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Economics of Vegetable Production Under Contract Farming.

M.R. Hasan
Department of Economics, Hajee Mohammad Danesh Science and Technology University (MDSTU), Dinajpur.

M.A.S.Mandal
Department of Economics, BAU, Mymensingh.

M.S. Rahman
Department of Economics, BAU, Mymensingh.

Abstract/ Executive Summary:

The study was designed to critically discuss the main features of contractual arrangements of vegetable production, supply chain of vegetable, profitability of vegetable production by contract and non contract farmers. Primary data collected thirty samples of each category which were randomly selected from the study area, Chandina of Comilla district. The supply chain started from the production of high value vegetable through contract farmers and finally exported to mainstream supermarkets of the world. The gross margins and net returns were significantly higher for the contract bitter gourd and okra (Tk. 261395 and Tk. 95057) than the non contract bitter gourd and okra production (Tk. 112053 and Tk. 18532). Partial budgeting analysis revealed that the contract growers benefited an amount of Tk. 93478 per hectare by producing French bean than the non-contract growers who produced cauliflower in the same vegetable growing season. The findings of the log0leaner regression model revealed that the key variable included in the model were individually or jointly responsible for variation in gross returns of contracts and non-contract vegetable production.

Keywords: Vegetable, Vegetable production, Contract farming, export market, Non-contract farming.

Location: Chandina Upazila & Bangladesh Rural Advancement Committee (BRAC).

Start Date: 01-06-2005

End Date: 30-12-2005

Program Area: Socio-economic and Policy

Commodity:

Objectives:

To critically discuss the main features of contractual arrangements of vegetable production.
To examine the vegetable supply chain integrating the producers with the export market
To estimate profitability of vegetable production under contract and non-contract farming systems
To estimate the effect of key variables for the production of different vegetable.

Methodology:

Both primary and secondary data were used in this study. Primary data collection was accomplished by direct interviews with the contract as well as non-contract vegetable growers. The study area was selected purposively during the period of June to December, 2005 considering the concentration of contract farmers and non-contract farmers as well as the collection centre of BRAC. There were hundreds of contract and non-contract farmers in the Chandina Upazilla. Multi-stage random sampling procedure was followed for selecting the samples. There were three unions in the Chandina Upazilla namely Chandina, Borkoit, Borkamta. Finally 30 contract and 30 non contract growers were selected by using lottery method from the list of contract and non-contract growers of the selected village. Secondary data were collected from the record book of BRAC. Secondary data were collected from the record book of BRAC. Costs and returns analysis were done on both variable, total cost basis and simple tabular analysis was done. as done. The log-linear or double log regression model was chosen to estimate the effects of key variables which were likely to have an impact in the production of different vegetables.

Source of Information: Bangladesh Journal of Agricultural, Vol. 35(2) 2010,(page no. 13-24), ISSN 0253-5408, BARC.

Article Link (Online Journal):

Funding Source:

1. Government

Budget:

Total Budget (Tk.) :

Achievement/Findings:

The contract farming developed capacity building confidence among the farmers regarding vegetable farming as well as it has very good impact on nutritional status of the growers family members proved to be a potential tool for poverty alleviation for the rural poor especially woman and unemployed youth. The result of this study show that the supply chain and contract farming model used by BRAC, one of the main contract vegetable producer and exporter in the country showed positive result. The strongly upstream oriented chain allows a greater and better control of all the productive processes and improves the communication and decision making among the chain partners. The BRAC vegetable supply chain has proved to be reasonably successful in linking the poor rural farmers to the upstream high value commodity markets.

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