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Profitability and Resource Use Efficiency of Producing Major Spices in Bangladesh

M. Serajul Islam
Professor, Department of Agricultural Economics, Bangladesh Agricultural University,Mymensingh, Bangladesh.

K. M. Mostafizur Rahman
Professor, Department of Agricultural Statistics, Bangladesh Agricultural University,Mymensingh, Bangladesh.

Md. Kamrul Hasan
Ph. D. Student, Department of Agricultural Economics, Bangladesh Agricultural University, Mymensingh, Bangladesh.

Abstract/ Executive Summary:

The present study attempts to determine the productivity, profitability and resource use efficiency of four promising spices crops such as garlic, chilli, ginger and turmeric. The data were collected from 480 farm households in the crop year 2010- 2011. Productions of all the crops were profitable as estimated by net returns and benefit cost ratios. Functional analysis showed that farm size, seed, inorganic and organic fertilizers, cost of power tiller and draft power, irrigation, education, farming experience and training had positive impact on the production of spices. Increasing returns to scale prevailed in the production process for garlic, chilli, ginger whereas constant returns to scale prevailed for the production of turmeric. All the models used fitted well to analyze the selected data for all crops. Small farmers were more efficient for garlic production only whereas the large farmers were more efficient for other spices crops. More educated and more experienced farmers were technically more efficient than less educated and less experienced farmers. Training reduced significantly the inefficiency of farmers in producing respective crops. The average estimated technical efficiencies for garlic, chilli, ginger and turmeric were respectively 88, 80, 69 and 79% which indicated that garlic production could be increased by 12%, chilli by 20%, ginger by 31% and turmeric by 21% with the same level of inputs without incurring any additional cost. As a policy option, training should be extended to all farmers to have a reduced inefficiency effect, which in turn would increase the profitability of spices crop production by saving resources. However, training should be provided frequently to improve the efficiency of farmer for spices production.

Keywords: Profitability, Resource use efficiency, Major spices

Location: 11 districts of Bangladesh

Start Date: 00-00-2010

End Date: 00-00-2011

Program Area: Socio-economic and Policy

Commodity: Garlic, Chilli, Ginger, Turmeric

Objectives:

The present study aimed at determining yield and economic returns and resource use efficiency in producing major spices in Bangladesh.

Methodology:

Four major spices (garlic, chilli, ginger and turmeric) released from Spices Research Centre (SRC) were considered for the study. Accordingly, spices growing areas were visited and then 480 spices farmers who commercially produced the spices were selected from 11 districts of Bangladesh. Field survey was conducted for collecting data and information. However, required data for respective spices were collected from targeted 480 farmers. Required data and information were collected on production and cultural management of spices grown, and problems of storage and marketing system of selected spices. During the field visit and data collection, it was observed and farmers also reported that irrespective of size of land under spices production, all of them used to produce respective spices commercially. However, all sample farmers were categorized as small, medium and large farmers depending on the size of land holding and analysis were done accordingly.For determining the profitability some descriptive statistics, such as total per hectare cost, per hectare gross return, net return and benefit cost ratio were calculated. To estimate productivity and resource use efficiency, the Cobb-Douglas stochastic frontier production function analysis were performed. In this case both farm-specific and farm-size-specific stochastic frontier production functions were estimated.

Source of Information: Bangladesh J. Agric. Econs. XXXIV, 1&2 (2011) 1-13

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

Productions of all the crops were profitable as estimated by net returns and benefit cost ratios. Functional analysis showed that farm size, seed, inorganic and organic fertilizers, cost of power tiller and draft power, irrigation, education, farming experience and training had positive impact on the production of spices. Increasing returns to scale prevailed in the production process for garlic, chilli, ginger whereas constant returns to scale prevailed for the production of turmeric. All the models used fitted well to analyze the selected data for all crops. Small farmers were more efficient for garlic production only whereas the large farmers were more efficient for other spices crops. More educated and more experienced farmers were technically more efficient than less educated and less experienced farmers. Training reduced significantly the inefficiency of farmers in producing respective crops. The average estimated technical efficiencies for garlic, chilli, ginger and turmeric were respectively 88, 80, 69 and 79% which indicated that garlic production could be increased by 12%, chilli by 20%, ginger by 31% and turmeric by 21% with the same level of inputs without incurring any additional cost. As a policy option, training should be extended to all farmers to have a reduced inefficiency effect, which in turn would increase the profitability of spices crop production by saving resources. However, training should be provided frequently to improve the efficiency of farmer for spices production.

Knowledge Management: Journal