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

Figures & data

Figure 1. A map of Nepal showing the study site.

Table 1. Sample size determination using the proportionate stratified sampling method

Rural Municipalities	Registered Apple Farmers	Selected Number of Farmers
Apihimal	20	17
Byas	27	23
Duhu	14	12
Marma	15	13
Naugadh	18	15
Total	94	80

Figure 2. Apple farming experience of the respondents in the study areas of Darchula district, 2022.

Table 2. Area, production, and number of bearing and non-bearing trees (2022) in the study areas

Rural Municipality	Area (Ropani)	Production (Quintal)	Bearing trees	Non- bearing trees	Average production per plant(kg)	Productivity (Qt/Ropani)
Apihimal	129	193	1688	2742	11.55	1.54
Byas	183	263.1	2520	3855	10.44	1.46
Duhu	73	86.5	980	1265	8.83	1.17
Marma	108	145.4	1630	1690	8.92	1.30
Naugadh	101.5	139.6	1615	1465	8.64	1.35
Total	594.5	827.6	8433	11017	9.68	1.36

(19.65 Ropani = 1 Hectare and 10 Quintals = 1 Ton)

Table 3. Initial investment cost (1–4 years) in apple farming in the present survey for the feasibility study of apple production in Darchula district of Nepal, 2022

S.N	COSTS	Initial Investment Cost (1–4 Years)
		Year 1	Year 2	Year 3	Year 4
A	Variable costs (Per Ropani)	Amt(NRs.)	Amt(NRs.)	Amt(NRs.)	Amt(NRs.)
1	Human Labor
1.1	Training and Pruning	0	400	520	640
1.2	Irrigation and Maintenance	400	400	400	400
1.3	Manuring and Weeding	1200	1320	1440	1560
2	FYM(Farm Yard Manure)	720	720	720	1440
3	Plant Protection Measures
3.1	Bordeaux Paste	0	0	200	400
	Total Variable Cost	2320	2840	3080	4040
B	Fixed Costs (Per ropani)
1	Land Preparation and Layout	2500	0	0	0
2	Sapling @ 20	7000	350	0	0
3	Pit Digging and sapling establishment	4000	200	0	0
4	Fencing	42500	0	0	0
5	Irrigation Channel Installation	10000	0	0	0
6	Tools and Equipment	2000	0	0	0
7	Land Lease	2000	2000	2000	2000
8	Land tax	50	50	50	50
9	Water Charge	40	40	40	40
	Total Fixed Cost	70090	2640	2090	2090
	Total Cost (Fixed + Variable)	72410	5480	5170	6130

(1 USD = NRs. 131.40)

Table 4. Operating costs (5–20 years) in apple farming in the present survey for the feasibility study of apple production in Darchula district of Nepal, 2022

S.N	Costs	Year (5–9)	Year (10–14)	Year (15–20)
A	Variable Costs (Per ropani)	Amt(NRs.)	Amt(NRs.)	Amt(NRs.)
1	Human Labor
	Training and Pruning	1775	3432	4458
	Irrigation and Maintenance	400	400	400
	Manuring and Weeding	2400	3720	4080
2	FYM (Farm Yard Manure)	2790	5580	7340
3	Plant Protection Measures
	Bordeaux Paste	505	745	860
	Total Variable Cost	7870	13877	17138
B	Fixed Costs (Per ropani)
1	Land Lease	2000	2000	2000
2	Land tax	50	50	50
3	Water Charge	40	40	40
	Total Fixed Cost	2090	2090	2090
	Total Cost (Fixed + Variable)	9960	15967	19228

(1 USD = NRs. 131.40)

Figure 3. Average apple production per plant per year in the study areas of Darchula district, 2022.

Figure 4. Cost of per kg apple production in the present survey for the feasibility study of apple production in Darchula district of Nepal, 2022.

Figure 5. Benefit-cost (B:C) ratio calculated for 20 years of productive fruiting period of apple in Darchula, 2022.

