CHAPTER – V

COST AND RETURNS OF BANANA CULTIVATION

5.1 General

Cost studies in agriculture provide an important part of information and

knowledge essential for the formulation and evaluation of economic policies both

at micro and macro levels. The cost of production of different varieties of banana

is very important in determining the banana productivity. Hence, data relating to

cost and return of small and marginal farmers producing three important varieties

of banana crop namely red banana, nendran and kathali are taken into

consideration and analysed in this chapter.

5.2 Input-Output Structures

The cost and return structure help the farmers in making use of costly

inputs efficiently and thereby they can try to secure optimum level of production

and income.

Tables 5.1, 5.2 and 5.3 present information on the average input used and

output obtained by small and marginal farmers growing red banana, nendran and

kathali varieties of banana.

5.2.1 Input-Output Structure of Red Banana

The input-output structure of red banana cultivation per acre between small

and marginal farmers is given in Table 5.1.

TABLE: 5.1

INPUT-OUTPUT STRUCTURE OF RED BANANA CULTIVATION

PER ACRE BY SMALL AND MARGINAL FARMERS
OF THE STUDY AREA

Small Marginal t-value

Particulars Farmer Farmer

Human Labour in man days 81.25 86.75 0.9981

per acre
Chemical Fertilizers in kgs. 2685.75 2793.65 4.1121*
Per acre
Farm manure in kgs. per 9752.36 9856.12 1.4265
acre
Pesticide cost in ` per acre 1726.45 1644.72 1.6975

Irrigation Cost in ` per acre 1486.45 1431.22 3.1599*

Propping cost in ``per acre 13935.26 13875.25 2.7416*

Cost of suckers in ` per acre 3612.14 3563.54 1.0621

Yield in tonnes per acre 16.89 17.53 2.6624*

Sample Size 37 405

Source: Field Survey

* Statistically significant at 5 per cent level

Table 5.1 indicates the average input used and output produced by the small

and the marginal farmers cultivating red banana in the study area. The average

159
yield is 16.89 tonnes per acre for the small farmers and 17.53 tonnes per acre for

the marginal farmers.

The difference in average requirement of human labour per acre is

significant and it is 81.25 man days in the case of small farmers and 86.75 man

days in the case of marginal farmers. The utilisation of fertilizer and irrigation

cost is also statistically significant between the small and marginal farmers. The

marginal farmers utilise more propping cost per acre than the small farmers. The

marginal farmers use `13,935.26 as propping cost and small farmers use only

`13,875.25 per acre of propping cost in the study area.

The other inputs, namely farm manure, pesticides and suckers are not

significant between small and marginal farmers.

Thus, it is observed that the level of input application was greater for

marginal farmers compared to the small farmers. The use of chemical fertilizers,

irrigation cost, propping cost and yield differs significantly between the two

groups of farmers. When more intensive use of input is made by the marginal

farmers, more yield is observed. Therefore, the first hypothesis that “there is no

significant difference exists between the banana yield of small farmers and

marginal farmers” is not proved.

160
5.2.2 Input-Output Structure of Nendran Banana

The input-output structure of nendran banana cultivation per acre between

small and marginal farmers is given in Table 5.2.

TABLE: 5.2

INPUT-OUTPUT STRUCTURE OF NENDRAN BANANA

CULTIVATION PER ACRE BY SMALL AND MARGINAL
FARMERS OF THE STUDY AREA

Small Marginal t-value

Particulars Farmer Farmer

Human Labour in man days 77.50 79.85 1.2512

per acre
Chemical Fertilizers in kgs. 2145.65 2465.45 3.7545*
Per acre
Farm manure in kgs. Per 8950.25 9100.25 1.2458
acre
Pesticide ` per acre 1345.25 1225.65 1.7457*
Irrigation Cost in ` per acre 1185.60 1235.65 3.4565*
Propping cost in ` per acre 12850.75 12750.75 2.1426
Cost of suckers in ` per acre 2850.45 2895.25 1.1421
Yield in tonnes per acre 14.55 15.86 3.1324*
Sample Size 37 405
Source: Field Survey
* Statistically significant at 5 per cent level

Table 5.2 reveals that the yield per acre of banana for the small farmers is

14.55 tonnes and that of the marginal farmers is 15.86 tonnes. The difference in

average requirement of human labour per acre is significant and it is 77.50 man

161
days in the case of small farmers and 79.85 man days in the case of marginal

farmers. Per acre utilisation of fertilizers and pesticides by the small farmers is

2,145.65 kgs. and `1,345.25 respectively as against 2,465.45 kgs. and `1,225.65

respectively by the marginal farmers. The use of fertilizers and pesticides is also

found statistically significant between the two groups of farmers.

The marginal farmers are found to utilize more farm manure and the

irrigation cost per acre is also more than that of the small farmers. For instance,

the marginal farmers use `9,100.25 of farm manure and `1,235.65 for irrigation

cost per acre while the small farmers use only `8,950.25 of farm manure and

`1,185.60 as irrigation cost per acre. The other inputs, namely propping cost and

sucker cost are not significant between the two groups of farmers.

Thus, it is observed that the level of input application is greater for

marginal farmers compared with the small farmers. Therefore, the first hypothesis

that “there is no significant difference exists between the banana yield of small

farmers and marginal farmers” is invalid.

5.2.3 Input-Output Structure of Kathali Banana

The input-output structure of different kathali banana cultivation per acre

between small and marginal farmers is given in Table 5.3.

