Vol. 9, Special Issue 12, Part S (2025)

This study analyse the profitability of oil palm cultivation in Telangana State specifically focusing on Badradri Kothagudem and Khammam districts which are leading with substantial oil palm plantations spanning over 26,590 ha and 12,405 ha respectively. Employing a multi-stage random sampling method, both primary and secondary data were gathered from selected mandals, villages and 120 oil palm growers to assess its economic viability. The study examined both the establishment and maintenance cost structures for oil palm cultivation distinguishing between variable and fixed costs. Key findings revealed that the gross income from oil palm orchards over a 25-year economic life period was Rs. 76.8 lakhs, with total costs amounting to ₹ 52 lakhs, resulting in a net income of ₹ 24.8 lakhs per ha.

The financial analysis indicated an internal rate of return (IRR) of 14.5%, a benefit-cost ratio (BCR) of 1.41, and a net present value (NPV) of ₹ 6,48,837 at a 5% discount rate, indicating positive returns. Sensitivity analysis showed that increases in total costs by 5% and 10% lowered the NPV and BCR, with IRR respectively. Similarly, an increase and decrease in yields by 5% affected profitability, bringing BCRs to 1.49 and 1.35 respectively, with the system remaining viable up to 30% reduction in returns beyond which it is unsustainable . The break-even point for oil palm production was determined at 208 MT with a total fixed cost of ₹ 18.1 lakhs, an average variable cost of ₹ 6881/MT, and an average selling price of ₹ 15564.75/MT.

These results underscore the economic potential of oil palm in Telangana despite fluctuations in costs and revenues, emphasizing its viability as a long-term investment. The study suggests that supporting policies, particularly in stabilizing input costs and facilitating price assurances, could enhance profitability further for oil palm farmers, making it as a promising crop for sustainable agricultural development in the region.