Financial analysis of apple (Malus domestica) production in Darchula district of Nepal

Abstract

AbstractA survey was conducted in five different rural municipalities of Darchula district, namely Apihimal, Byas, Dunhu, Marma, and Naugadh, with the objectives of analyzing and documenting the economics of apple production and identifying the constraints associated with apple production and marketing. The survey was carried out among 80 different apple farmers selected through random sampling from the list of 94 farmers registered at Apple Zone, Darchula. A pretested, semi-structured questionnaire was used to collect the data from respondents. Data analysis was done using MS Excel and SPSS. The average area under apple cultivation was found to be 7.52 ropani. Financial analysis for a productive period of 20 years identified apple as a profitable activity with an average benefit-cost ratio of 1.88 and a net present value of NRs. 119266.17 per ropani. Further, the IRR and payback period were found to be 22.03% and 8 years and 8 months, respectively. The total cost of production associated with apple farming was found to be NRs. 135542.41 per ropani. Fencing costs and labor wages were found to account for the majority of investment and operational costs, respectively. Sensitivity analysis for a 10% increase in cost, a 10% decrease in output, a 1% increase in output price, and a one-year delay in production revealed the project’s insensitivity to the changes mentioned. The study concluded that apple farming was financially feasible in Darchula district, with a further need for progressive mechanization of farming practices and the utmost need for improvement of irrigation and transportation facilities to enhance apple production as desired.

Keywords

• B:C Ratio
• internal rate of return
• net present value
• pay back period
• sensitivity analysis