PROFITABILITY OF AROMATIC PLANTS

CULTIVATION IN NALGONDA AND

MAHABUBNAGAR DISTRICTS OF TELANGANA
STATE - THE CASE OF PALMAROSA CROP

SUNKARABOINA MOUNIKA

B.Tech.(Agril.Engg)

MASTER OF BUSINESS ADMINISTRATION

(AGRIBUSINESS MANAGEMENT)

2015
 PROFITABILITY OF AROMATIC PLANTS
CULTIVATION IN NALGONDA AND
MAHABUBNAGAR DISTRICTS OF TELANGANA
STATE - THE CASE OF PALMAROSA CROP

BY

S. MOUNIKA
B.Tech (Agril. Engg)

PROJECT REPORT SUBMITTED TO THE

PROFESSOR JAYASHANKAR TELANGANA STATE
AGRICULTURAL UNIVERSITY
IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR
THE AWARD OF THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION
(AGRIBUSINESS MANAGEMENT)

CHAIRPERSON: Dr. SEEMA

SCHOOL OF AGRIBUSINESS MANAGEMENT

COLLEGE OF AGRICULTURE
RAJENDRANAGAR HYDERABAD-500 030.
PROFESSOR JAYASHANKAR TELANGANA STATE
AGRICULTURE UNIVERSITY
2015
 DECLARATION

I, S. MOUNIKA hereby declare that the project report entitled

“PROFITABILITY OF AROMATIC PLANTS CULTIVATION IN NALGONDA
AND MAHABUBNAGAR DISTRICTS OF TELANGANA STATE- THE CASE
OF PALMAROSA CROP” Submitted to the Professor JayashankarTelangana
State Agriculture University for the degree of MBA (Agribusiness Management) is
the result of theoriginal work done by me. I also declare that no material contained in
the project report has been published earlier in any manner.

Place: Hyderabad (S. MOUNIKA)

Date: I. D. No. RMBA/13-08

 CERTIFICATE

Ms. S. MOUNIKA has satisfactorily prosecuted the course of project and that the

report entitled “PROFITABILITY OF AROMATIC PLANTS CULTIVATION IN

NALGONDA AND MAHABUBNAGAR DISTRICTS OF TELANGANA STATE-

THE CASE OF PALMAROSA CROP” submitted is the result of original workand is

of sufficiently high standard to warrant its presentation to the examination. I also certify

that neither the project report nor its part thereof has been previously submitted by her

for a degree of any University.

Date: Chairperson

(Dr. SEEMA)
 CERTIFICATE

This is to certify that the project report entitled “PROFITABILITY OF

AROMATIC PLANTS CULTIVATION IN NALGONDA AND
MAHABUBNAGAR DISTRICTS OF TELANGANA STATE - THE CASE OF
PALMAROSA CROP” submitted inpartial fulfilment of the requirements for the
degree of ‘Master of Business Administration in Agribusiness Management’ of the,
“Professor JayashankarTelangana State Agricultural University” Hyderabad is a
record of the bonafide original work carried out by Ms. S. MOUNIKA under our
guidance and supervision.
No part of the project report has been submitted by the student for any other
degree or diploma. The published part and all assistance received during the course of
investigations have been duly acknowledged by the author of the project report.

Project report approved by the Student Advisory Committee

Chair person : Dr. SEEMA

Professor and Head of the Department
School of Agribusiness Management
College of Agriculture
Rajendranagar, Hyderabad – 500030

Chairperson : Dr. P. RADHIKA

Associate Professor
School of Agribusiness Management
College of Agriculture
Rajendranagar, Hyderabad – 500030

Member : Shri M.H.V. BHAVE

Associate Professor
Department of Statistics & Mathematics
College of Agriculture
Rajendranagar, Hyderabad – 500030

Date of final viva-voce:

 ACKNOWLEDGEMENT

I gracefully record my profound sense of gratitude and regards to the

Chairperson, Dr. Seema, Professor and Head of the Department, School of
Agribusiness Management, Rajendranagar, professor Jayashankar Agricultural
University for her invaluable suggestions and meticulous and continuous guidance
throughout the period of the study.

I deem it a proud privilege to express my highest veneration and respectful

gratitude to Member of Advisory Committee, Dr. P. Radhika, Associate Professor,
School of Agribusiness Management, College of Agriculture, Rajendranagar, Professor
Jayashankar Agricultural University for her unbounded affection, assistance and
encouragement during my course of study.

I equally owe my deep sense of gratitude to Shri M.H.V. Bhave, Associate

Professor, Department of Statistics and Mathematics and member of my Advisory
Committee for his invaluable guidance, suggestions and support during my course of
study.

I owe a deep sense of honour, regards and cordial love to my parents

Shri Sathyanarayana and Smt. Jaya to my Uncle shri. Srinivas and Aunty smt.
sharadha and for their unbounding love, unparallel affection and unstinted
encouragement throughout my educational career and without their moral support I
could not have completed the project report.

I am in dearth of words to express my sense of gratitude to my family members and

relatives for their blessings, love, affection and valuable moral support throughout my
life. I express my profound sense of gratitude to my lovly sister ch.Mouna, my brother-
in-law ch. Anil kumar, to my brother Sathwik, and to my cousins Siddharth,
Sirichandana, Pushkal for their whole hearted help and cooperation during my
research and valuable moral support.
 It will be a great lapse on my part if I fail to extend my best regards to all my
teachers and well wishers who have contributed in building up my present status. I also
thank the staff of School of Agribusiness Management for their help during my project
work.
My acknowledgement would be incomplete and meaningless without thanks to
my friends Navyatha, sirisha, zebadanish, sabitha, jhanu, yashu, srilatha, padduakka,
sowjanya, shambhavi, keerthi, karunya, sripavani, srujana for their help. I wish to
extend my thanks all those who have contributed even in a small way in the completion
of my project work.

Finally I am very much thankful to Professor Jayashankar Telangana State

Agriculture University. For providingme the opportunity to pursue my degree

Date: (S. Mounika)

 CONTENTS

Chapter No. Title Page No.

I INTRODUCTION

II REVIEW OF LITERATURE

III MATERIAL AND METHODS

IV RESULTS AND DISCUSSION

V SUMMARY AND CONCLUSIONS

LITERATURE CITED

APPENDICES
 LIST OF TABLES

Table Title Page

No. No.
4.1 Percentage change and growth rates in area, production and
productivity of aromatic crops in India (2004-05 to 2013-14)

4.2 Age group of the respondents in the study area.

4.3 Literacy status of sample farmers in selected districts

4.4 Structure of farm assets of the sample farms (in Rs.)

4.5 Cost structure of palmarosa per acre

4.6 Returns from palmarosa cultivation

4.7 Financial feasibility of palmarosa

4.8 Constraints faced by the farmers in production of palmarosa crop

4.9 Constraints in the marketing of palmarosa

 SYMBOLS AND ABBREVIATIONS

The following abbreviations shall be used both for singular and plural units

0 C : Degree Celsius

0 F : Degree Forenhight

Ac : Acre

BCR : Benefit Cost Ratio

Cm : Centimetre

CAGR : Compound Annual Growth Rate

Dept : Department

et al. : and others people

etc. : For example, for instance

FYM : Farm yard manure

Ha : Hectare

Kg : Kilogram

Km2 : Square Kilometre

Mm : Millimetre

MT : Metric Tonnes

NHM : National Horticulture Mission

No. : Number

NHB : National Horticultural Board

ROI : Return on Investment

Rs : Rupees

Sl. No. : Serial Number

SHM : State Horticulture Mission

VAT : Value Added Tax

Viz. : Namely
Author : S. MOUNIKA

Title of the project : PROFITABILITY OF AROMATICPLANTSCULTIVATION

IN NALGONDA AND MAHABUBNAGAR DISTRICTS OF
TELANGANASTATE - THE CASE OF PALMAROSA CROP

Degree : MBA (AGRIBUSINESS MANAGEMENT)

Faculty : AGRICULTURE

Department : SCHOOL OF AGRIBUSINESS MANAGEMENT

Major advisor : Dr. SEEMA

University : PROFESSOR JAYASHANKAR TELANGANA STATE

AGRICULTURE UNIVERSITY

Year of submission : 2015

ABSTRACT

Aromatic plants are the plants which contain essential oil in them. These essential oils are
volatile oils as they are often found in different species of plants which are known to be very
complex in their chemical nature. The characteristic flavour and aroma that they impart are
basically advantageous in attracting insects and other animals which play a key role in
pollination or dispersal of seeds and fruits. However, the aroma in these essential oils is being
exploited largely in perfumery, cosmetic and pharmaceutical industries. India has a perfumery
tradition that dates back to over 5000 years to Indus valley civilization. In the excavations of
Harappa and Mohanjodaro, a “water distillation still” and “receiver” have been recorded whose
shape resemble the “deg” and “bhaka” currently used by “attars”(traditional perfumers) of
Kannauj in India.
 There are several aromatic plants presently in use for medication which have come to us
from our ancestors inhabiting different countries. Thus, aniseoil, citronella, vetiver, eucalyptus,
spruce oil and aroma chemicals like camphor, menthol, cineol thymol and guacacol still act as
both aromatic and additives. In addition to the aromatic oils, the finer perfumes contain fixative
substances which are less volatile than the oils which delay evaporation. There are several
aromatic species which are utilized for this purpose. Palmarosa is one among them.The present
study was conducted to examine the profitability of aromatic plants cultivation in Nalgonda and
Mahabubnagar districts of Telangana states - The case of palmarosa crop.

Objectives :

1. To study the trend in area, production and productivity of aromatic crops in the country.
2. To estimate economics and value addition of the selected crop.
3. To evaluate the viability of the investment.
4. To identify the production and marketing constraints.
This study plays an important role in assessing business viability and potential of
palmarosa crop. It helps the production as well as processors to analyze the profitability of
palmarosa production and financial feasibility of palmarosa processing. About 120 farmers were
selected from Nalgonda, Mahabubnagar districts of Telangana. Secondary data on area,
production and productivity of aromatic in India, Telangana was collected for a period of ten
years from 2004-05 to 2013-14, from which trends in growth rates of aromatic production were
analyze by using Compound Annual Growth Rate (CAGR) function.

The Compound Growth Rates for area, production and productivity of aromatic crops in
India during 2004-05 to 2013-14 were 0.16 per cent, 0.21 per cent and 0.05 per cent respectively.
Growth rate is not significant for all three variables. The palmarosa cultivation in the study area
was totally under rain fed conditions because of the non-availability of irrigation sources and
semi arid conditions. The machine labour utilization was found low in the study area for
palmarosa cultivation as most of the farmers were still using traditional cultivation practices.
Total cost of cultivation of palmarosa was Rs. 31985.26 for the first year per acre. In the second
year Rs.23231.51, whereas in the third year Rs. 24741.5 and in the fourth year Rs. 25980.26.
Production of oil per acre was 53.2 for the first year, second year it was 56.5. In the third year
57.8 for the fourth year 52.4 oil produced per acre in the study area. Gross income or the total
revenue earned by the grower from the sale of the produce from one acre of palmarosa was Rs. 66500 for
the first year, second year it was Rs. 77405, in third year it was Rs.80920, whereas in fourth year it was
Rs.75980. The Benefit Cost Ratio for palmarosa production was for the first year 1.56 whereas, in
the second year 2.29 remains same in the third year 2.29. For the fourth year 2.09 .i.e. for every
rupee investment, farmers were getting Rs. First year 0.569 returns on investment was found to
be 56.9 percent in the second year Rs. 1.29 of 129.49 percent whereas in the third year Rs. 1.29
with the 129.31 percent and for the fourth year it was 1.07 of 107.83 percent.

