Economic processing of mango in Gadchiroli district of Maharastra

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1 Volume 5 Issue 2 September, e ISSN International Research Journal of Agricultural Economics and Statistics Visit Us - DOI : /HAS/IRJAES/5.2/ Research Paper Economic processing of mango in Gadchiroli district of Maharastra S.B. DATARKAR, A.S. DAREKAR, U.T. DANGORE AND K.H. PARSHURAMKAR See end of the paper for authors affiliations Correspondence to : S.B. DATARKAR Department of Agricultural Economics, Mahatma Phule Krishi Vidyapeeth, Rahuri, AHMEDNAGAR (M.S.) INDIA Paper History : Received : ; Revised : ; Accepted: ABSTRACT : The present study was conducted in one processing unit in the vicinity of Gadchiroli district during year The data revealed that, the processing unit had a capital investment of Rs lakh. Quantity of mango processed products prepared by the unit was 460 kg/year. Mango pickle (78.26 %) and amchur (21.74 %), were the major mango products prepared by the unit. Major items of variable costs were in the packaging cost. Net returns from mango pickle and amchur were Rs. 19, and Rs. 9,265.23, respectively. Input-output ratio for mango pickle was 1:2.72 and for amchur it was 1:2.35. Break-Even quantity was observed for Mango pickle and amchur was 6.00 kgs and 7.37 kgs, respectively. High packaging cost and spoilage due to shut down of electricity and hot climatic conditions were the major aspects affecting the profitability of mango processed products and major problems faced by processing units. Redressal of these aspects through alternative measures can certainly review the profitability of processing units. However, processing of mango products is a profitable business. KEY WORDS : Processing, Break even analysis, Mango HOW TO CITE THIS PAPER : Datarkar, S.B., Darekar, A.S., Dangore, U.T. and Parshuramkar, K.H. (2014). Economic of processing of mango in Gadchiroli district of Maharastra. Internat. Res. J. Agric. Eco. & Stat., 5 (2) : INTRODUCTION Annual mango production in India nearly amounted to 105 lakh tonnes on an average with 54 per cent of total world production. In respect of area it commanded 14.9 lakh hectares constituting 54 per cent in world area. Andhra Pradesh State in India secured second position next to Uttar Pradesh with 32 lakh tonnes of production and 4 lakh hectares of area. Mango (Mangifera indica L.) is called the king of tropical fruits. Mango belongs to the genus Mangifera, consisting of numerous species of tropical fruiting trees in the flowering plant family Anacardiaceae. India is the largest producer of mango in the world with a share of 44 per cent of the total world production of mango. Fortunately, the prices of mango are showing increasing trend. As a result, the cultivators are encouraged to undertake new plantations as well as for adoption of improved technologies and increase the yield of mango. It was observed that, it has helped to increase the employment potential due to increase in production, transport, marketing, processing and export trade. Moreover, the income of farmers and other agencies engaged in these activities has increased substantially, resulting into improving the standard of living of the people in this region. Preservation and processing of fruits is an old practice. The term processing is used synonymously for preservation. The fundamental principle of preservation of food by heat is known as processing. In case of fruits and vegetables, processing and preservation facilitate conservation of surplus production of fruits and vegetables of one season for use in another season or place. So also, to utilize surplus production of fruits and vegetables properly, the processing and preservation of these agricultural products is of prime importance. The seasonal gluts and off-season scarcities of fruits and vegetables are well-known in our country. The need for their preservation, which are otherwise perishable, necessitates development of processing industry. However,

2 S.B. DATARKAR, A.S. DAREKAR, U.T. DANGORE AND K.H. PARSHURAMKAR our processing industry is able to handle hardly about two per cent of the produce as against Thailand 30 per cent, Brazil 70 per cent and Malaysia 83 per cent. Since the inception of fruits product order under Essential Commodities Act 1955, in order to improve the quality standard of various fruit and vegetable products (Malliswari, 1996; Veerkar and Borude, 1990 and 1995). The objectives of the present study was to study the economics processing of mango and to identify the constraints faced by processors. MATERIALS AND METHODS In Gadchiroli, there was only one unit of mango processed product namely Adishakti Bahu-Uddheshiya Mahila Gramin Bachat Gut, Gadchiroli, is a self-help group. About 100 kg mango processed in one weak per month in this unit to produce mango products. Analytical tools : For processing of mango the fixed cost (i.e.,cost of land, building, shed, storage, machineries, vehicles