Growth of Crop-output in Kerala Is it Real or monetary? +

Transcription

1 ArthaJ SocSci,, (205), 8- ISSN X doi.org/.272/ajss.35.5 Growth of Crop-output in Kerala Is it Real or monetary? + N Karunakaran* Abstract The main feature ofthe development of agriculture in Kerala in the last five decades is the change in cropping pattern and shift in cultivation, that is, shift in the cultivated area under food grain crops to non-food grain crops and shift in the cultivated area under one non-food grain crop to another non-food grain crop. The growth of agricultural crop output and productivity has been affected by many factors. The sources of output growth like area, yield and cropping pattern have relevance in deciding the programmes of agricultural development and priorities of investment in it. The growth of agricultural output in the state like that of other parts of India is influenced by the gross cropped area, productivity and level of prices. The increase in the agricultural crop output is decomposed into real and monetary components. The real component includes area, yield, cropping pattern and interaction. The monetary elements consist of the pure price, price yield, price cropping pattern and total interaction. From the analysis of the + Paper presented in the three day international conference on 'Economic Reforms, Growth, and Sustainable Development: Changing Role of Institutions at Central University of Kerala held during -8, February 205. * Head of the PG Department of Economics, EKNM Government College,Elerithattu, Elerithattu Post, Nilishwar Via, Kasaragod Dist, Kerala, India; narankarun@gmail.com 8

2 Artha J SocSci ISSN X decomposition of output growth into real and monetary components of Kerala agriculture in the last five decades, the general conclusions arrived at are: price factor is the major element in determining the relative contribution of different elements to the growth of crop output and the overall growth in the Kerala agriculture is monetary growth in nature rather than real growth. Keywords: Kerala; crop output; real growth; monetary growth. Introduction The agricultural development experience of Kerala since the seventies has shown a sharp decline in the area under food crops and the continuous expansion of non-food crops. Area under food crops decreased from7 percent of the total cropped area to 3 percent; whereas the area under non-food crops went up from 33 percent to 87 percent. The agriculture-scenario at present indicates a heavy concentration of non-food crops. The predominance of crops dependent on world market conditions and the dominance of perennial crops against annual or seasonal crops are two main peculiarities of the cropping pattern of agriculture in Kerala. The emergence of cash crops as a dominant sector over the last four decades is also notable. The shift in cultivation from food grain crops to non-food grain crops and from one non-food grain crop to another non-food grain crop emerged. In the state there are many factors affecting the growth of crop output and productivity. The sources of output growth like area, yield and cropping pattern have relevance in deciding the programmes of agricultural development and priorities of investment in it (Ranade CG, 80). The growth rates as such offer no explanation for the desperate performance of agriculture. It is also important to find why growth rates differ from one another so that the bottlenecks could be removed to achieve speedy development in agriculture (Sikka BK and Vaidya CS, 85). Though there are many elements of inclusive growth in agriculture, for rapid development of this sector, an attempt to analyse the growth of agricultural production in the state in terms of its determinants, viz, area, productivity and prices is very essential. Changes in the gross cropped area, productivity and level 0

3 N Karunakaran Growth of Crop-output in Kerala of prices are important components influencing the growth of aggregate agricultural output (Karunakaran N, 203). Therefore, an investigation into the growth of crop-output in Kerala in real and monetary terms for the last five decades is attempted in this paper. Literature Review, Materials and Methodology Decomposition of the growth of crop-output is an old concept in agricultural growth analysis. Still it has its usual importance to researchers and policy makers for identifying the root causes of high and low growth of agricultural output. The first systematic study about this was by Minhas and Vaidyananthan (5). The growth of crop-output was decomposed into a set of physical factors, such as, area, yield and rate of cropping pattern as well as interaction between the latter two. Later, Minhas developed a seven-component version of his additive scheme which was subsequently used by Mishra VN (7) for his study. RajenderSondhi, et.al (75), VidhyaSagar (77), DharmNarain (77), Dashora SK, et.al (2000) and Kurosaki Takashi (2002) used the same as well as a modified version of the Minhas- Vaidyananthan model. Besides these methodology used for decomposition, Ashok Parikh (), Dayal () and Bhalla, et.al (7) adopted multiplicative schemes, instead of the additive schemes, in their decomposition exercise. Table. The Decomposition Model Crop c c c n Price weight in year Proportion of area in year Per hectare yield in year 0 t 0 t 0 t w w t c c t y y t w 20 w 2t c 20 c 2t y 20 y 2t w n0 w nt c n0 c nt y n0 y nt

