chapter economic viability and profitability related...

CHAPTER - V1

ECONOMIC VIABILITY AND PROFITABILITY RELATED

ASPECTS OF ALTERNATIVE METHODS OF ORCHID AND

ANTHURIUM CULTIVATION - AN ANALYSIS

This chapter makes an in-depth analysis of the economic viability and

cost and profitability related aspects of Orchid and Anthurium cultivation. For the

purpose of comparison, the cost and returns, which is expected to continue for a

period of 5 years, are taken as a base. The analysis of cost and profitability of both

the Orchid and Anthurium cultivation is also carried out by considering these

aspects. Moreover, three alternative methods of cultivation adopted by the Small-

scale, Medium-scale and Large-scale cultivators of Orchids and Anthuriums have

also been taken into account.

Section - I of this chapter is devoted to make an analysis of

economic viability of alternate methods of Orchid cultivation, while Section - II tries

to analyse the economic: viability of Anthurium cultivation. Section - Ill makes a

comparative analysis of the net returns from alternative methods of Orchid and

Anthurium cultivation. Section - IV makes an in-depth analysis of the cost and

profitability related aspects of Orchid and Anthurium cultivation.

SECTION - I

AANLYSIS OF THE ECONOMIC VIABILITY OF ALTERNATIVE METHODS OF

ORCHID CULTIVATION

The cost and profitab~lity of Orchid cultivation is analysed by taking

1,000 plants (4 cents) as the base in the case of small-scale cultivators, 5,000

plants in the case of medium-scale and 25,000 plants in the case of large-scale

cultivators respectively. :Selection of plants, size of pots used and the method of

cultivation are the important factors determining the cost of cultivation. In case of

commercial cultivation, exotic or imported varieties of plants, especially the Near

Flowering Size (N.F.S.) plants are to be selected. If small cuttings of plants or ex-

agar plants are selectetl, the cost of plants can be reduced to a considerable

extent. But the risk attached to the process of acclimatization of plants will be very

high and the time taken tor flowering such plants will also be very long when

compared to the Near Flowering Plants (N.F.S. varieties). The average cost of a

Near Flower~ng Size (N.F.S.) ot an exotic variety of Orchid plant will come to

Rs.75. The cost of pot 1 vase is another decisive factor determining the cost of

cultivation. The average cost of an 8" clay pot will come to Rs.10 while the average

cost of a 6" clay pot will come to Rs.6 only. If one resorts to low cost cultivation

technique by substituting coconut husks with clay pots, the cost of vase for

cultivation can again be brought down to a very low rate of Re 0.25. However, the

durability of coconut husks is limited to a maximum period of two years only. The

damages caused to plants, delay in flowering and the additional costs incurred for

replacement of useless coconut husks, etc. are other drawbacks of this method of

cultivation. Similarly, the cultivation in 6 pots will also become inconvenient to the

cultivator when the plants, grow beyond a certain limit.

The commercial cultivation of Orchids can be carried out in three

ways namely, cultivation of plants in Coconut Husks, cultivation of plants in 6" pots

under shade houses 1 poly houses and cultivation of plants in 8" pots under shade

houses 1 poly houses. In Kerala, majority of the cultivators are following the

cultivation of plants in clay pots under shade houses. The cost of cultivation of

Orchid plants is calculated without taking into account the interest on investment.

But the interest factor us taken for the purpose of ascertainment of the monthly net

income of cultivators.

Details of the comparative cost of cultivation of Orchid plants, without

considering the interest factor, by adopting 3 alternative ways namely, i. cultivation

of plants in Coconut Husks, ii. in 6" Pots and iii. in 8" Pots are given in Table

No.6.1 and the details of calculat~on are given in Appendix - IX.

Table No. 6.1 Cost of cultivation in the case of Orchid Plants by adopting ~.

alternative methotis of cult~vation. Methods Cost of Cultivation

of cultivation (in Rs.) -- 95,020

Method - II - 1,22,820 Method - Ill 1,40,396

4,11,765 5,34,015 6,10332

Method - I i 17,78,925 Method - II 23,15,300 Method - 1 1 1 26,49,570

Source: Field Survey.

From Table No. 6.1, it can be observed that the cost of the Small-

scale Orchid cultivators ts the lowest (Rs. 95,020) in the case of those who have

adopted the first method, while it works out to be the highest (Rs. 1,40,396) in the

case of method - Ill. Among the Medium-scale units, those who adopt the first

method of cultivation (method - I) has the lowest cost of cultivation (Rs. 4,11,765),

while it works out to be the highest (Hs. 6,10,532) in the case of the third method of

cultivation. As far as the large-scale units are concerned, the analysis indicates a

low cost of cultivation of Rs. 17,78,925 in the case of method - I as against a high

cost of cultivation of Rs. 26,49,570 in the case of method - 111.

Analysing all the categories of cultivators resorting to the distinct

methods of cultivatton, it is also revealed that method - l emerges to be the best

possible alternative for the purpose of investment when compared to the other

methods of cultivation.

