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Market Marginal Analysis of the Peas Production in Hazara Division Khyber Pakhtunkhwa, Pakistan

SJA_34_4_827-833

 

 

 

Research Article

Market Marginal Analysis of the Peas Production in Hazara Division Khyber Pakhtunkhwa, Pakistan

Sajad Ali1*, Syed Asghar Ali Shah2, Jaffar Ali3, Muhammad Nadeem Iqbal4, Arshadullah Jadoon5 and Farmanullah6

1Department of Economics, Sarhad University of Information and Technology, Peshawar, Khyber Pakhtunkhwa, Pakistan; 2Agricultural Research Institute Tarnab, Peshawar, Khyber Pakhtunkhwa, Pakistan; 3Islamia College University, Peshawar, Khyber Pakhtunkhwa, Pakistan; 4Leader and Management Studies Department, National Defence University, Islamabad, Pakistan; 5Northeast Normal University, Jilin, Changchun, China; 6The University of Agriculture, Peshawar, Khyber Pakhtunkhwa, Pakistan.

Abstract | The present study was conducted to examine the Peas production as well as their related promoting rehearses, categorize the scenario of socio-economic, methodical and marketing restraints faced by the farmers in augmenting and stimulating export of the country. The pea’s cultivators and also market agents were quizzed by using structured questionnaires in two related districts that is Haripur and Mansehra in the year 2013-14. The data were analyzed by using SPSS Package version 22 for calculating marketing marginal analysis and cross-tabulation were also been employed. The studied statistics of the land size of chosen pea’s farmers fluctuated amongst 0.878 to 31.26 acres having mean of 4.524 acres. Moreover, maximum merchants and Beoparis credited the output of peas from the farmers directly from the local market that is Mansehra and Haripur. It is worthwhile to mention that the public sale arrangement was not totally available in the local markets. Furthermore, the 68 percent in district Mansehra while, in the Haripur 46 percent farmers traded the pea’s output in the local markets. The left over peas output in both the selected districts were offered for sale in the regional markets that is Rawalpindi and Peshawar markets. The 82 percent of the peas producers availed the price discrepancy at different stage, and the remaining of 18 percent have not gained profit from their prevailing price deviation, as at premature stage the pea’s producers sold their output. The farmers can got maximum share that is 68 percent of the user’s rupee tracked by the traders. The results showed that the seller got up to 23 percent having an average of about 18 percent of the buyer’s rupee in the entire spell, and as well as the dealers can get a minimum share. The farmer can get 100 percent while the seller can get only 17.5 percent share in the marketing of peas production, comparatively high than the other markets.


Received | August 25, 2016; Accepted | October 07, 2018; Published | November 17, 2018

*Correspondence | Sajad Ali, Dept. of Economics, Sarhad University of Information and Technology, Peshawar, Khyber Pakhtunkhwa, Pakistan; Email: sajadali1879@gmail.com

Citation | Ali, S., S.A.A. Shah, J. Ali, M.N. Iqbal, A. Jadoon and Farmamullah. 2018. market marginal analysis of the peas production in Hazara Division Khyber Pakhtunkhwa, Pakistan. Sarhad Journal of Agriculture, 34(4): 827-833.

DOI | http://dx.doi.org/10.17582/journal.sja/2018/34.4.827.833

Keywords | Market Marginal Analysis, Marketing channels, Structured questionnaire, Beoparis, Net Margins, Pre-harvest contractor, Marketing cost



Introduction

A Pea (Pisum Sativum) vegetable is botanically a fruit. It is usually used to label as the minor sphere-shaped seeds or described as the pods of legume. The pea is a green having pod-shaped fruit extensively grown as a cool-season vegetable crop. The pea seed can be planted at the soil temperature extents to 100C and with the plants growing well at the temperatures of 13°C to 18°c. It does not grow well in the summer heat of warmer moderate and tropical weathers but grow well on cooler and high altitude tropical areas. Many cultivars reach to maturity level at about 60 days after plantation. Moreover, Peas also grows well in to some extent acidic and well-drained soils. It is a cool season crop, grown in many parts of the world. The average pea weighs between 0.1 and 0.36 grams (Van Blommestein, J.A., 1980).

Nature has blessed Pakistan with abundant quantities and qualities of fruit and vegetables to compensate the deficiency of food items which are very essential in the routine diet of our people. For this purpose, peas play a major role and having a good source of vitamins C, E, B-complex, iron, and magnesium. Peas and other legumes are also good source for curing diabetics as it supports to normalize the flow of blood sugar. Fresh peas are generally one of the most digestible and having a laxative effect.

