universiti putra malaysia mohammad ismail mia ikdpm 2012 1
TRANSCRIPT
UNIVERSITI PUTRA MALAYSIA
MOHAMMAD ISMAIL MIA
IKDPM 2012 1
SUPPLY RESPONSE OF SELECTED CROPS IN BANGLADESH
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SUPPLY RESPONSE OF SELECTED CROPS IN BANGLADESH
By
MOHAMMAD ISMAIL MIA
Thesis Submitted to the School of Graduate Studies, Universiti Putra Malaysia,
in fulfilment of the Requirements for the Degree of Master of Science
May 2012
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DEDICATIONS
Dedicated to my parents,
To my brother and sister
To my wife Ayesha Siddika
And
All those individuals who behind the scene make me possible
to complete my study successfully.
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Abstract of thesis presented to the Senate of Universiti Putra Malaysia in fulfilment of the requirements for the degree of Master of Science
SUPPLY RESPONSE OF SELECTED CROPS IN BANGLADESH
By
MOHAMMAD ISMAIL MIA
May 2012
Chairperson : Professor Fatimah Mohamed Arshad, PhD
Institute : Institute of Agricultural and Food Policy Studies
Bangladesh is one of the most populous countries in the southern part of Asia with a
population density of 1074 person per square kilometre. Agriculture contributes
about 21% to the country’s GDP and employs over 48% of the total labour force in
2010. Jute, sugarcane, lentil and mustard are important crops. Jute and sugarcane are
cash crops. Lentil is a popular pulse crop considered as poor man’s protein. Mustard
is an oil crop. Area and production of all these are declining while their imports,
poverty and unemployment are in rise. The objective of this study is (i) to determine
the growth rates of area and production of jute, lentil, mustard and sugarcane; (ii) to
estimate the supply responsiveness of these crops to change in price and non price
factors; and (iii) to compare the acreage response of these four crops. The study
utilised a simple calculation of growth rate on margin residuals such as area and
production and also estimates acreage responsiveness of these crops to change in
price and non price factors use of Johansen cointegration aopproach and vector error
correction model (VECM) using data1980/81-2007/08.
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Area growth rates of jute were negative for all the sub periods as well as for the
whole period. Jute production also grew negatively. Lentil area grew negatively
while its production grew positively. Growth rates of both area and production of
mustard and sugarcane were negative during the last 28 years period.
The short-run elasticity of jute acreage is 0.5463 while in the long-run it is 1.2941.
Jute growers make considerable area adjustments in the short-run and long-run in
response to its own price. Coefficient of aus price was negative. Weather appeared to
have positively influenced jute acreage.
Short-run and long-run acreage elasticity of lentil with respect to its price is 0.2296
and 0.3628 respectively suggesting that lentil growers do not make considerable area
adjustments in response to price of the crop. Weather variable did not appear to have
shown any influence on lentil area in the short-run. The short-run and long-run
elasticities of area with respect to mustard price is 0.2403 while in the long-run, the
real mustard price elasticity is 0.6398. In terms of sugarcane, the short-run and long-
run elasticities of sugarcane area with respect to its real price are 0.1990 and 0.6731
respectively. Low short-run and long-run elasticities of these crops trend to make
minimum area adjustment in response to their expected prices.
The study simples that the area allocation decision of the farmers does not only
depend on price of the product, a set of other factors such as improved technology,
ensuring input delivery, providing support price, providing extension services and
preventing force to artificially control prices are also necessary. Hence, in a land
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scarce country like Bangladesh, a comprehensive set of policy is required to provide
economic incentives that will induce producers and other industry participants to
invest above on the said sectors.
