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BUSINESS ANALYSIS OF GERBERA CULTIVATION
UNDER POLYHOUSE- A CASE STUDY IN RANGA

REDDY DISTRICT OF ANDHRA PRADESH
BY
K. SRIDEVI
B.Sc. (Horti)
PROJECT REPORT SUBMITTED TO THE

ACHARYA N. G. RANGA AGRICULTURAL UNIVERSITY
IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR
THE AWARD OF THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION

(AGRIBUSINESS MANAGEMENT)
CHAIRPERSON: Dr. ALDAS JANAIAH
SCHOOL OF AGRIBUSINESS MANAGEMENT

COLLEGE OF AGRICULTURE
ACHARYA N. G. RANGA AGRICULTURAL UNIVERSITY
RAJENDRANAGAR, HYDERABAD-500 030.
2014
DECLARATION
I, K. SRIDEVI, hereby declare that the project report entitled “BUSINESS

ANALYSIS OF GERBERA CULTIVATION UNDER POLYHOUSE- A CASE
STUDY IN RANGA REDDY DISTRICT OF ANDHRA PRADESH” submitted to
the Acharya N.G. Ranga Agricultural University for the degree of MBA
(Agribusiness Management) is the result of the original work done by me. I also
declare that no material contained in the project report has been published earlier in any
manner.
Place: Hyderabad (K. SRIDEVI)

Date: / / 2014 I. D. No. RMBA/12-31
CERTIFICATE
Mrs. K. SRIDEVI has satisfactorily prosecuted the course of project and that the
report entitled “BUSINESS ANALYSIS OF GERBERA CULTIVATION UNDER
POLYHOUSE- A CASE STUDY IN RANGA REDDY DISTRICT OF ANDHRA
PRADESH” submitted is the result of original work and 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: / / 2014 Chairperson
Dr. ALDAS JANAIAH

CERTIFICATE
This is to certify that the project report entitled “BUSINESS ANALYSIS OF
GERBERA CULTIVATION UNDER POLYHOUSE- A CASE STUDY IN
RANGA REDDY DISTRICT OF ANDHRA PRADESH” submitted in partial
fulfillment of the requirements for the degree of ‘Master of Business Administration in
Agribusiness Management’ of the Acharya N. G. Ranga Agricultural University,
Hyderabad is a record of the bonafide original work carried out by Mrs. K. SRIDEVI
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.
Dr. ALDAS JANAIAH

Chairperson of the Advisory Committee
Project report approved by the Student Advisory Committee
Dr. ALDAS JANAIAH

Chairperson : Associate Dean
College of Agriculture
Jagtial.
Member : Dr. SEEMA

Professor & Head
School of Agribusiness Management
Rajendranagar, Hyderabad – 500030
Member : Shri M.H.V. BHAVE

Associate Professor
Department of Statistics & Mathematics
Rajendranagar, Hyderabad – 500030
Date of final viva-voce: / / 2014

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

and major advisor, Dr. Aldas Janaiah, Associate Dean, Agricultural College, Jagtial
for his 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. Seema, Professor and Head, School of
Agribusiness Management, College of Agriculture, Rajendranagar, Acharya N.G Ranga
Agricultural University for her unbounded affection, cheerful 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 pay my heartfelt regards to Dr. P. Radhika, Associate Professor, School of

Agribusiness Management, College of Agriculture, Rajendranagar, ANGRAU for her
generous help, and valuable guidance during the course of study.
I owe a deep sense of honour, regards and cordial love to my parents
Shri K. V. Ramanaiah (late) and Smt. K. Padma 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 husband V. Srinivasa Rao, for
his wholehearted 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 to 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 for their voluntary help, mood refreshing gossip which helped me in completing
the project work. I wish to extend my thanks to one and all those have contribution even
in a small way in the completion of my project work.
Finally I am very much thankful to Acharya N. G. Ranga Agricultural University

for the support received during the course of investigation.
Date: / /2014 (K. Sridevi)

LIST OF TABLES
Table Page
Title
No. No.
1.1 Area and production of flowers in major countries of the world.
1.2 Area and production of flowers in India
1.3 State wise area and production of flowers in India
3.1 Particulars of selected mandals, villages and farmers in Ranga

Reddy district
3.2 Demographic details of Ranga Reddy district
3.3 Land utilization pattern of the district Ranga Reddy (2011-12)
3.4 Source wise irrigated area of district Ranga Reddy during 2010-11
4.1 Trends in area of polyhouse based farming in Telangana and Andhra

Pradesh
4.2 Trends in area of polyhouse based farming in Ranga Reddy District

of Telangana and Andhra Pradesh.
4.3 Age profile of sample farmers in selected districts
4.4 Literacy status of sample farmers in selected districts
4.5 Family size of respondents
4.6 Land holdings of respondents
4.7 Establishment cost of gerbera under polyhouse
4.8 Cost of production of gerbera under polyhouse
4.9 Yield and income details from gerbera under polyhouse
4.10 Estimates of investment analysis parameters in gerbera cultivation
4.11 Price spread in Gerbera marketing through channel-I
4.12 Price spread in gerbera marketing through channel-II
4.13 Constraints faced by gerbera growers
4.14 Constraints faced by commission agents in the marketing of Gerbera
4.15 Constraints faced by retailers

LIST OF ILLUSTRATIONS
Figure No. Title Page No.
1.1 Share of exports of flowers from India (2012-2013)
1.2 Area under cut flowers in the country (2012-13)
3.1 Map of Ranga Reddy district

SYMBOLS AND ABBREVIATIONS
% : Per cent
@ : At the Rate
°C : Degree Celsius
°F : Degree Fahrenheit
ac : Acre
AICRP : All India Co-ordinated Research Project
APEDA : Agricultural and Processed food Export Development Authority
BCR : Benefit Cost Ratio
CAZRI : Central Arid Zone Research Institute
cm : Centimetre
CAGR : Compound Annual Growth Rate
Dept : Department
et al. : and others people
etc. : For example, for instance
ha : Hectare
IRR : Internal Rate of Return
ICAR : Indian Council of Agricultural Research
ICRISAT : International Crop Research Institute for the Semi-Arid Tropics
Kg : Kilogram
2
Km : Square Kilometre
MNC’s : Multi-National Company’s
MT : Metric Tonnes
No. : Number
NPV : Net Present Value

Author : K. SRIDEVI
: BUSINESS ANALYSIS OF GERBERA CULTIVATION

UNDER POLYHOUSE- A CASE STUDY IN RANGA
Title of the project REDDY DISTRICT OF ANDHRA PRADESH
Degree : MBA (AGRIBUSINESS MANAGEMENT)
Faculty : AGRICULTURE
Department : SCHOOL OF AGRIBUSINESS MANAGEMENT
Major advisor : Dr. ALDAS JANAIAH
: ACHARYA N. G. RANGA AGRICULTURAL

University UNIVERSITY
Year of submission : 2014
ABSTRACT
Gerbera (Gerbera jamesonii) is a herb and its flowers are like Daisy. It can be
grown as a field crop in open air on raised beds, as a greenhouse plant under controlled
conditions (polyhouse ) and as a potted plant. Gerbera is the latest sensation to Indian
floriculture, commercially grown throughout the world in a wide range of climatic
conditions. Thumping success of Gerbera under protected conditions has extensively
discouraged growers to raise this crop under open field conditions, with the result, most
of the studies have accrued out under protected conditions. According to the global
trends in floriculture, gerbera occupies the 4th place among cut flowers. In India,
flowers are grown in around 233,000 ha land, with the production of loose flowers
around 1729,000 MT and that of cut flowers 76732 lakh numbers (2012-13), as per
NHB 2013 database. Andhra Pradesh contributes about 9 per cent to the cut flower
production and 12.98 per cent to the loose flower production. The study area Ranga
Reddy district was selected purposively because the gerbera cultivation in polyhouse is
developing as a new venture. It has got distinct advantage due to International airport,
Hyderabad market and good transport facility to the market area.The present study
“Business viability of gerbera cultivation in polyhouse a case study in Ranga Reddy
district of Andhra Pradesh is studied with the following objectives:
1) To study the growth trend of polyhouse based farming in Andhra Pradesh.

2) To analyze the financial feasibility of gerbera cultivation under polyhouse
conditions in study area.
3) To identify the different marketing channels and price spread in gerbera.
4) To identify the production and marketing constraints in polyhouse based gerbera
cultivation.
This study plays an important role in assessing business viability and potential of
gerbera cultivation in Ranga reddy district of Andhra Pradesh. It helps the producers
as well as intermediaries to analyze the profitability and feasibility of gerbera
cultivation under polyhouse. A sample size of 25 gerbera growers , 10 commission
agents cum wholesalers and 5 retailers were selected from three mandals of
RangaReddy district of Andhra Pradesh viz. Chevella, Shamshabad and Shamirpet.
Secondary data on area of gerbera in Ranga Reddy district as well as in
AndhraPradesh was collected for a period of seven years from 2007-08 to 2013-14
and a positive trend was revealed.
The cost of cultivation of gerbera is Rs. 3.64 lakhs per 0.1 ha and net return per
0.1 ha is 2.46 lakhs. The BC Ratio, NPV and IRR were 1.1, Rs.4.87 lakh and 28.8
per cent respectively. Two channels of marketing were identified for gerbera, which
are
Channel I Producer – Commission agent cum wholesaler-consumer

Channel II Producer – Commission agent cum wholesaler –Retailer-consumer
The producers share in consumer’s rupee in channel I is higher than channel II since it is
the shorter channel (68.13per cent). Whereas the producers share in consumer’s rupee in
channel II is 27.25 per cent. Major problems of producers and market intermediaries in
the study area are high initial investment, lack of market information, new market and
fluctuation of prices/seasonal demand. The study suggested an overall improvement in
providing market information, credit provision and storage facilities.
Keywords: Gerbera, Cost of cultivation, Marketingchannel , Benefit Cost Ratio,

Financial feasibility.
Chapter I
INTRODUCTION
Floriculture is an age old farming activity in India having immense potential for
generating self-employment among small and marginal farmers but the social and
economic aspects of flower growing were, however, recognized much later. The
offering and exchange of flowers on all social occasions, in places of worship and their
use for adornment of hair by women and for home decoration have made them to
become an integral part of human living.
In the recent years it has emerged as a profitable agri-business in India and

worldwide as improved standards of living and growing consciousness among the
citizens across the globe to live in environment friendly atmosphere has led to an
increase in the demand of floriculture consistently.
Availability of natural resources like diverse agro-climatic conditions permit

production of a wide range of temperate and tropical flowers, almost all through the
year in some or other parts of the country. Improved communication facilities have
increased their availability in every part of the country. The commercial activity of
production and marketing of floriculture products is also a source of gainful and quality
employment to scores of people.
Floriculture is the sunrise industry of India as it offers excellent self employment

and good remuneration for the small and marginal farmers. Developed countries in
Europe, America, and Asia continents account for more than 90 per cent of the demand.
The important floricultural crops in the international cut flower trade are rose,
carnation, chrysanthemum, gerbera, gladiolus, gypsophila, liastris, nerine, orchids,
archilea, anthurius, tulip, lilies, etc. Floriculture crops like gerberas, carnation, etc. are
grown in green houses whereas the crops grown in open fields are chrysanthemum,
roses, gaillardia, lily marigold, aster, tuberose etc.
The area under floriculture in India is 232.65 thousand hectares with a production
of 1729.2 MT and 76731.9 MT of loose and cut flowers respectively (NHB database
book, 2013)
In 2013-14, the total value of exports of floriculture from India was Rs. 455.90
crores. The major importing countries were United States, Netherlands, Germany,
United Kingdom, United Arab Emirates, Japan and Canada. There are more than 300
export-oriented units in India. More than 50 per cent of the floriculture units are based
in Karnataka, Andhra Pradesh and Tamil Nadu.
Table 1.1. Area and production of flowers in major countries of the

world (2010-2013)
(Value in lakh rupees and quantity in mt)
2010-11 2011-12 2012-13

COUNTRY
Qty. Value Qty. Value Qty. Value
United States 7430 5799 7559 7129 6697 8381
Netherland 3149 4527 3924 5413 3099 5970
Germany 4474 4332 5257 5752 3715 5675
United Kingdom 4290 3530 3456 3856 3192 4568
Canada 524 811 868 1203 986 1619
Japan 640 1234 737 1472 801 1567
United Arab Emirates 823 896 817 1126 1029 1545
Italy 1255 893 1267 1119 821 1350
Ethiopia 132 695 415 822 163 1232
Australia 336 679 356 991 353 1074
Others 5845 6109 6270 7649 6266 9364
Total 28907 29604 30926 36532 27122 42345
(Source: www.apeda.gov.in)
Table 1.2. Area and production of flowers in India.
Year Area Production

