Agricultural Economics Research Review

Vol. 20 January-June 2007 pp 171-176

Research Note

Grade Development and Study of

Price-Quality Relationship of Cashew Nut in
North District of Goa1
Naik Amita Namdeo2, K. Koulagi2 and L.K. Wader3

Abstract

The grade standards have been developed for ascertaining the quality of
cashew nuts and quality-price relationship has been studied in the North
District of Goa, based on the data collected through personal interview for
the year 1999-2000. Laboratory analysis, indexing, stepwise multiple
regression analysis and tabular presentation have been employed for data
analysis. Laboratory analysis consisted of generating data on qualitative
variables, namely (i) number of nuts per kg, (ii) extraneous matter, (iii) void
nuts, (iv) broken and damaged nuts, (v) oozing of liquid from cashew nut
shell, (vi) cutting test, (vii) floating test, (viii) length, (ix) width, (x) thickness,
(xi) moisture percentage, and (xii) recovery of kernels. By assigning
appropriate weightages to these qualitative variables, scores have been
worked out by adding the 12 quality parameters multiplied by the respective
weightage. The total score so obtained has constituted the basis for grades.
Five grade standards have been developed for cashew nut, based on
composite index. It has been found that the number of nuts per kg, moisture
percentage and cutting test reduce the prices and these factors could
explain 98 per cent variations in price. All variables have been found to
have the expected signs and only three variables, namely number of nuts
per kg, floating test, and length have been observed significant in price
determination. These results could be used as a guide by the farmers for
fetching better price in the market, and by buyers for getting product of
ascertained quality.

1
Part of MABM post-graduate thesis submitted to the Department of Agricultural
Marketing, Co-operation and Agribusiness Management, University of Agricul-
tural Sciences (UAS), Dharwad, Karnataka
2
Research Scholars, Department of Economics, Karnataka University, Dharwad.
3
Professor, Department of Agricultural Marketing, Co-operation and Agribusiness
Management, College of Agriculture, UAS, Dharwad, Karnataka.
The authors are grateful to the referee for his suggestions.
172 Agricultural Economics Research Review Vol. 20 January-June 2007

Introduction
Cashew, botanically known as Anacardium occidentale, was introduced
to India by the Portuguese about 400 years ago. The importance of cashew
in the Indian economy has been as a foreign-exchange earner and
employment generator. The processed kernels are highly nutritious as they
are rich in fats, proteins, carbohydrates, minerals and vitamins. The kernels
have fat-soluble vitamins like A, D, E and K. In the year 1999–2000, the
export of cashew kernels from India was of 92,461 tonnes, valued at about
Rs 2450 crores. The major consumers of Indian cashew kernels are: United
States (37%), Netherlands (24%), Japan (8%), UK (6%), Australia (4%)
and UAE (3%). India is the largest producer, processor and exporter of
cashew in the world.
The quality of cashew, brought to the market by the farmers, varies
considerably from lot to lot. Therefore, it is highly essential to evolve a
grading system for cashew nuts on a scientific basis to get remunerative
prices. This grading should be based on ‘objective evaluation of quality
aspects’ so that sellers are able to describe the quality of their produce and
buyers understand what is being offered to them. Hence, the present study
was undertaken to develop grade standards for cashew nut and to study the
price- quality relationship of cashew nut.

Methodology
The North District of Goa state was selected for the study, because it
ranked first in area, production and productivity of cashew nuts with 42
cashew processing units. For the development of grade standards for cashew
nuts, the samples were collected from 15 cashew processing units.
Initially, from each processing unit, a sample of 5-kg was drawn from a
lot at different spots and then by using hand halving method, a final sample
of l-kg was drawn from these samples. Thus, l5 representative samples
were drawn from 15 processing units. These samples were analyzed in the
laboratory for their physical and chemical qualitative variables, as described
below.

Qualitative Variables
A brief description of these variables is given below:
Number of Nuts: The number of nuts per kilogram were counted. Higher
the number of nuts per kilogram, poorer was their quality.
Extraneous Matter: Dust, dirt, stones, earth, chaff, straw and any other
impurity mixed with the nuts, were termed as extraneous matter. It was
regarded as a discounting quality factor of grade and price.
 Namdeo et al.: Price-Quality Relationship of Cashew Nut 173

Void Nuts: Nuts in which there were no kernels (No./kg).

