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Economics of Potato Seed Production– an Analytical Study from Terai Zone of West Bengal

Nityananda Layek and Gobinda Mula

  • Page No:  149 - 155
  • Published online: 26 Aug 2021
  • DOI: HTTPS://DOI.ORG/10.23910/2/2021.0418f

  • Abstract
  •  gobindamula@gmail.com

The study was conducted to analyze the economics of cultivation of potato seed in respect of technical efficiency and allocative efficiency in Terai zone of West Bengal, India based on primary data collected during September 2018 to March, 2019. The multistage sampling technique was used to select 80 potato seed grower as respondent. Total variable cost of cultivation (Rs. acre-1) was 47662.70 and 46098.94, respectively for seed and conventional production. Net return (GI-Cost C3) in seed production revealed ` 29931.67 acre-1 which was 53.13% higher than conventional potato production. The input-output ratio (based on Cost C3) for seed production was examined as 1:1.51. The contribution of different used resources to the variation of income (yield) was found 90% (R2=0.900). The factors viz., seed and organic fertilizers found significant at 5% and human labour at 1% level. Low price of output, diseases and pest attack, high price of inputs, shortage of labour and irrigation were major problems in potato seed production. Hence, to increase production potential of potato seed at the farmers level, the availability of quality seed is to be ensured along with proper infrastructure, guidance and training facilities.


Keywords :   Allocative efficiency, marketing efficiency, net return, technical efficiency

  • Introduction

    Potato is one of the most widely cultivated horticultural and important vegetable crops originated in the high hills of Peru and Bolivia of South Africa, where it was domesticated approximately 7,000 to 10,000 years ago (Patel et al., 2019). Being the second largest producer, India occupies a prominent position on global potato map (Scott and Suarez, 2011; Rana, 2015). India produced 45.34 million tonnes potatoes (12.32% of world production) against 95.99 million tonnes by China (24.17% of world production) while Russian Federation, third largest producer of potatoes, produced 30.20 million tonnes (8.20% of world production) in 2013 (Anonymous, 2015). Despite the significant progress in Potato R&D, the national average yield (from 2011-12 to 2013-14) revealed 22.48 t ha-1 which was almost half of productivity as compared to the developed countries viz., USA (46.53 (t ha-1), Netherland (44.83 t ha-1), France (44.16 t ha-1) and Germany (44.00 t ha-1). Although on an average, India’s land productivity in respect of potato was better than Asia’s, an important reason for the yield gap is the dearth of quality planting material (Jain and Kumar, 1998).

    Within India, potato production is highly concentrated in Gangetic plains as three largest potato producing states viz., Uttar Pradesh (32.38% of national production), West Bengal (26.94% of national production) and Bihar (14.56% of national production); collectively contribute about 74% to the national production (Rana and Anwer, 2018). But in terms of productivity, Uttar Pradesh, West Bengal and Bihar ranked 4th, 8th and 7th position over the country and even the productivity of West Bengal and Bihar found to be lower than national average productivity and Gujarat was the leading state in terms of productivity (31.58 mt ha-1) although, its contribution to the total production was only 8.18% during FY 2015-16 (Horticulture Statistics at a glance, 2017). Therefore, India has to increase the potato productivity and that could be achieved through supply of good quality hybrid seed of suitable variety.  But farmers used maximum quantity (about 91%) of self-retained seed from the previous autumn crop for potato cultivation and there is no standard seed supply system (Sidhu et al., 1997), thus majority (91.3%) of the growers purchase seed from open market with a limited supply from the Ministry of Agriculture (Ghebreslassie et al., 2014). Farmers who store seed potato without renewing the seed from a reliable source and use it for several consecutive cultivation seasons will face reduction in quality and performance (Gildemacher, 2012) and  potato seed tubers supplied by local and informal systems are poor in terms of health, physiological, physical and genetic features (Gildemacher et al., 2009). This has been associated with the failure of the formal seed sector to multiply sufficient quantities of the new varieties and make it available to the farming communities (Rubyogo et al., 2010). There is also a shortage of certified seed or quality seed of desirable crop varieties and the cost of certified seed of certain crops is very high, particularly for potato and jute. Therefore, there is urgent need to set up informal seed production system involving local farmers (Roy, 2014). Further, the main components of a seed production system are: 1) seed production and storage, 2) seed tubers quality, 3) seed availability and distribution, and 4) the flow of knowledge (Hirpa et al., 2012). Thus to fulfil the farmers expectation of higher yield, timely availability of viable seed along with adequate storage facility and capacity building of seed growers is paramount important.