It is observed during the field survey that the medium and large-scale

(high) cultivators enjoy the advantages of the economies of scale in the cultivation

of plants and the sale of produces like the flowers and plants. There will be a 10

per cent reduction in the cost of construction of greenhouse in the case of medium-

scale cultrvators, while in the case of large-scale cultivators the reduction in the

cost of greenhouse will be 20 per cent. Advantages on the bulk purchase of clay

pots required for the cult~vation are enjoyed by both the medium and large-scale

cultivators. In the case of 6 pots, medium-scale cultivators enjoy a discount of 15

per cent of the price 'of clay pots while large-scale cultivators enjoy a price

reduction to the exten,t of 25 per cent when compared to the small-scale

cultivators. There will be savings in the case of labour due to the mechanisation of

the agricultural operations by the medium-scale and large-scale cultivators. The

savings in Labour cost will be to the extent of 40 per cent in the case of Medium-

scale cultivators while the Large-scale cultivators are able to save the labour cost

to the extent of 70 per cent due to the adoption of the highly sophisticated and

scientific methods of irrigation and fertigation. Medium and large-scale cultivators

are also benefited on the bulk purchase of fertilisers and pesticides by availing the

reduction in the cost of fertilisers and pesticides to the extent of 10 per cent and 15

per cent respectively. Medium and large-scale cultivators also enjoy the benefits of

the economies of large-scale in the marketing of flowers and plants. Elimination of

intermediaries and other innovat~ve marketing strategies like sales in the form of

value-added items like bouquets, tlower arrangements and landscape designing

enable the medium and large-scale cultivators in fetching high price for the flowers

and plants. It is also observed dur~ng the field investigation that the medium-scale

cultivators, on an average, are able to get 10 per cent increase in the price of

flowers and a 5 per cent increase in the price of plants sold. In the case of large-

scale cultivators the increase in the price realisation of flowers and plants is to the

tune of 20 per cent and 'I0 per cent respectively.

The financial viability of various methods of cultivation in the case of

Orchid plants carried out by different categories such as Small-scale, Medium-

scale and Large-scale units are analysed in this section of the study by considering

the factors considering earlier. Various scientific criteria such as Pay Back Period,

Discounted Pay Back Period, Post Pay Back Profitability, Discounted Post Pay

Back Profitability, Net Present Value, Benefit Cost Ratio and Internal Rate of

Return, have been adopted for the evaluation of each method of cultivation

adopted by different categories of Orchid cultivators in order to find out the best

possible alternative in each case. These tools have been worked out separately for

Small-scale (Low category) cultivators, Medium-scale (Medium category)

cultivators and Large-scale (High category) cultivators, adopting three alternative

methods of cultivation, viz., the cultivation in coconut husks (Method -I), in 6 pots

(Method --/I) and in 8" pots (Method -111). Details regarding the results of the

analysis based on Pay Hack per~od as the criterion for evaluation are presented in

Table No. 6.2 and the details of calculation are given in Appendix - XII.

Table No. 6.2 Pay Back period in case of Orchid cultivators adopting Alternative methods of cultivation

Medium-scale Method - I

(Medium) Method - p-p.- - I1 .p-.. --

p

Method - Ill Source: Field Survey.

The Pay Back Period, in case of Orchid cultivation carried out on a

small-scale basis, indicates that the recoupment of initial investment is the lowest

(2.29 years) in case of method - I, while it works out to be the highest (2.80 years)

in the case of method - Ill. Among the medium-scale units, those who adopt the

first method of cultivation (method - I) has the lowest Pay Back Period (2.07

years), while it works out to be the highest (2.49 years) in the case of the third

method of cultivation. As far as the large-scale units are concerned, the analysis

indicates a low recoupment period of 1.84 years in the case of method - I as

against a high Pay Off Period of 2.23 years in the case of method - Ill.


methods of cultivation, it is also revealed that method - I emerges to be the best

possible alternative for ihe purpose of investment when compared to the other

methods of cultivation. Besides these, it is also discernible that the Pay Back

Period, in case of large-scale cultivators adopting method - I for cultivation of

Orchids, comes to be the lowest (1.84 years), while it works out to be the highest

(2.80 years) for small -. scale cultivators resorting to the third method of cultivation.

The Discounted Pay Back Periods have been worked by taking into

account not only the magnitude of returns, but also the time value of money

obtained from each method of cultivation

Details with respect to the results of the analysis based on the

Discounted Pay Back period as the criterion for evaluation are presented in Table

No. 6.3.

On analysing the Discounted Pay Back Periods, it is revealed that the

small-scale units adopting the first method of cultivation has the lowest Discounted

Pay Back Period of 2.57 years, while in the case of method - II and method - Ill,

these works out to 2.99 years and 3.21 years respectively.

In the case of medium-scale units, method - I, method - I1 and

method - Ill come in the order of preference with respect to the Discounted Pay

Back Periods of 2.28 years, 2.62 years and 2.83 years respectively.

As far as the large units are concerned, method - I is found to be the

rnost ideal one in terms of Discounted Pay Back Period with 2.03 years, while in

the case of method - I I and method - Ill, the Discounted Recoupment Periods

works out to 2.32 years and 2.5 years respectively.

Results of the analysis by taking Post Pay Back Profitability as the

criterion for evaluation are given in Table No. 6.4.

Table No. 6.3 Discounted Pay Back Period in case of Orchid cultivators adopting alternative methods of cultivation -. .. . - -.

Category of Alternative

Cultivators Methods -..-p- .--

Medium-scale Method - II . ~ - .--p-- ~ ..p--.---

---.-p. ..

- Discounted Pay Back

Period (in Years)

2.57 2.99 3.21 2.28 2.62 2.83

- 2.03 2.32 2.50


Table No. 6.4 Post Pay Back Profitability in case of Orchid cultivators adopting ~.

alternative methods of cultivation r r -

7 - - A l t e r n a t i v e T P o s t Pav Back 1 / Cateqorv of Cultrvators 1 Methods 1 profitability 1

1 1 Small-scale (Low)

Medium-scale (Medium) -p-. . - .-

(High)

~ ... -

of cult~vat~on

Method - 1 1 1 Method - I 15,62,970 Method - I! 14,59,058 Method - Ill -- 13,94,016 Method - I 87,58,227 Method - II 83,02,307 Method - ill 80,18,178

Source: Field Survey,

The Post Pay Back Profitability in case of Orchid cultivation carried

out on a small-scale basis indicates that the method-l provides the highest

(Rs.2,73,610) Post Pay Back Earnings, while it works out to be the lowest

(Rs.2,35,039) in the case of method - Ill. Among the medium-scale units, those

who adopt the first method of cult~vatron (method - I) has the highest Post Pay

Back Earn~ngs (Rs 15,62,970), while it works out to be the lowest (Rs. 13,94,016)

in the case of the third method of cultivation. As far as the large-scale units are

concerned, the analysis indicates that the first method gives the highest Post Pay

Back Earnlngs (Rs. 8ir,58,227), while the Method - Ill provides the lowest Post Pay

Back Earnings (Rs. 80,18,178).

