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ECONOMIC ANALYSIS OF RAISIN INDUSTRY IN SANGLI
DISTRICT OF MAHARASHTRA
Gaikwad S. B.1 and Gade A. D. 2
Abstract
Raisin is the second most important product of the grapevine, wine being the first. Grape growers of
Sangli district are expertise in quality raisin making .Therefore market gluts and fail of prices of grape is
common. However, as grape is of perishable nature, many times when the production of grape is much more
and sufficient domestic market is not available for sale of grapes, farmers have to sustain heavy financial
losses. Further, as process of grapes production basically requires major capital investment, if sale or export
of grape is not possible in time, farmers do suffer a lot. In such situation the maximum benefits from grape
cultivation can be derived by establishing the processing industries for production of value added products
like good quality wine, raisin and juice which has market potential for domestic as well as international
market. Raisin is a popular dry fruit item with shelf life of around 6 months if stored properly, taking in to
consideration the present paper aims to analyze an economics of production and value addition to raisin
grapes. The Major constraints faced by processing firm were cost of raw material, availability of labour and
price fluctuation of raisin and unavailability of raw material during off season. This study suggests that
government should take necessary action to guard the investors of raisin industry.
Keywords: Raisin grape, Production cost, net returns, Cost benefit ratio and Economics of raisin.
INTRODUCTION
India is the 9th largest grape producing country in the world with the production of 2689910 metric tons,
which make a share of 3.88 per cent of total production of grape in the world. Grape export from India is
172744.41 metric tons valued at 1259.40 crores that make a share of 1.7 per cent of total export of grapes in
world (Gade et.al, 2014). However, as grape is of perishable nature, many times when the production of grape is
much more and insufficient domestic market, farmers have to sustain heavy financial losses (Hajra, 2012;NHB,
2013). Further, as process of grapes production basically requires major capital investment, if sale or exports of
grapes is not possible in time, farmers do suffer a lot. In such situation the maximum benefits from grape
cultivation can be derived by establishing the processing industries for production of value added products like
good quality wine, raisin and juice (Gade and Gaikwad, 2014).Which has market potential for domestic as well
as international market. Raisin is a popular dry fruit item with shelf life of around 6 months if stored properly
(Sharma, 2010).
Raisins are the second most important product of the grapevine, wine being the first
(Shanmugavelue,1989). In India about 78 per cent of the total production of grape is used for fresh consumption
(table fruit), about 17 to 20 per cent of grapes are used to produce raisins and 1 to 2 per cent used for the wine
making (Gaikwad,2007; Shreeshail,2007; Patil ,2008, Gaikwad & Gade, 2013).Economic analysis indicates a
continuous increase in production and development of raisin trade in international market (Oulkar, 2009). Drying
of grapes in the form of raisins can provide remunerative returns to the growers. In India, raisins are mostly
produced in Sangli, Solapur and Nasik districts in the state of Maharashtra as well as Bijapur district in
Karnataka, and some parts of Tamil Nadu, Andhra Pradesh and Punjab. Grape growers of Sangli district are
expertise in quality raisin making. This is a good product, especially for some progressive farmers who are
already in grape farming. Raisin processing industry generates income and employment opportunities in the
region. However low capacity utilization and fluctuation in profitability of processing firm is an issue often rose.
In this paper an attempt is made to study the economics of raisin production, in Sangli District of
Maharashtra state (fig.1).
1
2
Research Guide, Asso. Prof. & Head, Dept of Geography, Miraj Mahavidyalaya, Miraj, Dist-Sangli-416410(M.S.)
Asst. Prof. UGC Teacher fellow in Geography, Mahila Mahavidyalaya, Karad, Dist: Satara-415124 (M.S.)
48
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OBJECTIVES OF THE STUDY
The present study has examined the following objectives:
1.
To study the production cost of raisin.
2.
To analyse the cost benefit ratio of raisin.
DATABASE AND METHODOLOGY
The primary data have been collected through sample survey and personal interviews. Sangli
district were selected purposively, there are 2320 grape producers in the sangli district 60 per cent of them
are raisin producers at the random 50 raisin producers were selected for the study. Primary data also collected
from the selected processing units with the aid of pre-tested interview schedule. From the processor, details
of information such as investment pattern, labour use, processing cost and production techniques were
collected. The data pertain to the agriculture year 2013-14.
Tools of Analysis:
The cost and returns in the selected processing units were estimated. The costs involved were
grouped into fixed and variable costs. The gross return of a unit was estimated by adding the revenue from
the sale of the raisin profit was derived by deducting total costs from total returns. The Benefit-Cost ratio is
mathematically expressed as following statistical equation.