However, peas are grown in almost every country of the world. The largest producers of the pea are the US, Europe, and India. The majority of Peas are managed and stored in the forms as canned, frozen, and dried. Commercially, the peas are categorized as round, smooth, wrinkled and having edible pods.

In India and Pakistan, fresh peas are used in many dishes i.e. Aloo Matar (curried potatoes with peas) or Matar Paneer (cheese with peas) and can be deputize for with frozen peas. Peas can be cultivated throughout the country. In Khyber Pakhtunkhwa, peas occupy an area of 1942 hectares with a total production of 13418 tones. The sites of cultivation in Khyber Pakhtunkhwa province are Haripur, Mansehra, Swabi etc. province wise area and production of peas is given in Table 1.

Keeping in view the facts and figures of the present research conducted in Haripur and Mansehra districts, in order to generate information regarding the market of the peas. The objectives of the study are as follows.

  • To study the socio-economic constraint in peas production and marketing system which have an impact on the expansion of marketing system.
  • To explore the present marketing channels used by the producer and determine the structure conduct and performances of existing marketing system.
  • To quantify the marketing margins of growers and other market intermediaries and assess ways to increase the grower share.

 

Table 1: Peas area and production in Khyber Pakhtunkhwa.

District 2013-14
Area in hectares Production in tones Yield in Kg/hectares
Peshawar 31 110 3548
Mardan 44 241 5477
Swabi 157 644 4102
Kohat 1 12 12000
Abbottabad 5 88 17600
Haripur/Mansehra 10 128 12800
Malakand 25 58 2320
Swat 1280 10200 7969
Shangla 5 40 8000
Dir Lower 30 126 4200
Dir Upper 20 19 950
Chitral 202 1266 6267
D.I Khan 33 91 2758
Tank 5 18 3600
Bannu 13 12 923
Lakki Marwat 4 5 1250
KP 1942 13418 6909

Source: Crop Reporting Service Khyber Pakhtunkhwa, 2013-14.

Materials and Methods

An information survey was conducted by the researchers in Haripur and Mansehra districts of Khyber Pakhtunkhwa in the first week of May, 2014. Interviews were conducted informally with individual pea growers, market intermediaries without using questionnaires. An effort was made to create a relaxed atmosphere in which respondents would feel free to expresses themselves. A comprehensive questionnaire was designed on the basis of information obtained in the informal survey. For examining the validity and accuracy of the interview schedule, it was pre-tested in the field. After pre-testing, changes and modification were incorporated and interviewing schedule was finalized for the collection of data.

During the interview efforts were made to explain question and their purpose so that correct and reliable information could be gathered. Given the limitation in term of grower availability, cost, efforts, data management, traveling and time, it was decided to interview 20% of the growers and other market agents. To achieve the specific objectives 60 growers, 20 contractors, 10 wholesalers and 10 retailers were interviewed as mentioned in Table 2.

Table 2: Distribution of sampled respondents for peas marketing survey, 2013-14.

Variables Districts
Haripur Mansehra Total
Peas growers 30 30 60
Contractors 10 10 20
Wholesalers 05 05 10
Retailers 05 05 10
All 50 50 100

 

Face to face interview were conducted on marketing system in a specific field as well as general characteristic such as land owner-ship, respondent’s age, education level and experience in peas growing and marketing.

Analytical frame work

Market margins analysis: Market margins elaborate the differences between prices at two different market levels. Marketing margins were estimated by collecting prices at various phases of the marketing sequence. It can also be calculated by the absolute margin or prices flow, which is the change between the prices, paid and received by each marketing organization. In literature different studies regarding marketing margins were made by Scarborough and Kydd, 1992, Swarup et al. 1985 and M. Ibrahim Lashari et al. 2003. The formula for Market Marginal Analysis can be written as;

Mm= (Ps x 100)/SP

Where; ‘Mm’ represents the marketing margins, ‘Ps stands for price spread or absolute margins and ‘Sp’ is sale price of the same organization.

Marketing costs: Marketing costs are the costs acquired by market intermediaries from farm to targeted consumer. The main modules of marketing cost including grading, loading, unloading, transportation, market commission and market charges. These costs were calculated in a per Kg form. The formula can be represented as;

MC = As / q h

Where; MC = Marketing cost of a specific unit quantity; As = Actual amount spent; qh = quantity handled.

