ECONOMIC FEASIBILITY OF OLIVE OIL PRODUCTION IN PAKISTAN

Abstract

The olive oil industry has proved to be a viable option for reducing Pakistan’s reliance on imported edible oils and improving farm profitability in areas with a suitable climate. The economic viability of olive oil production was analyzed using project-level data collected from 30 orchards in Pakistan’s major olive-growing areas. Economic analysis criteria were compared based on parameters such as annual net profit, benefit–cost ratio (BCR), and payback period, using inferential statistical methods. The average annual net returns were PKR 2.12 million per hectare (ha) (range: PKR 0.61–3.20 million), and the mean BCR was 6.43, indicating strong financial feasibility in most projects. The average payback period was 0.64 years, indicating a relatively fast return on the initial investment. One-way ANOVA indicated significant provincial variation in net income (F = 9.84, p < 0.001), with the highest profitability observed in Baluchistan (PKR 2.82 million/ha) and Gilgit-Baltistan (PKR 2.73 million/ha). In contrast, it was at a minimum in Sindh (PKR 1.36 million/ha). The Pearson correlation analysis indicated strong positive correlations between net profit and the amount of olive withstanding (r = 0.81), oil extraction rate (r = 0.69), and farmgate price (r = 0.74). In contrast, variable production costs were negatively associated with profitability (r = -0.63 at p < 0001). Linear regression analysis accounted for 79% of the variability in net income (R² = 0.79) and identified olive yield and farmgate price as the best positive predictors.  Olive oil production is economically viable in Pakistan, especially in ecologically compatible areas, provided yields are optimized, costs are effectively controlled, and continuous market access is ensured.