Critical Economics analysis of turmeric production in surkhet district in Nepal
Introduction
Background of study
Turmeric is a perennial herbaceous tuberous medicinal plant of the family Zingiberaceae. It is native to India and China and is also known as “golden spice of life” Haldi in Nepali language and is most commonly used spice in the culinary all over the world. The word turmeric is derived from a French word 'Terre merite' meaning merit of the earth(Kadte et al., 2018). The most important component found in ginger which makes it valuable in the market is curcumin which is very helpful in the treatment of many diseases. Turmeric is useful in the preparation of dye, drugs and cosmetics. In Ayurvedic medicine, turmeric is a well-documented treatment for various respiratory conditions (e.g., asthma, bronchial hyperactivity and allergy), as well as for liver disorders, anorexia, rheumatism, diabetic wounds, runny nose, cough, and sinusitis(Araújo & Leon, 2001). Critical Economics analysis of turmeric production in surkhet district in Nepal .
It has unique importance in performing pooja and many other religious and marriage ceremonies in Nepal. It is one of the spices which plays an important role in the national economy and is also one of the five major important spices in Nepali. If we talk about the production of turmeric all arounds the globe, India ranks first followed by China and Myanmar (Bishnoi et al., 2020). In context of Nepal, among high values crops, turmeric covers 11% area and 15.07% in case of production(MOAD, 2019). Fresh turmeric (Kapurkot 1) has 13.8% powder forming ability and 92.8% of dry turmeric is converted into powder. It contains 4.89% curcumin and 6.65% aromatic oils(PMAMP, 2017).
Nepal is a federal democratic country situated in between the two large countries i.e. India and China and in between the latitude of 26022’N to 30027’N and longitude of 8004’E to 88012’E. It has a total geographical area of 1,47,181 sq. Km where the main source of occupation for most of the people is Agriculture. Agriculture contributes to about 27.10% of total GDP and provides livelihood and employment to 65.6% of total labor force of the country(AITC, 2019). Nepal is federally divided into seven provinces and among them is a Karnali province where our study area Surkhet district is situated. The headquarter of this district is Birendranagar and is also the capital of Karnali province. Birendranagar is further divided into 9 local level units of 5 municipality and 4 village municipality. Other districts connected with Surkhet are Salyan districts in East, Doti and Achham in West, Achham, Dailekh and Jajarkot in the North and Kailali and Bardiya in South. The major Agricultural crops of this district are ginger, turmeric, vegetables, mandarin, citrus, mango, litchi, banana and cereals like rice, maize, wheat, millet and barley, legumes like lentil, chickpea, gram, soyabean, etc. and mustard. The area occupied by turmeric in Surkhet is 120 ha and the production is 1080 MT with a productivity of 9Mt/ha(MOAD, 2019). It is one of the high turmeric producing district of Nepal and also supplies turmeric to various parts of Nepal. It is a hub for turmeric production and therefore the study area for this research was chosen as Surkhet district Nepal.Which is importants things.
Statement of the problem
In Nepal , If we see the overall scenario of the per capita domestic produce in surkhet and whole nation, it is in the declining ratio. Critical Economics analysis of turmeric production in surkhet district in Nepal .There are many factors associated with it. First of all, it is due to the poor linkage between the value chain adding person which helps in this activities. Moreover the study on the economics of turmeric production in surkhet district has not been made so far.
