economics of carnation vs capsicum

Comparative Economic Analysis of Carnation and Capsicum Cultivation under Polyhouse in Himachal Pradesh

Sukhjinder Singh, M.K. Singh, Sanjay Kumar and P.S. Ahuja

Institute of Himalayan Bioresource Technology (CSIR), Palampur-176061 (H.P.)

INTRODUCTION:

Floriculture is fast emerging as a major venture in the world scene. Improvement in the

standard of living has a direct impact on demand of modern flowers. This was reflected much

earlier in Europe, USA and Japan and very recently in India also. The flowers have been used in

social ceremonies and also for religious purpose. In India, the floriculture industry got an

appreciable boost during the last two decades due to active patronage from the Govt. of India.

Carnation (Dianthus- caryophyllus) is also known as the divine flower. It is belongs to the family

of Caryophyllaceae. Carnation is occupying the position of one of the top ten flowers of the world

for more than five decades. Carnations were the first flowers to be cultivated on a commercial

scale in the high altitude areas of tropics for export to Europe and North America. South Africa,

Colombia, Kenya, Morocco, Turkey etc. were the pioneer countries in commercial cultivation of

carnation for export purpose. In India, the areas in and around Kodaikanal, Nasik, Himachal

Pradesh and Uttarakhand etc. are suitable for carnation cultivation. It is estimated that more than

6000 ha of land is under carnation cultivation in the world.

In Himachal Pradesh, Carnation crop is gaining popularity among the flower growers, due

to congenial climatic conditions of districts Mandi, Bilaspur, Kullu, Solan, Chamba and Kangra. It

can also be grown successfully in other hilly parts of country. The flowers produced in the State

are being sold in the domestic markets, especially in Delhi. Growers associations and co-operatives

have been formed for marketing the flowers grown in the region.

Capsicum is commonly known as sweet pepper, red, yellow or green pepper. It is

domesticated species of plant belonging to the family Solanaceae and native to America. Capsicum

is cultivated for its fruits and important source of vitamin A, C and E. It is used in food both

chopped and raw in salads as well as medicine. It has very good potential as an alternative for

greenhouse tomato. In Himachal Pradesh, Capsicum is growing under polyhouse in districts

Bilaspur, Kullu, Kangra, Mandi and Solan.

Institute of Himalayan Bioresource Technology (IHBT) at Palampur is playing a very

important role to promote floriculture industry in the State. IHBT is providing quality planting

materials of carnation and other commercial cut flower crops to the growers either directly or

through grower's societies. Moreover, the floriculturists are also being provided with R&D

backings by the scientists of IHBT in the areas of cultivation and post -harvest management

technologies of the produce. Regular trainings programmes are organized by the institute for the

benefit of farmers.

Since, the State Govt., IHBT and Agriculture Universities are laying adequate emphasis on

the cultivation of carnation and capsicum in the state and capital investment is same, so it becomes

absolutely necessary to calculate the economics of carnation and capsicum. Therefore, the present

study was undertaken with the following objectives-

1. To find out the cost structure of carnation and capsicum cultivation under polyhouse conditions.

2. To calculate different income measures for economics of carnation and capsicum in polyhouse.

MATERIALS AND METHODS

The primary data of carnation flower and capsicum production which covers cultivation of

carnation and capsicum each in 500 sq.m. polyhouse were collected from farmers of Bilaspur

District. A questionaire containing detailed information on various components of carnation as

well as capsicum cultivation, prices of various inputs used and output produced were prepared.

Cost components were categorized as Capital cost and Recurring cost. Capital cost includes

polyhouse construction cost and fertigation unit cost, whereas, recurring cost include planting

material cost, bed preparation charges, plant protection cost, hoeing charges, fertilizers cost,

packaging & transportation charges etc. Total cost includes total recurring cost, rental value of

land, depreciation charges on capital cost, interest on capital cost, interest on recurring cost and

commission charges. The data was analyzed and presented as per the procedure adopted by the

Commission for Agriculture Costs and Prices (CACP), Govt. of India (Reddy et al., 2004).

In order to know the economics of carnation and capsicum production, the following

formula were calculated on the basis of prevailing market prices of carnation flower and capsicum

yield and agri-inputs used in production.

