AN ECONOMIC ANALYSIS OF TOMATO HYBRID SEED PRODUCTION UNDER CONTRACT FARMING IN
HAVERI DISTRICT
NAGARAJ M. SANNAMANI
DEPARTMENT OF AGRICULTURAL ECONOMICS COLLEGE OF AGRICULTURE, DHARWAD
UNIVERSITY OF AGRICULTURAL SCIENCES, DHARWAD – 580 005
JUNE, 2014
ii
AN ECONOMIC ANALYSIS OF TOMATO HYBRID SEED PRODUCTION UNDER CONTRACT FARMING IN
HAVERI DISTRICT
Thesis submitted to the
University of Agricultural Sciences, Dharwad
in partial fulfillment of the requirements for the Degree of
Master of Science (Agriculture) In
Agricultural Economics
By
NAGARAJ M. SANNAMANI
DEPARTMENT OF AGRICULTURAL ECONOMICS COLLEGE OF AGRICULTURE, DHARWAD
UNIVERSITY OF AGRICULTURAL SCIENCES, DHARWAD – 580 005
JUNE, 2014
iii
DEPARTMENT OF AGRICULTURAL ECONOMICS COLLEGE OF AGRICULTURE, DHARWAD
UNIVERSITY OF AGRICULTURAL SCIENCES, DHARWAD
CERTIFICATE
This is to certify that the thesis entitled "AN ECONOMIC ANALYSIS OF
TOMATO HYBRID SEED PRODUCTION UNDER CONTRACT FARMING IN HAVERI
DISTRICT" submitted by Mr. NAGARAJ M. SANNAMANI, for the degree of MASTER OF
SCIENCE (AGRICULTURE) in AGRICULTURAL ECONOMICS, to the University of
Agricultural Sciences, Dharwad is a record of research work done by him during the
period of his study in this University under my guidance and supervision and the
thesis has not previously formed the basis for the award of any degree, diploma,
associateship, fellowship or other similar titles.
DHARWAD
JUNE, 2014 (S. M. MUNDINAMANI) CHAIRMAN Approved by :
Chairman :
Members : 1.
2.
3.
4.
(JAGADEESH G. ANGADI)
(V. K. DESHPANDE)
(H. BASAVARAJA)
(S. M. MUNDINAMANI)
(R. M. HOSAMANI)
iv
Acknowledgement
“Gratitude takes three forms, A feeling from the heart, an expression in words and a
giving in return……..”
At last the moment has come to look in to deeper layer of my heart which is filled with
the feeling of togetherness and loveliness; consolation and satisfaction. Some are permanent
and some are momentary but both involve a member of the persons to whom I acknowledge
my warm regards.
I have no words to express my heartfelt love and affection for persistent
encouragement and blessing of my parents Shri. Malleshappa, Smt. Mallamma and my dear
sister Mamatha, for their never ending support, affection, love and sacrifice that forms the
soul for this body and responsible for what I am Today. I am eternally grateful to them for all
that they have done for me.
It is always immense and immeasurable pleasure to applaud the auspicious person,
who has the character of kind benevolence, consummate and care taking affair in other
welfare. Here I am in hunt to express my pleasurable feelings and thankfulness to my well
wisher cum chairman of advisory committee, Dr. S. M. MUNDINAMANI, Professor,
Department of Agricultural Economics, Univ. Agric. Sci., Dharwad, for his thought provoking ,
inspiring and valuable guidance in planning and execution of my research work.
My diction is too poor to translate my gratitude to Dr. H. BASAVARAJA, Professor
and University Head, Dept. of Agricultural Economics, Dr. JAGADEESH G. ANGADI,
Professor and Head, Department of Agricultural Extension Education, Dr. V. K.
DESHPANDE, Associate Professor, Dept. of Seed Science and Technology and Dr. R. M.
HOSAMANI, Associate Professor, Dept. of Horticulture who served as members of my
Advisory committee for their sagacious suggestion and constructive criticisms during the
period of study and in improving the manuscript
I am highly indebted to Dr. L. B. Kunnal, Professor, Dr. S. B. Hosamani, Professor
and Head, Department of Agricultural Economics, Dr. S. S. Guledagudda, ADR, Bijapur, Dr.
G. N. Kulkarni, Dr. (Smt.) Jayashri A. Handigol Smt. R. l. Bilagi, Associate Professors,
Department of Agricultural Economics, and Dr. P. A. Kataraki, Professor, College of
Agriculture, Dharwad, for their help and encouragement during the study and research work.
This thesis has come to reality because of the wonderful friends of my life thanks
from the core of my heart, to all of them and would like to register for their wonderful
guidance, extreme patience, sound and faithful advice, constant encouragement, care, love
and kindness and for all the trouble they took for my sake.
v
I am very glad to mention sincerely the support from my senior friends Shreeshail,
Aravind Kammar, Vinod, Savitha, Netrayani, Pavitra, Vijay, Sachin and Ramachandra,
Pavankumar, Kusuma, and my dear friends Vijay, Vittal, Siddu, Rohit, Sharat, Rudragouda,
Samuel, Basavaraj, Virupaksh, Lakkappa, Mahadev, junior friends Siddu, Praveen, Vinayak,
Shashi, Kadli, and all my UG friends who encouraged me during my post graduation
I convey my whole hearted thanks to Mr. Arjun, Mr. Kalmesh (M/s Arjun Computers)
and Kumbar Binders for his meticulous typing of the manuscript neatly, timely and more vitally
his co-operation and affection towards
………….omission of any names doesn’t the lack of gratitude. Ending inevitable for all good
work it is time to end the acknowledgement.
DHARWAD
JUNE, 2014 (NAGARAJ M. SANNAMANI)
vi
Affectionately Dedicated to
My Beloved Parents,
Sanju, Manju &
Dear Mamatha
vii
CONTENTS
Sl.
No. Chapter Particulars
CERTIFICATE
ACKNOWLEDGEMENT
LIST OF TABLES
LIST OF FIGURES
LIST OF PLATES
LIST OF APPENDICES
1. INTRODUCTION
2. REVIEW OF LITERATURE
2.1 Cost and returns in seed production
2.2 Resource use efficiency in seed production
2.3 Income and employment generation through contract
farming
2.4 Problems in contract farming
3. METHODOLOGY
3.1 Description of the study area
3.2 Sampling procedure
3.3 Nature and sources of data
3.4 Analytical tools and techniques
3.5 Definition of the terms and concepts
4. RESULTS
4.1 Socio-economic characteristics of the farmers
4.2 Input use pattern in tomato hybrid seed production
4.3 Cost and returns in tomato hybrid seed production
4.4 Resource use efficiency in tomato hybrid seed production
4.5 Pattern of income and employment in tomato hybrid seed
production
4.6 Problems faced by the contract farmers and the contract
firms
viii
5. DISCUSSION
5.1 Socio-economic characteristics of the farmers
5.2 Input use pattern in tomato hybrid seed production
5.3 Cost and returns in tomato hybrid seed production
5.4 Resource use efficiency in tomato hybrid seed production
5.5 Pattern of income and employment in tomato hybrid seed
production
5.6 Problems faced by the contract farmers and the contract
firms.
6. SUMMARY AND POLICY IMPLICATIONS
REFERENCES
APPENDICES
ix
LIST OF TABLES
Table No.
Title
3.1 Demographic profile of study area
3.2 Land use pattern in the study area
3.3 Sources and pattern of irrigation
3.4 Cropping pattern followed in Haveri district
3.5 Selection of villages and sample farmers
4.1 General features of sample respondents
4.2 Average land holding pattern of sample farmers
4.3 Cropping pattern of the sample farmers in the study area
4.4 Input use pattern in tomato hybrid seed production
4.5 Cost incurred in tomato hybrid seed production
4.6 Returns realised in tomato hybrid seed production
4.7 Production function estimates in tomato hybrid seed production
4.8 Allocative efficiency of resources in tomato hybrid seed production
4.9 Pattern of employment in tomato hybrid seed production
4.10 Problems faced by contract farmers in Production, Processing and Marketing of tomato hybrid seeds
4.11 Problems faced by contracting firms
x
LIST OF FIGURES
Figure
No. Title
3.1 Map showing the taluks selected for the study
3.2 Schematic representation of Sampling Plan for the study
4.1 Average land holding pattern of sample farmers
4.2 Cropping pattern of the sample farmers in the study area
4.3 Cost incurred in tomato hybrid seed production
xi
LIST OF PLATES
Figure
No. Title
1. Tomato hybrid seed production under open field
2. Labours engaged in tomato hybrid seed production
3. Tomato hybrid seed production under shade net
4. Tomato hybrid seed production under polyhouse
xii
LIST OF APPENDICES
Appendix No.
Title
I. Interview schedule for contract farmers
II. Interview schedule for contracting firms
III. Factors influencing selection of seed growers
IV. Factors considered by the firms for selection of the farmers in tomato hybrid seed production
1. INTRODUCTION
Around 70 per cent of India’s poor live in rural areas; and tackling poverty
implies addressing the problems faced by the rural poor. The majority of these
people are farmers who depend on agriculture and the related activities for their
sustenance. In many situations, small farmers are able to make efficient production
choices, if they are not constrained in choosing optimal input and output levels.
Increased production does not necessarily lead to higher incomes, particularly
where prices fluctuate widely, markets are unorganized and inefficient, market
access is limited, or bargaining power is weak. There is an intense feeling that in
the era of liberalization and globalization, small farmers are being completely
neglected and marginalized from high value agribusiness activities and hence are
unable to derive maximum benefits due to their fragmented and uneconomic size of
holdings and inadequate access to external inputs and services. Against this
backdrop, vertical coordination through contractual arrangements is necessary to
link product characteristics and production processes to consumer preferences.
This has given rise to the concept of ‘Contract Farming’.
Contract farming can be defined as an agreement between farmers and
processing or marketing firms for the production and supply of agricultural products
under forward agreements, frequently at predetermined prices.
It is a form of vertical integration within agricultural commodity chains, such
that the firm has greater control over the production process, as well as the
quantity, quality, characteristics and the timing of what is produced. The
conventional approach to vertical integration has been for firms to invest directly in
production through large-scale estates or plantations (especially for traditional
tropical commodities such as tea, banana and sugarcane). Contract farming, in its
various forms, allows a degree of control over the production process and the
product without the firm directly entering into production.
Contract farming is the contractual arrangement between farmers and a
company, whether oral or written, specifying one or more conditions of production
and or marketing (Roy, 1963). The new agricultural policy of the Government of
India is aimed at promoting growth of private sector participation in agribusiness
2
through contract farming, which accelerates technology transfer and capital flow
and thus, provides assured markets for crops. Contracting leads to environmental
equity, food security and sustainability. It provides better income to farmers and
generates more employment for labour through introduction of new crop
technologies and by providing markets and inputs. In fact, contract farming as a
system would affect the producers positively or negatively depending on the context
of the economy (Singh, 2000).
Karnataka is emerging as one of the leading states in contract farming in
vegetables with around 22 companies (both domestic and multinational) offering
contract farming for a variety of vegetables. Contract farming of fresh vegetables is
concentrated in south Karnataka. Baby corn is the new crop introduced in 1999 by
contract farming firms. Similarly, green chilli production under contract farming
started in 2002. High-value agriculture is associated with vertically coordinated
marketing channels, super markets and export-oriented agribusiness. However,
impact of vertical coordination on small farmers has not been adequately studied in
India.
Increasing production is the talk of the day which is one of the ways and
means for the economic development of the country. The significant increase in
agricultural production depends largely upon employment of new technology. The
process of modernizing Indian agriculture primarily involves the intensive use of
non-conventional inputs such as quality seeds, chemical fertilizers, pesticides,
herbicides, irrigation, farm machinery and a network of research and extension
infrastructure. These factors enable the country to make its agriculture more
productive and cost competitive especially in the scenario of world agricultural trade
under WTO.
Historical background of contract farming
Contract farming first began in Taiwan in 1895 by the Japanese government
for sugar production. US company used contracts in banana plantation in Central
America, whereas in India it is gaining importance in recent times Indian Tobacco
Company (ITC) by introducing Virginia tobacco in coastal Andhra Pradesh in
3
1920’s, made an entry into contract farming for the first time in the country. Since
then, contract farming is expanding steadily in India. More prominent examples with
respect to contract farming in India are tomato cultivation in Punjab, Haryana and
Rajasthan; Sunflower Vegetable seed production and gherkin production in
Karnataka. The intensity of contractual arrangement varies according to depth and
complexity of the provisions such as market provision, resource provision and
management specifications. Contract farming has existed in Karnataka for decades
mainly in sugar mills where farmers have been growing sugarcane at the pre-
guarantee of a specified price. In the same manner, corporate sector has
introduced varieties of horticultural produce such as potato, chilli, tomato and
gherkin and seed production of different crops.
Benefits of contract farming
Contracts are generally signed at the time of planting and specify how much
produce the company will buy at what price. Often the firm provides credit, inputs,
farm machinery rentals, technical advice and retains the rights to reject the
substandard produce (Glover, 1990).
i) To farmers
There is an assured market of their produce, which will eliminate the risk of
price fall during glut. Information on market price is made available ex-ante. This
instills confidence among the contract farmers. It saves the difficulties involved in
timely transportation and eradicates the exploitation by the middlemen. Farmer can
receive assistance from the processor in the form of technical service and input
supply on credit with or without interest cost. Companies often provide credit to the
farmers, which reduce the burden of self expenses to the farmer. This enables the
farmers to escape from the evils of private moneylenders. Farmer is assured of
better returns compared to other field crops as the companies offer relatively better
prices.
ii) To firm
The companies know the acreage planted and is assured of the grower’s
output thus reducing its supply risk. The company is in control of the contract
4
provision and stipulations that can encourage quality and production through the
terms of agreement. The companies know their approximate cost of raw product in
advance. As better growers tend to contract with the same company over several
years, some stability in company-grower relationship is attained. Since, some of the
crops have no/less domestic market (at present), the farmers have no option to sell
their produce outside and the company is assured to get regular supply of the
produce.
Importance of seed production
Seed is a vital input and dynamic instrument for increasing agricultural
production. It has been one of the miraculous inputs responsible for green
revolution in India as well as elsewhere. The green revolution has brought
prosperity, stability and confidence not only in agriculture, but also in the economic
well being of the country. The seed acted as a catalyst to trigger off changes in
several sectors.
It has been reported that genetically good quality seed alone can increase
crop production by 20 per cent. Farmers in India knew the value of good seed from
time immemorial and have contributed for improvement of seeds through selection
and cultivation. Seed is a basic input and forms only a small part of the total
cultivation expenses. Yet, without good seed the investment on fertilizer, pesticides
and other inputs will not pay the required dividend. In fact, seed is the real vehicle
of production and other inputs like water and fertilizers can be regarded as fuel.
Quality seed production is a specialized activity and a portion of crop produce
retained by the farmer as seed cannot substitute for quality seed since such seed is
likely to be of genetic purity and may suffer from lack of desired qualities.
Tomato
Tomato (Lycopersicon esculentum) is a solanaceous self-pollinated
vegetable crop. It occupies the largest area among the vegetable crops in the world
after potato. Tomato fruit can be consumed either fresh, cooked or in the form of
processed products such as jam, jelly, juice, ketchup, sauce etc. It is considered as
‘poor man’s apple’ because of its attractive appearance and very high nutritive
value, containing vitamin A, vitamin C and minerals like calcium, potassium etc.
