Karnataka J. Agric. Sci.

,24 (2) : (164-169) 2011

Investment pattern and maintenance cost in pomegranate orchards : An economic analysis*

K. T. RAVIKUMAR, S. B. HOSAMANI, N. R. MAMLE DESAI, SURESH D. EKBOTE AND K. V. ASHALATHA Department of Agricultural Economics, University of Agricultural Sciences, Dharwad - 580 005, India Email: mamle2desai @rediffmail.com (Received: November, 2009)
Abstract: The Investigation was carried out in the year 2008 - 2009 to study the investment pattern in pomegranate orchard and to compute the costs and returns in pomegranate cultivation in Chitradurga district revealed that, the cost of establishment per ha was found to be `1,90,888.41 and `1,89,644.33 of which material cost constituted 56.87 and 58.15 per cent and maintenance cost 43.13 and 41.85 per cent in Challakere and Hiriyur taluks respectively. The average per ha maintenance cost incurred by respondents in Challakere taluk was ` 82,320.70 during the first three years. The labour, material and fixed costs accounted for 53.73, 24.59, and 21.68 per cent, respectively, it was ` 79,368.02 in Hiriyur taluk where labour, material and fixed cost accounted for about 56.16, 21.74 and 22.10 per cent, respectively.The average per ha maintenance cost incurred in Challakere taluk was ` 23,148.67 during the 4th year onwards of which, labour material and fixed cost accounted for 43.65, 20.32 and 36.02 per cent to the total maintenance cost. The average per ha yield in Challakere taluk was 4.68 tonnes and the net returns obtained were `1, 40,588.18. Similarly the average yield of Hiriyur taluk was 4.60 tonnes per ha, and the net returns were `1, 37,352.27. The financial feasibility analysis revealed that on an average the investment in pomegranate orchards can be recovered within six years in both the taluks. The net present values were positive and of higher magnitude indicating worthwhileness of investment. The returns per rupee of investment in these orchards were capable of generating nearly three rupees which was highly profitable venture. The internal rate of return was found to be in the range of 57-59 per cent which was much higher compared to the cost of capital (9.5 percent) and hence highly profitable. Overall, the proposition of growing pomegranate crop was highly profitable as revealed by the financial feasibility tests. Key words : Investment pattern, cost, returns, pomegranate

