Economic Analysis of Potato Basic Seed Production Under Contract Farming in Kavrepalanchok, Nepal

Abstract

In Nepal, potato basic seed production under contract farming is at the initial phase. However, pre-basic seed potatoes were produced in Nepal since 1989/90, production of the basic seed has been relatively low, despite the government's lucrative subsidy on the price of pre-basic seed. There have been very limited studies on the production and economics of potato-basic seed under contract farming. This study examines the cost of production, resources use efficiency, return to scale, and various problem associated with the production of basic seed under contract farming in Kavrepalanchok, Nepal. The authors used the Cobb Douglas production function to explore the technological relationship between inputs and outputs. As well as to estimate and analyze the return to scale. They used a scaling technique to construct an index for prioritizing the problems of potato seed production under contract farming as per farmers' perception. The authors found the cost of basicpotato seed production per 500m² areas under contract farming as Rs. 99129.0064. The high cost of production is due to the higher cost of pre-basic seed. They found the gross return from seed production as Rs. 171547.2 per 500m² areas and the Benefit-cost ratio as 1.72. Similarly, they found positive regression coefficients for seed cost and organic manure which is significant at 1% level and negative regression coefficients for human labor which is significant at 5% level. They observed the overutilization of inputs in potato seed production under contracting farming, which was primarily due to the restrictions impeached by the contract agencies on the contract farmers. The authors found that unavailability of pre-basic seed in required quantity as the major problem faced by the farmers of the study area. A comparative study of the seed production with contract and without a contract, may illustrate the better scenario of the study area. Only a few studies have examined the economics of seed production under contract farming in developing countries. The authors' findings suggest that productivity and profitability can be maximized if a proper allocation of the resources and existing problems of irrigation, insect.

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