Input Demand and Output Supply Elasticities of Coarse Cereals in India: A Translog Profit and Sure Approach

Aims: The aim was to estimate the output supply and input demand elasticities of maize, jowar and bajra production, using the restricted normalised translog profit function, for the major producing states of India (Andhra Pradesh, Maharashtra and Rajasthan).

Study Design: A stratified multi-stage random sampling design was adopted for carrying out the sampling.

Place and Duration of Study: The study pertains to cross sectional plot level data for the period 2013-14 and 2017-18. The study is based on secondary data, collected from Directorate of Economics & Statistics, Ministry of Agriculture, Government of India.

Methodology: For the present studied crops (maize, jowar and bajra), those states were selected which covered maximum area, i.e, 85% of the total area under the cultivation. Socio-economic data of farmers such as age, sex, level of education, occupation, size of landholding were collected. The translog profit function approach was used as the econometric technique to estimate output supply, and input demand functions. Labour, fertiliser and seeds are taken as variable inputs. Statistical software STATA version 16 was used for the analysis.

Results: The results suggest that the changes in market prices of inputs and output significantly affect the farmers’ profits, crop produce supply and the use of resources in the cultivation of these crops. The supply elasticities of maize, jowar and bajra with respect to its own prices are positive and statistically significant indicating that increase in support prices can boost the supply of these nutri-grains and farmers profits. Labour demand for these crops in the country is elastic and significant to its own price.

Conclusion: During both the periods, 2013-14 (typical monsoon year) and 2017-18 (drought year), the elasticities derived are statistically robust as almost all of them carried compatible signs and in line with the theory. Promoting these crops can contribute to labour absorption.