Introduction

per cent of the total area under pomegranate in the district. Hence, Challakere and Hiriyur taluk was specifically selected for the study. The top villages having larger area under pomegranate cultivation were selected. The information on area under pomegranate crop and number of pomegranate growers from the selected villages was obtained from the respective village accountants (Talati). A proportionate sample of ten per cent of the population from each village was selected randomly. Thus, the total size of the sample selected for the study was 120. The average age of the sample farmers in both taluk was found to be 44 years and more than 50% farmers depended mainly on agriculture as their primary occupation. Around 25% of farmers in the selected taluks completed their primary education were as the per cent of illiterate farmer in the selected taluks ranged from 12 to 15%. So far as size of family was concerned, it was found to be 7 members in family in both taluks. The average size of holding of sample farmers was 2.30 and 2.89 ha and the average size of the pomegranate orchards was 1.58 and 1.47 ha in Challakere and Hiriyur taluks respectively. The varieties of pomegranate grown in the study area were Ganesh or Bhagwa type. The range of age of bearing orchards was 4 to 15 years. The expected productive life span of pomegranate orchard as estimated by the respondents was 25 years. On an average plant population per ha was 375. For analyzing the data collected during the study, tabular analysis and financial analysis were employed. The technique Material and methods of tabular analysis was employed for estimating the investment Pomegranate cultivation is practiced throughout the district. pattern, maintenance cost of pomegranate, pattern of labour However, the large scale cultivation of pomegranate is use, yield and return structure of pomegranate etc. In order to concentrated mainly in Challakere and Hiriyur taluk extending know the relative profitability of investment in pomegranate on an area of 260 and 628 hectares and forming 20.08 and 48.42 cultivation measures of project evaluation namely. Pay Back * Part of M. Sc. (Agri.) thesis submitted by the first author to the University of Agricultural Sciences, Dharwad - 580 005, India Horticulture is a fast growing sector and expects comparatively lower requirements of water and easy adaptability to adverse soil and waste land situations. The productivity of fruits and vegetables is of vital importance as it provides higher cash income than cereals per unit of land. India is one of the leading countries in pomegranate production and more than 1.32 lakh hectare area is under cultivation presently. Out of this, nearly 94,000 hectare area is covered in Maharashtra, which produces fruits of over 1 lakh metric tonnes worth about Rs. 400 crores. In Chitradurga district of Karnataka, where the study has been conducted pomegranate is being grown on commercial scale. The area under pomegranate in the district is 1297 ha (10.79 % of total area under pomegranate in the state). Dry land horticulture is picking up fast in the district. The important horticulture crops grown in the district are pomegranate, Sapota, Ber and Papaya. Study of the economics of pomegranate production is indispensible since there is no proper farm business data on its cost of production. The accurate figures on establishment cost, operating cost and input requirement of pomegranate orchard could be of great help to the pomegranate growers of Chitradurga district in particular. Therefore, an attempt was made to study the investment pattern in pomegranate orchard and to compute the cost and returns in pomegranate cultivation in Chitradurga district.
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Karnataka J. Agric. Sci.,24 (2) : 2011 Period (PBP), Net Present Value (NPV), Benefit Cost Ratio (BCR), and Internal Rate of Return (IRR) were computed. Results and discussion The cost of establishing a pomegranate orchard up to bearing can be broadly classified into establishment cost and maintenance cost. So, the establishment cost included not only the costs incurred in the zero years that is at the time of planting but also the costs incurred in maintaining the plants till the time of bearing that is up to three years of planting. For establishing, pomegranate orchard investment has to be made on land, well, pump set, pump house, plant material, digging of pits and sprayer and these costs together constituted the material costs of establishment. These costs have to be invested during the year of establishment of the orchard and are considered as the costs incurred during zero year in the study. During next three years farmers has to maintain the orchard by applying fertilizers, manures, chemicals irrigation etc. The costs incurred by the farmers on all these items for the three years are grouped together as cost of maintenance. The total costs of establishment (Table 1) were found to be ` 1,90,888.41 and ` 1,89,644.33 per ha of which material costs constituted 56.87 and 58.15 per cent and maintenance costs 43.13 and 41.85 per cent in Challakere and Hiriyur taluk respectively. Similar results were obtained by Koujalagi (1990) in his study of the pattern of investment in pomegranate orchards in Bijapur district, Karnataka. The establishment cost (` 24,229.53) consisted of material cost in the initial year (85.65) and maintenance cost (49.35%) upto bearing three years. The material cost included the value of land, plant material, cost of digging of pits and planting, well, pump set, pump house, and sprayer. The per hectare total establishment cost worked out to be ` 24, 224.53 and returns per orchard was ` 45,429.96. The maintenance cost (Table 2) as indicated in the results included the wages of labour as well as cost of materials utilized and fixed costs in Challakere taluk. It was observed that out of
Table 1. Investment pattern in pomegranate orchards Sl. No. Particulars

total maintenance cost the major component was variable cost followed by material cost and fixed cost. Under the variable cost the labour cost formed an important cost accounting nearly 50 per cent of total maintenance cost, since the crops require higher amount labour involvement to prefer the important activity like loosening the soil around the trunk and formation of basin, watch and ward, pruning and training and land preparation etc. Among material cost the major component fertilizers, PPC and manure. Since the pomegranate crop is responsively to nutrient and as well as in the recent year the diseases like bacterial blight and anthracnose have created lot of problem hence to control these diseases the farmers have been trying with different chemicals thus the expenses on these items were found to be higher. So far as fixed cost is concerned the rental value of land formed the major cost component and it is observed that because of the higher productivity of the land and crops which are higher profit fronted the farmers to go for renting of land for the production of pomegranate crops. Even for the farmer who has been entering this crop on their own land where imputed the rental value taking into consideration ongoing rental rate the cost worked out to be higher. Since the opportunity cost of land was taken into consideration for calculating the rental value of land,it was found to vary over the years. In Hiriyur taluk, the maintenance cost (Table 3) included the wages of labour as well as cost of materials utilized and the fixed costs. It was observed that variable cost formed an important component followed by material cost and fixed cost. Under the variable cost the labour cost accounting nearly 50 per cent of total maintenance cost, since the crops require higher amount labour to perform the important activity like loosening the soil around the trunk and formation of basin, watch and ward, pruning and thinning and land preparation etc. Among material cost the major components were fertilizers, PPC and manure. Since the pomegranate crop is responsive to nutrient as well as in the recent year the diseases like Bacterial blight and Anthracnose have created lot of problem hence to control these diseases the
(`/ha) Challakere % 2.07 8.16 16.01 3.12 0.67 2.08 3.88 0.29 9.46 11.13 56.87 12.58 14.77 15.77 43.12 100.00 value 4025.35 15025.35 30012.54 6145.85 1359.75 3858.89 7689.25 514.56 19185.91 22458.85 110276.30 23845.77 27626.84 27895.42 79368.03 189644.33 Hiriyur % 2.12 7.92 15.83 3.24 0.72 2.03 4.05 0.27 10.12 11.84 58.15 12.57 14.57 14.71 41.85 100.00