To estimate commission charges, the following formula can be used

Cc = (Sp x R c) /q m

Where; Cc = commission charges; Sp= sale earnings; R = rate of commission; qm= quantity marketed.

Net margin

The net margin is the net earnings after subtracting all marketing expenditures. Net earnings of peas were calculated by using the formula as under;

Nm = Ps – Mc

Where; Nm indicates net margins, ’Ps’ represents absolute margins and ‘Mc’ is the marketing cost including grading, loading, unloading, transportation, commission charges and market taxes. These costs were computed on per kg basis for producers and other market agents.

The data were analyzed by using Statistical Package for Social Sciences (SPSS) software package. The replies of the respondents were codified and keeping in view the specific objectives of the study.

Results and Discussion

Farm size and peas area of the growers

Farm size affects the efficient utilization of resources, type of cropping pattern of the farmers and marketing strategies. According to Jairath M.S. (2008), Shergill, H.S. (2010) and Sidhu R.S., M.S. Sidhu and J.M. Singh (2010) and many other researchers reported that large farms have an advantage in marketing system over the small farms. On the other hand, Griffin (1970) found a positive relationship between farm size and productivity which are closely related to marketing strategies. The average farm size and area under peas of various districts of Khyber Pakhtunkhwa are tabulated as under.

The farm size of the selected growers ranged from 0.878 to 31.24 acres with the average of 4.524 acres in the study area. Data showed that 90% respondent had less than 10 acres, 8% falling between 10 to 25 acres and 2% had more than 25 acres. It is significant that more than half of the total cropped area is assigned to pea’s crop which shows its importance in the targeted area.

Pea’s varieties and seed source

There is collection of more than (12) recommended varieties of Peas in Khyber Pakhtunkhwa. From the available resources, numbers of varieties have been recommended for the growers with respect to their quality and vigorous growth. It is remarkable that most of the growers (90%) in the study area grown Meteor variety (locally called Freshy). 96% percent of the pea’s area is covered under Meteor variety followed by the local variety called Hara. It is commonly believed that farmers should use pure, clean and disease free seed to obtain optimum yield. Growers have a number of option available as a seed sources i.e. own seed, other farmers, seed purchase from market etc. the data shows that majority of the respondents (85%) purchased seed from market at Baffa, Mansehra, while the rest of the growers used own seed or obtained seed from other farmers.

Marketing channels

A network of distribution called a trade system in which commodities moves from the producer to the final consumer. It plays essential role for sustainable agricultural development. A marketing channel including both producer and the ultimate consumer for the commodities and all market agents inculcated in the title transfer. (Khan, 1999) also described marketing networks as: a linkage of collaborating establishments that collectively accomplish all the actions essential to link producers of goods and services to the targeted users. The existing pea’s marketing channels are presented in Figure 1. Private organization and individuals carried out the peas marketing i.e. producers, commission agents, wholesaler and retailers were the principle market agencies in peas marketing system.


 

Sale of pea’s produce

Pea’s farming is carried out by large number of growers, who were geographically scattered in many localities of Khyber Pakhtunkhwa. In research area, majority of the growers (82%) sold their produce in wholesale/seasonal markets such as Baffa, Mansehra (seasonal market), tube well No.18 Haripur (seasonal market) and Rawalpindi wholesale market. The remaining 18% sold their produce to pre-harvest contractors as shown in Figure 1.

Reason for sale to pre-harvest contractors

In the research area some of the pea growers (18%) sold their produce to pre harvest contractors at flowering or immature stage as depicted in Figure 2. Lack of financial resources for marketing cost, no manpower to handle and no knowledge regarding marketing system were the major reasons for sale to pre-harvest contractors.


 

Sale through wholesale/seasonal markets

Most of the wholesalers and Beoparis bought pea’s produce from the growers directly at the seasonal markets such as Baffa (Mansehra) and Tube-well No. 18 (Haripur) and sold at different wholesale markets of the country. It is noteworthy that auction system was not existed in these seasonal markets, because the markets take place on the road side during the season.

Data showed that 68% and 46% of the growers in the both districts sold their pea’s produce in seasonal markets such as Baffa (Mansehra) and Tube-well No.18 (Haripur) respectively. The remaining 54% of the growers in Haripur districts and 32% in Mansehra districts sold their produce at the local seasonal markets as well as at Rawalpindi wholesale market as depicted in Table 4.

