CHAPTER-VII AGRICULTURE PRODUCTION AND EXPORTS OF GUJARAT

Transcription

1 CHAPTER-VII AGRICULTURE PRODUCTION AND EXPORTS OF GUJARAT 7.1 Introduction The economy of Gujarat is one of the fastest growing economies among all Indian states. It also has the distinction of achieving higher agricultural growth compared to national average. Geographical location of Gujarat has endowed it with longest coastal line among all states in India to international trade, facilitating easier access to international trade. In spite of industrialization majority of population in Gujarat is dependent on agricultural for its livelihood. The agriculture production in turn depends on many seasonal factors, resulting in variability of production. This uncertainty in agricultural production has led to exclusion of rural population from receiving benefits of economic liberalization and high growth of GDP in India. In such a scenario it becomes imperative to take steps to increase production improves value added production in agricultural sector for improving income levels of population dependent on it. Promoting exports from agriculture sector will lead to improvement in incomes of rural population, allowing them to share gains and benefits from economic development. The agriculture production in Gujarat and export performance of selected agriculture commodities from Gujarat has been studied and presented here. Export plays a significant role in economic development of a country by enabling it not only to pay for its import requirement but also lead to multiple expansions in national income through foreign trade multiplier. The production of most of the agricultural crops in Gujarat has been increasing over the years; it is the export of these crops that has significantly picked up during the last decade. Gujarat has an edge in production of castor, cumin, fennel, isabgol, sesamum, groundnut, mango, garlic, dehydrated onion, fish and seafood and cotton in the international market (GITCO, 2009).However, agriculture productivity and exports are considerably low in international market. Substantial improvement of economy needs to be done to take advantage of opportunities in international market to improve condition of population dependent on agriculture. 178 P a g e

2 Since 1991 trade policy reform measures were aimed at integration of industrial, trade and exchange rate policies to enhance the efficiency in the economy. The object of these measures has been aimed to eliminate discretionary controls on international trade transactions, reduce the nominal as also the effective protection available to domestic industry, and to bring domestic prices closer to world prices. In this context, it is important to distinguish between three dimensions of trade policy reforms. First - a rapid dismantling of quantitative restrictions on imports and exports; Second - a substantial reduction of taxes and subsidies on trade and Third - several adjustments in the exchange rate. The growth in area, production and productivity of selected agricultural has been studied during pre WTO period of to and post WTO period to has been under taken to study changes in trend and possible impact of WTO implementation, The same is also undertaken for selected agro processed products in Gujarat, subsequent to trend analysis, changes in export of the selected agro products has been under taken and the same has been presented below here. The agriculture commodities selected are the ones which have prominent contribution to agriculture exports from Gujarat. Thus, agriculture commodities selected are Groundnut, Cotton, Castor, Sesamum, Tobacco, while agro processed products included for study and analysis are castor oil, sesame, Tobacco, manufactured Pickle &chutney, process fruit juice. For Gujarat, agriculture sector performance has been analyzed by trend break analysis to show whether major land mark events such as commencement of economic liberalization in 1991 and implementation of WTO by various authors. A brief of this has been studied and presented below. 7.2 India s Agricultural Trade India's global agricultural trade during pre and post-wto period has been fluctuating. On an average per annum, India's global agricultural exports were rupees Crores during pre- WTO period ( ), which increased to rupees Crores during post-wto period ( ). The coefficient variation of agro export was percent. The growth of agricultural exports has been lower during the pre-wto period (11 per cent) as compared to the post-wto period (18 per cent). Index of agricultural exports increased by 56.3 per cent. This is an encouraging trend to India's agricultural exports during the post-wto period. The coefficient variation of Total national exports was 521 percent (Ref. Table: 7.1) compared to agro exports it was 70 percent. 179 P a g e

3 Table 7.1: Export & Import of Agri-Commodities to the total National export & import ( ) year Agricultural Imports Total National Imports %age Agriculture Imports to Total National Imports Agriculture Exports Total National Exports %age Agriculture Imports to Total National exports , Source: Govt. of India (2009) Similarly, India's global agricultural imports also increased from rupees Crores during pre-wto period ( ) to rupees Crores during post-wto period ( ) on an average per annum. The coefficient of variation of Agro imports was 73.5 percentage. (Ref. Table: 7. 1B) However, the increase in global agriculture imports was more than exports 180 P a g e