and wages of permanent labour etc.) and the variable cost (i.e. the cost related to raw materials used, ingredients required for processing of products including preservatives, labels, packaging energy charges etc.) were calculated from concerned units. Simultaneously, the marketing cost of processed products was collected. Subsequently, total return and value addition over the raw material was worked out. Concept and terms related to processing of mango : The information related to processed products was collected from selected processing unit i.e. Adishakti Bahu - Uddheshiya Mahila Gramin Bachat Gut, Gadchiroli, on the basis of installed processing capacity of a unit, for the study, for the year The primary data were collected from the selected mango processing units by personal interview with the concerned person, regarding cost of processing, returns etc. Fixed cost : It includes the data on cost of machinery, building, furniture and wages of permanently employed labours, license fees, insurance and taxes. Data on above items were collected separately for selected unit. Variable cost : Variable cost consists of the expenditure on purchase of raw material, wages of causal labour, oil and lubricants, energy charges, repair and maintenance of machinery, packaging cost and interest on working capital. Data on these items were collected separately through interview with unit owner. Total cost : Total cost of processing composed of the total fixed cost and total variable cost and was calculated by adding these costs together. Marketing cost : Marketing cost includes marketing expenditure on purchase of raw material and marketing expenditure on disposal of finished products, which included transport, loading, unloading, weighing charges and market taxes. Value addition in mango : Break-even analysis : The point of which the two curves, i.e., total cost curve and total revenue curve intersect is called the break even point (BEP) which indicates the level of production at which the producer neither loses money nor makes a profit. In other words, the quantity at which all costs allocated to a product are equal to all revenues from its sale is known as break-even point. At quantities smaller than the break even point, there is a loss and at larger quantities there is a profit. There are two approaches in break-even analysis. One is called linear when the selling price of a product remains constant and the other curvilinear, in which we come across changes in revenue owing to the selling price. The second approach has applications in respect of perennial crops. F BEP = (P V) where, F = fixed cost in (Rs./ha), P = Price per quintal (Rs.), 206 Table 1 : Estimation of utilization of mango and their finished products Sr. No. Products Processing unit 1. Total quantity of mango for processing 468 (A) Total finished mango products (recovery per cent to A) 460 (B) Different finished mango products obtained i. Mango pickle 360 (78.26) ii. Amchur 100 (21.74) 2. Total finished mango products 460 (100.00) Figures in parenthesis indicated percentage to the total finished products

3 ECONOMIC OF PROCESSING OF MANGO Table 2 : Fixed capital investment in selected processing unit (Rs. in Lakh) Sr. No. Type of fixed capital Amount Per cent 1. Land Building Machinery and equipment (including vehicles) Permanent staff (annual salary) Other (misc.) Grand total Figures in parenthesis indicated percentage to the total Table 3 (a) : Economics of production of mango pickle (Rs./100 kg) Sr. No. Particulars Quantity Average rate (Rs.) Cost (Rs.) Per cent to total Variable cost 1. Raw material i. Mango (kg.) ii. Salt(150g) iii. Fenugreek powder(25g) iv. Turmeric powder(15g) v. Niger seed(15g) vi. Red chilli Powder (10g) vii. Clove(50) viii. Black pepper(g) ix. Cumin(15g) x. Mustard oil(350ml) xi. Asafoetida(2g) Packing i. Polythene bags ii. Spoilage (1.5 %) iii. Labour cost Intt. on vari. cost (10%) - - Variable cost Variable cost per kg Fixed cost 1. Intt. of fixed capital Depreciation Fixed cost Fixed cost per kg Marketing cost i. Transportation cost ii. Advertisement cost(rs.) iii. Taxes iv. Commission Marketing cost Marketing cost per kg Total cost Total cost per kg Returns i. Quantity (kg.) ii. Rate (Rs./kg.) iii. Total receipts (Rs.) Net Returns Benefit cost ratio - - 1:

4 S.B. DATARKAR, A.S. DAREKAR, U.T. DANGORE AND K.H. PARSHURAMKAR V = Variable cost per quintal. The break-even analysis will also facilitate in computation of certain measures, viz., margin of safety and percentage of margin of safety which help in the decision-making. Margin of safety : It indicates the difference between total output and output at BEP or total revenue obtained from the enterprise and revenue at BEP. The positive figure of this indicator reveals the shock-absorbing capacity of the enterprise in the event of fluctuation in returns against anticipation owing to any unforeseen eventually. Margin of safety (in units) = Total output- output at BEP Margin of safety (Rs) = Total revenue- Revenue at BEP BEP output Percentage of margin of safety (%) 100 volume of output RESULTS AND DATA ANALYSIS The findings of the present study as well as relevant discussion have been presented under the following heads : Utilization of mango for processing and related products prepared : The information on the quantity of mango available for processing and quantity of finished products prepared during the period 2010 to 2011 is presented in Table 1. In this processing unit only mangoes were processed for making pickle and amchur. The details of finished product obtained are given in Table 1. The total quantity of mangoes used for processing was 468 kg. and the total quantity of finished products obtained by the unit was 460 kg. Out of the total quantity, 360 kg (78.26 %) of mango was processed for 208 Table 3(b) : Economics of production of Amchur (Rs./100kg.) Sr. No. Particulars Quantity Average rate (Rs.) Cost (Rs.) Per cent to total Variable cost 1. Raw Material i. Mango (kg.) ii. Salt(kg) Packing i. Polythene bags ii. Lobour cost iii. Label iv. Intt. on vari. cost (10%) Variable cost Variable cost per kg Fixed cost 1 Intt. of fixed capital Depreciation Fixed cost Fixed cost per kg Marketing cost i. Transportation cost ii. Advertisement cost(rs.) iii. Taxes iv. Commission(Rs.) Marketing cost Marketing cost per kg Total cost Total cost per kg Returns i. Quantity(kg.) ii. Rate (Rs./kg.) iii. Total receipts (kg) Net returns Benefit cost ratio - - 1:2.35

5 ECONOMIC OF PROCESSING OF MANGO making mango pickle and 100 kg (21.74 %) of mango was processed for making amchur. Capital investment in mango processing unit : Table 2 reveals the fixed capital investment in selected processing unit.the average capital investment for processing unit was Rs.6.42 lakhs. Buildings, land, machinery and permanent staff contributed major part to the capital investment i.e per cent per cent 5.29 per cent and 9.34 per cent, respectively. The effective life of processing units was estimated over fifty year (Aaker and Day, 1980; Nagraj et al., 1989). Economics of production of mango processed products : Mango pickle and amchur were processed by the processing units under study. The economics of production of the product is presented in Table 3a. Economics of production of mango pickle : Table 3a, presents calculation of cost and returns worked out on 100 kg. of mango. Total cost incurred for the preparation of mango pickle was recorded as Rs.7, per 100 kg. Total variable cost also indicated same trend with a contribution of per cent. Among the variable cost, raw material cost was a major cost concern contributing per cent followed by polythene bags 8.27 per cent and labour cost 6.61 per cent. Fixed cost formed the major concern for selected units to the extent of 9.54 per cent in total cost because of under utilization of its processing capacity. On an average, mango pickle incurred total cost of Rs.7,253.29, of which total variable cost was Rs , fixed cost was Rs and total marketing cost was Rs.350 with a gross receipt of Rs.27,000 (per 180 kg.), net returns of Rs.19, were good. Total returns obtained from the sale of 180 kg. of mango pickle were Rs19, The benefit cost ratio was 1:2.72. Economics of production of Amchur : Amchur is the product obtained from mango by drying which is in the form of dried pieces. It is collected and packed in dry container first and then packed in closed container. Table 3(b), presents calculation of cost and returns which was worked out on 100 kg. of mango. Total cost incurred for the preparation of amchur was recorded as Rs per 100 kg. Total variable cost also indicated same trend with a contribution of 7.99 per cent. Among the variable cost, raw material cost was a major cost concern contributing per cent followed by polythene bags per cent and labour cost 9.14 per cent. Fixed cost formed the major concern for selected units to the extent of per cent in total cost because of under utilization of its processing capacity. On an average, amchur incurred total cost of Rs.3,934.77, of which total variable cost was Rs , fixed cost was Rs and total marketing cost was Rs.370 with a gross receipt of Rs Table 4 : Estimation of value addition in mango Raw mango Sr. Items (468 kg) No. Mango pickle Amchur 1. Processed products obtained Purchase price of fresh mango (Rs.) Total cost of processing Price of processed product (Rs.) 27, , Increase in the value of processed product over fresh mango (Rs.) 6. Per cent increase in the value of processed product over fresh mango 26, , , (per 110 kg.), net returns of Rs.9, were good. The benefit cost ratio was 1:2.35. Bisen et al. (2003) and Kane (1991) had also done some relative work on mango. Estimation of value addition in mango : It is gathered from Table 4, that, in the light of purchase price of mango (per 460 kg) for the preparation of finished products and the selling price of product, the highest value addition