 lakh hectares under spices (13.50%) and 0.27 lakh hectares under commercial flowers (1.50%) including the area under the medicinal and aromatic plants. (Appendix-I) Pomegranate crop in Karnataka is spread in 25 districts of the state. But, its commercial cultivation is concentrated in Koppal, Bagalkot, Bellary, Bijapur, Tumkur, Chitradurga and Raichur districts. Among the major pomegranate growing districts of the state, Koppal and Bagalkot districts stood first and second place with respect to area and production under this crop. Hence, these two districts were selected for the present study. The district wise area, production and productivity of pomegranate in Karnataka during are presented in Table Land Use Pattern in Selected Districts and Taluks The land use pattern in the study area is presented in Table 3.1. The total geographical area of Bagalkot and Koppal districts was 6,58,877 hectares and 5,52,495 hectares with the net cultivable area of 4,55,341 hectares and 3,58,966 hectares respectively.

26 Table 3.1: Land use pattern in the study area ( ) (in hectares) Sl. No. Particulars Bagalkot district Bagalkot Taluk Mudhol Taluk Koppal district Kustagi taluk Yalaburaga taluk 1 Total geographical area Area under forest Land not available for cultivation Cultivable waste land Fallow land Net area sown Source: Bagalkot and Koppal District at a Glance

27 The area not available for cultivation was 53,642 and 55,497 hectares, fallow land was 63,030 & 91,128 hectares and 81,126 & 29,451 hectares of land was under forests in that order Cropping Pattern in the study area The cropping pattern of the selected districts presented in Table-3.2 revealed that in Bagalkot district, cereals formed the important component of cropping pattern with per cent of the gross cropped area followed by oilseeds (20.32%), commercial crops (15.48%), fruits & vegetables (3.35%) and spices (0.61%). Among the taluks of Bagalkot district, the area under commercial crops was highest with per cent in Mudhol taluk as against 4.43 per cent in the case of Bagalkot taluk. In Koppal district, similar trend was observed as in the case of Bagalkot district with cereals accounting for per cent of the cropping pattern followed by oilseeds (29.59%), pulses (14.71%), commercial crops (3.73%), fruits & vegetables (3.53%) and spices with 0.37 per cent. The cropping pattern in Kustagi and Yelburga taluks was found to be similar to that of Koppal district. 3.2 Sampling procedure Multistage sampling method was used for selection of districts, taluks and villages. The pomegranate fruit growers were selected randomly from the selected villages. For selection of commission agents and exporting agencies, a proportionate random sampling method was employed Selection of the Districts Bagalkot and Koppal districts were purposively selected based on highest area and production in the state, since these two districts together accounted for more than 50% of area & production under pomegranate in the state during the year (Table-3.3 and Fig. 3.1) Selection of the Taluks Pomegranate is grown in all taluks of Bagalkot and Koppal districts. In order to select the major pomegranate growing taluks, all the taluks of both districts were listed in the ascending order of magnitude on the area under pomegranate crop in each district for the year (Table 3.4 & 3.5 and Fig. 3.2 & 3.3). From the table it could be observed that Bagalkot and Mudhol taluks in Bagalkot district and Kustagi and Yalaburaga taluks in Koppal district topped with respect to pomegranate area. Hence totally four above mentioned taluks from these two selected districts were chosen purposively for the present investigation Selection of Villages There are 24 and 18 villages in Bagalkot and Mudhol taluks of Bagalkot district and 30 and 22 villages in Kustagi and Yalaburaga taluks of Koppal district, respectively. Based on the highest area under pomegranate cultivation, five villages from each of the selected taluk were chosen. Thus, totally 20 villages from four taluks were selected for the study (Table 3.6) Selection of the Growers For the selection of pomegranate growers, the purposive sampling method was adopted. Five pomegranate growers from the list of farmers growing pomegranate were randomly selected from each chosen village. Thus, a total of 100 pomegranate growers were selected for the purpose of the study (Table 3.6) Selection of Market The important market intermediaries involved in marketing of pomegranate both for domestic and export markets were commission agents, commission agents-cum wholesalers, distant wholesalers, retailers and export agencies. To compute the marketing costs and margins under different channels of pomegranate marketing, ten wholesaler / wholesaler cum commission agents, ten retailers and ten exporting agencies were selected for collection of required information. Thus, in all 30 market intermediaries were chosen to elicit the required information.

28 Table 3.2: Cropping pattern in the study area ( ) Sl. No. Crops Bagalkot district % Bagalkot taluk % Mudhol taluk % Koppal district % Kustagi taluk % (Area in hectares) Yelburga taluk I. Cereals 1 Paddy Jowar Bajra Maize wheat Other Cereals Sub-Total (I) II. Pulses 1 Bengal Gram Red gram Other pulses Sub-Total (II) III. Oil seeds 1 Groundnut Sunflower Others Sub Total (III) IV. Fruits and Vegetables 1 Fruits Vegetables Sub Total (IV) V. Total Spices 1 Total Spices Sub Total (V) VI. Commercial crops 1 Sugarcane Cotton Others Sub-Total (VI) Grand Total Source: Bagalkot and Koppal District at a Glance %

29 Table 3.3: District-wise area, production and productivity of pomegranate in Karnataka during Sl. No. District Area (hectares) % to total area Production (tons) % to total production 1 Bangalore (Urban) Bangalore (Rural) Chikkaballapura Chitraduraga Davangere Kolar Ramanagar Shimoga Tumkur Bagalkot Belgaum Bijapur Dharwad Gadag Haveri Bellary Bidar Gulbarga Koppal Raichur Chamarajanagar Chikmagalur Hassan Mandya Mysore State Total Source: Horticultural crop statistics of Karnataka state at a glance ( )

30 Fig 3.1 : Map of Karnataka showing the Study Districts

31 Table 3.4: Taluk-wise area, production and productivity of pomegranate in Bagalkot district during Sl. No. Taluks Area (ha) % to total area Production (tons) % to total production 1 Bagalkot Mudhol Badami Bilagi Hungund Jamakhandi Total Source : Horticultural crop statistics of Karnataka state at a glance ( ) Table 3.5: Taluk-wise area, production and productivity of pomegranate in Koppal district during Sl. No. Taluks Area (ha) % to total area Production (tons) % to total production 1 Kustagi Yelburga Gangavati Koppal Total Source : Horticultural crops statistics of Karnataka state at a glance ( )

32 Fig. 3.2: Map of Bagalkot District showing the Study Area Fig 3.3: Map of Koppal District showing the Study Area

33 3.3 Nature and sources of the data The present study was carried out during the agricultural year by utilizing both primary and secondary data. The primary data relating to establishment cost, production cost, price obtained by the farmers, channels followed in marketing of pomegranate produce, cost of marketing of fruits, problems faced during production and marketing were obtained from the producers. The data on costs incurred by the market functionaries in the marketing of the produce, the price at which the commodity was purchased and sold etc., were collected in order to work out the margins obtained by each of them. The primary data were collected with the help of pre -tested structured schedule. The general information about the pomegranate cultivators, the area under pomegranate, age of the orchard, number of plants, spacing input use etc, was also collected. The relevant information on other aspects like fixed assets, land use, cropping pattern, source of irrigation, yield and returns, quantity sold, place of sale and the channel through which the fruits were exported, the marketing costs incurred, profit margin earned by each functionaries were also collected. The schedule was also used exclusively for pomegranate exports for collection of information about purchase and sale of produce, cost of packing material, quality requirements of fruits for export, mode of transport and its cost and problems associated with export were gathered and ensured that the data made available by them were clear, comprehensive and reasonably correct. The secondary data pertaining to the area, production and productivity of pomegranate were collected from the Directorate of Horticulture, Lalbag, Bangalore, Deputy Director of Horticulture, Bagalkot and Koppal districts, Senior Assistant Director of Horticulture, Bagalkot, Mudhol, Koppal and Kushtagi taluks and also from the fruit growers associations in the study area. As the data on export of pomegranate from Karnataka was not available, only the export data related to the country was analysed. 3.4 Analytical tools and techniques To fulfill the specific objectives of the study, based on the nature and extent of availability of data, the following analytical tools and techniques have been adopted Tabular analysis Growth rate analysis Instability analysis Financial feasibility analysis Markov Chain analysis SWOT analysis Tabular analysis The collected data were presented in tabular form to facilitate easy comparisons. The tabular analysis technique was employed for estimating the cost and return structure, marketing cost and margins under different channels of pomegranate marketing, opinion of farmers regarding the problems in production, marketing and export of fruits. The data were summarized with the aid of statistical tools like averages and percentages to obtain the meaningful results Growth rate analysis The growth rate on area, production and productivity of pomegranate in Karnataka state and in the study districts as well as growth rate in export of pomegranate from India were computed by using the following growth model. Y t = ab t u t. (1) Where, Y t = Area / production / productivity in the year t a = Intercept indicating y in the base period (t = 0) b = (1 + g) regression coefficient t = time period in years. = Disturbance term for the year t u t

34 Table 3.6: Distribution of sample pomegranate growers in the study area ( ) Sl. No. District/taluk Village Area (hectares) No. of pomegranate growers selected I Bagalkot district a) Govinakoppa b) Kaladagi Bagalkot taluk c) Devanal 98 5 d) Sardal 90 5 e) Hiresanshi 82 5 a) Hebbal 90 5 b) Chitrabankot Mudhol taluk c) Machaknur 50 5 d) Chikkur 40 5 e) Badnur 35 5 II Koppal district a) Tavaragera b) Menadal Kustagi taluk c) Kilarhatti 88 5 d) Madalagatti 80 5 e) Shakapur 75 5 a) Kalkabandi b) Vajjarbandi Yelburga taluk c) Tarakalkatti 81 5 d) Chikkamageri 75 5 e) Talakal 65 5 Total Source : Office of the Senior Assistant Director of Horticulture, Bagalkot, Mudhol, Kustagi and Yelburga taluks.

