Profitability and cost of credit of made tea production in some selected areas of Maulvibazar district in Bangladesh

Abstract

Profitability is the main cause for running a successful farm business and credit can play a significant role in achieving profitable agribusiness. The present study seeks to find out the financial profitability of tea cultivation, receipt, utilization, repayment, magnitude and extent of transaction cost involved for obtaining loan from 9 selected tea estates of Maulvibazar District applying simple random method. Descriptive statistics method like average, percentage, correlation, ratio etc. was used. This research indicates that Tea cultivation in Maulvibazar District is financially viable. Cost of production per kilogram and cost of cultivation per hectare of made tea were Tk. 158.18 and Tk. 2, 49,791, respectively. The highest cost component was the labour wage constituting 23.66% followed by establishment 18.00% and tea manufacturing 14.91% respectively. The average per hectare yield was 1547 kilogram. Gross return per kilogram and gross margin was per ha. Tk. 35.96 and Tk. 50,500,00 respectively. The average benefit-cost ratio was 1.20. The study showed that there exits positive correlation between the credit received and size of holdings The study shows that about seventy five per cent of credit is utilized for field level operations. Cost of credit including rate of interest is 13.48 per cent. To maintain the financial viability of the tea production, quality clonal plant materials should be used and cost of cultivation is to be reduced.