Table 3: Average farm size and area under peas in both districts of Hazara Division, Khyber Pakhtunkhwa.

Variables Districts
Haripur Mansehra All
Operation land holding (acres) 5.92 3.11 4.52
Peas area (acres) 3.43 1.76 2.59
Peas area in % 56.78 58.10 57.30

 

Table 4: Sale of pea’s produced through different wholesale/seasonal markets in both districts of Hazara Division, Khyber Pakhtunkhwa.

Selling point Districts
Haripur (%) Mansehra (%) All (%)
Baffa (Mansehra) (local) 0 68 35
Tube-well (Haripur) (local) 46 0 22
Rawalpindi/Baffa (Mansehra) 0 32 16
Rawalpindi / Haripur 54 0 27

 

Purchasing point of retailers

Data represent that majority of the pea retailers bought peas from growers directly at seasonal markets and settled prices among themselves, because auction system is not existing in these seasonal markets.

Marketing margins analysis

Margin analysis, as a proportion of buyer’s price, is commonly used to measure the degree of customers prices transferred back to the producers. Marketing margins rest on the duration of marketing channels and the amount at which the output is kept or treated (Shepherd, 1993). Marketing margin can be described in two ways: absolute cash margins and percentage margins. Moreover, the absolute cash margins can be considered as a good sign of trend marketing costs (Swarp et al., 1985).

Peas prices

The value of peas was estimated on the basis of 35 kg per bag. Simple analyses of mean pea’s prices on per bag (35 kg) basis by stages of season are presented in Table 5.

Majority of the growers (82%) enjoyed the price variation at each level because they sold their produce in the markets, while the rest (18%) were not benefited from price variation, because they sold their peas crop to pre-harvest contractors at immature stage.

Table 5: Average sale price of peas at different market intermediaries by various districts of Hazara Division.

Marketing Agents Price Rs./35kg pack
Early season Mid-season Late season All season
Grower 1500 800 1000 1100
Beopari 1650 900 1200 1250
Wholesaler 1725 950 1300 1325
Retailer 2100 1225 1500 1608

 

Share in consumer’s rupee

The consumer’s one rupee expense on Peas product is divided among the market agents and growers. It shows that share of consumer’s rupee, which is actually split among Producers and other market agents. The Results showed that the pea’s growers received a highest portion (68%) of the consumer’s rupee followed by the retailers as depicted in Figure 2. Data also indicated that the retailer realized 13% to 23% with an average of 18% of the consumer’s rupee in the whole season, while wholesaler received a minimum portion of the consumer’s rupee.

Absolute cash margin (ACM) and marketing cost (MC)

The absolute cash margin of growers was estimated as the sale price of peas per 35kg bag. Generally, the absolute margin of the commission agents is the commission charged on sale income but in peas marketing, auction system is not existed in the seasonal markets. The absolute cash margin was calculated for each functionary as below.

Marketing costs are comprised of all the costs experienced on marketing of pea’s outputs. The marketing cost of producers and other Market agents are detailed in Table 6.

Table 6: Absolute cash margin (ACM) and marketing cost (MC) of growers and other market agents.

Marketing Agents

 

Early season Mid-season Late season All season
ACM MC ACM MC ACM MC ACM MC
Grower 1500 65 800 65 1000 64 1100 65
Contractors/Beopari 150 55 100 48 200 50 150 51
Wholesaler 75 11 50 12 100 12 75 12
Retailer 375 65 275 65 200 64 288 65

 

The average marketing cost of peas was estimated at per pack (35kg) basis for different market intermediaries. The producer and contractor costs were estimated to be a maximum Rs.65 and 51 respectively in all Season. The wholesaler and retailer had cost of Rs. 12 and Rs.15 per 35 kg bag respectively as show in Table 6. The cost includes transportation of Peas from market to selling point, rent of shop and hawkers (consist of wooden platform mounted on three cycle wheel) etc.

Table 7: Marketing margins for grower and other market agents.

