Assessment of Prices and Profitability in Chilli – A Study in Guntur District of Andhra Pradesh

Abstract

The study was undertaken in Guntur district of Andhra Pradesh to assess the prices and profitability of chilli marketing. The study used both primary and secondary data collection. The elasticity coefficients for area (1.177) and material costs (3.699) were positively significant in Cobb- Douglas production function. In multiple regression analysis area, expenses on production material and expenses on marketing services were found significantly influencing the income of the farmers. In ARDL model for factors influencing market arrivals of commodities analysis R2 showed that 73 percent of variation and current prices were found significantly influencing the arrivals of the farmers. In ARDL model factors influencing current prices of commodities analysis R2 showed that 84 percent of variation and lagged prices (Pt-1 and Pt-2) were found significantly influencing the current price of the farmers. Also price spread analysis of data indicated that majority of farm produce was routed through two marketing channels, Channel-I (producer-trader-wholesaler-retailer-consumer) and Channel-II (producer-processor-retailer-consumer). Producer’s share in consumer’s rupee was found to be 80.51%, 76.72% and price spread was `1500.67, `1971.92 for Channel-I and Channel-II respectively. Marketing efficiency in channel I and channel II were 3.53, 14.11 and 2.93, 16.87 respectively in Acharya’s and Shepherd’s methods. Low price for the produce at the time of harvest and lack of transportation with scores 78.26 and 63.13 was the most important constraint faced by the farmers.