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Abstrak tesis yang dikemukakan kepada Senat Universiti Putra Malaysia sebagai memenuhi keperluan untuk Ijazah Master Sains
TINDAK BALAS PENAWARAN TERHADAP TANAMAN PILIHAN DI BANGLADESH
Oleh
MOHAMMAD ISMAIL MIA
Mei 2012
Pengerusi : Professor Fatimah Mohamed Arshad, PhD
Institut : Institut Kajian Dasar Pertanian dan Makanan
Bangladesh merupakan salah satu negara yang mempunyai ramai penduduk di
selatan Asia dengan ketumpatan populasi sebanyak 1074 orang per kilometer
persegi. Pertanian menyumbang sebanyak 21% kepada GDP negara dan
menggunakan lebih 48% jumlah tenaga kerja pada 2010. Jerami, tebu, kekacang dan
biji sawi adalah tanaman yang juga penting. Jerami dan tebu adalah tanaman kontan.
Manakala kekacang adalah nadi tanaman yang popular yang di anggap sebagai
protein kepada orang miskin. Biji sawi adalah tanaman minyak. Kawasan dan
pengeluaran terhadap kesemua jenis tanaman ini menurun sementara kadar import,
kemiskinan dan pengangguran meningkat. Objektif kajian ini adalah (i) Menentukan
kadar pertumbuhan kawasan dan pengeluaran jerami, kekacang, biji sawi dan tebu;
(ii) Untuk menganggar tindak balas penawaran terhadap tanaman untuk perubahan
dalam harga dan faktor-faktor bukan harga; dan (iii) Untuk membandingkan tindak
balas keluasan terhadap empat jenis tanaman ini. Kajian ini menggunakan pengiraan
mudah terhadap kadar pertumbuhan ke atas sisa margin seperti keluasan dan
pengeluaran dan juga menganggar tindak balas keluasan terhadap tanaman untuk
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perubahan dalam harga dan faktor-faktor bukan harga menggunakan “Johansen
cointegration” dan “vector error correction model” (VECM) menggunakan data
1980/81-2007/08.
Kadar pertumbuhan kawasan jerami adalah negatif pada semua sub tempoh begitu
juga untuk kesemua tempoh kajian. Pengeluaran jerami juga berkembang secara
negatif. Kawasan pertumbuhan kekacang adalah negatif sementara pertumbuhan
pengeluaran adalah positif. Kadar pertumbuhan untuk kedua-dua kawasan dan
pengeluaran biji sawi dan tebu adalah negatif sepanjang tempoh 28 tahun yang lepas.
Keanjalan keluasan jangka pendek jerami adalah 0.5463 manakala dalam jangka
panjang adalah 1.2941. Penanam jerami membuat pertimbangan dalam pelarasan
kawasan dalam jangka pendek dan jangka panjang dalam tindak balas terhadap
harganya sendiri. Pekali terhadap harga aus adalah negatif. Cuaca menunjukkan
kesan positif terhadap keluasan jerami. Keanjalan keluasan jangka pendek dan
jangka panjang kekacang dengan harga adalah 0.2296 dan 0.3628 masing-masing
mencadangkan bahawa penanam kekacang tidak membuat pertimbangan pelarasan
kawasan dalam tindak balas harga terhadap tanaman. Pembolehubah cuaca tidak
menunjukkan sebarang pengaruh ke atas kawasan kekacang dalam jangka pendek.
Keanjalan keluasan jangka pendek dan jangka panjang dengan harga biji sawi adalah
0.2403 manakala dalam jangka panjang, keanjalan harga sebenar biji sawi adalah
0.6398. Manakala bagi tebu, keanjalan jangka pendek dan jangka panjang kawasan
tebu dengan harga sebenar adalah 0.1990 dan 0.6731. Keanjalan yang rendah dalam
jangka pendek dan jangka panjang terhadap aliran tanaman ini menjadikan pelarasan
kawasan yang minimum dalam tindak balas terhadap harga jangkaan.
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Hasil kajian menyimpulkan bahawa peruntukan kawasan yang di buat oleh petani
tidak hanya bergantung kepada harga produk, tetapi faktor-faktor lain seperti
kemajuan teknologi, memastikan penyampaian input, menyediakan harga sokongan,
menyediakan perkhidmatan sambungan dan desakan kawalan terhadap harga
kawalan juga di perlukan. Oleh itu, negara yang mempunyai tanah yang terhad
seperti Bangladesh, satu komprehensif polisi diperlukan untuk menyediakan insentif
ekonomi yang boleh menyuntik pengeluar dan lain- lain industri mengambil
bahagian untuk melabur dalam sektor tersebut.
