Suitability of Large Cardamom Farming as Business in Eastern Corridor of Nepal

Abstract

Background: Black gold popularly renounced for Large cardamom which is world’s oldest and third expensive spice following, saffron and vanilla. The study was to assess suitability of large cardamom farming as business in eastern Nepal. Methods: Eastern Nepal, subdivided as Koshi corridor (Sankhuwasaba and Tehrathum) and Mechi corridor (Taplejung and Panchthar), were purposively selected as a research site. About 480 Households were selected randomly. An interview schedule was prepared for cost of production and other expenses incurred along with production and price received by farmers. Result: During the 7-year cycle, the total fixed cost was NRs 115,663. The breakeven point for large cardamom was calculated to be 157.45 kg. The average price per kilogram of large cardamom was NRs 1274.6. The average variable cost per kilogram of large cardamom was NRs 621.01. Financial indicator like net present value (NPV), benefit cost ratio (BCR) and internal rate of return (IRR) were 1,536,006, 2.14 and 71.31. The Return on Investment (ROI) and Payback period (PBP) were 138.45 and 5.6 years. Under worse scenario, The NPV declined to 977,115.1, the BCR fell to 1.60, the IRR fell to 50.02 and the ROI fell to 78.84. The PBP has risen to 6.8 years. This scenario demonstrated that simultaneous negative increases in cost and income had a greater impact on the profitability of large cardamom farming. Finally, the study’s findings highlighted the sensitivity of financial indicators in large cardamom farming to changes in production costs, income and delays. This helpful information could be used by stakeholders to make decisions and develop strategies to improve sustainability of large cardamom growing in the research area.