Supply Response Function in Indian Agriculture

Chapter

Abstract

This chapter captures the supply response in terms of area and yield of foodgrain crops at the all-India level considering the period between 1980–81 to 2013–14. Among the price factors, real farm harvest price of own crop was most significant with a positive sign, and the competing crop (real) price was significant with a negative sign. Among the non-price factors, rainfall was significant with a positive sign in almost all the crops. Irrigation was found positive and significant only in wheat, rice and rabi coarse cereals. The kharif coarse cereals presented a case of being rainfed crops, wherein the irrigation coefficient was mostly insignificant and even had a negative sign. The lagged dependent variable was most significant with a positive sign indicating the influence of past behaviour on the future decisions of the farmers. The results of the study corroborate the recent literature indicating non-price factors, especially irrigation being more prominent in farmers’ acreage decision than the price factors. Yield determinants were somewhat similar to area determinants. Own real price had a significant coefficient with a positive sign in wheat and coarse grains implying that profitability motive does influence yield through input usage and management. Rainfall was most significant with a positive sign indicating the climate factor. Fertilizer use per hectare was highly significant with a positive sign indicating the changing contours of Indian agriculture which further connotes that fertilizer price subsidies might help to encourage farmers to attain higher yield. The positive effect of irrigation on yield emphasizes a need for increasing major and medium irrigation including check dams to raise the productivity of agricultural sector.

Keywords

Supply response Indian agriculture Minimum support price Nerlovian model Area response Yield response 

References

  1. Antonovitz F, Green R (1990) Alternative estimates of fed beef supply response to risk. Am J Agric Econ 72:475–487CrossRefGoogle Scholar
  2. Askari H, Cummings JT (1977) Estimating agricultural supply response with Nerlove Model: A survey. Int Econ Rev 18(2):257–292CrossRefGoogle Scholar
  3. Bapana SL, Binswanger HP, Quizon JB (1981) Systems of output supply and factor demand equations for semi-arid tropical in India. Ind J Agric Econ 39(2) April–JuneGoogle Scholar
  4. Behrman JR (1968) Supply response in underdeveloped agriculture. AmsterdamGoogle Scholar
  5. Behrman JR (1966) Price elasticity of the marketed surplus of a subsistence crop. J Farm Econ 48:875–893CrossRefGoogle Scholar
  6. Chavas J, Holt M (1990) Acreage decisions under risk: The case of corn and soybeans. Am J Agric Econ 72:529–538CrossRefGoogle Scholar
  7. Chavas J, Holt M (1996) Economic behavior under uncertainty: A joint analysis of risk preferences and technology. Rev Econ Stat 78:329–335CrossRefGoogle Scholar
  8. Ghosh N, Neogi C (1995) Supply responses of food grains and policy action: A model with rational expectations hypothesis. Ind J Agric Econ 50(2)Google Scholar
  9. Gulati A, Kelley T (1999) Trade liberalization and Indian agriculture. Oxford University Press, OxfordGoogle Scholar
  10. Holt MT (1993) Risk response in the beef marketing channel: A multivariate generalized ARCH-M approach. Am J Agric Econ 75:559–571CrossRefGoogle Scholar
  11. Hurt CA, Garcia P (1982) The impact of price risk on sowings 1967–78¢. Am J Agric Econ 64:565–568CrossRefGoogle Scholar
  12. Jha S, Srinivasan PV (1999) Grain price stabilization in India: Evaluation of policy alternatives. Agric Econ 21:93–108CrossRefGoogle Scholar
  13. Kohli DS (1996) Supply response in agriculture: A review of methodologies. Working paper (National Council of Applied Economic Research), Number 63Google Scholar
  14. Krishna R (1962) A note on the elasticity of marketable surplus of a subsistence crop. Ind J Agric Econ 17Google Scholar
  15. Krishna R (1965) The marketable surplus function for a subsistence crop: An analysis with Indian data. Econ Weekly 17:309–324Google Scholar
  16. Krishna R, Chhibber A (1983) Policy modeling of a dual grain market: The case of wheat in India. Research Report 38. International Food Policy Research Institute. Washington, D.CGoogle Scholar
  17. Krishna R, Raychaudhuri GS (1980) Some aspects of wheat and rice price policy in India. World Bank Staff Working Paper No. 381. International Bank for Reconstruction and Development, Washington, D.CGoogle Scholar
  18. Kumar P (1998) Food demand and supply projections for India. Agricultural Economics Policy Paper 98–01. Indian Agricultural Research Institute, New DelhiGoogle Scholar
  19. Kumar P, Rosegrant M (1997) Dynamic supply response of cereals and supply projections: A 2020 vision. Agric Econ Res Rev 10:1Google Scholar
  20. Kumar P, Rosegrant M, Hazell P (1995) Cereal prospects in India to 2020. In IFPRI 2020 Vision Brief No 23 (publisher and location missing)Google Scholar
  21. Kumar P, Sarkar S (2012) Economic reforms and small farms: implications for production marketing and employment. Academic Foundation, New Delhi Google Scholar
  22. Lin W (1977) Measuring aggregate supply response under instability. Am J Agric Econ 59:903–907CrossRefGoogle Scholar
  23. Ministry of agriculture, http://agricoop.nic.in, http://dacnet.nin.in
  24. Mythili G (2001) A note on acreage response for major crops in the selected states. In: Kalirajan KP, Mythili G, Sankar U (eds) Accelerating growth through globalisation of Indian agriculture. Macmillan, New DelhiGoogle Scholar
  25. Mythili G (2006) Supply response of Indian farmers: Pre and post reforms. IGIDR Working Paper series, WP-2006–009Google Scholar
  26. Mythili G (2008) Acreage and yield response for major crops in the pre-and post-reform periods in India: A dynamic panel data approach. PP Series 061, Indira Gandhi Institute of Development of Research, MumbaiGoogle Scholar
  27. Narain D (1965) The impact of price movements on areas under selected crops in India 1900–1939. Cambridge University Press, CambridgeGoogle Scholar
  28. Nerlove M (1958) The dynamics of supply: Estimation of farmers’ response to price. John Hopkins PressGoogle Scholar
  29. Paris Q (1970) The farmer and the norms of a market economy in developing countries: An analysis of case studies. Farm Econ 11:493–510Google Scholar
  30. Peterson W (1979) International farm prices and the social cost of cheap food policies. Am J Agric Econ 59:12–21CrossRefGoogle Scholar
  31. Pope RD, Just RE (1991) On testing the structure of risk preferences in agricultural supply analysis. Am J Agric Econ 73:743–748CrossRefGoogle Scholar
  32. Rahji MAY, Adewumi MO (2008) Market supply response and demand for local rice in Nigeria: Implications for self-sufficiency policy. J Cent Eur Agric 9(3):567–574Google Scholar
  33. Rao JM (1989) Agricultural supply response: A survey. Agric Econ 3:1–22CrossRefGoogle Scholar
  34. Subervie J (2005) The variable response of agricultural supply to world price instability in developing countries. J Agric Econ 59(1):72–92Google Scholar
  35. Timmer CP, Falcon W (1976) The political economy of rice production trade and trade in Asia. In: Reynolds L (ed) Agriculture in development theory. Yale University Press, New HavenGoogle Scholar

Copyright information

© Springer Nature Singapore Pte Ltd. 2017

Authors and Affiliations

  1. 1.ADRTC Institute for Social and Economic ChangeBangaloreIndia

Personalised recommendations