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Cost-effectiveness and Resource Use Efficiency of Sweet Potato in Bangladesh

*Md. Tanvir Ahmed
Seed and Agro Enterprise, BRAC, Bangladesh

Sudhir Chandra Nath
Seed and Agro Enterprise, BRAC, Bangladesh

S.S.R.M. Mahe Alam Sorwar
Seed and Agro Enterprise, BRAC, Bangladesh

Md. Harun -OR-Rashid
Seed and Agro Enterprise, BRAC, Banglades

Abstract/ Executive Summary:

In Bangladesh sweet potato is the 4th most important source of carbohydrate after rice, wheat and potato. The study was conducted to determine the profitability and resources use efficiency of sweet potato (Ipomoea batatas Poir) in Bangladesh. This study also aimed to find the factors affecting gross return of sweet potato production. A total of 100 farmers were selected from the study area through stratified random sampling technique and face to face interview was conducted to collect primary data. The cost and return analysis indicated that per hectare net return from sweet potato was 82,758.93 BDT (Bangladesh Taka). Benefit cost ratio (BCR) was found 1.97. Labor and vine cost accounted for the 48% and 28% of the total cost, respectively. Cobb-Douglas production function was used to determine the factors affecting gross return of sweet potato. The result showed that farm size, cost of vine, cost of land preparation and cost of labor have positive impact on gross return. Sweet potato cultivation is more sensitive to the output price which can be compensated by increasing yield. Resource use efficiency analysis revealed that farmers are not efficient in using resources in sweet potato production. Vine, land preparation, fertilizer and labor were underused and therefore increase the use of these resources can maximize profit in sweet potato production in Bangladesh.

Keywords: Cost-effectiveness, Resource use efficiency, Sensitivity analysis, Sweet potato production

Location: Two major sweet potato growing districts of Bangladesh namely Jamalpur and Netrokona

Start Date: 00-01-2013

End Date: 00-08-2013

Program Area: Socio-economic and Policy

Commodity: Sweet potato

Objectives:

Though there are huge potential of sweet potato to address the food security of Bangladesh but there are limited number of study found on sweet potato production and its resource utilization efficiency. This study aims to determine the productivity, profitability and resource use efficiency of sweet potato in two districts of Bangladesh.

Methodology:

The study was carried out during January 2013 to August 2013 in two major sweet potato growing districts of Bangladesh namely Jamalpur and Netrokona. Shorisabari and Sadar upazila (Sub-district) were purposively selected for the study from Jamalpur and Netrokona district, respectively. Stratified random sampling technique was used to identify the sample farmers. Not all farmers from the study area cultivate sweet potato. Hence, they were stratified into two groups; sweet potato cultivars and non-sweet potato cultivars. Sample farmers were randomly selected from the sweet potato cultivar group. A total of 100 farmers that is 50 from each district were taken for the study. A questionnaire was prepared for collecting information from the sample farmers. Primary data were taken regarding the socio-economic characteristics of sample farmers, input used in sweet potato cultivation, cost of different inputs, prices of output and yield of sweet potato through field survey. Descriptive statistics (mean, average, percentage etc.) and tabular analysis was done to analyze the data. Profitability of sweet potato was examined on the basis of gross return, net return and benefit cost ratio (BCR). Cobb-Douglas form of production function was used to determine the effects of key variables to the production of sweet potato. Statistical software (STATA 12) was used to do the regression analysis. The Cobb-Douglas production function model is as follows:

Y = aX1 b1X2 b2X3 b3X4 b4X5 b5X6 b6 X7 b7 eui ................... (1)

The function was transformed into the following double log or log linear form;

ln Y = ln a + b1ln X1 + b2ln X2 + b3ln X3 + b4ln X4 + b5ln X5 + b6ln X6 + b7ln X7 + Ui

Where, Y = Gross return (BDT/ha) X1 = Age of farmer (years) X2 = Experience of sweet potato cultivation (years) X3 = Farm size (ha) X4 = Cost of vine/planting materials (BDT/ha) X5 = Cost of land preparation (BDT/ha) X6= Cost of fertilizer (BDT/ha) X7 = Cost of labor (BDT/ha) a = Intercept b1, b2, b3, b4, b5, b6, b7, = Production coefficient of the respective variable inputs Ui = Error term

Calculation of resource use efficiency: To accomplish the objective of profit maximization for efficient allocation of resources, one should use more of the variable resource so long as the value of the added production is greater than the cost of the added amount of the resource used in producing it. The standard way to examine such efficiency is to compare marginal value product (MVPs) with marginal factor costs (MFCS) of each variable input. Resource use efficiency of an input is calculated using the basic economic formula;

MVP/MFC=1

The resource is considered to be efficiently used as well as profit will be maximized when the ratio of MVP to factor MFC approaches one, if in other words MVP and MFC for each input are equal. If the ratio is greater than 1, the resource is underused and the gross return could be increased by using more of the resource and if it is less than 1, the resource is overused and the excess use of resource should be decreased to minimize the loss (Taru, 2008).

Source of Information: Journal of Agricultural Economics and Rural Development Vol. 2(2), pp. 026-031, July 2015

Article Link (Online Journal):

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

Sweet potato production is a profitable venture for the farmers. This study found that famers are getting almost double return than the cost of sweet potato production. The profitability of sweet potato production is more sensitive to the market price of output during the harvesting period. Farmer can compensate the risk of low market price of output by increasing the yield. Farmers are using mostly traditional variety of sweet potato and getting yield around 23 tons per hectare. But the potential yield of high yielding variety of sweet potato is around 35 tons per hectare. Moreover, farmers are not using their resources efficiently. Vine/planting materials, land preparation, fertilizer and labor are underused in the study area. The profitability, as well as the gross return, can be increased by applying more resources until it reaches to the optimum level. Again, farmers are very ignorant of using irrigation and chemicals which also leads to lower yield of sweet potato. From the result of the study it is recommended that farmer should use high yielding variety of sweet potato and optimize the resource use in sweet potato production.

Knowledge Management: Journal