4 during post-wto period. During pre WTO period growth rate of agriculture imports was 43 per cent during the post-wto period it was 13.51per cent in case of agro exports as shown in Table7.1A). Table 7.1A: Regression Result: Export & Import Values of Agro-Commodities to the total National export & import ( ). Imports/Exports Year Intercep t Slope R 2 CGR percentag e Agri imports Agri imports Total National Imports Pre Agri EXports WTO Total National Exports Total National Imports Post Agro Exports WTO Total National Exports Agro imports Total National Imports Overall Agro Exports Periods Total National Exports Calculation from secondary data 181 P a g e

5 Table 7.1B: Export & Import Values of Agro-Commodities to the total National exports & import ( ) Average, Co-efficient of variation Average Mean SD CV Calculation from secondary data It is clear from the above analysis that liberalization under WTO has rather increased India's global agricultural imports more than its exports. Indian agriculture sector has been adversely affected during post-wto regime. Compound growth of agro imports pre WTO time was 43 percent compared to post WTO growth rate of 13.5 percent, but overall period agro imports growth was reached to 19.2 percent Agriculture in Gujarat: Geographically Gujarat is endowed with longest coastal line among all states in India, facilitating easier access to international trade. In spite of industrialization majority of population in Gujarat is dependent on agriculture for its livelihood. The production of most of the agriculture crops in Gujarat has been increasing over the years; however it is the export of these crops that has significantly picked up during the last decade. Since 1991 trade policy reform measures were aimed at integration of industrial, trade and exchange rate policies to enhance the efficiency in the economy. Average annual Growth Rate in Gujarat (GSDP) during the year was 6.3 percent, it has reached to 10.2 percent in the year The total GSDP in the state always registered a positive annual growth throughout the 30 year period of study, agricultural GSDP did not show statistically significant trend rate of growth during the first three decades. Before, the terms of trade were rising for the non-agriculture sector and after ; the same was declining. 182 P a g e

6 The agriculture commodities selected for the study on the basis of substantial contribution of Gujarat to all India production are groundnut, sesamum, cotton, tobacco (unmanufactured), cumin, fennel. Similarly, based on same reason agro process commodities selected for study of export are Tobacco (manufactured), Process fruit juice, Pickle and chutney, Mango pulp and Castor-oil. The Gujarat government has set up Gujarat agro industries corporation limited (GAICL) for providing assistance to food processing units. The government of India has initiated National Mission of Food Processing (NMFP), realizing the need for processing of food items show that farmers and primary sectors can improve its income Growth Statistics of Gujarat - Agriculture v/s Total GSDP The structural breaks in the agricultural GSDP and total GSDP series in Gujarat state are calculated The Quandt method using OLS (ordinary least squares) technique : In Y = β0 + β1t + β2 (t - ti*) D1 + β3 (t - tj*) D2 + e Where D1=l for t>t1* D2 = 1 for t > t2* are two dummy variables and t, * and t2* are break dates. It can be seen from Table 7.1 the trend rates for agricultural real incomes in the first three decades in Gujarat turn out to be statistically insignificant and hence the null hypothesis about the trend rate = 0 cannot be rejected. None of the trend rates during the first three decades is high and actually, for the 1980s it turns out to be negative and insignificant. The table shows average annual growth rate (Agriculture + Animal Husbandry) during the year was 12.4 percent, it has reduced to 9.5 percent in the year In case of Average annual Growth Rate (GSDP) during the year was 6.3 percent, it has reached to 10.2 percent in the year P a g e

7 Table 7.2 Growth Statistics for Gujarat - Agriculture v/s Total GSDP Periods Average annual growth rate Standard Deviation Cofficie nt of Variati on Trend Rate (β) Average. Annual Trend Rate Agriculture+ Animal Husbandry to to * to * to (A) * Total GSDP to * to * to * to (A) * * Statistically significant at 5% level Source: Shah et al. (2010) & Has Agriculture in Gujarat shifted to high growth path by Ravindra H. Dholakia page no 5 During 1990s Gujarat shows for the first time a statistically significant trend growth rate of 4.7percent pa. With considerably low extent of fluctuations compared to previous decades. The last decade ( to ) shows both in trend growth rate as well as the lower degree of fluctuations raising the statistical significance level of the estimate. Log-linear trend rate of growth estimated on the basis of all observations in the series still gives a highly significant growth rate of 8 percent pa in real terms during the last decade. Gujarat agriculture in recent decades almost keeps intact even after two consecutive droughts in the state. 184 P a g e

