chapter economic viability and profitability related...
TRANSCRIPT
CHAPTER - V1
ECONOMIC VIABILITY AND PROFITABILITY RELATED
ASPECTS OF ALTERNATIVE METHODS OF ORCHID AND
ANTHURIUM CULTIVATION - AN ANALYSIS
This chapter makes an in-depth analysis of the economic viability and
cost and profitability related aspects of Orchid and Anthurium cultivation. For the
purpose of comparison, the cost and returns, which is expected to continue for a
period of 5 years, are taken as a base. The analysis of cost and profitability of both
the Orchid and Anthurium cultivation is also carried out by considering these
aspects. Moreover, three alternative methods of cultivation adopted by the Small-
scale, Medium-scale and Large-scale cultivators of Orchids and Anthuriums have
also been taken into account.
Section - I of this chapter is devoted to make an analysis of
economic viability of alternate methods of Orchid cultivation, while Section - II tries
to analyse the economic: viability of Anthurium cultivation. Section - Ill makes a
comparative analysis of the net returns from alternative methods of Orchid and
Anthurium cultivation. Section - IV makes an in-depth analysis of the cost and
profitability related aspects of Orchid and Anthurium cultivation.
SECTION - I
AANLYSIS OF THE ECONOMIC VIABILITY OF ALTERNATIVE METHODS OF
ORCHID CULTIVATION
The cost and profitab~lity of Orchid cultivation is analysed by taking
1,000 plants (4 cents) as the base in the case of small-scale cultivators, 5,000
plants in the case of medium-scale and 25,000 plants in the case of large-scale
cultivators respectively. :Selection of plants, size of pots used and the method of
cultivation are the important factors determining the cost of cultivation. In case of
commercial cultivation, exotic or imported varieties of plants, especially the Near
Flowering Size (N.F.S.) plants are to be selected. If small cuttings of plants or ex-
agar plants are selectetl, the cost of plants can be reduced to a considerable
extent. But the risk attached to the process of acclimatization of plants will be very
high and the time taken tor flowering such plants will also be very long when
compared to the Near Flowering Plants (N.F.S. varieties). The average cost of a
Near Flower~ng Size (N.F.S.) ot an exotic variety of Orchid plant will come to
Rs.75. The cost of pot 1 vase is another decisive factor determining the cost of
cultivation. The average cost of an 8" clay pot will come to Rs.10 while the average
cost of a 6" clay pot will come to Rs.6 only. If one resorts to low cost cultivation
technique by substituting coconut husks with clay pots, the cost of vase for
cultivation can again be brought down to a very low rate of Re 0.25. However, the
durability of coconut husks is limited to a maximum period of two years only. The
damages caused to plants, delay in flowering and the additional costs incurred for
replacement of useless coconut husks, etc. are other drawbacks of this method of
cultivation. Similarly, the cultivation in 6 pots will also become inconvenient to the
cultivator when the plants, grow beyond a certain limit.
The commercial cultivation of Orchids can be carried out in three
ways namely, cultivation of plants in Coconut Husks, cultivation of plants in 6" pots
under shade houses 1 poly houses and cultivation of plants in 8" pots under shade
houses 1 poly houses. In Kerala, majority of the cultivators are following the
cultivation of plants in clay pots under shade houses. The cost of cultivation of
Orchid plants is calculated without taking into account the interest on investment.
But the interest factor us taken for the purpose of ascertainment of the monthly net
income of cultivators.
Details of the comparative cost of cultivation of Orchid plants, without
considering the interest factor, by adopting 3 alternative ways namely, i. cultivation
of plants in Coconut Husks, ii. in 6" Pots and iii. in 8" Pots are given in Table
No.6.1 and the details of calculat~on are given in Appendix - IX.
Table No. 6.1 Cost of cultivation in the case of Orchid Plants by adopting ~.
alternative methotis of cult~vation. Methods Cost of Cultivation
of cultivation (in Rs.) -- 95,020
Method - II - 1,22,820 Method - Ill 1,40,396
4,11,765 5,34,015 6,10332
Method - I i 17,78,925 Method - II 23,15,300 Method - 1 1 1 26,49,570
Source: Field Survey.
From Table No. 6.1, it can be observed that the cost of the Small-
scale Orchid cultivators ts the lowest (Rs. 95,020) in the case of those who have
adopted the first method, while it works out to be the highest (Rs. 1,40,396) in the
case of method - Ill. Among the Medium-scale units, those who adopt the first
method of cultivation (method - I) has the lowest cost of cultivation (Rs. 4,11,765),
while it works out to be the highest (Hs. 6,10,532) in the case of the third method of
cultivation. As far as the large-scale units are concerned, the analysis indicates a
low cost of cultivation of Rs. 17,78,925 in the case of method - I as against a high
cost of cultivation of Rs. 26,49,570 in the case of method - 111.
Analysing all the categories of cultivators resorting to the distinct
methods of cultivatton, it is also revealed that method - l emerges to be the best
possible alternative for the purpose of investment when compared to the other
methods of cultivation.
