IDEAS home Printed from https://ideas.repec.org/a/ags/phajad/199100.html
   My bibliography  Save this article

Supply Response and Investment in Agriculture in Andhra Pradesh

Author

Listed:
  • Pandey, Lalmani
  • Rao, P. Parthasarathy
  • Birthal, P.S.
  • Bantilan, Cynthia
  • Binswanger, Hans P.

Abstract

The study explored the response of aggregate farm output, input use, and farm investment decisions to output and input prices, wages, technological change, public investments, and climatic factors using district-level panel data of over 39 years from Andhra Pradesh. It confirms the low, short-run aggregate output supply elasticity of Indian agriculture as found in the literature. It validates the hypothesis that the relationships between public investment, financial institutions, and farm investment of labor and capital in agriculture have not changed over the years. The empirical estimates of aggregate output supply elasticity with respect to output price (0.2), roads (0.2), markets (0.11), and net irrigated area (0.05) are higher than previous findings for selected states in India. Aggregate agricultural output responds positively to credit availability (represented by banks) and canal irrigation, each with an elasticity of 0.01. The wage elasticity (0.3) on aggregate output is higher than price elasticity (0.2), indicating that the effects of rising wages outweigh the incentives offered by output price support. Climatic factors (e.g., rainfall) significantly affect fertilizer use and aggregate output while deviation from normal rainfall adversely affects aggregate output. The study substantiates previous findings that public investment in infrastructure and financial institutions respond to the agriculture potential and agro-climatic endowments of an area. A renewed focus, therefore, is required for better targeting of public investments in areas that are relatively resource poor and have harsh agro-climatic conditions for a more inclusive growth and rural poverty reduction.

