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Analysis of Total Factor Productivity of Wheat in Bangladesh

Md. Rezaul Karim
Senior Scientific Officer, Agricultural Economics Division, BARI, Joydebpur, Gazipur.

Rezaul Karim Talukder
Professor, Department of Agricultural Economics, BAU,Mymensingh.

Abstract/ Executive Summary:

The study dealt with the total wheat scenario in terms of productivity growth in Bangladesh covering the period from 1980 to 2006. The 26 years of wheat production period was divided in to three consecutive sub periods: period I (1980 to 1990), period II (1991 to 2000) and period III (2001 to 2006). Technological breakthrough was started from the mid of the 1" period and continued up to the end of the 2°d period. The study revealed that the growth rate of inputs used was higher in the 2nd period than in the 1st period. The growth rate of output price was always lower than that of input prices. In spite of the lowest partial factor productivity indices of all the input, the total factor productivity indices were highest in the 2nd period. The 28 years' (1972-73 to 1999-00) mean rainfall and temperature did not favor the farmers to produce more wheat. In aggregate sense, the wheat production in the 2"d period was the most cost effective. The growth rate of yield was found to be 0.2 percent during the study period. Of the period, only 2nd period was considered as the golden revolutionary period in the history of wheat in Bangladesh since 1980. Technological change in wheat production in the golden revolutionary period has relatively benefited consumers more than producers. Research, mechanization and market are the most important sources of growth in total factor productivity. The extent of annual fluctuation of wheat productivity will have to be minimized by more efficient use of inputs.

Keywords: Total factor, Productivity, Wheat, Estimate

Location:

Start Date: 00-00-1972

End Date: 00-00-2006

Program Area: Socio-economic and Policy

Commodity: Wheat

Objectives:

a) To estimate the inputs used in wheat production

b) To construct the partial as well as total factor productivity indices

c) To provide a policy guideline for scientists, extension personnel and policy makers.

Methodology:

The pioneering work of Solow (1957) in devising a method for measuring technological progress led the way to the estimation of total factor productivity. Solow defined total factor productivity (TFP) as follows: cp, = qt -a, (L, - (1-at)K where, (pt = growth rate of productivity as the residual after deducting the contributions of labor and capital, q, = growth rate in value of output, a, = share of labour, L, = growth in labour cost, (1, - a,) = share of capital in total revenue, K= growth in capital cost and at and (1t - a) = the weights derived from Cobb- Douglas production function. These last two variables are the basis of the so-called Divisia index. The Divisia index is a weighted sum of the growth rates, where the weights represent the components' share in total revenue. Use of this procedure implies perfect competition and constant returns to scale. Subsequently, the formulation was modified by Tornqvist (Christensen 1975 and Diewert 1976). The modification consists in using as weights the average of the period (t-1) and t. The Tornqvist-Theil index noted below was used by Rosegrant and Evenson (1992 and 1993) in their measurement of total factor productivity in Pakistan and Indian agriculture. A comprehensive review of various methods for computing the total factor productivity index and their mathematical details are found in Grosskopf (1993). In short, the productivity indicates a bundle of output produced from a bundle of unit of inputs while the total factor productivity measures the rate of change in the cost of producing output relative to the rate of change in revenue. The salient feature of the model was that, cost of production was weighted average of the cost of different factors of production, using the share of factors as weights. These techniques, popularly known as the Tornqvist-Theil index (Alston, et al. 1995),To construct the total factor productivity index, a rigorous attempt was needed for collecting the time series data on both inputs and outputs. It is very much difficult and sometime impossible to gather data on individual inputs used in any individual crop enterprise. The time series data of individual inputs used for wheat was not an exceptional one. Data on individual inputs were collected from various issues of BBS, BARI annual report, Wheat Research Centre (WRC) report and also from various sources of published materials, books, journals etc. Some missing data on inputs were derived by using recognized statistical techniques of interpolation and extrapolation. The data on production and area were obtained from various issues of the Bangladesh Bureau of Statistics (BBS). The price data on various inputs were also collected from Bangladesh Bureau of Statistics and Directorate of Agricultural Marketing (DAM). Using all these available data, the time series data on cost and return for wheat were estimated and used in the analysis.

Source of Information: Bangladesh J. Agric. Econs. XXXI, 1(2008)1-17

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

The study revealed that the growth rate of inputs used was higher in the 2nd period than in the 1st` period. The growth rate of output price was always lower than that of input prices. In spite of the lowest partial factor productivity indices of all the input, the total factor productivity indices were highest in the 2nd period. The 28 years' (1972-73 to 1999-00) mean rainfall and temperature did not favor the farmers to produce more wheat. In aggregate sense, the wheat production in the 2"d period was the most cost effective. The growth rate of yield was found to be 0.2 percent during the study period. Of the period, only 2nd period was considered as the golden revolutionary period in the history of wheat in Bangladesh since 1980. Technological change in wheat production in the golden revolutionary period has relatively benefited consumers more than producers. Research, mechanization and market are the most important sources of growth in total factor productivity. The extent of annual fluctuation of wheat productivity will have to be minimized by more efficient use of inputs.

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