167 Chapter-S Agricultural Production and Income of Households Faizabad is an important agricultural developing district of Eastern Uttar Pradesh. Agriculture and its allied activities are main sources of livelihood of rural people in this district. This district has three-crop seasons namely-kharif, Rabi and Zaid. However, only Kharif and Rabi crop seasons have been considered here for study because the contribution of Zaid being almost negligible. Only agricultural production has been taking into account for calculating Farm Business Income (FBI) of farmers. Agricultural production comprises of Rabi (wheat, Gram, Sarso and Masoor) and Kharif(Paddy, sugarcane and Maize). 5.1: Per Acre Production ofrabi Crops Per acre, production of wheat is highest among the Rabi crops. Wheat production occupies a major share in Rabi crops. Even Uttar Pradesh shares a significant proportion of India's total Wheat production. However, the production of Wheat crop is distributed not equally across the Blocks of Faizabad district in Uttar Pradesh. Sarso and Masoor are equally popular. Masoor Dal (Pulse) is not generally consumed in Faizabad district. Therefore, Masoor is sold elsewhere or exported out of the state. Here production performance of various rabi crops is discussed for borrowers and non-borrowers to know the impact of credit on production. Non-borrower Households: Table-5.1 presents the per acre production of various Rabi crops by farm size for five blocks of Faizabad district. When as one moves from small to big farm size, the per acre production of Wheat decreases
168 Table-5.1: Per- Acre Production (quintal) of Rabi Crops for non-borrowers Farm Crops Blocks of Faizabad District Size Sohawal Milkipur Amaniganj Rudauli Avg. c.v. Tarun (%) Marginal Wheat 12.24(8) 12.43(12) (43) Gram 7.80(8) 8.33(12) Sarson 5.56(4) 6.02(6) Masoor 6.09(2) 5.91(4) Small Wheat 13.62(7) 13.95(9) (32) Gram 8.33(7) 8.95(9) Sarson 6.13(4) 6.38(6) Masoor 6.37(3) 6.28(5) Medium Wheat 13.26(3) 13.29(6) (19) Gram 7.04(3) 7.65(6) Sarson 5.63(2) 5.94(4) Masoor 5.63(2) 5.88(3) Large Wheat 13.11(2) 13.18(3) (8) Gram 6.54(2) 6.27(3) Sarson 5.11(2) 5.38(3) Masoor 5.47(1) 5.25(2) All Wheat 13.15(20) 13.11(30) (102) Gram 6.42(20) 6.80(30) Sarson 6.10(12) 5.63(19) Masoor 5.09(8) 5.03(14) Source: Primary Survey ( 2003 ) Note: Frequencies in bracket 13.69(0) 14.02(13) 8.31(0) 7.94(13) 5.39(0) 5.28(7) 5.87(0) 6.06(6) 14.04(0) 15.08(7) 9.04(0) 8.79(8) 6.33(0) 5.76(5) 6.19(0) 7.17(4) 13.56(2) 14.02(4) 8.13(2) 8.11(4) 5.86(1) 5.02(3) 5.23(1) 6.04(2) 13.28(1) 13.26(1) 5.98(1) 6.06(1) 5.27(1) 4.98(1) 5.01(1) 5.67(1) 13.43(3) 14.29(26) 6.86(3) 7.12(26) 5.21(1) 5.46(16) 5.67(1) 6.13(13) 13.77(10) 13.18(43) 6.26 8.44(10) 7.36(43) 3.39 6.1196) 5.87(23) 6.59 5.35(5) 5.91 (1 7) 5.09 15.23(8) 13.42(32) 5.02 9.03(8) 7.54(32) 3.35 6.36(4) 5.93(19) 4.22 6.25(3) 6.01(15) 6.30 13.98(4) 12.172(19) 2.67 8.06(4) 7.42(19) 5.98 4.99(2) 5.33(12) 8.31 5.78(1) 5.46(9) 5.39 12.91(1) 11.98(8) 1.11 7.34(1) 6.54(8 8.52 4.83(0) 5.07(7) 4.30 4.99(0) 5.02(5) 5.57 13.97(23) 13.45(102) 3.34 8.21(23) 7.27(102) 3.64 5.57(12) 5.63(60) 4.33 5.59(9) 5.19(45) 4.61 from 13.63 quintals to 13.11 quintals in Sohawal for non- borrowing farmers. The similar trend occurs in Milkipur and Amaniganj. When one moves from marginal to big farm size, per acre production of Wheat decreased from 14.02 to13.26 quintal in Rudauli Block. The similar trend exists with Tarun Block also. Per acre
169 production of Gram, Sarso and Masoor decreases with every rise in the size of farm. One may conclude that per acre production decreases with rise in the sizes of farms, as shown in table-5.1. It shows negative relationship between farm size and per acre production. Borrower Households: The performance of these households has been shown in table-5.2. It shows that per acre production of wheat is the highest and lowest of Sarso in Faizabad district for borrowing farmers. Amanigang, Rudauli and Tarun blocks have comparatively higher production of wheat than Sohawal and Milkipur blocks. However, in the case of Gram and Sarso, Sohawal and Milkipur blocks play comparatively better role than other three blocks. Per acre production of all crops, in general, decreases with rise in the farm size, which shows inverse relationship between farm size and its productivity. The similar trend occurs with Gram, Sarso and Masoor because credit has positive impact on the production performance. From above it becomes clear that there is negative relationship between farm size and per acre productivity of Rabi crops. The number of cultivating borrowing households increases with rise in the farm size. The C.V. ratio decreases with rise in the farm size. One may conclude from this section of study that (a) there is inverse relationship between farm-size and per acre productivity. (b) There is positive relationship between number of borrowing cultivating households and farm-size while there is negative relationship between non-borrowing cultivating households and farmsize. (c) The C.V. ratio ofrabi crops decreases with rise in the farm size. (d) The per acre productivity in the case of borrowing households is more than nonborrowing one.
