Economic Implications of Cotton Production in District Naushahro Feroz, Sindh Province of Pakistan.

ECONOMIC IMPLICATIONS OF COTTON PRODUCTION IN
DISTRICT NAUSHAHRO FEROZE, SINDH PROVINCE OF

PAKISTAN
T HESIS
BY
GHULAM RAZA SARGANI

REG.NO: 2K9-AE-137
DEPARTMENT OF AGRICULTURAL ECONOMICS

FACULTY OF AGRICULTURAL SOCIAL SCIENCES
SINDH AGRICULTURE UNIVERSITY
TANDO JAM
2012

PAKISTAN
BY
GHULAM RAZA SARGANI

REG.NO: 2K9-AE-137
A THESIS SUBMITTED THROUGH THE DEPARTMENT OF

AGRICULTURAL ECONOMICS, FACULTY OF AGRICULTURAL
SOCIAL SCIENCES, TO SINDH AGRICULTURE UNIVERSITY,
TANDOJAM IN CONNECTION WITH THE PARTIAL
FULFILMENT OF THE REQUIREMENTS
FOR THE DEGREE OF
MASTER OF SCIENCE (AGRICULTURE) HONOURS
IN
AGRICULTURAL ECONOMICS
2012
TABLE OF CONTENTS
CHAPTER
PARTICULARS
PAGE
APPROVAL CERTIFICATE BY THE SUPERVISORY

COMMITTEE
RESEARCH CERTIFICATE
ii
THESIS RELEASE FORM
iii
HALF TITLE PAGE
iv
ACKNOWLEDGEMENTS
LIST OF TABLES
vi
LIST OF ANNEXTURES
vii
ABSTRACT
viii
INTRODUCTION
01
II
REVIEW OF LITERATURE
05
III
METHODOLOGY
13
IV
RESULTS
18
DISCUSSION
34
VI
CONCLUSION AND SUGGESTIONS
39
LITERATURE CITED
43
QUESTIONNAIRE
50
SYNOPSIS
53

DISTRICT NAUSHAHRO FEROZE, SINDH PROVINCE OF PAKISTAN
BY
GHULAM RAZA SARGANI
APPROVAL CERTIFICATE BY THE SUPERVISORY COMMITTEE
Mumtaz
1. SUPERVISOR
MUMTAZ ALI JOYO

Assistant Professor
Department of Agricultural Economics
Faculty of Agricultural Social Sciences
Sindh Agriculture University
Tando jam.
Sanaullah
2. CO-SUPERVISOR-I
SANAULLAH NOONARI
Assistant Professor
Tando jam.
mujtaba
3. CO-SUPERVISOR-II
DATE OF THESIS DEFENCE
GHULAM MUJTABA KHUSHK

Assistant Professor
Department of Rural Sociology
Tando jam.
________________________________2012
DEPARTMENT OF AGRICULTURAL ECONOMICS

FACULTY OF AGRICULTURAL SOCIAL SCIENCES
SINDH AGRICULTURE UNIVERSITY TANDOJAM

RESEARCH CERTIFICATE
This is to certify that the present research work entitled "Economic

Implications of Cotton Production in District Naushahro Feroze, Sindh Province of
Pakistan", embodied in this thesis has been carried out by Mr. Ghulam Raza Sargani, under
my supervision and guidance in connection with partial fulfillment of the requirements for the
degree of Master of Science (Agriculture) Honours in Agricultural Economics and that the
research work is original.
Mumtaz
Dated_________________________2012
( MUMTAZ ALI JOYO )

Assistant Professor
and
Research Supervisor
ii
SINDH AGRICULTURE UNIVERSITY, TANDO JAM
THESIS RELEASE FORM
I, Ghulam Raza Sargani, authorize the Sindh Agriculture University, Tandojam, to supply
copies of my thesis to libraries or individual upon request.
----------------------Signature
----------------------Date
iii

DISTRICT NAUSHAHRO FEROZE, SINDH PROVINCE OF PAKISTAN
BY
SARGANI
iv
ACKNOWLEDGEMENTS
All acclamation and approbation is due to Allah (Subhan-u-Tahala) my
Creator, my Shaper out of naught, my Fashioner, Omnipresent, Omniscient to what I need,
cognizant of my deed, the Only ONE who is nearer to me than my jugular vein, to whom are
ascribed the traits of Absolute Perfection and Beauty. Eternal blessing and peace be upon the
beloved of Allah who has been sent as Mercy for all the worlds- Hazrat Muhammad (PBUH),
the city of knowledge, the illuminating torch and the rescuer of humanity from going astray
I offer my humble thanks to Almighty Allah" Who enabled me to complete
one of my lifes academic urges. I express my real thoughts and feelings to Supervisor
honorable Mr. Mumtaz Ali Joyo, Assistant Professor, Department of Agricultural Economics,
Faculty of Agriculture Social Sciences, Sindh Agriculture University Tandojam, for his
courteous professional advises, thesis transcript checking and its improvement, motivation,
fruitful suggestions and encouragement during this study.
The Author is extremely indebted to Mr. Sanaullah Noonari, Assistant
Professor, Department of Agricultural Economics, Mr. Allah Bux Chhutto, Associate Professor,
Department Statistics, Mr.Ghulam Mujtaba Khushk Department of Rural Sociology Faculty
of Agricultural Social Sciences, Sindh Agriculture University Tandojam, for their precious
guidance, help, and valuable suggestions during research work and management of the
manuscript.
I transcend my power of narration to express how I feel obliged to my
cherished and venerated Father for whatever I have achieved in the field of education and on
the highway of life. I will love to be extraordinary thankful to my mother, a great strength
behind me in the shape of oceans of prayers for me. I owe a special debt of gratitude to my
elder brother Mr. Ghulam Qambar Sargani who is a symbol of love, sacrifice and affection. I
am thankful to my younger brothers and my sisters for their moral support and prayers.
Friends who were the main source of encouragement for me; they prayed for my success and
shared my responsibilities with unprecedented patience.
GHULAM RAZA SARGANI
LIST OF TABLES
TABLE
PARTICULAR
PAGE
3.1
Distribution of sample Cotton growers in the study area during 2010-11
17
3.2
Distribution of sample Cotton growers by farm size in the study area during
2010-11
17
4.1
Socio-economic profile of cotton growers in study area during 2010 -11
19
4.2
Education levels of cotton growers in study area, during 2010-11
20
4.3
Cropping patterns of sample cotton growers in the study area during 2010-11
21
4.4
Land Tenurial Status of cotton growers in study area, during 2010-11
22
4.5
Cotton varieties planted on the selected farms in study area, during 2010-11
22
4.6
Sources of technical information to sample cotton growers in study area,

during 2010-2011
23
4.7
Area, production and yield of cotton in Sindh and Pakistan during 2001- 02 to
2011 -12
24
4.8
Averages per acre land inputs realized by cotton growers in study area,
during 2010-2011.
25
4.9
Averages per acre labour cost incurred by the selected cotton growers in
study area, during 2010-2011
26
4.10
Averages per acre capital inputs applied by the selected cotton growers in
27
4.11
Averages per acre marketing costs incurred by the selected cotton grower
in study area, during 2010-2011
28
4.12
Averages per acre total costs incurred by the selected cotton growers in
29
4.13
Averages per acre physical productivity realized by cotton growers in the

30
4.14
Averages per acre revenue productivity realized by selected cotton growers

in study, during 2010-2011
31
4.15
Averages per acre net income realized by the cotton growers in study area,
during 2010-2011
32
4.16
Input-output and cost benefit ratio calculated by the selected

cotton growers in study area, during 2010-2011
33
vi
LIST OF APPENDICES
APPENDIX
PARTICULARS
PAGE
Distribution of sample Cotton growers by farm size in the Study

area during 2010-11
45
II
Area under Cotton Crop in Pakistan during 1990-2011
46
III
Productions of Important Crops in Pakistan during 1990-2011
47
IV
Yield Per Hectare of Cotton Crop in Pakistan during 1990-2011
48
vii
AN ABSTRACT OF THE THESIS OF

Ghulam Raza Sargani
TITLE:
For
Master of Science (Agri.) Honors Economics
Major Agricultural Economics
ECONOMIC IMPLICATIONS OF COTTON PRODUCTION IN DISTRICT

NAUSHAHRO FEROZE, SINDH PROVINCE OF PAKISTAN
The present study was designed to explore the important factors affecting such as socioeconomic conditions of cotton growers which affect the yield of cotton crop. The data on
various cost items including land inputs, labour inputs, capital inputs, marketing costs and
physical and revenue productivity, net return, input-output ratio and cost-benefit ratio on
various farm sizes during the year 2010-11, were collected from 60 selected cotton farmers for
this purpose, different villages of taluka Kandiaro district N.Feroze by using multi-stages
cluster sampling survey method. The education level of selected growers was in order of that
the education level of selected growers was in order of 35 % primary (5-years), 18.30 %
middle (8-years), 13.30 % matriculate (10-years) 6.70 % intermediated (12-years), 2 %
graduate more than 25 % of cotton respondents were illiterate in the study area. However,
the 33.3% of selected farmers obtained technical information from neighboring farmers.
Relatively senior members of farmers family were operating the farming business and had 28.6
years of farming experience. Cotton growers spend average per acre fixed costs of
Rs.12277.95 that includes rent of land, land tax, irrigation charges and local fund. Cotton
farmers spent an average per acre labour cost of Rs 4381.30 including ploughing, fertilizer,
and picking cost, inter culturing and leveling. Cotton farmers spent on capital inputs as
average per acre Rs. 6707.00 including costs of seed, urea, pesticides/ insecticides, machinery
and equipments charges. Cotton growers on average spent per acre marketing cost Rs. 1504.77
including expenses on transportation, loading, unloading and commission charges costs.
Cotton respondents expend an average per acre total cost Rs. 24871.00 including fixed and
variable costs viz labour costs, capital inputs and marketing costs. Cotton farmers realized
average per acre physical productivity of 23.35 and harvested between 20.00 to 28.00 maunds
per acre yield. Cotton growers realized an average per acre revenue productivity of Rs.
41249.16 and ranged between Rs. 30400.00 to Rs. 49400.Cotton respondents get average per
acre net returns / income of Rs. 16378.20 that ranged Rs. 10085.10 to Rs. 18691.09 growers
received as net returns from cotton produce. The input-output ratio of cotton growers average
was 1: 1.65 and cost benefit ratio of cotton producers of Rs. 1:0.65 averages while investing a
rupee which is meager benefit. The poor production implies that the soil quality, inadequate
canal water, insect pest and poor extension services could be the causes to this low production
due to lack of marketing facilities at village level, less payment by the marketing agencies,
high prices of inputs, lack of timely availability of genuine fertilizers. The practical results
indicate that significant increase in output of cotton in the study area could be traced mainly to
use of latest technology plays the key role in cotton productivity enhancement.
viii
CHAPTER-I
INTRODUCTION
Agriculture is the single largest sector of Pakistan economy, it plays a
central role and accounting for over 21 percent of GDP and remains by far the largest
employer, absorbing 45 percent of the countrys total labour force. Agriculture has
contributed 5.9 percent value added in growth of Gross Domestic Products (GDP).
Nearly 62 percent of the countrys population resides in rural areas, and is directly or
indirectly linked with agriculture for their livelihood continues to revolve around
agriculture and allied activities (GOP, 2011).
Pakistan is the 5th largest producer of cotton, 4th largest consumer of
cotton, 4th largest exporter of cotton yarn and 3rd largest exporter of raw cotton, in
the world. Cotton (Gossypium: Hirsutum) is known as white gold and important
non-food cash crop lifeline for the economy and is playing significantly role in the
uplift of the economy is the principle source of raw material for textile sector the
largest agro-based industry which provides 45 percent employing of workforce and
60% foreign exchange earnings, cotton is an occupation of more than 1.5 million
farming families which contributes to the exports of country in the form of raw
cotton, yarn cotton cloth and other by-products. Cotton contributes 6.9 percent of
value added in agriculture and 1.4 percent of GDP. Cotton was cultivated on the area
of 3106 thousand hectares, 10.1 percent more than last year 2820 thousand hectares
the production was estimated 12.7 million bales for 2009-10, highly by 7.4 percent
over the last years production of 11.8 million bales. Cotton production expected to
decline by 1.3 million tons to 22.2 million tons, as against a rise in consumption to
24.1 million tons, in. higher consumption is pushing prices up (GOP, 2011).
In cotton growing areas, the sale of cotton produce may account as

