CHANGES OF RETURN ON INVESTMENT OF POTATO PRODUCTION THROUGH CONTRACT FARMING

Abstract

The research aims to determine the changes of Return on Investment (ROI) of potato production through contract farming and to explore the contribution of selected farmer characteristics in potato contract farming (CF). The research was carried out in Mithapukur Upazila under the Rangpur district and Birampur Upazila under Dinajpur district. From September to December 2019, a structured interview schedule was used to collect data from two hundred and sixty-two (262) potato contract farmers from a population size of eight hundred and twenty (820). A proportionate random sampling technique was used to select sample farmers from 3 potato CF companies. Data were also collected from 56 non-contractual potato farmers from Pirganj Upazila under Rangpur district, where no contractual potato farming had been established. Thirteen selected characteristics of the potato contract farmers, namely, age, education, farming land size, potato contract farming land size, potato CF experience, support services, training exposure, knowledge on CF, extension media contact, satisfaction on CF, innovativeness, commercialization, and business growth due to potato CF were considered as the independent variables. Changes of Return on Investment (ROI) of potato production through contract farming was the dependent variable of the research. The extent of changes of ROI of potato production through CF farming ranged from 5.30 to 96.21, indicating that the majority (79.01%) of the farmers attained a medium level of ROI, 10.31% attained a high level, and 10.69% attained low changes of ROI. It was discovered that 80% of the contract farmers had medium to large farming land for potato contract farming, 99% of farmers received support services from the contractor, 86.26% had medium to higher training exposure, 84% had good knowledge of potato contract farming, 87% had strong extension media contact. Commercialization of the potato farmers were medium to high found 89%, and 83.97% of respondent contract farmers showed medium to high-level growth of business due to potato contract farming. According to the stepwise regression, seven characteristics of potato contract farmers contributed 93.80% of the changes of return on investment of potato production through contract farming. Among them, business growth showed highest (84.9%) contribution, followed by extension media contact (5.6%), knowledge on contract farming (1.6%), effective land contract farming land size (0.8%), commercialization of potato farming (0.5%) and training exposure (0.3%) contributed to the changes of return on investment of potato production through contract farming. Results of path analysis revealed that knowledge on potato contract farming of the potato contract farmers had the highest total indirect effect (0.64), followed by Training exposure (0.58), extension media contact (0.52), support services (0.51), effective CF land size (0.30), business growth due to contract farming (0.29) and commercialization (0.18) on changes of return on investment of potato production through contract farming. Finally, contract farming is an appropriate farming model that has a positive increment of ROI on potato production. Bangladeshi planners and policymakers could use the evidence of the benefits of potato contract farming in other areas of farming.