Estimation of Production Function of Hiunde (Boro) Rice Course No: MDS 5303 P7 Estimation of Production Function of Hiunde (Boro) Rice Presented by: Md. Bappy Shahrier (MDS-121534) Md. Hasan Ali (MDS-121507)

Background of the study Agriculture is the mainstay of Nepalese economy dependent upon monsoon rainfall due to lack of sufficient irrigation facilities. The average annual economic growth rate of - Agriculture sector was 3.3% (target 4%) - Paddy production was 2.34% and yield was 2.26% Paddy during 2003/2004 was grown in Area 1,559,436 ha Improved varieties 83% Irrigated 46% Unirrigated 37% Production 4,455,722 mt yield 2857 Kg/ha The net profit from one ha of rice under improved and irrigated condition in Tarai belt was Rs 9524.00/ha Rs 10500.00 for hills

Background of the study Rice in Nepal is mostly grown in main/summer season (June/July- October/November) and early/Chaite/Autumn rice (March/April-May/June). Except these two season crops, farmers are also growing rice as Hiunde Dhan (Boro) on winter (November/December-May/June) Winter rice in Nepal is generally called as Hiunde Dhan While in India and Bangladesh it is popularly known as 'Boro Rice'.

Limitations of the study: Objective The main objective of this study was to estimate production function. Limitations of the study: The estimation of production function of winter rice in eastern region of the country has not been found sufficiently studied and its socio-economics study is also lacking The primary information was collected from 35 farmers and only 33 were valid for final analysis due to outlier nature of certain information.

Methodology Study area Sampling Technique Sampling number Village Development Committee (VDC) of Rangeli, Aampgachhi and Takuwa in Morang District Sampling Technique Random Sampling number 35 farmers Questionnaire Standardized semi-structured Primary information collection technique Face to face interview schedule Secondary Data Collection Published documents Statistics Mean, total count and percent Empirical model Cobb-Douglas production function

Empirical model Cobb-Douglas production function This function has been widely used in agricultural studies because of its simplicity. This function allows: either constant, increasing or decreasing marginal productivity, or not all the three and even any two at the same time. The model specified was:

Where, Y = Production of winter rice (kg), A = Intercept X1 = Area of winter rice (ha), X2 = Human labor (Man days), X3 = Bullock labor (Labor days), X4 = Nitrogen (kg), X5 = Phosphorous (kg), X6 = Potash (kg), X7 = Tractor hour, D1 = Dummy for number of irrigation (1 for up to 10 irrigations, and 0 for otherwise), D2 = Dummy for number of irrigation (1 for more than 10 irrigations, and 0 for otherwise), b1 to b9 = Elasticities coefficients, μ = Error term

Previous model can be estimated by using Ordinary Least Square (OLS) method. The Cobb-Douglas Production Function was transferred into log-linear form as: The values of the input coefficients imply their contribution to the production of winter rice or the coefficients are the level of determination to winter rice production.

Results Input Variables Unit Value Farm Size Ha 5.08 Cropping Intensity % 194 Seed Rate Kg/ha 85 Use of Nitrogen 74.52 Use of Phosphorous 38 Use of Potash 18.58 NPK 131 Irrigation Number 15 Human Labor Labor/ha 84 Use of Tractor Hour/ha 1.69 Bullock Labor Bullock pairs/ha 16 Yield Kg/ha 4802.5

Estimation of production function The share of input variables (Farm size, Cropping Intensity, Human labor, nitrogen…….) to winter rice production was estimated by using OLS (Ordinary Least Square) technique. The value of F test in OLS estimation indicated that the model is significant at 1%. The value of adjusted R2 (coefficient of determination) is 0.95 which discloses that the model has explained 95% of total variation in winter rice production due to the variation in area, human and bullock labor, nitrogen, phosphorous, potash, use of tractor and number of irrigations.

Estimates of ordinary least square (OLS) technique Explanatory variables Elasticities Standard errors t statistics Intercept 8.09*** 0.47 17.24 Area, ha 0.91*** 0.11 8.14 Human Labor, days 0.05 0.97 Bullock labor, days 0.01 0.03 0.48 Nitrogen, Kg -0.33*** 0.12 -2.64 Phosphorous, Kg 0.33*** 0.10 3.13 Potash, Kg 0.02* 1.93 Tractor use, Hour 0.02*** 0.009 2.68 Dummy for number of irrigation up to 10Ɨ 0.36* 0.19 1.84 Dummy for number of irrigation > 10ǂ 0.42** 0.18 2.26 Adjusted R2 0.95 ***, **, * Significant at 1, 5, and 10% respectively. Ɨ1 for up to 10 irrigations and 0 for otherwise. ǂ1 for more than 10 irrigations and 0 for otherwise. F value (9, 33) 75.63*** Observations 33

The coefficient of determination (adjusted R2) is a summary measure that tells how well the sample regression line fits the data. The fit of the model is said to be better the closer is R2 to 1. Therefore, in this model 95% variation in winter rice production has been defined by independent variables included in the model. The intercept is significant at 1% level which implies the level of output when the value of all independent variables is zero.

0.91*** it means The coefficient of winter rice area is positive and significant at 1% level which implies that, other factors keeping constant, 1% increase in area would result in 0.91% increase in winter rice production. Likely, by increasing 50% area (ha) Production can increase 46% [50*0.91=46%] Significant at 1% Same as -0.33*** it means If Nitrogen rate is increase 100% then production will Decrease 33% [-0.33*100 = 33%]

Gross margin analysis of winter rice cultivation in Morang District Unit Value Average production of winter rice kg/ha 4802.50 Average price of winter rice Rs/kg 7.16 Gross revenue from grain production = (Average production of winter rice x Average price of winter rice) Rs 34385.90 Total variable cost 19878.49 Net Profit = (Gross revenue from grain production- Total variable cost) 14507.41 Benefit cost ratio (BCR) = (Gross revenue from grain production/ Total variable cost)   1.73

Figure illustrated that the net profit of winter rice Hiunde (Boro) is far higher than normal/early rice in Morang District

Thanks to all