Trends and De­ter­mi­nants of In­dian Agri­cul­tural Pro­du­tion: An Em­pir­i­cal Study

Economic Challenger - - CONTENTS - − Lalit Sharma, Anju Rani Seema Sharma

AB­STRACT

It is nec­es­sary to know the trends in the to­tal food grains of coun­try to learn about the rea­sons why In­dian to­tal food grain pro­duc­tion / yield / area are in­creased or de­creased at a spe­cific pe­riod. The study is based on sec­ondary data and data ranges for the pe­riod 1990−91 to 2010−11. In or­der to sat­isfy the ob­jec­tives the study em­ploys sim­ple de­scrip­tive as well as some econo­met­ric tech­niques. The study uses the An­nual Com­pound Growth Rate (ACGR), co­ef­fi­cient of vari­a­tion, sim­ple or­di­nary least square tech­niques and Mul­ti­collinear­ity.

Key words: In­dian food grains, Trends, co­ef­fi­cient of vari­a­tion, and de­ter­mi­nates.

IN­TRO­DUC­TION

Agri­cul­ture is the pri­mary sec­tor and it plays a vi­brant role in the eco­nomic devel­op­ment of In­dia. Nearly 14.6 per­cent of the gross domestic prod­uct is ac­counted by agri­cul­ture sec­tor where about 50 per­cent of the work­force is en­gaged. In­dia has a va­ri­ety of cli­matic and soil con­di­tions. This re­sults in di­verse agro−cli­matic zones and makes it pos­si­ble to grow a wide va­ri­ety of agri­cul­tural prod­ucts. In­dia has be­come self−suf­fi­cient in food grains. Its agri­cul­tural ex­ports ac­counted for around 9.1 per­cent of In­dia’s to­tal ex­port for the year 2010−11. Now In­dian agri­cul­ture has been go­ing through a se­ri­ous cri­sis dur­ing the post−re­form pe­riod. Be­sides domestic con­cerns, such as de­cline in pro­duc­tiv­ity, high in­put cost, stag­nant net sown area, de­clin­ing pub­lic sec­tor in­vest­ment, in­ad­e­quate avail­abil­ity of in­sti­tu­tional credit, and ris­ing agri­cul­tural im­ports, In­dian agri­cul­ture has been fac­ing ex­ter­nal chal­lenges un­der WTO (World Trade Or­ga­ni­za­tion) regime. (Ka­mat, et al, 2007).

OB­JEC­TIVES OF THE STUDY

The study fo­cuses on tem­po­ral changes in food grains pro­duc­tion dur­ing 1990−91 to 2010− 11, and also in­quires the role of agri­cul­ture de­ter­mi­nants in in­creas­ing pro­duc­tion out­put.

RE­SEARCH METHOD­OL­OGY Data source

The data for the study has been col­lected from Eco­nomic Sur­vey ( var­i­ous is­sues), publi­ca­tion of min­istry of fi­nance, GOI and the agri­cul­ture statis­tics at a glance ( var­i­ous is­sues), a publi­ca­tion of min­istry of agri­cul­ture. Be­sides, other sources are Hand­book of Statis­tics on In­dian Econ­omy, publi­ca­tion of Re­serve Bank of In­dia (RBI).

Trend Anal­y­sis− Growth rate Anal­y­sis

Var­i­ous sta­tis­ti­cal tools were used for the anal­y­sis of the sec­ondary data about an­nual com­pound growth rate of area, pro­duc­tion, and yield of to­tal food grains from 1990−91 to 2010− 11. The an­nual com­pound growth rate is com­puted by em­ploy­ing fol­low­ing for­mula: Y = abt By us­ing log­a­rithm, it may be writ­ten as: Log y = log a + t log b Y* = a* + t.b* (where log y = y*, log a = a* and log b = b*) The value of b* is com­puted by us­ing OLS Method. Fur­ther, the value of ACGR can be cal­cu­lated by fol­low­ing method: ACGR = (An­tilog b* −1) x 100