over the value of fresh mangoes was recorded for mango pickle (Rs.26,625) followed by amchur (Rs.11,825). Per cent increase in the value of processed products over fresh mango was highest in mango pickle i.e per cent followed by 860 per cent in amchur. The value addition over purchase price of mango was same i.e. Rs in mango pickle and amchur powder (Prasad, 2005). Break even analysis for different mango products : Table 5a, shows that, the minimum output level required to cover at least the cost of production was 6.00 kg. At this level, the cost of production and gross return was equal. The margin of safety indicates the shock absorbing capacity of the unit, which was positive at 174 kg, and in monetary terms it Table 5a : Break even analysis for mango pickle Sr. No. Particulars Mango pickle 1. Total quantity of output (kg) Per unit price (Rs.) Per unit variable cost (Rs.) Contribution (B) (C) (Rs.) Fixed cost (Rs.) Break even point (E) / (D) (kg) Margin of safety In physical unit (kg) In revenue (Rs.) Per cent margin of safety

6 S.B. DATARKAR, A.S. DAREKAR, U.T. DANGORE AND K.H. PARSHURAMKAR Table 5b : Break even analysis for Amchur Sr. No. Particulars Amchur 1. Total quantity of output (kg) Per unit price (Rs.) Per unit variable cost (Rs.) Contribution (B) (C) (Rs.) Fixed cost (Rs.) Break Even Point (E) / (D) (kg) Margin of safety In physical unit (kg) In revenue (Rs.) Per cent margin of safety 6.7 was Rs.26,100. The per cent margin of safety for was 3.32 (180 kg) as higher than the break-even level. Table 5b shows that, the minimum output level required to cover at least the cost of production was 7.37 kg. At this level the cost of production and gross return was equal. The margin of safety indicates the shock absorbing capacity of the unit, which was positive at kg, and in monetary terms it was Rs.1, The per cent margin of safety for was 6.7 (110 kg) was higher than the break-even level. Borude (1977) and Joshi et al. (1999) have also done some preliminary studies on the economics of mango processing form the state of Maharastra. Conclusion : In present study an attempt was made to study the economics of production and processing of this fruit of Vidarbha. The present study was conducted in Gadchiroli district of Maharashtra. There was only one unit of mango processed product namely, Adishakti Bahu-Uddheshiya Mahila Gramin Bachat Gut, Gadchiroli, is a Self Help Group. About 100 kg mango processed in one weak per month in this unit to produce mango products. The data pertained for the year The total quantity of mangoes, used for processing was 468 kg. Total finished products of mangoes obtained i.e. mango pickle 360 kg and Amchur 100 kg, respectively. The major products processed in processing unit were mango pickle (180 kg) and Amchur (110 kg). The highest value addition over the value of fresh mangoes was recorded for mango pickle followed by amchur. Break even analysis for processing units showed that the units were running very well above the break-even point. Authors affiliations: A.S. DAREKAR, Department of Agricultural Economics, Mahatma Phule Krishi Vidyapeeth, Rahuri, AHMEDNAGAR (M.S.) INDIA U.T. DANGORE AND K.H. PARSHURAMKAR, Agricultural Economics and Statistics Section, College of Agriculture, NAGPUR (M.S.) INDIA LITERATURE CITED 5t h Year of Excellence Aaker, A. David and Day, S. George (1980). Marketing Research, John Wieley & Sons, New York Bisen, R.K., Chandraker, Annu, Verma, Sanjay and Thakur, B.S. (2003). Studies on intercropping and cultural practices on growth and yield of mango orchard. In Abstract of National Seminar on Mango Challenges In Management of Production, Post- Harvest, Processing and Marketing organized by Gujarat Agricultural University, Junagadh on June, 2003 : 39. Borude, S.G. (1977). Economics of mango processing in Ratnagiri district. Agric. Mktg., 20(3) : Joshi, M.G., Wadkar, S.S., Veerkar, P.D. and Powar, A.G. (1999). Comparative economics of scale of processing of alphonso mango into South Konkan region, Bihar J. Agric. Mktg., 7(2) : Kane, S.D.(1991). Economics of preparation of traditional products of mango and kokum at household level in Ratnagiri district (M.S.). M.Sc. (Ag.). Konkan Krishi Vidyapeeth, Dapoli, RATNAGIRI, M.S. (INDIA). Malliswari, M.N. (1996). Mango processing in Andhra Pradesh potential, infrastructure and constraints. Indian J. Agric. Mktg., 10(2): Nagraj, N., Choth, L. and Prakash, T. (1989). Economic analysis of Karnataka fruit processing in the case of Karnataka Agro-fruits Ltd. Indian J. Mktg., 19(8, 9 and 10) : Prasad, S. (2005). Mango pulp units pin hopes on exports. Online Ed. of India s National Newspaper, April, 16, The Hindu, Tamil Nadu News. Veerkar, P.D. and Borude, S.G. (1990). Comparative economics of scale of processing of Alphonso mango into pulp in Ratnagiri District. Indian J. Agric. Mktg., 4(2): Veerkar, P.D. and Borude, S.G. (1995). Economics of mango products in Ratnagiri district. J. Maharashtra Agric. Univ., 20(1):