8 7.2.3 Structural Breaks in Gujarat Agriculture and Total GSDP The structural breaks have been identified by empirical studies in India using two distinct methods: Quandt method (1980) by using regression models. The Bai-Perron method was used for Indian GDP series. While both the methods statistically find the break dates from the series itself without the structural break dates, the Bai-Perron method allows simultaneous consideration of the possibility of multiple breaks that Quandt method does not fully satisfies, these methods are used to identify the structural breaks in the Agricultural GSDP and total GSDP series in Gujarat state. In Y = β0 + β1t + β2 (t - ti*) D1 + β3 (t - tj*) D2 + e Where D1=l for t>t1* D2 = 1 for t > t2* are two dummy variables and t, * and t2* are break dates. After the necessary iterations and trials, the final results for the Quandt method for the total real GSDP and real agricultural GSDP for Gujarat state considering the 30 year data from are as follows The Bai-Perron method with BIC criteria as suggested by Wang (2006) identifies three structural breaks in real GSDP series but in the Quandt method two structural breaks have been studied Real GSDP (at constant prices) In Y = (t) (t-7) D (t-23) D2 (0.0017) (0.0010) (0.0040) R 2 = For , t=l and for (a),t = 30 Figures in brackets represents Standard Errors of parameters, and all estimated values are significant at 1 percent level of significance. 185 P a g e

9 7.2.5 Real Agricultural GSDP (at constant prices) lny = (t) (t - 22)D 1 (0.0025) (0.0192) R 2 = For , t = 1, and for (A), t = 30. Figures in brackets represent Standard Errors of parameters. The basic trend rate is significant at 1 percent level of significance, but the shift parameter (accelerator) is significant only at 10 percent level of significance. The maximum number of regimes is given by the number of data points (= 30 in our case) divided by 8 (= 4 in our case). Therefore, up to 4 break dates are considered simultaneously. The procedure considers the break points in a sequence - 0, 1, 2, 3, 4 in the series and for each run, generates statistics called Bayesian Information Criterion (BIC) and the familiar residual Sum of Squares (RSS). Then, the run for which these two criteria are minimized is picked up as the optimal run and the corresponding number of structural break points is identified as the endogenously determined point. This method is applied to both total real GSDP and real agricultural GSDP series in Gujarat over the 30 year period Terms of Trade in Gujarat Agriculture The inter-sectorial terms of trade in a state economy is best measured with the help of GSDP data by sectors at current and constant prices. GSDP deflators by agricultural and nonagricultural sectors in Gujarat, and terms of trade defined as the ratio of the two series, i.e. P NA /P A - trends in terms of trade in Gujarat over the 30 years. It can be seen that the series fluctuates considerably over time, and shows some broad decreasing, increasing and again decreasing trends over the three decades. The long-term trends in the terms of trade in Gujarat, there would be three distinct phases, viz. 186 P a g e

10 , when the P NA /P A was declining; , when the P NA /P A was rising; and , when the P NA /P A was again declining. The sectoral terms of trade in the domestic economy is related with price incentives to producers, savings and investments in the economy. The total GSDP in the state always registered a positive significant annual growth throughout the 30 year period, agricultural GSDP did not show statistically significant trend rate of growth during the first three decades.the trend rate of total GSDP also was considerably low during the first two decades in Gujarat. In the last two decades also Gujarat's total GSDP showed substantial acceleration. The structural break in P NA /P A series found around exactly coincided with the turn of agriculture in the state. Before, , the terms of trade were rising for the non-agricultural sector and after ; the same was declining over time. Thus, agriculture was relatively losing before and was gaining after in Gujarat. This seems to have spurred positive and significant growth of agriculture in the state after By changing cropping pattern in favor of high value crops, bringing more area under plough, increasing cropping intensity, increasing investments in modern inputs and machinery, increasing irrigation, and steps for better technology, marketing, storage, etc. This suggests lagged relationship between prices and agriculture output supply. With increased agricultural supply, total GSDP is also expected to increase. The following equations show: ln (Agri. + AH) = a + b ln (P NA /P A )-1, + u; and ln(gsdp) = c + d ln (P NA /P A ) -1 + v Where u and v are random errors, and a & c are intercepts, and b & d are elasticity parameters. The estimates of these equations through OLS regressions are: ln (Agri.+AH) = ln (PNA/PA) -1 + e 187 P a g e