much as 40% of cash income of rural household besides this, it accounts for 60% of
our export earnings and about 85% of domestic oil production comprising some 400
textile mills, 7 million spindles, 27,000 looms in the mill sector (including 15,000
shuttle less looms), over 250,000 looms in the non-mill sector, 700 knitwear units,
4,000 garment units (with 200,000 sewing machines), 650 dyeing and finishing units,
nearly 1,000 ginneries, 300 oil expellers, and 15,000 to 20,000 indigenous, small scale
oil expellers (kohl us) depends upon cotton. More often relatively low domestic price
of cotton, through the imposition of export duties, in order to support domestic
industry. Cotton crop of the country has been witnessing ups and downs over last two
decades. (GOP, 2011)
Since the inception of Pakistan, cotton production has increased

tremendously; cotton occupied an area of just over 1 million acres during 1947-48,
whereas now it has been increased to 32.3 million acres in 2010-2011. However
figure reveals that cotton production has been shown considerable variability in recent
years, due to mainly in yield fluctuation, with area tending to grow steadily status of
cotton production, area and yield of cotton in Pakistan (GOP, 2011).
Cotton cultivation in the province has been recorded on 611,000 acres

this year which is 21,000 acres more than the target fixed by the federal government.
The Kharif crops suffered a loss of $4bn in foreign exchange earnings or 2.323
percent of the GDP, agriculture. Cotton received a loss of 1.8 million bales,
accounting for 1.8 percent of the GDP, Earlier the cotton production target was set at
14.5 million bales for 2011-12 however almost 50 percent of the cotton crop was
intensively and extensively damaged by heavy rains and devastating floods in Sindh
and cotton production would reduce to 13 million bales for the year. Cotton growers
have lost heavily as there. Quality of seed-cotton and the resultant lint have also been
2
badly damaged; seed-cotton was sold as low as Rs 1,500 per maund of 40 Kg ex-gin
while lint cotton was sold as low as Rs 3,500 per maund of 37.324 kg ex-gin. These
rates are well below production cost. Due to this, Sindh has large unsold stocks of
cotton to 33 percent of total arrivals. This season, stocks of unsold cotton are 2.04
million bales against 1.08 million bales same time last season - about 100 percent
increase from last year. The fall in seed-cotton prices were mainly due to lower
economic activity caused by massive power load shedding it was further compounded
by cash flow problems with the ginners, creating a bottleneck in bulk purchase of
seed-cotton from farmers. In view of future forecast of world supply and demand,
cotton prices in the international market are likely to be higher than last year.
Similarly, the market price of seed-cotton is also expected to follow the same pattern
in view of the depressed demand for it (GOP, 2010).
Overall 32 percent cotton sown area of Tharparkar, Umerkot,

Mirpurkhas, Sanghar, Tando Allahyar, Badin, Tando Muhammad Khan, KashmoreKandhkot, Hyderabad, Matiari, Jamshoro, Dadu, Shikarpur, Naushahro Feroze,
Nawabshah, Khairpur, Sukkur and Ghotki districts of Sindh province. The bales from
Tando Adam in Sindh reportedly sold at Rs 1890 per maund (37.32 kgs), while
another 200 bales from the same station were said to have been sold at Rs 1900 per
maund; 400 bales from Benzirabad (Nawabshah) sold at Rs 1900 per maund, 500
bales Naushahro Feroze sold at Rs 1800 per maund; while 1000 bales from the
Khairpur district sold at Rs 1950 per maund. During 2009-10, the domestic price of
seed-cotton was reported at around Rs 1,900 per 40 kilograms in early season.
However, the price started sliding, particularly in November-December, and touched
the level of Rs 1,300 per 40 kilograms at some places the (Arshad, 2010).
The fall in seed-cotton price was mainly due to lower economic

activity caused by massive power load shedding. It was further compounded by cash
flow problems with the ginners, creating a bottleneck in bulk purchase of seed-cotton
from farmers. In view of future forecast of world supply and demand, cotton prices in
the international market are likely to be higher than last year. Similarly, the market
price of seed-cotton is also expected to follow the same pattern in view of the
depressed demand for it (GOP, 2010).
Looking at the above facts and economic importance of cotton crop in

our country the study was designed to achieve following objectives.
Objectives
1. To examine the status and growth of cotton production in Sindh and Pakistan.
2. To analyze the production cost of cotton crop in the study area.
3. To identify the production, marketing constraints in the study area.
4. To suggest policy measures & program initiatives for efficient cotton
production.
CHAPTER-II
REVIEW OF LITERATURE
A literature review is a body of text that aims to review the critical

points of current knowledge including substantive findings as well as theoretical and
methodological contributions to a particular topic a piece of discursive prose, not a list
describing or summarizing one piece of literature after another. Meeting this demand
for increasing productivity depends upon a stream of knowledge about cotton and its
environment and new technologies to utilize that knowledge; including knowledge
about resource use in the cultivation of cotton. The most relevant literature on
economic analysis of cotton carried out in different parts of the world is reviewed in
this chapter.
McKinion, et al. (2001) reported that the precision agriculture is that

through more precise timing and usage of seed, agricultural chemicals and irrigation
water that higher economic yields can occur while enhancing the economic
production of field crops and protecting the environment. The analyses performed in
this manuscript demonstrate proof of concept of how precision agriculture coupled
with crop simulation models and geographic information systems technology can be
used in the cotton production system in the Mid South to optimize yields while
minimizing water and nitrogen inputs. The 1997 yield was used as a comparison for
the analysis. Actual cultural practices for 1997 were used as input to the model. After
the 201 simulations were made using the expert system to optimize for water and
nitrogen on a one acre basis, the model predicted that an increase of 322 kg/ha could
be obtained by using only an average increase of 2.6 cm of water/ha and an average
decrease of 35 kg N/ha.
Ashiq and Khan (2002) conducted a study to measure the

competitiveness of seed cotton production and to determine the consistency between
current policies with existing comparative advantage. The analysis covered two major
cotton producing provinces, Punjab and Sindh due to their major share in total cotton
production. The cost of production estimates are based on the data of Agricultural
Prices Commission (APCOM) for five harvesting years i.e. 1997-98 to 2001-02.
Average cost per acre is calculated for each province by taking over into average over
five harvesting years. At national level data is obtained by taking the weighted
average of provinces depending upon their shares in production. They select policy
analysis matrix (PAM) approach to determine the comparative competitiveness of
Pakistans cotton and policy effects the comparative advantage was measured through
Domestic Resource Cost (DRC) ratio, and Social Benefit Cost Ratio (SBC).
Tariq, et al. (2003) has examined the cotton crop and found that it has
120 to 130 days life span in many countries rather than 200 days or even more in
Pakistans case. He further explains that 60,000 to 80,000 plants are sown per acre but
in Pakistan 50,000 plants per acre are maintained. Besides, cotton crop is attacked by
various diseases which reduce the overall production of the country. In this regard, he
has suggested a few main points for increasing the output of cotton production.
Firstly, when this crop is attacked by the insects, chemical means are not the only
solution to control them. But the varieties having multi-adversity resistance (MAR)
should be use for this purpose.
Siddiqui (2004) studied the role of support price for various

agricultural commodities including cotton. The author observes that support price
help raise the production and safeguards the interest of the farmers against falling
prices in the postharvest months particularly when the harvest is a bumper-one.
6
Moreover, it helps to stabilize inter-year and intra-year prices of the agriculture

commodity. The author further examined custom ginning and hedge trading.
Sharma et al. (2004) evaluated that the effects of plant spacing (60 x
60, 60 x 30 and 60 x 15 cm) and NPK level (80:40:20 and 120:60:30 kg/ha) on the
seed cotton yield and yield attributes (bolls per plant, boll weight per plant, yield per
plant and plant height) of 6 cotton cultivars (Vikram, Khandwa-2, Khandwa-3, LRA5166, A-51-9 and 79-BH-5-3). The crop was raised under recommended practices.
Seed cotton yield and its attributes (except boll weight and plant height) were
significantly influenced by various plant spacing and genotypes. In contrast, no
significant differences in these parameters were observed due to varying NPK levels.
The closest spacing of 60 x 15 cm recorded the highest seed cotton yield (954 kg/ha)
compared with 60 x 30 and 60 x 60 cm spacing (826 and 764 kg/ha, respectively).
Among the cultivars, BH-79-5-3 recorded the highest yield (1072 kg/ha), followed by
Vikram with (974 kg/ha).
Yingnan (2004) studied that the cotton production Management

System (MSCP) based on the validated Cotton plus simulation model for Xinjiang
and Huang-Huai-Hai regions in China. By applying the techniques of crop simulation
model and knowledge engineering, MSCP can conduct the decision-making for
optimal multi-objectives, optimal cultivation for all-growth season and decisionmaking for production on time. The computer simulation experiments for optimal
cultivation for all-growth season before planting in Xinjiang have been made by using
MSCP, the test results showed that the production objective could be obtained by
following the suggested cultivation. The conclusion is that the establishment of MSCP
brings the development on model based.
Javed and Hassan. (2006) assessed the comparative advantage of

cotton production in Pakistan and determined that how far the current set of policies is
consistent with the comparative advantage. The Domestic Resource Cost (DRC),
Nominal Protection Coefficient (NPC) and Effective Protection Coefficient (EPC)
were used for the analysis of data for the harvesting years, 1998-99 to 2002-2003. The
analysis was carried out in the context of Policy Analysis Matrix (PAM). The
Domestic Resource Cost (DRC) analysis for Punjab concluded that farmers in Punjab
had comparative advantage in producing seed cotton for the study period. The value
of Nominal Protection Coefficient showed that the seed cotton farmers in Punjab were
taxed. This was further confirmed by the values of Effective Protection Coefficient.
The analysis showed that Sindh had more comparative advantage than Punjab.
Khan and Yasin (2006) calculated the cost of cotton ginning in