Keywords: Palmarosa, Compound Annual Growth Rate (CAGR), Cost ofcultivation,

Profitability, Benefit Cost Ratio.
 Chapter I

INTRODUCTION
Medicinal and aromatic plants (MAPs) are receiving considerable attention all over the
world because of their vast untapped economic potential, especially in the use of herbal
medicines. India is a varietal emporium of the medicinal and aromatic plants (MAPs) and has
well-established local health care tradition still relevant in indigenous health care system.

Aromatic plants are the plants which contain essential oil in them. These essential oils are
volatile oils as they are often found in different species of plants which are known to be very
complex in their chemical nature. The characteristic flavour and aroma that they impart are
basically advantageous in attracting insects and other animals which play a key role in
pollination or dispersal of seeds and fruits. However, the aroma in these essential oils is being
exploited largely in perfumery, cosmetic and pharmaceutical industries. India has a perfumery
tradition that dates back to over 5000 years to Indus valley civilization. In the excavations of
Harappa and Mohanjodaro, a “water distillation still” and “receiver” have been recorded whose
shape resemble the “deg” and “bhaka” currently used by “attars”(traditional perfumers) of
Kannauj in India.

There are several aromatic plants presently in use for medication which have come to us
from our ancestors inhabiting different countries. Thus, aniseoil, citronella, vetiver, eucalyptus,
spruce oil and aroma chemicals like camphor, menthol, cineol thymol and guacacol still act as
both aromatic and additives. In addition to the aromatic oils, the finer perfumes contain fixative
substances which are less volatile than the oils which delay evaporation. There are several
aromatic species which are utilized for this purpose. Palmarosa is one among them.

In India, most of the medicinal and aromatic plants including crude drugs (roots, stems,
leaves, flowers, seeds, fruit, whole plants etc.) are handled by the traditional herbal crude drugs
dealers commonly known as "Pansaris" in the North and "Pachamarunna Kado" in the South,
who sell crude drugs under Ayurvedic, Unani or local names. Aromatic chemicals and oils are
widely used in food, flavour, perfumery and cosmetic industries. In the past few years, there has
been a tremendous increase in the number of drugs derived from various sources mainly because
of the due recognition of medicinal and aromatic plants the world over, coupled with the basic
realization that drugs and essential oils derived from plants are much safer to use and are easily
available at a price affordable by common man with least side effects as compared to synthetics.

India is endowed with a unique wealth of biota which includes a large number of
medicinal and aromatic plants. Many of these plants are rare, endemic and found only in wild
sources. The population explosion coupled with improved standard of living lead to ruthless
exploitation, resulting in the imminent danger of extinction of these plants. Most of these wild
medicinal and aromatic plants are highly habitual specific, found only in forests and occupying
highly specialized ecological niche with restricted distribution. Medicinal and aromatic plants
constitute the basis of primary health care for a majority of population and are a critical source of
income for many rural people particularly for nearby forest areas. This is more true in case of
developing countries, as people are dependent on traditional systems of medicine which are
culturally appropriate, technologically simple, economically affordable and generally effective
systems with little or no side effects. WTO driven trade policies and immense muscle power
enjoyed by the multinational drug companies are driving the modern medicines beyond the reach
of a large segment of population. There are about seven lakh registered and trained practioners of
the traditional systems of medicine which accounts for about seven doctors per every 10,000
population almost the same as that of the modern system in India. (Sunil, 2010).

Medicinal and Aromatic Crops are the source of basic raw materials for pharmaceutical,
perfumery, flavor, soap and cosmetic industries and now a days are receiving global attention
since they contribute for health security, employment and income generation to millions of
people in rural and peri-urban areas. In addition, they contribute to health needs of people in
rural communities in alternate systems of medicine, generate additional employment and income,
offer opportunities for processing and export enterprises and contribute for national
development.

The market for aromatic plants is still in the nascent stage, primarily because of low
awareness among farming community, especially about their potential and returns (Purohit,
2004). The central as well as state governments provide a variety of financial assistance in the
form of loans and subsides to the farmers engaged in MAP’s cultivation through their agencies
like National Medicinal Plant Board (NMPB), Agri Export Zone, National Bank for Agriculture
and Rural Development (NABARD), Agricultural and Processed Food Products Export
Development Authority (APEDA), National Horticulture Board (NHB) etc. The NMPB has
introduced several promotional as well as commercial programmers for the development of
MAP’s with financial assistance upto 100 percent.

Palmarosa plant is a native of India and it grows wild in forests of Madhya Pradesh,
Maharashtra, Andhra Pradesh, Karnataka, Uttar Pradesh and Odisha. It is also found in lesser
frequency in Karnataka, Tamil Nadu and in some parts of Uttar Pradesh.

Palmarosa is a major aromatic plant grown exclusively for extraction of aromatic oil
from the grass. Grass is the most economical part of the plant. The essential oil is present in all
parts of the grass, viz. inflorescence, leaves and stems of which the inflorescence contains the
major portion. Hence, the crop should be harvested at full flowering to seed production stage in
order to obtain maximum and good quality oil.

Palmarosa can be distilled either by hydro-distillation or steam distillation methods.

Steam distillation results in maximum yield of better quality oil. Palmarosa oil has a sweet floral,
with a hint of rose smell and is pale yellow in color with a nearly watery viscosity. It is a wild
growing, herbaceous green and straw-colored grass, with long slender stems, terminal flowering
tops and fragrant grassy leaves. It is harvested before the flowers appear and the highest yield is
obtained when the grass is fully dried - about one week after it has been cut. There are two
varieties of grass from which the oil can be extracted - motia and sofia. The sofia chemotype will
be far more active and pleasant smelling - and for this reason most of the oil sold by us is from
the chemotype.

Palmarosa oil is used to counter physical and nervous exhaustion, stress-related

problems and nervousness. It is most useful during convalescence and cools the body of fever,
while aiding the digestive system, helping to clear intestinal infection, digestive atonia and
anorexia nervosa. It is effective in relieving sore and stiff muscles.
 Palmarosa oil could be used with good effect on the skin, for nervous and stress-related
problems and for the digestive system. The therapeutic properties of palmarosa oil are antiseptic,
antiviral, bactericide, cytophylactic, digestive, febrifuge and hydrating.

Palmarosa oil can help clear up infections and prevent scarring when added to the water
used to wash the wound. When included in creams and lotions, it has a moisturizing and
hydrating effect on the skin, which is great to fight wrinkles. It also balances the natural
secretion of sebum, which keeps the skin supple and elastic. On cellular level, it helps with the
formation of new tissue and for that reason is great for rejuvenating and regenerating the skin.
It is most useful when fighting a dry skin and to sort out skin infections. The crop can be
propagated by both seeds and slips. For commercial cultivation, the crop is propagated by
seeds. It is always better to use fresh seeds that were harvested during the previous season,
which are in good condition and free from pests.

The increased demand for aromatic crops for domestic consumption as well for export
has led a situation of over exploitation of these natural resources leading to habitat loss, genetic
erosion and species loss perhaps leading to a crisis situation of the future. Thus the demands for
these crops and their products has necessitated in their large-scale cultivation.

1.1 Importance of the study

The present study was conducted to examine the profitability of aromatic plants
cultivation in Nalgonda and Mahabubnagar districts of Telangana state - The case of palmarosa
crop. For the risk prone farmers of dryland areas such as Mahabubnagar and Nalgonda districts,
crop diversification through introduction of medicinal and aromatic crops is a viable option to
help increase the income of small holders. The number of MAP’s possesses the ability to grow in
poor soils and under low rainfall and moisture conditions, there by assisting in the natural
regeneration of these crops. The entry of these MAP’s into the world food and drug market as
environment friendly botanical products is providing an important new opportunity for farmers
in the Nalgonda and Mahabubnagar districts of Telangana.

5. To study the trend in area, production and productivity of aromatic crops in the country.
6. To estimate economics and value addition of the selected crop.
7. To evaluate the viability of the investment.
8. To identify the production and marketing constraints

1.2 Limitations of study

The data suffers from lack of authentic statistical information. Since, the data was
collected by survey method, the inherent lacunae associated with this type of enquiry have crept
into the study, even though the estimates were provided by the memory recall on account of the
non-maintenance of reliable information. As for as possible by cross questioning the degree of
discrepancy if any, would be negligible as the estimates presented are in averages. It may
however, be recognized that the findings of the study need not be generalized beyond the
boundaries of the area under investigation and applicable to such other areas having similar agro-
climatic and socio- economic condition.
 CHAPTER II
REVIEW OF LITERATURE
This chapter reviews the research work done in the fields related to the objectives of study. There
are few comprehensive studies made on profitability of aromatic plants cultivation. Some of the
studies conducted on production and processing of medicinal and aromatic crops have been
reviewed and presented under the following sub-heads.

2.1 Studies on trend analysis.

2.2 Studies on economics of aromatic and medicinal plants.
2.3 Studies on problems in aromatic and medicinal plants cultivation and marketing.

2.1 Studies on trend analysis.

Muthuswamy (2013) in his study on export performance of Indian turmeric, studied
about Indian turmeric production, state wise export of turmeric by India and country wise export
of turmeric by India. He has mentioned that Andhra Pradesh, Maharashtra, Orissa, West Bengal,
Tamil Nadu, Karnataka and Kerala are the major turmeric producing states in India. He has
showed that in the period 2006-2011 there is only slight increase in the turmeric exports from
India. The study also delt in detail about the India’s export of turmeric to major markets like
USA, UK, and UAE. He has concluded that India has the potential to become a major player.
The world trade in turmeric will be usually in the form of dry turmeric, fresh turmeric and
turmeric powder.

Sharma and Gummagolmath (2012) examined the trends in the area, production and
productivity of guar in India as well as in Rajasthan state for the period of 1990-91 to 2007-08.
They found in their study that there was a high year-to-year variation in both area and production
in the country and in Rajasthan state. Fluctuation in production of guar was the major problem in
having sustained supply. The major problem of farmers was non-availability of certified seed at
the time of sowing. They suggested the need to establish a Research and Development Centre as
the centre of excellence and promote the improved cultivation practices of guar among the
farmers.
 Damodaram et al. (2012) studied on export performance and competitiveness of
safflower. Comparative advantage and symmetric comparative advantage have been worked out
for safflower seed and safflower oil for India, Mexico and United States of America for the
period 1992-2009. The results have indicated that India had fluctuating trends in its
competitiveness in the export of safflower seed while it had no competitive advantage in the
export of safflower oil except in the year 1997, it is also observed that USA has very strong
comparative advantage for the export of safflower oil as well as safflower seed while Mexico has
weak comparative advantage for export of safflower seed and strong comparative advantage for
export of safflower oil. The results revealed that support prices do not have high impact on
increase or decrease in safflower production in India.

