tobacco
... the economics of tobacco production in district Mansehra, NWFP (Pakistan). According to his study tobacco cultivation began in the study area from 1966-67. The yield of tobacco was 1200 Kg per hectare at that time which improved the socio-economic conditions of tobacco growers in the study area. Efforts were made to improve per hectare yield of tobacco in the study area. As a result of these efforts the yields have increased to 2000 Kg per hectare. A 66.7 percent increase in the per unit yield of tobacco provided Rs. 13600 as extra income. Bhatti (1992) analyzed marketing of tobacco in Swabi district. According to his study per acre cost of one barn was Rs. 466. In which the most costly item was firewood. Which were about 43 percent of the total cost of tobacco curing and marketing. It was followed by miscellaneous cost such as food, tea etc. which was about 15 percent of the total cost. Third in the order of importance were the wage of curer and workers of grading and bales binding which were about 10 percent and 9 percent respectively. He recommended that as curing of tobacco plays a very important role in shaping the grade and quality of tobacco in the sense that if there is any defect found in operating the above mentioned items, then the quality of tobacco might suffer and grower’s income may decrease. Therefore he suggested that the companies of tobacco board should construct their own barns and take only the green leaf from the growers. This may not only help the companies to get the required quality grade but also reduce the cost and hence increase the net revenue to the farmers. Clauson (1992) used data from 365 Burley producers in Kentucky and Tennessee, USA. The variable costs of producing and selling Burley tobacco were found to have increased from $2231 per acre in 1991 to $2285 in 1992. Total costs per acre, excluding land and quota costs, are expected to increase about 2.5% to $3140. Most 1992 variable costs increased due to higher input prices. The variable costs of producing Burley tobacco per 100 pounds were $106 in 1991and $107 in 1992, up from $94 in 1990. The total cost per 100 pounds, excluding land averaged $132 in 1990, $145 in 1991, and is expected to be $147 in 1992. Vegar (1992) investigated the economics of tobacco growing in 26 hill farms (average 1.8 ha) and 30 lowland farms (average 2.9 ha) in Herzegovina in the years 1982/83. Tobacco was the cash crop in the hill area and was planted on 54.4% of the total area; in the lowlands it occupied only 24.5%, taking second place to maize. Farm income in the hill area was co-related with area of production. Total cost of production was lower in the hill area but value of production per farm, income and profits were also lower despite a higher price for their much better quality tobacco. Singh et al. (1994) evalued different methods of inter culturing for the control of weeds, and the consequent impact on the yield, quality and economics of chewing tobacco (N tabacum L) in field trials at Pusa in 1989-90 and 1991-92. It was found that the use of a grubber on the 15th day after planting followed by hand weeding on the 35th day resulted in the highest cured leaf yield and first grade outturn. The next best treatment was the use of a 3-tine bullock drawn cultivator on the 15th day, with hand weeding on the 35th day. Use of either the grubber or 3-tine cultivator required the lowest input of labour per hectare. While hand weeding with a Khurpi required the greatest labour input, reflected in the cost of production. Weeding using either the grubber or 3-tine cultivator fetched higher net returns than hand weeding with a Khurpi, this in turn was an improvement in the efficiency of cultivation by 25% and 8%, respectively, Over the traditional method of interculture. Iqbal (1998) conducted a study on economics of tobacco production and calculated the per hectare cost of tobacco production at Rs. 27418.09 while curing and marketing cost was worked out at Rs. 31629.20 per hectare. The results show that rent of land, fertilizers and farm-yard manures were the major components of production costs while fuel material, curer’s wages, unloading grading and picking were the major components of curing and marketing cost. Shah (1998) estimated cost and revenue of FCV tobacco production in district Mansehra. According to his study the cost of FCV tobacco production, curing and marketing was estimated at Rs. 22711 per acre among which curing and marketing cost accounted for 49.2 percent , cost of FCV tobacco