170 Table-5.2: Per- Acre Production (quintal) of Rabi Crops for borrowers Farm Crops Blocks of Faizabad District Avg. c.v Size Sohawal Milkipur Amaniganj Rudauli Tarun (%) Marginal Wheat 13.11(11) I 1.46(8) 14.06(14) 13.97(10) 14.12(10) 12.41(53) 8.47 (53) Gram 8.07(11) 9.63(8) 9.58(14) 7.48(10) 9.02(10) 8.53(53) 10.85 Sarson 6.77(5) 7.81(4) 7.07(10) 6.95(8) 7.02(7) 8.06(35) 5.57 Masoor 5,93(4) 6.21(3) 6.49(9) 6.53(8) 6.86(11) 6.07(31) 5.10 Small Wheat 14.02(12) 14.58(9) 15.11(15) 15.49(11) 15.33(11) 14.52(58) 4.04 (58) Gram 10(12) 10.05(9) 10.71(15) 9.93(11) 9.81(11) 8.57(58) 3.44 Sarson 8.22(7) 8.53(6) 8.80(11) 7.88(9) 8.05(9) 8.11942) 4.46 Masoor 7.80(6) 6.98(4) 7.21(10) 8.01(9) 7.08(8) 6.12(37) 6.20 Medium Wheat 13.95(13) 14.01(10) 14.12(16) 15.06(12) 15.13(11) 11.95(62) 4.07 (62) Gram 10.02(12) 9.53(10) 9.41(16) 9.07(12) 9.03(11) 8.23(62) 4.27 Sarson 7.91(9) 8.02(7) 7.95(12) 7.16(10) 7.96(9) 7.98(47) 4.61 Masoor 6.53(8) 6.01(5) 6.83(11) 7.97(10) 6.90(9) 6.02(33) 10.49 Large Wheat 13.44(6) 13.88(5) 13.97(14) 14.71(3) 14.95(7) 11.55(35) 4.39 (35) Gram 9.58(6) 9.06(5) 9.26(14) 8.49(3) 8.56(7) 8.07(35) 5.16 Sarson 7.43(5) 7.67(4) 7.52(9) 6.93(2) 7.07(6) 7.19(27) 4.25 Masoor 6.01(5) 5.97(4) 6.47(9) 7.81(2) 6.25(5) 5.96(25) 11.66 All Wheat 13.55(208 (208) 13.57(42) 13.18(32) 13.63 (59) 13.42 (36) 13.51(39) ) 4.56 Gram 8.46(41) 8.51(32) 8.39 (59) 8.11 (36)) 8.11 (39) 8.42(208) 4.26 Sarson 7.21(27) 7.58 (21) 7.41 (42) 6.95(29) 7.09(32) 7.06(151) 3.90 Masoor 6.33(23) 6.58(16) 6.01 (39) 6.59(29) 6.11 (29) 6.26(136) 7.07 Source: Primary Survey ( 2003 ) Note: Frequencies in bracket
171 When one compares between borrower and non-borrower households, one finds that borrowing farmers are able to perform better than those of non-borrowing farmers are. 5.2: Per Acre Production of Kharif Crops Paddy is the main Kharif crop in Faizabad district of Uttar Pradesh. The performance of both the borrowing and non-borrowing farmers has been discussing here. Per acre, production of non-borrowing households has been shown in table-5.3. Per acre, production of Sugarcane is much more than other two crops. Per acre, production of Sugarcane is 334 quintals while this figure for Paddy is 21.27 quintals. The block wise performance varies marginally. The farm size wise performance of non-borrowing farmers shows that productivity decreases with rise in the farm size. Per -acre production of paddy in average term, decreased from 22.73 quintal for small farmers to 21.18 quintal for large non-borrowing farmers. It shows inverse relationship between the farm size and per acre production. The co-efficient of Variation decrease with rise in the farm size, which shows that consistency in per acre production, rises with rise in the farm size. The C. V. ratio of Sugarcane is more than other two Kharif crops. Case two deals with borrowing farmers which has been shown in table-5.4. Per acre, production of borrowing farmers shows better performance than those of non-borrowing farmers as shown as in table-5.4.. Per acre production of Paddy is 22.6 quintals for borrowing farmers while this figure for non-borrowing is 21.27 quintals. The similar trend occurs with remaining Kharif crops. The comparative picture shows that credit has a positive impact on the per acre productivity, as shown before.
