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RPF - III (PERFORMA FOR SUBMISSION OF FINAL

REPORT OF RESEARCH PROJECTS)

Part- I : General Information 800 Project Code : 8001 Institute Project Code No. : Econ.1 (813) 8002 ICAR Project Code No. 801 Name of the Institute and Division 8011 Name and address of Institute : Indian Institute of Spices Research, Calicut 8012 Name of Division / Section : Social Science 8013 Location of the Project : Calicut 802 Project Title : Economics of Spices Production and Marketing 803 Priority Area : 8031 Research approach

Applied Research

Basic Research

Process/Technology

development

Transfer of Technology

01 Applied Research

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804 Specific Area : Agricultural Economics 805 Duration of Project : 5 Years 8051 Date of start : April 1998 8052 Date of Completion : April 2005 (Extended period) 806 Total cost /Expenditure Incurred (Give reasons for variation, if any from original estimated cost) Rs. 10.0 lakhs 807 Executive Summary

• Cost of cultivation of major spice crops in their area of production were estimated.

• Recommended spices production technologies were evaluated for their economic feasibility.

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• Marketing system of both domestic and external trade were analysed. • International and domestic prices for the crop were collected and analysed. • Spice database developed under the external funded project was strengthened and

updated. • Impact of liberalized trade on Indian spice industry was analysed.

808 Key words: Cost of cultivation, marketing system, economic analysis, Technology evaluation, Database, Exportable surplus, productivity, cost : benefit ratio.

Part-II : Investigator Profile

(Please identify clearly changes, if any in Project personnel)

810 Principal Investigator : 8101 Name : Dr. M.S.MADAN 8102 Designation : Senior Scientist 8103 Division/ Section : Social Science 8104 Location : Calicut 8105 Institute Address : Indian Institute of Spices Research, Calicut 811 Co- Investigator: 8111 Name : Jose Abraham 8112 Designation : Principal Scientist 8113 Division/ Section : Social Science 8114 Location : Retired 8115 Institute Address :

Par-III: Technical Details 820 Introduction and objectives 8201 Project Objectives : Immediate objectives:

• To document the present production and post production system including marketing being followed in the region for commercially important spice crops (black pepper, cardamom, ginger, turmeric and vanilla)

• To evaluate the existing practices and problems therein from techno-economic point of view to suggest alternatives

• Identification, survey and collection of primary / secondary data on selected sampling parameters for major spices to create a digitized database

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• To study the supply side data base to increase marketable surplus • To study the marketing prospective for Indian spices in the international

market by analyzing the demand side data. Long-term objectives

• To increase the marketable surplus through increased productivity • Expand the share of Indian spices in international market in terms of both

value and volume • Enhance the returns to predominantly small and marginal farmers by

introducing improved production and post-harvest technology. 8202 Background information and importance of the projects

Background Immediately after joining the institute I was assigned a task of creating a status report on �Cardamom economy of India and Pepper economy of India. For this purpose, a review was made making use of the published information on spice crops. It was found that, these high value commercial crops with great demand both in domestic and international market is produced in the country using the age old traditional technology. The production system in combination with the presently followed post-harvest system yields very less quantity of marketable surplus of world standard. However, in the world market many new entrants achieved higher productivity and Low cost per unit. Thus, India has lost its prime position as the leader in production and export of spices in the world. Therefore, it was felt that there is a need to document the present production and postproduction system including marketing to analyse and identify constraints on the way to achieve the last glory by the country. Since Kerala accounts for more than 75% of the total spices produced in the country, the project was started to cover the state first, and then extended to other adjacent spice producing states in the country. Review of Status of Research A. International status: Spices are mostly grown and exported by developing and least developed countries. Spices play an important role in the agricultural economy of these countries mainly because of the increasing demand in the world market. Major producers of spices in the world are India, Indonesia, Brazil, Vietnam, China, Guatemala etc. World trade of spices amounted to approximately one billion US$ in 1996. At present the world trade in spices is around 5.5 to 5.75 lakh tons valued US$1.873 to 2.1 billion and the projected world trade in spices by the year 2001 is 6.25 lakh tones valued US$ 3.0 billion.

The principal import markets for spices are the European Union followed by the United States and Japan. However, the United States is the single largest import market for spices in the world. Other important markets include Singapore, Saudi Arabia, Malaysia, Canada and Hong Kong. Consumption of spices varies from one country to another and is influenced largely by the size of the population and the rate at which it grows. It is also influenced by the disposable income, which in the case of developing countries is a major factor. In the developed country markets spices are used in the industrial sector, principally in food processing whereas in developing countries, spices are mainly consumed in individual housel holds. However, the social habits, particularly those of cooking and eating, determine the overall per capita consumption of spices. With consumers turning more towards ethnic cuisine and spicy foods, and development of new uses for spices in the world market increase the demand for spices world over. What has

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been termed the �hot trend� in spices is increasing per capita consumption of spices like pepper, ginger etc. However, due to bacteriological problems oils and oleoresins have assumed greater significance move recently. Spices in other forms, such as encapsulated spices, are entering the market, which could not only influence the usage pattern but also affect the actual amount of spices used particularly in the industrial sector. In the global market the health consciousness is rising, the demand for quality is increasing and convenience is becoming a significant consideration. This demands the producing countries to be more cautious in quality maintenance in their export consignments. This issues like microbiological contamination and pesticides residues. But unfortunately, no reliable data on production, marketing, demand, supply and consumption pattern world over is available to plan the production and marketing strategies world over. Only the data on export and import is available. Consumption trend and pattern in importing and exporting countries is also not available. Organisations like international trade council (ITC) does the market research and market promotion for spices. The organization prepares and circulate trade information. For spice crops, theirs is the only source of information on regional / world trade in spices. International Pepper Community (IPC) is the principal organization involved in pepper related issues. Reports by Australian Centre for International Agricultural Research, Australia has published many technical reports in the field of spices production and marketing. However, when compared to other commercial agri-horticultural crops, studies on spice crops are much less, though it is more essential.

b. National status: India is the largest producer, consumer and exporter of spices in the world. Almost all spices are grown in this country. The important among them are black pepper, cardamom small and large, ginger, turmeric, chillies, garlic and variety of seed and tree spices. Economic Importance: Spices play an important role in the agricultural economy of the country. The total value of spices produced in India was about 7000 crores annually. India�s export in 1997-98 was 2.187 lakh million tones valued US$368.32 million. As a whole, export account for only five per cent of the spice production n the country. There are certain spices like pepper and celery where export account for more than 70% of the production. However, about one per cent of the production is exported in the case of chilli. The strong domestic market accounts for 95% of the total production. Exports of spices, therefore, depend largely upon the surplus vailable after meeting the demands within the country. India�s aim is to earn more foreign exchange through enhanced export gets shattered due to much production and postharvest handling related constraints such ase:

• Low productivity and high unit cost of production • Adoption of traditional production technology leading to less marketable

surplus • Absence of scientific and hygienic postharvest technology at the farm level

leading to poor quality produce • Incompetititve price of Indian produce in the international market.

