A Financial Viability and Relative Profitability of Mango Orcharding in Lucknow District of Uttar Pradesh

Shyam Prakash Singh
Journal article Economic Affairs • March 2020

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Abstract

The existence of the wide range of natural endowment is very much favorable for growing a large array of horticultural crops throughout the country. The country observed a sharper increase in the area of horticultural crops compared to food grains. In the fruit industry, mango stands top in position. Due to perennial nature, the cost and return behavior has been estimated @ 10 percent opportunity cost of capital as like investment appraisal for the interest of development of mango entrepreneurs. The per hectare net present value (NPV), for the entire life period (55 years) of the mango orchard has been found to be ` 600237.34. Benefit-cost ratio is 1.76. The adjusted IRR is also worked out as 19.80 percent, which is sufficiently higher than the opportunity cost of the capital or the rate of interest charged by the financial institutions. The payback period was about 8.2 years. Thus, the evidence reveals that investments in mango orchard are highly profitable, economically feasible and financially viable. To overcome the question of risk and uncertainty in investment over a longer period the usual technique is how sensitive the investment if the cost or return increase/decrease due to economic or other change in the market. Some competing crop performed better in term of benefit-cost ratio, but in terms of average annual net return of ` 36030.60 ha-1 which was evidently higher than that of alternative crops. The mango cultivation is low input intensive as compared to food grain that means fewer requirements of resources for its production. So, we can say mango production is more profitable venture for resource-poor farmers.

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Economic Affairs

Economic Affairs, Quarterly Journal of Economics, is a Peer-Review publication based on multi-dis... see more