172 To enhance the per acre production, the number of borrowers should increase. However, one should bring Spread Effect through increasing the number of borrowers among marginal, medium and small farmers because per acre productivity increases when size of farm decreases. One may conclude that (a) per acre production decreases with rise in the farm-size. (b) C. V. ratio is negatively associated with farm size (c) per acre productivity in the case of borrowing is more than those of non-borrowing cultivating households. Table-5.3: Per-Acre Production (quintal) ofkharifcrops for non-borrowers Farm Kharif Blocks of Faizabad district SIZe Crops Sohawal Milkipur Amaniganj Rudauli Tarun Avg. c.v. Marginal Paddy 20.23{7) 21.50{13) (43) Sugarcane 300.24(6) 312.04(12) Maize 8.04(5) 7.94(8) Small Paddy 22.12(8) 22.19(8) (32) Sugarcane 354.13(5) 361.02(8) Maize 10.19(4) 12.90(7) Medium Paddy 22.03(3) 21.98(5) (19) Sugarcane 342.08(3) 350.05(5) Maize 9.04(2) 10.12(5) Large Paddy 21.95(2) 20.88{4) (8) Sugarcane 321.66(2) 319.07(3) Maize 891).45 9.43(2) All Paddy 21.48(20) 21.53(30) (102) Sugarcane 329.62(16) 335.34(28) Maize 8.73(12) 10.19(22) Source: Primary Survey ( 2003 ) Note: Frequencies in bracket (0) 23.03(12) 21.12(11) 20.36(43) (0) 309.45(11) 308.22{11) 301.32(40) (0) 8.38(8) 7.82(8) 8.04(29) (0) 25.11(9) 23.18(7) 22.73(32) (0) 360.16(9) 358.33(7) 357.15(29) (0) 10.36(6) 11.03(6) 11.14(23) 21.07(2) 23.33(4) 22.67(5) 22.31(19) 345.19(2) 346.98(4) 340.05(5) 344.37(19) 11.05(1) 9.06(2) 10.10(4) 9.67(14) 20.23(1) 21.17(1) 21.19(0) 21.18(8) 329.44(1) 326.99{1) 328.06(0) 325.14(7) 10.23(0) 8.11(0) 9.21(0) 9.08(3) 20.75(03) 23.26(26) 22.14(23) 21.27(102) 332.65(3) 335.39(25) 333.46(23) 333.39(95) 10.28(1) 8.28(16) 9.44(18) 9.48(69) 8.47 10.85 5.57 5.10 4.04 3.44 4.46 6.20 4.07 4.27 4.61 10.49 4.39 5.16 4.25
173 Even a high production can't ensure high earning to farmers when cost of cultivation increases and selling price of their product decreases. It suggests that to know the purchasing power of farmers, one should know the cost structure of production, product value of their products and hence their earnings. An improvement of earnings may enhance their borrowing capacity and supplier's supplying capacity. Per acre cost of production for both Kharif and Rabi for both the borrowers and non-borrowers has been dealt with in the next section of this chapter. Table-5.4: Per-Acre Production (quintal) of Kharif Crops for borrowers Farm Kharif BLOCKS OF FAIZABAD DISTRICT size Crops Sohawal Milkipur Amaniganj Rudauli Tarun Avg. c.v. (%) Marginal Paddy 20.91(10) 22.28(9) (53) Sugarcane 316.53(10) 309.58(9) 19.10(13) 25.78(ll) 22.03(10) 308.43(12) 307.ll(ll) 307.06(10) 21.02(53) 308.7(52) 11.11 1.27 Maize 8.16(7) 9.03(8) 10.07(8) 9.69(9) 8.54(8) 8.08(40) 8.67 Small Paddy 23.44(12) 24.13(10) (58) Sugarcane 356.03(ll) 369.44(10) 23.06(14) 26.46(12) 26.10(10) 370.18(13) 369.74(12) 357.41(9) 23.6(58) 356(58) 6.30 1.47 Maize 10.96(8) 13.01(9) 11.65(9) 11.50(10) 11.13(9) 10.65(45) 6.94 Medium Paddy 23.16(13) 23.93(ll) (62) Sugarcane 353.II(12) 361.73(ll) 22.95(15) 26.03(12) 25.91(1l) 360.03(14) 361.18(12) 351.65(10) 22.39(62) 337.54(59) 6.07 1.33 Maize 10.65(10) 12.56(10) 10.51(10) 11.06(ll) 10.58(10) 10.07(51) 7.75 Big Paddy 22.85(7) 22.45(2) (35) Sugarcane 332.18(6) 351.01(2) 22.01(17) 25.17(1) 24.43(8) 353.61(15) 358.70(1) 343.33(6) 21.38(35) 347.76(38) 5.78 2.97 Maize 9.58(5) ll.l3(1) 10.43(12) 10.51(0) 10.48(5) 9.87(23) 5.29 All Paddy 21.59(42) 22.19(32) (208) Sugarcane 331.71(39) 337.94(32) 21.78(59) 22.81(36) 23.6(39) 22.6(208) 338.06(54) 339.18(36) 341.86(35) 335.34(196) 7.23 1.77 Maize 9.51(30) 10.33(28) 10.16(39) 10.29(30) 9.12(32) 10.16(159) 7.12 Source: Primary Survey ( 2003 ) Note: Frequencies in bracket
174 5.3: Per Acre Cost of Production Cost of production is the expenditure incurred in cash plus in kind :md imputed value of family labour. Imputed value of family labour is hidden cost of production. Imputed value, in general, occurs more with marginal and small farmers and less with big and large farmers because most of the family members of former one work on either own or tenant farm for which no remuneration is paid. Overall cost of production depends on (a) technology of production, (b) rate of growth of production of different crops in different regions, (c) prices of inputs and outputs, (d) cropping pattern, (e) cropping intensity, (f) sizes of farms, (g) types of crops and (h) returns to scale and returns to variable factors. In the agricultural sector, technology of production is related with an optimal combination of inputs and outputs, High Yielding Verities of seeds, Thresher, Tractors, and so on. Cost of technology is overhead cost of production in the scale of production. The cost structure for both the borrowing and non-borrowing cultivating households has been shown in table-5.5 and 5.6 respectively. Per acre, cost of production for borrowing farmers is comparatively more than to those of non-borrowing because in this case borrowers have to pay installments, stationeries, intermediaries cost and so on. One more point may be noted here that per acre cost on all heads except wages of labourers decreases with rise in the farm size. Wages to labourers increase with rise in the farm size. Per acre, cost of Kharifis more than that ofrabi. There are many reasons of being the high cost of Kharif crops. First, Kharif crops require more water than those of Rabi crops. Second, Per acre labour requirement for Kharif crops is more than Rabi crops. Third, Per acre need of insecticide and fertilizer for Kharif crops is more than that