production was 48 percent while nursery rising was 2.71 percent. The cost of FCV tobacco production was worked out at Rs. 10910 per acre, of which 32 percent and 19 percent was spent on fertilizers and rent of land. The cost of curing and marketing was Rs. 11185 per acre, of which cost of fuel wood was the major component which accounted for 31 percent. On the average an acre of land gave 1080 Kgs of cured tobacco which was sold at an average rate of 35.30 per Kg. The per acre gross and net revenues (including by products) were estimated at Rs. 39324 and Rs. 16613. Woods et al (1999) discussed the context within which educational programmes to address the economic adjustments facing tobacco producers and related rural communities have developed in the USA. Discussion is expanded by examining current programme approaches employed by various organizations. Many of these organizations have a mutual stake in helping producers in tobacco communities develop their management capacity. A range of initiatives aimed at facilitating economic adjustment is compared, including the major issues addressed and expected outcomes. Many of the initiatives have made useful contributions; however, gaps and limitations remain. Brown et al (1999) presents the economic fundamentals associated with domestic tobacco production and the US tobacco programme. It discusses the pressures for and against the tobacco programme and analysis the implications of potential changes in US tobacco policy. The effects of a cigarette price increase with and without a programme are examined. It is concluded that whether or not the programme is maintained in the face of declining tobacco demand has significant implications for southern US agriculture. Morgan et al (1999) development of the US Burley tobacco programme is reviewed and adjustments by southwest Virginia farmers to the lease and transfer provision are examined. The study focuses on Washington, Scott, Russell, Lee and Smyth counties which produce almost all of the state's Burley tobacco. The Burley tobacco programme has been successful because its support price system guarantees the farmer a reasonable return on the investment required to produce such a labour intensive crop. The lease and transfer provision of the programme has allowed farmers to consolidate allotments to achieve different scales of production. Foreman (2000) analyzed that the net returns to flue-cured tobacco production in the USA fell in 1999 from the previous year as the expenditures per acre for labour, fuel, and quota increased and the gross value of production per acre fell. The value of gross production minus cash expenses totalled $1442 per acre in 1999, down 12% from 1998. The residual returns to management and risk fell $374 from the previous year, to a loss of $179 per acre in 1999. Khan (2004) reported that tobacco is both a labor and cost intensive crop. High cost of production per hectare is involved in view of exorbitant rates of fertilizers, insecticides and fuel wood. The cost of production per hectare of FCV tobacco is over Rs. 100000. It has been persistent demand of tobacco growers then since tobacco is a highly labour intensive and cost oriented crop therefore the banks should give agricultural production loans to tobacco growers against the agreement executed with them by the tobacco companies. Hussain Z (2005) conduct the study on net revenue from tobacco in Tehsil Dargai District Malakand. The study was conducted in five (5) villages selected through purposive sampling. The sample includes ninety-five (95) farmers selected through systematic random sampling process. Who were interviewed through a well-designed questionnaire. The objectives of the study were to estimate the cost of production of tobacco, gross and net income from tobacco crop, and analyze the factors affecting the tobacco output in research area. The area of the sampled respondents was 577.15 acres total in kharif and Rabi seasons with an average of 6.07 acres. Tobacco was being grown on 359.125 acres with an average of 3.78 acres, which was 62.22% of the total cropped area. The average total cost of tobacco production was Rs.48905 per acre. In it the average rent of land for tobacco crop was Rs.7017.2 per acre. Nursery raising cost for one acre was Rs1045.2, tillage, seedbed preparation and plantation cost was Rs2612.5 per acre. Fertilizer and pesticides cost was Rs9983.52 per acre, cultural practices, topping and irrigation cost was Rs4307.8 cost of loading barn, curing, binding and marketing was