Analysing all the categories of cultivators resorting to three distinct

methods of cultivation, it is also revealed that method - 1 emerges to be the best


methods of cultivation. Besides these it is also discernible that the Post Pay Back

Profitability, in case of Large-scale cultivators, adopting method - I for cultivation of

Orchids come to be the highest (Rs. 87,58,227), while it works out to be the lowest

(Rs. 2,73,610) for small-scale cultivators resorting to the first method of cultivation.

Details of the Discounted Post Pay Back Profitability in case of

various categories of Orchid cultivators are exhibited in Table No. 6.5. The

Discounted Post Pay Back Profitab~lity has been worked by taking into account not

only the magnitude of returns, but also the time value of money obtained from each

method of cultivation.

Table No. 6.5 Discounted Post Pay Back Profitability in case of Orchid cultivators adopting alternative methods ol cultivation

Cat ego ry of-r..~'. -~TGTative Discounted Post Pay

Cultivators Back Profitability (in

-p-. Rupees) 1,66,923

Small-scale (Low) - - - I I 1,42,285 Method - Ill 1,26,705

Medium-scale .- 9,91,565

(Medium) ~. 8,83,215

Method - Ill 8,15,395 Method - I - 57,09,972 Method - II 52,34,582 Method - Ill 49,38,319


The Discounted Post Pay Back Profitability is worked out in the case

of Orchid cultivation on a small-scale basis indicates that the method - I provides

the highest (Rs.1, 66,9;!3) Discounted Post Pay Back Earnings, while it works out

to be the lowest (Rs.1. 26,705) In the case of method - Ill. Among the Medium -

scale units, those who adopt the first method of cultivation (method -I) has the

highest Discounted Post Pay Back Earnings (Rs.9, 91,565), while it works out to

be the lowest (Rs. 8,15,395) in the case of the third method of cultivation. As far as

the large-scale units a1.e concerned, the analysis indicates that the first method

gives the h~ghest Discouilted Post Pay Back Earnings (Rs.57, 09,972), while the

Method - Ill provides the lowest Discounted Post Pay Back Earnings

(Rs.49,38,319).


methods 01 cultivation, it is also revealed that method - I emerges to be the best


methods of cultivation. Besides these, it is also discernible that the Discounted

Post Pay Back Profitability, in case of Large-scale cultivators, adopting method - I

for cultivation of Orchids come to be the highest (Rs.57, 09,972), while it works out

to be the lowest (Rs.1, 66,923) for small-scale cultivators resorting to the first


Details regarding the results of the analysis based on Net Present

Value Method as the criterion for evaluation are shown in Table No. 6.6

Table No. 6.6 Net Present Value Method in case of Orchid cultivators adopting alternative . - methods of cultivation --p - - - P -- P --.p-

r F t e g o r y of ~u~ t i va to rs ] Alternative Methods Net Present Value Method No. -. of cultivation

+ - (in Rupees)

1 I I ~ r n a ~ l e (LOW) Method - II .- -- Method - Ill


The Net Present Value is worked out in the case of Orchid cultivation

on a small-scale basis indicates that the method - I provides the highest

(Rs.1,66,923) Net Present Value, while it works out to be the lowest (Rs.1, 26,705)


first method of cultivat~on (method - I) has the highest Net Present Value

(Rs.9,91,565), while it works out to be the lowest (Rs. 8,15,395) in the case of the

third method of cultivatron. As far as the large-scale units are concerned, the

analysis indicates that the first method gives the highest Net Present Value

(Rs.57,09,972), while the method - Ill provides the lowest Net Present Value

(Rs.49, 38,319).




methods of cultivation. Besides these it is also discernible that the Net Present

Value, in case of large-scale cultivators, adopting method - I for cultivation of

Orchids come to be the highest (Rs.57, 09,972), while it works out to be the lowest

(Rs.1, 66,923) for small.-scale cultivators resorting to the first method of cultivation.

The Net Present Value has been worked by taking into account not

only the magnitude of returns, but also the time value of money obtained from each


Results of the analysis by taking Benefit Cost Ratio as the criterion

for evaluation are presented in Table No.6.7. The Benefit Cost Ratio have been

worked by taking into consider no[ only the magnitude of returns, but also the time

value of money obtained from each method of cultivation

Table No. 6.7 Benefit Cost Ratio in case of Orchid cultivators adopting alternative methods of cultivation 7-

