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Contract Farming in Tomato Seed Production in Rangpur District of Bangladesh: a Financial Analysis

M. A. R. Sarkar
MS student
Department of Agricultural Economics, Bangladesh Agricultural University,Mymensingh-2202, Bangladesh

M. H. A. Rashid
Department of Agricultural Economics, Bangladesh Agricultural University,Mymensingh-2202, Bangladesh

M. R. Sarker
M.S. Student
Department of Agricultural Economics, Bangladesh Agricultural University,Mymensingh-2202, Bangladesh

Abstract/ Executive Summary:

The present study attempted to determine the contract growers’ costs and returns of the open pollinated tomato seed production and resource use efficiency under different categories of farmers in some selected areas of greater Rangpur district. In total 60 open pollinated tomato seed contract growers were purposively selected in consultation with BADC personnel at the categories of marginal, small and medium farmers. Total cost, gross margin, gross return, net return and benefit cost ratio (undiscounted) were estimated for financial analysis. The results revealed that per hectare total cost, gross return and net return of open pollinated tomato seed production were estimated at Tk 220313, 384000 and 163687, respectively. Benefit cost ratios came out to be 1.64, 1.74 and 1.83 for marginal, small and medium farmers’, respectively which was found a bit higher for the medium open pollinated tomato seed contract growers. The Cobb-Douglas production function model was used to estimate the values of coefficient and related statistics of production function. The coefficient of human labour cost, cost of using seed, organic manure cost, fertilizer cost and irrigation charges were statistically significant. Returns to scale was found to be 1.19 and that of the value of R² was 0.79. The marginal productivity analysis indicated that the contract growers in the study areas have failed to show their efficiency in using the resources. It was evident that timely and efficient uses of different inputs are most important to increase production and profitability of the open pollinated tomato seed contract growers.

Keywords: Contract farming, Profitability, Resources use efficiency

Location: Two Upazilas namely: Mithapukur and Pirgachha of Rangpur district

Start Date:

End Date:

Program Area: Socio-economic and Policy

Commodity: Tomato

Objectives:

i) To determine the contract growers’ cost and relative profitability of open pollinated tomato seed production

ii) To analyze the resource use efficiency in selected open pollinated tomato seed production.

Methodology:

The present study was conducted in two Upazilas namely: Mithapukur and Pirgachha of Rangpur district since these districts are known as major vegetable seed growing districts in Bangladesh. The relevant secondary data were collected from different handouts, reports, published and unpublished documents of the Government of Bangladesh (GoB) and its different organizations and agencies. The primary data were collected from the sample seed contract growers by adopting a purposive sampling design. In all 60 open pollinated tomato seed contract growers were randomly selected in consultation with BADC personnel taking 20 contract seed growers from each of the three selected farm categories viz., marginal (0.02 to 0.40 ha), small (0.41 to 1.01 ha) and medium (1.02 ha and above) farmers, respectively. Large category of farm was not considered because of non availability in the farmers’ list. The variety of Ratan was selected for tomato seed production. Necessary data relating to production of open pollinated tomato seeds were obtained from the selected contract farmers with the help of a pre-tested and well structured interview schedule during 2011. Contract growers who grow tomato seed on contract basis and seeds are produced under the direct and close supervision of BADC. Open pollination means transfer of pollen from one plant to the stigma of another plant. The marginal productivity of a particular resource represents the additional to gross returns in value term caused by an additional one unit of that resource, while other inputs are held constant. The most reliable, perhaps the most useful estimate of MVP is obtained by taking resources (Xi) as well as gross return (Yi) at their geometric means. Marginal Factor Cost (MFC) of all the inputs are expressed in terms of additional taka spends for providing individual inputs. In the present study, Marginal Factor Cost was the average price of different variable input used in the study area. When the ratio of MVP and MFC is equal to unity indicates that the resource is efficiently used. When the ratio of MVP and MFC is more than unity implying the resource is under utilized. When the ratio of MVP and MFC is less than unity implying the resource is over used.

Source of Information: Progress. Agric. 22(1 & 2): 169 – 179, 2011 ISSN 1017-8139

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

In agriculture, seed is a vehicle to deliver almost all agro-based technological innovations so that the farmers can exploit the genetic potential of new varieties. The availability, access and use of seed of adaptable varieties are, therefore, the major determinants to attain the efficiency and productivity of other packages like irrigation, fertilizers and pesticides. This is one of the vital keys to increase crop production, enhance food security and alleviate rural poverty in the developing countries. Cultivation of open pollinated tomato seed was highly profitable on the basis of its return to investment. Farmers are highly pleased and encouraged with these technologies as they have the bright scope to increase their income by cultivating this crop. For upgrading the knowledge of the farmers, it is necessary to disseminate the latest information of the improved technological package of open pollinated tomato seed cultivation which will enhance the farmers to increase production. From the analysis it is clear that open pollinated tomato seed cultivation has brought changes in economic status of the sample contract growers. As this crop is very labour intensive crop, there is an ample scope for increasing employment in the rural areas of Bangladesh. To minimize higher rejection rate of seeds by the firms a predetermined quality specification may be given to the farmers in the beginning of the season. This would enable the farmers to produce the better seeds with the help of Agricultural Scientists. The scheme of crop insurance may be introduced to cover the seed production activity which involves climatic risks. Finally, the results would help the planners and policy makers in formulating suitable policies for grant of loans and fixation of prices and also throw further light on the avenue for future research in the area of open pollinated tomato seed production.

Knowledge Management: Journal