value Establishment costs Rental value of Land 3950.24 Well 15582.35 Pump set 30568.86 Pump house 5960.58 Sprayer 1275.68 Plant material 3964.85 Investment in digging of pits and planting 7410.14 Staking 558.95 Fencing 18050.48 Drip irrigation 21245.58 Total 108567.71 B. Maintenance cost up to bearing period I year 24015.19 II year 28193.00 III year 30112.52 Subtotal (I+II+III) 82320.71 Total establishment cost (A+B) 190888.41 Note : Figures as percentages indicate per cent to total establishment cost. 165 A. 1 2 3 4 5 6 7 8 9 10

Investment pattern and maintenance cost in pomegranate orchards in Chitradurga...

Table 2. Maintenance cost of pomegranate orchard during gestation period in Challakere taluk Sl. No. Particulars I year II year III year I Variable cost A Labour cost 1 Land preparation 1102.56 1312.10 1420.54 2 Loosening of soil around the 3856.25 3989.25 4025.36 trunk and formation of basin 3 Gap filling 354.95 218.65 4 FYM application 524.35 621.35 635.32 5 Fertilizer application 824.35 921.35 1095.32 6 Weeding 806.00 1008.40 1025.20 7 Pruning and training 1254.25 1432.35 1523.65 8 Thinning of flowers and fruits 798.25 925.36 1253.14 9 PPC spraying 1025.31 1245.36 1354.25 10 Irrigation, watch and ward 2550.25 2630.65 2758.58 11 Miscellaneous 564.35 578.35 598.25 Total labour cost (A) 13305.92 15019.47 15908.26 B Material cost 1 Seedlings for gap filling 452.35 241.21 2 Manure 1012.50 1176.25 1215.36 3 Fertilizers 1254.35 2239.12 2578.25 4 PPC 1102.35 1352.64 1536.65 5 Others 378.41 335.82 312.24 Sub Total 3747.61 5556.18 5883.71 Interest on working capital @ 8.5% 1449.55 1748.93 1852.32 Total variable cost A+B 18503.08 22324.58 23644.29 II Fixed cost 1 Rental value of land 4210.36 4536.68 5102.35 2 Land revenue 21.23 21.23 21.23 3 Depreciation 724.00 735.00 746.00 4 Interest on fixed capital @ 9.5% 556.52 575.51 598.65 Total fixed cost II 5512.11 5868.42 6468.23 Total cost (I+II) 24015.19 28193.00 30112.52 (`/ha) %

Total

3835.20 11870.86 573.60 1781.02 2841.02 2839.60 4210.25 2976.75 3624.92 7939.48 1740.95 44233.65 693.56 3404.11 6071.72 3991.64 1026.47 15187.50 5050.80 64471.95 13849.39 63.69 2205.00 1730.68 17848.76 82320.71