Cost Benefit Ratio =
F = (E/D)
PRODUCTION COST OF RAISIN GRAPE
Cost of production is a term used to describe the average cost of producing one unit of a commodity.
The Production cost of raisin grapes more than other traditional crops. The items of cost that go into cost of
production are both fixed (Establishment) and variable costs.
ESTABLISHMENT COST OF RAISIN GRAPE CULTIVATION
Establishment cost of vineyard includes, cultural practices, layout, trenching, filling, nursery
plantlet, plantation, grafting, blower, training, farm house, HTP & sprayers, tube-well, well/tank, watering
pipeline, and drip irrigation system etc are the heads of expenditure and it also includes cost of watering,
fertilizers, inter-culturing and spraying during gestation period. Total establishment cost is apportioned on the
annual account to the commercially viable life of the orchard.
Table-1 reveals that the establishment cost of vineyard in Sangli District. It is evident that per
hectare average cost of establishment of vineyard was Rs. 710215 .It comes to Rs 35510.67 per acre by
dividing the total cost by 20, which is sound and economic life of the vineyard. The cost of establishing of
vineyard was higher. It is mainly because of the high cost of bowers (38.35 per cent) and tube-well or well
(17.50 per cent), together share 55.85 per cent cost was incurred of fixed cost Followed by drip irrigation
cost accounts for 11.97 per cent, filling the trenches or pits with FYM & fertilizers ( 6.32 per cent), water
pipeline ( 5.80 per cent), farmhouse ( 4.18 per cent) and HTP & sprayers ( 4.14 per cent), nursery plantlet (
3.40 per cent), grafting ( 2.08 per cent), trenching (1.86 per cent), water storage tank (1.82 per cent) and
cultural practices and plantation both (1.03 per cent) incurred of fixed cost.
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Table 1. Establishment Cost of Vineyard (Expenditure in Rs/Hector)
Si.
No.
Major Heads of
Expenditure
A
1
2
3
4
Initial investment
Cultural Practices
Layout
Trenching
Filling Pits With FYM
& Fertilizers
Nursery plantlet
Plantation
Grafting
Blower
Training
Water storage tank
5
6
7
8
9
10
11
12
13
14
15
Expenditure in Rs per hector
(Including labour charges)
Farm house
HTP & sprayers
Tube-well ,well/ tank
Watering pipeline
Drip irrigation
Total
Average
per hector
Average
cost per
hector
(20 Years)
Cost in
percent
Small
Medium
Large
7650
2500
13832
53846
9017
2292
13175
41346
4792
2358
12750
39500
7153
2383
13252
44897
357.65
119.16
662.60
2244.85
1.03
0.33
1.86
6.32
24700
7500
16055
278869
1250
3450
24082
7120
14820
269781
1920
16000
23712
6925
13585
266325
2950
19333
24164
7181
14820
271658
2040
12927
1208.23
359.08
741.00
13582.9
102.00
646.38
3.40
1.01
2.08
38.35
0.28
1.82
54210
25759
286650
52350
93564
922185
21000
37575
49000
38445
86200
631773
14000
25025
37333
32824
75275
576687
29736
29453
124327
41206
85013
710215
1486.83
1472.65
6216.38
2060.31
4250.65
35510.67
4.18
4.14
17.50
5.80
11.97
100
Source: Based on fieldwork
DEPRECIATION COST OF VINEYARD
Depreciation costs include the timely repairing of farm implements like water storage tanks, farm
house, HTP & sprayers, tube-well, well/ tank, watering pipeline, drip irrigation, etc. Table 2 revels that
depreciation cost of grapevine cultivation. The total depreciation cost of Rs 11066.64 is incurred in grapevine
cultivation. Tube-well, well/ tank are accounted for the highest depreciation cost per year (56.17 per cent). It is
followed by drip irrigation (15.36 per cent), HTP & sprayers (13.30 per cent), watering pipeline (7.44 per cent),
farm house (5.37 per cent) and water storage tank (2.33 per cent) respectively.
Table 2. Cost of Grapevine Cultivation
Si.
No
.
Major Heads of
Expenditure
Fixed Cost
Average
cost per
hector
Holding group
Small
Medium
Large
Average
depreciat
ion rate
in %
Depreciatio
n cost per
hector per
year
Cost
in %
1
Water storage tank
3450
16000
19333
12927
2
258.54
2.33
2
Farm house
54210
21000
14000
29736
2
594.72
5.37
3
HTP & sprayer
25759
37575
25025
29453
5
1472.65
13.30
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4
Tube-well ,well /
tank
286650
49000
37333
124327
5
6216.35
56.17
5
Watering pipeline
52350
38445
32824
41206
2
824.12
7.44
6
Drip irrigation
93564
86200
75275
85013
2
1700.26
15.36
Total
515983
248220 203790 322662
11066.64
100
Source: Based on fieldwork
Table 3 reveals that per hectare variable cost of raisin grape production in Sangli district. The total
variable cost incurred per year of raisin grapes is Rs 204831.The raisin grape cultivation 56.76 per cent of the
total variable cost was incurred for compost fertilizer, chemical fertilizer, insecticide and pesticide. Followed
by October pruning, G.A treatment march pruning, electrical charge, and interest on working capital, growth
hormone, harvesting, weeding, mulching and inter cultivation.
