Cost, returns and economic viability of cashew plantations in Tamil Nadu

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1 Visit us - DOI : /HAS/IRJAES/7.1/76-85 International Research Journal of Agricultural Economics and Statistics Volume 7 Issue 1 March, e ISSN Research Paper Cost, returns and economic viability of cashew plantations in Tamil Nadu R. LOGANATHAN, K. MANI, G. MARIAPPAN AND K. INDRAKUMAR See end of the paper for authors affiliations Correspondence to : R. LOGANATHAN Department of Agricultural Economics, Tamil Nadu Agricultural University, COIMBATORE (T.N.) INDIA yahoo.com Paper History : Received : ; Revised : ; Accepted : ABSTRACT : Cashew cultivation in India dates back to over 400 years, when the Portuguese who arrived in Kerala in the 16 th century introduced it. Initially it was cultivated to arrest soil erosion, afforestation and wasteland development programmes, but later it becomes an important cash crop. The total area under cashew in the world was lakh hectares during In terms of area under cultivation, India ranked first with 8.93 lakh hectares constituting about one fourth of the area under cashew in the world. To find out the costs and returns of the cashew cultivation among dry cashew cultivated farmers and irrigated cashew cultivated farmers. To estimate the economic viability of dry cashew/ irrigated cashew plantations. Cashew was being cultivated as a dry crop in Cuddalore and Ariyalur districts to a larger extent. In Pudukkottai district, cashew was cultivated as both irrigated and dry crop and obviously the yield under dry condition was lesser than that of cashew grown under irrigated conditions. In the next stage, top six villages were purposively selected for the study. In each of the selected villages, 10 cashew growers were randomly selected. However, in Gandharvakkottai block of Pudukkottai district, cashew was cultivated as dry crop, while it was raised as an irrigated crop in Alangudy block of Pudukkottai district. Therefore, 30 dry cashew farms in Gandharvakkottai block and 30 irrigated cashew farms in Alangudy block were selected for the study. Thus, totally 150 dry cashew farms and 30 irrigated cashew farms were selected. Cost and returns like (i) Establishment costs and (ii) Maintenance costs were worked out. Yield and returns like, the yield and prices realized by the growers for the nuts were used to calculate the gross returns, net returns and the returns per hectare of cashew plantation. Economic viability of dry cashew varieties/irrigated cashew varieties the capital budgeting techniques like Net Present Value (NPV), Benefit Cost Ratio (BCR) and Internal Rate of Return (IRR) were employed to assess the economic viability of cashew farms and also for cashew processing units. The gross returns were also more in irrigated farms (Rs ) than that of the dry farms (Rs ). The output-input ratio was 1.85, 2.03 for dry cashew farms, irrigated cashew farms, respectively. These would indicate the high profitability of cashew production was found only in irrigated farms and this was achieved by gap filling and following modern farming techniques. The Net Present Value was higher for irrigated farms (Rs. 80,027) than that of the dry farms (Rs. 57,911). In case of Benefit Cost Ratio, irrigated farms had higher ratio of 2.28 than that of the dry farms Similarly, the Internal Rate of Return was also more for irrigated farms (42 %) when compared to that of the dry farms (37 %). This would highlight that the cashew plantation would be a financially worthwhile venture in the study area and there is a vast potential for taking up the cultivation of high yielding varieties of cashew plantation, especially in the irrigated conditions of Pudukkottai district of Tamil Nadu. KEY WORDS : Cashew nut, Cost and returns, Establishment costs, Maintenance costs, Economic viability, Net present value (NPV), Benefit cost ratio (BCR), Internal rate of return (IRR)

