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Business Rationale for Investment on Power Operated Open Drum Thresher in Bangladesh

Swapan Kumar Roy
Independent Researcher
120/1 Moneswar Road, Zigatola, Dhaka-1209

Shahjahan Ali Pramanik
Independent Researcher
120/1 Moneswar Road, Zigatola, Dhaka-1209

Abstract/ Executive Summary:

A study was carried out to investigate the investment of a selected agro-machinery - power operated Open Drum Thresher in the course of mechanization of Bangladesh to over come the expensive limited labour during rice threshing season. The analysis for small holder investment in this machine considers both different types of models, and inter-regional differences in agro- economic factors that influence the business rationale. Open-drum threshers look like a wise investment, compared to manual pedal-threshers, even for relatively small- holding farmers. Production acre ages of 2 - 3 acres per year can generate good internal returns. Capital costs are modest (Tk. 4000 - 7000) and can be recouped in a short period. Therefore, power operated Open Drum Thresher can able to overcome the shortage of labour during peak harvesting season.

Keywords: Power-operated Open Drum Thresher, Business rational, Inter- regional wage rate, Pedal thresher, Break-even area

Location: Bogra, Comilla, Dinajpur, Jessore, Kustia, Dhaka, Sylhet and Mymensingh

Start Date: 01-01-2004

End Date: 30-06-2005

Program Area: Socio-economic and Policy

Commodity: Performance evaluation

Objectives:

1. To analyze the business rationale for smallholder farmers to invest in specific type of agro- machinery (power operated Open Drum Thresher) in Bangladesh.

2. To provide the specific information on cost- effectiveness of power operated Open Drum Thresher for investment by farmers, producers, investors and R & D organizations in future.

3.To justify the investments of depending on different interest rate regimes or opportunity costs.

Methodology:

The field survey was done to collect information on power operated Open Drum Thresher from farmers and different stakeholders in northern and middle regions of Bangladesh (Bogra, Comilla, Dinajpur, Jessore, Kustia, Dhaka, Sylhet and Mymensingh). For this purpose, we developed questionnaire for farmers and/ or rental service providers to collect the information on types and models, advantageous locations, incurred capital costs, running costs items, expected economic life, usage operating hours or acres, costs savings in terms of labours and other factors. To find the farmers who are using the power operated Open Drum Thresher, we communicated with agro- machinery manufacturers, repairing workshops, local farmers, research organizations and Department of Agricultural Extension (DAE) in the investigated regions. Another questionnaire was made for agro- machine producers or manufacturers to collect information on size, capacity, power requirement, produced numbers, supplied regions/ districts and other relevant information related to selected agro- machine. This information helps us to do crosscheck the collected field information of agro- machine from farmers. We also visited government and private financial institutions in selected regions to collect information about financial supports to farmers and manufacturers in investing on agro- machine. The business rationale for investing in agro- machinery or power operated Open Drum Thresher depends mainly on three factors: The capital cost and performance characteristics of the technology (C), the alternative costs (mainly labour) for which the agro-machinery is substituting (L) and the scale of production (i.e. capacity utilisation) (S). To select regions, we consulted regional research organizations, the department of 'agricultural extension, local private institutions and literature about current usage patterns of selected agro-machinery. Since it was a short- term investigation, we selected eight regions initially for the field work which cover almost all the typical crops and agricultural practices used in Bangladesh. During field survey (December 2005 - January 2006), we were able to find 17 users of power operated Open Drum among which 2, 6, 3, 4, 2 interviewees were found in Bogra, Comilla, Dinajpur, Kustia and Mymensingh, respectively.

Source of Information: JOURNAL OF AGRICULTURAL ENGINEERING, THE INSTITUTIONAL OF ENGINEERS, BANGLADESH, Vol. 32 (A), December 2006, pp. 85-93, ISSN 0379–4318.

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

This study set out to analyze the business rationale for small- holder investment in specific type of agro- machinery in Bangladesh. The analysis considers both different types and models of agro- machinery, and inter- regional differences in agro- economic factors that influence the business rationale for investment. Power operated Open- drum threshers look like a wise investment, compared to manual pedal- threshers, even for relatively small-holding farmers. Production acre ages of 2 - 3 acres per year can generate good internal returns. Capital costs are modest (TK 4000 - 7000) and can be recouped in a short period. Renting or sharing investment with neighbours can make this technology viable even for the average small- holder having an acre or less. They are already in widespread use, and improved access to appropriate medium- term loans could increase take- up further.

Knowledge Management: Journal