(in `000 Ha) Loose flowers Cut flowers
(in`000 MT) (in lakh Nos.)
2006-07 144 880 37175
2007-08 166 868 43654
2008-09 167 987 47942
2009-10 183 1021 66671
2010-11 191 1031 69027
2011-12 254 1652 75066
2012-13 233 1729 76732
(Source: Indian Horticulture Database, 2013)
Figure 1.1 Share of exports of flowers from India (2012-2013)
Export of flowers from India
The country has exported 22,485.21 MT of floriculture products worth of Rs. 455.90
crores in 2013-14.
Area under floriculture cultivation
West Bengal has largest area under floriculture while Tamil Nadu is largest
producer of loose flowers whereas Karnataka is largest producer of cut flowers.
Maharashtra, Karnataka, Andhra Pradesh, Haryana, Tamil Nadu, Rajasthan and West
Bengal have emerged as major floriculture centres in the country.
Figure 1.2.Area under cut flowers in the country (2012-13)
Table 1.3 State wise area and production of flowers in India (2012-2013)
States/Union Area Production

Territories
(‘000 HA)
Cut flowers Loose flowers

(in lakh No’s) (in ‘000 MT)
Andhra Pradesh 35 6909.0 224.4
Tamil Nadu 29 1168.0 312.97
Karnataka 30 9441.8 207.5
Madhya Pradesh 17 0.0 193.0
Gujarat 17 0.0 149.3

Maharashtra 22 7914.0 119.0
Haryana 6 1270 64.7
West Bengal 24 25429.1 65.14
Himachal Pradesh 1 1760.3 37.7
Chattisgarh 10 0.0 37.8
Uttar Pradesh 16 4908 31.49
Odisha 8 6040 26.2
Sikkim 0 214.1 26.50
Jharkhand 2 1711.0 22.0
Punjab 2 0 10.5
Bihar 1 324 10.2
Assam 2 3750 11.7
Delhi 6 1038.0 5.7
Rajasthan 3 0.0 3.7
Uttarakhand 2 3633 1.82
Jammu & Kashmir 1 222.1 0.4
Pondicherry 0 0.0 0.4
Andaman & Nicobar 0 0.0 0.4
Daman & Diu 0 0.0 0.0
Manipur 0 0.0 0.0
Nagaland 0 96.7 0.0
Mizoram 0 605.2 166.8
Arunachal Pradesh 0 297 0.0
Total 232.7 76731.9 1729.2

Polyhouses are the frames of inflated structure covered with a transparent material
in which crops are grown under controlled environmental conditions. Polyhouse
cultivation as well as other modes of controlled environment cultivation has been
evolved to create favourable micro-climates, which favours the crop production possible
all through the year or part of the year as required. Polyhouses and other technologies
for controlled environment plant production are associated with the off-season
production of ornamentals and foods of high value, where outdoor production is not
possible. The primary environmental parameter traditionally controlled is temperature,
usually providing heat to overcome extreme cold conditions. However, environmental
control can also include cooling to mitigate excessive temperatures, light control either
shading or adding supplemental light, carbon dioxide levels, relative humidity, water,
plant nutrients and pest control.
Flowers grown under greenhouses in different countries around the world are
around 46,008 ha (Sudhagar, 2013). Globally more than 145 countries are involved in
the cultivation of ornamental crops and the area under these crops is increasing steadily.
The production of flower crops has increased significantly and there is a huge demand
for floricultural products in the world, resulting in growing international flower trade.
The world consumption of cut flowers and plants is increasing and there is a steady
annual increase of 10 to 15 per cent in all importing countries.
Floriculture is taking strong roots in India, which is emerging as a reliable

floriculture supplier to the world. Indian floriculture industry has been shifting from
traditional flowers to cut flowers grown under polyhouse for export purposes. The
liberalized economy has given an impetus to the Indian entrepreneurs for establishing
export oriented floriculture units under controlled climatic conditions. The commercial
activity of production and marketing of floriculture products is also a source of gainful
and quality employment to scores of people.
India has a larger area under floriculture than many other countries, but the area
under protected cultivation is limited. The proportion of the area under protected
floriculture to the total floricultural area is 99 per cent in Colombia, 70 per cent in the
Netherlands and 58 per cent in Italy, whereas in India it is hardly 0.56 per cent.
Although the floriculture industry is growing at a faster rate compared to other
horticultural based industries, still there is a vast scope to bridge the gap of demand and
supply in domestic as well as world market in the field of floriculture.
The genus Gerbera was founded by the Pre-Lannean botanist, Gronovius and was
named in honour of German naturalist, Traugott Gerber, who travelled Russia in 1743.
In the family Asteraceae (Compositae), this group at present comprises 45 species,
native to tropical Asia and Africa. About 7 species were recorded in India, distributed in
the temperate Himalayas from Kashmir to Nepal at altitudes of 1,300 to 3,200 meters.
Gerbera (Gerbera jamesonii) is a herb and its flowers are like Daisy. Flower
stalks are long, thin and leaf-less. It flowers year-round in warm and humid conditions.
It can also be grown as a field crop in open air on raised beds, as a greenhouse plant
under controlled conditions (polyhouse) and as a potted plant. Plants are stem less and
tender perennial herbs. Leaves are radical, petiole, lanceolate, deeply-lobed, sometimes
leathery, narrower at the base and wider at top and are arranged in rosette at the base. A
well drained, rich, light, neutral or slightly alkaline (pH 5.5 to 6.5) soil is most suitable
for gerbera production. Gerberas are propagated by seeds, cuttings of clumps with buds,
and from tissue-cultured plants. Plants on raised beds are irrigated and fertigated
through drip. Gerbera plants produce flowers 7-8 weeks after planting. Plants have
productive life up to 24-36 months. Flowers are ready to harvest when 2-3 whorls of
stamens are developed. The flower is plucked at the heel with angular cut. Plucking
should be done in morning or evening. For long distance transport corrugated
box/cartons are used. Gerbera does not need cooling like rose or carnation and have
reasonably long shelf life.
There are several varieties in Gerbera. Many varieties are released by private
companies. Some of the varieties are Dalma (white), Dana Ellen (yellow), Rosalin
(pink), Savannah (red), Cream Clementine (cream white) and Maroon Clementine
(orange) etc. It is ideal garden plant for beautification on flower beds, borders and in
rock garden. The flowers are of various colours and suit very well in different floral
arrangements.
Gerbera is the latest sensation to Indian floriculture, commercially grown

throughout the world in a wide range of climatic conditions. Thumping success of
Gerbera under protected conditions has extensively discouraged growers to raise this
crop under open field conditions, with the result, most of the studies have accrued out
under protected conditions. According to the global trends in floriculture, gerbera
occupies the 4th place among cut flowers.
1.1 PROBLEM STATEMENT
Ranga Reddy district is leading in gerbera cultivation under polyhouse .There is
enormous potential to increase the area of gerbera under polyhouse farming which has
both domestic and good export market. The trend regarding area will be an indicator of
growth of this industry. The cost structure, marketing channels and problems
encountered will be some of the important issues to study about. Similarly, the
feasibility of gerbera cultivation under polyhouse units is the biggest challenge for the
new investors, therefore this study is being carried out with the following objectives.
1.2 OBJECTIVES
1) To study the growth trend of polyhouse based farming in Andhra Pradesh.
2) To analyse the financial feasibility of gerbera cultivation under polyhouse
3) To identify the different marketing channels and price spread in gerbera.
4) To identify the production and marketing constraints in polyhouse based gerbera

cultivation
1.3 SCOPE OF THE STUDY

The study critically examines and analyses the economics of polyhouse based
gerbera cultivation in Andhra Pradesh. This study would also enable the growers in
making decision to overcome the problems in the marketing system of gerbera in the
study area. The growth trend of polyhouse based gerbera farming, potential for domestic
and export market of gerbera, the estimated cost and returns, the price spread etc. will
help the producers to look keenly into the investment opportunities. The findings of the
study will be useful to the gerbera growers in identifying the pattern of its production
and marketing, which will enable them to make decisions to obtain maximum profits.
The study would be of considerable economic value in providing real facts and figures
to the planners, policy makers and extension workers of the region for developing a
sound plan and imparting technical knowledge to the farmers for maximizing output
with available capital inputs of the farmers.
1.4 LIMITATIONS OF THE STUDY
A one man research is always confronted with various bottlenecks and the present
study is not an exception to these limitations. One of the most important limitations of
the study was that the study was confined to a particular agro-climatic and agro-
economic region and hence conclusions drawn are applicable to that area and areas with
similar conditions only. Therefore, the extent of generalization has to be cautiously
made. Secondly, the data was collected through survey method by interviewing farmers.
Therefore, the objective of the data is limited to the extent that the farmers are able to
sum up from their memory, as they do not maintain any records. However, all care has
been taken to get reliable data from informants. Due to fluctuation in the price of
gerbera, the average price during the study period has been taken for the computation of
the price spread. Hence, it could be considered as one of the limitations of the study.
The study is also confronted with the constraints of limitation of time, sample size and
resources at the disposal of investigator.
1.5 STRUCTURE OF THE PROJECT REPORT

The study is presented in five chapters as follows.
I. Introduction: The importance of the study, problem setting and objectives are
covered.
II. Review of Literature: The available and relevant literature is thoroughly

reviewed.
III. Materials and Methods: The methodology adopted in sampling, data

collection, analytical tools used and methods of evaluation are explained.
IV. Results and Discussion: The results of the study and the discussion evolved
from the study are presented under this sub head.
V. Summary and Conclusions: Summary and conclusions of the study are

presented under this section.
Chapter II
REVIEW OF LITERATURE
For any investigation, the findings of earlier studies may possibly give insight of
the problem and sets direction for the research. An extensive survey of literature was
undertaken in order to have an understanding of various concepts related to the problem
concerned, interpretation of findings of the study and the limitations. Careful study of
the earlier studies conducted in India and abroad on production and marketing provides
guidance and clarity while conducting the research study. In this chapter an attempt is
made to review the literature of the past research work relevant to the present study. The
review has been presented under the following subheads.
2.1. Studies on growth trend.

2.2. Studies on financial feasibility.
2.3. Studies on marketing channels and price spread.
2.4. Studies on production and marketing constraints.
2.1 STUDIES ON GROWTH TREND

Singha and Chakravorty (2013) studied the growth trend in maize production which
registered CAGR at 8.5 per cent in the last three decades. Using one way Least Squares
Dummy Variable (LSDV) for twenty-seven districts over twelve years, present study
explored that the introduction of new hybrid seed (HYV) is one of the most important
factors for significant growth of maize crop in the state. Further, though the crop is
suitable in the drier region, the role of timely rainfall is also found to have significant
impact on the yield level.
Jayale et al. (2012) studied the growth of banana exports in Tamilnadu compared
to the growth rate of banana and its relative share to total fruits exported from India.
CAGR and C.V. were positive in quantity and value of exports of banana. Banana
export in volume, Banana export in value, total fruit export in volume and total banana
production in term of CAGR was 27.81 per cent, 40.97 per cent, 10.76 per cent, and
7.67 per cent, respectively and co-efficient of variation was 116.40 per cent, 148.03 per
cent, 114.82 per cent and 31.85 per cent respectively.
Sharma and Gummagolmath (2012) examined the trend 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 the
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
promoting the improved cultivation practices of guar among the farmers.
Panwar and Kumar (2008) have noted that floriculture in India is being viewed as
a high growth industry. Commercial floriculture is becoming important from the export
angle. The liberalization of industrial and trade policies have paved the way for
development of export oriented production of cut flowers. The total business of
floriculture products in India during 2005 was Rs. 8174 lakhs while it increased to
Rs.10117 lakhs by April 2006. In India, flower production of West Bengal registered
the highest compound growth rate of 16.61 per cent followed by Andhra Pradesh (13.74
per cent) and Maharashtra (9.11 per cent). The growing demands of flowers in the
domestic as well as the export market will require a concerted effort on the part of the
government as well as the private entrepreneurs to develop floriculture on scientific
lines.
Ashalatha (2000) analysed the growth rate of Indian cashew industry in two
periods, Period-I, covering 1956-57 to 1970-71 and period-II, covering 1971-72 to
1998-99. It was observed that the growth rate of area, production, productivity, kernel
export, raw cashew import, cashew nut shell liquid – unit value of export showed
positive trend but the cashew nut shell liquid quantity exported showed negative and
non-significant growth due to the fact of reduction in the import of raw nuts (-0.75 per
cent) and also decrease in prices for Indian cashew in the world market during 1980-
1990.
2.2 STUDIES ON FINANCIAL FEASIBILITY