2 R. LOGANATHAN, K. MANI, G. MARIAPPAN AND K. INDRAKUMAR HOW TO CITE THIS PAPER : Loganathan, R., Mani, K., Mariappan, G. and Indrakumar, K. (2016). Cost, returns and economic viability of cashew plantations in Tamil Nadu. Internat. Res. J. Agric. Eco. & Stat., 7 (1) : INTRODUCTION : Cashew cultivation in India dates back to over 400 years, when the Portuguese who arrived in Kerala in the 16 th century introduced it. Initially it was cultivated to arrest soil erosion, afforestation and wasteland development programmes, but later it becomes an important cash crop. Till 1980, Kerala and Tamil Nadu were the leading cultivators of cashew in India but later, Andhra Pradesh overtook Kerala to become the leading cultivator of cashew. The total area under cultivation during the past three decades has increased to 92 per cent. (i.e., from 4.64 lakh ha in and it increased to 8.93 lakh ha in ). The total area under cashew in the world was lakh hectares during In terms of area under cultivation, India ranked first with 8.93 lakh hectares constituting about one fourth of the area under cashew in the world, followed by Brazil (21.31 %), Nigeria (10.69 %), and so on. India ranked first in terms of cashew production also with 6.95 lakh tonnes and contributed slightly more than one third of the global production of lakh tonnes during Cashew is the third highest foreign exchange earner among agri-based export items. At present, Cashew production stands at 6.95 lakh tones with productivity of kg/ha (Indian Cashew Statistics, Cashew nut Export Promotion Council, Cochin, 2010). Maharashtra recorded the highest increase in the cashew production by almost 27 times among the major cashew producing states in India from 0.08 lakh tonnes in to 2.25 lakh tonnes in and it was followed by Orissa with an increase by 15 times, Andhra Pradesh by six times, and so on. Tamil Nadu showed an increase in the production from 0.11 lakh tonnes during to 0.68 lakh tonnes in accounting for an increase of 518 per cent. However, in Kerala, the total production declined from 1.17 lakh tonnes in to 0.75 lakh tonnes accounting for a decline of 36 per cent. Indian Cashew processing industry is well developed and has a huge potential to process raw cashew nut. As India s present production of raw cashew nut is not sufficient to fully utilize its installed processing capacity, Indian cashew processing industry is forced to meet its requirements by importing raw cashew nuts (Gandhi, Antrepreneur, 2006). Cashew processing industries in India have flourished primarily because of heavy demand for cashew products in the International market. All the 1,100 cashew processing units in India put together have a processing capacity of eight lakh tonnes of raw cashew nuts, as against the domestic production of five lakh tonnes during Hence, there is a necessity for import of cashew nuts for processing and re-export (Balasubramanian, 2002). However, the main constraint in processing industries is the heavy dependence on the imports due to shortage of adequate raw nuts from indigenous sources. To bridge the gap of the industrial demand and the present trend in production, steps have to be taken up to increase the production of raw nuts. This can be achieved by the adoption of high yielding varieties to suit the different agro ecological regions of India (Balasubramanian, 2001). Cashew is traditionally cultivated in Tamil Nadu for the past two centuries. Cashew occupied an area of 99,168 hectares with a production of 51,667 tonnes and yield of 521 kg/ha in Tamil Nadu in the year of (Season and Crop Report, ). Among the different cashew growing districts in Tamil Nadu, Ariyalur (31.4 %), Cuddalore (30.2 %) and Pudukkottai (8.5 %) were the major cashew growing districts accounting for about 70 per cent of the total area. Cuddalore district ranked first in terms of cashew production with 24,302 tonnes (47.0 %) and had the highest cashew productivity of 810 kg / ha among cashew growing districts in the state. Though Ariyalur district ranked first in area under cashew, it produced only 19 per cent of total cashew production in Tamil Nadu and its productivity was lesser (315 kg / ha) than the state s average productivity of 521 kg / ha. Pudukkottai district occupied fourthplace with 5.6 per cent of total production with the productivity of 343 kg / ha (Season and Crop Report, ). The productivity levels in Tamil Nadu and Andhra Pradesh were far less than the national average of 760 kg / ha, which could be increased by employing proper planting materials and the latest farming technologies (Selvarajan and Dharmalingam, 1998). The reasons identified by the research studies for 77

