Profit Margins on Groundnut Production

Groundnuts also known as peanuts are the second most important legume after bens in Uganda. It’s also the sixth most important oilseed crop in the world. Groundnuts are predominately cultivated by smallholder farmers on the average of 0.5-1 acre of land for food security. However, it is increasingly becoming a commercial crop too. Although North and Eastern Uganda are traditionally growing areas, production has spread to Western and Central regions as well.

The average yield of groundnuts in Uganda is about 290 kg per acre as opposed to yield potential of 1200 kg per acre. Some of the major constraints to enhanced groundnut productivity include low use of inputs including fertilizers, quality seed, and agro-chemicals, susceptibility to rosette disease, and poor market linkages for produce. Groundnuts are predominately marketed in form of unshelled pods, the seed for propagation, groundnut powder, G-nut paste, and predominately as shelled seeds.

The groundnut is scientifically known as Arachis hypogaea. Hypogaea means “under the earth”, is a species in the legume family. The groundnuts are annual herbaceous plants growing 30 to 50 cm tall. After pollination, the flower stalk elongates causing it to bend until the ovary touches the ground. Continued stalk growth then pushes the ovary underground where the mature fruit develops into a legume pod.

Gross Margins per Acre of Groundnuts by Variety
Variety o Groundnuts
Local Serenut 2 Red Beauty
Output (bags/acre) 9.4 16.7 8.6
Price (UgX/bag) 67,872 69,915 98.076
Total Revenue 638,000 1,167,580 843,450
Land Preparation (UgX/acre) 8,000 9,319 9,103
Ploughing (UgX/acre) 125,000 149,530 156.270
Seed (UgX/acre) 68,700 63,374 111,990
Planting (UgX/acre) 19,600 20,752 21,030
Weeding (UgX/acre) 168,000 189,450 187,030
Harvesting (UgX/acre) 206,000 217,130 151,500
Post-harvest (UgX/acre) 15,000 19,683 17,413
Bagging (UgX/acre) 10,560 21,132 10,614
Total Variable Costs (UgX/acre) 620,860 690,370 664,950
Gross Margin (UgX/acre) 17,140 477,210 178,500
Gross Margin (UgX/acre) 1,823 28,575 20,756
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