Objectives
For this study, there are two main types of objectives:-
Broad Objectives
To know about the economics of the production of turmeric in Surkhet district of Nepal Specific Objectives
1. To know about the resource use and cost structures of the turmeric farmers 2. To know about the returns and profitability of the turmeric farmers
3. To know about the constraints faced by the farmers in marketing and production 4. To know about the price spread, price stability and price variation of turmeric
Literature Review
Trend Analysis
In context of Nepal, Turmeric is a very high value crop and also its production is favored by its low investment and low water requirement. Critical Economics analysis of turmeric production in surkhet district in Nepal .Initially, the Nepalese farmers used to cultivate turmeric in the marginal and unused land but nowadays the commercial cultivation of turmeric has been started by Nepalese farmers. In 2010/11, the area and the production of turmeric was 72 ha and 619 Mt with a productivity of 8.59 Mt/ha. The production of turmeric in next two years i.e. 2011/12 and 2012/13 was increased but the area under cultivation remained the same. For next two years the production was 1008 Mt with a productivity of 14 Mt/ha. However, the area and production of turmeric in 2013/14 were reduced to 12 ha and 54 Mt with a productivity of 4.5 Mt/ha. The area and production of turmeric in the years 2014/15, 2015/16 and 2016/17 are 121 ha, 115 ha, 120 ha and 975 Mt, 1035 Mt, 1080 Mt with a productivity of 8.05 Mt/ha, 9 Mt/ha and 9 Mt/ha respectively. But these data raised very highly in the next year which became 205.46 ha area, 3169 Mt production with 12.8 Mt/ha productivity. The area and production of turmeric in 2018/19 and 2019/20 are 241 ha, 325 ha and 2424 Mt, 4897 Mt with a productivity of 10.05 and 15 Mt/ha. But these data fell down heavily the next year and became 115 ha area and 472 Mt production with 4.1 Mt/ha productivity.
A man cannot produce a physical product nor he can destroy it, the only thing he can do is to create utility by changing its form. So the process of adding utility to a physical material by using factors like land, labor, capital and entrepreneurship is called production(Vogt, 2015).
Short run and long run
Short run refers to a time period in which a firm does not have sufficient time to increase the scale of output. It can increase only the level of output by increasing the quantity of a variable factor and making intensive use of the existing fixed factors. On the other hand long run refers to the time period in which the firms can increase the scale of output by increasing the quantity of all the factor inputs simultaneously and in the same proportion. The distinction between fixed and variable factors is relevant only in the short run but this distinction disappears in the long run.
Level of production and scale of production in turmeric
When any firm increases production by increasing the quantity of one factor input where as the quantity of other factor inputs keeping constant; it increases the level of production. But
on the other hand, when the firms increases production by increasing the quantity of all the factors of production simultaneously and in the same proportion, it increases the scale of production.
Production function
In economics, production function refers to the physical relationship between inputs and output under given technology. In other words, production function is a mathematical functional/technical/engineering relationship between inputs and output such that with a given combination of factor inputs and technology at a given period of time, the maximum possible output can be produced such as land, labor capital and entrepreneurship.
Critical Economics analysis of turmeric production in surkhet district in Nepal .If there are two factor inputs: labor (L) and capital (K), then production function can be written as: Qx = f (L, K) where Qx is the quantity of output of commodity x, f is the function and L and k are the units of labor and capital respectively. It says that quantity of output depends on units of labor on capital used in production.
Here two points are worth considering. Firstly, production function must be considered with reference to particular period of time i.e. short period and long period. Secondly, production function is determined by state of technology.
Factors of production
Factors of production are the resources that are used to produce the services and goods. They are also called as the building blocks of economy. The factors of production are divided into four categories which are land, labor, capital and entrepreneurship.
Land
Land is the primary factor of production and includes not only the land resources but also anything that comes from the land(The Economic Lowdown Podcast Series, n.d.). The land resources may be renewable like forests or non-renewable resources like oil and natural gases. The income that is generated by the use of land is called as rent.
Labor
Labor is the effort contributed by the people for the production of goods and services. If we are paid for our work done, it means we have been contributing to the production process as labor. For example, waiter, engineer, driver, construction laborer, etc.Critical Economics analysis of turmeric production in surkhet district in Nepal . The income that is generated by the labor is called wage and is the largest source of the income for most of the people.
Capital
Capital is the machinery, tools and buildings that human use to produce goods and services. For example, tractor, harrow, plough, etc. The income earned by the use of capital sources is called as interest.
