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Assessment of Cost-benefit Parameters of Conservation Agricultural Machinery for Custom Hires Entrepreneurship in the Southern Region of Bangladesh

Mohammad Abdul Mottalib*
Bangladesh Agricultural University, Mymensingh-2202 & Scientific Officer, Spices Research Centre, Bangladesh Agricultural Research Institute, Bogura, Bangladesh

Mohammed Ayub Hossain
Farm Machinery and Postharvest Process Engineering Division, Bangladesh Agricultural Research Institute, Gazipur-1701, Bangladesh

Mohammad Israil Hossain
Farm Machinery and Postharvest Process Engineering Division, Bangladesh Agricultural Research Institute, Gazipur-1701, Bangladesh

Mohammad Nurul Amin
Department of Farm Power and Machinery, Bangladesh Agricultural University, Mymensingh-2202, Bangladesh

Mohammad Monjurul Alam
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

Abstract/ Executive Summary:

This paper presents, assessment of cost-benefit parameters of conservation agricultural machinery for custom hires entrepreneurship development in the southern region of Bangladesh. The key principles of the study were to determine the economic parameters for developing conservation agriculture (CA) machine custom hire entrepreneurship and effective schedules for CA machine operation. Field experiments were conducted at Dumuria, Wazirpur, Subarnachar and Kolapara Upazila (Sub-district) of Khulna, Barishal, Noakhali and Patuakhali districts, respectively in the southern region of Bangladesh in the years 2017 and 2018. Two villages in each Upazila were selected for this study. Primary data was collected from these field experiments. Secondary data from various sources were used in this section of the research. Annual operating costs were calculated, and project financial profitability was determined by four on farm financial measurement techniques namely, benefit-cost ratio (BCR), net present value (NPV), internal rate of return (IRR), payback period (PBP). The total cost of operation of a CA machine was found US$32 per hectare. Annual savings for replacement and a profit margin for the entrepreneur, the rent-out charge of the CA machine was estimated at US$82 per hectare of machine operation. Considering 15% interest rate, the NPV of CA machine in exiting condition was US$683. The NPV indicates that CA machinery is considered financially sound and the project is said financially viable because IRR (39%) of CA machine was greater than the bank interest rate (14%). The benefit-cost ratio of the machine was found 1.10, which was a profitable venture for an entrepreneur. The break-even use of the CA machine was estimated 3.12 ha of machine operation. Therefore, the owners of CA machines or local service providers (LSPs) can start this business right now which will be a highly profitable venture for an entrepreneur. Keywords: benefit-cost ratio, CA machine, entrepreneur, operating cost, payback period

Keywords: Benefit cost ratio, CA machine, Entrepreneur, Operating cost, Payback period

Location: Southern region, Bangladesh

Start Date:

End Date:

Program Area: Socio-economic and Policy

Commodity: Farm machineries

Objectives:

The present study was undertaken to estimate the cost-benefit parameters of conservation agricultural machinery for developing a CA machine custom hire entrepreneurship in Bangladesh.

Methodology:

2.1 Data collection Field experiment were conducted at Dumuria, Wazirpur, Subarnachar and Kolapara Upazila (sub-districts) of Khulna, Barishal, Noakhali and Patuakhali districts, respectively in the southern region of Bangladesh during Rabi (Dry winter; November-March) and Kharif- (Pre monsoon; Mid March-Mid July) season in the years of 2017 and 2018. Two villages in each Upazila were selected for the study. CA machinery was used for planting of jute in Dumuria; mungbean, maize, and chickpea in Wazirpur and Kolapara; soybean and cowpea in Subarnachar. Primary 2.2 Selection of CA machine Power tiller operated CA machine was developed by Farm Machinery and Postharvest Process Engineering Division of Bangladesh Agricultural Research Institute (BARI) (Ahmed et al., 2005; Matin et al., 2008) named BARI seeder or planter as shown in Figure 2. The planter was tested and evaluated for planting different crops like maize, wheat, pulses and oilseeds in field condition. The field performance results were satisfactory. This machine can perform planting operations maintaining standard seed rate and line spacing. Different seed metering (inclined type) plates were used for planting different crops of seed directly. It is able to complete planting operation in a single pass and average field capacity is 0.11 ha h^-1. This machine performs well at 15% to 30% of soil moisture level. This machine can finish planting operation on the same day of previous crop harvest, whereas conventional methods it takes 7-9 days from harvest to seeding. Farmer can remove seeding unit from the machine and convert only for tilling purpose. Three different conservation tilling method (zero, strip, minimum tillage) can be operated by this single machine. Inverted T furrow opener is used for different tilling method especially for zero till method and 15° tip angle rotary blade is used for proper back filling of soil in the furrow in strip-till method. Strip tillage can be done by removing the rotary blades. In strip-tillage the number of blades depends on the number of furrow opener where in front of every furrow opener, four blades are arranged for tillage (Hossain et al., 2005).

2.3 Fixed costs are expenses incurred regardless of whether the machine is operated or not (depreciation (D), interest on investment (I), shelter, taxes and insurance (STI). Fixed costs are fixed in total, but decline per hectares, as the annual use of the machine is increased (Barnard and Nix, 1980). In the calculation of fixed cost is assumed and the following equation was used (Hunt, 2001). Total fixed cost per year, FCyr = D+I+STI (1) where, FC = Total fixed cost, US$ yr-1 ; D = depreciation, US$ yr-1 ; I = interest on investment (bank interest rate on agricultural loans), US$ yr-1 ; STI = shelter, tax and insurance US$ yr-1 ;

Source of Information: AgricEngInt: CIGR Journal

Article Link (Online Journal): Open access at http://www.cigrjournal.org Vol. 21, No. 3

Funding Source:

1.

Budget:

Total Budget (Tk.) :

Achievement/Findings:

The CA machinery was found suitable in terms of technical and financial performance over traditional system, and recommended for development of custom-hire service entrepreneurship. Based on the findings and their interpretations it can be concluded that this work is describing a novel idea of developing a proper business schedule for sustainable CA machine custom hire entrepreneurship. There were higher overall profits because of the lower costs of the CA machine and the fact that CA machines could be used for more area per day and more days during the year. For replacement of the existing CA machine on expiry of economic life, the entrepreneur has to save an amount of US$315 per year in a bank account. Based on the operating cost, annual savings for replacement and a profit margin for the entrepreneur, the rent-out charge of the CA machine is estimated as US$82 per hectare of machine operation. The benefit-cost ratio of machine was found 1.10, which was profitable venture for an entrepreneur. The break-even use of the CA machine is estimated 3.12 ha of machine operation. The CA machinery was not familiar to the farmers and custom hire service providers of the study areas. A CA machine owner or local service provider (LSPs) can be started this business right now which will be profitable venture for an entrepreneur. To extend the benefits of CA machinery among the farmers and custom hire service providers, appropriate adoption and dissemination programs must be launched all over Bangladesh.

Knowledge Management: Journal