Economic analysis of rice farming in Mazandaran province and solutions to achieve maximum profitability

Thesis‌ to receive a master's degree

In the field of industrial engineering,  Industrial orientation

September   1393

Abstract:

Many economists have considered agriculture as the driving force of economic growth in the early stages of development. The role of the agricultural sector in terms of providing income, employment, foreign exchange, market and especially providing food among other sectors is of special importance. One of the main tasks of agriculture in any country is to meet the food needs of that society. The importance of food supply alone can be the basis of economic development strategy. Due to its special climatic situation, Mazandaran province has long been considered as one of the main bases of agriculture and food supply in Iran and has the first rank in rice production in the country. In general, the economy of Mazandaran relies on agriculture regardless of some limited industrial and economic activities, but this important activity has been decreasing in recent years. Most of the farmers are not satisfied with the profitability of rice farming and are not sure about their career future. They are hopeful and looking for land use change, especially in the lands near the sea. This decrease in interest in cultivation is accompanied by a decrease in agricultural land, and as a result, the unemployment rate in this province increases. So, one should look for solutions to revive this important activity and provide hope for a future job for the rice farmer. The review of the previous research showed that most of the studies conducted in the field of improving the amount of harvesting (higher productivity in production), reducing the amount of waste in different stages of production and transformation, examining the system of agricultural machines and devices, as well as examining and analyzing the productivity and production factors, the studies conducted seek to increase production and reduce waste in order to obtain more products. However, the main goals of this thesis with an economic and engineering perspective are to determine a clear and clear picture of the current situation of the agricultural sector in the economy of Mazandaran province and to determine the ratio of income to expenses of a working rice farmer during the 10-year period (1382 to 1391) in order to prove the first hypothesis that rice farming in Mazandaran province has no economic justification with the existing methods. Then by identifying cost factors as independent variables and determining the cost of different stages of rice cultivation, following Changing the method of various stages of cultivation (which is the traditional method at first) with new methods (mechanization) and then analyzing the effects and economic consequences of implementing different options and choosing the best option proposal, seeks to reduce costs and increase the profitability of rice, so that the second hypothesis can be checked that it is possible to improve the capacity and production methods in this sector. In terms of the purpose of this research, it is of an applied type and from the point of view of data collection, it is a causal method. It is considered a comparison. The method of collecting information is also field. The independent variables of this research include cost parameters in different stages of production and transformation, including labor cost, seed cost, pesticide cost, transportation cost, threshing cost, conversion, irrigation and so on. May be These parameters are fully available in the questionnaire attached to this final exam. dependent variables‌ They are: amount of rice cultivation in Mazandaran province, amount of total cost, amount of total income, amount of net profit and ratio of income to cost. The statistical population includes all the lands under rice cultivation in 15 important cities producing this product and the sample size is 50 people, including rice farmers in the 15 mentioned cities of Mazandaran province, from May 1382 to May 1391. The tools of data collection in the present research are interviews, questionnaires and documented information in the organization of agricultural jihad in Mazandaran province. In order to answer the questions and examine each of the hypotheses, the main engineering economics techniques (current value[1] and income-cost ratio[2]) have been used.. With the analysis done in the fourth chapter, it was found that although the cost of rice farming in Mazandaran province has increased every year so that after 10 years this income has grown to more than 3 times, but in contrast to this increase in cost, the resulting income has also grown in the same proportion so that when using the inflation rate and the time preference rate (one-year bank interest rate) it is converted and transferred to the base year (year 1382) and compared with the base year. It is possible, there is no significant difference, and despite farmers' concerns about the unprofitability of rice cultivation in Mazandaran province, this activity can still be profitable. But this is not the end of the work and it has been shown that there is a possibility to improve the conditions and make rice cultivation more profitable and this important activity can be given more prosperity in the province. In this way, by identifying the cost-generating parameters in different stages of production and transformation and by changing the method of rice cultivation, including mechanization, the cost-generating factors should be reduced as much as possible and if possible eliminated, so that the total cost is reduced and the profitability ratio, which shows the ratio of income to cost, is increased, so that there is more incentive for the rice farmers of Mazandaran province to continue this activity.

Key words: Mazandaran province, rice farming,   cost, income, profitability, mechanization, economic evaluation

Introduction:

The role of agriculture in the growth and prosperity of the country is not hidden from anyone. The agricultural sector is very important for providing food to the society. Rice is one of the leading food products in the world [Sheka; Bangura] and after wheat as the most important ingredient. It is considered food in the world [Sachchamarga, K; W. Williams, G, 2004]. The area under rice cultivation in the country is about 564 thousand hectares with an average production of 2400 kg (white rice) per hectare [Central Bank of the Islamic Republic of Iran, 2013]. According to the annual per capita consumption of rice, there is a shortage of rice needed for consumption, which is supplied from abroad. Meanwhile, Mazandaran province is known as the largest rice producer in the country. In order to produce rice for the over seventy million population of Iran, a large volume of activities and spending a lot of money is needed, but the result of all these efforts and spending a lot of money, the dissatisfaction of farmers, a lot of waste, the unemployment of rice farmers and their migration to the city and the transformation of their lands into villas and industrial towns, the reasons for these problems are rooted in the economy and social issues. There is enough information about the economic cultivation method of this product. The result of these factors is the reduction of rice production and the need for more imports, which will lead to the dependence of the country. Rice production in the country is a product of suffering and hardship, and according to the farmers, it has a high cost, a suffering that has caused the young generation to no longer want to continue the work of their fathers and ancestors. In the past years, the agricultural lands of this province, especially the paddy fields, have faced a serious risk of change of use, and as a result of this change of use, the area under rice cultivation in this province has decreased a lot. As a result of the reduction in the area under rice cultivation, the production of this product has also decreased [Fazel Saatchi, 2009]. The roots of this dissatisfaction should be investigated, because according to farmers, expenses account for a major share of income, and the welfare of farmers has decreased significantly compared to previous years. These conditions are in spite of the fact that Mazandaran province, with its water conditions, and‌ With good weather, it can take steps towards the prosperity and self-sufficiency of the agricultural sector by producing more of this product and play a significant role in increasing non-oil exports and reducing foreign exchange outflow from the country. Here, the question that has been in the researcher's mind for years is why the dissatisfaction of farmers increases every year? Is the income from agriculture profitable for a farmer or not? The review of the previous research showed that most of the studies conducted, including the article by Peshgar et al. (Rafiee, 2011) in the field of energy and economic analysis of different levels of rice products in Gilan province, and the article by Dr. Morteza Nasiri and the article by Mrs. Kobri Tadjaditalab in the field of improving the amount of harvesting (more efficiency in production), reducing the amount of waste in different stages of production and conversion, examining the system of agricultural machines and devices. In this thesis, first, the economic level of rice farming is examined and after determining the position of rice in the economy of Mazandaran and rice farmers, solutions are presented to make this important activity more profitable.