Data-Enabled Insights from Sericulture: Jayalxmi

Agro Tech

By
Yawar Ali
MBA 1.5 (Finance)
Submitted to DR. Zafar Zaheer

Institute of Management Sciences, Peshawar Pakistan

Session: 2019-2021
Contents
By Yawar Ali MBA 1.5.........................................................................................1
Summary:..............................................................................................................3
Analysis of Sericulture data from Karnataka:......................................................3
Hypothesis Development:.....................................................................................3
Null Hypothesis:...................................................................................................4
Alternate Hypothesis:...........................................................................................4
Methodology:........................................................................................................4
Rearing Cost:....................................................................................................5
Crop insured:....................................................................................................5
Years of experience:..........................................................................................6
Training on sericulture:.....................................................................................6
Biofertilizers and mechanization:.....................................................................6
Loan amount:....................................................................................................6
Subsidy received and instrument management cost:........................................6
Recommendations:...............................................................................................6
Self-made Assumptions:.......................................................................................6
Difference in income by gender:..........................................................................7
Null hypothesis:................................................................................................7
Alternate Hypothesis:.......................................................................................7
Methodology:....................................................................................................7
Difference in income of farmers by Districts:......................................................8
Null hypothesis:................................................................................................8
Alternate hypothesis:........................................................................................8
Methodology:....................................................................................................8
Districts where the income of farmers should be enhanced:................................9
Factors affecting Loan Repayment. (Logistic Regression):.................................9
Hypothesis Development:.................................................................................9
Null Hypothesis:...........................................................................................9
Alternate Hypothesis:...................................................................................9
Methodology:..................................................................................................10
Summary:
Jayalaxmi Agro Tech (JAT), a company based out of Bellary in Karnataka and
co-founded by Anand Babu, strives to keep the Indian farmer informed about
the modern best practices, thereby boosting the agricultural yield. The
company's flagship product is a suite of crop-specific mobile apps in several
regional languages with heavy emphasis on audio-visual content to break the
language and literacy barrier prevalent in rural areas. The farmer is empowered
with the right information at the right time to make agriculture sustainable and
more profitable. JAT intended to collect data on sericulture (rearing of
silkworms for producing raw silk) to improve income of silk producers.
Karnataka is one of the largest producers of raw silk in India. Sericulture
requires less investment but offers high returns if done correctly. Sericulture
also involves cultivation of mulberry trees, the leaves of which are used to feed
the silkworms. The yield of sericulture is heavily dependent on the quality of
inputs such as the type of silkworm breed used, quality of the mulberry leaves
and environmental conditions of the silkworm rearing house. Jayalaxmi Agro
Tech collected farmer level data on sericulture practices in the districts of
Belagavi, Bellary, Chikballapur, Mandya, and Tumakuru in the state of
Karnataka. The company wanted to analyze the data collected to gain insights
so that they could make grassroot level impact by fine tuning sericulture as an
occupation. These insights could possibly help towards building better policy
interventions to improve the welfare of sericulture farmers.

Analysis of Sericulture data from Karnataka:

The data collected from sericulture farmers can be used for conducting simple
hypothesis tests and build regression models to understand the factors that are
associated with income generated in agriculture. The idea is to share insights
with the sericulture farmers so that they can take informed decisions.

Hypothesis Development:
As we are intending to study the factors that affect the income generated in
agriculture. So, we will go for a multiple linear regression model.
Income per acre is going to be our dependent variable (Y), and the other factors
are going to be independent variables. I have chosen the following independent
variables.
 Training on sericulture. (training_on_sericulture)
 Crop insured. (crop_insured)
 Amount of loan taken by the farmer. (loan_amount)
  Total subsidy received from the sericulture department.
(seri_total_subsidy)
 Cost of rearing silkworms. (rearing_cost)
 Cost of managing the instruments required for sericulture.
(instrument_mgmt_cost)
 Number of years of experience of the farmer in sericulture.
(years_of_exp_in_sericulture)
 Biofertilizers used. (bio_fertilizers)
 Farmer is mechanized. (mechanization)
Hypothesis development is important because it enables us to develop a specific
direction as well as better understanding about the subject matter of the study.

Null Hypothesis:
Income is not affected by Training on sericulture, Crop insured, Amount of loan
taken by the farmer, Total subsidy received from the sericulture department,
Cost of rearing silkworms, Cost of managing the instruments required for
sericulture, Number of years of experience of the farmer in sericulture,
Biofertilizers used, and Farmer mechanization.

Alternate Hypothesis:
Income is affected by Training on sericulture.
Income is affected by Crop insurance.
Income is affected by Amount of loan taken by the farmer.
Income is affected by Total subsidy received from the sericulture department.
Income is affected by Cost of rearing silkworms.
Income is affected by Instruments management cost.
Income is affected by Years of experience of farmer.
Income is affected by Biofertilizers.
Income is affected by the Mechanization of a farmer.