162
 TABLE: 5.3

INPUT-OUTPUT STRUCTURE OF KATHALI BANANA

CULTIVATION PER ACRE BY SMALL AND MARGINAL
FARMERS OF THE STUDY AREA

Small Marginal t-value

Particulars Farmer Farmer

Human Labour in man days 69.50 72.50 0.9856

per acre
Chemical Fertilizers in kgs. 2015.12 2165.18 2.6547*
Per acre
Farm manure in kgs. Per 6850.12 7145.25 1.0235
acre
Pesticide `per acre 1025.69 1326.45 1.8621

Irrigation Cost in ` per acre 1089.45 1425.75 3.8561*

Propping cost in `per acre 11500.50 12650.25 4.0125*

Cost of suckers in `per acre 1950.25 2436.15 1.0269
Yield in tonnes per acre 12.85 14.72 3.2624*
Sample Size 37 405
Source: Field Survey
* Statistically significant at 5 per cent level

Thus the above table 5.3 shows an average yield per acre obtained by the

small farmers producing kathali banana variety is 12.85 tonnes while the marginal

farmers an yield of 14.72 tonnes. There is a surplus of 1.87 tonnes of the yield per

acre realized by small farmers compared to the marginal farmers sharing kathali

variety.

163
 Human labour employed by the small farmers is about 69.50 man days

while it is 72.50 man days for the marginal farmers. The difference in the man

days may be attributed to the more intensive use of family labour by the marginal

farmers.

Small farmers used 2,015.12 kgs. and marginal farmers 2,165.18 kgs. of

chemical fertilizers per acre. The amount of farm manure applied by the small

farmers is 6,850.12 kgs. and by marginal farmers is 7,145.25 kgs. per acre. The

average expenditure on pesticides per acre amounted to `1,025.69 and

`1,326.45 and propping cost `11,500.50 and `12,650.25 and suckers cost of

`1,950.25 and `2,436.15 for small and marginal farmers respectively. The use of

chemical fertilizers, irrigation cost, propping cost and yield is found statistically

significant between the two groups of farmers.

The input application is greater for marginal farmers than small framers.

The above analysis shows that the level of input application is greater for marginal

farmers compared to the small farmers in all the three varieties of banana

cultivation. More intensive use of input provides them more yield. Therefore, the

first hypothesis that “there is no significant difference exists between the banana

yield of small farmers and marginal farmers” is not proved.

5.3 Cost and Return Structure

The cost of cultivation of banana includes the cost of inputs like sucker

cost, cost of manures and fertilizers, plant protection chemicals, cost of propping

164
and transportation cost. The cost of human labour, interest on working capital,

rent paid for land are also taken into consideration.

The present study is worked with three cost structure (Cost A, Cost B and

Cost C) in cultivation of banana by a farmer excluding the rent paid to the leased

land.

The expenditure towards wages, plants, manures, chemical fertilizers,

pesticides, irrigation charges, propping cost and the interest paid on working

capital are included in Cost A.

Cost B structure includes all the expenditures of Cost A plus the rent paid

to the leased land.

Cost C includes all the expenditure of Cost B and the interest on own and

borrowed capital.

In the Kalkulam taulk of Kanyakumari district, most of the banana farmers

borrow money for the cultivation of banana. As Cost C includes all the

expenditures of Cost B and the interest on own and borrowed capital, it is decided

to work out with the cost and return structure with Cost A and Cost C.

The cost and return structure of red banana, nendran, kathali are given

below.

5.3.1 Cost and Return Structure of Red Banana

Per acre cost and return structure of small and marginal farmers cultivating

red banana is presented in Table 5.4.

165
 TABLE: 5.4
COST AND RETURN STRUCTURE OF SMALL AND MARGINAL
FARMERS CULTIVATING RED BANANA (PER ACRE)
Small Farmer Marginal Farmer
Sl. Items of Cost A Value Value in Value Value in
No in ` Percentage in ` Percentage
1. Value of human labour
including family labour 32100 21.67 33000 22.15

2. Plantation Charges Human 9200 6.21 9000 6.04

Labour
3. Chemical Fertilizers 20500 13.84 21200 14.23

4. Pesticides 900 0.61 700 0.47

5. Sucker Cost 7500 5.06 7200 4.83

6. Farm Manure 22500 15.19 23000 15.44

7. Cost of Irrigation 10600 7.16 9600 6.44

8. Propping Cost 29500 19.92 30200 20.27

9. Transport Cost 1700 1.15 3600 2.42

10 Interest on Working Capital 600 0.41 500 0.34

Cost A Total 135100 91.22 138000 92.62

Cost C
11. Rent 11000 7.43 10000 6.71

1. Interest on Fixed Capital, Land

Revenue, Cess and Tax,
Depreciation of Implements 2000 1.35 1000 0.67
and Machinery
Cost C Total 148100 100.00 149000 100.00
Yield Per Acre in tonnes 16.89 17.53
Yield Per Acre in `(bunches, 248200 252450
suckers and leaves)
Net Income in ` 1,00,100 1,03,450

Source: Field Survey

166
 From Table 5.4, it is understood that the net income of `100,100 earned by

the small farmers is lesser than that of `1,03,450 earned by the marginal farmers.

The total cost incurred by the small farmers is `1,48,100 which is lesser than the

cost of `1,49,000 incurred by the marginal farmers. Variable cost is 91.22 per cent

for the small farmers and 92.62 per cent for the marginal farmers. Among the

different types of inputs, human labour constitutes the major cost component

which is 21.67 per cent that is 22.15 per cent of the total cost, for the small and

marginal farmers respectively. Propping cost is the next important cost component

which accounts for 19.92 per cent for the small farmers and 20.27 per cent for the

marginal farmers.

Expenditure made on chemical fertilizers is greater in the case of marginal

farmers. It is 14.23 per cent for marginal farmers and 13.84 per cent for small

farmers. Rent paid is 7.43 per cent for the small farmers and 6.71 per cent for the

marginal farmers. Other costs made on sucker purchase, farm manure, irrigation

and interest on working capital are found to be lesser than eight per cent for both

the groups.

The following Figure 5.1 shows the cost structure of banana cultivation in

the study area by small and marginal farmers.