Table 5. Analysis of net present value (NPV) and benefit-cost (B:C) ratios in the present survey for the feasibility study of apple production in Darchula district of Nepal, 2022

Year	Cost	Benefit	Discount Factor	Present Value of cost at 12% discount rate (NRs.)	Present Value of Benefit at 12% discount rate	Present Value of Net Benefit at 12% Discount Rate (NRs.)	Benefit Cost (B:C) Ratio
1	72410	0	0.893	64651.79	0	−64651.79	0.00
2	5480	0	0.797	4368.62	0	−4368.62	0.00
3	5170	0	0.712	3679.90	0	−3679.90	0.00
4	6130	0	0.636	3895.73	0	−3895.73	0.00
5	8035	7650	0.567	4559.27	4340.82	−218.46	0.95
6	9415	17000	0.507	4769.93	8612.73	3842.80	1.81
7	10340	34000	0.452	4677.29	15379.87	10702.58	3.29
8	10780	42500	0.404	4353.86	17165.04	12811.18	3.94
9	11230	51000	0.361	4049.65	18391.11	14341.46	4.54
10	12990	59500	0.322	4182.43	19157.41	14974.98	4.58
11	14985	68000	0.287	4307.83	19548.38	15240.55	4.54
12	15980	85000	0.257	4101.67	21817.38	17715.71	5.32
13	17375	110500	0.229	3981.90	25323.75	21341.85	6.36
14	18505	119000	0.205	3786.49	24349.76	20563.27	6.43
15	19228	136000	0.183	3512.88	24846.69	21333.81	7.07
16	19228	136000	0.163	3136.50	22184.55	19048.04	7.07
17	19228	68000	0.146	2800.45	9903.82	7103.37	3.54
18	19228	68000	0.130	2500.40	8842.69	6342.29	3.54
19	19228	68000	0.116	2232.50	7895.26	5662.76	3.54
20	19228	68000	0.104	1993.30	7049.34	5056.04	3.54
				135542.41	254808.58	NPV= 119266.17	1.88

(1 USD = NRs. 131.40)

From the above table,

(1) Net present value at 12% discount (NPV) = NRs. 119266.17

(2) Average benefit-cost (BC) ratio for a productive period of 20 years = 1.88

Table 6. Analysis of the internal rate of return (IRR) in the present survey for the feasibility study of apple production in Darchula district of Nepal, 2022

Year	Cost	Benefit	Net Benefit	Discount Factor at 22%	Present Value of Net Benefit at 22%	Discount Factor at 23%	Present Value of Net Benefit at 23%
1	72410	0	−72410	0.82	−59352.46	0.81	−58869.92
2	5480	0	−5480	0.67	−3681.81	0.66	−3622.18
3	5170	0	−5170	0.55	−2847.15	0.54	−2778.27
4	6130	0	−6130	0.45	−2767.08	0.44	−2678.18
5	8035	7650	−385	0.37	−142.45	0.36	−136.75
6	9415	17000	7585	0.30	2300.36	0.29	2190.41
7	10340	34000	23660	0.25	5881.61	0.23	5554.93
8	10780	42500	31720	0.20	6463.30	0.19	6054.70
9	11230	51000	39770	0.17	6642.28	0.16	6171.77
10	12990	59500	46510	0.14	6367.19	0.13	5868.07
11	14985	68000	53015	0.11	5948.95	0.10	5438.04
12	15980	85000	69020	0.09	6348.29	0.08	5755.91
13	17375	110500	93125	0.08	7020.83	0.07	6313.93
14	18505	119000	100495	0.06	6210.22	0.06	5539.53
15	19228	136000	116772	0.05	5914.82	0.04	5233.14
16	19228	136000	116772	0.04	4848.21	0.04	4254.58
17	19228	68000	48772	0.03	1659.79	0.03	1444.72
18	19228	68000	48772	0.03	1360.48	0.02	1174.57
19	19228	68000	48772	0.02	1115.15	0.02	954.93
20	19228	68000	48772	0.02	914.06	0.02	776.37
					204.61		−5359.72
From Table,
Lower Discount Rate (LDR)							22
Upper Discount Rate (UDR)							23
Difference in discount rate							1
NPV at LDR							NRs. 204.61
Absolute Value of NPV at UDR							NRs. 5359.72

(1 USD = NRs. 131.40)

