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Impact of Multi-crop Planter Business on Service Providers’ Livelihood Improvement in Some Selected Areas of Bangladesh

MA M Miah
Principal Scientific Officer
Agricultural Economics Division, Bangladesh Agricultural Research Institute (BARI), Joydebpur, Gazipur-1701, Bangladesh

M. E. Haque
Adjunct Associate Professor
Murdoch University, Australia

R. W. Bell
Murdoch University, Australia

Abstract/ Executive Summary:

The custom hiring of the Versatile Multi-crop Planter (VMP) is a profitable enterprise for Local Service Providers (LSP) that could improve their household livelihood but the impacts have not yet been assessed in Bangladesh. In this study, we assessed the use pattern and profitability of custom-hiring the VMP, and its impacts on LSPs’ livelihood. A total of 18 LSP were purposively selected from Rajshahi, Thakurgaon, Mymensingh, and Rajbari districts for this study. The study revealed that LSPs effectively utilized VMP and 2-wheel tractor (2WT) for 4-6 months. They earned Tk. 1,42,434 (with incentive on VMP) and Tk. 1,36,134 (without incentive) per year as net income. The average payback periods were 0.72 and 0.98 years with and without incentive, respectively. The annual break-even of a VMP use was 7.79 ha. The LSPs reported a considerable cash (annual income increased by 34.9 %), and capital enhancement, e.g., land holdings (8.3 %), value of livestock (11.2 %), dwelling houses (36.6 %), household furniture (19 %), and modern amenities (45.5 %). The increased incomes from VMP custom hiring were mostly spent on nutritious food, land mortgage-in, and dwellings. The LSPs reported minor challenges such as being unable to use this machine in the wetland condition (61 %), no seating arrangement on the machine during operation in small plots (56 %), long time taken to complete sowing due to narrow planting width per pass (50 %), farmers’ skepticism about the planting machine as it is still new technology (44 %), and lack of skilled drivers (17 %). Financial support and technical assistance should be made available by the government for LSPs and local manufacturers to accelerate greater adoption of the VMP.

Keywords: Break-even point, Net return, Payback period, Planting machine, Planter, Livelihood.

Location: Rajshahi, Thakurgaon, Mymensingh and Rajbari districts

Start Date: 00-00-2012

End Date: 00-00-2016

Program Area: Farm Mechanization

Non-commodity: Income generation

Objectives:

The specific objectives of the study were: (i) To estimate the profitability of the custom hiring of the VMP for seeding operations on farms; (ii) To assess the impacts of VMP on LSP’s livelihood improvement; and (iii) To determine the problems that LSPs reported during VMP operation.

Methodology:

The project "Overcoming agronomic and mechanization constraints to development and adoption of conservation agriculture in diversified rice-based cropping in Bangladesh" was funded by ACIAR since April 2012 to March 2017. In this project, a total of 47 VMPs were purchased by interested LSP of Rajshahi, Thakurgaon, Mymensingh and Rajbari districts during 2012-16. Therefore, the above mentioned districts were purposively selected for the present study. Sampling Technique and Period of Study In order to evaluate the impact of VMP operations at farm level, a total of 18 LSP of VMP who provided at least 2-years of planting services to the farmers were purposefully selected from the aforesaid districts and interviewed for this study. Data and information were gathered from selected LSPs of VMP through conducting household survey using pre-tested questionnaire and the interview was conducted during December, 2016. Analytical Technique Calculation of costs and return: In estimating the profitability of VMP operation at farm level, different cost items such as fuel and oil, wages for a driver, repair and maintenance, spare parts, depreciation, and interest on investment were calculated based on field level data. The costs of depreciation for 2WT or power tiller (add the % used), VMP and machinery shed were assumed to be linear over time. In the study area, the 2WT was not used throughout the year with VMP. However, 12 months were considered in estimating the costs of depreciation and interest on investment for both VMP and 2WT in this study. The profitability of VMP for planting operation at farm level was estimated both with and without planting incentive. We calculated the breakeven point of VMP operation for the LSP based on fixed cost, variable cost and gross income which were calculated from farm level data. At break-even point, the revenues of the business are equal its total costs and its contribution margin equals its total fixed costs. The break-even on the basis of land area (ha) planted by VMP was estimated using the following equation. Breakeven land area (ha) planted by VMP = FC/P-VC; Where, FC is total fixed cost, P is the gross income, and VC is total variable cost Calculation of impacts: The impacts of VMP on the livelihoods of LSPs were assessed through analyzing ‘Before’ and ‘After’ socio-economic standings of the LSPs. It means that we asked the respondent to report what was their situation before and after operating the VMP. Data regarding land holdings, livestock resources, yearly household income, ownership of farm equipment, household assets, liability status, and food intake were analyzed and compared for measuring the impacts of VMP service on its LPS’s livelihoods. The values of different household assets were collected based on present value. For example, the house of a service provider was built five years back with Tk.50000 but due to price hiking; the present value of this house is Tk.70000 which was used for reporting. Besides, if that farmer invests extra money for renovation and/or extension of the house that amount was also added to the present value in this report. Two-tail t-test was employed to determine significant difference between two periods.

Source of Information: Bangladesh J. Agril. Res. 44(3): 409-426, September 2019

Article Link (Online Journal): DOI: https://doi.org/10.3329/bjar.v44i3.43475

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

The study assessed the annual use pattern and profitability of VMP operations and its impacts on LSP’s livelihood. The VMP can be used for 12 months in a year, but the highest use occurs in the rabi season. The custom hiring of VMP services is a profitable business in the study areas. The payback period and annual break-even size of land were less than a year (0.72 year) and 7.79 ha, respectively. This custom hiring business has made some improvements in the livelihoods of the LSPs of VMP. The incomes from custom hiring business are mostly spent on land mortgage, livestock purchase, construction of houses, purchase of furniture & modern amenities, and purchase of dietary fish & meat that indicate higher standard of living of LSP and their families. Besides, most LSPs gain honour from farmers and popularity in the locality. Although renting out VMP service was profitable, it is constrained by some minor problems, no seating arrangement on the machine during ploughing, slow planting operation time, heavy weight, and lack of trained drivers.

Knowledge Management: Journal