3 COST, RETURNS & ECONOMIC VIABILITY OF CASHEW PLANTATIONS the very low productivity were use of seedlings propagated from seeds, poor adoption of improved planting materials (clone), low population density per unit area and adoption of poor agronomic practices (Selvaraj and Sundaravaradarajan, 1999). The National Research Centre for Cashew at Puttur in Karnataka, Regional Research Station at Vridhachalam in Tamil Nadu and Cashew Research Station at Bapatla in Andhra Pradesh have developed good planting materials and advanced farming technologies. The Regional Research Station, Vridhachalam released a high yielding variety, viz., VRI-3 in 1992 and Cashew Research Station, Bapatla released a high yielding variety, BPP- 8 in 1990 with yield potential of 2.9 tonnes / ha. Hence, the existing production efficiency of cashew plantations in Tamil Nadu needs to be thoroughly studied to explore the possibilities of enhancing the productivity of cashew. In Indian cashew industry, different methods of processing of cashew are practiced. Many processors are still using traditional methods viz., drum method, though a number of modern innovative methods are also widely used. The adoption of appropriate methods of processing can bring higher efficiency in the form of higher out turn, better quality kernels and cashew nut shell liquid. It also reduces unit cost of production besides reducing the environmental pollution and thereby providing better environment for a contented, motivated and healthy work force, which is an important asset of any enterprise. However, the main constraint in processing industries is the heavy dependence on the imports due to shortage of adequate raw nuts from indigenous sources. To bridge the gap of the industrial demand and the present trend in production, steps have to be taken up to increase the production of raw nuts. This can be achieved by the adoption of high yielding varieties to suit the different agro ecological regions of India (Balasubramanian, 2001). Hence, an in depth study is necessary to find out the existing production efficiency of cashew in the State and to compare the efficiency of dry cashew varieties and irrigated cashew varieties. The objectives of the present study was to find out the costs and returns of the cashew cultivation among dry cashew cultivated farmers and irrigated cashew cultivated farmers and to estimate the economic viability of dry cashew/ irrigated cashew plantations. MATERIALS AND METHODS : Cashew was being cultivated as a dry crop in Cuddalore and Ariyalur districts to a larger extent. In Pudukkottai district, cashew was cultivated as both irrigated and dry crop and obviously the yield under dry condition was lesser than that of cashew grown under irrigated conditions. During , the productivity of cashew per ha in Cuddalore, Perambalur (Ariyalur) and Pudukkotai districts were 810 kg, 315 kgs and 343 kg, respectively. The average productivity of cashew in Tamil Nadu was 521 kg per ha (Season and Crop Report, ). The productivity of cashew in Pudukkottai district was 800 kg / ha for irrigated cashew and for dry cashew 500 kgs / ha (Horticulture at a Glance, ). Therefore, it was decided to select two categories of cashew growers, viz., irrigated cashew farm households and dry cashew farm households in Pudukkottai district. In the second stage of sampling, Panruti block of Cuddalore District, Andimadam block of Ariyalur district which formed the erstwhile Perambalur district and Gandharvakottai and Alangudy blocks of Pudukkottai district were selected purposively which had maximum area under cashew among various blocks in the respective districts. In the next stage, the revenue villages of the selected block were arranged in descending order according to their area under cashew and the top six villages were purposively selected for the study. In each of the selected villages, 10 cashew growers were randomly selected. In all the selected villages of Cuddalore and Ariyalur districts, cashew was raised as a dry crop. However, in Gandharvakkottai block of Pudukkottai district, cashew was cultivated as dry crop, while it was raised as an irrigated