Productivity and Profitability Margin at Farms in Punjab A. Quddus, Mazhar-ul... · Web viewProductivity and Profitability Margin at Farms in Punjab (Overtime Study of Cash Crops)

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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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.


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Table -3:- Productivity Estimates of Various Major Crops(Rs. per acre)

1990 2000 2008

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.


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Documents

Productivity and Profitability Margin at Farms in Punjab A. Quddus, Mazhar-ul... · Web viewProductivity and Profitability Margin at Farms in Punjab (Overtime Study of Cash Crops)