Resource Use Efficiency in Indian Agriculture

Abstract

The term ‘resource use efficiency in agriculture’ may be broadly defined to include the concepts of technical efficiency, allocative efficiency and environmental efficiency. An efficient farmer allocates his land, labour, water and other resources in an optimal manner, so as to maximise his income, at least cost, on sustainable basis. However, there are countless studies showing that farmers often use their resources sub-optimally. While some farmers may attain maximum physical yield per unit of land at a high cost, some others achieve maximum profit per unit of inputs used. Also in the process of achieving maximum yield and returns, some farmers may ignore the environmentally adverse consequences, if any, of their resource use intensity. Logically all enterprising farmers would try to maximise their farm returns by allocating resources in an efficient manner. But as resources (both qualitatively and quantitatively) and managerial efficiency of different farmers vary widely, the net returns per unit of inputs used also vary significantly from farm to farm. Also a farmer’s access to technology, credit, market and other infrastructure and policy support, coupled with risk perception and risk management capacity under erratic weather and price situations would determine his farm efficiency. Moreover, a farmer knowingly or unknowingly may over-exploit his land and water resources for maximising farm income in the short run, thereby resulting in soil and water degradation and rapid depletion of ground water, and also posing a problem of sustainability of agriculture in the long run. In fact, soil degradation, depletion of groundwater and water pollution due to farmers’ managerial inefficiency or otherwise, have a social cost, while farmers who forego certain agricultural practices which cause any such sustainability problem may have a high opportunity cost. Furthermore, a farmer may not be often either fully aware or properly guided and aided for alternative, albeit best possible uses of his scarce resources like land and water. Thus, there are economic as well as environmental aspects of resource use efficiency. In addition, from the point of view of public exchequer, the resource use efficiency would mean that public investment, subsidies and credit for agriculture are