821 Project Technical Profile 8211 Technical programme

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(Indicate briefly plan of procedure, techniques, instruments and special materials, organisms, special environments etc.) • �Commodity movement system� methodology was followed to study the

production and marketing system for individual spice crops. • For data collection random sampling technique was followed to identify

individual samples from the purposively selected universe. • Data from the participants of the commodity movement system were collected

using specially prepared and tested questionnaires. • Collected data were analysed using the simple mathematical, statistical and farm

management techniques. • Cost and return analysis was done using the budgeting technique of farm

management. The crops like pepper, cardamom are perennial in nature and will have a productive life of more than 10 years and expected to generate cash flow for number of years in future. Hence to have a meaningful comparison, discounting technique is used to find out the present value of future net cash flow. Net Present Value (NPV)

Σ[(Bt-Ct) / (1+r)t] Internal Rate of Return (IRR)

Σ[(Bt-Ct) / (1+IRR)t] = 0 Benefit-Cost Ratio (BCR)

Σ[(Bt / (1+r)t] / Σ[(Ct) / (1+r)t] where, Bt denotes the benefits in the year t, Ct is the cost in year t and t is the time period, and r is the discount rate (rate of interest).

8212 Total man months involvement of component project workers M.S.Madan - 37 man months Jose Abraham - 6 man months 822 Final Report on the Project

Detailed report containing all relevant data with a summary of results (not exceeding 2-5 pages)

8221 Achievements in terms of targets fixed for each activity

Targets:

• Estimation of cost of cultivation for major spice crops in their area of production. • Economic evolution of spices production technologies • Analysis of marketing system including prices in both domestic and international

markets for commercially important spices • Development of spice database to pool the scattered information on various

spices. • Impact analysis of research investments and technologies transferred.

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Achievements 1998-99:

Estimation of cost of cultivation A Rapid Rural (Market) Appraisal (RRA) was carried out in the spice districts of Kerala i.e. Wayanad and Idukki and Coorg district of Karnataka to collect information on production and post-harvest practices including marketing of spices. Based on the RRA information, questionnaires were prepared to conduct survey on ginger and pepper and pre-tested in the spice districts of Kerala (Wayanad and Idukki). The preliminary survey has revealed certain characteristic changes like predominance of mixed cropping system, improvement in productivity etc. in general. Cost of cultivation for pepper was worked out using the preliminary (pre-testing) and RRA data collected.

Technology evaluation

In order to achieved the objective of �economic evaluation of technology� proven technologies for small-scale/cottage units to produce value added spice products were worked out: Rapid Multiplication Technology for production of rooted pepper cuttings is the proven available technology, which provides an opportunity to start a profitable small- scale venture to produce 15000-20000 rooted pepper cuttings/yr. Financial analysis carried out reveals the fact that the unit with payback period of less than 2 years will yield the benefit cost ratio of 2.2.and the estimated cost was Rs.3.16/cutting.

Creation of database

Through desk research, available secondary data on area, production, productivity and prices for commercially important spice crops were collected to create a spice database. Primary data collected through field surveys were analysed and added to the database.

1999-2000

Cost of cultivation The estimated average cost of production per kg of black pepper excluding rental value of land in Kerala was Rs.35.59 in the year 1998-99 (Table 1). The estimated full supply price at 20% rate of return was around Rs.42/- and the minimum expected price of farmer was between Rs.50-60/kg. Thus looking to the estimated cost and expected price, the prevailed farm gate price (Rs.160/kg.) during the crop year 1998-99 was high enough to work as an incentive to increase production and productivity. On an average the crop needs at least 178 man days per annum per hectare. This number will go up, when the intended end product is either white pepper or green pepper. Around 60% of the paid out cost of producing 1Kg of pepper was attributed towards labour cost. Price of labour has increased by about 400% in the predominantly pepper producing state of Kerala during the past decade.

Marketing system anlysis: The decentralized commodity distribution system (marketing system) for black pepper with less number of intermediaries is comparatively more efficient that than for ginger. With 11% price spread and low marketing cost (6.74%) the system provides better share (87.7%) to the producer in the consumer price (Table 2). Among the alternative channels available for pepper, more than 60% of the produce moves through the most common channel of:

Producer> village assembler > local trader > wholesaler > exporter.

Table: The estimated cost of production of black pepper (1998-99)

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Cost component Amount (Rs./ha)

Investment during establishment 65480 Compound interest on investment @ 15% 24623 Total investment (S. No. 1+2) 90118 Annuity value @ 15% for 15 year 14240 Annualaintenance cost 28466 Total cost of production 42706 Average annual production (kgs)* 1200 Cost of production (Rs./kg.) 35.56 Benefit cost ratio 4.5

* Assumed average of 1 kg/vine. Table: Distribution of marketing margin of black pepper

% share in the f.o.b. price Institution Export

market Domestic

market Overall

Farmers share 86.3 89.19 87.7 Marketing cost 7.2 6.2 6.7 Marketing margin 5.9 4.7 5.3 Price spread 13.2 10.9 11.1 Exporter�s/ wholesaler�s price 100 100 100

! An ex-post evaluation of central government sponsored programme on �Integrated measures against Phytophthora foot rot disease of black pepper in Kerala� revealed the following facts:

! Most farmers (about 97%) in the region are aware of the programme and its components.

! About 73% farmers adopted the recommended cultural and phytosanitation measures (Component � I)

! Adoption quotient for chemical control measures (Component � II) was only 41.1%.

! Application of measures and fertilizers not in the lines of recommended agronomic practices.

! Positive growth rates of 6.54% and 3.37% respectively in the spice districts of Idukki and Wynad were attributed to the success of the technology.