Methodology:
I will be using Multiple Linear Regression. I filtered my data for dependent and
independent variables. Then I applied multiple linear regression model and the
test results are shown as follows.
This Multiple R is the correlation coefficient which tells us how strong the
linear relationship is. In this case its about 53%. This means that the linear
relationship between variables is 53% strong and the variables have a weak
positive relationship.
Standard error is 33227 which means that this much change in the income of
farmers is not because of the taken independent variables. Other factors might
have caused this change which we have not considered. It’s the error term.
When there are more than 1 independent variables, so we consider adjusted R
Square. Here the value is 26% which means that the independent variables
explain about 26% of the variation in dependent variable, and the independent
variables cause 26% of change in our dependent variable.
The total number of observations are 508.

Since the Significance F-value is less than 5% so we reject the null hypothesis
and say that the income is affected by most of our independent variables.

We will now analyze each of our independent variable and will see how they
respond to income. The y-intercept value represents what would be the value of
Y when the X’s are Zero.
Rearing Cost:
The p-value of rearing cost is less than 5% so we will reject the null hypothesis
and will say that it has an effect on the income of the farmer per acre. The
coefficient of rearing cost is positive which means that there is a positive
correlation between income and rearing cost. For every 1 rupee rise in rearing
cost, the income will increase by 0.224 rupees. The t-stat value is 3.14 which is
greater than 2 and we can reject the null hypothesis.
Crop insured:
Its coefficient is negative which means that there is a negative correlation
between income and the insurance of crops. P-value clearly indicates that we
can reject the null hypothesis and state that there exists a relationship between
these 2 variables. The insurance of crops will reduce the income by 14906.
Years of experience:
The p-value of this independent variable is more than 5% so in this case we
cannot reject the null hypothesis and say that the income is not as such affected
by the years of experience of a farmer.
Training on sericulture:
The p-value in this case is less than 5% so we can reject the null hypothesis and
state that there exists a relationship between income and training on sericulture.
Income is impacted by this variable. The relationship is negative as obvious by
the sign of coefficient.
Biofertilizers and mechanization:
As the p-values of both these variables are less than 5% so we reject the null
hypothesis and state that the income is impacted by these two variables. The
impact is positive as their coefficients are positive.
Loan amount:
The p-value in this case is quite less than 5% so we reject the null hypothesis
and state that there is a relationship between loan amount and income. As the
coefficient is negative, which states that the relationship is also negative.
Subsidy received and instrument management cost:
As the p-value of these two variables is quite higher than 5% so we cannot
reject the null hypothesis and we conclude that the income is not affected by
these two variables.

Recommendations:
The rearing cost should be increased as its positively related to the income of
the farmer. The insurance of crops should be decreased as it negatively impacts
the income. The use of biofertilizers should be increased and farmers are
supposed to be more mechanized in order to enhance the income. The loan
amount negatively impacts the income of the farmer so it should also needs to
be decreased.

Self-made Assumptions:
I also want to know the difference in income by gender and district.

Difference in income by gender:

Null hypothesis:
Income of Male and Female is same.
Alternate Hypothesis:
Income of Male and Female is not same.
Methodology:
As there are two variables and the variable under consideration is quantitative
so we will use Independent Sample T-test.
We run the independent sample T-test by arranging the data of male and female
income in excel and generate the following results.

As the p-value is greater than 5% that is 38.27%(Two-tail), we cannot reject the

null hypothesis because if we do so we will be committing type 1 error. So, we
conclude that the income of male and female farmers is the same.
Difference in income of farmers by Districts:
Null hypothesis:
Income of farmers in all the districts is same.
Alternate hypothesis:
Income of farmers in all the districts is not same.
Methodology:
As the number of variables is more than 2 and variable under consideration is
quantitative so we will use Anova Test.
We run the anova test in excel by arranging the incomes according to their
districts and produce the following results.

As the p-value is 0 which is less than 5% so we can easily reject the null
hypothesis and state that there lies a difference in income by districts. Every
district farmer has different income.
Districts where the income of farmers should be
enhanced:
The below mentioned table is of Anova where I compared the average incomes
from all the districts.

As the average incomes of Tumakuru, Bellary and Mandya districts is very low
so these districts need to be checked out and such measures should be taken
where the income of farmers can be enhanced.

Factors affecting Loan Repayment. (Logistic

Regression):
As the loan repayment variable is qualitative in nature so we would use Binary
logistic regression to check what factors are associated with the repayment of
loan by the farmers.
Hypothesis Development:
Null Hypothesis:
Loan repayment is not affected by Gender, Subsidy, Instrument management
cost, income per acre and rearing cost.
Alternate Hypothesis:
Loan repayment is affected by gender.
Loan repayment is affected by Subsidy.
Loan repayment is affected by Instrument management cost.
Loan repayment is affected by Income of farmers.
Loan repayment is affected by Rearing cost.
Methodology:
We must download the Real Statistics Resource pack from http://www.real-
statistics.com/. We will install its add-in in excel and will produce the following
results.