    With the above context, assessing the economics in potato seed production assumes paramount important. Hence the study was conducted for evaluating the cost of cultivation, technical efficiency and allocative efficiency of input factors and also to examine marketing efficiency of seed production of potato at farm level.

  • Materials and Methods

    2.1.  Study area

    The study was conducted in Cooch Behar and Jalpaiguri districts of Terai zone in West Bengal during September 2018 to March, 2019. Both the districts were selected purposively based on maximum number of potato seed growers. One block from each district Sitalkuchi (latitude 26.160412 and longitude 89.18654) from Cooch Behar and Maynaguri (latitude 26.573830 and longitude 88.821495) from Jalpaiguri, having maximum area under potato seed production were selected. From each block, four villages were selected purposively based on maximum number of potato seed growers. From each village, 10 number of potato seed growers were selected randomly. Thus, a total number of 80 potato seed growers were taken as respondent for the study. The primary data was collected with the developed schedule from respondents through personal interview method.

    2.2.  Cost and return analysis

    Descriptive statistical analysis such as mean, percentage etc. was carried to compute cost of cultivation. The farm management analysis and related farm income measures at Cost A1, Cost A2, Cost B1, Cost B2, Cost C1, Cost C2 and Cost C3 were done. The efficiency measures were also carried out to examine the resource productivity in potato seed production.

    In order to study the resource productivity and resource use efficiency among different types of production function, Cobb-Douglas production function in logarithmic form was used as given below:

    Y=aX1b1X2 b2X3b3X4b4X5b5X6b6 X7b7U1

    The Cobb-Douglas production function was transformed into the following double log or log linear form so that it could be solved by the least square method:

    Log Y=Log a+b1 Log X1+b2LogX2+b3LogX3+b4LogX4+b5LogX5+b6LogX6+b7LogX7+Ui

    Where, Y=production (Rs. acre-1), X1=Human labour (Rs. acre-1), X2=Seeds (Rs. acre-1), X3=Organic fertilizers (Rs. acre-1), X4=Inorganic Fertilizer (Rs. acre-1), X5=Agro-chemical (Rs. acre-1), X6=Irrigation (Rs. acre-1), X7=Micronutrient (Rs. acre-1), a=constant and Ui=Error-term

    The estimated coefficients of independent variables were used to compute the marginal value products (MVP) and the resources-use efficiency (RUE) was worked out using following formula. MVP was estimated at their respective geometric mean level and MFC was taken as unit price of the factor.


    2.3.  Marketing margin

    Marketing margin of the middleman was calculated as the difference between the total payment (marketing cost+purchase price) and receipts (sale price) of the middleman and calculated as:


    Where, Ami=Absolute marketing margin of ith middleman

    Pri=Sale price unit-1

    Ppi=Purchase price unit-1

    Cmi=Cost incurred on marketing unit-1

    2.4.  Marketing efficiency

    Marketing efficiency is the ratio of market output to marketing inputs. An increase in this ratio represents improved efficiency and decrease denotes reduced efficiency. Marketing efficiency was calculated by using Acharya’s index of marketing efficiency:



    ME=Index of marketing efficiency

    FP=Price received by the farmer

    MC=Total marketing cost

    MM=Marketing margins

    2.5.  Constrains in potato seed production

    The Garrett’s ranking technique was used to study the opinion of farmers regarding the constraints faced by them in cultivation and marketing of potato seed. The present position of each rank was converted into scores by referring table given by Garrett and Woolworth (1969). The constraint with the highest mean value was considered as the most important one and the others followed in that order. The percent position of each rank was found out by the following equation:

    Present position=(100(Rij- 0.5))/Nij


    Rij =Rank given for the ith constraint by jth individual

    Nij=Number of constraints ranked by the jth individual

  • Results and Discussion

    3.1.  Social and economic profile of seed growers

    Input use and the corresponding efficiency as well as participation and decision making of the farming folk depend to a large extent on the socio-techno-economic features of them. Therefore, it necessitates having a brief sketch about the social and economic profile of seed growers in the selected study areas. The average age of the seed growers was found 42.69 years with an average family size of 4.81 indicated that young and middle aged farmers were more interested in potato seed production (Table 1).