! There is a reduction in vine mortality from 7.41% to 3.7%. ! Overall productivity in pepper increased from 268 kg/ha during 1994-95 (base

year) to 315 kg/ha in 1998-99.

Software for building database on spice information and spices economics Two software packages to store and retrieve spices database prepared and put into use:

i. Spices information system. ii. Spices economics system Data from the database were tabulated and analyzed to bring out useful interpretations:

! Total export of pepper and pepper products from 1989/90 to 1998/99 increased annually by 14.07 per cent per annum in terms of quantity and 19.44 per cent in terms of value.

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! There is also a marked change in share of value added products especially pepper oil and oleoresins (9.25% respectively) leading to a conclusion that the composition of export basket is changing rapidly.

Based on the instability index worked out for the above period value of pepper exported is more stable (55.40%) than the export volume (46%).

Ginger

Ginger (Zingiber officinale) is a herbaceous probably native to south-eastern Asia and now widely cultivated in tropical and warm temperate lands. It is cultivated commercially as an annual crop. The ginger of commerce is the dry product of the rhizome or underground stem. India accounts for about 50 per cent of the total world production. Other major ginger producing countries are Jamaica, Nigeria, Sierra Leona, Thailand, Taiwan, China, Fiji, Islands, Australia, Japan and Ceylon. Jamaican ginger is well known for its lemon-like flavor and qualities. Indian ginger is regarded as Cochin ginger in the world market and is considered next best to Jamaica.

Kerala is the major ginger producing State in India particularly the Wynad area. Karnataka, Tamil Nadu, Andhra Pradesh, Himachal Pradesh and Assam are the other major ginger producing states in India. Middle East is the biggest buyer of Indian ginger. There is great scope for ginger products like essence, oils, resinoids, oleoresins etc. in the Western countries of Europe and America. Saudi Arabia is the most important importer followed by Aden, Morocco, U.S.A., U.K., Holland and Sudan.

Table Cost of cultivaqtion of ginger under scientific management

S. No. Component of cost Cost

(Rs./ha) 1 Seed @ Rs.25/kg for 1800 kg including transport charges, 45000 2 Seed treatment (including cost of chemicals and labour

charges @ Rs.1/kg 1800

3 Land preparation including making of 3m x 1m beds (@ Rs.10/bed, for 1800 beds)

18000

4 FYM @ 10 kg/bed (18 tons x 500) 9000 5 Chemical fertilizers (130kg urea, 68kg rock phosphate and 100

kg potash with labour charges) 3500

6 Planting (cutting the seed rhizomes, making pits, planting and mulching

18000

7 Cost of mulch @ Rs.200/ton 3000 8 Weeding, earthing up and green manure application (including

cost of green manure) 18000

9 Top dressing (two rounds) and pest and disease management 6000 10 Harvesting, cleaning and transporting (18 ton) 9000

Total 131300 The estimated cost of fresh ginger comes to Rs.7.29/kg

The adoption of any technology, whether it is a new variety evolved, a process or machinery, depends mainly on its economics. Similarly cost of production of agricultural commodities is an important parameter often sought for by the traders and government agencies for formulating procurement and export policies as well as deciding support prices for the products. For the farmer, it is essentialto know the economics of cultivation to select the crop so that it will be profitable for him. So, the present study is intended to estimate cost of production of ginger based on costs of inputs and to evaluate the economic potential of ginger cultivation in Kerala.

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The components of cost in ginger cultivation is given in Table below. The cost is worked under the prevailing cost situations during the year 1998-99.

Dry ginger is prepared after peeling the outer skin, washing and drying in the sun. Peeling is usually done manually and hence involves labour. Peeling can also be done effectively and safely by keeping the rhizomes inside the rotating wire-mesh drums. Bleached ginger is obtained by soaking it in 3 per cent lime water for a few minutes and then fumigated with sulphur and then dried. This process is repeated once or twice to get a fully bleached white product. The recovery of dry ginger is 18 to 20 per cent.

2000

Regular training programmes on �Spices Poduction Technology�. Nursery Management� and On-farm Processing of Spices� were conducted. On request, training to farmers from various parts of the country was also arranged. On behalf of Spices Board, sponsored training programme on �Spices Production Technology� to spices growers and extension officers from Northeastern states were conducted.

2000-01

I Spice Database A software package �Spice Data-base� created and put into use for storage of primary and secondary data on spices. Packages created earlier for Spices information System and Spices Economics System were also put into use.

II. Spice Economics Data from the �Spice database� was tabulated and analysed to bring out useful interpretations on spice economy to help the policy makers and other developmental agencies.

Export performance of Indian spice industry

Black Pepper

Total export of pepper and pepper products from 1989/90 to 7998/99 increased annually by 14.07 per cent per annum in terms of quantity and 19.44 per cent in terms of value. ! There is also a marked change in share of value added products especially pepper

oil and oleoresins (9.25% and 9.24% respectively) leading to a conclusion, that the composition of export basket is changing rapidly.

! Based on the instability index worked out for the above period, value of pepper exported is more stable (55.40%) than the export volume (46%).

Cardamom

Demand and supply estimates for cardamom Status of world cardamom industry in general and Indian cardamom industry in particular was analysed in terms of year-wise production, price trend, change in consumption pattern and finally the forecasted demand and supply position for the crop.

The Forecast

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The forecast ased on historic data helped us to understand the overall direction in which the supply (area and production) will move and price fluctuates, forcast is produced with upper and lower confidence limits. The upper confidence limit is calculated for 97.5 per cent and the lower for 2.5% i.e. the actual should fall inside the confidence band 95% of the time.

Demand The major markets for cardamom are Saudi Arabia, Kuwait, Jordan, Qatar, UAE,USSR and Western Europe. Other important importers include West Germany, Pakistan,UK, Japan. The highest consumption of cardamom (80% of the total world consumption) takes place in the Middle East where it is used in the preparation of their traditional drink �gahwa�. Demand potential in the world was at an average growth rate of 2% per annum. Which is proportionate to the growth rate of population. Demand was accordingly estimated for 2000-2001 as 12000 tonnes. Recent domestic consumption trends in India indicate a sharp increase in off-take. As against 1500 tonnes in 1985-86, domestic consumption has gone up to more than 6850 tonnes during 1997-98. If this level is maintained, the world demand (including India�s) at the turn of the century may be more than 15000 tonnes. When actual data is not available, deducting the quantity exported from total production gives an approximate consumption in the domestic market. The growth equation fitted for the consumption trend in the country is:

In Dt= 6.7110+0.0725T R2=815

Accordingly, the estimated growth rate is 7.3% per annum. Thus, the growth rate in demand is much more than the growth rates in production. Under the circumstances, it is unlikely that India can reclaim its position as the world�s largest producer and exporter because an increasing percentage of production will be consumed domestically leaving nothing much for export. The global import demand for cardamom is expected to be 18,000mt by 2000 AD and 20,000mt in 2005.