It is observed during the field survey that the medium and large-scale
(high) cultivators enjoy the advantages of the economies of scale in the cultivation
of plants and the sale of produces like the flowers and plants. There will be a 10
per cent reduction in the cost of construction of greenhouse in the case of medium-
scale cultrvators, while in the case of large-scale cultivators the reduction in the
cost of greenhouse will be 20 per cent. Advantages on the bulk purchase of clay
pots required for the cult~vation are enjoyed by both the medium and large-scale
cultivators. In the case of 6 pots, medium-scale cultivators enjoy a discount of 15
per cent of the price 'of clay pots while large-scale cultivators enjoy a price
reduction to the exten,t of 25 per cent when compared to the small-scale
cultivators. There will be savings in the case of labour due to the mechanisation of
the agricultural operations by the medium-scale and large-scale cultivators. The
savings in Labour cost will be to the extent of 40 per cent in the case of Medium-
scale cultivators while the Large-scale cultivators are able to save the labour cost
to the extent of 70 per cent due to the adoption of the highly sophisticated and
scientific methods of irrigation and fertigation. Medium and large-scale cultivators
are also benefited on the bulk purchase of fertilisers and pesticides by availing the
reduction in the cost of fertilisers and pesticides to the extent of 10 per cent and 15
per cent respectively. Medium and large-scale cultivators also enjoy the benefits of
the economies of large-scale in the marketing of flowers and plants. Elimination of
intermediaries and other innovat~ve marketing strategies like sales in the form of
value-added items like bouquets, tlower arrangements and landscape designing
enable the medium and large-scale cultivators in fetching high price for the flowers
and plants. It is also observed dur~ng the field investigation that the medium-scale
cultivators, on an average, are able to get 10 per cent increase in the price of
flowers and a 5 per cent increase in the price of plants sold. In the case of large-
scale cultivators the increase in the price realisation of flowers and plants is to the
tune of 20 per cent and 'I0 per cent respectively.
The financial viability of various methods of cultivation in the case of
Orchid plants carried out by different categories such as Small-scale, Medium-
scale and Large-scale units are analysed in this section of the study by considering
the factors considering earlier. Various scientific criteria such as Pay Back Period,
Discounted Pay Back Period, Post Pay Back Profitability, Discounted Post Pay
Back Profitability, Net Present Value, Benefit Cost Ratio and Internal Rate of
Return, have been adopted for the evaluation of each method of cultivation
adopted by different categories of Orchid cultivators in order to find out the best
possible alternative in each case. These tools have been worked out separately for
Small-scale (Low category) cultivators, Medium-scale (Medium category)
cultivators and Large-scale (High category) cultivators, adopting three alternative
methods of cultivation, viz., the cultivation in coconut husks (Method -I), in 6 pots
(Method --/I) and in 8" pots (Method -111). Details regarding the results of the
analysis based on Pay Hack per~od as the criterion for evaluation are presented in
Table No. 6.2 and the details of calculation are given in Appendix - XII.
Table No. 6.2 Pay Back period in case of Orchid cultivators adopting Alternative methods of cultivation
Medium-scale Method - I
(Medium) Method - p-p.- - I1 .p-.. --
p
Method - Ill Source: Field Survey.
The Pay Back Period, in case of Orchid cultivation carried out on a
small-scale basis, indicates that the recoupment of initial investment is the lowest
(2.29 years) in case of method - I, while it works out to be the highest (2.80 years)
in the case of method - Ill. Among the medium-scale units, those who adopt the
first method of cultivation (method - I) has the lowest Pay Back Period (2.07
years), while it works out to be the highest (2.49 years) in the case of the third
method of cultivation. As far as the large-scale units are concerned, the analysis
indicates a low recoupment period of 1.84 years in the case of method - I as
against a high Pay Off Period of 2.23 years in the case of method - Ill.
Analysing all the categories of cultivators resorting to the distinct
methods of cultivation, it is also revealed that method - I emerges to be the best
possible alternative for ihe purpose of investment when compared to the other
methods of cultivation. Besides these, it is also discernible that the Pay Back
Period, in case of large-scale cultivators adopting method - I for cultivation of
Orchids, comes to be the lowest (1.84 years), while it works out to be the highest
(2.80 years) for small -. scale cultivators resorting to the third method of cultivation.
The Discounted Pay Back Periods have been worked by taking into
account not only the magnitude of returns, but also the time value of money
obtained from each method of cultivation
Details with respect to the results of the analysis based on the
Discounted Pay Back period as the criterion for evaluation are presented in Table
No. 6.3.
On analysing the Discounted Pay Back Periods, it is revealed that the
small-scale units adopting the first method of cultivation has the lowest Discounted
Pay Back Period of 2.57 years, while in the case of method - II and method - Ill,
these works out to 2.99 years and 3.21 years respectively.
In the case of medium-scale units, method - I, method - I1 and
method - Ill come in the order of preference with respect to the Discounted Pay
Back Periods of 2.28 years, 2.62 years and 2.83 years respectively.
As far as the large units are concerned, method - I is found to be the
rnost ideal one in terms of Discounted Pay Back Period with 2.03 years, while in
the case of method - I I and method - Ill, the Discounted Recoupment Periods
works out to 2.32 years and 2.5 years respectively.
Results of the analysis by taking Post Pay Back Profitability as the
criterion for evaluation are given in Table No. 6.4.
Table No. 6.3 Discounted Pay Back Period in case of Orchid cultivators adopting alternative methods of cultivation -. .. . - -.
Category of Alternative
Cultivators Methods -..-p- .--
Medium-scale Method - II . ~ - .--p-- ~ ..p--.---
---.-p. ..
- Discounted Pay Back
Period (in Years)
2.57 2.99 3.21 2.28 2.62 2.83
- 2.03 2.32 2.50
Source: Field Survey.
Table No. 6.4 Post Pay Back Profitability in case of Orchid cultivators adopting ~.
alternative methods of cultivation r r -
7 - - A l t e r n a t i v e T P o s t Pav Back 1 / Cateqorv of Cultrvators 1 Methods 1 profitability 1
1 1 Small-scale (Low)
Medium-scale (Medium) -p-. . - .-
(High)
~ ... -
of cult~vat~on
Method - 1 1 1 Method - I 15,62,970 Method - I! 14,59,058 Method - Ill -- 13,94,016 Method - I 87,58,227 Method - II 83,02,307 Method - ill 80,18,178
Source: Field Survey,
The Post Pay Back Profitability in case of Orchid cultivation carried
out on a small-scale basis indicates that the method-l provides the highest
(Rs.2,73,610) Post Pay Back Earnings, while it works out to be the lowest
(Rs.2,35,039) in the case of method - Ill. Among the medium-scale units, those
who adopt the first method of cult~vatron (method - I) has the highest Post Pay
Back Earn~ngs (Rs 15,62,970), while it works out to be the lowest (Rs. 13,94,016)
in the case of the third method of cultivation. As far as the large-scale units are
concerned, the analysis indicates that the first method gives the highest Post Pay
Back Earnlngs (Rs. 8ir,58,227), while the Method - Ill provides the lowest Post Pay
Back Earnings (Rs. 80,18,178).
