Grape is one of the finest fruits and the healthiest food. Grapes are a rich

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1 1.1. INTRODUCTION Grape is one of the finest fruits and the healthiest food. Grapes are a rich source of vitamins and minerals that can contribute to a balanced healthy life. In addition, it has commendable medicinal qualities and has been used in naturotheropy for centuries. Among the fruits, grape is a delicious, refreshing and nourishing fruit. Grape is one of the most important subtropical fruit crops. The crop has wide adaptability and it has been taken up under a wide range of soil types. In India 94 per cent of the cultivated area falls in the tropical region 1. Nowadays grapes have gained enormous commercial value because they not only serve as a table fruit but also are great by valued. Grape is a refreshing fruit and it is a good source for minerals like calcium and iron and vitamins A, C and B6 2. The chemicals in grapes are perfectly balanced and are harmless solvents. The flavonoids present in grapes act as antioxidants and reduce the damage caused by full radicals. Due to its medicinal properties, grape juice is popularly known as nectar of the gods. It is easily assimilated and is a good remedy for constipation, rheumatism, and skin and liver disorders. Moreover all the nerve, muscular and constitutional diseases of the body is cured by the grape treatment. Continued consumption of grapes cures all complaints of stomach, bowels and liver because of the presence of natural salts and acids. 1 2 Pradeep parate, Indian Export Scenario for Grapes, CAB CALLING, January- March-2006, P. 43. Vigneshwara Varmudy, FACTS FOR YOU Market Survey, April-2011, P.20. 1

2 1.2. HISTORICAL BACKGROUND OF GRAPES Vitis vinifera L. is the principal source of all the cultivated varieties of grapes throughout the world. This type of vine was grafted from the Vitis silvestries, the wild vine found in the earlier times of the tertiary periods of the Geological era 3. The seeds of both vitis silvestris and vitis vinifera L. have occurred in the pre-historic sites in Europe, in many of the Neolithic and Bronze Age lake-side villages of Switzerland, north of Italy and Yugoslavia 4. According to the discoveries made recently by the scientists in Western Kazakhastan, grapes are among the oldest plants on earth. They have discovered clear imprints of vines and their leaves in Creataceous Chalk deposited, which dated back 90 to 95 million years, a time at which dinosaurs flourished. Therefore, it is evident that grape is possibly as old as mankind MULTI FACET USES OF GRAPES Grapes can be eaten raw and are the primary source of red and white wine. In some cases, a grape is used as the symbol of conscience. Here are some important uses and health benefits of grapes Council of Social and Industrial Research, Wealth of India Raw Material, publications and information Directorate, New Delhi, 1976, x-sp-w, p.526. A J Winkler, General Viticulture, university of California, Berkley, Los Angeles, 1970, Chapter-1, pp.1-2. K.G. Shanmugavelu, Viticulture in Inida, Agro Botanica, New Delhi, 1998, p.1 2

3 Table grapes The grapes which are used either fresh or for graceful purposes are called table grapes. It must be attractive in appearance, tasty to eat and have long in life. For marketing of table grapes appearance is the most important factor. The berries should be sizable, and uniform in size and colour. The bunch should be medium in size, not very squeezed together and berries should not plunge easily. However marketing of grapes as table grapes depends upon the climate and distance of market and vineyard. In India 78 per cent of grapes produced is used for table purpose only 6. The important table grape varieties are Anab-e-Shani, Bangalore Blue, Beauty Seedless, Bhokri, Cheema Sahebi, Delight, Gulabi (Pannier Drakshi, Muscat) Thomson Seedless, Pusa Seedless and Perlette Raisin grapes Raisins are simply dried grapes. These can be eaten raw or used in cooking and sweltering. It mostly preferably is seedless. Consumers enjoy the sweet taste of raisins because it has high sugar content (20-20 Brix), crunchy pulp and thin skin. A good raisin variety should have soft texture, delightful flavor and little tendency to become sticky in storage. Almost all the grape producing countries are producing raisins, India 6 7 Pradeep parate, Op.cit, p.43., Economics of Grapes Cultivation in Theni District, Unpublished Ph.D Thesis Submitted to Madurai Kamaraj University, Madurai, 2004, P.7. 3

4 also produces raisins. Two varieties of raisins are made by Indian producers, one most popular raisin is Kishmish which is used with seedless grapes and another one is Munnakka which is made using seeded grapes. In international trade mostly Thomson seedless, Black Crinth and Muscat of Alexandria grapes cultivars are producing all type of raisins. Other than the above cultivars, Pusa Seedless, Sultana, Fiesta and kishmish beli are also suitable for raisin making. Consuming raisins is good for health; it can help cure cough, angina, mouth ulcers, bladder disorders and hemorrhoids Wine grapes The grapes which are primarily used to produce wine are known as wine grapes. Economically, wine is one of the most important uses of grapes. As a result 80 per cent of the grape produced in the world is used for wine-making, grapes can be fermented without the addition of sugars, acids, enzymes or other nutrias. The important wine grape varieties of the world are white Riesling, Chardonnay, Cabernet Sauvignon, Tinta Maderia and Muscat blanc. France and Italy are the top two wine producing countries of the world. In India wine is made on small scale from Bangalore Blue grapes. Among the commercial varieties Thomson Seedless and Arka kanchan, a hybrid evolved at the Indian Institute of Horticulture Research, Bangalore, are very good for wine making. 4