11 P - values: (3.2E-57) (0.190): R Square = And ln (GSDP) = ln (PNA / PA)-1 + e P - Values: (2.1E-49) (0.042): R Square = These equations are estimated with the 30 years data on Gujarat. It is seen that the first of these equations on agricultural GSDP is statistically not a good fit at all and the R 2 is not significant even at 10 percent level. However, the second one on the total GSDP is statistically significant at 5percent level with expected negative sign. The estimate for elasticity of supply with one year lag turns out to be (-) 1.8, implying that one percent increase in relative agricultural prices would lead to 1.8 percent increase in the total real GSDP in the state on an average in the long run. The equation for agriculture GSDP does not fit the data for all the years well, perhaps because there might be substantial changes in the relationship during different phases. It can be seen from the above price-wise regression results that during , the elasticity was positive and not significant, but during the latter period of , the elasticity was negative and significant. It is because of such a sharp contrast in the two phases that the overall regression for the whole 30-year period turned out to be statistically insignificant Cropping pattern in Gujarat The changes in cropping pattern in Gujarat have been presented in table 7.3. It reveals that the area under total food grains has declined from 49 percent from the triennium to 38 percent during triennium During the same period area under total cereals declined from percent to percent. While the area under rice has more or less remained around 5 to 6 percent, the area under wheat has significantly increased from 4.95 percent in to 9.67 percent in The area under bajra has declined sharply from percent to 8.43 percent. Among cereals, the sharpest decline in area has been observed for jowar from percent in to 1.22 percent in The percent area under oilseeds has slightly improved from per cent in to percent in While the percentage area under groundnut, a major cash crop of Gujarat, has declined from to 17 percent, other 188 P a g e

12 oilseeds crops like castor, sesamum and rapeseed and mustard have made substantial gains. Area under total pulses has marginally increased from 7.86 percent to 7.35 percent. Table: 7.3 Cropping Pattern of Gujarat ( to ) (Area as Percent to Gross Cropped Area) 189 P a g e S.NO Crops Triennium Average Rice Wheat Jowar Bajra Maize Ragi Kodra Barley Other Cereals Total Cereals Gram Tur Other Pulses Total Pulses Total Food Grains Groundnut Castor Sesamum Rape & Mustard Total Oil Seeds Cotton Tobacco : Sugarcane Gross Cropped Area in '00 Hact (108992) *Estimated average Note: Figures in bracket denote GCA in 00' Hact (106952) (106395) Source: Directorate of Agriculture, Krishi Bhavan, GoG, Gandhinagar, (110446)*

13 The average area under cotton, a major cash crop of Gujarat, has fluctuated over the decades. However, the introduction of Bt. Cotton has resulted in rise in its area from percent in to percent in Cropping pattern in Gujarat indicates that it is quite distinct from what has prevailed at the all India level. Some structural rigidity has been observed in area allocation at the national level. At the all India level, food grain crops continued to claim around 75 percent of the gross cropped area for almost the first three decades of planning ( ). Thereafter, even though it had gradually declined, it was as high as 64 percent in In contrast, Gujarat had only 47 percent of its GCA under food crops during , which has gradually declined to 38 percent only by (Ref. Table 7.3). The scope for increasing net area sown may be limited; the gross cultivated area can increase with increasing irrigation creating opportunities for double cropping. It has been observed in recent years that recharging of wells and construction of check dams, farm ponds and deepening of village tanks have helped in increasing rabi cultivated area in Saurashtra, Kutch and North Gujarat by 6 to 8 lakh hectares or about 5 to 7 percent of cultivated area. 190 P a g e

14 Table: 7.4 Average Yield Rates of Crops in Gujarat Sr. No. (Yield in Kg./Hact) Crops to to to to to to Rice Wheat Jowar Bajra Maize Ragi Other Cereals Total Cereals Gram Tur Other Pulses Total Pulses Total Food Grain Groundnut Castor Sesamum Rape & Mustard Total Oil Seeds Cotton Tobacco Sugarcane Source: Directorate of Agriculture, Government of Gujarat, Gandhinagar, 2009 Average Yield Rates The table: 7.4 shows average yield rates of crops in Gujarat. As production performance is influenced by both changes in area as well as productivity, a better indicator of progress will be changes in yield rates of crops over the period. Data on changes in five yearly average yield rates during to are provided in table 7.4. The data show that Gujarat farmers have been scaling higher peaks of productivity over time. Among cereals, the highest peaks in average productivity have been achieved for rice, wheat, jowar and bajra during Only maize 191 P a g e

