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Impact of Increased Energy Price on Shallow Tubewell Business in Tangail District of Bangladesh

F. Nargis
Sector Research Analyst
Sector Research Analyst, Vista Consulting Services Ltd

R.H. Sarwer Miah*
Data Analyst
Data Analyst, The WorldFish Center

T.H. Miah
Professor
Professor, Department of Agricultural Economics, Bangladesh Agricultural University, Mymensing, Bangladesh.

Abstract/ Executive Summary:

This study evaluated the impact of increased energy price on income of shallow tubewell (STW) owners under diesel and electrically operated STWs. Five adjacent villages of Ghatail Upazila in Tangail district were purposively selected. In total, 30 STW owners were randomly selected from these villages. Both diesel operated shallow tubewell (DOSTW) and electricity operated shallow tubewell (EOSTW) business were found profitable in current energy prices. The profit from MV Boro paddy production under EOSTW was relatively higher than the DOSTW due to lower operation and maintenance (0 & M) cost of EOSTW. The DOSTW owners were anxious about increased price of diesel over time. The trend of increasing diesel price hike would possibly break the existing irrigation market in Bangladesh. A stable energy price is essential to protect the irrigation water market, more particularly DOSTW. A reasonable scope apparently exists in the study areas for the expansion of STWs to increase productivity of MV Boro paddy and farm income of the STW owners. Hence, investment in this business can go ahead elsewhere in Bangladesh where topographical and ecological environments are similar to those of the study areas. Since the EOSTW business was more profitable than the DOSTW, the expansion of electricity supply to this business would be positive way to increase the food production resulting ultimate food security of farm households. It is also necessary to take steps for stabilizing diesel price for the interest of the majority of MV Boro paddy producers mainly depend on DOSTWs.

Keywords: Impact,Energy price, Shallow tubewell, Tangail

Location:

Start Date: 00-01-2008

End Date: 00-04-2008

Program Area: Farm Mechanization

Commodity: Tubewell

Objectives:

i. To assess the profitability of STW irrigation business from the viewpoints of investors;

ii. To analyse the impact of increased energy prices in the business and contribution of STW irrigation business to household income and food security

iii. To suggest some policy guidelines/recommendations.

Methodology:

The study area was chosen purposively from an intensively irrigated area of Ghatail Upazila in Tangail district, which falls under the Indo-Gangetic basin. The study area comprises five adjacent villages namely Sheikh Shimul, Saitapara, Kurmushi, Kaijalipur and Kagmari Beltail of Ghatail Upazila. The entire irrigation system of the areas mainly depends on groundwater lifting device like STW. Another significant advantage for selecting this area is the presence of a reputed irrigation water market business over the past few decades . In total, 30 STW owners were selected randomly for this study. During the selection of 30 STW owners, equal importance was given to DOSTWs and EOSTWs. Primary data were collected during the period from January to April in 2008. Analytical techniques — e To assess the profitability of investment in STWs for irrigating MV Boro paddy at existing A period, financial analysis was done. Diesel price is increasing over time and recently { electricity price have also increased, as stated earlier, are the sources of power of STWs in Bangladesh. Under the uncertain situation, sensitivity analysis was also employed to examine » the sustainability of STW irrigation management from the viewpoints of STW owners. In fact, I . financial analysis was done using three discounting measures namely benefit-cost ratio (BCR), net present value (NPV) and internal rate of return (IRR).

Source of Information: Bangladesh J. Agric. Econs. XXXII, 1&2 (2009) 17-29

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

Both diesel operated shallow tub ewell (DOSTW) and electricity operated shallow tube well (EOSTW) business were found profitable in current energy prices. The profit from MV Boro paddy production under EOSTW was relatively higher than the DOSTW due to lower operation and maintenance (0 & M) cost of EOSTW. The DOSTW owners were anxious about increased price of diesel over time. The trend of increasing diesel price hike would possibly break the existing irrigation market in Bangladesh. A stable energy price is essential to protect the irrigation water market, more particularly DOSTW. A reasonable scope apparently exists in the study areas for the expansion of STWs to increase productivity of MV Boro paddy and farm income of the STW owners. Hence, investment in this business can go ahead elsewhere in Bangladesh where topographical and ecological environments are similar to those of the study areas. Since the EOSTW business was more profitable than the DOSTW, the expansion of electricity supply to this business would be positive way to increase the food production resulting ultimate food security of farm households. It is also necessary to take steps for stabilizing diesel price for the interest of the majority of MV Boro paddy producers mainly depend on DOSTWs.

Knowledge Management: Journal