TOTAL FACTOR PRODUCTIVITY IN ASSAM AGRICULTURE
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Date
2016-07
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AAU, Jorhat
Abstract
Technical change in agriculture increases production at the same level of input-use and enables it to avoid trapping into Ricardo’s law of diminishing returns to which the sector is more prone. Total Factor Productivity (TFP) is often seen as the real driver of growth within an economy. Many studies showed that, different factors of TFP like Policy support, production strategies, public investment in infrastructure, research and extension for crop, livestock and fisheries etc., have significantly helped in increasing the agricultural productivity, food production and its availability. Assam’s economy is predominantly agrarian. Agriculture and its allied activities play an important role in the socio- economic development of the State of Assam as this sector is the major contributor to the State economy as well as providing livelihood to a significant proportion of the population of the State. Assam accounts for a fairly significant share of the country’s acreage and output of many crops. In spite of having high inherent potentiality, Assam’s agriculture is yet to experience modernization in real sense. Agriculture in Assam exhibits most of the characteristics of underdeveloped/backward agriculture. During last few decades, Assam Government has made lots of investments in agricultural sector for the development of the sector. But, whether these investments have been contributing significantly towards the agricultural growth in the real scenes or not, it is very much important to know. Considering this, the present study was conducted with the three objectives to estimate the TFP growth and its contribution to Assam agriculture, to examine the determinants of TFP in Assam agriculture and to suggest policy measures for improving TFP in Assam agriculture.
The study was conducted for three crops rice, jute and rapeseed and mustard both individually and collectively termed as total crops for the time period of two decades from 1991-92 to 2010-11. Further, for more convenience, the entire study period was divided into two sub periods viz., 1st period (191-92 to 2000-01) and 2nd period (2001-02 to 2010-11). The study was based on secondary data collected from different reputed published sources. Tornqvist Theil index was used for computing TFP indices of the three selected crops. The input, output and TFP indices were calculated both in current price and constant price (at price of 1991-92) of the inputs and outputs to find out whether there any nominal price effect was existed or not. Again, the indices were also computed for per hectare area and total area under the selected crops in Assam to know how efficiently inputs were used under both situations. In order to evaluate the determinants of TFP in Assam, the TFP index was regressed against the variables viz., rice area under flood, no. of villages electrified, rainfall, share of irrigated area to total cropped area, expenditure in Agricultural research and education, investment in Agriculture and allied activities, share of HYV area to total rice area, rural literacy and cropping intensity by using Cobb Douglas production function.
The results of the study revealed that, all the three crops rice, jute and rapeseed and mustard of the state had experienced negative TFP growth at current price, but at constant price, it was estimated to be positive in both per hectare area and total area for the study period. It revealed the presence of the nominal effect of increased input costs resulted in a lower (negative) TFP at current price pointing out the occurrence of gap between the farm harvest prices of the farm outputs and costs of inputs incurred in production of those three major crops in the state. Again, except rice, for other two crops, jute and rapeseed and mustard, TFP index were estimated to be higher in per hectare area rather than their total area. It implied that, in jute and rapeseed and mustard both, inputs were more efficiently allocated and utilized per hectare area rather than total area in the state. Only rice was found to have highly significant TFP growth (at constant price). Other two crops were reported to have positive TFP with very lower growth rate, but not significantly in Assam.
Expenditure in Agricultural research and education, rural literacy, irrigation and cropping intensity were found to have positive impact on TFP of all three crops both individually and collectively. However, none of the selected variables was found to have significant impact on TFP of jute as well as rapeseed and mustard. Investment in agriculture and allied activities also was an important source of TFP for all selected crops except jute. In rice, HYV area also contributed positively in TFP. Villages electrified and rainfall exhibited no any effect towards TFP growth of all selected crops individually as well as collectively also. The findings of the study have important policy implications for construction of proper price structure, improving input-use efficiency in total area under these crops, allocating scarce public resources to agricultural research, education, irrigation etc. and increasing HYV area and cropping intensity for enhancing the TFP in the state for better sustainable growth in agriculture.
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