Profitability and Value Chain Analyses of Beef Cattle Production in Some Selected Areas of Nilphamari District

PROFITABILITY AND VALUE CHAIN ANALYSES OF
BEEF CATTLE PRODUCTION IN SOME SELECTED

AREAS OF NILPHAMARI DISTRICT
MS THESIS
KHONDOKER MD. SHAKIYA KAWSAR

Examination Roll No. 16AEP-JD05M
Semester: January-June, 2018
Registration No. 39116
Session: 2011-12
Master of Science (MS)

in
Agricultural Economics (Production Economics)
Department of Agricultural Economics

Bangladesh Agricultural University
Mymensingh-2202
JUNE 2018
A Thesis
By

Session: 2011-12
Submitted to the
Bangladesh Agricultural University, Mymensingh
In partial fulfillment of the requirements
For the degree of
Master of Science (MS)

in
Agricultural Economics (Production Economics)

Mymensingh-2202
JUNE 2018
A Thesis
By

Session: 2011-12
Approved as to style and content by
_______________________________ __________________________
(Professor Dr. M. Saidur Rahman) (Professor Dr. Md. Taj Uddin)
Supervisor Co-supervisor
_____________________________
(Professor Dr. Ismat Ara Begum)
Chairman
Examination Committee & Head
Mymensingh-2202
JUNE 2018
ACKNOWLEDGEMENTS
All praises are to Almighty Allah, the Supreme Ruler of the Universe, who enables the
author to complete this thesis successfully. The author also recognizes his great
indebtedness to many individuals and institutions that helped him, in one way or other, to
complete this dissertation.
The author expresses his heartfelt sense of gratitude and sincere appreciation to his
supervisor Professor Dr. M. Saidur Rahman, Department of Agricultural Economics,
Bangladesh Agricultural University, Mymensingh, for his untiring inspiration, scholastic
guidance, constructive criticism, constant encouragement and great patience throughout
the study period. Without his unfailing interest, continuous supervision and valuable
suggestions throughout the period of this research, the author could not able to finish this
thesis.
The author also expresses his deepest gratitude and indebtedness for the kind cooperation
of his Co-supervisor Professor Dr. Md. Taj Uddin, Department of Agricultural
Economics, Bangladesh Agricultural University, Mymensingh in the successful completion
of this work
The author feels his honest and heartfelt gratitude to his respected teachers Professor Dr.
W. M. H. Jaim, Professor Dr. M. Serajul Islam, Professor Dr. M. Harun-Ar-Rashid,
Professor Dr. Fakir Azmal Huda, Professor Dr. Sadika Haque, Professor Dr. Ismat Ara
Begum, Professor Dr. Hasneen Jahan, Professor Dr. Humayun Kabir, Associate Professor
Dr. A. H. M Saiful Islam, Associate Professor Dr. Shamima Akter and other respected
teachers of the Department of Agricultural Economics, Bangladesh Agricultural
University, Mymensigh, for their kind observations and sincere efforts to warrant a timely
completion of this work.
The author thanks cordial to the farmers in the study areas who provided relevant
information about this research work. The author expresses loving gratitude to his friends
Md. Forhadur Rahman, Mohammad Yunus, Farooq Hasan, Ripon Chandra Das, Monirul
Islam, Salah Uddin, Nazmus Sakib, Ariful Islam for their friendly help, co-operation and
inspiration throughout the study period.
It is a great pleasure for the author to express his boundless gratitude and ever
indebtedness to his beloved parents: Kh. Md. Afjalul Hoque, Most. Sufia Begum, brother:
Kh. Md. Habibe Kawsar for their never ending prayer, support, affections and selfless
sacrifice in the long process of building his academic career which can never be repaid.
Finally, the author would like to thank all the staff of Department of Agricultural
Economics, Bangladesh Agricultural University, Mymensingh, for their help at different
stages during the study period in this faculty.
The Author
iv
ABSTRACT
The major attempt of the present study is to assess the profitability and value
chain analyses of beef cattle with the help of primary data from the farmers and
actors in this beef cattle market. Secondary data were also used in this study.
The study also identified socioeconomic characteristics of beef cattle producers
and beef cattle actors. Primary data were collected from 35 beef cattle producing
farmers, 15 small beef cattle traders, 3 big beef cattle traders and 9 beef butchers of
the selected areas of Kishoreganj Upazila under Nilphamari district. The area was
purposively selected considering the concentration of different beef cattle farmers
and beef cattle value chain actors. The major finding of the study is that the beef
cattle production was profitable in the context of the study area. Gross cost,
gross returns and undiscounted BCR per five to six month of beef cattle
production were Tk. 29472, Tk. 34901 and 1.18, respectively. The value addition
by beef cattle producers, small traders, big traders and butchers were Tk. 5428,
Tk. 2422, Tk. 4375 and Tk. 7082, respectively. The net value addition by the beef
cattle producers, small traders, big traders and butchers were Tk. 5268, Tk. 2105,
Tk. 4167 and Tk. 6408, respectively. The study also identified some problems
faced by the farmers of beef cattle producers and actors in the study area. The
problems need to be solved as soon as possible to expand the growing beef cattle
production business. Based on the findings of the study, some recommendations
are suggested to improve the cultural and management practices of beef cattle
production with a view to increase the income and employment opportunities of
the farmers and other people who are involved in the different activities of the
whole value chain to develop and strengthen the beef cattle industry in
Bangladesh.
v
CONTENTS
CHAPTER TITLE PAGE

ACKNOWLEDGEMENTS iv
ABSTRACT v
CONTENTS vi
LIST OF TABLES xi
LIST OF FIGURES xii
ABBREVIATIONS xiii
1 INTRODUCTION 1-11
1.1 Background of the study 1
1.2 Importance of beef cattle production sector in 2
Bangladesh
1.3 Contribution of livestock sector in Bangladesh 5
1.4 Value Chain Concept 7
1.5 Present condition of beef marketing in 8
Bangladesh
1.6 Justification of the study 9
1.7 Objectives of the study 10
1.8 Limitations of the study 11
2 REVIEW OF LITERATURE 12-19
3 MATERIALS AND METHODS 20-31

3.1 Pilot visit in several beef producing areas 21
3.2 Selection of the study area 21
3.3 Target group 24
3.4 Selection of sample 24
3.5 Data collection instruments 24
3.6 Preparation of interview schedule 25
3.7 Period of data collection 26
3.8 Collection of data 26
vi
LIST OF CONTENTS (Continued)
CHAPTER TITLE PAGE

3.9 Analysis of data 27
3.10 Analytical framework of the study 27
3.10.1 Tabular technique 27
3.10.1.1 Gross return 28
3.10.1.2 Interest on operating capital 28
3.10.1.3 Gross margin 29
3.10.1.4 Net return 29
3.10.1.5 Benefit-cost ratio (BCR) 30
3.11 Value addition analytic technique 30
3.12 Problem faced during data collection 30
4 SOCIO-ECONOMIC CHARACTERISTICS OF THE 32-38
RESPONDENT FARMERS
4.1 Age distribution of the respondents 32
4.2 Family size of the respondent farmers 33
4.3 Educational status of the respondents 34
4.4 Land ownership patterns of respondents 35
4.5 Occupational status of the respondents 37
5 PROFITABILITY ANALYSIS OF BEEF CATTLE 39-45
PRODUCTION
5.1 Variable costs 39
5.1.1 Purchase price of beef cattle 40
5.1.2 Cost of human labor 40
5.1.3 Cost of husk 40
5.1.4 Cost of khud 40
5.1.5 Cost of rice straw 40
5.1.6 Cost of salt and oil cake 41
5.1.7 Cost of drug/ vaccine/ veterinary services 41
5.1.8 Cost of rope/electricity/coil 42
5.1.9 Total variable cost 42
5.2 Fixed Cost 42
vii
CHAPTER TITLE PAGE

5.2.1 Cost of drinkers 42
5.2.2 Cost of spade 42
5.2.3 Cost of shade 42
5.2.4 Cost of bucket 43
5.2.5 Cost of housing 43
5.2.6 Total fixed cost 43
5.3 Gross cost 43
5.4 Return from beef cattle 43
5.5 Gross margin 44
5.6 Net return 44
5.7 Benefit cost ratio (Undiscounted) 44
5.8 Concluding remarks 45
6 VALUE CHAIN ANALYSIS OF BEEF CATTLE 46-52
PRODUCTION
6.1 Value addition of independent beef cattle 46
producer
6.1.1 Marketing cost of independent beef cattle 46
producer
6.1.2 Value addition by independent beef cattle 46
producer
6.2 Cost and value addition by small traders 47
6.2.1 Value addition by small traders 47
6.3 Cost and value addition by big traders 48
6.3.1 Marketing cost of big traders 48
6.3.2 Value addition by big traders 48
6.4 Cost and value addition by butchers 49
6.4.1 Marketing cost of butchers 49
6.4.2 Value addition by butchers 50
6.5 Total value addition scenario per beef cattle 50
6.6 Marketing channel 52
6.7 Marketing channels of beef cattle 52
7 PROBLEMS AND SOLUTIONS OF BEEF CATTLE 54-59
PRODUCTION
7.1 Problem faced by the beef producer 54
viii
CHAPTER TITLE PAGE

7.1.1 Shortage of quality feed and high feed cost 54
7.1.2 Instability of beef price 54
7.1.3 Low productivity 55
7.1.4 Inadequate scientific technique and method 55
7.1.5 Lack of capital and credit facilities 56
7.1.6 Disease incidence and high medical cost 56
7.2 Solutions of constraints as suggested by the 56
beef cattle producer
7.2.1 Reasonable price of feed and adequate supply 56
of feed
7.2.2 Ensuring reasonable price of beef cattle 57
7.2.3 Availability of high quality feed 57
7.2.4 Ensuring adequate scientific techniques and 57
methods
7.2.5 Timely supply of credit on easy term 57
7.2.6 Veterinary program 57
7.3 Problem faced by other actors 58
7.3.1 Price instability 58
7.3.2 Lack of adequate market information 58
7.3.3 Transportation cost 58
7.3.4 Lack of credit facilities 58
7.3.5 Freezing facilities 58
7.4 Measures suggested by the actors 59
7.4.1 Adequate market information 59
7.4.2 Make credit facilities available 59
7.4.3 Take step to lowering the transportation cost 59
7.4.4 Market stability 60
8 SUMMARY, CONCLUSIONS AND 61-65
RECOMMENDATION
8.1 Summary 61
8.2 Conclusions 63
ix
CHAPTER TITLE PAGE

