“The rising demand has made lemongrass cultivation a thriving business and farmers are finding it a good source for generating good returns with not much investment both financially as well as resource wise”
Hey guys today I am going to discuss on topic “how to make money from lemongrass farming?”
This article talks about the methods of lemongrass farming. Mostly cultivated in the Indian subcontinent, lemongrass is also grown in Sri Lanka, Southern India as well as in the Himalayan region of India like Arunachal Pradesh, Sikkim, Uttar Pradesh. Now it is also been farmed in other parts of the world like the America, Africa and Asia.
Before that let’s gain some knowledge about lemongrass.
Lemongrass is a tropical and perennial plant (which lives for more than 2 years) mostly cultivated in the Indian subcontinent and is a very useful herb used to treat various health problems. Grows as long as 2-3 meters tall and has basically leaves that are used for various purposes. Regular use of lemongrass has medicinal benefits and it also works as a refreshment especially from stress and anxiety.
Mostly consumed after boiling the leaves, lemongrass uses lowers blood pressure, chances of heart problems, reducing pain during menstrual cycle, and many more.
In the recent few decades, the demand for lemongrass and its products have seen a rise especially due to wide usage by people for its health benefit, as earlier it was only limited to the medicinal world or the places it was widely grown. The rising demand has made lemongrass cultivation a thriving business and farmers are finding it a good source for generating good returns with not much investment both financially as well as resource wise.
The commercialization of lemongrass has made it a widely demanded entity and products manufactured using lemongrass are in demand. Some of the common usage of lemongrass are:
- Lemongrass is used as insect repellant
- Used for scenting detergents and soaps
- It is used as tea mostly taken in the morning for refreshment and healthy digestion
- Used as flavor for various culinary preparations
- The citral component found in lemongrass oil is used widely in cosmetics, perfumes and beverages.
- Lemongrass oil has anti-bacterial and anti-fungal properties
- It is helpful in relieving from stomach cramps and intestinal issues
- It works as a great preservative
- Good to reduce stomach related issues like digestion, menstrual cramps, high blood pressure, fever and common cold.
As mentioned earlier, lemongrass farming isn’t very complex issue and it can easily be done following the basic procedures of farming while caring about certain specific issues. Mostly cultivated in Indian subcontinent, lemongrass cultivation has found its way even in America and Africa.
In India, many states cultivate lemongrass for domestic consumption as well as commercial consumption. The rise in demand in the recent few years has made farmers grow more lemongrass plants as one can get good returns from it in comparison to basic produce.
States like Uttar Pradesh, Sikkim, Maharashtra, Arunachal Pradesh, Kerala, and Assam have major share of lemongrass cultivation while other states do grow but have not much cultivation.
Lemongrass cultivation mostly finds traction in tropical and sub-tropical climates that are 1500 meters above the sea. With a temperature of 10-33 degree Celsius and with an annual rainfall of 700-3000 mm, lemongrass will see a productive growth. Sandy, loamy and rocky soil are best for lemongrass cultivation that offers PH level of 5-8. Such conditions increase the citral level in lemongrass.
Financial Aspects of Lemongrass Farming in India:
The rise in demand mostly through exports has made lemongrass farming a very lucrative option for our farmers. With not much investment one can make a good return exclusively through exports. India’s climatic conditions as well as the geography, both support lemongrass cultivation.
India has been a leader in lemongrass production over the years producing over 1800 MT of lemongrass annually. The wide demand of lemongrass for various usage (mentioned above) has made its farming a lucrative business especially through imports. Though various countries now export lemongrass but still it has a decent scope with good returns.
The average sale price of lemongrass oil in India is at Rs 1200 per kg. A general estimation if made, on a 1 hectare of land, approximately 480 kg of lemongrass oil can be produced annually. Thus in a year Rs 5,76000 can be made as return inclusive of cultivation cost.
Now let us come to the cultivation cost for growing lemongrass. A lemongrass slip once sown lasts for 5-6 years from which leaves can be extracted every 3-4 months. In the initial year, only twice leaf extraction can be done but from the 2nd year, 3-4 times extraction can be done.
