Cost of Cultivation, Returns and Farm Profitability Analysis

Abstract

Cost of cultivation and farm profitability analysis form the backbone of agricultural economics and farm management studies. While agricultural production is often viewed through the lens of yields and output, the true success of farming lies in its economic viability. Farmers operate under conditions of limited resources, uncertain weather, fluctuating market prices and rising input costs. In such a scenario, understanding the cost structure of cultivation, estimating returns accurately and analysing profitability are essential for informed decision-making. This chapter presents an in-depth academic discussion on the concepts, components and methods of cost of cultivation, returns and farm profitability analysis. It explores different cost concepts, measurement of returns, indicators of profitability, enterprise-wise analysis and their relevance in practical farm management. The chapter also discusses how cost and return analysis supports technology adoption, crop planning, risk management and policy formulation.