Encashing
litchi
The
potential of litchi in India is unexploited so far. Huge price disparities
exist between the returns that the producers get and the actual selling
price, say Sudha Mysore and PG Chengappa
Fruits
are grown in an area of over 3.83 million ha in India, contributing
to an annual production of around 46.04 million tonnes. A select set
of fruits like mango and grapes dominate the domestic and export trade.
This can be attributed to numerous factors including research and
development efforts, production technologies, infrastructure and institutional
support extended by the government policy and cooperation among cultivators.
Absence or underplay of similar institutional and infrastructure facilities
for a number of other fruits having similar production advantage is
responsible for impeding the diversification of the Indian export
fruit basket. Litchi is one such fruit, which is widely grown in the
foothills of the Himalayas and has a vast untapped potential in the
domestic and global market. It offers immense scope to boost exports,
through appropriate institutional support.
India is the second largest producer of litchi, both in terms of quality
and yield. Cultivated over an area of 56,400 ha, the fruits production
in the country has been increasing at over nine per cent annually.
This growth rate is marginal compared to other producing countries
like China, Thailand and Australia.
In comparison to other fruits, litchi ranks seventh in area and ninth
in production but is sixth in terms of value, in India. Litchi flourishes
well in regions with moist atmosphere, abundant rainfall and freedom
from frost during winters and loo during summers. It is cultivated
in the sub-tropical foothills of Himalayas in Bihar, Tripura, West
Bengal, Uttar Pradesh, Punjab and Haryana. Bihar holds the largest
area under litchi cultivation with 26,000 ha (over 46 per cent of
the total area) and accounts for more than 74 per cent of the total
production in the country. West Bengal stands second in terms of production
at 36,000 tonnes.
An interesting feature of Litchi distribution in India is its cascading
production pattern commencing from the east, and spreading to the
west. Litchi production commences during the first week of May in
Tripura, while Litchi in Bihar matures by the third week of May and
continues up to the first week of June. Litchi in Uttar Pradesh and
Punjab is ready for harvest during the 2-3rd week of June, while in
Himachal it comes to harvest by the last week of June, thereby extending
the total season of its availability to over two months in a year.
Economics
of litchi cultivation
Litchi
forms an important component of the home gardens segment where minimal
maintenance is accorded to trees. It contributes to more than 60 per
cent of the income accruing from home gardens countrywide, and ranges
from Rs 2,500 to Rs 20, 000 per annum.
A commercial litchi orchard normally has around 100 plants in a hectare.
The cost of establishment of a commercial orchard, from planting till
first viable harvest is Rs 22,043/ha that includes the cost of plants,
land preparation, application of manures and fertilisers (Table 1).
Though the orchard may get some yield in the second year itself, economic
yield starts only from the third year, hence the establishment costs
include the cost of maintaining the tree up to the beginning of the
third year.
Marketing
and profitability
|
The Pre harvest contractor makes the maximum margin in litchi
marketing, as he only performs a transfer function without involving
any other cost.
|
BIf
growers do not intend to market their litchi harvest, the itchi orchards
are given away on Pre- Harvest Contract (PHC) during the month of
January. The fruit is sold through a PHC to the wholesale or commission
agent, who undertakes the harvesting and packing, in addition to transporting
the produce to the market.
The
main channels of marketing for litchi include:
m
Producer – PHC – wholesaler/commission agent (distant market)
– stockists – retailers – consumers -m Producer –
wholesaler/commission agent (distant market) – stockists –
retailers
– consumers (self-marketing)- m Producer – village level
agent – commission agent – stockists – retailers –
consumers
More than 65 per cent of growers prefer sale through PHC. About 20
per cent undertake self-marketing. The cost of marketing when sold
in the distant markets is approximately Rs 41,400/ha (79 per cent
of the total cost) and the growers can realise up to Rs 47,595 as
net return, which is only Rs 29,800 in case of field sale through
PHC.
However, in terms of overall profitability, sale through PHC is preferred
due to the high benefit to cost ratio of 5.81. On the other hand,
self-marketing in the distant domestic market is more profitable with
higher net gain of over Rs 7.94/kg, but is also costly due to high
cost of marketing. Absence of price information and marketing credit
are the constraints in self-marketing. Huge gardens involving high
marketing expenditure, long distance transportation to main market
centres away from production areas, and absence of market regulation
and exploitative marketing practices by market intermediaries are
other important factors impeding self-marketing.
The
Pre-Harvest Contractor
or the commission agent makes the maximum margin in litchi marketing,
as he only performs a transfer function without involving any other
cost. The stockists in litchi sale adopt the undercover system and
realise higher margins. The retailers are the second market intermediaries
who realise a margin of 20 per cent in the consumers price. The overall
price spread in litchi trade is observed to be around Rs 49.5 per
kg and works out to over 82 per cent. In case the grower undertakes
self- marketing, the price spread is approximately Rs 40 per kg.
Processing
and export prospects
Due to a very short production season of around
two months in a year, market gluts and over supply leading to distress
sale are frequent happenings in litchi trade. Diverting a part of
the produce towards processing is a safe solution to the problem and
is successfully adopted in other fruits like grape.
India’s
share in litchi exports
India’s share in litchi exports
Litchi is in demand both in fresh as well as in processed form. Estimates
show that, annually over 100,000 tonnes of litchi is traded internationally.
contd...
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