An econometric analysis of optimality for sustainable paddy production in India

Abstract

The optimal level of production inputs ensures maximum returns to farmers and reduces the adverse effects of excessive use of inputs like fertilizers and pesticides on the environment. In India, paddy has the highest use of major inputs besides being labour intensive. This paper focuses on this crop and finds that, at national level, most of the inputs are used below optimum, and their usage can be increased to attain profit maximising yield, about 17% higher than the existing yield. However, across states, existing use of resources is different than that at the national level. In Punjab, Haryana and Tamil Nadu the use of almost all inputs is more than optimum. Seed that accounts for 8.6% of the cost of cultivation is overused in major rice growing states, namely Assam, West Bengal, and Chattisgarh, while fertilizer use is sub-optimal except in Chattisgarh. Human and animal labour together account for about 80% of the total cost, and are found to be overused in most states. These results indicate pathways for states that can be followed to attain optimality. Overall, the optimum level of input use ensures 8.5% higher farm profits.