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Productivity and Efficiency Impacts of Urea Deep Placement Technology in Modern Rice Production: an Empirical Analysis from Bangladesh

Sanzidur Rahman
University of Plymouth, UK

Basanta K. Barmon
East West University, Bangladesh

Abstract/ Executive Summary:

Rice is the most dominant field crop in Bangladesh covering 75% of the total cultivated area and consumes 80% of the total fertilizers alone. Nevertheless, the productivity of rice in Bangladesh remains one of the lowest in the world. Urea, the main source of nitrogen (N), plays a key role in rice production, is required in large amount, is the most limited nutrient and also suffers from heavy system losses. A worldwide crisis of urea fertilizer in 2008 spurred the need to economise on its use with urgency. The Urea Deep Placement (UDP) technology is aimed at increasing N fertilizer use efficiency in rice production and thus holds the promise to economize on the use of a very important but finite resource (i.e., urea) while improving rice productivity. The present study econometrically measures the impact of recently introduced UDP technology on productivity and efficiency of modern rice cultivation at the farm-level in Bangladesh using a stochastic production frontier approach. Data were collected from Shimlagachi village in Sharsha upazilla (sub-district) of Jessore district, located 225 kms southwest of capital Dhaka. A total of 100 farmers using UDP technology and another 100 farmers using conventional urea to produce rice in both Boro (dry winter) and Aman (monsoon) seasons were randomly selected. Detailed input-output data including socio-economic information of the farmers were collected through administering a pre-tested structured questionnaire. The survey was conducted during May-June 2013. Results reveal that net profit, productivity and technical efficiency are significantly higher for the farmers using UDP technology as compared with the conventional urea users. On average, productivity of UDP farmers is 13% higher (estimated at 7164 kg/ha and 5242 kg/ha for Boro and Aman seasons, respectively) than the conventional urea users. Profitability is also significantly higher for UDP farmers (BCR estimated at 1.36 and 1.08 for Boro and Aman seasons, respectively) than the conventional urea users (BCR estimated at 1.17 and 0.99 for Boro and Aman seasons). Finally, technical efficiency is 14% higher (estimated at 0.93) for the UDP farmers. However, the relative gain from UDP technology adoption is significantly higher in Boro season as compared with Aman season. The key policy conclusion is that the UDP technology should be disseminated widely with urgency so that Bangladesh can improve its food security by significantly increasing rice productivity while at the same time economize significantly on the use of N fertilizer nutrient.

Keywords: Urea Deep Placement technology, Urea Super Granules, Profitability, Stochastic production frontier, Technical efficiency, Modern varieties of rice, Bangladesh.

Location: Shimlagachi village in Sharsha upazilla (sub-district) of Jessore district

Start Date: 00-05-2013

End Date: 00-06-2013

Program Area: Socio-economic and Policy

Commodity: Fertilizer, Rice

Objectives:

The principle aim of this study is to evaluate the merits of adopting UDP technology in modern rice production at the farm-level. The specific objectives are to: (a) examine profitability of adopting UDP technology; (b) identify the impact of UDP technology on rice productivity; and (c) identify the impact of UDP technology on technical efficiency in rice production.

Methodology:

In order to examine the impact of UDP technology on profitability of modern rice production, the standard Cost-Benefit Analysis (CBA) is used. Next, to examine the impact of UDP technology on rice productivity and efficiency, the SFA is applied. The details of the methods used are presented below preceded by a description of the study area and the data. Study area and the data To assess the diverse impacts of UDP technology on MV Boro rice and MV Aman rice production, Shimlagachi village in Sharsha upazilla (sub-district) of Jessore district was selected. Jessore is located at a distance of 225 km towards the south west of capital Dhaka, Bangladesh. The Shimlagachi village was purposively selected because the farmers in this village have adopted UDP technology using USG along with conventional urea in MV rice production. Initially, a detailed list of farmers who have adopted UDP technology and/or conventional urea in MV rice production was collected from upazilla (sub-district) agriculture office. Then a total of 100 farmers using UDP technology and another 100 farmers using conventional urea to produce rice in both Boro and Aman seasons were randomly selected. Selection of the UDP adopters and conventional urea users from the same village will provide clear information on relative advantage of this technology. This is because all farmers in the village face similar input and output prices as well as the production environment, and therefore, any observed differences could be confidently attributed to UDP technology alone. Detailed information on various inputs used and output of MV rice produced in both seasons including socio-economic information of the farmers were collected through administering a pre-tested structured questionnaire. The survey was conducted during May-June 2013. Profitability or Cost-Benefit Analysis Profitability or CBA includes calculation of detailed costs of production and returns from rice produced in Boro and Aman seasons on a per hectare basis. MV Aman rice is largely produced under rainfed condition while MV Boro rice production requires supplementary irrigation throughout. The total cost (TC) is composed of total variable costs (TVC) and total fixed costs (TFC). TVC includes costs of human labour (both family supplied and hired labour, wherein the cost of family supplied labour is estimated by imputing market wage rate), mechanical power, seed, manure, chemical fertilizers, pesticides, and irrigation. TFC includes land rent (if owned land is used then the imputed value of market rate of land rent is applied). The gross return (GR) is computed as total rice output multiplied by the market price of rice. Profits or gross margin (GM) is defined as GR–TVC, whereas the net return (NR) is defined as GR–TC. Finally, the Benefit Cost Ratio (BCR) is computed as GR/TC. Analytical framework: The stochastic production frontier model The stochastic production frontier approach, developed by Aigner et al. (1977), is utilized in this study. This is because, in this approach, we can relax the unrealistic assumption of perfect efficiency of the farmers in their production process and identify individual farmers who are technically inefficient and their level of inefficiency in relation to their best performing peers operating at the frontier using same technology.

Source of Information: The Journal of Developing Areas Volume 49 No. 3 Summer 2015, 119 – 134.

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Achievement/Findings:

The policy implication is clear. The UDP technology should be promoted throughout Bangladesh so that the farmers could economise on the use of N fertilizer and yet significantly improve profitability, productivity and efficiency in MV rice production as evidenced in this study, even though the magnitude of gains are much lower than those obtained from agronomic experiments reported in the literature. Therefore, the ambitious plan undertaken by the government to disseminate UDP technology to 3 million farmers (IFDC, 2009) is a step in the right direction. However, the success of wide spread dissemination of this technology will require investments on both elements of this technology: (a) converting commercially available urea into USG through briquetting; and (b) disseminating technological knowhow on the deep placement of USG correctly in the irrigated rice fields at optimum time. According to IFDC (2009), only 2400 briquetting machines are available in Bangladesh in 2009, which is clearly inadequate. Therefore, support is needed to establish small-scale briquetting enterprise throughout Bangladesh. The dissemination of technological knowhow of UDP can be undertaken using mass media and mobile phone technology that is widely available throughout Bangladesh. In fact, the Department of Agricultural Extension and Marketing of the government of Bangladesh has been using national radio and television network to disseminate information on agricultural technologies over the past three decades which need to be further strengthened. Another key policy implication is to invest in developing skills of female agricultural labour so that they can contribute positively in farming. Widespread diffusion of the UDP technology with adequate support services holds the promise to sustain rice production and improve food security in Bangladesh.

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