crop in Alangudy block of Pudukkottai district. Therefore, 30 dry cashew farms in Gandharvakkottai block and 30 irrigated cashew farms in Alangudy block were selected for the study. Thus, totally 150 dry cashew farms and 30 irrigated cashew farms were selected. Cost and returns : The total costs of cultivation were divided into (i) Establishment costs and (ii) Maintenance costs. Establishment costs: It was the cost incurred during the establishment of a cashew plantation. This cost comprised of land preparation / land clearing, digging of pits, planting material and its transportation, weeding, manures and fertilizers, plant protection chemicals and all other after care operations during the establishment period (up to three 78

4 R. LOGANATHAN, K. MANI, G. MARIAPPAN AND K. INDRAKUMAR years from the date planting of the crop). Maintenance cost: It includes all the costs incurred annually for the maintenance and production in the cashew plantation from the 3 rd year onwards till the end of the life span of 35 years (productive year). It consisted of (a) annual fixed cost and (b) annual variable cost. The annual fixed cost included apportioned annual share of establishment cost, rental value of land, land tax and cess, repairs and maintenance of building and machines, depreciation and interest on fixed capital. The annual variable cost included the human labour cost, bullock labour cost, cost of machine power, material cost (plant protection chemicals, manures and fertilizers, etc.) and interest on working capital. Yield and returns: In the study area only the nuts of cashew has economic importance and apple has no use. The yield and prices realized by the growers for the nuts were used to calculate the gross returns, net returns and the returns per hectare of cashew plantation. Economic viability of dry cashew varieties/irrigated cashew varieties : Capital budgeting techniques like Net Present Value (NPV), Benefit Cost Ratio (BCR) and Internal Rate of Return (IRR) were employed to assess the economic viability of cashew farms and also for cashew processing units. Net present value (NPV): This criterion was used to assess the present value of net accrued benefits over the economic life of the cashew plantations. It is the differences between the present value of the benefit stream and present value of cost stream. The general mathematical form of net present worth is: n NPV Bt / (1 i) Ct / (1 i) t 1 t n t 1 where, B t = Benefit during t th year; C t = Cost during t th year; and t= Time period. The annual discount rate considered for the analysis was 12 per cent and the project period considered was 10 years. If the NPV is positive, it indicates the financial viability of cashew farms. t Benefit cost ratio (BCR): It is the ratio between the discounted cash inflows and discounted cash outflows and this ratio must be unity or more for an investment to be considered as financially viable. The BCR is obtained from the following formulae: n n t t BCR [ Bt / (1 i) ] / [ Ct / (1 i) ] t 1 t 1 Internal rate of return (IRR): It is the rate of return, which equates the discounted benefits with the discounted costs. It represents the annual rate of return from cashew plantations. IRR is arrived through the interpolation technique by using different discount rates, so as to see that the net present worth is equated to zero. The formula is: Lower discount rate Differencebetween two discount rates x NPV at lower discount rate IRR Absolute differencebetween the NPV's at two discount rates The IRR more than the discount rate or opportunity cost of capital is considered for promising economic feasibility and financial soundness of the project. RESULTS AND DATA ANALYSIS : The results obtained from the present investigation as well as relevant discussion have been summarized under following heads : Cost of cultivation of cashew : The per hectare cost of cultivation along with the details of yield, gross returns per hectare, net returns per hectare and output-input ratio were estimated for sample farms. Establishment cost of cashew plantations : The estimation of establishment cost of cashew for the three districts of farms, viz., dry cashew cuddalore, ariyalur, Pudukkottai and also irrigated cashew Pudukkottai farms were under taken. The results are presented in Table 1. The average establishment cost per ha in irrigated farms was more (Rs. 10,369) than that of dry farms (Rs. 8,500). The cost of manures and fertilizers constituted the highest share in the total establishment cost in irrigated farms (35 %), which was followed by land clearing (22 %), weeding (11 %) and so on. The costs of manures and fertilizers, weeding and plant protection were more 79

