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Cost and Return Analysis of Kharif Sorghum (Sorghum bicolor) in Bhilwara District, Rajasthan
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First Online 28-05-2022|
Methods: The standard cost concept method of the Commission for Agricultural Cost and Price (CACP) was used to calculate the cost of cultivation (COC) of sorghum crop. It includes Cost A1, Cost A2, Cost B1, Cost B2, Cost C1, Cost C2 and Cost C3. Farm income measures, which include gross income, farm business income, family labour income and net income, are used to determine crop profitability and return on investment.
Result: The results of study revealed that total cost (Cost C2) of sorghum cultivation per ha was found to be ₹ 25149.69. The cost of producing one quintal of sorghum was calculated to be ₹ 1383.18. Sorghum cultivation generated a net income, farm business income and family labour income of ₹ 23658.44, ₹ 30680.32 and ₹ 26527.74 per ha, respectively.
Indian farmers in the different parts with good irrigation facilities have switched from millets and sorghum to rice, wheat, maize and other high-value crops (Seetharam et al., 1989; Kelley and Rao, 1993; Hall, 2000). On the other hand, farmers’ demand for millet crops like sorghum in arid and semi-arid regions such as Rajasthan, Maharashtra, Karnataka, Andhra Pradesh and Gujarat is unlikely to decrease in the near future, as there are few crops to substitute in the fragile growing environments for low-income farmers (Pray and Nagarajan, 2009). Thus, sorghum crop plays a critical role in ensuring income, nutritional security and environmental suitability for millions of farmers. Sorghum is grown by the majority of farmers not for profit, but because it is the only crop that can withstand the extreme climatic conditions found in many parts of the country, Bhilwara district of Rajasthan is no exception. Area, production and productivity of sorghum in Bhilwara district of Rajasthan was 68598 ha, 64435 mt and 939 kg per ha during the year 2019-20. Despite the fact that only a few studies have looked at the economic aspects of Kharif sorghum crop in Rajasthan in general and in the Bhilwara district in particular. This study looks at the economics of Kharif sorghum cultivation in Bhilwara district of Rajasthan.
MATERIALS AND METHODS
Standard method of cost concepts employed by Commission for Agricultural Cost and Price (CACP) were-used in order to calculate the cost of cultivation (COC). It comprises Cost A1, Cost A2, Cost B1, Cost B2, Cost C1, Cost C2 and Cost C3.
Cost A1 = Cost A1 accounts for all actual expenses incurred by the owner in cash and kind during production. It includes the 14 cost items viz; (i) hired human labour (permanent and casual), (ii) owned bullock labour, (iii) hired bullock labour, (iv) owned machinery labour, (v) hired machine labour, (vi) fertilizers, (vii) manure (produced on farm and purchased), (viii) seed (both farm-produced and purchased), (ix) insecticides, pesticide and fungicides, (x) irrigation charges, (xi) canal-water charges, (xii) land revenue, cesses and other taxes, (xiii) depreciation on farm implements and (xiv) interest on the working capital.
Cost A2 = Cost A1 + Rent paid for leased in land.
Cost B1 = Cost A2 + Interest on value of owned fixed capital assets (excluding land).
Cost B2 = Cost B1 + Rental value of owned land.
Cost C1 = Cost B1 + Family labour (imputed value).
Cost C2 = Cost B2 + Family labour (imputed value).
Cost C3 = Cost C2 + 10 per cent of Cost C2.
Now a days, the Government of India announces minimum support price (MSP) based on 1.50 times that of Cost A2 + Family labour, whereas farmers always demand MSP based on 1.50 times that of Cost C2. Hence, valid comparison of MSP and cost of production has been accomplished in both ways.
Farm income measures
Farm income measures are used to assess return on investment at various levels and to determine profitability of crops. The important income measures are:
Gross income (GI)
Gross income includes the income received from both main and by-product.
GI = Value of main product + Value of by-product
GI = Qmp × Pmp + Qbp × Pbp
GI = Gross income.
Qmp = Quantity of main product.