Choudhary et al. (2011) in their study on the trends in area, production and productivity
of mustard in India found that growth rates in area and production of mustard have been highly
significant during the period 2008 indicating the popularity of the crop in India and ever growing
demand from the industry and diversified utility of mustard in the agricultural economy of India.
The contribution of Rajasthan in terms of area was 20% to the total mustard seed cultivation of
India during earlier years but it has increased up to 40% during the period 2007-2010, while in
case of production, the contribution of Rajasthan was 21% to total production during earlier
years but it has increased up to 50% during 2007-2010. The increase in the area of mustard may
be due to increased demand for mustard in North India or may be due to shift in acreage in
favour of mustard due to its higher profitability. Increase in productivity might be attributed to
technology break-through in mustard with the release of high yielding varieties, utilization of
proper combination of inputs and better field management practices. Production increased both
due to significant increase in area and productivity.

Sharma (2007) observed the growth in area, production and productivity of vegetable
crops in North West Himalayan region during the period of 1995-96 to 2004-05. He found that
the increase in production and productivity was higher than increase in area. The area,
production and productivity of vegetable crops recorded a significant growth, however, growth
in production (7.51%) and productivity (4.65%) was found higher as compared to area (2.85%).
The results highlight the fact about comparative advantage of growing vegetable crops on
account of its varied agroclimatic conditions. Tomato crop has the highest value productivity
both at current as well as constant prices followed by cauliflower and pea. The decomposition
analysis revealed that overall increase in vegetable production was mainly due to acreage
expansion.

Patidar et al. (2006) in their study on contribution of area and productivity towards
growth of soybean production in Madhya Pradesh observed that Ujjain, Indore, and Dewas being
the most important soybean production districts which contributed more than 24.2% of area and
26.0% of production of soybean in the state with an average productivity of 1207 kg per ha. Six
districts, namely Indore, Dhar, Shajapur, Sehore, Sagar and Betul fall under the category of low
risk prone districts. The growth in area, production, and productivity was positive and significant
in all major districts except Betul, and growth was higher during period I (1984-85 to 1993-94)
compared to period II (1994-95 to 2003-04). The area, yield and their interaction effect were also
positive in almost all districts of Madhya Pradesh. In period II, area effect was negative in Betul
district, while yield effect and interaction effect were negative in Dhar, Ujjain and Sagar districts
of Madhya Pradesh.

Bharat (2004) studied the economic analysis of groundnut seed production and growth of
seed industry in Gujarat state. Compound growth rates for area, production and productivity have
been estimated for the state and different seed producing agencies. Instability in area and
production is measured by using coefficient of variation. Compound growth rates have been
found positive for area and production of quality seeds and negative for yield. In case of
foundation seeds, positive growth for area and production for most of the crops like rapeseed and
mustard, soybean, fodder and vegetables was observed. Positive and significant growth rates of
certified seed production are found in most of crops except sorghum. Positive and significant
increase in yield has been observed only for groundnut and soybean.

Angles (2001) assessed the growth performance of turmeric in important South Indian
states over the period from 1979-80 to 1998-99 by using the exponential growth function of the
form Yt = abt. They reported that the growth rates in area, production and productivity of
turmeric in Andhra Pradesh, Tamil Nadu and Karnataka registered positive and significant
growth. While growth rate of area was negative (-0.02) in Kerala, production and productivity of
turmeric were positive and showed significant growth. The growth rates in area (2.07 %),
production (6.57 %) and productivity (3.78%) of turmeric in India registered positive and
significant growth. A negative growth rate of area was found (-0.02) in Kerala as the production
of turmeric is takenunder in small patches, as the plantation crops such as rubber, coconut etc.
dominate and they are more profitable than turmeric.

Ashalatha (2000) analyzed various growth rates with respect to cashew in two periods;
Period-I, covering 1956-57 to 1970-71 and period-II, covering 1971-72 to 1998-99. In India it
was observed that the growth rate of area, production, productivity, kernel export and raw
cashew import showed positive trends but the cashew nut shell liquid quantity exported showed
negative growth and was non-significant due to the fact that the imports of raw nuts have
declined (0.75%) and also prices for Indian cashew decreased in the world market during 1980-
1990.

2.2 Studies on economics of aromatic and medicinal plants.

Guleria et al. (2014) studied the economics of production and marketing of important
medicinal and aromatic plants in mid hills of Himachal Pradesh maximum from stevia (`
173627.29), safedmusli(` 85462.01), aloe vera(` 63832.29) and lemon grass (` 43325.69). The
benefit–cost ratio was found to be in the similar trend i.e., safedmusli(1.30), stevia(1.27), aloe
vera(1.22) and lemon grass (1.19). However, the internal rate of return was found to be highest in
case of lemon grass (40%),aloe vera(36%) and stevia (32%). Hence the cultivation of MAPs
seems to have good returns for the farmers

Ram Suresh et al. (2014) conducted economic analysis of palmarosa cultivation in India
and have shown that the major portion of operational cost was shared by human labour,
distillation charges and preparation of nursery. Total variable cost was found to be Rs.47,926 per
hectare per year. The gross returns were found to be Rs.1,24,000 per hectare. The net returns
over variable cost were Rs.76,074 per hectare. The benefit–cost ratio was found to be 2.59
indicating a higher profit to the farmers. The independent variables like human labour, planting
material and distillation charges were positive indicating significant impact on the returns from
the crop.

Mishra et al. (2013) examined in their study titled agribusiness and entrepreneurship
development through medicinal and aromatic plants: An Indian state of affairs in India, that
being a specialized area of knowledge based production and processing, the MAPs have gained
importance in agribusiness and development of entrepreneurship and also in transforming the
socio-economic status of the poor farmers. Therefore, MAPs have found place in the mandate of
several research institutes, government organizations, financial and promotional agencies (CSIR,
ICAR, NMPB, DBT, DST, ICMR, NABARD, NMPB, NHB NHM, AYUSH, CAPART, etc.).

Ram Suresh et al. (2012) studied the economics of production and marketing of aromatic plants
in Uttar Pradesh. Three medicinal and aromatic plants viz, menthol, tulsi and vetiver were identified for
the study. The results indicated that the net returns over total cost have been found higher for vetiver
(Rs. 153933/ha), followed by menthol mint (Rs. 53,250/ha) and tulsi (Rs. 40,094/ha). The benefit cost
ratio was highest for menthol mint (3.27), followed by tulsi (3.21) and vetiver (3.04).

Phodani et al. (2011) conducted a study on promotion of medicinal and aromatic plants
cultivation for improving livelihood security in West Himalaya region. The results suggested that the
participatory approach was one method where various stakeholders come together to learn cultivation,
processing and marketing. The integrated value chain was developed taking into account the experience
and expertise of different disciplines. The net monetary benefit obtained was Rs 1,55,750 from all the
three clusters selected for the study. The study stressed on the significance of integrated value chain in
production and marketing of MAP’s.

Kadar and Chairbha (2010) studied economic appraisal of citronella oil extraction plant
in Ballapura district. The study revealed that returns per rupee of investment was 1.38 which
indicated that production of citronella oil was profitable.

Singh et al. (2010) studied economics of production and marketing of palmarosa

(CymbopoganMartinii) in Udham Singh Nagar district of Uttarakhand. The cost of cultivation
(per ha) of this crop was Rs. 26458.59 (1st year), 21507.43 (2nd year) and 21443.20 (3rd year).
The net returns were Rs. 42578.12 (1st year), Rs. 58365.72 (2nd year) and Rs. 63749.41 (3rd
year). The four types of marketing channels were identified in the marketing of palmarosa in the
study area. Disposal pattern and price spread through all four marketing channels were worked
out. The production, marketing and economic constraints were also identified and rated as per
farmers' opinion.
Gogai (2009) worked out the cost of establishment of patichouli as Rs.41,179.00 per ha,
whereas the average operation cost was Rs.28,447.76 per ha per year. The total cost per year was
Rs.45,500.75. The average gross returns and net returns were Rs.1,23,421.33 and Rs.77,920.58
respectively.

Mal et al. (2009) studied the economic analysis of cultivation of safedmusli in Haryana
and found that total cost of cultivation per acre of safedamusli was Rs. 1,82,152.30 of which total
variable cost and fixed cost were Rs. 1,40,793.60 and Rs. 41,354.71 respectively. Cost on
planting material was maximum (Rs. 1,01,101.30) followed by harvesting of crop (Rs.
15,236.84), inter-culture and hoeing (Rs. 7473) and chemical fertilizer (Rs. 6442.10). Gross
returns and net returns per acre were Rs. 2,47,052 and Rs. 64,900 respectively. B: C ratio was
1.36.

Deshpande et al. (2008) estimated the economics of selected medicinal and aromatic
crops in Karnataka, Madhya Pradesh, West Bengal, Uttaranchal and Kerala. Total cost of
cultivation and gross returns of sweet flag per acre were Rs. 44,876.58 and Rs. 77,184
respectively and net returns over variable and total cost per acre were Rs. 37,026.2 and Rs.
32,308.4 respectively. Patchouli cost of cultivation and gross returns per acre were Rs. 48,417.88
and Rs. 48,680 respectively and net returns over variable and total cost per acre was Rs. 3180.7
and Rs. 262.12 respectively. Isabgol cost of cultivation and gross returns per acre were Rs.
5975.8 and Rs. 10,688.26 respectively and net returns over variable and total cost per acre was
Rs. 6510.64 and Rs. 4712.46 respectively. Total cost of cultivation and gross returns for
ashwagandha per acre were Rs. 26,396.75 and Rs. 84,000 respectively and net returns over
variable and total cost per acre were Rs. 60,495 and Rs. 57,603.3 respectively. Total cost of
cultivation and gross returns for chandramuli per acre were Rs. 26,217 and Rs. 70,500
respectively and net returns over variable and total cost per acre were Rs. 47,343 and Rs. 45,093
respectively. Average total cost of cultivation and gross returns for jumbo farm per acre per year
were Rs. 13,605 and Rs. 44,344 respectively and net returns over variable and total cost per acre
per year were Rs. 30,738.4 and Rs. 30,738.4 respectively. Total cost of cultivation and gross
returns for leadwort per acre were Rs. 1,55,350.13 and Rs. 4,61,700 respectively and net returns
over variable and total cost per acre were Rs. 3,15,864.88 and Rs. 3,06,349.9 respectively. Total
cost of cultivation and gross returns from lemon grass per acre were Rs. 14,412 and Rs. 11,149.8
respectively and net returns over variable and total cost per acre were Rs. -832.57 and Rs. -
3262.93. This showed lemon grass cultivation in the study area was not profitable.

Deebasouaghanayaki and Sundaravaradarjan (2007) studied the economic analysis of

aloe vera cultivation in Tamil Nadu. In group1, the regression coefficient for land and labour
were positively significant. It could be concluded that these variable positively influenced on the
yield levels. In group 2, the regression coefficient for land, labour and manures were positively
significant. It could be inferred that these variable positively influenced on yield level of
aloevera. In group 3, the regression coefficient suckers and labour were found positively
significant so it can be concluded that these variables were positively influenced on yield levels.

Mittal and Singh (2007) examined in their study on shifting from agriculture to agribusiness: The
case of aromatic plants in the state of Uttarakhand. The results revealed that the payback period was
almost same around 4.35 years in lemongrass and citronella and lower in patchouli (2.69 years). The
NPV was positive and BCR was estimated to be around 1.17 for all the three crops which indicated a net
benefit of Rs. 0.17. The study concluded that the returns from MAP’s are substantially higher than the
most profitable commercial crops like sugarcane.

