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Economic Assessment of Farm Power Technology with Particulat Reference to Power Tiller Use in Bangladesh

M. M. Alam
Associate Professor
Departmetn of Farm Power and Machinery, Bangladesh Agricultural University, Mymensingh.

M. G. Hossain
Associate Professor
Departmetn of Physics, Bangladesh Agricultural University, Mymensingh.

M. A. Satter
Associate Professor
Departmetn of Farm Power and Machinery, Bangladesh Agricultural University, Mymensingh.

Abstract/ Executive Summary:

The study has been carried out to appraise the financial and economic impact of substitution of draught animal power (DAP) by power tiller (PT) in Bangladesh agriculture. The substitution of technology has been assessed under three main farm sizes namely small, medium and large, and the crops considered are rice, wheat and jute, Two on farm financial measurement techniques namely Gross Margin (GM) and Partial Budgeting (PB) are used for this purpose. The gross margins of DAP system at all three farm levels have been found marginally greater than that of PT system whereas the net margins of PT system at the same farm levels have ended with higher margins. The budgets conclude in favour of substituting DAP by PT.

Keywords: Draught power, Power tiller, Technology

Location: Bangladesh Agricultural University, Mymensingh.

Start Date:

End Date:

Program Area: Socio-economic and Policy

Non-commodity: Power Tiller

Objectives:

To appraise the financial and economic impacts of agricultural mechanization in Bangladesh.

Methodology:

Agriculture is a dynamic industry. The changes in an agricultural enterprise take place largely because of economic reasons, together with other factors such as climatic conditions, technology, market development, government intervention etc. To face the challenge of adjustment to an ever changing financial and economic circumstances, one must be aware of profitability of the industry and the effective tool for measuring it. In this study two major on-farm financial measurement techniques have been considered. They are: 1) Gross Margin (GM) analysis and 2) Partial Budgeting (PB).

Considerations for Economic Analysis: The farm holdings in Bangladesh are divided into small (Av. 0.37 ha), medium (Av. 1.25 ha) and large (Average 4.5 ha). All the farm holdings grow similar crops in the three cropping seasons. Three main crops, namely rice, wheat and jute have been considered for present calculations. It has been assumed that farmers grow rice two-third of their land and the rest is shared by jute and wheat crop. Physical and financial data for rice, wheat and jute have been collected from the farmer of Mymensing sadar .

Calculation Procedure for Gross Margin (GM) and Net Margin (NM): The gross margin of an agricultural enterprise is its output less its variable production costs. The enterprise output includes the market value of production retained on the farm. The variable costs must be specific to the enterprise and vary in proportion to the size of the enterprise, i. e. costs that vary directly in proportion to the level of output of the enterprise. the gross output is calculated as yield times unit price of crop. For crop production the variable cost items are identified as costs of seed, fertiliser, chemical, casual labour, variable machinery cost etc. Thus, gross margin has been calculated as gross output less total variable cost. The fixed cost items are identified as cost of machinery and permanent labour, and net margin (NM) has been calculated as gross margin less fxed costs (FC).

Calculation Procedure for Partial Budget (PB): Partial budgeting is a marginal analysis which attempts to determine the changes in inputs, outputs, costs, revenues and profits associated with a proposed change in action, where this action does not affect the overall structure and performance of the enterprise. the effect of a partial budget is that it compares the costs of change with the benefits of change by examining the impact of that change as net income.

Source of Information: J. Agril. Mach. & Mech. Vol-3 (1), Pag: 67-73, 1996

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

The government of Bangladesh is no longer subsidising agricultural sectors but providing credits and extension advises to the farmers. Farmers are making decisions on their own to purchase new machines and put the technology into practice. In recent years, farmers have been buying power tillers and replacing their draught aniaml in tilling, threshing and transporting, and they are operating successfully with minor exceptions. The present study provides evidence of financial benefits in favour of substituting DPA by PT. PT. net margins at all farm sizes have appeared better than that of DAP, and the partial budgets conclude that net gains can be made through this technology substitution decision. Moreover, a substantial power shortage in peak cropping seasons exists in the country, and unavailability of draught cattle to meet that shortage is a common phenomena. In this context, the adoption of PT might be successful if its full capacity is utilised and property managed.

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