5 Canning grapes Another important use of grape is that it can be made into candies but only a small quantity of gapes is canned. Only seedless grapes like Thomson seedless are canned. Seedless white grapes with large berries are preferred for canning or bottling in Brix sugar syrup Grape Juice One important use of grape with great health benefit is that it can be made into grape juice. The cultivars known as juice grapes are those which produce juice for acceptable beverage when it is preserved by pasteurization, germ-proof filtration or other means. It is important that the juice should retain the natural flavour of fresh grapes throughout the preservation Other uses Apart from the above discussed way of utilization, grapes are also used for the preparation of grapes Jelly, grape seed extract, Jam, grape seed oil, Vinegar and Bread spread. Moreover a number of winery bi-products are 1. Tartarates (Cream of Tartar) 2. Argols (Wine Stone), which are settled on the walls and the base of wine tanks. These are purified as Rocella salts. 5

6 3. Pomace is used as cattle feed. 4. Tannins can be purified and they have many health promoting properties WORLD GRAPE PRODUCTION Grapes occupy a predominant position in world fruits production, accounting for nearly 16 Per cent of the total fruit production. Grapes and grape products exports occupy almost one-quarter of all horticulture produce exports and one fifth of the global production. With increasing grapes consumption as fresh and other forms grapes production also is increasing noticeably. With evidence of estimates of the Food and Agriculture Organization (FAO) the leading grape producing countries in the world are Italy, China, USA, Spain and Chili. At present (2010) India occupies the 9 th position in the world as far as grape production is concerned. Table 1.1 gives details of the country-wise grape production statistics. 6

7 TABLE 1.1 MAJOR GRAPES PRODUCING COUNTRIES OF THE WORLD (Fig. in MT) S.No Countries India Italy France USA Spain Turkey China Iran Argentina South Africa World Source: FAO Statistics ( GRAPES PRODUCTION IN INDIA Grapes are one of the oldest utilized fruit crops in India. It seems to have been introduced into India by the invaders from Iran and Afghanistan about 1300 A.D 8. In India, among growing commercial fruit crops grape is most important. It occupies 1.14 per cent of the total area of cultivation with 2.56 per cent of the total production of fruits. India s share in the global production of grapes is 2.8 percent 9. During pre 8 9 Shamsingh, S. Krishnamurthy and S.L. Katyal, Fruit Culture in India, Dalip Singh Publishers Ltd, (under secretary fir ICAR, 1963) New Delhi, p.218 Vigneshwara Varmudy, Grapes: Time to exploit external opportunities, Facts For You, April-2011, P.20 7

8 partition period India had most of the grapes growing regions falling under North-West India. After the partition these areas went to Pakistan, at that time production grapes in northern states namely the Punjab, Haryana, Uttrapradesh, Himachalapradesh and Mathiyapradesh was not sufficient to meet domestic demand, as outcome of this situation grape prices rose very high. After the taking positive initiatives by the government and other stakeholders grape culture has spread to a number of states now. At present grapes cultivations commercially taken up under wide range of soil and climate conditions, while there are three distinct regions, viz., sub-tropical, hot-tropical and mild tropical. Basically Indian viticulture differs from that of American and European countries in respect of cultural practices. Sub-tropical Region This region covers the northwestern plains corresponding to 28 and 32 N latitude including Delhi; Meerut district of Uttar Pradesh; Hissar and Jind districts of Haryana; and Bhatinda, Ferozpur, Gurdaspur and Ludhiana districts of Punjab. Vines undergo dormancy and bud break starts in the first week of March while the rains arrive in the first week of June, and therefore, only days are available from the initiation of growth to harvest. Consequently, Perlette is the only early ripening variety grown in this region. Rain damage is a problem with Thompson Seedless in this region. Single pruning and a single harvest are accepted practices here. 8

9 Hot Tropical Region This region covers Nashik, Sangli, Solapur, Pune, Satara, Latur and Osmanabad districts of Maharashtra; Hyderabad, Ranga Reddy, Mahbubnagar, Anantapur and Medak districts of Andhra Pradesh; and Bijapur, Bagalkot, Belgaum, Gulberga districts of northern Karnataka lying between 15 and 20 N latitude. This is the major viticulture region accounting for 70 percent of the area under grapes in the country. Vines do not undergo dormancy and double pruning and a single harvest is the general practice in this region. Maximum and minimum temperatures are 42 C and 8 C, respectively. The major problems in this region are soil and water salinity and drought. Berry growth is impaired and in certain locations pink blush sometimes develops on green berries due to temperatures that drop to a low of 8 C. Thompson Seedless and its clones (Tas-A-Ganesh, Sonaka), Anab-e-Shahi, Sharad Seedless and Flame Seedless are the varieties grown in this region. Mild Tropical Region An area covered by 10 and 15 N latitude including Bangalore and Kolar districts of Karnataka; Chittoor district of Andhra Pradesh and Coimbatore; and Madurai and Theni districts of Tamil Nadu fall in this region. The maximum temperatures in a year seldom exceed 36 C, while the minimum is about 12 C. The principal varieties are Bangalore Blue (Syn. Isabella), Anab-e-Shahi, Gulabi (Syn. Muscat Hamburg), and Bhokri. Thompson Seedless is grown only with limited 9