Mittal and Singh (2007) worked out economics of some important aromatic plants such
as lemongrass, citronella and patchouli. They found that average total cost of herbage cultivation
per ha per year at 2003-2006 price were Rs. 40,400, Rs. 39,287 and Rs. 32,919 for lemongrass,
citronella and patchouli respectively and average total cost of oil productionper ha per year were
Rs. 57,230, Rs. 56,408, and Rs. 36,101 for lemongrass, Citronella andPatchouli and average net
returns per ha per year for herbage cultivation and oil productionfor lemongrass, citronella and
patchouli were Rs. 17,320 and Rs. 48,974, Rs. 608 and Rs.45699, and Rs. 7296 and Rs. 25,821
respectively.

Rajesh (2006) studied the economic evaluation of vanilla cultivation in Uttar Kannada
district of Karnataka. He worked out total cost incurred in processing of vanilla bean as Rs.
6775.94 per quintal. The study revealed that labour cost was Rs. 4680 (69.07%), packing
material was Rs. 50 (0.73%) and fuel was Rs. 60 (0.88 per cent). Gross returns and net returns
obtained from 20 kg of processed bean were Rs. 30,000 and Rs.23, 224.06 respectively.

Muniram et al. (2005) observed that cost of cultivation of java citronella per ha as Rs.
30,000 and gross returns and net returns were Rs. 75,000 and Rs. 45,000 respectively.

Patra et al. (2005) worked out economics of cultivation of palmarosa and they found that
cost of cultivation for 1st, 2nd, 3rd, 4th and 5th years were Rs. 36,700, Rs. 32,000, Rs. 34,000,
Rs. 31,000 and Rs. 28,500 including cost of distillation and net returns per ha for 1st, 2nd, 3rd,
4th and 5th years Rs. 38,300, Rs. 68,000, Rs. 91,000, Rs. 81,000 and Rs. 71,500 respectively.

Patra et al. (2004 a) worked out economics of vetiver cultivation. They found that cost of
cultivation of vetiver per ha was Rs. 57,000 including distillation cost (Rs. 5000).The study
revealed that preparation of land and planting was the largest item (Rs. 30,000). Gross returns
and net returns were Rs. 1,13,000 and Rs. 56,000 respectively from vetiver oil production.

Patra et al. (2004 b) worked out economics of aswagandha. They found that cost of
cultivation per ha as Rs. 5000. The study revealed that cost of preparation of land (Rs. 1200) and
root digging and grading were the major items of cost of production. Gross returns and net
returns were Rs. 27,500 and Rs. 22,500 respectively.

Patra et al. (2004 c) worked out cost of cultivation of kalmegh per ha as Rs. 10,900.Cost
of seeds (Rs. 2500) and manures and fertilizer application (Rs. 2000) were the two major cost
incurred in cultivation of kalmegh. Gross returns and net returns obtained were Rs. 36,000 and
Rs. 25,100 respectively.
 Sundar and Kambai (2004) studied the economics of production of gloriosa superb in
Tamil Nadu with a sample size of 100 farmers. Cost of establishment was Rs. 63,423.134 and the
average cost of maintenance was Rs. 17,956.64 per ha per year. Expenditure on manures and
fertilizers (Rs. 7034.19) was the single largest item and total cost of cultivation per ha was Rs.
38,138.35 and gross returns and net returns per ha were Rs. 1,46,556.51 and Rs. 1,08,418
respectively.

Verma (2004) analyzed the economics of production, resource use efficiency, marketing
and constraints of garlic production and marketing in Indoor district of Madhya Pradesh and
found that variables included in regression analysis explained 86.69 per cent of variation in gross
returns, the elasticity of production with respect to seed and bullock labour were 0.503 and
0.1633 respectively. The regression coefficient of manures and fertilizers and plant protection
were 0.4795 and 0.39 respectively, these variables were found positive and significant. The
average marginal product of seed, manures and fertilizers, bullock labour and plant protection
were Rs. 0.06, Rs. 0.67, Rs. 0.27 and Rs. 0.60 respectively were positive and considerably lower
than unity. This indicted that seed, manures and fertilizer, bullock labour and plant protection
were underutilized. In case of expenditure on human labour, machine power and irrigation were
Rs. -0.78, Rs. -0.24 and Rs. -0.17 respectively shows negative value which indicates that these
variables are excessively used therefore is need to reduce its application to the recommended
level.

Farooqi et al. (2001) worked out the economics of palmarosa cultivation at Bangalore
and found that the cost of establishment was Rs. 15,355 per ha and maintenance cost was Rs.
14,900 per ha per year. From this study, land preparation (Rs. 4000) was the main cost of the
establishment, distillation and fertilizers were the main cost in maintenance of palmarosa
cultivation. They also worked out the economics of geranium cultivation in Bangalore and found
that the cost of establishment was Rs. 87,000 per ha and average cost of maintenance was Rs.
16,500 per ha per year. They found that the average net returns were Rs. 83,500. It was revealed
from the study that the cost of planting material (Rs. 75,000), harvesting (Rs. 2000) and
distillation cost were the important items of expenditure. The study also revealed that the
establishment cost of patchouli cultivation as Rs. 65,800 per ha and the average net returns was
Rs. 78,800 per year. The study revealed that cost of planting material (Rs. 50,000) was the single
major important cost in the establishment of the crop.

Jadhav et al. (2001) studied per acre cost of cultivation of isabgoal and patchouli and
results revealed Rs. 3994.46 and Rs. 32,707.16 as total cost and per acre returns were Rs. 5172
and Rs. 1,01,211.40 respectively. The per acre returns of patchouli was more than isabgoal. The
benefits cost ratio was 1.26 and 2.00 for isabgoal and patchouli respectively.

Subrahmanyam and Gajanana (2001) studied economics of lemon grass cultivation and
production of oil in Kerala. They worked out cost of distillation for own distillation units and
hired distillation units were Rs. 10,892 and Rs. 11,212.50. The study revealed that cost of fuel
was major cost and same in both cases with Rs. 7762. The net average returns were Rs. 5924.8
per acre. They also worked out net cost per kg of oil which was Rs. 271.54 and net returns per kg
of oil were Rs. 167.46 per kg.

Farooqi et al. (2000) worked out the economics of rosemary cultivation at Bangalore and
found that cost of establishment was Rs. 64,400 and the average cost of maintenance was Rs.
19,400 per ha per year. The study revealed that expenditure on planting material was (Rs. 50,000
per ha) and expenditure on distillation (Rs. 4000 per ha), fertilizer (Rs. 4000 per ha), plant
protection (Rs. 3000 per ha) and harvesting (Rs. 2000 per ha) were the main items in the
maintenance cost of rosemary cultivation.

Goswami (2000) observed that the cost of establishment of citronella was Rs. 2317.84
per acre and average cost of maintenance per ha was Rs. 8249.06, Rs. 7372.58, Rs. 8913.22 and
Rs. 6285.29 in 1st, 2nd, 3rd and 4th years respectively. The study revealed that expenditure on
human labour was the single largest item ((Rs. 4648.98, Rs. 5894.11, Rs. 5480.25 and Rs. 4820
for 1st, 2nd, 3rd and 4th year).Gross returns per ha in 1st, 2nd, 3rd and 4th year were Rs.
20,152.55, Rs. 33,759.58, Rs. 33,454.52 and Rs. 24,090.6 respectively.
 Jarial (1999) estimated the total expenditure in the cultivation of safedmusli which was
Rs. 2,95,000 and total income was Rs. 6,30,000 per acre. It was also estimated that the total cost
of cultivation per acre of senna was Rs. 3,700 and income from the sale of leaves was Rs.
15,000.Net income observed during the first year was Rs. 11,300 and it was Rs. 13,300 during
the subsequent years.

Vasudeva (1999) observed that the total cost of cultivation of periwinkle per hectare was
Rs. 15,000 and the returns from leaves, stem and root were Rs. 30,000, Rs. 3000 and Rs. 30,000
respectively. The net profit was Rs. 54,000.

Suneetha (1998) studied the cost of cultivation of medicinal crops in Kerala. The cost of
cultivation of plumbago, kaempferia, aloe, ocimum and long pepper as inter crops in coconut
garden were estimated using partial budgeting technique. These medicinal crops provided
additional returns of Rs. 30,340 per acre per annum. The additional cost involved in cultivation
was Rs. 25,091 per acre for all the above mentioned crops.

Farooqi and Vasundhara (1997) studied the cost of cultivation of medicinal plants like
ashwagandha, coleus, long pepper (as inter crop in coconut garden) and periwinkle. They found
that the cost of cultivation and the net returns per acre for ashwagandha were Rs. 2,267 and Rs.
9,878 respectively followed by coleus (Rs. 2,631 and Rs. 29,757), long pepper (Rs. 36,599 and
Rs. 86,477) and periwinkle (Rs. 3,846 and Rs 16,396).

Reddy (1996) studied the economics of production and processing of lemongrass in

Narasimharajapurataluk of Chikkamangalore district, Karnataka. He worked out the cost of
setting of distillation unit was Rs. 2120 which includes labour cost (Rs. 500) and material cost
(Rs. 1620). The average maintenance cost of distillation was Rs. 1531.75. The average gross
returns and net returns per year were Rs. 7138.2 and Rs. 2466.32 respectively from distillation
units.

Shankar (1993) studied the economics of production and processing of davana is Eastern
zone of Karnataka. He worked out total cost of processing at Rs. 8,47,175.00 of which Rs.
64,975 was fixed cost and the variable cost was Rs. 7,82,700, Cost of raw material was found to
be maximum (Rs. 7,20,000), followed by labour cost for drying and distillation (Rs. 36,000),
depreciation on equipments (Rs. 30,000), repairs and maintenance (Rs.24,000), fuel wood (Rs.
14,400).The gross returns and net returns were Rs. 12,37,500 and Rs. 3,90,325 respectively and
NPV, IRR and B:C ratio for processing units were Rs. 12,77,574, 55.57 per cent and 3.19 in the
same order.

2.3 Studies on problems in aromatic and medicinal plants cultivation and

marketing.

Joshi and Joshi (2014) in their study on the role of medicinal plants in livelihood improvement in
Uttarakhand examined production and management aspects through an industry -community
partnership approach. The study indicated the growing demand for medicinal plants in related to the
great cultural significance and suggested that a fixing of support price by the government, improving
awareness levels, increasing production and productivity, establishing cluster approach low cost
processing etc. will help in boosting the livelihood of the farmers.

Aijan et al. (2008) studied the economic analysis of cultivation and marketing of gloriosasuperbain
Tamil Nadu. They identified problems such as labour problem, high cost of cultivation, pest and diseases
problem and weed problem with respect to production and fluctuation in price, no market information
and selling only in registered contractors were the market problems.