175 of Rabi crops. Fourth, Both the cash and kind expenditure for Kharif is higher than Rabi crops. Table-5.5: Breakup of per acre cost (Rs.) of production for non-borrowers Variables Farm size Avg. Marginal Small Medium Big A. Material 3451.7 3143.7 2843.2 2467.6 2895.3 (68.86) (64.83) (61.29) (56.79) (61.97) I. Seeds 1052.5 935.2 897.8 668.7 808.1 (21.00) (19.28) (19.35) (15.35) (17.30) 2. Manures and fertilizers 1303.1 1186.9 1005.3 901.8 1176.4 (26.00) (24.48) (21.67) (20.75) (25.18) 3. Pesticides 95.2 83.1 78.2 59.4 79.9 (1.90) (1.71) (1.68) (1.36) (1.71) 4. Tractors charges 298.7 305.2 311.7 336.1 309.1 (5.95) (6.29) (6.71) (7.73) (6.61) 5. Thresher charges 306.5 296.2 273.4 255.6 279.3 (6.11) (6.10) (5.89) (5.86) (5.97) 6. Water and other charges 395.7 337.1 276.8 246.0 242.5 (7.90) (6.97) (5.99) (5.70) (15.20) B. VVagestolabour 1560.3 1705.2 1795.7 1876.9 1776.3 (31.14) (35.17) (38.71) (43.21) (38.03) Total (A+ B) 5012.0 4848.9 4638.9 4344.5 4671.6 Source: Primary Survey ( 2003 ) Note: Percentage share in parentheses. (100) (100) (100) (100) (100)
176 Table-5.6: Breakup of per acre cost (Rs.) of production for borrowers Variables Farm size Avg. Marginal Small Medium Big A. Material 3651.5 3306.2 3051.9 2846.2 2958.6 (58.29) (54.00) (51.00) (48.44) (50.30) I. Seeds 1089.9 1030.1 1075.5 998.3 1037.8 (17.40) (16.82) (17.97) (17.00) (17.64) 2. Manures and fertilizers 1591.0 1428.6 1195.4 1117.5 1171.6 (25.40) (23.33) (19.98) (19.01) (19.92) 3. Pesticides 106.5 91.3 86.7 79.4 83.9 (1. 70) (1.50) (1.48) (1.35) (1.42) 4. Tractors charges 273.6 288.4 297.5 306.1 293.4 (4.36) (4.71) (4.97) (5.20) (4.90) 5. Thresher charges 307.1 285.7 269.9 265.6 273.3 (4.90) (4.67) (4.51) (4.52) (4.65) 6. Water and other charges 283.4 182.1 126.9 79.3 98.6 (4.50) (2.97) (2.09) (1.36) (1.68) B. VVagestolabour 1941.6 1959 2034.1 2095.3 2066:7 (31.00) (32.00) (34.00) (35.16) (35.14) C. Financial cost 670.2 857.4 898.2 934.2 856.5 (10.71) (14.00) (15.00) (15.90) (14.56) Total (A + B +C ) 6263.3 6122.6 5984.2 5875.7 5881.8 Source: Primary Survey Note: Percentage share in parentheses. (100) (100) (100) (100) (100)
177 The break-up of per acre cost of production for both the borrowers and nonborrowers has been incorporated here. Table-5.5 deals with non- borrowing farmers while table-5.6 deals with borrowing farmers. Per acre cost of production is the highest for sugarcane in the case of both borrowers and non-borrowers. It is Rs. 5510 per acre cost of production of sugarcane in the case of non-borrowers while this figure in the case of borrower is Rs. 5229 of borrowers. The next highest costly crop is Paddy. The cheapest crop is Sarso. Table-5.6 (a) shows ratio of cost of production between borrowers and non-borrowers. It is 1.26, on an average. This ratio increases with rise in the farm size. For marginal farmer, it is 1.25 and that for big farmer it is 1.35. Cost ratio being more than one, shows that borrowing farmers are incurring more cost of production than non-borrowing one. It is so, only because of financial cost, which is associated only with borrowing farmers. As it has been shown in the table-5.7 that per acre cost of production decreases with rise in the farm size. There are various reasons of declining the per acre cost of production with rise in the farm- size. First, spread effect of cost occurs with rise in the farm size. Second, requirement of credit decreases with every rise in the farm size because every increase in the farm size enables farmers to meet their needs from farm products. Third, Imputed value of labour is high for small size of land. For example, per acre cost of production ofkharif crops decreased from Rs. 3661 for marginal farmers tors. 3142 for large farmers. The similar trend occurs with Rabi crops. Per acre cost of production of Kharif crop is Rs. 340 I and that of Rabi is Rs. 1368 in Faizabad district. Per acre, cost of production of Kharif crops is the highest in the Sohawal block. On the similar trend, per acre cost of Rabi crops is the highest in the Milkipur block.
178 Table-5.6 (a): Ratio of cost of production for borrowers and non-borrowers Variables Farm size Avg. Marginal Small Medium Big A. Material 1.06 1.05 1.07 1.15 1.02 I. Seeds 1.03 1.10 1.19 1.49 1.28 2. Manures and fertilizers 1.22 1.20 1.19 1.24 1.21 3. Pesticides 1.12 1.09 1.10 1.33 1.05 4. Tractors charges 0.91 0.94 0.95 0.91 0.95 5. Thresher charges 1.00 0.96 0.99 1.03 0.98 6. Water and other charges 0.72 0.54 0.46 0.34 0.41 B. VVagestolabour 1.24 1.15 1.13 1.11 1.14 Total Cost of production 1.25 1.26 1.29 1.35 1.26 Source: Primary Survey ( 2003 ) Note: Cost ratio = (borrowers' cost of production) I (Non-borrowers' cost of production) Table-5.7: Per acre cost (Rs.) of production for non-borrowers Farm Crops Sohawal Milkipur Amaniganj Rudauli Tarun Avg. c.v. size (%) Up to Kharif 3723 3636 3671 3617 3658 3498.5 1.10 2.50 Rabi 1477 1540 1501 1508 1475 1513.5 1.76 acre Total 5200 5176 5172 5125 5133 5012 0.61 2.51 to Kharif 3639 3449 3669 3462 3438 3415.2 3.19 5.00 Rabi 1429 1481 1402 1420 1399 1433.7 2.31 acre Total 5068 4930 5071 4882 4837 4848.9 2.16 5.01 to Kharif 3413 3154 3364 3296 3241 3302.8 3.09 10.00 Rabi 1369 1361 1319 1283 1284 1336.1 3.09 acre Total 4782 4515 4683 4579 4525 4638.9 2.46 Above Kharif 3208 3075 3227 3113 3088 3124.6 2.24 10.01 Rabi 1257 1264 1206 1190 1214 1219.9 2.65 acre Total 4465 4342 4433 4303 4302 4344.5 1.68 All Kharif 3395 3203 3382 3272 3456 3376.4 2.45 Rabi 1372 1401 1387 1390 1363 1295.2 2.03 Total 4867 4604 4769 4662 4819 4671.6 1.71 Source: Primary Survey ( 2003 )