167
 FIGURE: 5.1

COST STRUCTURE OF RED BANANA

Small Farmers

Interest on
Woking Interest on
Rent Fixed Capital
capital Human Labour
7% 1 %
1% 23%
Propping Cost
Plantation
20%
Charges
6%

Chemical
Cost of Fertilizers
Irrigation 14%
Farm Manure
7%
15% Pesticides
1%

Sucker Cost
5%

Marginal Farmers

Interest on
Interest on
Working
capital RentFixed Capital
Human Labour
7% 1%
2% 23%
Propping Cost
21%

Plantation
Charges
Cost of
6%
Irrigation
6% Chemical
Fertilizers
Farm Manure
14%
15%
Pesticides
0%

Sucker Cost
5%

168
 The cost incurred for red banana cultivation by the marginal farmers is

higher than the cost incurred by small farmers. They earned more net income.

5.3.2 Cost and Return Structure of Nendran Banana

Per acre cost and return structure of nendran banana cultivation is presented

in Table 5.5 and Figure 5.2 shows the cost structure of banana in the study area for

small and the marginal farmers.

169
 TABLE: 5.5
COST AND RETURN STRUCTURE OF SMALL AND MARGINAL
FARMERS CULTIVATING NANDREN BANANA (PER ACRE)
Small Farmer Marginal Farmer
Sl. Items of Cost A Value Value In Value Value In
No in ` Percentage in ` Percentage

1. Value of human labour 17500 20.60 18000 20.70

including family labour

2. Plantation Charges 6800 8.00 7200 8.28

3. Chemical Fertilizers 15500 18.25 16000 18.40
4. Pesticides 600 0.71 600 0.69
5. Sucker Cost 3600 4.24 3500 4.03
6. Farm Manure 9200 10.83 9300 10.70
7. Cost of Irrigation 2800 3.30 3000 3.45
8. Propping Cost 17000 20.01 17900 20.59
9. Transport Cost 2000 2.35 2100 2.42
10. Interest on Working Capital 500 0.59 450 0.52
Cost A Total 75500 88.88 78050 89.76
Cost C
11. Rent 8500 10.01 8000 9.20
12. Interest on Fixed Capital, Land
Revenue, Cess and Tax, 950 1.12 900 1.04
Depreciation of Implements
and Machinery

Cost C Total 84950 100.00 86950 100.00

Yield Per Acre in tonnes 14.55 15.86
Yield Per Acre in `(bunches,
suckers and leaves) 1,28,000 1,33,900
Net Income in ` 43050 46950
Source: Field Survey

170
 Table 5.5 shows that the net income earned by the small farmers is `43,050

as against `46,950 by the marginal farmers. The total cost incurred by the small

farmers is `84,950 which is lesser than the cost incurred by the marginal farmers

(i.e. `86,950). The variable cost accounts to 88.88 per cent for the small farmers

and 89.76 per cent for the marginal farmers.

The human labour constitutes the major cost component, accounting 20.60

per cent of the total cost in the case of the small farmers and 20.70 per cent in the

case of the marginal farmers. Propping cost is another important cost component

which accounts to 20.01 per cent for the small farmers and 20.59 per cent for the

marginal farmers. Expenditure spent on chemical fertilizers is greater in the case

of marginal farmers, which worked out to be 18.40 per cent as against 18.25 per

cent as in the case of small farmers.

The cost of rent calculated for small farmers is 10.01 per cent and it is 9.20

per cent for the marginal farmers. Farm manure is 10.83 per cent of the total cost

for the small farmers and it is 10.70 per cent for the marginal farmers. Other costs

such as sucker cost, pesticides, irrigation cost and interest on working capital is

worked out to be lesser than 5 per cent in both the groups. For nendran variety,

the cost of cultivation is more for the marginal farmers than small farmers. Their

return is also high.

171
 FIGURE: 5.2

COST STRUCTURE OF NENDRAN BANANA

Interest on Small Farmers

Working
Capital
1%
Interest on
Transport Rent Fixed Capital
Human Labour
Cost 10% 1%
21%
2%

Propping Cost Plantation

20% Charges
8%

Cost of
Irrigation
3% Chemical
Fertilizers
Farm Manure 18%
11%
Pesticides
1%

Sucker Cost
4%

Interest on
Working
Marginal Farmers
Capital
1%
Interest on
Transport Rent Fixed Capital
Cost Human Labour
9% 1%
2% 21%

Propping Cost Plantation

21% Charges
8%

Cost of
Irrigation
3% Chemical
Fertilizers
Farm Manure 18%
11%
Pesticides
1%

Sucker Cost
4%

172
5.3.3 Cost and Return Structure of Kathali Banana
Per acre cost and return structure of kathali banana cultivation is presented

in Table 5.6.

TABLE: 5.6
COST AND RETURN STRUCTURE OF SMALL AND MARGINAL
FARMERS CULTIVATING KATHALI BANANA (PER ACRE)
Small Farmer Marginal Farmer
Sl. Items of Cost A Value Value In Value Value In
No in ` Percentage in ` Percentage

1. Value of human labour 13300

including family labour 14500 23.54 21.68
2. Plantation Charges 7400 12.01 8600 14.02
3. Chemical Fertilizers 7000 11.36 6900 11.25
4. Pesticides 1200 1.95 1400 2.28
5. Sucker Cost 3200 5.19 3100 5.05
6. Farm Manure 9000 14.61 10000 16.30
7. Cost of Irrigation 2500 4.06 2400 3.91
8. Propping Cost 8100 13.15 7300 11.90
9. Transport Cost 1500 2.44 1200 1.96
10. Interest on Working Capital 600 0.97 500 0.81
Cost A Total 55000 89.29 54700 89.16
Cost C
11. Rent 6000 9.74 6000 9.78
12. Interest on Fixed Capital, Land
Revenue, Cess and Tax, 600 0.97 650 1.06
Depreciation of Implements
and Machinery
Cost C Total 61600 100.00 61350 100.00
Yield Per Acre in tonnes 12.85 14.72
Yield Per Acre in `(bunches, 103750 105250
suckers and leaves)
Net Income in ` 42,150 43,900
Source: Field Survey

173
 Table 5.6 shows that the average yield per acre realized by the small

farmers cultivating kathali variety is 12.85 tonnes. They earn `1,03,750 per acre.

