Assessment of Economic Viability and Production Dynamics of Chilli Cultivation in Guntur District, Andhra Pradesh

Mehazabeen Acchukatla ^1*, Renuka Chandra Thogati ¹, Kalyan Chakravarathy Parle ¹, Chitrasena Padhy ², Kalee Prasanna Pattanayak ³ and Y. Shelton Peter ⁴
1 Department of Agri Business Management, Centurion University of Technology and Management,
Paralakhemundi 761211, India
2 Department of Agricultural Extension Education, School of Agriculture, SR University,
Warangal 506371, India
3 SoM, Centurion University of Technology and Management, Paralakhemundi 761211, India
4 Department of Agricultural Economics, SKCAS, Anantapur 515001, India
*(e-mail: mehaa998@gmail.com; Mobile: +91-7539901488)
(Received: 6 August 2025; Revised: 14 September 2025; Accepted: 4 November 2025; Published: 1 December 2025)

ABSTRACT

This study evaluates the economic viability and production dynamics of chilli (Capsicum annuum L.) cultivation in Guntur district, Andhra Pradesh, with emphasis on growth trends, cost–return structures, and risk factors influencing farmer profitability. Two mandals Medikonduru and Vatticherukuru, were purposively selected, and 120 farm households were sampled using probability-proportional-to-size (PPS) methodology. The results revealed robust growth in chilli cultivation, with compound growth rates (CGRs) of 11.5% (area), 12.8% (production), and 8.2% (productivity), subject to a structural break around 2010–11. The corrected cost analysis showed an average C3 cost of ₹125,916 per acre, yielding a gross return of ₹168,000, net return of ₹42,084, BCR of 1.33, and a cost of production of ₹157.4/kg. Scenario analysis confirmed strong sensitivity to price and yield fluctuations, with profitability margins narrowing under adverse conditions. The Monte Carlo simulation indicated a mean NPV of ₹41,894, moderate variability of ₹16,963, and low downside risk 0.32%, underscoring price volatility as the dominant determinant of profitability. By integrating growth trend analysis, corrected cost-return estimates, and stochastic risk modelling, this study provides a comprehensive and empirically grounded assessment of chilli farming economics in India’s leading production hub. The findings highlight the importance of price stabilization, crop insurance, and efficient market linkages to enhance farm resilience and profitability.
Key words : cost, zivot-andrews, compound growth rate, profit, monte carlo sensitivity