Profitability options of medicinal plants production under risk: Understanding from Aloe vera, Bombax ceiba root and Withania somnifera cultivation in North-West Region, Bangladesh

Abstract

Medicinal plants (MPs) cultivation are an integral part of agricultural diversification, sustainable livelihoods, and profitable options for farmers in Bangladesh. The study is conducted to examine the profitability scenarios of MPs under different risks, i.e. price, yield and market absorption. Primary data were collected from 196 MPs growers of Aloe vera, Bombax ceiba root and Withania somnifera from Natore and Bogura districts of Bangladesh. Monte-Carlo simulation method is applied with considering the embedded risks. Results show that MPs production is profitable alternative to traditional crops in the study area. A. vera production is more profitable compared with B. ceiba root and W. somnifera. The lion share of cost is for human labor followed by seedlings for the selected MPs. Results from Monte-Carlo simulation indicate that there is a significant negative impact on growers’ profits taking into consideration of price, yield and market absorption risks, however, there is a greater possibility of making a profit from A. vera, B. ceiba and W. somnifera production by addressing these risks. The policy should be triggered on taking risk reduction strategies emphasizing more prices and market absorption of MPs by the farmers through establishing contract farming. Farmers should exploit more efficient marketing channels by contracting upstream market actors and avoid traditional long channels that they solely rely on.