Entrepreneurship
An entrepreneur is a person who combines the other factors of production - land, labor, and capital - to earn a profit. The most successful entrepreneurs are innovators who find new ways produce goods and services or who develop new goods and services to bring to market. Without the entrepreneur combining land, labor, and capital in new ways, many of the innovations we see around us would not exist. The payment for entrepreneurship is called as profit.
Methodology
In this section, how the above mentioned research objectives are to be accomplished along with the site selection, research design, sampling technique, sampling population, sampling size, sampling methods and data analysis techniques are discussed.
Site selection
In the course of LEE internship, turmeric zone of surkhet district was selected as my study area on the basis of lucky draw done for LEE site selection at Agriculture and Forestry University on 11th of magh 2077. Moreover surkhet district has a huge potential for the turmeric production. The total area under cultivation of turmeric in this district is 120 ha producing about 1080Mt of turmeric according to the recent data of 2017/18(MOAD, 2019). Within this district too, five study area are chosen among which 3 are municipality viz. Panchapuri municipality, Lekbesi municipality and Bheriganga municipality and two are Village municipality viz. Chaukune and Barahataal.
Preliminary study
For the purpose of preliminary study, pilot survey is to be carried out to gather the statistical information of the target area. That information includes socioeconomic, demographic, topographic information about turmeric cultivation and marketing along with the relationship with the stakeholders. This study will be useful in the preparation of the questionnaire.
Sample size, sampling technique and sampling procedures
For this study, Proportionate sampling technique is applied for the sampling design. The population is not distributed equally in all of the municipalities of surkhet district. Moreover, the cooperatives and the farmer’s group are also not present in the equal number in all municipalities. Some municipalities have more number of cooperatives whereas some have lesser number of cooperatives. Critical Economics analysis of turmeric production in surkhet district in Nepal .depending on the number of cooperatives and farmer’s group in respective municipality and village municipality, the sample cooperatives and farmer’s group are selected proportionately and within them, the farmers for the study were selected by simple random sampling method. A total of 15 cooperatives or farmer’s groups are selected by proportionate sampling method and from each cooperatives 8 farmers are selected randomly. So a total of 120 farmers are selected as a sample.
Methods and techniques for data collection
Primary data
The primary data will be collected through household survey and Key Informant Interview with the sample farmers through the questionnaire developed for the primary data purpose.
Household survey
60 households will be selected altogether through multistage sampling technique. To know the current status of the turmeric farmers and to share knowledge, information and perception, questionnaire survey will be conducted. Open ended and close ended questions will be formed from which useful information will be gathered.
Key Informant Interview
The experienced personalities and expert in turmeric cultivating farmers will be selected purposively. Zone officer, local leaders and presidents of cooperatives will be our major key informants. Series of questions about the major scenario of turmeric production area, yield, productivity, number of famers involved in turmeric cultivation and economic activities are to be asked through Key Information Interview.
Secondary data
Secondary data are gathered from journals, relevant articles, newspapers, zone office, MOAD, Krishi Diary(AITC), HVAP, Ministry of Agriculture, internet, etc. Production area, productivity, yield of different districts and trend analysis are carried out.
Data analysis method
The primary and secondary information collected from the field survey and other methods will be analyzed by using Statistical Package of Social Science(SPSS) and Microsoft Excel for calculating benefit cost ratio, price spread, etc. Both descriptive and analytical methods will be used to analyze the data. The outputs will be represented through pie chart, regression line, timeline, bar diagrams and tables.
Socioeconomic and farm characters
Variables like, sex, age, education status of the respondents, ethnicity, occupation, area of turmeric cultivation, live stocks will be analyzed using simple descriptive statistics such as mean, frequencies, percentages and standard deviation.
Cost of production
The cost of production is the total cost that is incurred during the overall process of production of the turmeric by the farmers. It is calculated by summing up the total fixed cost and the total variable cost i.e.
Total cost = Total fixed cost + Total variable cost
The total fixed cost is the sum of land cost, depreciation cost and repair and maintenance cost whereas total variable cost is the sum of the cost of inputs and total cost of labor i.e.