Rs20693.46 and miscellaneous cost were Rs3245 per acre. The average gross revenue from tobacco was Rs575.15 per acre. While net revenue including land rent was Rs8610 per acre. The regression analysis of tobacco yield shows that NPK fertilizer, farmyard manure (FYM), hoeing and weeding were the main contributing factors in higher tobacco yield. CHAPTER-III MATERIALS AND METHODS This chapter discusses the methodology used for the study. It includes universe of the study, determination of sample size, data collection procedures and statistical as well as econometric techniques used for estimating the costs and net returns of tobacco and analyzing the impact of different variables on the yield of the tobacco production. The details of the materials used to reach the conclusions are explained below. 3.1 Universe of Study The present study was confined only to district Swabi of NWFP. The soil and climatic conditions of this district is very conducive for both agricultural crops like wheat, maize, sugar beat, sugar cane and tobacco as well as horticultural crops like apricot, plums, citrus and walnut. Most of the cropped area is irrigated through canal water coming from river Kabul. 3.2 Scope of Study The study was carried out in two villages of district Swabi. A total of 80 respondents were interviewed about different characteristics of the farmers and cost and return data that were supported by some secondary data about prices of input and output. The study has used data on cost and return from tobacco for the harvest year 2005-06. 3.3 Sample Selection The study area was district Swabi of NWFP. Due to financial and transport constraints two villages from the selected district were purposively selected that includes Yar Hussain and Char Bagh. Another reason for this selection is the presence of canal-irrigated system and also these villages have a well established network of extension and research oriented services. The proportional allocation sampling technique is used to get the required sample size at the rate of 2 percent from the above two villages. The proportional sampling allocation method is borrowed from S.M. Chaudhry, 1997, P.18. A list of all operating farmers are obtained. The total numbers of such farmers are 4000. Then stratified random sampling is used to select respondents. 3.4 Proportional Sampling Allocation Technique Several authors and researchers have used the following proportional allocation technique for the above kind of sampling process. (e.g. Chaudhry, 1998, P.18). NI = n/N * Ni Where NI = No of the sampled respondents in each village I = No of villages in the study area i.e. is 1.. 2. n = Total sample size N1 = No. of respondents in Yar Hussain N2 = No. of respondents in Char Bagh Ni = Total No of growers in each village N = Total No of growers in the research area Therefore N1 = 2248/4000 x 80 = 44.96 = 45 approx N2 = 1752/4000 x 80 = 35.04 = 35 approx So the following table shows the total number of sampled farmers in the research. Table 1.1 Numbers of Respondents in Each Village Area. Districts Villages No of farmers Sample size Swabi Yar Hussain 2248 45 Char Bagh 1752 35 Total 2 4000 80 Source: District census Report of Swabi, Population Census Organization, Islamabad, August 1999. 3.5 Data Collection This study is based on primary data. Primary data is collected on cost and return of tobacco production and tobacco yield in the study area. Interview schedule is used as a research instrument for the collection of data in the light of the objectives of the study. The interview schedule is prepared in such away to cover all the relevant information for the study and is discussed with experts. The interview schedule is pre-tested in the field and is modified according to the feed back from the farmers. 3.6 Analysis of Data The collected data was transferred to tally sheets and then punched into computer. Statistical package for social sciences (SPSS) was used for enterprise budgeting and regression analysis. (www.SPSS.com). 3.7 Costs and Net Returns of Tobacco Production 3.7.1 Theoretical Modeling Costs and returns of tobacco production were estimated by using Simple Budgeting Technique. The purpose was to identify the importance of each factor in tobacco yield and production. It is used for estimation of net return and profit through profit function analysis. 