Supply In order to make projections for Indian Cardamom, a model was developed for area and production. Both area and production are expected to grow slowly in the immediate future. The growth in production is expected to be more pronounced than in area indicating the improvement in yield per unit area. As per the cyclical movement discussed earlier, after the peak so achieved in 1995-96, three year period of decline is already over, it is the turn of increasing trend to reach the next peak in the cycle. As per the forecasted value, by the year 2000-2001 the expected production level will be between 8000 to 10000 tons: and the area expansion is expected to touch 90000 ha during the same period. The improvement in internal and international price will catalyze the supply to jump in the usual fashion discussed earlier.

Since the forecasted production is not sufficient to create enough export surplus and the reports of declining production in Guatemala is already reflected in the form of less supply to the world market by that country during the 1998-99 crop year , the repercussions will be favourable to Indian farmers in the form of increased price. The prevailing higher market price is expected to continue in the near future and there is also a possibility for the price to cross the Rs.1000/kg mark before falling down as per the usual cyclical fluctuations. Availability of less exportable surplus will have direct effect on the export.

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Spices (all) The estimated growth rate for export of various spices during the past two decades showed that, during eighties, except black pepper all other commodities have registered a negative growth rate in volume exported. Among the value added spice products, oils and oleoresin achieved the maximum growth rate of 42.93% in volume and 25.91% in value terms. Overall, there was a negative growth rate of 3.6 was recorded for total spices during the period 1978-79 to 1987-88. However, during the period from 1988-89 to 1997-98, except in cardamom (small) exports of all other commodities achieved a positive growth rate both in volume and value terms. Chilli and ginger have performed well. Unit price rise was more for pepper than for all other commodities exported. During this decade almost all the crops have recorded a positive growth rate in terms of value because of the continued rising trend in prices.

Impact of QRs free trade on Indian industry Export performance of major spices after removal of quantitative restriction on trade i.e. during the first half of the current financial year (April-June 2001) is not encouraging. Export during the period is estimated as 59840 tonnes valued Rs.406.08 crores (87.03 million US$) as against 67668 tonnes valued Rs.460.02 crores (104.23 million US$) in the corresponding period of last year. Compared to last year, the export has shown a decline of 12%, both in terms of quantity and rupee value. In dollar terms, the decline is 17%. In order to analyse the impact of QRs free trade on prices, three years average (1997-2000) was compared with April-June 2001 (table 44). As it can be seen from the table the price fall varied from 0.88% in oils and oleoresin to 39.4% in black pepper. The estimated loss due to price fall is around Rs.2257.84 million.

Table Compound growth rate spices export during 1978-79 to 1997-98

1978-79 to 1987-88 1988-89 to 1997-98 1978-79 to 1997-98 Spice Qty Value Price Qty Value Price Qty Value Price

Total spice -3.6 10.81 14.95 9.71 21.81 11.05 5.77 13.27 7.56Black pepper 9.64 28.69 17.38 2.33 15.87 13.22 10.27 3.22 13.82Cardamom (s) -14.13 -16.17 -2.31 -4.19 4.19 8.79 -12.73 -8.27 4.68Cardamom (L) -3.67 9.3 13.44 13.63 21.75 7.15 14.11 23.22 7.98Chillies -14.67 -7.9 7.86 18.77 28.33 8.36 10.09 20.89 9.79Ginger -11.39 -.34 12.47 18.35 23.4 4.26 6.73 11.43 4.4Turmeric -4.2 2.33 6.82 6.37 18.39 11.3 4.45 12.49 7.7Oil & Oleoresins 42.93 25.91 10.33 16.66 30.15 11.57 25.49 27.39 8.63Seed spices -11.79 -5.87 9.29 13.62 18.07 9.36 5.31 13.27 7.57

2001-2002

Economics of cultivation Repeat surveys conducted in Kerala and Karnataka indicated marked increase in cost of production of major spice commodities. Production of black pepper was profitable with a benefit-cost ratio of 1.9. However, both ginger and turmeric growers faced benefit-cost ratio of <1 because of drastic price fall. Surveys in spice nurseries indicated poor demand for black pepper, ginger and turmeric planting materials, while there was an increased interest among farmers for vanilla cultivation. The

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status of spices production in Andhra Pradesh and Kerala were analysed and policy implications brought out.

Table: Impact of QRS free trade on prices of Indian spices Average Price

Spice 1997-00 2000-01

Price differenc

e

Apr-June 2001

Price difference

change (%)

Average Export

Qty

Value of Expt. loss

Pepper 176.59 169.52 -7.07 107.01 69.58 -39.40 37306.7 -2595.77 Cardamom(s) 456.54 514.06 57.53 574.34 117.80 25.80 460.3 54.23 Cardamom(L) 98.40 168.31 69.92 163.64 65.24 66.30 1361.7 88.84 Chillies 35.44 32.01 -3.43 32.18 -3.26 -9.19 56493.0 -184.00 Ginger 34.98 34.88 -0.10 44 9.02 25.79 15367.0 138.61 Turmeric 32.83 26.39 -6.43 20.71 -12.12 -36.92 32326.0 -391.76 Coriander 24.76 23.44 -1.32 29.92 5.16 20.84 18252.7 94.18 Cumin 53.99 85.10 31.11 89.13 35.14 65.09 9672.7 339.92 Celery 25.86 32.39 6.53 32.5 6.64 25.68 3496.0 23.21 Fennel 35.70 44.45 8.75 42.86 7.16 20.06 6410.7 45.90 Fenugreek 18.04 19.75 1.71 29 10.96 60.77 8661.0 94.94 Other seeds(1) 33.89 36.96 3.07 35 1.11 3.29 2840.0 3.17 Garlic 17.58 9.46 -8.13 18 0.42 2.36 5536.7 2.30 Other spices(2) 37.98 41.40 3.42 34.74 -3.24 -8.54 19179.7 -62.22 Curry powder 57.33 64.47 7.14 65 7.67 13.38 5383.0 41.30 Mint oil 334.97 326.32 -8.64 358.33 23.36 6.97 3184.0 74.39 Oils & Oleoresins 1017.12 1004.28 -12.85 1008.16 -8.96 -0.88 2796.0 -25.06

Total 155843.7 -2257.84

Data on production and marketing Data on various aspects of production, productivity, markets, market prices, arrivals, auction prices, wholesale and retail prices in the domestic market and spot prices for spices in international markets were collected and tabulated for preparation of a database.