8.3 Recommendations 63
8.4 Scope of further research 64
REFERENCES 66-69
x
LIST OF TABLES
TABLE TITLE PAGE
1.1 Contribution of livestock and poultry in the national 5

economy of Bangladesh
1.2 Livestock contribution in GDP 5
1.3 Livestock population of Bangladesh (in lakh number) 6
1.4 Production of milk and meat 6
1.5 Demand, production and deficiency of milk and meat 7
4.1 Age distribution of the respondents farmers 32
4.4 Average land distribution of the sample farmers 36
5.1 Average human labor use in beef cattle production 40
5.2 Average cost of beef cattle production 41
5.3 Return from beef cattle production 44
5.4 Net return, gross margin and BCR of beef cattle 44
production
6.1 Marketing cost of independent beef cattle producer 46
6.2 Value addition by independent beef cattle producer 47
6.3 Marketing cost of small traders 47
6.4 Value addition by small traders 48
6.5 Marketing cost of big traders 48
6.6 Value addition by big traders 49
6.7 Marketing cost of big butchers 49
6.8 Value addition by butchers 50
7.1 Problems suggested by the beef cattle producers 55
7.2 Problems suggested by the actors 59
xi
LIST OF FIGURES
FIGURE TITLE PAGE
3.1 Research methods follow in the study 20
3.2 District map of Nilphamari 22
3.3 Upazilla map of Kishoreganj 23
4.3 Average land distribution of the sample farmers 36
6.1 Value addition, marketing cost and net value addition 51
6.2 Percentage of total value addition by actors 51
6.3 Marketing channel of beef cattle 52
xii
ABBREVIATIONS
A.I – Artificial Insimenation
BBS - Bangladesh Bureau of Statistics
BCR – Benefit Cost Ratio
BER – Bangladesh Economic Review
BDFA - Bangladesh Dairy Farmers Association
BRAC - Bangladesh Rural Advancement Committee
Dec. - Decimal
DLS - Department of Livestock Services
e.g. – for Example
et al. – et alia (and Others)
etc. - et cetra
FY – Fiscal Year
FFYP - Fourth Five Year Plan
FAO – Food and Agriculture Organization
GOB – Government of Bangladesh
gm. – Gram
GDP – Gross Domestic Product
HDI – Human Development Index
i.e. - That is
IOC – Interest on Operating Capital
Kcals - Kilo Callories
Kg. – Kilogram
Km2 – Square Kilometer
MoF – Ministry of Finance
MS – Master of Science
MS Excel – Microsoft Excel
NGO - Non Government Organization
NLDP - National Livestock Development Policy
No. – Number
MFIs - Micro Finance Institutions
Mt. – Metric Tone
PRSP - Poverty Reduction Strategy Paper
R&D – Research and Development
RMG - Ready Mate Garments
Sq. - Square
SWOT - Strengths Weakness Opportunity and Threats
Tk. – Taka (Bangladeshi Currency)
UMS - Urea Molasses Straw
UNDP - United Nation Development Program
UK - United Kingdom
USAID - United States Agency for International Development
WB - World Bank
$ - Dollar of United States of America
xiii
CHAPTER 1
INTRODUCTION
1.1 Background of the Study
Agriculture continues to play a central role in economic development and to be a

key contributor to poverty reduction in many parts of the world. Agriculture
alone is not sufficient to address poverty and inequality that are so pervasive in
today’s world. It’s become crucial for policy makers to focus immediate attention
on agro industries. Such industries, established along efficient value chains, can
increase significantly the rate and scope of industrial growth. A significant
proportion of national funds are used to support agricultural production inputs in
developing countries. Traditionally little attention has been paid to the value
chains by which agricultural products reach final consumers and to the intrinsic
potential of such chains to generate value added and employment opportunities
(UNIDO, 2009).
Bangladesh ranks eighth in the world with a population of over 161 million
encompassing an area of 1,47,570 sq. kilometer. Now Bangladesh is lower middle
income country with per capita income ($1610); gross national product ($1384)
high growth rate of population (1.37%) and low standard of living compared to
other countries in economic consideration (Bangladesh Economic Review, 2016).
The economy of Bangladesh is mostly depend on agriculture. But in Bangladesh,
almost half of the population lives below the poverty line consuming less than
2122 kcals/capita/day (BBS, 2009). While the standard amount is 2630
kcals/capita/day for developing countries and 3420 kcals/capita/day for
developed world (FAO Statistics Division, 2010). Apart from the prevailing deficit
in the total calorie intake, the normal diet of Bangladeshi people is seriously
imbalanced. Yet the country has a big deficiency of meat and dairy product.
According to DLS, with per capita daily demand for meat at 120gm, the annual
demand for meat in Bangladesh is 6.4 million tons but it produces only 4.56
million tons last year, leaving a shortfall of nearly 1.84 million tons (DLS, 2014).
1
Beef enterprises are considered as Treasure for the economy of Bangladesh
particularly in the rural areas. Development of beef production is necessary to
create employment opportunity for the rural peoples. The beef production sector
does not provide expected contribution to national income due to several factors.
These concern information, breeding, feeding, management, diseases and
marketing etc. The development of beef production sector is hindered by a large
number of technical, institutional and socioeconomic constraints in the country.
This study is supposed to be helpful to have an assessment of the role of market
failures and of government policies in contributing to its poor performance.
1.2 Importance of Beef Production Sector in Bangladesh
Livestock plays an important role in the national economy of Bangladesh with a

direct contribution of around 3% percent to the agricultural GDP and providing
15 percent of total employment in the economy. The livestock sub-sector that
includes poultry offers important employment and livelihood opportunities
particularly for the rural poor, including the functionally landless, many of whom
regard livestock as a main livelihood option. About 75 percent people rely on
livestock to some extent for their livelihood, which clearly indicates that the
poverty reduction potential of the livestock sub-sector is high. According to
Bangladesh Economic Review (2006), the growth rate in GDP in 2004-05 for
livestock was the highest of any sub-sector at 7.23%, compared to 0.15% for crops,
and 3.65% for fisheries sub-sector. These changes have been prompted by a rapid
growth in demand for livestock products due to increase in income, rising
population, and urban growth.
It is an established fact that high quality animal protein in the form of milk, meat
and eggs is extremely important for the proper physical and mental growth of
human being. In Bangladesh, around 8% of total protein for human consumption
comes from livestock. Hides and skin of cattle, buffaloes, goats and sheep are
valuable export items, ranked third in earnings after Ready Mate Garments
(RMG) and shrimp. Surprisingly, Bangladesh has one of the highest cattle
densities: 145 large ruminants/km2 compared with 90 for India, 30 for Ethiopia,
2
and 20 for Brazil. But most of them trace their origin to a poor genetic base. The
average weight of local cattle ranges from 125 to 150 kg for cows and from 200 to
250 kg for bulls that falls 25-35% short of the average weight of all-purpose cattle
in India. Milk yields are extremely low: 200-250 liter during a 10-month lactation
period in contrast to 800 liter for Pakistan, 500 liter for India, and 700 liter for all
Asia. Despite highest cattle densities in Bangladesh, the current production of
milk, meat and eggs are inadequate to meet the current requirement and the
deficits are 85.9, 77.4 and 73.1% respectively. If 5% GDP growth rate is considered
then the current production of these commodities need to be increase 2.5 to 3.0
times by the year 2020 to feed the growing population in the country. This
illustrates how urgent is the need to increase the production of milk, meat and
eggs. The PRSP (Poverty Reduction Strategy Paper) stresses the importance of the
livestock sub-sector in sustaining the acceleration of poverty reduction in the
country. The dynamic potential of this emerging sub-sector thus requires critical
policy attention.
In the past, due importance was not given to the development of the livestock
sub-sector despite its significant contribution to the national economy. In the
Financial Year 2006-07 the livestock sub-sector received only about 1.0 percent of
the total budget allocation, or only about 3.5 percent of the agricultural sector
budget. Though production of animal protein has maintained an upward trend,
per capita availability of animal protein presently stands at around 21 gm
meat/day, 43 ml milk/day and 41 eggs/year vis-a-vis the recommended intakes
of 120 gm meat/day, 250 ml milk/day and 104 eggs/year. Shortage of quality
inputs, inadequate services and physical infrastructure, institutional weaknesses
in terms of weak regulatory framework and enforcement, limited skilled
manpower and resources, and inadequate research and technological
advancement are all continuing to act as constraints to livestock development.
3
The growth opportunities in the livestock sub-sector vary significantly among the
species. Qualitative rather than quantitative development of large ruminants
(cattle and buffalo), a parallel increase of the productivity and population size of
the small ruminants (goat and sheep), and poultry keeping emerges as promising
to offer substantial growth potentials with a positive impact on nutrition,
employment and poverty alleviation. Research and technological development
merit priority to counteract allied problems in the fields of feed, breed and disease
and meet the challenge of the country’s livestock sector in the 21st century.
National Livestock Development Policy has been prepared to address the key
challenges and opportunity for a comprehensive sustainable development of the
Livestock sub-sector through creating an enabling policy framework.
Bangladesh is rich in farm animal (cattle, buffalo goat, sheep, horse, pig, chicken,
duck, geese & pigeon) genetic resources (FAnGR). The proportion of improved
cattle in the country is still found less than 3% and the number of is also very low.
Goat, sheep and poultry farm was established at the district level for producing
improved breed and the supply of these to the farm level. The number was found
still insignificant. There is, however, a high degree of inequality for land holdings,
but a low degree of inequality for livestock holdings. The distribution of
indigenous breed is less unequal than the distribution of improved breeds. There
is a possibility of improvement in rural income distribution with an increase in
investment for indigenous livestock development. The landless and small farm
holdings own the highest percentage of poultry; sheep and goats. While the
medium and large farms possess significant percentage of cattle and buffaloes
and the improved breeds of all species. Thus, the investment in small ruminant
and poultry species will greatly help generate employment and income for the
rural poor and thus improve livelihood. However, the database on the
distribution of livestock population and their prices among the agro-ecological
regions was not available. This study is an outcome of focusing on district level
statistics and formal and informal marketing systems and the evolutionary
process in regional marketing of the animal and their products.
4
1.3 Contribution of Livestock Sector in Bangladesh
The agriculture sector cannot absorb surplus manpower. Many landless laborers
find it hard to obtain employment. So, landless farmers are moving towards
livestock sector. About 20% people are directly engaged with livestock sector and
more than 50% people are partly engaged in livestock sector (BBS, 2017). About
1.60% of the total GDP earned from animal farming in the year 2016-2017
(Table 1.2).
Table 1.1 Contribution of Livestock and Poultry in the National Economy of

Bangladesh
Contribution of Livestock in Gross Domestic Product (GDP), 1.60%

(2016-17)p
GDP growth rate of Livestock (2016-17) p 3.32 %
GDP volume (Current price) in Crores (Taka), (2016-17) p 35,576
Share of Livestock in Agricultural GDP (2016-17) p 14.31%
Employment (Directly) 20%
Employment (Partly) 50%
Cultivation of land by livestock 50%
Fuel supply from livestock and poultry 25%
Source: BBS, 2017
The contribution of livestock sector to agriculture share of gross domestic product

was 14.31 during 2016-2017 with an annual growth rate of 3.32% (BBS, 2017).
Table 1.2: Contribution of Livestock in the GDP
Items 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

GDP (Base: 2.06 1.98 1.90 1.84 1.78 1.73 1.66 1.60
2005-06)*
Growth rate of 2.51 2.59 2.68 2.74 2.83 3.10 3.21 3.32
GDP
Source: BBS, 2017
5
The above table shows the GDP of previous year according to base year 2005-06 to
present 2016-17. It shows that the percentage of contribution of livestock is
decreasing per year. In fiscal year 2009-10 it was 2.06% and now in fiscal year it is
1.60%. The other side is the growth rate of livestock sector is increasing per year.
In fiscal year 2009-10 it was 2.51% which is increasing in fiscal year 2016-17 by
3.32%.
Table 1.3: Livestock population of Bangladesh

(Lakh)
Livestock 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
species
Cattle 229.00 229.76 230.51 231.21 231.95 233.41 234.88 236.36 237.85 239.35
Buffalo 12.60 13.04 13.49 13.94 14.43 14.50 14.57 14.64 14.71 14.78
Sheep 27.80 28.77 29.77 30.02 30.82 31.43 32.06 32.70 33.35 34.01
Goat 215.60 224.01 232.75 241.49 251.16 252.77 254.39 256.02 257.66 259.31
Total 485.00 495.58 506.52 516.84 528.36 532.11 535.90 539.72 543.57 547.45
Ruminant
Source: BER, 2016
According to Bangladesh Economic Review (2016), it has estimated 23.935 million

cattle, 1.478 million of buffalo, 3.401 million of sheep and 25.931 million of goat
jointly produced 80 million metric tons of organic fertilizer and supply of 25% of
fuel.
Table 1.4: Production of Milk and Meat
Products Unit 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Milk Lakh 26.50 22.90 23.70 29.50 34.60 50.70 60.92 69.70 72.75 92.83
MT
Meat Lakh 10.40 10.80 12.60 19.90 23.30 36.20 45.21 58.60 61.52 71.54
MT
Source: BBS, 2017
About 92.83 lakh metric ton milk were produced in fiscal year 2016-17 and about
71.54 lakh metric ton meat were produced in fiscal year 2016-17. The following
table shows that the rate of production is increasing per year.
6
Table 1.5: Demand, Production and Deficiency of Milk and Meat
Products Demand Production Deficiency

