II '' FFaarrmm MMaannaaggeemmeenntt HHaannddbbooookk DDrr.. BBaasshhiirr AAhhmmaadd DDrr.. ZZaakkiirr HHuussssaaiinn DDrr.. JJiimm LLoonnggmmiirree PPuubblliisshheedd iinn ccoollllaabboorraattiioonn wwiitthh tthhee EEccoonnoommiicc aanndd PPoolliiccyy AAnnaallyyssiiss PPrroojjeecctt ((CCrreemmoonniicc33 IInntteerrnnaattiioonnaall CCoonnssuullttiinngg DDiivviissiioonn,, WWaasshhiinnggttoonn DD..CC)),, AASSSSPP//UUSSAAIIDD uunnddeerr tthhee pprroovviissiioonn ooff UUSSAAIIDD ccoonnttrraacctt nnoo.. 339911--00449922--CC--OOOO--00883311.. AAuugguusstt 11999933 CONTENTS Page Foreword i Acknovvledgements ii 1. INTRODUCTION . , . . . . . . . . . . . . . . .. 1 Background " 1 t:sasic Concepts 1 2. ENTERPRISE BUDGETS AND PROFITABILITY . 9 Food Crops Wheat in Rice Based Cropping System 9 Wheat in Cotton Based Cropping System 10 Wheat ir"1 LJarani Areas ,...................... 11 Basrnati-370 Rice 12 Basmati-385 Rice 13 IRRi Rice 14 Irrigated Maize (Kharif) 15 Irrigated Maize (Spring) 16 Maize Barani (Kharif) . . . . . . . . . . . .. 17 Cash Cro)s Sugarcane (Fresh) 18 Sugarcane (Ratoon) 19 Seed Cotton in Cotton Based Cropping System 20 Seed Cotton in Mixed Cropping System 21 Pulses and Oilseeds Gram or (Chickpeas) Barani 22 Lentils (Barani) 23 Mung (Barani) 24 Mash (Barani) 25 Rapeseed and Mus(ard (Irrigated) 26 Sunflower (Irrigated) 27 Safflower (Irrigated) . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 28 Canola (Barani) 29 Soyabenns (Irrigated) . . . . . . . . . . . . .. 30 Groundnut (Barani) 31 Vegetables and fruits Potatoes (Autumn ero,:» . . . . . . . . . . . . . . . . . . . . . . . . .. 32 Onions 33 Chillies 34 Tomatoes 35 Water Melon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Musk Melon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Mango Orchard 38 Kinnow Orchard . . . . . . . . . .. 40 Guava Orchard 42 Fodder Crops Bel'seem (Irrigated) 44 Maize Fodder (Irrigated) . . . . . . . . . . . . . . . . . . . . . . . . .. 45 Sadnbahar (Irrigated) , 46 livestock Nili Ravi Buffalo 47 Average Milking Buffalo ,...... 48 Sahiwal Cow 49 Average Milking Cow 50 Beef Cattle 51 Meat Buffalo 52 Sheep 53 Beetal Goat . . . . . . . . . .. 54 Teddy Goat 55 Poultry Broilers 56 Egg Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 57 ·3. ENTERPRiSE LABOR REQUIREMENTS BY OPERATION AND CROP Main Rabi Crops 59 Main Kharif Crops ,......................... 60 Rabi Pulses and Oil.r.-eeds 61 Kharif Pulses and Oilseeds 62 Cash Crops ,...... 63 Vegetables Crops . . . . . . . . . . . . 64 Fodder Crops ,......... 65 4. FARM MACHINERY COSTS Prices of Farm Machinery and Equipments, 1993 66 Cost per Hour of Operation - Tractor Cultivator . . . . . . . . .. 68 Cost per Hour of Operation - Tractor Raja Hall . . . . . . . . . .. 69 Cost per Hour of Operation - Tractor Drill .. . . . . . . . . . . .. 70 Cost per Hour of Operation - Tractor Threshing . . . . . . . . .. 71 Operational Cost per Hour of One Cusec Capacity Diesel Tubewell ... ,.................... 72 Operational Cost per Hour of One Cusec Capacity Electric Tubewell 73 Operational Cost per Hour of Tubewell Driven by Tractor 74 5. RECOMMENDED PRACTICES Wheat 75 Rice 85 Maize 93 Cotton 98 Sugarcane 108 Potato 114 Dairy Farming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 118 Sheep 123 Goat 127 Poultry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 129 6. WATER REQUIREMfNTS OF CROPS 135 7. NUTRIENT CONTENTS OF FOODSTUFFS , 137 8. GENERAL FARM MANAGEMENT INFORMATlON Water Charges for Crops 139 Typical Sowing and Harvesting Time of Major Crops 140 Standards for Agricultural Operation 142 Ratio of By-product Yield to Main-product Yield. . . . . . . .. 143 Retail Prices of Pesticides, Weedicides and Fungicides 144 Government Subsidised Hiring Rates of Buldozer . . . . . . .. 146 Government Subsidised Drilling Plants Rates . . . . . . . . . .. 146 Subsidy on Tubewell , ,............. 147 Local Calendar, English Calendar and Matching Days of Calendar year , . . . . . . . .. 148 FormulC\e 149 Local and Metric Conversion Factors 152 Local Terms ,.,............. 