35 Equation (I) was converted into the logarithmic form in order to facilitate the use of linear regression. Taking logarithm on both sides of the equation (1) This equation is of the following form Where, Ln Y t = Lna + Lnb + e t Q t = ln Y t A = lna B = ln b e t = ln u t The linear regression of the above form was fitted separately for area, production and productivity of pomegranate. The values of a and b parameters in equation (1) were obtained by taking antilogarithms of a and b values as a = Anti log A b = Anti log B Average annual compound growth rate was calculated as b = 1+g g = b 1 To obtain percentage compound growth rate, the values of g was multiplied by Instability analysis To know the variation in export of pomegranate over the years, the Coefficient of Variation (CV) was worked out by employing the following formula Coefficient of Variation (%) = Standard Deviation Mean x 100 SD = 1/n Σ (x x ) 2 ΣXi Mean = N Σxi n = Sum of observations = Number of observations Financial feasibility analysis Discounted cash flow technique was employed for evaluating the investments and to find out the technical feasibility and economic viability of investment on pomegranate orchard. A few most frequently used measures of project evaluation techniques were used. These measures were advocated as tools or aid to evaluate and find out the worthiness of an investment, especially those of long term projects. The techniques used for the financial analysis for the present study were, Net Present Value (NPV) / Net Present Worth (NPW), Benefit Cost Ratio (BCR), Internal Rate of Return (IRR) and Pay Back Period (PBP).

36 Net Present Value (NPV) Net present value is one of the measures of financial viability of the project. The difference between the present value of investment outlays and that of future net cash inflows is known as the net present worth. The criterion is presented below. Where, Y n r I n n NPV = Y n (1 + r) -n - I i=1 = Refers to the net cash inflows in the year n = Refers to the discount factor = Initial investment = Economic life of the pomegranate orchard. The decision rule associated with the Net Present Value is, the project will be accepted if its value is positive and reject if its value is negative. (if the net present value is zero, it is a matter of indifference) Benefit Cost Ratio (BCR) Benefit cost ratio is the ratio of the discounted net benefits to the initial investment. The benefit cost ratio (BCR) was worked out by using following formula. Discounted net cash flows BCR = Initial investment It measures the present value of returns per rupee invested and it is a relative measure. The decision rule is that, accept the project, when BCR is greater than one, reject it when BCR is less than one and if BCR is zero, it is a matter of indifference Internal Rate of Return (IRR) The Internal Rate of Return is the rate of return which equates the present worth of benefits to present worth of costs, which means the rate at which the net present value of project is equal to zero. This is another way of using discounted cash flow for measuring worth of project is to find out that discount rate which just makes the net present worth of cash flow equal to zero. This discount rate is termed as internal rate of return in the sense that it represents the average earning power of money used in the project over the project life. This is generally determined by trial and error method. By this trial and error method one discount rate is found which is too low and leaves a positive net worth and another discount rate is found which is too high and leaves a negative net worth of cash flow stream. The internal rate of return may be then estimated by interpolation. Interpolation is a simple method of determining the intermediate value between two discount rates. The rate followed for interpolating the value of internal rate of return is as follows. Internal rate of return = Lower discount rate + Difference between two discount rates x Present worth of cash flow at lower discount rate Absolute difference between the present worth of cash flows at the two discount rates The Internal Rate of Return is a relative measure. To accept the project, the calculated IRR should be greater than the ongoing opportunity cost of capital.

37 Pay Back Period (PBP) Pay Back Period is the one of the traditional and undiscounted measure of project analysis technique. It represents the length of time required for the stream of cash proceeds produced by the investment to be equal to the original cash outlay. When the cash flows are equal in all the years of the project life period, the following method is used for calculation of pay back period. Pay back period = Initial investment Average annual net cash inflow In the present study, payback period was calculated by the process of cumulating the net cash flows till the time when cumulative cash flows become equal to the original investment outlay. According to the payback criterion, the shorter the payback period, the more desirable is the project. A firm using this criterion may specify the maximum acceptable payback period. If this is n years, projects with a payback period of n years or less are deemed worthwhile, and projects with a payback period exceeding n years are considered unworthy. More commonly, however, the payback period may be used as a constraint rather than as the decision criterion Markov chain analysis The dynamic nature of trade pattern was analyzed by applying First Order Markov process and examining the gains and losses in export share of pomegranate in major importing countries. In the context of current application, the major pomegranate importing countries were considered since the export of pomegranate from India was highly inconsistent and unstable. The average export of pomegranate to particular country was considered to be a random variable following the First Order Markov process. The basic assumption of first order Markov process is that the average export of a commodity (pomegranate) from a country to its importing countries in any period depends only on export in the previous period and this dependence is the same among all periods. This is algebraically expressed as- Where, r E jt = E it -1Pij + e i = 1 E jt = Exports from India during the year t to j th country E it-1 = Exports to i th country during the year t-1 P ij = The probability that exports will shift from i' th country to j th country E jt = The error term which is statistically independent of E ij-1 and R = Number of importing countries The transitional probability matrix, which can be arranged in a (c r) matrix, has the following properties. The diagonal elements of matrix P indicate the probability that the export share of a particular country will remain the same from one period to another. The off-diagonal or transfer probabilities indicate the probability that the export share of a particular country will shift to another country over time. Thus, the export share of a country during the period t was obtained by multiplying the actual exports in the previous period (t-1) with transition probability matrix. The transitional probability matrix is estimated in the linear programming (LP) framework by a method referred to as minimization of mean absolute deviation (MAD). jt

38 The LP formula is stated as, Where, Subject to- XP* +V=Y GP*=1 P*>=0 Min OP* + Ie P* is a vector in which probability P are arranged, 0 is a vector of zeros, I is an appropriately dimensioned vector of area, e is the vector of absolute errors (IUI) Y is the vector of export to each country X is a block diagonal matrix of lagged values of Y and V is a vector of errors. G is a grouping matrix to add the row-elements of P arranged in P* to unity. The major pomegranate importing countries considered for the study were Saudi Arabia, UAE, UK, Bangladesh and Bahrain The SWOT analysis The SWOT Analysis has been a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities and Threats involved in a project or in a business venture. It involved specifying the objective of the business venture or project and identifying the internal and external factors that were favourable and unfavourable to achieving that objective. If a SWOT analysis does not start with defining a desired end state or objective, it runs the risk of being useless. A SWOT analysis was incorporated into the strategic planning model. An example of a strategic planning technique that incorporates an objective-driven SWOT analysis was SCAN analysis. Strategic Planning, including SWOT and SCAN analysis, has been the subject of much research. Strengths : Attributes of the organization/situation that were helpful to achieving the objective Weaknesses : Attributes of the organization that were harmful to achieving the objective. Opportunities : External conditions that were helpful for achieving the objective. Threats : External conditions which could do damage to the business's performance. Identification of SWOTs was essential because subsequent steps in the process of planning for achievement of the selected objective might be derived from the SWOTs. First, the decision makers have to determine whether the objective was attainable, given the SWOTs. If the objective was NOT attainable a different objective must be selected and the process repeated. The usefulness of SWOT analysis was not limited to profit-seeking organizations. SWOT analysis might be used in any decision-making situation when a desired end-state (objective) has been defined. In the present study, the strengths, weaknesses, opportunities and threats of pomegranate export were assessed using the opinions obtained from the sample exporters. The Likert type of scaling technique with four point continuum was used in assessing the strengths, weaknesses, opportunities and threats of pomegranate export. Respondents were asked to indicate the amount of agreement or disagreement (from strongly agree to strongly disagree) on a five -point scale. The same format was used for multiple questions.

39 3.5 Definition of terms and concepts used Production aspects Pomegranate is a drought resistant and responds well under medium to shallow soils. The establishment period of the crop is about 3 years and could be cultivated economically for about 15 years under good management condition. Though, pomegranate starts yielding from the third year, the economic yield starts from fourth year onwards. The investments in the pomegranate orchard were classified into establishment and maintenance costs/cost of cultivation. The pomegranate producer sample consisted of 100 growers. The age of the orchards operated by the respondents ranged from 1 to 15 years. For making the future yield projections of pomegranate, these sample orchards were grouped depending upon their age. Later the average yields were calculated for each of these groups such as average yield for 4 year old orchard, average yield for 5 year old orchard and so on. The average yield computed in this fashion was taken as yield projections for different years in future for the purpose of financial feasibility analysis. 1. Establishment cost The cost incurred during planting and the cost of maintenance of pomegranate for initial three years was considered as establishment cost. The costs incurred under this comprises land preparation including bullock labour, digging of pits and planting, application of manures and fertilizers, spraying of chemicals, weeding, maintenance of equipments and materials, cost of seedlings, drip set, sprayer, plant protection chemicals and all other related after care operations. In the present study, the total establishment cost included the initial investment and the maintenance cost of pomegranate orchard for the initial period of 3 years. 2. Maintenance costs / cost of cultivation The cost incurred on annual basis for maintaining the pomegranate orchard from the first year onwards till the end of the life span of 15 years. The annual maintenance cost was divided into variable cost and fixed cost. A. Variable cost Variable cost included the cost of human and bullock labour, cost of farm yard manure, fertilizer, plant protection chemicals and irrigation charges (electricity charges, guiding charges). i) Labour cost It was computed based on the actual wages paid by the producers (8 hours) in the study area for men, women and bullock pairs during the study period. The same wage rates were considered for imputing family labour. While expressing labour in man days, woman days were converted into man days by taking 0.75 man days equal to one woman day. The watch and ward was done by the producer themselves in the study area. The prevailing wage rates in the study area during study period was Rs. 80 and Rs. 50 for men and women, respectively. ii) Bullock labour It was measured in pair days. Here one pair means eight hours of work by a pair of bullocks and a person needed to operate the bullock pair. It was valued at rate of Rs. 300 per pair prevailing in the study area. iii) Cost of fertilizers, manures and plant protection chemicals The cost of fertilizers, manures and plant protection chemicals were computed based on the actual prices paid by the growers. iv) Interest on working capital Interest on working capital was charged at the rate of 7 per cent per annum, which was the rate at which the farmers used to get short term loans.

