Economies of the Factors Affecting Crop Production in India: Analysis Based on Cobb-Douglas Production Function

Abstract

The Cobb-Douglas Production Function which has the advantage of permitting hypothesis testing and calculation of confidence intervals to test the reliability of the estimation has been applied in this study of the agricultural production process using several production factors within the broad terms of land, labor, & capital. Agricultural production has been considered as the dependent variable, whereas, area coverage for agricultural production, labor employed in agriculture, agricultural household expenditure, fertilizer applied, and irrigation coverage have been considered as independent variables. Agricultural productivity has been examined from a different perspective such as the productivity of land, labor, and capital. The factors of production estimated through the regression analysis demonstrated that the growth of crop production significantly depends on the application of fertilizer. Besides, irrigation and household consumption also have a positive impact on production. The use of seeds, types of machinery, and expenditures for sowing and harvesting are considered responsible for the increase in consumption for rural households, so their use may have some positive impact on production, but the effect of these factors is not much significant. Land and labor have a negative correlation with crop production. Overall crop production shows decreasing returns to scale due to a decrease in land productivity, use of traditional plow methods, land degradation, decrease in soil fertility, and increase in soil salinity. The increasing crop production is the result of the application of fertilizer and improved seeds. Land and labor were negatively correlated with crop production, whereas, fertilizer was positively correlated but excessive use of inorganic fertilizer may further aggravate soil fertility. This study also measures the marginal contribution of each input to aggregate agricultural output.