Pmp = Price of main product.
Qbp = Quantity of by-product.
Pbp = Price of by-product.
Profit at Cost A2
It is also termed as farm business income (FBI). It provides an estimate of returns to the farmers for his labour, investment and profit.
FBI = Gross income-Cost A2
Profit at Cost B2
It is also termed as family labour income (FLI). It provides an estimate of returns to the farmer for his labour and profit.
FLI = Gross income-Cost B2
Profit at Cost C2
It is also known as net income (NI). It provides an estimate of returns to the farmers purely of profit.
NI = Gross income - Total cost (Cost C2)
Return per rupee: It is defined as follows:
RESULTS AND DISCUSSION
The per ha cost incurred in sorghum cultivation is presented in the Table 2. It was found out that, the total cost of cultivation for overall category was ₹ 25149.69, which constitute ₹ 20203.48 of variable cost and ₹ 4946.21 of fixed cost. The component wise break up of cost of cultivation indicated that variable cost and fixed costs accounted for 80.33 and 19.67 per cent of total cost, respectively. This study found that fixed costs account for one-fifth of total costs, which is consistent with the findings of Rao et al., (2017); Burark and Sharma (2017); Kumar and Singh (2015); Zalkuwi et al., (2015); Gautam et al., (2020) and Gautam et al. (2021) found that fixed costs account for one-third of total cultivation costs. Machine labour was observed to be the most important variable cost, accounting for nearly 26.61 per cent of the total cost of sorghum cultivation. This study showed that machine labour is a major component of variable cost, which is consistent with Zalkuwi et al., (2015); Grover and Kumar (2013); Kumar et al., (2016); Rao et al., (2017); Gautam et al., (2020); Gautam et al., (2021) found that human labour is the major component of variable cost as well as total cost in sorghum cultivation. The machinery was used in the study area for ploughing, sowing and harvesting operations. Seeds, human labour, manures, plant protection chemicals and fertilisers were the next major variable cost items, accounting for 14.97, 14.51, 11.05, 3.36 and 2.53 per cent of total cost, respectively. Bullock labour cost was zero, which means that not a single farmer in the study area used bullock power for land preparation or sowing operations. This showed that farmers were interested in mechanisation. Rental value of owned land, followed by depreciation of farm implements and machinery, were observed to be the major contributors of total fixed cost, accounting for approximately 14.72 and 3.16 per cent of total costs, respectively. Zalkuwi et al., (2015); Rao et al., (2017), Gautam et al., (2020); Gautam et al., (2021) were also observed similar findings of rental value of owned land as major part of fixed cost in sorghum cultivation. It was found that per ha total cost of cultivation was highest for small farmers followed by medium and large farmers i.e., ₹ 25394.40, ₹ 25052.48 and ₹ 24650.21, respectively. Similar findings of rental value of owned land as a major part of fixed cost in sorghum cultivation were observed by Zalkuwi et al., (2015); Rao et al., (2017); Burark and Sharma (2017); Gautam et al., (2020); Gautam et al., (2021). Small farmers had the highest total cost of cultivation per ha, followed by medium and large farmers, at ₹ 25394.40, ₹ 25052.48 and ₹ 24650.21, respectively. The per ha total cost of cultivation was higher for small farmers, which contributed the most to overall total variable cost and total fixed cost, followed by medium and large farmers, accounting for variable costs of ₹ 20394.60, ₹ 20144.08 and ₹ 19784.03, respectively and fixed costs of ₹ 4999.50, ₹ 4908.40 and ₹ 4866.18, respectively. Due to the more mechanised nature of farming in comparison to the small farmers, the cost of machine labour and hired human labour was highest among large farmers, followed by medium and small farmers. Total labour cost increased with increasing land holding size, which is consistent with the findings of Kumar et al., (2016), whereas Grover and Kumar (2013) found the opposite. Small farmers paid the most for family labour, manure and fertiliser application, followed by medium and large farmers. Depreciation costs were higher for small farmers and lower for large farmers; this could be due to large farmers’ use of heavy machinery year round, requiring good care and maintenance. As a result of the study’s findings, it is possible to conclude that total cost decreased as household land size increased. The same was true for variable and fixed costs across all land size categories. With increasing land size categories, the share of hired human labour, total human labour and machine labour increased, while the opposite trend was observed for family labour.
