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Price Incentives, Nonprice factors, and Crop Supply Response:The Indian Cash Crops

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  • SUNIL KANWAR

    (Delhi School of Economics)

Abstract

Agriculture as a source of growth was sorely neglected in the early development strategies of the currently developing countries. Realisation of this shortcoming prompted public policy in these countries to encourage agriculture by various means. The success of these policies depends, however, on how farmers respond to the incentives provided. Using panel data pertaining to Indian agriculture for the period 1967-68/1999-00, covering 7 major 'annual' cash crops cultivated across 16 major states, we provide estimates of area, yield and output elasticities w.r.t price and nonprice variables. Our results suggest that the preferred policy ought to be to enhance irrigation and encourage the use of fertiliser and HYVs, if long-run agricultural growth is to be achieved.

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Paper provided by Centre for Development Economics, Delhi School of Economics in its series Working papers with number 132.

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Length: 45 pages
Date of creation: Nov 2004
Date of revision:
Handle: RePEc:cde:cdewps:132

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Keywords: Incentives; supply response; deprivation;

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  1. Lahiri, Ashik Kumar & Roy, Prannoy, 1985. "Rainfall and supply-response : A study of rice in India," Journal of Development Economics, Elsevier, vol. 18(2-3), pages 315-334, August.
  2. Chavas, Jean-Paul & Holt, Matthew T, 1996. "Economic Behavior under Uncertainty: A Joint Analysis of Risk Preferences and Technology," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 329-35, May.
  3. Kaushik Basu, 2003. "Analytical Development Economics: The Less Developed Economy Revisited," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262523442, December.
  4. Gulati, Ashok & Narayanan, Sudha, 2003. "The Subsidy Syndrome in Indian Agriculture," OUP Catalogue, Oxford University Press, number 9780195662061, September.
  5. Rosegrant, Mark W. & Kasryno, Faisal & Perez, Nicostrato D., 1998. "Output response to prices and public investment in agriculture: Indonesian food crops," Journal of Development Economics, Elsevier, vol. 55(2), pages 333-352, April.
  6. Marc Nerlove, 1979. "The Dynamics of Supply: Retrospect and Prospect," Discussion Papers 394, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Holt, Matthew T., 1999. "A Linear Approximate Acreage Allocation Model," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(02), December.
  8. Nerlove, Marc & Bessler, David A., 2001. "Expectations, information and dynamics," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 3, pages 155-206 Elsevier.
  9. Barten, Anton P. & Vanloot, Chris, 1996. "Price dynamics in agriculture: An exercise in historical econometrics," Economic Modelling, Elsevier, vol. 13(3), pages 315-331, July.
  10. Nerlove, Marc & Fornari, Ilaria, 1998. "Quasi-rational expectations, an alternative to fully rational expectations: An application to US beef cattle supply," Journal of Econometrics, Elsevier, vol. 83(1-2), pages 129-161.
  11. Nigel Key & Elisabeth Sadoulet & Alain De Janvry, 2000. "Transactions Costs and Agricultural Household Supply Response," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 245-259.
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