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Lovely Professional university
M.B.A
Term Paper 2010-2012 ECO-515 Excellent attempt, though the research should have been understood than merely copied and pasted. Good calculations on elasticity. 19/25
TOPIC:- ANALYSIS OF DEMAND & SUPPLY OF RICE IN INDIA & INCOME, PRICE & CROSS ELASTICITY OF THAT COMMODITY
CONTENT
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Acknowledgement Objectives of the study
Introduction of the topic
Data collection
Data interpretation Critical analysis
Findings
Conclusion
Acknowledgement
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The project of such magnitude cannot be accomplished without the assistance and cooperation of several people. Exchange of ideas generate a new object to work in a better way. So, whenever a person is helped by others, his heart is bound to pay gratitude and it is not merely formality but an expression of deep sense of gratitude and cumulative appreciation. [Name]
Objectives of the study •
•
•
•
To analyze the demand and supply of rice in India To do deep study about the fluctuations taking place in demand and supply Factors pertaining to change in demand and supply Effect of income of consumer, price of commodity and price of substitutes goods on the commodity
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Introduction of the topic
Rice is a very important food source commodity. As the second most produced food in the world, rice is a cereal grain that is grown as a staple. Rice can be grown nearly anywhere. The three largest exporters of rice are the United States, Thailand and Vietnam. Rice is a crop that is best grown where there is a low cost of labour and high levels of rain as rice is a labour intensive crop and requires plenty of water to grow. Rice grains are milled to remove the outer husk, called the chaff. At this stage it is referred to as brown rice. Further processing to remove the bran, residue and germ make it into white rice, commonly found in stores.
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Rice
Commodity Research & Analysis Report
Rice is the second most produced food in the world. Rice is a cereal grain grown as a staple food for much of the world’s population. Rice Fundamental Commodity Analysis (short term investment): Rice is rated a sell; although Wiki Wealth could not find adequate publicly traded companies to indicate the true potential of rice. Rice Value Investor Survey (long term investment): Rice has an average growth potential per the investor survey results.
Rice
SWOT Analysis:
Strength: Rice is the number one staple food source for much of the world; Weakness: there is little tradable supplies of crops, so forming an international market for rice is difficult. Opportunity to grow: rice may become more popular as Asian cuisines increase in popularity worldwide; Threats to growth: high recent farming cost could lower the profitability of commodities.
Rice Trade
Analysis:
The commodity analysis sell rating indicates that rice should decrease in price over the short term, whereas an average investor survey means rice may stay the same in price over the long term.
Ind India ia Count ountrry & Curre urrenc ncyy Analy nalyssis Rese esearch arch Report.
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India (INR) has a highly regulated economy; however, recent liberalization has tran transfo sforme rmed d the the econ econom omy y towa toward rdss a capi capita tali list st,, mark market et-b -bas ased ed syst system em.. Indi India' a'ss Fundamental Currency Analysis (short term investment): India’s currency is fairly valued with very low investment flow potential combined with very high purchase price price parity parity potent potential ial.. India' India'ss Value Value Invest Investor or Survey Survey (short (short term term invest investmen ment): t): India’s economic environment is unfavourable for long term economic growth due to low scores on economic freedom, transparency, economic diversity, and the SWOT SWOT analys analysis. is. India' India'ss Genera Generall Tradin Trading g Partner Partners: s: Belgiu Belgium, m, Pakist Pakistan, an, the UK, UK, Japan, and the US are the top export partners. India's Commodity Trading Partners: India produces a significant amount of staples for domestic use and needs to import energy. SWOT Analysis of India: The leading Indian strength is their supply of natura naturall resour resources ces,, while while the main main weakne weakness ss is a lack lack of infras infrastru tructu cture. re. India' India'ss Currency Trading Strategy: A fairly-valued currency, very low investment flow potential and an unfavourable business environment leads to a negative outlook for Indian investments. For our entire list of country & currency analysis, see the Country & Currency Analysis home page.
Industry Investment Impact The total factor productivity (TFP) of rice grown in various regions of India and examines the sources of productivity growth and marginal rates of return to public investment in rice research. The paper also projects the supply and demand of rice in the 21st century in India. The results of the study highlight a spectacular increase in rice yield from 1.1 t ha-1 in 1967-71 to 1.9 t ha-1 in 1997-99. The TFP index has risen at 0.9% per annum and has contributed one-third of production growth. A decelerating tendency in TFP growth is observed. The cost per unit of rice has declined steadily. The cultivation of basmati rice has benefited farmers in the northern northern states of India. Demand for rice will be met in the future with a marginal marginal surplus for trade. To maintain the surplus status of rice, the study emphasizes the need to strengthen efforts to increase production by maintaining or increasing TFP through public investment in irrigation, infrastructure development, research, and efficient input use. More than half of the required growth in yield to meet the demand target must be met from research efforts in developing location-specific and low-input-use technologies with emphasis on the regions where current yield is below below the requir required ed nation national al averag averagee yield. yield. All effort effortss need need to concen concentra trate te on
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accelerati accelerating ng growth growth in TFP while conserving conserving natural resources and promoting promoting the ecological integrity of the agricultural system.
