Economics of small scale irrigation and resource use plans in the Bogra District of Bangladesh

Field: Economics, Econometrics and Finance (Social Sciences)

Food production in Bangladesh has always been less than what is needed for domestic consumption. To meet the food deficit every year it has to import food grain from outside. Irrigation can play a major role in the production of food grain in Bangladesh and can help to alleviate the situation. The pressure of population and the need for additional food supplies are necessitating the spread of irrigation throughout the country. Most of the surface water now available for exploitation is already being used. There is great scope to increase the irrigated area in winter (dry months) by exploiting underground water using tubevjells (deep or shallow) in Bangladesh. In this study financial analysis and linear programming techniques are applied to investigate the impact of shallow tubewell irrigation at micro level on cropping pattern, farm income, economics of enterprise combination and resource allocation. The results of the criteria used for financial analysis have been found to be encouraging. The analysis gives positive net present values and high financial rate of return as a result of shifts in the cropping pattern towards the high yielding varieties of rice and as a result of low cost of investment for each tubewell. Sensitivity analysis even at 10 per cent increase in all costs, other things remaining the same, also indicates the soundness of the project. Linear programming technique is employed to determine for resource allocation purposes the optimum farm plan (i.e. that plan yielding the highest total gross margin) with and without irrigation. The analysis suggests that although the total gross margin with optimal allocation of resources without irrigation increases considerably compared to original plan, with shallow tubewell irrigation in the optimum plan total gross margin is increased further. Farm income, with irrigation, increases mainly as a result of increased cropping intensity and introduction of high yielding rice crops which are found to be more profitable under the existing resources and constraints compared to the local varieties. With irrigation, optimal allocation of the resources increases the labour absorption capacity of the farm considerably. This indicates that underempoyment and unemployment prevailing in the study area can be reduced with tubewell irrigation. Parametric programming relaxing the production credit with irrigation implies that if more credit is made available to the tubewell farmers, it would further increase the total gross margin. With maximum absorption of production credit, total labour requirement will also increase which will further alleviate the underemployment problem. The major policy implication of the results of the study is that the potential to increase the total gross margin exists in the tubewell farms with optimal resource allocation. Considerable increase in food grain production is also feasible with irrigation. To enable the farmers to implement the optimum farm plans and to achieve the full benefits of irrigation, agricultural extension and research activities should be carried out in this respect with co-ordinated effort.