15 crop had achieved higher average productivity level during Among pulses, gram, tur and all pulses have achieved highest peak in average productivity during Among oilseeds, groundnut, castor and rapeseed and mustard and all oilseeds had achieved higher average yield rates during Only in the case of sesame, the peak average productivity level was found during During the 20 year period ( ) cotton had achieved peak average productivity during The increase in average productivity level achieved for cotton was remarkably high during due to the introduction of Bt. cotton. Thus, it can be concluded that considerable improvement in productivity has been achieved in Gujarat continuously during the period of study Influence of Trade Openness of Agricultural Exports The value of co-efficient of determination (R 2 ) exceeds 89 percent. Affecting the agricultural exports as constant, the 89 percent variation in agricultural exports is explained by trade openness. The estimated parameter (p) reveals that one unit change in Trade Openness, the agricultural exports increases by units. This variable emerges statistically significant. The regression estimates of the model are presented in Annexure 7.5. It may be seen from the table that the computed value of F is greater than the table value at 1 percent level. As far as an Indian agricultural export is concerned, the above results proved that, trade openness exert a positive impact on agricultural exports Influence of Trade Openness on Manufactured Goods Export Export performance of manufactured goods so many factors. In this back drop, the study attempt to estimate the impact of globalization. In addition to trade openness, which is an indicator of globalization, the Real Effective Exchange Rate (REER) is also considered as a determinant. It represents a measure of International competitiveness. The co-efficient of the Trade Openness (p) is expected to be positive in its character. It shows that a unit increase in trade openness would tend to increase exports of manufactured goods of India. The regression estimate of the model is presented in Annexure 7.5. It may be seen from the table that the co-efficient of multiple determination (R 2 ) of the model is 0.65 i.e., nearly, 65 percent of the variations in 192 P a g e

16 exports of manufactured goods are explained by the variable i.e. Trade openness. This variable emerges statistically significant at 1 percent significant level. For one unit change in Trade openness, the export of manufactured goods increased by units. The constant term of the model is Because calculated F value is greater than the table value, the whole model is significant at 5 percent as well as 1 percent level. The agriculture export from Gujarat data and results of analysis were also available from other sources, which have been briefly presented below Agricultural Performance and Exports from Gujarat In recent past Gujarat has experienced significant increase in production of major crops. Farmers have changed from commercial crops to cash crops. There has been a significant increase in area under castor, mustard, and sesamum; groundnut and cotton, being the main cash crops of Gujarat. The productivity of most crops has risen substantially over the years and this rise has been most pronounced during All the cereals except maize, pulses, and gram achieved the peak of productivity during the period The coefficient of variation in Gujarat for most of the crops highlights a sharp decline in the risk factor and volatility in the productivity for farmers. It is interesting to see that the reduction in risk is more pronounced for commercial and cash crops than for traditional crops. Apart from food grains (cereals and pulses), oilseeds, and cash crops like cotton and tobacco, Gujarat has leapfrogged in production of horticulture crops also. The area, production, and yield of fruits and vegetables have increased substantially. For example, from to , production of fruits and vegetables grew by 5.5 percent p.a.; whereas from to , the same grew at 12.8 percent p.a. Gujarat has an edge in castor, cumin (jeera), fennel (saunf), psyllium (isabgol), sesamum (til), groundnut, mango, garlic, dehydrated onion, fish and seafood, and cotton in the international market (GITCO, 2009). Although concrete data on exports at the state level are not collected and published by any official source so far in the country, there are a few isolated efforts made to estimate exports originating from Gujarat (GITCO, 2001 and 2009). Some data are collected from exporters and CMIE, cybex India, New Delhi etc. 193 P a g e