In­sta­bil­ity Anal­y­sis

The in­sta­bil­ity was mea­sured by es­ti­mat­ing the co­ef­fi­cient of vari­a­tion of pro­duc­tion, area, and yield. The co­ef­fi­cients of vari­a­tion of th­ese pa­ram­e­ters were cal­cu­lated as un­der:

Stan­dard de­vi­a­tion CV (% ) = −−−−−−−−−−−−−−−−−−−−−−−−−−−−−− X 100

Mean Anal­y­sis of de­ter­mi­nates of In­dian Food Grain Pro­duc­tion

In or­der to find out the, de­ter­mi­nates of In­dian Food Grains Pro­duc­tion since 1990−91 to 2010−11 we use the fol­low­ing model:

lnY =  +  ln NSA+ £ lnNIA+  lnCF +  lnP + ¥ lnCE + U .. (1) Where Y is the In­dian Food Grains Pro­duc­tion NSA is the Net Sown Area NIA is the Net Ir­ri­gated Area CF is the Con­sump­tion of Fer­til­izer P is the use of Pes­ti­cides CE is the Con­sump­tion of Elec­tric­ity Equa­tion 1 the pa­ram­e­ters  ,  , £,  ,  , and ¥ are lin­ear and pa­ram­e­ters are the re­spec­tive elas­tic­ity. This model is also known as log− log model and finds out the Mul­ti­collinear­ity in this study.

RE­SULT AND DIS­CUS­SION Trends Anal­y­sis

In the ear­lier years of plan­ning, food avail­abil­ity was a se­ri­ous prob­lem in In­dia. To­tal food grains pro­duc­tion was hardly 95.32 mil­lion ton in the year 1990−91, which in­creased to 241.56 mil­lion ton at the end of 2010−11. To­tal wheat pro­duc­tion was 55.14 mil­lion ton in the year 1990−91, which in­creased to 95.32 mil­lion ton at the end of 2010−11. To­tal rice pro­duc­tion was 74.29 mil­lion ton in the year 1990−91, which in­creased to 85.93 mil­lion ton at the end of 2010− 11. To­tal Coarse Ce­re­als pro­duc­tion was 32.7 mil­lion ton in the year 1990−91, which in­creased to 42.22 mil­lion ton at the end of 2010−11. To­tal Pulses pro­duc­tion was 14.26 mil­lion ton in the year 1990−91, which in­creased to 18.09 mil­lion ton at the end of 2010−11 (Min­istry of Agri­cul­ture, Government of In­dia).

The an­nual com­pound growth rate or trends of area, pro­duc­tion and yield of food grains are shown in ta­ble no.1. The data re­veals that dur­ing 1990−91 to 2010−11, the growth rate in to­tal food grains pro­duc­tion has shown an in­creas­ing trend and is at 1.66 per­cent. The rate of rice is 1.254 per­cent. Sim­i­larly in­crease in growth rate for wheat is 2.24 per­cent, to­tal ce­re­als are 1.285 per­cent, and pulses are 1.58 per­cent. For en­tire pe­riod of 1990−91 to 2010−11, the high­est growth rate of area is no­ticed for wheat (0.958 per­cent) and neg­a­tive for rice (−0.02 per­cent), coarse (− 1.36 per­cent) and to­tal food grains (−0.08). The growth of yield is high­est in coarse (2.68 per­cent) and the low­est in pulses (0.882).

Dur­ing the 2 decades, there have been some shifts in the ar­eas from rice, coarse, pulses and to­tal food grains (ex­clude wheat). The lower area un­der food grains has been due to short­fall in the area un­der jowar in Ma­ha­rash­tra, Ra­jasthan, and Gu­jarat, and ba­jra in Ma­ha­rash­tra, Gu­jarat and Haryana, and in case of pulses in Ma­ha­rash­tra, Ut­tar Pradesh, Andhra Pradesh and Ra­jasthan (Eco­nomic Sur­vey of In­dia, 2011−12). This Shift in crop­ping pat­tern was tak­ing place due to re­mu­ner­a­tive price be­ing of­fered to com­mer­cial crops and bet­ter mar­ket ac­cess given to grow­ers ( Ka­mat, et al, 2007).