5
Apart from these, it also contains organic acids like citric, malic and acidic acids
which found in fresh tomato fruit, promotes gastric secretion, acts as a blood purifier
and works as intestinal anti-septic. Tomato is a native to Peruvian and Mexican
region. It was introduced by Portuguese to India.
Method of tomato hybrid seed production
Hybrid tomato varieties have many advantages compared to open-pollinated
varieties. Hybrids usually produce higher yields. Many hybrids have better fruit
quality and disease resistance. With all of these advantages, many farmers prefer
to grow hybrid seeds inspite of the higher input costs. The demand for hybrid
tomato seeds can open a new market for growers interest in seed production.
Tomatoes grow best in the dry season under day temperatures of 21-25°C
and night temperatures of 15- 20°C. Humidity levels higher than 60per cent at the
time of fruit maturity will increase disease problems and reduce seed yields.
Optimum soil pH for tomato hybrid is 6.0 to 7.0. The female flower must be
pollinated by the pollen from the male line. To prevent self-pollination, remove the
stamens from the flower buds of the female line before they shed their pollen. This
process is called emasculation. The best time for pollen collection is during the
early morning before the pollen has been shed. Pollination is usually done three
times weekly over a three to five week period.
Hybrid fruits are easily recognized by their cut sepals. Remove the naturally-
pollinated (non-hybrid) fruits, if any, from the female plants. Harvest the ripe fruits
and keep them in nylon bags. Crush the fruits by trampling with feet. Put the bags
of crushed fruits into big plastic containers and ferment to separate the gel mass
embedding the seeds. If temperature is above 25°C, one day of fermentation may
be sufficient. If cooler, two days of fermentation may be needed.
After two days of fermentation, wash the seeds by putting them in an open
plastic container. Then fill the container with water and stir the seeds to allow the
pieces of flesh and skin sticking on the seeds to float. Repeat the washing several
times, adding fresh water to the container every time until all the flesh and gel are
completely removed, leaving clean seeds at the bottom. Drying can be done for
three to four days in shade, maintaining a temperature of 28-30°C.
6
Importance of the present study
The private seed companies in seed production resort to contract farming
mainly to have assured supply of genuine seed material in required quantity at the
right time, which has been produced under their supervision. On the other hand, the
farmers are interested to enter into contract mainly to minimize the price risk and
also to reap higher profits out of this seed production activity over commercial
production of crops
Tomato hybrid seed production under contract farming is highly profitable,
even small farmers can practice it. Risk involved due to fluctuation in market price is
minimized through contract farming. As tomato hybrid is a highly valuable crop, it
helps the farmers to get the loan from the commercial banks. Farmer is assured of
better returns compared to other field crops as the companies offer relatively better
prices. The farmers will get all required things for cultivation of tomato such as
inputs, technology and extension services in one roof. Keeping in view the
importance of tomato hybrid seed production under contact farming and its
influence on socio economic status of farm households, the present study was
taken up with the following specific objectives.
Objectives of the Study
1. To estimate cost and returns in tomato hybrid seed production;
2. To analyse the resource use efficiency in tomato hybrid seed production;
3. To estimate the extent of income and employment generation through
contract farming in tomato hybrid seed production; and
4. To analyse the problems faced by the farmers and firms in production,
processing and marketing of tomato hybrid seeds.
Hypotheses
1. Tomato hybrid seed production is profitable under contract farming.
2. Resources are used optimally in tomato hybrid seed production.
7
3. Tomato hybrid seed production and processing generates substantial
employment opportunities and income.
4. Farmers and firms are facing many constraints in production, processing and
marketing of tomato hybrid seeds under contract farming.
Limitations of the Study
Despite the advantages, contract farming has many constraints. Though
contract farming is basically a way of allocating risk between the firm and its
farmers, the distribution of risk depends largely on factors such as bargaining
power, availability of alternatives or access to information. In short term crops such
as vegetables, farmers tend to divert their produce to the open market rather than
supply to the contracting firm when the prices are high. The cost calculations of the
firm crumble, as they are forced to arrange supply of raw materials from alternative
sources with attendant uncertainties. Similarly, in long-duration crops such as
plantation crops, the firms often fail to honour the contract, as they know that
farmers have no alternative but to sell the products to them at lower prices.
The area, production and marketing of tomato hybrid seed production have
not been documented by any institution or government. Thus, the production and
requirement estimates are made to suffer from lack of statistics. The existing
marketing network for tomato hybrid seeds produced is generally more confined
and restricted.
2. REVIEW OF LITERATURE
In this chapter, with a view to evaluate the objectives of the study, findings
of some of the earlier research studies have been reviewed. This would enable the
researcher to collect information and subject them to sound reasoning and
meaningful interpretation. It was hoped that such a review of literature would
provide a basis for either conforming the earlier results or contradicting them and
there by suggesting the points for further improvement.
Keeping in view the objectives of the study, the reviews are presented under
the following headings:
2.1 Cost and returns in seed production
2.2 Resource use efficiency in seed production
2.3 Income and employment generation through contract farming
2.4 Problems in contract farming
2.1 Cost and returns in seed production
Madalia and Charan (1974) studied costs and returns in H-4 cotton seed
production in Gujarat and reported that the average cost of seed production was
Rs. 44,688.80 per hectare. The labour charges for crossing operation and cost of
crossing material accounted for 45.26 and 12.73 per cent of the total cost,
respectively. The total quantity of certified seeds produced per hectare was
1225.05 kg. The average net returns from seed production amounted to Rs.
42,549.77 per hectare. Thus, per kg cost and net profit were estimated to be Rs.
35.61 and Rs. 33.90, respectively.
Mallikarjunaiah et al. (1974) studied the economics of hybrid jowar seed
production and estimated the average cost of hybrid jowar seed production at Rs.
1,722.5 per acre with an average yield of 7.74 quintals of quality seeds. The net
returns were Rs. 3,686.58 per acre, while net return per rupee of investment was
Rs. 2.14. The average cost of production per kg of seeds was Rs. 1.53.
Rakhunde (1974) studied the economics of the hybrid cotton seed
production in Parbhani district of Maharashtra. He worked out the input: output
ratio of H-4 cotton seed production to be 1:1.71. The average yield was 1330.22 kg
9
per hectare which was obtained by using 522.95 kg nitrogen, 194.00 kg of
phosphorus and 153.42 kg of potash. The per kg cost of seed was calculated to be
Rs 34.96 while net return of Rs. 24.04 per kg which was obtained by selling the
certified seed at the rate of Rs. 60.00 per kg.
Srinivasan and Gururajan (1974) studied the cost of production of hybrid
cotton seed where male sterile line was used and they found that the actual cost of
a kg of hybrid cotton seed worked out to be Rs. 22.00 only.
Arunkumar (1976) studied the economics of hybrid jowar seed and potato
production (a major competitive crop) in Devanahally taluk of Bangalore district
and indicated that the total cost of hybrid jowar seed production was Rs. 6,242.75
per hectare, while it was Rs. 10,354.99 for potato. Seed was a major item of cost in
potato cultivation (26per cent). Manures and fertilizers together accounted for
nearly 33 per cent of the total cost of production of both jowar and potato. The
gross return from jowar was Rs. 7,997.40 and the net return was Rs. 1,981.53. In
potato, these figures were Rs. 7,997.40 and Rs. 1,754.65 per hectare,
respectively.
Rajmane (1979) worked out the economics of seed production of Varalaxmi,
Godavari and H-4 cotton in Parbhani district of Maharashtra. The cost per quintal
of seed in Varalaxmi, Godavari and H-4 were Rs. 5,970.35, Rs. 6,116.81 and Rs.
6,625.49, respectively and corresponding figures of physical yield per hectare were
835 kg, 777 kg and 515 kg, respectively. The net profit at cost C from the seed
production of Varalaxmi, Godavari and H-4 were Rs. 12,772.39, Rs 10,747.35 and
Rs. 7,078.73 in that order.
Patel and Dholaria (1981) analysed economics of hybrid cotton seed
production in Gujarat. It was revealed that the average cost of a kg of seed worked
out to be Rs. 53.60, Rs. 36.90 and Rs. 30.97 in the year 1971-72, 1972-73 and
1973-74, respectively. The labour together with processing costs alone formed
about two-third of the total cost (cost C) for the three year average. The physical
output were 521.66, 1183.70 and 947.74 kg per hectare for the years 1971-72,
1972-73, 1973-74 and the corresponding figures of gross returns were Rs.
66,780.01, Rs. 82,813.46 and Rs. 80,876.64.
Madalia and Patel (1984) compared the economic performance of seed
production of two important hybrid cotton varieties viz., Hybrid-4 and Varalaxmi
10
grown in Gujarat. They found that the per acre total cost of seed production of H-4
and Varalaxmi cotton during 1978- 79 came to Rs. 23,234 and Rs. 23,101,
respectively and where it was Rs. 24,338 (H4) and Rs. 21,445 (Varalaxmi) during
1979-80. The cost on hired labour in H-4 cotton seed production during 1978-79
was constituted about 46 per cent of the total cost and that for Varalaxmi it was
47.04 per cent. The yields were 842 and 938 kg for H-4 and Varalaxmi during the
year 1978-79 and 828 kg and 872 kg during 1979-80 in that order. They estimated
the ratios of gross return to the total cost and found them to be 1:1.34 and 1:1.29
during the year 1978- 79 for H-4 and Varalaxmi, respectively and corresponding
figures of 1978-80 year were 1:1.27 and 1:1.30.
Anonymous (1990) estimated the cost of hybrid cotton seed production at
research farm of Central Institute for Cotton Research (CICR) Nagpur. It was
reported that the total cost per hectare was around Rs. 60,000. The seed output
under optimum conditions would be 600 to 700 kg per hectare. The cost of
production per kg of seed thus was from Rs. 90 to 130. The market price per kg of
seed realized by the farmer for hybrid cotton seed was around Rs. 150 in public
sector and up to Rs. 300 in private companies.
Mane (1991) examined the economics of production of hybrid cotton seeds
(NHH-44 and PKV Hy-2) in Parbhani district of Maharashtra state and reported that
the total cost of hybrid seed production was Rs. 67,061.62 and Rs. 62,629.44 per
hectare for NHH-44 and PKV Hy-2 cotton hybrids, respectively with an average
yield of 8.78 quintals and 6.62 quintals per hectare of certified seeds of NHH-44
and PKV Hy-2 hybrids, respectively. The net returns at cost D was Rs. 30,458.38
and Rs. 28,148.21 per hectare for NHH-44 and PKV Hy-2 hybrids, respectively.
The per hectare net income realized at cost D was Rs. 30,458 in NHH-44 and Rs.
28,148 in PKV Hy-2 hybrid.
Ramamoorthy (1996) studied the economics of hybrid cotton seed
production in Coimbatore. The study revealed that the hybrid seed producer of
Savitha variety received a net profit of Rs. 2.37 per rupee invested, whereas the
variety LRA 5166 seed producing farmers received a net profit of Rs. 0.63 per
rupee invested.
Naik et al. (1996) studied economics of tomato seed production in Dharwad
district. The study revealed that the total cost of production per acre of tomato seed
11
production increased with an increase in the size of holding. The total returns from
per acre of tomato seed production was Rs. 45,800 for medium farmers, Rs.
44,150 for small farmers and Rs. 43,485 for large farmers. Net profits were the
highest in the case of medium category (Rs. 33,215) farmers, followed by small
(Rs. 32,465) and large (Rs. 30,779) category farmers. This was due to lower cost
of production and higher productivity in smaller sized farms compared to the larger
ones.
Anonymous (1997) studied the cost and returns in summer cotton in Tamil
Nadu and reported that there was a decline in yield and increase in cost of
cultivation. The decline in hybrid yield was alarming at 16 per cent. The farmers
price and costs showed that the increase in farm price hectares been
compensated by an equal increase in cost of cultivation between 1976 and 1996.
Narayanakutty et al. (1998) studied the economics of vegetable seed
production at Agricultural Research Station, Mannuthy of the Kerala Agricultural
University during the period 1994-95 to 1996-97. The cost of cultivation of
vegetable seeds showed a wide variation from Rs. 3,09,218 in the case of okra to
Rs. 86,416 per hectare in melon. Bulk of the cost in all the crops was accounted by
the labour charges. The net returns for okra were Rs. 3,03,282 and Rs. 23,588 for
melon. The per kg cost of seed production was Rs. 252.42 and Rs. 392.79 for okra
and melon, respectively. The benefit cost ratio, which was 1.98 and 1.27 for okra
and melon, respectively indicated that seed production of okra is more profitable
than melon.
Ramamoorthy (1999) studied the cost of seed production for summer
cotton. He observed that for every one rupee invested, the farmer, seed company
and retailers realized a profit of 71 paise, Rs. 1.76 and 11 paise respectively.
Kannababu and Rana (2003) studied the costs and net returns of sorghum
hybrid (CSH 15R, CSH 16, CSH 18 and CSH 19R) seed production in an
experimental station in India during the rabi season of 2000-01. The estimated
variable cost and fixed cost of sorghum hybrid seed production per hectare were
Rs. 29,280 and Rs. 7,020, which were 81 and 19 per cent, respectively, of the total
cost of seed production per hectare (Rs. 36,300). Human labour and material
constituted about 57 per cent of the variable cost. The total value of the produce
12
was estimated to be Rs. 52,750. The net benefit/cost ratio was 0.45, with net
income of Rs. 16,450 per hectare for sorghum hybrid seed production.
Gnanakumar (2007) studied the financial feasibility of investments in
contract poultry farming in Tamil Nadu region. Fifty integrated poultry were
selected randomly in Coimbatore district. He concluded that on an average,
farmers received a growing cost Rs. 2.36 per Kg of bird. The study also calculated
the profitability per chick, which was found to be Rs 1.50 in the beginning. The
study also estimated the returns on investment that was found to be 11.5 per cent
in the beginning and increased up to 20 per cent.
Naduvinmani (2007) studied the economics of red banana production under
contract farming in Karnataka found that the total cost of red banana production
per hectare was Rs. 1,30,991 while the gross and net returns were Rs. 4,28,630
and Rs. 2, 97,639 respectively. The benefit cost ratio for red banana was 3.28.
Zakir Siraz (2008) presented a detailed structure on management of
contract farming in livestock: a case of poultry industry. Primary data were
collected from the selected 30 poultry farmers in each category, spread across two
districts i.e., Bangalore rural and Dharwad in Karnataka state. Under cost
comparison in case of contract farming, the total cost incurred was Rs. 3.75 per
bird. In case of non-contract, the total cost incurred per bird was Rs. 58.31. The net
return obtained per bird was Rs. 1.94 in case of contract farmers and it was Rs.
1.23 in case of non-contract farmers. The meat feed price ratio was 1.74 in
contract arrangements and it was 1.56 in case of non-contract. Similarly, the
Benefit: Cost ratio in case of contract poultry farming was 1.52 and it was 1.02 in
case of non-contract farming.
Mundinamani et al. (2009) reported the cost and returns of major crops
under contract farming in Northern Karnataka. The productivity of tomato was
found to be 84 quintals per hectare, which resulted in a gross return of Rs. 1,
32,266 with net return of Rs. 92,419 per hectare. The average yield of hybrid bendi
was 6.4 quintal per hectare and net returns realized was Rs. 37,329 per hectare
and the net return of cotton was. Rs 68,125 per hectare with yield of 4.21 quintal
per hectare. The benefit: cost ratio of tomato, bendi and cotton were 3.29, 2.4 and
2.83, respectively.