Suggested Citation

  • Pandey, Lalmani & Rao, P. Parthasarathy & Birthal, P.S. & Bantilan, Cynthia & Binswanger, Hans P., 2012. "Supply Response and Investment in Agriculture in Andhra Pradesh," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 9(2), pages 1-16, December.
  • Handle: RePEc:ags:phajad:199100
    DOI: 10.22004/ag.econ.199100
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/199100/files/AJAD_2011_9_2_3Pandey.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.199100?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Binswanger, Hans P. & Khandker, Shahidur R. & Rosenzweig, Mark R., 1993. "How infrastructure and financial institutions affect agricultural output and investment in India," Journal of Development Economics, Elsevier, vol. 41(2), pages 337-366, August.
    2. McGuirk, Anya & Mundlak, Yair, 1991. "Incentives and constraints in the transformation of Punjab agriculture," Research reports 87, International Food Policy Research Institute (IFPRI).
    3. Binswanger, Hans & Yang, Maw-Cheng & Bowers, Alan & Mundlak, Yair, 1987. "On the determinants of cross-country aggregate agricultural supply," Journal of Econometrics, Elsevier, vol. 36(1-2), pages 111-131.
    4. Lau, Lawrence J. & Yotopoulos, Pan A., 1989. "The meta-production function approach to technological change in world agriculture," Journal of Development Economics, Elsevier, vol. 31(2), pages 241-269, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Narayanamoorthy, A. & Hanjra, Munir A., 2006. "Rural Infrastructure and Agricultural Output Linkages: A Study of 256 Indian Districts," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 61(3), pages 1-16.
    2. Sabrine Dhahri & Anis Omri, 2020. "Does foreign capital really matter for the host country agricultural production? Evidence from developing countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(1), pages 153-181, February.
    3. van Keulen, Herman & Kuyvenhoven, Arie & Ruben, Ruerd, 1998. "Sustainable land use and food security in developing countries: DLV's approach to policy support," Agricultural Systems, Elsevier, vol. 58(3), pages 285-307, November.
    4. Binswanger, Hans P., 2006. "Leonard K. Elmhirst Lecture: Empowering Rural People for Their Own Development," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25713, International Association of Agricultural Economists.
    5. Binswanger, Hans P. & Khandker, Shahidur R. & Rosenzweig, Mark R., 1993. "How infrastructure and financial institutions affect agricultural output and investment in India," Journal of Development Economics, Elsevier, vol. 41(2), pages 337-366, August.
    6. Anderson, J. R., 1996. "On Getting Agricultural Growth In Sub-Saharan And South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 35(4), December.
    7. Craig, Barbara J. & Pardey, Philip G. & Roseboom, Johannes, 1994. "International Agricultural Productivity Patterns," Working Papers 14470, University of Minnesota, Center for International Food and Agricultural Policy.
    8. Butzer, Rita & Mundlak, Yair & Larson, Donald F., 2010. "Measures of Fixed Capital in Agriculture," Discussion Papers 290011, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    9. Chan-Kang, Connie & Pardey, Philip G. & Wood, Stanley & Roseboom, Johannes & Cremers, Marleen, 1999. "Reassessing Productivity Growth In African Agriculture," 1999 Annual meeting, August 8-11, Nashville, TN 21600, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Kerr, John M., 1996. "Sustainable development of rainfed agriculture in India:," EPTD discussion papers 20, International Food Policy Research Institute (IFPRI).
    11. Pingali, Prabhu L. & Heisey, Paul W., 1999. "Cereal Crop Productivity in Developing Countries: Past Trends and Future Prospects," Economics Working Papers 7682, CIMMYT: International Maize and Wheat Improvement Center.
    12. Kerstens, Kristiaan & O’Donnell, Christopher & Van de Woestyne, Ignace, 2019. "Metatechnology frontier and convexity: A restatement," European Journal of Operational Research, Elsevier, vol. 275(2), pages 780-792.
    13. Mundlak, Yair & Butzer, Rita & Larson, Donald F., 2012. "Heterogeneous technology and panel data: The case of the agricultural production function," Journal of Development Economics, Elsevier, vol. 99(1), pages 139-149.
    14. Craig, Barbara J. & Pardey, Philip G. & Roseboom, Johannes, 1994. "International Agricultural Productivity Patterns," ISNAR Archive 310754, CGIAR > International Food Policy Research Institute (IFPRI).
    15. Macours, Karen & Swinnen, Johan F. M., 2000. "Causes of Output Decline in Economic Transition: The Case of Central and Eastern European Agriculture," Journal of Comparative Economics, Elsevier, vol. 28(1), pages 172-206, March.
    16. Aboagye, Anthony Q. & Gunjal, Kisan, 2000. "An analysis of short-run response of export and domestic agriculture in sub-Saharan Africa," Agricultural Economics, Blackwell, vol. 23(1), pages 41-53, June.
    17. Fan, Shenggen & Chan-Kang, Connie, 2008. "Regional road development, rural and urban poverty: Evidence from China," Transport Policy, Elsevier, vol. 15(5), pages 305-314, September.
    18. Shahidur R. Khandker & Zaid Bakht & Gayatri B. Koolwal, 2009. "The Poverty Impact of Rural Roads: Evidence from Bangladesh," Economic Development and Cultural Change, University of Chicago Press, vol. 57(4), pages 685-722, July.
    19. Khondoker Abdul Mottaleb & Dil Bahadur Rahut, 2019. "Impacts of Improved Infrastructure on Labor Allocation and Livelihoods: The Case of the Jamuna Multipurpose Bridge, Bangladesh," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 31(4), pages 750-778, September.
    20. Ulimwengu, John & Funes, Jose & Headey, Derek & You, Liangzhi, 2009. "Paving the way for development?: The impact of transport infrastructure on agricultural production and poverty reduction in the Democratic Republic of Congo," IFPRI discussion papers 944, International Food Policy Research Institute (IFPRI).

    More about this item

    Keywords

    Demand and Price Analysis; International Relations/Trade;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:phajad:199100. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/searcph.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/searcph.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.