Powar and Hange (2008) studied the economics of production and marketing of selected
medicinal and aromatic plants in Western Maharashtra. The general problems identified by them
were unawareness of agro-techniques, high price for seed material, non availability of sufficient
irrigation water, lack of sufficient loan in time, lack of market intelligence and market
information and low demand in local market. Lack of information in storage of produce resulted
in discolorations, lack of near markets place major problems in safedamusli. Unawareness of
processing for value addition and high incidence of disease and wilt and anthracnose were major
problems in pudina. Lack of guidance for increasing oil content, cheating from agent for price
variation were major problems in citronella.
 Reddy et al. (2008) undertook the project titled public-private sector partnership in diversifying
semi-arid tropical (SAT) systems through medicinal and aromatic plants. The study was undertaken in
Kurnool, Mahabubnagar and Nalgonda districts. The findings of the study revealed that introduction of
MAP through technical back stopping, capacity building and marketing support from private industries
will increase the farm incomes of the farmers to 60% when compared to the conventional crops like
sorghum, groundnut and sunflower. In addition rural employment trade value etc. was also indicated.

Singh and Jha (2008) in their study on medicinal and aromatic plants cultivation in Bihar showed
the comparative economics of MAP’s and a few major field crops. The returns from medicinal plants like
safedmusali, sarpandha, satawari are fairly high than the returns from aromatic plants like lemon grass,
rosaspeices etc. The study also indicated the small scale production and tiny marketable surplus as the
major constraints.

Mittal and Singh (2007) identified problems in production and processing of aromatic plants.
They found that high initial cost of production, poor quality of inputs and delay in their supply, lack of
awareness about loan facility, incentives and procedural delays in obtaining loan, price fluctuations,
inadequate market information, lack of trained labour for cultivation, high rate of interest, lack of
training programs on cultivation methods and their awareness to farmer and prevalence of pests and
diseases were major production problems. Other problems were lack of basic infrastructure and
organized marketing system, lack of processing facilities, high processing cost. Improper handling of
herbage and longer distance between farms and distillation units.

Rajesh (2006) studied the economic evaluation of vanilla cultivation in Uttar Kannada
district of Karnataka. He identified problems in production, processing and marketing of vanilla.
Non availability of genuine planting material, non availability of organic manures, incidence.of
pest and diseases, non availability of credit facility were major production problems. Lack of
knowledge to process the bean, non availability of skilled labour for processing, occurrence of
pest and diseases after processing, low price for poor quality processed bean were major
processing problems. Price fluctuation and lack of marketing facilities were major problems in
marketing.
 Kumar and Nendran (2003) identified problems in production of medicinal and aromatic
plants with industrial utilization perspective, were poor agriculture practices, poor harvest and
post harvest treatment practices, lack of research on development of high yielding varieties and
domestication, inefficient processing techniques leading to low yield and poor quality, high
energy losses during processing, lack of research and development on product and process
development, difficulties in marketing, lack of trained personnel and equipment, lack of facilities
to lubricate equipment locally and lack of access to latest technological and market information.

Benerjee (2002) found that non availability of quality seeds, non involvement of
organized institutions, lack of finance, fluctuation in price, buyers quality specifications are not
known, unknown extraction technique, lack of awareness among entrepreneurs and lack of
financial assistance to set up entire unit are the major problems in the production and processing
of senna leaves.

Farooquiet al. (2000) reported that in efficient organization, lack of research, unplanned
exploitation of natural resource, failure to grow on large scale, inferior method of production,
mal practices and adulteration are the major constraints in the production and marketing of
aromatic crops.

Singh et al. (2000) identified problems associated with the cultivation of aromatic crops
in South India and they were old genetic stock used for commercial cultivation, underdeveloped
marketing network, no minimum support price, substandard oil particularly oil derived from wild
sources, communication gap and lack of coordination among growers and user industries,
financial resource constraints for small farmers, lack of processing network, predominance of
incumbent weather in coastal areas, inadequate research and development works and absence of
matching technology in respect of crop/region.

Singh et al. (2000) identified problems of cultivation of aromatic crops in South India:
problems and prospects. Cultivation of aromatic crops like rose, scented geranium, patchouli,
palmarosa, citronella Java, lemongrass, Eucalvptus, citriodora, tagetes, davana, mint etc. Has a
lot of potential, it has remained mostly unexploited.Small holding size, unproductive forest
plantations, poor availability of improved genetic material, pool management, frequent incidence
of cyclones / heavy rains in coastal areas and inadequate / polluted ground water are the main
hindrances for popularizing cultivation of aromatic crops in the region. Experimental work
carried out this region and subsequent demonstration at farmers’ fields, suggest that variables
essential oil bearing crops can be grown profitably either as pure crop or as inter crop in orchards
/ agro - forestry.
 Chapter III
METHODOLOGY
The design of the study is a prerequisite for any scientific investigation, so this chapter
deals with the material and methods adopted for conducting the present study. The present
research had been taken up in Mahabubnagar, Nalgonda district of Telangana state. The details
regarding methodology adopted in selection of location, methods of data collection and
analytical tools employed in achieving the objectives of the study have been discussed under the
following sub-headings.

3.1 Selection of study area.

3.2 Description of study area.
3.3 Selection of sample respondents.
3.4 Collection and source of data.
3.5 Tools and techniques.
3.6 Concepts, definitions and procedures adopted in computation

3.1 Selection of study area.

The present study was conducted in Nalgonda and Mahabubnagar districts of Telangana
state. Nalgonda and Mahabubnagar districts were purposively selected for the study as palmarosa
crop is gaining increasing importance in recent times.

3.1.2 Selection of Mandals

Nalgonda district has 57 mandals, of which mandals viz., Kattangur, Haliya and Bhongir
were selected for the study whereas Mahabubnagar district has 64 mandals of which three
mandals viz., Bijinapally, Thimmajipeta and Jadcherla were selected for the study because
palmarosa cultivation is taken up in these areas.

3.1.3 Selection of villages

From each mandal, two palmarosa producing villages were selected. Table 3.1 shows the
villages selected from each mandal.
Table 3.1 List of selected mandals and villages in Nalgonda and Mahabubnagar districts

S. No District Selected mandals Selected villages

1. Nalgonda Bhongir Nagireddypally,
Vedulagudem
2. Anumula Haliya,
Peddavorukunta
3. Kattangur Aitipamula,
Chevuruannaram
4. Mahabubnagar Bijinapally Lattupally,
Kodiparthy
5. Thimmajipeta Appajipally,
Bajipoor
6. Jadcherla Kavarammapeta,
Ligampet

3.2 Description of the study area

The description of the study area was felt necessary because of the fact that the
profitability and productivity of any crop is determined to a larger extent by the resource
endowment, physical environment, social matrix and agro-climatic conditions of that region.

3.2.1 Description of Mahabubnagar and Nalgonda Districts

The main occupation of the people in the selected districts is agriculture. It has abundant
irrigation facilities which are pre-requisite for the development of agriculture.

3.2.2 Location
Nalgonda is located at 17.050°N 79.2667°E. It has an average elevation of 420 metres
(1,380 ft). The rivers Krishna, Musi, Aleru, Peddavagu, Dindi Halia and Paleru flow through the
Nalgonda district.
Mahabubnagar is located at 16°73' N and 77°98' E. It has an average elevation of 503
metres (1,650 ft). Krishna and Tungabhadra rivers flow through the district.
3.2.3 Demographics

According to the 2011 census, Nalgonda district has a population of 3,483,648. The
district has a population density of 245 inhabitants per square kilometre (630/sq mi).
Its population growth rate over the decade 2001-2011 was 7.26%. Nalgonda has a sex ratio of
982 females for every 1000 males, and a literacy rate of 65.05%.

As of 2011 India census, Mahabubnagar district has a population of 4,042,191. This gives
it a ranking of 55th most populous districts in India (out of 640).The district has a population
density of 219 inhabitants per square kilometre (570/sq mi). Its population growth rate over the
decade 2001–2011 was 15.03%. Mahabubnagar has a sex ratio of 975 females for every 1000
males and a literacy rate of 56.06%.

3.2.4 Geography

The Boundaries of Nalgonda district are Krishna and Khammam districts in the East,
Mahabubnagar and Hyderabad districts in the West, Mahabubnagar and Guntur districts in the
South, Medak and Warangal districts in the North directions.

The Boundaries of Mahabubnagar district are Gulbarga and Raichur districts of

Karnataka in the West, kadapa district in the East, Kurnool district of Andhra Pradesh in the
South, Ranga Reddy and Nalgonda districts of Telangana in the North directions.

3.2.5 Climate

As the Nalgonda district has the climate with most rainfall from June to September the
mean maximum temperature is about 40oC (104oF) and the mean daily minimum is about 28oC
(82.4o F) sometimes day temperature crosses 44oC during this period. December is the coldest
month with the mean daily maximum and minimum temperatures being 35oC and 20oC
respectively. Sometimes during the coldest season, night temperature may drop down to about 10
o
C.

As Mahabubnagar district is the climate with most rainfall from June to September, the
mean maximum temperature is about 35.0 °C (95.0 °F) and the mean daily minimum is about
30oC. December is the coldest month with the mean daily maximum and minimum temperatures
being 25.0 °C (77.0 °F) respectively.

3.2.6 Forest
Nalgonda district has no forest area of significance. Only about 5.86% of the total
geographical area is covered by forest, which is far from the ideal percentage of 25%.
Mahabubnagar forest forms 16.39% (3.02 lakh Ha) of the total geographic area of the
district. The forests are spread over areas of Achampet and Mahabubnagar mandals. The forest
produce includes timber, bamboo, and beedi leaves.

3.2.7 Soils
The soils of the Nalgonda district are mainly red earths comprising loamy sands, sandy
loams and sandy clay loams. In the areas of flat topography and along side the river Krishna and
its tributaries, Regur or Black Cotton soil is found.
The soils of the district in general in Mahabubnagar are Red Sandy, Black Cotton and
loamy soils.

3.2.8 Economy
Nalgonda district is a major producer of cement in Telangana due to the availability of
lime stone across the borders of Nalgonda district and neighboring Guntur district. There are
large number of cement industries.
In 2006, the Indian government named Mahabubnagar one of the country's 250 most
backward districts (out of 640 total). It is one of the 9 districts in Telangana currently receiving
funds from the Backward Regions Grant Fund Programme (BRGF).
3.3 SELECTION OF SAMPLE RESPONDENTS
The respondents for the study consisted of palmarosa crop growers.

3.3.1 Selection of farmers

All the palmarosa growers in the selected villages were listed and ten farmers from each
village from both the districts were selected randomly for collecting the data. A total of 120
farmers were selected for the study.

3.4 COLLECTION AND SOURCES OF DATA

For the study, the data was collected from primary and secondary sources. Primary data
was collected from farmers schedules developed specially for different groups of respondents.

The purpose of the study was explained to the respondents so as to get their cooperation.
The primary data pertained to the year 2014-15. Secondary data was collected from website of
Ministry of Agriculture, Government of India, Central Institute of Medicinal and Aromatic Crop,
National Horticultural Board, National Horticulture Mission, Directorate General of Commercial
Intelligence and Statistics (DGCIS), Directorate of Economics and Statistics, Season and crop
report of Andhra Pradesh, Statistical Abstract of Andhra Pradesh, reports of various Commodity
Exchanges of India, books, journals etc. The data on area, production and productivity of
aromatic and medicinal plants of India was collected for the period from 2004-05 to 2013-14.

3.5 TOOLS AND TECHNIQUES

For analysing the data collected the following tools and techniques were used.