3.7.2 Empirical Modeling 3.7.2.1 Net Returns According to Debertin (1986), farmer’s profit (net revenue) is equal to total revenue (TR) minus total cost (TC). Hence Š = TR - TC………………………………………… (3.1) TR = P * Q0 (Value of output produced) TC = SVi * Xi Further analysis are required to achieve the specific objectives established in chapter 1 i.e. to prepare enterprise budget for tobacco crop to analyze determinants of higher tobacco yield and to estimate net return through profit function. Further details of modeling and analytical procedure is given below. 3.8 Tobacco Yield in the Study Area 3.8.1 Theoretical Modelling of Tobacco Yield We used multiple regression model for tobacco yield. The estimation of yield function is to ascertain how different factors (e.g seed rate, number of irrigation, total fertilizer nutrients applied, deep ploughing, farm yard manure, cultivation time and chemical weeding) contribute towards higher tobacco yield and productivity. 3.8.2 Empirical Modeling of Tobacco Yield. The following empirical generalized multiple regression model is estimated using the ordinary least square (OLS) method. (3.2) The model specified above is tested using linear and double-log forms with a view to check functional form best fits the model. The generalized multiple regression model in equation 3.4 can be written in more specified way in equation 3.5 as follow. Y = b0+b1X1+b2X2+b3X3+b4X4+b5X5+b6X6+b7X7+b8 D8+b9 D9+b10 D10+ei… (3.3) Where Y = Per acre tobacco yield in kgs X1 = Total seed rate. X2 = Number of irrigations. X3 = Per acre fertilizer nutrients applied. X4 = Proportion of acreage where deep ploughing practiced. X5 = FYM per acre applied X6 = Proportion of tobacco acreage sown within optimum time. X7 = Number of weeding per acre D8 = Dummy variable for tenancy (Owner =1,else=0) D9 =Dummy variable for institutional credit use (Credit used=1, Else=0 ). D10 =Dummy variable for seed sown (Certified seed = 1, Else=0) ei = Standard Error. 3.9 Tobacco Profit Function 3.9.1 Theoretical Modelling of Tobacco Profit Function. Farmer’s profit (net revenue) is equal to total revenue (TR) minus total cost (TC) (Debertin, 1986). Hence Š = TR - TC..…………………………………(.3.4) Where TR = P * Q0 TC = SVi * Xi Therefore putting the values of TR and TC in equation 3.4, we get II = PQ - CQ II = f (P, C, Q) 3.9.2 Empirical Modeling of Tobacco Profit Function. The empirical model of tobacco profit function is given below: Š = b0 + b1P +b2C + b3 Q i…………… .(3.7) Where II = Profit ( Net return) P = Output price at wholesale level (Rs/Kg) C = Cost per unit produced (Rs/kg) Q = Output of tobacco TC = Total cost of production (Rs/acre) Equation (3.8) depicts that profit (Š) depends on price of output (P), cost per unit produced (C) and total output (Q). Thus, equation (3.7) will be used to estimate profit (Š) of tobacco. CHAPTER-IV RESULTS AND DISCUSSION This chapter presents the analysis and discussion of results in the light of the objectives of the study. Necessary explanations have also been added along with the findings of the research at the appropriate places. The chapter includes five sections. The first section deals with the socio-economic characteristics of the tobacco growers/farms in each village, the second section depicts the costs and gross net revenue from tobacco crop, the third section presents the empirical analysis of most significant factors in determining tobacco yield. The fourth section clarifies the description and estimation of the net revenue function, while the fifth section identifies the on-farm yield constraints of tobacco growers. 4.1 Socio-Economic Characteristics of Tobacco Growers The Tobacco production depends upon several important factors, which include age of respondents, size of land holding, educational level of the growers and tenancy status, therefore the data regarding these characteristics of the Tobacco growers was collected in the study area. The results are as follows. 4.1.1 Age of Respondents Age groups of respondents are given in Table 4.1. Ten percent of respondents were between 30 and 39 years. Highest (36.25%) number of respondents was in the age group between 50 and 59 years. No respondent was less than 20 years of age. Research findings support our hypothesis that gradually old people are being piled up in farming profession. Table 4.1 Age of Respondents Name of villages 20-29 30-39 40-49 50-59 60-69 Total Yar Hussain 8 5 9 16 7 45 Char Bagh 6 3 7 13 6 35 All Villages 14 (17.5) 8 (10) 16 (20) 29 (36.25) 13 (16.25) 80 (100) Source: Survey 4.1.2 Educational Level of Tobacco Growers Generally, it is believed that educated farmers are more responsive to modern technology and cropping practices than illiterate farmers. Education