COST - BENEFIT ANALYSIS OF MUSHROOM CULTIVATION

Transcription

1 Indian J. Agric. Res., 41 (4) : , 2007 COST - BENEFIT ANALYSIS OF MUSHROOM CULTIVATION Ram Singh and Ram Suresh TET Division, Central Soil Salinity Research Institute, Karnal , India ABSTRACT The present study was conducted in Sonepat and Gurgaon districts of Haryana during the year to work out the benefit cost ratio of mushroom cultivation. The study revealed that (1) the fixed capital investment was more than double in case of large and medium farms as compared to the small farms, (2) the use of compost had positive relationship with the farm size, (3) there existed a positive relationship between the mushroom production and farm size, (4) large farmers had lowest cost of mushroom production as compared to small and medium due to the most efficient utilization of fixed farm resources. The major problems regarding the production of mushroom were: lack of finance, lack of availability of good quality spawn; high price of spawn and problems of insect, pests and diseases etc. The study further suggests since, mushroom cultivation is capital intensive in nature and also increases with the increase in farm size, the financial assistance through institutional agencies at cheaper interest rate would be the desirable entity. INTRODUCTION Mushroom is an edible fungi that contains 20-35% protein, which is higher than the vegetable and fruits. Mushroom are very rich in lysine and tryptophan amino acids, it contains good amount of vitamin C and vitamins of B- complex group, have no starch, while the cholesterol is totally absent. The total carbohydrate content is 4-5%. In mushroom cholesterol, the dreaded sterol for heart patients is absent and in its place erg steal is present which can be converted into vitamin D by the human body. Furthermore, folic acid and vitamin B-12, which are normally not found in vegetables, are present in mushroom. These are fairly good source of vitamin C also. After harvesting mushroom, the residue left in the soil is organic compost with natural nutrients to further enrich the soil. Undoubtedly, India has tremendous potential for the growth of agro based industries and mushroom production and processing is an emerging area with an excellent export potential. With the commercialization of agriculture and globalization of national economy, the demand for high tech agro-product like mushroom is rising fast both domestically and in the international market. At present the consumption of mushroom in India is 40 thousand tons, as against the world consumption of about 5 million tons. A mushroom growers require sufficient knowledge on technology and economics of mushroom cultivation. There is always a minimum size of a unit to become viable, i.e. a smaller unit than that may not be profitable. Although depending upon the availability of manpower, market infrastructures and raw material, one can plan for small, medium and large units yet it is crucial to determine the optimum output level, which makes a farm viable. There is a worldwide demand for fresh, frozen and processed mushroom. So, the cultivation has come up to a large scale in the country. The market survey conducted at national level reveals that the domestic demand-supply gap for mushroom by the year 2006 would be 124 thousand tons, while the estimated demandsupply gap for mushroom in the major world market is estimated thousand tons by the year The mushroom growers are unaware of the profitability of mushroom cultivation. Therefore, It is essential to work out the benefit cost ratio of mushroom cultivation.

2 MATERIAL AND METHODS The present study was conducted in Sonepat and Gurgaon district of Haryana during for analysis. One hundred mushroom growers from ten selected villages were taken and categorized into small (less than120 qtls), medium ( qtls) and large (more than 240 qtls) on the basis of the quantity of straw used by them. The data needed for the study were collected from the mushroom growers by personal interview method using pre-tested schedule. Tabular analysis was adopted to analyse the general economic characteristics of the sample growers, determine the resource, cost structure, returns, and profits. Break-even point (BEP) of output was calculated by using the following formula: TFC BEP = (ASP-AVC) Where, TFC = Total fixed cost ASP = Average sale price of mushroom A V C = Average variable cost RESULTS AND DISCUSSION Cost component of mushroom production on different categories of farms. The cost estimates for mushroom production on different categories of farms have been presented in Table 1. The total cost of production varied from Rs on small farms to Rs on large farms. However the average total cost of mushroom production was Rs The fixed cost of mushroom production was worked out to be 38.39, and per cent on small, medium and large farms, respectively. The proportion of fixed cost to total cost being lowest on large farms as compared to both small and medium farms implies the optimum use of fixed farm resources on that size of farm. On an average, total fixed and variable cost were Rs and Rs , which constituted about and Vol. 41, No. 4, per cent respectively. Among the fixed cost, the depreciation on buildings were worked out to be Rs , Rs and Rs comprising of about 22, 23 and 21 per cent of the total cost on small, medium and large farms, respectively. Moreover the interest on fixed capital investment varied from 7.06 to per cent across different categories of mushroom farms and it was observed to be maximum on medium sized farms. Among the variable cost, the compost on an average, accounted for the highest share of 33 per cent of the total cost. It might be because of the fact that compost serves as the base material for mushroom production. Among different categories of farms, it varied between 30 to 35 per cent and was highest on small sized farms. The expenditure on labour and spawn were the other major items, which accounted for and per cent of the total cost, respectively. The generator fuel and electricity charges however constituted the least share, i.e., 0.52 and 0.54 per cent, respectively. The interest on variable cost accounted for 3.22 per cent of the total cost and varied between 2.88 to 3.38 per cent between different categories of mushroom farms. Amongst critical inputs, compost occupied the major share of total expenditure, which ranged between to per cent across the categories of farms followed by value of spawn in small farms (10.33%), while labour charges were high among medium (13.82%) and large farms (14.33%). Moreover, pesticides, insecticides and casing ranged between 4.26 to 5.66 per cent across the categories of mushroom farms. On the whole, the share of compost in total cost was 33 per cent followed by labour charges (13.49%), spawn (12.07%), interest on variable cost (3.22%), casing (2.43%), pesticides and insecticides (2.43%), electricity charges and