Ashfaq (2013) made an attempt to examine the cost and return of tuberose cut
flower along with factors affecting revenue in Kasur district of Punjab province. The
average tuberose acreage in the study area was about one acre. Total variable cost of the
small farmers was Rs.152371, medium Rs.146574 and large Rs.147587. The production
of tuberose was highest for the medium farmers (290480 pieces), followed by small
(289202 pieces) and large (268700 pieces). Gross margin per year was the highest for
the small farmers (Rs.0.253 million) followed by medium farmers (Rs.0.246 million)
and large (Rs.0.237) farmers. The benefit cost ratio of large, medium and small farmers
were 2.68, 2.66 and 2.60 respectively. Large farmers have highest return because they
have abundant amount of money, infrastructure and marketing information.
Mazumdar and Lahiri (2012) studied the cost-benefit and sensitivity analysis of
cut flower roses in comparison with other floricultural crops. They found that the area
of roses has been higher than other floricultural crops and its production and net income
are also higher than others. Whereas the benefit cost ratio of hibiscus has been found to
be higher than rose and jasmine, indicating higher profitability than rose and jasmine.
Break-even quantity and sensitivity analysis of cost, yield (production) and price have
been positive for all crops.
Mou (2012) examined the production and profitability of some selected flowers in
comparison with their competing crops and identified the value chains and channels of
flower marketing in Bangladesh. Stratified random sampling method was used to collect
primary data and samples were collected from the 32 farmers of Guptergaon under
Phulpur Upazila in Mymensingh district and from the 21 flower traders, retailers and
wholesalers of different flower trading zones in Dhaka city. The study reveals that gross
margins of flower and vegetables per hectare were Tk.1, 359,824.20 and Tk.46,362.14,
respectively. The average marketing margin of three intermediaries i.e., BRAC,
wholesaler-cum-retailer and retailer in Dhaka city, were Tk. 187.56, Tk. 638.39 and
Tk.689.72 per 100 flowers, respectively. Lack of mother stock and their high price,
price of fertilizer and insecticides, lack of scientific knowledge & training, attack by
pest & disease, lack of extension work came out as major financial and technical
problems of the flower farmers while inadequate and underdeveloped transportation
and communication system, low market price, lack of market information, unstructured
market are among major market related problems. On the other hand, marketing
intermediaries specified price instability, lack of adequate market information, lack of
storage facilities, unsold flower, inadequate shop-space, demand fluctuation, strikes as
their problems and constraints.
Bhosale et al. (2011) studied production and marketing of gerbera under

polyhouse in 0.1 hectare of land. The cost of cultivation and gross return of gerbera was
found to be Rs. 10, 26,740 and Rs. 11,72,466 for the first year. Net profit from gerbera
cultivation was Rs. 1,45,726. Output-input ratio was 1.14 and per box and cost of
cultivation of gerbera was Rs. 1,711.23 for first year. The marketing channels identified
were, channel I i.e. Producer-Wholesaler-Florist-Consumer and channel II i.e.
Producer-Florist-Consumer. The consumer’s price for the same produce in channel I
and channel II was Rs. 2400 and Rs. 3200, respectively. Per box cost of marketing of
gerbera of producer in channel I and channel II was Rs. 181.03 and Rs. 309.49
respectively.
Perke et al. (2009) study on Mogra (Jasminum sambac) an important species of

jasmine flower revealed that use of hired human labour and family labour was 627.63
man days and 160.32 man days per hectare, respectively. Cost-A was Rs.49617.39 and
cost-C was Rs.87248.78. The output-input ratio at cost-C was 1.41 per hectare.
Sengar and Kothari (2008) studied the economic evaluation of greenhouse for
cultivation of rose nursery and observed that the total construction cost of 80 m2 arch
shape greenhouse was Rs.100000/-. Out of total 80 m2 floor area, 55 m2 area is used for
plant seedling and 25 m2 areas is left for movement in the greenhouse carrying out
agricultural operations. In 55 m2 area of greenhouse, 9700 seedlings could be raised
with 0.075 x 0.075 m spacing in 20 pits. Suitability of the economics of greenhouse
were done by four economic indicators such as net present worth (Rs 453221/-), internal
rate of return (53 per cent), benefit cost ratio (4.5) and payback period (2.2 years) for
rose nursery.
Ali and Banerjee (2006) in their study conducted to examine the economics of
marketing of tagar [Valeriana officinalis] flower in Bagnan, West Bengal, India
showed that packing, loading, and hiring of assistants contributed to the major costs
incurred in marketing of tagar flowers. All costs at maximum and minimum prices were
higher in marketing channel I than in marketing channel II. The traders' profit in both
channels was higher at maximum prices than at minimum prices. At maximum price
level, traders had a marketing margin of 84-86 per cent, while producer-sellers' share
was 64 per cent. The traders' share was reduced to less than 40 per cent at minimum
price level. It is concluded that the marketing system for this flower is imperfect and
inefficient. This highlights the need for establishing agro-processing industries in the
surrounding area.
Gajanana and Dakshinamoorthy (2005) studied the Carnation [Dianthus

caryophyllus] under polyhouse cultivation in Pune (Maharashtra) and Bangalore
(Karnataka) in India. Economic feasibility of production indicated it to be highly
profitable and economically viable in both regions. However, the use of cost effective
methods appear to cut down the establishment costs by 50 per cent in Bangalore in
comparison to that in Pune. Similar reduction in costs was seen in other items such as
the inner net, drip irrigation system and bed preparation in Bangalore, thereby reducing
the overall cost of establishment by 27 per cent at Rs. 308 155/500 m2 polyhouse as
against Rs. 422 585/500 m2 in Pune. The annual maintenance costs worked out to Rs.
1,81,822 in Bangalore while it was Rs. 1,56,012 in Pune indicating a better maintenance
strategy. The productivity was higher in Bangalore at 14 cut flowers/plant/annum as
compared to 10 cut flowers/plant/annum in Pune. Overall, the gross returns and benefit
cost ratio were higher in Bangalore at Rs. 488 668.9 and 2.69 respectively. The
economic viability and feasibility analysis indicated that the production of carnation is
highly profitable and economically viable in both the places, with a net present value of
Rs.356 302 in Bangalore and Rs. 121 839 in Pune. Results indicated that growers could
expand the area devoted for this cut flower, but should practise self marketing in distant
markets to achieve higher profits.
Sharma (2002) analyzed the costs and returns of chrysanthemum production as

well as the marketing costs and margins in Jaipur district, Rajasthan, India. Data for the
agricultural year 1996-97 were collected from a sample of 60 farmers and 14
florists/retailers. Average cost of production was Rs. 580 per quintal while net return
was Rs. 60 806 per hectare. Major cost items in chrysanthemum marketing were
damage to the flowers, labour and transportation charges. The loss in the quantity of
flowers was high (28.12 per cent of total marketing cost). Producers received only 24.93
per cent from the price paid by consumers while florists earned a margin of 58.42 per
cent.
Guledagudda et al. (1997) studied the cost and returns in commercial Jasmine
production .The results revealed that, per acre establishment costs of jasmine garden
was Rs. 8346, of which a major proportion was spent on labour, followed by plant
cuttings. The total cost per acre (Rs. 47,370) constituted variable cost (Rs. 30,792),
fixed cost (Rs. 4,579) and marketing cost (Rs. 11,998). Average net returns over
variable, fixed and marketing costs worked out to Rs. 52 303, Rs. 47 724 and Rs. 35
726, respectively. Financial tests (@ 14 per cent discount rate) revealed that, jasmine
enterprise had maximum net present value (Rs. 182 741), Benefit cost ratio (1.73),
Payback period (1.9 years) and Internal rate of return (> 50 per cent), which justified the
investment. Supply of quality plants and reduction in commission charges were the
areas of immediate concern.
2.3 STUDIES ON MARKETING CHANNELS AND PRICE

SPREAD
Kumar et al. (2013) discussed the investment feasibility and marketing of jasmine
in Chitradurga district. The Channel I-Producers-Commission agent-wholesaler-
Retailer-Consumer was more popular. Through this channel the net return realized by
commission agents, wholesaler and retailer worked out to Rs. 25 50, Rs. 313 74 and Rs.
9,600, respectively. About 75-80 per cent of flowers moved through channel-I the
reason for the preference of this channel was that the commission agent advances loans
to farmer. The price spread in channel-I, Channel-II and channel-III was estimated to be
Rs. 37.15, Rs. 36.48 and Rs. 25.13, respectively. Farmers got higher returns in channel
III i.e., selling directly to retailers which worked out Rs 44.20/kg.
Khan and Bashir (2013) analysed the structure and operation of the flower
marketing system in Punjab, Pakistan. In the first channel the main players were
producers, wholesalers-cum-commission agents, retailers and consumers. In the second
channel producers were directly linked with retailers. In Channel-I the highest
consumer's price of Rs. 444.78 per 100 pieces of cut roses indicated that consumers
have to pay more there. The price spread was greater in Channel-I which was Rs.
243.36 per 100 pieces of cut roses. In Channel-II where producers were directly linked
with retailers, producer's share was maximized up to 46.86 per cent which increased the
marketing efficiency of Channel-II as compared to Channel-I. The study revealed that
as the number of marketing intermediaries in the marketing channel increases, the
producers and consumers are least benefitted. Therefore, there is need for more vertical
integration in the cut roses market.
Kumar et al. (2013) conducted a study during the season 2009-10 to estimate the
cost of cultivation of marigold flower and returns and marketing margins of different
middleman involved in marigold flower trade in Kannauj district of Uttar Pradesh. The
study was based on information collected from randomly 60 marigold flower growing
farmers, commission agent cum wholesaler and retailers. The overall cost of cultivation
of marigold flower was estimated as Rs. 7,365 per hectare. The overall gross income
and average net income from marigold crop was estimated to be Rs. 121792 and
Rs. 48,141 per hectare, respectively. The average return per rupee investment was
estimated as Rs. 1.66, which shows that marigold cultivation was highly profitable in
the selected area. Out of two marketing channels, Channel-I (producer-commission-
retailer-consumer) was the important channel from producers’ point of view, where
producers received more percentage share (35.68 per cent) in consumer's rupee than the
channel-II (31.95 per cent). The total marketing cost was Rs. 6.90 and Rs. 8.63 per
kilogram of marigold flower for channel-I and channel-II, respectively. The major item
of marketing cost was the value of quantity loss and labour charges. In channel-I
retailers earned a margin of 10.35 and 34.69 per cent of the price paid by the consumers.
Bahirat and Jadhav (2012) identified channels of marketing and price spread for
rose in the Satara district. Three marketing channels were observed during the survey
viz., channel I - producer to consumer, II - producer to florist to consumer and IIIrd
channel producer to wholesaler cum commission agent to florist to consumer. Out of the
total quantity of flowers marketed, maximum quantity of flowers were sold through
channel II. The marketing efficiency index was found maximum in the channel I
followed by channel II and III. Cultivation of rose was profitable at all the levels of cost.
Per hectare yield of rose was 2,24,166. The gross value received was Rs. 380242.
Benefit cost ratio was 1:1.29.
Maske et al. (2012) undertaken the study to analyze marketable surplus and price
spread of papaya in Raipur district of Chhattisgarh. On an average, producers'
marketable surplus has been found more than 99.76 per cent of the total production of
selected papaya grower's area. The price spread of papaya with respect to various
marketing channels has indicated that the producers' share has an inverse relationship
with the number of intermediaries. The net price received by the producers is relatively
higher in the channels in which the produce had directly sold to the consumers or
retailers. The study has also highlighted the needed for effective measures to reduce
marketing losses at various stages. Study has emphasized on the strengthening of
institutions, establishment of processing units and development of market infrastructure
in the area.
Jagtap et al. (2009) made an attempt to study the economic efficiency of marigold
marketing in Pune (Maharashtra). It was observed that on an average, marigold flower
production was 2850 kg on 0.40 ha. of a farm. The marketed surplus of marigold was
disposed through three different channels. The highest net margin of retailer was
Rs.4.54 in channel-I followed by that of Rs.3.05 and Rs.3.00 in channel-III and channel-
II, respectively. Channels-I was found to be the most efficient in regard to producer,
intermediaries and consumer's point of view. Similarly, producer's share in consumer's
rupee was also high in channel-I.
Dhillon et al. (2005) conducted the study to estimate the marketing cost and price
spread for marigold [Tagetes sp.] in three major growing regions of marigold in
Haryana, viz., Gurgaon, Sonepat and Faridabad. The study revealed that production of
marigold was higher (14.55 q) on medium farms followed by large farms (13.85 q). The
average area and production of marigold were 1.00 hectare and 12.95 qtl. per hectare on
the sample farmers. The study revealed that the marigold was considerably more
profitable than rose, chrysanthemum, gladiolus and tuberose. However, to popularize
marigold flower, liberal credit facilities, new production technology, storage facilities,
efficient marketing system, etc. need to be developed in the study areas.
2.4 STUDIES ON PRODUCTION AND MARKETING