10 success. This climate condition very possible the harvest of three crops in a year or five crops in the course of two years by adopting a system of pruning soon after the harvest of every crop 10. India has the distinction of achieving the highest productivity in grapes in the world 11. Other Asian region countries with sizeable extant of grape cultivation are China, Australia, the Republic of Korea, Japan, Pakistan, New Zealand, Thailand, Vietnam and Myanmar. The total area under farming in these regions is estimated to be around hectares, with a total production of about metric tonnes and with a share of around 30 per cent to total world production. India s national average productivity is 23.5 metric tonnes per hectare; it is more than two times of the world average productivity. In spite of this, grape cultivation in the peninsular is perfect to the extent that yields up to 100 tonnes per hectare have obtained in cultivar Anab-e-Shahi in Hyderabad region which has been acclaimed as a Biological Wonder 12. India is emerging as a major producer and exporter of grapes in the world. India produces about lakh tonnes of grapes annually, of which about thousand tonnes are exported to various countries. The export of grapes to major 10 K.G. Shanmuga Velu, Viticulture in India, Agro Botanica, New Delhi, 1998, p S.D. Shikhamany and M. Sudha, Lucrative Export Possibilities, The Hindu Survey of Indian Agriculture, P K.L. Chadha and S.D. Shikhamany, The Grape- Improvement, Problem and Post-harvest Management, Malhotra Publishing House, New Delhi, 1999, P.3. 10

11 countries during was Netherlands, UK, UAE, Bangaladesh, Saudi Arabia, Belgium, Egypt the Arab republic and Germany. In India grapes are harvested mostly throughout the year, but the peak season is February to May 13. Table No. 1.2 provides the present harvesting season of grapes state-wise. Nearly 94 per cent of the cultivated area falls in the tropical region 14 namely Maharashtra, Karnataka, Andhra Pradesh and Tamil Nadu. In terms of production, Maharashtra stands first followed by Karnataka, Tamil Nadu and Andhra Pradesh 15. The grape farmers of Maharashtra have taken to the latest practices in vineyard management and are producing quality grapes, now being exported to West Asian countries 16. The farmers of Maharashtra in cooperation with the Maharashtra State Agriculture Marketing Board (MSAMB) have branded the grapes they produce as Maha grapes, which is widely preferred in the external Market. 13 Vikas Singhal, Indian Agriculture 2003, Indian Economic Data research Centre, New Delhi, 2003, P Pradeep Parate, Indian Export Scenario for Grapes, CAB CALLING, January- March 2006, p Vigneshwara Varmudy, op.cit, p N.G. Perur, Export Vistas in Horticulture The Hindu Survey of Indian Agriculture, 1989, p

12 TABLE 1.2 HARVESTING SEASON OF GRAPES IN INDIA AT GRAPE PRODUCING STATES States/UTs Jan Feb Mar Apr May Jun Jul Aug Seb Oct Nov Dec Andhra Pradesh Haryana Himachal Pradesh Jammu & Kashmir Madhya Pradesh Maharashtra Mizoram Nagaland Punjab Rajasthan Tamil Nadu Uttarkhand Lean Season Peak Season Source: Horticulture Data Base-2010, National Horticulture board. Farm management is determining the quality and quantity of the produce, normally during the October to December period only; most of the farmers are engaged on farm management activities. Pruning, canopy management, application of bio regulators and plant protection measures are carried out in a time bound manner. Grapes are harvested almost around the year but the peak production season periods lead to glut in the market and poor quality of grapes resulting in tremendous post harvest losses. 12

13 In total production more than 78 per cent for table purpose, nearly 20 per cent is dried for raisin production and 2 per cent is used for manufacturing of juice and wine. As cold storage facilities are inadequate most of the produce are consumed as table purpose on that a sizeable magnitude of produce are lost as post harvest looses. The grape (Vitis Vinefera) is one of the important fruit crops of the tropical and subtropical parts of the world and the area under grapes is negligible in India compared with other countries. The area under grapes in various growing states in India is presented in Table 1.3. The total area under grapes during the period of in India is nearly about hectares with the annual production of nearly tonnes. In India the major area under grapes is in Maharashtra followed by Karnataka, Tamil Nadu and Andhra Pradesh. Even though the area under grapes is negligible in India, the productivity per/hectare is far higher than in many European countries thereby establishing India s capability was an efficient producer Srinivasan P.S. proc. 1 st Int. Workshop on post Harvest Management of grapes, Pune 1985, pp

