Economic analysis of production and marketing of raw cashewnut in kerala

Abstract

Cashew (Anacardium occidentale L.), a perennial tree native to Eastern Brazil is globally recognized for its commercial significance. India, holding the position of the world's second largest raw cashew producer, accounts for 22.32 per cent of global raw cashew production. Maharashtra leads cashew production in India, followed by other states. India the second largest exporter of cashew nuts, representing over 65 per cent of global cashew kernel exports. Kerala, a major cashew producer in India, has an area and production of 1.06 lakh hectares and 0.71 lakh tonnes, respectively. Despite having the highest processing capacity in India, Kerala faces challenges due to insufficient domestic production, leading to dependency on imported raw cashew nuts. It highlights the significance of area expansion under cashew cultivation in Kerala and there is a need to assess economic aspects along with constraints. In this context, the study entitled ‘Economic analysis of production and marketing of raw cashew nut in Kerala’ was undertaken with the objectives: Analysing the trends in area, production and productivity of raw cashew nut, estimating the economics of raw cashew nut production and marketing, analysing the price behaviour of raw cashew nut, delineation of major challenges faced by cashew farmers. The micro level study was conducted in Kannur and Kollam districts. Kannur has the highest area under cashew cultivation in Kerala. Kollam has been showing a declining trend over the years, and revival of cashew cultivation has been reported recently. From each district, two blocks with maximum area under cashew i.e., Iritty and Irikkur from Kannur district; Anchal and Kottarakkara from Kollam were purposively selected. From each selected blocks, three panchayats were randomly selected. Fifteen farmers from each panchayath in Kannur (90) and five farmers from each panchayath in Kollam (30) were randomly selected, making a total of 120 farmers. Further data was collected from 20 market intermediaries and 10 officials from line departments making a total sample size of 150. India showed positive trend in area and production of raw cashew nuts, while Kerala exhibited negative trend in these aspects, and has exhibited positive trend in productivity. The establishment costs of raw cashew were estimated as ₹1,36,031 and ₹1,16,697 per hectare for Kannur and Kollam, respectively. The average maintenance cost was estimated as ₹42,960 in Kannur and the maintenance cost for yield increasing phase was ₹26292 per hectare in Kollam. The estimation of total cost of cultivation was confined to Kannur district and was worked out as ₹57,816 per hectare per year and the cost of production as ₹65/kg. The efficiency of raw cashew cultivation was analysed using the Cobb-Douglas production function. The quantity of organic manures and human labour were found to be significant at five and ten per cent level of significance respectively. In Kannur, four marketing channels were identified: channel I: Producer-village trader-wholesaler-processing units, channel II: Producer-itinerant traders-wholesaler processing units, channel III: Producer- wholesaler- processing units, channel IV: Producer-Fair Trade Alliance Kerala agent (FTAK) – FTAK. whereas only two channels in Kollam as channel I: Producer- village traders-processing units and channel II: Producer-processing units. The highest marketing efficiency was observed in channels IV and III in Kannur, while in Kollam, it was highest in channel II followed by channel I. Channel IV and III in Kannur had the highest producer's share in consumer's rupee, with 94 per cent and 92 per cent, respectively. While in Kollam, channel II had the highest producer's share of 98 per cent. The price behaviour analysis indicated that there is an increasing price trend over the years from 2006 to 2023 and seasonality existed with highest prices in January, February months and it was observed decreased prices in May and June months due to onset of monsoon resulting in raw nut quality deterioration and fechting lower price. Cyclical variations with two cycles and irregular variations found to be less predominant. The constraints affecting cashew production in Kannur included the presence of tea mosquito bug and cashew stem and root borer, unfavourable weather, high labour costs, and untimely supply of raw materials by the government. Additionally, scattered land holdings and a lack of technical knowledge were also observed in Kollam. Marketing constraints include low price, Price fluctuations, non- receipt of the announced price by the Kerala State Cashew Development Corporation were common marketing constraints for both districts, along with exploitation by middlemen and lack of drying and processing units were the constraints in Kannur district. Farmers should adhere to recommended agricultural practices and participate in training programs which would enhance the technical knowledge. Promoting farmer producer organizations can bring economics of scale, while the establishment of processing units in Kannur can enable farmers to process and involve in direct export. To generate additional income, there is a need to commercialize cashew apple value addition and waste utilization, such as producing industrial ethanol, cashew fenny, and cashew honey etc. Market innovation is essential for ensuring grading and maintaining the reputation of 'Kerala cashew' for its superior quality and taste.