3.5.1 Tabular Analysis

This was done by working out simple averages and percentages. Simple averages were
used to estimate cost of cultivation of palmarosa, profit margin etc.
3.5.2 Functional analysis
3.5.2.1 Estimation of Compound Annual Growth Rate (CAGR):
Keeping in view the objective of the study, growth rates of area, production and
productivity of palmarosa in India were calculated by fitting exponential function of the form
Y=ABt
(Or)
Log Y= Log A + Log B
Where,
Y = Area under cultivation
T = Time in years (1, 2, 3…. …6)
A = Constant and
B = Regression coefficient
The above equations can be fitted by using the least squares method of estimation. That equation
also enables to obtain the Compound Growth Rate (CGR in %) as follows
Compound Growth Rate= (Antilog of B-1) * 100

3.5.3 Garrett Ranking Method

The Garrett ranking technique was used to study the opinion of the farmers regarding the
constraints faced by them in turmeric cultivation. Garrett percentages were calculated by using
the following formulae.

Where,
Rij= Rank given for the ithitems by the jthindividual.
Nj= Number of items ranked by the jthindividual.

By using score card prepared by Garret, scores were allocated to the percentage values.
Mean of Garret scores was calculated for each attribute. Attribute with highest mean score is
considered as a major constraint faced by the farmers.
3.6 Concepts, definitions and procedures adopted in computation
The terms and concepts used in the study and the procedure used to calculate the cost of different
items are given below:

1. Human labour
The human labour is measured in terms of man days for different farm operations of palmarosa
cultivation. The women days were converted into adult man days of eight hours per day on the
basis of wage difference between man and women labour.

2. Machine labour
The cost of machine labour both hired and owned is calculated for differential rates for deferent
types of operations prevailed in study area.

3. Material costs
The planting material used (slips) was valued at the current market rate. Remaining
material costs covered in this are expenditure on fertilizers, plant protection chemicals and
farmyard manures.

4. Other expenses
Includes packing materials (cans, plastic boxes) used while purchasing seedlings and sticks.
These costs were computed based on the actual prices paid by the growers

5. Fixed cost
Includes the land revenue, rental value of owned land, interest rate on fixed capital and
depreciation on farm implements and machinery.

6. Interest on fixed capital

Interest on fixed capital was calculated at the rate of 10 per cent on fixed capital at which the
banks charge for the long-term loan for processing unit.
7. Interest on working capital
Interest on working capital was charged at the rate of 12.5 per cent per annum. It is the rate at
which the farmers used to get short-term loans which was given at subsided rate of 1.5 to 2
percent of short term loan (8.5 percent).

8. Land revenue
Land revenue paid by the farmers during the current year is considered for this study.

9. Land value and rental value of land

Rental value of land was imputed at the prevailing land rent per acre per annum in the study area.

10. Establishment cost

It is the cost incurred on the establishment of palmarosa cultivation.

11. Farm Yard Manure (FYM)

Farm yard manure is charged as per the prevailing market rates during the period of study in the
study area

12. Fertilizers
The fertilizer cost is calculated at the actual price paid by farmers.

13. Irrigation charges

The charges for electricity or fuel paid towards lifting well water were allocated to the rising
palmarosa in proportion to the area under each crop.

14. Gross income/ Gross returns

It is the value of total quantity of palmarosa produced at the prices where the product is sold.

15. Net returns

Net returns were calculated by deducting total cost from gross returns.
16. Cost of production per litre
This can be worked out by dividing total variable cost (TVC) by yield.
Cost of production per kg = TVC / Yield

17. Net return per kg

Derived by dividing net returns over total cost by total yield
Net return per kg = Net return/Yield
 Chapter IV
RESULTS AND DISCUSSION
In accordance with the determined objectives of the study, this chapter deals with the
presentation and description of results of the study. For easy understanding and convenience, the
results of the study are discussed under the following sub-heads.
4.1. Trends in area, production and productivity of aromatic plants in India.
4.2. Socio-economic profile of the sample farmers.
4.3. Structure of farm assets.
4.4. Cost and return pattern of palmarosa production.
4.5. Marketing and value addition in palmarosa.
4.6. Constraints faced by the farmers in production and marketing of palmarosa.

4.1. Trends in area, production and productivity of aromatic plants in India.

In this section an attempt has been made to analyze the Compound Growth Rate (CGR) and per
cent change in area, production and productivity of aromatic plants in India. The data pertaining
to it was accessed from the secondary source for a period of ten years (2004-05 to 2013-2014).

The area, production and productivity of aromatic plants in India from 2004-2005 to
2013-2014 has been presented in the Table 4.1. The area under aromatic crop in 2004-05 is seen
as 131 acres. In 2005-06 the area increased to 262 acres i.e. 100 percent increase over the
previous year and it further increased to 324 acres (23.66 percent) in the subsequent year.
Similarly, in 2006-07, the area increased to 397 acres (22.53 percent) and again it further
increased to 430 acres (8.312 percent) in the year 2007-08, 509 acres (18.372 percent) in the
year 2008-09, whereas, in 2009-2010, the area increased to 510 acres i.e. 0.196 percent increase
over the previous year and it decreased to 506 acres (-0.784 percent) in 2010-11. In 2011-12, the
area increased to 557.2 acres i.e. 10.11 percent over the previous year. Finally in the year 2013-
2014 area decreased to 493.25 acres i.e. 11.4 percent decrease over previous year.

The production of aromatic plants in India in the year 2004-05 is seen as 159 quintals. In
2005-06 it increased to 202 quintals (22.044 percent), in 2006-07, the production decreased to
178 quintals (-11.88 percent) in 2007-08 it suddenly increased to 396 quintals i.e., by 122.47 per
cent over the previous year. In 2008-09, the production increased to 430 quintals (8.585 percent)
and to 573 quintals (33.25 percent) in the year 2009-10. In 2010-11 production increased to 605
quintals (5.58 percent) whereas in the year 2011-12, the production decreased to 566 quintals (-
6.44 percent). In the year 2012-13 the production increased to 918.2 quintals (62.22 percent) and
it was 895.3 quintals (-2.49 percent) in the year 2013-14.

The productivity of aromatic plants in 2004-05 is seen as 121.37 kg/acre whereas in

2005-06, it decreased to 77.099 kg/ acre (-36.47 percent) and further decreased to 54.93 kg/acre
in the year 2006-07. The productivity increased to 99.74 kg/acre (81.5 percent) in 2007-08, 100
kg/acre (0.25 percent) in 2008-09 and to 112.57 kg/acre (12.5 percent) in 2009-10. In 2010-11, it
increased to 118.62 kg/acre (5.3 percent) whereas in 2011-12 it decreased to 111.85 kg/acre (-
5.70 percent). In year 2012-13, it increased to 164.78 kg/acre (47.31 percent) and finally for the
year 2013-2014 it was 181.51 kg/acre (10.14 percent) over previous year.

The Compound Growth Rate of area is 0.16 whereas for production it is 0.21 and for
productivity it is 0.05.
Table 4.1. Percentage change and growth rates in area, production and productivity of
aromatic crops in India (2004-05 to 2013-14)

% %
% change
Area in Production change change
Over Productivity
Sl. No. Year ‘000 in ‘000 over Over
Previous in Kg/acre
Acres Quintals previous previous
Year
Year Year

1 2004-05 131 - 159 - 121.37 -

2 2005-06 262 100 202 22.044 77.099 -36.47

3 2006-07 324 23.66 178 -11.88 54.93 -28.74

4 2007-08 397 22.53 396 122.47 99.74 81.5

5 2008-09 430 8.312 430 8.585 100 0.25

6 2009-10 509 18.372 573 33.25 112.57 12.5

7 2010-11 510 0.196 605 5.58 118.62 5.3

8 2011-12 506 -0.784 566 -6.44 111.85 -5.70

9 2012-13 557.2 10.11 918.2 62.22 164.78 47.31

10 2013-14 493.25 -11.4 895.30 -2.49 181.51 10.14

%
Change
in 2013- 276.52 463.08 49.55
14 over
2004-05

CGR 0.16 0.21 0.05

(Source: Central Institute Medicinal and Aromatic plants, Hyderabad)

4.2. Socio-economic profile of the sample farmers

The socio-economic characteristics of the respondents include educational status, age

group. This analysis provides a comprehensive view about the socio-economic conditions of the
respondents so as to execute the research in a most appropriate manner and also suggest suitable
measures.

4.2.1 Age group of the respondents in the study area

Age is one of the most important factors that influence decision making of individuals.
Age has a bearing on the farmers risk taking attitude and innovativeness in adopting new
technologies. Particulars regarding the age of the sample farmers are presented in the Table 4.2.
It was found that nearly 47.5 per cent of sample farmers were between 25-45 years age whereas
nearly 22.5 per cent of the sample farmers were 46-55 years old which accounts for 24 in number
in the selected area. About 20 per cent of sample farmers were 56-65 years old and the remaining
10 per cent of sample farmers belonged to 65 years and above age group.

Table 4.2. Age group of the respondents in the study area.

Sl. No. Age (years) No. of farmers Per cent

1 25-45 57 47.5
2 46-55 27 22.5
3 56-65 24 20
4 65 and above 12 10
Total 120 100
(Source: Estimates from the survey data of the study.2015)
4.2.2. Educational status of respondents in the study area.

The educational status of the farmer plays a vital role in the adoption of any new
technology. In the present study, the sample farmers are categorized into five groups with respect
to literacy status, viz., illiterate, 1st to 7th , 8th to 10th, inter and degree college level. Among the
sample farmers, 7 were illiterate which constitute 5.83 per cent of the total sample size, 5.0 per
cent had 8th to 10th education, 22.5 per cent of farmers were possessing inter level education and
farmers having degree level education constituted 51.6 per cent of the total sample farmers.

Table 4.3. Literacy status of the respondents in the study area

Sl. No Educational status No. of farmers Per cent

1 Illiterate 7 5.83
2 1st to 7th 6 5.0
3 8th to 10th 18 15
4 Intermediate 27 22.5
5 Degree 62 51.6
Total 120 100
(Source: Estimates from the survey data of the study.2015)

4.3. Structure of farm asset

The study of the farm assets in general reveals the economic background of the farmer.
The risk bearing ability of the farmer largely depends on the value of the assets owned by the
farmer.
The values of fixed and working assets have been worked out per farm and per hectare
for the entire sample. The value of farm assets among the sampled farms is presented in Table
4.4.
The fixed assets include the value of land and farm building. The value of land depends
on accessibility, fertility status etc. The working assets include machinery and implements,
equipments, value of livestock and other miscellaneous infrastructure.
 On perusal of Table 4.4, it is clear that the value of land per farm was Rs.712000 and per
acre it was Rs. 40000. The value of total fixed assets was of the order of Rs. 875760 per farm
and Rs. 49200 per acre. The value of the total working assets was found to be Rs. 719120 per
farm and Rs. 40400 per acre.

Table 4.4. Structure of farm assets of the sample farms (in Rs.)

Sl. No. Particulars Per farm Per acre

1 Fixed assets
a. Land 712000 40000
b. Farm buildings 163760 9200
Total fixed assets 875760 49200

2 Working assets 719120 40400

Total assets 1594880 89600
Total assets without land 882880 49600

The value of total assets was Rs. 1594880 per farm and Rs. 89600 per hectare
respectively. The total assets without land were Rs. 882880 per farm and Rs. 49600 per acre.

