Economic analysis of rice (Oryza sativa L.) cultivation in Gorkha district of Nepal

Abstract

A study was conducted to analyze the production economics and factors contributing to the gross return of rice production in the Gorkha district of Nepal in 2020, where a rice block was established under the Prime Minister Agriculture Modernization Project (PM-AMP). Altogether, 76 rice-growing farmers were selected as a sample by using a simple random sampling technique. Primary data were collected by using a pre-tested interview schedule, while secondary data were collected by reviewing related literature. The data was analyzed using descriptive statistics, chi-square, independent sample t-tests, and Cobb-Douglas production function. The results showed that the average landholding was 0.74 ha and the average area under rice cultivation was 0.52 ha, with a productivity of 3 mt ha^-1. The findings revealed that the cost of rice production for small farmers was significantly higher (NRs. 171466 ha^-1) than that for large farmers (NRs. 132088 ha^-1). The study reveals that investment in rice cultivation was economically viable in the study area because the overall B: C ratio was greater than one (1.17). The production function analysis reveals that a 10% increase in expenditure on seeds, total labor, and nutrients, keeping all other variables constant, could increase the gross return of rice by 2.97%, 2.19%, and 0.62%, respectively. The sum of coefficients was 0.56, reflecting a decreasing return to scale. Thus, a 100% increase in expenditure on variables presented in the model caused a 56% increase in the gross return of rice production. The findings suggest that human and bullock labor needs to be replaced by the use of farm machinery. Hence, the cost of cultivation would be reduced with the improvement in production and the gross returns of rice cultivation.