5 COST, RETURNS & ECONOMIC VIABILITY OF CASHEW PLANTATIONS in irrigated farms than that of the dry farms and this led to the increase in the total establishment cost in irrigated farms than that of dry farms. The average number of trees maintained in irrigated farms per ha was more (169) than that of the dry farms (146) and obviously, there existed more scope for increased cashew production in the former than that of the latter. Maintenance cost of cashew plantations : The maintenance cost of cashew plantation such as weeding, manuring, plant protection, etc., from second to ninth year are presented in Table 2 through 7 for Cuddalore, Ariyalur, Pudukkottai (dry), total dry farms, Pudukkottai (irrigated) and overall farms, respectively. It could be seen from Table 2 through 5 that manuring and fertilizer application constituted the major share (around two-thirds) of total expenses, in all the dry farms of the selected three districts. The cost of manuring and fertilizer application was slightly more in the initial years of establishment, i.e., up to fourth year (74 % of the total maintenance cost in all dry farms), and thereafter it showed a declining trend. It could also be observed that the maintenance cost was more in the dry farms of Ariyalur district followed by Pudukkottai and Cuddalore districts unto the period of nine years. In Cashew dry farms (Table 5), the major cost component was for manuring and fertilizer application and it was followed by cost of plant protection, harvesting and weeding. The shares of costs of manuring and fertilizer application and Table 1: Establishment cost of cashew plantations (First year) (Rs./ha) Sr. Dry Operations No. Cuddalore Ariyalur Pudukkottai Total dry Irrigated - Pudukkottai 1. Land clearing 2020 (23.60) 1994 (23.51) 1983 (23.56) (23.55) 2304 (22.22) (23.31) 2 Digging of pits 580 (6.78) 577 (6.80) 575 (6.83) (6.80) 610 (5.88) (6.62) 3. Seedling and transportation 720 (8.41) 718 (8.46) 738 (8.77) (8.50) 820 (7.91) (8.40) 4. Planting, staking and mulching 810 (9.46) 806 (9.51) 802 (9.53) (9.49) 785 (7.57) (9.03) 5. Weeding 920 (10.75) 917 (10.81) 906 (10.76) (10.78) 1150 (11.09) (10.85) 6. Manures and fertilizers 2755 (32.18) 2735 (32.24) 2700 (32.07) (32.19) 3600 (34.72) (32.71) 7. Plant protection 270 (3.15) 260 (3.07) 254 (3.02) (3.09) 580 (5.60) (3.59) 8. Irrigation charges 485 (5.67) 475 (5.60) 460 (5.46) (5.60) 520 (5.01) (5.49) 9. Total cost Average no. of trees per ha Cost per tree Figures in parentheses indicate percentage to total. Overall Table 2 : Maintenance cost of dry cashew plantations in the sample farms of Cuddalore district (Rs. / ha.) Sr. No. Operations 2 nd year 3 rd year 4 th year 5 th year 6 th year 7 th year 8 th year 9 th year 1. Seedlings and transportation 75 (1.85) Planting, staking and mulching 20 (0.49) (11.43) 4. Manuring and fertilizer application 2850 (70.22) 5. Plant Protection chemicals 650 (16.01) (9.56) 3180 (71.54) 840 (18.90) (8.66) 3490 (71.08) 895 (18.23) 6. Harvesting (2.03) Total cost (7.98) 3785 (71.07) 956 (17.95) 160 (3.00) 5326 (7.23) 3973 (67.59) 1280 (21.78) 200 (3.40) 5878 (6.77) 4272 (68.06) 1320 (21.02) 260 (4.14) 6277 (6.22) 4625 (67.67) 1394 (20.40) 390 (5.71) 6834 (6.19) 4638 (67.52) 1426 (20.76) 380 (5.53) 6869 Cost per tree (Rs.) Figures in parentheses indicate percentage to total cost

