Abstract
To determine cost of production (CoP) of a crop is a persistent distress for the Government of Punjab (Pakistan) in the given conditions of rural and political dynamics. For the purpose, Crop Reporting Service (CRS), Agriculture Department Punjab has been evolving, using and analyzing sample data based on Area Frame Sampling (AFS) technique for conducting surveys to gather information regarding crop acreage, CoP, grain yield / production and other agricultural items. Timely decision on CoP of a crop by the government before the arrival of a crop is, obviously, very important for the announcement of support price for the crop and also for the evaluation of cost and benefit analysis of agriculture sector. Using AFS technique, based on two-stage sampling design, 5500 segments of 150 acre each have been selected covering almost 2600 Union Councils (UCs) of the Punjab for the study. From each randomly selected segment, two farmers were randomly selected. Through a detailed questionnaire, covering almost 75 variables on CoP of a crop, data are collected from the farmers of a specific crop. For this purpose wheat crop (Wheat is one of the core agricultural crops in Pakistan) has been selected as a case study for the comparison of Average (using Arithmetic Mean) CoP and Weighted Average CoP (WACoP) of wheat. In this paper, a detailed data flow and method for the determination of CoP of a crop is discussed. Average (using Arithmetic Mean) CoP technique was available to determine the production cost of any crop using the root level data from the farmers. But while compiling the report of COP on Punjab level, it has to be mentioned that the average cost of each head then ultimately total of all heads’ averages computed to find out the average COP of the specific crop. To overcome this problem, it has been proposed a new method to determine the CoP of any crop by using WACoP and taking proportion of usage of a specific head as a weight of the head. Data are compiled on provincial level and proportion of each cost factor of a crop was calculated as usage of each cost factor varies from crop to crop and area to area. The proportion of each cost factor has been used as its weight for the final evaluation of CoP of the crop. As cost factors vary, so for, all crops during a season, each year these weights of cost factors were freshly calculated to get latest CoP of a crop. Government of Pakistan has declared Rs. 1400/40kg as support price of wheat during Rabi season 2019-20 based on this study.
Highlights
Agriculture's role in the growth of economic progression has framed a vital question in development economics for several years [1]
Through a detailed questionnaire, covering almost 75 variables on Cost of Production (CoP) of a crop, data are collected from the farmers of a specific crop
Results of CoP are used in multiple dimensions like for fixation of area target of a crop or volume of import / export of a crop and per acre cost of production of a crop plays a pivotal role to assess the crop’s viability
Summary
Agriculture's role in the growth of economic progression has framed a vital question in development economics for several years [1]. Where a large section of the population depends on agriculture for its livelihood, it is important to have detailed estimates of the costs incurred, returns realized and net income derived from farming and accounts for 24 percent of gross domestic product [2]. The comprehensive scheme for the Study of Cost of Cultivation of Crops which collects in-depth data on various aspects of farm economy across major states in Pakistan on an annual basis began from 1970-71. Ray (1915), highlight the items of cost of cultivation included in the estimate are (1) ploughing cattle, (2) agricultural implements, (3) seed, (4) manure, and (5) labor requited for ploughing, sowing reaping, etc. The method of calculation varies according to the description of crops grown, the method of cultivation, as well as according to the mode in which these items are paid in each district [4]
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