4.66 14.42 0.70 2.16 3.45 3.45 5.11 3.62 4.40 9.64 2.11 53.73 0.84 4.14 7.38 4.85 1.25 18.45 6.14 78.32 16.82 0.08 2.68 2.10 21.68 100.00

farmers have been trying with different chemicals thus the expenses on these items were found to be higher. So far as fixed cost was concerned the rental value of land formed the major cost component and it is observed that because of the higher productivity of the land and crops which were highly profitable prompted the farmers to go for renting of land for the production of pomegranate crops. Even for the farmer who has taken up this crop on his own land where imputed rental value was taken into consideration based on ongoing rental value of land, the cost worked out to be higher. Not much difference was observed between Challakere and Hiriyur taluks. It was observed that out of total maintenance cost the major component was variable cost followed by material cost and fixed cost. Maintenance costs (Table 4) as indicated in the results that, the recurring costs incurred after the establishment of the orchard i.e., from 4th year onwards for upkeep of the plants so that good yield can be obtained over the economic lifespan of the plants. The maintenance cost included the expenditure towards the use of labour and other material inputs per year along with fixed cost for different age group of orchards. Under variable cost the labour cost formed an important cost accounting nearly 40 per cent of total maintenance cost in both the taluks. The labour activities like harvesting, watch and ward

and harrowing application of manure and fertilizers Among material cost the major component FYM, PPC and fertilizers. The supply of nutrient through manure it was found necessary to improve yield of orchard during bearing period. So far as fixed cost concern the rental value of land formed the major cost component. It was observed from Table 5 that the average quantity of fruit produced per ha in case of Challakere and Hiriyur taluk were 4.68 and 4.60 tons respectively. The fruits produced in the beginning year's fetched better price than the succeeding years, due to its size, taste and external appearance. As the plant grows older the size of fruit reduces and fetch lower price than the earlier once. However, the attainment of old age depends on the type of maintenance of orchards. The yield rate in pomegranate orchard varies with the size of the orchard as well as the age of pomegranate tree. During the initial years (4th to 8th year) the yield was less. The yield was maximized from 9th year onwards and remained same up to 19th year because, the yield rate changes with age of the orchard. The average yield was more in both the taluks due to a higher density of plant population in a hectare and sufficient use of inputs. 20th year onwards the yield starts declining due to the replacement of dead trees are rarely carried out by the farmers. Also poor management and inefficient use of inputs are attributed to the yield. Similar results were recorded

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Table 3. Maintenance cost of pomegranate orchard during gestation period in Hiriyur taluk Sl. No. Particulars I year II year III year I Variable cost A Labour cost 1 Land preparation 1002.56 1323.10 1520.54 2 Loosening of soil around the trunk 3946.25 4012.35 4198.56 and formation of basin 3 Gap filling 364.95 168.65 4 FYM application 564.35 581.35 698.32 5 Fertilizer application 844.35 961.35 1095.32 6 Weeding 856 1124.80 1131.85 7 Pruning and training 1296.96 1398.55 1512.35 8 Thinning of flowers and fruits 801.23 954.36 1001.14 9 PPC spraying 989.25 1154.35 1454.65 10 Irrigation, watch and ward 2435.35 2512.84 2684.56 11 Mand formation of basiniscellaneous 610.02 624.30 750.32 Total labour cost (A) 13346.32 15012.30 16216.26 B Material cost 1 Seedlings for gap filling 442.95 257.45 2 Manure 945.25 1034.59 1454.36 3 Fertilizers 1345.85 2125.54 2878.75.25 4 PPC 1024.65 1165.68 1654.25 5 Others 312.58 358.35 289.24 Sub Total 3628.33 5127.11 3655.30 Interest on working capital @ 8.5% 1442.85 1711.85 1689.08 Total variable cost A+B 18417.49 21851.26 21560.64 II Fixed cost 1 Rental value of land 4135.65 4468.86 4995.65 2 Land revenue 21.85 21.85 21.85 3 Depreciation 714.25 724.36 745.63 4 Interest on fixed capital @ 9.5% 556.52 560.51 571.65 Total fixed cost II 5428.27 5775.58 6334.78 Total cost (I+II) 23845.76 27626.84 27895.42 (`/ha) %

Total

3846.20 12157.16 533.60 1844.02 2901.02 3112.65 4207.86 2756.73 3598.25 7632.75 1984.64 44574.88 700.40 3434.20 3471.39 3844.58 960.17 12410.74 4843.78 61829.39 13600.16 65.55 2184.24 1688.68 17538.63 79368.02

