Profitability is the major objective of any farm or firm. The high wage rate in the state and the rapid rise in the cost of cultivation have raised questions regarding the profitability of crop cultivation in Kerala. The post reform period has been a period of agrarian distress with falling prices and declining income of the farmers There has been a tendency for the farmer to withdraw from paddy cultivation in Kerala due to uneconomic returns.. Cultivation of paddy and other annual crops is a losing proposition. In the background of this context, this study attempts to compute the profitability of crop cultivation of seven selected crops in the state. The data published in the Cost of Cultivation reports of the Department of Economics and Statistics, Government of Kerala is used in this study. Though there has been a rapid increase in wage rate and the cost of cultivation, the study shows that the gross value of output has increased faster. The farmer being rational has resorted to coping strategies like reducing the percentage of hired human labour in the total operational cost. When considering Cost A, crop cultivation has been profitable, but while considering cost B, crop cultivation has been highly unprofitable. The rapid increase in the value of land is the prime cause for the spiraling increase in cost B. Banana, Pepper and tapioca has been the most profitable crops in the state. The profitability of paddy crop has not been commensurate when compared to the profit accruing to other crops in Kerala. Any effort to increase the area under paddy cultivation must provide price and non-price incentives to the farmers.

Highlights

• The post reform period witnessed a rapid rise in agricultural wage rates.
• The cost of cultivation increased rapidly in the post reform period.
• The rapid increase in the value of land is the prime cause for the spiraling increase in cost B.
• Banana, pepper and tapioca has been the most profitable crops in the state respectively.
• The profitability of paddy crop has been not been commensurate when compared to the profit accruing to other crops in Kerala.