Broken and Damaged Nuts: Nuts which were broken/internally-damaged
or discoloured affecting the quality (No./kg).
Cutting Test: Raw cashew nuts in sample of 5-kg were collected from
different bags and mixed together. One kilogram raw nuts were taken from
the bulk and cut open using hand-cutting tool. Based on the kernel,
appearance as white, shriveled, dotted or reject, the percentage of good
kernel was calculated.
Floating Test: One kilogram of sample was put in a vessel containing
water, after continuous stirring floaters were collected and counted. Immature
nuts due to low density than water, improperly filled nuts and deteriorated
nuts floated. Higher the percentage of floaters, poorer was the quality of
cashew nuts. It was a discounting factor for both quality and price
Size: It was determined with the help of length, width, and thickness of the
nut. Bigger the size, better was the quality.
Moisture: The moisture (%) in cashew nuts inversely affected the price
and grade.
Recovery: Out of 1-kg of raw nuts with husk and without husk were
weighed and percentage of nuts without husk was calculated. Higher the
percentage, better was the quality of cashew nuts. It is a factor contributing
to higher price and higher grade for cashew nuts.
In order to determine the importance to each of these variables,
appropriate weightages were assigned. The weightages were obtained by
interviewing research experts, processors, traders, dealers, and farmers
and also by obtaining correlation coefficients to get ranking for a particular
variable. The variable which was most important among the variables, got
the highest weightage. The weightages were assigned as follows: (i) Number
of nuts (0.26), (ii) Extraneous matter (0.05), (iii) Void nuts (0.06), (iv) Broken
and damaged nuts (0.06), (v) Oozing of liquid from the cashew nut shell
(0.07), (vi) Cutting test (0.09), (vii) Floating test (0.15), (viii) Length (0.04),
(ix) Width (0.04), (x) Thickness (0.04), (xi) Moisture percentage (0.10) and
(xii) Recovery of kernels (0.04). Thus, a composite index for each sample
of cashew nut included in this study was worked out. The composite index
was prepared by multiplying the quality parameters with their respective
weightages and were added together to get the composite index number.
Like this, the composite index was calculated for all the samples, which is
presented in Table 1.
This, in turn, was the basis for scientific grading of cashew nuts. Stepwise
multiple regression analysis was used to study the relationship between the
price and grades.
174 Agricultural Economics Research Review Vol. 20 January-June 2007

Results and Discussion

This study has been divided into three parts. Part I presents the grade
standards developed for raw cashew nuts in the study area. Part II presents
the grade and qualitative variables and their inter-relationship. Part III depicts
the results of stepwise regression analysis, indicating the most important
variables contributing to the price.
Part I: The samples whose score (refer to Table 1) was 52.01 to 56.0,
were designated as Grade I. Samples whose score was 48.01 to 52.0, as
Grade II and so on. The composite index of 36.01 to 40.00 was grouped as
Grade V.
Part II: In this part, an attempt was made to establish true relationship
between the 12 qualitative variables and the scientific grades by means of
correlation coefficients. It can be seen from Table 2 that all the variables
carried the signs as expected. The variable of number of nuts was not only
significant at 1 per cent level but also carried the sign as expected. It gave

Table l. Development of grade standards for cashew nuts in the study area
S. No. Composite index Grade number
1 52.01-56.00 I
2 48.01-52.00 II
3 44.01-48.00 III
4 40.01-44.00 IV
5 36. 01 -40 00 V

Table 2. Correlation between grades and quality characteristics of cashew nuts

S. No. Quality character Correlation co-efficient
1 Number of nuts -0.926**
2 Extraneous matter -0.727**
3 Void nuts -0.702**
4 Broken and damaged nuts -0.719**
5 Oozing of liquid from cashew nut shells -0.708**
6 Cutting test -0.770**
7 Floating test -0.813**
8 Length 0.647**
9 Width 0.602*
10 Thickness 0.538*
11 Moisture percentage -0.817**
12 Recovery of kernels 0.587*
Notes: *Significant at 5%, and
** Significant at 1% level
 Namdeo et al.: Price-Quality Relationship of Cashew Nut 175

the signal to the producers to grow cashew nuts which were bold and weighed
lesser nuts per kilogram.
It is observed from Table 2 that all the characteristics were having
correlation with the scientific grade. Among variables, the number of nuts,
extraneous matter, void nuts, broken and damaged nuts, oozing of cashew
nut shell liquid, floating test, cutting test, moisture percentage and length
were highly correlated with scientific grade. However, the negative sign
indicated that increase in the value will result in lowering of the scientific
grade.
It could be seen from Table 3 that only three variables contributed to
the price determination. The regression coefficient of number of nuts
(-0.027) was significant at 5 per cent level. While the regression coefficients
of floating test and length were –0.013 and 0.357, respectively and both
were significant at 1 per cent level. The R2 value was 0.98, indicating that
98 per cent of total variations in price were explained by the qualitative
variables.

Table 3. Stepwise multiple regression analysis for quality characteristics of

cashew nut samples (Dependent variable –price)
S. No. Variables Regression co-efficient R2
1 Number of nuts -0.027*
(2.14) 0.98
2 Floating test –0.013*
(4.159)
3 Length 0.357**
(3.39)
Note: Figures within the parentheses indicate the ‘t’- value
*Significant at 5% level
**Significant at 1% level

Conclusions
The grade standards of cashew nuts have been developed to study
their price-quality relationship. Laboratory analysis, indexing, stepwise multiple
regression analysis and tabular presentation have been used for data analysis.
Five grade standards have been developed for cashew nuts, based on their
composite index. The results based on price-quality relation have revealed
that the number of nuts per kilogram, moisture percentage and cutting test
affect the prices and these factors could explain 98 per cent of total variations
in prices.
176 Agricultural Economics Research Review Vol. 20 January-June 2007

References
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Erratum
In the advertisement of NABARD published on the back cover page
of the Conference Issue (2006) of Agricultural Economics Research
Review published by Agricultural Economics Research Association
(India) containing proceedings of the Conference on “Sustainable
Agricultural and Rural Livelihood”, the matter printed within the box
regarding ‘Investment in NABARD Capital Gain Bonds’ may be
treated as deleted and not published. The inadvertant error is
regretted. For correct version of NABARD advertisement, kindly
read back cover page of this issue of the journal.
Editor