Economic Analysis of Oilpalm Cultivation in India: A Case of Andhra Pradesh State

Aim: Present study was taken up with an objective to examine the economic viability and financial feasibility of oilpalm cultivation in Andhra Pradesh.

Study Design: Random sampling was used for the study. From each district, based on area proportionality 60 oil palm growers were selected.

Place and Duration of Study: The present study was based on primary data collected from 8 oil palm growing districts of Andhra Pradesh. Data was collected in the year 2021.

Methodology: To study the financial feasibility, cost concepts given by Commisssion for Agricultural Costs and Prices (CACP), profitability measures like NPV, BCR, IRR and resource use efficiency were used.

Results: The results revealed that, the total cost during the pre-bearing period (initial 3 years) was Rs. 247831 per hectare which includes variable cost (Rs. 167267) and fixed cost (Rs. 80564). The total cost during bearing period (4th to 15th years only) was Rs. 1260177 with a variable cost of Rs. 669494 and fixed cost of Rs. 590684. The total cost (Cost C3) of Oil palm and the net returns over Cost C3 were found as Rs. 1666053 and Rs. 942092 pKer hectare respectively. The increased transportation costs of manures and non-availability of Farm Yard Manure led to the usage of more inorganic fertilizers by sample farmers. The resource use efficiency revealed that manures, fertilizers and annuity of drip system are underutilized whereas; labour and transportation costs were over-utilized.

Conclusion: Benefit-cost ratio on variable costs and total costs was 2.98 and 1.49 respectively at 7 per cent which determines that the oil palm cultivation is financially more viable and best suited for rich, large land owning farmers. IRR was 26.01 per cent at which NPV becomes zero. The NPV, BCR and IRR revealed that oil palm cultivation was economically viable in Andhra Pradesh.