Economic analysis of orchid flower trade in Kerala

Abstract

The research entitled “Economic analysis of orchid flower trade in Kerala” was conducted in Thiruvananthapuram (TVM) and Ernakulam (EKM) districts during the period from October, 2014 to March 2015. A sample of 10 elite growers having 5 years of experience, actively involved in commercial orchid production and 5 florists were selected randomly from each district. The study was carried out with the objective to understand the opportunities and challenges in orchid flower trade in Kerala and to assess the economic viability of orchid cultivation as an agri-business enterprise. In this study, the socio-economic characteristics of the orchid growers were ascertained. Aranthera was observed as the most popular orchid among the growers in TVM district whereas Dendrobium was mostly cultivated in EKM district. Even though growers had developed their own practices for cultivation of orchids, innovations could not be observed. The costs and returns were analysed for a unit of 1000 orchid plants. Cost of cultivation using A B C cost concepts showed that cost A1 (paid out costs) was Rs. 1,25,585 of which planting material accounted for 80.44 per cent, followed by hired labour (7.15 per cent). Considering all variable and fixed costs, cost C3 came to Rs. 1,53,868. The total cost of establishment was worked out to Rs. 1,49,504. Cost of planting material alone contributed 67.57 per cent of the total cost of establishment followed by shade structure or artificial support (18.67 per cent). The average annual returns obtained from a unit of 1000 orchid plants was Rs. 1,06,789. Even though the cost of cultivation and establishment costs were higher, the returns was lower in Ernakulam district. Capital productivity analysis revealed that orchid cultivation is a viable enterprise with B – C ratio of 1.64 and Net Present Worth of Rs. 1,37,898. Pay Back Period and Internal Rate of Return was obtained as 3.03 years and 55 per cent respectively. Orchid cultivation was found more remunerative in TVM compared to EKM. The resource use efficiency estimated using Cobb-Douglas

production function revealed that the input planting material was underutilized and could be increased further to reach the optimum level. Four marketing channels were identified, of which Producer (exporter) – Distant Wholesaler – Consumer channel was observed as the most prominent channel contributing to 51.13 per cent. Price spread was Rs. 6.3 per flower and producer‟s share was 74.8 per cent in this channel. Most efficient channel was Producer – Consumer with lowest price spread (Rs. 0.09), highest Shepherd‟s index (155.76) and highest producer‟s share (99.36 per cent). But only 5.44 per cent of total flowers produced were marketed through this channel. Ninety two per cent of total quantity of flowers produced were sold in domestic markets of Chennai, Bangalore, Mumbai, Delhi etc and the remaining were sold in local market. Flowers were sold by florists after value addition. Value added products like flower arrangements, bouquets and wreaths helped them in realizing highest net margin among intermediaries. However value addition was not observed among growers. Orchid cultivation in Kerala can be a highly profitable agribusiness enterprise, if proper marketing strategies are followed. Opportunities are optimal for new entrepreneurs to start orchid cultivation since there is high demand for orchid flowers in the domestic market and high demand for potted flowering plants in the local market. Marketing is the major challenge faced by growers in cut flower orchid production, because of the small unit size and unorganized marketing. Therefore it is suggested that orchid flower marketing system should be under the ambit of regulation and control. This requires establishment of primary market producing area, wholesale market in the cities, terminal markets for export and revitalization of nonfunctional producers association in the state which must be financially supported by the government