4.4 Cost and return pattern of palmarosa production

The cost of cultivation comprises of both fixed and variable costs and the same for
selected crop is worked out and presented below. The costs are classified into establishment
costs and maintenance costs. Similarly, the maintenance costs during the crop period were also
computed.
4.4.1. Cost structure of palmarosa
A. Establishment cost
i) Direct cost
a) Land preparation
This was important operation in establishing the palmarosa crop. Generally ploughing is
done with tractors and also with bullocks. Total amount incurred in this operation was Rs. 6240
per acre which accounted for 19.5 per cent of total establishment cost incurred in the first year.
b) Planting material and transport
An amount of Rs. 2900 per acre was incurred on purchase of planting material which
accounted for 9.06 per cent of the establishment cost.

c) Manuring
The cost incurred on manuring was Rs. 1100 per acre which accounted to 3.43 percent of
the total establishment cost.

d) Weeding and inter cultivation

Weeding and inter cultivation was done to improve the soil condition and also to
conserve moisture. Cost incurred on weeding and inter cultivation was about Rs. 4160 per acre
which accounted for 13.005 per cent of total establishment cost.

e) Fertilisation
Costs incurring on fertilizers was Rs. 870 per acre which accounted for 2.72 percent of
the total establishment cost.

f) Plant protection, harvesting and transport

Cost incurred on plant protection was Rs.380 which accounted to 1.18 percent of the total
establishment cost.

g) Harvesting and transport

Harvesting and transport was amounted for the establishment cost is Rs. 2040 to percent
of 6.37.

h) Irrigation
Water requirement depends up on the climatic conditions. The source of irrigation was
bore wells, the irrigation charges includes actual charges paid for electricity utilized in the
establishment year crop which was Rs.300 (0.93 percent).
i) Land revenue and cess
Land revenue and cess paid from the first was Rs. 20 (0.06 percent).

j) Interest on working capital

The interest on working capital was charged at the rate of 12.5 per cent per annum for the
establishment cost. The interest on working capital was charged same in the first year Rs.
2251.25 (7.03 percent).
The total direct cost from the establishment year of palmarosa was Rs. 20261.25 (63.34
percent).

ii) Indirect cost

Indirect costs are fixed costs. The fixed costs also constitute major portion in palmarosa
production and it constituted about 36.65 percent of the total cost for the establishment cost. The
major cost under fixed cost was rental value of owned land which constituted around Rs. 5500
i.e., 17.19 percent of the total cost of cultivation for the first year. The total indirect cost in the
first year 11724.01.

The total cost of cultivation in the establishment year is 31985.26.

B. Maintenance cost
i) Direct cost
a) Manuring
The amount spent on manuring during the second year maintenance was Rs. 1250 (5.3
percent) whereas in the third year it was Rs. 1320 (5.33 percent) and in the fourth year it was
Rs.1400 (5.38 percent).

b) Weeding and inter cultivation

Weeding and inter cultivation was done to improve the soil condition and also to
conserve moisture. The cost incurred from second year to fourth year Rs. 4200 (18.07 percent),
Rs. 4250(17.17 percent), Rs. 4320 (16.62 percent) respectively from second year to fourth year.

c) Fertilisation
 The cost of fertilization amounted from the second year Rs. 930 (4.00 percent), Rs. 980
(3.9 percent) in the second year and in the fourth year Rs. 1020 (3.92 percent) respectively.

d) Plant protection
The cost of plant protection from the second year to fourth year were Rs. 420 (1.80
percent), Rs. 476 (1.89 percent), Rs. 530 (2.04 percent) as the yield increased from second year
the cost also increased onwards.

e) Harvesting and transport

Harvesting and transport was amounted in the second year was Rs. 2170 (9.34 percent),
whereas in the third year Rs. 2650 (10.71 percent) and for the fourth year Rs. 2730(10.50
percent).
f) Irrigation
Water requirement depends up on the climatic conditions. From the second year to fourth
year of crop which was Rs. 350 (1.5 percent), Rs. 370 (1.4 percent), Rs. 430 (1.6 percent).

g) Land revenue and cess

Land revenue and cess paid from the second year Rs. 20 (0.06 percent) whereas in third
year Rs. 20 (0.06 percent) and from the fourth year was Rs. 20 (0.06 percent).

h) Interest on working capital

The interest on working capital was charged in the second year Rs. 1167.5(5.02 percent),
third year Rs. 1257.5 (5.08 percent) and fourth year Rs. 1306 (5.02 percent).

The total direct cost from the second year to fourth year of palmarosa was Rs. 10507.5
(45.22 percent), Rs. 11317.5 (45.74 percent), and Rs. 11756.25 (45.25 percent).

ii) Indirect cost

Indirect costs are fixed costs. The fixed costs also constitute major portion in palmarosa
production. From the second year to fourth year it was 54.77 percent, 54.25 percent, 54.74
percent. The major cost under fixed cost was rental value of owned land which constituted
around by in the second year Rs. 6500 (27.97 percent), third year Rs. 7200(29.10 percent),
fourth year Rs. 8000 (30.79 percent). The other items are; depreciation, land revenue and
interest on fixed capital.
 Table 4.5. Cost of cultivation of palmarosa in the study area

Sl.no Particulars Establishment cost (I year) Maintenance cost (II year) Maintanence cost (III year) Maintanence(IV year)
Cost Percentage Cost Percentage Cost Percentage Cost Percentage
(Rs/acre) (Rs/acre) (Rs/acre) (Rs/acre)
A. Direct costs
1 land preparation 6240 19.50 - - - - - -
2 Planting material 2900 9.06 - - - - - -
and transport
3 Manuring 1100 3.43 1250 5.38 1320 5.33 1400 5.38
4 Fertilisation 870 2.72 930 4.00 980 3.96 1020 3.92
5 Irrigation 300 0.93 350 1.50 370 1.49 430 1.65
6 Weeding and 4160 13.00 4200 18.07 4250 17.17 4320 16.62
intercultivation
7 Plant protection 380 1.18 420 1.80 470 1.89 530 2.04
8 Harvesting and 2040 6.37 2170 9.34 2650 10.71 2730 10.50
transport
9 Land revenue and 20 0.06 20 0.08 20 0.08 20 0.07
cess
10 Interest on working 2251.25 7.03 1167.5 5.02 1257.5 5.082 1306.25 5.02
capital(12.5%)
 Sub total(A) 20261.25 63.34 10507.5 45.22 11317.5 45.74 11756.25 45.25

B. Indirect costs
1 Rental value of 5500 17.19 6500 27.97 7200 29.10 8000 30.79
owned land
2 Interest on fixed 4960 15.50 4960 21.35 4960 20.04 4960 19.09
capital(10%)
3 Depriciation 1264.01 3.95 1264.01 5.44 1264.01 5.10 1264.01 4.86
Sub total (B) 11724.01 36.65 12724.01 54.77 13424 54.25 14224.01 54.74
Total (A+B) 31985.26 100 23231.51 100 24741.5 100 25980.26 100
4.4.2. Returns from palmarosa cultivation
The gross returns from sale of palmarosa were obtained from the first year onwards. The
yield, gross income, as well as net income were on the increasing trend during first four years.
The yield obtained was 53.2 kg/acre in the first year; 56.5 kg/acre in second year followed 57.8
kg/acre in the third year and in the fourth year is decreased to 52.4 kg/acre.

Table 4.6. Returns from palmarosa cultivation (Rs per acre)

Sl. No. Particulars Unit Quantity

I II III IV
1 Palmarosa oil produced (per Kg
53.2 56.5 57.8 52.4
acre)
2 Price of Palmarosa oil (per Rs
1250 1370 1400 1450
kg)
3 Distillation charge and other
4720 4820 4870 4900
incidentals
4 Total cost per acre and Rs
42383 33729 35289 36557.76
distillation charge
5 Gross return per acre Rs 66500 77405 80920 75980
6 Net return per acre Rs 24117 43676 45631 39422.24
7 BC Ratio - 1.56 2.29 2.29 2.07
8 ROI (Return on Investment) Per cent 56.9 129.49 129.31 107.83

Gross income or the total revenue earned by the grower from the sale of the produce from one
acre of palmarosa was Rs. 66500 for the first year, second year it was Rs. 77405, in third year it was Rs.
80920, whereas in fourth year it was Rs. 75980. Although gross income is a good measure to gauge the
productivity and efficiency of the farm, but it alone does not tell the success of farm business. Hence, net
income was estimated. Higher the net income, more success in the business vice versa. The palmarosa
crop farmers realized net income of Rs. 24117 in first year, Rs. 43676 second year, Rs. 45631 third year,
Rs. 39422.24 fourth year per acre.
4.5. Marketing and value addition of palmarosa

Palmarosa Essential Oil is also known as Turkish Geranium or Indian Geranium Oil. Soothing to
the body and mind it also supports healthy skin because it is gentle. It also can be used for
animals. Palmarosa oil blends that contain clarity and joy essential oils. It is also may be found
in animal scents ointment and rose ointment both these ointments are great for minor cuts and
scrapes.

The health benefits of palmarosa essential oil can be attributed to its properties as an
antiseptic, antiviral, bactericidal, cytophylactic, digestive, febrifuge and hydrating substance.
Palmarosa is a grass whose botanical name is Cymbopogon Martini. It has two varieties, also
called chemotypes, Motia & Sofia, which differ slightly in their aroma. Different producers give
preference to different chemo types depending on the demand of the market.

Extraction of this essential oil is done by steam distillation of dried grass which is
harvested before flowering. The chief constituents of this oil are geraniol, geranyl acetate,
dipentene, linalool, limonene and myrcene. This oil smells like rose oil, which is how it got the
name palmarosa. This is also why it is sometimes used in place of rose oil and is often
adulterated with rose oil, since it is cheaper.

This oil is widely used as a flavoring agent in the food and beverage industry, as well as
in soap, perfume, oil and cosmetics industries. It also has many medicinal uses. For extraction of
oil than the grass the analysis indicates that Rs. 4720, Rs. 4820, Rs. 4870 and Rs. 4900 was
incurred for processing 53.2 kgs, 56.5 kgs, 57.8 kgs, 52.4 kgs of oil per acre during the same
years in the same order.
4.6. Constraints faced by the farmers in production and marketing of
palmarosa
4.6.1. Constraints faced by the farmers in production of palmarosa crop
Table 4.7. Constraints faced by the farmers in production of palmarosa crop

Sl. No. Particulars Mean score Ranking

1 Labour shortage 93.33 1
2 Non-availability of quality plant 91.66 2
material
3 Pests and disease attack 41.66 3
4 High weeding cost 20.83 5
5 Lack of processing facilities 14.16 6
6 Soil erosion 30.83 4

The constraint labour shortage with the maximum mean score of 93.33 was ranked as the
first constraint, non-availability of quality plant material with mean score of 91.66 was ranked as
second constraint, pests and disease attack with mean score of 41.66 was ranked as third
constraint, soil erosion having mean score of 30.83 was ranked as fourth constraint, high
weeding cost with mean score of 20.83 was ranked as fifth constraint, lack of processing
facilities with mean score of 14.16 was ranked as sixth constraint.
4.6.2. Constraints faced in marketing
During the survey the problems faced while marketing of palmarosa have been identified. The
results of the survey are presented in Table 4.8

Table 4.8. Constraints in the marketing of palmarosa

Sl. No. Particulars Mean score Ranking

1 High transportation costs during peak 83.33 1
harvesting
2 High cost towards middle men 55 5
3 Accessibility to market information 15.00 8
4 Shortage of labour 46.66 7
5 Improper weighing procedures 56.6 4
6 Delay in payment for produce sold 60.83 3
7 Lack of storage facilities at market 50 6
yard
8 Collection of excess commission 72.5 2

The constraint High transportation costs during peak harvesting with a mean score of 83.33 and
was ranked as first constraint, collection of excess commission was ranked as second constraint
with mean score of 72.5, whereas delay in payment of produce sold was ranked as third
constraint. Improper weighing procedures with a mean sore of 56.6 was ranked as fourth
constraint, high cost towards middle men with a mean sore of 55 was ranked as fifth for lack of
storage facilities at market yard was ranked as sixth constraint with mean score 50, shortage of
labour with mean score of 46.66 was ranked as seventh constraint followed by accessibility to
market information with mean score 15.00 was ranked as eighth constraint.
 Chapter V

SUMMARY AND CONCLUSIONS

Palmarosa crop is an aromatic crop. The botanical name for the source of palmarosa oil is Cymbopogon
martinii, which belongs to the grass family Poaceae (Graminae).