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ACKNOWLEDGEMENTS
My greatest and ultimate debt and gratitude to Allah (S.W. T) the Most Beneficent
and the Most Merciful, may Allah pardon and forgive my weakness and endow me
with knowledge and help.
I would like to express my deepest sense of gratitude and thanks to the chairman of
my thesis supervisory committee, Professor Dr. Fatimah Mohamed Arshad for her
critical assessment, helpful suggestion, guidance and moral support in preparing this
thesis. Her insight and practical skill have left a distinct mark on this work.
I would also like to express my deepest sense of gratitude and sincere appreciation to
my honourable supervisory committee member, Dr. Md. Ferdous Alam for his time
and support by making valuable comments and suggestions to complete this
research. His guidance helped me in all the time of research and writing of this
thesis. I express my profound appreciation and heartfelt gratitude to my honarable
supervisory committee member Professor Dr. Zainal Abidin Mohamed for his
advice, valuable suggestions and constant inspiration in conducting the research
work.
My appreciation is extended to Food Planning and Monitoring Unit (FPMU),
Ministry of Food and Disaster Management, People’s Republic of Bangladesh and
National Food Policy and Capacity Strengthening Program (NFPCSP), Food and
Agriculture Organization (FAO) for giving me opportunity to complete my study. I
am also thankful to those of the Institute of Agricultural and Food Policy Studies
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(IKDPM), Universiti Putra, Malaysia of those who helped me to complete of this
study. I also extend thanks and appreciation to all my brothers, friends and
colleagues for their positive contribution in the completion of this thesis.
Lastly, I feel proud to express my heartfelt gratitude to my parents, my elder brother
Dr. Md. Abdul Mannan Mia and vabi Dr. Khandakar Sharmin Ferdous (Shanta) and
my sister for supporting and providing a loving environment for me spiritually
throughout my life. Last but not the least; I would like to especially thank my
nephew Sakib, Adrita and Sabit. Finally, I am thankful to my wife Ayesha Siddika
(Labony) for her continuous inspiration, sacrifice and moral support during the entire
study period
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I certify that a thesis Examination Committee has met on 24 May, 2012 to conduct the final examination of Mohammad Ismail Mia on his thesis entitled “Supply Response of Selected Agricultural Crops in Bangladesh” in accordance with the Universities and University Colleges Act 1971 and Constitution of the Universiti Putra Malaysia [P.U.(A) 106] 15 March 1998. The committee recommends that the student be awarded the Master of Science.
Member of the Thesis Examination Committee were as follows:
Khalid b Abdul Rahim, PhD Professor Faculty of Economics and Management Universiti Putra Malaysia (Chairman) Mohd Mansor Ismail, PhD Professor Faculty of Agriculture Universiti Putra Malaysia (Internal Examiner) Ismail Abd Latif, PhD Faculty of Agriculture Universiti Putra Malaysia (Internal Examiner) Abu Hassan Md Isa, PhD Professor Faculty of Economics and Business Universiti Malaysia Sarawak (External Examiner) ZULKARNAIN ZAINAL, PhD Professor and Deputy Dean School of Graduate Studies
Universiti Putra Malaysia
Date:
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This thesis was submitted to the Senate of Universiti Putra Malaysia and has been accepted as fulfillment of the requirement for the degree of Master of Science. The members of the supervisory committee were as follows:
Fatimah Mohamed Arshad, PhD Professor Institute of Agricultural and Food Policy Studies Universiti Putra Malaysia (Chairman) Zainal Abidin Mohamed, PhD Head, Department of Agribusiness and Information system Faculty of Agriculture Universiti Putra Malaysia (Member) Md. Ferdous Alam, PhD Research Fellow Institute of Agricultural and Food Policy Studies Universiti Putra Malaysia (Member)
BUJANG BIN KIM HUAT, PhD Professor and Dean School of Graduate Studies Universiti Putra Malaysia
Date:
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DECLARATION
I declare that the thesis is my original work except for quotations and citations, which have been properly acknowledged. I also declare that it has not been previously, and is not concurrently, submitted for any other degree at Universiti Putra Malaysia or at any other institution.