17 Total agro & allied products export from India was Rs Billion compared to Gujarat Rs billion, percentage of changes during the Over a period of time during the year export percent reduced to 10.27, Sesamum and Niger seeds changed from to 16.6 percent. Groundnut from to percentages shows almost no significance change. Most important value added products exported from Gujarat it has reduced from 89 percent to 87 percent. Process fruit and vegetable percentage of export increases from 155 to 500 percentages. Table7.5. indicates that all the agro products have experienced a remarkable growth in exports in the country as well as in the state during the four years to Gujarat has emerged as a hub of agricultural production like cotton, castor, and psyllium production as well as exports to international markets. The value of floriculture exports has also increased more than threefolds over a period of time from Gujarat. 194 P a g e

18 Table 7.5 Export Values of Major Crops from India and Gujarat (Rs. Billion) Increase India Gujarat % India Gujarat % India Gujarat Agriculture& allied products ,535 1,233 Rice ',055 - Spices Sesame and Niger seeds ,034 Groundnut ,589 1,600 Oilmcals ,517 1,392 Castor oil X ,079 1,051 Fresh fruits and Vegetables Processed food, fruits and vegetables Poultry and dairyproducts ,935 5, , ,150 2,300 Floriculture , ,541 15,000 Source: Compiled from GITCO (2001) as quoted in Dholakia (2003) and GITCO (2009) It is clear from table that export of agriculture products has declined during this period, while exports of food items also declined. The table 7.6 shows export of selected items from Ahmedabad International air-cargo terminal but fruits and vegetables has increased considerably both in terms of quantity and value of exports from international air cargo terminal at Ahmedabad. The exports of flowers is also picking up. Thus, fruits and vegetables and flowers 195 P a g e

19 are increasingly taking the place of food items and agricultural products as an export item from Ahmedabad air-cargo. Table 7.6 Exports of Selected Items from Ahmedabad International Air-Cargo Terminal Quantity Rs. Lakh Quantity Rs. Lakh Quantity Rs. Lakh Quantity Rs. Lakh (Tons) (Tons) (Tons) (Tons) Agricultural products Food item Fruits & vegetables Flowers Total of Above Source: Compiled from figures provided by GSECL, 2010 Gujarat has 40 seaports at different location, however, in terms of turnover; the ports of Gujarat are far ahead of the national average. The respective share of 12 large seaports of India is shown in table 7.6, Gujarat has only one major port, namely Kandla, which has consistently risen in ranks during the past decade and topped the chart for tonnage handled since displacing Vishakhapatnam as the highest tonnage handling port. Over this period, tonnage handled at Kandla port increased at 9.57 percent p.a. The Kandla port has shown a huge jump after and even the recent global economic slowdown has not affected Kandla port's performance adversely. In fact, several capacity expansion works were taken up during the global slowdown year of and the current capacity utilization for the Kandla port stands at 93 per cent. 196 P a g e

20 Table 7.7 Percentage Share of Tonnage handled by Major Seaports of India Sea Port Kolkata Paradip Visakhapatnam Ennore Chennai Tuticorin Cochin New Mangalore Mormugao Mumbai JNPT Kandla Source: Maps of India (2010) However, the small and medium ports of Gujarat show the real strength of performance. Over a decade of time Kandla has highest percentage of share of tonnage i.e percent followed by Vishakhapatnam ie percent. The non-major ports, also known as minor and intermediate ports, have commanded 70 to 80 per cent of the total tonnage handled by all Indian non-major ports over the past two decades. The share of non-major ports of Gujarat has been high for long now, the increase in tonnage has significantly picked up since P a g e

21 Table 7.8 Numbers of APMC and Market Yards in Gujarat Market Committees (APMC) Main Yards of Market Committees Sub-Market Yards Source: India Stat Market (2010) The state Government had amended the APMC Act to provide competition, allow spot markets, and contract farming. As shown in Table 7.8. the APMC during the year not very significant changes are witnessed. Very limited progress in these areas in the state has been made but concrete macro level data is yet not available on their functional details. The farmers/ producers would certainly stand to gain. The number of sub market yards has reduced from 226 to 215 during the year , indicating that more efforts need to be put in for providing farmers appropriate price of their products. 7.3 Trend, Variability, and Growth Analysis of area, production and yield of selected agro commodities: Keeping in view objectives of the study, data collected from different sources were analyzed. Compound growth rates in area, production and yield of selected agro commodities were worked out for the Gujarat state as well as India. The growth rates were worked out for two sub periods; namely, pre WTO period ( to ) and post WTO period ( to ) and for the overall study period of to For estimating the growth of area, production, productivity, and exports, the compound growth rate was computed using the following function. Y = a bt Log Y = Log a + t Log b Where Y = Area, Production, Productivity, exports. 198 P a g e