4.85 15.32 0.67 2.32 3.66 3.92 5.30 3.47 4.53 9.62 2.50 56.16 0.88 4.33 4.37 4.84 1.21 15.64 6.10 77.90 17.14 0.08 2.75 2.13 22.10 100.00

from the studies conducted by Raikar (1990) that per ha. NPV was found to be ` 28,440.58 in the case of small orchard, ` 16,780.84 in the large orchard and ` 21,034.59 in average orchard. The B: C ratio at 12 per cent discount rate was 2.87 in small orchard 12.25 in large orchard and 2.49 in an average orchard. The payback period was 8.90 years, 9.38 years and 9.18 years in small, large and over all orchards, respectively. The internal rate of return was found to be ` 20.22, 17.88 and 18.88 per cent in small, large and average orchard respectively. In this section cost and returns of different periods of growth are discussed. The cost incurred and returns obtained in pomegranate orchards were presented in Table 6 and 7. The annual costs per hectare in both the taluks were higher in the first three years mainly because more labour required during this period for ploughing, application of fertilizers, FYM, PPC, weeding, watch and ward and loosening of soil around the trunk and formation of basin etc. The per hectare cost remained the same from 4th to 19th year during bearing period of orchards, since, they were applying the same quantity of inputs and also the labour employment remained same for different operations during this period. The returns varied according to age yield pattern of trees. They increased up to 19th year and maximized. Returns decreased from 20th year onwards till 25th year.

Pomegranate is a perennial fruit crop, once established continues to bear up to 25 years. Average returns are expected only after three years of planting. Till then heavy investment is required. Resources once committed retrieval is impossible. Further this needs vast resources and income is spread over a number of years. Therefore, costs and returns have to be analysed carefully to test the worthiness of investment in pomegranate enterprise. This analysis helps farmers in decision making. Hence, the technique of project evaluation such as pay back period, net present value, benefit-cost ratio, and internal rate of return were employed in pomegranate crop. In analysing the investment feasibility the establishment costs maintenance costs and gross returns (three years) were considered at 9.5 per cent discount rate representing the opportunity cost of capital. The initial investment on per ha of pomegranate was ` 24015.19 and ` 23845.77 in the first year ` 28193.00 and ` 27626.84 in the second year and ` 30112.52 and ` 27895.42 during the third year in Challakere and Hiriyur taluk respectively.(Table 8). The annual maintenance cost of bearing orchard was ` 23148.67 and ` 24306.31 in Challakere and Hiriyur taluk respectively which was assumed to be constant from fourth to 25th year. The streams of costs and benefits during establishing period (three years) and maintenance/ bearing period (fourth to

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Investment pattern and maintenance cost in pomegranate orchards in Chitradurga...

Table 4. Maintenance cost of pomegranate orchard in bearing period (4th year onwards) in selected Sl. No. Particulars Challakere Unit Qty Value % I. Variable cost A. Labour cost 1 Ploughing/Harrowing M/hr 4.56 2052.00 8.86 2 Application of FYM MD 19.59 1077.45 4.65 3 Application of Fertilizers MD 4.61 230.50 1.00 4 Application of PPC MD 3.29 264.50 1.14 5 Weeding MD 18.91 756.40 3.27 6 Irrigation, watch MD 42.63 2231.50 9.64 and ward 7 Harvesting MD 62.69 3234.50 13.97 8 Miscellaneous 258.98 1.12 Total labour cost 10105.83 43.66 B Material cost 1 FYM Tonnes 4.59 3442.50 14.87 2 Fertilizers Kgs 36.67 570.00 2.46 3 PPC Liters 3.84 691.20 2.98 Total material cost 4703.70 20.32 Subtotal (A+B) 14809.53 63.98 II Fixed Cost 1 Rental Value of land 7050.02 30.46 2 Land revenue 21.23 0.092 3 Depreciation 725.54 3.13 4 Interest on fixed cost 542.35 2.34 Total fixed cost 8339.14 36.02 Grand total (I+II) 23148.67 100.00 Table 5. Yield and return structure of pomegranate in the selected taluks Sl. Particulars Challakere Hiriyur No. Yield Total value Yield Total value Period (tonnes/ha) ` (tonnes/ha) ` 1 4th 3.12 93600 3.21 80250 2 5th 3.25 97500 3.35 100500 3 6th 3.45 103500 3.46 103800 4 7th 3.85 115500 3.67 110100 5 8th 3.98 119340 3.87 116100 6 9th 4.10 123000 4.01 120300 7 10th 4.25 127500 4.12 123600 8 11th 4.38 131400 4.29 128700 9 12th 4.52 135600 4.41 132300 10 13th 4.85 145500 4.69 140700 11 14th 4.95 148500 4.85 145500 12 15th 5.12 153600 5.05 151500 13 16th 5.34 160200 5.23 156900 14 17th 5.64 169200 5.49 164700 15 18th 5.76 172800 5.68 170400 16 19th 5.89 176700 5.79 173700 17 20th 5.60 168000 5.50 165000 18 21st 5.41 162300 5.29 158700 19 22nd 5.12 153600 5.02 150600 20 23rd 5.02 150600 4.95 148500 21 24th 4.85 145500 4.75 142500 22 25th 4.65 139500 4.58 137400 Total 103.10 3092940 101.26 3021750 Average yield 4.68 140588.18 4.60 137352.27 (tonnes/ha) taluks Qty Hiriyur Value (`/ha) %