Analysing all the categories of cultivators resorting to three distinct
methods of cultivation, it is also revealed that method - 1 emerges to be the best
possible alternative for the purpose of investment when compared to the other
methods of cultivation. Besides these it is also discernible that the Post Pay Back
Profitability, in case of Large-scale cultivators, adopting method - I for cultivation of
Orchids come to be the highest (Rs. 87,58,227), while it works out to be the lowest
(Rs. 2,73,610) for small-scale cultivators resorting to the first method of cultivation.
Details of the Discounted Post Pay Back Profitability in case of
various categories of Orchid cultivators are exhibited in Table No. 6.5. The
Discounted Post Pay Back Profitab~lity has been worked by taking into account not
only the magnitude of returns, but also the time value of money obtained from each
method of cultivation.
Table No. 6.5 Discounted Post Pay Back Profitability in case of Orchid cultivators adopting alternative methods ol cultivation
Cat ego ry of-r..~'. -~TGTative Discounted Post Pay
Cultivators Back Profitability (in
-p-. Rupees) 1,66,923
Small-scale (Low) - - - I I 1,42,285 Method - Ill 1,26,705
Medium-scale .- 9,91,565
(Medium) ~. 8,83,215
Method - Ill 8,15,395 Method - I - 57,09,972 Method - II 52,34,582 Method - Ill 49,38,319
Source: Field Survey.
The Discounted Post Pay Back Profitability is worked out in the case
of Orchid cultivation on a small-scale basis indicates that the method - I provides
the highest (Rs.1, 66,9;!3) Discounted Post Pay Back Earnings, while it works out
to be the lowest (Rs.1. 26,705) In the case of method - Ill. Among the Medium -
scale units, those who adopt the first method of cultivation (method -I) has the
highest Discounted Post Pay Back Earnings (Rs.9, 91,565), while it works out to
be the lowest (Rs. 8,15,395) in the case of the third method of cultivation. As far as
the large-scale units a1.e concerned, the analysis indicates that the first method
gives the h~ghest Discouilted Post Pay Back Earnings (Rs.57, 09,972), while the
Method - Ill provides the lowest Discounted Post Pay Back Earnings
(Rs.49,38,319).
Analysing all the categories of cultivators resorting to three distinct
methods 01 cultivation, it is also revealed that method - I emerges to be the best
possible alternative for the purpose of investment when compared to the other
methods of cultivation. Besides these, it is also discernible that the Discounted
Post Pay Back Profitability, in case of Large-scale cultivators, adopting method - I
for cultivation of Orchids come to be the highest (Rs.57, 09,972), while it works out
to be the lowest (Rs.1, 66,923) for small-scale cultivators resorting to the first
method of cultivation.
Details regarding the results of the analysis based on Net Present
Value Method as the criterion for evaluation are shown in Table No. 6.6
Table No. 6.6 Net Present Value Method in case of Orchid cultivators adopting alternative . - methods of cultivation --p - - - P -- P --.p-
r F t e g o r y of ~u~ t i va to rs ] Alternative Methods Net Present Value Method No. -. of cultivation
+ - (in Rupees)
1 I I ~ r n a ~ l e (LOW) Method - II .- -- Method - Ill
Source: Field Survey.
The Net Present Value is worked out in the case of Orchid cultivation
on a small-scale basis indicates that the method - I provides the highest
(Rs.1,66,923) Net Present Value, while it works out to be the lowest (Rs.1, 26,705)
in the case of method - Ill. Among the medium-scale units, those who adopt the
first method of cultivat~on (method - I) has the highest Net Present Value
(Rs.9,91,565), while it works out to be the lowest (Rs. 8,15,395) in the case of the
third method of cultivatron. As far as the large-scale units are concerned, the
analysis indicates that the first method gives the highest Net Present Value
(Rs.57,09,972), while the method - Ill provides the lowest Net Present Value
(Rs.49, 38,319).
Analysing all the categories of cultivators resorting to three distinct
methods of cultivation, it is also revealed that method - I emerges to be the best
possible alternative for the purpose of investment when compared to the other
methods of cultivation. Besides these it is also discernible that the Net Present
Value, in case of large-scale cultivators, adopting method - I for cultivation of
Orchids come to be the highest (Rs.57, 09,972), while it works out to be the lowest
(Rs.1, 66,923) for small.-scale cultivators resorting to the first method of cultivation.
The Net Present Value has been worked by taking into account not
only the magnitude of returns, but also the time value of money obtained from each
method of cultivation.
Results of the analysis by taking Benefit Cost Ratio as the criterion
for evaluation are presented in Table No.6.7. The Benefit Cost Ratio have been
worked by taking into consider no[ only the magnitude of returns, but also the time
value of money obtained from each method of cultivation
Table No. 6.7 Benefit Cost Ratio in case of Orchid cultivators adopting alternative methods of cultivation 7-
Category of Cultivators ~ ----pp--
ethod - II . . ... - I Small-scale (LOW) E
~~~ ~ I M e t h o d -. -. . - Ill -- ' hAethnrl - I
/ 2. Medium-scale (Mediur
3. j Large-scale (High)
Source: F~eld Survey.
P-
ethod - II .-pp-
2.26 ethod - Ill 1.86
On analysing the Benefit Cost Ratio, it is revealed that the small-
scale units adopting the first method of cultivation has the highest Benefit Cost
Ratio of 1 76 times, while in the case of method - II and method - Ill, these works
out to 1 .l6 times and 0.9 times respectively.
