Past versus Future Situations Regarding Cost of Cultivation of Rice Crop in India: Implication to Doubling the Farmers Income

Mahajan S

Published on: 2021-09-17

Abstract

In the present study, the secondary time series data of cost of cultivation and profit of rice crop from 2004-05 to 2014-15 have been taken as endogenous variable with exogenous variables as cost of machine labour(CML), cost of seed(CS), cost of fertilizer & manure(CFAM), cost of insecticides(COI), irrigation charges(IC) and fixed costs(FC). The methodologies, Quantile Regression (QR) and the Box-Jenkins have been applied on the cost of cultivation and profit of rice data. On the basis of findings, it has been observed that by minimizing the variables CS, COI and FC, the profit of rice growers will be maximized as per the QR model(s). Further, the time series model(s) have been developed in order to forecast the cost of cultivation of rice crop for India. The best model for cost of cultivation was ARIMA (0 1 1) on the basis of AIC and SBIC criterion. The forecasted value for the cost of cultivation of rice crop for the year 2020-21 shall be Rs 60495.90 per hectare. In addition, the gain in profit percentage w.r.t cost have also been calculated and has been observed it shall be 120.08 percent for the forecasted year 2020-21 on the basis of proposed model.

Keywords

ARIMA; Box-Jenkins; Quantile regression model; Profit function; Fixed cost; Forecast

Introduction

Economic growth in India has been broadly on an accelerating path. The mismatch between the contribution of agriculture to national income and share in employment has remained large and widened. The manufacturing and service sectors have failed to absorb the excessive workforce in agriculture. Consequently, value addition per worker in agriculture grew slowly and income per farmer never crossed one-third of the income of a non-agriculture worker since the 1980s. The time series data of cost of cultivation and profit of rice crop over decade have been taken in order to work on doubling farmers’ income. According to government’s report, the annual growth rate required between 2015-16 and 2022-23 be 10.4 per cent in farmers’ real income but from 1993-1994 to 2015-16 an annual growth rate was 3.31 per cent which was quite less. For the same, in order to double the farmer’s income by 2020-21, the following objectives have been formulated:

  • To estimate QR model in order to identify significant variables which may maximize the profit of rice growers
  • To forecast the cost of cultivation of rice crop through ARIMA.