Resource Use Efficiency and Profitability of Rice Production in the Terai Belt of Nepal

Abstract

Rice is the major cereal crop in terms of area under cultivation and known as primary staple food with significant contribution to gross domestic product in Nepal. The high production cost and inefficient use of available resources are major problems observed in rice production. The study was carried out in three major rice producing districts of Terai belt of Nepal to analyze the level of resources used and profitability in rice production.  A total of 100 samples from each district were taken using simple random sampling technique. The benefit cost ratio was used to determine the profitability while the Cobb-Douglas production function was used to determine the resource use efficiency analysis. The study revealed that the average land holding size under the rice production was more than the national average and the average productivity (4.86mt/ha) of rice production in the districts were also higher than the national average (3.47mt/ha). The BC ratio of rice (1.67) production was found more than which implies the profitable nature of rice production in Nepal. The per hectare total cost incurred in rice production from land preparation to marketing was found NPR. 96, 905 (±24044)/ha and the profit after deducting cost incurred for rice production was NPR. 58, 559. The costs on seed and irrigation were found overused, however the costs incurred in organic manures, harvesting and post-harvest operations were found underused. The cost on seed and irrigation need t0 be decreased by 129 and 218% whereas the cost on organic manures, harvesting and post-harvest operations need to be increased by 97, 74 and 76%, respectively for optimal allocation of resources used in rice production. The return from rice production is low as compared to other major economic crops in Nepal, thus this study helps the policy makers, producers and other stakeholders for better planning and policy formulation for massive promotion of rice cultivation as it has high contribution to food and nutrition security of Nepali people.