4 Artha J SocSci ISSN X Source: - Kaushik KK (3), Agricultural Transformation in a Developing Economy, Kanishka Publishers and Distributors, Delhi, pp: 28. Kurien CT and Joseph James (7) and Kaushik KK (3) used a procedure which was a modification of the Minhas-Vaidyananthan method to study the contribution of different elements to the growth of crop-output in Tamilnadu and Himachal Pradesh. This procedure is used to study the overall growth of crop-output in Kerala in real and monetary terms and is shown in Table.. Observing the value of output in period zero (V 0) and in period t (V t), the difference between the two is decomposed into eight component elements, viz, (i) change in area, (ii) change in yield per hectare, (iii) change in cropping pattern, (iv) the interaction between yield and cropping pattern, (v) the price change, (vi) the interaction between price and yield, (vii) interaction between price and cropping pattern and (viii) interaction between price, cropping pattern and yield. The c and y are the crops and their yields and w are the prices in period zero (0) and period t. If V 0 and V twill represent the value of output in the two periods and A 0 and A t will denote gross cropped area in years 0 and t respectively, then by definition, V 0 = A 0 Σ iwi 0 ci 0 yi 0 V t = A tσ iwi tci tyi t Terminal period output valued at base year prices can be said to represent the real output of the terminal year to be denoted by P t. That is, P t = A t Σ iwi 0ci tyi t The difference in the value of aggregate output (V t- V 0) can be disaggregated into its real and monetary components with the help of the concept: V t - V 0 = (V t - P t) + (P t - V 0) The first term on the right hand side V t - P t = A tσ iwi tci tyi t - Σ iwi 0ci tyi t is the difference between the terminal year aggregate output valued in terms of terminal year prices (wi t) and base year prices (wi 0), and 2

5 N Karunakaran Growth of Crop-output in Kerala hence can be thought of as a measure of the monetary component in increase in output. The second term P t - V 0 = A t Σ iwi 0ci tyi t - A 0 Σ iwi 0ci 0yi 0 is the difference between real output in the terminal year and real output in the base year, and hence can be said to be a measure of the real component in increase in output. (P t - V 0) can be decomposed as shown below. That is, (P t - V 0) = (A t - A 0) Σ iwi 0 ci 0 yi 0 + A t Σ iwi 0 ci 0 (yi t- yi 0) + A t Σ iwi 0 yi 0 (ci t- ci 0) + A t Σ iwi 0 (yi t- yi 0) (ci t- ci 0) () In the decomposition scheme (), the first term on the right hand side is the area, the second the yield, the third the cropping pattern and the fourth interaction, representing the interaction between yield and changes in cropping pattern. The term area reflects the impact of growth of average area on the increase in the level of production, keeping all other influences inoperative during the period. Yield reflects the impact of the growth of average yield and the cropping pattern reflects the impact of cropping pattern changes during the current period as compared to the base period. The interaction between yield and cropping pattern signifies the influence of these factors over others in bringing about the changes in production. The scheme () shows the disaggregation of the real component. A decomposition of the monetary component is shown in scheme (2). V t - P t = A t Σ ici 0yi 0 (wi t - wi 0) + A t Σ ici 0 (wi t - wi 0) (yi t - yi 0) + A t Σ iyi 0 (wi t - wi 0) (ci t - ci 0) + A tσ i (wi t - wi 0) (ci t - ci 0) (yi t - yi 0) (2) 3

6 Artha J SocSci ISSN X The first component in the scheme (2) is the pure price, that is, in the absence of any change in the total output (ci 0yi 0 is total output of the i th crop) an increase of this magnitude in the value of output is solely due to rise in prices. The second and third terms are respectively the first order interactions between price and yield rate and price and cropping pattern, under constant cropping pattern and constant yields. These s signify the influence of any of the two factors over the others in bringing about changes in production. The last term is the second order interaction term between the three variables considered, viz, changes in prices, cropping pattern and yields and may be called the total interaction. The variables and notations used in the model are: A 0 = Gross cropped area in base year zero (0), A t = Gross cropped area in terminal year (t), V 0 = Value of output in period zero (0), V t= Value of output in period t, P t = Real output of the terminal year (t), ci 0 = Proportion of the area of the i th crop in Gross cropped area in the base year, yi 0 = Yield of the i th crop in the base year, wi 0 = Farm harvest price of the i th crop in the base year, ci t= Proportion of the area of the i th crop in the terminal year (t), yi t= Yield of the i th crop in the terminal year (t), wi t = Farm harvest price of the i th crop in the terminal year (t). The subscript 0 and t refer respectively to the base year and terminal year. Subscript i is used for the i th crop. Results and Discussion Time series analysis of acreage, production and productivity data of twelve major crops in Kerala during the last five decades (Table.2) revealed the performance of these crops in terms of growth of area, production and productivity.