40 3) Fixed cost Fixed costs included interest on fixed capital, the land revenue, depreciation cost and rental value of owned land. i) Interest on Fixed Capital Interest on fixed capital was calculated at the rate of 9 percent, based on the prevailing bank rate for long-term investments. ii) Depreciation Cost The depreciation cost for the farm assets were worked out by straight line method. This was apportioned to area under individual crop. iii) Land Revenue study. iv) Land Rent Land revenue paid by the farmers during the current year was considered for this Rental value of land was imputed at the prevailing land rent per hectare per annum in the study area Marketing aspects Marketing costs Marketing cost is the cost incurred on packaging material, cleaning, grading, sorting, loading and unloading, storage and transportation etc., paid in marketing the produce. It is the actual expenses incurred in bringing goods by the producer from the farm gate to the consumer Marketing Cost of the Producer Seller (MCP) These costs included cost of packages and packing charges, loading and unloading charges, transportation cost, market fee and miscellaneous expenses Transaction Costs of the Wholesaler (TCWS) These costs comprised storage cost, storage loss, transportation cost, loading and unloading charges, labour cost and miscellaneous charges including electricity and telephone charges Transaction Costs of Exporter (TCE) It included the cost of labour for sorting, grading and cleaning of fruits for packing, loading and unloading charges, cost of the packing material and transportation cost Market functionaries (intermediaries) Wholesaler (W.S) Wholesalers are professional buyers. He purchases from the producer in large quantities and sells it to the retailer. The wholesaler is involved in buying and selling of the commodities in bulk at the wholesale market. He is the first agency to receive the produce when it arrives in the market Distant wholesaler The distant wholesaler is the one who arrives in the study area during the harvesting season from distant markets even from other states of the country. He settles the price contract with the farmer before the actual transaction of the produce Retailers Retailers sell the pomegranate fruits directly to consumer in the market. They purchase the produce from wholesaler.

41 Exporter The role of fruit exporting agency comes during harvesting stage of pomegranate fruits by settling the negotiations regarding the price of the fruit with the growers. The fruit exporters select only the exportable qualities of pomegranate fruits and then pack the fruits in the exportable packages and those boxes are to be sent to the air port or sea port through refrigerated vans Marketing channels These are the routes through which the product flows from the producers to the consumers. The channels followed in the sale of pomegranate fruits in the study area are as follows: 1. Channel-I : Producer Commission agent cum wholesaler Retailer Consumer 2. Channel-II : Producer Distant wholesaler 3. Channel-III : Producer Exporter Prices Wholesale Price (WSP) This was the price at which the wholesaler sold the produce to the retailer. Retail Price (R.P) Export price It was the price at which the retailer sold the produce to the final consumer. This was the price at which the exportable quality fruit was sold to exporter by the pomegranate fruit grower. Producer s Net Price (PNP) This referred to the wholesaler price less the sum of costs incurred by the producer seller in the marketing of his produce. PNP = WSP MCP

42 4. RESULTS Keeping in view the objectives of the study, the data collected were analysed employing appropriate analytical tools and the major findings are presented under the following heads. 4.1 General characteristics of the sample pomegranate farmers 4.2 Growth in area, production and productivity of pomegranate 4.3 Investment pattern and maintenance cost in pomegranate orchards 4.4 Yield and return structure of pomegranate orchards in the study area 4.5 Financial feasibility of investment in pomegranate orchard 4.6 Marketing of pomegranate 4.7 Present Status and export scenario of pomegranate 4.8 Direction of trade and changing pattern of exports during pre and post-wto periods. 4.9 SWOT analysis of pomegranate export 4.10 Problems faced in production, marketing and export of pomegranate 4.1 General characteristics of the sample pomegranate farmers The general characteristics of sample farmers in the study area are presented in the Table 4.1. The present study covered 100 pomegranate growers consisting of 50 farmers each from Bagalkot and Koppal districts. It could be observed from the Table that the average age of the farmers was and years for Bagalkot and Koppal districts respectively. The average age of the sample farmers from both the selected districts was found to be years. In both the districts, the main occupation of the sample respondents was mainly agriculture. As far as the education was concerned about 32 per cent of the sample farmers were illiterate in Koppal district as compared to 24 per cent illiteracy in Bagalkot district. The education level of the sample farmers in Bagalkot district had an edge over the Koppal district as revealed in the Table 4.1. The total land holding of the sample farmers was comparatively high (4.06 ha) in Bagalkot district as compared to Koppal district (3.97 ha) with acreage of dryland dominating in both the cases. The average area of sample farmers in Koppal district was comparatively more (1.20 ha) as compared to Bagalkot district with 0.92 hectares. The varieties cultivated by the sample farmers in both the districts, were Kesar and Araktha varieties. (plate no- 4.1) The range of the bearing orchard was found to be 4 to 15 years and the life span of the orchard was reported to be 15 years in both the districts for the above mentioned varieties. The soil types in the study districts consisted of red sandy loams and white masori (muram). The Bagalkot district consisted of per cent of red sandy loam while in, Koppal district it was per cent. The white masori (muram) soil type in Koppal district was highest with per cent followed by in Bagalkot district with per cent. The method of irrigation followed in both Bagalkot and Koppal districts was drip with 84 per cent and 91 per cent respectively for irrigating the pomegranate crop. 4.2 Growth in area, production and productivity of pomegranate The compound growth rates for area, production and productivity of pomegranate for the period to is depicted in the Table 4.2. From the Table it could be observed that the production of pomegranate showed a significant growth of 2.60 per cent per annum at one per cent level of significance followed by growth in area with 2.29 per cent at 5 per cent level of significance for Karnataka. As far as the two selected districts were concerned, Koppal district showed substantial growth both in area and production of pomegranate as compared to the Bagalkot district. The growth in production of pomegranate in Koppal district was per cent followed by 24 per cent growth in area at one per cent level of significance. On the other hand, the growth in area and production of pomegranate for Bagalkot district though significant but was comparatively less than Koppal district with 6.73 per cent (at 5% level of significance) and 5.95 per cent (at 1% level of significance) respectively. On the contrary, the productivity of pomegranate for Karnataka State, Bagalkot and Koppal districts though positive but was found to be non-significant with 0.30 per cent, 0.73 per cent and 1.09 per cent per annum respectively.

43 Table 4.1: General characteristics of sample farmers Sl. No. Particulars Unit I. General information of the sample farmers Bagalkot Koppal Pooled (n = 50) (n = 50) (n = 100) 1 Age Years Occupation a. Main (agriculture) No b. Subsidiary occupation No Education a. Illiterate No (24.00) (32.00) (28.00) b. Primary No (36.00) (34.00) (35.00) c. High school No (24.00) (22.00) (23.00) d. College No (16.00) (12.00) (14.00) Total No (100.00) (100.00) (100.00) 4 Family size No Land holdings a. Irrigated Ha b. Dry land Ha Total Ha II. Salient features of pomegranate orchards 6 Area under Pomegranate Ha Varieties -- Kesar and Kesar and Kesar and Araktha Araktha Araktha 8 Range of bearing orchard years Life span of orchard years Plant population Plants/Ha Soil type of selected pomegranate orchards a. Red sandy loam % b. White masori (Muram) % c. Other soil types % Total % Method of irrigation a. Drip % b. Conventional % Note: Figures in parentheses indicate percentage to the respective totals

44 Bhagwa (Kesar) Araktha (Mrudula Plate 4.1 Popular pomegranate cultivars in the study area

45 Table 4.2: Compound growth rates for area, production and productivity of pomegranate ( to ) (Per cent per annum) Sl. No. Particulars Compound Growth Rate (%) Karnataka Bagalkot District Koppal District 1 Area 2.29** 5.95* 24.00* 2 Production 2.60* 6.73** 25.35* 3 Yield * Significant at 1 per cent ** Significant at 5 per cent