Marketing Agents Early season Mid season Late season All season
Grower 100.0 100.0 100.0 100.0
Contractor 9.1 11.1 16.7 12
Wholesaler 4.4 5.2 7.7 5.7
Retailer 17.9 22.4 13.3 17.6

 

Marketing marginal analysis

Marketing margins are calculated for different marketing agents involved in Peas marketing in the research area are calculated by using formula as;

Mm= (Ps x 100)/SP

Where; ‘Mm’ represents the marketing margins, ‘Ps stands for price spread or absolute margins and ‘Sp’ is sale price of the same market intermediary. Moreover, absolute margin or prices spread, which is the change between the prices, paid and received by each marketing organization.

The marketing margins are presented in the tabular form as;

The above estimates reveals that the grower and retailer got 100% and 17.6% margin, respectively in the one step promotion of peas produce, which are high as compared to other market intermediaries such as contractor and wholesaler.

Table 8: Net margin of pea’s grower and other market agents.

Marketing Agents Early season Mid season Late season All season
Grower 1435 735 934 1035
Contractor 95 52 150 99
Wholesaler 64 38 88 63
Retailer 361 259 184 168

 

Net margin

The net margin is the net earnings after subtracting all marketing cost. Net margins are calculated for different marketing intermediaries involved in Peas marketing in both targeted area is as below;

The above estimated reveal that the net margins for producers and retailer is high as compared to other market agents as depicted in Table 8.

Conclusions and Recommendations

It is concluded that pea’s farming is a profitable profession. Majority of the growers wanted to increase the acreage of pea’s crop. Hazara division enjoyed the central position in Khyber Pakhtunkhwa by supplying peas. Marketing system analyses illustrated that marketing of peas is completely performed privately without government intervention. It revealed that marketing structure is not entirely competitive to prevent market traders from accumulating too much margins. However, no marketing agents were able to handle prices, but statistics stream of market and prices was fast in between the market intermediaries including producers. In the current environment, it is suggested that government should make venture on substructure growth specifically in establishment of assemble markets, communication network and institution credit system to reduce post-harvest losses and to enhance the bargaining power of the growers in the market.

Author’s Contributions

Sajad Ali: Designed the research and wrote the first draft.

Syed Asghar Ali Shah: Conducted the research

Jaffar Ali: Helped in data collection.

Muhammad Nadeem Iqbal: Helped in experments and data analysis.

Arshadullah Jadoon: Prepared the reports and did field work.

Farmanullah: Helped in environmental location and sampling.

References

Crops Statistics of Khyber Pakhtunkhwa, 2013-14. Crops Reporting Services, Agriculture, Livestock Cooperative Department, Peshawar (Various issues).

GoP. 2006-07. Agricultural statistic of Pakistan. Ministry of Food, Agricultural and Livestock, Economics Wing, Islamabad.

Griffin, K. 1970. The Green Revolution: An Economic Analysis. United Nations Research Institute, Geneva.

Jairath, M.S. 2008. Enhancing farmers’ linkage to markets. India. J. Agric. Econ. 63(3): 355-356.

Khan, M. 1999, Economics of milk production and marketing in the development of Pakistan with special reference to Peshawar District. Ph.D. Thesis submitted to the University of Wales, Abery stwyth, Uk.

Ibrahim, M.L. 2003. Socio Economic aspects of tomato production and marketing system in Sindh. Socio Economics Research studies 2002-03. Soc. Sci. Div. Pak. Agric. Res. Counc. Head Quarters, Islamabad.

Scarborough, V. and J. Kydd, 1992. Economic analysis of agricultural markets: Manual Natur. Resour. Inst., Chatham.

Shephered, A.W. 1993. A guide to Marketing Cost and How to calculated them. Marketing and rural Finance Service Division. FAO, Rome, Italy.

Shergill, H.S. 2010. Growth of farm debt in Punjab- 1997 to 2008, Institute for Development and Communication, Chandigarh, pp. 1-92.

Sidhu, R.S., M.S. Sidhu and J.M. Singh 2010. Estimating Efficiency of Horticultural Commodities under Different Supply Chains in Punjab, Research Report, Department of Economics and Sociology, Punjab Agric. Univ. Ludhiana, pp. 1-68.

Swarup, R., C.S. Sikka, C.S. Nada and Vaidya. 1985. Price spared and Marketing Margins for Apples: Temporal and Spatial Analysis. India. J. Agric. Econ. Vol. 2(3): 433-446.

Van-Blommestein, J.A. 1980. Climatic and soil requirements for the cultivation of peas. Farming in South Afr. Green peas. B. 1/1980.

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Sarhad Journal of Agriculture

September

Vol. 35, Iss. 3, Pages 663-1019

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