7 N Karunakaran Growth of Crop-output in Kerala Table.2. Compound Growth Rates of Area, Production and Productivity of major crops during the last five decades in Kerala. Crops Area Production Productivity Rice Coconut Arecanut Rubber Pepper Cashewnut Tapioca -2.3 ** Coffee Tea Cardamom **** Ginger * Banana and other plantains *0.23 * - Significant at probability level 0.0 ** - Significant at probability level 0.03 **** - Significant at probability level 0. Source: - Karunakaran. N (203), Growth Trends of Area, Production and Productivity of Crops in Kerala: A Fifty Years Experience, Southern Economist, Vol. 5, 7, pp: The production of major food crops, rice and tapioca reached negative growth rates due to the declining trend of their cultivation area; but the production rate of banana and other plantains increased due to the increase in cultivation area. Both area and productivity growth rates influenced the production rates of nonfood crops. Pepper production growth and growth rate of coconut production was determined more by increase in area. Increase in yield growth rate was responsible for increase in production growth rate of arecanut. Productivity growth rate was responsible for good production growth rate for ginger. Decline in area and yield growth rate was responsible for the negative growth rate in production of cashewnut. For cardamom and tea only yield growth rate is helpful for production growth. In the case of coffee both area and yield growth rates helped the increase in production growth rate. The outstanding performance of rubber in the production 5

8 Artha J SocSci ISSN X growth rate is as a result of the combined growth of area and productivity. Table.3Contribution of different elements in real and monetary terms to the growth of crop-output during the last five decades in Kerala (in %). 0 s 70 s 80 s s 2000 s Five decades vt vo Overall growth vo Area Yield Cropping pattern Interaction Pure price Price Yield Price cropping pattern Total Interaction Monetary Growth (7+8++) Total (+) Source: - Karunakaran N (203), Relative contribution of different elements to the Growth of principal crop output in Kerala. Indian Development Review, (2), The growth of crop-output in Kerala in real and monetary terms was done for 2 major crops during the last five decades considering five sub-periods. Since the period can be divided in different ways, and the result will vary accordingly, decade wise classification of the entire period into five sub-periods was undertaken. In choosing the crops for analysis, the primary consideration has been to ensure maximum coverage of cropped area. The results of the analysis are summarised in Table.3 and is decomposed into real growth and monetary growth. With 3 percent of the overall growth being real and percent being monetary in 0 s; and percent being real and percent being monetary in 2000 s.

9 N Karunakaran Growth of Crop-output in Kerala The results in Table.3 shows that the real growth has tended to decline from 3 percent during0 s to percent in 2000 s and monetary growth has correspondingly risen from percent to percent. Comparison of the real and monetary growth during different periods revealed the dominance of monetary growth over real growth in all the periods under study. More specifically, the overall growth in Kerala in the agriculture sector is actually monetary growth rather than real growth. Conclusion The growth of agricultural crop output in Kerala like that of other parts of India is influenced by the gross cropped area, productivity and level of prices. The increase in agricultural crop-output is decomposed into real and monetary components. The real component includes area, yield, cropping pattern and interaction. The monetary elements consist of the pure price, price yield, price cropping pattern and total interaction. From the analysis of the output growth of major crops into real and monetary components of Kerala agriculture in the last five decades, the general conclusions derived are: there are fluctuations in the overall growth of crop-output in Kerala over different periods; there is a perceptible increase in the monetary growth and decline in the real growth of crop-output; price factor is the major element in determining the contribution of different elements to the growth of crop-output; overall growth in the Kerala agriculture is monetary growth in nature rather than real growth; among twelve crops studied during different periods, rubber is the only crop, exhibited positive values in all the components in the analysis and for all crops during the overall period, the share of monetary components is more than 0 percent for the overall growth of output of these crops compared to real components. References Ashok Parikh (), State wise growth rates in Agricultural output, an economic analysis, ArthaVijnana, 8(),