46 4.3 Investment pattern and maintenance cost of pomegranate orchards The investment in pomegranate included primarily the costs incurred in establishing the orchard. The costs incurred in the orchard upto the bearing stage (three years) formed the establishment cost of the orchard. The investment pattern in pomegranate orchards were classified into initial costs and maintenance costs. The initial investment was the expenditure incurred during the zero year which constituted the rental value of land, costs on bore well and accessories, sprayer, plant material, digging of pits and planting, staking, fencing, installation of drip set etc. The maintenance cost comprised the expenditure incurred on the maintenance of the orchard upto the time of bearing, (three years) such as expenditure on labour, fertilizers, manures, plant protection chemicals, irrigation, material cost and fixed cost during the gestation period. The per hectare cost of establishment of pomegranate orchard is presented in Table 4.3. The per hectare cost of establishment of pomegranate orchard was Rs. 2,85, and Rs 2,78, for Bagalkot and Koppal districts respectively. The material cost constituted a major share in the total establishment cost of pomegranate orchard. Out of the total establishment cost (A+B), the initial investment constituted per cent (Rs. 1,52,482.52) and per cent (Rs. 1,47,996.28) for Bagalkot and Koppal districts respectively. Similarly, the maintenance cost upto the bearing period (3 years) accounted for per cent (Rs. 1,33,516.24) and per cent (Rs. 1,30,444.03) for Bagalkot and Koppal districts, respectively. Among the initial costs of investment, the cost on bore well and accessories accounted for a major share of per cent (Rs. 73,177.26) followed by installation of drip irrigation set (13.11%), cost on fencing (6.85%), rental value of land (3.72%), planting material (2.07%) and investment in digging of pits and planting (1.47%) for Bagalkot district. The cost on sprayer and staking material accounted for a meager share in the material cost with 0.30 per cent and 0.22 per cent respectively. In the case of Koppal district, more or less similar pattern was observed in respect of establishment cost of pomegranate orchards. The cost on bore well and accessories contributed a major share in the material cost with per cent (Rs. 71,566.28) followed by installation of drip irrigation set (13.65%), fencing (6.79%), rental value of land (3.05%), planting material (2.08%) and investment in digging of pits and planting (1.36%). The maintenance cost upto the bearing period for Bagalkot district for the I, II and III year were Rs. 42,553.28, Rs. 45, and Rs. 45, accounting for per cent, per cent and per cent of the total establishment cost respectively. The total maintenance cost during the gestation period (3 years) accounted for Rs. 1,33, (46.68%) for Bagalkot district. Similarly, the maintenance cost for Koppal district during the first three years amounted for Rs. 40,680.48, 44, and 45, accounting for per cent, per cent and per cent of the total establishment cost respectively in that order. The total maintenance cost during the establishment period (3 years) accounted for 1,30, (46.85%) for Koppal district Maintenance cost of pomegranate orchard during the gestation period The maintenance cost incurred on pomegranate orchards in Bagalkot and Koppal districts is presented in Table 4.4 and Table Bagalkot district It could be observed from the Table 4.4 that the average per ha total cost incurred on maintenance of pomegranate orchard by the growers during the establishment period was Rs. 1,33, for Bagalkot district. Of the total cost, the share of variable cost was per cent (Rs. 96, ) followed by fixed cost with per cent (Rs. 36,748.01). In the variable cost, the expenditure on labour alone was per cent (Rs. 57,477.87) followed by material cost with per cent (32,959.73).

47 Table 4.3: Investment pattern in pomegranate orchards Sl. No. A. Initial Investment Particulars Bagalkot (Rupees/hectare) Koppal value % value % 1 Rental value of land Bore well and accessories Sprayer Plant material (Seedlings) Investment in digging of pits and planting Staking Fencing Installation of drip set Total B. Maintenance cost up to bearing period I year II year III year Subtotal (I+II+III) Total establishment cost (A+B)

48 Table 4.4: Maintenance cost of pomegranate orchard during gestation period in Bagalkot district (Rupees/hectare) Sl. Particulars I year II year III year Total % No. I A VARIABLE COST Labour cost 1 Inter-cultivation Loosening of soil around the trunk & formation of bed for drip irrigation Gap filling FYM application Fertilizer application Weeding Pruning and training Thinning of flowers and fruits Plant protection chemical spraying Irrigation, watch and ward Miscellaneous B Total labour cost (A) Material cost 1 Seedlings for gap filling Manure Fertilizers Plant protection chemicals Others Total material cost (B) C Interest on working 7.0 % II Total variable cost (A + B + C) FIXED COST 1 Rental value of land Land revenue Sub Total Interest on fixed 9.0 % Depreciation Total fixed cost Total cost (I+II)

49 Sl. No. I A Table 4.5: Maintenance cost of pomegranate orchard during gestation period in Koppal district VARIABLE COST Labour cost (Rupees/hectare) Particulars I year II year III year Total % 1 Inter-cultivation Loosening of soil around the trunk & formation of bed for drip irrigation Gap filling FYM application Fertilizer application Weeding Pruning and training Thinning of flowers and fruits Plant protection chemical spraying Irrigation, watch and ward Miscellaneous B Total labour cost (A) Material cost 1 Seedlings for gap filling Manure Fertilizers Plant protection chemicals Others Total material cost (B) C Interest on working 7 % II Total variable cost (A+B+C) FIXED COST 1 Rental value of land Land revenue Sub Total Interest on fixed 9 % Depreciation Total fixed cost II Total cost (I+II)

50 In the labour cost, the cost on loosening of soil around the trunk and formation of basin accounted a major share with Rs. 11, (8.58%) followed by FYM application (6.70%), intercultivation (4.53%), weeding (4.17%), spraying of plant protection chemicals (3.91%), irrigation (3.86%) (watch and ward), pruning and training (3.52%), thinning of flowers and fruits (2.92%) and fertilizer application (2.22%). The cost on miscellaneous expenditure and gap filling were meager with 1.40 per cent and 1.24 per cent, respectively. Among the material costs, the expenditure incurred on plant protection chemicals was found to have a major share with Rs. 11, (8.59%) followed by cost on manures (8.45%) and fertilizers (5.31%). The interest on the working capital accounted for 4.74 per cent of the total cost. Among the fixed costs, the cost on the rental value of land accounted for a major share with per cent followed by depreciation (1.41%) and land revenue (0.09%). The interest on fixed capital accounted for 2.16 per cent of the total cost. The total fixed cost accounted for Rs. 12,232.67, Rs. 12, and Rs. 12, for the I, II and III year, comprising per cent (Rs. 36,748.01) of the total cost of maintenance during the gestation period in Bagalkot district Koppal District It could be observed from the Table 4.5 that the average per hectare total cost incurred on maintenance of pomegranate orchard by the growers during the gestation period was Rs. 1,30, in Koppal district. Of the total cost, the variable costs accounted for a major share of per cent (Rs. 1, ) followed by fixed cost with per cent (Rs. 29,827.86) in the total cost. In the case of variable cost, the expenditure incurred on labour to carry out different operations in the orchard accounted for a major share with per cent (Rs. 59,426.09) followed by material cost with per cent (Rs. 34,607.72). Among the labour cost, the cost on farm yard manure application accounted for a major share with Rs. 10, (7.68%) followed by cost on loosening of soil around the trunk and formation of bed for drip irrigation (7.21%), cost on weeding (5.20%), intercultivation (4.68%), cost on spraying of plant protection chemicals (4.21%), irrigation (watch and ward) (4.15%), pruning and training (4.07%), thinning of flowers and fruits (3.13%) and fertilizer application (2.63%). The cost on miscellaneous expenditure and gap filling were meager with 1.50 per cent and 1.09 per cent respectively. In the material cost, the cost incurred on plant protection chemicals accounted a major share of Rs. 12, (9.24%) followed by cost on manures (9.08%) and fertilizers (5.70%). The interest on working capital accounted for 5.05 per cent of the total cost. Among the fixed costs, the cost on rental value of land accounted for a major share with per cent followed by depreciation (1.51%) and land revenue (0.09%). The interest on fixed capital accounted for 1.76 per cent of the total cost. The total fixed cost incurred during the first, second and third year of gestation period was Rs. 9,925.12, Rs. 9, and Rs. 9, per hectare respectively accounting for per cent (Rs. 29,827.86) of the total cost of maintenance of pomegranate orchard in Koppal district Maintenance cost of pomegranate orchard during bearing period Maintenance cost is the recurring cost which will be incurred after the establishment of the orchard normally from fourth year onwards for upkeep of the plants so that good yield can be obtained over the economic lifespan of the plants. The maintenance cost comprised of the expenditure towards the use of labour and other material inputs along with fixed costs. The maintenance cost incurred for pomegranate orchard in the selected districts during the bearing period is depicted in Table Bagalkot district Of the total maintenance cost, the variable costs constituted a major share of per cent (Rs. 42,801.71) followed by the fixed cost with per cent (Rs. 12,207.67) during the bearing period in Bagalkot district. Among the total variable cost, the material cost accounted for a major share of per cent (Rs. 21,460.60) followed by labour cost with per cent (Rs. 18,541.00) of the total cost.