Pakistan. The author observes that there are 1263 ginning factories in the country with
about 5745 gin stands, out of which 2.5 percent, 63 percent, and 33 percent and 1.5
percent gin stands have 80, 90, 100 and 120 saws respectively. The cost of ginning
was calculated basing on electric cost, depreciation of the machinery, repair and
maintenance cost of the building and machinery, cost of establishing a ginning
factory, cost of mechanical staff including unskilled and skilled labour and cost of
ministerial staff.
Naidu and Shankar (2007) analysed that the cotton is no remunerative

as a commercial crop that farmers, even in agro-climatic zones not suitable for cotton
cultivation, grow cotton. This scenario underwent a change during the recent years,
due to heavy borrowing, over investment in inputs and frequent crop failure, the
cotton growers in India had to suffer severe and unbearable hardships. This paper
made an attempt to probe into economic aspects of production and productivity of
cotton crop by using the Cobb-Douglas Production function. It was observed that the
8
multiple coefficient of determination was significant at the 1% level for all the
categories of farmers, indicating that there was significant contribution of all
independent variables to the farm output of the sample farmers. It was also evident
that the large farmers were more benefited form per rupee investment in cotton
cultivation, compared to other categories of sample farmers. Finally, the study
suggested certain measures for the profitability of cotton crop.
Das et al. (2008) reported that the productivity of the cotton-wheat

cropping system used in the Indo-Gangetic plains is low, mainly due to improper and
imbalanced use of chemical fertilizer and organic manure. An experiment was carried
out between 2001 and 2003 at the Research Farm of Agronomy Division, Indian
Agricultural Research Institute, New Delhi, under irrigated conditions. The objective
of the experiment was to study the effect of inorganic and organic sources of nitrogen
(prilled urea fertilizer nitrogen, farmyard manure (FYM), and Azotobacter) alone and
in their various combinations on the performance of cotton (Gossypium hirsutum L.)
The results of this study showed considerable improvement in growth, yield
attributes, and yield of cotton with addition of higher doses of fertilizer N through
prilled urea. The performance of cotton with FYM @12 t ha-1 was found to be
intermediate (from 30 to 60 kg N ha-1). The highest growth and yield (2.33 t seed
cotton ha-1) was recorded following an integrated application of 30 kg N ha-1 through
prilled urea and FYM @12 t ha-1 along with Azotobacter (M4), and was 48.2% higher
than control.. The highest seed cotton equivalent yield (3.88 t ha-1) and production
efficiency (12.79 kg ha-1 day-1) were achieved with an integrated application of 30 Kg
N ha-1 through prilled urea and FYM @ 12 t ha-1 along with Azotobacter (M4). The
same combination also gave the highest net returns (US $ 954.7 ha-1).
Khachatryan et al. (2008) reported that cultivated cotton on about half

of its 4.5 million arable lands since independence the government has embarked on a
9
program of diversification, aimed at self-sufficiency in wheat production by

encouraging the gradual shift from cotton to wheat. It tried to realize a
macroeconomic program of reforms, which includes privatizing input and output
markets, increasing production incentives, eliminating the state order for cotton, and
streamlining the export system. Despite the announced program, the state continues to
play a major role in the production and marketing of cotton (sets production quotas
and prices, supplies inputs, and purchases the crop). Those attempts of restructuring
the agriculture have not brought any positive social or economic results. This paper
argues that restructuring cotton production by decreasing the areas under traditional
cotton in favor of cotton under plastic will result in welfare gains.
Dagistan et al. (2009) determined that the input and output involved in
cotton production in the Hatay province of Turkey. The average energy consumption
of the farms investigated in this study is 19 558 MJha-1. Of the total energy, 2.87% is
direct and 71.13% is indirect. Renewable energy accounts for 12.30% and energy
usage efficiency is found to be 2.36. The total energy input into the production of one
kilogram of average Turkish cotton is estimated to be 4.99 MJ. The dominant
contribution to input is energy in the form of nitrogen fertilizer (40.28%), followed by
water for irrigation (22.37%) and diesel oil (17.04%). The cost of cotton production
per acre is found to be 2 246 $ha-1 in the region, with 79.87% of this being variable
costs. It can be concluded that intensive cotton farms are being operated in the area
since the variable cost ratio is quite high. As a result of benefit-cost ratio (1.24)
analysis, cotton production is found to be economically efficient.
Javed et al. (2009) estimated that the technical, allocative and

economic efficiency and subsequently to investigate the determinants of technical,
allocative and economic inefficiency of cotton-wheat and rice-wheat farming systems
10
in Punjab, Pakistan. Data were collected from 400 farmers (200 farmers from each
farming system) for the crop year 2005-06. Technical, allocative and economic
efficiency scores were estimated by a non-parametric data envelopment analysis
procedure. Technical, allocative and economic inefficiency scores were separately
regressed on socio-economic and farm specific variables to identify the sources of
technical, allocative and economic inefficiency using a Tobit regression model. The
mean technical, allocative and economic efficiency calculated for the cotton wheat
system was 0.75, 0.44 and 0.37, respectively. Results of the study revealed that if
sample farms in cotton-wheat system operated at full efficiency level they could
reduce their input use by 25 percent and cost of production by 56 percent without
reducing the level of output and with the same technology.
Khan and Chaudhry (2009) examined the factors affecting cotton

production in Multan region using primary source of data. A sample of 60 small
farmers, 25 medium and 15 large farmers was randomly selected from two Tehsils
namely Multan and Shujabad of district Multan. The Cobb-Douglas Production
Function is employed to assess the effects of various inputs like cultivation, seed and
sowing, irrigation, fertilizer, plant protection, inter-culturing / hoeing and labour cost
on cotton yield. The results depicted that seed, fertilizer and irrigation were found
scarce commodity for all category of farmers in district Multan. The Cobb-Douglas
Production Function results revealed that the coefficients for cultivation (0.113) and
seed (0.103) were found statistically significant at 1 percent level. The Cost-Benefit
Ratio for the large farmers was found higher (1.41) than that of small (1.22) and
medium (1.24) farmers. There is a dire need to ensure the availability of these scarce
inputs by both public and private sectors as these inputs were major requirement of
the cotton crop.
11
Daniel et al. (2010) reported that the study examined the Net Income
and efficiency of resource use among cotton farmers in the southern part of Adamawa
State where cotton is predominantly grown. Analysis of the sampled farmers showed
that 86% of them were youth which suggest that if proper attention is given to cotton
cultivation, a lot of youth would be gainfully employed. The results also revealed that
40% of the farmers did not attend any formal school while 14% attended tertiary level
of education. About 59% of the respondents reported. The average cost and returns
per acre of the cotton farmers was N46, 046.25 and N56, 224.90 respectively. This
2
showed a profit of N10, 175.15 per acre. The R of 0.86 of the regression model
shows that 86% of the farmers income is being explained by the exogenous variables.
Land, labour and seed have positive influence on farmers income and the first two
significant at 1% and 10% levels respectively. Fertilizer, chemical and transportation
had negative influence on farmers income probably due to their escalating prices.
The marginal physical product analysis revealed that an extra acre of land acquired
for cotton will result to an increase of over one ton of cotton.
Khan and Akhtar (2011) studied provides cost-benefit analysis of

cotton production and processing by different stakeholders in Pakistan. In order to
analyze the cost-benefit analysis, Multan and Bahawalpur regions were selected as
study area since majority of the cotton producers are living herein. Cotton is one of
the major crops of Pakistan and have important role in agricultural production. It has
been identified that spinners and ginners have an incentive in the shape of profit to
raise their production. Basing on the study, it is recommended that the Government of
Pakistan should support the cotton producer by giving subsidies in the inputs and with
the help of support price system. By promoting productive capacities of grower, the
poverty can be reduced in the study areas
12
CHAPTER-III
METHODOLOGY
Primary as well secondary data was used in the study. Primary data
was collected from sample of 60 cotton growers through multistage clustered
sampling method which equally distributed among different categories of farmers
were selected by sampling techniques from the farms located study area. The selected
respondents were interviewed through a well prepared and designed questionnaire for
the purpose. Secondary data collected from literatures, reports and publications etc.
Data so collected was analyzed, tabulated and interpreted in the thesis. Every
successful research starts with an appropriate planning before taking any further action.
Planning is a series of actions that a researcher has decided to take in order to achieve
something. Therefore, a care full plan is essential for all research studies.
The material required for research in economics is the collection of

facts and figure their information collected by the research worker from both primary
and secondary sources. Thus the material for the present research work comprises
data collected from cotton growers of District Naushahro Feroze of Taluka kandiaro
areas on Socio-Economic characteristics, farming system, production techniques
adopted in cotton crop, constraints and issues in cotton production, marketing system
of cotton crop, problems in the disposal of cotton, cost and investment made by the
cotton growers, income and net returns realized by the cotton growers in the study
area.
The study was helpful in suggesting the ways and means to eliminate
constraints and issues in order to create incentives among growers and increase
production of cotton crop. The research problems are tackling with the specific
methodology to grip all the objectives already determined for the research study
13
Survey is considered the best method to carry out researches in the field of social
sciences. The main task of the research workers in social science is to investigate the
general conditions prevailing, in the study area. It is this said that generalization could
be best apprehended through survey method. Survey has so far, proved successful to
spell out generalization on certain aspects. General tendency of the people towards
any particular aspect could be judged after recording the interviews of a sample of
respondents. Therefore survey method was considered meaningful o examine cotton
production and constraints around the study area.
Cost function analysis Y= f (Xn)

Cost function describes the relationship between inputs and outputs;
the output depends on various quantities of input, so the production is dependent is
dependent variable, while the factors of cost are independent variables. The factors of
costs include land inputs, labour inputs, capital inputs and marketing costs. There is
great potential for increasing crop yields which can be achieved in considerable
shorter span of time and with much less financial costs. Proper managements of
production factors such as land, labour, capital and other water and non water inputs
are the key to meet this end. Mechanization of agricultural operations is an important
aspect, which meets to be adopted along with brining improvements in use of other
inputs e.g water, fertilizer, seed, herbicides and pesticides steps for efficient adequate
use of other water and non water initiated at the same time. Adoption of appropriate
irrigation practices for on farm water management along with use of right type of
agricultural equipment to ensure timely and properly establishment of cotton can help
in achieving higher levels of productivity in the study area.
14
Following is the mathematical form of cost of production function