CONSTRAINTS
Manju et al. (2010) conducted a study in Faridabad district of Haryana to identify

the constraints being faced by the farmers in the cultivation, storage and marketing of
flowers. Majority of the respondents had low level of adoption (67 per cent) followed
by medium (23 per cent) and high (10 per cent). Regarding cultivation constraints,
majority of the farmers had given the higher score to the lack of awareness about large
number of varieties for commercial cultivation (423 score) followed by labour intensive
(315 score), fear of natural hazards (241 score), lack of irrigation facilities (135 score)
and flower size decrease year after year (115 score). The major storage constraints faced
by the farmers were lack of standard containers (349 score) followed by damage or
spoilage due to storage facility (317 score), unfavourable temperature range/climatic
conditions (295 score) and lack of quality packing materials (180 score). Whereas 10
per cent commission from the farmers (877 score), wide fluctuations in prices (778
score), monopoly of private commission agents in fixing prices (577 score) and no
support price by the government (538 score) were the marketing constraints faced by
the farmers.
Jahan (2009) made an attempt to examine the production and marketing cost
structure and profitability of some selected flowers such as tuberose, rose, gladiolus and
marigold. The study covered primary market (Jessore), wholesale market (Dhaka city)
and retail market (Dhaka city) for flower business. The highest net return was earned
from rose (Tk. 3,53,927) followed by tuberose (Tk. 1,76,941), gladiolus (Tk. 1,33,069)
and marigold (Tk. 84,643). Total marketing cost per hundred flower was highest for
retailer (Tk 41.14) because of their diverse activities and lowest for wholesaler cum
retailer (Tk 5.66) due to their limited functions. On an average, the net marketing
margin was highest for retailers (Tk. 28.10) and lowest for wholesaler (Tk. 9.03). The
flower-farmers and intermediaries faced various production and marketing problems in
the study areas. Based on the findings, some recommendations were made to overcome
the problems that include development of storage facility, provision for scientific
knowledge and training facility, and establishment of permanent flower wholesale and
local markets, etc.
Singarwad et al. (2009) conducted the study in the Nanded district of

Maharashtra. The results revealed that constraints like difficulties in control of pests and
diseases were severe problem which was expressed by 93.33 per cent of flower growers.
In the next order, non-availability of transport facilities was opined by 92.22 per cent of
them. Other difficulties faced were pruning (86.66 per cent) and control of weeds (84.44
per cent). As regard the suggestions, about 91.11 per cent of flower growers gave
emphasis on pests control and 84.4 per cent for provision of training over pruning
problem.
Bagade et al. (2008) examined cut flower production, disposal and marketing in
Ratnagiri district, Maharashtra, India. The volumes of production and disposal of
gerbera were 1,34,763 and 132 904 flowers for a cooperative unit and 1,28,557 and
1,26,069 flowers for a private unit, respectively. As regards the production and disposal
for both co-operative and private units, the month of May had the highest quantity. The
total marketed surplus of gerbera was 132 904 and 126 070 flowers, giving a value of
Rs. 388 993 for a cooperative unit and Rs. 366 936 for a private unit. The maximum
share of quantity disposed was through commission agents. The total cost of marketing
of gerbera for cooperative and private units was Rs. 84 666 and Rs. 77 529,
respectively, and 44.37 per cent and 45.47 per cent of those amounts were commissions
paid to commission agents respectively. Input- output ratios indicated the profitability
of gerbera production. The main factors influencing the prices of gerbera include
seasonality of supply, place and distance of market, high cost of transportation, and
availability of technical advice. Major marketing constraints include the high cost of
packing material and problems with storage, market functionaries, and market
infrastructure.
Gowda et al. (2006) conducted the study to determine the adoption, marketing
pattern and constraints in cultivation and marketing of cut flowers in Belgaum District
of Karnataka. Results showed that 40 per cent of the gerbera growers and 47.50 per cent
of carnation growers belonged to medium adoption category. 100 per cent of gerbera
and carnation growers adopted soil sterilization, digging of trench, use of suitable soil,
type of bed preparation, use of planting material, spacing between rows and plants,
special cultural practices, harvesting of flowers and treatment of flowers. With respect
to application of FYM and chemical fertilizers, farmers had less knowledge. 70 per cent
of the respondents sold their produce through commission agents and 30 per cent of the
respondents sold their flowers through retail outlets. The major problems in production
and marketing of cut flowers were pests and diseases, high investment, exploitation by
the middlemen, fluctuation in prices and low price of the flowers.
Ozkan et al. (1999) conducted a study to investigate the production structure and
main marketing problems of the export-oriented Turkish cut flower industry. The results
indicate that cut flower companies were not highly mechanized, but did use computer
accounting systems. Transportation of cut flowers to foreign markets was the largest
expense item in the cut flower industry. Cut flower companies face difficulties in
obtaining and keeping qualified human resources, even with a high rate of
unemployment. It was also observed that managers do not use specific performance
indicators relevant to the cut flower industry. The most common method for being
aware of cut flower export was by personal contact with the importers. It was concluded
that main concerns raised by managers were increased competition, price cutting,
transportation expenses for export, and training and labour supply.
Chapter III
MATERIALS AND METHODS
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 has been taken up in Ranga Reddy district of Andhra Pradesh
(presently in 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 has been discussed under the following sub-headings
3.1 Selection of study area.
3.2 Selection of sample farmers.
3.3 Collection and source of data.
3.4 Tools and techniques.
3.5 Concepts, definitions and procedures adopted in computation
3.6 Description of study area.
3.1 Selection of study area

Ranga Reddy district of Andhra Pradesh which surrounds the Hyderabad city is
emerging as the potential centre for growing cut flowers in the poly houses. There has
been a steep rise in the number of polyhouses for the past 6-7 years. Roses, gerbera,
coloured capsicum, carnation etc. are mostly raised in the polyhouses. Since the demand
for gerbera is high, almost all the polyhouses in this district grow this flower. Therefore
looking at the growth potential, Ranga Reddy district is purposively chosen for the
study. Almost all popular varieties of gerbera like Silvester, Ruby red, Dune, Roselle,
Intense, Balance, Paradise, Goliath, etc. are cultivated in this region and it offers high
potential for sale of cut flowers Three mandals of the district namely; Chevella,
Shamshabad, Shamirpet were selected for the study as these mandals are emerging as
potential areas for gerbera production. From each mandal, villages were identified based
on the criteria of highest production to gather the information. Therefore, altogether 3
mandals, and 11 villages formed the basis for the study.
3.2 Selection of sample farmers
Sample of 25 polyhouses in Ranga Reddy district raising gerbera were randomly
selected .Among the selected polyhouses, about 5 small units, 15 medium units and 5
large units were selected. The units were classified based on the floor area i.e.
Small units - Less than 1000 sq.mtrs
Medium units - 1000 sq.mtrs – 1 acre
Large units - More than 1 acre
From each selected village, gerbera growing farmers were interviewed randomly
for collecting the data. Similarly 5 intermediaries were interviewed under each
identifiedchannel.
Table 3.1. Particulars of the selected mandals, villages and farmers in Rangareddy
District
S. Mandal Villages No. of

No. Farmers
Ikkareddy guda 3
1 Chevella
Pamena 3
Urella 3
Chenevelly 3
Jukal 2
2 Shamshabad
Shamshabad 2
Kavaguda 2
Mudichintapalli 3
3 Shamirpet
Ponnal 2
M.C.Palli 1
Potharam 1
Total 25
Selection of the Market
The gerbera growers of the selected villages sell their flowers at the
Gudimalkapur flower market. Therefore, this market was considered for the present
enquiry.
Collection of data and method of enquiry
Primary data
Both primary and secondary data were used in the study. The primary data from
the sample owners (farmers) of the unit on the cost and returns and investment pattern,
production and marketing constraints etc. were collected with the help of pre tested
questionnaire . Another set of questionnaire was designed to access the information, on
the margins on spoilages, marketing costs etc. from the intermediaries involved in the
marketing
Secondary data
The secondary data on area and production of gerbera and the number of
polyhouses over a period of time was collected from the published sources such as
Government departments, APEDA, journals, websites, periodicals, past records etc.
3.4 Tools and Techniques

3.4.1 Tabular analysis
The data collected were compiled and tabulated to draw valid inferences from the
study. Apart from the functional analysis, simple percentages and averages were also
used to compute and compare the results of the study.
3.4.2 Functional analysis

3.4.2.1 Estimation of Compound Annual Growth Rate (CAGR)
Keeping in view the objective of the study, growth rates of area of polyhouse in
Ranga Reddy district of Telangana state 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 were fitted by using the least squares method of estimation.
The equation also enables in obtaining the Compound Growth Rate (CGR in per cent)
as follows
Compound Growth Rate= (Antilog of B-1) * 100
3.4.2.2 Financial analysis
The techniques used for the financial analysis were
1. Net Present Value (NPV)

2. Benefit Cost Ratio (BC Ratio) and
3. Internal Rate of Return (IRR)
1. Net Present Value

The Net Present Value represents the discounted value of the net cash
inflows of the project. In the present study, a discount factor of 14 per cent was used
to discount the net cash inflows representing the opportunity cost of capital. It can
be represented by
n
NPV = ∑Yi (1 + r)-i – I
i=1
Where,
Yi = Net cash inflows in the year
n r = Discount factor
I = Initial investment
i = Year of life period 1, 2……….n.
2. Benefit Cost Ratio
Benefit Cost Ratio analysis is an important tool to assess economics of farming. It

is the ratio of net value of the crop produce after deducting the cost of different inputs. It
indicates the rate of returns from the use of an input.
BCR = Net returns /Total costs

While doing investment analysis, BCR is worked out by using the following formula
Discounted net cash flows
BCR = ————————————
Initial investment
n
∑Yi (1 + r)-i
i =1
= ——————————
I
Where,
Yi = r =
i=
3. Internal Rate of Return (IRR)
The rate at which the Net Present Value of the project is equal to zero is called
Internal Rate of Return (IRR) to the project. The net cash inflows were discounted to
determine the present worth by the following interpolation technique
Present worth of cash

Flows at lower discount rate
IRR = Lower discount rate + (Difference between the two) X ( )
discount rates Absolute difference between
present worth of cash flows at the two
discount rates
3.4.3 Cost of marketing (C)
The total cost incurred on marketing, in cash or in kind, by the producer-seller and
by various intermediaries involved in the sale and purchase of the commodity till the
commodity reaches the ultimate consumer was computed as follows.
C = Cf + Cm1 + Cm2 + Cm3 + ……………….Cmn

Where,
C= Total cost of marketing of the commodity
Cf = Cost paid by the producer from the time, the produce leaves the farm till sale
Cmn = Cost incurred by the nth middleman in the process of buying and selling the
product
3.4.4 Producer’s share in consumer’s rupee (Ps)

It is the price received by the producer as a percentage in the consumer’s price.
Ps = (PF/PC) x 100
3.4.5 Analysis of price spread under different channels
It is the difference between the price paid by the consumer and the price received
by the producer. The price spread was worked out by using the following method
Price Spread = Pp - Pf
Where,
Pp = Price paid by the consumer
Pf = Price received by the farmer
3.5 Concepts, definitions and procedures adopted in computation
Concepts, definitions and procedures adopted in this study are presented below.
3.5.1 Cost of cultivation

All the costs incurred in the cultivation of gerbera i.e., operational and fixed costs
are considered to arrive at the total cost. It always refers to unit area (1000 Sq.mtrs).
Operational costs include human labour, machine labour, seed, fertilizer and manures,
insecticides, interest on working capital and miscellaneous expenditure.
Fixed costs include rental value of owned land, land revenue, depreciation on
machinery, implements and poly house and interest on fixed capital etc.
Variable costs include cost on seeds, manure, fertilizer and wages of human and
bullock labour, plant protection chemicals, irrigation, interest on operational capital and
repairs and maintenance charges.
3.5.2 Human labour

Family labour is imputed at the general wages prevailing for the permanent
labourers in the villages. The actual wage paid was considered in case of casual labour.
3.5.3 Planting material

The Planting material is charged at standard rates procured from private agencies
from Pune, Bangalore, Gujarat, etc. The purchased planting material is charged at the
rates actually paid.
3.5.4 Manures and fertilizers
Farm produced manures are charged at the prevailing local rates. Chemical
fertilizers and other manures purchased are charged at the rates actually paid.
3.5.5 Plant protection chemicals

The actual prices paid for the plant protection chemicals by the growers are
considered.
3.5.6 Interest on working capital

The interest on working capital is charged at the rate of 12 per cent for the crop
period.
3.5.7 Rental value of owned land

