Is the Tobacco Production Profitable in District Swabi: An Empirical Analysis

Abstract

Tobacco is the country’s most valuable cash crop, contributing for a large portion of the country's agricultural output. This study intends to observe to evaluate the cost and benefit of the tobacco production in Swabi district, KP, Pakistan. During 2018-19 academic year, data was collected from three villages in Sikandari, Dagi, and Lahor using a random sampling technique. The total number of samples for analysis was 100. To estimate tobacco production, cost, and profitability, the Cobb-Douglas production function was employed. The total average Cost of per acre tobacco production was Rs. 151370while total revenue per acre was Rs. 457600. It was found that the average marketing costs were Rs. 82360 per acre, fertilizer costs were Rs. 12000 per acre, nursery costs were Rs. 4110 per acre, land rent was Rs. 37000 per acre, land preparation was Rs. 4000 per acre, irrigation costs were Rs. 3200 per acre and cultural costs were Rs. 6000 per acre. In the period of analysis, the average net income (net profit) from tobacco was Rs. 306230 per acre and the gross income was Rs. 343230 per acre. It is recommended that if the farmers use quality seeds, the latest technology, usage of chemical fertilizers, irrigation, insecticides, and weeding the tobacco profitability will be increased and a handsome contribution in our GDP. It is also be noted that in the research area, inputs such as marketing costs and land rent are quite expensive; therefore, the government may compensate farmers by lowering the prices of inputs such as fuel wood, rent, fertiliser, pesticides, and so on.