Milk 148.65 Lakh Metric 92.83 Lakh Metric 55.82 Lakh Metric
Ton Ton Ton
Meat 71.35 Lakh Metric 71.54 Lakh Metric Surplus
Ton Ton (0.19 Lakh MT)
Source: BBS, 2017
The total demand for milk was 148.65 lakh metric ton besides production was
92.83 lakh metric ton and the deficiency of milk was 55.825 lakh metric ton. The
demand of meat was 71.32 lakh metric ton and the production was 71.54 lakh
metric ton. Where surplus was 0.19 lakh metric ton.
1.4 Value Chain Concept
The concept of value chain was first introduced and popularized by Mychael
Porter of Harvard University in 1985.
According to Michael Porter (1985), a value chain is a high level model used to
describe the process by which businesses receive raw materials, add value to the
raw materials through various processes to create a finished product, and then
sell the end product to customers.
“Value chains are an integral part of strategic planning for many businesses
today. A value chain refers to the full lifecycle of a product or processes, including
material sourcing, production, consumption and disposal/recovery processes”
(World Business Council for Sustainable Development, 2011).
The value chain is a toll for identifying ways to create more customer value. The
value chain identifies nine strategically relevant activities that create value and cot
in a specific business. These nine value creating activities consist of five primary
activities and four support activities (Kotler, 2002).
Value chain provides the framework for designing and implementing many
development programs and projects. Given a multitude of different arenas of
application, geographical locations, commodity types, target groups and desired
7
outcomes, a variety of closely related conceptualizations of value chains has
emerged (Stamm and von Drachenfels, 2011).
The livestock value chain can be defined as the full range of activities required to
bring product (e.g live animals, meat, milk, eggs, leather, fiber, manure) to final
consumers passing through different phases of production, processing and
delivery. It is a market focused collaboration among the different stakeholders
who produce and market value added products.
Value chain analysis is essential to understanding of markets, the participation of

different actors, their relationships and the critical constraints that limit the
growth of livestock production and consequently the competitiveness of
smallholder farmers. These farmers currently receive only a small fraction of the
ultimate value of their output.
1.5 Present Condition of Beef Marketing in Bangladesh
Beef is 32 percent costlier in the country than the global average, largely due to
inadequate domestic production, drop in the flow of cattle smuggled in from
India and extortion from traders. Consumers paid Tk. 480-510 or about $6 for each
kg of beef in Dhaka last month when the global average price was $ 4.54 (about
Tk. 366) per kg, according to the World Bank (WB) Commodities Price Data
released every month. Beef is, however, not the priciest in Bangladesh. The red
meat is pricier in the UK but cheaper in Pakistan, according to Numbeo, the
internet database of the cost of living. Mohammad Shah Emran, general secretary
of Bangladesh Dairy Farmers' Association (BDFA) linked the high prices to
declining flow of cows from India. “We are yet to become self sufficient in
producing beef,” he said, adding that the sector has not grown enough to meet
domestic demands, mainly because of the farmers' fear of an influx of cattle from
the neighboring country causing the prices to plummet. Market data shows that
the prices began to rise after cattle flow from India, in early 2015, started declining
in the wake of Indian authorities' strong vigilance.
8
Prior to the crackdown, over 20 lakh cows were smuggled into Bangladesh every
year, according to National Board of Revenue. The meat prices were less than Tk.
300 per kg in Dhaka at the time, according to market data gathered and compiled
by The Daily Star. Consumers could buy one kg of the red meat for Tk. 280-300 in
February 2015, when the global average prices of beef was $4.63 or Tk. 360, based
on Bangladesh Bank's exchange rate at the time. It shows that beef prices in the
country were 24 percent lower than the global average. As the inflow slumped in
mid 2015, beef prices shot up. In August, 2015, retail prices in Dhaka were about
Tk. 400 per kg or $5.14, which was 10 percent higher than then global average of
$4.68, according to the World Bank and local market data. The gap between
domestic and global average prices widened even more early this year when meat
packers cited higher purchase prices and alleged extortions and hiked red meat
prices. “It begins from the borders,” said Robiul Alam, secretary general
Bangladesh Meat Merchant Association. Traders have to pay extortionists
between Tk. 10,000 and 12,000 just to bring a cow to the Gabtoli cattle market
from the border. Earlier, the illegal toll was much lower, he added. AFM Asif,
chief executive officer of Bengal Meat, said the demand for meat was rising in line
with the growth of economy. “But supply is not increasing keeping pace with
demand,” he said Bangladesh annually requires 70.52 lakh tonnes of meat but it
could only produce 61.52 lakh tonnes, according to data from Department of
Livestock Services (DLS).
1.6 Justification of the Study
Beef is prospective but poorly developed sector in Bangladesh. The importance of

beef enterprise in a country like Bangladesh, where malnutrition is a crucial
problem can hardly be over emphasized. Both population growth and rising
income are contributing to rapid expansion in the demand for milk and its
products as it has high income elasticity of demand.
Beef production section facing several blocked in Bangladesh. So, to promote

growth in Bangladesh there is a great need to study the reasons for poor
development of beef enterprise and find the ways to overcome these constraints.
9
The beef yield, the transportation of beefs, marketing and upto final sale of the
beef products to consumers does not reach their full potential because of various
challenges associated with each value chain actors. The present study will be
helpful to identify profitability and value additions and problems of the actors
and also give suggestions for probable solutions which in turn will be helpful to
improve the beef value chain.
To the best of author’s knowledge, no specific study on profitability and value

chain of beef producers is conducted in Nilphamari District. The available research
findings are not sufficient as well as systematic. Moreover, previous studies
examined only production side or marketing side or simply the supply chain
analysis separately. But this study has aim to cover both production and value
addition side in a systematic manner.
So, it is expected that the present study would not only help the individual beef
producers and value chain actors but also the policy makers, researchers with a
view taking further steps for beef cattle production.
1.7 Objectives of the Study
The objectives of the present study are as follows:

 To identify the socio-economic characteristics of beef producing farmers.
 To determine the profitability of beef cattle production.
 To examine the value addition by actors.
 To identify the problems and give solutions of beef production in the study
area.
10
1.8 Limitations of the Study
Although the study has revealed some new issues and dimensions, it holds some
limitations. The researcher suffers from a number of limitations which are
mentioned below:
 The study was confined to the beef profitability and value chain analysis in
some selected areas of Nilphamari district based on limited data. As the
study may not be representative of whole of Bangladesh, care should be
taken to draw any conclusion about the beef production and value chain.
 Inadequate time and fund availability for the study was an important
limitation. Price and cost data were taken only for a few months of a year.
These do not represent the actual view of the whole season. The study
might provide more meaningful results if it covered a number of different
districts and upazilla.
 Beef production was not the main occupation in most cases of the study
area
 Another important problem is that the respondent were not much

cooperative in the study area. Whenever they know that the researcher is
just a student and they will not be provided anything by the researcher,
they refused directly to provide data.
 The respondents are very afraid of leaking information about their income,
properties and volume of business to the government officials who cause
significant financial losses in form of income tax. So, they are uninterested
to provide actual information.
11
CHAPTER 2
REVIEW OF LITERATURE
The purpose of this chapter is to review the related available literatures, which
Support the present study. It is always beneficial for the researcher to consult
available literature to assess the past stock of knowledge with the hope of
receiving future guidelines for conducting further research in the particular area.
Review of some of the important studies from different libraries and websites
focusing on cattle production, marketing, value chain, problems and solutions at
home and abroad is presented sequentially in this chapter.
Hassanullah (2013) examined the beef cattle value chain in Bangladesh focusing;
northwest region of Bangladesh. The study conducted a field survey in Rajshahi,
Natore and Pabna districts during 14-21 July 2013. The researcher found that
annual beef production was 1.92 million MT as against total requirement 4.33
million MT. A large part of deficit of beef cattle and beef products met by
smuggling and import of live animals from neighboring countries viz. India,
Pakistan, Nepal and Sri Lanka, etc. Cattle rearing were more profitable with the
great advantage of providing rash flow which was a great benefit to the poor to
meet cash need for meeting expenses. Use of by-products of beef cattle such as
hides, bone, manure, slaughterhouse blood and offal etc, could make cattle
rearing more profitable and lower consumer prices. The study revealed that the
Metropolitan kosais added the highest value (Tk. 6500) per 100kg bull followed by
Paikars (Tk. 4350), local kosai (Tk. 3850), farmers (Tk. 3500), foreyas (Tk. 1500) and
brokers (Tk. 1350). The discontentment expressed by farmers that they were not
getting fair price of the beef cattle to a great extent true. In fact they were getting
28.69% of the total value addition on beef cattle because of long value chain.
Hossain (2013) investigated the present status and potentialities of organic beef
cattle production in Sirajgonj district of Bangladesh through field survey. The
study found that 12% cattle were indigenous and 88% crossbred. About 83%
12
farmers used cultivated fodder and 17% used cultivated and roadside grass. Most
of the farmers used mixed feed which was buying from local market and 37%
farmers used vitamin mineral supplementation. About 13% farmers used natural
breeding, 73% and 14% farmers used A.I. and both methods for livestock
breeding. About 87%, 80% and 83% farmers; practiced vaccination, de-worming
and grooming respectively. About 70% farmers used hormone, antibiotic and
growth promoter and only 33% farmers remove sick or injured animal from
healthy stock. About 73% farmers allowed access to outdoor and pasturing during
winter season and 27% farmers reared male and female cattle separately. About
97% farmers did not keep livestock record and only 3% farmers kept their
livestock record.
About 63% farmers reported anywhere and everywhere use of growth promoter,
57% reported high cost of vitamin mineral supplement, 43% reported unavailable
organic fertilizer and 17% reported lack of technical knowledge were the major
problems in organic beef cattle production. There are great potentialities for
organic beef cattle production in Bangladesh both for satisfying animal protein
requirement and production of quality beef. For this, it is a prime importance to
find out present status of organic beef cattle production in Bangladesh.
Ahmed et al. (2010) investigated the systems of management in small scale cattle
fattening programs in Bangladesh. About 40.9% respondents selected cattle on the
basis of age and 14, 25.6 and 16.7% respondents selected on the basis of breed, age
and sex, respectively. Most of the respondents (79.1%) fattened cattle for 3-6
months and rest fattened fur a prolonged period. About 90.2% respondents used
own capital for cattle fattening and 2.3, 4.2 and 3.3% respondents took bank loan,
NGO loan and lending for rattle fattening, respectively. About 79.5% did not have
any training on cattle fattening whereas about 20.5% respondents had taken short
training on cattle fattening. About 63.7% respondents used cattle fattening tablets,
27% respondents used urea molasses straw (UMS) and 51% followed
conventional feeding. About 72.6% vaccinate the cattle by themselves and about
13
76.3% took help from veterinary surgeon for treatment of their cattle. About 45%
reported shortages of animal feed, 50% reported lack of credit and 95% reported
high cost of feed as the major problems of small scale cattle fattening. The results
of this study will be useful for farmers and researchers to identify the overall
problems and their remedies on feeding, management and marketing related to
small scale cattle fattening practices in Bangladesh.
Alemayehu (2011) examined the value chain of beef cattle production and
marketing in Ethiopia: Challenges and opportunities of linking smallholder
farmers to the markets found that production being the main challenges for the
beef cattle production and value chain was the unofficial cross-border trade
dominated by influential personalities and illegal exporters. Limited access to
production and market-related information such as production systems, prices,
value chains, competitors, consumer preferences and lack of capital to invest in
assets, equipment and inputs that would improve duality are the major challenges
faced by the market value chain actors. High demand of animals by the local
abattoirs, increasing official export and increasing domestic meat consumption
were the opportunities that was enhance the system. Empowering poor
smallholder Farmers help to provide high-quality, sustainable livestock
production with an identified market destination and access to basic production
inputs, credit, capacity building, market-related information.
Ambarawati (2002) identified the beef production in halt dominated by