The prevailing land rents for agricultural production were imputed for the sample,
since all land holdings were observed to be owner operated.
3.5.8 Commission agent – cum – wholesaler
When the commission agent performs the duties of wholesaler in buying and
selling of the commodities in bulk at wholesale market, he is called commission agent-
cum-wholesaler.
3.5.9 Retailer
The retailer is a person who purchases produce directly from producers or village
merchants in the retail market or purchases the produce through commission agent-cum-
wholesaler in the wholesale market and sells them to consumer in the retail market.
3.5.10 Depreciation
The depreciation was worked out for the items like farm machinery and
implements, farm buildings and wells. Depreciation was calculated by using straight
line method. The average life of the asset as indicated by each farmer was used in the
computation of the depreciation. The average value of the asset after its useful life as
estimated by respondents was considered for calculation of junk value. The depreciation
cost of equipment was apportioned to the crop based on its percentage use.
3.5.11 Interest on fixed capital
Interest on fixed capital excluding land is charged at the rate of 10 per cent, as the
fixed deposits in commercial banks would fetch this rate of interest. The items
considered under fixed capital were polyhouse, implements and machinery. Interest was
considered on the average value of these assets over its life time i.e cost and salvage
value are divided by two,as the assets decreases its value over time. No interest was
charged on the land value since the rental value of owned land was considered.
3.5.12 Gross returns
These are the total receipts obtained by selling total produce.
3.5.13 Net returns
These are the profits left after deducting the total cost of production from the gross
returns.
3.4 AGRO ECONOMIC FEATURE OF STUDY AREA
3.4.1 Location
District – Ranga Reddy
District Rangareddy District was formed on 15th August, 1978 by carving out
some portion of Hyderabad urban Taluk and& the merger of the entire rural and urban
areas of the remaining Taluks of erstwhile Hyderabad district.
The district is located in the central part of the deccan plateau and lies between
160 30’ and 180 20’ of North Latitude and 77030’ and 79030’ of East Longitudes. The
district is bounded on the North by Medak District, East by Nalgonda District, South by
Mahaboobnagar District, West by Gulbarga District & North West of Bidar District of
Karnataka State. It covers an area of 7493 Sq. Kms.
3.4.5 Soils
Red soils predominate in the District followed by black soils. More than 50 per
cent per cent of the villages have red-chalka soils as the predominate soils and dubba
soils are found besides red chalka soils.
Figure 3.1. Map of Ranga Reddy district
3.4.6 Climate
The climate of the district is characterized by hot summer and is generally dry
except during the south west monsoon season. The year may be divided into four
seasons. March to May is the summer season, June to September constitutes the South
West monsoon season, October to December forms the North East monsoon season and
January to February is the winter season. The maximum and minimum temperatures
recorded so far 44.40 oC (111.90F) and 28.60 oC (83.80F).
Storms and depressions which originate in the Bay of Bengal during September
and the post-monsoon months move in Westernly and North Westernly direction across
the peninsula. Some of these depressions effect the weather over the District causing
widespread to heavy rains and gustly winds. Thunder storms occur during summer
season and towards the end of the South West monsoon and early part of the post-
monsoon seasons.
3.4.7 Rainfall
The district has a normal rainfall of 781.2 mm,the bulk of which is received
through the South West Monsoon during the period from June to September. The actual
rainfall received during the year 2010-11 is 1055.5 mm.
3.4.8 Population
Table 3.1 Demographic details of Rangareddy district
S. No. Particulars Number
1 Total Population 5,296,741
2 Males 2,701,008
3 Females 2,595,733
4 Rural Population 1,577,569
5 Urban Population 3,719,172
6 Sex Ratio 961
7 Population Density (Persons /Sq. Km.) 707
8 Decade Growth Rate of Population 40.09 per cent

(2001-2011)
(Source: www.census2011.co.in/census/district/123-rangareddy.html)
3.4.9 Land Utilization
Table 3.2 Land utilization pattern of the district Ranga Reddy (2011-12)
S.No. Particulars Area (in ha.)

1. Total geographical area 749300
2 Forest 73075
3 Barren & uncultivable land 27084
4 Other land 106512
5 Land put to non-agricultural uses 106512
6 Cultivable waste 18910
7 Permanent pastures and other grazing lands 31722
8 Land under miscellaneous tree crops & 6176
groves not included in net area sown
9 Other Fallow lands 101723
10 Current fallows 147960
11 Net area sown 236138
12 Total cropped area 277268
13 Area sown more than once 41130
(Source: District Statistics Ranga Reddy – 2011)
3.4.9 Cropping Pattern

The variation in the rainfall, source of irrigation and fertility of the soils is the
main cause for the difference in the cropping patterns in the District. The principal crops
of the district are paddy, jowar, maize, cotton, castor, pulses and vegetables
3.4.10 Irrigation
Gross irrigated area in 2009-10 is 78782 hectares which constituted 34.3 per cent
of the gross cropped area. Though, two good rivers traverse the district there are no
irrigation projects. River Musi that rounds through the district is untapped for irrigation
until it feeds the Himayatsagar and Osmansagar tanks mainly for drinking water
purpose. However, the waters of Kagna have been utilised by a medium project known
as Kotpally project which has an ayacut of 3,723 ha . In Vikarabad, Marpally and
Dharur Mandals, 455 ha has been irrigated during the year 2009-10. The Navandgi
irrigation scheme is also on the river Kanga (Tandur area). Inderched and Gangavarm
lift irrigation schemes also irrigate some area in this part. Through there are other
medium projects like Juntupally (Tandur area) Kotpally (Marpally, Vikarabad and
Tandur) which has an ayacut of 843 hectares and Laknapur (Pargi and Dharur mandals)
which has an ayacut of 1071 hectares, irrigate only a limited area and as such, wells
form the principal source of irrigation in the district. An estimated number of (40,847)
wells and tube wells with pump sets exist at present in the district with scope for many
more. Out of the 4.87 lakh hectares of available cultivable land only 0.56 lakh hectares
of land was cultivated under irrigation.
Table 3.3 Source wise irrigated area of Ranga Reddy district during 2010-11
per cent of
Source of Irrigation Area in ha. Total Irrigated
S. No.
Area
1. Canals 1334 1.26

2. Tanks 6088 5.76
3. Tube well 87863 83.09
4. Dug Well 8663 8.19
5. Lift irrigation 226 0.12
6. Other sources 1573 1.49
Total 105747 100
(Source: District Statistics Office, Ranga Reddy – 2011)

Chapter IV
RESULTS AND DISCUSSION

This chapter deals with the presentation and description of results with critical
discussion so as to arrive at meaningful conclusions, in accordance with the objectives
of the study. The discussion throws light on the possible cause for the results obtained.
For easy understanding and convenience, the results and findings of the study are
discussed under the following subheads.
4.1. Growth trend of polyhouse based farming in Andhra Pradesh.

4.2 Financial feasibility of gerbera cultivation under polyhouse conditions in the study
area.
4.3. Marketing channels and price spread in gerbera.
4.4. Production and marketing constraints in polyhouse based gerbera cultivation.
4.1 GROWTH TREND OF POLYHOUSE BASED FARMING IN

TELANGANA AND ANDHRA PRADESH
Table 4.1. Trends in area of polyhouse based farming in Telangana and Andhra
Pradesh.
S. No. Year Total Area Per cent Change over
(Acres) previous year
1 2007-08 0.14
2 2008-09 1.14 714.3
3 2009-10 2.77 142.9
4 2010-11 6.37 129.9
5 2011-12 25.07 293.6
6 2012-13 42.48 69.44
7 2013-14 41.93 -1.29
8 Per cent change in 29850
2013-14 over 2007-
08
(Source: State Horticulture Mission, Government of Andhra Pradesh of 2013-14)
In this section an attempt has been made to analyze the per cent change in area
over the previous years. The data pertaining to it was collected from the secondary
source for a period of seven years (2007-08 to 2013-2014).
The area under polyhouse based farming in Andhra Pradesh and Telangana from
2007-08 to 2013-2014 has been presented in the Table 4.1. The area under polyhouse in
2007-08 is seen as 0.14 acres. In 2008-09 the area increased to 1.14 acres i.e. 714.3 per
cent increase over the previous year and it further increased to 2.77 acres (142.9 per
cent) in the subsequent year. Similarly, in the year 2010-11, the area increased to 6.37
acres (129.9 per cent) and again it further increased to 25.07 acres (293.6 per cent
increase) in the year 2011-12, 42.48 acres (69.44 per cent) in the year 2012-13 whereas
in 2013-14 the area decreased to 41.93 acres i.e., -1.29 per cent over the previous year
which may be due to high initial investment, low remunerative price, high pest and
disease attack etc. If we analyse the change in year 2013-2014 over the year 2007-08, it
showed a positive trend.
Table 4.2. Trends in area of polyhouse based farming in Ranga Reddy district of
Telangana State
S. No. Year Total Polyhouse Per cent Change over
(Acres) previous year
1 2008-09 0.64
2 2009-10 0.63 -1.56
3 2010-11 1.53 142.8
4 2011-12 8.08 428.1
5 2012-13 12.42 54.05
6 2013-14 15.17 22.14
7 Per cent change in 2270.3
2013-14 over 2008-09
(Source: State Horticulture Mission, Government of Andhra Pradesh of 2013-14)
In this section an attempt has been made to analyze the per cent change in area
under polyhouse in Ranga Reddy district of Telangana State and the data pertaining to it
was accessed from the secondary source for a period of six years (2008-09 to 2013-
2014).
The area under polyhouse based farming in Ranga Reddy district of Telangana
state from 2008-09 to 2013-2014 has been presented in the Table 4.2. The area under
polyhouse in 2008-09 is seen as 0.64 acres. In 2009-10 the area decreased to 0.63 acres
i.e. -1.56 per cent decrease over the previous year and it further increased to 1.53 acres
(142.8 per cent) in the subsequent year. Similarly, in the year 2011-12, the area
increased to 8.08 acres (428.1 per cent) and again it further increased to 12.42 acres
(54.05 per cent increase) in the year 2012-13 where as in the year 2013-14 the area
increased to 15.17 acres i.e. 22.14 per cent over the previous year which may be due to
better returns over the traditional open cultivation.
If we analyse, the results revealed that there is a huge increment of 2270.3 per
cent change in year 2013-2014 over the year 2008-09.The drastic increase in the area
may be due to schemes of State Horticulture Mission and the growth rate of area is
significant. It revealed positive trend.
During 2008-09 ,National Hortculture Mission(NHM) provided financial

assistance of 50 per cent of the cost of the poly house subject to a max. of Rs. 325/-
sq.m for small and marginal farmers and Rs. 215/- sq.m for other farmers limited to
1000 sq.m per beneficiary (i.e maximum of Rs.3.25 lakhs and 2.15 lakhs respectively ).
Subsequently from 2010 -2012 NHM provided subsidy of 50 percent of the

total cost of the poly house subject to a maximum of Rs.467/- sq.m limited to 1000 sq.m
per beneficiary i.e maximum of Rs.4.67 lakhs.
Further during 2012-13 NHM gave assistance of 50 percent of the total cost
subject to a maximum of Rs.467/- sq.m limited to 4000 sq.m per beneficiary i.e
maximum of Rs. 18.68 lakhs and also 50 percent of the total cost of planting material
and inputs subject to a maximum of Rs.250/- sq.m limited to 4000 sq.m per
beneficiary(i.e Rs 10 lakhs)
But during 2013-14 National Horticulture Mission provided financial assistance

of 50 percent of the total cost of the poly house subject to a maximum of Rs.467/-
sq.m limited to 2000 sq.m per beneficiary. It also provided subsidy of 50 per cent on
the total cost of the planting material and inputs subject to a maximum of Rs.250/-
sq.m limited to 2000 sq.m per beneficiary with a condition that if required remaining
2000 sq mts may be achieved after successful completion of the 2000 sq. mt unit
including plant material.
4.2 Financial feasibility of gerbera cultivation under polyhouse conditions in study

area
4.2.1 Socio-economic profile of the sample farmers

The socio- economic characteristics of the respondents include educational
status, age group, size of the holdings and size of the family. This analysis was required
to have 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.
4.2.2 Age group of the respondents
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 4.5. It was found that 12 per cent of sample farmers were young
(<35years) in the selected area, whereas 80 per cent of the sample farmers were middle
aged (35-50 years) and remaining 8 per cent were seniors (>50 years).
Table 4.3: Age profile of sample farmers in selected districts
No. of Percentage
S.No Particulars
respondents (%)
1 Young (<35 years) 3 12
2 Middle aged (35-50 years) 20 80
3 Seniors (>50 years) 2 8
Total 25 100
(Source: Estimates from the survey data of the study, 2014)
4.2.3 Educational status of the respondents
The educational status of the farmer plays a vital role in the adoption of new
technology. In the present study, the sample farmers are categorized into five groups
with respect to literacy status, viz., illiterate, primary school, high school, inter and
degree level. Among the sample farmers, 1 were illiterate which constitute 4 per cent of
the total sample size, 8 per cent had primary school education and 64 per cent possessed
high school education. The proportion of farmers possessing inter level education was
somewhat high i.e. 20 per cent and farmers having college level education constituted 4
per cent of the total sample farmers.
Table 4.4: Literacy status of sample farmers in selected districts
S. No. of
Particulars Percentage (%)
No respondents
1 Illiterate 1 4
st th
2 Primary school (1 to 5 ) 2 8
th th
3 High school (6 to 10 ) 16 64
th th
4 Inter (11 to 12 ) 5 20
th
5 Degree (above 12 ) 1 4
Total 25 100.00
4.2.4 Family size of the respondents
Particulars regarding the family size are presented in the table 4.7. It is observed
that the majority of the respondents had a family size between 4 to 6 members (48 per
cent) and 40 per cent of them were having a family size between 6 & above members
and only 12 per cent of families had less than 4 members.
Table 4.5: Family size of respondents
S.
Family size Number of respondents Percentage (%)
No
1 Less than 4 3 12
2 4 to 6 12 48
3 6 & above 10 40
Total 25 100.00
4.2.5. Land holding particulars of the respondents
The total sample of 25 farmers and was categorized into 3 categories namely;
small (<2 ha), medium (2-5 ha) and large (>5 ha) in the proportionate manner. It can be
clearly observed from the table 4.8 that 64 per cent farmers had medium land holding
whereas 24 per cent had small land holding. Farmers having large land holding were 12
per cent of the total sample farmers.
Table 4.6: Land holdings of respondents
S.No Category Number of respondents Percentage (%)
1 Small 6 24
2 Medium 16 64
3 Large 3 12
Total 25 100.00
i) Establishment cost of gerbera under polyhouse
The establishment cost components of gerbera cultivation under polyhouse has
been presented in the Table 4.3.It has seen from the Table that the establishment cost of
gerbera under 1000 square metres greenhouse condition worked out to be Rs.9.80 lakh.
The highest proportion of this cost was incurred on polyhouse structure, which accounts
for 69.39 per cent (Rs. 6.80 lakh) of the total establishment cost. While the planting
materials constitute about 19.39 per cent (Rs. 1.9 lakh).Other costs like land and land
development constitutes 9.18 per cent and 2.04 per cent of the total establishment cost
respectively.
Table 4.7. Establishment cost of gerbera under polyhouse.
Amount (Rs. In Percentage of
S.No Particulars
lakhs) total cost
1 Land (0.1 ha) 0.2 2.04
2 Land development 0.9 9.18
3 Green house with drip and farm equipment 6.8 69.39
4 Planting Materials 1.9 19.39
Total 9.80 100
Cost of production of Gerbera under polyhouse