IN­STA­BIL­ITY ANAL­Y­SIS

It is very nec­es­sary to an­a­lyze in­sta­bil­ity

of In­dian food grains pro­duc­tion in term of area, yield and pro­duc­tion. Re­sults from ta­ble no.2 in­di­cate the in­sta­bil­ity of term in the en­tire pe­riod (1990−91 to 2010−11) based on the co­ef­fi­cient of vari­a­tion (CV) of food grains´ area, yield and pro­duc­tion.

Re­sults in ta­ble 2 show that in case of rice area the co­ef­fi­cient of vari­a­tion is more sta­ble at (CV=2.81 per­cent) and sim­i­larly to­tal food grains also sta­ble at (CV= 2.18 per­cent). The other food grains are ob­served un­sta­ble with high value of co­ef­fi­cient of vari­a­tion. The rea­son for the high in­sta­bil­ity in th­ese food grains may be due to the de­flec­tions in the growth rate in the area.

In case of yield, it is found that more in­sta­bil­ity is pre­vail­ing in all food grains with high value of co­ef­fi­cient of vari­a­tion. This is due to the poor agri­cul­tural growth rate which led to more in­sta­bil­ity. In case of pro­duc­tion, it is ob­served that mostly food grains are in an un­sta­ble growth with high co­ef­fi­cient of vari­a­tion. For the en­tire pe­riod (1990−91 to 2010−11) anal­y­sis shows that all area, yield and pro­duc­tion are show­ing high in­sta­bil­ity. Pro­duc­tion is more un­sta­ble than yield and yield is more un­sta­ble than area. It means that there are con­sid­er­able quan­ti­ta­tive in­creases in terms of pro­duc­tion.

DE­TER­MI­NANTS OF IN­DIAN FOOD GRAINS PRO­DUC­TION

In or­der to check for the de­ter­mi­nants of food grains pro­duc­tion, the present study uses five ex­plana­tory vari­ables to find out its re­la­tion­ship with out­put. Th­ese de­ter­mi­nants are net sown area, net ir­ri­gated area, con­sump­tion of fer­til­iz­ers, use of pes­ti­cides, and con­sump­tion of elec­tric­ity. Th­ese ex­plana­tory vari­ables de­ter­mine the food grains pro­duc­tion in the four dif­fer­ent models. Our study is thus lim­ited due to un­avail­abil­ity of vari­ables.

The ma­trix of pair wise cor­re­la­tion co­ef­fi­cients is pre­sented here. The last col­umn stands for the vari­able num­bers. Thus, the cor­re­la­tion be­tween vari­able 2 and 3 is 0.934. Note that cor­re­la­tion co­ef­fi­cients show some high val­ues. Di­ag­o­nal el­e­ments are all 1.00 be­cause the cor­re­la­tion be­tween a vari­able and it­self is one. As ex­pected, Vari­able 2 `Net Ir­ri­gated Area´ is pos­i­tively cor­re­lated with Chem­i­cal Fer­til­izer and neg­a­tively cor­re­lated with Pes­ti­cides. Chem­i­cal Fer­til­izer is neg­a­tively cor­re­lated with con­sump­tion of Elec­tric­ity. We can ex­pect th­ese high cor­re­la­tions to in­tro­duced mul­ti­collinear­ity among th­ese vari­ables and af­fected re­gres­sion re­sults.

