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Cost and Return Analysis of Banana Cultivation Under Institutional Loan in Bogra, Bangladesh

Md. Shah Kamal
Department of Agricultural Finance, Bangladesh Agricultural University, Mymensingh-2202, Bangladesh

Md. Arshad Ali
Department of Entomology, Bangladesh Agricultural University, Mymensingh-2202, Bangladesh

Md. Ferdous Alam
Department of Agricultural Finance, Bangladesh Agricultural University, Mymensingh-2202, Bangladesh

Abstract/ Executive Summary:

The present study was aimed at assessing the loan use, repayment and profitability of banana cultivation under bank loan. For this purpose, 60 loanee farmers were selected from four villages of Shibgong upazila in Bogra district. The empirical magnitudes of the variables were mean, percentage and ratio, cost and return of banana cultivation was made. Apart from this, some tabular analysis was also done to achieve the objectives of the study. The major findings of this study revealed that banana cultivation under the institutional loan was a profitable business. It was estimated that average annual total cost of production of banana was Tk. 34553.33, while gross return and net returns per farm were Tk. 127533.33 and Tk. 92980.00 respectively. The overall benefit cost ratio of banana farming came out to 3.69 indicating that one Taka investment resulted in a net benefit of Tk. 2.69. The findings also show that scientific uses of inputs have increased the production of bananas. The credit aspects of the study indicate that Rajshahi Krishi Unnayan Bank (RAKUB) has greater contribution as financing agency to banana production than other institutional sources of credit. But it is clear that the banana producers got credit as a part of operating capital which was not sufficient to them. Most of the credit amount (78.22%) was utilized for farming purposes. Rate of repayment was fully satisfactory (100%). RAKUB credit programme benefited the credit receivers in respect of increasing income, spending capacity decision making power and social status.

Keywords: Credit, Loan, Banana cultivation, Cost-benefit analysis, Bangladesh.

Location: Shibganj upazila of Bogra district

Start Date:

End Date:

Program Area: Socio-economic and Policy

Non-commodity: Cost of production

Objectives:

In this regards, cost of production and profitability study of banana would provide valuable information to the individual farmers for effective operation and management of their farms through pinpointing the drawbacks. The research workers will also be benefited in doing further studies of similar nature. The study is expected to also assist planners in making effective and judicious plan in respect of production and consumption and in formulation of macro and micro policies for agricultural development.

Methodology:

Study area and sampling To achieve the objectives of the present study, a preliminary survey was conducted in two unions under Shibganj upazila of Bogra district. On the basis of preliminary information four villages namely Rahabal, Voria, Dauli and Goneshpur were selected for the study. The selection of the study area was based on the considerations a) the RAKUB branch of Dauli union provided credit to the farmer living in the selected villages. b) availability of a large number of banana loanee framers in the study area. The major occupation of the loanees is agriculture. An up to date list of banana growers receiving loans in 2005 was collected from the RAKUB branch office for the purpose of selecting the samples. There were altogether 200 loanees, out of it 60 loanees were selected randomly for the present study. The survey for this study was conducted in the year 2006. Repeated visits were made for collecting necessary information. Preparation of survey schedule and pre-test A draft survey schedule was prepared in the light of the objectives set for the study. The draft survey schedule was pre-tested in the study area by interviewing a few banana loanee farmers. The final survey schedule was developed after making necessary corrections, modification and improvements according to field experience. The final schedule contained the information on identification of the loanee, family characteristics, land holdings, occupation of the loanee, income and expenditure of the loanee families both from farm and non-farm sources accrued during the investigation and incurred in farm production, family expenditure and non-farm business expenditure if any respectively during the same period, amount for credit applied for and received from bank during the study year, utilization of loan, repayment of loan amount by the farmers, nature of security offered for receiving loan. Formal rate of interest and other loan costs incurred obtaining credit from the bank some qualitative information were also sought. Collection of data Data were collected by the author himself through personal interviews with the 60 selected banana growers. A survey schedule was used for collecting information. Before going to make an actual interview, the academic purpose of the study was clearly explained to the sample farmers. Initially the farmers hesitated to answer the questions. But when they were assured that the study was purely an academic one and was not likely to have any adverse effect on them, they provided cooperation to the researcher. At the time of interview the researcher asked the questions systematically and explained wherever it was felt necessary. In order to make the information reliable and to minimize error, data were collected in local units. The local units were later converted into international standard units. In the study area, farmers used both purchased and home supplied inputs for cultivating banana. Both inputs and outputs were valued at the farm gate price during the survey period. It was easier for a farmer to determine the cost of the purchased inputs such as: suckers/seeds, fertilizers, insecticides etc. but it was not so easy to determine the cost of home supplied inputs such as: family labour, animal labour etc., for which no payment was actually made. For solving this problem of such home supplied inputs the principle of opportunity cost was employed in this study. For the purpose of estimation, the cost items were discussed as cost of human labour, cost of animal and mechanical power, sucker/seeds, fertilizer, insecticides, irrigation, bamboo, land use cost and interest on operating capital. All the input costs mentioned here were taken into account in calculating the per acre cost of banana cultivation. In estimating total costs, both variable and fixed input costs were considered. In fact, all the above mentioned costs are variable costs except land use cost and interest on operating capital. Analysis of data Data were analyzed with a view to achieving the objectives of the study. For this study, tabular analysis was applied to classify data in order to derive meaningful findings by using simple statistical measures like means, percentage and ratios.

Source of Information: International J Natural Social Science, Volume 2, Issue 1, February 2015, Pages 19–27

Article Link (Online Journal):

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

In respect of profitability, it can be easily concluded from the study that farms having more banana cultivation can earn relatively more profit. Credit for banana farming was mainly used in banana cultivation. Repayment of credit has been extremely satisfactory.

Knowledge Management: Journal