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2011 Cambridge Business & Economics Conference ISBN : 9780974211428
Productivity and Profitability Margin at Farms in Punjab
(Overtime Study of Cash Crops)
By
Dr. Muhammad A. Quddus*
Dr . Mazhar-ul-Haq Baluch**
* Director, Punjab Economic Research Institute, Lahore
**Senior Research Fellow, Lahore School of Economics, Lahore
Punjab Economic Research Institute48-Civic Centre, Johar Town, Lahore-Pakistan
Lahore School of Economics
Intersection Main Boulevard Phase –VI DHA and Burki Road, Burki 53200Lahore-Pakistan
June 27-28, 2011Cambridge, UK
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2011 Cambridge Business & Economics Conference ISBN : 9780974211428
Productivity and Profitability Margin at Farms in Punjab(Overtime Study of Cash Crops)
byMuhammad A. Quddus* and Mazhar-ul-Haq Baluch**
Abstract
The ensuing paper has been attempted to assess the use level resources (bio-chemical technology and cultural
practices) to determine productivity and profitability of major crops in Punjab-Pakistan. The technology
package or resource use pattern depends upon the prices of the concerned inputs. Consequently the cost of
resource use varies from farmer to farmer of the same category or other categories and it would vary from year
to year. The cost per unit of output estimated for all the considered crops( except basmati paddy) was higher by
5.80 percent, 36.28percent and 7.22 per cent in case of wheat, cotton, and sugarcane respectively as compared
with 1990-91. The average yield of all major crops showed increasing trend during the considered period
except cotton. In 1990, both the food and sugar cane crops showed negative returns to the producers of the
crops. Such losses for wheat, rice and sugarcane crops were 9.49 percent and 21.66 percent and 33.92 percent
respectively of the cost of production. The cotton growers received profit by 55.86 of the production cost in the
same period. In 2000, the adverse situation was obvious with 4.39 percent in case of wheat and 4.20 percent in
case of basmati paddy more return than investment. However the cotton and sugarcane crops proved failure in
meeting even the production expenses.
Introduction
In this era of electronic media the improvement in managing the gap between the users and
the technology, which has made practical adoption of it and its implication fast to the possible
level at farm fields specifically in cash crop production. Pakistan is not lagging behind in this
field and public as well as private sector was making utmost efforts to pace with the changes
considering current economic environment of the country.
* Dr. Muhammad Abdul Quddus, Director, Punjab Economic Research Institute (PERI), Lahore** Dr. Mazhar ul Haq Baluch, Senior Research Fellow, Lahore School of Economics, Lahore.
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Consequently, with declining share in GDP, agriculture proved to be yet the single largest
sector contributing 21 percent to GDP and employing 44 percent of the workforce. Moreover,
dependency of about two third population of Pakistan living in rural areas was on farm and
allied activities. Empirical evidence suggests that higher growth in agriculture on a sustained
basis had a lasting impact on poverty reduction in Asia in 1970s and 1980s. In later decades
the impact of agriculture on poverty reduction became weaker as the Asian countries in
general and South Asia in particular began to witness productivity gains stagnating on
account of structural issues, including limited investment in research and extension services.
(Pakistan Economic Survey, 2007-08) The performance of agriculture remained volatile
ranging from 1.1 percent to 6.5 percent, at an average rate of 4.1 percent per annum during
2002-03 to 2008-09. Agriculture supports a growing food demand, economic growth and
development of other industries and services. Agricultural products and production beyond
the demand of domestic market further support income and foreign exchange earnings. There
exists historic perspective of agricultural policies, which have been formulated, modified
over time and implemented for improvement of the sector to a justified level of contribution
to sharing in the economy. However, the performance of the sector depends upon the sowing
pattern, appropriate area allocation among various crops i.e., cash and fodder crops, resource
use pattern and ultimately the productivity of these crops. However, the development of live-
stock is the allied activity to boast up added sharing contribution of agriculture. Generally,
Cash crops are given due attention to provide food and fibre to every household irrespective
to classification of localities within the boundary of the country.