14 TABLE 1.3 STATE-WISE AREA AND PRODUCTION OF GRAPES IN INDIA Year: S.No States Area (in 000 Ha) Production in MT 1 Maharashtra Karnataka Tamil Nadu Andhra Pradesh Punjab Haryana Jammu & Kashmir Others Total Source: Agriculture, Centre for Monitoring Indian Economy- June VARIETIES OF GRAPES GROWN IN INDIA Climate conditions of India are very suitable for grape culture, so that nearly 30 varieties of grapes are produced in India. In Maharashtra the most popular varieties are Thomson seedless, Cheama Sahebi and Bhokri. In Karnataka the most area is covered by Bangalore Blue. The important varieties in Tamil Nadu are Anab-e-shahi, Muscat (Panneer) and recently vineyards with seedless varieties like Thomson seedless; Snoka and Sarat seedless also exist. Verities of grapes grown in various regions are presented in Table 1.4.and paragraph; moreover Table 1.5 exhibits the varieties share on the total production. 14

15 TABLE 1.4 IMPORTANT VARIETIES GROWN IN INDIA Growing region Andhra Pradesh Haryana Karnataka Madhya Pradesh Maharashtra Punjab Rajasthan Varieties Thomson Seedless, Sharad Seedless, Crimson Seedless and Anab-e-shahi Anab-e-shahi, Periettee Bangalore Blue, Anab-e-shahi, Thomson Seedless, Sharad Seedless, Dilkhush, Flame Seedless. Ganesh, Thomson Seedless, Sharad Seedless, Sonaka and Chirah Thomson seedless, Kali sahebi, sonaka, sharad seedless, Flame seedless, H-5, ganesh Anab-e-shahi, Perlette Sharad seedless, Anab-e-shahi, Perlette Tamil Nadu Thomson seedless, panneer (Muscat), Sonaka, Bhokri and Gulabi Source: Post-Harvest profile of Grapes, Directorate of Marketing and Inspection Ministry of Agriculture, Hybrid varieties Arkavati, Arka Hans, Arka Kanchan, Arka Shyam, Arka Neel Mani, Arka Shweta, Arka Majestic, Arka Chitra, Arka Krishna, Arka Soma, Arka Trishna. Exotic varities Italica Victoria, Assario, Almeria, 15

16 S.No TABLE 1.5 PRODUCTION OF IMPORTANT VARIETIES OF GRAPES IN INDIA Variety Share (in Percentage) Production 1 Anab-e-Shahi (White & Seeded) 15 2 Bangalore blue Syn. Isabella (black, Seeded) 15 3 Bhokri (White, Seeded) 5 4 Gulabi Syn. Muscat Hamburg (Purple, Seeded) 5 Perlette (White, Seedless) 5 6 Sharad Seedless- A mutant of Kishmish Chorni (Black, Seedless) 7 Thomson Seedless and its mutants (white, seedless) 55 Source: Facts for You, Market survey, June Presently grapes are commercially cultivated in Nasik, Pune, Sangli, Solapur, Satara, Ahmednagar, Latur, Beed and Aurangabad districts in Maharastra; Bangalore, Mysore, Tumkur, Kolar, Bijapur, Gulbarga, Raichur and Bellary districts in Karnataka; Dindigul, Theni, Madurai, Salem, and Coimbatore districts in Tamil Nadu; Ludhiana district in Punjab; Telangana and Rayalseema districts in Andhra Pradesh; and Hissar district in Haryana GRAPE CULTIVATION IN TAMIL NADU Grapes was introduced in Tamil Nadu in but only in recent years it has come to be recognized as a very rewarding crop. Certain special features lend 18 S.D. Shikhamany, Grapes Production in India, Director, National Research Centre for Grapes (ICAR), Manjri Farm, Pune , India. 16

17 distinctiveness to Tamil Nadu in many aspects of grape culture. This climate condition renders the harvest of three crops possible in a year or five crops in two years. Thus the crop is available in the market almost throughout the year 19. In Tamil Nadu, Pachadraksha (Thomson Seedless) is the earliest variety to be grown and occupies the leading position due to its unfailing yields season after season, the adaptability to the region and the easy marketability. However, it has been gradually yielding place to the coloured varieties principally the Muscat (Muscat Humberg) 20. In Tamil Nadu nearly 3, hectares are used for grape cultivation in twelve districts but only a few districts concentrate on grapes cultivation namely Theni, Coimbatore, and Dindigul districts. Table 1.6 provides the homological statistics of Tamil Nadu. Theni, Coimbatore and Dindigul Districts are the leading grapes producing districts in Tamil Nadu VARIETIES GROWN IN TAMIL NADU Since 1950 s grape is being cultivated in the study area and farmers in the early period had grown it as a traditional crop. Later, however, many farmers left grape culture due to various reasons like severe nematode infestation and it was not a 19 K.G. Shanmugavelu, Op.cit, pp S. Krishnamurthy and V.N. Madhava Roa, Advances in Viticulture in Madras State- Special Features and Certain Aspects of Research. Advances in Agricultural Sciences and their Application, Golden Jublee Volume, Madras Agricultural Journal, pp Suresh.G & S. Krishnamurthy, Marketing of Grapes in Tamil Nadu: A case study of Coimbatore District, IUP Journal of Marketing Management, Vol. X, No.3,

