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LIST OF TABLES
Table
Page
1
Age distribution of respondents and household head in the study area
(2014)
24
2
Distribution of the population by sex in the study area (2014)
25
3
Sex distribution of the household head in the study area (2014)
25
4
Ethnic composition of respondents in study area (2014)
26
5
Age distribution of the sampled population in the study area (2014)
26
6
Farm characteristics of the respondents in the study area (2014)
27
7
Organizational participation of Coffee growers in the study area (2014)
28
8
Major source of household income in the study area (2014)
29
9
Gross margin, profitability and benefit-cost from coffee in the study area
(2014)
30
10
Estimated coefficients for the factors affecting production of coffee in the
study area (2014)
30
11
Reasons for the cultivation of coffee in the study area (2014)
31
12
Constraints in production and marketing of coffee in the study area (2014)
31
5
LIST OF FIGURES
Figure
Page
1
Map of Nepal showing Parbat District (Research site)
17
2
Family type of the respondents in the study area (2014)
25
3
Educational status of sampled household in the study area (2014)
27
4
Training received situation among sampled households in the study area
(2014)
28
5
Marketing channel of coffee in Parvat district (2014)
32
6
ACRONYMS
%
Percent
APP
Agriculture Perspective Plan
CDOs
Community Development Organizations
DADO
District Agriculture Development Office
DDC
District Development Committee
FGD
Focus Group Discussion
GFI
Gross Farm Income
GM
Gross Margin
ha
Hectare
HH Household
IAAS
Institute of Agriculture and Animal Sciences
INGO International Non-Governmental Organization
Kg
Kilogram
MoAD
Ministry of Agriculture and Development
mt.
metric ton
NGO
Non Governmental Organization
NRs
Nepalese Rupees
P-value
Probability Value
qtl
Quintal
R
Coefficient of multiple correlation
R
2
coefficient of multiple determination
RTS
Return to Scale
SPSS
Statistical Package for Social Science
7
EQUIVALENTS
Months
Area
1 Kattha = 20 Dhur
1 Bigha = 20 Kattha = 13.31 Ropani = 0.68 Hectares
1 Hectare = 30 Kattha = 19.66 Ropani
Weight
1 Ton
= 10 Quintals = 1000 kg
Currency (as of 25 August, 2014)
Euro () 1 = 127.74NRs. (Buying rate)
US$ 1
= 96.45 NRs. (Buying rate)
Nepali Calendar
Gregorian Calendar
Baisakh
Mid April Mid May
Jestha
Mid May Mid June
Ashad
Mid June Mid July
Shrawan
Mid July Mid August
Bhadra
Mid August Mid September
Aswin
Mid September Mid October
Kartik
Mid October Mid November
Mangsir
Mid November Mid December
Poush
Mid December Mid January
Magh
Mid January Mid February
Falgun
Mid February Mid March
Chaitra
Mid March Mid April
8
ABSTRACT
Coffee is one of the important cash generative crops in the mid hill regions of Nepal. Study
considered the production economics along with marketing performance of coffee in
Pakuwa VDC of Parbat district, Nepal. Survey was done in June 2014. Data collection was
conducted through semi-structured pre-tested questionnaire administered on 40 farmer
respondents selected randomly. Gross margin analysis, profitability index and the benefit-
cost ratio (B-C ratio) was used to analyze the production economics of coffee in the study
area. The results revealed that, coffee cultivation is a profitable enterprise in the study area.
This is reflected by the gross margin of NRs. 90205.43 per hectare, benefit-cost ratio of
3.84 and profitability index of 1.23. Coffee sector alone contributed 16.26 percent of total
household income showing positive sign for commercialization. The number of productive
plant and cost on sapling were the most significant factor affecting production of coffee in
the study area and holding the other explanatory variables constant, one percent change
would increase the yield of coffee by 0.894 and 0.151 percent respectively. Further,
increasing return to scale was observed in coffee production with value 1.26. Farmers
explained more income from coffee and easy to sell as the reasons for its cultivation. Lack
of irrigation and lack of detailed knowledge were ranked as severe production problems
whereas; low price and lack of processing facility stood as marketing constraints in the
study area. Study resulted positive economic significance of coffee and this shows
immense need of Government, NGOs, traders, and other line agencies to lay efforts on
production and marketing management such that its production and income can be raised.
9
1 INTRODUCTION
1.1 Background of the study
Nepal lies between 26
0
22''North-30
0
27''North latitudes, and 80
0
04''East- 88
0
12''East
longitudes with total area of 1, 47,181 sq. Km. A large number of people have the
agriculture as the major occupation in Nepal, 65.6 percent of total economically active
population is involved in agriculture (MoAD, 2013). Agriculture as the sector wise shares
the 35.11% to the total GDP of the country. From terai to high hills, Nepal possesses huge
potentiality of different vegetable, fruits, cash crops, medicinal and aromatic plants. High
value cash crops such as coffee show great potentiality from the perspective of trade.