Total fixed cost = Cland + Cdepreciation + Crepair and maintenance
Where,
Cland = Land cost
Cdepreciation = Depreciation cost
Crepair and maintenance = Repair and maintenance cost
Also,
Total variable cost = Total cost of inputs + Total cost of labour
Where,
Input costs include the cost of seed, manure, packaging materials, transportation and communication and miscellaneous costs (NRs.).
Labour costs include costs of bullocks, field preparation, FYM placement and planting, mulch collection, weeding, spraying, irrigation, harvesting, cleaning, grading, sorting, packaging, marketing and transportation (NRs.).
Gross Return
It is the total amount of the revenue after the total quantity of the turmeric produce is sold.
Gross return = Quantity (Kg) * Price per unit (NRs.)
Benefit cost analysis
Gross return of production of turmeric and total cost for production are used to analyze the B/C ratio. The formula used for calculating the B/C ratio is
Grossreturns( .)
Rs
B/C ratio = Total cos ( .)
t Rs
Where,
Gross return was calculated from the income of sold product (NRs.)
The total cost of production was calculated by summation of variable cost and fixed cost incurred in the production process (NRs.)
If B/C ratio>1, project is feasible
If B/C ratio<1, project is infeasible
If B/C ratio=1, neutral
Price spread
Price spread is the difference between the price of a commodity paid by the consumer to the price received by the farmer. It is nothing but the sum total of the beneficiaries kept by the intermediaries involved in the marketing of the commodity from the point of production to the point of consumption. To figure out the price spread, the selling price of turmeric by the farmers and the cost price of turmeric by the consumers is to be calculated and the difference is calculated as price spread.
Price spread = Selling price of farmers – Cost price of consumers
Price stability and Price variation
The difference in the price of same commodity in different time duration, different location and due to other factors is price variation. A very low rate of inflation or deflation of the price of a commodity or sustainability of price of a commodity over a period of time is called price stability.
Budget Summary
Gannt Chart
A problem tree for low turmeric production in surkhet
Low turmeric production in
surkhet
Low seed rhizome quality of
EFFECTS
turmericDisease and pests Lack of proper knowledge and
CORE PROBLEMS
skills in farmers L
CAUSES
A objective tree for low turmeric production in surkhet
A logical framework for improved livelihood of turmeric farmers by adoption of modern agricultural practices
References
AITC. (2019). Krishi Diary. Ministry of Agriculture, Land Management and Cooperatives.
Araújo, C., & Leon, L. (2001). Biological activities of Curcuma longa L. Memórias Do Instituto Oswaldo Cruz, 96, 723–728. https://doi.org/10.1590/S0074-02762001000500026
Bishnoi, R. K., Kate, S. S., & Guleria, A. (2020). Economics of Turmeric Production and Farmers Perception on New Marketing Method in Samastipur District of Bihar. 9(10), 3042–3050.
Kadte, A. J., Perke, D. S., & Kale, P. S. (2018). Economics of Turmeric Production in Sangli District of Maharashtra , India. 6, 2279–2284.
MOAD. (2019). Statistical Information on Nepalese Agriculture. Ministry of Agriculture, Land Management and Cooperatives, Government of Nepal.
PMAMP. (2017). Zone Profile. Ministry of Agriculture, Land Management and Cooperatives.
The economic lowdown podcast series. (n.d.). Federal Reserve Bank of St. Louis. https://www.stlouisfed.org/education/economic-lowdown-podcast-series/episode-2-factors of-production
Vogt, W. (2015). Production Function. Dictionary of Statistics & Methodology, 81–93. https://doi.org/10.4135/9781412983907.n1521
Example documents is given below for data collection questionary :
APPENDIX
Questionnaire
QUESTIONNAIRE DESIGN FOR ECONOMICS OF TURMERIC PRODUCTION, PROCESSING AND MARKETING IN SURKHET DISTRICT OF NEPAL
Dear respondent,
I am Santosh Rajbanshi, Bsc.ag student from Agriculture and Forestry University Rampur, Chitwan. I am here to collect information about production and marketing of turmeric in Surkhet.
