Profitability in Groundnut Cultivation in India: A State-wise Analysis

Abstract

Profitability in groundnut cultivation has been analyzed for five major groundnut-growing states, viz. Andhra Pradesh, Gujarat, Karnataka, Maharashtra and Tamil Nadu for the past fifteen years (1996-97 to 2010-11) using secondary data. On considering cost C2, loss was observed in ten or more years in all the states, except Gujarat. Considering cost A2 with family labour cost, it was found that farmers earned profit in all the fifteen years in Gujarat, while incurred loss in Tamil Nadu (in 2001-02), Andhra Pradesh (in 1999-00 and 2001-02), Karnataka (in 1999-00, 2001-02 and 2008-09) and Maharashtra (in 2002-03, 2004-05 and 2008-09). Implicit prices were found higher than the minimum support price (MSP) in eleven or more years, but less than cost of production in twelve or more years, except in Gujarat. The frequent losses in groundnut have pointed out the need for better farm management through mechanization, competitive MSP and trade policy reforms to make groundnut cultivation a sustainable enterprise