Supply response of rice and jute farms in Bangladesh
Creators: name: Karim, Rezaul
Publisher: name: Canberra, ACT : The Australian National University
Year: 1975
Subjects: subject: Rice Bangladesh
subject: Jute fiber Bangladesh

description: Time series data for 19 years from 1951/52 to 1969/70 were analysed to estimate supply response functions for rice and jute in Bangladesh. A priori, farmers' decisions on rice acreage were expected to be influenced by net expected profitability per acre of rice and jute. Farmers' decisions on jute acreage were expected to be influenced by net expected profitability per acre of rice and jute, and acreage restriction regulations on jute up to 1959/60. Yield per acre was expected to be influenced by the level of input use and the weather. But as data on the level of input use was not available in the case of jute, the relative expected price of jute and rice was used as a proxy variable. Total production of each crop was the acreage of the crop times yield per acre. Net expected profitability per acre was defined as expected price per maund times expected yield per acre less expected cost of production per acre. Farmers' price and yield expectation formations were specified using both the Fisher arithmetic lag structure and the Koyck geometric lag structure, The expected cost of production per acre was assumed to be the previous years' average costs. The coefficient of the net expected profitability variables were tested for homogeneity both within and between the rice and jute acreage equations. Only the homogeneity within the jute acreage equation was acceptable at the 5 percent level of confidence. The best fit of the models was obtained using the Koyck geometric lag formulation of expectations with a two year lag distribution of weights and with X equal to .6. For the acreage and jute yield functions impressive fits were obtained. For the rice yield function the fit was poor. For rice acreage, net expected profitability of rice per acre was the lone significant determinant. For jute acreage, the relative net expected profitability of jute and rice per acre and the acreage restriction regulations were significantly different from zero. For rice yield, technology was significantly positive and for jute yield none of the variables except trend were significantly different from zero at the 5 percent level. The poor fit for the rice yield may have been due to the inadequacies of the data. The farmers were responsive to economic variables in the sample period. The elasticities of response were greater for the cash crop jute than for the food crop rice. The short and long run price elasticities of rice production were .11 and .21 respectively and those of jute production were .85 and 1.67. The price, yield and cost of production of rice had greater influence in determining jute production than rice production. Identical changes in the profitability of both rice and jute left jute supply unchanged in the sample period. The estimated price elasticities of the crops were comparable with those estimated by other researchers for similar crops in the subcontinent. Based on the estimated elasticities, an analysis was made for the implications for production, GDP and foreign exchange of 12 different changes in price, yield and cost of production per acre of the two crops. Although price policies could be manipulated to increase production, current social conditions and the country's export trading position indicate that a more satisfactory solution would be to attempt to increase production by increasing yield per acre.