1. Farm business income = Gross income – Cost A1

2. Family labour income = Gross income – Cost B

3. Net income = Gross income – Cost C

4. Farm investment income = Farm business income – imputed value of family labour or

= Net income + imputed rental value of owned land + interest on

owned fixed capital invested

RESULTS AND DISCUSSIONS:

I. CARNATION:

(A) With Subsidy:

Agronomic practice followed for establishment and management of carnation crop under 500

sq.m. polyhouse was analysed as are given in Table 1. Major recurring expenditure Rs. 80,544 was

on purchase of planting material (53.41% of total recurring cost of 1st, IIIrd and Vth year). Total

recurring cost was highest in 1st, 3rd and 5th year (Rs. 1,50,825). Total capital investment was Rs.

4,16,795 in the 1st year after availing subsidy on polyhouse construction and fertigation unit.

Different cost components of carnation production under 500 sq.m. polyhouse were evaluated.

Total cost was Rs. 7,17,089 in 1st year, Rs. 3,44,711.50 in 2nd year, Rs. 2,50,279 in 3rd year, Rs.

1,60,058.50 in 4th year and Rs. 2,50,279 in 5th year and Rs. 1,60,058.50 in 6th year . Total cost was

highest in 1st year due planting material cost and bed preparation charges. Gross returns from the

sale of flowers was Rs. 5,52,220 in each year. Net Returns were negative in 1st year i.e. Rs. –

1,64,869; Rs. 2,07,508.50 in 2nd year, Rs. 3,01,941 in 3rd year, Rs. 3,92,161.50 in 4th year, Rs.

3,01,941 in 5th year and Rs. 3,92,161 in 6th year.

For the purpose of doing Farm income analysis; total cost, gross returns, number of flower

produced, net returns, Cost A1, Cost B and Cost C were computed on an average basis. Cost A1

was computed as Rs. 1,95,143; Cost B was computed as Rs. 2,07,901 and Cost C was Rs. 2,24,326

as is given in Table 3. Farm business income was calculated as Rs. 3,57,077, Family labour

income as Rs. 3,44,319, Net income as Rs. 3,27,894 and Farm investment income was computed

as Rs. 3,40,652 as is given in Table 4.

(B) Without Subsidy

Agronomic practice followed for establishment and management of carnation crop under 500

sq.m. polyhouse (without subsidy) was analysed as are given in Table 2 . Major recurring

expenditure Rs. 80,554 was on purchase of planting material in 1st (53.41% of total recurring cost

of 1st year). Total recurring cost was highest in 1st, 3rd and 5th year (Rs. 1,50,825). Total capital

investment was Rs. 5,62,500 in the 1st year without any subsidy. Different cost components of

carnation production under 500 sq.m. polyhouse were evaluated.

Total cost was Rs. 8,89,021 in 1st year, Rs. 5,46,017.50 in 2nd year, Rs. 2,59,021 in 3rd year, Rs.

1,68,800.50 in 4th year and Rs. 2,59,021 in 5th year and Rs. 1,68,800.50 in 6th year . Total cost was

highest in 1st year due planting material cost and bed preparation charges. Gross returns from the

sale of flowers was Rs. 5,52,220 in each year. Net Returns were negative in 1st year i.e. Rs. –

3,36,801. Whereas for others it was as Rs. 6202.50 in 2nd year, Rs. 2,93,199 in 3rd year, Rs.

3,83,419.50 in 4th year, Rs. 2,93,199 in 5th year and Rs. 3,83,419.50 in 6th year.

For the purpose of doing Farm income analysis; total cost, gross returns, number of flower

produced, net returns, Cost A1, Cost B and Cost C were computed on an average basis. Cost A1

was computed as Rs. 2,03,885, Cost B was computed as Rs. 2,22,996 and Cost C was Rs. 2,39,421

as is given in Table 3 . Farm business income was calculated as Rs. 3,48,335, Family labour

income as Rs. 3,37,966, Net income as Rs. 3,21,541 and Farm investment income was computed

as Rs. 3,31,925 as is given in Table 4.

Comparison of Carnation (subsidy vs without subsidy)

Percentage difference of carnation with subsidy over without subsidy is calculated for Farm

business income, family labour income, net income and farm investment income as is given in

Table 5. It was calculated as 2.51%, 1.88%, 1.98% and 2.56% for farm business income, family

labour income, net income and farm investment income respectively.