There remains a need for adoption of overtime changes in technological aspects by making
appropriate use of modern inputs like chemical fertilizers, new high yielding crop varieties,
pesticides/insecticides, use of modern agricultural machinery on one hand and on the other
hand the restructuring of production relation in the form sector through long term impact of
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land reforms for growth of the concerned sector. In addition, the inherited distribution of land
was causing farm land structure further deteriorated making its use impossible for profitable
productivity and production specifically for food and cash crops. Though emanating from the
crop sector specifically food and cash will provide food security by increased supply, stabling
prices and raising income of the poor farm households under indispensable economic
environments, there needs policy orientation opportunities considering structural phenomena
and unconvertible old fashioned crop management skills of farmers, traditional practices of
home produced seed utilization, crop growing practices in the absence of appropriate
agricultural infrastructure, limited research and gap between research and extension and
extension and farmers’ linking channels to lead the sector pacing with modern era of crop
sector productivity and production.
Crop growing phenomena depend mainly upon natural environmental condition and
unfavourable climatic conditions make the crops failure despite the use of appropriate latest
technology and sound careful management. So reasonable authentic forecasting is not
possible from sowing to ultimate harvesting the crop output under preserved method at the
farm or the household level or loading it to market. However, aloof from natural unavoidable
happenings, productivity and profitability of crop sector depend upon farmer crop growing
strategy, availability of irrigation water, adoption of appropriate crop growing technology and
public sector incentive initiating policy measures and their implementation status.
Pakistan‘s agriculture sector contribution is closely linked with the supply of irrigation water.
Sometimes shortage of canal irrigation water for specific crop cannot be met by any
artificial and natural source. Consequently, the performance of agriculture sector has been
varying overtime. Due to input pricing policy the changes were occurring in prices of about
all the inputs, required for better productivity and the measures and the use of the appropriate
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chemical technology has become out of reach of the common farmers despite increase in the
prices of crop outputs. On the other hand world demand for agricultural goods including
crops, horticulture, livestock, forestry and fisheries is rapidly increasing so in the country the
demand for agricultural goods will probably more expand in near future. This gives
indication that productivity improvement in all the sub-sectors and mainly the agriculture as a
whole has to occupy a strategic importance concerning intensive cultivation techniques at
farm level considering the land resources un-expandable. The present scenario is the
reflection of already in practice structural and non-structural policies.
The ultimate output per acre gained from farm land with use of other concerned inputs in case
crop enterprise is crop yield. It also gives indication of farm productivity with respect to the
latest recommended farming production practices (Khan et al, 1984). Yield of major crops is
determined by computing the ratio of total production of a crop and total cropped area of that
crop. The facts remain that the crop cultivators were not harnessing real yield potential. There
exists about a vast gap not only at national level obtained by progressive growers but it also
becomes wider at research stations for all the major crops. The ensuing paper has been
carried out to determine the present direction of productivity and estimated profitability of the
major crops gained by the farmers considering the practically adopted knowledge gained
from accessible sources or disseminated by the extension wing of Agricultural department.
This would help partially to know the status of productivity of cereal crops and need
assessment regarding status of availability and requirement of food. Moreover, an overtime
productivity gap of the all major crops grown in the Punjab province will lead us to explore
production potential of these crops as well as adoption pattern of chemical and cultural
technological aspects.
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Objectives of the Study
Growth performance of agricultural sector depends upon production pattern of various sub-
sectors, while the major among them is the crop sector. Thus to identify the needed resources
and use level of proposed resources, a guideline concerning will need to assess productivity
and profitability gaining under the existing adoption level of technology by farmers and to
propose strategic measures to raise productivity and profitability in future on the basis of past
experience to feed the local population and foreign exchange needs. So the principle
objectives of the study are as under:-
To examine the use pattern of resources and ultimate cost of production of the farmers
to grow major crops i.e. wheat, rice, sugarcane and cotton separately.
To assess the use level of bio-chemical technology and cultural practices adopted by
growers and to identify overtime changes in crop growing practices of the
considered crops.
Overtime comparison of productivity and profitability of these major crops
To assess comparative return of the considered crops with respect to cost investment.
To suggest certain policy measures on the basis of derived results.
Research Methodology
Reliable data on cost of production and yield obtained by the farmers is a prerequisite for the
formulation of price policy and procurement pattern by the Government. Information on
input use pattern and yield obtained provides a good insight for sound business management.