In the case of medium-scale units, method - I, method - II and
method - Ill come in the order of preference with respect to the Benefit Cost Ratio
of 2.41 times, 1.65 times and 1.34 times respectively
As far as the large units are concerned, method - I is found to be the
most ideal one in terms of Benefit Cost Ratio with 3.21 times, while in the case of
method - I1 and method -- Ill, the Benefit Cost Ratio works out to 2.26 times and
1.86 times respectively.
Details of the Internal Rate of Return in case of various categories of
Orchid cultivators are exhibited in Table No. 6.8
Table No. 6.8 lnternal Rate of Return in case of Orchid cultivators adopting alternative
The Internal Rate of Return worked out in case of Orchid cultivation
carried out on a small-scale bas~s lndlcates that the method - I provides the highest
(48.5 per cent), wh~le it works out to be the lowest (39 per cent) in the case of
. - methods of cultivation --
method - Ill. Among the medium-scale units, those who adopt the first method of
cultivation (method-l~) has the highest lnternal Rate of Return (53 per cent), while it
works out to be the lowest (44.78 per cent) in the case of the third method of
cultivation. As far as the large-scale units are concerned, the analysis indicates
that the f~rst method gives the h~ghest lnternal Rate of Return (56.26 per cent),
while the method - Ill provides the lowest lnternal Rate of Return (49.6 per cent).
Analysing all the categories of cultivators resorting to three distinct
methods of cultivation, it IS also revealed that method - I emerges to be the best
Alternative Methods Category of Cultivators of cultivation .--p--...--- F--:!!- 1 Small-scale (Low) Method Method - - II Ill l
~~ p----.
Medium-scale Method - I
(Medium) Method - II p -. Method - Ill .. .. . - -. - . -
Method - I - --
3 Large-scale (High) Method - - II p-.--
Method - Ill ~- ~
possible alternative for the purpose of investment when compared to the other
methods of cultivation. Moreover. it is also discernible that the lnternal Rate of
lnternal Rate of Return - . (in percentages) 48.50 42.62
--.p 39.00 53.00 47.87 44.78 56.26 52.00 49.60
Return, in case of Large-scale cultivators adopting method - I for cultivation of
Orchids, comes to be the highest (56.26 per cent), while it works out to be the
Source: Field Sulvey.
lowest (48.5 per cent) for small-scale cultivators resorting to the first method of
cultivation.
It is alscl observed from the analysis that the first method of
cultivation. I.e., cultivation in coconut husks. is found to be the most ideal one
among all the categories of Orchid cultivation in terms of their net income.
SECTION - I1 ANALYSIS OF THE ECONOMIC VIABILITY OF ALTERNATIVE METHODS
ANTHURIUM CULTIVATION
The cost and profitability of Anthurium cultivation is analysed by
taking 1,000 plants (4 cents) as the base in the case of small-scale cultivators,
5,000 plants in the case of medium-scale and 25,000 plants in the case of large-
scale cultivators respectively. Selection of plants, size of pots used and the method
of cultivation are the important factors determining the cost of cultivation. Exotic or
~mported varlet~es ot plants, especially the Near Flowering Size (N.F.S.) plants
are Ideal for commercial cultivat~on if small plants or ex-agar plants are selected,
the cost of plants can be reduced to considerable extent. But the r~sk attached to
the process of acclimatisation of plants will be very high and the time taken for
flowering such plants will also be very long when compared to the Near Flowering
Plants (N.F.S. varieties). The average cost of a Near Flowering Size (N.F.S.) of an
exotic variety of Anthurium plant will come to Rs. 60. The cost of pot is another
factor determining the cost of cultivation. The average cost of a 10" clay pot will
come to Rs.12, while the average cost of an 8" clay pot will come to Rs.10 only. If
one resort to cultivation in Trenches, there is no need for clay pots and as such the
initial cost can be reduced to a considerable extent. Similarly, 8" pots will also
become inconvenient to the cultivator when the plants grow beyond a certain limit.
The commercial cultivation of Anthuriums in clay pots can also be
carried out in two alternative ways namely, cultivation of plants in clay pots (in 8"
pots and 10" pots) under shade houses l poly houses and cultivation of plants in
trenches under shade houses 1 poly houses. In Kerala majority of the cultivators
are following the cultivation of plants in clay pots under shade houses while some
of the large scale (High category) cultivators in the terraneous areas are found to
be involved in the cultivation of Anthurium plants in trenches. The cost of
cultivation of Anthurium plants is calculated here without taking into account the
interest on investment. But the interest factor is taken for the purpose of
ascertainment of the monthly net income of cultivators.
Details of the comparative cost of cultivation of Anthurium plants
without considering the ~nterest factor by adopting 3 alternative ways namely,
i)cultivation ot plants in Trenches, ii) in 8" Pots and iii) in 10" Pots are given in
Table No. 6.9 and the details of calculation are given in Appendix - XIII.
Table No. 6.9 Cost of cultivation in the case of Anthurium Plants bv adopting
From Table No. 6.9, it can be known that the cost of the small-scale
Anthurium cultivators is the lowest iRs 1,25,683) in the case of those who have
followed the first method of cultivat~on, while it works out to be the highest (Us.
1,40,162) in the case of rnethod - Ill. Among the medium-scale units, those who
adopt the first method of cultivat~on (method - I) has the lowest cost of cultivation
(Rs. 5,48,212), while it works out to be the highest (Rs. 6,13,967) in the case of the
third method ot cultivation. As far as the large-scale units are concerned, the
analysis shows a lower co:;t of cultivation of Rs. 23,93,738 in the case of method -
I as against a high cost of cultivat~on of Rs. 26,98,318 in the case of method - 111.
Analysing all the categories of cultivators resorting to the distinct
methods of cultivation, it 1s also revealed that method - I emerges to be the best
possible alternative for the purpose of investment when compared to the other
methods of cultivation.
