Wholesale or direct sale for a 0.8 ha carp harvest
A farmer in Wardha district manages a 0.8 ha composite carp pond. He stocked 6,000 fingerlings/ha and harvested 3.24 t after nine months. Costs were: seed ₹14,000; feed ₹1,85,000; manure and fertilizer ₹18,000; labour ₹65,000; pond lease ₹45,000; miscellaneous ₹23,000. A wholesaler offers ₹105/kg at the pond gate. Alternatively, the farmer can sell directly in a town market at ₹155/kg, but expects 8% loss from transport and handling and extra costs of ₹35,000 for transport, ice, market fees and labour. He has no cold storage and must sell within two days. He asks whether direct selling is worth the extra effort and what price he needs to break even. He has one small vehicle and can transport only about 400 kg per trip.
1. Calculate the break-even price and profit for the wholesale option.
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Total cost:
- Seed ₹14,000
- Feed ₹1,85,000
- Manure and fertilizer ₹18,000
- Labour ₹65,000
- Pond lease ₹45,000
- Miscellaneous ₹23,000
- Total = ₹3,50,000
Wholesale revenue at ₹105/kg for 3,240 kg:
- 3,240 × 105 = ₹3,40,200
- Profit = 3,40,200 − 3,50,000 = −₹9,800 (a loss)
Break-even price = total cost ÷ saleable kg
- 3,50,000 ÷ 3,240 = ₹108.02/kg
So the wholesale offer is below break-even. At ₹105/kg the farmer loses about ₹9,800. He needs at least about ₹108/kg at the pond gate just to cover costs.
2. Calculate the saleable quantity, break-even price and profit for direct selling.
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Direct selling has 8% loss, so saleable quantity is:
- 3,240 × 0.92 = 2,980.8 kg, about 2,981 kg
Extra costs are ₹35,000, so total cost is:
- 3,50,000 + 35,000 = ₹3,85,000
Revenue at ₹155/kg:
- 2,981 × 155 = ₹4,62,055
- Profit = 4,62,055 − 3,85,000 = ₹77,055
Break-even price for direct selling:
- 3,85,000 ÷ 2,981 = ₹129.16/kg
Direct selling is profitable at ₹155/kg and is above break-even by about ₹26/kg. However, the margin is sensitive to price fall and to higher handling loss. If the market price drops below about ₹129/kg, direct selling loses money.
3. Recommend a choice and state two conditions or risk controls.
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Recommendation: direct selling is worth trying, but not all 3.24 t should be risked in one market. The direct route gives about ₹77,000 profit compared with a loss of about ₹9,800 wholesale, a difference of about ₹87,000. That is a strong incentive.
Conditions and risk controls:
- Pre-arrange buyers and staggering. Confirm demand before harvest and sell in batches. The vehicle carries only about 400 kg per trip, so about eight trips are needed; plan trips over two days with ice and shade. Keep a wholesale buyer as a fallback for unsold fish.
- Control loss and price risk. Use clean ice, avoid overcrowding, and sell early in the day. Set a minimum acceptable price near ₹130/kg; if the market price falls below that, divert fish to the wholesaler rather than force a loss. Keep simple records of each trip so the farmer can compare actual profit with the estimate.
The decision rule is: choose direct selling only if the expected market price stays comfortably above ₹129/kg and the farmer can move the fish quickly without extra mortality.