Y = f (Xn)
Y= (X1, X2, X3, Xn)
Where
X1.n= per hac input used
Standard error of X is estimated as
s.e. ( x ) = var ( x )
Where var ( x ) =
var ( x )
(Anderson et al., 2001)
n
Arithmetic Mean
It is defined as value obtained by dividing the sum of all observations
by their numbers. Arithmetic mean or average can also be used for tabulated
presentation of data.
A.M or Average = Xn n
Where
= Total or Sum, Xn = Variables observations used in analysis. n = No. of
observations.
Standard Deviation
Deviation of a data from its mean is called the standard deviation. If a
deviation of it Mean is squared then the resulting deviation is called standard
deviation.
S.D = [(X-X*) / n]
Where
X = Value of Observations, X* = Mean of a Variable, n= No. of observations.
= Square Root and = Summation
15
Standard Error
Square root of standard deviation is called standard error
S. Error = ( [(X-X*)/n])
Where
X = Value of Observations, X* = Mean of a Variable & n= No. of observations
= Square Root and = Summation
Data analysis
Initially the data were arranged and organized in coding system. By

using the coding sheet, all the data were tabulated, summarized and analyzed through
computer software SPSS (Statistical Package for Social Sciences).Descriptive
statistics were uses to calculate interpret and discuss results and formulate the
recommendation. The data were summarized and presented in the form of tables and
figures.
Sampling Method
Multistage cluster sampling was applied to select representative

samples of respondents. Cluster sampling has two important advantages over Simple
Random Sampling and Stratified Sampling. Firstly, it is economical and secondly it is
suitable for selecting a sample when the sampling frame of individual elements is not
available. Cluster Sampling only needs a list of elements in the clusters sampled
(Anderson et al., 2001)
16
Table-3.1
Distribution of sample Cotton growers in the study area during

2010-11
Selected
Taluka
Union Council
Kamal Dero
Kandiaro
Mohabat Dero
Name of Village
No. of Farmers Percent
Paryal Sargani
13
21.66
Jara Dakhan
12
20.00
Sher Mohammad
11.66
Chuttal Sargani
13.33
M.Ismail Bhagat
15.00
Sanjar Lashari
11
18.33
60
100.00
All
The present study were sampled as multistage clustered sampling so

that one taluka Kandiaro from district Naushahro Feroze out of which two union
councils Mohabat Dero and Kamal Dero were selected in each union council three
villages were selected and among each village different number of farmers were
randomly selected from the study area hence over all sixty respondents were
interviewed for the study.
Table 3.2
Distribution of sample Cotton growers by farm size in the study

area during 2010-11
Farm Size
No. of Farmers
Percent
Small (<10 acres)
23
38.33
Medium (10-20 acres)
26
43.33
Large (>20 acres)
11
18.33
60
100.00
All
The result shown in table-3.2 that the distribution of cotton growers

38.33 percent of having less than ten acres of land were small farmers, 18.33 percent
of having more than 20 acres of land and 43.33 percent were large cotton growers and
having 10-20 acres of land were medium size of cotton growers in the study area
17
CHAPTER IV
RESULTS
Production is a process whereby some goods and services called inputs

are transformed into other goods and services called outputs. Production of agriculture
commodities not only results through the transformation of various inputs into outputs
but it is also subject to the physical, natural and socio economic condition of the area.
It is therefore necessary to have a brief account of the socio-economic indicators like
family size, educational level etc. as prevailing in the study area, and to account the
production practices as well as returns in physical and revenue terms. The present
study was carried out to investigate the economic implications of cotton production in
Kandiaro area of district Naushahro Feroze.
Characteristics of Sample Cotton Growers
The knowledge of socio-economic characteristics of sample farmers

provide better insights for understanding the general environments the farmers are
working in some selected socio-economic characteristics of sample owner farmers are
generally believed to be more responsive to technological changes and are considered
to be in a better position to take risk of adoption of new technologies with uncertain
outcomes. Others are of the view that owner-cum-tenants are more innovative as they
can share the risk with land owners. These arrangements show the importance of
information on land tenure system. More than sixty five percent of the sample farmers
were owner farmers. Since the majority of the farmers are resource poor farmer
thereby only 13 percent of the samples growers have own tractors. In addition to their
own land preparation, they rented out tractors to other farmers. Majority of the
farmers (77 percent) used rented tractors. The sample farmers are classified into three
groups on the basis of their ages viz., 27 percent were 20 to 30 years old, 43 percent
18
were 31 to 40 years old, and 30 percent were more than 40 years old. Education level
of sample farmers was also obtained. Literacy ratio was very low in the study area as
more than 25 percent of the respondents were illiterate. Farmers were also inquired
about the sources of information regarding latest crop technology. More than 88.3
percent of the sample cotton grower opinioned that they did not know about the
extension activities of the Sindh Agricultural Extension Departments, among the
reason for cotton cultivation 40% growers told that it increase income and 60% were
opinion that it makes the property more productive and fair. The soil types of cotton
fields were recorded from farmers perception and classified into four main groups. In
study area clay, clay-loam, saline and sandy soil was 10.8, 54.2, 27.6 and 7.4 percent,
respectively.
Table -4.1
Socio-economic profile of cotton growers cotton growers

Characteristics
Average
Standard Error
Age of respondent (years)
51.28
1.49
Formal education (years)
13.02
0.25
Farming experience (years)
28.6
1.6
The information regarding socio-economics characteristics of the

sample cotton grower is presented in table-4.1. On an overall basis the average age of
selected cotton growers was 51.28 years, implying that relatively senior members of
farmers family were operating the farming business and had 28.6 years of farming
experience.
Educational levels
Education and training make the grower skilled and more efficient,
education not only enhance the standard of living but also help in maintenance of
farms which can bring prosperity of his family. Therefore, literacy level was asked
from the selected cotton growers in the study area.
19
Table -4.2
Education levels of cotton growers in study area, during 2010-2011
Education level
No. of respondents
Percentage
Illiterate
15
25.00
Primary
21
35.00
Middle
11
18.30
Matriculate
13.30
Intermediate
6.70
Graduate
1.70
Total
60
100.00
It was observed in table-4.2 that the education level of selected

growers was in order of 35.00% primary (5-years), 18.30% middle (8-years), 13.30%
matriculate (10years) 6.70% intermediated (12-years), 1.70% graduate beyond the
25.00% of cotton respondents were illiterate in the study area.
Crop seasons and Cropping Patterns
There are two main crop seasons; "Kharif" and "Rabi" in the study
area. The Kharif season starts from April-May and ends in October-November while
the Rabi starts from November-December and ends in April-May. However due to
regional variation in temperature, several factors i.e. varieties, availability of water,
soil texture etc determine the crop pattern, sowing and harvesting time. Wheat,
Cotton, Rice, Sugar-cane are the major crops of the district; Jowar, & Mustard,
Mattar, Onion, Bajra and Maize fall in the category of minor crops. Cropping patterns
in study area is shown in Table 4.3. In study area during Kharif season, rice,
sugarcane, Jowar and cotton, were the major predominant crops with 22.4, 15.2, 5.6
and 45.6 percent of the total cropped area, respectively. Also, wheat vegetables,
20
barseem, maize had 74.4, 18.6, 5.8 percent respectively sizable share in the Rabi
cropping pattern of sample cotton growers.
Table -4.3
Cropping patterns of sample cotton growers in the study area

during 2010-11
Crops
Percent area
Kharif crops
Cotton
45.6
Rice
22.4
Sugarcane
15.2
Jowar
5.6
Vegetables
6.8
Others
4.4
All
100.00
Rabi Crops
Wheat
74.4
Sugarcane
18.6
Barseem
5.8
Others
1.2
All
100.00
Land Tenure Status
It was apparent from the result in the table-4.4 that 65.00 percent were
owner, 18.30 percent were owner cum tenant and 16.70 percent of the respondents were
identified as tenant in the study area during 2010-2011
21
Table -4.4
Land Tenurial Status of cotton growers in study area, during

2010-2011
Land Tenure Status
No. of respondents
Percentage
Owner
39
65.00
Owner Cum Tenant
10
16.70
Tenant
11
18.30
Total
60
100.00
Cotton varieties
The result shown in the table -4.5 that most popular commercial cotton
varieties Ali Akbar-802, CIM-109, NIAB-78, CIM-111, Neelam- 121 and Qalandri
were grown the by the farmers in the area of study. Whereas NIAB-78, CIM-109,
Qalandri, Neelam- 121, CIM-111 varieties covered about 30.00, 25.00, 13.30, 13.30,
and 10.00 percent of land and Ali Akbar-802 variety planted by the selected growers
on cotton covered 8.30 percent on the studied farms in study area during 2010-11
Table -4.5
Cotton varieties planted on the selected farms in study area,

during 2010-11
Cotton varieties
No. of respondents
Percentage
Ali Akbar-802
8.30
CIM-109
15
25.00
NIAB-78
18
30.00
CIM-111
10.00
Neelam- 121
13.30
Qalandri
13.30
Total
60
100.00
22
Sources of Information about cotton
The most common and acceptable source of information of rural area

have always been personal sources like experienced farmers, Electric media,
Newspapers, Neighbors, Agriculture department is also significant in the wake of
increasing literacy and informational knowledge about recommended technologies of
cotton.
Table -4.6
Sources of technical information to sample cotton growers in study

area, during 2010-2011.
Sources of information
No. of respondents
Percentage
12
20.0
16
26.7
20
33.3
11.7
8.3
60
100.0
Friends
Relatives
Neighboring grower
Govt. Agri. Department
Media (Electric/print)
Total
It is demonstrated in the table-4.6 that majority of the selected cotton

farmers i.e. obtained technical information from neighboring farmers that was 33.3%
while obtained 26.7% from relatives, 20.0% from friends, 8.3% knowledge about
cotton production practices from electric media and newspapers and 11% from
government agricultural department the role of agriculture department on providing
technical information was meager about cultural practices and marketing was found
minor.
23
Status of and growth cotton production in Sindh and Pakistan
The status and growth of cotton production of Sindh province area 547
million acres were grown, 2443 production in million bales and 759 yield per hectares
in kilograms (lint) and 2929 million acres area, 10800 million bales production and
627 yield per hectare in kilogram (lint) attributed during 2001-02. During 2011-12
there slight increase area 549 million acres, 2448 million bales production, 761 yield
per hectare kilogram (lint) in Sindh and 3200 area in million acres, 14010 production
in million bales and 744 yield per hectare in kilograms (lint) in Pakistan were studied
the details of area, production and yield of cotton in Sindh and Pakistan from 20012002 to 2011-12 of area, production and yield of cotton production of the study area is
given which meets first objective of study is given in appendices.
Table-4.7
Area, production and yield of cotton in Sindh and Pakistan during