Coffee which falls under Rubiaceae family and genus Coffea, has two major species
C. Arabica and C. robusta and one minor species C. liberica. As the climate and soil in the
mid and high hills of Nepal are found to be very suitable for Arabica coffee, the coffee
planted in Nepal is all Arabica (Giri, 2006). Coffee is one of the important cash generative
crops in the mid hill regions of Nepal. Initially, coffee spread to several districts through the
initiation of individual farmers as well as by an ADB/N supported programs. Presently,
coffee is cultivated in around 40 districts, but it has been producing commercially in about
20-22 hill districts. Some districts like Gulmi, Palpa, Argakhanchi, Lalitpur, Tanahu, Kavre,
Sindhupalchowk, Lamjung, Kaski, Gorkha, Syangja, Parbat, Baglung are successfully
growing and producing Coffee beans and is increasing gradually (NTCDB, 2014). Coffees
are mainly grown in the mid hill region of Nepal and is high value cash generating crop for
hill farmers (khanal, 2003). Total area and production coffee in Parbat district is 76 ha. and
10.5 metric ton respectively with approximate 1800 farmers (MoAD, 2013). Whereas; total
national area, production and farmers of coffee sector is 1750 ha, 366 mt. and 27000
farmers respectively (MoAD, 2013). Coffee provides 5 times more yield than that of maize
and millets and 2-3 times more yield than that of any other cash crops (Dhakal, 2004).
Especially Nepalese coffee has high demand in Japan, America, South Korea, Germany and
the Netherlands. However, in comparison with demand in the international market,
Nepalese coffee has low production and below the standard quality specified by the
developed countries. Nepal has a great potential to produce organic coffee by utilizing its
long back production system called as organic by default. Coffee is grown with shade crops
of multipurpose tree species. It could be an important means for the soil conservation; bio-
diversity maintenance and watershed balance in the mid-hills of Nepal (Nepal, 2006).
10
1.2 Statement of problem
Coffee is a relatively new cash crop started to be grown in Nepal almost with no use of
inorganic fertilizer and pesticide. It could be an important occupation in the rural
economies with massive participation of marginal, poor and down trodden class of rural
communities. In addition, it could be an important means for soil conservation, bio-
diversity maintenance and watershed balance in the mid-hills of Nepal (AEC, 2006).
Despite the higher economical importance of coffee it is being devalued and graded
as low grade agriculture product in Nepal due to the wrong and narrow conception of the
people. Farmers are not properly and adequately aware of coffee farming technologies.
Professionalism and commercialization have yet to be cultivated. The economics of
production along with market and price information about coffee is not easily available and
price is not communicated to producers until the day of trade. There is no proper market
channel of selling coffee in local as well as national market. The mistrust and non-
transparent nature of the pricing process, control of few dominant buyers in pricing and
marketing, irregularity in the demand from final buyers/processors, lack of knowledge on
the producer level are the main causes for information gaps. Thus the research on this
study will become a fruitful for the economics of cultivation and marketing performance of
high value cash crops, mostly in coffee production and its marketing potentiality for
domestic and export market promotion. Thus, realizing this importance of documentation,
production economics and marketing performance of coffee, this study is proposed to dig
out promotion, support, extension of benefits along with marketing channels and problems.
Based on this study a possible solution measures for promotion and dissemination strategy
of coffee farming may be suggested. Based on the above statements following research
questions were formulated;
· What are the gross margin, cost and benefit of coffee plantation?
· Is the coffee plantation profitable?
· What are the factors affecting in coffee production?
· What are the major constraints of coffee production and marketing?
· Which type of marketing channel is used in the trade of coffee?
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1.3 Research rationale
Coffee is a high value low volume cash crop. National long-term perspective has given
priority in high value cash crop (APP 1995).This crop is economically more (nearly three
times) profitable in the present context as compared to other cereal crops (Bajracharya,
2003). By utilizing the comparative resource advantage, Nepal would compete for quality
coffee production. However the volume of production and associated production cost
accompanied with the marketing management is the most important prerequisite to be a
competitive in the international market. Positive view of government on use of marginal
land, cultivation can be done in marginal land, natural forest/ biodiversity conservation /
soil erosion, involvement of marginalized people in collection and harvesting. Organic
coffee production provides income to people with limited alternative employment
opportunities and low income.
Information about prevailing growing and marketing system of organic coffee
provides basis for the formulation of appropriate policy and act. Suitable policy will
provide production and marketing incentives for this crop, which is on behalf of large
numbers of rural poor farmer living in mid-hills of Nepal. Hence, it is justified that there is
an immediate need of conducting research on existing production, value addition, income
contribution and marketing situation of cash crop and having clear understanding of factors
that affect rural poor farmer's decision on growing and sustainable management of high
value cash crops.
1.4 Objectives
The overall objective of the study was to analyze the production economics and marketing
performance of coffee in Parbat District of Nepal. The specific objectives were;
· To analyze gross margin, benefit cost ratio and factors affecting in coffee
production.
· To analyze the contribution of coffee in household income.
· To identify and rank the problems associated with production and marketing of
Coffee.
· To identify marketing channel used in the trade of Coffee.
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1.5 Scope and limitation of the study
This study is an attempt to analyze the economics of coffee production along with its
marketing performance. This study would furnish some kind of conclusion,
recommendation and feedback, which could be useful basis for future research and also in
planning, implementing and evaluating a development-oriented program for all sectors,
engaged in coffee production. Despite having the great scope the research has its
limitations.
Any research process will involve challenges and complications, especially when
the context is foreign to the researcher (Scott et al., 2006). The research was carried out
mostly on recall basis, which might lead to some response errors. In addition, the research
covered only a limited area and population due to resource and time constrains, which
might not be generalized to other areas of the country. Because of the diversified nature of
human being with respect to many aspects like intelligence, attitude, thinking, perception,
status, ethnicity, family size, landholding, knowledge and the information gathered from
the respondents may vary to other locations.
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- , 2016, Production Economics and Marketing Performance of Coffee in Parbat, Nepal, Hamburg, Bedey Media GmbH, https://www.anchor-publishing.com/document/340187
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