It 1s observed during the field survey among the cultivators of
Anthuriums that the medium and large-scale (High) growers of these plants enjoy
alternative methods of cultivation. Alternative Methods
L i o , b i y a t i o n -p--- ~~ --
i-- - Small-scale (Low) Ee thod - II
Method - Ill - . - . ~ + .--p------
Method - I
(Medium) 1- Method - II Method - Ill -- .-p-. ~
: Method - I L Large-scale (High) LMethod - II
' Method - Ill -L ~ 1 -
Cost of Cultivation (in Us.) 1,25,683 1,29,827 1,40,162 5i48,212 5,68,184 6,13,967
23,93,738 24,95,993 26,98,318 J
Source: Field Survey.
the advantages of the economies of scale in the cultivation of plants and in the
sale of produces like the flowers and plants. There will be a reduction to the extent
of 10 per cent in the cost of construction of greenhouse in the case of medium-
scale cultivators while in the case of large-scale cultivators the reduction in the
cost of greenhouse will be 20 per cent. Both the medium and large-scale
cultivators enjoy advantages on the bulk purchase of clay pots required for the
cultivation. In the case of 8" pots and 1 0 pots medium-scale cultivators enjoy a
discount ot 15 per cent of the price of clay pots, while large-scale cultivators enjoy
a price reduction to the extent ot 25 per cent when compared to the small-scale
cultivators. There will be savings in the case of labour due to the mechanisation of
the agricultural operations by the medium-scale and large-scale cultivators. There
will be a savings of labour cost to the extent of 40 per cent in the case of medium-
scale cultivators while the large-scale cultivators are able to save the labour cost to
the extent of 70 per cent due to the adoption of the highly sophisticated and
scientific methods of irrigation and fertigation. Medium and large-scale cultivators
are also benefited on the bulk purchase of fertilisers and pesticides by availing the
reduction in the cost of fertilisers and pesticides to the extent of 10 per cent and 15
per cent respectively. Medium and Large-scale cultivators also enjoy the benefits
of the economies of large.-scale marketing of flowers and plants. Elimination of
intermediaries and other innovative marketing strategies like sales in the form of
value added items like bouquets, flower arrangements and landscape designing
enable the medium and large-scale cultivators in fetching high price for the flowers
and plants. It is also observed during the field investigation that the medium-scale
cultivators, on an average, are able to get 10 per cent increase in the price of
flowers and a 5 per cent in the price of plants sold. In the case of large-scale
cultivators the increase in the price of flowers and plants is to the tune of 20 per
cent and 10 per cent respectively.
Analysis of the economic viability of the Anthurium cultivators through
the adoption of various methods of cultivation resulted by small-scale, medium-
scale and large-scale cultivators have been carried out by means of various criteria
such as Pay Back Period, Discounted Pay Back Period, Post Pay Back
Profitability, Discounted Post Pay Back Profitability, Net Present Value, Benefit
Cost Ratio and Internal Rate of Return. These criteria have been adopted for the
purpose of analysis with a view to make a comparison of various alternatives and
to determine the best possible alternative from among them. These tools have
been worked out separately for Small-scale (Low categories), Medium-scale
(Medium category) and Large-scale (Large category) cultivators adopting three
alternative methods of cultivation namely the cultivation in Coconut husks (Method
- I), in 8" pots (Method - 11; and in 10" pots (Method - Ill)
Details regarding the results of the analysis based on Pay Back
Period as the criterion for evaluation are presented in Table No. 6.10 and the
details of the calculation is given in Appendix - XVI.
cultivation out on a small-scale basis indicates that the recoupment of initial
investment is the lowest (2.05 years) in case of method - I, while it works out to be
the highest (2.17 years) in the case of method - Ill. Among the Medium-scale
Table No. 6.10 Pay Back Period in case of Anthurium cultivators adopting alternative methods of cultivation
units, those who adopt the first method of cultivation (method - I) has the lowest
Pay Back Period (1.84 years), while it works out to be the highest (1.95 years) in
the case of the third method of cultivation. As far as the large-scale units are
concerned, the analysis indicates a low recoupment period of 1.67 years in the
case of method-l as against a high Pay Off Period of 1.76 years in the case of
Alternative Methods of cultivation
Medium-scale 1 Method - I
(Medium) : Method - II
---..p- Method - 111 Method - I
I-- p
method - Ill.
Analysing all the categories of cultivators resorting to the distinct
methods of cultivation, it is also revealed that method - I emerges to be the best
possible alternative for the purpose of investment when compared to the other
methods of cultivation. Bes~des these it is also discernible that the Pay Back
Pay Back Period
( in Years) 2.05 2.09 2.17 1.84 1 .87 1-95 1.67 1.70 1.76
Period, in case of large-scale cultivators , adopting method - I for cultivation of
The Pay Back Period is calculated in the case of Anthurium
Anthurium comes to be the lowest (1.67 years), while it works out to be the highest
(2.17 years) for small-scale cultivators resorting to the third method of cultivation
Details with respect to the results of the analysis based on
Discounted Pay Back Period as the criterion for evaluation are presented in Table
No. 6.1 1
On analysing the Discounted Pay Back Periods, it is revealed that the
small-scale units adopting the first method of cultivation has the lowest Discounted
Pay Back Period of 2.29 years, while in the case of method - II and method - 111,
these works out to 2.34 years and 2.5 years respectively.
In the case of medium-scale units, method - I, method - II and
method - Ill come in the order of preference with respect to the Discounted Pay
Back Periods of 2.03 years, 2.07 years and 2.17 years respectively.
As far as the large units are concerned, method - I is found to be the
most ideal one in terms of Discounted Pay Back Period with 1.82 years, while in
Table No. 6.1 1 Discounted Pay Back Period in case of Anthurium cultivators
-
Alternative Methods Cultivators of cultivation
(Medium) ~~ ---- ~~ ,---p-.p-
Method - I
Method - 111
Discounted Pay Back Period ( in Years)
2.29 2.34 2.50 2.03 2.07 2.17 1.82 1.86 1.94
source: Field Survey.
the case of method - II and method - Ill, the Discounted Recoupment Periods
works out to 1.86 years and 1.94 years respectively.