Digitized database A �Spices Database�, that was developed was integrated with the database developed under the NATP sponsored project on �Integrated National Agricultural ResourcesInformation System (INARIS)�. The data from the database were tabulated and analysed to bring out useful interpretations. The strengths and weaknesses of Indian spice industry in general and black pepper and cardamom in particular were analysed in the context of free trade in the world market.

The present scenario of spice production and marketing and price behaviour were analysed to know the opportunities in the light of WTO impact. The trend in area and production, change in productivity due to change in technological inputs and developmental activities, price trends and impact of international prices on domestic price were worked out using time series data.

Economic evaluation of technologies The cost of production of rooted black pepper cuttings following the bamboo and pit methods were worked out to know the economic viability of the technologies. The cost of black pepper cuttings produced through bamboo method was much costlier than the pit method, which is more suitable for small and medium farmers. The improved technologies being popularized under Pepper Technology Mission were evaluated for their economic viability.

2002-2003

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Estimation of cost of cultivation of spices Surveys were conducted in predominantly cardamom growing districts of Idukki (Kerala) and Kodagu(Karnataka), to update the cost of cultivation data for major spice crops. The estimated cost of cultivation for cardamom during the crop year 2001-02 in Idukki and Kodagu districts was Rs.213.97 and Rs.222.17/kg. Respectively.

Table: Economics of cardamom cultivation (Karnataka) (2001-02)

Particulars Cost (Rs./acre) Establishment cost (for 2 yrs) Labour 11,972.70 Planting materials 3000.00 Manures 6500.00 Fertilizers 2025.56 Pesticides 5944.50 Total establishment cost 29,442.76 Maintenance cost Labour 17,360.20 Compost 2837.50 Fertilizer 2250.72 Pesticides 3963.40 Drying charges 10,294.50 Interest on working capital @ 13% per annum 4037.66 Total maintenance cost 40,743.98 Estimated cost of cultivation Amortized value of initial investment @ 11% per annum 4999.46 Total maintenance cost per year 40,743.96 Total cost of production 45,743.44 Returns Average annual production / acre (dry capsule) 205.89 Gross returns @ Rs. 636.37/kg 1,31,022.21 Net returns 83,728.17 Cost of production/kg of dry capsules 222.17

Analysis of marketing system for spices

During the course of the survey information on marketing aspects was also collected. More than 75% of the produce was marketed through auction centers and lot sizes less thasn 16kg were not brought to the auction center. Ore than 50% of the lots were less than 100kg lots. Bodynayakanur-(Madurai District, Tamil Nadu) was the major packing and forwarding center for cardamom mainly because of lower labour wages (Rs.22/day). About 40% of the produce was transported by train to domestic markets; road transport was cheaper (Rs.3.50/km) than train (Rs.6.40/km). Delhi and Kanpur were the major destinations for the produce from Bodynayakanur. Detailed analysis of seasonal variation in cardamom prices is being done based on the price obtained from auction centers.

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Economics of spice production technologies

The cost of various spice production technologies was assessed in terms of their economic viability.

Table: Cost of cultivation for rapid multiplication of rooted black pepper cuttings (bamboo method) (2003)

Particulars Cost (Rs.) Nonrecurring expenditure Clearin,leveling and providing drainage in nursery area Available Semi-permanent nursery structure of 24m x 6m shed 97000 Masonary charges including cost of cement 15000 Shade net 12000 Total 124000 Recurring expenditure (once in 3 years) Bamboo 200 pieces @ Rs.54/piece 10800 Arranging bamboo splits (10 mandays) @ Rs.120/day 1200 Mother vines 600 nos @ Rs.6/vine 3600 FYM 260 cft @ Rs.20/cft 5200 Forest soil 650 cft @ 600/cft 3900 Sand 260 cft @ Rs.9/cft 2340 Fumigation of potting mixture 1300 Coir dust 60 cft @ Rs.2/cft 120 Preparation of rooting medium (240 cft) (6 man days) 720 Preparation of potting mixture (982 cft( (15 man days) 1800 Total 30,980 Recurring expenditure (every 3 years) Cost (Rs) Fertilizers Urea 29kg @ Rs. 4.65/kg 134.85 Super phosphate 29kg @ Rs.3.10/kg 89.90 Muriate of potash 15 kg @ Rs.4.35/kg 65.25 Magnesium sulphate 7 kg @ Rs.3.50/kg 24.50 Cowdung slurry 100 Plant protection chemicals Redomil 1 kg @ Rs.1300/kg 1300 Phorate 22 kg @ Rs.50/kg 1050 Quinalphose 1 lit @ Rs.320/ltr 320 Copper oxychloride 10 kg @ Rs.14.61/kg 610 Charges for applicationof nutrient solution and pesticides 1950 Labour charges for tying vines, irrigation and maintenance 38000 Cost of temporary shed (1000 capacity, 12m x 6m) 9500 Cost of shade net 9000 Total 62,145 Annuity value @ 11% 26,315 Total cost of production 88,459 Cost of production/cutting 4.95

Digitization of database

Published secondary data were collected and used for populating the digital database on spice technology. Data on area production, export import and price for various spices were collected, refined and loaded into a database software for statistics . Database for 10 years was made available through the web site < www.spicestat.org> Commercial profile of all major spices was prepared and made available in the database.

