Profitability, input demand and output supply of mustard production in Bangladesh

Abstract

This paper estimates profitability, input demand and output supply of mustard production at the farm-level inBangladesh utilizing a survey data of 206 mustard farmers from two regions of Bangladesh by applying a profitfunction approach. Mustard production is profitable at the farm level (Benefit Cost Ratio = 1.34) with no adverseinfluence of farm size on yield and profitability. Mustard farmers are also responsive to changes in market pricesof inputs and outputs. Mustard price is the most dominant determinant of output supply and input demand. A 1% increase in mustard price will increase output supply by 0.62% and increase demand for mechanical power, fertilizer and labour by 1.06%, 1.05% and 1.01%, respectively but will decrease seed demand by 3.96%. The fixed factors have no role except land fragmentation substantially reducing seed demand. Policy implications include price policy to improve mustard price and tenurial reform aimed at improving land fragmentation and smooth functioning of the hired labour market in order to increase production and profitability of mustard in Bangladesh.