Profitability of Groundnut Production Under Smallholder Farmers in Metekel Zone North Western Ethiopia

Abstract

Groundnut is South America origin introduced in to Ethiopia in 1920s which is now grown over all warm climate low land part of the country and used as staple food and valuable cash crops for millions of smallholder Ethiopian farmers. This research aims to provide farm level evidence that could guide informed production decision making. The research tried to identified and estimated of cost component and profitability of groundnut production under smallholder farmers. Enterprise budget and descriptive statistics methods were used to analyze data collected from field records of 80 selected groundnut producer smallholder farmers from two districts. The descriptive statistics revealed that harvesting and pilling of groundnut takes higher labor share and female labor contribution is almost similar with male labor in groundnut production process. The enterprise budget analysis revealed that sample smallholder farmers earned net gross margin of ETB 15,761.26 per hectare from groundnut production. Moreover the benefit cost ratio 2.29 indicated that for every one ETB incurred cost, farmers could earn a benefit of ETB 2.29. In addition to this, the sensitivity analysis indicated that profitability of groundnut is more sensitive to increasing of input price and decreasing of output price than to decreasing input price and increasing of output price simultaneously. Therefore, this paper concluded that groundnut production in Metekel zone of Benshagul gumuz is profitable enterprise. This paper suggests that variety improvement and market linkage between producers and agro-industries would be enhanced production and profitability of groundnut under smallholder farmers.

Keywords: Groundnut, Production, Cost, Enterprise budget analysis, profitability and Sensitivity analysis

DOI: 10.7176/JBAH/13-1-03

Publication date: January 31^st 2023