22 t = Time variable a = Constant b = (1+r) = where r = (compound growth rate) = (Antilog b-1) x 100 Variability has been examined by computing coefficient of variation CV= Standard Deviation X 100 Mean Index of Instability = CV X (1- R²) Coefficient of variation was multiplied by (1- R²) the formula suggested by Cuddy and Della (1978) was used to compute the index of Instability. The empirical study is based on data analysis using statistically and econometric methods. Period-wise growth rates and trend-breaks are worked out to find out any possible shifts in the trend behavior of the trade variables under study. While growth rates are worked out by using Regression method, for the year s pre and post WTO trend breaks. Production of Groundnut in Gujarat and India. In Gujarat groundnut production is undertaken predominantly in Saurashtra region. The data related to area, production and productivity is presented in table 7.9 The state of Gujarat is a principal and highest producer of groundnut and contributes to major share of demand for edible oil of people in the country. The data related to area allocated, production and yield of groundnut in Gujarat and India are given in table 7.9. The data indicates that total area allocated for groundnut production in Gujarat and India has declined by10 percent approximately in compared to In Gujarat area allocated gas declined during pre WTO era. While the same for India increased from to by about 10 percent during pre WTO period while it declined by around 18 percent during post WTO period. Thus, the area under cultivation for groundnut in Gujarat as a percent of area under cultivation for India has remained stagnant (around 30 percent) between and , although during pre WTO era it had declined by almost 24 percent in It is clear that during post WTO 199 P a g e

23 period farmers in Gujarat have allocated greater percent of land although total land under groundnut has remained same. Overall, there is a large variation in land allocation to groundnuts for India, ha in , while it declined to hectares in This variability has been less, for Gujarat. The period during post WTO has seen even less variability in land allocation to groundnut in Gujarat. Thus, farmers in Gujarat have become more consistent in allocation of land to groundnut cultivation in post WTO era. The state of Gujarat also contributes to a healthy share of groundnut production in India both during pre and post WTO periods. However, the share to all India production has varied considerably during pre WTO period from a low of 8.6 percent in to high of 32.3 percent in , as well as post WTO period from a low of 10.7 percent in to high of 55 percent during the year Thus, it is evident that during post WTO period Gujarat is more consistently contributing to a higher percent to total all India production of groundnut. The table 7.9, further reveals that yield of groundnut has increased from 741 kg per hectares in to 1393kg per hectare in , indicating doubling of yield, the average yield during post WTO period is much higher than average yield during pre WTO era. However, during post WTO years the yield has not shown much improvement and has stagnated around kg per hectares in Gujarat. Some years during post WTO period have a very low yield, which corresponds to failure of groundnut crop in Gujarat. The yield of groundnut in Gujarat, however, is much higher than yield for all India. The table 7.9A provides regression result for area, production, and productivity of groundnut in Gujarat and India during pre and post WTO period. It is clearly evident from intercept value that average production and productivity in Gujarat has improved during post WTO period in comparison to pre WTO period while the same has not improved much and remained stagnant for India as a whole. The table further reveals that in Gujarat growth of production and productivity during post WTO period is higher compared to pre WTO period. This indicates improvement in efficiency in groundnut production since WTO implementation in Gujarat. In contrast to Gujarat, growth in production and productivity for India is much less. The T value decline for Gujarat as well as for India during post WTO period compared to the pre WTO 200 P a g e

24 period, indicating reduced variability in production of groundnut. Compared to India, Gujarat recorded less variability in production of area and productivity during post WTO period; this may be owing to improved agriculture practices adopted by farmers relative to their counterparts in India. 201 P a g e

25 Table 7.9 Area, production, Yield of Groundnut in Gujarat & India ( ) Pre and Post WTO regime. Gujarat '000 Hectares '000 tonnes '000 tonnes Area Area Total production 'Kg./Hect '000 Hect Total Kg./Hect Year sown (%) production (%) Yield Area sown production Yield Source: Ministry of Agriculture, Govt. Of India, Pre WTO India Post WTO P a g e

26 Table 7.9A: Regression Results on Area, Production, Productivity of Groundnut in Gujarat and India ( to ) Calculation from secondary data 203 P a g e

