Economic Analysis Of Privatization Effect On The Agricultural Sector(Case Study Of Blue Nile Corporation Schemes)

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Saad, Nabeel Ahmed Mohammed
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The government had adopted a series of macro and micro economic policies to promote investment in agriculture and to improve basic infrastructure and provide facilities to initiate privatization activities and encourage private sector investment. The study set forth an economic analysis of the privatization effect on the performance of the privatized schemes in the Blue Nile region. The prudence of the analysis is directed to test the managerial capacities and awareness of the farmers in the privatized scheme to manage the agricultural resources rationally apart from the governmental supervision which they were accustomed to. The study is interested in the assessment of the performance of these farms compared by their counterparts in the semi mechanized and traditional farms in Sinnar rain fed areas that used to manage their farms privately and they had attained a considerable experience in this field. The assessment includes direct comparison between the performance of privatized farms who had acquired some sort of rehabilitation and those who had not .Direct comparison was made also to assess the performance of these farms before and after privatization. Secondary data was used as well as primary data. Two types of Questionnaires were designed (one for companies and the other for the farmers) and 172 farmers were choosed randomly. Since sorghum is the dominant crop in the study area and the study is interested in the assessment of the performance of these farms through direct comparison with other farms in other sectors (rain- fed semi mechanized and rain fed traditional sectors), the farm level analysis was focused only on the activities related to sorghum production. Descriptive analysis approach is used to view the changes in the general trend of areas, production and yields. T-test was used to test the effects of rehabilitation done by the government recently in the privatized schemes. The analysis of Production function and cost function was used to assess the efficiency of resource utilization in producing sorghum crop in the privatized schemes compared with their counterparts in the semi mechanized and traditional rain fed schemes. The results obtained indicate that there is a significant difference between the average net return per feddan grown in the privatized rehabilitated farms and the not habilitated farms which indicates positive effect of rehabilitation in good utilization of resources used in these farms. The results showed that there is a significant difference between the net return per feddan in the privatized farms compared by the traditional rain-fed farms whereas the average net returns per feddan exceeds its peer in the privatized sector by 118%. The marginal analysis for the cost function showed that the amount of output in the privatized farms which maximizes profits exceeds the amount actually obtained by almost 614% indicating bad performance. The results indicates also that the farms in the semi mechanized rain fed are about to reach the economic points of production before their peers in the privatized farms. The results obtained from the production function analysis indicates that the resources embedded in the model (input, machinery work and managerial work) contributes positively, but by a decreasing rates to the total value of production .The investment of additional one Dinnar (SDD) on theses resources will yields less than one SDD indicating irrational use of these resources. The same results were obtained in the semi mechanized rain fed sector semi mechanized rain fed sector. An overall conclusion of the study stated that the transference of the assets or managerial responsibilities to the private sector or farmers groups, especially in the agricultural pumping schemes, do not grant alone the desired efficiency unless it is supported by a technical consultation and means to insure good utilization of assets. The principal recommendations call for adoption of necessary procedures and allocate enough money to rehabilitate and reconstruct the privatized schemes either from the federal resources or foreign subsidies to raise the capacity of the pumps and irrigation and drainage system, In addition to the Provision of technical back-up support to the irrigation activities through the Federal Ministry of Irrigation, and hurrying the grouping of the existing farmers companies to reduce managerial expenses and to benefit from the economic scale in utilizing the available resources rationally.
University of khartoum