smallholders. Three different beef cattle development schemes introduced to
encourage beef production, including the Beef NES scheme, the Food Safety
Credit and the Food Safety Project. They differed in profit and cost sharing
arrangements. The Beef NES scheme conducted under a contract farming system
between farmers and finance providers. The Food Safety Credit scheme provided
subsidized credit to farmers, while the last scheme was a cooperative-type of
arrangement under a Bali government grant. A gross margin analysis of these
schemes conducted to compare profitability of the schemes. The results showed
14
that the Food Safety Project provided the highest gross margin to farmer-
participants and can potentially improve the quality of Bali beef.
Anita et al. (2010) determined the extent beef cattle to which the South African
consumer needs and demands regarding beef had changed, and whether the beef
value chain is positioned to meet these changes. The supply chain concept, market
orientation, meat quality and consumer food trends the theoretical framework of
this study; an industry analysis provided the context in which agri-businesses
function; a network analysis provides a better understanding of the roles and
value-adding activities that are delivered by chain participants; and an analysis of
the South African consumer establishes the composition of the market, consumer
needs and disposable income issues that are critical to finding the optimal
solution that is sustainable enough to meet the changing environment. Although
the industry was a good status, good management practices could further
increase consumer confidence in beef.
Burns and Bogale (2011) studied impact assessment of livestock value chain
interventions under the USAID project linking poor rural households to
microfinance and markets in Raya Azebo, Ethiopia. The study findings show that
there has been a significant increase in the contribution of income derived from
livestock fattening relative to all other income sources for cattle value chain
participants and also significant increase in the value of savings for participants.
The results indicate that microfinance and value chain interventions can have a
significant impact on the livelihoods of SNP participants. The assessed changes in
financial assets and improvements in food security certainly suggest that well
designed and implemented livestock value chains in concert with the provision of
credit may represent a potential pathway of poverty.
Brewin et al. (209) examined the adoption of product end process innovations in
the Canadian food processing industry using multivariate probit modal. Their
ridings suggest that firms that conduct both process; and product innovations in-
15
house are better able to enjoy complementarities. They also found the firms were
more likely to innovate in response to keeping pace with competitors.
Carroll (2010) observed the fast track land reforms in Zimbabwe resulted in a
radical transformation of the agricultural sector as 3 000 mainly white commercial
farmers ceded the land to about 20 000 mainly black farmers resulting in the
breakdown of the beef industry. The objectives to determine the potential of the
farmers to engage in market driven production. The study showed that the farms
had adequate infrastructure and grazing resources and adequate husbandry
knowledge. However, average herd size was small and service delivery
institutions were weak. A deterministic model was used to illustrate the stages
necessary to create commercially viable herds. Recommendations made that
investments should be made in restocking using adapted high yielding breeds,
strengthening farmers-driven commodity associations and establishing linkages
with high value markets.
Colton (2011) decided the best time to sell calves on the Cow Ranch in Roseburg,
Oregon. The two options were directly off the cow at 550 pounds in October or at
850 pounds in June, 2011. The revenues and costs from selling calves at these two
times were collected for the last five years. Data were put into an excel
spreadsheet to show profit and loss from each year. Both selling prices and costs
were examined to show at what point to sell would make the best profit. Using
figures from this spreadsheet it was determined that selling calves at 850 pounds
in June was the most feasible for the Gow Ranch.
Damdinsuren et al. (2011) showed that the meat’s value, informal international
market, improving value added meat and meat products export has important
significance in Mongolian meat industry, stock raising and its veterinary
development. Mongolia has enough meat reserve and its law, legal environment,
state policy and strategy have been basically defined to support and develop meat
market. Mongolian meat market analysis results have been united and completed
16
in SWOT analysis, and some strategy suggestions have been promoted for value
chain’s renewal.
David et al. (2011) investigated the technical efficiency and technology gaps across
three main beef cattle production systems in Kenya. Results show that there is
significant inefficiency in nomadic and agro-pastoral systems. Further, in contrast
with ranches, these two systems were found to have lower technology gap ratios.
The average pooled technical efficiency was estimated to be 0.69, which suggests
that there is considerable scope to improve beef production in Kenya.
FAO (2005) found that Serbian livestock husbandry has been faced with a twenty
year crisis leading to a decline in the volume of production of around 1.5% every
year. This has been driven by a significant shrinkage of the national market
together with numerous other challenges of transition: the privatization of state
agricultural enterprises followed by the absence of any long-term livestock
husbandry development strategy; the technological obsolescence and under
investment into processing capacities, particularly in the exporting sector of the
meat processing industry; poor relationships between livestock producers and
processors with no coordinated representation on either side; an absence of
positive structured policy measures and delays, sometimes lags lasting up to half
a year, in the implementation of comparably sparse subsidy measures. All these
factors resulted in the marginalization in particular of livestock product exports.
Compared to 1990, in 2005 total meat production was 30% lower, and by
particular sectors the fall was: beef 42%; lamb 22% and poultry meat Union. There
is a serious financing gap to this art of the chain actors. Whereas actors at the
higher level of the chain, like processors are well financed. The lower levels of the
chain actors were providing credit financing which reached the processors. For
the efficient flow of products and value additions all the way through the various
actors financing services needed to be available. He recommended a triangular
inter-relationship of actors with Micro Finance Institutions (MFIs) and commercial
banks to share risks and to lower transaction costs, to fill in the financial gaps
17
observed at the lower level of the value chain actors. In addition to financing, milk
quality, unfair competition, marketing, weak milk consumption cultures, feed
quality, access road and cost of inputs are identified as serious challenges to the
dairy value chain.
McEachern and Schroeder (2007) observed that superior knowledge of customers’

perceptions of value is recognized as a crucial success factor in today’s
competitive market place. Despite this, the voice of the consumer is often poorly
integrated in the value chain. Few studies have assessed value created for
consumers. The study evaluated the main attitudes driving consumer purchases
of fresh meat bearing value based labels. Market potential for further
differentiation was also examined.
Miah (2002) conducted the study in three municipal towns of Patina,

Mymensingh and Sylhet in Bangladesh to measure the profitability and resource
use efficiency of peri-urban livestock production, characterizes and measure use
the efficiency of marketing system of livestock and livestock products, and assess
the nature of production and marketing constraints. He found that peri-urban
commercial livestock farming was more profitable than traditional farming and
small holder beef cattle production was profitable when only variable cost or cash
post was consider. This production was less profitable mainly due to small heard
size and low productivity of animal. The major constraints to higher production
of livestock and livestock products included scarcity of feed and fodder, quality
breed, veterinary cares and services, working capital, and low price of products.
The most important problems of the marketers included scarcity of products,
payment made on advance for the products, fluctuations in demand and prices,
inadequate marketing facilities, lack of working capital, weight loss of animal and
harassment of police.
Mitcheels and Gow (2008) used a structural equation model for beef producers to
explore the importance of a producer’s market orientation on their subjective
performance within agricultural commodity markets. They found that market
18
oriented firms are highly innovative and achieve superior performance.
Mustafa (2012) showed the effects of years gain and length of time to reach
slaughter condition were highly significant (p<0.001) buy the effects of year on
daily gain were not significant (p>0.05) in Sudan. It was also shown that seasonal
variation was important in determining both total gain and fattening period
(p<0.001). The results indicated that the feedlot was operating efficiently. Profits,
up to 28.07% of the operation total cost achieved in 1999 indicated the high
profitability of this investment as compared to other types of business.
Rokunjjaman (2013) conducted a study dealing with how beef fattening farmers
utilize their livestock (beef fattening) credit provided by BRAC to improve their
livelihood and repayment aspects of livestock credit in the study area. The study
also aimed at determining the profitability of beef fattening adopted by loanee
farmers of BRAC. Regarding objectives of the study 50 samples were collected
randomly from Saidpur upazilla of Nilphamari district. Samples were categorized
into small (1-2 bulls), medium (3-4 bulls) and large (>4 bulls) farmers on the basis
of number of helps. The major findings of the study revealed that the average
annual income of small, medium and large farm families was Tk 47179.35,
109337.20 and 161873.38 respectively during the year. Beef fattening were
profitable as indicated by the BCR. The BCR for small, medium and large farmers
stood at 1.30, 1.41 and 1.51 respectively during the study year.
Above studies mainly focused on beef cattle production and value chain of beef
cattle. A few of them explains the beef cattle production and value chain. Thus the
present study was undertaken to examine profitability and value chain analyses
of beef cattle production in the study area.
19
CHAPTER 3
METHODOLOGY
This chapter presents a detail description of the methods followed at different
stages in order to reach the objectives of the study. Methodology is an inevitable
and undisputed part of research work. A very careful and sincere consideration
was needed to follow each stage presenting sequentially direction towards the
objectives of the study. The study uses available published and unpublished
materials received from different sources including the internet. Sources as well as
field survey data which were collected from individual beef cattle producers and
traders from selected survey areas.
This study followed the sequential methodological steps as presented:

1. Pilot visit in several beef producing areas
2. Selection of the study area
3. Selection of sample and sample size
4. Selection of sampling technique
5. Preparation of the survey schedule
6. Selecting methods of data collection
7. Data collection
Primary sources from selected respondents- Secondary data -

a) Beef cattle producers a) Research report and documents
b) Small traders, big traders & butchers b) Journals and maps
c) Theses
8. Processing and entry of data in Excel sheet
9. Tabulation and analysis of data
10. Interpreting the data by text, table, graph etc.
11. Thesis write up
Figure 3.1 Research methods followed in the study
20
Methods used and followed in the present study considering the objectives of the
study are described below:
3.1 Pilot Visits in Several Beef Producing Areas

Pilot survey was conducted with the few individuals of the targeted population of
the survey in order to test and refine the survey instruments before the main data
collection across the target population. Researcher visited Kishoreganj,
Nilphamari to test survey before implementing it on large scale to obtain
informative and useful information. Primarily five beef producers and five actors
were interviewed as pilot survey by the researcher.
3.2 Selection of the Study Area

Keeping in mind the objectives of the present study based on the limitations
associated with it only Kishoreganj Upazila of Nilphamari district were selected
as the study area. The reasons for selecting the area were as follows:
 Transportation system is very necessary for any types of agribusiness. The
transportation system is quite good of Kishoregonj Upazila of Nilphamari
district.
 Comparatively higher concentration of beefs in these area.
 The researcher is familiar with the language, ways of living and other
characteristics as he hails from one of the selected areas.
 Researcher’s belief about getting well cooperation from the selected
respondents.
 Accessibility and communication system were convenient to the researcher.
 No such study was conducted earlier in this area.
District map of Nilphamari is shown Figure 3.2 and Upazilla map of Kishoreganj
is represented in Figure 3.3.
21
Figure 3.2 District map of Nilphamari
22
Figure 3.3 Upazilla map of Kishoreganj
23
3.3 Target Group
In the study area a good number of people were known to be engaged in
producing and trading of beef. So, the target group was the beef producers, small
traders, big traders and butchers.
3.4 Selection of Sample

Sample is an integral part of research. Due to time and resource limitations, only
Kishoreganj Upazila under Nilphamari district were chosen purposively as the
study area based on the concentration of beef producers and traders. At first a list
of 35 beef producers from Kishoreganj Upazila were selected randomly who used
to supply beef in the market and a list of 15 small traders, 3 big traders and 7
butchers were selected. In this study purposive sampling technique was used to
draw sample of value addition actors.
Categories of sample No. of sample

Beef producers 35
Small traders 15
Big traders 3
butchers 7
total 60
Specific places of Kishoreganj Upazila were selected. Only those unions,

para/mohollas and beef market were selected where beef producers and others
value chain actors (small traders, big traders, butchers) were available. For this
reason Putimari and Borovita union of Kishoreganj Upazilla were selected
respectively.
3.5 Data Collection Instruments

For collection of data interview schedule was prepared. Two types of interview
schedule were developed for this purpose. They are:
 Interview schedule for beef producers.
 Interview schedule for small traders/big traders/butchers.
24
3.6 Preparation of Interview Schedule
Preparation of interview schedule is one of crucial importance in any survey. Two
types of draft interview schedules were prepared to collect the data to reach the
objectives of the study from beef producers and actors of value chain. Before
preparing the final schedule, draft schedules were pre-tested to verify the
relevance of the questions with the set of objectives of the study. After necessary
correction, modification and adjustment the final schedules were developed. The
major items of information for each type are bas follows:
1) The interview schedule for beef producers

The schedule included questions on:
i. General information about the sample farmers;
ii. Family size and composition, education and occupation of the sample
framers;
iii. Pattern of land ownership.
iv. Use of materials inputs for production of beef;
v. Yield, output and return of beef producers
vi. Questions relating to the problems the sample farmers faced
vii. Suggestion with respect to problems faced by the beef production.
2) The interview schedule for small traders/big traders/butchers

The interview schedule included questions on:
i. General information about the sample farmers;
ii. Family size and composition, education and occupation of the sample
framers;
iii. Pattern of land ownership.
iv. Marketing cost of small traders/big traders/butchers.
v. Gross return of small traders/big traders/butchers.
vi. Questions relating to the problems the sample farmers faced
vii. Suggestion with respect to problems faced by the beef production.
25
3.7 Period of Data Collection
To satisfy the objectives of the study, necessary data were collected by researcher
himself through personal interview with the sample farmers. The duration of data
collection was January to February, 2018. In order to obtain reliable data, the
researcher initially visited for several times to introduce himself with the people
of the study areas. The author also collected additional data from different GOs
and experts from Nilphamari district.
3.8 Collection of Data