18 profitable enterprising. There on when the price of grapes started increasing and also realizing the growing demand for fruits among the urban consumers, the farmers in this are resorted to grape growing again. The most important variety grown in this area is Muscat Hamburg. The vines are raised on the pandal system; the pandal is erected by using 2m high stone pillars and 8-10 gage thickness wires. The main planting season is from June January. The rooted cutting area ts planted in pits with a spacing of 5 x 10 between plants. The first pruning is done at the end of the 11 or 12 th months. The vines are pruned twice a year, first in December and January and harvesting in April and May (Summer Crop) and the second pruning in May-June and harvesting in August- September (Monsoon Crop). In Tamil Nadu region Thomson seedless, panneer (Muscat), Sonaka, Bhokri and Gulabi are produced by the growers. The Muscat variety is also known as the Pannerdrakshai, is very popular among the grape verities, on account of its quick growth and early maturity. The agro climate and the soil condition of this region are very conducive for the cultivation of the Muscat variety. 18

19 TABLE 1.6 DISTRICT-WISE AREA, PRODUCTION AND PRODUCTIVITY OF GRAPES IN TAMIL NADU S.No Districts Area Production Productivity S.No Districts Area production Productivity 1. Coimbatore Sivagangai Cuddalore Thanjavur Dharmapuri The Nilgiris Dindigul Theni Erode Thiruvannamalai Kancheepuram Thoothukudi Kanniyakumari Thruchirapalli Karur Tirupur Madurai Thirunellveli Nagapattinam Thrivallur Namakkal Thiruvarur Perambalur Vellore Pudukottai Vilupuram Ramanathapuram Virudhunagar Salem Krishnagiri Source: National Horticultural statistics. 19

20 1.7. STATEMENT OF THE PROBLEM Grape is one of the important fruits cultivated in India. India occupies the 11 th position in the world in the production of grapes. As grapes have value additions, it has sizable export market. As of now, the export of grapes contributes 12 percent of the total export of various fruits from India. The Indian farmers are slowly giving up the cultivation of traditional crops because of the un-remunerative prices. For those farmers grape cultivation is an important alternative as it gives them good return on their investment. This is the reason that the government and the Horticulture Department are encouraging farmers to go for grape cultivation. This has resulted in bringing more and more areas under grape cultivation and thereby increasing the production of grapes. As agriculture in India suffers from many problems, the grape growers are also facing problems, which, in recent times have, resulted in the decline in the area and production of grapes. In this regard the study of cost and return shall help the growers in making adjustments in the organization, operation and management of their farms with a view to achieve optimum levels of production and income in the grape cultivation. Further the study of marginal value productivity of inputs and returns to scale shall help the farmers in using the resources efficiently. Such a study at region level shall help the policy makers to evolve macro level policies to redress the various problems faced by the grape growers in different regions of the country. Hence the present study, A study on Production and Marketing of Grapes in Tamil Nadu. 20

21 1.8. OBJECTIVES OF THE STUDY The following are the main objectives of the study 1. To analyse the trend and growth in area, production and productivity of grapes cultivation during the study period. 2. To ascertain and compare the cost and returns structure of small, medium and large farmers of grapes cultivation in the study. 3. To study the resource-use efficiency in grapes cultivation. 4. To find out the grower s share in a consumer rupee in sale of grapes and analyse the marketing efficiency of different channels of grapes. 5. To highlight the problems of production and marketing of grapes growers in the study area. 6. To suggest policy measures for achieving higher production and productivity and increasing the area under grapes cultivation SCOPE OF THE STUDY Though grapes are cultivated in different states such as Maharashtra, Karnataka, Andhra Pradesh and Tamil Nadu and so on, the present study is confined to Tamil Nadu alone which is the third largest Producer of grapes in India. The highest productivity in grapes is also achieved in Tamil Nadu. Likewise, though 21

22 there are more than 10 varieties of grapes cultivated in India, the Muscat variety alone is taken for study as it accounts for on seventy per cent age of the total grape cultivation in India and 98 per cent in the study area MEASUREMENT OF VARIABLES Rental Value of Land In the case of leased land, the actual rent paid was taken. The rental value of owned land was equivalent on the basis of the rental value of comparable land in the area. The Directorate of Economics and Statistics imputed rental value for owned land at the existing rate of rent prevailing for similar land in the village. In the case of leased land, the actual rent paid was taken 22. In the present study most of the grapes gardens were owner operated. For that reason the rental value prevailing in the adjacent area was taken as the rental value of the grape gardens under the study Grape Sapling Grape saplings were produced in the private farms, department of horticulture and the sample farm itself. In the case of farm produced saplings, the prevailing market price was taken into account Labour Men and women were standardized into man-day the same in proportion to their wage rate current up followed in the locality. In the present study, family labour 22 Directorate of Economics and Statistics, Studies on the economics of farm Management in Tanjore, Report for the year , Ministry of Agriculture and Irrigation, Government of India Press, New Delhi, 1974, p