The details of costs incurred and returns realized on gerbera production under
1000 square meters polyhouse condition were analyzed and the results are presented in
Table 4.8 and Table 4.9 respectively. The total cost of production worked out at Rs 3.64
lakhs and can be categorized under two heads i.e., fixed costs and variable costs. The
fixed costs accounted for 20.88 percent of the total cost of cultivation which include
interest on fixed capital (12.09 percent) and depreciation on equipment (8.79 per cent).
The variable costs accounted for 79.12 per cent of the total cost and includes cultivation
and marketing expenses. Among the cultivation expenses, expenditure on pesticides and
fertilizers is 26.37 per cent. Expenses on labour, interest on working capital and
electricity charges accounted for 16.48, 8.24 and 2.20 per cent respectively of the total
cost. The marketing cost accounted for 25.82 per cent.
Table 4.8: Cost of production of gerbera under poly house

S.N Total cost(Rs in
o Particulars Lakhs) Per cent
A. Fixed cost
1 Depreciation on Machinery and equipment 0.32 8.79
Interest on fixed capital @ 10 per cent per
2 annum 0.44 12.09
3 Total fixed cost 0.76 20.88
B. Variable cost
1 Labour cost 0.6 16.48
2 Electricity charge 0.08 2.2
3 Fertilizer and pesticide 0.96 26.37
4 Marketing cost(package,packing,transport) 0.94 25.82
Interest on Working capital @ 12 per cent
5 annum 0.30 8.24
6 Total variable cost 2.88 79.12
Total Annual Cost(A+B) 3.64 100
iii) Yield and returns from gerbera under polyhouse
Table 4.9, throws light on the total yield and returns from gerbera 1000 for a
square meters polyhouse. The yield from 0.1 ha of gerbera under polyhouse cultivation
was about2.44 lakh stems per year. The average price realized per stem in the market
was Rs.2.5. Therefore, as revealed from Table 4.9 a net return of Rs 2.46 lakh per 0.1
ha was realized from these farms after meeting both the variable and fixed costs.
Table 4.9: Yield and income details from gerbera under polyhouse
S.No Particulars
1 Total yield/year (No’s) 2.44
2 Sale price per flower (Rs.) 2.5
3 Gross returns (Rs. in lakhs) 6.10
4 Cost of cultivation (Rs. in lakhs) 3.64
5 Net returns (Rs. in lakhs) 2.46
4.6.2.4 Financial feasibility of gerbera cultivation under polyhouse
Assumptions were made for carrying out business analysis of polyhouse unit.
The life of greenhouse structure is 15 years, 5 years for its polycover and 3 years for the
planting material. The techniques of project evaluation such as Net Present Value,
Benefit-Cost Ratio and Internal Rate of Return were employed to assess the financial
feasibility of investment on gerbera cultivation. In analyzing the investment feasibility,
the establishment costs, working costs and gross returns from the gerbera polyhouse
units were discounted at 14 percent discount rate, since it represents the opportunity cost
of the capital.
The Net Present Value (NPV) criterion helps to evaluate the benefits accrued and
costs incurred during the project life. The advantage of NPV is that it gives an idea
about surplus and varies with level of investment and discount rates. In this study, NPV
was calculated to indicate the money that would be generated by a project at a given
discount rate.The cost of polycover (Rs.0.5 lakh) and cost of the plant material (Rs. 1.90
lakh) was considered after every 5 and 3 years respectively in the calculations . It is an
absolute measure by discounting the net cash inflows. The NPV of 0.1 Ha poly house at
14 per cent discount rate was Rs 4.87 lakh (The formal selection criterion of NPV is to
accept all the projects with positive values. Applying this principle, the Net Present
Value of gerbera farming in polyhouse units clearly indicated financial feasibility of
investment. (Table 4.10)
Benefit-Cost (BC) Ratio is another tool for appraising the worthiness of

investment and it helps to ascertain the profitability of an enterprise. In production of
gerbera , initial investment was made to establish the poly house units and variable
costs be incurred during subsequent years . The decision in BC Ratio frame work is to
select the projects where the ratio is more than one. The BC ratio of the processing unit
confined 1.1 at 14 per cent discount rate, which is more than unity indicating the
worthiness of investment on these units. (Table 4.10)
Internal Rate of Return (IRR) is suggested to be very suitable measure for

evaluating the profitability of investment on different projects. The IRR is the rate of
discount at which the net present worth of project is zero or the discounted costs are
equal to the discounted returns. It is superior over the other measures since it takes into
consideration the reinvestment opportunities of enterprises during the life span. The
formal selection criterion of IRR is to accept the projects with IRR more than the
opportunity cost of capital. The Internal Rate of Return being 28.89 per cent for gerbera
units was higher than the interest rate at which the processors could borrow from lending
agencies and invest on these units. In other words, it is the average earning power of
money invested on gerbera polyhouse units during its life span. Since IRR was more
than the opportunity cost of capital, it clearly indicated that investment on gerbera
cultivation under polyhouse units is financially feasible. (Table 4.10)
Table 4.10 Estimates of investment analysis parameters in gerbera polyhouse unit
Sl. No. Particulars Unit Value
1 Net Present Value (NPV) Lakh Rs 4.87
2 Benefit Cost Ratio (BCR) - 1.1
3 Internal Rate of Return (IRR) Per cent 28.89
4.5 Different marketing channels and price spread in gerbera

The selection of marketing channel becomes crucial for the farmers, since the real
benefit accrued to them mainly depends upon the choice of agency and channel for
disposal of their produce. The channel selected by them must account for minimum
marketing cost and ensure higher share in consumer’s rupee. The selection of marketing
channel depends upon the quantity of flowers available with farmer, rise in the market
demand, price of the flower, supply of flower in the market etc.
4.5.1 Marketing channels and price spread in gerbera
The marketing channel is the chain of intermediaries through whom the produce
moves from producers to consumers. Price spread refers to the difference between
consumer price and net price received by the producer. The difference consists of the
charges borne by the producer and other market functionaries against marketing margin
of intermediaries involved in the system. In the study area, mainly two important
channels were identified in marketing of gerbera cut flowers in different markets by
asking respondents in the study area and price spread has been calculated for these
channels.
Channel-I : Producer - Commission agent-Consumer
Channel-II : Producer - Commission agent-Retailer-Consumer

The study also revealed that nearly 75 per cent of the gerbera growers prefer
channel I and this channel is more popular and convenient to the farmers. Only 25per
cent of the selected producers prefer to sell through channel II.
Price spread in marketing channel I

Price spread for gerbera in channel I is given in Table 4.11. The analysis indicates
that the net share of the producer in the consumer’s rupee was 68.13 per cent. The cost
incurred by producer on packing, package bagging, transport and other expenses etc.
was Rs. 157.00 per box which is 19.63 per cent of consumer’s rupee. Among all the
costs, package cost was high which shared 9.38 per cent of total cost paid by the
consumer. Net price received by the farmer was Rs. 545
Table 4.11. Price spread in gerbera marketing through channel-I (Producer-
Commission agent-Consumer)
per cent of
S.No. Particulars Rs. per box consumer
price
1 Net price received by producer 545 68.13

(Producer’s share in the consumer’s rupee)
2 Expenses incurred by producer on 157 19.63
marketing
2.a. Package cost 75 9.38
2.b. Packing cost 50 6.25
2.c. Transport cost 30 3.75
Other expenses 2.0 0.25
2. d.
3 Producer’s selling/commission agents 702 87.75
purchase price
4 Cost incurred by commission agent
4.a Labour charges 6 0.75
4.b Market fee 8 1.0
4.c Shop establishment charges 2 0.25
4.d Damage & miscellaneous 2 0.25
5 Commission agent’s margin 80 10.00
6 Consumer price 800 100.00
7 Price spread 255
(Source: Estimates from the survey data of the study.,2014)
Note: Each box contains 40 bunches of 10 flowers each
The producer sold directly to the commission agent at Rs.702 per box. The total
costs incurred by the producers was Rs. 157 per box, which accounted for 19.63 per cent
of consumer’s price and it was the highest among all the marketing margins incurred in
between producer and consumer.The net price received by the farmer (producer’s share
in the consumer’s rupee) was Rs. 545 per box, which constituted 68.13 per cent of the
consumer’s price. The cost incurred by commission agent were the market fee @ 1per
cent, labour cost, damage and miscellaneous charges etc. which was Rs.18 per box i.e.
2.25 per cent of consumer’s rupee. Thus, the margin retained by the commission agent
amounted to Rs.80 per box which is 10 per cent of the consumer’s rupee. Among the
other costs, market fee was high which shared 1 per cent of the consumer’s rupee. The
price spread which shows the difference between price paid by the consumer and price
received by the producer is Rs. 255 per box.
Price spread in marketing channel – II

Price spread for gerbera in channel-II is given in Table 4.12. This Table indicates
that the net share of the producer in the consumer’s rupee was 27.25 per cent. Producer
sells to the commission agent at Rs.702 per box. The cost incurred by producer on
packaging, packing cost, transportation cost, spoilage and other miscellaneous charges
was Rs.157 per box which is 7.85 per cent of consumer’s rupee. Thus, net price received
by the producer was Rs.545/-.
Here, total costs incurred by the commission agent was only Rs. 72 and margin
was Rs. 226, which accounted for 3.6 per cent 11.3 per cent of the consumer’s price
respectively. Further it can be observed from the Table that commission agent’s selling
price of retailer’s purchase price was Rs. 1000 per box which was 50 per cent of the
consumer’s price. Total costs incurred by the retailer was Rs. 72 and margin was Rs. 928
which account for 3.6 per cent and 46.4 per cent of the consumer’s price respectively.
Whereas, retailer’s purchase price was Rs. 2000 per box and the price spread was Rs.
1455.
Table 4.12. Price spread in gerbera marketing through channel-II (Producer-
Commission Agent – Retailer - Consumer)
per cent of
S.No. Particulars Rs per. Box
consumer price
1 Net price received by producer 545 27.25

2 Expenses incurred by producer 157 7.85
on marketing
2.a Package cost 75 3.75
2.b Packing cost 50 2.5
2.c Transport cost 30 1.5
2.d Other expenses 2.0 0.1
3 Producer’s selling/commission 702 35.1
agents purchase price
4 Cost incurred by commission
agent
4.b Transport 2 0.1
4.c Market fee 8 0.4
4.d Shop establishment charges 2 0.1
4.e Damage & miscellaneous 10 0.5
5 Commission agent’s margin 226 11.3
6 Commission agent sale or 1000 50
retailer purchase price
7 Costs incurred by the retailer
7.b Transport 10 0.5
7.c Damage 10 0.5
7.d Other Expenses and 2 0.1
miscellaneous
8 Retailer’s margin 928 46.4
9 Retailer sale or consumer price 2000 100
10 Price spread 1455
(Source: Estimates from the survey data of the study.,2014)
Note: Each box contains 40 bunches of 10 flowers each
Thus the above analysis clearly shows that longer the channel and more the
number of intermediaries in the system, larger is the price spread and the share of
producer in consumer rupee declines.
4.7 Constraints encountered in production and marketing of gerbera
In this section an attempt has been made to analyze the problems faced by
producers, wholesalers and retailers in the production and marketing of gerbera in the
study area. The producers, commission agents and retailers were asked to indicate the
problems faced by them and the results are presented below
4.7.1 Constraints faced by the producers in the production of gerbera

It is observed from the Table 4.13 that the major problems faced by the producers
in the production and marketing of gerbera are ; high initial investment, availability of
credit , high cost of planting material, pesticides , fertilizers, commercial electricity
connection, high cost of inputs etc.
Table 4.13 Constraints faced by gerbera growers
No. of farmers Percentage per

