The Key Factors to Augment Groundnut Farm Income in Gujarat: TFP Growth and Market Support

Abstract

This paper has provided insights on the returns to investment in groundnut research and sources of productivity in Gujarat state from 1990-91 to 2011-12. Two outputs and ten inputs have been used to construct total output, total input and total factor productivity index using Tornqvist Theil Index technique. Compound growth rates were worked out using semi-log trend equation. Although the area under groundnut decreased yet, the production and productivity increased significantly at the rate of 5.10 and 5.24 per cent per annum, respectively during the study period. The groundnut registered higher TFP growth of about 2.21 per cent per annum in last two and half decades resulting in annual decline of 0.27 per cent in real cost of production. The Investment on groundnut research generated 27.10 per cent IRR thus, found to be a highly paying proposition. The growth in TFP was remarkably increased in nineties largely contributed by the release of groundnut varieties viz., GG-2 in 1986, GG-20 and GG-12 in 1991, GG-13 in 1994. The government expenditure on research, extension education, irrigation infrastructure and rainfall generated significant returns. The steady growth in TFP needs to be maintained by enhancing the resources which have contributed to productivity. More public and private investments, in under developed regions of the state are needed to strengthen agricultural research and rural infrastructure. The sufficient procurement at MSP is essential to enhance farm income.