27 Table 7.9 B: Regression Results and Descriptive statistics of Groundnut Cultivation in Gujarat and India ( to ). Agri. Commodities Gujarat India '000 Hectares Area sown '000 tonnes Total production 'Kg./Hectare Yield '000 Hectares Area sown '000 tonnes Total production 'Kg./Hectare Yield Groundnut Average SD CV Index of instability Calculation from secondary data P a g e

28 The growth analysis was carried out with the help of regression coefficients. The regression coefficient for Gujarat State and India has shown negative growth with decreasing trend in area under groundnut. These regression coefficients were also statistically significant at 1 percent level of probability. It can be seen from Table 7.9 B that there has been more variation in productivity in groundnut production (55.16 percent) for Gujarat State than (19.21 percent) for all India. The instability in productivity was more for Gujarat compared to all India average. This may be due to unfavorable monsoon and prevalent dry spells during the month of September which has badly affected the pod formation in crop resulting in reduction in yield per hectare and thereby decreasing the productivity of groundnut and some unusually goods years. However, area allocation in Gujarat shows very less instability compared to all India. This indicates that farmers are consistent in allocating land to groundnut in Gujarat. During the post-wto period, the growth rate for area and production was increased. Thus, variation in growth rate of production between post-wto periods was due to protocols developed by board for multiplication of groundnut using the tissue culture route. Advance technologies have ensured genetic purity and selection of appropriate time for planting as demanded by the market led to the increase in productivity, as the prices shot up in international market. Production of Cotton in Gujarat and India Cotton is a very important cash crop in India and the country ranks first in cotton area in the world and second in cotton production. About 15 million farmers in the country spread across 10 states are engaged in cotton production, on an area of about 10 million hectares. India also holds a prominent position in cotton textile industry in the world, manufacturing products for a large number of end uses in India and abroad. Despite being one of the top most cotton growing countries in the world, the cotton yields in India are one of the lowest. A major reason for this low productivity is the severe insect pest incidence, which causes extensive crop damage. The major cotton producing states in the country are Maharashtra, Gujarat, Andhra Pradesh, Punjab and Tamil Nadu, and among them Maharashtra alone accounts 205 P a g e

29 for over one-third of the cotton area in the country. The state of Gujarat has been one of the leading cotton producer states in India. In , it accounted for 20 percent of area and almost 25 percent of cotton production of India. However, as revealed by data in table 7.10, area under cotton cultivation declined, in absolute term as well as percent wise of all India level by the year prior to implementation of WTO. Since, implementation of WTO, it is evident from table 7.10 that area allocated to cotton in Gujarat has increased consistently to 25 percent of all India in the year , the cotton production has also increased to almost 32 percent of all India levels. The increase in share of production was especially visible from percent in to percent in , when it attained highest share in all India production. This may be attributed to early and widespread adoption of Bt cotton cultivation by farmers in Gujarat compared to farmers in rest of India. The comparison of productivity also reveals that Gujarat has higher productivity compared to all India levels throughout the period of study. For all years with a few years of exceptions the yield of cotton production in Gujarat is higher on an average by approximately 20 percent during pre and post WTO period, except for a few exceptional years of bad years for cotton cultivators. Overall the productivity has increased by more than 2.5 times in Gujarat compared to less than 2.5 time for India. Thus, Gujarat has succeeded in improving productivity more compared to India as clear from data in table Table 7.10: Area, production, and Yield of Cotton in Gujarat & India ( ) Pre and Post WTO Regime '000 Hect Area sown Gujarat '000 Hect Area India Year Area (%) '000 bales Total production Prod n (%) Kg./Hect Yield sown '000 bales Total production Kg./Hect Yield P a g e

30 Pre WTO Post WTO Source: Ministry of Agriculture, Govt. Of India, P a g e

31 Table ARegression Results on Area, Production, Productivity of Cotton in Gujarat and India ( to ) Pre and Post WTO Regime Calculation from secondary data 208 P a g e

32 Table 7.10 B: Regression Results and Descriptive statistics of Cotton Cultivation in Gujarat and India ( to ) Gujarat India Agri. Commodities '000 Hectares '000 bales 'Kg./Hectare '000 Hectares '000 bales 'Kg./Hectare Area sown Total production Yield Area sown Total production Yield Cotton Average SD CV Calculation from secondary data Index P a g e