10 Artha J SocSci ISSN X Bhalla GS and Alagh YK (7), Performance of Indian Agriculture: a district wise study, Planning Commission, Govt. of India, and Published by Sterling Publishers, New Delhi. Dashora SK, Dhaka JM, Agarwal NJ (2000), Growth in production of important pulse crops in Rajasthan, Agricultural Situation in India, 52(8), November. Dayal R () Agricultural growth rates and their components, Indian Journal of Agricultural Economics, 2(), DharmNarain (77), Growth of Productivity in Indian Agriculture, Indian Journal of agricultural Economics, 32(), - Govt. of Kerala (203), Economic Review, State Planning Board, Thiruvananthapuram, Kerala, -. Kannan KP and Pushpangadan A (88), Agricultural Stagnation in Kerala: An Exploratory analysis, Economic and Political Weekly, 23(3), A20-A28. Karunakaran N (203), Growth Trends of Area, Production and Productivity of Crops in Kerala: A Fifty Years Experience, Southern Economist, 5(7), Karunakaran N (203), Relative contribution of different elements to the Growth of principal crop output in Kerala. Indian Development Review, (2), Karunakaran N and Gangadharan K (203), Growth of Output of Principal Crops in Kerala: A Decomposition Analysis, Middle East Journal of Scientific Research, 7(8), Kaushik KK (3), Growth of Agricultural Production: a component analysis, Agricultural Transformation in a Developing Economy, Kanishka Publishers and Distributors, Delhi, Kurian CT and Joseph James (7), Economic changes in Tamil Nadu: 0-70, A regionally and functionally Disaggregated analysis, Allied Publishers Pvt. Ltd, New Delhi, 2-3. Kurosaki Takashi (2002), Agriculture in India and Pakistan, 0-5, A further note, Economic and Political Weekly, 37(30), July 27 August 2 Mani KP (200), Cropping pattern in Kerala - spatial inter-temporal analysis, Kerala Economy: Trends during the post-reform period (Ed), by Rajan K, Serials Publications, New Delhi, -8. Minhas BS and Vaidyanathan A (5), Growth of crop output in India, 5-5 to 58-: An analysis by component elements, 8

11 N Karunakaran Growth of Crop-output in Kerala Journal of the Indian Society of Agricultural Statistics, 7(2), Mishra VN (7), Growth of crop output in Gujarat: A component analysis Anvesak, (), -5. RajenderSondhi and Karam Singh (75), Component Analysis of Food grain economy of India, Journal of Social and Economic Studies, 3(2), Ranade CG (80), Impact of cropping pattern on agricultural production, Indian Journal of Agricultural Economics, 35(2), Sikka BK and Vaidya CS (85), Growth rates and cropping pattern changes in agriculture in Himachal Pradesh, Agricultural Situation in India, 3(), VidhyaSagar (77), A component analysis of Growth of agricultural productivity in Rajasthan: 5- to -7, Indian Journal of Agricultural Economics, 32(), -. Annexure Table Decomposition of the growth of crop-outputduring the last five decades in Kerala 0 s Crops c 0 y 0 w 0 c t y t w t Rice Coconut Arecanut Rubber Pepper Cashewnut Tapioca Coffee Tea Cardamom Ginger Banana and other plantains A 0 = 23 ( 000 hectare) A t = 2 ( 000 hectare)

12 Artha J SocSci ISSN X 70 s Crops No c 0 y 0 w 0 c t y t w t Rice Coconut Areca nut Rubber Pepper Cashew nut Tapioca Coffee Tea Cardamom Ginger Banana / plantains A 0 = 233 ( 000 hectare) A t = 285 ( 000 hectare) 80 s Crops c 0 y 0 w 0 c t y t w t Rice Coconut Areca nut Rubber Pepper Cashew nut Tapioca Coffee Tea Cardamom Ginger Banana / plantains A 0 = 2885 ( 000 hectare) A t = 30 ( 000 hectare) 0

13 N Karunakaran Growth of Crop-output in Kerala s Crops c 0 y 0 w 0 c t y t w t Rice Coconut Areca nut Rubber Pepper Cashew nut Tapioca Coffee Tea Cardamom Ginger Banana / plantains A 0 = 3020 ( 000 hectare) A t = 307 ( 000 hectare) 2000 s Crops c 0 y 0 w 0 c t y t w t Rice Coconut Arecanut Rubber Pepper Cashew nut Tapioca Coffee Tea Cardamom Ginger Banana / plantains A 0 = 3022 ( 000 hectare) A t = 2 ( 000 hectare)

