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The Journal of Research ANGRAU

Contents of 41(1) 2013 - acharya ng ranga agricultural university

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<strong>Research</strong> Notes<br />

J.Res. <strong>ANGRAU</strong> 41(1) 124-126, 2013<br />

AN ECONOMIC ANALYSIS OF VALUE ADDITION TO COTTON<br />

E. RADHIKA, R. VIJAYA KUMARI and D.V. SUBBA RAO<br />

Department <strong>of</strong> Agricultural Economics, College <strong>of</strong> Agriculture<br />

ANGR Agricultural University, Rajendranagar, Hyderabad – 500 030<br />

Date <strong>of</strong> Receipt : 15.06.2012 Date <strong>of</strong> Acceptance : 18.12.2012<br />

<strong>The</strong> processing <strong>of</strong> cotton is a business which<br />

is undertaken for the purpose <strong>of</strong> value addition to the<br />

produce. <strong>The</strong> value addition to cotton takes place at<br />

three main stages <strong>of</strong> processing viz., ginning,<br />

spinning and weaving.<br />

<strong>The</strong> ginning <strong>of</strong> cotton is important for value<br />

addition to the produce, as the spinning mills accept<br />

cotton only after ginning. Indian ginning industry is<br />

very large in size and is spread over a large area in<br />

cotton growing states. An attempt was made to study<br />

the cost and returns, value addition in case <strong>of</strong> cotton<br />

ginning and spinning industries and also the benefit<br />

cost analysis, which gives an intensified idea about<br />

the pr<strong>of</strong>itability condition the unit.<br />

<strong>The</strong> study was undertaken in Adilabad and<br />

Guntur districts <strong>of</strong> Andhra Pradesh. <strong>The</strong> study is<br />

based on primary data (for the year 2010-2011)<br />

collected from ginning and spinning units. A<br />

multistage random sampling technique was employed<br />

for the selection <strong>of</strong> sample units. 20 ginning units<br />

and 5 spinning units were selected for the study. <strong>The</strong><br />

data collected was subjected to analysis through<br />

tabular analysis.<br />

On an average, the total cost incurred in the<br />

processing <strong>of</strong> kapas to lint worked out to Rs. 4630.87<br />

per quintal <strong>of</strong> kapas. It is worth noting that the total<br />

variable cost (Rs. 4545.75 per quintal) formed a<br />

substantial component (98.2%) <strong>of</strong> the total cost <strong>of</strong><br />

processing <strong>of</strong> kapas to lint. <strong>The</strong> total fixed cost being<br />

Rs. 85.12 per quintal, accounted for only 1.8 per cent<br />

<strong>of</strong> the total cost <strong>of</strong> processing. In the total fixed cost<br />

(Rs. 85.12), salaries to permanent staff (Rs. 33.56)<br />

found to be the major component and accounted for<br />

0.72 per cent <strong>of</strong> total processing cost followed by<br />

interest on fixed capital, insurance and depreciation<br />

on building and machinery, which accounted for 0.43<br />

per cent, 0.34 per cent and 0.2 per cent <strong>of</strong> the total<br />

fixed cost respectively. Licence fee and taxes<br />

together accounted for 0.12 per cent <strong>of</strong> the total cost<br />

<strong>of</strong> processing <strong>of</strong> kapas to lint. Of the total variable<br />

costs, the cost <strong>of</strong> raw material (Rs. 4238 / quintal)<br />

accounted for 91.51 per cent <strong>of</strong> the total processing<br />

cost, followed by interest on working capital (Rs.<br />

216.75 / quintal) accounting for 4.68 per cent,<br />

electricity charges (Rs. 49.97 / quintal) accounting<br />

for 1.08 per cent and wages to casual labour (Rs.<br />

22.3 / quintal) for 0.48 per cent. <strong>The</strong> repair and<br />

maintenance (Rs. 15.91 / quintal) and telephone<br />

charges (Rs. 2.82 / quintal) altogether accounted for<br />

0.45 per cent <strong>of</strong> the total cost incurred in the<br />

processing <strong>of</strong> kapas. <strong>The</strong>se results are in line with<br />

the results <strong>of</strong> Mundinamani (2000) and Dodamani<br />

(2007).<br />

Table 1. Returns from processing <strong>of</strong> kapas to lint (for one quintal <strong>of</strong> kapas ginned)<br />

S.No<br />

email: etttediredhikareddy@gmail.com<br />

Particulars<br />

129<br />

Amount<br />

(Rs)<br />

1 Returns from main product(lint) 3978.81<br />

2 Returns from by-product (seed ) 991.6<br />

3 Gross returns 4970.41<br />

4 Raw material cost (kapas) 4238<br />

5 Value addition 732.41<br />

6 Processing cost 392.87<br />

7 Net value addition 339.54<br />

8 Benefit-cost ratio 1.86

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