The net income earned by the small farmers is `42,150. The total cost incurred by

small farmers is `61600 with the operating cost of 89.29 per cent of the total cost.

Human labour is 23.54 per cent forming the major item of the total cost. The other

expenses are chemical fertilizers 11.36 per cent, propping cost 13.15 per cent,

plantation cost 12.01 per cent, farm manure 14.61 per cent, pesticides 1.95 per

cent and transport cost 2.44 per cent. The interest on working capital is 0.97 per

cent (`600) of the total cost.

The yield of marginal farmers amounts to 14.72 per acre and the monetary

terms of `1,05,250 being the net income received against the total cost incurred

`61,350. While the operating cost accounts for 89.16 per cent (`54,700), human

labour constitutes 21.68 per cent (`13,300). The percentage share of chemical

fertilizer is 11.25 per cent (`6,900), propping cost 11.90 per cent (`7,300),

plantation cost 14.02 per cent (`8,600), interest on working capital 0.81 per cent

(`500), cost of irrigation 3.91 per cent (`2,400), transport cost 1.96 per cent

(`1,200), rent has a percentage of 9.78 per cent (`6,000) and interest on fixed

capital 1.06 per cent (`650).

In Kalkulam taluk the marginal farmers cultivating kathali banana earn more

income than small farmers as the cost of cultivation charges with increase in the size

of the land area. The following Pie-diagram (Figure 5.3) shows the cost structure of

banana cultivation in the area under study by small and marginal farmers.

174
 FIGURE: 5.3
COST STRUCTURE OF KATHALI BANANA

Interest on
Working Small Farmers
Capital
1%
Interest on
Transport
Rent Fixed Capital
Cost Human Labour
10% 1%
2% 24%
Propping Cost
13%

Cost of
Plantation
Irrigation
Charges
4%
12%
Chemical
Farm Manure
Fertilizers
15%
11%
Sucker Cost
Pesticides
5%
2%

Marginal Farmers

Interest on
Interest on
working Fixed Capital
Rent Human Labour
capital 1%
10% 22%
2%
Propping Cost
12%

Cost of
Plantation
Irrigation
Charges
4%
14%
Farm Manure Chemical
16% Fertilizers
11%
Sucker Cost
5% Pesticides
2%

175
 From the above analysis it is clear that the cost of cultivation for marginal

farmers is higher than the cost incurred by the small farmers, except in kathali

variety. They earn more income than the small farmers in cultivating all varieties

of banana.

5.4 Input-Output Ratio

5.4.1 Input-Output Ratio of Red Banana

The input-output ratio of red banana cultivation by the small and marginal

farmers in the area under study is presented in Table 5.7.

The input-output ratio per acre of red banana cultivation, in terms of

operating cost is `1.80 for the small farmers and `1.87 for the marginal farmers.

The profit gained by the marginal farmers is greater than the benefit enjoyed by

the small farmers, it is found that the marginal farmers gain `1.70 and the

small farmers gain `1.67 over a rupee spent on cultivation.

Thus, it is observed that the cost of production and output per acre for the

small farmers are higher than that of the marginal farmers.

176
 TABLE: 5.7

ECONOMICS OF CULTIVATION OF RED BANANA PER ACRE

Small Marginal
Sl. Farmers Farmers
No. Items of Cost (in `) (in `)

1. Output in tonnes (Acre) 16.89 17.53

2. Gross Return 2,48,200.00 2,52,450.00

3. Total Operating Cost (Cost A) 1,38,000.00 1,35,000.00

4. Net Return over Cost A 1,10,200.00 1,17,450.00

5. Cost C 1,49,000.00 1,48,100.00

6. Net Return over Cost C 99,200.00 1,04,350.00

7. Cost of Production/tonne (Cost A) 8,170.52 7,701.08

8. Cost of Production/tonne (Cost C) 8,821.79 8448.37

9. Input-Output Ratio (Cost A) 1.80 1.87

10. Input-Output Ratio (Cost C) 1.67 1.70

11. Benefit – Cost Ratio (Cost C) 0.67 0.70

Source: Field Survey

5.4.2 Input-Output Ratio of nendran Banana

The input-output ratio of nendran banana cultivation by the small and

marginal farmers in the area under study is presented in Table 5.8.

177
 TABLE: 5.8
ECONOMICS OF CULTIVATION OF NENDRAN BANANA
PER ACRE
Small Marginal
Sl. Farmer Farmer
No. Items of Cost (in `) (in `)

1. Output in tonnes (Acre) 14.55 15.86

2. Gross Return 128000.00 133900.00

3. Total Operating Cost (Cost A) 75500.00 78050.00

4. Net Return over Cost A 52500.00 55850.00

5. Cost C 86950.00 84950.00

6. Net Return over Cost C 41050.00 48950.00

7. Cost of Production/tonne (Cost A) 5189.00 4921.19

8. Cost of Production/tonne (Cost C) 5975.95 5356.24

9. Input-Output Ratio (Cost A) 1.70 1.72

10. Input-Output Ratio (Cost C) 1.47 1.58

11. Benefit – Cost Ratio (Cost C) 0.47 0.58

Source: Field Survey

Table 5.8 shows that yield per acre received by the small and marginal

farmers cultivating nendran banana is 14.55 and 15.86 tonnes respectively. The

variable cost and total cost of production are to the tune of `75,500 and

`86,950 respectively for small farmers and `78,050 and `84,950 respectively for

marginal farmers. The input-output ratio per acre in terms of Cost A and Cost C is

`1.70 and `1.47 respectively for small farmers and `1.72 and `1.58 respectively

178
for marginal farmers. The benefit-cost ratio shows that the rupee expended result

in a benefit of small and marginal farmers is `0.47 and `0.58 respectively.

5.4.3 Input-Output Ratio of Kathali Banana

The input-output ratio of kathali banana cultivation by the small and

marginal farmers in the area under study is presented in Table 5.9.