15

Table: Cost of cultivation for rapid multiplication of rooted black pepper cuttings (trench method) (2003)

Particulars Quantity required Unit cost (Rs) Total cost

(Rs) Labour (man days) 4 nos 80.00 320.00 polybags 150 nos 0.30 45.00 Farm yard manure 4 kg 2.00 8.00 Fytolan 30g 0.23 6.90 Runner shoots (having 3 viable nodes) 50 nos 2.50 125.00 Total cost per 150 nos/pit 504.00 Cost of production/cutting 3.37

Table: Cost of production of vermin-compost Items Cost (Rs.)

Non- recurring expenditure Clean thatched shed or shaded place Available Semi-permanent masonary tank(2.00m x 0.75 m size) 3200.00 Total 3200.00 Recurring expenditure during 1st year Earth worms 500.00 Cowdung (Rs/kg) 5.00 Vegetable waste 5.00 Labour cost (including masonary work) 6000.00 Total 6510.00 Total of items (I & II) 9710.00 Recurring expenditure during subsequent years Earth worms Available Cowdung 10.00 Vegetable waste 5.00 Labour 3000.00 Apportioned cost of initial investment @ 11% 1496.00 Total cost of production 4511.00 Cost of production /Kg 4.51

Table: Cost of production of coir pith compost (100kg)

Particulars Qty. required Cost/unit(Rs) Total cost(Rs)

Coir pith 100 kg 1.50/kg 150

Urea 5 kg 4.80/kg 24

Spawn bottles 5 x 250 g 60/kg 75

Total man days 8 85/kg 680

Total cost/100 kg 929

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Table: Cost of production of Trichoderma Particulars Cost (Rs)

Sorghum @ Rs.5.30/kg including, loading,unloading and powdering 8.70 Transport 0.70 Autoclaving 4.50 Polypropylene bags (4 bags) @ Rs.60/kg 0.80 Filling and autoclaving (50p/bag) 2.00 Research time Rs.1500/30 days (producing 500/100kg) 5.00 Depreciation capital investment @ 10% 0.27 Institutional charges 40% 8.58 Quality maintenance (20% loss or contamination) 6.01 Packaging , escalation of cost of raw material 13.94 Total cost/kg 50.50

2003-2004

1. Economics of spices production and marketing

Estimation of cost of cultivation of spices Surveys were conducted in vanilla growing districts of Karnataka and Kerala to estimate the cost of cultivation of vanilla. There was a rapid increase in area under vanilla cultivation in the states of Kerala and Karnataka (Table 56). Low price for other competing crops and prevailing better prices for vanilla were the major reasons for increased area expansion.

Table: Cost of cultivation of vanilla

Particulars Cost(Rs.�acre)

Establishment cost per acre (700 vines) Labour 10050.00 Planting material 4560.00 Manures 28000.00 Chemicals 1548.00 Standards for support 2280.00 Total establishment cost 46438.00 Maintenance cost per acre (700 vines) Labour usage for all operations 4350.00 Compost 14000.00 Chemicals 645.00 Interest on working capital @ 11% per annum 2089.45 Total maintenance cost 21084.45 Output and returns per acre (700 vines) Apportioned investment cost @ 11% 6458.00 Total maintenance cost 21084.45 Total cost of production 27542.45 Returns Average annual production. Kg/acre (green) 82.25 Gross returns @ Rs.1100/kg 90475.00 Net returns 62932.55 Cost of production/kg 334.86 Net returns/kg 765.13 Benefit Cost Ratio 3.28

17

The estimated cost of cultivation indicated the Benefit Cost Ratio of 3.3 and 3.8 in Karnataka and Kerala respectively. The estimated maintenance cost was Rs.21,084 acre/year. The incurred cost towards compost formed the major component (66%0 followed by labour charges (21%). While estimating the cost of cultivation, the value of the land was not taken into account. On an average the total cost of production per acre (700 vines) in first year of bearing was Rs.77,542. The average yield per acre was 82.25 kg of green beans and the average gross returns realized per acre by selling green beans was Rs.90,475. The average net return per acre was Rs.62,933 with the Benefit Cost Ratio of 3.28. (Table)

Economics of on-farm processing (curing) of vanilla indicated that, sale of processed vanilla beans returned a huge net benefit of Rs.54,825/q over the sale of green beans (Table). Large farms performed better than small farms in vanilla cultivation mainly because of their on-farm processing activities. In the absence of established marketing system, the growers depend on few processors and exporters for on-farm processing and marketing of their produce.

Table: Processing cost per quintal of vanilla beans

Materials and labour Qty. Unit cost (Rs)

Total value(Rs) Cost(Rs./q)

Washing beans Women labour 2 50 100 100 Killing process Container 1 800 800 136 Thermometer 1 30 30 30 Jute bags 10 15 150 150 Men labour 2 60 120 120 Womwn labour 1 50 50 50 Sweating Wooden box 6 300 1800 487 Blanket 25 150 3750 2190 Women labour 18 50 900 900 Slow drying Stand 1 3000 3000 812 Men labour 1 60 60 60 Grading and packing Polythene self-stickable bags 20 2 40 40 Women labour 2 50 100 100 Total 5175

Table: Cost and returns from on-farm processing of vanilla beans

Particulars Total value(Rs)

Selling of 1q green beans @ Rs.1100/kg 1,10,000.00

Processing cost/q of green beans 5175.00

Selling 20 kg processed beans (1:5 ratio) @ Rs.8500/kg 1,70,000.00

Deduction of processing cost from returns of dry sale 164825.00

Net extra income by processing/q of green beans 54825.00

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8222 Questions- Answered

• Is it economic to cultivate spices • What is the dominant marketing channel for spices and what is share received by

producer in consumer price • Whether the domestic price is effected by the international price? • What is the economics of processing spices • What are the major technologies available for production of nursery materials and

other bio-inputs for spices with their economics. 8223 Process/ Product/ Technology/ Developed

• Details on cost of cultivation of various spice crops • Information on economic viability of important spice production technologies • Database software for spice information and spice economics • Publications giving information on spices production and economics

8224 Practical Utility (not more than 150 words)

• Information generated and economics worked out can help the planners and researchers in their future plan for spices development.

• Economics of spices production technologies worked out can help the financial institutions like NABARD in their agricultural finance related activities.

• The information can help the state and central governments to plan various developmental activities oriented towards spices.

• The information generated and the database created can help the researchers to reorient their research programes for the betterment of spices production.