S. No. Particulars
(n=25) cent
PRODUCTION CONSTRAINTS
1 Huge initial investment 23 92
2 Availability of credit 22 88
3 High cost of planting material 21 84
4 High cost of pesticides and fertilizers 20 80
5 Pests and disease attack 19 76
6 High labour charges 18 72
7 Commercial electricity connection 18 72
8 Availability of water 18 72
9 Availability of skilful labour 17 68
10 Change in climate 15 60
11 Perishability of produce 10 40
MARKETING CONSTRAINTS
1. Lack of market information and new 21 84
markets
2 Fluctuations in price / seasonal 21 84
demand
3 Low price for the flowers 20 80
4 High package costs 19 76
5 Exploitation by middle men 17 68
6 High transportation costs 16 64
(Source: Estimates from the survey data of the study.2014)
High initial investment was the major problem expressed by 23 farmers that
constituted about 92 percent of the total number of farmers followed by availability of
credit which was expressed as a major problem by 22 farmers (88 per cent). High cost of
planting material was expressed as a major problem by 21 farmers (84 per cent) and 20
farmers (80 per cent) reported High cost of pesticides and fertilizers as a major
bottleneck. Pests and disease attack is expressed as a major problem by 19 farmers (76
per cent). High labour charges, availability of water and commercial electricity
connection was highlighted as major problem by 18 farmers (72 per cent) in all the three
cases while non availability of skillful labour, change in climate and perishability of
produce was expressed as major problem by 17 farmers (68 per cent), 15 farmers (60 per
cent), and 10 farmers (40 per cent).
The main constraints regarding marketing of gerbera comprised of lack of market

information and new markets and fluctuations of price due to seasonal demand as
expressed by 21 farmers (84 per cent) , low price for the flower. high package cost and
exploitation by middle men and their proportion was 80 per cent, 76 per cent, and 68 per
cent respectively. High transportation costs was expressed as major problem by 16
farmers (64 per cent).
4.7.2 Constraints faced by commission agents-cum-wholesalers

It is observed from the Table 4.14 that the major problems faced by the
commission agents-cum-wholesalers in the marketing of gerbera were high price
fluctuation, lack of storage facilities, high market fee , lack of proper transportation
facility, delay in payments etc. High price fluctuation was the major problem expressed
by 80 per cent of the commission agents. Lack of storage facility and lack of proper
transportation facility, were expressed as a major problem by 70 per cent commission
agents. Delay in payments was reported by 50 per cent agents, high market fee were
highlighted by 40 per cent of the agents.
Table 4.14 Constraints faced by commission agents in the marketing of Gerbera
(n=10)
No. of Percentage (
S. No. Particulars
respondents per cent)
1 High price fluctuation 8 80
2 Lack of storage facility 7 70
3 Lack of proper transportation facility 7 70
4 Delay in payments 5 50
5 High market fee 4 40
(Source: Estimates from the survey data of the study.2014)
4.7.3 Constraints faced by the retailers

The major problems faced by the retailers were lack of regular consumers, price
fluctuations as expressed by more than 80 per cent of the sample retailers. Nearly 60 per
cent retailers surveyed reported about wastage of flowers, lack of awareness among
consumers as the problem. While 40 per cent complained of quick deterioration in
flower quality as the important constraint.
Table 4.20. Constraints faced by retailers (n=5)
S. No. Particulars No. of retailers Percentage
1 Lack of regular consumers 4 80
2 Price fluctuations 4 80
3 Wastage of flowers 3 60
4 Lack of awareness among consumers 3 60
5 Quick deterioration in quality 2 40
Source: Estimates from the survey data of the study.2014)
Chapter V
SUMMARY AND CONCLUSION

Floriculture is a fast emerging and highly competitive industry. The science and
art of commercial floriculture has been recognized as an economic activity with the
potential for generating employment and earning valuable foreign exchange. In several
countries of the world, floricultural products are amongst the main export items of
agricultural origin. For any country to diversify its agricultural base geared towards
export, the ornamental crop industry presents one of the most interesting and viable
options. The aesthetic value of flowers and ornamental plants, their use in social events,
overall satisfaction in working with them and high income generating power are
attracting modern entrepreneurs to invest money in the floriculture industry. The
demand for flowers and ornamental plants for different needs like religious, official
ceremonies, parties, house decoration, weddings, funerals etc. is on the rise. This
demand for fresh flowers and plants is increasing worldwide over the coming years. A
new generation of growers are coming forward to employ modern technology for
maximising production and offer quality produce for consumer acceptability, thus
fetching a better price. It has emerged as a lucrative profession with high potential for
returns compared to other agri-horticultural crops. Floriculture comprises both
traditional and modern flower crops. The traditional flowers are grown in open air
conditions viz. Chrysanthemum, jasmine, crossandra, rose, tuberose, aster, marigold etc.
The modern flower crops are grown in polyhouses viz. roses, gerbera, carnation etc.
At global level, floral business is around US $ 176 billion which is expanding

with an annual growth rate of 10.3 per cent, is expected to reach US $250 billion by
2025. Flowers and foliage accounted for 52.45 per cent and live plants, bulbs and
cuttings accounted for 47.55 per cent of total floriculture products at global trade.
Germany is a leading country in floriculture trade with 17.04 per cent share followed by
USA (10.57 per cent) and Netherlands (10 per cent) while India falls on 52 rank (0.08
per cent). In recent years, a paradigm change in the flora industry has been observed and
has lead to the development of new productions centres in Asia and Africa which were
earlier concentrated in USA and Europe. In Asia, India, China and Thailand are moving
progressively in this direction and emerging as leading countries.
As per the estimates of National Horticultural Board in 2013, in India, flowers are
grown in around 233,000 ha land, with the production of loose flowers around 1729,000
MT and that of cut flowers 76732 lakh numbers (2012-13)-. The area under flower
production has increased by 40 per cent, loose flower production by 75 per cent while
cut flower production by 60 per cent in last five years. Tamil Nadu, Karnataka and
Andhra Pradesh are the leading loose flower producing states. West Bengal, Karnataka,
Maharashtra, Andhra Pradesh and Orissa are the leading cut flower producing states.
India is the fifth largest exporter of dried flowers, and second largest exporter of dried
foliage in the world accounting for around 7 per cent of world exports in dry flowers and
foliage. The main export markets for India’s dry flower industry are USA, Netherlands,
UK and Germany. Major importers of flora products from India are USA, Netherlands,
Germany, United Kingdom, Japan, Canada and Japan. Thus, there exists the great
potential and vast opportunities for export of cut flowers.
Andhra Pradesh contributes about 9 per cent to the cut flower production and
12.98 per cent to the loose flower production in India. In 2010-11, the area under flower
production was 21.8 thousand hectares, which increased to 64.2 thousand hectares in
2011-12 which again decreased to 35 thousand hectares in 2012-13 contributing to
loose flower production of 133.7 thousand MT, 389 thousand MT and 224.4 thousand
MT respectively and cut flower production of 6202 lakhs, 7099.4 lakhs and 6909 lakhs
respectively.
In recent years, due to adoption of polyhouse technology, the progressive
farmers in Rangareddy district have also opted for cut flower production on small scale.
The study was under taken with the following specific objectives:
 To study the growth trend of polyhouse based farming in Andhra Pradesh
 To analyse the financial feasibility of gerbera cultivation under polyhouse

 To identify the different marketing channels and price spread in gerbera.
 To identify the production and marketing constraints in polyhouse based gerbera

cultivation.
To fulfil the objectives of the study, the data was collected through personal
interviews from the selected gerbera growers, commission agents cum wholesaler and
retailers with the help of pretested scheduled designed for the purpose. Besides data on
quantity purchased, price paid/received, costs incurred were collected from the market
functionaries. Data on establishment of polyhouse, production and marketing was
collected from farmers. 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
The growth trend of polyhouse based farming in Andhra Pradesh.
The per cent change in area under polyhouse based farming in Telangana and
Andhra Pradesh during the period of 2013-2014 over 2007-2008 was 29850 per cent
which is mainly due to the huge financial assistance from State Horticulture Mission and
the increase in demand of flowers in the State
The per cent change in area under polyhouse based farming in Ranga Reddy
district during the period of 2013-2014 over 2007-2008 was 2270.3 per cent which is
mainly due to the huge financial assistance from State Horticulture Mission and the
increase in demand of flowers in the State
Socio-economic profile
It is observed that only 4 per cent of the total respondents were illiterate. About 80
per cent of the farmers were in the age group of 35 and 50. The average family size of
the farmers was six. About 64 per cent of farmers were having medium size land
holdings.
Financial feasibility of gerbera cultivation under polyhouse conditions in study

area
The gerbera cultivation under polyhouse in the study area was due to nearness to
Hyderabad market and the International airport. Labour, pesticide and fertilizer are the
major costs in the cultivation. Total cost of cultivation of gerbera was Rs. 3.64 per 0.1
ha and the net returns are 2.46 lakhs .The Benefit Cost Ratio for gerbera cultivation is
1.1.
Marketing channels
Two important channels of gerbera marketing were identified and are here under
Channel-I Producer- Commission agent-cum-wholesaler-consumer
Channel-II Producer- Commission agent--cum-wholesaler-Retailer-consumer
Price spread of Gerbera
Channel-I: Producer- Commission agent--cum-wholesaler-consumer

In channel I, the net share of the producer in the consumer’s rupee was 68.13 per
cent. The cost incurred by producer was Rs.157 per box which is 19.63 per cent of
consumer’s rupee. The producer sold directly to the commission agent-cum-wholesaler
at Rs. 702 per box. The cost incurred by commission agent-cum-wholesaler was Rs.18
per box which is 2.25 per cent of consumer’s rupee. The margin retained by the
commission agent amounted to Rs.80 per box which is 10 per cent of consumer’s rupee.
The price spread which shows the difference between price paid by the consumer and
price received by the producer is Rs. 255 per box.
Channel-II Producer- Commission agent--cum-wholesaler-Retailer-consumer

In channel-II, the net share of the producer in the consumer’s rupee was 27.25 per
cent. Producer sold to the commission-agent-cum-wholesaler at Rs. 702 per box. The
cost incurred by producer was Rs. 157 per box which is 7.85 per cent of consumer’s
rupee. Thus, net price received by the producer was Rs. 545. The commission-agent-
cum-wholesaler sells to the retailer at Rs. 1000 per box. The cost incurred by
commission-agent-cum-wholesaler was Rs. 72 per box i.e. 3.6 per cent of consumer’s
rupee. Thus, the margin retained by the commission-agent-cum-wholesaler amounted to
Rs. 226 per box which is 11.03 per cent of consumer’s rupee. The retailer sold to
consumer at Rs. 2000 per box and Cost incurred by the Rs. 72 per box which is 3.6 per
cent of the consumer and margin in Rs. 928 per box and it accounts for 46.4 per cent of
the consumer’s price. The price spread which shows the difference between price paid
by the consumer and price received by the producer was Rs. 1425 per box. Thus the
above analysis clearly shows that longer the channel and more the number of
intermediaries in the system, bigger the price spread and the share of producer in
consumer rupee declines.
Production and marketing constraints