3 258 INDIAN JOURNAL OF AGRICULTURAL RESEARCH TABLE 1: Break-up of cost of cultivation on different mushroom farms (Rs.) Particulars Category of farms Small Medium Large Average A. Fixed cost (i) Depreciation on Buildings (22.47) (22.75) (21.19) (2.66) (i) Depreciation on equipments (2.18) (1.45) (0.87) (1.12) (iii) Interest on fixed capital per cent (13.75) (15.32) (7.06) (9.52) for one year Total (38.39) (39.52) (29.12) (32.30) B. Variable cost (i) Labour charges (6.49) (13.82) (14.33) (13.49) (i) Electricity charges (1.26) (0.74) (0.38) (0.54) (iii) Compost (34.95) (29.90) (33.75) (33.00) (iv) Pesticides and insecticides (2.82) (2.14) (2.48) (2.43) (v) Casing (2.83) (2.12) (2.48) (2.43) (vi) Spawn (10.33) (8.88) (13.34) (12.07) (vii) Generator fuel (0.74) (0.52) (viii) Interest on variable cost for 6 (2.93) (2.88) (3.38) (3.22) 10 per cent Total (61.61) (60.48) (70.88) (67.70) Total (A + B) (100.00) (100.00) (100.00) (100.00) Figures in parentheses are the percentages to total. TABLE 2: Costs and returns from mushroom production on different categories of farms Particulars Categories of farms Small Medium Large Average Total variable cost (Rs.) Total production cost (Rs.) Mushroom production (kg.) Average selling price (Rs./kg) Gross returns (Rs.) Net returns (Rs.) Returns over variable cost (Rs.) Benefit cost ratio (over variable cost) 1: 99 1: 13 1: : 1.18 Benefit cost ratio (over total production cost) 1: 61 1: 07 1: 83 1: 80 Cost of production Break-even point of output (kg) Net returns (Rs./kg) (Rs.)

4 generator fuel was 0.54 per cent and 0.52 per cent, respectively. As a result, the large mushroom growers earned more profit from the mushroom cultivation than those of small and medium growers. In fact the better management practices being adopted by the large mushroom growers ultimately benefited them in higher income generation capacity, the medium mushroom growers as compared to small growers also witnessed relatively more profit. It implies that the economics of scale operated very well on large sized farms. This is however, supported by the benefit cost ratio (over total production cost) which is higher on large farms (1.83) as compared to small (1.61) and medium farms (1.07) with an overall value of (1.80). Same picture may be seen by benefit cost ratio (over variable cost) highest on lagre farm ( ). The overall benefit cost ratio over variable cost was As per kg cost of production of mushroom decreased with the increase in size of farms i.e. Rs.20.72, Rs and Rs on small, medium and large farms respectively. Thus, net returns from per kg. of mushroom were Rs 12.70, Rs and Rs on small, medium and large farms, respectively. It is clear from the Table 2 that large growers were spending least for 1 kg of mushroom production as compared to those of small and medium growers due to the most efficient utilization of fixed farm resources is mushroom production. The per unit higher cost of production for small growers also indicated that they were not in a position to properly utilize their scarce resources for this enterprise. Problems faced in production of mushroom Opinion of the respondent of mushroom growers on different aspects of production related problems are presented in Table 3. The table reveals that of the total respondents, 68 per cent highlighted the lack of finance for mushroom Vol. 41, No. 4, production. This problem was raised by a maximum percentage of large respondents (73%) followed by small (70%). About 60 per cent of the medium growers also raised this issue. Total 15 per cent reported not much profitable mushroom, among which medium (20%), followed by small (18%) and large (7%). 54 per cent and 55 per cent of the respondents on an overall base highlighted the lack of availability of good quality spawn and high price of spawn, respectively. Discussion with respondents revealed that spawn plays a crucial role in production of mushroom. Many times they are told by the fellow growers that good quality of spawn is available at a particular place they arrange spawn from that place but that did not come upto expectations. The problems of lack quality of spawn is faced by mushroom growers medium (63%), large (57%) and followed by small mushroom growers (45%). About this problem further they reported that they had to go from one place to other for search of good quality spawn. It was further told that because of ignorance; they had to depend upon spawn producers, which many times leads to selection of unreliable source. Therefore, there should be an agency, which ensures good quality spawn. The price of spawn was also reported to be too high. The percentage of such respondents increased with increase in the size of mushroom farms. As such 40, 63 and 67 per cent of the respondents from small, medium and large category, respectively reported this problem. Such an observation may be an account of small quantity of spawn requirement by small mushroom growers. Problem of insect, pests and diseases was reported by 43, 40 and 33 per cent of the small, medium and large respondents, respectively (Table 3). Other problems reported by the respondents included problem of composting, non-availability of straw/bran and lack of manures and fertilizers in order of priority.