Name of respondent:- ………………………………………………
Contact number:-………………………
Address:- …………………………………
Age:- Sex:- Religion:- Ethnicity:- a) Brahmin b) Chhetri c) Janajati d) Dalit e) Other
Education:- a) Illiterate b) Can read and write only c) 1-5 d) 6-8 e)8-10 f) 10-12 g) Graduate
Number of family members ……………………
Family member:- a) Nuclear( ) b) Joint( )
Has any of your family member migrated? Yes( ) No( ) If yes, then how many? …………….. India……………. Other…………..
1) Access to road Yes( ) No( ) 2) Decision making M( ) F( ) 3) Participation in meetings, trainings Yes( ) No( )
1. Physical assets
Tractor…………. Sprayer………… Spade…………. Sickle………..
Irrigation pipe(in meters)……………..
2. Livestock
3. Area ( in ropani ) __________________________
Upland ……………. Rented in………….. Rented out…………… Lowland ……………. Rented in………….. Rented out…………… Total cultivatied……………. Upland…………. Lowland………… 4. Area for turmeric cultivation(In ropani)
Upland………… Lowland………………
5. Rent value (Rs.)…………………
Wage:- Male……………. Female………………
Bullock/day…………….. Tractor/hr……………
6. Availability of labor
a) Very easy b) Easy c) Moderate d) Difficult e) Very difficult Hired labor ……….% Home/Family labor………….% 7. How many labors are required in total for a season? …………………. 8. Do you grow other crops in the same land? Yes( ) No( ) If yes, mention 9. Do you have record keeping? Yes( ) No( )
10. Where do you procure seeds from? ……………………………………….. 11. What is the total cost of production of turmeric in year? ……………………………. 12. What is the cost of production of turmeric in a hectare? …………………………….. 13. What quantity turmeric do you produce in a hectare? …………………………
15. At what rate did you sell your produce last 5 years?
a) On 2077, Rs………………
b) On 2076, Rs………………
c) On 2075, Rs………………
d) On 2074, Rs………………
e) On 2073, Rs………………
16. What was the cost of seed rhizome last 5 years?
a) On 2077, Rs………………
b) On 2076, Rs………………
c) On 2075, Rs………………
d) On 2074, Rs………………
e) On 2073, Rs………………
17. How do you sell your produce? a) After processing b) Without processing 18. The turmeric is processed in the farm level as …....... a) Chaanaa b) Powder c) Other ………………………….
19. Where do you process your turmeric?
a) At field b) At nearest processing centre c) Other ………….. 20. Processing of turmeric on the farm level is done by:-
a) Human labor b) Machine labor c) Both
Cost for human labor = …………………….
Cost for Machine labor = …………………..
a) Utensils charges ……………………… b) Fuel charges ……….………. 21. Total cost of turmeric processing …………………
22. Who do you sell your produce?
a) Wholesalers b) Retailers c) Merchants d) Small households e) Haatbazaar (Mandi) f) Other ……………..
23. Where do you sell your produce?
a) Birendranagar b) Chhinchu c) Nepalgunj f) Other ……………………………
24. What is the current price of turmeric in the market? Rs…………………. 25. Marketing cost
26. What is the total revenue you get from turmeric production? Rs…………………. 27. What is the total profit you get from the turmeric production? Rs…………………. 28. What are the constraints faced by you during the production of turmeric? a) Lack of financial support
b) Lack of irrigation water
c) Lack of knowledge and technical knowhow
d) Pests and diseases
e) Lack of labor
f) Lack of quality seed rhizomes
g) High price of seed rhizomes
h) Lack of transportation and storage facility
i) Others
29. What are the constraints faced by you for marketing of turmeric? a) Lack of transportation
b) Low price of produce
c) Lack of storage facility
d) Others
30. What do you suggest PMAMP for the encouragement of turmeric production in surkhet?