Category of Cultivators ~ ----pp--

ethod - II . . ... - I Small-scale (LOW) E

~~~ ~ I M e t h o d -. -. . - Ill -- ' hAethnrl - I

/ 2. Medium-scale (Mediur

3. j Large-scale (High)

Source: F~eld Survey.

P-

ethod - II .-pp-

2.26 ethod - Ill 1.86

On analysing the Benefit Cost Ratio, it is revealed that the small-

scale units adopting the first method of cultivation has the highest Benefit Cost

Ratio of 1 76 times, while in the case of method - II and method - Ill, these works

out to 1 .l6 times and 0.9 times respectively.

In the case of medium-scale units, method - I, method - II and

method - Ill come in the order of preference with respect to the Benefit Cost Ratio

of 2.41 times, 1.65 times and 1.34 times respectively


most ideal one in terms of Benefit Cost Ratio with 3.21 times, while in the case of

method - I1 and method -- Ill, the Benefit Cost Ratio works out to 2.26 times and

1.86 times respectively.

Details of the Internal Rate of Return in case of various categories of

Orchid cultivators are exhibited in Table No. 6.8

Table No. 6.8 lnternal Rate of Return in case of Orchid cultivators adopting alternative

The Internal Rate of Return worked out in case of Orchid cultivation

carried out on a small-scale bas~s lndlcates that the method - I provides the highest

(48.5 per cent), wh~le it works out to be the lowest (39 per cent) in the case of

. - methods of cultivation --

method - Ill. Among the medium-scale units, those who adopt the first method of

cultivation (method-l~) has the highest lnternal Rate of Return (53 per cent), while it

works out to be the lowest (44.78 per cent) in the case of the third method of

cultivation. As far as the large-scale units are concerned, the analysis indicates

that the f~rst method gives the h~ghest lnternal Rate of Return (56.26 per cent),

while the method - Ill provides the lowest lnternal Rate of Return (49.6 per cent).


methods of cultivation, it IS also revealed that method - I emerges to be the best

Alternative Methods Category of Cultivators of cultivation .--p--...--- F--:!!- 1 Small-scale (Low) Method Method - - II Ill l

~~ p----.

Medium-scale Method - I

(Medium) Method - II p -. Method - Ill .. .. . - -. - . -

Method - I - --

3 Large-scale (High) Method - - II p-.--

Method - Ill ~- ~


methods of cultivation. Moreover. it is also discernible that the lnternal Rate of

lnternal Rate of Return - . (in percentages) 48.50 42.62

--.p 39.00 53.00 47.87 44.78 56.26 52.00 49.60

Return, in case of Large-scale cultivators adopting method - I for cultivation of

Orchids, comes to be the highest (56.26 per cent), while it works out to be the

Source: Field Sulvey.

lowest (48.5 per cent) for small-scale cultivators resorting to the first method of

cultivation.

It is alscl observed from the analysis that the first method of

cultivation. I.e., cultivation in coconut husks. is found to be the most ideal one

among all the categories of Orchid cultivation in terms of their net income.

SECTION - I1 ANALYSIS OF THE ECONOMIC VIABILITY OF ALTERNATIVE METHODS

ANTHURIUM CULTIVATION

The cost and profitability of Anthurium cultivation is analysed by

taking 1,000 plants (4 cents) as the base in the case of small-scale cultivators,

5,000 plants in the case of medium-scale and 25,000 plants in the case of large-

scale cultivators respectively. Selection of plants, size of pots used and the method

of cultivation are the important factors determining the cost of cultivation. Exotic or

~mported varlet~es ot plants, especially the Near Flowering Size (N.F.S.) plants

are Ideal for commercial cultivat~on if small plants or ex-agar plants are selected,

the cost of plants can be reduced to considerable extent. But the r~sk attached to

the process of acclimatisation of plants will be very high and the time taken for

flowering such plants will also be very long when compared to the Near Flowering

Plants (N.F.S. varieties). The average cost of a Near Flowering Size (N.F.S.) of an

exotic variety of Anthurium plant will come to Rs. 60. The cost of pot is another

factor determining the cost of cultivation. The average cost of a 10" clay pot will

come to Rs.12, while the average cost of an 8" clay pot will come to Rs.10 only. If

one resort to cultivation in Trenches, there is no need for clay pots and as such the

initial cost can be reduced to a considerable extent. Similarly, 8" pots will also

become inconvenient to the cultivator when the plants grow beyond a certain limit.

The commercial cultivation of Anthuriums in clay pots can also be

carried out in two alternative ways namely, cultivation of plants in clay pots (in 8"

pots and 10" pots) under shade houses l poly houses and cultivation of plants in

trenches under shade houses 1 poly houses. In Kerala majority of the cultivators

are following the cultivation of plants in clay pots under shade houses while some

of the large scale (High category) cultivators in the terraneous areas are found to

be involved in the cultivation of Anthurium plants in trenches. The cost of

cultivation of Anthurium plants is calculated here without taking into account the

interest on investment. But the interest factor is taken for the purpose of

ascertainment of the monthly net income of cultivators.

Details of the comparative cost of cultivation of Anthurium plants

without considering the ~nterest factor by adopting 3 alternative ways namely,

i)cultivation ot plants in Trenches, ii) in 8" Pots and iii) in 10" Pots are given in

Table No. 6.9 and the details of calculation are given in Appendix - XIII.

Table No. 6.9 Cost of cultivation in the case of Anthurium Plants bv adopting

From Table No. 6.9, it can be known that the cost of the small-scale

Anthurium cultivators is the lowest iRs 1,25,683) in the case of those who have

followed the first method of cultivat~on, while it works out to be the highest (Us.

1,40,162) in the case of rnethod - Ill. Among the medium-scale units, those who

