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Profitability analysis of potato crop

Profitability analysis of potato crop

Potato is an important vegetable crop for growers and consumers as well in Pakistan. Overtime, per capita consumption of potatoes has risen to around 14.4 kg in Pakistan mainly due to dietary preferences for fast food. Rapid expansion in the processing industry with the entry of several firms have also contributed to increasing consumption of potato products. Furthermore, potato is the cheapest source of carbohydrates, vitamins, minerals, and proteins. Growing consumer demand and rising government attention to the development of horticultural crops has significantly contributed to the expansion of potato area and production in Pakistan.

In recent years, its production has experienced significant fluctuations mainly due to price changes and demand and supply imbalances. Pakistan has achieved significant improvement in potato yield. Yet, the yield per acre is much less as compared to other potato producing countries. The province of Punjab contributes 93.6% of the total national produce followed by Khyber Pakhtunkhwa (5.17%), Baluchistan (1%), and Sindh (0.33%). Pakistan also exported 364 million tonnes of potato in 2020-2021. Major potato export destinations include Afghanistan, Sri Lanka, Malaysia, Iran, UAE, and Russian Federation.

Okara, Sahiwal and Depalpur are the major potato producing area in Punjab. From these area 45 farmers were selected to estimate the profitability of potato crop. Table below shows per acre production cost of potato crop in the study area for cropping season 2021. Major items contributed towards the total cost are seed, fertilizer, land rent, and bardana (packing bags) cost. Average yield in the area was 294 mounds / acre and the average crop price was Rs.1000/mounds during the data collection period. Average profit estimated was Rs.104171/acre and Benefit-Cost Ratio (BCR) was calculated as 1.61 which shows the economic viability of potato production.

Table: Potato Production Costs and Profitability Analysis
Sr. No. Operations/Inputs Cost/Acre (Rs.)
1 Cost of Land Preparations 8440
2 Cost of Seed & Sowing 31060
3 Cost of Water (Tube well & Canal) 6356
4 Cost of Fertilizer 28731
5 Cost of Dung / FYM 5257
6 Cost of Pesticides 6884
7 Cost of Weedicides 1595
8 Cost of Harvesting 10958
9 Full / Half Yearly Land Rent (Rs. / acre) 36133
10 Cost of Labor (Permanent+Seasonal Hired) 8789
11 Cost of Transport 5500
12 Bardana Cost 16062
13 Marketing Cost 3953
14 Other miscellaneous costs 1000
15 Total Cost 170719
16 Average Yield (40kg/acre) 294
17 Crop Price (Rs. /40kg) 1000
18 Gross Revenue (Rs. /Acre) 294000
19 Aarthi Commission (Total Revenue * 0.065) 19110
20 Net Revenue (Rs. /Acre) 274890
21 Profit (Rs. /Acre) 104171
22 B-C Ratio 1.61

Contributing Author: Prof. Dr. Khalid Mushtaq, Director, Institute of Agricultural & Resource Economics, University of Agriculture Faisalabad,, 041-9200644; 0300-6735714

Authors Acknowledge to Institute of Chartered Accountants of Pakistan (ICAP) for providing grant for the field surveys.

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