13
Sridhara and Hosamani (2010) Economics of contract farming –a case
study of chilli in Bagalkot district of Karnataka. The results revealed that per acre
cost of chilli cultivation estimated to be Rs. 38721.36, Rs. 41238.37 and Rs.
39882.74 in Bilagi, Mudhol and overall study area respectively. The per acre yield
of chilli produce obtained were 1122.98, 1088.67 and 1096.49 Kgs in Bilagi,
Mudhol and overall study area respectively by the chilli farmers. The marginal
productivity analysis indicated that there is a scope for reorganizing the resources
like seeds, bullock labour and plant protection chemicals. Climatic factor, improper
identification of pest and disease, electricity problem and non- existence of crop
insurance were the problems confronting the chilli farmers.
Patil (2011) conducted the study to examine the cost and returns of
production of pigeon pea under transplanted and conventional methods. The study
revealed that the cultivation of pigeon pea in transplanted method was found to be
more profitable compared to conventional method. Total cost of cultivation in
transplanted method and conventional method were Rs. 39,382.31 per hectare
and Rs. 30,819.53 per hectare respectively. Net returns were found to be higher in
the case of Transplanted system (Rs. 54,103.25/ha) than in conventional method
(Rs. 25,562.78/ha).
Rithesh (2013) conducted a study to compare the cost and returns of
sugarcane processed for Sugar and Jaggery. The study revealed that the cost
incurred by the sample farmers in cultivating sugarcane for sugar and jaggery
preparation was Rs. 56,723.60 per acre and Rs. 55,942.26 per acre respectively. It
was also noticed that the expenditure on variable cost was higher (Rs. 46,058.72
per acre) for farmers growing sugarcane for sugar production and also for farmers
growing sugarcane for jaggery preparation (Rs. 45,277.38 per acre). The share of
the fixed cost in total cost of cultivation was Rs. 10,664.88 per acre accounting for
18.80 per cent for farmers growing sugarcane for sugar production where as the
share of the fixed cost in total cost of cultivation was Rs. 10,554.44 per acre
accounting 18.90 per cent for farmers growing sugarcane for jaggery preparation.
In case of sugarcane grown for sugar purpose, the gross returns and net returns
were found to be Rs. 1,18,750.00 per acre and Rs. 62,026.44, respectively where
as in case of sugarcane grown for purpose of jaggery, the gross returns and net
returns were found to be Rs. 2,92,980.00 and Rs. 1,42,095.30, respectively.
2.2 Resource use efficiency in seed production
14
Srikanthamurthy (1986) studied the productivity of resource use in two
major food crops (Ragi and Paddy) in Bangalore district. Cobb-Douglas production
function was fitted and results indicated that marginal farmers used nutrients in
excess.
Muralidharan (1987) studied the resource use efficiency in rice production in
Kerala, employing the Cobb-Douglas production function. The adjusted R² was
0.84 indicating that 84 per cent of the variation in yield of paddy is explained by the
estimated production function. The coefficient of land and human labour were
positive and significant at one per cent probability level.
Deshmukh et al. (1991) used Cobb-Douglas production function to study
resource use efficiency under different farming systems. Production elasticities of
gross cropped area and expenditure on manures and fertilizers were relatively
higher on irrigated farms as compared to rainfed farms under the bajra-based
farming system.
Balappa Shivaraya et al. (1998) fitted a modified Cobb-Douglas type of
production function to determine the resource use efficiency in the production of
red gram, in Gulbarga district. The study stated that land and fertilizers were found
to influence the production significantly for both types of farmers, effect of plant
protection chemicals was negative and statistically significant in non-IPM farmers
resulting in negative returns. In IPM farmer’s effect of plant protection chemicals
was positive and the ratio (1.023) of marginal value product to marginal factor cost
was nearer to one clearly indicating its optimal use in red gram production.
Naik et al. (1998) analyzed the resource use efficiency and productivity of
various factors involved in onion production using Cobb-Douglas production
function. They observed that regression coefficient for land and farmyard manure
was positive and highly significant.
Dyammannavar (2000) in his study on economics of gherkin production and
trade in Haveri district employed Cobb-Douglas production function. The
regression co-efficient of bullock labour (0.2338) and FYM (0.4805) were found to
be statistically significant indicating their crucial role in gherkin production. The
MVP to MFC ratio was more in case of bullock labour, FYM, staking material and
seeds. This indicated that there is an opportunity to maximize returns by using
more of these resources.
15
Dileep et al. (2002) examined resource use efficiency of contract farms and
non-contract farms in tomato of Haryana state, India. Data was collected from total
sample size of 100 farmers of different size groups of Ellenabad block of Sira
district during 1999-2000. They fitted Cobb-Douglas production function model and
obtained allocative efficiency based on marginal value productivity. The results
showed that there existed a scope to increase the production of tomato by
increasing the use of critical inputs particularly fertilizer, irrigation and plant
protection chemicals in the case of non-contract farms whereas the contract
farmers made excessive use of plant protection chemicals.
Sunanda and Narendra (2003) studied the resource productivity of mesta
farms in Srikakulam district of Andhra Pradesh and observed that mesta fiber
accounts for 70 per cent of raw jute. The cultivation involves intensive human
labour in addition to manures and fertilizers, seed and cattle labour. The Cobb-
Douglas production function analysis for these variables indicated constant returns
to scale on all farm size groups. The marginal value product to opportunity cost
ratios for all farm size groups indicated resource use efficiency and revealed the
scope of adjustments and reorganization of resources, so as to obtain higher
returns in mesta cultivation.
Mohan (2009) examined that the production function estimates of IPM
farmers indicated that output elasticities of seed (0.138), human labour (0.148) and
IPM component (0.279) had significant influence on the cotton yield in IPM
farmers. Whereas in non-IPM farmers, chemical fertilizer (0.087) and plant
protection chemicals (-0.047) found to have significant influence positively and
negatively on cotton production in non-IPM farmers.
Jalihal (2009) studied the resource use efficiency in coleus production using
Cobb-Douglas production function. Five variables were used in production function
and these variables explained 82 per cent of variation in the production of coleus
with respect to Semi-lab Pvt. Ltd. contract farmers, the coefficient of labour cost
0.8569 was positive significant at five per cent level, the coefficient of planting
material (1.140) and FYM (1.240) was found to be positive and significant at one
per cent level. In Natural Remedies Pvt. Ltd. the variables explained 89 per cent of
total production, the coefficient of labour cost 0.1875 was positive and significant at
five per cent level, the coefficient of planting material (1240) and FYM (1.310) were
found to be positive and significant at one per cent level.
16
Nethrayini and Kunnal (2010) estimated contract farming of gherkin under
agri export zone in Karnataka- an economic analysis. The results revealed that the
agreement between the farmers and the company was oral and informal for 77.7
per cent of the farmers and for the rest 22.2 per cent, it was written and formal
agreement. The Marginal Value Product (MVP) to Marginal Factor Cost (MFC)
ratio showed that human labour (1.79), plant protection chemicals (3.18) and
staking materials (2.66) were under utilized in gherkin cultivation. The MVP to MFC
ratio for seeds and FYM and fertilizers was negative which indicated the over
utilization of these resources. In gherkin cultivation under contract farming on
sample farms women labour employment (57.24%) was more than men labour use
(42.75%).
Vincent et al. (2010) conducted a study to determine resource use
efficiency, optimal production levels, production systems of small-scale poultry
farmers in Bureti district, Kenya. Primary data were obtained using a set of
structured questionnaires from 300 representative farmers drawn from the study
area using cross-sectional sampling techniques. Data were analyzed by Cobb-
Douglas production function. The results showed that the resources used in poultry
production were underutilized while others were over utilized. The efficiency
indicators for poultry feeds (0.0603) showed that poultry feeds were inefficiently
used. Labour efficiency indicator (-0.091) showed that farmers were not only
grossly inefficient in the use of the resource but also over utilized it while the
efficiency indicator (60.86) for poultry equipment implied the resource was
inefficiently utilized.
David and Shabu (2011) conducted a study to examine the resource use
efficiency in rice production in Kwande Local Government Area of Benue State
Nigeria. The data for the study was collected from 100 rice farmers in the four
districts of the study area using a simple random sampling technique. Cobb
Douglas production function and technical efficiency techniques were used as
analytical tools. The study revealed coefficient of elasticity of Cobb Douglas
production function of 1.3 which implies that rice farmers in the area are producing
in the first stage of production. The technical efficiency estimates reveal that all the
Marginal Physical Productivity (MPPs) were higher than the Average Physical
Product (APPs) which also suggest that, the farmers were producing in the first
stage of production. The study concluded that rice farmers in kwande local
government were technically inefficient in rice production.
17
Rama Rao (2012) in his study entitled that Efficiency, yield gap and
constraints analysis in irrigated vis-à-vis rain fed sugarcane in north coastal zone
of Andhra Pradesh. The economics of yield gap in irrigated and rain fed sugarcane
cultivation have been studied in North Coastal Zone of Andhra Pradesh for the
period 2008–09 by collecting data on various aspects of costs and returns.
Budgeting techniques, cost concepts, benefit cost ratio (BCR), yield gap analysis
and response priority index have been used for the analysis. The study has shown
that the value of BCR is higher for plant crop in irrigated (1.49) than in rain fed
(1.43) regions. The yield gap between irrigated and rain fed regions has been
found to be 67.00 per cent, in which input usage had a higher (41.86%) effect than
cultural practices (25.93%).
Karthick et al. (2013) conducted a study on resource use efficiency and
technical efficiency of turmeric production in Tamil Nadu. The resource-use
efficiency and technical efficiency of turmeric production have been computed
using primary data collected from 90 turmeric growers spread over three blocks in
Dharmapuri district of Tamil Nadu. The study has revealed that planting material,
nitrogen, potash, harvesting and curing cost, machine hours and irrigation have a
positive and significant influence on turmeric yield. Economic efficiency of these
variables, except harvesting and curing cost, is more than one, indicating that
these resources are being used at sub-optimum levels and there exists the
possibility of enhancing the yield of turmeric by increasing their use. The technical
efficiency of about 69 per cent of sample farmers has been found more than 80 per
cent, which indicates the possibility of increasing the yield of turmeric by adopting
better technology.
2.3 Income and employment generation through contract farming
Birari et al. (1991) in their study have examined the pattern of employment
and participation of women in agriculture activities in Maharashtra.The proportion
of family women labour was the highest (14.2%) in western Maharashtra, while the
proportion of hired women labour was the maximum of 65 per cent in Vidarbha
region. Women accounted for 18 per cent of the total labour employment under
special activities such as incidental farm work. Nearly 50 per cent of the labour
requirement for agricultural activities was contributed by woman in the study area.
18
Ponghal et al. (1999) in their study studied the efficiency of men and women
labour in performing different crop production operations in major crops of
Haryana. The study revealed that women labour participation was quite high in
operations like transplanting, weeding and picking.There was no participation of
women labour in irrigation and ploughing operations in all zones of Haryana and
almost in all the crops.
Singh (2000) conducted a study on contract farming of tomato, potato and
chilli revealed that contract farming has led to more employment opportunities.The
labour intensity was much higher than the traditional crops. It varies from 38 labour
days in potato to 67 labour days in other kharif crops.
Singh (2001) examined the supply chain management and role of contract
farming. The researcher highlighted that the services of contract farming system
were advantageous to both the farmers and the company. The impact was clearly
brought out by contract farming. Tomato yields increased three fold (from 16 mt/ha
to 52 mt. /ha), chilli yields increased from 6mt./ha to18 mt./ha, farm incomes
increased by more than 2.5 times, processing season linked to fruit increased from
28 to more than 55days and there was an improvement in the quality of produce.
Tatlidal and Akturk (2004) made a study on comparative analysis of the
contract and non-contract farming models of tomato production in Biga district of
Canakkale province, Turkey. Data for 2002-03 production period was obtained
from a sample of 57 contract farms and 45 non -contract farms. Input use level,
gross-margin and net profit in tomato-growing farms were examined. Farms
operating by the contract farming model utilized more input per unit area, adopt
technological innovations and obtain greater yields of tomato per unit area. The
gross margin of contract farms was 13 per cent while net profit was19 per cent
higher when compared to non-contract farmers.
Vinayaka (2005) reported in maize cultivation about 6.32 man days of
human labour used for land preparation, for FYM and compost transportation and
application 5.96 man days were employed. About 7.96 man days were employed
for sowing. For weeding about 8.92 man days, for harvesting 10.6 man days and
for threshing 13.6 man days were used. Total of 53.36 man days were employed
for different activities of maize cultivation by contract farming.
19
A study by Ramsundharam et al. (2005) on contract farming of cotton in
Coimbatore district of Tamil Nadu revealed that the income obtained by contract
farming was 75 per cent more than non-contract farming.
A study by Jagadish Kumar and Prakash Kumar (2008) in Tumkur district
revealed that the average gross farm income was higher on contract farms (Rs.
1,35,898) than non-contract farms (Rs. 69,498) by about 96 per cent. The per-
year income from crops was higher on contract (Rs 1,24,215) than non-contract
(Rs. 56,4180) farms, the farmer contributing 91.4 per cent and the latter 81.2 per
cent to the gross farm income. The family human labour employed in crop
production and livestock was also more on contract farms than non-contract farms.
It was due to higher cropping intensity and more labour- intensive crops.
2.4 Problems in contract farming
Ramamoorthy (1995) studied the major socio-economic constraints in
cotton production and management. The constraints were identified and ranked
through rank analysis. The study identified the major production constraints as
poor quality input supply, inadequate credit supply and high production risk and the
marketing constraints as price fluctuation, storage problems, under weighment and
poor market development.
Naik (1998) identified the problems for operationalization of recommended
technologies in different farming systems in Uttara Kannada district. The problems
faced by the farmers were broadly classified into production, financial, marketing
and infrastructural/ extension problems. Among production problems, non-
availability of plant material and timely availability of fertilizers were common. Major
marketing problems were absence of procurement of food grains and surplus milk,
lack of market information and delay in obtaining sale proceeds. Financial
problems included non-availability of credit facilities while infrastructural or
extension problems were lack of training facilities and field demonstrations.
Key and Runsten (1999) examined the main disincentive for firms to
contract with small holders appeared to be the transaction costs associated with
providing inputs, credit, extension services and product collection and grading.
Many firms had found it easier and more profitable to deal with a few large
growers. The study suggested increasing small holders participation in contract
farming with a renewed effort on the part of growers to organize themselves or to
20
organize with the help of government agencies, non-profit organizations, or the
agro-processors.
Chulaki (2001) identified the problems faced by seed growers in production
and marketing of hybrid cotton seeds in Northern Karnataka. The problems faced
by the farmers were classified into production and marketing problems. Among
production problems, non availability of skilled labour and non-availability of
financial assistance were common.
Arunkumar (2002) opined that major problems faced by the contract farmers
were low contract price and irregular payments. The other problems faced were
unawareness of potentiality of crops, poor technical assistance, manipulation of
norms by firms and higher rejection rate. He also opined that major problems faced
by contract firms were land constraints and fixing of contract price. The other
problems were farmer’s discontent and holding up of vehicles. The contract
farmers try to put lower grade into higher grade and it was difficult to check and
make sure of the grade. Farmers held up vehicles in the villages demanding that
they should be paid higher prices even though agreement does not say so.
Kumar and Singh (2005) studied success and failure of contract farming in
Himachal Pradesh for cauliflower seed production in the agricultural year 2002-
2003. The problems faced were absence of written legal agreement, lack of prior
price information, near monopoly of big firms, deductions made on account of the
moisture content and foreign material in the seed.