TABLE: 5.9
ECONOMICS OF CULTIVATION OF KATHALI BANANA
PER ACRE
Sl. Small Marginal
No. Items of Cost Farmer Farmer
(in `) (in `)
1. Output in tonnes (Acre) 12.85 14.72

2. Gross Return 105250.00 103750.00

3. Total Operating Cost (Cost A) 54700.00 55000.00

4. Net Return over Cost A 50550.00 48750.00

5. Cost C 61350.00 61600.00

6. Net Return over Cost C 43900.00 42150.00

7. Cost of Production/tonne (Cost A) 4256.81 3736.41

8. Cost of Production/tonne (Cost C) 4774.32 4184.78

9. Input-Output Ratio (Cost A) 1.92 1.89

10. Input-Output Ratio (Cost C) 1.72 1.68

11. Benefit-Cost Ratio (Cost C) 0.72 0.68

Source: Field Survey

179
 The input-output ratio per acre of kathali banana cultivation in terms of

operating cost was `1.92 for the small farmers and `1.89 for the marginal farmers.

The profit gained by the marginal farmers was greater than the benefit enjoyed by

the small farmers. Benefit-cost ratio reveals that the marginal farmers gained

`0.68 and the small farmers gained `0.72.

Thus, it is observed that the cost of production and output per acre for the

marginal farmers is lesser than small farmers. The small farmers indeed, enjoyed

greater monetary benefits than the marginal farmers for kathali banana in the study

area.

5.5 Economic Returns

For a long time, in India, marketing conditions are primitive and farmers

are exploited by traders and middlemen. The farmers feel that they do not get

competitive prices for their output as the price is fixed by the commission agents

and retailers. They cannot fix the sale price over and above their cost price. They

face the problems of unsatisfactory prices, high market expenses etc. The

economic return of the banana cultivation is explained through the Table 5.10.

180
 TABLE: 5.10

ECONOMIC RETURNS OF BANANA

Total Total Gross

Varieties Production Cost of Profit (in `)
(in `) Cultivation (in `)
Red Banana 16729830 9265180 7464650

Nendran Banana 15962017 8363863 7598154

Kathali Banana 7554910 4126753 3428157

Source: Compiled from Field Survey

Table 5.10 explains that the total production of red banana is `1,67,29,830,

nendran is `1,59,62,017 and kathali is `75,54,910 and the total cost of cultivation

of red banana is `92,65,180, nendran is `83,63,863 and kathali is `41,26,753 and

the gross profit is `74,64,650, `75,98,154 and `34,28,157. The banana cultivation

is profitable. But the farmers are highly exploited by traders, brokers and

middlemen.

5.6 Analysis of Determinants of Annual Gross Returns

Banana production is a function of a number of variables. A farmer will be

benefitted if he has knowledge of the relative importance of the inputs influencing

the production of banana. He would be able to make desirable changes and

improve production. The knowledge of the productivity of the variables would

enable the policy makers also to formulate plans for the development of

agriculture.

181
 The production technology is not uniform and consists of different types of

cultivators. Hence it is necessary to estimate one production function. In this

section, an attempt has been made to analyse the factors which determine the

annual gross return per unit. In order to identify the determinants of production

function, the following form of multiple linear regression model of Cobb-Dougles

type is used.

Y = αO + β1logX1 + β2logX2 + β3logX3 + β4logX4 + β5logX5 + U

Where Y = Annual gross return

x1 = Verities of banana

x2 = Age of the plant

x3 = Capital invested (in `)

x4 = Land in acres

x5 = Farming experience

U = Disturbance term

5.6.1 Estimation of Annual Gross Return per Unit

The annual gross return of banana production in Kalkulam taluk is

regressed upon many interdependent variables and finally five variables are

selected namely, varieties of banana, age of the plant, capital invested, land in

acres and farming experience of the farmers. It has been found that the multiple

regression co-efficients in terms of its ‘F’ value which is calculated to be 32.64

with an R2 value of 0.68 explains nearly 68 per cent of the variation in the annual

182
gross return of production. All the co-efficient are found significant at one per cent

level. The results of the estimated multiple regression is given in Table 5.11.

TABLE: 5.11

MULTIPLE LINEAR REGRESSION – BANANA PRODUCTION

FUNCTION
Co-efficients Std. Error t Sig.

(Constant) 6.9911 6.9413 10.07 0.000

X1 0.4313 1.1187 3.86 0.000

X2 -0.4032 9.8088 -4.11 0.000

X3 0.5434 1.0895 4.99 0.000

X4 0.2895 3.5432 2.53 0.000

X5 0.0409 4.3297 3.25 0.000

R2 = 0.68 F = 64.5896 N = 442

X1 – Varieties of Banana X2 – Age of the Plant

X3 – Capital Invested X4 – Land in acres
X5 – Farming Experience

The multiple linear equations is

y = 6.9911 + 0.4313X1 – 0.4032 X2 + 0.5434X3 + 0.2895X4 + 0.0409X5

According to the estimated model, the annual gross return increases by

0.4313 units for every one unit increase in the varieties of banana. For one time

increase in the age of the plant the annual gross return increases by –0.4032. For

one unit increase in the capital invested the gross return increases by 0.5434. For

183
one unit increase in the area in acres, the gross return increases by 0.2895 and for

one unit increase in the farming experience the gross return increases by 0.0409.

The co-efficients are all significant in terms of their ‘t’ values. Among the

independent variables, the age of the plant is found to have negative influence and

the others have positive relation with the dependent variable.

From the table 5.11 the multiple coefficient of determinantion R2 is 0.68

per cent. Hence we conclude that the variables X1, X2, X3, X4 and X5 are 68 per

cent, total variation in the dependent variable ‘y’ that is varieties of banana, age of

the plant, capital invested, area in acres and farming experience are totally 68 per

cent variation in the annual gross return of banana production in the study area.

Further the above table explains that the multiple regression F test is say

that the overall variables to data is good fit, that the calculated value of F is greater

than the table value. So we conclude that the data of the variables are good fit,

and overall the variables X1, X2, X3, X4 and X5, y are linear.

Among the significant variables, capital invested has a greater influence on

the determination of the total production followed by the varieties of the banana.