The sample farmers as other farmers in Bangladesh did not keep written records
on farm business transaction or activities. Hence, it was very difficult to collect
actual data and the researcher had to rely completely on the memory of the
farmers. To overcome this problem, all possible efforts were made by the
researcher to ensure the collection of reasonably accurate information from the
field on recall basis. Data were collected from the respondents through face to face
interview by researcher himself. During data collection, the objectives of the study
were clearly explained to the respondents so that they could respond freely.
Initially, the farmers hesitated to answer the questions; but when they were
assured that the study was purely an academic one and it would not affect them
adversely then they were cooperative with the researcher. At the time of
interview, the researcher asked questions systematically and explained the
question whenever it was felt necessary. Farmers were requested to provide
correct information as far as possible. After each interview was over, the interview
schedule was checked so as to ensure that information to each of the items had
properly been recorded. If there were such items, which were overlooked or
contradictory, were corrected by another interview. In order to minimize the
errors, data were collected in local unit, but later those were converted into
international units.
In addition to, secondary data were also collected from different books, journals,
newspaper, department of agriculture and agricultural economics, from different
26
handouts, reports, published and unpublished documents of the Government of
Bangladesh (GOB) and its different organizations and agencies such as Statistical
Yearbook of Bangladesh, Bangladesh Economic Review, from different
organization and website searching.
3.9 Analysis of Data

The data and information collected from field surveys, interviews, discussions
and communications were scrutinized, classified, edited and coded. The
responses of the respondents that were recorded in the interview schedule were
transferred into a master sheet for entering the data in the computer. Data entry
was then done by the researcher himself and analysis was done using the
concerned computer software package i.e.; Microsoft Excel and SPSS. A list of
tables with their meaningful interpretations were prepared on the basis of the
aims and objectives of the study.
3.10 Analytical Framework of the Study

Analytical techniques enable researchers to examine complex relationships
between variables. A combination of descriptive and statistical techniques as
demanded by the study was used to achieve the objectives and to get the
meaningful results. The following techniques were used for analyzing data.
3.10.1 Tabular technique

Tabular technique is a well-known and widely used technique to show the results
of farm management study because it is simple, convenient and very easy to
understand. It is the technique that is commonly followed to find out the crude
association or differences between variables and output. Various descriptive
statistical measures (i.e., sum, average, percentages, ratios, standard deviation
etc.) were employed to examine the objectives. Tabular analysis included
socioeconomic characteristics of sample farmers, production practices and their
costs and return, input use, problems faced by the respondents and their probable
suggestions.
27
Profitability of beef production from the view of individual farmers was
measured in terms of gross return, gross margin, net return and benefit cost ratio
(undiscounted). Beef production is an intensive practice of production.
3.10.1.1 Gross return

Gross return was calculated by multiplying the total volume of output of an
enterprise by the average price in the harvesting period (Dillon and Hardaker,
1993). Here, the output includes the physical quantities of main product (beef)
and by product (Cow dung). The following equation was used to estimate gross
return:
GRi  i 1 Qi Pi   j B j
n n
Where,
GRi = Gross return from ith product (Tk. /beef cattle);
Qi = Quantity of the ith main product (No. of beef cattle);
Pi = Average price of the ith main product (Tk. /beef cattle)
Bj = Estimated value of the ith by-product (Tk. /kg); and
i, j = 1,2,3,..................., n; beef cattle production in the study area
3.10.1.2 Interest on operating capital

Interest on operating capital (IOC) was determined by taking all costs incurred on
various operations in the process of production in the study area. It was assumed
that if the farmers borrowed the money from a bank, they had to pay interest at
the same rate. It was estimated by using the following formula (Miah 1987):
Interest on OC = AI × i × t
Where,
AI = (Total investment)/2;
i = Rate of interest per year (%); and
t = Period of beef cattle production (in month)
28
3.10.1.3 Gross margin
Gross margin calculation was done to have an estimation of the difference
between total return and variable costs. The analysis is also easily understandable
because of its simplicity. The following equation used to assess gross margin:
GM = TR – TVC
Where,
GM = Gross Margin;
TR = Total Return; and
TVC = Total Variable Cost
3.10.1.4 Net return

Net return analysis considered fixed costs, cost of land rent, interest on operating
capital, depreciation of farm implements etc. Net return was calculated by
deducting all costs (variable and fixed) from gross return. To determine the net
return of beef cattle production, the following equation was used in the present
study:
∏ = ∑ Pm.Qm - Σ(Pxi.Xi) – TFC
Where,
Π = Net return (Tk.);
Pm = Per unit price of beef cattle (Tk. /cow);
Qm = Quantity of beef cattle (No. of beef cattle)
Pxi = Per unit price of ith inputs (Tk.);
Xi = Quantity of the ith inputs per beef cattle (kg.);
TFC = Total fixed cost (Tk.);
and i = 1, 2, 3,...................,n (number of inputs)
29
3.10.1.5 Benefit-cost ratio (BCR)
The BCR is a relative measure, which is used to compare benefit per unit of cost.
The BCR estimated as a ratio of gross returns and gross costs. The formula of
calculating BCR (undiscounted) is shown below:
Gross Benefit
Benefit Cost Ratio 
G ross C ost
3.11 Value Addition Analytic Technique

This technique was needed to identify actors working in the value chain.
Analyzing of value chain includes identifying the activities performed in milk
marketing sector, organizing them into a sequence and analyzing function in
relation to both the preceding steps and subsequent ones. Value chain actors as
small traders, big trader’s, and butchers in the beef cattle production sector in this
study.
To achieve the third objective of the study a simple cost and return analysis was
used to determine the value addition by actors. The following equation was used
to assess the value addition by actors.
1) Value addition by independent beef cattle producers
Value addition=selling price of beef cattle – production costs
Net value addition = value addition – marketing cost
2) Value addition by the small traders/big traders/butchers

Value addition = selling price – purchase price
Net value addition = value addition – marketing cost
3.12 Problem Faced During Data Collection

The researcher has to face certain problems during data collections, which are
noted below:
 Most of the farmers had a very little idea about the research work. So, most
of the times it wasn’t easy to handle them and manage them to provide
necessary data.
30
 Respondents in general were afraid of tax imposition or land acquisition by
the government and for that reason they are unwilling to give information.
 Beef producing farmers don’t keep any written record of their cost and
return activities. So, most of the time the actual data is not found because
researcher had to rely on their memory totally.
 Most of the respondent were very busy and didn’t have enough time and
interest to sit for the interview because they remained busy with their
outside farm activities. Small traders, big traders and butchers were very
hard to convince for the interview.
 The time of data collection was limited. So, all data and other necessary
information were collected within the shortest period of time.
31
CHAPTER 4
SOCIO-ECONOMIC CHARACTERISTICS
Analysis of socio-economic condition of the sample farmers is very important in case

of research planning because there are numerous interrelated and constituent
attributes that shapes an individual. It also profoundly influences development of
his/her behavior and personality. For the variation of socioeconomic aspects, people
differ from one another. However, for the sake of present study, a few of the socio-
economic characteristics have been taken into consideration for discussion.
4.1 Age Distribution of the Respondents

In the present study, the age distribution of the selected respondents was taken
into account. Considering the ages, the total numbers of respondents of the
sample were divided into four categories:
i. Less than 30 years
ii. 31-40 years
iii. 41-50 years
iv. 51 years and above
Within the age groups, percent of the total respondents; 1.66 percent of
respondents belonged to the age group of below 31 years, 45 percent fell into
31-40 years, 21.66 percent fell into 41- 50 years and 31.66 percent fell into in 51
years and above age group. This information implies that irrespective of farm
categories the majority of the respondents fell in the age group of 31-40 years
which indicates that they were relatively medium in age.
Table 4.1: Age distribution of the respondents

Small Big
Categories Producers Butchers Total Percentage
traders traders
less than 30 0 1 0 0 1 1.66
31-40 years 13 5 3 6 27 45.00
41-50 years 8 4 0 1 13 21.66
51 years and above 14 5 0 0 19 31.66
Total 35 15 3 7 60 100
Source: Field Survey, 2018
32
4.2 Family Size of the Respondent Farmers
Family size was explained by classifying the families into three groups: small (0-4
members), medium (5-6 members), and large families consisting of more than 6
members. Table 5.2 shows that 80 per cent families of beef cattle producers as well
as value chain actors like small traders, big traders, butchers are small, 15 per cent
medium and remaining 5 percent are large families.
Table 4.2: Family size of the respondent farmers

Small Big
traders traders
Small family
27 13 2 6 48 80
(0-4 members)
medium family
5 2 1 1 9 15
(5-6 members)
large family
3 0 0 0 3 5
(above 6 members)
Total 35 15 3 7 60 100
Fig. 4.1 Family size of the respondent farmers
33
4.3 Educational Status of the Respondents
Education may be defined as the ability of an individual to read and write or
formal literacy received up to certain standard. Educational status affects the
adoption of appropriate technology and livestock production. The government
and various non-government organizations placed greater emphasis and
extended special facilities (like free education, stipend, etc.) for increasing the
literacy rate in the study area. Education helps a person to have day to day
information about the modern technologies, production costs and also production
skills. To examine the educational status of beef cattle producers as well as small
traders, big traders and butchers were divided into five categories. These were:
a. Illiterate/ below primary,

b. Primary level (class 5),
c. Secondary level (class 10), and
d. Higher secondary level (class 12),
e. Graduation and above
Table 4.3: Educational status of the respondents

Small Big
traders traders
Illiterate/below
12 9 0 2 23 38.33
primary
Primary level (class
1 3 0 4 8 13.33
5)
Secondary level
9 3 3 1 16 26.66
(class 10)
Higher secondary
5 0 0 0 5 8.33
level (class 12)
Graduation and
8 0 0 0 8 13.33
above
Total 35 15 3 7 60 100
34
Fig. 4.2 Educational status of the respondents
It is evident from the Table 4.3 that, most farmers (38.33 percent) below primary
education, although 13.33 percent of them were primary level. Moreover, 26.66
percent had Secondary level education and only another 8.33 percent got
education at higher secondary level. Only 13.33 percent of respondents have got
graduation level education. The figure 4.1 shows the peaks of education level of
the farmers.
4.4 Land Ownership Patterns of Respondents

In this study the land holding of the sample farmers was defined as the sum total
of all type of land possessed by the farmers and having legal right on it. Land size
is measured by the entire land area operated by the farmers. It is computed by
adding the area rented and mortgaged in from others and deducting the area
rented and mortgaged out to others. Therefore, the land size was measured by
using the following formula:
Land size = Own land (homestead + pond + garden + land under flower + Crop
area) + (Ranted in + Mortgaged in) - (Rented out +Mortgaged out).
35
Table 4.4: Average land distribution of the sample farmers
Small Big
traders traders
Homestead area 20.45 10.73 21.66 13 65.84 16.66
Pond 8.82 3.26 6 2.85 20.93 5.29
Fallow land 0 0 0 0 0 0
Own cultivable 106.77 61.6 70 70 308.37 78.04
land
Total 136.04 75.59 97.66 85.85 395.14 100
Fig. 4.3 Average land distribution of the sample farmers
It appears from Table 4.4 that the average farm size of beef cattle producers, small
traders, big traders and butchers was 136.04 decimals, 75.59 decimals, 97.66
decimals and 85.85 decimals respectively. Homestead area of were 16.66 percent
to the total land area: The Table 4.4 also shows the average size of pond of the
sample farmers (5.29 percent) and the percentage of own cultivable land is 78.04
percent. There is no fallow land.
36
4.5 Occupational Status of the Respondents
Distribution of sample household members according to occupation is presented
in Table 4.6. It appears that total 36.66 percent of the sample farmers are engaged
in agriculture, 38.33 percent were engaged in business, 5 percent were engaged in
government service. About 11.66 percent sample farmers were engaged in non -
government service and 8.33 percent respondents were day labors.
Table 4.5: Occupational status of the respondents