Gnanakumar (2007) studied the financial feasibility of investments in
contract poultry farming in Tamil Nadu region. Fifty integrated poultry were
selected randomly in Coimbatore district. The study found out the problems of
poultry farmers that compelled them to enter a contract. Poor income from
traditional agriculture, water scarcity, high market risk in traditional agriculture,
labour crunch and need for more substantial working capital were the primary
reasons that were evolved from the study.
Jagadish Kumar and Prakash Kumar (2008) study revealed that delayed
payment for crop produce, lack of credit for crop production, scarcity of water for
irrigation, erratic power supply and difficulty in meeting quality requirements have
been found to be the major constraints faced by contract farmers. The scarcity of
water for irrigation, erratic power supply, lack of credit for crop production and
21
lower price for crop produce have been identified as major constraints of non-
contract famers. The major constraints expressed by the contracting agencies in
expanding contract farming include violation of terms and conditions by farmers,
lack of proper management by the company, frequent price fluctuations in
international markets and scarcity of transport vehicles during peak periods.
Kanchana et al. (2009) studied the problems faced by contract poultry
farming in Coimbatore district. They found that out of 350 respondents, 169 of the
respondents had ranked low growing charges as first rank, 126 of them had ranked
high electricity charges as second, third rank was given to deduction of tax at
source by 113 respondents and 74 of the respondents had ranked non-availability
of labour as fifth rank.
Jalihal (2009) reported the major problems faced by coleus contract farmer
with respect to contracting companies in Belgaum and Bagalkot. The problems
faced by coleus farmers were delay in payment (75%), breach of contract by
company (55%) and manipulation of norms (50%).
Vijay Kumar and Sonnad (2010) revealed that the major problems faced by
the ashwagandha contract farmers viz. were lack of proper yard stick to measure
quality of the produce which was about 73.33 per cent followed by manipulation by
norms (60.00%), lack of technical assistance (60.00%) and rejection rate (46.00%)
by firms.
Jagadeesh (2011) conducted a study on economic efficiency of contract
farming models in medicinal plants and reported that major problems faced by the
ashwagandha growing contract farmers in case of centralised model were high
rejection rate (80%), followed by lack of credit facility (70%), irregular payment
(60%), low contract price (40%), manipulation of norms by contract farming firm
(30%), non availability of package of practice (25%), lack of technical assistance
(15%) and high cost of planting material (15%).
Kalamkar (2012) conducted a study on Inputs and Services Delivery System
under Contract Farming: a case of broiler farming in districts of Barabanki, Sitapur
and Raebaerli in Uttar Pradesh. He revealed that contract farmers face problems
like delay in supply of inputs, high feed prices, delay in lifting the produce, delay in
payment, low price and sometime even rejection of output. Beside these problems,
low growing charges, delay in providing chicks, delay in providing veterinary
22
services, high visiting charges and deduction of tax at source are some other
problems being faced by the contract farmers.
Prasad et al. (2013) estimated performance and constraints of Gherkin
contract farming in two randomly selected talukas ‘Kunigal’ and ‘Sira’ in Tumkur
district of Karnataka. Karnataka accounts for almost 90 per cent of export of
preserved gherkins. Gherkin cultivation is largely driven through contract farming.
Performance of farmers was measured using structured interview schedule on Five
dimensions such as contract farming, extension, market, economics and social
dimensions. Constraints of gherkin contract farming was measured using principal
component matrix on Six dimensions such as soil and environmental management,
lack of government support in contract management, disease pest complex
management, difficulty in management, timely input and technical know-how
support and high input cost.
3. METHODOLOGY
This chapter outlines brief description of the study area, sampling
procedure, nature and sources of data collected and the various statistical tools
and techniques employed in analysis of data under the following headings.
3.1 Description of the study area
3.2 Sampling procedure
3.3 Nature and sources of data
3.4 Analytical tools and techniques
3.5 Definition of the terms and concepts
3.1 Description of the study area
3.1.1 Location of the study area
The study was undertaken in Ranebennur, Hirekerur and Byadagi taluks of
Haveri district. It falls under the Northern Transitional Zone (Zone-8) of Karnataka
state. Geographically it lies within the interior of Deccan Peninsular between 14°19'
and 14°48' North latitude and between 70°15' and 75°50' East longitude. The area
of the district is 4,85,156 hectares and bounded on the North by Dharwad and
Gadag districts, on the south by Shimoga and Davanagere districts, on the East by
Bellary district and on the West by Uttar Kannada district.Dharma, Kumadwati,
Varada and Tunga- Bhadra are the four rivers flowing in the district.
3.1.2 Population and demography
The geographical area of Haveri district is 4, 85,156 hectares spread over in
seven taluks, the district has 691 inhabited villages and 7 uninhabited villages. The
district has seven taluks viz., Haveri, Byadagi, Savanur, Ranebennur, Hirekerur,
Hangal and Shiggaon. The population of district according to the year 2011-12 was
15,98,506 with 1000:957 male to female ratio. Out of this 12,42,442 were in rural
areas and rest were in urban and semi-urban areas. The population density of the
24
25
Table 3.1: Demographic profile of study area
Sl. No.
Particulars
Study taluks Total study area
Haveri district
Ranebennur Hirekerur Byadagi
1. Geographical area (ha) 90475 80694 43656 214825 485156
2. Population (numbers) 335084 231005 141040 707129 1598506
Rural 215393 211819 110977 538189 1242442
Urban 119691 19186 30063 168940 356064
3. Population density (per sq.km) 337 263 293 297 298
4. Literacy rate (%) 79.9 81.6 77.0 79.5 77.6
Male 85.8 88.6 84.6 86.33 84.2
Female 59.2 63.0 69.2 63.8 70.7
5. Net area irrigated (ha) 23891 11882 6380 14051 99028
6. Rain fall (mm) 670.3 925.7 700.0 765.23 791.6
Source: District Statistical office, Haveri (2011-12)
26
district was 298 per sq. km and the growth rate of population in the district was
11.08 per cent. (Table 3.1)
3.1.3 Climate, rainfall and soil type
There are three distinct agricultural seasons in the district viz., Kharif (June-
September), Rabi (October-January) and summer (February-May). The south-west
monsoon commences by the end of the May or early June and continues
intermittently till the end of September. The average annual rainfall in the district is
791.6 mm with average rainy days of 61 and major portion of which received from
southwest monsoon. The average temperature ranged from 16°C to 42°C.
3.1.4 Land use pattern
The total geographical area of the Haveri district is 4,85,156 ha, out of which
the net cultivable area is 3,63,207 ha. The area not available for cultivation is
around 33,096 ha. About 17,445 ha of land is fallow, 5793 ha is barren land and
47,454 ha is under forests (Table 3.2)
3.1.5 Pattern and Sources of Irrigation
The area under irrigation is 99,028 hectares. The major sources of irrigation
are canals (6168 ha), tanks (12,980 ha), wells (2105 ha), tube wells (48799 ha), lift
irrigation (785 ha) and others (19064 ha) (Table 3.3).
3.1.6 Cropping pattern
The cropping pattern in Haveri district during 2011-12 indicated that maize
occupied major area of 1,38,978 ha followed by cotton (ha), paddy (49,678 ha),
oilseeds (30,138 ha) and pulses (13,354 ha). (Table 3.4)
3.1.7 Area Potential for seed production
The distribution of tomato hybrid seed production in the state is limited to
some specific regions where the climate, weather and availability of potential
growers are the main deciding factors. Moderate temperature of around 18°-20°
with around 25°C in the day and 15°C at night is optimum for tomato hybrid seed
production. Too low temperature causes low seed set, low pollen production. Too
27
Table 3.2: Land use pattern in the study area
Area (ha)
Sl. No.
Classification of land (area in ha)
Study taluks Total study area
Haveri district
Perce ntage
Ranebennur Hirekerur Byadagi
1. Area under forest 10614 8876 4889 24379 47454 9.78
2. Non-agricultural area 6239 6794 2131 15164 33096 6.82
3. Barren land 834 712 501 2047 5793 1.19
4. Fallow land 5280 2663 2265 10208 17445 3.59
5. Net area sown 64478 58570 32551 155599 363207 74.86
6. Area sown more than once
8492 7954 5731 22177 47922 9.88
Total Geographical
area 90475 80694 43665 214834 485156 100
Source: District Statistical office, Haveri (2011-12)
28
Table 3.3: Sources and Pattern of Irrigation
Area (ha)
Sl. No.
Sources (area in ha)
Study taluks Total study area
Haveri district
Ranebennur Hirekerur Byadagi
1. Canals 0 0 0 0 6168
2. Tanks 765 819 625 2209 12980
3. Wells 236 352 189 777 2105
4. Tube Wells 12592 8945 5818 27355 48799
5. Lift Irrigation 265 124 115 504 785
6. Others 9147 897 6426 16470 19064
Total 23005 11137 13173 47315 99028
Source: District Statistical office, Haveri (2011-12)
29
Table 3.4: Cropping pattern followed in Haveri district
Area (ha)
Sl. No.
Crop (area in ha)
Study taluks Total study area
Haveri district
Perce ntage
Ranebennur Hirekerur Byadagi
1. Paddy 8670 3288 707 12665 49678 11.67
2. Ragi 8 138 40 186 604 0.14
3. Jowar 4683 2341 2446 9470 30254 7.10
4. Maize 26234 31399 18239 75872 138978 32.64
5. Wheat 17 0 1 18 471 0.11
6. Pulses 1024 3616 1020 5660 13354 3.14
7. Sugarcane 921 325 315 1561 5398 1.28
8. Fruits 372 420 240 1032 5629 1.32
9. Vegetables 4957 1649 1143 7749 9596 2.25
10. Oilseeds 1598 1654 838 4090 30138 7.08
Total 48484 44830 24989 118303 425815 100.00
Source: District Statistical office, Haveri (2011-12)
30
high temperature causes flower abscission, low viability and high pest and disease
problem. Therefore tomato hybrid seed production can be carried out in the winter
season of a northern transitional zone of Haveri district and also availability of
skilled labour for the operations of emasculation, pollination, seed extraction and
grading is an another important factor for the contracting firms to concentrate on
tomato hybrid seed production towards Haveri district.
3.2 Selection of study area and sampling procedure
The selection of study area and the sampling procedure adopted has been
described below.
3.2.1 Selection of study area
Haveri district was purposively selected for the study, as it is one of the
important and major tomato hybrid seed growing district in Karnataka. Out of seven
taluks in the district, Ranebennur, Hirekerur and Byadagi taluks were selected for
the study because tomato hybrid seed producing companies are concentrated only
in these three taluks of the district.
3.2.2 Sampling procedure
To evaluate the objectives of the study, a multistage sampling procedure
was adopted. In the first stage, three taluks were selected, in the second stage four
villages were selected from each of these three taluks and in the third stage, ten
farmers were chosen from each village of selected taluks (Table 3.5).
3.2.3 Selection of taluks
In Haveri district, large scale cultivation of tomato hybrid seed has been
concentrated in Ranebennur, Hirekerur and Bydagi taluks. Therefore, these three
taluks were purposively selected for the study.
3.2.4 Selection of villages
From each of the three selected taluks, four villages were purposively
selected, where the maximum tomato hybrid seed growing area was concentrated.
Totally twelve villages were selected.
31
32
Table 3.5: Selection of Villages and Sample farmers
Sl. No. Taluks Village Sample size
1 Ranebennur
1. Nittur 10
2. Konanatale 10
3. Yalabadagi 10
4. Billahalli 10
Sub total 40
2 Hirekerur
1. Hiremattur 10
2. Hullatti 10
3. Lingadevarakoppa 10
4. Neshvi 10
Sub total 40
3 Byadagi
1. Masanagi 10
2. Ghalapooji 10
3. Chikkabasuru 10
4. Tadasa 10
Sub total 40
Total 120
33
3.2.5 Selection of farmers
Ten contract farmers from each of the selected villages were selected
randomly, in all 120 farmers were selected for the study.
3.2.6 Selection of firms
Ten leading contract firms involved in tomato hybrid seed production were
selected for the study.
3.3 Nature and source of data
3.3.1 Primary data
The study was based on both primary and secondary data. For evaluating
the objectives of the study, required primary data were collected from sample
farmers through personal interview method with the help of well-structured
schedule. The data covered general characteristics of farmers, land holding,
assets, costs, returns, yields, constrains etc.
3.3.2 Secondary data
The secondary data required for the study were collected from the
Department of Agriculture, Department of Horticulture, RSKs and other published
sources.
3.4 Analytical tools and techniques employed
To fulfill the specific objectives of the study, based on the nature and extent
of availability of data, the following analytical tools and techniques have been
adopted.
3.4.1 Tabular presentation technique
Tabular analysis was adopted to compile the general characteristics of the
sample farmers, descriptive statistics like averages, percentages etc. are used to
obtain the meaningful results.
34
3.4.2 Budgeting technique
This technique was used to estimate the costs and returns in tomato hybrid
seed production.
3.4.3 Functional analysis
The Cobb-Douglas type of production function was used to study the effect
of various inputs on tomato hybrid seed production. It being a homogenous
function provided a scale factor enabling to measure the returns to scale. The
estimated regression coefficients represented the production elasticities.
The form of Cobb-Douglas production function used in the present study
was as follows.
Y = aX1b1X2
b2X3b3 X4
b4 X5b5X6
b6 aX7b7eu____________ (1)
Where,
Y = Gross returns in rupees per acre.
a = Intercept
X1 = Expenditure on seedlings (Rs/acre).
X2 = Expenditure on FYM (Rs/acre).
X3 = Human labour expenditure (Rs/acre).
X4 = Bullock labour & machine hour (Rs/acre).
X5 = Expenditure on Fertilizer (Rs/acre).
X6 = Expenditure on PPC (Rs/acre).
X7 = Expenditure on Stacking materials (Rs/acre).
eu = Error term
bi’s = Output elasticities of respective factor inputs, i = 1, 2….7 and
The Cobb-Douglas production function was converted into log linear form
and parameters (coefficients) were estimated by employing Ordinary Least Square
Technique (OLS). The logarithmic form of equation was
35
log Y = log a + b1 log X1 + b2 log X2 + b3 log X3 + b4 log X4 + b5 log X5 + b6 log X6+
b7 log X7 + u loge _____________ (2)
The regression coefficients (bi’s) were tested using‘t’ test at chosen level of
significance.
3.4.4 Allocative efficiency
Given the technology, allocative efficiency exists when resources are
allocated within the farm according to market prices. To decide whether a
particular input is used rationally or irrationally, its marginal value products were
computed. If the marginal value product of an input just covers its acquisition cost it
is said to be used efficiently.
The Marginal Value Products (MVP) was calculated at the geometric mean
levels of variables by using the formula.
Y
MVP ith resource = bi * ----------- __________________ (3)
X
Where,
Y = Geometric mean of the output
Xi = Geometric mean of ith independent variable
bi = The regression coefficient of the ith independent variable
In order to determine the efficiency of allocation of the resources or price
efficiency, the value of the marginal product obtained by multiplying the marginal
product (bi) by the price of the product and was compared with its marginal cost. A
ratio of the value of marginal product to the factor price more than unity implied
that the resources were advantageously employed. If the ratio was less than one, it
suggested that resource was over utilized.
The criterion for determining optimality of resource use was,
MVP/MFC > 1 under utilization of resource
36
MVP/MFC = 1 optimal use of resource
MVP/MFC < 1 excess use of resources.
3.4.5 Garrett’s ranking technique
Attributes for selection of sample respondents were prioritization by using
Garrett’s ranking technique in the following manner.