level of farmers is considered as a good measure of flexibility of farmers in adopting better cropping practices. Education profile of respondents is explained in Table 4.2. Thirty percent of respondents were illiterate.18.75% of respondents had education of primary level, 10% of middle and 15% of matriculate level. Only 25% of respondents had their education above matriculation. Table 4.2 Educational Level of the Sample Farmers Name of Villages Illiterate Literate Primary Middle Matric FA/FSc BA/BSc MA/MSc Total Yar Hussain 14 8 5 7 4 6 2 45 Char Bagh 10 7 3 5 3 4 2 35 All Villages 24 (30) 15 (18.75) 8 (10) 12 (15) 7 (8.75) 10 (12.5) 4 (5) 80 (100) Source: Survey 4.1.3 Tenurial Status of Respondents It is generally believed that owner of the land are good farm managers and give more efficient results in terms of yield, profit and farm management. While some people believe that tenants are more efficient in growing their crop farms. The study of land tenure status is thus important in order to determine the tenurial status of the tobacco growers and the effects of such character on tobacco yield and profitability. Land tenure status is the measure, which give complete picture of the status of the farmers that how much of the cultivated land is owned by them. Tenurial status reflects relationship between land and man. Among cultivars Owner-cum-tenants had the highest number (42.5%) followed by owners (35%) and tenants (22.5). Tenurial status is shown in Table 4.3. Table 4.3 Tenurial Status of Respondents Name of Villages Owner Owner cum Tenant Tenant Total Yar Hussain 16 19 10 45 Char Bagh 12 15 8 35 All Villages 28 (35) 34 (42.5) 18 (22.5) 80 (100) Source: Survey 4.1.4 Size of Land Holdings Most of cultivars in the area are small landholders. Average size of land holding is 5.28 acres. Over thirty five percent of farmers have land holding less than 5 acres. 28.75 percent of farmers have land holding between 5 and 10 acres and 32.5 percent of farmers have land holdings over 10 acres. Details of farm size are summarized in Table 4.4. Table 4.4 Sizes of Land Holdings Name of Villages Less than 1 1 to less than 2 2 to less than 5 5 to less than 10 10 and Above Total Yar Hussain 2 8 7 13 15 45 Char bagh 2 7 5 10 11 35 All Villages 4 (5) 15 (18.75) 12 (15) 23 (28.75) 26 (32.5) 80 (100) Source: Survey Crops and Cropping Patterns There are two main cropping seasons in the area i.e Rabi and Kharif. Rabi crops are sown in October/November and harvesting in April-May, whereas Kharif crops are sown during June/July and harvesting in October/November. Wheat is the principal crop of Rabi season. Besides wheat, Rabi fodders are also grown during this season. A very few farmers practice gram and lentil as Rabi crops. Among the sampled respondents, there was no such farmer. Main Rabi fodders are burseem and shaftal. Main Kharif crops are sugarcane, sugar beet maize, potato, sugar beet etc. Common vegetables grown in the area are radish, potato, calucacia, spinach, battle gourd, tomato, cauliflower and turnip. Some farmers also grow fruit trees. Peach, mango, and plum are the main fruits grown in the area. Cropping pattern is given in Table 4.5. Table 4.5 Area under Main Crops Crops/Vegetables Total area (acre) % age area Tobacco 199.45 47.15 Wheat 124.99 29.55 Maize 51.86 12.26 Potato 4.69 1.11 Sugarcane 42.01 9.93 Total 423 100 Source: Survey Crops Yields Average per acre wheat yield in the research area was 1192 kg. It is significantly above the national and provincial average. Country’s average per acre wheat yield is 979 kg whereas provincial average per acre wheat yield is 599 kg (GOP 2003-04). Reasons for relatively higher wheat yield are fertile land, canal irrigation system and higher per acre input use. Sugarcane is another major crop of Peshawar valley. Its per acre yield in the area is 21900 kg per acre compared with the country’s average per acre yield of 20128 kg and provincial per acre sugarcane of 21790 kg (GOP, 2003-04). Similarly yields of other crops are relatively higher as compared with average yield of Pakistan and NWFP. Reasons for this are the same as explained. Average yields of various crops are summarized in Table 4.6. Table 4.6 Yields of Main Crops, Vegetables and Orchards Crops/Vegetables Yield (kg)/Acre Tobacco 1030 Sugar cane 21900 Wheat 1192 Maize 710 Potato 6140 Source: Survey 4.2 Budget Summary of Tobacco Production 4.2.1 Cost of Tobacco Production Agricultural inputs and their cost play important role in tobacco yield, returns and profitability. The detailed