Return on date
orchards in Balochistan
By Syed Mohammad Khair
Pakistan is the fifth largest date producer in the world,
with an area of 74.80 thousand hectares and production of
426.80 thousand tons. Balochistan produces 225 thousand tons
of dates from an area of 42.3 thousand hectares and
contributes 53 per cent to the total national output. Dates
are second after apples in the area.
The Mekran division is producing 227 thousand tons of quality
dates from about 20 varieties. Unfortunately, only a few
thousands tons are marketed. Mekran is the second largest date
producer area in the country after Sukkur. In the province,
the Kech district share is 59 per cent.
The date orchard involves not only planting but requires
ceaseless care and application of necessary inputs around the
year. Growers have to choose whether they should assign their
limited resources to plant date orchard or utilize these
elsewhere. There is a lack of information about the financial
feasibility in long-term investment in fruit orchards.
The investment appraisal analysis of date intercropped with
Lucerne shows a negative cash flow during the first three
years due to initial investment costs and the application of
inputs and care each year. The cash flow becomes positive in
the fourth year. The cash flow remains higher from year nine
to year 20 due to a good return from the intercrop.
To calculate the net present value (NPV) of date orchard
intercropped with Lucerne, the cash flow is discounted. The
net present value (NPV) of Rs73,506 at 12 per cent discount
rate and the internal rate of return (IRR) is 17 per cent.
The investment analysis of date intercropped with wheat and
vegetables shows a negative cash flow during the first three
years of date planting with intercrops due to the initial
establishment costs of planting date orchard. The cash flow
becomes positive in the fourth year and remains positive till
the rest of production period.
To calculate the net present value (NPV) of intercropped date
orchard the cash flow is discounted. The net present value (NPV)
at Rs54,541 at 12 per cent discount rate and the internal rate
of return (IRR) is 15 per cent.
Benefit-cost ratio analysis: A second discounted measure of
project worth is the benefit-cost ratio. This is the ratio
obtained when the present worth of the benefit stream is
divided by the present worth of the cost stream. It is noted
that the absolute value of the benefit-cost ratio will vary
depending on the interest rate chosen. The higher the interest
rate, the smaller the resultant benefit-cost ratio, and if a
high enough rate is chosen, the benefit-cost ratio will be
driven down to less than one. The decision rule of this
technique is to accept those projects that at least the cost
of the stream equals the benefit of the stream i.e., (1:1).
The maximum benefit- cost of date orchard intercropped with
was obtained at 1:1.71. The analysis indicates that the
revenue received makes the overall return from the same field
more attractive for growers.
The benefit-cost ratio of date orchard intercropped with wheat
1:1.53 and is less than as compared to intercropping with
Lucerne because Lucerne is a perennial crop and there is great
demand for fodder in local market.
The return on investment in date orchard is estimated against
the current rate of interest on agricultural loans, i.e. 12
per cent per annum.
Intercropping in young orchard is extensively acceptable among
growers and economically profitable. The payback for dates
stars from first year with intercrops. There were no orchards
without intercrops because farmersí opinion in this regard is
that the intercrops are a source of revenue all over the year.