FARMER RESPONSE TO CHANGES IN PRODUCTION ENVIRONMENT

IN SYSTEM 'H' OF MAHAWELI

Y.M. Wickramasinghe

Faculty of Agriculture, Rajarata University of Sri Lanka, Puliyankulama, Anuradhapura

ABSTRACT

This study was conducted to assess as to how farmers in the System 'H' of Mahaweli, an area with relatively well developed infrastructure, have responded to changes occurred in the agricultural production environment during the period from Yala 1989 to Yala 2001. Paddy was excluded from this study, as paddy is not cultivated in large extents in Yala due to low availability of irrigation water.

Time–trend analysis indicated that certain crops have lost their popularity while some other crops have gained it over time. As information available at the Mahaweli Authority of Sri Lanka, Thambuththegama was insufficient to explain the farmer behavior, information related to cost of cultivation and profitability of crops were examined. A new ratio called the profitability ratio was computed to assess profitability of crops. Results revealed that the crops gained popularity were the crops with less marketing problems and have attractive financial returns.

Farmers also have adopted improved production technologies such as the use of hybrids, nursery raising of seedlings of cucurbitaceae, pruning and training of vines and use of liquid fertilizer, which gave high financial returns.

Increasing production efficiency, selling farm produce at high prices and purchasing production inputs at low prices would enhance profitability in agriculture. Improved production technologies will raise production efficiency while integrated pest management, organic manure and bulk purchasing of inputs would help in bringing down the cost of production. Furthermore encouraging farmers to sell their produce as a group would enable them to obtain relatively high prices.

Keywords: Farmer response, production environment, cost of production, profitability ratio, trend analysis.

INTRODUCTION

Present day farming is a commercial venture that aims at profit maximization, for which, efficient allocation of scarce resources is mandatory. Technical efficiency and allocative efficiency are two techniques that are popular among agricultural economists in measuring resource use efficiency. The technical efficiency indicates the ability of a firm to produce the maximum possible output from a given set of resources while allocative efficiency depicts the ability to maximize profit (Kalirajan, 1986). Both selection and application of appropriate technology are important in making a technological progress in agriculture (Shand and Hafi, 1987) because technical efficiency depends on the production technology used while the allocative efficiency depends on the way that resources are being allocated. Furthermore, the prevalence of favorable production and marketing environments, promotion of improved technologies and enhancing decision-making skills of the farmer as a businessman (or the entrepreneurship skills of the farmer) are essential pre-requisites in making farming a financially attractive venture that is sustainable in the long-run. At the same time, domestic Agriculture is being affected adversely by globalization, certain structural changes of the economy and some shortsighted trade and fiscal policies of the government. Therefore, creation of a favorable production and marketing environments, enhancement of entrepreneurship skills of the farmer, development and dissemination of improved technologies, taking appropriate measures to protect the farmer from effects of the outside economic forces and provision of other incentives to motivate the farmer are the areas to which the government should pay serious attention in promoting domestic agriculture. Otherwise, farmers who have access to alternative sources of income would quit farming and withdraw resources that are already being allocated to agriculture.

The system 'H' of Mahaweli is a farmer settlement with intensively developed infrastructure facilities (Figure 1). Being located in the close proximity of an agricultural research and a training complex, and two recently established economic centres (i.e. Dambulla and Thambuththegama) farmers of the system 'H' of Mahaweli have relatively easy access to improved technologies and markets.

As a result, resourceful farmers with entrepreneurial skills have adopted new agricultural production technologies and have changed their marketing strategies. A proper examination of farmer response to changes took place in agricultural production and marketing environments of the system 'H' of Mahaweli would be beneficial in promoting agricultural production and marketing in similar environments. Hence, this paper attempts to explain as to how farmers of the study area have responded to changes that occurred in their production and marketing environments during the period from 1989 to 2001.

MATERIALS AND METHODS

This study depends heavily on secondary data. Primary data was used only to confirm the results of the analysis of the secondary data. A random sample of 300 farmers were interviewed using a specially structured and pre tested questionnaire to gather primary data.

Simple Linear Regression analysis was employed to compute time trends in cultivated extents of selected crops and a special profitability ratio was developed to explain the profitability of crops.