For this purpose seven attributes were identified for production problems,
five attributes for processing problems and six attributes for marketing problems.
Each of 120 respondents selected were asked to rank the above seven attributes
from rank 1 to 7, for five attributes from rank 1 to 5 and six attributes from rank 1 to
6. To know the problems of contracting firms taken seven attributes and asked to
give the rank from 1 to 7. In this analysis, high scored attribute get first rank and
low scored attribute get least rank. In the next stage rank assigned to each
problem by each individual was converted into per cent position using the following
formula.
Per cent position = 100 (Rij – 0.5) / Nj
Where,
Rij stands for rank given for the ith factor (i= 1, 2………N) by the jth individual
(j = 1, 2…….120)
Nj stands for number of factors ranked by jth individual.
Once the per cent positions were found, scores were determined for each
per cent position by referring Garrett’s table. Then, the scores for each attribute
were summed over the number of respondents who ranked that factor. In this way,
total scores were arrived at for each of the seven attributes of production, five
attributes of processing and six attributes of marketing and mean scores were
calculated by dividing the total score by the number of respondents who gave
ranks. Final overall ranking of the different attributes was done by assigning rank 1,
2, 3… etc in the descending order of the mean scores.
37
3.5 Concepts used in the study
In this section, different concepts of cost and returns used in the study are
presented. It is observed at the time of data collection that farmers of this region
are more familiar with acre as the unit of measuring the land area instead of
hectare. Hence, in this study, all calculations pertaining to the cost and returns of
tomato hybrid seed production were calculated on per acre basis (2.47106 acres =
1 hectare).
3.5.1 Costs
The total cost (TC) was divided into two broad categories of costs i.e.
variable costs and fixed costs.
A.1 Variable costs (VC)
These costs comprised of costs incurred on variable inputs such as
seedlingss, farmyard manure, fertilizers and plant protection chemicals, staking
materials, labour (human and bullock) and interest on working capital. The
computation of variable cost components is as follows.
1. Seedlings
It is a young plant sporophyte developing out of a plant embryo from a seed.
2. Farmyard manure (FYM)
The value of FYM was computed by considering the rates prevailing in the
local area at the time of application.
3. Fertilizers
The companies supply fertilizers. The cost of fertilizers was based on the
actual price paid by the sample farmers including the cost of transportation and
other incidental charges if any.
4. Plant protection chemicals (PPC’s)
Companies’ supply PPC’s, the actual price paid by the farmers towards
plant protection chemicals was used to compute the cost of plant protection
chemicals.
38
5. Staking materials
It includes the cost of stacking sticks, steel wire and jute thread which was
used for staking the plant. The actual price paid by the sample farmers was used
to compute the cost of staking materials.
6. Mulching sheet
It is a thin plastic sheet, used to control the weeds and protect soil moisture
in the seed production plot.
7. Hybrid
Is a plant resulting from a cross between two parents that are genetically
dissimilar.
8. Rouging
Is the operation of removal of off-type or any unwanted plants and disease
plants in female parent block and male parent block in hybrid seed production.
9. Emasculation
It is the technique of removing of anthers from the female plant in order to
make it sterile and to enhance the cross-pollination.
10. Pollination
It is the transfer of pollen from anther of male parent to the stigmatic surface
of female parent in hybrid crossing block.
11. Processing
Refers to all step involved in the preparation of handling, pre-conditioning,
drying, cleaning, size grading, upgrading, treating and packaging.
12. Field standards
Refers to the standards that are to be met with, for certification w.r.t. land
requirement, isolation, objectionable weed plants, plants affected with designated
diseases, off-types, planting ratio etc.
39
13. Human labour
Human labour was estimated in terms of eight hours of work per day. The
women labour days were converted into man days on the criteria that one woman
day is equal to 0.60 man days on the basis of wage rate equivalent.
14. Bullock labour
It was measured in pair days where, one pair day means eight hours of
work by a pair of bullock. Prevailing rate per day paid by farmers was used in the
calculation.
15. Machine labour
The costs of machine labour both for hired and owned on per hour basis
was calculated using differential rates for deferent type of operations that prevailed
in study area.
16. Interest on working capital
This was calculated on the entire working cost of the enterprise at the
prevailing rate of interest of 8 per cent per annum on short term loans for the
duration of crop from the financial institutes.
A.2. Fixed costs (FC)
1. Depreciation charges
Depreciation on each capital equipment and machinery owned by the
farmers and used for cultivation of land was calculated for individual farmer based
on the purchase value using the straight line method.
Purchase value – Junk value
Annual depreciation = ----------------------------------------
Economic life of the asset
The average life of the asset as indicated by each farmer was used in the
computation of the depreciation. The average value of the asset after its useful life
as estimated by the respondents was considered for calculation of junk value. The
40
depreciation cost of each equipment was apportioned to the crop based on its
percentage use.
2. Interest on fixed capital
Interest on fixed capital was calculated at 11 per cent per annum, which is
the prevailing rate of investment credit. The items considered under fixed capital
are implements and machinery. Interest was considered on the value of these
assets after deducting the depreciation for the year. No interest was charged on
the land value since the rental value of owned land was considered. Then the
amount so calculated was apportioned to the crop acreage for the duration of crop.
3. Gross return
The total value of produce for both main and byproduct together is referred
to as the gross return.
4. Net return
Return obtained by subtracting the total cost from gross return.
5. Land revenue
Actual land revenue paid by the farmers was considered.
6. Land rent
The prevailing land rent for agricultural enterprises were imputed for the
sample farmers, since all land holdings were observed to be owner operated.
41
Plate 1. Tomato hybrid seed production under open field
42
Plate 2. Labours engaged in tomato hybrid seed production
43
Plate 3. Tomato hybrid seed production under shade net
44
Plate 4. Tomato hybrid seed production under polyhouse
4. RESULTS
The findings of the study are presented in this chapter under the following
headings in consonance with the objectives of the study.
4.1 Socio-economic characteristics of the farmers
4.2 Input use pattern in tomato hybrid seed production
4.3 Cost and returns in tomato hybrid seed production
4.4 Resource use efficiency in tomato hybrid seed production
4.5 Pattern of income and employment in tomato hybrid seed production
4.6 Problems faced by the contract farmers and the contract firms
4.1 Socio-economic characteristics of the farmers
4.1.1 General features of sample respondents
General information about tomato hybrid seed growers which will assist to
analyze the results is presented in Table 4.1
The average age of contract farmers in the range of 20-30,30-40,40-50 and
above 50 was 34.71 per cent, 32.23 per cent, 17.35 per cent and 15.70 per cent
respectively, with an average family size of seven members. About 13.33 per cent of
the farmers were illiterate and remaining farmers were found to be literate. About
29.16 per cent, 34.16 per cent and 23.33 per cent of the farmers had studied up to
primary school, high school and college education respectively. Almost all farmers
growing tomato hybrid seeds took up agriculture as main occupation along with
subsidiary occupation.
4.1.2 Average land holding pattern of sample farmers
The pattern of land holdings of tomato hybrid seed growers is given in Table 4.2. The
average size of the land holding of the sample growers was 7.75 acres out of which
dry land was 3.35 acres (45.53%) and irrigated land was 4.44 acres (54.47%).
Tomato hybrid crop was cultivated in an minimum area of 0.5 acres and maximum
area of 1.0 acres and an average area of 0.75 acres.
46
Table 4.1: General features of sample respondents
Sl. No.
Particulars Average
(No.) Percentage
I. Average age of farmers
1. 20-30 42 34.71
2. 30-40 38 32.23
3. 40-50 21 17.35
4. Above 50 19 15.70
Total 120 100
II. Education Level
1. Illiterate 16 13.33
2. Primary (1-7) 35 29.16
3. High school (8-10) 41 34.16
4. College and above (>10) 28 23.33
Total 120 100
III. Occupation
1. Agriculture as main occupation 117 90.69
2. Agriculture as subsidiary occupation 12 9.30
IV. Family type
1. Nuclear 102 85
2. Joint 18 15
V. Average size of the Family
1. Adults: Male 3 42.86
Female 2 28.57
2. Children: Male 1 14.29
Female 1 14.29
Total 07 100
47
0
10
20
30
40
50
60
Owned Leased in Leased out Owned Leased in Leased out
Dryland Irrigated
Percen
tag
e
Land holdings
Fig. 4.1: Average Land holding pattern of sample farmers
48
Table 4.2: Average Land holding pattern of sample farmers
Sl. No.
Particulars Area
(acres) Percentage
I. Dry land
1. Owned 3.5 43.42
2. Leased in 0.17 2.11
3. Leased out 0 0
Sub total 3.35 45.53
II. Irrigated land
1. Owned 4.07 50.50
2. Leased in 0.32 3.97
3. Leased out 0 0
Sub total 4.4 54.47
Total size of Land holding 7.75 100
III. Average plot size of tomato hybrid seed production
1. Minimum 0.5 Acres --
2. Maximum 1.0 Acres --
3. Average 0.75 Acres --
49
4.1.3 Cropping pattern of the sample farmers
Cropping pattern of sample farmers is presented in Table 4.3. It was evident
from the table that in the study area 74.90 per cent of gross cropped area was
cultivated in the kharif and 25.11 per cent in the rabi seasons. Maize occupied major
portion of the area in kharif, which worked out to be 31.85 per cent of gross cropped
area, followed by cotton, onion and other crops, which occupied 23.00, 5.06 and
15.00 per cent of the gross cropped area in that order.
In the rabi season, sunflower occupied a major portion of the gross cropped
area, which worked out to be 8.42 per cent, followed by chilli, tomato hybrid seed
production and other crops, which occupied 3.03 and 5.05 per cent and 8.59 per cent
of gross cropped area, respectively. The cropping intensity of sample farmers was
133.52 per cent
4.2 Input use pattern in tomato hybrid seed production
In contract farming of tomato hybrid seed production (Table 4.4) on an
average the farmer used 2,419 of male and 4,394 female seedlings per acre. The
quantity of FYM applied per acre was 12.05 tonnes. Where as, the chemical fertilizer
application was 1,065.5 kg per acre, which includes 588.5 kg per acre of urea, 287.5
kg per acre of DAP and 189.5 kg per acre of MOP. The most commonly used plant
protection chemicals by the sample seed growers were Corozene, Cabrotop, Okeo,
Selvo-303 and MX-60. The average quantity of these plant protection chemicals used
was 8.0 litres by the tomato seed growers. On an average, the human labour
employed per acre for tomato seed production was around 1,259.17 man days
(includes men and women man days), 4.8 pair days of bullock labour and 3.33
machine hours utilized by each contract seed growers.
The tomato hybrid seed growers used on an average 4,394 number of staking sticks
for supporting the plant stem and 90 kg of steel wire, 55.72 kg of jute thread and
92.62 kg of mulching sheet were used for one acre seed production of tomato hybrid
seeds.
50
Table 4.3: Cropping pattern of the sample farmers in the study area
Sl. No.
Particulars Area (acre) Average area
(acre) Percentage
I. Kharif
1 Cotton 273 2.27 23.00
2 Maize 378 3.15 31.85
3 Onion 60 0.5 5.06
4 Others 178 0.83 15.00
Total 889 6.75 74.90
II. Rabi
1 Sunflower 100 0.83 8.42
2 Chilli 36 0.30 3.03
3 Tomato seed production 60 0.50 5.05
4 Others 102 0.85 8.59
Total 298 2.48 25.11
III. Gross cropped area 1187 -- 100
IV. Net cropped area 889 --
V. Cropping intensity (%) -- 133.52
51
0
5
10
15
20
25
30
35
Cotton Maize Onion Others Sunflower Chilli Tomato
seed production
Others
Kharif Rabi
Percen
tag
e
Crops
Fig. 4.2: Cropping Pattern of the Sample Farmers in the Study Area
52
Table 4.4: Input use pattern in tomato hybrid seed production.
Quantity/acre
Sl. No. Particulars Units Quantity
Inputs
1 FYM Tonnes 12.05
2. Seedlings No.
a. Male seedlings 2419.00
b. Female seedlings 4394.00
Sub total 6814.00
3. Fertilizer Kg
a. Urea 11.77
b. DAP 287.5
c. MOP 189.5
Sub total 1065.5
4. PPC Liters
a. Corozene 2.5
b. Cabrotop 1.0
c. Okeo 750 ml
d. Selvo-303 250 ml
e. MX-60 2.0
f. Others 1.5
Sub total 8.00
5. Labour Man days
a. Men Labour 212.31
b. Women Labour 1046.86
c. Bullock labour Pair days 4.8
d. Machine hours Hours 3.3
6. Staking sticks No. 4394.00
7. Steel wires Kg 90
8. Jute thread Kg 55.72
9. Mulching sheet Kg 92.62
53
4.3 Cost and returns in tomato hybrid seed production
4.3.1 Cost structure in tomato hybrid seed production
Among the variable cost, expenditure on human labour was the major cost, in
that men labour cost was Rs. 45,638.75 (11.77% of the total cost), women labour
cost was Rs. 1,76,648.8 (45.96% of the total cost), bullock labour cost was Rs.
1,212.5 (0.31% of the total cost), machine hour cost was Rs. 6275 (1.62% of the total
cost). The amount spent on seedlings was Rs. 13,625 (3.52% of the total cost). The
expenditure on staking sticks, steel wire, jute thread, mulching sheet and others was
Rs. 36,931.25 (9.53% of the total cost) Rs. 5,483.62 (1.41% of the total cost) Rs.
3,987.52 (1.03% of the total cost) Rs. 12,849.3 (3.31% of the total cost) and Rs.
3,291.66 (0.85% of the total cost) respectively. The amount spent on fertilizers was
Rs. 14,226.74 (5.1% of the total cost), FYM was Rs. 10,625 (2.74% of the total cost)
and cost involved in use of plant protection chemicals was Rs. 23,400 (6.02% of the
total cost).
The total cost of tomato hybrid seed production was Rs. 3,82,530.75 per acre,
out of which variable cost was Rs. 3,82,530.75, which was 97.64 per cent of the total
cost and interest on working capital was Rs. 28,335.61 (7.31% of the total cost).
Among fixed cost, rental value of land was major cost, which was Rs. 4,333.45
(1.12% of the total cost) and other fixed cost items were depreciation Rs. 282.27
(0.07% of the total cost). The interest on fixed capital was Rs. 556.99 (2.36% of the
total cost).
4.3.2 Returns realized in tomato hybrid seed production
The details of returns structure per acre of tomato hybrid seed production was
presented in Table 4.6
The total cost incurred for tomato hybrid seed production was Rs. 3,87,708.34 per
acre, out of which Rs. 3,82,530.75 was variable cost and fixed cost was Rs. 5,177.59.
The total quantity of seed yield obtained per acre was 73.57 kg. The price per kg of
graded seeds was Rs. 12,200. The average gross returns realized per acre were Rs.
8,97,554. Net returns over variable cost from an acre were Rs. 5,15,023.25 and net
returns over total cost were Rs. 5,09,845.66. The cost of production per kg incurred
was Rs. 5,269.92. The benefit cost ratio was Rs. 2.31 in tomato hybrid seed
production.