    Nearly 70% of the seed growers had educational level from secondary onwards that led them to scientifically understand the potato seed production technology. The average annual income of the seed grower revealed Rs. 197803.73. The farming folk were mostly marginal in nature having average land holding to the tune of 5.12 acre and the net cropped area was 4.60 acre of which 42.93% (1.97 acre) was used for seed production purpose. It was investigated that the varieties like Kufri Jyoti, Kufri Arun and Kufri Sundari were used for potato seed production.

    3.2.  Cost and return analysis

    On the basis of standard cost concepts, a comparative cost and return analysis between seed production and conventional production practices of potato was carried out and presented in Table 2.

    The average total variable cost of cultivation estimated in seed production was 3.87% than conventional production system. But, expenditure on various items of cost was almost same in both production systems. Only expenditure for purchase of seed was 8.59% higher in seed production practice than in conventional practice. The reason might be due to the use of lower quality seed in conventional production practice and higher quality seed in seed production practice. The study revealed that seed was the second costliest input accounting 35.54% of expenditure. The finding is also synonymous with the study of Ashu et al. (2018) and Kushwah and Singh (2011). The other cost items were expenditure on organic fertilizers, inorganic fertilizers, micro-nutrient, irrigation, application of agro-chemicals. Here agro-chemical includes pesticides, herbicides, insecticides, fungicides and chemicals for seed treatment. Share of own family labour with respect to total human labour was around 55% in both the production process. Per acre fixed cost of cultivation in both processes was found same (Rs. 6295.06). Subsequently, the average total cost of cultivation per acre was estimated as Rs. 53957.76 in seed production and Rs. 52,394.00 in conventional production process. The average gross return from one acre of land was Rs. 89127.00 in seed production which is 16.07% higher than the gross return fetched from conventional production practice. This was might be due to the variation (12.50%) in output or yield between two production processes as well as market price.

    3.3.  Cost of cultivation and related income measures

    The cost of cultivation and related income measures on potato production was calculated and shown in Table 3.

    The per acre average Cost A1, Cost A2, Cost B1, Cost B2, Cost C1, Cost C2 and Cost C3 were estimated as Rs. 37797.70, Rs. 38263.94, Rs. 43708.94, Rs. 48368.94, Rs. 53813.94 and Rs. 59195.33, respectively in seed production whereas in conventional production, the above costs were Rs. 36024.99, Rs. 36491.23, Rs. 41936.23, Rs. 46596.23, Rs. 52041.23 and Rs. 57245.35, respectively. Family Labour Income (FLI), Farm Business Income (FBI) and Net Income were estimated to be Rs. 45418.06, Rs. 51329.30 and Rs. 29931.67 in seed production while in conventional production process; these were Rs. 34855.77, Rs. 40767.01 and Rs. 19546.65, respectively. From the cost analysis, it was observed that the net profit based on Cost C3 in seed production was 53.05% higher than conventional method of production. The reason might be the higher level of productivity in seed production practice. The gross return was estimated as Rs. 89127.00 acre-1 in potato seed multiplication and Rs. 76792.00 in conventional potato production. However, production cost acre-1 was Rs. 597.75 in seed multiplication and Rs. 596.37 in conventional potato production. The results are also in conformity with the study of Sable et al. (2017) and Ashu et al. (2018). It is to note here that 10% cost of Cost C2 was considered as managerial costs for accounting the net income (Cost C3). Another important finding from cost and return analysis revealed that the overall technical efficiency (input-output ratio) based on Cost C3 and total cost was 1.51:1 and 1.65:1 in seed production and 1.34:1 and 1.47:1 under conventional production process.

    3.4.  Regression coefficients of different inputs

    Data presented in Table 4 revealed that the independent variable human labour was positively significant at 1% level while other variables viz., seed and organic manures were significant at 5% level each. The coefficient of seed (X2), inorganic fertilizers (X4), agro-chemical (X5) and micro-nutrient (X7) were negative and non-significant indicating that these factors were not utilized optimally. The co-efficient of irrigation (X6) was found positive but non-significant. Further, the elasticity of each independent variable was less than unity in each input implying decreasing marginal productivity to each. The coefficient of multiple determinants (R2) was 0.900 indicating that the model could explain 90% variation of income in potato seed production.