8225 Constraints, if any Nil 823 Publications and Material Development (One copy each to be supplied with this Proforma) 8231 Research papers Appendix - I 8232 Popular articles Appendix - I 8233 Reports Appendix - I

19

8234 Seminars, conferences and workshops (relevant to the project) in which the scientists have participated. (List abstracts forwarded) Appendix-I 824 Infrastructural facilities developed (Details of field, laboratory, note books and final material and their location) Filled questionnaire of the survey undertaken for the project. Kept in the

Social science section. 825 Comments / Suggestions of Project Leader regarding possible future line of work that may be taken up arising out of this Project.

• Looking to the result of the project, need of the type of data by various

end-users like scientists, planners, extension workers, farmers, traders

etc. it was felt that the research project should be an on-going one to

provide annual cost of cultivation according to updated economic

parameters including prices of inputs and outputs.

• In order to identify the various factors contributing to production of various

spice crops, there is a need to follow the factor productivity approach for

various cropping systems involving spices.

• Economics of spices production is influenced to a large extent by the

market price, which in turn is influenced by the international price. So,

there is need to analyse the impact of various export-import and trade

related policy measures influencing the spices production system in the

country.

• There is also need to analysed the impact of socio-economic and agro-

ecological changes on spice cultivation in the country.

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Part-IV : Project Expenditure (Summary)

Year 1998-99 to 2004-05 830 Total Recurring Expenditure 8301 Salaries: (Designation with pay scale) Estimated Actual

i) Scientific 360000 861000 ii) Technical 230000 39000 iii) Supporting iv) Wages

____________________________________________________ Sub-Total 597000 905000 ____________________________________________________ 8302 Consumables i) Chemicals ii) Glasswares iii) Others 0 36000 ____________________________________________________ Sub-Total 36000 ____________________________________________________ 8303 Travel 150000 46000 8304 Miscellaneous 55000 13000 (other costs) ____________________________________________________ 8305 Sub-Total 802000 59000 (Recurring ____________________________________________________ 831 Total Non � Recurring Expenditure (Equipments and works) i) ii) iii) _____________________________________________________ 823 Total (830 and 831) 802000 1000000 _____________________________________________________

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Part-V : Declaration

This is to certify that the final report of the Project has been submitted in full consultation with the Project workers as per the approved objectives and technical programme and the relevant records, note-books, materials are available for the same.

Signature of the Project Investigator:

Co-Investigators 1.

2.

Signature & Comments of the Head Of the Division/ Section Signature & Comments of the Joint Director (Research) Signature & Comments of the Director

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Appendix-I PUBLICATIONS A. RESEARCH / REVIEW ARTICLES

1. Madan, M.S. (2004). Estimation of cost of cultivation in spices - Vanilla. Indian Journal of Arecanut, Spices and Medicinal Plants, 6 (1) : 28-38.

2. Thankamani, C.K., Madan, M.S., Sivaraman, K. and K.Kandiannan (2005). Utilization of composted coirpith for growth and yield of turmeric. Agric. Sci. Digest, 25(2): 99-102.

3. Madan, M.S., Sarma, Y.R. and Nagendra, J. (2002). Spices Production and prospects in Andhra Pradesh. Indian Journal of Arecanut, Spices and Medicinal Plants, 4 (1) : 42-50.

4. Parthasarathy, V.A., Madan, M.S. and T.J.Zachariah (2003). Export potential of Indian spices - a perspective. Indian Horticulture, April � June, 2003.

5. Madan, M.S. and M.Tamil Selvan (2001). Indian Black pepper: Changing Scenario. Indian Jn. of Arecanut, Spices and Medicinal Plants, 3 (1) : 262-269.

B. CHAPTERS IN BOOKS

6. Madan, M.S. and M. Tamil Selvan (2000). Export Potential of Indian Spices b- An Economic Evaluation. pp. 128-140. In Madan and Jose Abraham (Eds) Spices Production Technology. Agricultural Technology Information Centre, Indian Institute of Spices Research, Calicut, pp.128-140.

7. Jose Abraham and M.S. Madan, (2000). Estimating cost of cultivation in spices, pp. 120-127. In Madan and Jose Abraham (Eds) Spices Production Technology. Agricultural Technology Information Centre, Indian Institute of Spices Research, Calicut, pp.120-127.

8. Peter, K.V. and M.S. Madan, (2000). Production of Chillies, pp. 68-75. In Madan and Jose Abraham (Eds). Spices Production Technology. Agricultural Technology Information Centre, Indian Institute of Spices Research, Calicut, pp.68-75.

9. Madan, M.S. (2002). Cardamom economy, In: Ravindran,P.N. and Madhusoodanan, K.J. (Eds). Cardamom, the Genus Elettaria, Taylor and Francis, London, pp.245-268.

10. Madan,M.S. and S.Kannan (2004). Economics and Marketing of Cinnamon and Cassia � A Global View. In: Ravindran, P.N., Babu,K.N. and Shylaja, M. (Eds.). Cinnamon and Cassia, the Genus Cinnamomum, CRC Press, Washington, pp. 285-310.

11. Madan, M.S. (2005). Production, Marketing and Economics of Ginger. In: Ravindran, P.N. and Nirmal Babu (Eds.). Ginger, the Genus Gingiber. CRC Press, Washington, pp.431-465.

12. Sivaraman, K., Madan, M.S. and M.Tamil Selvan, (2002). Black Pepper (Piper nigrum L.). In: Singh, H.P., Sivaraman, K. and M.Tamil Selvan (Eds). Indian Spices: Production and Utilization, DASD/CDB, Govt. of India, pp.30-76.

13. Madan, M.S., Sarma, Y.R., Peter, K.V., Sivaraman, K., Varma, S., Srinivasan, V. and P.Singh. (2005). Impact Assessment of Improved Management Practices for Phytophthora Foot Rot Disease in Black Pepper. In: Joshi, P.K., Suresh Pal, Birthal, P.S., and M.C.C.Bantilan (Eds.). Impact of Agricultural Research: Post-Green Revolution Evidence from India. National Centre for Agricultural Economics and Policy Research, New Delhi and International Crops Research Institute for the Semi-Arid Tropics, Hyderabad, pp. 281-292.

14. Madan, M.S. and S.Kannan (2006). Economics, Marketing and Export of Spices. In: Ravindran, P.N., Nirmal Babu, K., Shiva, K.N. and Johny A. Kallupurackal (Eds.). Advances in Spices Research: History and Achievements of Spices

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Research in India Since Independence. Agrobios (India), Jodhpur. Pp. 935-972.