54
Table 4.5: Cost incurred in tomato hybrid seed production
Rs/acre
Sl. No
Particulars Units Cost in (Rs) Percentage
A. Variable cost
1 FYM Tonnes 10625 2.74
2. Seedlings: No.
a. Male seedlings 4837.5 1.25
b. Female seedlings 8787.5 2.27
Sub total 13625 3.52
3. Fertilizer Kg
a. Urea 3768 0.97
b. DAP 7197.91 1.86
c. MOP 3260.83 2.27
Sub total 14226.74 5.1
4. PPC Liter (ml)
a. Corozene 5430 1.40
b. Cabrotop 4320 1.11
c. Okeo 2300 0.59
d. Selvo-303 5250 1.35
e. MX-60 2600 0.67
f. Others 3500 0.90
Sub total 23400 6.02
5. Labour Man days
a. Men Labour 45638.75 11.77
b. Women Labour 176648.8 45.56
c. Bullock Labour Pair days 1212.5 0.31
d. Machine hour Hours 6275 1.62
6. Staking sticks No. 36931.25 9.53
7. Steel wires Kg 5483.62 1.41
8. Jute thread Kg 3987.52 1.03
9. Mulching sheet Kg 12849.3 3.31
10. Others -- 3291.66 0.85
11. Interest on working capital (8%) 28335.61 7.31
Total Variable cost 382530.75 97.64
B. Fixed cost
1 Depreciation (11%) 282.27 0.07
2 Rental value of land 4333.45 1.12
3 Interest on fixed capital 556.99 0.14
Total fixed cost 5177.59 2.36
Total cost (A+B) 387708.34 100
55
0
10
20
30
40
50
60
FY
M
Seed
lin
gs
Ferti
lizer
PP
C
Lab
ou
r
Sta
ck
ing m
ate
ria
ls
Dep
recia
tion
Ren
tal v
alu
e o
f land
In
terest o
n f
ixed c
apit
al
Variable cost Fixed cost
Percen
ta
ge
Cost
Fig. 4.3: Cost incurred in tomato hybrid seed production
56
Table 4.6: Returns realised in tomato hybrid seed production
Rs/acre
Sl. No Particulars Unit Amount
I. Costs
a) Variable cost Rs 382530.75
b) Fixed cost Rs 5177.59
Total cost Rs 387708.34
II. Returns
1 Graded seeds Kg 73.57
2 Price Rs/kg 12200
3 Gross returns Rs 897554
4 Net returns over variable cost Rs 515023.25
5 Net returns over total cost Rs 509845.66
6 Cost of production per Kg Rs/kg 5269.92
7 BC Ratio -- 2.31
57
4.4 Resource use efficiency and allocative efficiency in tomato hybrid seed
production
4.4.1 Resource use efficiency in tomato hybrid seed production
In a production unit, one of the major objective is to co-ordinate and utilise
resources in such a manner that they together yield the highest net returns. In this
section an attempt is made to analyse the productivity of resources involved in the
production of tomato hybrid seeds.
In order to study the resource use efficiency of inputs in tomato hybrid seed
production, a modified Cobb-Douglas type production function was fitted to the data.
The efficiency of allocation of resources was studied by comparing the marginal value
product with the marginal factor cost of each factors of production included in the
analysis.
The estimated coefficients of Cobb-Douglas production function are presented
in Table 4.7. The output elasticities of seedlings (0.540) and FYM (0.305) were
significant at one per cent, the output elasticities of PPC (0.197) was significant at ten
per cent. The output elasticities of human labour (0.312), bullock labour and machine
hour (0.102) was positive, but found to be non-significant. While stacking materials (-
0.065) and fertilizer (-0.085) had non-significant negative elasticities.
The coefficient of multiple determination (R2) for tomato hybrid seed was 0.94.
This indicates that the variables included in the function explained 94 per cent of the
variation in the production of tomato hybrid seeds.
The sum of elasticities (Σbi) was 1.30 which indicated increasing returns to
scale. One per cent increase in all the inputs used in the production simultaneously
would increase output by 1.30 per cent.
4.4.2 Allocative efficiency in tomato hybrid seed production
The allocative efficiency of resources in the production of tomato hybrid seeds
has been explained as under (Table 4.8).
The ratio of Marginal Value Product (MVP) to Marginal Factor cost (MFC) in
the case of seedlings, FYM, human labour, bullock labour and machine hour, PPC
58
Table 4.7: Production function estimates in tomato hybrid seed production
Sl. No. Particulars Parameter Co-efficients
1 Intercept a 11.401
(2.419)
2 Seedlings X1 0.540***
(0.185)
3 FYM X2 0.305***
(0.020)
4 Human labour X3 0.312
(0.115)
5 Bullock labour & Machine hour X4 0.102
(0.014)
6 Fertilizer X5 -0.085
(0.061)
7 PPC X6 0.197*
(0.061)
8 Stacking materials X7 -0.065
(0.102)
9 R2 value -- 0.94
10 Returns to scale (Σbi) -- 1.30
11 F value -- 56
Note: *** Significant at 1% level *Significant at 10% level Figures in parentheses indicate standard errors.
59
Table 4.8: Allocative efficiency of resources in tomato hybrid seed production
Sl. No. Particulars MVP MFC MVP/MFC
1 Seedlings 0.588 1 0.588
2 FYM 15.895 1 15.895
3 Human labour -0.005 1 0.069
4 Bullock labour & machine hour 3.192 1 3.192
5 Fertilizer -0.033 1 -0.033
6 PPC 0.126 1 0.126
7 Stacking materials 0.069 1 -0.005
60
were 0.540, 0.305, 0.312 and 0.102, indicating returns of Rs. 0.540, 0.305,
0.102 and0.312 for every additional unit of inputs used in that order.
The negative ratio of MVP to MFC for stacking materials (-0.005) and fertilizer
(-0.033) indicated that the factors were used at higher level than necessary, resulting
in a loss due to excess use.
4.5 Income and employment generation through tomato hybrid seed production
4.5.1 Income generation through tomato hybrid seed production
The total cost incurred for tomato hybrid seed production was Rs. 3,87,708.34
per acre, out of which Rs. 3,82,530.75 was variable cost and fixed cost was Rs.
5,177.59. The total quantity of seed yield obtained per acre was 73.57 kg. The price
per kg of graded seeds was Rs. 12,200. The average gross returns realized per acre
were Rs. 8,97,554. Net returns over variable cost from an acre were Rs. 5,15,023.25
and net returns over total cost were Rs. 5,09,845.66. The returns per kg incurred
were Rs. 12,200. The benefit cost ratio was found to be Rs. 2.31 per kg. Hence, the
results of the tables revealed that, tomato hybrid seed production is an income
generating enterprise to the farmers.
4.5.2 Pattern of employment in tomato hybrid seed production
The pattern of labour use in tomato hybrid seed production (Table 4.9)
indicated that human labour was used pre-dominantly for most of the operations.
Bullock labour was used for land preparation and transportation of FYM. The
machine power in the form of tractor owned by the farmers themselves was used in
land preparation and transportation of FYM.
In tomato hybrid seed production around 4.80 man days of human labour used
for ploughing, 3.42 man days for harrowing and 8.32 man days for transportation of
FYM, 12.97 man days for spreading of FYM were employed. For seed bed
preparation 27.75 man days were employed. About 18.55 man days for transplanting
of seedlings, 85.92 man days for weeding and 65.82 man days for application of
fertilizers were employed. 9 man days were employed for irrigation. For roughing,
emasculation and pollination about 22.39 man days, 86.30 and 765.75 man days
were employed respectively. For plant protection chemicals spraying 20.27 man
61
Table 4.9: Pattern of employment in tomato hybrid seed production
Sl. No.
Type of operation
Family labour Hired labour Total human labour
(man days)
Male (man days)
Female (man days)
Male (man days)
Female (man days)
A. Production
1. Ploughing 2.45 ---- 2.35 ---- 4.80 2. Harrowing 2.10 ---- 1.32 ---- 3.42 3. Transportation of FYM 3.76 ---- 4.56 ---- 8.32 4. Spreading of FYM 3.47 ---- 9.50 ---- 12.97 5. Seed bed preparation ---- ---- 27.75 ---- 27.75 6. Transplanting of
seedlings 4.17 9.20 4.12 1.05 18.55
7. Fertilizer application ---- 32.30 ---- 33.45 65.82 8. Irrigation charges 9.00 ---- ---- ---- 9.00 9. Weeding 8.15 23.77 ---- 54.00 85.92
10. Rouging 3.62 5.50 ---- 13.27 22.39 11. Emasculation 4.40 13.12 18.45 50.32 86.30 12. Pollination ---- 183.45 ---- 582.30 765.75 13. PPC spraying 15.4 2.50 ---- 2.30 20.27 14. Harvesting of fruits 13.12 8.77 16.27 21.52 59.70
Sub total 69.74 278.69 84.35 758.22 1160
B. Processing and marketing
1. Crushing and extraction of seeds
12.52 ---- 20.02 ---- 32.55
2. Acid seed treatment 9.30 ---- 9.52 ---- 18.87 3. Cleaning and drying ---- 4.25 ---- 3.15 7.4 4. Grading of seeds 4.17 ---- ---- 2.55 6.72 5. Packing and
transportation 2.70 ---- ---- ---- 2.70
Sub total 28.69 4.25 29.54 5.7 68.24
Total (A+B) 98.43 282.94 113.88 763.92 1228.24
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days, picking of fruits 59.70 man days, crushing and extraction of seeds 32.55 man
days were employed. And about 18.87 man days for acid seed treatment, 7.4 man
days for drying and cleaning, 6.72 man days for grading of seeds and 2.7 man days
for packing and transportation were employed in tomato hybrid seed production.
Total of 1228.24 man days were employed for different activities in tomato
hybrid seed production, in that 98.43 (male) man days and 282.94 (female) man days
of family labour were employed for different activities. Hired labour to the extent of
113.88 (male) man days and 763.92 (female) man days were used in tomato hybrid
seed production.
Among the various cost items, nearly 57.33 per cent of the cost was found in
human labour. This was one of the important aspects of tomato hybrid seed
production, which incurs maximum cost on labour and provides employment to the
human labour. The tomato hybrid seed production involves technically trained labour,
whose wage rate is higher as compared to other labour, the cost on these items was
found to be higher.
4.6 Problems faced by the contract farmers and contract firms
4.6.1 Problems faced by the contract farmers.
In the present study, opinion survey was conducted regarding the production,
processing and marketing of tomato hybrid seed growers and the results are
presented in Table 4.10. The opinions of the seed growers on the problem of growing
tomato hybrid seed crop were gathered right from the procurement of inputs in seed
production process till the crop was marketed. The respondents were asked to rank
the attributes in a scale of one to seven for the production problems, the least rank
being seven and rank one represent highest score. The methodology used for this is
given in the section three. The ranks indicate farmer’s preference for different
production problems.
In the ranking method non-availability of skilled labour was given utmost
priority by the farmers (78.83). The second importance was given to high wage rate
(78.10).
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Table 4.10: Problems faced by contract farmers in Production, Processing and Marketing of tomato hybrid seeds.
n=120
Sl. No. Problems Sum Average Rank
Production Problems
1 Non-availability of skilled labour 9460.00 78.83 I
2 High wage rate 9372.00 78.10 II
3 High pest and disease attack 8893.00 74.10 III
4 Lack of technical guidance 8264.00 68.87 IV
5 Non-availability of high yielding hybrids 7767.00 64.73 V
6 Climatic factors 6576.00 54.80 VI
7 Non-availability of seedlings on time 4278.00 35.65 VII
Processing Problems
1 Lack of technical guidance about seed extraction method
9156.00 76.30 I
2 Non-availability of mechanical seed extraction facility
8696.00 72.47 II
3 Non-availability of acid (HCl) for seed extraction and cleaning
6324.00 52.70 III
4 Problem of bad odour (Smell) during fermentation 5346.00 44.55 IV
5 Non-availability of skilled labour for processing and seed extraction
3896.00 32.47 V
Marketing Problems
1 Higher rejection rate 8854.00 73.78 I
2 Irregular payment 8258.00 68.62 II
3 Low contract price 7256.00 60.47 III
4 Delay in purchasing of seeds 7100.00 59.17 IV
5 Manipulation of norms by the firms 5769.00 48.08 V
6 Grading of seeds 3569.00 29.74 VI
.
64
The third and fourth ranks were high pest and disease attack (74.10) and lack
of technical guidance (68.87). Non availability of high yielding varieties, climatic
factors and non-availability of seedlings on time occupied next three positions with
score of 64.73, 54.80 and 35.65 respectively. In this ranking method, non-availability
of skilled labour has got first rank (78.83) and non availability of seedlings on time
(35.65) got the least rank among the different attributes
So for as the processing problems were concerned, non-availability of
technical guidance about seed extraction method (76.30) was considered as first
rank, non-availability of mechanical seed extraction method (72.47) was taken as
second rank. Non availability of acid for seed extraction and cleaning (52.70),
problem of bad odour or smell during fermentation (44.55) and non-availability of
skilled labour for processing and seed extraction (32.47) were occupied third, fourth
and fifth ranks respectively.
The major marketing problems faced by the tomato hybrid seed growers with
contract firm were higher rejection rate was given first priority by the farmers (73.78).
The second importance was given to irregular payment (68.62). The third and fourth
ranks were low contract price (60.47) and delay in purchasing of seeds (59.17).
Manipulation norms by the firms and grading of seeds occupied next two positions
with score of 48.08 and 29.47 respectively.
4.6.2 Problems faced by the contracting firms
The opinion survey conducted regarding problems of contract firms and results
are presented in Table 4.11.
The firms expressed the problem of mixing of low grade with high grade by the
farmers was taken as a first rank (8.80). Fixing of contract price was taken as a
second rank (8.30). Lower productivity, inability of farmers to take farm operations,
land constraints, government regulations and selection of farmers occupied next five
positions with score of 7.60, 6.70, 6.50, 5.80 and 5.20 respectively.
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Table 4.11: Problems faced by contracting firms n=10
Sl. No.
Problems Sum Average Rank
1 Mixing of low grade with high grade seeds 88.00 8.80 I
2 Fixing of contract price 83.00 8.30 II
3 Lower productivity 76.00 7.60 III
4 Inability of farmers to take up farm operations 67.00 6.70 IV
5 Land constraints 65.00 6.50 V
6 Government regulations 58.00 5.80 VI
7 Selection of the farmers 52.00 5.20 VII
5. DISCUSSION
The results of the investigation presented in the preceding chapter are
discussed in detail in this chapter. The main focus here is to throw a light on some
of the causes responsible for the major trends observed in the findings. Keeping
the objectives of the study in view the results are discussed under the following
heads.
5.1 Socio-economic characteristics of the farmers
5.2 Input use pattern in tomato hybrid seed production
5.3 Cost and returns in tomato hybrid seed production
5.4 Resource use efficiency in tomato hybrid seed production
5.5 Pattern of income and employment in tomato hybrid seed production
5.6 Problems faced by the contract farmers and the contract firms.
5.1 Socio-economic characteristics of the farmers
The socio-economic characteristics of the respondents include general
features, details of land holdings and cropping pattern of the sample farmers.
5.1.1 General features of contract farmers
The results revealed that nearly 87 per cent of contract farmers were
educated. As most of the farmers were educated they were able to find the source
where the required information was available. It was also interesting to note that
most of the farmers were young aged indicating better awareness regarding
modern farm concepts, when youth are included in farm activities. Young age
coupled with better education has mostly made the farmers to increase their farm
income by adopting hybrid seed production. Hence, they might have gone for
contract farming by joining hands with the several private seed companies
involved in cultivation of tomato hybrid seeds. All the sample farmers practiced
agriculture as their main occupation. The average size of the family was seven.