Depending on the climatic conditions and the amount of rainfall received, cultivation cost can be reduced or can increase. For example, proper cultivation requires 700mm of rainfall on average and if this is not received then regular watering is required which can add into your cultivation cost. A sapling or slip of lemongrass costs close to 2-5 Rs and in a hectare of land it will require close to 50,000 slips.
Secondly, regular field maintenance is also required like preparing the soil for sowing, weed removal, regular watering, fertilizers, etc. This cost can be calculated based on personal preferences one makes. Mostly, farmers in India personally do all these activities and therefore no labor cost is required.
Manure, fertilizers, chemicals for weed control, extraction machine, water pump, electricity, fuel, etc. will have separate charges. Thus, one can make a 15-22% of profit based on amount invested and amount earned as profit.
Essential Machinery used for Oil Extraction:
- Evaporate Vessel
- Pump for condensation and
- Pump for cooling the water
- Steam Boiler
- Florentine Flask
- Cooling tower
Both cost of cultivation and profit can change from person to person, based on the quality of soil, how cultivated, cost of resource deployed, price at which the oil is sold, how much amount of oil extracted from the leaves, climate of the place where harvested, etc.
Tentative Cost Involved for Lemongrass Farming:
Costs vary based on farming size and resource deployed but to give a tentative figure it can be said that it can easily cost you close to 4-8 lakhs in general. If you are renting farm land for produce then the cost can go much high.
- Registration and Licensing: 1.5 lakhs to 2 lakhs
- Premises: 2-2.5 lakhs
- Cost of machinery and other equipment: 5 lakhs to 6 lakhs
- Manpower: 2 lakhs to 3 lakhs
- Electricity and water supply: 80 thousands to 1.2 lakhs
- Marketing and Advertisement: 2 lakhs to 3 lakhs
- Other Expenses: 1 lakh to 2 lakhs
But, to give an outline, one can easily make a profit of 15-22% based on the cost incurred v. profit made. In th end, it could be said that lemongrass farming is a lucrative business if one knows the best practices of cultivation and the best market for selling the extracted oil.
Legal Formalities for starting your Lemongrass Farming Business:
Though there is no registration or legal formality required to cultivate lemongrass since it doesn’t fall into the category of drugs or any scheduled produces. Thus one can cultivate lemongrass as per his or her convenience.
To start a business that deals with selling or manufacturing of lemongrass, one needs to get registered as a proprietor with the government of India and register under the Goods and Services Tax Act of 2017. You will be granted license to become a proprietor to sell such products.
Manufacturing at local level and selling at local level doesn’t necessarily requires any kind of registration but if you aim to supply your manufactured product in a big market especially for export then you must obtain the relevant license and get yourself registered.
Food Safety and Standards Authority Act deals with products manufactured or packaged for consumption and the said authority known as FSSAI grants license for this. One needs to apply to FSSAI, a procedure of testing and certification will be carried out before granting you license.
If the lemongrass oil is used for cosmetics or drug related purpose then one needs to get license or permission under the Drugs and Cosmetic Act. Exporting goods also requires licensing, registration and due process.
Under the Foreign Trade Policy one has to obtain Export Import Code and has to open a current account with a bank authorized to deal in foreign exchange. It would be beneficial for you to consult a professional dealing with the related issue.
You can also join groups that exclusively deal with lemongrass manufacturing, trade and export as they will help you maneuver through the complex ways.
Reaching the Market and Selling your Produce:
Getting a good market to sell your produce and product is the essential element in making maximum profit out of lemongrass farming business. Ready to use products from lemongrass like tea can be manufactured by self and it can enhance your profits.
Raw lemongrass oil is sold close to Rs 1200 per kg. To make extra profits you need to locate to market that offers you good price for the oil. You can also get into partnership with businesses that use lemongrass oil for various purposes like perfumes, cosmetic and medicinal products.
There are mini level products derived from lemongrass that can be manufactured or packaged by you requiring very decent resources and investment. This product can be sold directly into the market with a price double that of the lemongrass oil. You can contact people dealing with lemongrass farming and related business to explore more into this field.