The constraints encountered by the farmers and intermediaries were analyzed in
the study. The major problem faced by the gerbera farmers was high initial investment,
availability of credit, high cost of planting material, high labour charges, high cost of
pesticides and fertilizers, pests and disease attack, availability of water, and ,
commercial electricity connection. The other problems faced by farmers were
availability of skilful labour, change in climate, and perishability of produce.
The marketing constants faced by the gerbera growers were lack of market
information, fluctuation in price / seasonal demand, low price for the flowers, high
package costs, exploitation by middle men and high transportation costs.
Lack of market information and new market ,high price fluctuation and lack of
storage facility was the major problem expressed by commission-agent-cum-wholesaler
followed by lack of proper transportation facilities and delay in payments. Other
problems expressed by intermediaries in marketing of gerbera is high market fees.
The major problems faced by the retailers were lack of regular customers, price
fluctuations, wastage of flowers, lack of awareness and quick deterioration of quality of
the flower.
CONCLUSIONS
It may be concluded from the study that there is an immense scope for
expansion of area and production of gerbera in Ranga Reddy as well as in other suitable
parts of Andhra Pradesh and Telangana. The cost of cultivation for gerbera is somewhat
higher but due to good demand in market, the returns are also very good. Producers can
get a net profit of Rs.2.46 lakhs per 1000 square meters by gerbera cultivation in case of
good price in the market.
There is a huge demand for gerbera in the international market, showing the
great scope in the future. The USA is the largest importer followed by Netherlands and
Germany. The gerbera cultivation is a profitable business for the investors and it can be
seen by good Benefit Cost Ratio (1.1). The investment is also financially feasible as
represented by NPV and IRR of the investment in the findings of the study.
The system of marketing reveals that the gerbera growers considered quick,
daily and easy payment as the main reason to sell flowers through commission agent –
cum- wholesaler (Channel – I) and also that farmer was getting good price and can
create demand in the market. Out of the two channels of gerbera marketing, first channel
i.e. producer-commission agent-cum-wholesaler-consumer was the more efficient from
producer as well as consumer point of view as the producer could get as high as 68.13
per cent of the consumers rupee.
The major problem identified in production of gerbera was high initial
investment and major problem faced by intermediaries was high price fluctuation and
lack of storage facilities in the market premises. The major problem of the retailer in the
market was lack of regular customers.
SUGGESTIONS AND POLICY IMPLICATIONS
1. There may be encouragement and good support from research centres and the
government bodies regarding development of new varieties suitable for exports and to
explore new market avenues respectively. The centre/state can promote commercial
floriculture activity with adequate financial subsidies and extension support.
2. The farmers take up indiscriminate sprays as per the schedule given by the consultant
not only leading to high cost of production but also pollute the soil and environ .The
farmers may be encouraged to take up IPM and INM practices
3. The price of gerbera in the market is mostly dependent on season for marriage
functions. In the off season, the farmers should follow leaf pruning, pinching, and
flower regulation so that time of flowering, duration of flush and subsequent flower
production may be controlled by the growers.
4. The farmers are entirely dependent on the consultant for the technical know-how
.Hence, farmers need to be trained in the scientific production practices and post harvest
management of gerbera.
5. With regards to the commercial electricity connection, the State electricity board and
Central government may pay attention to resolve this issue or may provide subsidy as in
the case of tissue culture labs. Solar power may also be encouraged to make the units
independent and self sustaining.
6. Most of the times, producers are not aware of the prices existing in the market and
dispose off the produce to commission agent –cum-wholesaler. Adequate and timely
information about the market arrivals, existing prices etc will help in forecasting the
demand and plan accordingly.
7. The farmers may also be provided with space/stalls in the market to sell their produce
to the consumer/ retailer directly.
8. 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.
9. The role of commission agents should be minimised in the marketing of gerbera. In

channel II, commission agents’share in consumer rupee is more. Therefore, it is
suggested that all the farmers can form a producers association and collectively market
the produce more on the co-operative lines so that price spread can be minimized. With
the help of an appropriate mechanism the number of intermediaries can be reduced and
the commission paid to the mediators can be avoided.
10. There is an immense potential for export of gerbera cut flowers. Therefore, lot of
focus may be paid towards improving the quality of the produce in order to receive good
price and widen the market.
11. The Gudimalkapur market does not have cold storage facilities. If there is huge dip
in the price, farmers can store up to 10 days and can market them when there is
reasonable price . Therefore, cold storages should be constructed in order to strengthen
the storage facilities.
12. Farmer-consumer linkages should be enhanced through direct marketing

arrangements at the market yards. Contract farming model should also be popularized in
the major growing areas.
13. The organized wholesale market should have proper post harvest and marketing
infrastructure facilities like auction platform, pack house, cold storage, Market
information system etc.
14. Private sector should be encouraged to develop modern markets under public private
partnership mode.
15. The possibilities of alternative marketing system like contract farming, direct
marketing, group marketing etc. should be explored to bring economies of scale.
Steps initiated by the government through its various policies and development
plans
The Floriculture division of Acharya N.G.Ranga Agriculture University have

carried out research on nutrient sprays in carnation and gerbera to standardise and
recommend the nutrients and dosages as the farmers were dumping large amount of
fertilizers for plant growth,flower size,yield and quality of flowers.
Presently, during 2014-15 National Horticulture Mission provides financial

assistance of 50 per cent of the total cost of the poly house subject to a maximum of
Rs.530/- per sq.mt. (upto area of 500 sq.mt), Rs.467/- (more than 500 to 1008 sq.mt),
Rs.445/- per sq.mt. (more than 1008 to 2080 sq.mt) and Rs.422/- per sq.mt. (more than
2080 to 4000 sq.mt) limited to 4000 sq.m per beneficiary. It also provides subsidy of
50 per cent on the total cost of the planting material of gerbera and inputs subject to a
maximum of Rs. 426 /- sq.m limited to 4000 sq.m per beneficiary
National Horticulture Board provides credit linked back ended subsidy @ 20 per
cent of the project cost limited to Rs.25 lakh per project in general area and Rs.30 lakh
in North eastern region, hilly and scheduled areas.
APEDA provides assistance for purchase of specialised transport units for

horticulture and floriculture sectors, which is 40 per cent of the cost subject to a ceiling
of Rs. 7.5 lakh per beneficiary. Assistance to exporters for use of packaging material as
per standards and specifications developed or adopted by APEDA. APEDA also
providing assistance to registered exporters of fresh fruits & vegetables, flowers and
eggs @ 25 per cent of the total cost of packaging material (including inner packaging
materials viz. punnets, sleeves, rubber band etc), subject to a ceiling of Rs 5 lakh per
beneficiary per annum.
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QUESTIONNAIRE
<
Title of the Research Topic: BUSINESS ANALYSIS OF GERBERA
CULTIVATION UNDER POLYHOUSE- A CASE STUDY IN RANGA REDDY DISTRICT OF

ANDHRA PRADESH
I. GENERAL PROFILE :
1) Name of the owner:
2) Age:
3) Address/village/town:
4) Mandal:
5) District:
6) Education: a) illiterate b) primary c) middle school d) high school e)
matriculation
f) Intermediate g) degree and above
8) Family structure:
Family members Male Female

Adults
Children
7) Land holdings: a) small(<3 acres) b) medium (3-10 acres) c) large (>10 acres)
8) Primary occupation: Agriculture / Service / Business / Others
9) Secondary occupation: Agriculture / Service / Business / Others
II. CHARACTERSTICS OF THE FARM:

1. Name of the farm
2 Year of establishment:
1) Location: a) rural b) urban c) Semi urban
3) Type of ownership: a) proprietary b) partnership
4) Type of farming: a) owned b) contract
5) Type of Poly house: a) b)
6) Size of the Poly house: a) 500-1000 Sq.Mts b) 1000-4000 sq mts
c) above 4000 sq mts
7) Variety of Gerbera cultivated: a)
b)
c)
d)
8) Type of sowing: a) all in all out b) weekly c) fortnightly d) monthly
9) Investment of capital: a) < 5 lakhs b) 5-10 lakhs c) > 10 lakhs
10) Source of credit: a) Own funds b) Institutional c) Non - institutional
11) Nursery source:
12) Source of Seedlings: a) Private nurseries b) Horticultural department c)
Others
13) No of Stems per Plant:
14) Duration of the crop:
15) Spacing
III. COST AND RETURNS OF GERBERA CULTIVATION
1. Establishment cost of gerbera under polyhouse.
Amount (Rs. In
S.No Particulars
lakhs)
1 Land (0.1 ha)
2 Land development
3 Green house structures
4 Grading house/packaging unit
5 Sprayers
6 Drip Irrigation
7 Planting Materials
8 Total
2. Cost of production of gerbera under poly house
S.No Particulars Total cost(Rs in Lakhs)

A. Fixed cost
1 Depreciation on Machinery and equipment
2 Interest on fixed capital @ 10 per cent annum
3 Total fixed cost
B. Variable cost
1 Labour cost
2 Electricity charge
3 Fertilizer and pesticide
4 Marketing cost
5 Interest on Working capital @ 12 per cent annum
6 Total variable cost
Total Annual Cost(A+B)
3. Yield and returns from gerbera under polyhouse
S.No Particulars
1 Total yield/year (No’s)
2 Sale price per flower (Rs.)
3 Gross returns (Rs. in lakhs)
4 Cost of cultivation (Rs. in lakhs)
5 Net returns (Rs. in lakhs)
IV. MARKETING CHANNELS AND PRICE SPREAD
1. Price spread in gerbera marketing through channel-I (Producer-Commission

agent-Consumer)
S.No. Particulars Rs. per box
1 Net price received by producer (Producer’s share in the

consumer’s rupee)
2 Expenses incurred by producer on marketing
2.a. Package cost
2.b. Packing cost
2.c. Transport cost
2. d. Other expenses
3 Producer’s selling/commission agents purchase price
4.a Labour charges
4.b Market fee
4.c Shop establishment charges
4.d Damage & miscellaneous
5 Commission agent’s margin
6 Consumer price
7 Price spread
2. Price spread in gerbera marketing through channel-II (Producer- Commission
Agent – Retailer - Consumer)
S.No. Particulars Rs per. Box
1 Net price received by producer

2 Expenses incurred by producer on marketing
2.a Package cost
2.b Packing cost
2.c Transport cost
2.d Other expenses
3 Producer’s selling/commission agents
purchase price
4.a Labour charges
4.b Transport
4.c Market fee
4.d Shop establishment charges
4.e Damage & miscellaneous
5 Commission agent’s margin
6 Commission agent sale or retailer purchase
price
7 Costs incurred by the retailer
7.a Labour charges
7.b Transport
7.c Damage
7.d Other Expenses and miscellaneous
8 Retailer’s margin
9 Retailer sale or consumer price
10 Price spread
v. PRODUCTION AND MARKETING CONSTRAINTS
1. Constraints faced by gerbera growers
No. of farmers Percentage per

S. No. Particulars
(n=25) cent
PRODUCTION CONSTRAINTS
1 Huge initial investment
2 Availability of credit
3 High cost of planting material
4 High labour charges
5 High cost of pesticides and fertilizers
6 Pests and disease attack
7 Commercial electricity connection
8 Availability of water
9 Availability of skilful labour
10 Change in climate
11 Perishability of produce
MARKETING CONSTRAINTS
1. Lack of market information and new
markets
2 Fluctuations in price / seasonal demand
3 Low price for the flowers
4 High package costs
5 Exploitation by middle men
6 High transportation costs
2. Constraints faced by commission agents in the marketing of Gerbera
S. No. Particulars No. of respondents

1 High price fluctuation
2 Lack of storage facility
3 Lack of proper transportation facility
4 Delay in payments
5 High market fee
3. Constraints faced by retailers
S. No. Particulars No. of retailers

1 Lack of regular consumers
2 Price fluctuations
3 Wastage of flowers
4 Lack of awareness among consumers
5 Quick deterioration in quality

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BUSINESS ANALYSIS OF GERBERA CULTIVATION

UNDER POLYHOUSE- A CASE STUDY IN RANGA

PROJECT REPORT SUBMITTED TO THE

MASTER OF BUSINESS ADMINISTRATION

CHAIRPERSON: Dr. ALDAS JANAIAH

SCHOOL OF AGRIBUSINESS MANAGEMENT

I, K. SRIDEVI, hereby declare that the project report entitled “BUSINESS

Place: Hyderabad (K. SRIDEVI)

Date: / / 2014 Chairperson

Dr. ALDAS JANAIAH

Dr. ALDAS JANAIAH

Project report approved by the Student Advisory Committee

Dr. ALDAS JANAIAH

Member : Dr. SEEMA

Member : Shri M.H.V. BHAVE

Date of final viva-voce: / / 2014

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

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

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

I pay my heartfelt regards to Dr. P. Radhika, Associate Professor, School of

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

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

It will be a great lapse on my part if I fail to extend my best regards to all my

My acknowledgement would be incomplete and meaningless without thanks to my

Finally I am very much thankful to Acharya N. G. Ranga Agricultural University

Date: / /2014 (K. Sridevi)

1.1 Area and production of flowers in major countries of the world.

1.2 Area and production of flowers in India

1.3 State wise area and production of flowers in India

3.1 Particulars of selected mandals, villages and farmers in Ranga

3.2 Demographic details of Ranga Reddy district

3.3 Land utilization pattern of the district Ranga Reddy (2011-12)

4.1 Trends in area of polyhouse based farming in Telangana and Andhra

4.2 Trends in area of polyhouse based farming in Ranga Reddy District

4.3 Age profile of sample farmers in selected districts

4.4 Literacy status of sample farmers in selected districts

4.5 Family size of respondents

4.6 Land holdings of respondents

4.7 Establishment cost of gerbera under polyhouse

4.8 Cost of production of gerbera under polyhouse

4.9 Yield and income details from gerbera under polyhouse

4.10 Estimates of investment analysis parameters in gerbera cultivation

4.11 Price spread in Gerbera marketing through channel-I

4.12 Price spread in gerbera marketing through channel-II

4.13 Constraints faced by gerbera growers

4.14 Constraints faced by commission agents in the marketing of Gerbera

4.15 Constraints faced by retailers

Figure No. Title Page No.

1.1 Share of exports of flowers from India (2012-2013)

1.2 Area under cut flowers in the country (2012-13)

3.1 Map of Ranga Reddy district

AICRP : All India Co-ordinated Research Project

APEDA : Agricultural and Processed food Export Development Authority

BCR : Benefit Cost Ratio

CAZRI : Central Arid Zone Research Institute

CAGR : Compound Annual Growth Rate

et al. : and others people

etc. : For example, for instance

IRR : Internal Rate of Return

ICAR : Indian Council of Agricultural Research

ICRISAT : International Crop Research Institute for the Semi-Arid Tropics

MNC’s : Multi-National Company’s

NPV : Net Present Value

: BUSINESS ANALYSIS OF GERBERA CULTIVATION