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5.1.2 Average land holding pattern of sample farmers
The average size of land holdings in the study area was 7.75 acres. The
proportion of land having the irrigation facility was 54.47 per cent of the total land
holding and remaining 45.53 per cent was under rainfed. Area under tomato
hybrid seed cultivation in sample farms constitutes only around 5.05 per cent of
the total size of land holdings. This indicates that there is much scope for bringing
some additional area under tomato hybrid seed cultivation to augment farm
income. However, the private companies give permission and supply inputs to the
farmers only for one or two plots of 0.5 to 1 acre only. This practice may be mainly
to protect the quality of the produce. But, if the farmers become strong and vigilant
enough to convince the companies regarding maintenance of the quality, they can
get permission and inputs to grow tomato hybrid seeds in large areas.
5.1.3 Cropping pattern of sample farmers
Cropping pattern followed by farmers in a particular area depends upon
rainfall condition, irrigation facilities and commercial importance of crops, food
habit and climatic conditions of the area.
About 31.85 per cent of the gross cropped area was occupied by maize
crop alone in kharif season. And onion occupied only 5.06 per cent of the total
gross cropped area. About 23.00 per cent of the gross cropped area was
occupied by cotton crop alone. In the rabi season nearly 8.42 per cent of the
gross cropped area was occupied by sunflower crop, chilli occupied 3.03 per cent
and tomato hybrid seed production was 5.05 per cent of the gross cropped area. It
was found from the table that farmers were found to diversify their cropping
pattern mainly because of minimizing the risk of crop failures, since major
proportion of their operational holdings was under dry land conditions. As they
have taken up labour intensive and highly risk oriented seed production activity on
their farm, they were not in a position to include other crop enterprises, which
require higher investment. As a result, the cropping pattern was mainly dominated
by cereals, followed by commercial crops like cotton and sunflower.
5.2 Input use pattern in tomato hybrid seed production
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The results of the study (Table 4.4) indicated that, contracting companies
provided seedlings as planting material to farmers, to maintain quality and purity
of the hybrid seeds. On an average, the farmers used 4,394 female seedlings and
2,419 male seedlings per acre. This had helped in establishing optimum plant
population per unit area to get desired yield level of tomato hybrid seeds. Pest
and diseases in tomato crop is very much hence, for the effective management,
farmers used nearly 8.0 liters of plant protection chemicals per acre. Some pf the
important plant protection chemicals are, Corozene, Cabrotop, Okeo, Selvo-303,
MX-60. The FYM were used at the rate of 12.05 tonnes per acre, by the sample
farmers for improving soil physical and structural properties. On the other hand,
the fertilizers like nitrogen, phosphorus and potassium used at the rate of 588.5,
287.5 and 189.5 kg per acre respectively.
The total human labour used was 1259.17 man days/acre (includes men
and woman man days) formed the major component of the input used in tomato
hybrid seed production and it clearly indicated that the seed production is a labour
intensive activity. Further, crossing (pollination) operation is specialized operation
which involves greater care and patience and hence more number of skilled
human labour was employed. The total bullock pair used was (4.8/pairdays) and
machine hour used was (3.3 hours).
Further, the seed growers using of staking sticks of 4394 numbers as for
the plant population and jute thread used depending upon the intensity of
flowering and plant population that is 55.72 kg per acre, steel wire at the rate of 90
kg per acre and the mulching sheet used at the rate of 92.62 kg per acre. It was
observed from the findings that there is a scope to increase the use of inorganic
fertilizers to enhance the yield of seed production. This would result in higher
income to the seed growers.
5.3 Cost and returns in tomato hybrid seed production
5.3.1 Cost structure in tomato hybrid seed production
It was observed from the table 4.5 that the total cost of tomato hybrid seed
production per acre was Rs. 3,82,530.75. The average total variable cost incurred
in tomato hybrid seed production was Rs. 3,82,530.75. Among the various cost
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items, maximum cost Rs. 2,22,287.55 (includes men and women man days) was
found on human labour (including men and woman labour) i.e., 50.30 per cent of
the total cost. This was one of the important aspects of tomato hybrid seed
production, which incurs maximum cost on labour and provides employment to
the human labour. The tomato hybrid seed production involves technically trained
labour, whose wage rate is higher as compared to other labour, the cost on these
items was found to be higher. There is a need to improve the efficiency of labour
by imparting further training and also offering some incentives to the labours in
ordered to reduce the cost of labour. This was followed by cost on staking sticks,
steel wires, jute thread, mulching sheet and other costs of Rs. 3,69,931.25, Rs.
5,483.62, Rs. 3,987.52, Rs. 3,291.66 and Rs. 28,355.61 respectively. Cost on
fertilizer is Rs. 14,226.74 (5.01% of the total cost), cost on FYM is Rs. 10,625
(2.74%), cost on seedlings accounts is Rs. 13,625 (3.52% of the total cost) and
plant protection chemicals accounts is Rs. 23,400 (6.02% of the total cost). The
average total fixed cost incurred in tomato hybrid seed production was Rs.
5,177.59 (2.36% of the total cost).
5.3.2 Returns realised in tomato hybrid seed production
The returns structure in tomato hybrid seed production was found to be
profitable and beneficial to the farmers in relation to the total cost incurred by
them. The gross returns and net returns were found to be much higher than their
cost structure. The gross return was found to be Rs. 8,97,554 per acre. The net
returns over variable cost were worked out to be Rs. 5,15,023.25. The net returns
over total cost were worked out to be Rs. 5,09,845.66. The returns were worked
out per kg basis, farmers realized net returns of Rs. 12,200 per kg. Then the
returns were worked out per each rupee of expenditure, it was found that farmers
obtained Rs. 2.31 which was much higher than the expenditure. Further, if the
farmers increase the use of fertilizers and pesticides in higher level, the returns
would be obtained through increased yield. This would lead to a further increase
in the net returns and average returns per rupee of expenditure.
70
5.4 Resource use efficiency and allocative efficiency in tomato hybrid seed
production
5.4.1 Resource use efficiency in tomato hybrid seed production
Regression equations were estimated separately using total gross returns
as the dependent variable and the amount of seedlings, FYM, human labour,
bullock and machine hour, fertilizer, plant protection chemicals and staking
materials as independent variables for tomato hybrid seed production (Table 4.7).
The regression equation was estimated in order to capture the nature and
magnitude of the effects of the independent variables on the productivity of tomato
hybrid seeds. The coefficients were estimated by employing the Cobb-Douglas
production function.
The output elasticity coefficients for seedlings, FYM and PPC were positive
and found to be significant. This showed that increase in the use of these inputs
would result in increase in efficiency of tomato hybrid seed production,
contributing significantly towards gross returns. Elasticity coefficients for human
labour, bullock labour and machine hour were found to be positive but non-
significant. Hence, it would not be profitable to further increase in the expenses on
these resources. The elasticity coefficients for fertilizer and stacking materials
were negative and found to be non-significant indicating that the fertilizer and
stacking materials were over used.
The sum of elasticity coefficients was 1.30 which indicated increasing
returns to scale. A one per cent increase in all the factors of production
simultaneously would result in an average increase of gross returns by 1.30 per
cent. The value of coefficient of multiple determination (R2) was 0.94 which
implied that 94 per cent of total variation in gross returns was explained by the
variables included in the model.
5.4.2 Allocative efficiency in tomato hybrid seed production
The Marginal Value Product (MVP) to Marginal Factor Cost (MFC) ratios
for seedlings, FYM, human labour, bullock and machine hour and PPC were
positive indicating that still there is scope to use these inputs and increase the
gross returns of tomato hybrid seed production. The MVP to MFC ratio for
71
fertilizer and stacking materials were found to be negative, it indicated that
expenditure on these inputs were more than the optimum level. Hence, withdrawal
of some units of these resources is profitable in the short-run.
5.5 Pattern of income and employment in the cultivation of tomato hybrid seed
production
5.5.1 Income generation through tomato hybrid seed production
Results of Table 4.6 revealed that the average yield of tomato hybrid seeds
was 73.57 kg per acre. Yield varied depending upon the area, type of hybrids, the
climatic conditions prevailing during the crop season, incidence of pests and
diseases and the most importantly, the alertness of the farmer in managing the
crop. The total gross returns realized from tomato hybrid seed production was Rs.
8,97,554, by seeing the gross returns we conclude that, the tomato hybrid seed
production is an income generating enterprise.
The total cost incurred by the farmers in cultivation of tomato hybrid was
Rs. 3,87,708.34 per acre while the net returns over variable and total costs
realized was Rs. 5,15,023.25 per acre and Rs. 5,09,845.66 per acre. Net returns
per kg of tomato hybrid seeds worked out to be Rs. 12200. The benefit cost ratio
was found to be RS. 2.31 per kg. Hence, the results of the tables revealed that,
tomato hybrid seed production is an income generating enterprise to the farmers.
5.5.2 Pattern of employment in tomato hybrid seed production
It was found from the table 4.9 that the total labour employed in tomato
hybrid seed production was about 1,228.24 man days of human labour. Out of
which, the proportion of hired labour was more (877.80 man days) as compared to
family labour (381.37 man days). Among the various activities, higher number of
man days of labour was used for emasculation, pollination, weeding, transplanting
of seedlings and crushing of fruits and extraction of seeds. More or less similar
trend was observed in respect to family and hired labour employment. From the
foregoing discussion, it is clear that tomato seed production was a highly labour
intensive activity and among the activities, emasculation, pollination, weeding,
transplanting of seedlings and crushing of fruits and extraction of seeds were
72
found to be most important. The activities like emasculation and pollination
requires skilled as well as training, so that higher efficiency would be achieved in
labour utilization and also acid seed treatment and cleaning requires more labour
in tomato hybrid seed production. Therefore, the labour employed in seed
production activity to be trained initially to improve their skill of pollination. This
would enhance the efficiency of labour use in seed production and thereby
reduction in cost of production.
5.6 Problems faced by the contract farmers and the contract firms.
5.6.1 Problems faced by contract farmers
The results pertaining to problems faced by the seed growers are
discussed in the light of views expressed by the seed growers and some facts
observed by the researcher at the time of survey (Table 4.10).
The major production problems are concerned, majority of the seed
growers expressed the non-availability of skilled labour was given utmost priority,
prevalence of higher wage rate, high pest and disease attack, lack of technical
guidance, non-availability of high yielding hybrids, climatic factors and non
availability of seedlings on time are the major problems and which are ranked one
to seven based on the Garrett ranking technique. Tomato hybrid seed production
is a labour intensive enterprise which requires more number of labours during the
crossing and harvesting season. Many seed growers had to pay advance wages
to the labours especially during critical stages of operations like crossing and
harvesting.
While processing problems are concerned, most of the seed growers
complained lack of technical guidance about seed extraction method and non-
availability of mechanical seed extraction method were the major problems and
other problems were non-availability of acid (HCl) for seed extraction and
cleaning, problem of bad odour and non availability of skilled labour for processing
and seed extraction.
73
Some of the marketing problems in tomato hybrid seed production were
higher rejection rate, irregular payment, low contract price, delay in purchasing of
seeds, manipulation of norms by the firms and grading of seeds.
5.6.2 Problems faced by the contracting firms
The major problems of contracting firms were divided into seven attributes
and they were ranked based on the Garrett ranking technique. Some of the
problems were mixing of low grade with high grade, it is difficult check, as the
seed size is very small. Fixing of contract price, low productivity was the major
hindrance in the seed production activity, problem of inability of farmers to take
farm operations, land constraints, government regulations and selection of
farmers were the major problems (Table 4.11).
6. SUMMARY AND POLICY IMPLICATIONS
In principle, contract farming could be an institutional arrangement that
enables farmers to access markets. Contracting is a form of joint production where
the grower supplies tools, land, labour and management, while the processor
supplies technical assistance, some inputs such as planting materials, technical
guidance and undertakes to buy the grower’s output at a pre-determined price.
From the view point of the processor, this arrangement ensures raw material
supplies of the desired quality. From the view point of the grower, such an
arrangement provides an assured market and reliable income. Without a contract,
risks would be too much and few small growers would want to produce these
crops. For this reason, Glover (1990) described contract farming is described as an
institutional arrangement that combined the advantages of plantations (quality
control, coordination of production and marketing) and of small holder production.
Tomato (Lycopersicon esculentum), a solanaceous self-pollinated vegetable
crop. It occupies the largest area among the vegetable crops in the world after
potato. Tomato fruit can be consumed either fresh, cooked or in the form of
processed products such as jam, jelly, juice, ketchup, sauce etc. It is considered as
‘poor mans apple’ because of its attractive appearance and very high nutritive
value, containing vitamin A, vitamin C and minerals like calcium, potassium etc.
Apart from these, it also contains organic acids like citric, malic and acidic acids
which found in fresh tomato fruit, promotes gastric secretion, acts as a blood
purifier and works as intestinal antiseptic. Tomato is a native to Peruvian and
Mexican region. It is introduced by Portuguese to India.
It has been reported that genetically good quality seed alone can increase
crop production by 20 per cent. Farmers in India knew the value of good seed from
time immemorial and have contributed for improvement of seeds through selection
and cultivation. Seed is a basic input and forms only a small part of the total
cultivation expenses. Yet, without good seed the investment on fertilizer, pesticides
and other inputs will not pay the required dividend. The improved quality seed
production especially hybrids is cost intensive and hence many farmers hesitate to
75
take up the seed production activity. Therefore, an attempt is made in the present
study to examine the economics of tomato hybrid seed production.
Objectives of the study
1. To estimate the cost and returns in tomato hybrid seed production.
2. To analyse the resource use efficiency in tomato hybrid seed production.
3. To estimate the extent of income and employment generation through
contract farming in tomato hybrid seed production.
4. To analyse the problems faced by the farmers and firms in the production,
processing and marketing of tomato hybrid seeds.
Methodology
The predominant tomato hybrid seed producing district of Haveri in
Karnataka state has been chosen for the present study. Both secondary and
primary data were used. The relevant secondary data were collected from
agriculture, horticulture departments and seed companies. The primary data were
collected from the sample seed growers by adopting a multi-stage sampling
design. In all 120 seed growers growing tomato hybrid seeds were randomly
selected at the rate of ten seed growers from each of the four selected villages of
three taluks like Ranebennur, Hirekerur and Byadagi. In addition, the leading ten
contract firms were also interviewed for eliciting the required information.
Statistical tools employed
Tabular analysis was adopted to compile the general characteristics of the
sample farmers, descriptive statistics like averages, percentages etc. are used to
obtain the meaningful results. Budgeting technique was used to estimate the costs
and returns in tomato hybrid seed production. In order to study the resource use
efficiency in tomato hybrid seed cultivation, Cobb-Douglas production function was
used. The production elasticities were used to assess the optimal use of resources
76
in production activities. Garrett ranking technique was also employed for analysing
the problems of contract farmers and contracting firms.
The salient findings of the study
The average size of the land holding of the sample growers was 7.75 acres,
of which the average size of tomato hybrid seed production was 0.75 acres, there
is need to bring more area under tomato hybrid seed production.
All the inputs needed for tomato hybrid seed production were supplied
timely to the farmers by the company except expenses of implements and labour
wage were met by the farmers with their own money
The private seed companies selected only few farmers and supplied inputs
to them. This practice was mainly to protect the quality of the produce.
Socio-economic features of contract farmers
The average family size of contract farmers was around 7 members and
with respect to education level was concerned, literate and illiterate were 86.65
and 13.33 per cent respectively. Average age of the respondents was 34 years. As
most of the farmers were literate they were aware of using pesticides in proper
dozes and also potentiality of the crop. It was also interesting to note that most of
the farmers were young aged and were ready to take risk of new system of
production and market linkage. Hence, they might have gone for contract farming
by joining hands with the private seed company involved in cultivation.