Results of the analysis by taking Post Pay Back Profitability as the
criterion for evaluation are given in Table No. 6.12
Table No. 6.12 Post Pay Back Profitability in case of Anthurium cultivators adopting alternative methods of cultivation
~ ~ .~ -. .-
- - 3,41,167 Small-scale (Low) 3,37,648
.- ~ Method - Ill 3,28,863
Medium-scale 19,44,798 19,27,841 18,88,928
. - 1,08,73,322 3 Large-scale (High) ~ - .- - -~ -p-..-- 1,07,86,407
~~ .-- Method - Ill -- - - 1,06,14,432 Source: Field Survey.
The Post Pay Back Profitability is worked out in the case of
Anthurium cultivation on a small-scale basis indicates that the method - I provides
the highest (Us. 3,41.167) Post Pay Back Earnings, while it works out to be the
lowest (Rs. 3,28,863) In the case of method - Ill. Among the medium-scale units,
those who adopt the first method of cultivation (method -I) has the highest Post
Pay Back Earnings (Hs.19,44,798), while it works out to be the lowest
(Rs.18,88,928) In the case of the th~rd method of cultivation. As far as the large-
scale units are concerned, the analysis indicates that the first method gives the
highest Post Pay Back Earnlngs (Us. 1,08,73, 322), while the method - 111 provides
the lowest Post Pay Back Earnings (Rs.1, 0614,432).
Analysing all the categories of cultivators resorting to three distinct
methods of cultivation, it is also revealed that Method -I emerges to be the best
possible alternative for the purpose of investment when compared to the other
methods of cultivat~or~. Besides these it is also discernible that the Post Pay Back
Profitability, in case of L-arge-scale cultivators , adopting method - I for cultivation
of Anthurlurn come to be the h~ghest (Rs. 1,06,14,432), while it works out to be the
lowest (Hs. 3,41,167) for small-scale cultivators resorting to the first method of
cultivation
Details of the Discounted Post Pay Back Profitability in case of
various categories of Anthurium cultivators are exhibited in Table No. 6.13
Table No. 6.13 Discounted Post Pay Back Profitability in case of Anthurium cultivators
Discounted Post Pay Category of Cultivators
Alternative Methods Back Profitability (in Rupees)
-p-..- ..
Medium-scale (Medium) Methoc -
- ..- --~ -~--..-p
Method -~ - I Method - II
Source: Field Survey.
The Discounted Post Pay Back Profitability worked out in case of
Anthurium cultivation on a small-scale basis indicates that the method - I provides
the highest (Rs.2, 12,207:1 Discounted Post Pay Back Earnings, while it works out
to be the lowest (Rs. 1.99,376) in the case of method - Ill. Among the medium-
scale units, those who adopt the first method of cultivation (method -I) has the
highest Discounted Post Pay Back earnings (Rs.12, 55,890), while it works out to
be the lowest (Rs. 11,537,628) in the case of the third method of cultivation. As far
as the large-scale units are concerned, the analysis indicates that the first method
gives the highest Discounted Post Pay Back earnings (Rs. 72,06,266), while the
method - Ill provides the lowest Discounted Post Pay Back Earnings
(Rs.69,36,319).
Analys~ng all the categories of cultivators resorting to three distinct
methods of cultivation, it is also revealed that method - I emerges to be the best
possible alternative for the purpose of investment when compared to the other
methods of cultivation. Besides these it is also discernible that the Discounted Post
Pay Back Profitabiliiy, in case of large-scale cultivators, adopting method - I for
cultivation of Anthurium come to be the highest (Us. 72,06,266), while it works out
to be the lowest (Rs. 2,12,207) for small-scale cultivators resorting to the first
method of cultivation.
Details regarding the results of the analysis based on Net Present
Value Method as the criterion for evaluation are shown in Table No. 6.14.
Table No. 6.14 Net Present Value Method in case of Anthurium cultivators adopting . - alternative methods of cultivat~on
Present Value Method (in Rupees)
2,12,207 2,08,536 1,99,376
Medium-scale 12,55,890
(Medium) 12,38,204 11,97,628 72,06,266 71,15,638
-- p--. ..- 69,36,319 Source: Field Survey.
The Net Present Value is calculated in the case of Anthurium
cultivation on a small-scale bas~s indicates that the method - I provides the highest
(Rs.2, 12,207) Net Present Value. while it works out to be the lowest (Rs.1,99,376)
in the case of method - Ill. Among the medium-scale units, those who adopt the
first method of cuit~vation (method -I) has the highest Net Present Value
(Rs.12,55,890), while it works out to be the lowest (Rs. 11,97,628) in the case of
the third method of cultivation. As far as the large-scale units are concerned, the
analysis indicates that the firsl method gives the highest Net Present Value
(Rs.72,06,266), while the method - Ill provides the lowest Net Present Value
Analys~ng all the categories of cultivators resorting to three distinct
methods of cultivation, it is also revealed that method - I emerges to be the best
possible alternative for the purpose of investment when compared to the other
methods of cultivation. Besides these it is also discernible that the Net Present
Value, in case of large-scale cultivators, adopting method - I for cultivation of
Anthurium come to be the highest (Rs. 72,06,266), while it works out to be the
lowest (Rs. 2,12,207) for small-scale cultivators resorting to the first method of
cultivation
Results of the analysis by taking Benefit Cost Ratio as the criterion
for evaluation are presented in Table No. 6.15
Table No. 6.1 5, Benefit Cost Ratio in case of Anthurium cultivators adopting alternative methods of cultivation
in times 1.69 1.61
~
1.42 2.29 2.18
(Medium) ---- . Method - Ill 1.95
3.01 2.85 2.57
Source: Field Survey.
On analysing the Benefit Cost Ratio, it is revealed that the small-
scale units adopting the first method of cultivation has the highest Benefit Cost
Ratio of 1.69 times, while in the case of method - II and method - Ill, these works
out to 1.61 times and 1.42 times respectively.