Small Big
traders traders
Agriculture 16 6 0 0 22 36.66
Business 4 9 3 7 23 38.33
Govt. service 3 0 0 0 3 5.00
Non govt. service 7 0 0 0 7 11.66
Day labor 5 0 0 0 5 8.33
Total 35 15 3 7 60 100
Fig. 4.4 Occupational status of the respondents
37
Above discussion of the socioeconomic characteristics of the respondent farmers
shows that in the study area about 45 percent respondents were age group
between 31-40 years. It indicates that most of the respondents were young. Most
respondents family size in the study were small and its about 80 percent. In the
study area illiteracy rate is high. About 38.33 percent respondents were illiterate.
Average land ownership of the respondent farmers were 136.04 decimals and
most of the respondents were related with business (about 38.33 percent) and
others are mostly related with agriculture.
38
CHAPTER 5
PROFITABILITY ANALYSIS OF BEEF CATTLE
PRODUCTION
The purpose of this chapter is to determine the costs and returns of beef cattle of
the sample farmers in the study area. In this study cost items included purchase
price of cow, different feeds, labor, housing, veterinary, salt and oil cake, drinkers,
spade, shade and electricity. Returns from beef cattle including selling price of
beef cattle and cow dung.
Calculation of profitability could be another meaningful option. The rate of

purchased inputs, for the same item even, varied for different farmers and
therefore, these prices were averaged for each item and the average market price
was used. The costs consist of both variable and fixed cost.
5.1 Variable Costs

Variable costs are the costs of using the variable inputs. These costs vary with the
level of production. Higher the production, higher the variable cost. In beef cattle
production various input costs like purchase price of beef cattle, labor cost, cost of
vushi, cost of rice burn (khud), cost of rice straw, cost of salt and oil cake, cost of
drug/vaccine/veterinary, cost of ropes, cost of electricity and cost of coil are
considered as variable cost. These are given below:
a) purchase price of beef cattle

b) human labor
c) cost of vushi
d) cost of khud
e) cost of rice straw
f) cost of salt and oil cake
g) cost of drug/vaccine/veterinary
h) cost of ropes
i) cost of electricity
j) cost of coil
39
5.1.1 Purchase price of beef cattle
The average purchase price of beef cattle in the study area was tk. 22791.67 and it
refers the 77.33% of the total cost (Table 5.2). It is the highest cost item in the beef
cattle production.
5.1.2 Cost of human labor

Human labor is the second highest cost item in the beef cattle production. In the
study area they usually used only family labor. Table 5.1 shows the average labor
cost per beef cattle in the study area was tk. 1756.14 and its represents 5.98% of
total cost.
Table 5.1: Average human labor use in beef cattle production

Items Human labor Wage rate Total cost Percentage of
(man-days) (Tk.) (Tk.) total cost
Family labor 10.93 160.56 1756.146 5.98
Hired labor 0 0 0 0
5.1.3 Cost of husk (vushi)

The average consumption of per beef cattle was 6.09kg and average price of per
husk is tk. 24.73. The total average cost of husk of per beef cattle was tk. 150.63.
5.1.4 Cost of khud

Most of the beef cattle producers in the study area were using khud as a major
feed for beef cattle. The average consumption of khud of per beef cattle was
87.291kg and average price of per kg of khud is tk. 18.85. The total average cost of
khud per beef cattle was tk. 1645.61 and its represent the 5.58% of the total cost.
5.1.5 Cost of rice straw

Rice straw was considered as the main feed in the study area by the producers.
Beef cattle feeding mostly depend on it. The average price of rice straw for per
beef cattle was tk. 1870.83 and its represent the second highest cost item consisting
6.34% of total cost.
40
5.1.6 Cost of salt and oil cake
The average consumption of salt and oil cake of per beef cattle was 6.23kg and the
average price of salt and oil cake was tk. 19.86. The average cost of salt and oil
cake of per beef cattle was tk. 123.90.
5.1.7 Cost of drug/vaccine/veterinary

The beef cattle producing farmers in the study area were very much careful to
their animals health. The used to maintain close contact with veterinary doctors or
field assistants. Upazila Livestock Officer also provide necessary advice to the
beef cattle producers. The average veterinary cost for average beef cattle was
tk. 109.35 in the study area.
Table 5.2 Cost of beef cattle production (6 months)

Variable cost
Percentage of
Items Units Quantity Unit price Total cost
total gross cost
Average purchase price No. 1 22791.67 22791.67 77.33
of beef cattle
Cost of human labor Man- 10.93 160.56 1756.06 5.95
days
Cost of vushi Kg 6.09 24.73 150.63 0.51
Cost of khud Kg 87.29 18.85 1645.61 5.58
Cost of rice straw 1870.83 6.34
Cost of salt and oil cake Kg 6.23 19.86 123.90 0.42
Cost of drug/vaccine/ Tk. 109.37 0.37
veterinary cost
Cost of ropes Tk. 36.45 0.12
Cost of electricity Tk. 21.45 0.07
Cost of coil Tk. 124.37 0.42
Total variable cost Tk. 28630.37 97.14
Fixed cost 0
Cost of drinkers Tk. 1 103.69 0.35
Cost of spade Tk. 1 27.11 0.09
Cost of shade Tk. 1 227.08 0.77
Cost of bucket Tk. 1 24.16 0.08
Cost of housing Tk. 1 460.45 1.56
Total fixed cost Tk. 842.50 2.85
Gross cost 29472.88 100
41
5.1.8 Cost of ropes/ electricity/coil
The average cost of ropes for per beef cattle in the study area was tk. 36.45. The
average electricity bill of per beef cattle was tk. 21.45. In the summer season they
use coil to protect their beef cattle from mosquito. The average cost of coil for per
beef cattle was tk. 124.375.
5.1.9 Total variable cost

Summation of the costs of variable inputs made total variable costs which were
Tk. 28630.37. It represents 97.14 percent of the total cost of production.
5.2 Fixed Cost

In economics, fixed costs are business expenses that are not dependent on the
level of goods or services produced by the business. They tend to be time-related,
such as rents being paid per month, and are often referred to as overhead costs.
Fixed cost of beef cattle production includes cost of drinkers, cost of spade, cost of
shade, cost of bucket and cost of housing etc.
5.2.1 Cost of drinkers

In the study area the beef cattle owners used drinkers to feed their beef cattle. It
was made by cement and average lifetime at least 10 years according to the
producers. Depreciation was measured by dividing the original value of the
drinkers during the time of construction by its total life in years. The average cost
of drinkers for per beef cattle was tk. 103.69 in the study area.
5.2.2 Cost of spade

In the study area the producers usually used spade which were made by iron. The
average lifespan is more than one year up to three years. The average cost of
spade for per beef cattle was tk. 27.11.
5.2.3 Cost of shade

Shade is usually used in the study area to keep the beef cattle outside of the
house. The average cost of shade was tk. 227.08 for per beef cattle and it was
generally build for one year.
42
5.2.4 Cost of bucket
The beef cattle producers used bucket to give feed to the beef cattle. The average
lifetime of bucket in the study area was one up to three years according to the
producers. Depreciation was measured by dividing the original value of the
bucket during the time of construction by its total life in years. The average cost of
bucket for per beef cattle was tk. 24.16.
5.2.5 Cost of housing

In the study area beef cattle owners used to keep their animals in the tin shed with
“pucca” floor and in some cases “kancha” floor. The houses in most the cases
were reasonably hygienic and well-spaced for animals. The cost of housing was
calculated by taking into account the depreciation cost. Depreciation was
measured by dividing the original value of the house during the time of
construction by its total life in years. The average housing cost for per beef cattle
in the study was tk. 460.45.
5.2.6 Total fixed cost

Summation of the fixed input costs made total fixed cost. It was Tk. 842.50 on
average per beef cattle. These occupied about 2.85 percent of total cost.
5.3 Gross Cost

Gross cost was calculated by adding all the cost of variable and fixed inputs. In
the present study average gross costs of beef cattle production were Tk.29472.88
(Table 5.2).
5.4 Return from Beef Cattle

The section deals with determination of total returns from the beef cattle
production. The returns from the beef cattle consisted value of beef cattle sold and
values of cow dung. The estimated gross return per beef cattle stood at tk. 32937.5
and cow dung was tk. 1963.54 (Table 5.3).
43
Table 5.3: Return from beef cattle
Items Quantity Price per unit Total
Average selling price of beef cattle 1 32937.5 32937.5
By product (cow dung) 1963.542
Gross return 34901.04
5.5 Gross Margin

Gross margin is the gross cost over the variable cost. Gross margin is obtained by
deducting total variable cost from gross return. The Table 6.4 shows per year
gross margin of beef cattle production was tk. 6270.67.
Table 5.4: Net return, Gross margin and BCR of beef cattle production
Items Taka
Gross cost 29472.88
Gross return 34901.04
Gross margin 6270.67
Net return 5428.16
BCR(undiscounted) 1.18
5.6 Net Return

Net return is calculated by subtracting total cost from total return. In the study,
per beef cattle net return was Tk. 5428.16 (Table: 5.4).
5.7 Benefit Cost Ratio (Undiscounted)

Benefit cost ratio (BCR) is a relative measure, which is used to compare benefit per
unit of cost. In this study, BCR of beef cattle production was calculated as a ratio
of gross return and gross cost. Per beef cattle BCRs were estimated 1.18
(Table: 5.4).
44
5.8 Concluding Remarks
From the above discussion, it can be concluded that the production of beef cattle
is profitable. It can generate potential income and employment for the local
people as well as the country. Farmers can easily make the production in any
place at their house. The average BCR of beef cattle production is 1.18 that
indicates the beef cattle production is profitable in the study area.
45
CHAPTER 6
VALUE CHAIN ANALYSIS OF BEEF CATTLE PRODUCTION
6.1 Value Addition of Independent Beef Cattle Producers

In the study area some beef cattle producers sell their product directly to the
market. They bear extra marketing cost. Different activities of selling the beef
cattle marketing are done by the producers. In the study area 35 beef cattle
producers out of 35 beef cattle producers sold beef cattle directly into the market.
6.1.1 Marketing cost

The marketing cost represents the cost of performing the various marketing
functions and operations performed by various agencies involved in the
marketing process. In other words, the costs which are incurred to move the
product from producers to consumers are ordinarily known as marketing cost.
The costs were mainly transportation cost, cost of human labor and miscellaneous
cost.The average cost of marketing of beef cattle incurred by independent beef
cattle producers was Tk. 159.895 per beef cattle.
Table 6.1 Marketing cost of independent beef cattle producer

Cost items Average cost Percent of total cost
Transportation cost 57.50 35.96
Labor cost 66.87 41.82
Miscellaneous cost 35.52 22.21
Total cost 159.89 100
Source: Authors calculations based on the collected data
6.1.2 Value addition by independent beef cattle producer

Value addition by independent beef cattle producers as found is shown in Table
6.2. The producers sell directly to the local market. The average production cost of
per beef cattle was Tk.29472.88 and it was sold at Tk. 34901.04.Value addition was
Tk.5428.16per beef cattle. The total marketing cost of milk producers was
estimated at Tk. 159.895 per beef cattle. The net value addition by milk producers
was estimated at Tk. 5268.625 per beef cattle (Table 6.2).
46
Table 6.2 Value addition by independent beef cattle producers
Particulars Average cost per beef cattle
a) Production cost 29472.88
b) Marketing cost 159.89
c) Selling price of beef cattle 34901.04
d) Value addition(c-a) 5428.16
e) Net value addition(d-b) 5268.26
6.2 Cost and Value Addition of small traders

Small traders add some value to beef cattle marketing. In the study areas small
traders are termed as “middleman or Dalal”. They often buy beef cattle from
producers from their house or in the market. The marketing cost of small traders
includes transportation, cost of human labor and miscellaneous cost. The average
transportation cost, average cost of human labor and average miscellaneous cost
were estimated at tk. 98.518, tk. 177.777 and tk. 40 respectively. Among the cost items
labor cost covered the highest cost representing 56.205% of total cost (Table 6.3).
Table 6.3 Marketing cost of small traders

Transportation 98.51 31.14
Labor cost 177.77 56.20
Miscellaneous cost/personal expenses 40.00 12.64
6.2.1 Value addition by small traders

