Western Ghats Kokum Foundation - Organic Farming Association of ...

In the establishment stage, the items of costs are labour required for preparation of
land, preparing of digging and filling of pits, planting of grafts providing support, watering,
application of manures and fertilizers, plant protection etc. and purchase of input material
like seedlings, manure and fertilizers, chemicals and other materials. Cost of land is also
included as this crop is of long duration. In the production stage, few preliminary
operations are eliminated while some new operations are added. In Table 1, cost incurred
during establishment of Kokum on one-hectare area is given. It comes to Rs. 56699 upto
seven years. Value of land is also included in the first year cost, because it is long-term
investment and necessarily value of land must be included. It can be seen from Table 2 that
Pay Back period of Kokum is 9 years.
It means that 9 years will be taken for the net undiscounted benefit to repay the
investment. But a more sophisticated version will use discounted net benefits that NPV
must be positive within a shorter period. In case of Kokum NPV is greater than cost, so the
Kokum plantation can be considered favourably, as it is more than zero at started discount
rate. The benefit cost ratio in case of Kokum is greater than one so decision will be in favour
of Kokum plantation IRR measure is practically used for all economic and financial analysis.
IRR is the discount rate at which the NPV is equal to zero. IRR is a measure of profitability of
the crop. Kokum plantation can be considered favourably as IRR is greater than the cost
capital.
45
Resource Book on Kokum (Garcinia indica Choisy)
Western Ghats Kokum Foundation, Panaji - Goa