Economic evaluation of the marketing system of Naga king chilli in Kohima District, Nagaland

Introduction

Naga King Chilli (Capsicum chinense), also widely known as Bhut Jolokia or ghost pepper, is one of the hottest chili varieties in the world. Indigenous to the North-Eastern states of Indiaparticularly Nagaland, Manipur, and Assam-it is renowned for its extreme pungency, smoky aroma, and deep cultural significance in local cuisine. Recognized for exceeding one million Scoville Heat Units (SHU), Naga King Chilli gained international attention in the early 21 st century and has since been used in culinary dishes, food products, and even defense-grade irritant formulations. Naga King Chilli (Capsicum chinense) plays a vital role in the rural economy of Northeast India, where its high pungency and limited geographic distribution allow it to fetch premium prices in both domestic and export markets. Farmers benefit from its high market demand, since even small harvests generate substantial income, and value-added products such as pickles, powders, and sauces significantly expand revenue potential. The Chilli has strong export demand in the United States, Europe, and Southeast Asia. Beyond food markets, its capsaicin-rich composition has also found use in defense technologies and natural pest repellents, further diversifying its economic importance. In Nagaland, Naga King Chilli is widely cultivated across many districts, including leading areas such as Peren district, Dimapur district, Mon district and Kohima district, where the agro-ecological conditions favour its growth. Nagaland produces around 4,000 metric tonnes (MT) of Naga King Chilli annually, indicating its continued importance as a spice crop for the region. This study is important because it will help to identify the existing marketing channels that are used to supply the products from producer to consumer. This research is essential in order to understand the economic challenges as well as give useful information about the market opportunities.

Objectives of the Study 1. To analyse the prevailing market channels for Naga King

Chilli in the selected study area. 2. To assess marketing costs, marketing efficiency, price spread, and the producer's share in the consumer's rupee in the marketing of Naga King chilli.

Research Methodology

The study was conducted in Kohima district of Nagaland. The district was purposively selected because Naga King Chilli (Capsicum chinense) is widely cultivated in the area and plays an important role in the livelihood of rural farmers. The agroclimatic conditions of the district are highly suitable for the cultivation of Naga King Chilli.

Sampling Procedure

A multistage sampling technique was adopted for the selection of respondents. In the first stage, villages having considerable area under Naga King Chilli cultivation were selected purposively. In the second stage, farmers cultivating Naga King Chilli were selected randomly from the identified villages. A total of 60 farmers were selected for the study and categorized into three farm size groups as follows:

Analytical Tools Used 1. Marketing Margin

Marketing margin is the amount added to the price of a commodity by intermediaries to cover marketing costs and their profit. The price spread of an agricultural commodity refers to the gap between the amount paid by the final consumer and the price received by the primary producer (farmer). It reflects the overall marketing costs-such as handling, transportation, storage, and processing-along with the margins or profits earned by intermediaries involved in the marketing chain.

Results and Discussion

In the study area, three major marketing channels were identified for the marketing of Naga King Chilli. These are: Channel I: Producer → Consumer Channel II: Producer → Retailer → Consumer Channel III: Producer → Wholesaler → Retailer → Consumer The results from table 2 indicate that the total marketing cost increases with the length of the marketing channel. Channel I, which involves direct sale from producer to consumer, recorded the lowest marketing cost (₹18.00/kg). This is because the produce passes through no intermediaries and therefore avoids intermediary costs and margins.

Channel II, involving a retailer, showed a higher marketing cost of ₹25.80/kg. The increase in cost is mainly due to the expenses incurred by retailers in transportation, storage, and market handling.

Channel III recorded the highest marketing cost (₹36.10/kg) as the produce passes through both wholesalers and retailers. Each intermediary incurs marketing expenses and adds their margin, which significantly increases the overall cost. Thus, the study indicates that shorter marketing channels help reduce marketing costs and increase the producer's share in the consumer's rupee. Encouraging direct marketing, farmers' markets, and producer cooperatives can help reduce the number of intermediaries and improve marketing efficiency. Understanding the price spread across different channels and producers' sahre in consumer rupee.

The analysis from Table 3 shows that price spread varies significantly across marketing channels. Channel I, where producers sell directly to consumers, recorded the lowest price spread (₹18/kg) since no intermediaries are involved. This channel allows farmers to retain a larger share of the consumer price.

In Channel II, the involvement of a retailer increases the price spread to ₹90/kg, mainly due to retailer marketing costs and margins. Channel III shows the highest price spread (₹130/kg) because both wholesalers and retailers are involved in the marketing process.

The results clearly indicate that as the number of intermediaries increases, the price spread also increases. This reduces the share of the producer in the consumer's rupee and lowers marketing efficiency. Therefore, promoting direct marketing channels, farmer cooperatives, and producer markets could help reduce price spread and improve farmers' income in the study area. The results from Table 4 show clear variation in the producer's share across the different marketing channels. Channel I recorded the highest producer's share (100%), as the farmer sells directly to the consumer without the involvement of intermediaries. This allows the farmer to receive the entire consumer price. In Channel II, where a retailer is involved, the producer's share declined to 78.57 percent due to the marketing costs and profit margin taken by the retailer. Channel III recorded the lowest producer's share (69.77 percent) because both wholesalers and retailers participate in the marketing process. Each intermediary adds marketing costs and margins, which increases the consumer price but reduces the share received by the farmer. Thus, the study indicates that shorter marketing channels result in higher producer shares, whereas longer channels with more intermediaries reduce the farmer's share in the consumer's rupee. Analysing the marketing efficiency across different channels The results from Table 5 clearly show that Channel I is the most efficient marketing channel, with the highest marketing efficiency value of 20.00. This is because the channel involves direct sale from producer to consumer, thereby eliminating intermediaries and minimizing marketing costs. As a result, farmers receive a higher share of the consumer's price.

Channel II exhibits moderate efficiency (16.15) due to the involvement of a retailer. The presence of a single intermediary increases the marketing cost and reduces the efficiency compared to Channel I.

Channel III is the least efficient channel (11.94), as it involves both wholesalers and retailers. The participation of multiple intermediaries increases the marketing cost significantly and reduces the efficiency of the marketing system. Each intermediary adds their own cost and margin, which increases the consumer price but does not proportionately benefit the producer. The marketing efficiency analysis using Shepherd's method indicated that Channel I was the most efficient marketing channel, followed by Channel II and Channel III. The higher efficiency of direct marketing channels was mainly attributed to lower transportation, handling, and intermediary charges. The findings clearly indicate that reduction in intermediaries can significantly improve farmers' income and marketing efficiency.

Based on the findings, the study suggests the development of efficient market infrastructure, establishment of storage and cold storage facilities to reduce post-harvest losses and price distress, improvement in transportation networks to reduce marketing costs, dissemination of timely market information, and promotion of direct marketing practices. Formation of Farmer Producer Organizations (FPOs) and strengthening cooperative marketing can also help farmers reduce dependence on intermediaries and enhance their share in the consumer's rupee.

Overall, the study concludes that although Naga King Chilli possesses high market potential and profitability, improving the existing marketing system and addressing marketing constraints are essential for ensuring better returns and sustainable livelihood opportunities for farmers in Kohima district of Nagaland.

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