Table 3. Variable Cost of Raisin Grape Production Per Hectare
Si. No.
Heads of Variable cost
Amount in Rs.
Percentage to the total
1
March pruning
9410
4.59
2
October pruning
23571
11.50
3
G.A treatment
9650
4.71
4
Electrical charge
9500
4.63
5
6
Mulching
Chemical fertilizer
5000
34990
2.44
17.08
7
Compost fertilizer
56000
27.33
8
Insecticide and pesticide
25300
12.35
9
Growth hormone
7450
3.63
10
Weeding
5250
2.56
11
Harvesting
6275
3.06
12
13
Inter cultivation
Total
4557
196953
2.22
14
Interest on working capital
7878
3.84
204831
100
Total
Source: Based on fieldwork
Table 4. Fixed Cost of Raisin Grape Production Per Hectare
Si.
Heads of Fixed cost
Amount in Rs.
Percentage to the total
No.
1
Rental Value of land
162844
62.73
2
Land revenue
450.00
0.17
3
Interest on fixed capital @ 12%
85225
32.83
4
Depreciation Cost
11066
4.26
259585
100%
Total fixed cost
Source: Based on fieldwork
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Table.4 reveals that per hectare fixed cost of raisin grape production in Sangli district. Fixed cost
included rental value of the land, duties and taxes, Interest on fixed capital, depreciation on tube-well / well /
water tank, drip irrigation, HTP & sprayers , watering pipeline, farm house and water storage tank respectively.
The total fixed cost of raisin grape production is Rs. 259585. Rent of land accounted the major share (62.73 per
cent) of the total fixed cost followed by interest on fixed capital (32.83 per cent), depreciation cost (4.26 per
cent), land revenue (0.17 per cent) of the total fixed cost.
ECONOMICS OF RAISIN PRODUCTION
The economics of raisins in the context means the cost incurred for production of raisin grapes,
processing, marketing and return received by producers. The cost of raisin production process broadly covers
three types of expenses i.e cost of raisin grapes, processing cost and marketing cost. There are two categories of
costs namely fixed costs and variable costs.
Fixed cost of raisin
The Fixed cost of raisin production includes value of land, shade, drying yard, processing unit,
machinery and pre-operative expenses. The fixed cost derived by proportionally the sound of its economic
life. The economic life of rack shad is considered 30 years (3.5 per cent per annum).The rate of recovery of
the material used for raisin production varies according to the nature of material. The capital recovery cost is
the amount of money required each year to recover the difference between the purchase prices and salvage
value (Laura 1998).
Table 5. Fixed Cost of Raisin Production
Si. No.
Major Heads Amount
Cost in
Rs
Fixed cost
in %
Interest rate per
year in %
Recovery cost per
year in Rs
Fixed capital
1
Land 20000 sq. ft. plot
222500
27.38
3.5
7787.5
Shade house 100 sq. ft.
41375
5.09
3.5
1448
Drying yard 250 ft.
437500
53.84
3.5
15312.5
Total
703875
86.63
80000
9.84
3.5
2800
Shade net
9950
1.22
20
1990
Processing unit
4100
0.50
20
820
Water storage tank
3250
0.40
10
325
Create
5000
0.61
20
1000
Miscellaneous assets
6300
0.77
10
630
108600
13.36
--
7565
812475
100
--
32113
24548
Machinery and Equipment
Grading Machine
2
Total
Total
Source: Based on Fieldwork
The investment pattern of raisin processing industries in the study area is presented in table 5. The
total establishment expenditure of the unit was Rs. 812475 of which cost of drying yard alone accounted for
around 53.84 per cent of the total investment, followed by land (27.38 per cent), grading machine (9.84 per
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cent), Shade house (5.09 per cent), Shade net (1.22 per cent), Create (0.61 per cent), processing unit (0.50 per
cent) and water storage tank (0.40 per cent).
Variable cost of raisin production
The variable cost of raisin production occurs at four stages i.e. processing, cleaning, grading and
raw material transportation. There is a close connection between the amount of variable costs and volume of
production when the variable cost increase also the production cost increased.
Table 6. Average Variable Cost of Raisin Production
Si.No.