6 R. LOGANATHAN, K. MANI, G. MARIAPPAN AND K. INDRAKUMAR weeding to the total cost were declining from second to ninth year while the share of cost of plant protection showed upward trend during this period. As the age of the plantation increases, the plant becomes bushy in nature and does not require much weeding. However, the crop requires more plant protection measures as it grows. As regards irrigated farms (Table 6) of Pudukkottai district, the cost of manuring and fertilizer application was the major cost component accounting for about 59 per cent of the total cost and it was followed by cost of plant protection (19 %) and irrigation charges (10 %). The total maintenance costs in irrigated cashew farms were ranging from Rs in second year to Rs in ninth year and they were higher than that of dry cashew farms which ranged from Rs in the second year to Rs during ninth year. The harvesting charges commenced from fourth year onwards and in most of the sample farms, family labour was used for harvesting. The harvesting cost was increasing from fourth year onwards as the production started increasing from fourth year. It could be seen from Table 8 that the average establishment cost of all farms was Rs. 17,878 and it was more in irrigated farms (Rs. 20,535) than that of the Table 3 : Maintenance cost of dry cashew plantations in the sample farms of Ariyalur district (Rs./ha) Sr. No. Operations 2 nd year 3 rd year 4 th year 5 th year 6 th year 7 th year 8 th year 9 th year 1. Seedlings and transportation 80 (1.85) 2. Planting, staking and mulching 20 (0.46) (10.73) 4. Manuring and fertilizer application Plant Protection chemicals (69.09) 773 (17.87) (8.96) 3352 (70.69) 965 (20.35) (8.16) 3749 (71.96) 935 (17.94) 6. Harvesting Total Cost (1.94) (7.28) 3785 (61.93) 1688 (27.62) 194 (3.17) 6112 (6.82) 4010 (64.35) 1552 (24.90) 245 (3.93) 6232 (6.35) 4389 (65.58) 1567 (23.41) 312 (4.66) 6693 (6.07) 4597 (65.61) 1609 (22.97) 375 (5.35) 7006 Cost per Tree Figures in parentheses indicate percentage to total cost (5.79) 4691 (63.95) 1799 (24.53) 420 (5.73) 7335 Table 4: Maintenance cost of dry cashew plantations in the sample farms of Pudukkottai district (Rs./ha) Sr. No. Operations 2 nd year 3 rd year 4 th year 5 th year 6 th year 7 th year 8 th year 9 th year 1. Seedlings and transportation 75 (1.89) 2. Planting, staking and mulching 20 (0.51) (11.72) 4. Manuring and fertilizer application 2750 (69.46) 5. Plant protection chemicals 650 (16.42) (9.38) 3260 (71.95) 846 (18.67) (8.50) 3580 (71.57) 897 (17.93) 6. Harvesting (2.00) Total cost (7.83) 3886 (71.60) 956 (17.62) 160 (2.95) 5427 (7.09) 3985 (66.53) 1380 (23.04) 200 (3.34) 5990 (6.64) 4291 (67.09) 1420 (22.20) 260 (4.07) 6396 (6.11) 4653 (66.83) 1494 (21.46) 390 (5.60) 6962 (6.07) 4738 (67.70) 1456 (20.80) 380 (5.43) 6999 Cost per tree Figures in parentheses indicate percentage to total. 81

7 COST, RETURNS & ECONOMIC VIABILITY OF CASHEW PLANTATIONS dry farms (Rs.17,177). The average annual variable cost of cultivation of cashew in all the sample farms was more (67 % of the total cost) than that of the annual fixed cost which accounted for 33 per cent. The annual fixed, variable and total costs were more in irrigated than that of the dry farms. However, the share of annual variable cost to total cost was more for irrigated farms (69.5 %) than that of the dry farms (66.1 %). The total cost of cultivation was more in irrigated farms (Rs. 21,538) than that of the dry farms (Rs. 18,022) and the average of all farms being Rs. 18,590. As discussed earlier, the cost of manures and fertilizers in all cashew farms accounted for a major share of per cent of total cost and it was followed by human labour (20.25 %), plant protection chemicals (7.37 %) and so on. It could be seen from Table 8 that the annual establishment cost per tree was more in irrigated farms (Rs.61.36) than that of dry farms (Rs.58.22). It could be seen from Table 8 that the cost per tree was more in irrigated farms (Rs.127) than that of the dry farms (Rs.123). The yield of raw nuts per ha was more in irrigated farms (970 kg) than that of the dry farms Table 5: Maintenance cost of cashew plantations in all dry cashew sample farms Sr. No. Operations 2 nd year 3rd year 4 th year 5 th year 6 th year 7 th year 8 th year 9 th year 1. Seedlings and transportation (1.86) 2. Planting, staking and mulching (0.48) (11.19) 4. Manuring and fertilizer application (69.60) 5. Plant protection chemicals (16.87) (5.78) (74.02) (20.20) (5.23) (74.03) (18.68) 6. Harvesting (2.06) Total Cost (4.65) (69.40) (22.78) (3.17) (4.34) (67.96) (23.99) (3.71) (4.05) (68.64) (22.85) (4.46) (3.77) (68.35) (22.20) (5.68) (3.69) (67.70) (22.88) (5.73) Cost per Tree Figures in parentheses indicate