51 Table 4.6: Maintenance cost of pomegranate orchard during bearing period (4 th year onwards) in the selected districts (Rupees/hectare) Sl. No. Particulars I. Variable cost A. Labour cost Unit Bagalkot Koppal Qty Value % Qty Value % 1 Pruning MD Inter-cultivation BP Loosening of soil around the trunk MD Application of FYM MD Application of Fertilizers MD Application of plant protection MD chemicals 7 Weeding MD Irrigation, watch and ward MD Harvesting MD Miscellaneous B Total labour cost Material cost 1 FYM Tonnes Fertilizers Kgs Plant protection chemicals Liters Total material cost (B) Rs C Interest on working Rs capital at 7 % Total variable cost (A+B+C) Rs II Fixed Cost 1 Rental Value of land Rs Land revenue Rs Sub-total Rs Interest on fixed 9 % Rs Depreciation Rs Total fixed cost Rs Total cost (I+II) Rs

52 Among the labour cost, the cost on weeding accounted for a major chunk with 6.59 per cent (Rs. 3626) followed by intercultivation (4.54%), harvesting (4.36%), loosening of soil around the trunk (3.33%), application of plant protection chemicals (2.96%), application of farm yard manure (2.66%), application of fertilizers (2.05%) and miscellaneous costs (1.45%) in the total cost. In the material cost, the expenditure incurred on plant protection chemicals was found to be maximum with per cent (Rs. 12,945) followed by farm yard manure (14.36%) and fertilizers (1.12%). The interest on working capital accounted for a share of 5.09 per cent of the total cost. Among the fixed costs, the rental value of land accounted a major share with per cent (Rs ) followed by depreciation (1.06%) and land revenue (0.07. The interest on fixed cost worked out to be 1.74 per cent (Rs ) of the total cost in Bagalkot district Koppal district It could be observed from the Table 4.6 that the average labour cost accounted for per cent (Rs. 19,850) of the total cost during the bearing period. Among the labour cost, the cost on weeding constituted a major portion with 6.80 per cent (Rs. 3825) followed by harvesting operations with 4.62 per cent (Rs. 2600), intercultivation (4.54%), loosening of soil around the trunk of pomegranate (3.42%), application of plant protection chemicals (3.25%), irrigation and watch and ward (3.20%), pruning (2.89%), application of farm yard manure (2.73%), application of fertilizers (2.16%) and miscellaneous costs (1.69%) of the total cost. The total material cost accounted for per cent (Rs. 23,459.20) of the total cost of maintenance of pomegranate orchard during the bearing period. Among the material costs, the cost on plant protection chemicals contributed a major share with per cent (Rs. 14,130) followed by cost on farm yard manure with per cent (Rs. 8,685.00) and cost on fertilizers with 1.15 per cent. The interest on working capital accounted for 5.39 per cent of the total cost. Among the fixed costs, the rental value of land accounted a major share with per cent (Rs. 8480) followed by depreciation (1.05%) and land revenue (0.07%). The interest on fixed cost worked out to be 1.36 per cent (Rs ) of the total cost in Koppal district. Among the total cost, the total variable cost accounted for a major share with Rs. 46, (82.43%) followed by fixed cost with Rs. 9, (17.57) in the total cost of maintenance of pomegranate orchard. The maintenance cost (total cost) of pomegranate orchard during the bearing period accounted for Rs. 56, for Koppal district. 4.4 Yield and return structure of pomegranate orchards in the study area The yield and return structure of pomegranate in Bagalkot and Koppal districts is presented in Table 4.7. From the Table it could be viewed that the pomegranate orchard, the economic yield started from fourth year after planting and continued upto the fifteenth year of the orchard establishment in the case of both the districts. The per hectare average yield increased at a increasing rate from fourth year onwards until the eight year and then onwards the yield started increasing at decreasing rate and finally highest yield was attained during the twelfth year of orchard establishment in both the districts. The yield from thirteenth year onwards started decreasing at a decreasing rate as the orchard reached fifteenth year of establishment. It could also be observed from the Table that the average yield (5.11 tons/ha) and the average returns (Rs. 2,14,725/ha) from pomegranate obtained by the sample farmers of Koppal district was comparatively more than that of Bagalkot district farmers (4.81 tons/ha and Rs. 2,01,845/ha). The average yield obtained by the Koppal district farmers during the 4 th year was 3.88 tons per hectare as against 3.51 tons per hectare in Bagalkot district. The yield was highest during the twelfth year of orchard establishment for both Koppal and Bagalkot districts with 6.87 and 6.34 tons per hectare, respectively. Thereafter, the yield started decreasing and it reached around 4.66 and 4.55 tons during 15 th year for Koppal and Bagalkot districts, respectively.

53 Table 4.7: Yield and return structure of pomegranate in the selected districts Sl. No. Age of the Bagalkot district Koppal district Pomegranate Orchard Yield Total value Yield Total value (Years) (tons/ha) (Rs.) (tons/ha) (Rs.) 1 4th th th th th th th th th th th th Average

54 Table 4.8: Cash flow analysis of pomegranate orchard in Bagalkot district Year Cash out flow Cash inflow Net cash flow Discount factor at 9 % (Opportunity cost of capital) Discounted net cash flow Lower Discount factor at 19 % Discounted net cash flow Higher Discount factor at 20 % (Rupees/hectare) Discounted net cash flow

55 Table 4.9: Cash flow analysis of pomegranate orchard in Koppal district Year Cash out flow Cash inflow Net cash flow Discount factor at 9 % (Opportunity cost of capital) Discounted net cash flow Lower Discount factor at 22 % Discounted net cash flow Higher Discount factor at 23 % (Rupees/hectare) Discounted net cash flow

56 4.4.1 Cash flows in pomegranate orchard The cost incurred and the returns obtained in pomegranate orchards are presented in Table 4.8 and Table Bagalkot district The cost per ha in pomegranate orchard from the fourth year was Rs. 55, and it remained same until the fifteenth year of orchard establishment. The cash inflow at the fourth year was Rs. 1,19,340 and it kept on increasing upto Rs. 2,15, during the twelfth year. Later it decreased to Rs. 1,54,700 during the fifteenth year of orchard establishment. The net cash flow at fourth year was Rs. 63, and it kept on increasing up to the twelfth year and it decreased to Rs. 99, during the fifteenth year of orchard establishment. The present value of the future return was calculated at nine per cent discount rate (opportunity cost of capital) Koppal district The cost per ha in pomegranate orchard from the fourth year was Rs. 56, and it remained same until the fifteenth year of orchard establishment. The cash inflow at the fourth year was Rs. 1,35, and it kept on increasing upto the twelfth year with Rs. 2,40, Later it decreased to Rs. 1,98, in the thirteenth year and upto Rs. 1,63, during the fifteenth year of orchard establishment. The net cash flow during the fourth year was Rs. 79, and it kept on increasing up to twelfth year when it was Rs. 1,84, Later it decreased to Rs. 1,06, during the fifteenth year. The future returns were discounted at nine per cent discount rate (opportunity cost of capital) to get the present value. 4.5 Financial feasibilities of investments in pomegranate orchard In order to examine the financial feasibility of investments in pomegranate enterprise, the measures of project appraisal were computed. These measures are presented in Table The measures considered were pay back period, net present value, benefit cost ratio and internal rate of return Net Present Value The net present value is simply the present value of net returns of the project discounted at the opportunity cost of capital. In other words, the net present worth of an investment is the difference between the present value of series of inflows (returns) and outflows (costs) over the economic life period of the pomegranate enterprise. The per ha net present values of pomegranate were Rs. 3,02, and Rs. 3,87, for Bagalkot and Koppal districts respectively discounted at the rate of 9.0 per cent opportunity cost of capital Benefit Cost Ratio The benefit cost ratio was obtained by dividing the discounted net returns by the initial investment. This criterion indicates the rate of return per rupee invested in pomegranate enterprise. The net present value of costs and returns were obtained by discounting the cost and return streams by the opportunity cost of capital. The benefit cost ratio obtained in pomegranate was 2.98 and 3.62 for Bagalkot and Koppal districts respectively at 9.0 per cent discount rate Internal rate of return This represents the rate of return over the life period of the project. This criterion measures the rate of return that can be realized by investment in pomegranate orchard. Hence, the IRR indicates an important basis of investment and better than other criteria of evaluation. The value of IRR generally depends on the magnitude of returns realized in each year over the economic life period and more particularly in the initial years of pomegranate enterprise. The internal rate of return was computed by inter-polating two discount rates (lower and higher discount rates).

57 Table 4.10: Financial feasibility of investment in pomegranate orchards Sl. No. Particulars Units Bagalkot Koppal 1 Net Present Value 9.0 % discount rate) (At Rs./ha 3,02, ,87, Benefit Cost Ratio (At 9.0 % discount rate) Ratio Internal Rate of Return Per cent % % 4 Pay Back Period Years

58 The internal rate of return in pomegranate was and per cent in Bagalkot and Koppal districts, respectively. The internal rate of return was higher than the opportunity cost of capital of 9.0 per cent. This indicates a higher average earning power of money invested in the project Payback period The payback period refers to the time required for the project to pay for itself. In other words, it is the period required to recover the establishment cost of the orchard. In the present study the pay back period was about 6.11 years for the orchards in Bagalkot district and in Koppal district it was 6.40 years. This clearly indicated that it would take 6.11 years in Bagalkot district and 6.40 years in Koppal district to recover the entire establishment cost of orchard. The foregoing analysis revealed that NPV was positive, BCR was greater than one and IRR was higher than the opportunity cost of the capital (9.00 per cent). The investments in pomegranate crop could be recovered in about six years after planting. Thus, the results of this study clearly revealed that investments in pomegranate orchard were highly profitable, economically feasible and financially viable. 4.6 Marketing of pomegranate Marketing channels The pomegranate produce in the study area was marketed through three channels from producers to the ultimate consumers (Table 4.11). The channels are as follows: Channel-I : Producer Commission agent-cum-wholesaler Retailer Consumer Channel-II Channel-III : Producer Distant wholesaler : Producer Exporter In channel-i, the producer himself brought the produce to the market and sold through commission agent-cum-wholesaler. The commission agent-cum-wholesaler acts as a mediator between producer-seller and retailer. For the service, he charges 3 per cent commission of the total value of produce marketed. In this channel about 16 per cent of the farmers in Bagalkot district and about 18 per cent of farmers in Koppal district sold their produce. In channel-ii the producer sold the produce to the distant wholesaler who arrived to the study area from distant places like Maharashtra, Andhra Pradesh, Tamil Nadu etc. This was the most common practice followed by majority of the farmers and consequently it was the most preferred channel among all the channels in the study area. About 60 per cent of the farmers in Bagalkot district and around 56 per cent of the farmers in Koppal district preferred to sell their produce through this channel. In channel-iii some of the large farmers in the study area themselves took the produce to the collection point indicated by the exporters and sold it directly to them in anticipation of higher price for their produce. Through this channel 24 percent of the farmers in Bagalkot district and 26 percent of the farmers in Koppal district sold their produce Marketing Cost Incurred by Producer-Seller in the Study Area The marketing cost of producer was assessed when he sold through different intermediaries such as commission agent, distant wholesaler and exporter in pomegranate marketing (Table 4.12) Bagalkot district When the produce was sold through the commission agent-cum-wholesaler, the major item of cost was commission charges with per cent followed by packing material (17.39%), transportation cost (16.54%), loading and unloading (1.74% each), miscellaneous charges (1.49%) and grading charges (1.17%). The cost of weighing was minimum with 0.87 per cent. The total cost incurred by the producer seller when he sold to the commission agent was Rs per ton of the produce as the commission charges and cost of transportation was bared by the producer.