In the case of medium-scale units, method - I, method - II and
method -- Ill come in the order of preference with respect to the Benefit Cost Ratio
of 2.29 times, 2.18 times and 1.95 times respectively.
As far as the large units are concerned, method - I is found to be the
most ideal one in terms of Benefit Cost Ratio with 3.01 times, while in the case of
method - I1 and method - Ill, the Benefit Cost Ratio works out to 2.85 times and
2.57 times respectively
Details of the lnternal Rate of Return in case of various categories of
Anthurium cultivators are exhibited in Table No. 6.16
Table No. 6.1 6 lnternal Rate of Return in case of Anthurium cultivators
Alternative eth hods Internal Rate of Return (in percentages)
51.9 Small-scale 49
I Method - Ill 47
Medium-scale , . 54 -
(Medium) I Method - II 53.5 ' Method - 111 52
Large-scale Method - I 57.5
(High) Method - II , 57
-~ Method - Ill 55.5 Source: Field Survey.
The calculation of lnternal Rate of Return is carried out in the case of
Anthurlurn cultivation on a small-scale basis indicates that the method - I provides
the highest (51.9 per cent) lnternal Rate of Return, while it works out to be the
lowest (47 per cent) in the case of method - Ill. Among the medium-scale units,
those who adopt the first method of cultivation (method - I) has the highest lnternal
Rate of Return (54 per cent), wh~le it works out to be the lowest (52 per cent) in the
case of the third method of cultivation. As far as the large-scale units are
concerned, the analysis indicates that the first method gives the highest lnternal
Rate of Return (57.5 per cent), while the method - Ill provides the lowest lnternal
Rate of Return (55.5 per cent).
Analysing all the categories of cultivators resorting to three distinct
methods of cultivation it is also revealed that method - I emerges to be the best
possible alternative for the purpose of investment when compared to the other
methods of cultivation. Besides these it is also discernible that the Internal Rate of
Return, in case of large-scale cultivators, adopting method - I for cultivation of
Orchids comes to be the highest (57.5 per cent), while it works out to be the lowest
(51.9 per cent) for small-scale cultivators resorting to the first method of cultivation.
It is also observed from the analysis that the first method of
cultivation is found to be the most ideal one among all the categories of Anthurium
cultivation in terms of their net income.
SECTION - Ill
ANALYSIS OF THE NET RETURNS FROM ALTERNATIVE METHODS OF
CULTIVATION OF ORCHIDS AND ANTHURIUM PLANTS
A combination of the monthly net income of various categories of
Orchid and Anthuriurn cultivators adopting various methods of cultivation (after
considering the interest factor on investment) is carried out in this section to know
the net returns from each methods of cultivation.
Details regarding the monthly net income of various categories of
Orchid cultivators adopting different methods of cultivation (after considering the
interest on investment @ 15 O/O per annum) are given in Table No.6.17 and details
of the calculation is given in Appendix - XVll
From the analysis of Monthly Net Income, of Orchid cultivators
adopting various methods of cult~vation, after considering the interest @ 15 per
cent on the original cost of investment, it is observed that the monthly net income
of a small-scale cultivator adopt~ng the first method of cultivation comes to
Rs.1,519, while in the case of those who adopt the second and third method of
cultivation the monthly income works out to Rs. 714 and Rs. 208 respectively.
The Monthly Net Income of the medium-scale cultivators, after
considering the interesl factor, comes to Us. 15,458, while the monthly net income
in the case of cultivators who adopt the second and third method of. cultivation
works out to Rs. 11,892 and Rs. 9,660 respectively. In the case of large-scale
cultivators the monthly net income, after taking into account the interest factor,
come to Rs.1, 02,053, Rs. 86,408 and Rs. 76,658 for those who adopt the first,
second and third methods of cultivation respectively.
Details regarding the Monthly Net lncome of various categories of
Anthurium cultivators adopting different methods of cultivation (after considering
the interest on investment @ 15 % per annum) are given in Table No. 6.18
Table N o 6.17 Details regarding the monthly net income of various categories of Orchid cultivators adopting different methods of cultivation
l a f t e r taking the interest on investment -categories of OrJhid Cultivators
1 Methods (Monthly Net Income in Rupees) No. 1 l-
--- -~--~---pp
Small ;Tettmd - l 1,519 Method - II 714 Method - 1 1 1 208
--p --- Source: Field S U N ~ ~ T - ~ ~
Mediu Large 1 5 4 2 1,02,053 11,892 9,660
86,408 76,658
Table No. 6.18 Details regarding the Monthly Net lncome of Various categories of Anthurium cultivators adopting different methods of cultivation
Cultivators
Large 16,427 1,12,327 15,843 1,09,345 14,510 1,03,443
From the analysis of Monthly Net Income, of Anthurium cultivators
adopting various methods of cult~vation, after considering the interest @ 15 per
cent on the original cost of investment, it is observed that the Monthly Net lncome
of a small-scale cultivator adopting the first method of cultivation comes to Rs.
2,407, while in the case of those who adopt the second and third method of
cultivation the monthly income works out to Rs. 2,286 and Rs. 1,985 respectively.
The Monthly Net Income of the medium-scale cultivators, after
consider~ng the interest factor, conies to Rs. 16,427, while the Monthly Net lncome
in the case of cultivators who adopt the second and third method of cultivation
works out to Rs. 15,843 and Rs. 14,510 respectively. In the case of large-scale
cultivators the Monthly Net Income. after taking into account the interest factor,
come to Rs. 1,12,327, Hs. 1,09,345 and Rs. 1,03,443 for those who adopt the first,
second and third methods of cultivation respectively.