percentage to total Table 6 : Maintenance cost of irrigated cashew plantations in the sample farms of Pudukkottai district (Rs./ha) Sr. No. Operations 2 nd year 3 rd year 4 th year 5 th year 6 th year 7 th year 8 th year 9 th year 1. Seedlings and transportation 110 (2.18) 2. Planting, staking and mulching 50 (0.99) (9.21) 4. Manuring and fertilizer application 2976 (59.05) 5. Plant protection chemicals 920 (18.25) 6. Cost of irrigation 520 (10.32) (8.26) 3175 (61.70) 1021 (19.84) 525 (10.20) (7.44) 3600 (63.05) 1015 (17.78) 550 ( 9.63 ) 7. Harvesting (2.10) Total cost (7.12) 3670 (61.54) 1079 (18.09) 600 (10.06) 190 (3.19) 5964 (6.43) 4002 (60.57) 1270 (19.22) 650 (9.84) 260 (3.94) 6607 (6.11) 4160 (59.78) 1350 (19.40) 700 (10.06) 324 (4.65) 6959 (5.72) 4358 (58.63) 1510 (20.31) 750 (10.09) 390 (5.25) 7433 (5.56) 4519 (59.12) 1465 (19.16) 800 (10.47) 435 (5.69) 7644 Cost per tree Figures in parentheses indicate percentage to total. 82

8 R. LOGANATHAN, K. MANI, G. MARIAPPAN AND K. INDRAKUMAR (730 kg). The gross returns were also more in irrigated farms (Rs ) than that of the dry farms (Rs ). The net returns per ha had also shown the similar trend. As the gross return and yield were more in irrigated farms, the cost of production per kg of raw cashew was lesser in irrigated farms (Rs.22.20) than that of the dry farms (Rs ).The output-input ratio was 1.85, 2.03 for dry cashew farms, irrigated cashew farms, respectively. These would indicate the high profitability of cashew production was found only in irrigated farms and this was achieved by gap filling and following modern farming techniques. The economic viability analysis for dry, irrigated cashew plantations : In order to evaluate the financial viability of cashew plantations, the project evaluation criteria such as Net Present Value (NPV), Benefit Cost Ratio (BCR) and Internal Rate of Return (IRR) were employed. The average age of cashew in Cuddalore, Ariyalur, dry cashew farms of Pudukottai districts were found to be 25 to 35 years and in irrigated farms of Pudukottai district, most of the hybrids were maintained for a period of 12 to 19 years. In general, the cashew yield was picking up from fourth year, stabilizing from ninth year onwards and the crop was maintained for a maximum period of 35 years. However, the project period considered for evaluating the financial viability of cashew plantation was 10 years and the discount rate used for estimating NPV and BCR was 12 per cent per annum. The results of the financial viability analyses for cashew dry, irrigated and overall situations are presented in Table 9. It could be seen from the table that the Net Present Value was higher for irrigated farms (Rs. 80,027) than that of the dry farms (Rs. 57,911). In case of Benefit Cost Ratio, irrigated farms had higher ratio of 2.28 than that of the dry farms Similarly, the Internal Rate of Return was also more for irrigated farms (42 %) when compared to that of the dry farms (37 %). This would highlight that the cashew plantation would be a financially worthwhile venture in the study area and there is a vast potential for taking up the cultivation of high yielding varieties of cashew plantation, especially in the irrigated conditions of Pudukottai district of Tamil Nadu. Conclusion : The study reveals that the share of fertilizer cost constituted a major percentage in the establishment and maintenance cost of cashew cultivation in the study area. The cost of per cultivation tree ranged 115 to 138 among the different farm groups. The output-input ratios among dry cashew Cuddalore, Ariyalur, Pudukkottai, total dry, irrigated Pudukkottai, over all farmers were 2.05, 1.80, 1.47, 1.85, 2.03 and 1.88, respectively. Hence, the study referred that Cuddalore, Ariyalur, some Pudukkottai farmers still concentrate on dry varieties of cashew farm than the irrigated hybrid varieties of farms. Further, the study shows that, NPV, BCR and IRR worked out to irrigated cashew farms were Rs.80, 027, 2.28 per cent, per cent and also dry cashew farms were Rs.57, Table 7: Maintenance cost of cashew plantations of all cashew sample farms (Rs./ha) Sr. No. Operations 2 nd year 3 rd year 4 th year 5 th year 6 th year 7 th year 8 th year 9 th year 1. Seedlings/saplings and transportation 82.5 (1.92) 2. Planting, staking and mulching 25 (0.58) (10.80) 4. Manuring and fertilizer application 2987 (69.56) 5. Plant protection chemicals 736 (17.14) (9.09) (71.38) (19.53) (8.24) (71.74) (18.01) 6. Harvesting (2.01) Total cost (7.56) (67.98) (21.37) (3.09) (6.93) (66.82) (22.58) 225 (3.67) (6.49) (67.37) (21.74) 288 (4.40) (6.06) (67.04) (21.41) 385 (5.49) (5.92) (66.70) (21.77) (5.61) Cost per tree Figures in parentheses indicate percentage to total. 83

