Economic Analysis of Black Pepper Production in Kolli Hills: A Study of Costs and Returns

Abstract

Black pepper (Piper nigrum) is an important spice crop in India, contributing significantly to farm income and rural livelihoods, particularly in hill ecosystems. However, region-specific evidence on its farm-level economics remains limited. This study analyses the cost of cultivation, returns, and profitability of black pepper production in Kolli Hills, Tamil Nadu. Primary data were collected from 60 farmers across four village clusters using a structured interview schedule. Economic analysis was carried out using descriptive statistics, cost–return analysis, per-hectare estimation, Benefit-Cost Ratio (BCR), and discounted cash flow techniques. The results showed that the average cost of cultivation was ₹4.15 lakh per hectare, while gross and net returns were estimated at ₹7.80 lakh and ₹3.60 lakh per hectare, respectively, based on an average yield of 17 quintals per hectare and a price of ₹550 per kg. The undiscounted BCR indicated that black pepper cultivation is economically viable, with labour and input costs forming the major share of total expenditure. Considering the perennial nature of the crop, a 15-year discounted cash flow analysis at a 12 percent discount rate was conducted, incorporating the initial establishment phase. The results revealed a positive Net Present Value (₹11,13,970 per hectare) and a discounted BCR of 1.57, confirming long-term financial viability. The study highlights that improving input efficiency, technology adoption, and market access can further enhance productivity and sustainability.