Mango pulp in Chittoor: sizing a weight-losing plant
A farmer cooperative in Chittoor district proposes a mango pulp unit. The belt produces about 12,000 t of surplus mangoes in a 50-day season, currently sold at ₹10/kg. A consultant quotes 35% pulp recovery, a pulp price of ₹90/kg, processing cost of ₹18/kg pulp, packaging ₹5/kg and transport ₹4/kg to Chennai. Annual fixed costs are ₹1.8 crore. A 20 t/day plant would run 50 days. Power cuts average four hours a day; a diesel generator would add ₹2/kg pulp. The nearest cold store is 60 km away and the nearest port 130 km. The cooperative can raise ₹2 crore. Officials suggest a 40 t/day plant instead. Most farmers own less than 2 ha, and 60% of the fruit is harvested in three weeks.
1. Calculate the material index, the contribution per tonne of raw mango and the break-even tonnage. Assess whether a 20 t/day plant is viable.
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Material index = weight of raw material ÷ weight of finished product = 1 ÷ 0.35 = 2.86. The process is strongly weight-losing, so it should locate near the raw material.
Per tonne of raw mango: output = 350 kg pulp; revenue = 350 × ₹90 = ₹31,500. Variable costs = raw mango ₹10,000 + processing 350 × ₹18 = ₹6,300 + packaging 350 × ₹5 = ₹1,750 + transport 350 × ₹4 = ₹1,400, totalling ₹19,450. Contribution = ₹31,500 − ₹19,450 = ₹12,050 per tonne.
Break-even tonnage = fixed cost ÷ contribution = ₹1,80,00,000 ÷ ₹12,050 = about 1,494 t. A 20 t/day plant running 50 days handles 1,000 t. Its contribution is ₹1.205 crore, which is ₹59.5 lakh short of the ₹1.8 crore fixed cost. The 20 t/day plant is not viable at these prices.
2. Advise the cooperative on the 40 t/day option, taking account of power cuts, fixed costs and the 12,000 t surplus.
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A 40 t/day plant handles 2,000 t in 50 days, above the 1,494 t break-even. Contribution would be 2,000 × ₹12,050 = ₹2.41 crore; if fixed costs stayed at ₹1.8 crore, the surplus would be about ₹61 lakh. But fixed costs will rise with larger equipment, so this is an optimistic upper bound and must be replaced by a firm quotation.
Power cuts of four hours a day remove about 16.7% of running time. A generator adds ₹2/kg pulp, or ₹700 per tonne of raw fruit, reducing contribution to ₹11,350/t and raising break-even to about 1,586 t. The 2,000 t throughput still clears this, but only by a thin margin.
Even a 40 t/day plant absorbs just 2,000 t of the 12,000 t surplus. The remaining 10,000 t still faces a price crash. The cooperative should consider a 40 t/day plant only with reliable power and a confirmed fixed-cost estimate, plus a pulp concentration line or a second fruit to extend the season. Otherwise two smaller units with contract farming may spread risk better.
3. Explain the locational logic of the plant and one risk-reduction measure suited to small farmers.
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The material index of 2.86 means that transporting ripe mangoes is much more expensive, and riskier, than transporting pulp. Mangoes are perishable and 60% are harvested in three weeks, so the factory must be close to the orchards. The port at 130 km is less important than the 60 km cold store because the product can be transported after processing; the critical locational pull is the raw material. This is a classic weight-losing, perishable agro-industry location.
The main risk is a procurement and price crisis: farmers sell in a narrow window and the factory cannot absorb the surplus. A suitable measure is a cooperative contract with a minimum procurement price and staggered variety calendars, backed by a small cold store or ripening chamber. A second measure is diversification into guava or tomato pulp to keep the plant running outside the mango season. Both measures stabilise farmer income and improve capacity utilisation without pretending that one plant can solve the whole surplus problem.