adopt the first method of cultivat~on (method - I) has the lowest cost of cultivation

(Rs. 5,48,212), while it works out to be the highest (Rs. 6,13,967) in the case of the

third method ot cultivation. As far as the large-scale units are concerned, the

analysis shows a lower co:;t of cultivation of Rs. 23,93,738 in the case of method -

I as against a high cost of cultivat~on of Rs. 26,98,318 in the case of method - 111.


methods of cultivation, it 1s also revealed that method - I emerges to be the best


methods of cultivation.

It 1s observed during the field survey among the cultivators of

Anthuriums that the medium and large-scale (High) growers of these plants enjoy

alternative methods of cultivation. Alternative Methods

L i o , b i y a t i o n -p--- ~~ --

i-- - Small-scale (Low) Ee thod - II

Method - Ill - . - . ~ + .--p------

Method - I

(Medium) 1- Method - II Method - Ill -- .-p-. ~

: Method - I L Large-scale (High) LMethod - II

' Method - Ill -L ~ 1 -

Cost of Cultivation (in Us.) 1,25,683 1,29,827 1,40,162 5i48,212 5,68,184 6,13,967

23,93,738 24,95,993 26,98,318 J


the advantages of the economies of scale in the cultivation of plants and in the

sale of produces like the flowers and plants. There will be a reduction to the extent

of 10 per cent in the cost of construction of greenhouse in the case of medium-

scale cultivators while in the case of large-scale cultivators the reduction in the

cost of greenhouse will be 20 per cent. Both the medium and large-scale

cultivators enjoy advantages on the bulk purchase of clay pots required for the

cultivation. In the case of 8" pots and 1 0 pots medium-scale cultivators enjoy a

discount ot 15 per cent of the price of clay pots, while large-scale cultivators enjoy

a price reduction to the extent ot 25 per cent when compared to the small-scale

cultivators. There will be savings in the case of labour due to the mechanisation of

the agricultural operations by the medium-scale and large-scale cultivators. There

will be a savings of labour cost to the extent of 40 per cent in the case of medium-

scale cultivators while the large-scale cultivators are able to save the labour cost to

the extent of 70 per cent due to the adoption of the highly sophisticated and

scientific methods of irrigation and fertigation. Medium and large-scale cultivators

are also benefited on the bulk purchase of fertilisers and pesticides by availing the

reduction in the cost of fertilisers and pesticides to the extent of 10 per cent and 15

per cent respectively. Medium and Large-scale cultivators also enjoy the benefits

of the economies of large.-scale marketing of flowers and plants. Elimination of

intermediaries and other innovative marketing strategies like sales in the form of

value added items like bouquets, flower arrangements and landscape designing

enable the medium and large-scale cultivators in fetching high price for the flowers

and plants. It is also observed during the field investigation that the medium-scale

cultivators, on an average, are able to get 10 per cent increase in the price of

flowers and a 5 per cent in the price of plants sold. In the case of large-scale

cultivators the increase in the price of flowers and plants is to the tune of 20 per

cent and 10 per cent respectively.

Analysis of the economic viability of the Anthurium cultivators through

the adoption of various methods of cultivation resulted by small-scale, medium-

scale and large-scale cultivators have been carried out by means of various criteria

such as Pay Back Period, Discounted Pay Back Period, Post Pay Back

Profitability, Discounted Post Pay Back Profitability, Net Present Value, Benefit

Cost Ratio and Internal Rate of Return. These criteria have been adopted for the

purpose of analysis with a view to make a comparison of various alternatives and

to determine the best possible alternative from among them. These tools have

been worked out separately for Small-scale (Low categories), Medium-scale

(Medium category) and Large-scale (Large category) cultivators adopting three

alternative methods of cultivation namely the cultivation in Coconut husks (Method

- I), in 8" pots (Method - 11; and in 10" pots (Method - Ill)

Details regarding the results of the analysis based on Pay Back

Period as the criterion for evaluation are presented in Table No. 6.10 and the

details of the calculation is given in Appendix - XVI.

cultivation out on a small-scale basis indicates that the recoupment of initial

investment is the lowest (2.05 years) in case of method - I, while it works out to be

the highest (2.17 years) in the case of method - Ill. Among the Medium-scale

Table No. 6.10 Pay Back Period in case of Anthurium cultivators adopting alternative methods of cultivation

units, those who adopt the first method of cultivation (method - I) has the lowest

Pay Back Period (1.84 years), while it works out to be the highest (1.95 years) in

the case of the third method of cultivation. As far as the large-scale units are

concerned, the analysis indicates a low recoupment period of 1.67 years in the

case of method-l as against a high Pay Off Period of 1.76 years in the case of

Alternative Methods of cultivation

Medium-scale 1 Method - I

(Medium) : Method - II

---..p- Method - 111 Method - I

I-- p

method - Ill.




methods of cultivation. Bes~des these it is also discernible that the Pay Back

Pay Back Period

( in Years) 2.05 2.09 2.17 1.84 1 .87 1-95 1.67 1.70 1.76

Period, in case of large-scale cultivators , adopting method - I for cultivation of

The Pay Back Period is calculated in the case of Anthurium

Anthurium comes to be the lowest (1.67 years), while it works out to be the highest

(2.17 years) for small-scale cultivators resorting to the third method of cultivation

Details with respect to the results of the analysis based on

Discounted Pay Back Period as the criterion for evaluation are presented in Table

No. 6.1 1

On analysing the Discounted Pay Back Periods, it is revealed that the

