Probabilistic Break-even Analysis of Field Crops in Madhya Pradesh, India

Abstract

A study was conducted to assess farmers’ profitability for major field crops in Madhya Pradesh. Cross-sectional data for the year 2019–20 on plot and state level cost of cultivation were obtained from the Directorate of Economics and Statistics, Government of India. Break-even yield was estimated and the probability of farmers failing to achieve this threshold was calculated. The study adopted an integrated analytical framework combining break-even analysis with probabilistic risk assessment. Yield distributions were first tested for normality and, where normality was not satisfied, probability estimates were obtained using numerical integration techniques. The findings revealed that the probability of not breaking even was highest for cotton, followed by pigeon pea and maize, indicating significant production and income risk in these crops. The negative break-even yield values observed for soybean and black gram suggest that, under prevailing cost and revenue conditions, farmers may not be able to cover even their variable costs, reflecting a situation of severe economic stress rather than short-term losses. The results further indicate considerable variation in profitability risk across crops. However, since the analysis is based on pooled cost data, differences in farm-level cost structures and management practices may not be fully captured. The study demonstrates that probabilistic break-even analysis can serve as a useful decision-support tool for designing crop-specific and risk-sensitive policy interventions, especially for vulnerable crops such as cotton, pigeon pea and maize.