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Viability of Sericulture Programme of Brac: Results of a Cost-benefit Analysis

Shantana R. Halder
Senior Research Economist, Resear and Evaluation Division, BRAC

Abstract/ Executive Summary:

Sericulture is a part of BRAC's Employment and Income Generation (EIG) programme started in 1978. Major components of the programme are: a) nursery; b) mulberry plantation; c) rearing of the silkworms; d) reeling and e) weaving. The study aimed to measure the efficiency of the programme from the participants' as well as the organizer's point of view. Results showed that the programme involved a significant proportion of full-time housewives and created employment opportunities for them. All the participants earned accounting profit from the activities they were involved in. The net economic gain was also found positive for most of them although the amount was negligible. For BRAC the cost of services provided to the programme participants was higher than the amount it received as service charge which has even increased over time.

Keywords: Sericulture, Cost-benefit, Organizers' point of view, Self-employment

Location: In Bangladesh

Start Date:

End Date:

Program Area: Socio-economic and Policy

Commodity: Silk, Livelihood

Objectives:

The objective of the study was to measure the efficiency of BRAC's sericulture programme through cost-benefit analysis from the participant' as well as the organizers' point of view. The study also focuses on the impact of programmes on the generation of self-employment.

Methodology:

Programme efficiency from the participant's point of view was calculated by using costs and returns data collected directly from the programme beneficiaries. Programme efficiency of BRAC was calculated by using its cost or input and revenue or output records. Output record include the total output with its input prices calculated through cash and credit sales of the products, and imputed values of the quantities consumed on the farm, i.e. given away and in-kind payment. Imputed value is estimated by using the current market price of the products. In measuring the economic viability of the given activity the economic profit was calculated by deducting all opportunity costs from the financial profit. The imputed value of household labour was calculated based on the average wage of similar kind of activities, which were carried out under each of the individual projects. For chawki and late age rearing and pedal spinning cost of household 'labour was taken Tic. 30 per person day employment as taken by Rural Development Programme (RDP) in measuring the profitability of the similar activities (RDP Working Manual, 1995). To measure the opportunity cost of additional capital used in the activity other than BRAC loan 15% interest rate was considered similar to BRAC's rate of interest. The programme can be treated as economically viable if the actual rate of return exceeds the market rate of interest. Indicators used to measure participant viability were: profit per unit of input; the average rate of return on investment; the average rate of return on operating cost; yield or value of output per unit of major input and amount of input per unit of output or cost of input per unit of output. Primary data used for measuring programme viability at the participants' level were collected from 10 randomly selected sericulture programme areas of BRAC in different regions where the plantation was at least two years old. The survey covered 492 programme participants including 26 sapling growers and 300 rearers. Since reeling, pedal spinning and weaving were not done in every selected Area Offices (A0s), 57 workers from three reeling centres, 45 weavers from three BRAC weaving programme areas, and 64 pedal spinners from 5 sampled AOs was finally surveyed. Data from the beneficiary households were collected in December 1995. The supply-side data were collected from BRAC annual reports and the receipts and expenditure statements of RDP.

Source of Information: Bangladesh J. agric. Econs. XXII, 2(1999): 99-116

Article Link (Online Journal):

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

To resolve problems faced by the programme and to make it more viable for the rural poor women several alternatives are being tested. This study suggested that BRAC should take alternative policy and reduce the existing dependence on roadside plantations for ensuring sufficient quality leaves. Based on this finding the programme is considering expansion of mulberry bush cultivation. However, financially viable bush cultivation requires a significant amount of land (Esim, 1999). The programme participants, who are the poorest section of the population, do not own that much of land. If BRAC plans to go for bush cultivation with the same population it should go for a long-term lease of land which will require subsidy. Another alternative would be to work with the moderately poor. The separation of leaf production from silkworm rearing would open up the leaf market. If so, rearers who do not pay for leaves collected from roadside have to do it in future which will increase the cost of cocoon production. On the other hand, it will also be difficult for BRAC to encourage the land owners for mulberry cultivation in the absence of leaf market. To reduce dependence on BSF supplied DFLs and to improve the quality of the egg study suggested to go for seed production on a large scale by establishing more BRACowned seed production centres (grainages). Although the productivity of DFLs produced in BRAC's own seed production centre is higher, the cost of BRAC supplied DFLs was relatively higher than the BSF ones due to the higher establishment cost of a grainage centre. Presently BRAC produces eggs which is a small part of the total demand of the programme. Recently BSF stopped supplying eggs to BRAC and as a stop-gap arrangement, BRAC resorted to using contract seed farmers for egg production. The study found that the skilled rearers those who raised more cocoons earned relatively higher profit. So, number of rearers could be reduced by enlarging the scale of operation in rearing. In such a case, the income earned from cocoon rearing could form a more significant part of total income and this could have a positive impact on poverty alleviation. At the same time, it could make sericulture relatively a more cost-effective enterprise. But the scale of cocoon rearing mainly depends on the availability of sufficient quality mulberry leaves. It is also found that significant production of yarn produced in the reeling centres remained unsold due to its lower quality and higher production cost. To increase the realization rate it was decided to reel oly high-quality cocoons in the reeling centres. To produce large quantity of high quality cocoons it was decided to use the cool season suitable for high quality cocoon production.

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