small-scale units adopting the first method of cultivation has the lowest Discounted

Pay Back Period of 2.29 years, while in the case of method - II and method - 111,

these works out to 2.34 years and 2.5 years respectively.


method - Ill come in the order of preference with respect to the Discounted Pay

Back Periods of 2.03 years, 2.07 years and 2.17 years respectively.


most ideal one in terms of Discounted Pay Back Period with 1.82 years, while in

Table No. 6.1 1 Discounted Pay Back Period in case of Anthurium cultivators

-

Alternative Methods Cultivators of cultivation

(Medium) ~~ ---- ~~ ,---p-.p-

Method - I

Method - 111

Discounted Pay Back Period ( in Years)

2.29 2.34 2.50 2.03 2.07 2.17 1.82 1.86 1.94

source: Field Survey.

the case of method - II and method - Ill, the Discounted Recoupment Periods

works out to 1.86 years and 1.94 years respectively.

Results of the analysis by taking Post Pay Back Profitability as the

criterion for evaluation are given in Table No. 6.12

Table No. 6.12 Post Pay Back Profitability in case of Anthurium cultivators adopting alternative methods of cultivation

~ ~ .~ -. .-

- - 3,41,167 Small-scale (Low) 3,37,648

.- ~ Method - Ill 3,28,863

Medium-scale 19,44,798 19,27,841 18,88,928

. - 1,08,73,322 3 Large-scale (High) ~ - .- - -~ -p-..-- 1,07,86,407

~~ .-- Method - Ill -- - - 1,06,14,432 Source: Field Survey.

The Post Pay Back Profitability is worked out in the case of

Anthurium cultivation on a small-scale basis indicates that the method - I provides

the highest (Us. 3,41.167) Post Pay Back Earnings, while it works out to be the

lowest (Rs. 3,28,863) In the case of method - Ill. Among the medium-scale units,

those who adopt the first method of cultivation (method -I) has the highest Post

Pay Back Earnings (Hs.19,44,798), while it works out to be the lowest

(Rs.18,88,928) In the case of the th~rd method of cultivation. As far as the large-

scale units are concerned, the analysis indicates that the first method gives the

highest Post Pay Back Earnlngs (Us. 1,08,73, 322), while the method - 111 provides

the lowest Post Pay Back Earnings (Rs.1, 0614,432).


methods of cultivation, it is also revealed that Method -I emerges to be the best


methods of cultivat~or~. Besides these it is also discernible that the Post Pay Back

Profitability, in case of L-arge-scale cultivators , adopting method - I for cultivation

of Anthurlurn come to be the h~ghest (Rs. 1,06,14,432), while it works out to be the

lowest (Hs. 3,41,167) for small-scale cultivators resorting to the first method of

cultivation

Details of the Discounted Post Pay Back Profitability in case of

various categories of Anthurium cultivators are exhibited in Table No. 6.13

Table No. 6.13 Discounted Post Pay Back Profitability in case of Anthurium cultivators

Discounted Post Pay Category of Cultivators

Alternative Methods Back Profitability (in Rupees)

-p-..- ..

Medium-scale (Medium) Methoc -

- ..- --~ -~--..-p

Method -~ - I Method - II


The Discounted Post Pay Back Profitability worked out in case of

Anthurium cultivation on a small-scale basis indicates that the method - I provides

the highest (Rs.2, 12,207:1 Discounted Post Pay Back Earnings, while it works out

to be the lowest (Rs. 1.99,376) in the case of method - Ill. Among the medium-

scale units, those who adopt the first method of cultivation (method -I) has the

highest Discounted Post Pay Back earnings (Rs.12, 55,890), while it works out to

be the lowest (Rs. 11,537,628) in the case of the third method of cultivation. As far

as the large-scale units are concerned, the analysis indicates that the first method

gives the highest Discounted Post Pay Back earnings (Rs. 72,06,266), while the

method - Ill provides the lowest Discounted Post Pay Back Earnings

(Rs.69,36,319).

Analys~ng all the categories of cultivators resorting to three distinct



methods of cultivation. Besides these it is also discernible that the Discounted Post

Pay Back Profitabiliiy, in case of large-scale cultivators, adopting method - I for

cultivation of Anthurium come to be the highest (Us. 72,06,266), while it works out

to be the lowest (Rs. 2,12,207) for small-scale cultivators resorting to the first


Details regarding the results of the analysis based on Net Present

Value Method as the criterion for evaluation are shown in Table No. 6.14.

Table No. 6.14 Net Present Value Method in case of Anthurium cultivators adopting . - alternative methods of cultivat~on

Present Value Method (in Rupees)

2,12,207 2,08,536 1,99,376

Medium-scale 12,55,890

(Medium) 12,38,204 11,97,628 72,06,266 71,15,638

-- p--. ..- 69,36,319 Source: Field Survey.

The Net Present Value is calculated in the case of Anthurium

cultivation on a small-scale bas~s indicates that the method - I provides the highest

(Rs.2, 12,207) Net Present Value. while it works out to be the lowest (Rs.1,99,376)


first method of cuit~vation (method -I) has the highest Net Present Value

(Rs.12,55,890), while it works out to be the lowest (Rs. 11,97,628) in the case of

the third method of cultivation. As far as the large-scale units are concerned, the

analysis indicates that the firsl method gives the highest Net Present Value

(Rs.72,06,266), while the method - Ill provides the lowest Net Present Value

Analys~ng all the categories of cultivators resorting to three distinct



methods of cultivation. Besides these it is also discernible that the Net Present

Value, in case of large-scale cultivators, adopting method - I for cultivation of

Anthurium come to be the highest (Rs. 72,06,266), while it works out to be the

lowest (Rs. 2,12,207) for small-scale cultivators resorting to the first method of

cultivation

Results of the analysis by taking Benefit Cost Ratio as the criterion

for evaluation are presented in Table No. 6.15

Table No. 6.1 5, Benefit Cost Ratio in case of Anthurium cultivators adopting alternative methods of cultivation

in times 1.69 1.61