CALCULATION

$\mathrm{I}\mathrm{R}\mathrm{R}=\mathrm{L}\mathrm{D}\mathrm{R}+\hspace{0.17em}\frac{\left(\mathrm{N}\mathrm{P}\mathrm{V}\mathrm{a}\mathrm{t}\mathrm{L}\mathrm{D}\mathrm{R}\right)}{\left(\mathrm{S}\mathrm{u}\mathrm{m}\mathrm{o}\mathrm{f}\mathrm{N}\mathrm{P}{\mathrm{V}}^{\prime }\mathrm{s}\mathrm{a}\mathrm{t}\mathrm{L}\mathrm{D}\mathrm{R}\mathrm{\&}\mathrm{U}\mathrm{D}\mathrm{R}\right)}\times \left(\mathrm{U}\mathrm{D}\mathrm{R}-\mathrm{L}\mathrm{D}\mathrm{R}\right)=\hspace{0.17em}22.03\mathrm{\%}$

Table 7. Calculation of payback period (PBP) in the present survey for the feasibility study of apple production in Darchula district of Nepal, 2022

Year	Cost	Benefit	Net Benefit	Cumulative Net Benefit
1	72410	0	−72410	−72410
2	5480	0	−5480	−77890
3	5170	0	−5170	−83060
4	6130	0	−6130	−89190
5	8035	7650	−385	−89575
6	9415	17000	7585	−81990
7	10340	34000	23660	−58330
8	10780	42500	31720	−26610
9	11230	51000	39770	13160
10	12990	59500	46510	59670
11	14985	68000	53015	112685
12	15980	85000	69020	181705
13	17375	110500	93125	274830
14	18505	119000	100495	375325
15	19228	136000	116772	492097
16	19228	136000	116772	608869
17	19228	68000	48772	657641
18	19228	68000	48772	706413
19	19228	68000	48772	755185
20	19228	68000	48772	803957

(1 USD = NRs. 131.40)

CALCULATION

From the above table,

Payback Period (PBP) = 8.67 years

 = 8 Years 8 months

Table 8. Sensitivity analysis under some uncertain conditions in the present survey for the feasibility study of apple production in Darchula district of Nepal, 2022

S.N	Uncertain Conditions	NPV (NRs.)	IRR(%)	BC Ratio
1.	Increase in cost by 10%	105711.93	20.59	1.71
2.	Decrease in output by 10%	80231.07	18.96	1.54
3.	Decrease in the price of output by 1%	103163.84	20.30	1.69
4.	Delay in production by 1 year	72116.96	17.71	1.48

(1 USD = NRs. 131.40)

Table 9. Actors’ involvement in marketing the produced apple in the study areas of Darchula district, 2022

Actors’ involvement in marketing	Frequency	Percentage (%)
Trader	21	26.25
Farmer themselves	32	40.00
Traders and farmers’ both	18	22.50
Farmer’s Group/Co-operatives	9	11.25

Table 10. Ranking of the problems associated with the production of apples in the study areas of Darchula district, 2022

Problems	Frequency of respondents with scores of								Index Value	Rank
	1	2	3	4	5	6	7	8
Lack of quality planting materials	7	11	31	21	0	9	0	1	0.42	VI
Lack of fertilizers and pesticides	43	21	16	0	0	0	0	0	0.21	VIII
Lack of irrigation	0	0	0	0	11	23	16	30	0.85	I
Disease and pest severity	4	15	28	29	4	0	0	0	0.40	VII
Lack of training and extension service	12	0	5	0	45	7	7	4	0.56	IV
Technical Constraints	5	2	0	4	9	19	41	0	0.74	III
Occurrence of natural hazards	0	12	0	10	0	18	8	32	0.76	II
Attack of wild animals and birds	9	19	0	16	11	4	8	13	0.55	V

Table 11. Ranking of the problems associated with the marketing of apples in the study areas of Darchula district, 2022

Problems	Frequency of respondents with scores of						Index Value	Rank
	1	2	3	4	5	6
High middleman margin	15	33	16	16	0	0	0.402	V
Price fluctuation	10	24	30	16	0	0	0.44	III
Lack of grading and packaging	23	13	16	28	0	0	0.42	IV
Lack of transport facilities	0	0	0	0	40	40	0.92	I
Lack of market information	32	10	10	20	0	8	0.396	VI
Lack of storage	0	0	8	0	40	32	0.87	II

Data availability statement

The data that support the findings of this study are available from the corresponding author upon reasonable request.