An Analysis of the Profitability of Groundnut Production by Small-holder Farmers in Chegutu District, Zimbabwe

Abstract

This study analyzes the viability and profitability of groundnut production by smallholder communal farmers in Chegutu district. A gross margin budget was used to compute the gross rate of return (GRR), and found to be 0.45. Proxing for fixed costs, net profit was computed and a net rate of return (NRR) of 0.31 was found. Multiple regression analysis was used to determine the socio-economic factors affecting profitability of groundnut production. Family size, level of formal education, land size and access to loans were all statistically significant with R² value of 72%. The major constraints were inadequate labour, high input costs, aflatoxin, poor extension services and poor access to loans. Groundnut is a profitable enterprise for smallholder farmers in Chegutu district. Smallholder farmers were encouraged to produce groundnuts at commercial level, use more modern inputs and explore commodity value addition.

Keywords: groundnut, profitability, aflatoxin, Chegutu