Therefore the second hypothesis namely “the capital invested had greater

influence on the determination of the total production of banana in Kalkulam

taluk” is valid and found correct.

184
5.6.2 Estimation of Cost Function

In order to identify the cost function of banana production, the following

form of simple regression model was fitted by the method of least squares.

C = a + b1x1 + b2x2 + b3x3 + b4x4 + b5x5 + b6x6 + b7x7 + b8x8 + u

Where C = Total cost

x1 = Wages for Labourers in `

x2 = Fertilizer cost in `

x3 = Sucker cost in `

x4 = Irrigation cost in `

x5 = Plantation cost in `

x6 = propping cost in `

x7 = Rent

x8 = Other Incidental Charges

A multiple regression has been estimated to find out the dominating factors

affecting the total cost. Here, different influencing items, wages for labourers,

fertilizer cost, sucker cost, irrigation cost, plantation cost, propping cost, rent and

other incidental charges are considered as explanatory variables. The results of the

estimated regression are presented in the Table 5.12.

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 Table: 5.12

Estimation of Cost Function Analysis

Coefficients Std. Error t Sig.

(Constant) 3.7191 6.3945 5.82 0.000

X1 0.5090 9.4005 4.26 0.000

X2 -0.4558 9.42621 -3.67 0.000

X3 0.7783 6.3770 3.49 0.000

X4 -0.6430 1.5489 -5.58 0.000

X5 0.7060 4.3922 2.67 0.009

X6 0.8600 8.9711 1.66 0.096

X7 -0.4168 2.5827 -2.10 0.036

X8 0.2650 4.0696 2.28 0.023

F = 58.53 R2 = 0.81 N = 125

x1 = Wages for Labourers x2 = Fertilizer cost

x3 = Sucker cost x4 = Irrigation cost

x5 = Plantation cost x6 = propping cost

x7 = Rent x8 = Other Incidental Charges

The model is found significant in terms of the ‘F’ value (58.53) and the

model explains about 81 per cent of the variations in the dependent variable. The

co-efficients are all significant in terms of their ‘t’ values. Among the independent

186
variables, fertilizer cost, irrigation cost and rent have negative influences. It

implies that one unit increase in these variables may lead to decrease in total cost

per unit by -0.4558 unit, -0.6430 unit, and -0.4168 unit respectively.

In the case of wages for labourers, sucker cost, plantation cost, propping

cost, and other incidental charges, it is significant and positively related to the total

cost. It means that an addition made to these variables is 0.5090 unit, 0.7783 unit,

0.7060 unit, 0.8600 unit and 0.2650 unit increase in total cost of banana

production.

Thus it is inferred from the analysis that the variable, wages for labourers

has a greater influence on the total cost followed by the variable, sucker cost. As

per F value, (58.53) the fitted regression model is found to be significant at five

per cent level.

In the case of cost function analysis, five out of eight variables namely

wages for labourers, sucker cost, plantation cost, propping cost and other

incidental charges were statistically significant and positively related to the cost of

cultivation of banana in the study area. Wages of labourers had a greater impact

on cost of cultivation. Hence, a positive relationship is observed between cost and

output. Therefore the third hypothesis that “there is a positive relationship

between cost and output of banana in the study area” is proved.

187
5.7 Analysis of Marketing

Market includes any place where persons assemble for the sale or purchase

of commodities intended for satisfying human wants. A market is a sphere within

which price determining force operates.1

Market is the area within which the forces of demand and supply converge

to establish a single price.2

A market means a social institution which performs activities and provides

facilities for exchanging commodities between buyers and sellers.3

The term agricultural marketing is composed of two words - Agricultural

and marketing. Agricultural in the broadest sense means activities aimed at the

use of natural resource for human welfare i.e. includes all the primary activities of

production. But generally, it is used to mean growing or raising crops and

livestock. Marketing connotes a series of activities involved in moving the goods

from the point of production to the point of consumption. It includes all the

activities involved in the creation of time place, form and possession utility.4

According to Thomson, the study of agricultural marketing comprises of all

the operations, and the agencies conducting them, involved in the movement of

farm produced foods, raw materials and their derivatives such as textiles from the

1
Hibbard B. H, “Marketing Agricultural Products”, [Link] Company Inc. New York, 1921,
pp.13 -15.
2
Encyclopaedia of Social Science, Vol. 10, 2000, p.133.
3
Gupta, A.P, “Marketing of Agricultural Produce in India”, Vora and Co, Publishers Pvt.
Limited, Bombay, 1975, p.15.
4
S.S. Acharya, N.L. Agarwal, “Agricultural Marketing in India” Second Edition, Oxford I. B. H.
Publishing Co Pvt. Ltd, Calcutta.

188
farms to the final consumers and the effects of such operations on farmers,

middlemen and consumers.5

5.8 Different Marketing Channels in Kalkulam Taluk

When the produce is brought for sale to the market each individual produce

is allotted a lot number. Some sales are based on the verbal understanding

between buyers and sellers by mentioning the rate as it is understood that the

buyer will pay the prevailing rate. This method is followed when cultivators

borrow from the traders or where his residence is far away from the market.

A cultivator, who has to borrow heavily for a growing crop, often

mortgages it in advance, so that the sale of produce, which is hardly more than a

mere formality, takes almost in his field as soon as the crop is harvested. In all

other cases where crop is not formally mortgaged it has to be disposed of almost

immediately after harvest in order to pay off the debt. The following table shows

the extent of use of different marketing channels in Kalkulam taluk.

5
Thomson. F. L, “Agricultural Marketing”, M.C. Graw- Hill Book Company Inc., New York,
1951, p.1.

189
 TABLE: 5.13

THE DISTRIBUTION OF BANANA USING DIFFERENT

MARKETING CHANNELS IN KALKULAM TALUK

Small Farmers Marginal Farmers Average

Marketing of the
No. of Percentage No. of Percen-
Channels Two
Respondents Respondents tage
Groups
Wholesalers / 12 32.43 130
pre harvest 32.10 32.27
Contractors
Retailers 10 27.03 84 25.68 26.35

Agents 7 24.32 102 27.65 25.99

Direct 8 16.22 89
14.57 15.39
marketing
Total 37 100 405 100 100
Source: Field Survey

The above table shows that in the case of banana small and marginal

farmers market their products through wholesalers, pre-harvest contractors,

retailers and agents. Only a small percentage of farmers have to sell their products

by direct marketing.

