A Financial Analysis and Credit Gap Assessment of Madurai Malli Flower in Madurai District of Tamilnadu

Global competitive environment in recent trend shifts towards traditional products of quality with a strong cultural link particular geographical origin, with the opportunity to move away from commodity markets into more profitable markets through differentiation. Thus, geographical indications(GI) act as a protection measure for both consumers and producers apart from solving problems that arise from information asymmetry and free riding on reputation. One such GI tagged product from Tamil Nadu is Madurai malli. The paper has determined to assess the financial feasibility of Madurai malli cultivation in Madurai district of Tamil Nadu. Primary data was collected with the aid of a well-structured and pre tested schedule from a random sample of 120 farmers. The findings showed that Madurai malli cultivation was economically viable and financially feasible in the area of study. The average cost of establishing a Madurai malli farm was found to be Rs. 204224.00/acre for the first year. The cost and returns incurred in cultivation for the subsequent years after establishment was calculated on an annual basis. Results of the financial feasibility measures show that the Net Present Value at 12 per cent discount rate, at the end of seven years was found to be positive, BenefitCost ratio was more than one and Internal Rate of Returns for Madurai malli cultivation was very high with a payback period of around 1year and 3 months. Credit facilities for the crop is solely provided by the National Agricultural Bank for Rural Development (NABARD) through cooperatives functioning in the study area from which the credit gap prevailing was assessed from the total variable costs incurred annually. The credit gap was found to be Rs. 144734.00/acre/year over the variable costs on an average. The study has recommended that farmers investment on Madurai malli cultivation was feasible but the credit needs of the farmers has to be fulfilled by the financial institutions.