The value addition by small traders is depicted in Table 6.4. Small traders was the
second actor of beef cattle value chain. They collect beef cattle from the producer.
The average purchase price of per beef cattle was Tk. 24311.11and the average
selling pricewas Tk. 26733.33 per beef cattle. So, the calculated value addition was
Tk. 2422.22 per beef cattle. Net value addition was Tk. 2105.925 per beef cattle for
small traders (Table 6.4).
47
Table 6.4Value addition by small traders
Particulars Average cost
a) Purchase price 24311.11

c) Selling price 26733.33
6.3 Cost and Value Addition Analysis of Big Traders

6.3.1 Marketing cost of big traders
Big traders purchase beef cattle directly from producers and small traders. They
directly sold beef cattle to the customers. Table 6.5 depicts that the average
estimated marketing cost per beef cattle incurred by the big traders was Tk. 207.5.
Among the cost items transportation cost covered the highest cost representing
48.192% of total cost. Among other cost items labor cost and miscellaneous cost
were Tk. 87.5and Tk. 20 which shared 42.168%, and 9.63% of the total cost
respectively (Table 6.5).
Table 6.5 Marketing cost of big traders

Transportation 100 48.19277
Labor cost 87.5 42.16867
Miscellaneous cost/personal expenses 20 9.638554
6.3.2 Value addition by big traders

The value addition by big traders is depicted in Table 6.6. The average purchase
price of the big traders was Tk. 45000 per beef cattle and the average selling price
was Tk. 49375 per beef cattle. The value addition was Tk. 4375.The total marketing
cost of big traders was Tk. 207.5 per beef cattle. The net value addition was
calculated at Tk. 4167.5 per beef cattle for big traders (Table 6.6).
48
Table 6.6 Value addition by big traders
a) Purchase price 45000
c) Selling price 49375
d) Value addition(c-a) 4375
6.4 Cost and Value Addition of Butchers

6.4.1 Marketing cost of butchers
The Butchers are usually perform the functions of processing and selling meat to
local consumers. They buy beef cattle from producers or small traders of from the
market directly. The costs involved in performing those services are mainly
transportation cost, labor cost and miscellaneous cost (shop rent, market toll and
personal expenses). The average total marketing cost incurred by butchers for per
beef cattle was estimated to be Tk. 674.2858 (Table 6.7).
Transportation cost on an average incurred by butchers was reported to be Tk. 0

per beef cattle. Labor cost and miscellaneous cost are Tk. 557.1429, and Tk.
117.1429 respectively and their shares are 82.62%, and 17.37%, of the total
marketing cost respectively (Table 6.7).
Table 6.7 Marketing cost of butchers

Transportation 0.00 0.00
Labor cost 557.14 82.62
Miscellaneous 117.14 17.37
cost/personal
expenses
49
6.4.2 Value Addition by butchers
Value addition by butchers as found is shown in Table 6.8. Butchers purchased
per beef cattle at Tk. 33142.86 and sold it at Tk. 40225.71.Thus value addition
wasTk. 7082.85 per beef cattle. The average total marketing cost was estimated to
be Tk. 674.2858 per beef cattle. So, the net value addition was calculated at
Tk. 6408.564 per beef cattle for butchers (Table 6.8).
Table 6.8 Value addition by butchers

a) Purchase price 33142.86
c) Selling price 40225.71
6.5 Total Value Addition Scenario per Beef Cattle

Figure 6.1 shows the value additions, marketing costs and net value addition of
different beef cattle value chain actors. Butchers add maximum value (7082.85Tk.
per beef cattle) to beef cattle value chain. A producer Figure 6.2 shows the
percentages of net value addition within the total value added to beef cattle by
different actors (Figure 6.1 and Figure 6.2).
Above figure 6.1 shows that the average marketing cost, value addition and net
value addition of independent beef cattle producer is Tk. 159.89, Tk. 5428.16 and
Tk. 5268.26. The average marketing cost, value addition and net value addition of
small traders are Tk. 316.29, Tk. 2422.22 and Tk. 2105.92. The average marketing
cost, value addition and net value addition of big traders are Tk. 207.50,
Tk. 4375.00 and Tk. 4167.50. The average marketing cost, value addition and net
value addition of butchers are Tk. 674.28, Tk. 7082.85 and Tk. 6408.56. From figure
6.2, we can see that the percentage of total value addition done by the actors. Here
most of value added by the butchers and it‟s about 36.68 percent. Butchers are the
maximum value addition actor. Next the beef cattle producers, big traders and small
traders adding 28.11 percent, 22.65 percent and 12.54 percent respectively.
50
Value addition
7082.85
8000
6408.564
Marketing cost
7000 Net value addition
5268.265
5428.16
6000
4167.5
4375
5000
Tk/Beef Cattle
4000
2422.22
2105.925
3000
2000
674.2858
316.2955
159.895
1000
207.5
0
Producers Small traders Big traders Butchers
Value chain actors
Figure 6.1: Value addition, marketing cost and net value addition per beef cattle
Producers Small traders

Big traders Butchers
36.68 28.11
12.54
22.65
Figure 6.2: Percentage of total value addition by the actors
51
6.6 Marketing channel
The chain of intermediaries through which the transaction of goods takes place
between producer and consumer constitutes a marketing channel. In other words,
marketing channel refers to pathway composed of various marketing
intermediaries who perform such functions as needed to ensure smooth and
sequential flow of goods and services from the producers to consumers in order to
achieve marketing objectives of the producing firms. Marketing channels are
alternative routes of product flows from producers to consumers (Kohls and Uhl,
1980, p.5).
6.7 Marketing channels of beef cattle

The process of beef cattle marketing started at the producer level and continued
moving through channel until the beef reach to the final consumers.
The channels of marketing of beef cattle as found in the study areas are shown in
Figures 6.3.
Farmers
(Primary)
Dalal/Small
Traders
Bepari/Big Farmer
traders (Secondary)
Butchers Bepari/Big
traders
Consumer
Fig. 6.3 Marketing channel of beef cattle
52
In Figure 6.3 the following channels are identified:
Channel I : Farmer (primary)ZDalal/Small traders ZBepari ZButcherZConsumer

Channel II : Farmer (primary)ZDalal/Small traders ZButcher ZConsumer
Channel III : Farmer (primary) ZDalal/Small traders ZBepariZ Farmer (secondary) ZBepariZ
Butcher Z Consumer
Channel IV : Farmer (primary)ZDalal/Small traders ZBepariZ Farmer (secondary)ZBepariZ
Consumer
Channel V : Farmer (primary)ZDalal/Small traders ZFarmer(secondary)Z BepariZ Consumer
Channel VI : Farmer (primary)ZDalal/Small traders ZFarmer (secondary)ZBepariZBucher Z
Consumer
Channel VII : Farmer (primary)ZConsumer
Channel VIII : Farma (secondary)ZConsumer
Among farmers, Beparies and butchers there was an active ingredient acting as
catalyst called „Dalal/Small traders‟ who helped in negotiating sale by taking
commission from transacting parties and who did not take the possession of the
animal.
53
CHAPTER 7
PROBLEMS AND SOLUTIONS
Problems and measures of value chain of dairy are dealt in this chapter. An
attempt has been made in this study to identify the major problems faced by beef
producers and other actors like small traders, big traders, butchers.
7.1 Problem Faced by Beef Cattle Producer

7.1.1 Shortage of quality feed and high feed cost
The availability of feed and fodder is a major constraint in developing the full
potential of the beef production sector. Most of the beef producing farmers have
limited livelihood capacities in the study area. They can't supply balanced feed
and fodder to their cattle. It is evident that most of the farmers claimed that the
price of feed was very high. Sometimes, it is beyond affordable price which
impairs production seriously. In the study area all (91.428%) of the farmers
complained that the feed cost was high and 31% of the total farmers complained
about shortage of quality feed (Table 7.1). Feed alone represents 80% of total
production costs.
7.1.2 Instability of beef price

The price of beef fluctuates markedly due to rapid change in the supply and
seasonal decline in demand for beef in the market. Due to instability in price at
markets, the producers remain uncertain about the prices. Sixty five percent of the
beef producers report that they do not get reasonable price for their products.
Low price of beef was another problem in the study area. The beef farmers of the
study area sold beef directly to the small traders or in the market. The beef
farmers also reported that they have low bargaining power in getting a fair price
for their beef.
54
7.1.3 Low productivity
The main problem of beef production development lies in its very low production
and low productivity. Breeding is the major technological improvement process
in the dairy industry.
But, 8.57% of the beef producing farmers in the study area reported to their
productivity are very low. They couldn't access to the crossbred cows for beef
production purpose because of their limited livelihood capacities.
Table 7.1: Problems suggest by the beef cattle producers

No. of
Problems Percentage
respondents
Shortage of feed 11 31.42
High feed cost 32 91.42
Instability of beef price 20 57.14
Lack of capital 13 37.14
Lack of credit facilities 18 51.42
Disease 17 48.57
Low productivity 3 8.57
Inadequate scientific techniques and methods 7 20.00
Lack of livestock extension service 15 42.85
High medical cost 17 48.57
7.1.4 Inadequate scientific techniques and methods

Intensive beef production essentially follows scientific techniques and methods.
Therefore, farmers need to be trained on the proper use of the modern techniques
of dairy farming. It is found that only a few percent of the total farmers received
instruction on modern methods of dairy management. About 42.85% of the beef
producing farmers reported that there were weak extension services in the study
area.
55
7.1.5 Lack of capital and credit facilities
Intensive beef production needs high investment because it is an expensive
agribusiness. When a farmer starts a beef production he needs at least 1,00,000 as a
cash capital because the price of improved breed dairy cow is very high. About 13%
of the farmers claimed that they face shortage of working capital in particular to
purchase supplementary inputs like feed during rearing beef. In general, about 18%
of respondents recognized that the access to credit is one of the major constraints in
producing beef (estimated from Table 7.1). Only a few of farmers receive credit
from banks and NGOs, but the interest rate is higher. The borrowed amount is
quite insufficient to meet the needs of dairying. However, in most cases, farmers
did not get bank loan in time due to cumbersome banking procedure.
7.1.6 Diseases incidence and high medical cost

Diseases and parasites are a major problem for the beef production sector in
Bangladesh. About 17% of the farmers in the study reported that diseases like
rinderpest, contagious bovine pleuropneumonia, and foot and mouth diseases
cause high mortality and severe economic loss (Table 7.1). Mastitis is a dangerous
disease for lactating animals, and reduces milk production. However, producers
reported that medical facilities are quite poor at district and Thana level livestock
offices in the study area. About 48.57% of respondents recognized that the prices
of essential animal drugs are high (Table 7.1). The vaccination program of the
Department of Livestock is limited because of budgetary constraints.
7.2 Solutions of Constraints as Suggested by the Farmers

The beef producing farmers of the study area are asked to suggest possible
solutions to the problems identified above. They put some suggestions, which are
discussed below:
7.2.1 Reasonable price of feed and adequate supply of feed

Most of the farmers proposed to reduced feed price and make it reasonable.
Because high price of feed is the most important reason for low growth of beef.
Because purchasing capability of the farmers are different. And they proposed to
adequate availability of feed in the market.
56
7.2.2 Ensuring reasonable price of beef
Low and unstable price is a serious problem against the profitable business. So it
is very important for producers to keep the price stable. Most of the farmers
suggests that the government should take proper steps such as fixing price to
ensure the stable and reasonable price.
7.2.3 Availability of high quality beef

Most of the farmers suggests that it should be important to maintain high quality
breed to increase the production. They suggest for importing high quality of beef
breeds which growth rate is higher.
7.2.4 Ensuring adequate scientific techniques and methods

The beef farmers suggested providing scientific techniques and methods from the
extension officers and livestock officers and arrangement of training on use of the
modern techniques. They are keen to have processing and preservation knowledge.
7.2.5 Timely supply of credit on easy term

Government intervention is needed in the form of simplification of lending
procedure of credit from banks and availability of credit at lower interest rate. To
implement these suggestions, immediate measure should be taken to simplify the
lending procedure.
7.2.6 Veterinary program

The animal health services need to be improved at every level. There are urgent
demands in veterinary education to up-grade and in some areas the quality of
training programs. Only in this way will educationists and researchers and
extension workers reach an adequate level of competence for their important task.
In the study area most of the dairy farmers suggested Government veterinary
programs should be easy accessible.
7.3 Problem faced by other actors

In study area the different actors faced various problems. The problems as
reported by them are discussed below:
57
7.3.1 Price instability
Price instability is the major problem in beef marketing. Price of beef fluctuate for
various reasons such as low demand as well as seasonally decline in demand.
Because of price instability the actors (small traders, big traders and butchers) get
lower profit and sometimes they are in losses. About 76% of the traders claimed
that price instability was a big problem for their business.
7.3.2 Lack of adequate market information