This is also useful information for the extension service to lay out the strategy towards the
assessment of the adoption pattern of technologies by the farmers and determine the lacking
aspect of the technologies in the respective areas. Keeping in view the subject matter, scope
and objectives of the study, primary data is required. Since the farmers do not practise the
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record keeping system in Pakistan / Punjab, the dependency of the reliability has been the
memory of the farmers and the timeliness of the crop season just after the completion of
harvest process of the respective crop is also essential to have reliable data set. Every year
the cost of production of the major crops is prepared by the Punjab Economic Research
Institute, (PERI) to support data collected by Crop Reporting Service of Department of
Agriculture every year to represent the Punjab Province to Agricultural Policy Institute (API)
to prepare estimates for determining the prices of major crops to announce before sowing as
well as harvesting of the respective crop at country level. Consequently the estimates
prepared by PERI on the basis of data collected from statistically representative sample have
been considered to be used in this article. The methodology used by PERI to have
respondents from the Irrigated region of the Punjab province has been elaborated in the
respective Farm Accounts Study, a regular study of the Institute, however, the same has been
briefly discussed to know the sample procedure.
The Irrigated Region of the Punjab province was stratified on the basis of agro- ecological
zones in to the following:
Cotton- Wheat Zone
Rice-Wheat Zone
Mixed Cropping Zone
To give due coverage to all the zones, nine study centres were established. In each study
centre a cluster of 2 to 4 villages was selected. Thus in all from the irrigated region 22
villages were brought under data collection coverage. For selection of respondents a complete
census of households in the sample villages was carried out. Then a sample of representative
farm households was determined by using the following formula.
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n= N Z2 P(1−P)N d2+Z2 P(1−p)
Where
n = Sample size
Z = Normal variate
P = Population proportion
d = Maximum error deemed acceptable
N = Target population
The allocation of sample respondents to various study centres was made proportionately
according to the proportion of farm households population in the sample district, while
further distribution of the sample farm households into various farm size categories was also
made proportionately on the basis of population of various farm size categories in the sample
villages to give due weightage for representation to all types of farmers as under:-
Small-A : Up to 6.25 Acres
Small-B : 6.26 Acres to 12.50 Acres
Medium : 12.51 Acres to 25.00 Acres
Large : Above 25.00 Acres
Consequently the data was collected from about 950 farm house holds of various farm size
categories every year for the considered period for the Farm Account Study. The same data
has been used for the ensuing paper.
Results of the Study
The dissemination of knowledge regarding the latest crop production practices is the principal
function of the extension wing of the Agricultural Department. Adoption level of such
practices affects the output of the respective crop. It is generally assumed that the use pattern
of these practices depends upon the soil texture, financial position as well as knowledge
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capacity of the crop cultivator. Thus varies crop production expenditure and output returns
vary from farmer to farmer. The performance of crop sector is closely linked with the supply
of irrigation water since chemical and cultural practices oriented the latest crop growing
technology mainly depends upon irrigation water. Consequently, the fluctuations in
production of major crops, which are generally the results of change in cropped area or crop
yield or both, affect the performance of agriculture at the same pattern.
Wizarat (1982) estimated that during 1964 to 1969 when the agriculture sector grew at
spectacular rate and about 54 percent increase in the output could be attributed to
technological change and 16 percent to increased use of inputs. She elaborated that
technological change was facilitated by subsidies on inputs, construction of water resources
and diffusion of tube well technology. She also found that the direct regulation of trade and
output prices of farm products caused a decline in factor productivity, which indirectly gives
indication regarding decrease in farm income. Technology is the integral part to achieve high
productivity of farm crops. Thus the optimal production in crop sector is not possible in the
absence of the latest production technology. In this section the use pattern of various aspects
of the crop production technology of major crops has been presented by assessing valuation
of the practices, inputs and ultimately profitability of all the considered crops has been
measured.
Resources Use Pattern
Farm land is generally used for growing various crops. Crop growing pattern depends upon
the availability of resources and purchasing power and inclination of the crop growers
considering soil texture and the return from each of the grown crops. Crops are classified as
cash, food and fodder crops. The ensuing paper has been confined to major four food and
cash crops i.e. wheat, rice, cotton and sugarcane. Every individual crop grower adopts the
cropping pattern considering the water availability and soil texture of the farm-land. He
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makes efforts to get maximum output of every cultivated crop at minimum cost to increase
the expected returns. The cost of production refers to cash spent on utilization pattern of
cultural and chemical practices. The cost of production of concerned crops was estimated
including land rent.