study of tobacco production tells us the contribution of most important inputs in tobacco production and their economic significance in tobacco yield and profitability. It is the total cost which is incurred on tobacco crop raising. Cost of tobacco production consists of Nursery raising cost, land preparation, seed and its application chemical fertilizer, farm yard manure, irrigation water, weeding/hoeing, pesticides, weedicides, harvesting, threshing and land rent. Table 4.7 highlights the accounting cost and economic significance of important inputs used in tobacco production. A detailed description of tobacco production budget is as follows: Table 4.7: Per Acre cost of tobacco production Items Units Quantity Rate/unit Cost Land Preparation M.Hrs 0.36 140 50.50 Seed Bed preparation MDs 1.59 60 95.67 Fertilizer Kgs 1.19 20 23.84 Weeding MDs 4.57 45 205.65 Pesticides Sprays 0.67 60 40.43 Lab. For Irrigation MDs 8.18 55 450 Water Charges Rs 250 Nursery cost Rs. ------ ------ 1116.09 Land Rent 6500 Land preparation M.Hrs 3.85 350 1350 Urea Kg 20.54 10 205.40 DAP Kg 21.16 18 380.90 NPK Kg 132.89 19 2525 FYM Kg 4666.6 0.30 1400 Application Cost M.Days 4 50 200 Fertilizer (NPK) 6061.3 F. layout M.Days 1.82 55 100 Hoeing/Weeding M.Days 16.8 50 840 Ridges M.Days 7.4 50 370 Bullock’s Plough M.Hrs 6.99 50 349.6 Transplantation M.Days 5.22 50 260.9 Gap Filling M.Days 2 60 120 Tools Depreciation Cost 35 4. Cultural Practices Cost 2075.5 Pesticide cost Rs 2.523 440 1110.12 Sucreside cost Rs 7.01 50 350.45 Application Cost Rs 6.4 50 320 Total Pesticide cost Rs 1780.57 Water Charges Hrs 5.26 70 368 Labour Cost M.Days 5.01 50 250.60 6. Irrigation Cost 618.60 Suckering cost M.Days 18.45 50 922.50 Herbicides Rs 14.17 60 850.20 Application Cost M.Days 3.20 50 160.20 Topping cost 1932.9 Total production Cost 20084.96 Source: Survey 4.2.1.1 Land Preparation Cost The first and important step in tobacco cultivation is land preparation that enhances the water holding capacity of the soil for long time and also it maximizes the ability of tobacco plant to get optimal nutrients from soil. Data shows that all the respondents used tractor for land preparation. Tractors were mostly hired and only few farmers have their own tractors, which they used both for commercial purposes and also on their farms. The average land preparation cost in the study area was Rs. 1350 per acre, which was 3.08 percent of the total cost of production. 4.2.1.2 Nursery Cost Nursery cost is the cost incurred on seed and labor used in the application of seed bed. Seed and rational use of seed play an important role in tobacco yield and production. Most of the farmers used improved and recommended tobacco varieties. Small number of farmers used seed taken from fellow farmers or homegrown seed. The average nursery cost of tobacco is Rs.1116.09 per acre, which was 2.54 percent of the total cost of production. 4.2.1.3 Soil Fertility Input Cost Chemical fertilizer and farmyard manure (FYM) are both soil fertility inputs. Both makes the soil more fertile and have direct impact on tobacco yield and production. Urea, DAP and NPK was commonly used in the study area. A major portion of the respondents also used farm yard manure in addition to these chemical fertilizers. Among fertilizers, DAP was more costly which was unbearable for small farmers. The cost of fertility inputs was Rs.6061.3, which was 13.82 percent of the production cost. 4.2.1.4 Irrigation Cost Water is considered lifeblood for farming and agriculture. Irrigation water is the limiting factor of agriculture production.. Tubewell and canal were the main sources of irrigation used in the research area. Availability of adequate water on time is immensely important for higher production. Abiana was charged for canal-irrigated system, which was Rs.300 per season while in case of tubewell irrigated system, water charges were charged at per hour basis by the owner of the tubewell. Average cost of tubewell irrigated system was Rs. 368 per acre. Labor used in the application of irrigation water costs Rs. 250.60 per acre. Therefore, the average irrigation cost was Rs. 618.60 per acre that is 1.41 percent of the total cost of tobacco production. 4.2.1.5 Cost of Pesticides and Weedicides Physical control was common for most weeds specially wild at which is the main problem of most of the farmers in the research area. The use of pesticides was also common in the research area. Most of the respondents used pesticides for the elimination and control of pests and weeds. The average per acre cost of pesticides was Rs. 1780.57 that is 4.06 percent of tobacco cost of production. 