An efficient market information system should be introduced for the essential
agricultural commodities like beef. In modern economy market information is
very important element to perform a business smoothly. In the study area there is
an organized system of dissemination of market information. 16% of the milk
traders claimed that they did not get adequate market information (Table 7.2).
7.3.3 Transportation cost

An efficient transportation system is very essential for trading any product.
According to the 24% of the traders in the study area, transportation systems are
quite good, but the transportation cost is higher than any other part of the
country. It created special problem in beef marketing.
7.3.4 Lack of credit facilities

Most of the milk traders have lack in credit facilities. At the time of increasing
demand they fail to purchase enough milk for the lack of money. Sometimes they
take loan on per day basis at high interest rate from the local NGOs, friends and
relatives. In the study area about 52% traders claim that they have credit problem.
7.3.5 Lack of freezing facilities

Freezing is very much important for meat preservation. About 4% butchers claim
that there is a problem of freezing opportunities.
58
Table 7.2 Problems suggest by the actors
Problems No. of respondents Percentage
Price instability 19 76
Lack of credit facilities 13 52
Lack of adequate market information 4 16
High transport cost 6 24
Lack of freezing facilities 1 4
Socially deprived 6 24
7.4 Measures suggested by actors

To overcome the problems of beef trading and for the improvement of exiting
marketing some suggestions are given by different beef traders and these are
discussed below:
7.4.1 Adequate market information

Market information should be well circulated to the intermediaries through
different media such as newspaper, radio, television etc. All actors suggest that
they need more market information, so that they can take suitable decision in
proper time.
7.4.2 Make credit facilities available

Government intervention is necessary to simplify lending procedure of credit
from banks and non-bank financial organizations. Small loan scheme for small
businessmen should be carried out for rapid growth of beef production sector.
7.4.3 Take step to lowering the transportation cost

The actors of beef value chain suggested especially for improvement of
transportation as well as lowering the transportation cost in the study area.
Availability of adequate number of transports would also increase marketing
efficiency by lowering cost.
59
7.4.4 Market stability
Most of the traders suggest that beef market should be stable. Otherwise they
cannot make profit properly and sometimes they face a great loss.
From the above discussion, it can be concluded that there are several problems
related to beef cattle production and marketing in the study area. The producers
mainly mentioned about the shortage of quality feed and high feed cost,
instability of beef cattle price, low productivity, and lack of capital and credit
felicities as well as others. They also give some suggestions how to eradicate the
constraints. There are also several problems mentioned by the several actors and
they also give some suggestions to solve the problems.
60
CHAPTER 8
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
This chapter discusses the summary, conclusion; policy recommendations, and

future scope of research about the study. In presenting the summary, contents
from chapters are discussed in brief here.
8.1 Summary
Beef is prospective but poorly developed sector in Bangladesh. The importance of
beef enterprise in a country like Bangladesh, where malnutrition is a crucial
problem can hardly be over emphasized. Both population growth and raising
income are contributing to rapid expansion in the demand for meat and its
products as it has high income elasticity of demand.
This study will help to find out how beef cattle industry can play a vital to fulfill
the demand for meat and create employment. Because beef cattle industry is a
profitable sector of Bangladesh.
The objectives of the study are (i) To identify the socio-economic characteristics of
beef producing farmers, (ii) To determine the profitability of beef cattle
production, (iii) To examine the value addition of actors, (iv) To identify the
problems and give solutions of beef production in the study area. Methodology was
undertaken to fulfill the objectives socioeconomic characteristics of the
respondents, profitability and value chain analyses of beef cattle producing
framers and problems and solutions of beef cattle production.
Primary data were randomly selected while in total it was 60 farmers. It is often
found that, farmer average age level was 31-40 years, whose were wise and
experienced enough. Most of the farmer has secondary level of education. So, they
are capable of being trained properly. Most of the family size was small and
medium. All farmers were eagerly intended to educate their children in school,
college, universities etc. About 36.66, 38.33, 5 and 11 percent respondents were
61
involved in farming, business, and government service and non-government
activities respectively as core occupation. So the overall socioeconomic condition
of the house hold was good.
Costs and returns were calculated to assess the profitability of beef cattle
production. In the present study a number of variables and fixed costs were
reported to have been incurred in beef cattle production. Per beef cattle gross cost,
Per beef cattle gross return, Per beef cattle gross margin and per beef cattle net
return of beef cattle production were Tk. 29472.88, Tk. 34901.04, Tk. 6270.67 and
Tk. 5428.16 respectively. Undiscounted benefit cost ratio of beef cattle production
per beef cattle came out to be1.18, which shows that beef cattle production was
profitable.
Value addition and net value addition were calculated to assess the value chain
analysis. In the study 35 beef cattle producers, 15 small traders, 3 big traders and 7
butchers were selected to analyses value chain. The value addition and net value
addition by beef cattle producers was Tk. 5428.16 and Tk. 5268.52. The value
addition and net value addition by small traders was Tk. 2422.22 and Tk.
2105.92.The value addition and net value addition by big traders was Tk. 4375 and
Tk. 4167.5. The value addition and net value addition by butchers was Tk. 7082.85
and Tk. 6408.62. Here butchers are the highest value addition actor.
From the study, it has been seen that beef cattle production is not only profitable
it also helpful for farmers than other business practice. Besides, farmers also faced
some problems while producing beef cattle. Among these problems faced by beef
cattle producers are shortage of quality feed and high feed cost, instability of beef
cattle price, low availability of quality cow as well as low productivity,
inadequate scientific technique and methods, lack of capital and credit facilities
and diseases incidence and high medical cost are worth noting. Problems faced by
the actors were price instability of beef cattle, lack of credit facilities, lack of
adequate market information, high transport cost, lack of freezing facilities and
socially deprived.
62
8.2 Conclusions
On the basis of the findings of the present study it can be concluded that,
significant scope apparently exists in the study area to increase the productivity of
beef cattle and to raise income, employment and nutritional status of the people.
Beef cattle production improved the socioeconomic status of the respondents and
showed positive results. And it also showed that landless people can generate
their income by beef cattle production and it proved to be a potential tool for
poverty alleviation in the rural and urban areas. Though Bangladesh does not
have enough land acreage to feed the people, she is blessed with a low cost labor,
plentiful supply of raw material and other inputs, technical know-how suiting our
favorable climate conditions. Beef cattle production is profitable as like as other
sector. There is huge scope for beef cattle production as a growing industry of
Bangladesh. If the government concerned authority provides several facilities
then it would be great scope to create employment opportunities for the
unemployment people. Though the marketing infrastructure is very poor which is
not being taken care of regularly, there is a great prospects to expand the beef
cattle industry of Bangladesh. That’s why there is urgent need to promote beef
cattle production as a weapon of poverty alleviation through income and
employment generation which should be the priority areas in the government
programs. Value addition by butchers were the highest among the actors who sell
directly to the final consumers. A large number of people were involved in beef
cattle value chain. So, this larger portion of the population could certainly be
benefited if the beef cattle sector is well developed.
8.3 Recommendations
On the basis of the findings of the study the following recommendations are made
for the improvement of beef cattle production.
 Concerned department of the Government should take initiatives to ensure

loan to the potential farmers for beef cattle production. For this both
government and non-government organization can play a vital role.
63
 Feed cost is high and emerging as a major threat to profitability in beef
cattle farming. More efforts are needed to increase domestic production of
animal feed and the government should ensure smooth supply of this
inputs.
 Beef cattle marketing facilities should be improved through organized
marketing bodies.
 Policy concerned to subsidies, taxation, import-export duties, credit facilities
and cooperatives/farmers' organization should be focused on beef cattle
production. The new entrants should access to credit facilities to modernize
and restructure the livestock sub-sector to gear up competitiveness.
 The skill of large number of villagers with high level of competence for
increasing their livestock productivity should be enhanced through various
training programme.
 The Department of Livestock Services (DLS) should take steps to issue
veterinary card to the registered beef cattle farmers to ensure timely supply
of veterinary services and medicines at reasonable cost.
 The existing Al services should be extended from the upazila level to the
union and village levels for improving the breed type. Moreover, facilities
of Al centers and sub-centers should be improved.
 Small scale beef cattle production should be encouraged in Bangladesh to
reduce poverty, enhance self-employment and for family feed security.
 BLRI and NGOs should take steps to extend livestock programme. The
policy makers should, therefore, extend more policy supports which will
encourage expansion of livestock sub-sector and thereby will contribute to
increase beef cattle production and in the country as a whole.
64
8.4 Scope of further research
Although the present study provides some useful information for researchers,
policy makers as well as farmers, it is not free of criticisms. The weaknesses of the
present study, of course, open up scopes for further research.
i. The future researchers could take up a broad-based study with large

sample.
ii. A further study can be undertaken by taking into account different
farm sizes to assess the overall impacts of the beef cattle production on
income and employment generation.
iii. Improving native cattle is the shortest way to increase body weight and
productivity.
iv. Research on feed conversation and agro byproducts treatment would be
carried out to ensure feed sufficiency throughout the year for animal
with low feed cost. Research is also needed for formulation and
commercial production of low cost for feed for beef cattle.
v. Very few market studies have been undertaken in the beef industry.
There is need to conduct periodic market surveys in this regard. Such
options should be further explored and the information generated
should be readily availed to farmers and other beef players. There is
need to regulate marketing channels in order to have a level playing
field for all participants.
65
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Profitability and Value Chain Analyses of Beef Cattle Production in Some Selected Areas of Nilphamari District

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PROFITABILITY AND VALUE CHAIN ANALYSES OF

BEEF CATTLE PRODUCTION IN SOME SELECTED

KHONDOKER MD. SHAKIYA KAWSAR

Master of Science (MS)

Department of Agricultural Economics

KHONDOKER MD. SHAKIYA KAWSAR

Master of Science (MS)

Department of Agricultural Economics

KHONDOKER MD. SHAKIYA KAWSAR

Approved as to style and content by

CHAPTER TITLE PAGE

2 REVIEW OF LITERATURE 12-19

3 MATERIALS AND METHODS 20-31

CHAPTER TITLE PAGE

CHAPTER TITLE PAGE

CHAPTER TITLE PAGE

CHAPTER TITLE PAGE

TABLE TITLE PAGE

1.1 Contribution of livestock and poultry in the national 5

FIGURE TITLE PAGE

3.1 Research methods follow in the study 20

3.2 District map of Nilphamari 22

3.3 Upazilla map of Kishoreganj 23

4.1 Family size of the respondent farmers 33

4.2 Educational status of the respondents 35

4.3 Average land distribution of the sample farmers 36

4.4 Occupational status of the respondents 37

6.1 Value addition, marketing cost and net value addition 51

6.2 Percentage of total value addition by actors 51

6.3 Marketing channel of beef cattle 52

1.1 Background of the Study

Agriculture continues to play a central role in economic development and to be a

1.2 Importance of Beef Production Sector in Bangladesh

Livestock plays an important role in the national economy of Bangladesh with a

Table 1.1 Contribution of Livestock and Poultry in the National Economy of

Contribution of Livestock in Gross Domestic Product (GDP), 1.60%

The contribution of livestock sector to agriculture share of gross domestic product

Table 1.2: Contribution of Livestock in the GDP

Items 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Table 1.3: Livestock population of Bangladesh

Source: BER, 2016

According to Bangladesh Economic Review (2016), it has estimated 23.935 million

Table 1.4: Production of Milk and Meat

Source: BBS, 2017

Products Demand Production Deficiency

1.4 Value Chain Concept

Value chain analysis is essential to understanding of markets, the participation of

1.5 Present Condition of Beef Marketing in Bangladesh

1.6 Justification of the Study

Beef is prospective but poorly developed sector in Bangladesh. The importance of

Beef production section facing several blocked in Bangladesh. So, to promote

To the best of author’s knowledge, no specific study on profitability and value

1.7 Objectives of the Study

The objectives of the present study are as follows:

 Another important problem is that the respondent were not much

Ambarawati (2002) identified the beef production in halt dominated by

McEachern and Schroeder (2007) observed that superior knowledge of customers’

Miah (2002) conducted the study in three municipal towns of Patina,

This study followed the sequential methodological steps as presented:

2. Selection of the study area

3. Selection of sample and sample size

4. Selection of sampling technique