Palmarosa plant is a native of India and it grows wild in forests of Madhya Pradesh, Maharashtra,
Andhra Pradesh, Karnataka, Uttar Pradesh and Odisha. It is also found in lesser frequency in Karnataka,
Tamil Nadu and in some parts of Uttar Pradesh. There is now expansion in cultivated area which is spread
over in the states of Uttar Pradesh, Andhra Pradesh, Rajasthan, Karnataka, Maharashtra, Madhya Pradesh,
Gujarat and Tamil Nadu.

In the light of above fact, it was felt necessary to conduct a micro level study and
examine the prospects of palmarosa in the Telangana area and to know the problems associated
with production and marketing. The study was under taken with the following specific
objectives:
9. To study the trend in area, production and productivity of aromatic crops in the country.
10. To estimate economics and value addition of the selected crop.
11. To evaluate the viability of the investment.
12. To identify the production and marketing constraints.

To fulfil the objectives of the study, the data were collected through personal interviews
from the selected palmarosa growers. Data on establishment cost of palmarosa crop,
maintenance cost, processing cost etc. were collected. The data collected was subjected to
various analytical tools. The various problems associated with production and marketing were
also analyzed.

Major findings of the study

Trend in area, production and productivity of palmarosa

The Compound Growth Rates for area, production and productivity of aromatic crops in
India during 2004-05 to 2013-14 were 0.16 per cent, 0.21 per cent and 0.05 per cent respectively.
Socio-economic profile

The socio-economic characteristics of the respondents include educational status, age

group. This analysis provides a comprehensive view about the socio-economic conditions of the
respondents so as to execute the research in a most appropriate manner and also suggest suitable
measures. It is observed that 51.6 per cent of the total respondents were graduates, illiterate
farmers are 5.83 percent, 1st to 7th were percent of 5.0, 15 percent of the farmers had 8th to 10th,
22.5 of the farmers possessing intermediate. About 47.5 per cent of the farmers were in the age
group of 25 and 45 whereas, 46-55 were 22.5 percent of the farmers, 20 percent of the were 56-
65 and 65 above farmers is 10 percent.

Cost and return pattern of palmarosa production

The palmarosa cultivation in the study area was totally under rain fed conditions because
of the non-availability of irrigation sources and semi arid conditions. The machine labour
utilization was found low in the study area for palmarosa cultivation as most of the farmers were
still using traditional cultivation practices. Total cost of cultivation of palmarosa was Rs.
37662.72 for the first year per acre. In the second year Rs. 28909.01, whereas in the third year
Rs. 30419 and in the fourth year Rs. 31657.76. Production of oil per acre was 53.2 for the first
year, second year it was 56.5. In the third year 57.8 for the fourth year 52.4 oil produced per acre
in the study area. Gross income or the total revenue earned by the grower from the sale of the produce
from one acre of palmarosa was Rs. 66500 for the first year, second year it was Rs. 77405, in third year it
was Rs. 80920, whereas in fourth year it was Rs. 75980. The Benefit Cost Ratio for palmarosa
production was for the first year 1.56 whereas, in the second year 2.29 remains same in the third
year 2.29. For the fourth year 2.09. i.e. for every rupee investment, farmers were getting Rs.
First year 0.569 return on investment was found to be 56.9 percent in the second year Rs. 1.29 of
129.49 percent whereas, in the third year Rs. 1.29 with the 129.31 percent and for the fourth year
it was 1.07 of 107.83 percent.
Production and marketing constraints
Different types of constraints were encountered by the farmers. The constraint of
marketing were high transportation costs during peak harvesting and was ranked as first
constraint, collection of excess commission was ranked as second constraint, whereas delay in
payment of produce sold, improper weighing procedures, high cost towards middle men, lack of
storage facilities at market yard, shortage of labour, followed by accessibility to market
information.

The production constraint labour shortage with the maximum mean score was ranked as
the first constraint, non- availability of quality plant material was ranked as second constraint,
pests and disease attack was third constraint, soil erosion as fourth constraint, high weeding cost
as fifth constraint, lack of processing facilities was ranked as sixth constraint.

CONCLUSIONS

It may be concluded from the study that there is an immense scope for expansion of area,
production and productivity of aromatic crop in India. The cost of cultivation for palmarosa is
somewhat higher but due to good demand in market, the returns are also very high resulted in
good net margin by the producers. Producers can get a net profit of Rs. 24117 per acre in the first
year for the second year Rs. 43676, whereas, in the third year Rs. 45631 for the fourth year Rs.
39422.24 by palmarosa.
There is a huge demand of Indian palmarosa in the international market, showing the
great scope in the future. Research reveals that it has applications in varied diseases and
disorders. The major problem identified in production of labour shortage, non- availability of
quality plant material, pests and disease attack, soil erosion, high weeding cost, lack of
processing facilities.

SUGGESTIONS AND POLICY IMPLICATIONS

1. The trend in area, production and productivity of aromatic in India has indicated
fluctuations during the past few years but still there is a lot of potential for increasing
palmarosa production. Therefore, there should be encouragement and good support from
research centres and the government bodies to the growers.
2. Major problem of farmers is the non-availability of human labour at the time of weeding.
 Even if the labour is available, the cost of hiring them is comparatively high. If proper
weeder is developed for using it in palmarosa fields and made available for an affordable
price, it will influence the farmers to take up more area under cultivation and also
productivity (production per acre) will also increase.
3. Palmarosa being a hardy aromatic crop can be grown under varying agro-climatic
conditions and different types of wastelands in different parts of India. The farmers need
to be educated about adoption of improved agro-technology and plant varieties for
obtaining optimum yield of the oil. It is required to establish sufficient number of
distillation units in palmarosa growing areas to ensure timely distillation of the harvested
crop besides the upgradation of post-harvest management for ensuring better quality oil.
There is a need for effective market intelligence system so that farmers can sell their
produce at remunerative price to industry directly.
4. The concerned government departments both at state and centre level should fix
minimum support price (MSP) of palmarosa oil. Adequate emphasis is also required
towards post harvest management including primary processing of the crop for producing
good quality oil and also to have proper storage and warehousing facility in the vicinity
of cluster where palmarosa cultivation is promoted. The independent variables like
human labour, seed/planting material and distillation charges were positive indicating
significant impact on the returns from palmarosa crop in the study area.
5. Establishment of processing or distillation units with adequate capacity should be
encouraged in the production regions of MAPs, so that the quality and quantity of
aromatic oil could be maintained and the growers would be able to get a higher price for
their produce. Access to technical know-how and institutional credit on priority basis can
help promote these processing units.
6. Marketing infrastructure such as better access to market yards, better roads, good
transport facilities, timely payment, provision of storage facilities, credit provision etc.
will improve the socio-economic conditions of the producer.
7. There is an immense potential for export of value added products of palmarosa. Therefore
lot of focus may be paid towards improving the quality of the produce in order to receive
good price of value added products and widen the market.
8. Most of the palmarosa producers are still using traditional cultivation practices in
palmarosa production. There is a strong need to intensify the better extension services in
 order to provide the better information about the new and improved cultivation practices
to the farmers.
9. This activity should be backed with availability of planting material and support on the
package of good practices for cultivation of MAPs. Research institutions should play a
lead role in this direction. Lastly, the study has observed that efforts towards
strengthening of the market information system and management of price risks will go a
long way indeveloping the positive economy of MAPs cultivation.
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 QUESTIONNAIRE

SCHOOL OF AGRIBUSINESS MANAGEMENT

ACHARYA. N. G. RANGA AGRICULTURAL UNIVERSITY

RAGENDRANAGAR, HYDERABAD

PROFITATABILITY OF AROMATIC PLANTS CULTIVATION IN NALGONDA AND MAHBUBNAGAR

DISTRICTS OF TELANGANA STATES - THE CASE OF PALMAROSA CROP

1. Name of the farmer

2. Village
3. Mandal
4. District
5. Main occupation: Subsidiary occupation:
6. Educationl status i) Illiterate ii) 1st To 7th iii) 8th To 10th iv) Inter v) Degree
7. Age group i) 25-45 ii) 46-55 iii) 56-65 iv) 66 and above
8. Year of establishment of a crop
9. Age of the crop

10. Establishment Cost of cultivation of palmarosa : (2014-2015)

Sl.no Establishment cost cost

Labour Material cost

Human Bullock Material

labour labour cost
1. 1Land preparation

2. 2Planting material and transport

3. 5Manuring

4. 6Fertilisation
 5. 7Weeding and inter cultivation

6. 8Plant protection

7. 9Irrigation and electricity charges

.
8. 1Harvesting
0
9. Land revenue and cess

a) Total labour cost

b) Total material cost

Recurring cost of cultivation

Sl.no particulars Amount spent (year wise)

I II III IV V
Q V Q V Q V Q V Q V
1 Manuring

2 Fertilization

3 Weeding and
intercultivation

4 Irrigation watch
and ward

5 Plant protection

6 Land revenue and

cess

7 Harvesting

Total
Depreciation value

Particulars Purchase value No. of years of working (Purchase Price −

Salvage Value) / Years
of Useful Life
Tractors

Machinery

Building

Equipment

Cost and returns of crop

Particulars Years
I II III IV V Total
a)Yields (Quintals)

b) Gross income (Rs)

c)Total cost

Net income (b-c)

Gross returns of plamarosa

Years Particulars
Yields Price Total value
2011-2012

2012-2013

2013-2014

2014-2015
10. Have you taken any loan for production of palmarosa? Yes /No. If yes

11. What constraints you faced in marketing

Sl.no Particulars Ranking from 1-10

1. High transportation costs during peak

harvesting season
2. High cost towards middle mens

3. Accessibility to market information

4. Shortage of labour

5. Improper weighing procedures

6. Delay in payment for the produce

sold

7. Lack of storage facilities at market

yard.

8. Collection of excess commission

9. Others
12. What constraints you faced in production

Sl.no Particulars Ranking from 1- 10

1. Labour shortage

2 Non- availability of quality plant material

3. Pests and disease attack

4. High weeding cost

5. Lack of processing facilities

6. Soil erosion

7. Others