59 Table 4.11: Preference of marketing channels by pomegranate growers in the study area Sl. No. Particulars Bagalkot (No. of growers) % Koppal (No. of growers) % 1 Channel-I Channel-II Channel-III Total Note: Channel-I : Producer Commission agent Retailer Consumer Channel-II : Producer Distant market wholesaler Channel-III : Producer Exporter (Channel-II was the popular channel among the growers)

60 Table 4.12: Marketing cost incurred by producer Sl. No. Items of cost Bagalkot district Cost incurred by selling to CA cum WS DISTANT WS EXPORT ER (Rs./ton) Koppal district Cost incurred by selling to CA cum WS DISTANT WS EXPORT ER 1 Packaging material (17.39) (17.77) Grading (1.17) (55.08) (5.38) (1.22) (54.61) (5.70) 3 Loading (1.74) (12.77) (1.71) (12.01) 4 Transportation (16.54) (63.85) (15.49) (64.14) 5 Unloading (1.74) (12.77) (1.71) (12.01) 6 Weighing charges (0.87) (0.86) Commission charges (59.07) (59.96) Miscellaneous charges (1.49) (44.92) (5.23) (1.27) (45.39) (6.14) Total (100.00) (100.00) (100.00) (100.00) (100.00) (100.00) Note: CA Commission agent, WS Wholesaler

61 There were only two items of cost when the producer-seller sold his produce to the distant wholesaler. The items of cost were grading charges with Rs per ton (55.08%) required for assembling the produce into different lots for easy transaction and miscellaneous charges with Rs per ton (44.92%). The total cost of marketing incurred by the producer when sold to the distant wholesaler was Rs per ton of the producer and ultimately this practice was the most popular among the farmers of the study area as the sale through this channel was quite affordable to the farmer as he bared minimum cost in marketing the produce. When the produce was sold to the exporter, the major cost incurred was on transportation of the produce to the collection point with Rs per ton (63.85%) followed by loading and unloading charges (12.77% each), grading charges (5.38%) and miscellaneous charges (5.23%). The total cost incurred by the producer when sold to the exporter was Rs per ton of the produce Koppal district In Koppal district, when the produce was sold through the commission agent-cumwholesaler the major item of cost was again the commission charges with per cent (Rs. 1050/ton) followed by packing material (17.77%), transportation cost (15.49%), loading and unloading (1.71% each), grading charges (1.22%) and miscellaneous charges (1.27%). The cost of weighing was minimum with 0.86 per cent. The total cost incurred by the producer seller when he sold to the commission agent-cum-wholesaler was Rs per ton of the produce as the commission charges and cost of transportation was bared by the producer. There were again only two items of costs when the producer-seller sold his produce to the distant wholesaler. The items of cost were grading charges with Rs per ton (54.61%) required for assembling the produce into different lots for easy transaction and miscellaneous charges of the produce with Rs per ton (45.39%). The total cost of marketing incurred by the producer when sold to the distant wholesaler was Rs per ton of the producer and ultimately this practice was the most popular among the farmers of Koppal district. When the produce was sold to the exporter, the major cost incurred was on transportation of the produce to the collection point with Rs per ton (64.14%) followed by loading and unloading charges (12.01% each), grading charges (5.70%) and miscellaneous charges (6.14%). The total cost incurred by the producer when sold to the exporter was Rs per ton of the produce Marketing cost incurred by the intermediaries The cost incurred by the commission agent-cum-wholesaler and the retailer on various items in marketing of pomegranate is presented in Table and Table Commission agent-cum-wholesaler The cost incurred by the commission agent-cum-wholesaler in Bagalkot district on various items in marketing of pomegranate is presented in Table It could be observed from the Table that the major cost incurred by the commission agent in Bagalkot district was on storage loss with Rs (75.54%) followed by labour cost (9.71%), cost of storage (5.79%), miscellaneous charges (4.12%) shop rent (3.23%) and license fees (1.62%). The total cost incurred by the commission agent-cum-wholesaler was Rs per ton of the produce handled. As far as the Koppal district was concerned, the major cost incurred by the commission agent-cum-wholesaler was on storage loss with Rs (74.74%) followed by labour cost (10.16%), cost of storage (6.00%), miscellaneous charges (4.37%) shop rent (3.01%) and license fees (1.73%). The total cost incurred by the commission agent cum wholesaler was Rs per ton of the produce handled Retailer The cost incurred by the retailer on various items in marketing of pomegranate in the study area is presented in Table 4.14.

62 Table 4.13: Marketing cost incurred by the commission agent cum wholesaler (Rs/ton) Bagalkot Koppal Sl. No. Particulars Cost incurred (Rs.) % Cost incurred (Rs.) 1 Labour cost % 2 Cost of storage Storage loss (2 % of the produce) license fee Shop rent Miscellaneous expenses Total Table 4.14: Marketing cost incurred by the retailer (Rs/ton) Bagalkot Koppal Sl. No. Particulars Cost incurred (Rs.) % Cost incurred (Rs.) % 1 Transportation cost Loading and unloading Municipality charges Storage loss (3 % of the produce) Miscellaneous expenses Total

63 It could be revealed from the Table that in Bagalkot district, the retailer incurred major cost on storage loss with Rs per ton (84.67%) followed by transportation cost (6.62%), loading and unloading charges (4.77%), miscellaneous charges (3.28%) and municipality charges (0.66%). The total cost incurred by the retailer was Rs per ton. The items of cost in marketing of pomegranate in Koppal district by the retailer followed the similar trend as in the case of Bagalkot district. The retailer incurred major cost on storage loss with Rs per ton (84.52%) followed by transportation cost (6.22%), loading and unloading charges (4.76%), miscellaneous charges (3.78%) and municipality charges (0.72%). The total cost incurred by the retailer was Rs per ton of the produce handled Marketing margin and price spread in marketing of pomegranate Pomegranate was marketed through various intermediaries starting from the producer to the ultimate consumers. The intermediaries involved rendered a variety of services in the process of marketing of pomegranate with a view to earn some profit. The margins of the intermediaries can act as an indicator of the efficiency of the marketing system. The marketing margin and price spread in marketing of pomegranate in the study area is presented in Table Bagalkot district Channel-I Marketing costs and margins of the agencies involved in the marketing of pomegranate indicated that the producer s share in consumer s rupee in channel-i was per cent after deducting the costs and margins of the intermediaries involved in the channel. The total marketing cost incurred by producers accounted for 4.68 per cent of consumer s price. The total marketing cost incurred by commission agent-cum-wholesaler and retailer amounted to Rs per ton and Rs per ton respectively. The price spread in first channel was Rs. 4, (12.74%). The shares of the commission agent and the retailer were Rs and Rs respectively. The net price received by the producer seller accounted for Rs (82.58%) after deducting the marketing cost of Rs (4.68%). Channel-II In this channel the producer sold his produce directly to the distant wholesaler who arrived during the harvesting season from distant places (from outside states) without involvement of any intermediaries. The net price received by the producer-seller in this channel was Rs. 33, (99.90%) after deducting the marketing cost of Rs (0.10%) per ton incurred by him. This was the most popular channel of marketing in the study area, since in this channel the net price received by the producer was maximum among all the channels of marketing with per cent and the distant wholesaler arrived to production point thus saving the time and transportation cost of the producer-seller and also due to immediate payment by the distant wholesaler after taking the delivery of the produce. Channel-III In this channel the producer-seller sold his produce directly to the exporter by transporting his produce to the collection point as indicated by the exporter. The cost of marketing incurred by the producer-seller was Rs per ton (0.67%) as the produce was to be transported to exporters collection point from the production places. In this channel the net price received by the producer was Rs. 34, per ton accounting for per cent, which was marginally less compared to the channel-ii Koppal district Channel-I In this channel, the net price received by the producer-seller was Rs. 30, per ton after deducting the marketing cost of Rs per ton (4.76%). The marketing cost of commission agent-cum-wholesaler and the retailer was Rs and Rs per ton respectively of the produce transacted.