4.2.1.6 Rent of Land In the study area there are two kinds of land rent. One kind of rent is determined by people willingness to pay rent and the other kind is the opportunity cost of land. The per acre land rent was similar in the study area. The rent was taken annually for two seasons by the owner of the land. The per acre rent is Rs. 6500, that is 14.82 percent of the total cost of tobacco production. 4.2.2 Marketing Cost Marketing costs includes transportation cost to home or godown, storage and other terminal markets. Most of the respondents sold the surplus tobacco. The marketing cost was very high that is Rs. 23779.75 per acre. 4.2.3 Total Cost of Tobacco Production Per Acre Total cost of tobacco production includes per acre production cost and marketing cost. The cost of tobacco production in the study area is Rs. 20084.96 per acre while marketing cost is Rs. 23779.75. therefore, the total cost of tobacco production is Rs. 43864.71 per acre in the area. 4.2.4 Return per Acre from Tobacco Crop Both tobacco and bhusa are the sources of income for the farmers of the tobacco crop. The return from tobacco depends on farmer’s interest in the activities relating to farming and also investment in inputs, level of tobacco yield and farms management practices. The return also depends on prices of tobacco output received by tobacco farmers. 4.2.4.1 Tobacco Leaf Yield Higher leaf yield depends on various factors i.e. availability of improved seed, adequate irrigation water, fertilizer, use of pesticides and plantation on time etc. tobacco yield of 1030 kg was obtained per acre in the study area. Most of the farmers sell the surplus tobacco in the market. Tobacco Curing and Marketing Cost Marketing costs includes transportation cost to home or godown, storage and other terminal markets. Most of the respondents sold tobacco grain. The marketing cost was very high that is Rs23779.75 per acre. Table 4.8 Marketing Cost of Tobacco Per Acre Items Unit Quantity Rate/Unit Cost Leaves Picking M.Days 45 50 2250 Transport to Furncace Rs 3 220 660 Stringing Rs 5.94 80 475 Loading Rs 5.07 75 380 Furnace Dpereciation Cost Rs 1430 Labour M.Days 2 60 120 Fuel Cost Kg 1643.5 4 6574 Fireman & Curer Cost Rs 84.23 75 6317 Grading Charges Rs 26.07 70 1825 Trying Cost Rs 24.8 50 1240 Application Cost Rs 28.6 50 1430 Transportation Rs 2.06 250 515 Unloading Rs 2 15 30 Marketing Cost Rs 7 60 420 Rent of hired place Rs 1 60 60 Opportunity rent of own land Rs 50 Commission Rs 3.75 Marketing cost 23779.75 Source: Survey Costs and Returns from Tobacco Production: - Table 4.9 shows the details of the total cost, total and net revenue of tobacco per acre. Table 4.9 Per acre Total Revenue of Tobacco: - Yield/acre Rate/Kg Total Revenue Total Costs Net Returns 1030 51.74 53292.2 43864.71 9427.49 An average output of 1030 kgs of tobacco per acre yields total revenues of Rs.53292.2 and net revenues of Rs. 9427.49. 4.2.4.2 Net Return of Tobacco Crop Net return is obtained when we subtract total per acre cost from total per acre gross revenue of tobacco crop. Therefore the net income was Rs 9427.49 in the area as calculated as follows. Net income = Total income - Total cost Net income = 53292.2-43864.71 = 9427.49 4.3 Major Determinants of Higher Tobacco yield Higher tobacco yield can be achieved by adopting better management and cropping practices. Different factors that are seed rate, number of irrigation, total fertilizer nutrients applied, deep ploughing, farm yard manure, sowing time and chemical weeding contribute positively towards higher tobacco yield. We postulate the following tobacco yield model to examine which of the aforementioned determinants significantly affect the tobacco yield. (3.4) Where Y = Total tobacco yield X1 = Total seed rate X2 = Number of irrigation X3 = Total fertilizer nutrients applied X4 = Proportion of acreage where deep ploughing practiced X5 = Proportion of acreage to which FYM applied X6 = Proportion of tobacco acreage sown within optimum time X7 = Proportion of tobacco acreage weeded chemically D8 = Dummy variable for tenancy (Owner = 1, Else = 0) D9 = Dummy variable for institutional credit use (Credit used = 1, Else = 0) D10 = Dummy variable for seed sown (Certified see = 1, Other = 0) ei = Standard error. We estimated the above module and get the following results Y = 620.017+958.358X1+1.379X2+0.1005X3-840.42X4+ 0.0015X5-100.37X6-2.71X7+8.805D8+268.071D9 +256.040D10 Standard err...