II. CAPSICUM

(A)With Subsidy

Agronomic practice followed for establishment and management of capsicum crop under 500

sq.m. polyhouse was analysed as are given in Table 6 . Major recurring expenditure Rs. 30,960

was on harvesting, packaging and transportation in all the years which was 30.46 % of total

recurring cost in 1st, 3rd and 5th years; whereas it was 45.80 % of total recurring cost of 2nd, 4th and

6th years. Total recurring cost was highest in 1st, 3rd and 5th year (Rs. 98,425). Total capital

investment was Rs. 3,94,745 in the 1st year after availing subsidy on polyhouse construction and

fertigation unit. Different cost components of capsicum production under 500 sq.m. polyhouse

were evaluated.

Total cost was Rs. 5,77,123 in 1st year, Rs. 5,40,793 in 2nd year, Rs. 5,34,617 in 3rd year, Rs.

4,93,187 in 4th year and Rs. 4,81,298 in 5th year and Rs. 4,33,470 in 6th year . Total cost was

highest in 1st year due to planting material cost and bed preparation charges. Gross returns from the

sale of capsicum was Rs. 1,84,000 in each year. Net Returns were negative in 1 st year i.e. Rs. –

3,93,123, Rs. – 3,56,793 in 2nd year, Rs. – 3,50,617 in 3rd year, Rs. – 3,09,187 in 4th year, Rs. –

2,97,298 in 5th year and Rs. – 2,49,470 in 6th year.

For the purpose of doing Farm income analysis; total cost, gross returns, capsicum produced, net

returns, Cost A1, Cost B and Cost C were computed on an average basis. Cost A1 was computed

as Rs. 1,05,504, Cost B was computed as Rs. 1,48,664 and Cost C was Rs. 1,59,694 as is given in

Table 8. Farm business income was calculated as Rs.78,496, Family labour income as Rs. 35,336,

Net income as Rs. 24,306 and Farm investment income was computed as Rs. 67,466 as is given in

Table 9.

(B) Without Subsidy

Agronomic practice followed for establishment and management of capsicum crop under

500 sq.m. polyhouse (without subsidy) was analysed as are given in Table 7. Major recurring

expenditure Rs. 30,960 was on harvesting, packaging and transportation in all years. Total

recurring cost was highest in 1st, 3rd and 5th year (Rs. 98,425). Total capital investment was Rs.

5,40,500 in the 1st year without any subsidy. Different cost components of capsicum production

under 500 sq.m. polyhouse were evaluated.

Total cost was Rs. 7,49,151 in 1st year, Rs. 7,42,247 in 2nd year, Rs. 7,69,028 in 3rd year, Rs.

7,64,509 in 4th year and Rs. 7,93,961 in 5th year and Rs. 7,92,434 in 6th year . Total cost was

highest in 1st year. Gross returns from the sale of capsicum was Rs. 1,84,000 in each year. Net

Returns were negative in 1st, 2nd, 3rd, 4th year, 5th year and 6th year i.e. Rs. – 5,65,151, Rs. -

5,58,247, Rs. - 5,85,028, Rs. – 5,80,509, Rs. – 6,09,961 and Rs. - 6,08,434 respectively.

For the purpose of doing Farm income analysis; total cost, gross returns, capsicum produced, net

returns, Cost A1, Cost B and Cost C were computed on an average basis. Cost A1 was computed

as Rs. 1,14,286, Cost B was computed as Rs. 1,84,198 and Cost C was Rs. 1,95,228 as is given in

Table 8. Farm business income was calculated as Rs. 69,714; Family labour income as Rs.- 198;

Net income as Rs. – 11,228; and Farm investment income was computed as Rs. 58,684 as is given

in Table 9.

Comparison of Capsicum (subsidy vs without subsidy)

Percentage difference of capsicum cultivation with subsidy over without subsidy is calculated for

farm business income, family labour income, net income and farm investment income as is given

in Table 10. It was calculated as 12.60 % for farm business income, more than 100 % for family

labour income, more than 100 % for net income and 15 % for farm investment income.

III. Percentage difference of carnation over capsicum:

(A) With subsidy

Percentage difference of carnation over capsicum cultivation under subsidy scheme is calculated

for farm business income, family labour income, net income and farm investment income as is

given in Table 11. It was calculated as 355 %, 874.40 %, 1249 % and 405 % for farm business

income, family labour income, net income and farm investment income respectively.