~

1.42 2.29 2.18

(Medium) ---- . Method - Ill 1.95

3.01 2.85 2.57


On analysing the Benefit Cost Ratio, it is revealed that the small-

scale units adopting the first method of cultivation has the highest Benefit Cost

Ratio of 1.69 times, while in the case of method - II and method - Ill, these works

out to 1.61 times and 1.42 times respectively.


method -- Ill come in the order of preference with respect to the Benefit Cost Ratio

of 2.29 times, 2.18 times and 1.95 times respectively.


most ideal one in terms of Benefit Cost Ratio with 3.01 times, while in the case of

method - I1 and method - Ill, the Benefit Cost Ratio works out to 2.85 times and

2.57 times respectively

Details of the lnternal Rate of Return in case of various categories of

Anthurium cultivators are exhibited in Table No. 6.16

Table No. 6.1 6 lnternal Rate of Return in case of Anthurium cultivators

Alternative eth hods Internal Rate of Return (in percentages)

51.9 Small-scale 49

I Method - Ill 47

Medium-scale , . 54 -

(Medium) I Method - II 53.5 ' Method - 111 52

Large-scale Method - I 57.5

(High) Method - II , 57

-~ Method - Ill 55.5 Source: Field Survey.

The calculation of lnternal Rate of Return is carried out in the case of

Anthurlurn cultivation on a small-scale basis indicates that the method - I provides

the highest (51.9 per cent) lnternal Rate of Return, while it works out to be the

lowest (47 per cent) in the case of method - Ill. Among the medium-scale units,

those who adopt the first method of cultivation (method - I) has the highest lnternal

Rate of Return (54 per cent), wh~le it works out to be the lowest (52 per cent) in the

case of the third method of cultivation. As far as the large-scale units are

concerned, the analysis indicates that the first method gives the highest lnternal

Rate of Return (57.5 per cent), while the method - Ill provides the lowest lnternal

Rate of Return (55.5 per cent).


methods of cultivation it is also revealed that method - I emerges to be the best


methods of cultivation. Besides these it is also discernible that the Internal Rate of

Return, in case of large-scale cultivators, adopting method - I for cultivation of

Orchids comes to be the highest (57.5 per cent), while it works out to be the lowest

(51.9 per cent) for small-scale cultivators resorting to the first method of cultivation.

It is also observed from the analysis that the first method of

cultivation is found to be the most ideal one among all the categories of Anthurium

cultivation in terms of their net income.

SECTION - Ill

ANALYSIS OF THE NET RETURNS FROM ALTERNATIVE METHODS OF

CULTIVATION OF ORCHIDS AND ANTHURIUM PLANTS

A combination of the monthly net income of various categories of

Orchid and Anthuriurn cultivators adopting various methods of cultivation (after

considering the interest factor on investment) is carried out in this section to know

the net returns from each methods of cultivation.

Details regarding the monthly net income of various categories of

Orchid cultivators adopting different methods of cultivation (after considering the

interest on investment @ 15 O/O per annum) are given in Table No.6.17 and details

of the calculation is given in Appendix - XVll

From the analysis of Monthly Net Income, of Orchid cultivators

adopting various methods of cult~vation, after considering the interest @ 15 per

cent on the original cost of investment, it is observed that the monthly net income

of a small-scale cultivator adopt~ng the first method of cultivation comes to

Rs.1,519, while in the case of those who adopt the second and third method of

cultivation the monthly income works out to Rs. 714 and Rs. 208 respectively.

The Monthly Net Income of the medium-scale cultivators, after

considering the interesl factor, comes to Us. 15,458, while the monthly net income

in the case of cultivators who adopt the second and third method of. cultivation

works out to Rs. 11,892 and Rs. 9,660 respectively. In the case of large-scale

cultivators the monthly net income, after taking into account the interest factor,

come to Rs.1, 02,053, Rs. 86,408 and Rs. 76,658 for those who adopt the first,

second and third methods of cultivation respectively.

Details regarding the Monthly Net lncome of various categories of

Anthurium cultivators adopting different methods of cultivation (after considering

the interest on investment @ 15 % per annum) are given in Table No. 6.18

Table N o 6.17 Details regarding the monthly net income of various categories of Orchid cultivators adopting different methods of cultivation

l a f t e r taking the interest on investment -categories of OrJhid Cultivators

1 Methods (Monthly Net Income in Rupees) No. 1 l-

--- -~--~---pp

Small ;Tettmd - l 1,519 Method - II 714 Method - 1 1 1 208

--p --- Source: Field S U N ~ ~ T - ~ ~

Mediu Large 1 5 4 2 1,02,053 11,892 9,660

86,408 76,658

Table No. 6.18 Details regarding the Monthly Net lncome of Various categories of Anthurium cultivators adopting different methods of cultivation

Cultivators

Large 16,427 1,12,327 15,843 1,09,345 14,510 1,03,443

From the analysis of Monthly Net Income, of Anthurium cultivators

adopting various methods of cult~vation, after considering the interest @ 15 per

cent on the original cost of investment, it is observed that the Monthly Net lncome

of a small-scale cultivator adopting the first method of cultivation comes to Rs.

2,407, while in the case of those who adopt the second and third method of

cultivation the monthly income works out to Rs. 2,286 and Rs. 1,985 respectively.

The Monthly Net Income of the medium-scale cultivators, after

consider~ng the interest factor, conies to Rs. 16,427, while the Monthly Net lncome

in the case of cultivators who adopt the second and third method of cultivation

works out to Rs. 15,843 and Rs. 14,510 respectively. In the case of large-scale

cultivators the Monthly Net Income. after taking into account the interest factor,

