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Production and Profitability of Banana in Bangladesh-an Economic Analysis

Abu Zafar Ahmed Mukul
Lecturer
Sher-e-Bangla Agricultural University, Dhaka-1207, Bangladesh.

Md. Arafat Rahman
Research Associate
Implementation of Monitoring an d Evaluation for IFC (World Bank Group) at A. D. S. L ., Bangladesh.

Abstract/ Executive Summary:

Banana production provides suitable options for subsistence and income generation in Bangladesh. In respect of income generation and poverty alleviation, production of banana might play a crucial role in meeting the cash needs of the farmers. It is a commercial fruit, but in context of Bangladesh, commercially it is grown in limited places.Inadequate marketing system affect the income of the producers and its trading which also limit the expansion of banana production in the country.To find out the problems in producing banana and to suggest improvement in the existing marketing system a study on banana was undertaken in Narsingdhi during the period January to March, 2013. In the study, besides the factors told, total cost, profit and benefit cost ratio for different marketing channel were evaluated. Profit of the producer, wholesaler and retailer in banana production were Tk. 55002.80 per Hectare, Tk. 59.08 per Chari, and Tk. 122.67 per Chari respectively and benefit cost ratio for producers, wholesalers and retailers were 1.40, 1.30 and 1.41 respectively. Cobb-Douglas production model was used to determine the contribution of some important inputs like land preparation, fertilizer, irrigation, insecticides, sucker and labor cost to production of banana. Further, explored the problems of producing banana and offered suggestion for improvement in the existing marketing system.

Keywords: Banana Production, Benefit Cost Ratio (BCR), Cobb- Douglas Function, Economic Profit, Narsingdhi District

Location: Narsingdhi, Bangladesh

Start Date: 00-01-2013

End Date: 00-03-2013

Program Area: Socio-economic and Policy

Commodity: Banana

Objectives:

To find out the problems in producing banana and
To suggest improvement in the existing marketing system.

Methodology:

In this study, survey for data collection was conducted during January to March, 2013. Both primary and secondary data were gathered. Narsingdhi was purposively selected,because a large number of people are engaged in banana production, the place is easily accessible and has a good communication facility in this area. The interviews were divided into the farmers, In this study, the farmers, wholesalers and retailers formed three major groups: and they were considered as the population of the study. Simple random sampling was used to determine the sample size which was 40 and it was allocated to 20 farmers, 10 wholesalers and 10 retailers. Qualitative information on different problems which were being faced were also collected. The cost of banana was calculated by fixed and variable cost. On the return side, the revenue from banana and its product were taken. Enterprise costing was followed in calculating cost and return. Economic performances as well as relative profitability of banana were calculated on the basis of gross margin and net return analysis. Reason to choose gross margin analysis was that the farmers were very eager to know their return over total variable cost. Per hectare net return was defined by subtracting the total cost (variable cost + fixed cost) from the total return obtained from banana production. Benefit Cost Ratio (BCR) of banana was estimated as a ratio of gross return to total cost: BCR =Gross Return /Total Cost. Cobb Douglas Production Function was chosen to estimate the effects of key variables on production process of banana. The double log form of the Cobb-Douglas proved to be superior alternative theoretical and econometric grounds.

Source of Information: International Journal of Economics, Finance and Management Sciences,Vol. 1, No. 3, 2013, pp. 159-165.

Article Link (Online Journal): doi: 10.11648/j.ijefm.20130103.15

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

Despite of some limitations, the findings of the study confirm that the farmers could obtain positive net return from cultivation of banana. It was also revealed that, the trading of banana is a profitable venture to different intermediaries. The profit of retailers was higher than that of other intermediaries.But the marketing efficiency was not good in the study area. The gap between the producer’s price and consumer’s price was huge and the producers did not get reasonable price for their product, on the other hand the intermediaries especially the retailer’s net marketing margin is high enough and ultimately the consumers are the main sufferer of this marketing system. Measure should be taken to improve the knowledge of a farmer to the modern cultivation technique and encouraged them to adopt the new technology to increase the production.

Knowledge Management: Journal