23 and hired labour are treated equally and converted into common physical units in terms of man-day equivalent. In the study area, wage rate was Rs. 250 for men and Rs. 150 for women Manure In the study area farmers use both manure purchased from private source and own source i.e. manure produced in their farm itself. The purchased farm yard manure and own source manure were valued under the prevailing market price plus overhead charges Pesticide Pesticides were valued at purchase cost prevailing in the study area. The purchase cost was valued at purchase price plus applying charges and other overheads Fertilizer In the case of the fertilizer used in the study area, the farmers used both their own source of manure and purchased if from others. In this study both the sources of fertilizer are valued at widespread market price of fertilizer plus overhead charges Depreciation Depreciation was calculated under the straight line method. It was done separately for farm building, machinery, tools and equipment and material used in the farming activities. Depreciation was charged at the rate specified below Studies on economics of Management in Coimbatore District, Tamil Nadu, Directorate of Economics and Statistics, New Delhi, , P

24 Farm Building Machinery Tools and Equipment Material : 2 Per cent : 10 Per cent : 25 Per cent : 50 Per cent Irrigation In the case of irrigation, cost was valued by fuel/electricity charges plus other overheads Total Establishment Cost It refers to the cost incurred on the vineyard upto the commercial yielding of grapes. It includes variable cost i.e. cost of sapling, care of young plants, irrigation, fertilizer and manure, labour charges and preparatory cultivation expenses and fixed cost such as rental value of land and other fixed costs Annual Share of Establishment Cost Since grapes are a long term crop, the cost incurred for establishing the farm will be distributed throughout the life period of the vineyard. In the study area the expected life period of grape plants is from 15 to 20 years. The annual share of establishment cost was calculated by the total establishment cost divided by the average life period of the plant i.e. 15 years Farm Building It refers to the shed used for storage and the processing of grapes and for keeping the implements. 24

25 Machinery It refers to the oil engine, the tractor, the tiller, the motor pump and the motor cycle owned by the farmers for the purpose of farming activities Tools and Equipment They include the sprayer, spade, crowbar, hammer and ladder owned by a grower Materials It includes knife, bucket and tarpaulin purchased by the grower for the farming activities METHODOLOGY This section is devoted to the presentation of the methodology, which includes the sampling technique, the collection of data, the period of study, the method of analysis, the tools for analysis and the measurement of variables used in the present study SAMPLE DESIGN The stratified multistage random sampling method is adopted for the present study taking Tamil Nadu state as the universe, the districts as the primary unit, the block as the secondary unit and the grape growers as the ultimate unit. Tamil Nadu consists of 30 districts; out of which 16 districts produce grapes. Among the grapes producing districts, Theni, Coimbatore and Dindigul districts alone produce grape more than 95 per cent of the total production. Hence these districts have been taken for the study. Among these districts, Theni district has eight blocks, 25

26 and out of the eight blocks the farmers of the three blocks namely Cumbum, Chinnamanur, and Uthamapalyam are engaged in grapes cultivation, hence these blocks have been taken to represent Theni district. At present in Coimbatore district, farmers of Thondamuthur block cultivate grapes and it represents Coimbatore district. Further in Dindigul district farmers of Battalagundu and Nilakottai blocks are engaged in grapes production hence theses blocks have been taken to represent the district. Five villages, one from each block which cultivates grapes, were selected to represent each block and are given in descending order. The proportionate sampling technique has been used to select the sample respondents from these six blocks. The number of grape farmers in each block of the respective district and the number of respondents chosen for the study are presented in Table 1.7. District TABLE 1.7 SAMPLE SIZE BLOCK-WISE DISTRIBUTION Block No. of cultivators in the villages Sample Size Percentage to total I-Coimbatore Thondaamuthur Total-I II- Theni Cumbum Chinnamanur Uthamapalayam Total-II III-Dindigul Nilakaottai Battalagundu Total-III Gross Total(I+II+III)

27 The individual sample was chosen from the list of farmers of each block using Tippet random number table. The data were collected from all these persons through interview schedule. On verification, 24 interview schedules were incomplete and contradictory and hence rejected. Finally 336 grape growers formed the sample size. These respondents were further categorised as small (4 acres), medium (5-8 acres) and large (above 8 acres) based on the size of the land owned by them. The economic life of a grape plant in Tamil Nadu was seen to hover around 12 to 18 years. Based on the magnitude of the production, the following four classifications were made for the grape plant. Age Group Upto 1 year Production Stage Non-bearing stage 2-6 years Increasing production stage 7-11 years Constant production stage Above 12 years Declining production stage Table 1.8 shows the classification of respondents according to the size of owned land and stage of production of the grape plant. 27

28 TABLE 1.8 CLASSIFICATION OF RESPONDENTS ACCORDING TO THEIR FARMING SIZE AND PRODUCTION STAGE No. of Respondents Classification of Non-Bearing Increasing Constant Declining respondents Total Stage Stage Stage Stage Small Medium Large Total Source: Primary Data In order to study the marketing channel, price spread, and to show the grower s share in the consumer rupee and also to find the marketing efficiency a pilot study was conducted to understand the marketing processes and activities involved in the sale of grapes by growers in the study area. Based on the information gathered from the growers and intermediaries level, a detailed interview schedule was drafted, pre-tested and used in the field survey. For collecting the data, an interview schedule was administered on 20 market intermediaries from identified market functionaries who were selected through convenient sampling method COLLECTION OF DATA Primary as well as secondary data were collected for the present study. Based on the information gathered from the vineyard level, a well designed schedule was drafted and pretested with a sample of 336 grapes growers. In the light of their opinions and suggestions, modifications were made and the present interview 28