179 Table-5.8: Per-Acre Cost (Rs.) of Production for borrowers Farm Crops Sohawal Milki- Amani- Rudauli Tarun Avg. c.v. size pur ganj (%) Up to Kharif 4198 4016 4086 4001 4273 4041.7 2.86 2.50 Rabi 2476 2388 2305 2283 2408 2221.6 3.31 acre Total 6674 6404 6391 6284 6681 6263.3 2.77 2.51 to Kharif 4012 4001 4013 3971 4101 3945.7 1.20 5.00 Rabi 2427 2308 2290 2203 2378 2176.9 3.70 acre Total 6439 6309 6303 6174 6479 6122.6 1.91 5.01 to Kharif 3973 3902 3962 3902 4067 3881.0 1.70 10.00 Rabi 2405 2283 2205 2176 2361 2103.2 4.28 acre Total 6378 6185 6167 6078 6428 5984.2 2.38 Above Kharif 3877 3993 3942 3790 3999 3795.3 2.23 10.01 Rabi 2276 2165 2036 2090 2357 2079.4 6.03 acre Total 6153 6158 5978 5880 6356 5875.7 3.00 All Kharif 4015 3978 4001 3916 4110 3818.3 1.75 Rabi 2396 2286 2209 2188 2376 2073.5 4.11 Total 6381 6234 6260 6064 6526 5881.8 2.44 Source: Primary Survey ( 2003) The findings of the cost structure of production show that per acre cost decreases with rise in the farm size. Per acre, cost of borrowing cultivating households is comparatively more than non-borrowing one. Per acre, cost of Kharif is more than that of Rabi crops. The C.V. ratio of the cost structure decreases with rise in the farm size. Now it would be better to know the per acre product value which has been dealt with in the next section of this chapter. 5.4: Per acre Product value Per acre product, value has been derived by multiplication of product and its price per quintal. Per acre product value of crops will deal with both the Kharif and Rabi crops and will be shown separately. Per acre product value of Rabi crops depends on: (a) total production, (b) gross sown area, (c) per quintal selling price
180 of product. Per quintal, selling price varies even in same area. Some farmers sell their products directly to Arhatiya or Baniya who visit on their farms during crop season. Some farmers sell their products to.designated government shops. Government buys farmers'.products at price higher than Arhatiya or Baniya. Even then, a large number of farmers sell their products to Arhatiya or Baniya because of following reasons. First, government is unable to pay cash in time. Sometime it becomes so long that it takes even years to be repaid. Second, Selling to Arhatiya or Baniya needs no transportation cost. Third, Arhatiya or Baniya pays cash in time, even in same season. Fourth, big and large farmers are able to bear the cost of waiting for selling their products to government agent. Per acre product value of Kharif is more than that of Rabi crops as shown in table- 5.9. Per acre product value ofkharifis Rs. 7218 and that ofrabi is Rs. 5425 for non-borrowing farmers in Faizabad district. The highest per acre product value of Kharif is in Amaniganj block and that of Rabi is in Tarun block. The per acre product value of Kharif decreased from Rs. 7315 for marginal farmers to Rs. 6951 for large farmers. The similar trend occurs with Rabi crops. It shows that the per acre product value decreases with rise in the farm size. The C.V. ratio decreases with rise in the farm size. The similar trend occurs with borrowing farmers, as shown in table-5.10. In this case also the per acre product value for Kharif crop is more than that of Rabi crops in Faizabad district. Per acre product value of Kharif is Rs. 7971 while that of Rabi is Rs. 6325. The per acre product value of Kharif decreases for borrower from Rs. 7995 for marginal farmers tors. 7912 for large farmers. The per acre product value of Rabi crops decreases from Rs. 681 0 for marginal farmers to Rs. 6064 for large farmers. The per acre product value of both the Kharif and Rabi
181 crops is the highest in the Tarun block. The C.V. ratio decreases with rise in the farm size. Table-5.9: Per acre product value (Rs.) of crops for non-borrowers Farm Crops Blocks of Faizabad district C.V. Size Milki Amani Rudauli Tarun Avg. Sohawal -pur -ganj Marginal Kharif 7175 7519 7403 6913 7129 7315.3 2.94 Rabi 5568 5797 5596 5204 7138 5724.1 11.37 Total 12743 13314 12999 12117 14267 13039.4 3.50 Small Kharif 7782 7998 8162 7606 8113 7323.5 2.63 Rabi 5816 5937 5870 5278 5421 5675.3 4.65 Total 13598 13935 14032 12884 13534 12998.8 2.96 Medium Kharif 7413 7412 7675 7606 7284 7181.9 1.90 Rabi 5730 5435 5576 5226 5325 5459.8 3.27 Total 13143 12847 13251 12832 12614 12641.7 1.76 Large Kharif 6979 7159 7274 7379 6813 6951.7 2.85 Rabi 5261 5064 4986 4755 4626 5215.4 4.55 Total 12240 12223 6260 12134 11439 12167.1 2.59 All Kharif 7337 7522 7628 7376 6834 7218.3 3.72 Rabi 5593 5558 5507 5115 5627 5425.9 3.40 Total 12900 13080 13175 12501 12501 12644.2 3.45 Source: Primary Survey ( 2003 ) From above, one may conclude following facts. First, per acre product value for both the borrowing and non-borrowing farmers' decreases with rise in the farm size. Second, Per acre product value of Kharif is more than that of Rabi. Third, Per acre product value for borrowing farmer is more than that of non-borrowing farmer. Fourth, C.V. ratio of product value for
182 both the borrowing and non-borrowing farmers decreases with rise in the farm size. Table-5.10: Per acre product value (Rs.) of crops for borrowers Farm Crops Blocks offaizabad district c.v. Size Sohawal Milki Am ani Rudauli Tarun Avg. -pur -ganj Marginal Kharif 7691 7807 8051 7454 7829 7995.1 2.80 Rabi 6579 6684 6497 6033 8009 6810.4 10.96 Total 14270 14491 14548 13487 15838 14805.5 5.82 Small Kharif 8313 8604 8385 8181 8630 8035.3 2.28 Rabi 6677 6674 6798 6128 6594 6427.9 3.95 Total 14990 15278 15183 14309 15224 14463.2 5.93 Medium Kharif 8262 8234 8288 8228 8457 7936.3 1.13 Rabi 6521 6431 6600 5991 6524 6325.9 3.79 Total 14783 14665 14888 14219 14981 14962.2 1.13 Large Kharif 7938 8118 8123 8081 8286 8912.5 1.53 Rabi 6256 6116 6088 5781 6282 6064.3 3.27 Total 14194 14234 14211 13862 14568 13976.8 1.75 All Kharif 7906.3 8113.2 8205.6 7805.9 8295.6 7971.5 1.93 Rabi 6439.5 6456.2 6438.3 6001.9 6725.7 6325.9 5.49 Total 14345.8 14569.4 14634.9 13807.8 15021.3 14297.4 3.65 Source: Primary Survey ( 2003 ) Now it would be better to find out the per acre net income of both the borrowing and non-borrowing farmers. It has been dealt with next section of this chapter. 5.5: Per -acre Net Income Per acre net income is nothing but the difference between per acre product value and the per acre cost of production. It has been derived for both the borrowing and non-borrowing farmers.
