Profitability analysis of grapes orchards in Pishin: An ex-post analysis

The study presents an ex-post analysis of long-term investment decisions for grape production in the district Pishin, Pakistan. The ex-post analysis offers the true worth of farmer's long term investment decisions for grape production. A total of 100 grape growers were interviewed to compute the long- term cost of production and financial feasibility. The total production cost estimate indicates that 16 percent were investment costs while the remaining 84 percent were the operating costs. The cost model indicates that operating costs for grape increases with age as the crop inputs and management increases with the passage of time. Among all operating costs, the irrigation water was the major cost constituted about 21% of the total costs followed by fertilizer (nitrogen, phosphorus, potash), which contributed about 13 % of total costs. The contribution of Farm Yard Manure was about 10% of the total cost. In addition, the cultural practices, whi ch include weeding, spraying, pruning, layering and soiling, were about 27 % of total cost. The long term economic analysis indicates that grapes orchards are found to be highly profitable with healthy rate of return (38%), positive net present value (Rs. 379,287) and benefit-cost ratio (4.82), which is larger than one. To test the robustness of the investment sensitivity analysis was carried out under different costs and benefit assumption. The sensitivity analysis indicates that grape still offers considerable returns indicating the robustness of long term investment. The long term investment analysis shows that investment in grapes orchards has an attractive return provided that orchards are properly managed in the light of advice of agriculture experts. Moreover, considering the grapes water requirement, which is much lower than other fruits such as apple, apricot and plum, it could be the most efficient crop to grow.