Entrepreneurship, Marketing and Agricultural Economics
Domain 12 tests the business side: costing, profitability ratios, marketing channels and the institutions that support horticultural enterprises.
Cost and income concepts
- Fixed costs (land revenue, depreciation, interest) versus variable costs (seed, fertilizer, labour, plant protection).
- Gross income = yield x price; net income = gross income - total cost.
- B:C ratio may be gross income / total cost or net income / total cost; always state the definition used.
- Break-even yield = total cost / price per unit.
Marketing
- Channels: producer to consumer; producer to retailer; producer through commission agent and APMC to wholesaler to retailer.
- e-NAM, FPOs, contract farming, direct marketing and farmer markets shorten the chain.
- Market margin and producer's share measure efficiency; grading and branding raise price realisation.
Worked example
Banana: cost of cultivation Rs 2,50,000/ha, yield 50 t/ha, price Rs 12,000/t. Gross income = 50 x 12,000 = Rs 6,00,000. Net income = 6,00,000 - 2,50,000 = Rs 3,50,000. Gross B:C = 6,00,000 / 2,50,000 = 2.40; net B:C = 3,50,000 / 2,50,000 = 1.40. Reasoning: the two ratios differ by exactly 1, so always report which one you calculated.
Marks-losing traps
- Mixing gross and net income.
- Omitting family labour or depreciation from cost.
- Comparing farm-gate price with retail price.
- Quoting a B:C ratio without stating the definition.