29 schedule was finalized and used during the field survey to collect primary data through the personal interview method. The objectives of the study were clearly explained to the growers personally and their co-operation was ensured. Even though the respondents did not maintain adequate farm records and accounts, they were able to provide particulars in view of their long association with farming. However, to minimize any recall bias, suitable cross checks and rechecks were carried out. In order to study the marketing channel and price spread, and to show the grower s share in the consumer rupee, 20 market intermediaries from identified market functionaries were selected and necessary information was collected. With the concern of secondary data, related to the area under grapes production, yielding and productivity as in the world, India, Tamil Nadu and the study area were collected from various issues of journals, official websites, reports and records both published and unpublished PERIOD OF STUDY In order to estimate the trend in area, production and productivity of grapes a period of 10 years i.e. from to were taken for this study. In the study area the same data were collected for the period from to The field survey was carried out from January- April 2011 for the primary data collection TOOLS OF ANALYSIS The following statistical tools were used for analyzing the data collected through the interview schedule and various sources were used so as to obtain meaningful inferences. 29

30 (i) Trend Analysis To study the trend in the area under cultivation, production and productivity of grapes in the world, India, Tamil Nadu and in the study area, regression equation of the following form was used. Where Y= a + bt Y= Area/Production/Productivity in the year T T= Time in years a= Constant b= Regression co-efficient (ii) Compound Growth Rate The compound growth rate with regard to area, production and productivity has been estimated on the basis of the semi-log or exponential function. Where Log Y= a + bt Y= Area/Production/Productivity T= Time a and b are the parameters to be estimated Compound growth rate = [(anti log b-1) x 100] (iii) Capital Productivity Project appraisal of grape farms of various categories of farmers has also been attempted in this study with the help of the estimation of benefit-cost ratio (BCR), the 30

31 net present value (NPV), the internal rate of returns (IRR) and the payback period. The estimation techniques of BCR, NPV, IRR and payback period have been delineated as follows: (a) Benefit Cost Ratio The benefit-cost ratio is the ratio of the sum of discounted, net benefits with sum of discounted capital costs. The benefit cost ratio is mathematically expressed as BCR = n å Bt å t t t= 1 (1+ r) t= 1 (1+ r) n Ct Where, B t = benefit in year t, C t = cost in year t, T = 1,2,3,4,.,n, n = project life in years, r = rate of discount (b) Net Present Value The net present value is found by subtracting the present value of cost from the present value of return. A project whose net present value is greater or equal to zero is considered worthy investment. Net present value = Present value of return present value of cost Symbolically, NPV = n å Bt- Ct t r) t= 1 (1+ Where, the symbols used are the same as in the case of benefit-cost ratio. 31

32 (c) Internal Rate of Return The IRR is defined as the rate which makes the present value of the expected cash inflows from an investment equal to the present value of the expected cash outflows of an investment. It is the maximum rate of interest which an organization can afford to pay on the capital invested in a project. The internal rate of return is the rate of interest at which discounted benefits become equal to discounted costs or the rate at which NPV becomes zero. If the IRR exceeds the cut-off rate (opportunity cost of capital) the investment is economically viable. Symbolically, n å Bt- Ct t= 1 IRR= = 0 t (1+ r) Where, the symbols used are the same as in the case of benefit-cost ratio. The National Bank for Agriculture and Rural Development (NABARD) considers that an agricultural project which yields a return of 15 per cent and above an economically viable project 24. Hence, in this study, benefits and costs are discounted at 15 per cent annual rate of interest. (d) Pay Back Period The payback period is the discounted measure of worthiness of an endeavor which measures the efficiency of cultivation by indicating the period within which 24 S. Balamurugan, A Study of Cost and Returns of Vanilla Cultivation in India Ph.D thesis submitted to Madurai Kamaraj University, Madurai, January

33 returns off-set the investment. In other words it measures the number of years required to recover the original cash outlay invested in the project. The maximum acceptable pay-back period is fixed by taking into account the reciprocal of the cost of capital. This can be termed as the cut-off point. Generally the pay-back period more than cut-off point of a project is not contemplate. Payback Period = Discounted Total Cost of the Project Annual Increase in Income (Mean Discounted Benefit) (iv) Cobb-Douglas type of Production Function A multiple linear regression model of the Cobb-Douglas type is used to estimate the relation between various input factors and gross yielding. This type of production function has been found to be the best fit for sub-perennial vineyard 25. In the linear regression model, one dependent variable and six independent variables are included as in the form given below. Log Y = β o + β 1 log X 1 + β 2 Log X 2 + β 3 log X 3 + β 4 Log X 4 + β 5 log X 5 + β 6 Log X 6 +U.(1) Where Y= Yield of Grapes in Kilograms per acre X 1 = Cost of Labour in Rupees per acre 25 Ramanan, Economics of Grapes Cultivation in Theni District PhD thesis submitted to the Madurai Kamaraj University, Madurai,