    3.5.  Allocative efficiency

    Table 5 shows the allocative efficiencies of resources used in multiplication of potato seed. To examine the efficiency of resource use, the MVP of each factor was compared with its acquisition cost. The RUE ratio indicates the potential for further use of input. The resource is said to be allocated efficiently or optimally if RUE=1 or MVP=MFC. The MVP and RUE for three factors viz., human labour, organic fertilizer and irrigation was positive implying the positive impact towards income. But for rest other variables viz., seed, inorganic fertilizer, agro-chemical and micro-nutrient it was negative indicating overuse of above inputs. There was no further scope to increase output of potato seed production through use of the said factors unless change in the production technology. The MVP of three inputs viz., X1, X3 and X6 were found to be greater than zero revealing that further increase in use of these factors would result into an increase in potato seed production and that should be coupled with change in production technology. The MVP was observed positive and highest for the input organic fertilizer (Rs. 1360.11) followed by human labour (Rs. 719.29) and irrigation (Rs. 2.09). But RUE was examined 8.42 for organic fertilizer and 3.06 for irrigation inferring that by one unit extra use these inputs, the quantity of output would be added by 8.42 and 3.06 units, respectively.

    3.6.  Marketing margin and marketing efficiency of marketing channels 

    In marketing of output of seed growers, only two channels were identified as follows:

    Channel I: Seed grower → RSPG → Wholesaler → Retailer → Consumer

    Chunnel II: Seed grower → RSPG → Consumer

    The seed producer used to sell their total output to existed Registered Seed Producer Group (RSGP) who took the responsibility to perform the activities like cleaning, grading and all the procedures and formalities for certification of seed bought from the seed growers.

    The estimated net marketing margin at different stages of marketing channel of potato seed is presented in Table 6. Net marketing margin for per kg of output was highest for RSGP (Rs. 4.50) followed by wholesaler (Rs. 3.00) and retailer (Rs. 1.50) for marketing channel I. While for marketing channel II, RSGP was the only middleman and they received a net marketing margin of Rs. 7.50. Further, the marketing cost was highest for RSGP (Rs. 6.50 kg-1) in both channels. The reason behind it might be that the RSGP did most of the post-harvest operations and formalities to get the certification. The marketing efficiency as well as producer’s share in consumer rupee of channel II found higher than channel I. The marketing efficiency of channel I was less than 50% and the producer’s share in consumer rupee in both channels was less than 40% which is contradictory to the findings of Balaji et al. (2010).

    3.7.  Constrains in potato seed production

    A total twelve important problems viz., unavailability of quality seed, weed problem, unavailability of quality fertilizers, technological problem, irrigation problems, disease and pest attack, shortage of labour, low price of output, high price of input, small holding of seed growers, availability of credit and storage facility for output were identified. Garrett’s ranking technique was used to rank the above said constraints. Among twelve, first five important constraints were low price of output, disease pest attack, high price of input, shortage of labour and irrigation for potato seed production (Table 7) that hindered the adoption and expansion of seed cultivation at farmer’s level. The result is also in conformity with the study of Pandit et al. (2006). The maximum net marketing profit taken by the middlemen in marketing channels might be one of the important reasons of low price of output and the high humid condition and prevailing of mostly acidic soil might be reason of high weed infestation as well as diseases and pest attack. While the migration of unemployed youths for searching of employment in expectation of fetching higher income from the other region of the country might be the reason of shortage of labour. The highly acidic loamy porous soil, very scanty rainfall and unavailability of mini and deep irrigation system are augmenting the irrigation problem in the study area.

  • Conclusion

    The net return in potato seed production was around 50% higher than conventional production practice. Although the inputs caused 90% variation in output but the resources were not utilized optimally. The producer’s share in consumer rupee and marketing efficiency could be increased by eliminating middlemen. Hence, development of storage, grading facilities, processing centre, institutional and technical support are crucial for success of potato seed production at farmer’s level.


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