Gross Margin and Profitability Analyzes of Shallot Farming

Abstract

The objective of this research was to examine the production costs, gross margin, and profitability of shallot farming in the Uluere District of Bantaeng Regency, Indonesia. The sample for the study respondents consisted 150 individuals engaged in shallot farming, selected randomly from a population of 1,500 individuals. The primary data utilized in this research were acquired through a structured interview procedure employing a pre-designed questionnaire. The data analysis method employed encompassed the examination of farm revenue, rate of return, capital turnover, and profitability index. Due to the findings, during the initial planting season of 2023, the production cost amounted to Rp26,613,747.00 per hectare, while the productivity reached 7,411.00 kg/ha. Subsequently, considering the prevailing average market value of Rp15,200.00/kg, the shallot farmers managed to attain a sales margin and net revenue of Rp86,334,561.00/ha and Rp59,720,815.00/ha, respectively. The rate of return for shallot farming was 3.28%. Additionally, the capital turnover was 374.11, indicating that a higher ratio of investment in shallot production can contribute to an advantageous financial situation and expedite the growing process of shallots. The profitability index was determined to be 0.77, indicating that farmers obtained an income of 0.77 shallots for each unit of production cost incurred. The research results clearly demonstrated that the shallots farming on the research site was a financially viable endeavour for the farmers. Nevertheless, it is important to acknowledge that our research has several limitations. Specifically, we were unable to offer any policy implications aimed at enhancing the productivity of shallot farming or reducing production costs, which could potentially result in increased agricultural income for farmers. It is recommended to conduct further study in the future to overcome the identified limitations