5 260 INDIAN JOURNAL OF AGRICULTURAL RESEARCH TABLE 3: Problems faced by the mushroom grower in production of mushroom Particulars Lack of Not much Lack of High Problem Lack of Problem of Problem Problem Any finance profitable quality price of of straw/ manure composting in picking of insect/ other spawn pawn bran and pest and problems fertilizers disease Small 28(70) 7(18) 18(45) 16(40) 12(30) 9(23) 13(33) 5(13) 17(43) 1(3) Medium 18(60) 6(20) 19(63) 19(63) 7(23) 3(10) 4(13) 3(10) 12(40) 3(10) Large 22(73) 2(7) 17(57) 20(67) 2(7) 3(10) 5(17) 2(7) 10(33) 2(7) Total Figures in parenthesis are the percentage to the total number of mushroom growers. Problem of straw was found to be more severe in case of small (30%) and medium (23%) size respondents. During the data collection period it was found that many times the mushroom growers had to purchase straw from far away places. For bran also they had to put many efforts. Problem in composting reported 33, 13 and 17 per cent for small, medium and large mushroom growers, respectively. As far as the problem in availability of manure and fertilizers is concerned, the only problem was observed in case of availability of gypsum, which was available on subsidy. CONCLUSION From the analysis of data presented in the preceding sections, the following conclusions emerge: 1. The fixed capital investment was more than double in case of large and medium farms as compared to the small farms. 2. The proposition of fixed cost to total cost being lowest on large farms (29.12%) as compared to small (38.39%) and medium (39.52%) farms implied the optimum use of fixed farm resources with that size of farm. 3. The use of compost had positive relationship with the farm size. Among different categories of farms, it varied between and per cent; highest being on large sized farms. 4. On the whole, the average share of compost in total variable cost was 33 per cent followed by labour charges (13.49%) and spawn (12.07%). 5. There existed a positive relationship between the mushroom production and farm size. The income generating capacity of mushroom growers went up with the increased size of farms. 6. Large farmers, growers adopted the better management practices, which resulted them in to higher net incomes, followed by medium and small farmers. This demonstrated the applicability of economics of scale in mushroom cultivation.large farmer had lowest cost of mushroom production as compared to small and medium growers due to the most efficient utilization of fixed farm resources. 7. The major problems regarding the production of mushroom were lack of finance, lack of availability of good quality spawn, high price of spawn and problems of insect, pests and diseases etc. Suggestions and policy implications Based on above conclusions, the following policy implications emerge: 1. Farm advisory service may be provided to the mushroom growers for dissemination of technical know-how at their door-step on the one hand, while, the viable/optimum mushroom units may be identified for the judicious use of fixed farm resources on the other. 2. As far as possible, the economics of scale in mushroom cultivation should be followed. 3. Since mushroom cultivation is a capital

6 intensive in nature and also increases with the increase in farm size, the financial assistance through institutional agencies at cheaper rate of interest would be the desirable entity. 4. Proper institutional arrangements are required to supply the good quality of spawn at reasonable prices and in desired quantities to the mushroom growers. Vol. 41, No. 4, Suitable mechanism is required for the discovery of remunerative mushroom prices to the growers either by government or by the appropriate agencies in the state. 6. Extension advisory service should effectively play their roles in advertising and creating awareness amongst rural and/or urban people about the nutritional aspect of mushroom.