4.64 20.58 3.12 4.53 17.56 40.63 67.69 4.64

1995.20 1131.90 156.00 296.50 702.40 2245.35 3384.50 283.58 10195.43 4192.50 681.28 799.20 4.64 15868.41 7124.35 21.85 735.35 556.35 8437.90 24306.31

8.21 4.66 0.64 1.22 2.89 9.29 13.93 1.17 42.01 17.23 2.80 3.29 23.32 65.33 29.31 0.09 3.03 2.29 34.71 100.00

5.59 47.61 4.44

twenty fifth years) have been annualized at 9.50 per cent discount rate. The Pay Back Period for pomegranate orchards in Challakere and Hiriyur taluks was 5.70 and 5.87 years respectively. This clearly indicates that a shorter period of less than six years would require getting back the initial investment. This could be attributed with fact that the initial investment higher besides higher rate of returns. The Pay Back Period to recover the initial investment forms to lower. Net present value (NPV) criterion helps to evaluate the benefits accrued and costs incurred during the project life. One advantages of NPV is that it gives an idea about surplus money that would be generated by a project at a given discount rate. It is an absolute measure and varies with level of investment and discount rate. In this study NPV was calculated by discounting net cash inflows. The NPV of pomegranate on per hectare at 9.5 per cent discount rate were ` 4, 75,538.23 and ` 4, 45,869.80 in Challakere and Hiriyur taluks respectively. The formal selection criterion of NPV is to accept all the projects with positive values. In pomegranate cultivation, initial investment was to be made to establish the orchard and maintenance costs were to be incurred during subsequent years. During these years of maintenance, the cash inflows or benefits exceed the cash outflows or costs and therefore the costs in the coming years would be met out of returns obtained.The decision in the B: C ratio frame work is to select the projects where the ratio is more than one in both the taluks. The B: C ratio was 2.90 and 2.70 in Challakere and Hiriyur taluks respectively at 9.5 per cent discount rate which satisfies the rule indicating the worth of investment on pomegranate
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Karnataka J. Agric. Sci.,24 (2) : 2011