(B) Without subsidy

Percentage difference of carnation over capsicum cultivation without subsidy is calculated for

farm business income, family labour income, net income and farm investment income as is given

in Table 12. It was calculated as 399.66 %, 1,70,790 %, 2963.74 % and 465.62 % for farm

business income, family labour income, net income and farm investment income respectively.

From the above results it is concluded that carnation cultivation in both conditions i.e. with subsidy

and without subsidy are giving more profits than capsicum cultivation under polyhouse conditions.

ACKNOWLEDGEMENT

Authors are thankful to farmers of District Bilaspur (H.P.) for providing necessary data of

carnation and capsicum cost of cultivation and income.

REFERENCES

1. Gittinger J. Price (1972). Economic analysis of agricultural projects. The johns Hopkins University Press, Baltimore and London.

2. Reddy, S. Subha, P. Raghu Ram, T.V. Neelkanta Sastry and I. Bhawani Devi (2004). Agricultural Economics. Oxford & IBH Publication Co. Pvt. Ltd., New Delhi.

Table1. Cost of cultivation of Carnation under 500 m2 Polyhouse (With subsidy)

S. No.

Particulars Value (Rs.)

Ist year IInd year IIIrd year IVth Vth VIth

1. Capital CostTotal capital cost (Polyhouse construction, fertigation, support net,etc.) without subsidy

416795

Balance capital from previous year

164869

2. Total Recurring Cost (planting material, bed preparation, inputs, hoeing, harvesting etc.) 150825.00 70271 150825.00 70271 150825.00 70271

4. Total Cost*Total Recurring Cost 150825.00 70271 150825.00 70271 150825.00 70271*Commission charges 55222 55222 55222 55222 55222 55222*Rate of interest on capital cost

50015 19784

*Depreciation charges on capital cost

25008 25008 25008 25008 25008 25008

*Rental value of land 1125 1125 1125 1125 1125 1125*Rate of interest on recurring capital

18099 8432.50 18099 8432.50 18099 8432.50

Total 300294 179842.5 250279 160058.5 250279 160058.5Total Capital Cost 416795 164869Total Cost 717089 344711.5 250279 160058.5 250279 160058.5

5. Gross returns 552220 552220 552220 552220 552220 5522206. Net Returns -164869 207508.5 301941 392161.5 301941 392161.5

Balance capital cost for next year

164869 - - - -

Table2. Cost of cultivation of Carnation under 500 m2 Polyhouse (without subsidy)S. No.



1. Capital CostTotal capital cost (Polyhouse construction, fertigation, support net,etc.) after availing subsidy

562500


336801

2. Total Recurring Cost (planting material, bed preparation, inputs, hoeing, harvesting etc.) 150825.00 70271 150825.00 70271 150825.00 70271

4. Total Cost*Total Recurring Cost 150825.00 70271 150825.00 70271 150825.00 70271*Commission charges 55222 55222 55222 55222 55222 55222*Rate of interest on capital cost

67500 40416


33750 33750 33750 33750 33750 33750


18099 8432.50 18099 8432.50 18099 8432.50

Total 326521 209216.5 259021 168800.5 259021 168800.5

Total Capital Cost 562500 336801Total Cost

889021 546017.5259021 168800.5 259021 168800.5

5. Gross returns 552220 552220 552220 552220 552220 5522206. Net Returns - 336801 6202.5 293199 383419.5 293199 383419.5


336801 -

Table 3. Cost concepts (year basis) in case of Carnation Cultivation under 500 sq.m. PolyhouseS. No. Particulars Value (Rs.)Cost A1 With subsidy Without subsidy1 Hired human labour 49877 498772 Inputs (Planting material,

FYM, Fertilizers, chemicals)49070 49070

3 Commission charges 55222 552224 Electricity charges 2700 27005 Depreciation 25008 337506 Interest on working capital 13266 13266

Total of A1195143

203885

Cost B1 Cost A1 195143 2038852 Rental value of owned land 1125 11253 Interest on fixed capital 11633 17986

Total of B 207901 222996Cost C1 Cost B 207901 2229962 Owned human labour 16425 164253 Total of Cost C 224326 239421

Table 4. Different Income Measures for Carnation Cultivation under 500 sq.m. PolyhouseS. No. Particulars Amount (Rs.)