PR = PF / CP

Where:

PR	- Profitability ratio

PF	- Farm gate price of a unit of the produce in rupees

CP	- Unit cost of production of the produce in rupees

RESULTS AND DISCUSSION

Time trends in cultivated extents

This study was confined to Yala seasons because it is the season in which farmers do cultivate both paddy and other field crops. Of the crops cultivated during Yala, paddy was excluded, because the crop is confined only to ill drained areas and the Mahaweli Authority of Sri Lanka does not encourage paddy cultivation in large extents during Yala due to shortage of irrigation water. Farmers do consider factors such as profitability, easiness in cultivation and availability of technical know how, cost of production, marketability and so on in selecting a crop. A period of 12 years, from 1989 to 2001, is sufficient to cause considerable changes in above factors as well as the farmers to react accordingly. Thus, the rate of change in cultivated extents of selected key crops were studied by employing simple linear regression analysis. In selecting crops, cultivated extents and the crop groups such as condiments, pulses, cereals and vegetables were considered. Due to long array of vegetables cultivated, those were considered as one group. Nevertheless, it was observed that vegetables belonged to families of cucurbitaceae, leguminaceae, solanaceae and cruciferaceae were commonly cultivated.

Results of the trend analysis reveal that the extents cultivated to Chilli, Red onion and Soyabean have declined over time. Mite attack, Leaf curl complex and Narrow leaf syndrome were the major causes for the observed reduction in chilli extent. According to farmers, high incidence of pests and diseases was the reason for low yield as well as high cost of production of chilli.

Lack of marketing facilities was the single factor that has contributed to the observed decline in soyabean extent. However, it was also found that soyabean is about to recapture the lost market after the recent introduction of forward trade agreements.

Cowpea, greengram and blakgram are the popular pulse crops in the study area. Cowpea and greengram have lost their popularity slowly while blackgram has gained popularity to a considerable rate.

Furthermore it was found that maize, big onion and vegetables have become popular among the farmers of the study area during the period considered (Table 1).

Big onion became popular due to relatively high profits that big onion produced and the prevalence of fairly developed marketing facilities. Farmers who cultivated big onion were concentrated around Dambulla trade center and therefore they did not face severe marketing problems other than price fluctuations.

Maize was introduced after Yala 1992. Farmers cultivated hybrid maize during Yala under irrigated conditions and harvested green cobs as it gave attractive financial returns.

Vegetables were also becoming popular over the years. There were two different groups of vegetables growers namely; those who cultivated vegetables in well drained paddy fields under irrigation and those who cultivated vegetables in well drained paddy lands as well as in other uplands under lift irrigation.

As a result, farmers in areas with supplementary irrigation facilities cultivated vegetables throughout the year. Further, it was observed during field visits, that vegetables of the family cucurbitaceae such as luffa, bitter gourd, snake gourd and cucumber were very popular.

Furthermore, where irrigation facilities were available farmers had cultivated fruit crops such as banana and papaw in large scale. It is evident that, farmers of the system 'H' of Mahaweli have changed certain components of their cropping systems in response to changes in cost of cultivation, profitability and marketing facilities.

Changes in crop husbandry

It was observed during field visits, that over 75% of the farmers have purchased seed from private dealers instead of using their own seeds. One reason for this practice was the higher usage of hybrids seeds. In order to minimize cost of land preparation farmers applied weedicides which was a common practice in the study area. Use of liquid fertilizers and agrochemicals was popular among farmers who grew high value cash crops and vegetables. It was also observed that farmers over used agrochemicals and this should be corrected in order to bring down the unit cost of production. Siriwardhana et. el (2000) have showed that transplanting of small seeded crops such as chilli produces high yields. In par with these findings farmers of the study area have transplanted many crops including vegetables, which belong to family cucurbitaceae (Upasena and Wickramasinghe, 2003). Farmers had raised those vegetable seedlings in small containers and kept them under shade for few weeks prior to planting in the field. Further, they also had pruned and trained vines of those vegetables in order to optimize production.

Though maize was a crop grown in rainfed uplands during Maha in the past, it has now become a popular crop in irrigated lands in Yala. Attractive prices of green cobs have stimulated the farmer to grow maize throughout the year. Study conducted by Upasena and Wickramasinghe (2003) showed that farmers in system 'H' of Mahaweli had harvested the majority of the produce of maize and chilli in green form in order to minimize risk associated with production and marketing.