Out of 442 respondents, 32.27 per cent of the farmers sell their products

through wholesalers, 26.35 per cent of the farmers sell their products through

retailers and 25.99 per cent of the farmers sell their products through agents. Only

15.39 per cent of the farmers sell directly their surpluses.

190
 The researcher has come to know that most of the banana cultivators in

Kalkulam taluk like to sell their produce to the wholesalers because they have

borrowed more money from them.

5.9 Marketing Costs, Marketing Margin and Price spread in

Kalkulam Taluk

The marketing cost, marketing margin of various intermediaries as well as

the price spread in most important channels like producer-consumer, wholesaler-

retailer - consumer are presented in this section. The marketing cost, marketing

margin and price spread of banana produced at Kalkulam taluk of Kanyakumari

district is discussed in detail. The study of price spread in banana marketing is an

important aspect since it reflects upon the share of the producer and different

market functionaries as well as the cost of marketing which is met from the price

paid by the consumers. It is the actual difference between the price paid by the

consumer and the price received by the producer.

5.9.1 Marketing Cost and Marketing Margin of Red Banana

The table 5.14 explains the marketing cost and marketing margin of red

banana.

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 TABLE: 5.14

THE PRICE SPREAD OF RED BANANA PRODUCED IN

KALKULAM TALUK
S. Items of Cost `/ Bunch in an Average Percentage
No. per bunch consist of 60
fingers
1. Gross price received by the Farmers 150 50.00
2. Marketing cost of farmers 0
3. Net Price received by the farmers 150 50.00
4. Marketing cost of the Pre-harvest
contractor
a. Cost of harvesting 4 1.33
b. Cost of loading 3 1.00
c. Cost of transport 8 2.67
d. commission charges 17 5.67
Total 32 10.67
5. Marketing margin of the Pre-harvest 33
contractor 11.00
6. Price received by the Pre-harvest 215 71.67
contractor
7. Marketing cost of wholesaler
a. Wastage 5 1.67
b. Smoking charges 3 1.00
c. Other expenses 6 2.00
Total 14 4.67
8. Marketing margin of the wholesaler 28 9.33
9. Price received by the wholesaler or 257 85.67
Price paid by the retailer
10. Retailer marketing cost
a. Transport cost 5 1.67
b. Wastage 5 1.67
Total 10 3.33
11. Marketing margin of the retailer 33 11.00
12. Retailer selling price or Price paid by 300 100.00
the ultimate consumer
Source: Field Survey

The net returns here means gross return minus extra cost involved in taking

to the market. The general cultivation costs are not deducted from gross returns.

192
 The analysis reveals that in the case of red banana 50 per cent of the price

paid by the consumer is spread in marketing the product. The major marketing

cost components is the commission charges accounting for 5.67 per cent of the

consumer’s price. Cost of transport constitutes 2.67 per cent of the consumer’s

price.

The marketing margin of the pre-harvest contractor is observed to be

11.00 per cent of the consumer’s price. The marketing margin of the wholesaler

and retailer is 9.33 per cent and 11.00 per cent respectively. The producer receives

the maximum share of 50 per cent (`150) of the consumer price. The price spread

is observed to be 50 per cent in red banana marketing.

5.9.2 Marketing Cost and Marketing Margin of Nendran Banana

The table 5.15 explains the marketing cost and marketing margin of

nendran banana.

In the case of nendran it is inferred that 42.50 per cent of the consumer’s

price is spread in marketing the products. The major marketing cost component is

the commission charges accounting for 5.50 per cent of the consumer’s price.

Cost of transport constitutes 1.50 per cent of the consumer’s price.

The marketing margin of the pre-harvest contractor is observed to be 10.50

per cent of the consumer’s price. The marketing margin of the wholesaler and

retailer is five per cent and 10.5 per cent respectively. The producer receives the

193
maximum share of 57.50 per cent (`115) of the consumer price. The price spread

is observed to be 42.50 per cent in nendran banana marketing.

TABLE: 5.15

THE PRICE SPREAD OF NENDRAN BANANA PRODUCED IN

KALKULAM TALUK
S. Items of Cost `/ Bunch in an Average Percentage
No. per bunch consist of
40 fingers
1. Gross price received by the Farmers 115 57.50
2. Marketing cost of farmers 0
3. Net Price received by the farmers 115 57.50
4. Marketing cost of the Pre-harvest
contractor
a. Cost of harvesting 2 1.00
b. Cost of loading 3 1.50
c. Cost of transport 3 1.50
d. commission charges 11 5.50
Total 19 9.50
5. Marketing margin of the Pre-harvest 21
contractor 10.50
6. Price received by the Pre-harvest 155 77.50
contractor
7. Marketing cost of wholesaler
a. Wastage 3 1.50
b. Smoking charges 2 1.00
c. Other expenses 3 1.50
Total 8 4.00
8. Marketing margin of the Wholesaler 10 5.00
9. Price received by the wholesaler or 173 86.50
Price paid by the retailer
10. Retailer marketing cost
a. Transport cost 3 1.50
b. Wastage 3 1.50
Total 6 3.00
11. Marketing margin of the retailer 21 10.50
12. Retailer selling price or price paid by 200 100.00
the ultimate consumer
Source: Field Survey

194
5.9.3 Marketing Cost and Marketing Margin of Kathali Banana

Table 5.16 express, the price spread of kathali banana produced in

Kalkulam taluk of Kanyakumari district.