34 X 2 =Cost of Fertilizer in Rupees per acre X 3 =Cost of Irrigation in rupees per acre X 4 = Cost of Plant protection chemicals (Rs/acre) X 5 = Cost of watch & Ward (Rs/acre) X 6 = Age of the plants (in years) U= disturbance term Where, t is the actual year (age) of the crop at the time of collection of data. b o, b 1, b 6 are the parameters to be estimated b o b 1,b 2 b 6 = Regression constant = Partial elasticity of yield with respect to the factors x 1, x 2,.x 6 respectively In order to test the significance of the estimated parameters, b 1,b 2 b 6 the following formula has been used bi t = SEbi.(2) SEbi = Standard error of bi The sum of all the production elasticity of factor inputs indicates the returns to scale i.e. å bi i=1,

35 If å bi > 1 increasing returns to scale å bi < 1decreasing returns to scale å bi = 1 constant returns to scale (v) Resource Use Efficiency The marginal value the productivity of resources and the cost of those resources would give an indication for the reallocation of resources to maximize returns. The optimization principle in resource allocation suggests that the application of a resource should be increased till the marginal value product of a factor equals its marginal cost. In the present study, the marginal value product of the inputs. X 1, X 2, X 6 was calculated by using the following formula MVPj = bj y x j p Where MVP j = Marginal value product for input bj = estimated elasticity co-efficient of variable Xj 35

36 ӯ = geometric mean yield (kg.) x j = geometric mean value of variable Xj p = mean net selling price of Grapes (Rs./Kg.) for j = 1, 2,.6. After computing the MVP of various inputs, it was divided by the marginal input cost or the factor cost to arrive at the ratio of marginal value product to the factor cost. (vi) Garrett s Ranking Technique Garrett s ranking technique was adopted to analyse the constraints in the production and marketing of grapes. The farmers were asked to rank the factors that were limiting grape production and marketing process. The order of merit thus given by the respondents was converted into ranks using the following formula: Per cent position = 100( Rij - 0.5) Nj Where, Rij = Rank given for i th factor by j th farmer and Nj = Number of factors ranked by j th farmer. 36

37 The per cent position of each rank obtained was converted into scores referring to the table given by Garrett. The scores of individual respondents for each factor were added together and divided by the total number of respondents for whom the scores were added. The mean scores for all the factors were analysed in the ascending order, ranks assigned and the important factor identified 26. (vii) Marketing Efficiency Marketing practice is said to be efficient when the marketing cost is less and thereby getting higher net revenue in the final consumer price. Marketing efficiency is measured by applying Shepherd s formula 27 and Acharya and Agarwal 28 formula. Shepherd s Formula ME = (V/I) 1 Where M: Index of marketing efficiency V: Value of goods sold or consumer price I: Total marketing cost or marketing cost per unit 26 Garrett E. Henry, Statistics in Psychology and Education, Vakils and Simsons Pvt Ltd., Bombay, 1969, pp Raju S (2008), Marketing Cost, Margin, Price Spread and Marketing Efficiency of Paddy: An Analytical Study, Marketology, Special Issue, pp , IIM Delh 28 Opcit Pp

38 Marketing Efficiency under Acharya and Agarwal Method Under the Acharya & Agarwal method, marketing efficiency is calculated with the comparison of the marketing cost and the total price-spread in the marketing system. By calculating in this way we can conclude which method is the most appropriate for different types of farmers in the study area. The marketing efficiency was measured by using the following formula as suggested by Acharya and Agarwal (2001). E = (O/I) X 100 Where E : Marketing efficiency O : Output of the marketing system (value added, that is, difference between Consumer s price and producer s price or marketing margin plus marketing cost) I: Total marketing cost 1.12 Organization of the thesis The present study, A Study on Production and Marketing of Grapes in Tamil Nadu, consists of seven Chapters. Chapter I deals with the historical background of grapes, uses of grapes, world grapes production and grapes production in India, statement of the Problem, objectives of the study, methodology which includes choice of the study area, 38

39 sampling technique, collection of data, period of study, method of analysis and tools used for analysis and organization of the thesis presented. Chapter II deals with reviews of the earlier studies related to cost, returns, grape cultivation, capital productivity, resources use efficiency, production function and marketing efficiency, research gab and characteristics of the sample respondents discus. Chapter III This Chapter deals with trend and growth of area, production and yield of grape at the world level, India, in Tamil Nadu, and the Study area level. Chapter IV discusses the cost and return structure of grapes. Chapter V deals with resource use efficiency and capital productivity. It also deals with the area-wise estimate of yield, return on investment and the determinants of yields of grapes. Chapter VI discusses the marketing practices of the grapes growers, marketing cost, marketing margin and price spread and problems associated with the cultivation and marketing of grapes. Chapter VII presents the summary of the findings, conclusions, the suggestions made in the context of the findings and scope for further study. 39