64 Table 4.15: Costs and margins in different channels of pomegranate marketing BAGALKOT DISTRICT KOPPAL DISTRICT (Rs./ton) Sl. No. Particulars Channel-I Channel-II Channel-III Channel-I Channel-II Channel-III Rupees % Rupees % Rupees % Rupees % Rupees % Rupees % 1 Gross Price received by the producer Marketing cost of producer Net price received by producer Marketing cost of a. Commission agent-cum-wholesaler Profit of Commission agent/ws Retailer s purchase price Cost of the Retailer Profit of retailer Consumer s purchase price Marketing Margin/price spread Producer s share in consumer rupee Note: Channel-I : Producer Commission agent Retailer consumer Channel-II : Producer Distant wholesaler Channel-III : Producer Exporter (The channel II and III were traced only upto the level of distant wholesaler and exporter)

65 The profits of the commission agent and the retailer were Rs and Rs per ton accounting for 3.00 per cent and 4.37 per cent respectively. The marketing margin/price spread was Rs per ton in the channel and the producer s share in the consumer s rupee was found to be per cent. Channel-II Unlike in Bagalkot district, the producer-seller sold his produce directly to the distant wholesaler who arrived from distant places and markets (outside Karnataka) during the marketing season. In this channel, the net price received by the producer-seller was Rs. 33, (99.89%) after deducting his marketing cost of Rs per ton (0.11%) of the produce sold. Similar to the Bagalkot district, this channel was the most popular channel in Koppal district. Channel-III In this channel, the producer-seller sold his produce to exporter by transporting the produce to the collection point by incurring a marketing cost of Rs per ton (0.66%) and thus receiving a net price of Rs. 37, per ton (99.34%). In this channel the net price received by the producer was comparatively lesser than channel-ii. 4.7 Present status and export scenario of pomegranate India is one of the leading countries in pomegranate production and at present, it is being cultivated in more than one lakh hectare area. The major pomegranate growing states are Maharashtra, Karnataka and Andhra Pradesh. The major varieties grown in India are Ganesh, Arakta, Mrudula, Muskat, Jyoti, Ruby and Bhagwa. In Karnataka, Bagalkot, Koppal, Bijapur, Bellary and Chitradurga are the leading districts with respect to pomegranate cultivation Present status The present status of pomegranate production in India during the year is depicted in Table From the Table it could be observed that, pomegranate is being cultivated in India in an area of thousand hectares with a production of thousand tons. It is mainly cultivated in Maharashtra, Karnataka, Andhra Pradesh and Gujarat states. Maharashtra is the leading state in the cultivation of pomegranate (98.90 hectares) with a production of thousand tones and contributing 67 percent to the country s production. Karnataka is the second largest producer of pomegranate contributing percent ( thousand tons) of the India s pomegranate production (Fig-4.1). Considering its production potential there is need to understand its export prospects Pomegranate export Production and export details of pomegranate from India during to are presented in Table The results from the Table revealed that the production of pomegranate in India during was about 81,150 tons and quantity exported was about tons accounting for 0.4 per cent of production. During the year the production was about 6,64,900 tons and the quantity exported was 10, tons accounting for 1.6 per cent of production which increased during the year with production of 8,20,970 tons and correspondingly the export was 33, tons (4.1%). It could be observed from the Table that in the recent years in tune with the increase in production there is an increase in the quantity exported. The percentage of export to the production has also increased from 0.4 to 4.1 per cent from the year to though sales channels of the pomegranate are currently directed all over the world, due to their origin, they are mostly consumed in the Middle and Far East as well as in Mediterranean countries and the United Kingdom. Consumption is dispersed and slow to take off, as western consumers consider it exotic and difficult to eat.

66 Table 4.16: Area and production of major pomegranate growing states in India during State/ Country Area (000 ha) Per cent Production (000 tonnes) Per cent Andhra Pradesh Chhattisgarh Gujarat Himachal Pradesh Karnataka Maharashtra Nagaland Orissa Rajasthan Tamil Nadu India Source:

67 Area (000' ha) Production (000' tons) Area & Production Andhra Pradesh Gujarat Karnataka Maharashtra Others Fig.-4.1: Area and production of major pomegranate growing states of India ( ) Fig.-4.1: Area and production of major pomegranate growing states of India ( )

68 Table 4.17: Export of pomegranate from India ( to ) Year Production (tons) Export (tons) Export as % of Production Source: Table 4.18: Compound growth rate of export of pomegranate from India ( to ) (Per cent per annum) Compound Growth Rate (%) Sl. No. Particulars Pre-WTO ( to ) Post-WTO ( to ) Overall ( to ) 1 Quantity (Kgs) 42.33* 20.52* 20.61* 2 Value (Rs.) 50.84* 28.09* 27.86* Note: * indicates significant at one per cent level of significance

69 4.7.3 Growth in the export of pomegranate from India The compound growth rates of pomegranate export were computed for the pre-wto, Post-WTO and the Overall periods ( to ) and the results are presented in Table The results from the Table revealed that the total quantity of Pomegranate exported from India showed a significant and positive compound growth rate for all the three periods. The highest growth was observed during Pre-WTO period (42.33 per cent) followed by overall period (20.61%) and post-wto period (20.52%). As far as the value of export was concerned, highest growth was observed during the Pre-WTO period with per cent followed by Post-WTO period (28.09%) and Overall period (27.86%) Instability in export The instability in the export of pomegranate both in terms of quantity and value were assessed through the coefficient of variation (CV) and the results are presented in the Table It can be observed from the Table that the CV (82.84%) was higher in terms of quantity during post-wto period compared to pre-wto period (73.51%). similarly, in terms of value, the CV was again higher in post-wto period (100.56%) as compared to pre-wto period (82.30%). The CV for overall period was relatively higher than pre and post-wto periods both in terms of quantity and value with and per cent respectively. 4.8 Direction of trade and changing pattern of exports during pre and post-wto periods The direction of trade was assessed using Markov chain analysis for Pre-WTO, Post- WTO and overall periods and the results of the same are presented under the following paragraphs Pre-WTO period ( to ) The transitional probability matrix of pomegranate export for the pre-wto period is presented in the Table There were five countries importing Indian pomegranate in large quantities, namely, Saudi Arabia, U.K., UAE, Bangladesh and Bahrain. The exports to the remaining countries were pooled under others category. It was evident from the Table that Bangladesh, Saudi Arabia (SA) and UAE were the stable importers of Indian pomegranate as reflected in high probability of retention of , and respectively i.e., the probability that Bangladesh, Saudi Arabia and UAE retained their export share of 80.11, and per cent respectively during pre-wto period. On the other hand Bahrain could able to retain its share only to the extent of 0.5 percent and UK had a probability of retention of zero indicating unstable importer of Indian pomegranate. It is important to note that other countries could not able to retain their share during pre-wto period as many countries were not consistently importing the Indian pomegranate Post-WTO period ( to ) The transitional probability matrix of pomegranate export to different countries during post-wto period is presented in Table The Table revealed that the UAE and Bangladesh continued to dominate in the Indian pomegranate export with a high probability of retention of and Similarly, Bahrain and other countries also joined the list with probability retention of and respectively during the post-wto period. On the contrary, Saudi Arabia had probability of retention of zero indicating unstable importer of Indian pomegranate during the post-wto period. It was interesting to note that unlike in the pre-wto period, other countries could able to retain their share to the extent of per cent in post-wto period. This phenomenon may be due to increased export of Indian pomegranate to countries like Netherlands, Belgium and Germany in the recent years. Similarly Bahrain increased its retention share to percent. UAE in addition to having high probability of retention of its own share was also likely to gain mainly from Saudi Arabia and other countries with probability of gain of and , respectively.

70 Table 4.19: Variation in export of pomegranate from India ( to ) Sl. No. Particulars Pre-WTO ( to ) Coefficient of variation (%) Post-WTO ( to ) Overall ( to ) 1 Quantity (Kgs) Value (Rs.) Table 4.20: Transitional probability matrix of pomegranate export from India during pre-wto period ( to ) Countries Saudi Arabia U.A. E U.K Bangla desh Bahrain Others Saudi Arabia U.A. E U.K Bangladesh Bahrain Others

71 Though Saudi Arabia had not retained its share but could gain from Bangladesh ( ), other countries ( ), and UAE ( ). Similarly, UK would likely to gain from Bahrain ( ), Bangladesh ( ) and others ( ). The probability of gain to Bangladesh was to some extent at the cost of others ( ). The probability of gain for Bahrain was to little extent from Bangladesh ( ), UAE ( ) and Saudi Arabia ( ). The probability of gain to other countries was at the cost of UK ( ), UAE ( ) and to some extent from Bangladesh ( ) Overall period ( to ) The overall period comprises the triennium average data for the period to The transitional probability matrix was worked out using the triennium averages for the data of the above said period (Table 4.22). It is observed from the Table that other countries and UAE were the stable importers of Indian pomegranate as reflected in high probability of retention at and respectively. Saudi Arabia and Bahrain were able to retain their share only to the extent of percent and 2.10 percent respectively. On the contrary, UK and Bangladesh were having a probability of retention of zero indicating that they were the unstable importers of Indian pomegranate during the overall period. The other countries and UAE showed stability in the import of Indian pomegranate during the overall period by gaining its share from UAE ( ) and U.K ( ). Similarly UAE gained from Bangladesh, Saudi Arabia UK and other countries with transfer probability of from Bangladesh, from Saudi Arabia, from UK and from other countries i.e., the probability that UAE would gain in the export share of Indian pomegranate during overall period was at the cost of Bangladesh, Saudi Arabia, UK and other countries. On the other hand UK and Bangladesh which had zero probability of retention would likely to gain from some major countries i.e., UK from UAE ( ) and Bangladesh from Saudi Arabia ( ) Projections of Indian pomegranate exports to major countries The export shares of Indian pomegranate to different countries were estimated for the triennium averages of the period , , , , , and by using transitional probability matrix of overall period and the same were compared with the observed export shares. A close look at the observed and estimated shares of pomegranate (Table 4.23 and Fig. 4.4 and 4.5) revealed that the difference was by and large small. That means the observed proportions of export shares were in consistent with the predicted shares of exports, which were derived from the Markov process validating the use of the Markov chain model for estimating the share of different countries by using transitional probability matrix. UAE was the major importer since with a share of percent which rose to percent in , but as per the projection the share of UAE remained around 47 to 50 percent in all the triennium periods. According to the projection using TPM, during period five major countries considered together would likely to have percent of their share in the Indian pomegranate export. The difference in export of shares between observed and expected values were by and large found to be minimum and small. If there are some instances of differences in few years they are mainly due to limitations of the model that the present estimates depend only on the previous year s observations. 4.9 The SWOT analysis of pomegranate export The analysis of strengths, weaknesses, opportunities and threats (SWOT) is a management technique applied to business organizations. In the present study this technique was employed to identify the strengths, weaknesses, opportunities and threats of pomegranate export and the results are presented in Tables 4.24 to The strengths The strengths of pomegranate export as per the opinion of exporters are depicted in Table Majority of the exporters agreed that the pomegranate production is largely contributed by Maharashtra and Karnataka followed by Indian cultivars are sweet to taste with low acid content and National Horticulture (NHM) Mission is providing financial support for adoption of good management practices for pomegranate crop.

