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Economic Returns to Investment in the Varietal Research and Extension of Winter Tomato in Bangladesh

M. A. Monayem Miah
Scientific Officer
Agricultural Economics Division, BARI, Gazipur

Md. Ismail Hossain
Chief Scientific Officer
Agricultural Economics Division, BARI, Gazipur

Abstract/ Executive Summary:

An ex-post rate of return analysis is conducted to estimate the economic returns to investments in the varietal research and extension of winter tomato in Bangladesh. Distribution of social benefits among the producers and consumers of tomato are also determined used to assess the efficiency of the programme. Data and information relating to market and research are obtained from published sources, scientists, extension workers, and economic sections of the respective organisations. A social rate of return of 57% and a net present value of Tk. 23.701 million are estimated. The benefit cost ratio (BCR) and the present value research costs (PVRC) of the programme are estimated to be 10.30 and Tk. 3.297 million respectively. Sensitivity analysis reveals that the IRR, BCR and NPV of the programme are estimated to be ranged from 44% to 70% 5.45 to 18.85; and Tk. 138.58 to Tk. 343.83 million respectively under various assumptions on the benefits and the research and extension expenditures. This indicates that the investments from Bangladesh government and donor agencies in the varietal research and extension of winter tomato were realistic and justified.

Keywords: Economic, Returns,Investment, Varietal research, Extension, Tamato

Location: Secondary data

Start Date:

End Date:

Program Area: Socio-economic and Policy

Commodity: Tomato

Objectives:

i. To estimate the distribution of benefits from the varietal research and extension program that accrues to the producers and consumers of tomato.

ii. To assess the efficiency of the varietal development program of winter tomato by estimating the rate of returns, net present value and benefit cost ratio.

Methodology:

Both market and research related data were used to measure the social benefits of the varietal research and extension of winter tomato. Market related data and information were collected from published sources and from the economic sections of the respective organizations. Contrarily, research related data were obtained from scientists, extension workers and other key informants. The annual investment and benefit streams were used o calculate rate of returns. The Akino and Hayami (1975) approximation formulas for calculating the changes in producers’ and consumers’ surpluses for a closed economy analysis were used in this study.

Source of Information: Annual Research Report 2001, Agricultural Economics Division, BARI, Gazipur

Article Link (Online Journal):

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

The varietal research and extension program of winter tomato in the country was found to be very efficient in terms of the higher IRR and NPV. Sensitivity analysis reveals that the IRR, BCR and NPV of the programme are estimated to be ranged from 44% to 70% 5.45 to 18.85; and Tk. 138.58 to Tk. 343.83 million respectively under various assumptions on the benefits and the research and extension expenditures. This indicates that the investments from Bangladesh government and donor agencies in the varietal research and extension of winter tomato were realistic and justified. A social rate of return of 57% and a net present value of Tk. 23.701 million are estimated. This rate of return found to be very high as compared to other rate of returns estimated for cereal and fibre crops in Bangladesh. The benefit cost ratio (BCR) and the present value research costs (PVRC) of the programme are estimated to be 10.30 and Tk. 3.297 million respectively. Due to inelastic demand and supply, all the benefits from the program have gone to the consumers’ baskets in terms of consumers’ surpluses, whereas the producers’ surpluses were found to be negative over the years of the program.

Knowledge Management: Report/Proceedings