2001- 02 to 2011 -12
Sindh
Year
Area
(in 000
acres)
Production
(in 000
bales)*
Pakistan
Yield/
hec in
kgs (lint)
Area
(in 000
acres)
Production
(in 000
bales)*
Yield/
hec in
kgs
(lint)
2001-02
547
2443
759
2929
10800
627
2002-03
542
2411
756
3114
10900
595
2003-04
561
2242
680
2751
10133
626
2004-05
635
3016
808
2994
10061
571
2005-06
637
2648
707
3210
14600
773
2006-07
570
2398
716
3100
13000
713
2007-08
607
2536
711
3072
13000
719
2008-09
562
2978
901
3035
11665
653
2009-10
634
4270
1144
2850
12060
719
2010-11
650
4282
1098
3120
12698
692
2011-12
547
2443
759
3200
14010
744
* 1 bale = 170 kg
24
Total Fixed cost
Total fixed cost is simply the summation of the several types of fixed
costs (Ronald, 1996). In the present study the total fixed costs include the rent of land
(lease) and the land taxes. These are sunk costs. They do not vary with the volume of
output and can have no bearing upon decisions regarding an increase or decrease in
productions. Fixed costs are those cots, which are incurred irrespective of the level of
output. Other characteristic of fixed costs is that they are not under the control of the
manager in the short run. They exist and at the same level regardless of how much or
how little the resource is used. They only way they can avoid is to sell the item, which
can be done in the long run.
Table -4.8
Averages per acre land inputs realized by cotton growers in study

area, during 2010-2011.
Minimum
Maximum
Average
Standard
Deviation
Standard
Error
10250.00
13000.00
11543.36
955.81
30.91
Land tax
202.35
465.40
302.91
83.32
9.13
Irrigation
charges
182.11
323.76
238.43
56.01
7.48
Local fund
121.41
323.76
193.24
45.56
6.74
10755.87
14112.91
12277.95
1140.71
54.26
Item
Rent of land
Total
It is apparent from the results presented in the table-14.8 that the

selected cotton growers spend average per acre fixed costs of Rs.12277.95 ( 54.26)
including rent of land, land tax irrigation charges and local fund an average per acre
cost of Rs. 11543.36 ( 30.91) as land rent, land tax per acre was Rs. 302.91 ( 9.13),
while irrigation charges per acre was 238.43 ( 7.48) and local fund was 193.24
(6.74) per acre ,land rent ranged between Rs 10755.87 to 14112.91 in the study area.
25
Labour inputs
Labour inputs, averages physical and mental effort for the performance
of any work. Inputs analyzed in this study include man as well as animal labour.
Labour inputs refer to all outlays incurred to labour for production process. The actual
labour used for various operations carried out by farmers have been calculated and
multiplied with wage rate for calculating the costs incurred on labour. Labour inputs
were employed for all cultural operations during the period of cotton cultivation in
study area. These operations are ploughing, leveling, sowing and inter-culturing,
application of fertilizer and picking.
Table -4.9
Averages per acre labour cost incurred by the selected cotton

growers in study area, during 2010-2011
Standard Standard
Deviation
Error
Minimum
Maximum
Average
Leveling
700.00
987.00
867.33
73.68
8.58
Sowing
400.00
900.00
688.90
136.86
11.69
Ploughing
456.00
956.00
790.88
119.90
10.95
Fertilizer
400.00
950.00
700.36
158.11
12.57
Picking
456.00
900.00
739.30
134.79
11.68
Inter-culturing
400.00
823.00
594.51
114.15
10.68
Total
2812.00
5516.00
4381.30
737.53
66.15
Item
The results presented in the table-4.9 the averages per acres labour cost
that revealed the cotton farmers incurred an average per acre cost of Rs 4381.30 (
66.15) including ploughing, fertilizer, picking, inter culturing and leveling as labor
costs. The table further indicated that the labour cost in the study area ranged between
Rs. 2812.00 to Rs. 5516.00.
26
Capital inputs
Capital has been defined as material goods used in further production.

Capital may be defined as that part of wealth, which is used for further production of
wealth. It is the capital that yields a farm entrepreneur to determine the type of
farming amongst various substitutes. Capital is a factor of production, which
possesses some distinct characteristics. The volume of capital can be increased or
decreased. Capital plays a strategic role in boosting up o the productivity. Certainly a
farm entrepreneur would like to invest capital in a type of farming from which he
expects high turnover. Capital also determines the role of technological innovation in
agriculture, which results in the increase of output, decrease in the cost or both. The
volume of capital can be increased or decreased. Capital plays a strategic role in
boosting up of the productivity.
Table -4.10
Averages per acre capital inputs applied by the selected cotton

Minimum Maximum
Item
Average
Standard Standard
Deviation
Error
Seed
800.00
1200.00
1000.00
159.71
12.63
Urea
1800.00
2300.00
1947.5000
137.60
17.76
D.A.P.
2500.00
4000.00
2880.0000
450.16
58.11
Pesticides/Insecticide
500.00
750.00
589.6500
31.53
4.07
Equipment charges
150.00
500.00
290.0000
115.27
14.88
Total
5750.00
8750.00
6707.15
894.27
107.45
The cotton growers spent on capital inputs as average per acre costs is
presented in table-4.10. Total average per acre cost is Rs. 6707.15 (107.45). The
further cost ranges from Rs. 5750.00 to Rs. 8750.00 in the study area.
27
Marketing costs
Marketing costs are those expenses which are incurred by the growers
when agriculture commodities move from the producing field (farm gate) to the final
consumers for the disposal of their production, the growers it included number of
expenses on transportation, loading, unloading and commission charges. All these
expenses paid on the basis of per unit.
Table -4.11
Averages per acre marketing costs incurred by the selected cotton

grower in study area, during 2010-2011
Standard Standard
Deviation
Error
Minimum
Maximum
Average
Loading
140.00
350.00
209.50
85.597
9.25
Transportation
437.00
900.00
482.66
89.11
9.40
Commission
270.00
580.00
498.85
67.04
8.18
Un loading
150.00
500.00
313.76
124.22
7.79
Total
997.00
2330.00
1504.77
365.967
34.62
Item
It is apparent that the result presented in table-4.11 that the selected

cotton growers on average spent Rs. 1504.77 (34.62) per acre marketing charges,
these
includes
Rs.209.50
(9.25)
loading
charges,
Rs.482.66(9.40)
Rs.313.76(7.79) on unloading and Rs.498.85(8.18) on commission charges. The

table further presented in the study area ranged between Rs. 997.00 to Rs. 2330.00
incurred marketing cost.
28
Total Cost of Production
The total cost is defined as sum of fixed cost plus variable costs make
the total cost of production. To determine the cost of production, it was considered
essential to being together all costs calculated under various headings. Therefore,
fixed costs (land inputs) and variable costs viz, labour costs, capital inputs and
marketing costs incurred by the just to fix selected cotton growers in study area, were
consolidated it can be seen from the results shown in table-4.12
Table -4.12
Averages per acre total costs incurred by the selected cotton

Standard Standard
Deviation
Error
Minimum
Maximum
Average
Total fix cost
10755.87
14112.91
12277.95
1057.39
33.77
Labour cost
2812.00
5516.00
4381.30
737.53
27.15
Capital input
5750.00
8750.00
6707.00
894.00
30.00
Marketing cost
997.00
2330.00
1504.77
365.967
34.62
20314.90
30708.90
24871.00
3054.89
125.54
Item
Total
Each cotton grower operating on average performance total costs of

production is presented in table-4.12 the result revealed that cotton farmers incurred
an average per acre cost Rs. 24871.00 (125.54) as total cost of production including
fixed cost, labour cost, capital inputs and marketing cost. The data further indicates
that cotton grower spent in the study area ranged between Rs. 20341.90 to Rs.
30708.90 on total cost in the study area.
29
Physical productivity
The yield when expressed in terms of physical weight is known as

physical productivity. It is generally expressed in terms of unit weight of production
obtained. In other words physical productivity of cotton farm is the same as the total
yield obtained of other crop by farmers is was determined by using following formula
APP
(TY-AS)
In the above formula APP stands for average physical productivity,

and TY total yield, whereas AS is symbolized the area sown under cotton production.
Table -4.13
Item
Physical
productivity
Averages per acre physical productivity realized by cotton growers

in the study area, during 2010-2011
Minimum
Maximum
Average
Standard
Deviation
Standard
Error
20.00
28.00
23.35
2.01
1.41
It explicit the results shown in that each cotton grower harvested and
average physical productivity presented in table-4.13. The results revealed that cotton
grower realized average per acre physical productivity of 23.3500 ( 1.41). The data
further indicates that the total physical productivity in the study area growers
harvested between 20.00 to 28.00 maunds per acre yield was attributed.
Revenue productivity
The value of farm production of gross profit it refers to money income

accruing to the farmers from the sale of their production. It is calculated by
multiplying the physical productivity (yield) obtained with the price, it is sold. For the
purposes of economic analysis, the revenue productivity at sample cotton farms in the
study area was also calculated the same formula for each individually farm and then
30
the averages per acres were derived, which is shown in table-4.14
Table -4.14
Item
Revenue
Averages per acre revenue productivity realized by selected cotton

growers in study, during 2010-2011.
Minimum
Maximum
Average
Standard
Deviation
Standard
Error
30400.00
49400.00
41249.16
4705.18
68.59
The revenue productivity average per acre is presented in table 16. The
result reveals that cotton growers realized an average per acre revenue productivity of
Rs. 41249.16 ( 68.59). The table further indicated that in the study area ranged
between Rs. 30400.00 to Rs. 49400.00 the revenue productivity was attributed.
Net - farm income
Net farm income is gross profits remains cash operating expenses and
depreciation cost of machinery and equipments costs could be obtained by subtracting
the gross revenue from cash operating expenses. Net income actually represents the
reward of the entrepreneur for producing a specific crop. Net income Averages output
or gross income after subtracting all farm expenses. Net income is calculated to judge
the efficiency of farm business as a whole. In order to measure the economic
efficiency of cotton per acre net return were computed by subtracting average per acre
cost from average per acre income obtained by sample growers.
31
Table -4.15
Averages per acre net income realized by the cotton growers in

Minimum Maximum
Average
Standard
Deviation
Standard
Error
Gross income (a)
30400.00
49400.00
41249.16
4705.18
68.59
Total cost of
production (b)
20314.90
30708.90
24871.00
3054.89
125.54
Net income a-b=c
10085.1
18691.1
16378.20
1650.29
-56.95
Item
The result showed that in the study area cotton growers received the
average per acre net income is presented in table-4.15. Results reveal that cotton
farmers realized an average per acre net returns of Rs. 16378.20 (56.95). The table
further indicates in the study area ranged between Rs. 10085.10to Rs. 18691.09 which
the growers received as net returns from cotton produce in the study area.
Input Output and Cost Benefit Ratio Relationship
The main objective of input-output ratio is usually used to determine

the production efficiency of some enterprise. That is calculated by dividing total
income with the total cost of production. The cost benefit ratio is defined as net
returns compared to cost of production. It is calculated by dividing net returns with
cost of production was computed on the basis of formula: Cbr = Nvp / Tcp
In the above formula CBR represents cost benefit relationship