MOHAMMAD ISMAIL MIA
Date: 24 May 2012
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TABLE OF CONTENTS
Page
DEDICATIONS ii ABSTRACT iii ABSTRAK vi ACKNOWLEDGEMENTS ix APPROVAL xi DECLARATION xiii LIST OF TABLES xvii LIST OF FIGURES xix LIST OF ABBREAVIATIONS xx CHAPTER 1 INTRODUCTION 1
1.1 Introduction 1 1.2 Role of Agriculture in the Economy 2
1.3 Overview of Agriculture 4 1.3.1 Area under Cultivation 4 1.3.2 Land Utilization 5 1.3.3 Irrigated Area 6 1.4 Overview of Bangladesh Climate 7 1.4.1 Rainfall 7 1.4.2 Temperature 8 1.5 Crop Season 8 1.6 Agriculture Input-Output Prices 9
1.7 Trade Situation 9 1.8 Nutritional Status 12
1.9 Employment 12 1.10 Food Self-Sufficiency 13 1.11 Status of Crops under Study 15 1.12 Jute 15
1.12.1 Production 16 1.12.2 Trade 17 1.12.3 Issue 18
1.13 Lentil 19 1.13.1 Production 19 1.13.2 Trade 21 1.13.3 Issue 23
1.14 Mustard 23 1.14.1 Production 24 1.14.2 Trade 25 1.14.3 Issue 26
1.15 Sugarcane 27 1.15.1 Production 27 1.15.2 Trade 28 1.15.3 Issue 29 1.16 Problem Statement 30
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1.17 Research Questions 32 1.18 Objectives 32 1.19 Significance of the Study 33 2 LITERATURE REVIEW 35 2.1 Introduction 35 2.2 Growth Rate of Agricultural Crops 35 2.3 Theoretical Model of Supply Response 37 2.4 Supply Responses of Selected Crops in Different Countries 38 2.5 Supply Response of Crops to Change in Price and
Non-price Factors 42 2.6 Supply Response of Agriculture Crops 51 3 METHODOLOGY 56 3.1 Introduction 56 3.2 Growth Rate 56 3.3 Theoretical Framework of Supply Response 57 3.3.1 Types of Supply Response 57 3.3.2 Responsiveness of annual crops 58 3.4 Criticism and Limitations of Nerlove Model 65 3.5 Empirical Specification of Acreage Response Model 67 3.6 Cointegration and Error Correction Approach to Estimate
Empirical Model 68 3.6.1 Unit root 70 3.3.2 The Johansen cointegration Approach 72 3.3.3 Error Correction Model 75 3.7 Sources of Data 76 4 RESULTS AND DISCUSSION 78 4.1 Introduction 78
4.2 Growth Rates of of Jute, Lentil, Mustard and Sugarcane 78 4.3 Unit Root Results 84
4.4 Results of Cointegration and Vector Error Correction Models 88 4.4.1 Cointegration Tests and Estimation of Vector Error
Correction Model for Jute 89 4.4.2 Cointegration Tests and Estimation of Vector Error
Correction Model for Lentil 92 4.4.3 Cointegration Tests and Estimation of Vector Error
Correction Model for Mustard 95 4.4.4 Cointegration Tests and Estimation of Vector Error
Correction Model for Sugarcane 97 4.5 Comparison of the Acreage Response of Jute, Lentil, Mustard
and Sugarcane 99
5 SUMMARY, CONCLUSION AND RECOMMENDATIONS 102 5.1 Introduction 102 5.2 Summary of the Study 102 5.3 Conclusion 107 5.4 Recommendations 108
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5.5 Limitations of the Study 108
REFERENCES 110 APPENDICES 119 BIODATA OF STUDENT 124