PROFITABILITY OF RED SWEET PEPPER (CAPSICUM ANNUUM L.) PRODUCTION IN FIELD CULTIVATION

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 in the analyzed farms and expenditure, in this study, the multiple Cobb-Douglas production function was applied. Data were generated by implementing the 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.