NVP denotes net value of productivity, where TCP symbolizes total cost of
production. The results regarding the input: output and cost: benefit ratio for the
cotton growers in Kandiaro area of district Naushahro Feroze are recorded.
32
Table -4.16
Input-output and cost benefit ratio calculated by the selected

cotton growers in study area, during 2010-2011
Item
Minimum
Maximum
Average
Standard
Deviation
Standard
Error
Input-output
Ratio
1:1.49
1:1.60
1:1.65
1.54
0.54
Cost Benefit
Ratio
1:0.49
1:0.60
1:0.65
0.54
-0.45
In the above table-4.16 the results indicated that the input-output ratio
was 1: 1.65 and cost benefit ratio ranges 1:0.49 to 1:0.60. It evidently showed that
cotton producers obtained benefit of Rs. 1:0.65 an average while spending a rupee in
the study area which is meager benefits for the cotton grower it is due to the
unfavorable prices of their produce in the study area were examined.
33
CHAPTER-V
DISCUSSION
The most important sector of the economy of Pakistan is agriculture
through more than two-third population of the country lives in rural areas and their
livelihood continues to revolve around agriculture and allied activities. Pakistan is by
and large a mono-crop economy as cotton is the lifeline for the economy many others
are indirectly linked with cotton value chain. Thus, livelihood of millions of farmers
are directly associated with cultivation and harvesting of cotton crop and sale of lint
and of those employed along the entire cotton value chain is dependent on this single
crop. Nature has bestowed the province of Sindh with a variety of ecological
conductions suitable for the production of cotton crops (GOP, 2011).
Cotton is major crop of Sindh. It is grown over 602.183 thousand acres

producing 2966.040 thousand bales annually .Cotton production is expected to decline
by 1.3 million tons to 22.2 million tons, as against a rise in consumption to 24.1
million tons, in. Higher consumption is pushing prices up, and ICAC secretariat
forecasts a rise in prices to a season average of US$1.63 per kilogram of cotton during
2009-10. Production will rebound to 24.4 million tons due to increases in area as well
as increases in yields. Consumption will also raise, thus expected supporting prices in
2010-11. The cotton crop is produced in area of Sindh comprising Ghotki Khairpur
Mirs, Sukkur, Shaheed Benzirabad (Nawabshah), Sanghar, Mirpurkhas Hyderabad
and Naushahro Feroze districts. (GOP, 2010).
The average farm size was estimated at 15.23 acres land out of which
11 acres was under cotton crop, which indicates the importance of cotton crop in
cropping pattern. The education level of selected growers was observed that selected
growers was in order 35.00% primary (5-years), 18.30% middle (8-years), 13.30%
34
matriculate (10-years) 6.70% intermediated (12-years), 1.70% graduate beyond the

25.00% of cotton respondents were illiterate in the study area. It was found that
majority of the selected cotton farmers i.e. obtained technical information from
neighboring farmers that was 33.3 percent while obtained 26.7 percent from relatives,
20.00 percent from friends, 8.3% knowledge about cotton production practices from
electric media and newspapers and 11% from government agricultural department the
role of agriculture department on providing technical information was meager about
cultural practices and marketing was found minor.
The cotton growers were not satisfied with marketing system at

prevailing in the area. They claim that major portion of retail price was snatched by
the local traders who do not take part in production and leaving a major share for
them which was too small of their production activities. The marketing organization
of cotton due to increased production has assumed paramount importance. Yet it was
characterized to the in efficient as the traders working between growers and
consumers were completely dominating over the cotton marketing system. Cotton
marketing has been almost ignored and it has been left to regulate by itself in the
study area. Some established conventions were operative to govern cotton marketing
system which mostly favors the traders and middleman who exercise their control
over the prices.
The results indicated that cotton farmers incurred an average per acre
cost of there is apparent from the results presented in the table-4.8 that the selected
cotton growers in the study area paid average per acre fixed costs of Rs.12277.95
including rent of land, land tax irrigation charges and local fund. The results revealed
that cotton farmers incurred an average per acre cost of Rs. 11543.36 ( 30.91) as
land rent, land tax per acre was Rs. 302.91 ( 9.13), while irrigation charges per acre
was 238.43 ( 7.48) and local fund was 193.24 (6.74) per acre. The table further
35
indicated that the land rent ranged between Rs 10755.87 to 14112.91 in the study
area. The results revealed the cotton farmers incurred an average per acre cost of Rs
4381.30 ( 66.15) as labor costs; it further indicated that the labour cost ranged
between Rs. 2812.00 to Rs. 5516.00 averages per acres in the study area.
While GOP (2006) reported that the variations were in yield which
suggests that there may be a reliable potential for improving productivity. The cotton
growers of the study area were confronted with many constraints, which were limiting
the expansion of cotton area and production. Haresh and uncertain climatic
conditions, shortage of irrigation water, improper use of inputs, ignorancy cultivation
techniques and in efficient marketing system were the main handicap constraints
causing low yield. Whereas, Sial et al. (2004) found that the improper agronomic
practices low, input supply and socio-economic constraints causing low yield.
The results shown that cotton farmers incurred average per acre cost
selected cotton growers spent 1504.77 (34.62) per acre marketing charges, these
includes Rs.209.50 (9.25) loading charges, Rs.482.66 (9.40) Rs.313.76(7.79) on
unloading and Rs.498.85(8.18) on commission charges the marketing cost in the
study area ranged between Rs. 997.00 to Rs. 2330.00. The cotton growers spent on
capital inputs as average per acre costs and total average per acre cost is Rs. 6707.00
(107.00). The further cost ranges from Rs. 5750.00 to Rs. 8750.00 per acre.
The result indicated that cotton farmers incurred an average per acre
cost each cotton grower operating on average performance total costs of production is
presented in table-4.12. The result revealed that cotton farmers incurred an average
per acre cost Rs. Rs. 24871.00 (125.54) as total cost of production including fixed
cost, labour cost, capital inputs and marketing cost. The data further indicates that
cotton grower spent cost in cotton production ranged between Rs. 20341.90 to Rs.
36
30708.90 in the study area.
The results further revealed that cotton grower realized average per
acre physical productivity of 23.3500 ( 1.41). The data indicates that the total
physical productivity in the study area growers harvested between 20.00 to 28.00
maunds per acre yield was attributed. Result interpreted that cotton growers realized
an average per acre revenue productivity of Rs. 41249.16 ( 68.59). The table further
indicated that in the study area ranged between Rs. 30400.00 to Rs. 49400.00.00 the
revenue productivity was recognized. Results reveal that cotton farmers realized an
average per acre net returns / income of Rs. 16378.20 (56.95). The result further
indicates in the study area ranged between Rs. 10085.10to Rs. 18691.09 which the
growers received as net returns from the study area and indicated results that the
input-output ratio of cotton growers average was 1: 1.65 and cost benefit ratio was
1:0.60. It evidently examined that cotton producers obtained benefit of Rs. 0.60
average while spending a rupee in the study area. While Sial et al. (2004) reported
that the cotton growers received Rs. 4235, average per acre returns. In that study area
input output and cost benefit ratio were estimated 1: 1.81 and 1: 0.81.
The result discussed in above section clearly indicate that the cost of
production as well as returns (physical and revenue) have increased over the time.
Normally, the increases in revenue returns take place because of technologically back
stopping or technical efficiencies, abundant availability of water in the area, and use
of hybrid seed cotton crop.
Although constraints were in the study area as follows:

(A) Production constraints were found from the study area
(1) Physical constraints of seed, labour and fertilizers
37
Lack of pure and quality seeds of cotton, Lack of agricultural labour

during peak seasons, lack of availability and high price of genuine fertilizers, lack of
availability of micro-nutrient fertilizers and lack of knowledge about recommended
package of practices (by agencies)
(2) Irrigation constraints
Underground water not fit for irrigation of cotton, inadequate irrigation

facilities, low availability of irrigation power, and high cost of irrigation
power.
(3) Plant protection constraints
High incidence of diseases, high incidence of sucking insect in cotton,

high incidence of other insect pest in cotton and lack of availability of genuine plant
protection chemicals
(4) Credit constraints
Lack of capital resources, lack of credit availability from institutional

sources and high cost of credit
(B) Marketing constraints were found from the study area
Lack of timely availability of good quality seeds, high prices of quality

seeds, lack of timely availability of genuine fertilizers, lack of timely availability of
plant protection appliances, lack of marketing facilities at village level, low price of
farm produce at the time of harvesting, lack of storage facilities, lack of grading and
standardization, lack of cheap and efficient transport, delay in payment by the
marketing agencies and less payment by the marketing agencies
38
CHAPTER-VI
CONCLUSION AND SUGGESTIONS
The present research study on economic analysis of cotton cultivation

in study area was conducted to investigate the average status of cotton production in
Sindh and Pakistan, average per acre cost of production, physical and revenue
productivity, net return, input output ratio, cost benefit ratio, issues and constraints,
faced by cotton growers and to suggest policy measures for sustainable cotton
production. The results derived from the study are concluded here under:
On the basis of present investigation in may be summing up, it is

concluded that cotton is the main cash crop of Pakistan and plays an important role in
the economy of the country. In our country, there are 80 percent of small growers and
they face financial constraints at the time of ploughing farms. They purchase their
input from the local traders on loan at high interest rates or pay 10 percent to 25
percent more price. While purchasing input from the market, they pay more prices
and when they bring their output for sale, they receive smaller amount. Keeping in
view these problems, they are unable to save from income for future crop.
In the study area an average age of selected cotton growers was 51.3
years. Almost all the respondents were married with family size 12 members. 60% of
the selected cotton growers were engaged full time in farm whereas, 40% were
operating as part time business. The selected cotton growers on an average owned 39
acres land overall, and about 80% were under cotton cultivation. The main source of
irrigation was canal and somehow was on tube well.
In the study area the most popular commercial cotton varieties Ali
Akbar-802, CIM-109, NIAB-78, CIM-111, Neelam- 121 and Qalandri were
39
respectively grown the by the farmers. More or less all the selected cotton growers
applied in drilling system. Fertilizer and pesticides sprayed 1 to 3 times during the
season. The selected respondents carried ploughing, sowing, fertilizer applications,
inter-culturing and picking operation by hired labour. The selected cotton growers
marketed or sold cotton produce at taluka level and local market. It was observed that
about all the selected cotton growers were self marketing their produce. It was
investigated that cotton grower got benefit of Rs. 1:0.60 average while spending a
rupee in the study area.
Hence, the farmers are not getting potential benefits from their cotton
crop. It is also to mention that due to fast growing inflation in the country, the cost of
cotton production, even calculated a year ago, would not serve the purpose. Thus, it is
quite imperative to calculate production costs of cotton on yearly basis till the stability
in the capital and recurring costs. The economic analysis review indicates that cost of
cotton production is in a continuous change due to inflation and the prices of inputs
are continuously changing. The fast changing scenario in costs on inputs used in
cotton, services rates and capital costs demands a regular study on the economic
parameters of cotton production. The main problem reported by the selected cotton
growers was on farms shortage of irrigation, low quality of seed and pesticides,
market distance low price of cotton crop received, poor farm market road, costly
inputs and exploitation of local traders. The cotton in important commercial crop in
study area, therefore its cultivation may be increased. Yet the growers are confronting
with many problems due to which per acre yield is declining.
40
Summary
1. Fixed cost
Average fixed cost per acre.
Rs.
12277.95
Rs.
4381.30
Rs.
1504.77
Rs.
6707.00
Rs.
24871.00
2. Variable costs
Average labour cost per acre.
3. Marketing cost
Average per acre marketing costs
4. Capital inputs
Average per acre capital inputs
5. Total costs
Average per acre total costs
6. Physical productivity
Average per acre productivity
23.35 Mds (40 kg)
7. Revenue products
Average Revenue productivity per acre
Rs.
41249.16
8. Net Farm income

