An Economic Analysis Of Average Cost And Returns Of Arabica Coffee In Chikkamagalur Districts Of Karanataka

Abstract

Coffee is native of tropical rain forests of Ethiopia and central Africa. Coffee is a major export earning commodity of several coffee growing countries in the world. The Arabs were the first to cultivate and to trade coffee. Coffee nicknamed as “Islamic milk” and & “sage’s milk” has conquered the third most popular drink after water and wine.Botanically, Coffee is a member of the Rubiaceae family and the genus coffee. The genus Coffea encompasses more than 70 commercially cultivated species, the majority of which are native to Africa, including two species in India, Coffea arabica and Coffea canephora. Coffea liberica is another plant that is grown to a smaller extent. For optimum credentials, coffee in India is grown as a silvi-horti crop under tree cover. Intercropping with orange, pepper, and cardamom on a coffee plantation provides an additional source of revenue.

The establishment cost incurred per hectare of coffee plantation was estimated considering the quantity of inputs and labour used and their respective market prices and wages prevailed in the study area. The establishment of coffee plantation requires four years. The establishment cost in coffee plantations were classified into investment and maintenance costs. The investment costs were considered for beginning period of the establishment with the maintenance cost was for four years period up to the bearing stage. The investment cost included the cost on land preparation, digging of pits and planting, shade tree planting, cost on sprayer, planting material, pump set, pump house, fencing etc. The maintenance cost included labour cost for various operations and material cost and fixed cost during gestation period. This criterion indicates the rate of return per rupee invested in coffee plantation. The benefit cost ratio at 12 per cent discount rate was 1.46 in small plantation and it was 1.56 and 1.65 in case of medium and large plantation. The result of B:C ratios for both the plantations in Chikkamangalur district were more than unity indicating that investment in coffee plantations was economically viable.