Production statistics available at the Mahaweli Authority of Sri Lanka, Thambuththegama, revealed that the productivity of the crops studied had not changed significantly during the period from yala 1989 to 2001.

Cost of production and profitability

Profit is the difference between gross revenue and cost of cultivation of a crop. Gross revenue is calculated by multiplying the yield by its unit price. An individual farmer has no power to influence the market price and therefore he should attempt to raise the productivity of crops by improving the technical efficiency of the production process. However, farmer needs technical know-how to raise technical efficiency in production. Under these circumstances, promotion of group activities among farmers would be an alternative way to enhance the bargaining power of the small scale farmer while bringing down the cost of production by making bulk purchase of production inputs. Strengthening of existing farmer organizations to play the role of an intermediary in input supply and produce marketing would serve this purpose.

Costs and returns calculated by the Socio-Economic and Planning Centre of the Department of Agriculture were used for this analysis. Due to the dearth of statistics, cost and returns of three crops were analyzed.

A profitability ratio that is similar to the benefit cost ratio was computed for this purpose. Any value of the profitability ratio that is greater than one indicates a profit. In other words, the greater the ratio the higher the profitability is.

Result of the analysis indicated that per unit (Kg) cost of production and profitability ratio of chilli including as well as excluding cost of family labour has increased over time (Tables 2, 3 and 4). However, magnitude of the profitability ratio was low when cost of family labour was considered indicating that the farmers have earned narrow profits. Reason for the reduction in extent cultivated to chilli might be the marginal profit that the crop produced. In general, as chilli is yet a profitable crop.

Encouraging farmers to increase average yield and to cut down cost of fertilizer by using organic manure are some of the alternatives through which profitability of chilli could be increased. At the same time, it is mandatory to explore the possibility in promoting integrated pest management for chilli to bring down the cost of production.

Extent cultivated to soya bean has declined rapidly due to its low profitability and marketing problems.

Big onion remains profitable when cost of family labour is excluded (Table 4). This means that big onion will remain as a small-scale crop managed purely by family labour. Action should be initiated to make farmers aware of the benefits of improving labour use efficiency as a mean of bringing down the cost of production.

Through this study did not analyze the profitability of vegetables and fruits, Upasena and Wickramasinghe (2003) have indicted that those crops produce attractive profits.

CONCLUSIONS

It is evident that farmers have responded to changes occurred in their production and marketing environments. Crops that were cultivated in fairly large extents have dropped with the decrease in profitability of such crops. However, farmers do continue to cultivate some of the essential food crops in small extents using family labour for home consumption disregarding their profitability. On the other hand, farmers have expanded the extents cultivated to crops, which are profitable. Therefore, encouraging farmers to reduce cost of cultivation by using organic manure and adopting integrated pest management and to increase yields would be appropriate means of raising profitability of crops which are profitable as well as to promote some crops which are marginally profitable at present. Furthermore, farmers have added new crops such as hybrids of vegetables and fruits such as banana and papaw into their cropping systems as cultivation of such crops is profitable.

As marketing facilities of the study area are relatively developed, especially with the establishment of two large economic centers, at Dambulla and Thambuththegama, marketing problems that farmers were facing in the past had reduced making them strong enough to tolerate financial shocks resulting from crop failures. However, it is useful to motivate farmers to enter into contractual sales agreements with private sector organizations especially when they grow crops in large extents.

Promotion of group activities among farmers and educating farmers on the benefits in enhancing labour use efficiency are the alternatives available to raise farm profits.

Farmers should be encouraged to cultivate crops that are profitable under irrigated conditions by promoting the use of ground water as well as water available in natural water streams. In addition, the Mahaweli Authority of Sri Lanka also should rehabilitate minor tanks located in the system 'H' and build new storage tanks in water logged locations to enhance the availability of water for supplementary irrigation during the dry spells in order to make farming a sustainable venture by minimizing income fluctuations. Imparting basic entrepreneurship knowledge as well as skills to progressive farmers seems to be a fruitful investment in order to make the farmer financially strong.