Head Expenditure
Cost per
tones (Rs)
Average cost per
hectare in Rs
Cost in
percent
1
Processing
7885
68126
57.19
2
Cleaning
1750
15120
12.69
3
Grading
1750
15120
12.69
4
Transportation of raw material
2400
20736
17.41
13785
119102
100.00
Total
Source: Based on Fieldwork
Table 6 illustrates that an average variable costs is Rs 13785 per tone and Rs 119102 average cost
per acre. Processing cost accounted for the highest is 57.19 per cent of the total variable costs. Followed by
transportation of raw material 17.41 per cent, cleaning and grading both are 12.69 per cent of variable cost.
The highest proportion processing cost is found due to the higher rate of raw materials and labour cost.
Table 7. Marketing Cost of Raisin
Si.
No.
Items of marketing cost
Small
Medium
Large
Average Cost
per kg
Average cost
per hectare
Cost in
%
1
Packing material
2.33
2.00
1.73
2.02
17462.9
25.64
2
Labour cost of Packing
0.26
0.26
0.26
0.26
2247.7
3.30
3
Transport
0.53
0.46
0.46
0.48
4149.6
6.09
4
Cold storage
2.40
2.40
3.60
2.80
24206
35.55
5
Commission agent
2.16
2.16
2.16
2.16
18673.2
27.49
6
Hamali
0.15
0.15
0.15
0.15
1296.75
1.90
Total cost
7.83
7.43
8.36
7.87
68036.15
100
Source: Based on Fieldwork
Table 7 reveals average per kilogram and average cost per hectare cost of raisin marketing. The total
marketing cost is Rs 7.87 per kg and average cost per hectare of marketing of raisin is Rs 68082.95 in Sangli
district. It indicates that cold storage account for the highest proportion of marketing cost with a share of
about 35.55 per cent. It is followed by commission agent (27 per cent), packing material (25, 64 per cent),
transport (6.09 per cent), labour cost of packing (3.30 per cent) and hamali (1.90 per cent) are respectively.
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Table 8. Per Hectare Net Returns and Cost Benefit Ratio of Raisin Grape
Si. No.
Particulars
Raisin
1
Yield per hectare in Kg
8645
2
Cost of production ( A)
464416
3
Cost of processing (B)
119102
4
Capital recovery cost (C)
67623
5
Total cost of production [D=(A+B+C)
651141
6
Total marketing cost
68082
7
Gross returns(E)
1037400
8
Net profit
318177
9
Cost benefit ratio - F=(E/D)
1:1.59
Source: Based on Fieldwork
Table 8 depicts that the net return and cost benefit ratio of raisin. Per acre yield of processed raisins
is 8645 Kg and the average price of raisin is Rs 120 in Tasgaon and Sangli market yard. For computing the
total returns from raisin processing, yield per hectare in kg and average market price received are considered.
The total gross returns raisin is Rs 1037400 per hectare. By deducting the total cost of production of about
651141 per hectare the net return comes to about Rs 318177.The cost benefit ratio of raisin is 1:1.59. It is
definitely an encouraging return to the farmers.
PROBLEM IDENTIFIED
Based on study we found that some of following problems faced by Indian raisin industry








There are insufficient marketing mechanisms for raisin marketing.
Exploitation of dealers and traders are major problem in India
Grape growers do not sell their grape for raisin making.
Currently there is a lack of sommelier schools, technical knowledge and favorable government
policy.
Scarcity of water and unseasonal rains in grape producing region.
Virus attacks such as leaf roll and rogues have also been concerns for producers
Lack of irrigation and power preventing
Day by day expenses are growing up for preparation of raisin.
SUGGESTIONS
Following suggestions were suggested for the making of government policy and grape producers for
the quality.





Sound development of rural infrastructure facilities like, transportation, adequate water and
electricity.
Co-ordinate with Research and Development Institutes to identify and develop appropriate root stock and raisin verities of grapes suited for different the geo-climatic region of India.
Setting up cold storage and collaborate raisin grape growers, raisin processing industry.
To decrease inconvenience in marketing of raisin, we can provided raisin export facilities.
Improvement in quality of the Indian raisins.
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CONCLUSION
On the basis of study we can conclude that the growth of the raisin industry in Sangli district
will bring large benefits to the people by way of employment and income. Farmers were facing the great
problem in grape marketing and they were getting very low prices for their quality grapes, these problems
have been solved by raisin making. The cost benefit ratio of raisin is 1:1.59. It is observed that the processed
raisin is definitely an encouraging return to the farmers. For making a quantum jump in exports there is a
need to formulate a suitable export strategy and strengthening of infrastructure facilities.
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