9 COST, RETURNS & ECONOMIC VIABILITY OF CASHEW PLANTATIONS Table 8: Costs and returns of cashew production in the sample households (Rs. /ha) Sr. Dry Irrigated Overall Particulars No. Cuddalore Ariyalur Pudukkottai Total dry Pudukkottai Establishment cost Annual fixed cost 1. Annual share of establishment cost 2124 (11.83) 2. Depreciation cost 325 (1.81) 3. Interest on fixed capital 1200 (6.68) 4. Rental value of owned land 2250 (12.53) 5. Land cess 125 (0.69) Sub Total 6024 (33.55) Annual variable cost 1. Human labour 3890 (21.67) 2. Bullock power 400 (2.23) 3. Machine power 875 (4.87) 4. Manures and fertilizers 4657 (25.94) 5. Plant protection chemicals 1359 (7.54) 2147 (12.14) 304 (1.72 ) 1100 (6.22) 2195 (12.41) 120 (0.68) 5866 (33.17) 4216 (23.84) 380 ( 2.15) 710 (4.02) 4524 (25.58) 1268 (7.17) 2080 (10.48) 312 (1.57) 1740 (8.77) 2645 (13.33) 120 (0.60) 6897 (34.75) 3785 (19.07) 410 (2.07) 925 (4.66) 5653 (28.49) 1465 (7.38) 2101 (11.65) 314 (1.74) 1268 (7.04) 2307 (12.80) 122 (0.68) 6112 (33.91) (21.20) 394 (2.19) 819 (4.54) 4803 (26.65) (7.46) 2512 (11.66) 540 (2.51) 1080 (5.02) 2320 (10.77) 125 (0.58) 6577 (30.54) 3705 (17.20) 580 (2.69) 1250 (5.80) 6229 (28.92) 1497 (6.95) 6. Irrigation charges ( 3.44) 7. Interest on working capital 750 (4.18) Sub total (66.45) Total cost (4.07) (66.83) (3.58) (65.25) (4.05) (66.09) (4.46) (69.46) Average no. of plants per ha (11.77) (1.89) (6.65) (12.42) (0.66) (33.39) 3765 (20.25) (2.29) (4.79) (27.12) (7.37) (0.66) (4.13) (66.61) Cost per Tree Yield (kg / ha.) Price (per kg.) Gross income (Rs.) Net income (Rs.) Cost of production (Rs./kg) Output-Input ratio Figures in parentheses indicates percentage to Cost 84 Table 9 : Economic viability analysis for dry, irrigated cashew plantations in the study area Sr. No. Project evaluation technique Cashew -dry Cashew- irrigated Cashew-overall 1. Net present value (NPV) 57,911 80,027 61, Benefit cost ratio Internal rate of return (IRR) (%)

10 R. LOGANATHAN, K. MANI, G. MARIAPPAN AND K. INDRAKUMAR 911, 2.03 per cent and per cent, respectively. It implies to create an awareness to adopt irrigated hybrid varieties in this study area which not only reduce the cost of cultivation but an increase the net income among the different cashew farms. Authors affiliations: K. MANI, Department of Agricultural Economics, Tamil Nadu Agricultural University, COIMBATORE (T.N.) INDIA G. MARIAPPAN, Department of Agriculture, VELLORE (T.N.) INDIA K. INDRAKUMAR, Department of Agricultural Entomology, Adhiparasakthi Agricultural College, KALAVAI (T.N.) INDIA LITERATURE CITED : Balasubramanian, D. (2001). Cashew processing Industries in Kerala, (Quilon and Calicut). The Cashew, 15(2): Balasubramanian, D. (2001). Cashew Processing Industries in India, (Overall analysis). The Cashew, 15(2): Balasubramanian, D. (2002). Performance of Cashew nut Processing in Mozambique. Agric. Mechanization Asia, 7t h Year of Excellence Africa & Latin America, 33(2): Horticulture at a Glance ( ). Joint Director of Agriculture office, Pudukkottai district. Indian Cashew Statistics (2010). Cashew nut Export Promotion Council, Cochin. Season and Crop Report of Tamil Nadu ( ) (Fasli1418), Department of Economics and Statistics, Chennai, T.N. (INDIA). Selvarajan, M. and Dharmalingam, V. (1998). Production technologies for cashew for different agro climatic tracts of Tamil Nadu. The Cashew, 12(3): Selvaraj, K.N. and Sundaravaradarajan, K.R. (1999). Cashew cultivation- problems, prospects and opportunities. Abstract of 19 th Annual conference of Association of Economists of Tamil Nadu and Pondicherry, Department of Economics, pp Sundaravaradarajan, K.R. and Jahanmohan, K.R. (2002). Marketing cost, margin, price spread and marketing efficiency of cashew in Tamil Nadu. Agric. Situ. India, 59(1) :