In Table 1, the cost incurred to produce major crops i.e., wheat, basmati paddy, cotton and
sugarcane was presented for the crop years 1990, 2000, and 2008 at current prices as well as
deflated prices of 1990. On the basis of current prices of inputs the cost per acre estimated
was Rs. 2587.52 in case of wheat, Rs. 3572. 07 in case of basmati (Paddy), Rs. 4717.90 in
case of cotton and Rs. 7211.89 in case of sugarcane. This showed increasing trend for the
considered periods and the cost increased by 174.33 percent for wheat, 154.45 percent in case
of basmati paddy, 169.16 percent for cotton and 158.60 percent in case of sugarcane on the
basis of current market prices in 2000 then 1990. Such increase was 130.5 percent in case of
wheat, 142.8 percent in case of basmati (Paddy), 94.3 percent in case of cotton and 80.2
percent in case of sugar cane on the basis of current market prices. This reflected an
increasing trend in production cost of all the considered crops on price escalation basis with
the passage of time.
The technology package or resource use pattern depends upon the prices of the concerned
inputs, soil texture of farm land and technical knowledge of the farmers regarding the sowing
strategy of cultivated crops. Consequently the cost of resource use varies from farmer to
farmer of the same category or of other category and it would vary from year to year.
Overtime the real change in cost of production was estimated for all the major crops
considering the prices of inputs of year 1990-91. To estimate the real cost on the base year
(1990-91) price GDP deflator was used since the GDP deflator was estimated on the basis of
overall GDP and this proved better instrument to determine price escalation. The cost per unit
of output estimated for all the considered crops except basmati paddy was higher by 5.80 June 27-28, 2011Cambridge, UK
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percent, 36.28percent and 7.22 per cent in case of wheat, cotton, and sugarcane respectively
in 2000 when compared with 1990-91. However, in case of basmati paddy the cost per unit
decreased by 2.68 percent in 2000 relative to 1990. In 2008 the cost trend in real term
remained on increase than the year 2000. The increase recorded was 123.82 percent, 135.68
percent, 88.66 percent and 74.99 percent for wheat, Basmati (Paddy), cotton and sugarcane,
respectively.
Return of Major Crops
To estimate the profitability of every considered crop there was a need to have knowledge
regarding the output of the respective crop in monetary term. The data given in Table 2
indicates that the resource used cost remained on increase with the passage of time on the
basis of current prices as well as 1990 prices. The average yield of all the major crops
showed increasing trend during the considered period except cotton. In case of cotton the
average yield per acre was 18.86 (40 Kgs) per acre in 1990 and decreased to 16.97 (40 Kgs)
in 2000, but again it was higher 20.26 (40 kg) per acre in 2008. This indicated that despite
increase in input prices the farmers used the inputs and they obtained higher yield for all the
crops except cotton in 2000 as compared to 1990. Actually the cotton is highly sensitive to
pest attack and climatic conditions. This crop despite farmer’s awareness input used at
recommended level become out of reach of a common farmer due to financial constraints.
However, the agriculture credit by the bank was given to the resourceful / influential farmers.
PRODUCTIVITY AND PROFITABILITY OF MAJOR CROPS
Productivity refers to the amount of resulted output per unit of input. There are various
methods to measure productivity such as productivity per unit of labour, productivity per unit
of energy and productivity per unit of purchased or hired equipments. Actually, there are
various econometric techniques (models) available to estimate per unit production of various
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crops. Specifically Cobb- Douglas Function allows economies of scale to vary with output.
However, such model needs time series data or sufficient observations of primary data from
the concerned fields. Sometimes productivity is measured by the ratio of total monetary value
of output and monetary cost of all the concerned inputs applied to produce the output.
Consequently per unit output or productivity was estimated considering the nature of data
available by applying the ratio of output to total input. This will lead to productivity of total
input used. Consequently, the following formula was applied to estimate the productivity of
various crops:
Z = Y/X
Where
Z = Productivity of respective crop
Y = Monetary value of the output of respective crop
X = Monetary value of all inputs utilized to obtain output of the
respective crop
The estimated productivity of various crops is presented in the Table -3.