Pattern of land holdings of sample farmers
The average size of the land holdings of the contract farmer was 7.75 acres.
The average area under tomato hybrid seed production accounted for about 0.75
acres, which worked out to be 5.05 per cent of total land holding. The companies
allotted very small sized land to cultivators mainly to maintain the quality of seeds.
Cropping pattern of sample farmers
Major proportion of the area in kharif was devoted for maize crop followed
by cotton and onion in the study area. In the rabi season, sunflower occupied a
77
major share followed by chilli. Over all, it was observed that farmers tried to
diversify their cropping pattern to minimize risks and seed production was taken up
on a plot of 0.5 acres only.
Input use pattern
It was found from the study that the contract seed growers used about 4,394
number female seedlings and 2,419 number of male seedlings, 1,259.17 man days
of human labour (including male and female), 12.05 tonnes of organic manure and
1065.5 kg of inorganic fertilizers. Around 8.00 liters of plant protection chemicals
were used in tomato hybrid seed production.
Cost incurred in tomato hybrid seed production
The results revealed that the total cost of tomato hybrid seed production per
acre was found Rs. 3,82,530.75. Among the various cost items, the maximum cost
Rs. 2,22,287.55 was found on human labour (including male and female). The
average total fixed cost incurred in contract farming was Rs. 5,177.59 of the total
cost.
Returns structure in tomato hybrid seed production
The tomato hybrid seed production was found to be profitable with Rs.
8,97,554.00 per acre as gross returns, Rs. 5,15,023.25 net returns over total cost
of cultivation. The seed growers would get Rs. 2.31 for every rupee investment in
seed production.
Resource use efficiency
The results of production function analysis indicated that with the coefficient
of multiple determination (R2) value of 0.94 for tomato hybrid seed production, the
inputs included in the model were able to explain 94 per cent of the variation in
tomato hybrid seed production of sampled seed growers.
The elasticity coefficients of regression estimates of seedlings and FYM
were significant at 1 per cent, the elasticity coefficients of regression estimates of
PPC was significant at ten per cent. The human labour, bullock labour and
78
machine hour and stacking materials had a positive significant influence on the
gross returns of tomato hybrid seed production. Whereas, fertilizer and stacking
materials were found to influence the gross returns negatively. The sum of
elasticities (∑bi) was found to be 1.30 implying increasing returns to scale.
The MVP to MFC ratio of FYM and bullock and machine hour was greater
than unity implying under utilization of resources. The MVP to MFC ratios of
seedlings, human labour, fertilizer, PPC and stacking materials were substantially
lesser than unity implying excess utilization of these resources.
Pattern of employment
In tomato hybrid seed production, it was found that the human labour
employed was about 1,228.24 man days per acre mainly due to higher use of
human labour for emasculation and pollination activities. Hence, tomato hybrid
seed production is a highly labour intensive activity. Emasculation, crossing,
picking of fruits, crushing of fruits and extraction of seeds require skilled personnel
to perform the operations to achieve higher labour efficiency.
Problems faced by the contract farmers
The major production problems in tomato hybrid seed production were non-
availability of skilled labours, high wage rate, high pest and disease attack, lack of
technical guidance, non-availability of high yielding hybrids and climatic factors.
The major processing problems were lack of technical guidance about seed
extraction method, non availability of mechanical seed extraction method, non
availability of acid for seed extraction and cleaning, problem of bad odour during
fermentation and non-availability of skilled labour for processing and seed
extraction.
The major marketing problems were higher rejection rate, irregular payment,
low contract price, delay in purchasing of seeds, manipulation of norms by the
firms and grading of seeds.
79
Problems faced by the contract firms
The major problems expressed by the firms were mixing of lower grade with
higher grades, fixing of contract price, land constraints, inability of the farmers to
take farm operations, lower productivity, government regulations and selection of
farmers.
Policy implications
Based on the findings of the study, the following policy implications are
worth considering for framing policy for promoting tomato hybrid seed production in
study area.
1. Results of the study relating to cost of production of tomato hybrid seeds
revealed that, it is a capital intensive activity, thus financial institutions have
to encourage the farmers by providing required credit as and when they
need as in case of crop loans., therefore there is a need to fix the scale of
finance for seed production to encourage the farmers to borrow loan from
commercial banks.
2. Tomato hybrid seed production is a highly risky activity inspite of taking all
operations in time, even a slight variation in climatic conditions such as
unexpected rains (cyclones) results in loss of crop or destroy seed quality
which may lead to rejection of seeds by the contracting firm, in such a
situation to protect the farmers, the scheme of crop insurance may be
introduce to cover the seed production activity which involves climatic risks.
3. The resource use efficiency analysis revealed that there is scope for
increasing the use of resources like seedlings, FYM, human labour and PPC
and reorganizing the expenditure on resources like fertilizer and stacking
materials because they are overused. Hence, there is need to educate the
farmers on the optimal use of these resources.
4. Seed extraction, processing and cleaning requires more skilled labour, in
order to save the cost on these activities, there is need to bring these
activities under mechanical seed extraction methods.
80
5. In few cases, the seeds are rejected by the contracting firms in view of not
meeting the quality standards by the farmers, these results in huge losses to
the seed growers. To overcome this problem, there is a need to create the
awareness about maintaining quality parameters in seed production.
6. Majority of the sample farmers expressed that the problem of delay in
paying sale proceeds up to 4-6 months, to overcome this problem, as and
when farmers carry their product the contracting firm may provide a part of
payment in order to protect the economic conditions of the seed growers.
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Appendix I: Interview schedule for contract farmers
UNIVERSITY OF AGRICULTURAL SCIENCES, DHARWAD DEPARTMENT OF AGRICULTURAL ECONOMICS
PART - A
Research Title: “AN ECONOMIC ANALYSIS OF TOMATO HYBRID SEED
PRODUCTION UNDER CONTRACT FARMING IN HAVERI DISTRICT.”
Schedule No: ___________ Date: ____________ I. General information of the respondents
1. Name:_________________________Age:__________Education:___________
2. Village :___________________ Taluk: _______________
District:_______________
3. Family type: Nuclear/ Joint __________________
4. Occupation: Main: __________________ Subsidiary:
________________
5. Association with social organization: ZP/TP/VP/NGO/SHG/Water use groups
6. Annual income: Main occupation: Subsidiary occupation: Total:
II. Family composition
Number of Family members: Male: Female: Children:
Sl. No.
Name Sex Age Education Occupation
1
2
3
4
5
6
7
8
III. Land Holdings: acre: Type of soil:
Sl. No. Particulars Survey No. Irrigated Dry land Total
1 Owned
2 Leased in
3 Leased Out
4 Fallow, if any
Total
88
IV. If Irrigated, Sources of Irrigation
Sl. No.
Sources
Availability of water
Adequacy Inadequacy Year
round Kharif Rabi Summer
1 Open well
2 Bore well
3 Canal
4 Tank
5 Farm pond
6 Others
V. Sources of Income
Sl. No. Sources Monthly Seasonal Annual income
(Rs)
1 Agriculture
2 Horticulture
3 Dairy
4 Wage earning
5 Salary
6 Others, if any
VI. Cropping pattern
Sl. No. Particulars Sole crop Mixed crop Intercropping
Total Crop Area Crop area Crop area
I Kharif
i
ii
iii
iv
II Rabi
i
ii
iii
iv
III Summer
i
ii
iii
iv
Total
89
VII. Input utilization pattern in tomato hybrid seed production:
1. Name of hybrid: ________________ 2.Season:__________________
3. Area (Acre): _______________ 4.Soil type: _______________
5. If irrigated, sources of irrigation: ___________ Method of irrigation: ___________
Sl. No Particulars Units Quantity
I. Inputs
1 FYM Tonnes
2. Seedlings No.
a.. Male seedlings
b. Female seedlings
Sub total
3. Fertilizer Kg
a. Urea
b. DAP
c. MOP
Sub total
4. PPC Liters
a. Corozene
b. Cabrotop
c. Okeo
d. Selvo-303
e. MX-60
f. Others
Sub total
5. Labour Man days
a. Men Labour
b. Women Labour
c. Bullock labour Pair days
d. Machine hours Hours
6. Staking sticks No.
7. Steel wires Kg
8. Jute thread Kg
9. Mulching sheet Kg
90
VIII. Labour utilization pattern in tomato hybrid seed production
Sl. No.
Name of the operation
No of times
Family labour Hired labour Machine labour
M W BP M W BP O H C
A. Production
1. Ploughing
2. Harrowing
3. Transportation of FYM
4. Spreading of FYM
5. Seed bed preparation
6. Transplanting of seedlings
7. Fertilizer application
8. Irrigation charges
9. Weeding
10. Rouging
11. Emasculation
12. Pollination
13. PPC spraying
14. Harvesting
Sub total
B. Processing and marketing
1. Crushing and extraction of seeds
2. Acid seed treatment
3. Cleaning and drying
4. Grading of seeds
5. Packing and transportation
Sub total
Total(A+B)
M: Men W: Women BP: Bullock pair ML: Machine Hour
91
IX. Cost incurred in tomato hybrid seed production
Rs/acre
Sl. No
Particulars Units Cost in (Rs)
Variable cost
1 FYM Tonnes
2. Seedlings: No.
a. Male seedlings
b. Female seedlings
Sub total
3. Fertilizer Kg
a. Urea
b. DAP
c. MOP
Sub total
4. PPC Liter (ml)
a. Corozene
b. Cabrotop
c. Okeo
d. Selvo-303
e. MX-60
f. Others
Sub total
5. Labour Man days
a. Men Labour
b. Women Labour
c. Bullock Labour Pair days
d. Machine hour Hours
6. Staking sticks No.
7. Steel wires Kg
8. Jute thread Kg
9. Mulching sheet Kg
10. Others --
11. Interest on working capital
(8%)
Total Variable cost
Wage rate of labour utilization
1. Men Labour Wage/Day =__________ 2.Women labour wage/day =_____________
3. Bullock Pair charges/day: =_______ 4. Tractor ploughing charges/ acre =________
5. Tractor harrowing charges/acre =__ 6. Tractor transportation charges/tonne =____
92
X. Gross returns
Rs. /acre
Sl. No Main product Quantity(Kg) Rs/Kg Total amount
(Rs)
Total:
XI. Problems faced by contract farmers in Production, Processing and Marketing of tomato hybrid seeds
n=120
Sl. No. Problems Rank
Production problems
1 Non availability of skilled labour
2 High wage rate
3 High pest and disease attack
4 Lack of technical guidance
5 Non availability of high yielding varieties
6 Climatic factors
7 Non availability of seedlings on time
Processing problems
1 Lack of technical guidance about seed extraction method
2 Non availability of mechanical seed extraction facility
3 Non availability of acid (HCl) for seed extraction and cleaning
4 Problem of bad odour (Smell) during fermentation
5 Non availability of skilled labour for processing and seed extraction
Marketing problems
1 Higher rejection rate
2 Irregular payment
3 Low contract price
4 Delay in Purchasing of seeds
5 Manipulation of norms by the firms
6 Grading of seeds
93
XII. Détails on institutionnel arrangements.
1. Does the company supply all the needed inputs? Yes/ No
2. Are you familiar with grading of produce? Yes/ No
3. Where does the grading take place? a) Farm level b)
Laboratory
4. From where you get all inputs? a) Farm delivery b) Company
shop
5. Is it the contract price paid by the company after delivery of produce? Yes/ No
6. Number of days of settlement of sale proceeds after delivery of seeds.
a) 1-2 months b) 2-3 months c) after 4 months
7. Did you sell all the produce to the same company as you entered into agreement? Yes/
No
If no, where do you sell/ to whom you sold that produce?
8. a) Are you satisfied with the present system of contract arrangements with the
companies?
Yes/ No
b) If no, please suggest the needed changes in the present system.
94
Appendix II: Interview schedule for contracting firms
UNIVERSITY OF AGRICULTURAL SCIENCES, DHARWAD
DEPARTMENT OF AGRICULTURAL ECONOMICS
(PART - B)
Research Title: “AN ECONOMIC ANALYSIS OF TOMATO HYBRID SEED PRODUCTION UNDER CONTRACT FARMING IN HAVERI DISTRICT.”
Schedule No: ___________ Date: ___________
I. General information:
a. Name of the company :
b. Address of the company :
c. Name of the respondent :
d. Designation :
II. Problems faced by contracting firms
Sl. No
Problems Rank
1 Mixing of low grade with high grade seeds
2 Fixing of contract price
3 Land constraint
4 Selection of farmers
5 Lower productivity
6 Government regulations
7 Inability of farmers to take farm operations
95
Appendix III: Factors influencing selection of seed growers by the firms
(n=120)
Sl. No.
Factors No. of
farmers Percentage
1 Adequate knowledge of seed production 42 35
2 No marketing risk 36 30
3 Supply of inputs 87 72.5
4 Profitability 90 75
5 Good opinion about the firm 63 52.5
6 The firm gives better contract terms 72 60
7 Others succeeded through contract seed production
33 27.5
8 Age and education of the farmers 45 37.5
96
Appendix IV: Factors considered by the firms for selection of the farmers in tomato hybrid seed production
(n=10)
Sl. No.
Factors No. of firms
Percentage
1 Availability of infrastructure 7 83.52
2 Distance from the village to the firm 4 51.43
3 Performance in the previous contract 6 78.57
4 Credibility of farmers 3 36.25
5 Location of seed production plot 5 62.54
6 Experience of the farmers in seed production 8 88.57
7 Involvement of farmers in seed production 3 42.36
8 Honesty and sincerity of the farmers 7 68.57
AN ECONOMIC ANALYSIS OF TOMATO HYBRID SEED PRODUCTION UNDER CONTRACT FARMING IN HAVERI DISTRICT
NAGARAJM. SANNAMANI 2014 Dr. S. M. MUNDINAMANI Major Advisor ABSTRACT
Tomato hybrid seed production under contract farming is highly profitable,
even small farmers can practice it. Farmer is assured of better returns compared to
other field crops as the companies offer relatively better prices. The farmers will get
all required things for cultivation of tomato such as inputs, technology and extension
services in one roof. The present study was conducted in Haveri district of
Karnataka. Both primary and secondary data were used in the study in order to
ascertain the cost and returns, resource use efficiency, extent of income and
employment and problems faced by the farmers and firms in production, processing
and marketing of tomato hybrid seeds. Tabular presentation method, Budgeting
technique, Cobb-Douglas production function and Garrett’s ranking techniques
were employed for the analysis of data.
The results revealed that the total cost of tomato hybrid seed production per
acre was found to be Rs. 3,87,708.34. Among the various costs, the maximum cost
Rs. 2,22,287.55 was found on human labour. The average total fixed cost incurred
was Rs. 5,177.59.The tomato hybrid seed production was found to be profitable
with Rs. 8,97,554.00 per acre as gross returns, Rs. 5,15,023.25 net returns over
total cost of cultivation. The seed growers would get Rs. 2.31 for every rupee
investment in seed production.
The MVP to MFC ratio of FYM and bullock and machine hour was greater
than unity implying under utilizations of resources. The MVP to MFC ratios of
seedlings, human labour, fertilizer, PPC and stacking materials were substantially
lesser than unity implying excess utilization of resources.
Non-availability of skilled labours, high wage rate, higher rejection rate,
irregular payments, and low contract price were the major problems expressed by
the farmers. Major problems expressed by the firms were mixing of lower grade with
higher grades, fixing of contract price and land constraints.