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What drives total factor productivity in rice cultivation? An analysis of returns to research investment in western India

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  • Mohit Kumar

    (Anand Agricultural University)

  • Ganga Devi

    (Anand Agricultural University)

Abstract

The study assessed total factor productivity (TFP) in rice cultivation in the Middle Gujarat region from 2001–02 to 2022–23, examining technological progress, sources of productivity growth, and the returns on research investments. To achieve these objectives, the Divisia Tornqvist Theil index method was applied to compute the total input index, total output index, and TFP across three distinct periods: Period I (2001–02 to 2011–12), Period II (2012–13 to 2022–23), and the overall period (2001–02 to 2022–23). Key determinants of TFP growth—including research and extension investments, cropping intensity, balanced nutrient application, infrastructural development, and climatic factors (rainfall)—were analyzed through regression analysis. The returns to research investments were estimated using the marginal product method, while the internal rate of return (IRR) was computed by generating a benefit stream of cash flow, assuming a 10 percent interest rate. The study found a notable improvement in productivity efficiency, with TFP rising from 0.95 in Period I to 1.19 in Period II, averaging 1.14 overall. Major drivers of TFP growth were investments in research (0.2340), extension (0.0640), infrastructure (1.0814), and favorable rainfall (6.2755). Estimated Value of Marginal Product showed that each rupee invested in rice research yielded ₹14, and the IRR stood at 24 percent annually, highlighting the high profitability of such investments. These results highlighted the critical role of sustained investment in agricultural research, extension services, and infrastructure in driving productivity growth. The study underscores the importance of continued modernization and expansion of irrigation infrastructure to ensure a reliable water supply and reduce the risks associated with unpredictable rainfall. Strengthening these key areas is essential for sustaining long-term agricultural productivity and enhancing the resilience and sustainability of rice cultivation in the Middle Gujarat region.

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  • Mohit Kumar & Ganga Devi, 2025. "What drives total factor productivity in rice cultivation? An analysis of returns to research investment in western India," SN Business & Economics, Springer, vol. 5(6), pages 1-24, June.
    • Handle: RePEc:spr:snbeco:v:5:y:2025:i:6:d:10.1007_s43546-025-00834-7
    DOI: 10.1007/s43546-025-00834-7
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