The data presented in the Table-3 did not reflect any systematic results regarding productivity
of food as well as cash crops. The estimated productivity, which was simple ratio of value of
output and collective costs of inputs indicate not only the resource use pattern but also the
ultimate yield /productivity by one unit (per acre). To determine the minimum support price,
the cost of production of agricultural crops was kept in view to make the crops beneficial for
the cultivators. Sometimes prices of agricultural output were maintained at low levels to
facilitate the provision of cheap raw material to industrial sector and cheap food to urban
consumers. With the result the support prices of food crops were generally kept low, even
less than the cost in 1990, to facilitate the provision of cheap raw material to industrial sector
and cheap food to urban consumers, since the productivity was less than 1 not only for wheat
and basmati rice but also the similar reflection was obvious in case of cotton. Actually, the
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cotton crop is highly sensitive to pest attack and climatic conditions. This crop despite
farmers’ awareness about input use according to requirements become out of reach of a
common farmer due to financial constraints, whereas the agricultural credit by the formal
financial institutions was also in the reach of resourceful and influential farmers. In year
2000 the results were completely adverse to 1990, while the estimated productivity results
were less than 1 for cash crops and wheat and rice (food crops) showed productivity concerns
the opposite for theoretical option i.e. greater than 1 for this period. However in 2008 the
farmers obtained positive returns for growing all the considered cash plus food crops.
Profitability Margin of Major Crops
Profitability refers to the excessive amount received by the farmers relative to the amount
invested. In Marxian political economy it is the rate of return on investment. In other words
the profit rate refers to the more benefits in monetary term relative to the cost of initial
investment. The simple way to measure the profitability is the rate of return per rupee spent
with respect to all the expenses incurred on a crop from that very sowing to harvesting and
then to use the crop for consumption or marketing. In crop production the farmers buy certain
inputs associated with self owning factors as well and use to grow the crops. As this involves
a production process and there involves the costs of purchased inputs and domestically
produced inputs to complete the crop production process. The positive return than the input
cost provides incentives for further continuing the production process by the same investment
at farm.
The profit does not indicate a success or a loss determines failure, since the farm products
depend upon mainly the natural environment or climatic conditions from sowing to
harvesting and preserving. The profit margin of the crop growers for various major crops
has been estimated and presented in the Table-4.
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The data given in this Table reveals that according to the farmers’ opinions there was no
specific response regarding the profitability or losses overtime for any of the considered
crops. In 1990, both the food crops showed negative returns to the producers of the crops.
Such losses for wheat, rice crops were 9.49 percent and 21.66 percent and sugar-cane (-)
33.92 percent respectively of the cost of production. The cotton growers received profit by
55.86 percent. of the production cost in the same period. In 2000, the reverse situation was
observed with 4.39 percent in case of wheat and 4.20 percent in case of basmati paddy more
return than investment. However, the cotton and sugarcane crops proved failure in meeting
even the production expenses. The estimated losses were 3.11 percent in case of cotton and
0.53 percent of the cost of production in 2000. In 2008, undoubtedly the price of inputs
touched the upper level than ever but more increased in output prices made the crop growing
activities beneficial for the growers and the measured profitability was 53.95 percent for
wheat, 58.62 percent in case of basmati paddy, (-) 15.84 percent in case of cotton and 30.89
percent in case of sugarcane. The increased prices of output lead the farmers towards a
relative better economic situation and the possibilities of betterment of supply position with
respect to demand of the country can be explored in near future. By this it can be concluded
that a solid return at reasonable cost may prove better incentive than any for the farmers to
adopt possibly adoptable the latest crop production technology in the light of available
resources to grow the crops not only for the domestic requirements but also to earn for
exchange by exporting to the needy countries.
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Summary and Conclusions
The ensuing paper has been carried out to determine the present direction of
productivity and profitability of the major crops gained by the farmers considering the
practically adopted knowledge gained from accessible sources or disseminated by the
extension wing of Agricultural department. This would help to know the status of
productivity of cereal crops and need assessment regarding status of availability and
requirement of food. Moreover, an overtime productivity gap of the all major crops
grown in the Punjab province will lead us to explore production potential of these
crops as well as adoption pattern of chemical and cultural technological aspects.
The principal objective of the study was to assess the use level resources (bio-
chemical technology and cultural practices) to determine productivity and profitability
of the major crops i.e., wheat, basmati paddy, cotton and sugarcane.
