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Abstract -1- AN ECONOMIC ANALYSIS OF GRAPES PRODUCTION AND MARKETING IN THE ARAB REPUBLIC OF YEMEN SUMMARY AND RECOMMENDATIONS In the Arab Republic of Yemen, the agricultural sector is regarded as one of the most important sectors of Yemen’s economic structure. This sector provides jobs for about one million and a half labourers. They form about 68.2% out of the total labour force which amounts to 2.12 million labourers in the different sectors. The proquction of grape crop faces various problems. There is scarcity in the analytical economic studies that handles the relation between the production, the cost and the prices to measure (assess) the net revenue (returnsincome) • Moreover, the grape crop is one of the rapid perishable crops that requires much care during handling it in the different marketing channels. Now, its marketing services are confined to performing some marketing services, and this results in reducing the grape marketing competence (effectiveness). This also cause a rise in grape retail prices and the grower (farmer) gets a low share of the price paid by the consumer. The objectives of this study are : 1- Estimating the prod4ction functions in order to determine the relationship between the value of the various production factors employed in production -2- processes on one hand, and the production of the hectare on the other. 2- Estimating and analyze costs of production in order to identify items of costs and their relative importance. Moreover, estimating value of production function to identify the elasticity of production costs and determine the optimum production level which can be obtained, with the minimum cost for achieving maximum profit. This enables us to measure the efficiency of grape cropj and identify the problems that face farmers or growers in producing grapes. These relationships, however, promide a lot of facts and data that enable us to design a production policy that aims at increasing the production and consequently increasing the net revenue of growers which results in increasing the national income. 3- studying marketing system of grapes to identify methods and services of marketing and to study the relationships between farm prices, retail prices and the problems that face growers of grapes in marketing their crop. The need of improving the marketing system and raising the marketing efficiency of this signific~nt crop will be discussed. This chapters, study includes the and summary introduction, five or and recommendations. -3- Chapter one examines the production of grape crop in the Arab Republic of Yemen in generally, and its production in Sa na governorate in particular. Chapter two examines the area under investigation, the method of sampling, the methods of analysis, and characteristics of grape farms studied in this sample. Sanha has been selected as a research area because it occupies the first position and the leading governorate in the production of grapes. It produces many types of the well-known grapes. They are the white grape, the Raziki grape, the Assirnigrape and the Black grape. The researcher employed a field research questionnaire designed especially for this purpose. It included the aspects related to the size of the area, its division into small holdings, the different kinds of grapes, all farming processes, ways of dealing ~ith the product and the problems that face the cUltivators in producing and marketing grapes. The third chapter of this section is concerned with estimating (assessing) the value of production functions to some of the rainy grapes: the linear model of the value of production function of the white rainy grapes show that the independent factors that have a positive influence on the production value are Land-renting -4- value (Xl), trimming value (X3), fighting pests value (X4) and the other expenses (X?). It is revealed that the most positive influence is Land-rent value (Xl) since the production incremental value is estimated by about 5.99 Rials. Whereas the other indication in the same linear model refer to the negative factors or variables: digging grassing value (X2), defoliating value (X5), and harvesting crop value (X6). The increase of the used factors by the value of one Rial leads to the decreasing of the value of the hectare’s production by about: 0.07, 0.05,0.01 Rials respectively. The total coefficient value to all the factors in the linear model is about 0.996. This means that it reflects nearly an equivalent return on the wide, and this value is in accordance with the resUlts revealed by the Cobb-Douglas function. The fourth section analyses the production costs of the grape-crop in the farms of the sample as it contains three levels of analysis in three parts. Part one is concerned with analyzing production costs on the levels of holdings, grades, and the results shows that it is possible to arrange decendingly the production processes according to its relative importance to the value of each one of them, since the rent of the land occupies the foremost place, and is followed bYr irrigation costs, digging grassing cost.s, the other expenses, defoliating costs and fighting pests, costs in the average for the all grades or levels of the land holdings. -5- The fifth section studies analyzing marketing grapes in the Arab Republic of Yemen. The role of establishments and the official organizations in marketing the products is presented. There is a description of vegetables and fruits markets and we determine the channels and methods of marketing the grape crop or harvest. Then the study examines classifying the marketing tasks and functions that take place: buying and selling process, as the amount that is sold fresh is about 75.5% out of the total grape production of the sample. But the amount that is dried and is made into dried grapes is about 22%, but the I remaining amount is about 2.5% out of total production of the sample, which is devoted to the personal consumption or otherwise. The study shows that the difference in the packages in terms of amounts, measurements and capacity leads to the imbalance in measurements and consequently leads to the instability of buying & selling prices among farmers and traders (merchants) in the wholesale markets. The high price of package that have official standards prevents farmers from possessing this method and so they cannot market their production of grapes in this way. The study reveals that transport costs is, for the farmers, an expensive process, and in particular for farmers who do not own cars. The cost of transporting one box from the production areas to Sanha is about 5 Rials. This cost from both El~Hodaida and Ta’EZ is nearly about 20 Rials. Moreover, the central wholesale markets do not have .._---_ .._- -_._._-------- -6- freezing stores grape-harvest to (refrigerators) and this exposes the damage, and in particular in Hodaida Central wholesale market. The low marketing retail selling prices, efficiency is due to the high and there are not additional marketing services that are done during the process of retail selling. This leads to the imblance between the price that the farmer takes and the price of selling the grapes to (followed by) the different marketing organizations in the system of marketing grapes. Moreover, we do really became aware of the problem that face farmers in the activity of marketing their grape-crop or harvest. These problems are : 1- The abundant supply of grapes and the low buying power of the markets, therefore this leads to reducing prices in the wholesale markets. ~ 2- There are many duties or taxes that the farmer has to pay in the markets. 3-The high prices of the empty package or the necessities of wrapping. 4- The high cost of transportation. 5- The lack of freezing stores in the wholesale markets and this leads to the damage of grapes, in particular in El-Hodalda wholesale market. |