153 9. REFERENCES : ,159 FOREWORD It gives me considerable pleasure to write fI foreword for this Farm Managemer.t Handbook. Pakistan has always had much information about agriculture, but often scattered and not easily accessible. A handbook such as this will serve as a very useful guide and hopefully will be u~ed by the academic community, students, farmers and other people working for Pakistani agriculture. The spreadsheets provided for various farm enterprises can readily be applied to many different economic conditions of our country. Dr. Bashir Ahmad, DV'. Zakir HloJSain Rana and Dr. Jim Longmire have put in great deal of dedicated work on the preparation of this document for which they deserve to be complimented. Dr. Muhammad Rafiq Khan Vice Chancellor University of Agriculture Faisalabad. August, 1993 ACKNOWLEDGEMENTS We feel immensely indebted to Dr. Muhammad Rafique Khan, Vice Chancellor, University of Agriculture, Faisalabad (UAF) for providing patronage, inspiration and encouragement for successful completion of the Handbook. We also owe our sincere thanks to Dr. Agha Sajjad Haider, former Member, Social Sciences, Pakistan Agricultural Research Council and Dr. Jim Longmire, former CIMMYT Economist, Pakistan. Actually, the idea of Farm Management Book was conceived with these individuals. Others who assisted us considerably during the early phases are: Mr. Muhammad Aslam Chaudhry, Associate Professor, Department of Agricultural Economics, UAF, Dr. Derek Byerlee, Director, CIMMYT, Economic Program Mexico and Dr. Murray Dawson, Farming System Specialist, Management of Agriculture and Research Transformation Project, Pakistan. We are grateful to Mr. Muhammad Azeem, Economist, Farming System Research Program and Mr. Ashery Hasan Syed, Scientific Officer, Livestock Research, National Agricultural Research Center, Islamabad, Mr. Muhammad Sharif, Agriculture Economic Research Unit, Faisalabad for providing us useful data for the Handbook. The present form of the budgets would not have been possible without critical comments of Dr. Tahir-ur-Rehman, who also helped in preparing farm budgets in Lotus Spreadsheet. His comments were alsa very useful in view of the introductory chapter of this book. Mr. Muhammad Nadeem, an intern in the Economic Wing, provided us considerable help in computer work at the final stages of this book for which we are grateful to him. The services rendered by Mr. Riaz Qadeer, Mr. Azhar Saleem, Department of Farm Management, UAF and Mr. Haroon Pervaiz, CIMMYT in typing various drafts of the book are also gratefully acknowledged. Finally, this book would never have been completeel without the strong moral and financial support of Dr. Richard J. McConnen, Chief of Party, Chemonics International for Economic Policy Analysis Project of the Agricultural Sector Support Program, USAID and Dr. A. H. Maan, Director General y Economic Wing, Islamabad. We are extremely grateful for their generous help and willing cooperation. Dr. Bashir AhLlad Dr. Zakir Hussain August, 1993 Dr. Jim Longmire (iiJ INTRODlJCTION . L INTRODUCTION Background Farm management data and information related to the performance of a cropping or livestock production system in the form of input-output ratios, costs, returns and profitability are needed by a wide variety of users. This group includes policy planners, advisors and extension agents, researchers, teachers, students, credit and input supply agencies and farmers. The policy planner, for instance, has to take into aCCOl'nt the likely farm level impact of a new policy or a proposed adjustment to an existing one. Similarly, researchers and extension agents engaged in Farming System Research (FSR) work and studies depend on the farm management type of information for several purposes such as: (a) evaluation of interventions to the existing systerds of production; (b) identification of the potential for financially ;'ewardi'lg innovations; (c) ordering of research priorities as well as exploration of further avenues for development; and, (d) comparison of the economic performance of alternative cropping and livestock systems. In a country like Pakistan, farm management data for agricultural enterprises are not readily available under a single cover. Numerous farm-level or farming systems studies do exist and their usefulness is undeniable. However, the data from these studies are rarely compatible and many of the studies remain inaccessible to those inteiested. Despite the fine work done on farm-level and enterprise economics much needs to be done to strengthen them. Over the last several years, Univer~ityof Agriculture, Faisalabad (UAF); the Pakistan Agricultural Research Council (PARC) in collaboration with International Maize and Wheat Improvement Centre (CIMMYT) and Punjab Economic Research Institute (PERI) have accumulated a unique data set on the technical and other aspects, at least, of major cropping systems through collaborative investigations and surveys in Pakistan. This data base, when supplemented with other established sources provided an excellent opportunity to create a Handbook on Farm Management for the first time in Pakistan. Some Basic Concepts The users of this Handbook are expected to have minimal familiarity with the concepts of farm management. An appreciation of the distinction between the variable and fixed costs and the idea of gross margin should be a logical starting point. However, to refresh memories, an explanation of these concepts is