Standard cost concepts
The standard cost concepts are presented in Table 3. The overall per ha Cost A1, i.e. the direct cost involved in sorghum cultivation, was estimated to be ₹ 18127.81. Because no land was taken on lease-in-land, the Costs A1 and A2 were determined to be the same. Gautam et al., (2020) reported a similar finding of no farming on leased-in land by any farmer. The Cost B1, Cost B2, Cost C1 and Cost C2 were calculated to be ₹ 18577.46, ₹ 22280.42, ₹ 21446.74 and ₹ 25149.69, respectively. The Cost C3, which takes into account the managerial function performed by farmers, was ₹ 27664.66. All costs were comparatively higher for small farmers, followed by medium and large farmers. Because the farm mechanised equipment purchased by large farmers was used continuously season after season, there was no need to hire machineries, lowering costs. The overall per quintal cost of sorghum production was found to be ₹ 1383.18, with small farmers spending the most (₹ 1435.52), followed by medium farmers (₹ 1349.81) and large farmers spending the least (₹ 1298.06). The cost of producing sorghum decreased as land size categories increased.
Comparison of cost of production
The minimum support price (MSP) of crops in the country is declared by the Government of India on the basis of Cost A2 plus family labour and its 50.00 per cent. M.S. Swaminathan recommended that MSP be at least 50.00 per cent higher than the cost of production. Table 4 compares the cost of production to the minimum support price. The cost of sorghum production was calculated using both approaches and the cost of sorghum production in the study area was found to be less than its MSP (₹ 2630 per q). Based on Cost A2 plus family labour and its 50.00 per cent, the cost of sorghum production was calculated to be ₹ 1625.62, which was found to be ` 994.38 less than its MSP for the overall category. Similarly, according to farmer demand, it was observed to be ₹ 1947.05, which was also ₹ 672.95 less than its MSP. Considering the minimum support price of year 2020-21 ₹ 2620 per 100 Kg of sorghum, farmers can obtain a higher sorghum price than farmers demand. However, none of the agencies in Bhilwara district of Rajasthan have procured sorghum at the announced price during the year 2020-21. Hence, the MSP should be followed by procurement to provide farmers with market support. If the government purchases the entire quantity of sorghum produce at the announced MSP from sorghum producers, it could be a good step toward doubling the farmer’s income.
Measures of farm Income of sorghum cultivation
Table 5 summarises various farm efficiency measures such as farm business income (FBI), family labour income (FLI) and net farm income (NI) from sorghum cultivation. The estimated gross income per ha is ₹ 4808.13. Large farmers had the highest gross income (₹ 50584), followed by medium farmers (₹ 49416) and small farmers (₹ 47772). Though gross income is a measure for analysing farm business efficiency, it does not help us judge farm business success. Therefore, another measure namely net income which represents surplus over the total costs was estimated. Higher net income reflects the degree of success of farm business. The net income was highest for large (₹ 25933.79) followed by medium (₹ 24363.52) and small (₹ 22377.60) farmers with overall average of ₹ 23658.44. Large farmers’ higher output value may be associated with higher expenditure on modern farm inputs such as hybrid seeds, tractors, reapers, threshers and so on. Net income increased with increase in size of land holding is in close conformity with the findings of Grover and Kumar (2013). While Kumar et al., (2016) observed offsite findings. However, reported negative net income in sorghum production in Rajasthan based on data 2010-11. Family labour income is a measure of farm efficiency that represents the returns to farmer-owned labour and family labour and it was ₹ 26527.74 per ha. Farm business income is another measure that indicates the return on owned resources such as land, labour and capital and it was ₹ 30680.32 per ha. The overall return per rupee was calculated to be 1: 1.94.
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