The technology package or resource use pattern depends upon the prices of the
concerned inputs, soil texture of farm land and technical knowledge of the farmers
regarding the sowing strategy of cultivated crops. Consequently the cost of resource
use varies from farmer to farmer of the same category or of other categories and it
would vary from year to year. The total expenses incurred on production of one acre
of all the considered crops increased overtime, which could be attributed to price
escalation and change in input use. Due to increase in prices of the relevant inputs, the
cultivators might decrease the physical use of the cash inputs but due to favourable
climatic conditions the yield remained on upper side causing the decrease in per unit
cost of output. As a result, the cost per unit of output estimated for all the considered
crops except basmati paddy was higher by 5.80 percent, 36.28percent and 7.22 per
cent in case of wheat, cotton, and sugarcane respectively as compared with 1990-91.
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The average yield of all the major crops showed increasing trend during the
considered period except cotton. In case of cotton the average yield per acre was
18.86 (40 Kgs) per acre in 19990 and decreased to 16.97 (40 Kgs) in 2001. However,
during the year 2008, cotton yield increased by 19.4 percent to 20.26 (40 Kgs).
In year 2000 the results were completely adverse to 1990, while the estimated
productivity results were less than 1 for cash crops and wheat and rice (food crops)
showed productivity concerns the opposite for theoretical option i.e., greater than 1
for this period. Due to relatively higher obtained yield and favourable prices of Rs.
112 per 40 kgs. in 1990 and Rs. 300 per 40 kgs in 2000. However, in 2008 the
farmers obtained positive returns for growing all the considered cash plus food crops ,
In 1990, both the food and sugar cane crops showed negative returns to the producers
of the crops. Such losses for wheat and rice crops were 9.49 percent and 21.66 percent
respectively and for sugarcane crop the loss was 33.92 percent of the cost of
production. The cotton growers received profit by 55.86 of the production cost in the
same period. In 2000, the adverse situation was obvious with 4.39 percent more return
than investment in case of wheat and 4.20 percent in case of basmati paddy. However,
the cotton and sugarcane crops proved failure in meeting even the production
expenses. The estimated losses were 3.11 percent in case of cotton and (-) 0.53
percent in case of sugarcane of the cost of production in 2000. In 2008, undoubtedly
the price of inputs touched the upper level than ever but more increase in output
prices made the crop growing activities beneficial for the growers and the measured
profitability was 53.95 percent in case of wheat, 58.62 percent in case of basmati
paddy, while (-) 15.84 percent in case of cotton and 30.89 in case of sugarcane,
respectively.
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The increased prices of output lead the farmers towards a relative better economic
situation and the possibilities of betterment of supply position with respect to demand
of the country can be explored in near future. By this it can be concluded that a solid
return at reasonable cost may prove better incentive than any for the farmers to adopt
possibly adoptable the latest crop production technology in the light of available
resources to grow the crops not only for the domestic requirements but also to earn
for exchange by exporting to the needy countries.
Policy Implications
Considering the scope and the results derived from precise discussion policy options are
proposed to be implemented for the betterment of economic position of the farmers by
increasing productivity and profitability of the major food and cash crops. The proposed
policy options are as under:-
Provision of guidance
The extension staff of the Agriculture Department needs to be equipped with the latest
crop production technology considering the environmental changes and must be
capable to disseminate the predicted cropping pattern for every category of the farmer
for adoption purposes. This should be scientifically proposed by the research
personnel on the basis of area and production of certain reasonable period for
prediction purpose to have unbiased estimates for the ongoing cropping season. This
would ensure the crop cultivators to have return incentives with exception of natural
situation to fulfil domestic needs and export purposes.
Timeliness in support price determination
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The support prices of the major food and cash crops should be determined, before the
initiation of sowing season of the respective crop, not only on the cost of production
basis but also considering international prices volatility, production, and demand of
the crop in addition to the domestic requirements. The input prices need to be revised
on yearly basis to eliminate the subsidy option considering the crop production status.
Corrective Measures of Agricultural Credit provision
Due to abrupt price escalation of inputs the adoption of the latest bio-chemical and
cultural practices oriented crop production technology becomes out of reach of the
subsistence farmers. The already implemented credit distribution policy has been
meant for the influential and effective farmers, thus the corrective measures need to
be initiated to provide equal access to every farmers to such credit to eliminate their
financial constraints.