183 Table-5.11 deals with non-borrowing farmers. Per acre net income to nonborrowing farmer in the Faizabad district is Rs. 7972.6 in which income from K.harif crops is Rs. 3841.9 and that from Rabi is Rs. 4130.7 per acre. It shows that per acre net income to non-borrowing farmer is comparatively more from Rabi crops than those of K.harif crops. This is so because of low per acre cost of production of Rabi crops than those of Kharif crops. Per acre income of large farmers is more than those of marginal farmers but data shows that as the farm size increases the per acre income of farmers decreases. Table-5.11: Per- acre income (Rs.) to non- borrowing farmers Farm Crops Blocks offaizabad district c.v. Size Sohawal Milkipur Amani- Rudauli Tarun Avg. ganj Marginal Kharif 3452 3883 3732 3296 3471 3816.8 6.61 Rabi 4091 4257 4095 3696 5663 4210.6 17.35 Total 7543 8140 7827 6992 9132 8027.4 6.29 Small Kharif 4143 4549 4493 4144 4675 3908.3 5.54 Rabi 4387 4456 4468 3858 4022 4241.6 6.60 Total 8530 9005 8961 8002 8697 8149.9 4.68 Medium Kharif 4000 4258 4311 4310 4043 3879.1 3.60 Rabi 4361 4074 4257 3943 4041 4123.7 4.10 Total 8361 8332 8568 8253 8084 8002.8 2.38 Large Kharif 3771 4084 4047 4266 3725 3827.1 5.70 Rabi 4004 3800 3780 3565 3412 3995.5 6.16 Total 7775 7884 7827 7831 7137 7822.6 4.05 All Kharif 3922 4009 4056 3684 3388 3841.9 7.48 Rabi 4211 4167 4150 3755 4294 4130.7 4.89 Total 8133 8176 8206 7439 7682 7972.6 3.68 Source: Primary Survey ( 2003 ) Per acre, income from Kharif crops is the highest in the Amaniganj block while per acre income from Rabi crops is the highest in the Tarun block. The C.V. ratio decreases with rise in the farm size, which shows that per acre income is more
184 flexible in the case with small size of farms. Per acre, income of borrowing farmers needs to be compared with non-borrowing farmers to get the impact of credit on income. Table-5.12: Per acre income (Rs.) to borrowing farmers Farm Crops Blocks offaizabad district c.v. Size Sohawal Milki- Am ani- Rudauli Tarun Avg. pur ganj Marginal Kharif 3493 3791 3965 3453 3556 3953.4 5.99 Rabi 4103 4296 4192 3750 5601 4588.8 2.13 Total 7596 8087 8157 7209 9157 8542.2 9.14 Small Kharif 4301 4603 4372 4210 4529 4189.6 3.67 Rabi 4250 4366 4508 3925 4216 4251.0 5.08 Total 8551 8969 8880 8135 8745 9440.6 3.65 Medium Kharif 4289 4332 4326 4326 4390 4155.3 0.83 Rabi 4116 4148 4395 3815 4163 4222.7 5.00 Total 8405 8480 8721 8141 8553 8378 2.52 Large Kharif 4061 4125 4181 4291 4187 4117.2 2.04 Rabi 3980 3951 4052 3611 3925 3984.9 4.36 Total 8041 8075 8233 7902 8112 8102.1 1.48 All Kharif 3881.3 4155.2 4184.6 3879.9 4135.6 4153.2 1.97 Rabi 4083.5 4180.2 4199.3 3863.9 4359.7 4252.4 7.26 Total 7964.8 8335.4 8383.9 7843.8 8495.3 8405.6 4.61 Source: Primary Survey ( 2003 ) Table-5.12 shows that per acre net income to borrowing farmers is more than those of non-borrowing farmers. Per acre income to borrowing farmers is Rs 8405.6 in which net income from Kharif is Rs. 4153 and that from Rabi is Rs.