Table 6. Cash flow analysis of pomegranate orchard in Challakere taluk Sl. Cash Cash Net cash D.F at Discounted No. outflow inflow flow 9.5% net cash ( ` ) ( ` ) ( ` ) flow (`) 0 190888.41 0 -190888.41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 24015.19 28193.00 30112.51 23148.67 23148.67 23148.67 23148.67 23148.67 23148.67 23148.67 23148.67 23148.67 23148.67 23148.67 23148.67 23148.67 23148.67 23148.67 23148.67 22100.12 20178.55 19328.71 19029.11 18728.75 17546.24 Total 0 0 0 93600 97500 103500 115500 119340 123000 127500 131400 135600 145500 148500 153600 160200 169200 172800 176700 168000 162300 153600 150600 145500 139500 3092940 -24015.19 -28193.00 -30112.51 70451.33 74351.33 80351.33 92351.33 96191.33 99851.33 104351.33 108251.33 112451.33 122351.33 125351.33 130451.33 137051.33 146051.33 149651.33 153551.33 145900.00 142121.50 134271.30 131570.89 126771.25 121953.76 2332440.86 0.91 0.83 0.76 0.70 0.64 0.58 0.53 0.48 0.44 0.40 0.37 0.34 0.31 0.28 0.26 0.23 0.21 0.20 0.18 0.16 0.15 0.14 0.12 0.11 0.10 -21931.68 -23513.27 -22935.31 49004.13 47230.02 46613.14 48926.52 46539.64 44119.11 42107.24 39891.28 37843.84 37603.23 35182.87 33437.73 32081.70 31222.34 29216.38 27376.97 23755.98 21133.10 18233.61 16316.80 14357.60 12613.69 666426.65 Table 7. Cash flow analysis of Years Cash Cash outflow inflow ( ` ) ( ` ) 0 189644.33 0 1 23845.77 0 2 27626.84 0 3 27895.42 0 4 24306.31 80250 5 24306.31 100500 6 24306.31 103800 7 24306.31 110100 8 24306.31 116100 9 24306.31 120300 10 24306.31 123600 11 24306.31 128700 12 24306.31 132300 13 24306.31 140700 14 24306.31 145500 15 24306.31 151500 16 24306.31 156900 17 24306.31 164700 18 24306.31 170400 19 24306.31 173700 20 23978.87 165000 21 22789.24 158700 22 22345.78 150600 23 21598.46 148500 24 20432.56 142500 25 19045.89 137400 Total 3021750 pomegranate orchard in Hiriyur taluk Net cash D.F at Discounted flow 9.5% net cash ( ` ) flow (`) -189644.33 -23845.77 0.91 -21776.95 -27626.84 0.83 -23041.09 -27895.42 0.76 -21246.65 55943.69 0.69 38912.99 76193.69 0.63 48400.34 79493.69 0.58 46115.60 85793.69 0.52 45452.37 91793.69 0.48 44411.95 95993.69 0.44 42414.62 99293.69 0.40 40066.41 104393.69 0.36 38469.71 107993.69 0.33 36343.68 116393.69 0.30 35772.22 121193.69 0.28 34015.92 127193.69 0.25 32602.76 132593.69 0.23 31038.23 140393.69 0.21 30012.87 146093.69 0.19 28521.83 149393.69 0.17 26635.70 141021.13 0.16 22961.58 135910.76 0.14 20209.58 128254.22 0.13 17416.51 126901.54 0.12 15737.73 122067.44 0.11 13824.87 118354.11 0.10 12241.38 2233646.36 635514.131

orchard. The benefit: cost ratio indicates expected returns for each rupee of investment in pomegranate enterprise. Thus, it could be concluded that investment in pomegranate orchard was economically feasible and financially viable in both the taluks. Internal rate of return is suggested to be very suitable measure for evaluating the profitability of investment on different projects. The IRR is the rate at which the resent worth of project is zero or the discounted costs are equal to the discounted returns.It is superior over the other measures since it taken into consideration the reinvestment opportunities of enterprises during the life span. The formal selection criterion of IRR is to accept the projects with IRR more than the opportunity cost of capital. The internal rate of return was 59.02 and 57.62 per cent in Challakere and Hiriyur taluks respectively. The IRR represents the maximum rate of interest at which the growers can borrow from lending agencies and invest on pomegranate orchard. In other words, it is the earning power of money invested on pomegranate during its life span. Since IRR was more than the opportunity cost of capital it clearly indicated that investment on pomegranate orchard is a financially sound and economically viable proposition in both the taluks. Thus, all the four criteria of investment feasibility revealed that investment in pomegranate is a profitable and financially attractive proposition.

Table 8. Financial feasibility of investment in pomegranate orchard in selected taluks Sl. Particulars Units Challakere Hiriyur No. 1 Pay back period Years 5.70 5.87 2 Net present value `/ha 475538.23 445869.80 (At 9.5 % discount rate) 3 Benefit cost ratio 2.90 2.70 (At 9.5 % discount rate) 4 Internal rate of return Per cent 59.02 57.62

References Anonymous, 2003, Horticultural crop statistics of Karnataka at a glance, Directorate of Horticulture, Lalbagh, Bangalore, pp. 1-45. Koujalagi, C. B,. 1990, An economic analysis of production and marketing of pomegranate in Bijapur district, Karnataka. M. Sc. (Agri.) Thesis, Univ. Agric. Sci., Dharwad (India). Patil, H. N., 1989, Marketing of alphonso mangoes in Maharashtra. J. Maharashtra Agric. Univ., 14 : 244-245. Raikar, N. A., 1990, Investment in production and marketing of cashew in Karnataka. M. Sc. (Agri.) Thesis, Univ. Agric. Sci., Dharwad (India).

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