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Custom Hiring Service of Reaper for Harvesting Paddy

Md. Kamrul Hasan
Department of Farm Power and Machinery, Bangladesh Agricultural University, Mymensingh 2202, Bangladesh Present address: Engineering Section, Sylhet Agricultural University, Sylhet, Bangladesh

Md. Rostom Ali
Department of Farm Power and Machinery, Bangladesh Agricultural University, Mymensingh 2202, Bangladesh

Chayan Kumer Saha
Department of Farm Power and Machinery, Bangladesh Agricultural University, Mymensingh 2202, Bangladesh

Mohammad Saidur Rahman
Department of Agricultural Economics, Bangladesh Agricultural University, Mymensingh 2202, Bangladesh

Md. Monjurul Alam
Department of Farm Power and Machinery, Bangladesh Agricultural University, Mymensingh 2202, Bangladesh

Abstract/ Executive Summary:

Paddy harvesting is labor and time intensive operation. There is an acute shortage of labor in pick paddy harvesting seasons in Bangladesh that promotes the growing market potential for providing hiring services of reaper by small entrepreneur to the farmers. Therefore, the study was conducted to determine the economic performance of Custom Hiring Service (CHS) of reaper for harvesting paddy in Bangladesh. Primary data were collected through field experiments and survey at Dumuria, Wazirpur, Subarnachar and Kalapara Upazilas of Khulna, Barisal, Noakhali and Patuakhali districts, respectively, of Bangladesh during six paddy harvesting seasons. Economic analyses for CHS of reaper were also carried out in the study. Operating costs were calculated and financial profitability was determined by four major financial parameters, namely, benefit-cost ratio (BCR), net present value (NPV), internal rate of return (IRR) and payback period. The BCR of the reaper was found 2.04 which indicates that the reaper is highly profitable for the hiring service. Considering 10% discount rate, NPV of the reaper was found BDT 426106 which indicates that reaper can be considered as financially viable. The estimated IRR of the reaper was found 91%, which is far greater than the bank rate of interest (9%). The payback period of the reaper was found 1.06 years. The break-even use of the reaper was found 14.79 ha per year. Major indicators in the analysis show that the investment on a reaper is highly profitable for custom hiring service. This analysis also supports for growing custom hiring service market of reaper in rural Bangladesh.

Keywords: Paddy, Harvesting, Reaper, Economic performance, Custom hiring service

Location: Dumuria, Wazirpur, Subarnachar and Kalapara Upazilas of Khulna, Barisal, Noakhali and Patuakhali districts, Bangladesh

Start Date: 00-00-2016

End Date: 00-00-2018

Program Area: Postharvest and Agro-processing

Non-commodity: Labour wages

Objectives:

To determine the economic parameters of reaper for knowing the feasibility and adoption of custom hire service (CHS) of the reaper.

Methodology:

Selection of harvesting machine: Reaper was used in the study. Model of selected reaper Vikyno AR 120 was used for harvesting of paddy at the experimental sites. The reaper was imported from Vietnam by ACI Motors Ltd. Technical specifications are presented. Experimental locations: Experiments on both mechanical and manual harvesting of paddy using reaper and the traditional manual system were conducted at Dumuria, Wazirpur, Subarnachar and Kalapara Upazilas of Khulna, Barisal, Noakhali and Patuakhali districts, respectively of the Southern Delta region of Bangladesh. The main source of the income of the farmers in all selected locations is agriculture. Two villages in each upazila were selected for this study. Data collection: Economic analysis is the most important part to develop an appropriate business model for custom hire services (CHS) of agricultural machinery. For appropriate economic analysis, primary data were collected through a field experiment during harvesting of Aman-2016, Boro-2017, Aman-2017, Boro-2018, Aman-2018 and Boro-2019 paddy in the selected locations and surveyed by filling up pre-tested questionnaire in the same locations. Cost estimation: The economic profitability of selected harvesting technology like reaper in this study was determined based on cost analysis. The cost analysis considered the fixed and variable costs of the machine. Fixed cost: Fixed costs are fixed in total, but decline per ha, as the annual use of the machine is increased (Barnard & Nix, 1979). Fixed cost comprises those costs, which must bear regardless of the machine is used. These costs include I) depreciation cost, ii) interest in investment and iii) taxes, shelter and insurance. Break-even use The break-even analysis is a useful tool to study the relationship between operating costs and returns. It is an intersection point at which neither profit nor loss is occurred. Above which the machine use can be considered as net gain (Gittinger, 1982). The break-even use of a reaper depends on its capacity of harvesting, power requirement, labor requirement and other charges. Break even use, ha/yr = Annual fixed cost, BDT/yr/ (Return, BDT/ha –Variable cost, BDT/ha).

Source of Information: J Bangladesh Agril Univ 18(S1): 872–879, 2020 ISSN 1810-3030 (Print) 2408-8684 (Online)

Article Link (Online Journal): https://doi.org/10.5455/JBAU.12575

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

The operating cost of reaper is important economic aspects of reaper custom hire entrepreneurship. The results of payback period (PBP), benefit cost ratio (BCR), net present value (NPV) and internal rate of return (IRR) indicated that investing on a reaper is highly profitable and highly suitable for development of custom-hire entrepreneur. The reaper is found suitable in terms of financial performance over manual harvesting of paddy, and recommended for development of reaper custom-hire service (CHS) entrepreneurship to avoid initial investment as machine user. To meet up the labor crisis in the peak harvesting period and reduce harvesting cost, human drudgery and labor involvement, using reaper for paddy harvesting could be an appropriate solution. Based on the analyses of the collected data, it can be recommended that an individual innovative farmer, entrepreneur as well organized farmers’ groups can invest their shared capital in providing services to the members of the group and other neighboring farmers.

Knowledge Management: Journal