Farm Size and Efficiency Comparative Profit Analysis in Agricultural Cooperatives
1. Introduction
The largest and biggest contributor to Bangladesh’s economy is the agricultural sector. Seen often as the ‘unsung’ hero of our growth revolution, it still serves as the most significant industry in this country. In spite of its large contribution to employment, relatively speaking, its contribution to GNP falls short of expectations. Hence, as with other developing countries, the agriculture sector in Bangladesh can be classified as predominantly being ‘traditional’. This implies that it is mainly comprised of small households that suffer from technological stagnation, unskilled labor, and supply chain and market linkage problems. In spite of this, a modern agriculture sector does exists which enjoys substantial economies of scale. It is a well established fact that with increase in scale of output, efficiency increases up to an optimum point and this paper will put this to the test by investigating whether this holds true in the agriculture sector as well.
2. Problem statement
Ideally, government policy should be directed towards increasing the capacity of the traditional agriculture sector in order to transform it towards a more modern one. However, with a weak local government structure, lack of strategic planning and corruption, effective government support towards this sector cannot be expected. Even if policy makers could come up with viable policies to help rural farmers, it would be very costly as most of these rural farmer’s are too small and dispersed in remote areas. Therefore, any aggregate development would either fail in cost effectiveness or fail in implementations. This leads to the point that increase in farm size needs to take place in the grassroots level
This paper therefore will look into the possibility of rural farmer’s joining together to ‘pool in’ their limited technology, land, labor and skills to achieve some form of economies of scale that can increase their efficiency and lower the costs. Such a
The largest and biggest contributor to Bangladesh’s economy is the agricultural sector. Seen often as the ‘unsung’ hero of our growth revolution, it still serves as the most significant industry in this country. In spite of its large contribution to employment, relatively speaking, its contribution to GNP falls short of expectations. Hence, as with other developing countries, the agriculture sector in Bangladesh can be classified as predominantly being ‘traditional’. This implies that it is mainly comprised of small households that suffer from technological stagnation, unskilled labor, and supply chain and market linkage problems. In spite of this, a modern agriculture sector does exists which enjoys substantial economies of scale. It is a well established fact that with increase in scale of output, efficiency increases up to an optimum point and this paper will put this to the test by investigating whether this holds true in the agriculture sector as well.
2. Problem statement
Ideally, government policy should be directed towards increasing the capacity of the traditional agriculture sector in order to transform it towards a more modern one. However, with a weak local government structure, lack of strategic planning and corruption, effective government support towards this sector cannot be expected. Even if policy makers could come up with viable policies to help rural farmers, it would be very costly as most of these rural farmer’s are too small and dispersed in remote areas. Therefore, any aggregate development would either fail in cost effectiveness or fail in implementations. This leads to the point that increase in farm size needs to take place in the grassroots level
This paper therefore will look into the possibility of rural farmer’s joining together to ‘pool in’ their limited technology, land, labor and skills to achieve some form of economies of scale that can increase their efficiency and lower the costs. Such a