Model−1 (1990−91 to 2010−11) uses only five vari­ables for mea­sur­ing food grain pro­duc­tion func­tion be­cause we can­not get com­plete data on re­main­ing vari­ables for the same pe­riod. Our re­sults point out that all ex­plana­tory vari­ables have an in­signif­i­cant ef­fect on the food grains pro­duc­tion. How­ever, the con­sump­tion of elec­tric­ity has neg­a­tive im­pact on the to­tal food grains pro­duc­tion, and net sown area, net ir­ri­gated area, con­sump­tion of fer­til­iz­ers, and pes­ti­cide have pos­i­tive ef­fect on food grains pro­duc­tion, but th­ese vari­ables re­main sta­tis­ti­cally in­signif­i­cant. The ¯R2 value of this model is 0.81 which means that about 81 per­cent of the vari­a­tion in the log of de­pen­dent vari­able is ex­plained by the log of th­ese five vari­ables. Here vari­able 5 con­sump­tion of elec­tric­ity is ex­cluded from the model to re­move the prob­lem of mul­ti­collinear­ity be­cause it has high value of Prob.

Model−II uses only four vari­ables for mea­sur­ing pro­duc­tion func­tion. In this model all vari­ables have pos­i­tive ef­fect on food grains pro­duc­tion but th­ese are sta­tis­ti­cally in­signif­i­cant. Here vari­able 4 `use of pes­ti­cide´ is ex­cluded from the model to re­move the prob­lem of mul­ti­collinear­ity be­cause it has high value of Prob. Af­ter ex­clud­ing the vari­able 4 there is no ef­fect on the ¯R2 value. The ¯R2 value is 0.82 per­cent.

Model−3 uses only three vari­ables for mea­sur­ing the pro­duc­tion func­tion. In this model net sown area shows pos­i­tive and sig­nif­i­cant ef­fect on the food grains pro­duc­tion at 5 per­cent level, It means that though the net sown area is in­creased by 1 per­cent food grains in­creased by 0.402 per­cent and net ir­ri­gated area shows pos­i­tive and sig­nif­i­cant ef­fect on the food grains pro­duc­tion at 10 per­cent level. It means that though the net ir­ri­gated area in­creased by 1 per­cent, food grains in­creased by 0.6 per­cent. Af­ter ex­clud­ing the vari­able 4 there is no ef­fect on the ¯R2 value. The ¯R2 value is o.83 per­cent. Here vari­able 3 `con­sump­tion of fer­til­iz­ers´ is ex­cluded from the model to re­move the prob­lem of mul­ti­collinear­ity be­cause this has high value of Prob. Model−IV uses only two vari­ables for mea­sur­ing the pro­duc­tion func­tion. Both vari­ables net sown area and net ir­ri­gated area are pos­i­tive and sta­tis­ti­cally sig­nif­i­cant at 10 per­cent and 1 per­cent lev­els. The ¯R2 value is o.82 per­cent.

REF­ER­ENCES

1. GOI (2010), ’ Agri­cul­tural Statis­tics at a Glance 2010 and ear­lier is­sue’, Di­rec­torate of Eco­nom­ics & Statis­tics, De­part­ment of Agri­cul­ture & Co­op­er­a­tion, Min­istry of Agri­cul­ture and Eco­nom­ics sur­vey of In­dia, Govt. of In­dia, and New Delhi.

2. Ka­mat, et al (2007), ’In­dian Agri­cul­ture in the New Eco­nomic Regime, 1971−2003: Em­pir­ics based on the Cobb Dou­glas Pro­duc­tion Func­tion’ Avail­able at: http://mpra.ub.uni−muenchen.de/6150/

3. Ra­manatam, Ramu (2002) ’ In­tro­duc­tory Econo­met­rics with Ap­pli­ca­tion’ Fifth Edi­tion Pub­lished by Thom­son Asia Pte Ltd., Sin­ga­pure Re­serve Bank of In­dia (2010), ’Hand book on In­dia Statis­tics, De­part­ment of Eco­nomic Pol­icy and Re­search, Mum­bai

4. Thanh. C. Nguyen and Singh Baldeo (2006), Trend in Rice Pro­duc­tion and Ex­port in Viet­nam’Avail­able:http://docs.google.com/-viewer?a=v&q=cache:OFDpTjqpEcMJ:clrri.org/-lib/omon­rice1413.pdf+trend+in+of+rice+pro­duc­tion+and+ex­port&hl=en&gl=in&pid=bl&sr­cid=ADGEESjHcrPHla79N

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