185 4252. Per acre net income from Rabi crops decreases from Rs. 4588 for marginal farmers to Rs. 3984 for big farmers. Similarly, per acre net income from Kharif crops decreases from Rs. 4189 for small farmers from Kharif crops to Rs. 4117 for big farmers. It shows that per acre net income decreases with rise in the farm size. Per acre income to borrowers is more than non-borrowing farmers. Per acre net income from Rabi crops is more than those of Kharif cops. The C.V. ratio decreases with rise in the farm size. It shows more consistency in per acre net income with higher farm size. From this section one summarises by saying that per acre net income decreases for both the borrowing as well non-borrowing farmers in both the crop seasons. However, per acre net income from Rabi crops is more than those of Kharif. Per acre, net income to borrower is more than non-borrowers. It suggests borrowing. 5.6: Per Household Income There are many reasons of rising per household income level with rise in farm size. First, Number of farmer's decreases with rise in the farm size. Second, Most efficient technology, in general, is used by big farmers. Use of irrigation facility, modern seeds & fertilizers, HYV seeds and insecticide increased with rise in the farm size. Third, Selling of agricultural products to government agencies at higher price increases with rise in the farm size. It IS true that government agencies do not repay in time. Cost of delay repayment can be borne by big farmers but not by small farmers. Small farmers sell their products at cheap price to Baniyas who come to buy these products at their farm itself. Wheat is the major
186 source of income among Rabi crops. On an average a farmer is able to generate income ofrs. 20,000 by wheat in one season. The similar trend occurs with Table-5.13: Per household Income from Rabi Crops (Rs.) Farm Rabi BLOCKS OF FAIZABAD DISTRICT Avg. c.v. size Crops Sohawal Milki- Amani Rudauli Tarun pur -ganj Marginal Wheat 6262 6601 6517 6864 5783 6574 Gram 1092 1386 1704 1021 1280 1124 Sarson 0632 0427 0454 0604 0357 548 Small Wheat 11463 14456 13574 10682 15331 12009 Gram 1267 1250 1836 2015 1470 1396 Sarson 0852 0966 0780 0790 0786 785 Mediu-m Wheat 19060 19600 23306 23882 21015 20337 Gram 1164 1555 1789 1142 1946 1451 Sarson 1164 1477 1701 1268 0919 1230 Large Wheat 43423 49845 47792 42291 45422 44386 Gram 1753 1685 1330 2201 2272 1987 Sarson 1292 1364 0816 1387 1474 1126 All Wheat 19056 21632 21821 20082 20836 20068 Gram 1318 1506 1657 1594 1749 1656 Sarson 0986 1056 0293 1100 988 897 6.09 1.68 5.04 5.06 1.96 3.65 1.09 3.84 3.14 6.46 0.85 0.69 5.27 0.50 2.73 Source: Primary Survey ( 2003 )
187 Kharif crops also. Per household income generated by Kharif crops has been shown in table-5.14. Table-5.14: Per household Income from Kharif Crops (Rs.) Farm Kharif BLOCKS OF FAIZABAD DISTRICT c.v. Size Crops Sohawal Milkipur Amaniganj Rudauli Tarun Avg. Marginal Paddy 9270 10177 9286 9155 10118 9689 3.31 Sugarcane 2230 2412 2226 1654 1576 2100 2.60 Maize 114 109 ll9 140 Ill Jl8 0.67 Small Paddy 19112 22215 22110 19228 23236 21020 2.94 Sugarcane 3773 3024 2264 2584 1894 2088 3.25 Maize 369 448 436 437 435 385 2.01 Medium Paddy 34006 34346 40213 45692 34671 37785 3.60 Sugarcane 3691 2563 4675 1777 2696 3020 3.08 Maize 678 561 783 660 647 666 2.14 Large Paddy 71562 73688 72347 69586 71453 71387 2.04 Sugarcane 3347 3459 2589 4371 3792 3671 1.02 Maize 785 890 840 760 771 769 2.19 All Paddy 33463 35331 36214 35790 34794 35418 2.81 Sugarcane 3335 2689 3513 2471 2564 3468 0.03 Maize 561 652 644 649 501 586 3.92 Source: Primary Survey ( 2003 ) Per household income increases with rise in the farm size as shown as in the table S.14. Earning to farmers is the base of demand for credit. Higher the earnings to the farmers, more the capacity to borrow. It improves viability of both the borrower and supplier of credit. Credibility of supplier increases with rise in earnings to farmers. More secured credit is supplied. One can see that per
188 household product value of Kharif crops varies according to sizes of farms, types of crops and areas of cultivation. Paddy is the main Kharif crop. Paddy generates highest revenue to farmers in the comparison of other Kharif crops. Maize is the least revenue generating Kharif crop. Big farmers are able to generate more revenue than marginal and small farmers are. 5. 7: Gini-Co-efficient of income distribution for borrowers (B) and non-borrowers (NB) Percentage Cumulative Distribution of Income This curve shows that inequality of income distribution among non-borrowing farmers is more than those of borrowing farmers. It infers that credit is able to decrease inequality existed in income distribution. 5.8: Cobb-Douglas Production Function Production function shows technological relationship between input and output. The quality and quantum of the output depends on technological efficiency, price efficiency and economic efficiency. Price efficiency will not be
189 considered in this case because some inputs like family labour, draught power and farm yard manure are not under the purview of regulated market. Technological efficiency depends on both the static (e.g. indivisible inputs-bullocks, tractors, tube wells, threshers; rural credit and managerial and entrepreneurial ability ) and dynamic (e.g. educational level, financial base, risk taking capacity, innovative work efficiency) factors. Economic efficiency includes scale economies. It shows that there are various inputs, which are required for output. This output depends not only on a single factor of production but on multiple factors. A conventional production function dealing with a single factor like labour or capital, implicitly assumes that there are no changes in the other inputs. To avoid these limitations, multiple factor productivity approach is adopted. Reason for selective Cobb-Douglas production function: There are many types of production function which deal with multiple factor productivity approach.. These are Hoch, Farrel, Seitz, Timmer, Lau & Yotopoulos, Nerlove and Cobb-Douglas. The present study deals with Cobb-Douglas production function. There are a number of reasons for the extensive use of Cobb-Douglas production function in this study. First, after conversion to Logarithms, the function can be estimated easily by linear estimation techniques. Second, a relatively small number of parameters need to be estimated, thus economizing on degree of freedom. Third, the function has a pleasing property such as declining but positive marginal products of inputs. Fourth, the co-efficient lend themselves to a straight and convenient interpretation. Fifth, the functional form has been repeatedly testified to fit the farm level data more appropriately than most other functional forms. Technological interpretation: Output gets affected vartous ways by technological changes. First, it can change the efficiency of the production process by enabling the production of greater level of output from the same level of inputs or the same level of outputs from a lower level of inputs. Second, it can lead to greater savings in one input than the other can. Third, a new technology can alter the degree of returns to scale in production process. Fourth, it can affect the homotheticity of the production function i.e. a new technology can change the relative intensities of factors of production of changing the relative marginal products of various factors. Fifth, it can help to substitute one factor to another.