SECTION - IV
ANALYSIS OF THE PROFITABILITY RELATED ASPECTS OF ALTERNATIVE
METHODS OF ORCHID AND ANTHURIUM CULTIVATION
This part of the study 1s devoted to examine the results of the Break-
Even Analysis in respect of alternative methods of cultivation of Orchid and
Anthurium plants
Break-Even Analysis in respect of alternative methods of cultivation
of Orchid and Anthurium plants adopted by various categories of cultivators have
been carried out here. For this purpose the Break-Even Analysis have been carried
out separately for Small-scale (Low category) cultivators, Medium-scale (Medium
category) cultivators and Large-scale (High category) cultivators, adopting three
alternative methods of cultivation. These three methods include the cultivation in
coconut husks (method - l), in 6" pots (method - II) and in 8" pots (method - Ill) in
the case of Orchid cultivation. In the case of Anthurium cultivation these comprise
of the cultivation in trenches (method -I), in 8" pots (method - II) and in 1 0 pots
(method - Ill) respectively. The results of the analysis by taking Break-Even Point
as the criterion for evaluation for selecting the best possible alternative by the
cultivators concerned are presented in Table No. 6.19 and Table No. 6.20
respectively and the details of calculation is given in Appendix - XVIII.
Table No. G. 19 Table showing the B.E.Ps in respect of alternative methods of cultivation of
P r c h i y Plants p-.-- .. ..
F - p .. - .- Break-Even Points
From the Break-Even Analysis it is found in the case of a small-scale
Alternative Small-scale
cultivation l
--p--- ...~~ -
Method-l 5,421 6,848 2 eth hod-l1
3 Method-Ill 7366
cultivator adopting to the first method of cultivation needs to sell 1,504 plants
Medium-Scale I Large-scale
(kiekies) @ Rs. 75 per plant (kiek~e) and 5,421 flower spikes @ Rs. 15 per flower
Source: Field Survey.
spike (Table No. 6.19) If he adopts the second method of cultivation he needs to
cultivators
market 1,710 plants (kiekies) @ Hs 75 per plant (kiekie) and 6,848 flower spikes
cultivators Plants
@ Rs.
78.75 5,040
5 , 8 8 5 6,414
@ Rs. 15 per flower spike. But if he follows the third method of cultivation he
Plants @
82.50 19,965 23,437 25,601
Flowers @
Rs. 16,50
20,167 23,544 25,656
needs to dispose off 1,840 plants (kiekies) @ Rs. 75 per plant (kiekie) and 7,366
Flowers @
Rs. 18
79,867 93,753
1,02,405
flower spikes @ Rs. 15 per flower spike
In respect of a medium-scale Orchid cultivator resorting to the first
method of cultivation needs to sell 5,040 plants (kiekies) @ Rs. 78.75 per plant
(kiekie) and 20.167 flower spikes @ Rs. 16.50 per flower spike (Table No. 6.19). If
he adopts the second method of cultivation he needs to market 5,885 plants
(kiekies) @ Rs. 78.75 per plant (k~ekie) and 23,544 flower spikes @ Rs. 16.50 per
flower spike. But if he follows the th~rd method of cultivation, he needs to dispose
off 6,414 plants (kiekies) @ Rs. 78.75 per plant (kiekie) and 25,656 flower spikes
@ Rs. 16.50 per flower spike.
In the case of a large-scale cultivator who resorts to the first method
of cultivation needs to sell 19,965 plants (kiekies) @ Rs. 82.50 per plant and
79,867 flower spikes @ Rs. 18 per flower spike (Table No. 6.19). If he adopts the
second method of cultivation, he needs to market 23,437 plants (kiekies) @ Rs.
82.50 per plant (kiekie) and 93,753 flower spikes @ Rs. 18 per flower spike. But if
he follows the third method of cultivation, he needs to dispose off 25,601 plants
(kiekies) @ Rs. 82.50 per plant (kiekie) and 1,02,405 flower spikes @ Rs. 18 per
flower spike,
Results of the analysis by taking Break-Even Point as the criterion for
evaluation in the case of Anthuriuni cultivation are presented in Table No. 6.20
Table No. 6.20 Table showing the B.E.Ps in respect of alternative methods of cultivation of Anthurium Plants
l l l Break-Even Points l - ~ . ~
Alternative k ~ m c & a ~ & ~ 1 S 1 Methods L~ . , . , cu l t i va to~ r cultivators Large-scale cultivators 1 No1 adopter for / plants1 Flowers 1 Plants / Flowers I Plants [ Flowers I
From the Break-Even Analysis it is found that a small-scale
Anthuriumcultivator resorting to the first method of cultivation needs to sell 3,200
plants (suckers) @ Rs. 40 per plant (sucker) and 11,203 flowers @ Rs. 10 per
flower (Table No. 6.20). If tie adopts the second method of cultivation, he needs to
market 3,255 plants (suckers) @ Rs. 40 per plant (sucker) and 11,397 flowers @
Rs. 10 per flower. But if he follows the third method of cultivation, he needs to
dispose off 3,393 plants (suckers) @ Rs. 40 per plant (sucker) and 11,879 flowers
@ Rs. 10 per flower.
In the case of a med~um-scale cultivator adopting the first method of
cultivation needs to sell '14,495 plants (suckers) @ Rs. 42 per plant (sucker) and
50,738 flowers @ Rs. 1'1 per flower (Table No. 6.20). If he adopts the second
method of cultivation, he needs to market 14,743 plants (suckers) @ Rs. 42 per
plant (sucker) and 51,607 flowers C4 Rs. 11 per flower. But if he follows the third
method of cultivation, he needs to dispose off 15,312 plants (suckers) @ Rs. 42
per plant (sucker) and 53,596 flowers @ Rs. 11 per flower.
In the case of a large-scale cultivator who resorts to the first method
of cultivation needs to sell 59,375 plants (suckers) @ Rs. 44 per plant (sucker) and
2, 07,817 flowers @ Rs. 12 per flower (Table No. 6.20). If he adopts the second
method of cultivation, he needs to market 60.564 plants (suckers) @ Rs. 44 per
plant (sucker) and 2,11,9;'8 flowers @ Rs. 12 per flower. But if he follows the third
method of cultivation, he needs to dispose off 62,917 plants (suckers) @ Rs. 44
per plant (sucker) and 2,20,211 flowers @ Rs. 12 per flower.