provided. Let us start with costs. - = Fann Management Handbook Page 1 In estimating the returns from an agricultural enterprise or a production system, an important distinction is drawn between variable and fixed cost. The Variable Costs are those costs which are specific to an enterprise and vary with its scale. Another way of appreciating the significance of this definition is that variable costs should be completely attributable to the presence of an enterprise on the farm. For instance, production of wheat in a cotton-based cropping system of Punjab, cost items such as seed, fertilizer, manure applied, tubewell water used, etc. make up variable costs since they are paid only if wheat is grown. Normally variable costs increase with the intensity of il . Jts for a particular enterprise. The Fixed Costs on the other hand are the cost items which can not be assigned directly to the operation of an enterprise; that is, they must be defrayed whether a particular enterprise is operated or not for the current production cycle. Whatever the scale or intensity of a particular enterprise, fixed costs do not vary. For wheat production, such items are: some family labor and land rent which must be paid irrespective of the presence of wheat in the current farm plan. On a farm where several enterprises are in op'3ration, it is very difficult to allocate fixed costs between enterprises. The market value of the produce (and that of any by-product) of a production system is defined as its output: Normally this value is based on prices at the farm (village prices adjusted for local transport costs). When the variable costs are subtracted from the estimate of the output, the remainder is called the Gross Margin. This difference between the output and the variable costs, usually calculated on per acre or per hectare basis, is a very useful measure of the performance of an enterprise and the contribution that it can make to farm income or profitability. The concept of gross margin is simple and easy tc. understand and can be used in many ways. It should, however, be po~nted out that on its own gross margin is not a profit measure, it is simply an estimate of the potential contribution that an individual enterprise can make to farm profit. The gross margins do vary from farm to farm due to varying influence of factors, like soil fertility, climate, market conditions, prices and the difference in farming practices. These factors also cause variation in gross margins from year to year on a farm and between farms. It is therefore, wise that in-so-far possible, in using gross margins, the variations in such factors, particularly prices and techniques of production should be taken into account. In this Handbook, however, the data and information used for various enterprises reflect typical circumstances with regard to the techniques of production and prices that prevail currently in Pakistan-Punjab. To simplify the .... ...... l'i'!'iQl6! ;p r• Page 2 Farm Management I1andbook budgets, prices, yields and other key assumptions are based on 1992-93 values. Farm operations such as ploughing, planking, etc. have been costed Ollt if carried out mechanically, notwithstanding the fact, that on many small farms bullocks may still be an important source of draught power. The reason for costing this way is that the bulk of land preparation in Pakistan is now mechanical, so costs of tractor operations set the market rates. The idea explained so far can be illustrated by considering the example of wheat grown in the Cotton Zone. The complete set of calculations, both on a per acre/hectare basis is given in the table entitled WHEAT IN COTTON BASED CROPPING SYSTEM. The Output is worked out as : Grain 21 Maunds (40 kg.j @ Rs. 130 = 2700.00 Straw 42 Maunds (40 kg.) @ Rs. 12 = 504.00 Rs. 3234.00 The Variable Costs are dealt in two parts; first, those which are incurred up to the point of harvest: Operations Unit Price Total Cost Rotavation 0.1 @ Rs. 150 = 15.00 Ploughing 3 @ Rs. 50 = 150.00 Ploughing & Planking 2 @ Rs. 70 := 140.00 Seed 40 kg @ Rs. 4 160.00 Fertilizer(s) N 42 kg. @Rs.9.13 := 383.00 P 22 Kg. @Rs.8.17 180.00 Manure 35 Maunds @ Rs. 5.00 175.00 Transport 35 Maunds @ Rs. 0.50 18.00 Irrigation Tubewell 4 Hrs. @ Rs. 35 140.00 Labor 10 Hrs. @ Rs. 4.5 45.00 These are then the variable costs wh:ch are incurred upto the point of harvest; thus, an amount of Rs. 1406 is required as working capital. In economic terms this money could have been invested to earn a return by depositing in a bank. Often, however, this working capital has to be borrowed by the farmer and interest has to be paid. In either case the interest charged is a variable cost and is worked out by multiplying the following components: - - Ie wm Farm Management Handbook Page 3