The Expansion in Role of Extension Staff
An equally essential measure needs to be initiated is the expansion in the role of
Agricultural Department staff in provision and appropriate utilization of agricultural
credit. The bank should sanction credit on need basis with the recommendations of the
deputed extension staff. The staff will be also entrusted responsibilities to ensure
appropriate utilization of the credit for the purpose for which it has been provided.
This would be a sort of check on bank authorities as well as on the farmers.
References
1. PERI. “Farm Accounts, Family Budgets of Rural Families and Cost of Production of Major
Crops in Punjab” Various Issues.
2. Government of Pakistan. “Pakistan Economic Survey, Finance Division, Economic Advisor’s
Wing, Islamabad.
3. Wizarat S. (1982). “The Nature of Technological Change and Aggregate Production Function
in Pakistan’s Agriculture, PIDE Publication No. 137, Islamabad.
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Tables
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Table-1:- Cost of Resource Use Pattern to grow Major Crops by the Farmers in PunjabRupees
Crops1990 2000 2008
Per Acre Per 40Kgs Per Acre Per 40Kgs Per Acre Per 40Kgs
Wheat 2587.52 123.747098.35
(3233.87)**287.38
(130.92)**16364.38(7238.00)
616.94
Basmati(Paddy)
3572.07 172.939089.08
(4140.80)**369.47
(168.30)**22064.17(9759.02)
789.27
Cotton 4717.90 250.15*12698.82
(5785.34)**748.31*
(396.00)**24676.37
(10914.40)1217.88*
Sugarcane7211.89 14.95
18650.01(8496.59)**
35.19(18.62)**
33614.96(14867.95
61.12
*Seed Cotton ** Estimates on prices of 1990-91
Table-2:- The Estimated Return of Major Crops to the Farmers in Punjab
Crops
1990 2000 2008Yield(40kgs)
Value (Rs.)
Yield(40kgs)
Value (Rs)
Yield(40 kgs)
Value (Rs)
Wheat 20.912341.92(112)*
24.707410(300)*
26.5225194.0(950)*
Basmati(Paddy)
19.52798.25(143.50)*
24.609471.00(385.0)*
28.035000(1250)*
Cotton 18.864620.70(245)*
16.9712303.25(725)*
20.2620766.50(1465)*
Sugarcane482.2
7353.55(15.25)*
530.018550(35.00)*
550.044000(80)*
*Support Price Rs. per 40 Kgs in respective year.
June 27-28, 2011Cambridge, UK
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2011 Cambridge Business & Economics Conference ISBN : 9780974211428
Table -3:- Productivity Estimates of Various Major Crops(Rs. per acre)
1990 2000 2008
Value CostProductivity
Value CostProductivity
Value CostProductivity
Wheat 2341.92 2587.52 0.90 7410.00 7098.35 1.04 25194.00 16364.38 1.54BasmatiPaddy
2798.25 3572.07 0.78 9471.00 9089.08 1.04 35000.00 22064.17 1.59
Cotton 4620.70 4717.90 0.98 12303.5 12698.82 0.97 29680.90 24676.37 1.20Sugarcane 7353.55 7211.89 1.02 18550.0 18650.01 0.99 44000.00 33614.96 1.31
Table-4:- Profitability Margin of the Crop Growers for various Major Crops
(Rs. per acre)
Crops
1990 2000 2008
Value Costs
Profit(%)
ValueCosts
Profit(%)
Value CostsProfit(%)
Wheat 2341.92(112)*
2587.52(-245.60) -9.49
7410(300)*
7098.35(311.65)
4.3925194(950)*
16364.3853.95
Basmati(Paddy)
2798.25(143.50)*
3572.07(-773.82)
-21.66
9471.00(385.0)*
9089.08(381.92)
4.2035000(1250)*
22064.17(12935.83)
58.62
Cotton7353.55(15.25)*
4717.90(2635.65)
55.8612303.25(725)*
12698.82(-335.97)
-3.1120766.50(1465)*
24676.37-15.84
Sugarcane4620.70(24.5)*
7211.89(-2591.19)
-33.92
18550(35.00)*
18650.01(-100.01)
-0.5344000(80)*
33614.96(10385.04)
30.89
*Support Price per 40 Kgs of respective Crop.
June 27-28, 2011Cambridge, UK
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