Average net income per acre
Rs.
16378.20
9. Input-Output ratio
Rs.
1:1.65
10. Cost benefit ratio
Rs.
1:0.65
41
SUGGESTIONS
The agricultural extension people of the provincial governments posted in the
rural areas provide on the spot guidance in the correct methods of production
practices and marketing.
To reduce losses during harvesting, bagging, marketing, transport have been
provided the facilities between main producing and consuming centers.
The growers should be trained about proper farm management practices
(proper use of chemical fertilizers, pesticides, inter-culturing and irrigation).
The loan facilities either public bank or by commercial banks should be
provided at low interest rate.
Farm to market roads should be constructed by government or by private
agencies on self help basis. Research, extension and education system should
be strengthened to cash the current research findings.
Availability of good quality high yielding hybrids seeds are required to
accelerate cotton growth and adoption of quality seed of desired varieties
along with timely supply of fertilizers may be ensured fertilizer, pesticides,
sprayers and other inputs of farm should be provided at subsidized rates.
The proper diffusion of modern technical knowledge and recommended
agronomic practices should be introduced through on farm research trials.
It is possible to increase cotton production by increasing the support price
programmed should be continued with the objective of attaining self
sufficiency in cotton crop. Support prices should be announced well before
sowing time and implemented effectively. Understand that unless it becomes
economically viable no new investment will take place for the profitability of
cotton growers.
42
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45
Appendix -I No of respondents, area, production of cotton in study area during

2010 -11
No of
Farmers
Cultivated
area
(in acres)
Total
production
(in maunds)
No of
Farmers
Cultivated area
(in acres)
Total
production
(in maunds)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
14
4
13
6
18
9
16
12
16
19
20
8
10
5
5
6
10
16
18
12
8
5
20
20
18
15
12
17
8
8
280
84
325
138
378
198
416
252
400
437
460
200
260
100
105
150
230
336
396
312
168
125
460
460
450
330
288
340
168
200
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
11
16
20
18
9
19
20
15
16
8
26
9
39
28
39
28
27
29
19
29
6
8
7
9
9
8
9
6
19
40
253
336
440
468
189
475
460
345
400
192
520
189
975
644
819
616
702
609
475
667
138
200
175
225
225
208
225
168
494
1000
46
Appendix -II
Area under Cotton Crop in Pakistan during 1990-2011
Fiscal year
1990-91
Cotton
2,662
1991-92
2,836
1992-93
2,836
1993-94
2,805
1994-95
2,653
1995-96
2,997
1996-97
3,149
1997-98
2,960
1998-99
2,923
1999-00
2,983
2000-01
2,927
2001-02
3,116
2002-03
2,794
2003-04
2,989
2004-05
3,193
2005-06
3,103
2006-07
3,075
2007-08
3,054
2008-09
2,820
2009-10
2010-11 P
3,106
2,689
(000 hectares)
P: Provisional (Jul-Mar)
Note: 1 ha = 2.47 acres Federal Bureau of Statistics
Source: Ministry of Food and Agriculture
47
Appendix III
Fiscal years
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11 P
Productions of Cotton Crop in Pakistan during 1990-2011

Cotton
(000 tonnes)
1,637
2,181
1,540
1,368
1,479
1,802
1,594
1,562
1,495
1,912
1,826
1,805
1,737
1,709
2,426
2,215
2,187
1,982
2,010
2,196
1,949
(000 tonnes)
48
(000 Bales)
9,628
12,822
9,054
8,041
8,697
10,595
9,374
9,184
8,790
11,240
10,732
10,613
10,211
10,048
14,265
13,019
12,856
11,655
11,819
12,913
11,460
Appendix IV
Yield per hectare of Cotton Crop in Pakistan during 1990-2011
Fiscal Year
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11 P
Cotton
615
769
543
488
557
601
506
528
511
641
624
579
622
572
760
714
711
649
713
707
725
(Kg/Hectare)
49
QUESTIONNAIRE
ECONOMIC IMPLICATIONS OF COTTON PRODUCTION IN DISTRICT
NAUSHAHRO FEROZE, SINDH PROVINCE OF PAKISTAN
1. General:
Samplenumber:___________Interviewer____________________Date____________
Taluka:_____________District: __________________Case No: ________________
Date of Interview:_____________ Name of the Farmer: _______________________
Age:_________(Years)Province_______________District/Taluka________________
Deh:________Villagename________CroppingZone________Educationlevel:______
Primary source of income___________Secondary source of income ______________
Farm size: Total
(Hectare/Acre) Land rent:________Rs./acre/hec/annum
Power Source: Bullock ________Own Tractor _________Rented Tractor _______
Full time Family Labor (No) _______ Part time (No) __________________________
1. Land Resources
Tenurial Status:
Land Type:
Owner=1, Owner cum Tenant=2, Tenant=3

Irrigated =1, Rainfed =2, both =3
Irrigated
Rainfed
Area owned (acre)

Area rented in (acre)
Area rented out (acre)
Net operational area (acre)
2. Household Composition
Age
Gender (Male=1,
Female=2)
Years of
Schooling
Employment Status of all

bread earners
Employment
Income
Status
(Rupees per
(Full time=1, Part
month)
time=2)
Less than
<5 Year
5-10
10-15
15-60
Above 60
2. Soil type: Clay _______loam ____Clay loam ____Sandy ____Other:______
50
3. Access to Basic Needs

Particulars
Metallic Road
Water
Hospital
School
College
Distance (Km)
Particulars
Distance (Km)
Boys
Girls
Boys
Girls
4. Farm Income from Crop Sector

Crop area
(acre)
Prod/acre Total
Prod
Total
Sold
Price(Rs/40kg)
Wheat
Rice
Cotton
Pluses
Maize
Sorghum/Millet
Winter
Vegetable.
Summer
Vegetable.
Orchard
Others (specify)
5. Farm Expenditures on crop sector
Wheat
Rice
Seed used (kg)

Cost per kg (Rs.)
Land preparation cost
No. of Irrigation
Cost per Irrigation(Rs.)
Fertilizer used (bag)
Cost per bag
Pesticide spray (no.)
Cost per spray
Rent/Owner of land
Transportation
Harvesting cost
Thresher cost
51
Cotton
Veg.
Others
6. Marketing costs
Items
Picking /Packing
Loading and
Unloading
Transport
Commission
Brokerage
Discount
Miscellaneous
Total
Quantity supplied (kg)
Rate
Amount
6. Physical Productivity
Product
Area sown
Acre /hectare
Total yield
(kg)
Per acre /hectare

Yield (kg)
Seed-Cotton
Total
7. Revenue Productivity
Product
Sold
Farm perquisites
Qty. Rate Amt.
Total amount
Qty. Rate Amt.
Seed Cotton
sticks
Total
8. Total cost of Production
Operations
Land inputs
Labour inputs
Capital inputs
Total
Area
Total amount
9. Net return
Area
(in acres)
Total
Total income
(A)
Total cost
(B)
Net income
(A B)
10. Credit
Did you get any credit? 1= Yes
2= No______If yes then specifies,
How Much (Rs.) ___Bank: _Relatives: Friends
Other:
If no, have you ever tried:
1= Yes
_ 2= No_____
If tried, problem
1= Yes
_ 2= No_____
Low Productivity Reasons: ______________________________________________
Marketing Constraints Reasons: ___________________________________________
Solution/suggestions: ___________________________________________________
52
SYNOPSIS
SYNOPSIS OF THE PROPOSED THESIS WORK TO BE DONE IN
CONNECTION WITH THE PARTIAL FULFILLMENT OF REQUIREMENTS
FOR THE DEGREE OF MASTER OF SCIENCES (HONOURS) IN
AGRICULTURAL ECONOMICS TO BE SUBMITTED TO SINDH
AGRICULTURE UNIVERSITY TANDO JAM BY MR. GHULAM RAZA
SARGANI
TITLE: ECONOMIC IMPLICATIONS OF COTTON PRODUCTION IN
PAKISTAN
INTRODUCTION:
Pakistan is one of the ancient homes in cotton cultivation in addition

Pakistan is the 4th largest cotton producer and consumer 3rd largest exporter of raw
cotton and yarn in the world. Nearly 62 percent of the countrys population resides in
rural areas, and is directly or indirectly linked with agriculture for their livelihood.
Pakistan is by and large a mono-crop economy as cotton is the lifeline for the
economy It is an occupation of more than1.5 million farming families and a source of
livelihood for several million of labour, so cotton is the main cash crop which
contributes 8.6 percent of value added in agriculture and 1.8 percent of (GDP) and
source of 60 percent foreign exchange earnings and providing raw material to the
local textile industry. A profound investment in the form of over 1000 ginning
factories, over 400, textile mills heavily depends upon cotton (GOP-2011).
Cotton being a non food cash crop and was cultivated on the area
of3106 thousand hectares, 10.1 percent more than last year 2820 thousand hectares,
and is
playing significantly role in the uplift of the national economy cotton
production is the principle source of raw material for textile sector the largest agrobased industry which provides 45 percent employing of workforce and ranked as top
foreign exchange earner which contributes to the exports of country in the form of
raw cotton, yarn cotton cloth and other by-products (govt of Pakistan-2010).Cotton
53
production has been faced with the problem of declining yields. The yields have
remained at 200 to 300 Kg of seed cotton per hectare, a figure that is below the world
average of 605 kg/ha.potential of realizing over 2500 kg of seed cotton per hectare in
Sindh. The cotton crop areas damaged due to the flood in Naushahro Feroze district
55,000 acres and 487,125 acres in province of Sindh during 2010 (Arshad, 2010).
Naushahro Feroze is a district Sindh Province of Pakistan. District is

bounded on the north east by Khairpur district, in the south by Shaheed Benazir bad
district and on the west by Dadu and Larkana districts. The entire district is a fertile
plain formed by the Indus River with sandy and hard clay loams and suitable for
many cash crops including cotton and wheat. The total area of district is 3,021 Square
kilometer by which area under cotton sown 56,312 thousand hectares and with
cotton production 2, 11,618 thousand bales. The three cotton producing districts of
sindh namely Khairpur, Shaheed Benazir bad and Sanghar which is top most cotton
producing of Sindh. (Arshad, 2010).
Cotton production has been subjected to instability due to the

fluctuation weather, changing govt policies, rising cost of inputs particularly including
low per acre yield that ranks Pakistan 10th in the world, high price of agriculture
inputs (seeds, fertilizers, pesticides etc); higher intensity of insects and pests attack;
shortage of good quality, high-yielding, ,high incidence of pests and diseases, lack of
certified seeds, collapse of extension services, lack of credit, low producer prices and
marketing problems. At the production level, high incidence of pests and diseases
turns out to be the major constraint deficiency of irrigation water; lack of advance
technologies; lack of awareness and agro-professionalism; and adulterations in
pesticides, fertilizers and seeds etc and year to year variability in output prices. This
has proved to be demanding, as most cotton farmers are resource-poor and have no
access to credit. The low investment with concurrent absence of sustainable marketing
54
system has lowered down the farm and crop productivity (Hassan, 2010)
To meet the goals of future cotton requirements of country, the major