190 Functional Form: In the present study following variables are used for estimating Cobb-Douglas production function- (I ) Dependent Variable: Gross Value of Output(Y): Gross Value of aggregate output of all the individual crops and their by-products has been taken as the dependent variable. Both outputs and inputs have been measured in value terms only. The actual prices received by the farmers have been used to value the aggregate production in the present study. (I) Independent Variables: The following independent variables have been selected to explain the variations in the value of output. Gross Cropped Area ( X1) : Sum of the area under all the crops sown in an agricultural year has been taken as explanatory variable. The quality or standard of land varies. Both the prices and rent of land vary depending upon quality, location, demand & supply, productivity of land etc. Therefore, only GCA has been taken as an explanatory variable. Biochemical Inputs ( X2 ): This is a composite input variable which includes expenditure on farm manures & fertilizers, pesticide, irrigation and seeds. The main advantage of using this composite variable is that it takes care of the problem of multicollinearity due to high correlation between irrigation and fertilizers. Machine Labour ( X3): It includes expenditure on repair and maintenance of tractors, threshers and other farm implements, etc. Human Labour ( X.): Labour input comprises three types of man days consisting of eight work hours. First, man- days of self-employed consisting of family labour including children and women has been taken into account. Second, man -days of casual labour has been calculated by dividing the amount paid with average district wage rate for respective farm operation. Third, man -days of permanent workers was calculated by dividing total amount paid with average annual wage rate of district. Financial Cost ( X 5 ): It includes interest amount paid by borrowers on loan taken.
191 On the basis on above dependent and independent variables, the functional form of Cobb -Douglas production function has been constructed in a generalized Logarithmic form in the following manner: LogY= k +a LogXt + b LogX2 + c LogX3 + d Log~+ elogxs On the basis of the collected field survey data, the value of given parameters (k, a,b,c,d,e ) has been calculated as shown in table-5.15. Table-5.15: Cobb-Douglas production function analysis and Regression co-efficient Variables Total Borrowers Non- Dependent : Gross output ( N=310) (N=208) Borrowers SI.No. (Y) _ili=102) 1 " Intercept 3.25 * * 3.225 1.595 (17.087) (23.706) (9.923) 2 XI (GCA) 0.733".. 0.704 (13.667) * 0.163 (20.030) (3.625) 3 X 2 ( Seeds, fertilizer, 0.197".. * 0.170 pesticide, irrigation) (4.678) 0.191 (2.965) _{6.5191 4 x3 {Tractor plus 0.033 * 0.019 0.181 Threshers charges) (1.416) (1.641) (2.670) 5 X 4 (Labour charges) 0.031 6 Xs (Financial cost) " 7 R2.. 0.020 0.446 (0.894) (1.040) (6.351) 0.017 * 0.083 - (3.748) (2.436) 0.861 0.961 0.890 8 Adjusted 2 0.858 0.960 0.889 * Significant at 0.01 level, t- value in parentheses Source: Primary Survey (2003),
192 This table infers following interpretations. First, Gross value of output is positively associated with inputs uses. Second, value of both the R 2 and adjusted R 2 is high showing a greater degree of goodness of fit. Third, in most of the cases, regression co-efficient is significant at 0.01 levels showing that inputs are able to affect gross value of outputs positively. Fourth, the efficiency parameter for borrowing cultivating households is almost twice of non-borrowing one. A higher value of efficiency parameter reflects better technical knowledge, experience, farming skill, better cropping pattern, rational distribution of time and high intensity of cropping. Fifth, in the double log formulation, the regression coefficients are positive and significant in most of the cases. In three cases (X1, X 2, and X3), elasticity co-efficient are greater for borrowers than those of nonborrowers. It shows that borrowing farmers are able to reap benefit more than those of non-borrowers. Sixth, the elasticity co-efficients of financial cost is positive and significant showing the greater impact on product value. Seventh, the sum total of regression co-efficients is 1.017 (CRS, because it is not significantly different from 1) for borrowing cultivating households and 0.96 ( significantly lower than 1, showing DRS) for non-borrowing one In short one can infer that Cobb-Douglas production function analysis shows that Agricultural credit is able to increase production efficiency through various ways. Therefore, it is suggested to provide a higher amount of agricultural credit to farmers to get higher returns. 5.9: Conclusion There are two types of cultivating households borrowing and non-borrowing. Their source of income is crops cultivated in Kharif and Rabi seasons. Per acre production of these crops decreased with rise in the farm size. In the similar trend, both the per acre cost and the product value decreased with rise in the farm size for both the borrowing and non-borrowing farmers. However, per acre cost of production of borrowing cultivating households is more than those of nonborrowing one because in the former case there is additional inclusion of financial cost. A higher cost association with the borrowing cultivating household does not discourage them from borrowing but it encourages them to borrow because net income is more for borrowing households and per acre material & wages to labour
193 cost IS low. It shows that credit has a positive impact on productivity and profitability to farmers. In this chapter itself, Cob-Douglas production function has been used to show how the borrowing cultivating households are able to improve production efficiency across the sizes of farms. Production efficiency and hence profitability of borrowing cultivating household is better than those of non-cultivating households. This chapter shows also that per acre cost of production in case of Kharif is more than that of Rabi crops. However, per acre income is more from Rabi crops because of lower cost of cultivation to farmers. From above it may be inferred that agricultural credit is able to enhance net income through two ways decreasing the cost and increasing the productivity. Therefore, credit demand should be fulfilled across the sizes of farms as per requirements.