14 Artha J SocSci ISSN X c 0,c t Share of area (%) of the total cropped area, y 0,y t Output in Kg per hectare, w 0, w t Price per quintal (In Rupees). Source: - Computed from (i) Statistics for planning (various issues), Department of Economics and Statistics, Govt. of Kerala, Thiruvananthapuram. (ii) Economic Review (various issues), State Planning Board, Govt. of Kerala, Thiruvananthapuram. Table 5 Decomposition of the growth of crop-output in Kerala during thelast five decades formajor crops (In%) Five Decades Crops c 0 y 0 w 0 c t y t w t Rice Coconut Arecanut Rubber Pepper Cashew nut Tapioca Coffee Tea Cardamom Ginger Banana / plantains A 0 = 23 ( 000 hectare) A t = 2 ( 000 hectare) - Rice 0 s 70 s 80 s s 2000 s 5 decades Increase in value of output 2 Area Yield Cropping pattern Interaction Pure price

15 N Karunakaran Growth of Crop-output in Kerala 8 Price Yield Price cropping pattern Total Interaction Monetary Growth (7+8++) 2 Total ( +) Coconut 0 s 70 s 80 s s 2000 s 5 decades Increase in value of output Area Yield Cropping pattern Interaction Pure price Price Yield Price cropping pattern Total Interaction Monetary Growth (7+8++) 2 Total ( +)

16 Artha J SocSci ISSN X 3- Arecanut 0 s 70 s 80 s s 2000 s 5 decades Increase in value of output 2 Area Yield Cropping pattern Interaction Pure price Price Yield Price cropping pattern Total Interaction Monetary Growth (7+8++) 2 Total ( +) Rubber 0 s 70 s 80 s s 2000 s 5 decades Increase in value of output Area Yield Cropping pattern Interaction Pure price Price Yield Price cropping pattern

17 N Karunakaran Growth of Crop-output in Kerala Total Interaction Monetary Growth (7+8++) Total ( +) Increase in value of output 5 Pepper 0 s 70 s 80 s s 2000 s 5 decades Area Yield Cropping pattern Interaction Pure price Price Yield Price cropping pattern Total Interaction Monetary Growth (7+8++) Total ( +) Cashewnut 0 s 70 s 80 s s 2000 s 5 decades Increase in value of output Area Yield Cropping pattern Interaction Pure price

18 Artha J SocSci ISSN X 8 Price Yield Price cropping pattern Total Interaction Monetary Growth (7+8++) 2 Total ( +) Tapioca 0 s 70 s 80 s s 2000 s 5 decades Increase in value of output Area Yield Cropping pattern Interaction Pure price Price Yield Price cropping pattern Total Interaction Monetary Growth (7+8++) 2 Total ( +) Coffee 0 s 70 s 80 s s 2000 s 5 decades Increase in value of output Area Yield Cropping pattern Interaction

19 N Karunakaran Growth of Crop-output in Kerala 7 Pure price Price Yield Price cropping pattern Total Interaction Monetary Growth (7+8++) Total ( +) Increase in value of output Tea 0 s 70 s 80 s s 2000 s 5 decades Area Yield Cropping pattern Interaction Pure price Price Yield Price cropping pattern Total Interaction Monetary Growth (7+8++) Total ( +) Increase in value of output Cardamom 0 s 70 s 80 s s 2000 s 5 decades Area Yield

20 Artha J SocSci ISSN X Cropping pattern Interaction Pure price Price Yield Price cropping pattern Total Interaction Monetary Growth (7+8++) Total ( +) Ginger 0 s 70 s 80 s s 2000 s 5 decades Increase in value of output 2 Area Yield Cropping pattern Interaction Pure price Price Yield Price cropping pattern Total Interaction Monetary Growth (7+8++) 2 Total ( +)

21 N Karunakaran Growth of Crop-output in Kerala 2 - Banana and other plantains 0 s 70 s 80 s s 2000 s 5 decades Increase in value of output Area Yield Cropping pattern Interaction Pure price Price Yield Price cropping pattern Total Interaction Monetary Growth (7+8++) 2 Total ( +) Source: - Computed from Table