aim and thrust of the research work have been focused on the enhancement economic
implications of cotton productivity, growth and status identification of the production
technology, marketing constraints, production cost of cotton specifically it analyzes the
relationship between socio-economic characteristics of cotton farmers and adoption of
cotton production technologies and assesses profitability of cotton production. The
research study is expected to provide information to policy makers and other
stakeholders of agricultural development and poverty reduction. There are various
factors that influence cotton yield. They include physical factors such as land
preparation, seed, irrigation, plant protection measures, etc. and qualitative variables
like education, age, farming experience, etc. The farming community is in a dire need
of updated information to boost up the cotton production. This requires conducting a
detailed study and making recommendations on the basis of the findings from the
study area. Looking the facts and economic importance of cotton crop in our country,
study will be conducted with following objectives
OBJECTIVES:
In order to achieve the major objectives of the study the leading activities of project
are as under:
1.
2.
3.
4.
To examine the status and growth of cotton production in Sindh and Pakistan.
To analyze the cost of production cotton crop in the study area.
To identify the production, marketing and constraints in the study area
To suggest policy measures & program initiatives for efficient cotton
production.
55
REVIEW OF LITERATURE:
Ashiq and Khan (2002) conducted a study to measure the
competitiveness of seed cotton production and to determine the consistency between
current policies with existing comparative advantage. The analysis covered two major
cotton producing provinces, Punjab and Sindh due to their major share in total cotton
production. The cost of production estimates are based on the data of Agricultural
Prices Commission (APCOM) for five harvesting years i.e. 1997-98 to 2001-02.
Average cost per acre is calculated for each province by taking over into average over
five harvesting years. At national level data is obtained by taking the weighted
average of provinces depending upon their shares in production. They select policy
analysis matrix (PAM) approach to determine the comparative competitiveness of
Pakistans cotton and policy effects the comparative advantage was measured through
Domestic Resource Cost (DRC) ratio, and Social Benefit Cost Ratio (SBC).
Tariq et al. (2003) has examined the cotton crop and found that it has
120 to 130 days life span in many countries rather than 200 days or even more in
Pakistans case. He further explains that 60,000 to 80,000 plants are sown per acre but
in Pakistan 50,000 plants per acre are maintained. Besides, cotton crop is attacked by
various diseases which reduce the overall production of the country. In this regard, he
has suggested a few main points for increasing the output of cotton production.
Firstly, when this crop is attacked by the insects, chemical means are not the only
solution to control them. But the varieties having multi-adversity resistance (MAR)
should be use for this purpose. Secondly, he has given the example of Egypt and Syria
in this regard.
Siddiqui (2004). Studied the role of support price for various

agricultural commodities including cotton. The author observed that support price
56
help raise the production and safeguards the interest of the farmers against falling
prices in the post harvest months particularly when the harvest is a bumper-one.
Moreover, it helps to stabilize inter-year and intra-year prices of the agriculture
commodity. The author further examined custom ginning and hedge trading.
Khan and Yasin (2006) calculated the cost of cotton ginning in

Pakistan the authors observed that there are 1263 ginning factories in the country with
about 5745 gin stands, out of which 2.5 percent, 63 percent, and 33 percent and 1.5
percent gin stands have 80, 90, 100 and 120 saws respectively. The cost of ginning
was calculated basing on electric cost, depreciation of the machinery, repair and
maintenance cost of the building and machinery, cost of establishing a ginning
factory, cost of mechanical staff including unskilled and skilled labour and cost of
ministerial staff.
Naidu and Shankar (2007) analyzed that the cotton is no remunerative

as a commercial crop that farmers, even in agro-climatic zones not suitable for cotton
cultivation, grow cotton. This scenario underwent a change during the recent years,
due to heavy borrowing, over investment in inputs and frequent crop failure, the
cotton growers in India had to suffer severe and unbearable hardships. Many cases of
suicides were recorded from deferent parts of the country among cotton growers. This
study was based on cotton cultivation in the Guntur district Andhra Pradesh. This
paper made an attempt to probe into economic aspects of production and productivity
of cotton crop by using the Cobb-Douglas Production function. It was observed that
the multiple coefficient of determination was significant at the 1% level for all the
categories of farmers, indicating that there was significant contribution of all
independent variables to the farm output of the sample farmers. It was also evident
that the large farmers were more benefited form per rupee investment in cotton
cultivation, compared to other categories of sample farmers. Finally, the study
57
suggested certain measures for the profitability of cotton crop.
Khachatryan
et al. (2008) described that cultivated cotton on about
half of its 4.5 million arable lands. Since independence the government has embarked
on a program of diversification, aimed at self-sufficiency in wheat production by
encouraging the gradual shift from cotton to wheat. It tried to realize a
macroeconomic program of reforms, which includes privatizing input and output
markets, increasing production incentives, eliminating the state order for cotton and
streamlining the export system. Despite the announced program, the state continues to
play a major role in the production and marketing of cotton (sets production quotas
and prices, supplies input, purchases the crop) those attempted of restructuring the
agriculture have not any positive social or economic result. This paper argues that
restructuring cotton production by decreasing the areas under traditional cotton in
favour of cotton under plastic will result in welfare gains.
Dagistan et al. (2009) determined that the input and output involved in
cotton production in the Hatay province of Turkey. The average energy consumption
of the farms investigated in this study is 19 558 MJha-1 of the total energy, 2.87% us
direct and 71.13% is indirect. Renewable energy accounts of 12.30% and energy
usage efficiency is found to be 2.36. Total energy input into the production of one
kilogram of average Turkish cotton is estimated to be 4.99 MJ. The dominant
contribution to input is energy in the form of nitrogen fertilizer (40.28%), followed by
w3ater for irrigation 22.37%) and diesel oil (17.04%). The cost of cotton production
per hectare is found to be 2246 $ha-1 in the region, with 79.87% of this being variable
costs. It can be concluded that intensive cotton farms are being operated in the area
since the variable cost ration is quite high. As result of benefitcost ratio (1.24)
analysis, cotton production in found to be economically efficient.
58
Choudhry and Khan (2009) evaluated that seed, fertilizer and irrigation
were found scarce commodity for all category of farmers in district Multan. The CobbDouglas Production Function results revealed that the coefficient for cultivation
(0.133) and seed (0.103) were found statistically significant at 1 percent level. The
Cost-Benefit Ratio for the large farmers was found higher (1.14) than that of small
(1.22) and medium (1.24) farmers.
METHODOLOGY:
Primary as well as secondary data will be used in present study.

Primary data will be collected of sample of 60 of cotton growers, randomly through
multistage cluster sampling method from one taluka of Naushahro Feroze district.
The selected respondents will be interviewed through a well designed questionnaire
prepared for the purpose. The secondary data will be collected from literature and
publications .Data so collected will be analyzed, interpreted and tabulated, in this
study and the same data will be analyzed through SPSS, Excel and other computer
software.
Cost function analysis Y= f (Xn)

Cost function describes the relationship between inputs and outputs;
the output depends on various quantities of input, so the production is dependent is
dependent variable, while the factors of cost production are independent variables.
The factors of cost production include land inputs, labour inputs, capital inputs and
marketing costs. Following is the mathematical form of cost function.
Y = f (Xn)
Y= (X1, X2, X3 .. Xn)
(X1, X2, X3 .. Xn) = per acre inputs used,
59
Where i= 1, 2, 3n
Standard error of Xi is estimated as
s.e. (X i) = var (Xi)
Where var Xi =
var (Xi)
n
MULTI STAGES CLUSTER SAMPLING METHOD
Stages
II
III
IV
Selected District
For Study
Taluka.
UCs
Villages
Respondents
Naushahro
Feroze
One
taluka
from
district
Two UC.s of
taluka
Kandiaro
Three villages
of each union
council.
No of respondents
from village.
LITERATURE CITED:
Ali, Shujat (2000) Productivity Growth in Pakistans Agriculture 1960-1996, PhD

Dissertation, Department of Economics, Simon Fraser University,
Canada
Choudhry, I. S. And M. B. Khan. 2009. Factors Affecting Cotton Procution in
Pakistan: Emprical Evidence from Multan District Journal of Quality
and Technology Management, Volume V, Issue 11, Dec, 2009, pg.91100
Naidu V.and A. Siva Shankar. 2007. An Econometric Analysis of Cotton Crop: A
Study on Guntur district of Andhra Pradesh, Journal of Agricultural
Economics, 4(2): 37-47
Muhammad, A. (2011) Report Pakistan Cotton Research and Development, Vice
President, Pakistan Central Cotton Committee, Karachi.
Dagistan, E., H. Akcaoz, B. Dmirtas and Y. Ylmaz 2009 Energy usage and Costbenefit analysis of cotton production in Turkey, University of Mustafa
60
Kemal Faculty of Agriculture, Department of Agricultural Economics,

Hatay, Turkey 2 (1/2) 137-138
Evenson, Robert E. (2002) Economic Impacts of Agricultural Research and Extension
Center Reprint No. 578. Economic Growth Center, Yale University
Khachatryan, N., K. Armen and U. Nazarkulov. 2008. Measuring the policy Effects
on cotton production in Uzbekistan, University of Hohenheim,
Agricultural Economics and Social Sciences in the Tropic and
Subtropics, Germany, Pp.188
Khan, M.A., M. Iqbal, I. Ahmad and M.H. Soomro (2002) Economic Evaluation of
Pesticide Use Externalities in the Cotton Zones of Punjab, Pakistan.
The Pakistan Development Review, Vol. 41, No. 4-II
Khan, Alamgir and Yasin (2006). Cost of Cotton Ginning in Pakistan. Agricultural
Mechanizatino Research Institute, Multan, Pakistan.
Khan, N. P. and M. Ashiq. (2002). Comparative advantage of cotton production in

Pakistan and its policy implications. Pakistan Journal of Agricultural
Economics Jan-June 1-16.
Pakistan, (2009) Cultivation and Production of cotton in Pakistan during the year
2008-2009 download from Pakistan Agricultural website,
www.pakistan.com,http://www.robox/business /agriculture/agriculturesectors- contributed -47 -percent-to-gdp-growth-in-2008-2009
PCCC (2010) Cotton Production Strategy 2009-09. The Pakistan Cottons, Vol.50
(1 & 2):1-22. Ministry of Food, Agriculture and Livestock,
Government of Pakistan, Karachi.
Siddiqui Ibad Badar (2004). Pakistan Cotton Market. An overview, Pakistan Central
Cotton Committee, Karachi.
Tariq (2003). Cotton Catastrophe: Could it be avoided? Economic and Business
Review of Daily Dawn 2003.
61
The study will be completed within

Two academic years
DURATION OF WORK
Sindh Province of Pakistan.
PLACE OF STUDY
INSTITUTION INVOLVED
RESEARCH SUPERVISER

Faculty of Agricultural Social Sciences,
Sindh Agriculture University, TandoJam
Mumtaz Ali Joyo

Assistant Professor,
Sindh Agriculture University, Tando Jam
APPROVED BY
STUDENT
Raza Sargani
Mumtaz
Mumtaz Ali Joyo
Assistant Professor
Sindh Agriculture University, Tando
Jam.
Ghulam Raza Sargani

2K9-AE-137
Student of M.Sc. (Agril) Hons
S.A.U Tando jam
62

Economic Implications of Cotton Production in District Naushahro Feroz, Sindh Province of Pakistan.

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Economic Implications of Cotton Production in District Naushahro Feroz, Sindh Province of Pakistan.

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ECONOMIC IMPLICATIONS OF COTTON PRODUCTION IN

DISTRICT NAUSHAHRO FEROZE, SINDH PROVINCE OF

GHULAM RAZA SARGANI

DEPARTMENT OF AGRICULTURAL ECONOMICS