With Subsidy Without Subsidy

1 Farm Business Income 357077 348335

2 Family Labour Income 344319 337966

3 Net Income 327894 321541

4 Farm Investment Income 340652 331925

Table 5. Percentage difference of carnation cultivation with subsidy over without subsidy Income Measures

Farm Business Income

Family labour Income

Net Income Farm Investment Income

With subsidy (Rs.)

357077 344319 327894 340652

Without subsidy (Rs.)

348335 337966 321541 331925

Percentage difference

2.51 1.88 1.98 2.56

Table 6. Cost of cultivation of Capsicum under 500 m2 Polyhouse (with subsidy)S. No.



1. Capital CostTotal capital cost (Polyhouse construction, fertigation, support net,etc.) after availing subsidy

394745


393123 356793 350617 309187 297298

2. Total Recurring Cost (planting material, bed preparation, inputs, hoeing, harvesting etc) 98425 67610 98425 67610 98425 67610

4. Total Cost*Total Recurring Cost 98425 67610 98425 67610 98425 67610*Rate of interest on capital cost

47369 47174 42815 42074 37102 35676


23648 23648 23648 23648 23648 23648


11811 8113 11811 8113 11811 8113

Total 182378 147670 177824 142570 172111 136172Total Capital Cost 394745 393123 356793 350617 309187 297298Total Cost 577123 540793 534617 493187 481298 433470

5. Gross returns 184000 184000 184000 184000 184000 1840006. Net Returns -393123 -356793 -350617 -309187 -297298 -249470


393123 356793 350617 309187 297298 249470

Table 7. Cost of cultivation of Capsicum under 500 m2 Polyhouse (without subsidy)S. No.


Ist year IInd year IIIrd year IVth Vth VIth1. Capital Cost

Total capital cost (Polyhouse construction, fertigation, support net,etc.) without subsidy

540500


565151 558247 585028 580509 609961

2. Total Recurring Cost (planting material, bed preparation, inputs, hoeing, harvesting etc) 98425 67610 98425 67610 98425 67610

4. Total Cost*Total Recurring Cost 98425 67610 98425 67610 98425 67610*Rate of interest on capital cost

64860 67818 66990 70203 69661 73195


32430 32430 32430 32430 32430 32430


11811 8113 11811 8113 11811 8113

Total 208651 177096 210781 179481 213452 182473Total Capital Cost 540500 565151 558247 585028 580509 609961Total Cost 749151 742247 769028 764509 793961 792434

5. Gross returns 184000 184000 184000 184000 184000 1840006. Net Returns -565151 -558247 -585028 -580509 -609961 -608434


565151 558247 585028 580509 609961 608434

Table 8. Cost concepts (year basis)S. No. Particulars Value (Rs.)Cost A1 With subsidy Without subsidy1 Hired human labour 44486 44486 2 Inputs (Planting material, FYM,

Fertilizers, chemicals)24780 24780

3 Electricity charges 2700 27004 Depreciation 23648 324305 Interest on working capital 9890 9890

Total of A1 105504 114286Cost B1 Cost A1 105504 1142862 Rental value of owned land 1125 11253 Interest on fixed capital 42035 68787

Total of B 148664 184198Cost C1 Cost B 148664 1841982 Owned human labour 11030 110303 Total of Cost C 159694 195228

Table 9: Different Income Measures for Capsicum Cultivation under 500 sq.m. PolyhouseS. No. Particulars Amount (Rs.)

With Subsidy Without Subsidy

1 Farm Business Income 78496 697142 Family Labour Income 35336 -198

3 Net Income 24306 -11228

4 Farm Investment Income 67466 58684

Table 10. Percentage difference of capsicum cultivation with subsidy over without subsidy Income Measures


Family Labour Income


With subsidy (Rs.) 78496 35336 24306 67466

Without subsidy (Rs.) 69714 -198 -11228 58684

Percentage difference 12.60% More than 100% More than 100%

15%

Table 11. Percentage difference of carnation over capsicum (with subsidy)Income Measures




Carnation (Rs.) 357077 344319 327894 340652

Capsicum (Rs.) 78496 35336 24306 67466

Percentage difference

355 % 874.40 % 1249 % 405 %

Table 12: Percentage difference of carnation over capsicum (without subsidy)Income Measures




Carnation (Rs.) 348335 337966 321541 331925Capsicum (Rs.) 69714 -198 -11228 58684Percentage difference

399.66 % 170790 % 2963.74 % 465.62 %

economics of carnation vs capsicum

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