TABLE: 5.16

THE PRICE SPREAD OF KATHALI BANANA PRODUCED IN

KALKULAM TALUK
S. Items of Cost `/ Bunch in an Average Percentage
No. per bunch consist of
70 fingers
1. Gross price received by the farmers’ 85 53.13
2. Marketing cost of farmers 0
3. Net Price received by the farmers 85 53.13
4. Marketing cost of the Pre-harvest
contractor
a. Cost of harvesting 2 1.25
b. Cost of loading 4 2.50
c. Cost of transport 4 2.50
d. commission charges 8 5.00
Total 18 11.25
5. Marketing margin of the Pre-harvest 17
contractor 10.63
6. Price received by the Pre-harvest 120 75.00
contractor
7. Marketing cost of wholesaler
a. Wastage 2 1.25
b. Smoking charges 2 1.25
c. Other expenses 4 2.50
Total 8 5.00
8. Marketing margin of the wholsaler 9 5.63
9. Price received by the wholesaler or 137 85.63
Price paid by the retailer
10. Retailer marketing cost
a. Transport cost 3 1.88
b. Wastage 4 2.50
Total 7 4.38
11. Marketing margin of the retailer 16 10.00
12. Retailer selling price or price paid by 160 100.00
the ultimate consumer
Source: Field Survey

195
 The consumer’s price spread on marketing kathali banana is 46.87 per

cent. The major marketing cost component is the commission charges accounting

for five per cent of the consumer’s price. Cost of transport constitutes 2.50 per

cent and the cost of loading is 2.50 per cent of the consumer’s price.

The marketing margin of the pre-harvest contractor is observed to be 10.63

per cent of the consumer’s price in kathali banana marketing. The marketing

margin of the wholesaler and retailer is 5.63 per cent and 10 per cent respectively.

The producer receives the maximum share of 53.13 per cent (`85) of the consumer

price.

The above analysis reveals that, in the case of red banana, nendran and

kathali banana varieties 50 per cent, 43.50 per cent and 46.87 per cent of the price

paid by the consumer is spread in marketing the product. The red banana, nendran

and kathali banana cultivators got only 50 per cent, 57.50 per cent and 53.13 per

cent of the price for their product. Therefore the fourth hypothesis that “the larger

the number of middlemen in the market the lower is the margin of the banana

grower” is proved.

5.10 Sources of Finance

Loans are taken by the cultivators for two purposes either for meeting the

consumption need or for cultivation. The following table shows the sources of

finance of the cultivators.

196
 TABLE: 5.17

SOURCES OF FINANCE

Source of Finance Small Marginal Total

Farmers Farmers Farmers
Owned 6 64 70
(16.22) (15.80) (15.84)
Borrowed 22 188 210
(59.46) (46.42) (47.51)
Both 9 153 162
(24.32) (37.78) (36.65)
Total 37 405 442
(100.00) (100.00) (100.00)
Source: Field Survey

The above table 5.17 shows that out of 442 respondents, 162 respondents

get their financial commitments for meeting their expenses for cultivation

purposes through borrowed money plus their own money. They also indulge in

borrowing money from the government.

The various marketing agents borrow funds at a high rate of interest. This

naturally leads to a rise in the cost of marketing with the ultimate result that the

share of the price received by the producer is correspondingly reduced.

Nearly 162 respondents have borrowed and owned finance for their

expenses for cultivation purpose which constitutes 36.65 per cent. The cultivators

have borrowed more money from Self Help Groups, Agricultural Co-operative

Credit Societies and banks. It reveals that the financial institutions policy has

frequently been changed by the government. One of the reasons for non-payment

of the loans is the government order about the repayment of loans. The

197
government frequently writes off the loans. This factor induces the borrower not

to repay their loan even though some people have the capacity to repay the loan.

5.11 Mode of Transport

In India with the vast distances, the existing means of transport are

woefully inadequate. Communications from the field to the village and from

village to the mandi are often extremely poor and defective. Bad roads, lanes and

tracts connecting village with the markets not only add to the loss of transportation

and aggravate the strain of the farmers but lead to the multiplication of small

dealers and intermediaries. They also restrict market by hindering cheap and rapid

movement of agricultural produce. There is not only mileage deficiency but there

is also a lack of feeder-roads connecting villages to market towns and the nearest

railway stations so that the product cannot be advantageously transported to

mandies.

Due to this lack of transport facilities much loss occurs. According to the

Directorate of Storage Inspection, the loss of marketable surplus of food crops in

transports is about 0.5 per cent of the quantities transported. The following table

shows the mode of transport.

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 TABLE: 5.18

MODE OF TRANSPORT
Trade of Transport Small Marginal Total
Farmers Farmers Farmers
Lorry 5 170 175
(13.51) (41.98) (39.59)

Tempo 10 210 220

(27.03) (51.85) (49.77)

Auto Tempo 22 25 47
(59.46) (6.17) (10.64)

Total 37 405 442

(100.00) (100.00) (100.00)

Source: Field Survey

The table 5.18 shows the mode of transport of the banana cultivators. Out

of the 442 respondents, five small and 175 marginal farmers use lorry for

transporting their banana products. This constitutes 39.59 per cent in this area that

is under study. 49.77 per cent of the respondents use Tempo for transporting of

their products and 10.64 per cent of the respondents use Auto Tempo for

transporting of their products. The researcher comes to know that there is no

sufficient transport facility in this area under study.

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5.12 An Overview

To sum up it is seen from the cost and return analysis that cultivation of

banana in the study area is a viable investment. The input application is greater for

marginal farmers compared to the small farmers in all the three varieties of banana

cultivation. More intensive use of input provides them more yield. The cost of

cultivation for marginal farmers is higher than the cost incurred by the small

farmers except in kathali variety. They earn more income than the small farmers

in cultivating all varieties of banana. The cost of cultivation for marginal farmers

is higher than the cost incurred by the small farmers except in kathali variety.

They earned more income than the small farmers in cultivating all varieties of

banana. The cost of production and yield per acre for the small farmers are higher

than that of the marginal farmers.

Thus cultivating banana can greatly enhance the income, employment and

standard of living of the cultivators of this study area.

200