Profitability of Red Sweet Pepper (Capsicum Annuum L.) Production in Field Cultivation

Wioleta Sobczak and Anna Sobczak

Roczniki (Annals), 2021, vol. 2021, issue 3

Abstract: The aim of the study was to assess the profitability of red sweet pepper (Capsicum annuum L.) production in relation to incurred labor and capital inputs in selected horticultural farms. The analyzed group consisted of farms producing sweet pepper in traditional cultivation in the districts of Przysucha and Radom. To determine the correlation between income and expenditure, in the analyzed farms a multiple Cobb-Douglas production function was ued. Data were generated using a cost accounting method for estimating the feasibility of production and it was analyzed by using project evaluation methods, like the Pay Back Period (PBP), Benefit Cost Ratio (BCR), Net Present Value (NPV) and Internal Rate of Return (IRR). The results of the estimation of Cobb-Douglas production function parameters show that the dominant positive impact on the gross return value was the cost of seedlings, irrigation costs and overhead costs. The conducted analyzes showed that the NPV for the investment is PLN 240,148, with a B/C ratio of 1.78. On the other hand, the PBP, in this case, amounts to 1.45 crop season and the IRR reached a level of 22% annually.The sensitivity analysis carried out showed that the most important factors affecting the profitability of pepper production in field cultivation are product prices, seed costs, fertilizer costs and human labor costs.

Keywords: Agribusiness; Productivity Analysis (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:paaero:324104

DOI: 10.22004/ag.econ.324104

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