come to Rs. 1,12,327, Hs. 1,09,345 and Rs. 1,03,443 for those who adopt the first,

second and third methods of cultivation respectively.

SECTION - IV

ANALYSIS OF THE PROFITABILITY RELATED ASPECTS OF ALTERNATIVE

METHODS OF ORCHID AND ANTHURIUM CULTIVATION

This part of the study 1s devoted to examine the results of the Break-

Even Analysis in respect of alternative methods of cultivation of Orchid and

Anthurium plants

Break-Even Analysis in respect of alternative methods of cultivation

of Orchid and Anthurium plants adopted by various categories of cultivators have

been carried out here. For this purpose the Break-Even Analysis have been carried

out separately for Small-scale (Low category) cultivators, Medium-scale (Medium

category) cultivators and Large-scale (High category) cultivators, adopting three

alternative methods of cultivation. These three methods include the cultivation in

coconut husks (method - l), in 6" pots (method - II) and in 8" pots (method - Ill) in

the case of Orchid cultivation. In the case of Anthurium cultivation these comprise

of the cultivation in trenches (method -I), in 8" pots (method - II) and in 1 0 pots

(method - Ill) respectively. The results of the analysis by taking Break-Even Point

as the criterion for evaluation for selecting the best possible alternative by the

cultivators concerned are presented in Table No. 6.19 and Table No. 6.20

respectively and the details of calculation is given in Appendix - XVIII.

Table No. G. 19 Table showing the B.E.Ps in respect of alternative methods of cultivation of

P r c h i y Plants p-.-- .. ..

F - p .. - .- Break-Even Points

From the Break-Even Analysis it is found in the case of a small-scale

Alternative Small-scale

cultivation l

--p--- ...~~ -

Method-l 5,421 6,848 2 eth hod-l1

3 Method-Ill 7366

cultivator adopting to the first method of cultivation needs to sell 1,504 plants

Medium-Scale I Large-scale

(kiekies) @ Rs. 75 per plant (kiek~e) and 5,421 flower spikes @ Rs. 15 per flower


spike (Table No. 6.19) If he adopts the second method of cultivation he needs to

cultivators

market 1,710 plants (kiekies) @ Hs 75 per plant (kiekie) and 6,848 flower spikes

cultivators Plants

@ Rs.

78.75 5,040

5 , 8 8 5 6,414

@ Rs. 15 per flower spike. But if he follows the third method of cultivation he

Plants @

82.50 19,965 23,437 25,601

Flowers @

Rs. 16,50

20,167 23,544 25,656

needs to dispose off 1,840 plants (kiekies) @ Rs. 75 per plant (kiekie) and 7,366

Flowers @

Rs. 18

79,867 93,753

1,02,405

flower spikes @ Rs. 15 per flower spike

In respect of a medium-scale Orchid cultivator resorting to the first

method of cultivation needs to sell 5,040 plants (kiekies) @ Rs. 78.75 per plant

(kiekie) and 20.167 flower spikes @ Rs. 16.50 per flower spike (Table No. 6.19). If

he adopts the second method of cultivation he needs to market 5,885 plants

(kiekies) @ Rs. 78.75 per plant (k~ekie) and 23,544 flower spikes @ Rs. 16.50 per

flower spike. But if he follows the th~rd method of cultivation, he needs to dispose

off 6,414 plants (kiekies) @ Rs. 78.75 per plant (kiekie) and 25,656 flower spikes

@ Rs. 16.50 per flower spike.

In the case of a large-scale cultivator who resorts to the first method

of cultivation needs to sell 19,965 plants (kiekies) @ Rs. 82.50 per plant and

79,867 flower spikes @ Rs. 18 per flower spike (Table No. 6.19). If he adopts the

second method of cultivation, he needs to market 23,437 plants (kiekies) @ Rs.

82.50 per plant (kiekie) and 93,753 flower spikes @ Rs. 18 per flower spike. But if

he follows the third method of cultivation, he needs to dispose off 25,601 plants

(kiekies) @ Rs. 82.50 per plant (kiekie) and 1,02,405 flower spikes @ Rs. 18 per

flower spike,

Results of the analysis by taking Break-Even Point as the criterion for

evaluation in the case of Anthuriuni cultivation are presented in Table No. 6.20

Table No. 6.20 Table showing the B.E.Ps in respect of alternative methods of cultivation of Anthurium Plants

l l l Break-Even Points l - ~ . ~

Alternative k ~ m c & a ~ & ~ 1 S 1 Methods L~ . , . , cu l t i va to~ r cultivators Large-scale cultivators 1 No1 adopter for / plants1 Flowers 1 Plants / Flowers I Plants [ Flowers I

From the Break-Even Analysis it is found that a small-scale

Anthuriumcultivator resorting to the first method of cultivation needs to sell 3,200

plants (suckers) @ Rs. 40 per plant (sucker) and 11,203 flowers @ Rs. 10 per

flower (Table No. 6.20). If tie adopts the second method of cultivation, he needs to

market 3,255 plants (suckers) @ Rs. 40 per plant (sucker) and 11,397 flowers @

Rs. 10 per flower. But if he follows the third method of cultivation, he needs to

dispose off 3,393 plants (suckers) @ Rs. 40 per plant (sucker) and 11,879 flowers

@ Rs. 10 per flower.

In the case of a med~um-scale cultivator adopting the first method of

cultivation needs to sell '14,495 plants (suckers) @ Rs. 42 per plant (sucker) and

50,738 flowers @ Rs. 1'1 per flower (Table No. 6.20). If he adopts the second

method of cultivation, he needs to market 14,743 plants (suckers) @ Rs. 42 per

plant (sucker) and 51,607 flowers C4 Rs. 11 per flower. But if he follows the third

method of cultivation, he needs to dispose off 15,312 plants (suckers) @ Rs. 42

per plant (sucker) and 53,596 flowers @ Rs. 11 per flower.

In the case of a large-scale cultivator who resorts to the first method

of cultivation needs to sell 59,375 plants (suckers) @ Rs. 44 per plant (sucker) and

2, 07,817 flowers @ Rs. 12 per flower (Table No. 6.20). If he adopts the second

method of cultivation, he needs to market 60.564 plants (suckers) @ Rs. 44 per

plant (sucker) and 2,11,9;'8 flowers @ Rs. 12 per flower. But if he follows the third

method of cultivation, he needs to dispose off 62,917 plants (suckers) @ Rs. 44

per plant (sucker) and 2,20,211 flowers @ Rs. 12 per flower.

chapter economic viability and profitability related...

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