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Profitability and Technical Efficiency of Vegetable Production in Bangladesh

Md. Rashidul Hasan
Department of Agribusiness and Marketing, Sher-e-Bangla Agricultural University, Dhaka, Bangladesh

M. Ariful Islam
Agricultural Economics Division, Bangladesh Rice Research Institute (BRRI), Gazipur, Bangladesh

Hiroshi Kameyama
Faculty of Agriculture, Kagawa University, 2393 Ikenobe, Miki, Kagawa, Japan

Hu Bai
Faculty of Agriculture, Ehime University, 3-5-7 Tarumi, Matsuyama, Ehime 790-8566, Japan

Abstract/ Executive Summary:

There is a substantial variation in profitability and efficiency among vegetables farms in Bangladesh. This study examined the level of profitability and technical efficiency of bean, brinjal and tomato production in Bangladesh. The study documented the crucial problems of vegetables producing farms. Data were collected through a field survey of 213 vegetable farmers selected by multi-stage random sampling technique in three districts from May to July 2014. Profitability of vegetable was analyzed using conventional farm income of farmers and the Benefit-Cost Ratio (BCR). Cobb-Douglas stochastic frontier production function model was used to estimate the farm level technical efficiencies. Analysis found that farmer’s average age was 44.4 years. They had 5.51 years of education, 1.42 numbers of agricultural training and 12.2 years of farming experience. Results showed that total costs were Tk. 196,198 (US$ 2,312.56)/ha for bean, Tk. 220,047 (US$ 2,593.66)/ha for brinjal, and Tk. 240,063 (US$ 2,829.59)/ha for tomato production. Net margin was Tk. 28,601 (US$ 337.11)/ha for bean, Tk. 36,557 (US$ 430.89)/ha for brinjal and Tk. 49,762 (US$ 586.53)/ha for tomato production. The net margin and the BCR indicated that the above mentioned vegetables were profitable in the study areas. Cobb-Douglas stochastic frontier production function indicated that agricultural training and number of adult households reduce the vegetable producers’ inefficiency. Overall technical efficiency was 87.3 % and there is opportunity for increasing technical efficiency by taking different management practices. Lack of capital and low prices of vegetables were the major problem of farmers. Department of Agricultural Extension (DAE) may provide some training to the farmers about storage of vegetables to ensure fair price of vegetables. Government may provide loan with a low interest rate which may solve capital shortage of farmers. There is scope for same type of further research in other vegetables producing districts in Bangladesh.

Keywords: Vegetables, Profitability, Benefit-Cost Ratio, Technical efficiency

Location: Overall Bangladesh

Start Date: 00-00-2014

End Date: 00-00-2015

Program Area: Socio-economic and Policy

Non-commodity: Profitability

Objectives:

To identify the socioeconomic characteristics of vegetable growers.

Methodology:

The selection of area and vegetables were based on total production. According to BBS (2015) Dhaka division ranked second, Rajshahi division ranked fourth and Chattogram division ranked fifth in brinjal production in the year 2013-2014. Rajshahi division ranked first, Chattogram division ranked third and Dhaka division ranked fourth position in tomato production. Dhaka
division ranked first and Chattogram division ranked third in bean production. Three districts namely, Mymensingh from Dhaka division, Rajshahi from Rajshahi division, and Cumilla from Chattogram division were purposively selected for the present study. According to BBS (2014) winter vegetables were ranked by the volume of production and tomato ranked first, brinjal ranked second and bean ranked eighth in the year 2013-2014. Three vegetables namely tomato, brinjal and bean were selected for the present study. The multistage random sampling technique was followed to select the sample. A total of 213 farmers were randomly selected from Char Kalibari village under Sadar Upazila of Mymensingh district, Quithipur village under Rajshahi Sadar Upazila of Rajshahi district and Nimshar village under Burichong Upazila of Cumilla district. Data were collected through field survey using a semi-structured interview schedule in the period of May to July 2014. Revenues and costs of vegetables were calculated for four months of the production season. Hasan et al. (2014b) used different equations to calculate the profitability of vegetables. The present study also used the similar equations to compute the profitability of different vegetables and the equations are as follows: ? Total variable cost = Seed and seedling cost + Power tiller cost + Hired labor cost + Fertilizer cost + Pesticides cost + Irrigation cost + Bamboo cost. ? Total cost = Family labor cost + Total variable cost
+ Interest on operating capital + Land rent. ? Total revenue = Total production × Average selling price. ? Gross margin = Total revenue - Total variable cost. ? Net margin = Total revenue - Total cost. ? Benefit-Cost Ratio (Variable cost basis) = (Total revenue) / (Total variable cost). ? Benefit-Cost Ratio (Total cost basis) = (Total revenue) / (Total cost). Cobb-Douglas production frontier model (Aigner et al., 1977) was used to estimate vegetables farm’s technical efficiency. The vegetables producers were asked to give their opinion about the eight selected problems. The weights were given for each response and a four-point rating scale was used to rank each problem. Weights 0, 1, 2 and 3 stand for no problem confrontation, low problem confrontation, medium problem confrontation, and high problem confrontation respectively. By adding weights of responses to the problems, we get a problem confrontation score. The problem confrontation score ranges from 0 to 24, where 0 indicates ‘no problem’ and 24 indicating ‘highest problem’. Hossain and Miah, (2011) and Hasan et al., (2014b) used the Problem Confrontation Index (PCI) in their studies. The Problem Confrontation Index was computed by using the following formula: PCI= P_h×3 + P_m×2+P_l×1+P_n×0 (8). Where, PCI = Problem Confrontation Index, P_h= Percentage of farmers with “high problem”; P_m= Percentage of farmers with “moderate problem”, P_l= Percentage of farmers with “low problem”, P_n= Percentage of farmers with “no problem”; The Problem Confrontation Index of the individual problems could range from 0 to 300, where 0 indicates “no problem” and 300 indicating “high problem” confrontation.

Source of Information: J Bangladesh Agril Univ 18(4): 1042–1053, 2020 ISSN 1810-3030 (Print) 2408-8684 (Online)

Article Link (Online Journal): https://doi.org/10.5455/JBAU.8013

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

This paper assesses the probability and efficiency of vegetable production at farm level in three different regions of Bangladesh. There is no previous research investigated profitability and technical efficiency of popular vegetables at a time in a single research including major vegetables producing districts in Bangladesh. Results reveal that total production and total cost were highest for tomato production, but brinjal production was more profitable than other vegetables in Mymensingh district. In Cumilla district, total cost was highest for brinjal production, but total yield was highest for tomato production and tomato production were more profitable than other vegetables. In Rajshahi district, total variable cost and total cost were higher for tomato than brinjal production and tomato production were more profitable than brinjal production. Cobb-Douglas production function showed that both the inefficiency variable, coefficient of farmer’s agricultural training (dummy) and adult household size (number) were negative and significant at the 10% level. It implied that more agricultural training (dummy) and more adult household size may raise the vegetable producers’ efficiency. It is evident that the vegetable producers’ efficiency may increase by increasing farmer’s agricultural training in the study area. The overall technical efficiency was 87.3 % and still, there is some scope for increasing the farm’s efficiency. Farmer’s mentioned different problems for producing vegetables in the study area.

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