72 Table 4.21: Transitional probability matrix of pomegranate export during post-wto period ( to ) Countries Saudi Arabia U.A. E U.K Bangla desh Bahrain Others Saudi Arabia U.A. E U.K Bangladesh Bahrain Others Table 4.22: Transitional probability matrix of pomegranate export during overall period ( to ) Countries Saudi Arabia U.A. E U.K Bangla desh Bahrain Others Saudi Arabia U.A. E U.K Bangladesh Bahrain Others

73 Table 4.23: Predicted and actual share of different countries in Indian pomegranate export during Year Saudi Arabia U.A. E U.K Bangladesh Bahrain Others Actual Share Predicted Share

74 70.00 Saudi Arabia U.A.E. U.K. Bangladesh Bahrain Others Share (%) Year Fig.-4.2: Actual share of different countries in Indian pomegranate export during 1988 to 2010 Fig.-4.2: Actual share of different countries in Indian pomegranate export during 1988 to 2010

75 60.00 Saudi Arabia U.A.E. U.K. Bangladesh Bahrain Others Share (%) Year Fig.-4.3: Predicted share of different countries in Indian pomegranate export during Fig.-4.3: Predicted share of different countries in Indian pomegranate export during

76 About 90 per cent of the exporters opined that the production areas of Karnataka were convenient for export, fruit can be exported from the state all round the year, drip irrigation subsidy at the rate of 75 per cent by NHM in the state has led to the expansion of area under the crop and the pomegranate growers associations had positive influence on export. About 80 per cent of the exporters agreed that Karnataka has established export network in several countries followed by 70 per cent of them opined that high yield technologies are already standardized by IIHR, Bangalore and 60 per cent of them opined that the recent cultivars have dark red coloured arils with soft seeds The weaknesses The weaknesses of pomegranate export as per the opinion of exporters are depicted in Table About 100 per cent of exporters agreed to the fact of non-availability of disease free material. About 90 per cent each of the exporters agreed that the extension and dissemination of technology is weak, exporters have no access to the trends in export and import prices (i.e., international and domestic prices), non-availability of post harvest infrastructure facilities and the fruit and aril colour fades during April to September due to intense heat, high humidity and rainfall. Lastly, about 80 per cent of them opined that, growers have lack of information regarding the quality production of pomegranate for export. However, about 20 per cent of the exporters disagreed that the growers have lack of information regarding the quality production of pomegranate for export. About 10 per cent each of the exporters also disagreed regarding exporters have no access to the trends in export and import prices, non-availability of post harvest infrastructure facilities and the fruit and aril colour fades during April to September due to intense heat, high humidity and rainfall Opportunities The opportunities of pomegranate export as per the opinion of exporters are presented in Table The results from the Table revealed that almost everyone agreed that Spain is the biggest exporter of pomegranates in the world but it does not have the supply during April to July which could be en-cashed by our state followed by Indian pomegranates have an edge over the Spanish fruits as our fruits are low in acids making them suitable for fresh consumption and lastly the Iran is the main competitor to India when exporting to the Gulf countries but its supplies are only during October to December which could also be en-cashed. The results also revealed that about 90 per cent of the exporters agreed that the State has good varieties and can supply pomegranate almost throughout the year and the remaining 10 per cent of the exporters disagreed to the concept Threats Threats of pomegranate export as conceived by the exporters are depicted in Table The results from the Table revealed that about per cent of the exporters agreed regarding the severe attack of Bacterial Blight disease, entry of distant market purchasers at the time of harvesting and problem of chemical residue in the fruits for export. Similarly about per cent of the exporters also agreed that Spain and Iran which are the major competitors are able to supply the fruits at cheaper prices due to low freight charges and about 10 per cent of them disagreed to this concept Problems faced in production, marketing and export of pomegranate Opinion survey was conducted to know the production, marketing and export constraints of pomegranate growers, traders and exporters and the results are presented in Tables to 4.30.

77 Table 4.24: Strengths of pomegranate export as per the opinion of exporters Sl. No. Particulars Unit 1 Strongly disagree Disagree Agree (n = 10) Strongly agree Pomegranate production is largely contributed by Maharashtra Number and Karnataka Per cent Production area of Karnataka are Convenient for export 3 Number Per cent High yielding technologies are already standardized by IIHR, Number Bangalore, NRC, Solapur. Per cent Recent cultivars have dark red coloured arils with soft seeds 5 Indian cultivars are sweet to taste with low acid content 6 Fruit can be exported from the State all round the year 7 Number Per cent Number Per cent Number Per cent Drip irrigation subsidy (75%) by NHM in the state led to Number expansion in area Per cent Karnataka has established export network in several countries 9 10 Number Per cent Pomegranate growers associations have positive influence on Number export Per cent Recently NHM is providing financial help for adoption of good Number management practices for pomegranate crop Per cent

78 Table 4.25: Weaknesses of pomegranate export as per the opinion of exporters (n = 10) Sl. No. Particulars Unit Strongly disagree Disagree Agree Strongly agree 1 Non-availability of disease free material 2 Extension and dissemination of technology is weak Number Per cent Number Per cent Farmers/exporters have no access to the trends in export and import prices Number Per cent Non-availability of post harvest infrastructure facilities Number Per cent The fruit and aril colour fades during April-September due to intense heat, high humidity and rainfall Lack of information with the growers regarding quality production for export Number Per cent Number Per cent

79 Table 4.26: Opportunities of pomegranate export as per the opinion of exporters (n = 10) Sl. No. Particulars Unit Strongly disagree Disagree Agree Strongly agree 1 The State has good varieties and can supply almost throughout the year. Number Per cent Spain is the biggest exporter but does not supply during April to July, which could be en-cashed by our State. Number Per cent Indian Pomegranates have an edge over Spanish fruits as our fruits are low in acids making them suitable for fresh consumption. Number Per cent Iran is the main competitor to India when exporting to Gulf. But its Number supplies are only during October to December, which could be encashed. Per cent

80 Table 4.27: Threats of pomegranate export as per the opinion of exporters (n = 10) Sl. No. Particulars Unit Strongly disagree Disagree Agree Strongly agree 1 Severe attack of Bacterial blight disease Number Per cent Entry of distant market purchasers at the time of harvesting. Number Per cent Chemical residue problem in fruit exports. Number Per cent Spain and Iran, the major competitors are able to supply at cheaper price due to low freight. Number Per cent

81 Problems faced in production of pomegranate The problems faced by the growers in the production of pomegranate are depicted in Table The results from the Table revealed that about per cent of the farmers expressed the attack of bacterial blight disease (plate-4.2) followed by per cent of them opined for labour scarcity, inadequate irrigation facility (78.00%), 75 per cent each for aril browning and problem of electricity supply, per cent of them expressed regarding the non-availability of disease free seedlings, per cent of them regarding inadequate information about exportable quality of fruit production, per cent of them regarding the financial problem, 20 per cent for short hole borer and 16 per cent of the farmers opined regarding the problem of wilt Problems faced in marketing of pomegranate The problems faced in marketing of pomegranates are presented in Table The results from the Table revealed that about per cent of the farmers opined that they have lack of price information followed by lack of storage facilities, higher transportation costs when fruits are sold outside the state, lack of processing facilities, fruit auction is not transparent and problem of language when fruits are sold outside the state, fruit spoilage due to damage during the transportation, high commission charges and problem of no guaranteed marketing accounting for per cent, per cent, per cent, per cent, per cent, per cent and per cent respectively Problems faced in export of pomegranate The problems faced in export of pomegranate by the exporters are presented in Table The results from the Table indicated that, about per cent of the exporters expressed regarding strict chemical residue testing during the export of the produce followed by 80 per cent each for small sized fruit not allowed for export, non-availability of cold chain facility and high cost of transportation, per cent for non-assurance of price in foreign countries, per cent of the exporters opined that it was difficult to judge the fruits affected by blackening of arils at the time of harvesting, per cent each for fluctuation of currency rates and varietal preferences and about per cent of the exporters opined about the problem of delayed payment. Plate 4.2: Incidence of bacterial blight disease in pomegranate