15. Madan M.S. (2006). Production, Marketing and Economics of Turmeric. In: Ravindran PN Sivaraman K and Nirmal Babu K (Eds.) Turmeric, the Genus Gingiber. CRC Press, Boca Raton, FL, USA pp: 369-408.

16. Parthasarathy, V.A. and M.S.Madan (2006). Spices Research and Development � An overview In: VA Parthasarathy and P Rajeev (Eds) Major Spices: Production and Processing. Indian Institute of Spices Research, Calicut pp: 1-14.

17. Bhat,A.I., Mathew, P.A., Nair, R.R. and M.S.Madan (2006) Vanilla. In: VA Parthasarathy and P Rajeev (Eds) Major Spices: Production and Processing. Indian Institute of Spices Research, Calicut pp: 1-14.

18. Madan, M.S. and V.A.Parthasarathy (2007).Changing Scenario of Indian Spice Trade in the Era of Globalisation. In: Bala Batavia and Parameshwar Nandakumar (Eds). Globalisation: capital Flows, Competition, and Regulation, APF Press, Toronto, Canada pp: 281-301.

C. PAPERS PUBLISHED IN CONFERENCE PROCEEDINGS/ PRESENTED

IN SEMINAR/ SYMPOSIA 19. Madan, M.S., John Zachariah, T. and Jose Abraham (2000). White Pepper Production

in India for Export: An Appraisal. In: Muralidharan, N. and R. Rajkumar (Eds.). Recent Advances in Plantation Crops Research. UPASI Tea Research Foundation, Tea Research Institute, Valparai-642 127, pp.

20. Madan, M.S. (2000). The Indian Black Pepper: Economics and Marketing. In: Ramana, K.V., Santhosh J. Eapen, Nirmal Babu, K., Krishnamurthy, K.S. and A.Kumar (Eds). Spices and Aromatic Plants: Challenges and Opportunities in the New Century. Indian Society for Spices, pp.225-232.

21. Madan, M.S., Nagendra,J. and K.A.Manoj, 2002. Cardamom Economy of India: Growth and Prospects. In: Korikanthimath, V.S., Zachariah, T.J., Kandiannan, K., Shiva, K.N., Krishnamurthy, K.S., Suseela Bhai, R. and Nair, R.R. (Eds.). Proceedings, National Seminar on Strategies for Increasing Production and Export of Spices, Calicut, pp.223-237.

22. Madan, M.S. and J.Nagendra, (2003). Economics of ginger production. In: Singh, H.P. and M.Tamil Selvan (Eds.). Indian Ginger: Production and Utilization. Directorate of Arecanut and Spices Development, Calicut, pp.156-168.

23. Madan, M.S., Srinivasan, V. and K.S.Krishnamurthy (2001). Integrated National Agricultural Resources Information System (INARIS) - Spices. Brain Storming session on Digitisation of Database on Plant Protection (Indian Phytopathological Society meeting), 10-12 December 2001, Calicut, Kerala.

24. Madan, M.S. (2003). Indian black pepper: Changing scenario. State level seminar on black pepper, Calicut.

D. PAPERS PRESENTED IN SEMINAR/ SYMPOSIA

25. Madan, M.S., Peter,K.V., Sarma, Y.R.Sivaraman, K. S.Varma, Srinivasan V. and P. Singh (2000). Impact Assessment of Improved Management Measures for Phytophthoral Foot Rot Disease of Black Pepper. Workshop on Impact of Agricultural Research. ICRISAT, Hyderabad.

26. Madan, M.S. (2000). Emerging Prospects for Indian Spices with Special Reference to Andhra Pradesh. 14th National Conference on Agricultural Marketing, 3-5 February 2001, Visakhapatnam, Andhra Pradesh.

27. Chembakam, Zachariah, T.J., Madan, M.S. and V.A.Parthasarathy (2004). Value addition and International Trade in Spices. First Indian Horticulture Congress, 6th � 9th, November, New Delhi.

24

E. POPULAR ARTCLES 28. Madan, M.S. (1999). International Trade in Black Pepper and India�s role. Spice India,

12 (12), (Tamil). 29. Madan, M.S., Y.R.Sarma and K.V.Peter (1999). Controlling Phytophthora foot rot in

black pepper. Agri News, 2 (3&4), (Tamil). 30. Madan, MS. and M. Rajendran, (2000). Clove in the World Spice Trade. Indian

Spices, 13 : (8). 31. Madan, M.S. (2000). India�s Share in International Trade in Ginger. Spice India,

(Tamil). 32. Madan, M.S. and Y.R.Sarma, (2000). Improved Technology for Control of

Phytophthora foot rot disease in Black pepper. Spice India, 13 (4), (Tamil). 33. Madan, M.S., Peter,K.V., Jose Abraham and K. Sivaraman,(2000). �Raising

Productivity of Black Pepper in Indian Context. Spice India, 13 (2-4). 34. Madan, M.S. and B.Knshnamoorthy, (2001). Sensational Cinnamon Barks - An Insight

into Trade Aspects. Spice India, 14 : (1), (Tamil). 35. Madan, M.S. and S.Kannan, (2002). Import Liberalisation and Indian Spice Economy.

Spice India, 15 (3). 36. Madan, M.S., Febin, Nagendra, J and Manoj, K.A.. Spices consumption in Malapuram

district of Kerala. Spice India (Communicated). F. Symposium/Seminar attended

Recent Advances in Plantation Crops Research. UPASI Tea Research Foundation, Tea

Research Institute, Valparai-642 127, 2000. Spices and Aromatic Plants: Challenges and Opportunities in the New Century. Indian

Society for Spices, Caicut. 2000. Proceedings, National Seminar on Strategies for Increasing Production and Export of

Spices, Calicut, pp.223-237. 2002. Indian Ginger: Production and Utilization. Directorate of Arecanut and Spices

Development, Calicut. 2003. Impact Assessment of Improved Management Measures for Phytophthoral Foot Rot

Disease of Black Pepper. Workshop on Impact of Agricultural Research. ICRISAT, Hyderabad. 2000.

14th National Conference on Agricultural Marketing, 3-5 February 2001, Visakhapatnam, Andhra Pradesh. 2000.

First Indian Horticulture Congress, 6th � 9th, November, New Delhi. 2004.