DEMAND
OF RICE IN CURRENT YEAR
Whea Wheatt and and rice rice stre streng ngth then ened ed in the the whol wholes esal alee grai grains ns mark market et on Tues Tuesda day y on increa increased sed offtake offtake by stocki stockists sts and local local parti parties. es. Howeve However, r, other other commod commodit ities ies continued to be traded in a limited range on some deals. Marketmen said, the pick up in demand from rolling flour mills and local parties helped wheat prices to recover. Wheat MP (deshi) and Wheat dara (for mills) were up at Rs 1250-1450 and Rs 945-965 per quintal respectively. In the rice section, permal raw new, sela and rice IR-8 traded higher at Rs 11451170, Rs 1450-1500 and Rs 1100-1120 per quintal respectively. The following were Tuesday's quotations per quintal: In thin trading, non-basmati rice prices declined in the wholesale grains market on Saturday on increased offerings by stockists against sluggish demand. Wheat and other commodities, however, held unchanged on some deals. Traders said stockists selling against reduced demand mainly pulled rice prices down. In the rice section, permal raw lost Rs 35 at Rs 1100-1160 per quintal while sale lost Rs 40 at Rs 1430-1500 a quintal. Rice IR-8 traded Rs 20 down at RS 10001030 a quintal for want of support. Rice basmati (lal quila) 5000, Shri Lal Mahal 4800, Basmati common 3850-4050, Permal raw new 1145-1170, old 870-900, permal wand 1260-1325, sela 1450-1500 and rice IR-8 1100-1120, Bajra 700-705, Jowar 735-760 (yellow), Maize 860-865 Barley (UP) 810-820 and Rajasthan 645-655.
Literature Survey on Demand In case of India India on the one one hand population population is is reaching reaching one billion, billion, on the the other other hand the agriculture sector is opening up. Thus there is a need to examine trend in the consumption pattern. There is a large literature on food demand.
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Radhakrishna Radhakrishna and Murty(1980) adopted piece wise expenditure system to find out income income and price price elasti elasticit city y for differe different nt income income groups. groups. The parameter parameter estimates estimates of the Linear Linear Expenditure Expenditure System(LES) System(LES) differ a good deal across the expenditure groups and between rural and urban areas, indicating the existence of non-linearities in consumption pattern. Although rural –urban dichotomy exists, the variations across the expenditure groups are more striking than rural-urban variations for the corresponding expenditure groups. As one moves from the lower to higher expenditure groups, the marginal budget share of cereals declines sharply in both rural and urban areas. The fall in marginal share is compensated by other non food items. Among cross price elasticities cereal cross price effect dominates. It is sizeable and negative. For non-food items it is large and negative.
have show shown n the the dema demand nd for for food food is not not only only Kumar Kumar and Mathur(1 Mathur(1996) 996) have influ influenc enced ed by income income chang changes es but also also by differe difference ncess in the urban urban and and rural rural lifestyles lifestyles,, the development development of more advanced advanced marketing marketing systems, systems, occupational occupational changes changes that that are closely closely linked linked with increas increasing ing per per –capita –capita income. income. Their Their study has revealed that structural shift was negative for rice, coarse cereals, pulses, milk and sugar and positive for wheat, edible oil, vegetables, fruits, meat, fish and eggs. The magnitude of structural difference between rural and urban areas for food was higher in the year 1987 than in the year1977. According to this study the structural changes will bring about major shifts in the consumption of milk, fruits, vegetables, and livestock in rural and urban areas. This will provide incentive to the producers to diversify production and diversification will provide enhancement of income of producers. have evalua evaluated ted food food secur security ity in term termss of chan changes ges in Rao and Gulati(1994) have relative prices. He points out that the relative prices of foodgrains foodgrains have declined declined as a result of green revolution. The low income groups spend a larger proportion of their income on food grains than the upper income groups; hence the former have benefited more than the latter in the recent r ecent times. using g NSSO NSSO data data for the the peri period od 1972 1972-1 -199 994 4 obse observ rved ed wide wide Murty(2000 ) usin variat variation ionss in margina marginall budget budget shares shares and dema demand nd elasti elasticit cities ies across across incom incomee groups, rural urban sectors and alternative models. The The household household size, consumer consumer taste and preferences are found to be statistically significant. According to this study income elasticities are quite high even for the staple food items. The marginal budget budget shares (MBS) are larger for substitutes substitutes and cereal substitutes substitutes in rural areas than urban areas. The opposite is true for all other items. MBS decline with rise in income. The non –food exhibits exactly opposite pattern. Lowest 30 % of the income group in rural India spends half of their income on cereals. The ‘rural-
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urban’ urban’ diffe differen rence ce is small small compar compared ed to across across income income group group differe differenti ntials als.. But Linear Expenditure System overestimates budget share for lower income group. The income elasticities of demand are quite on the higher side, exceeding unity in many cases, even for staple items like cereals. The elasticities seem to decline marginally for food item like cereal across income levels. The income and own price elasticities are uniformly smaller in the case of food for f or urban population than their rural counterparts. This shows that the urban consumer is less responsive to inco income me and and pric pricee chan change gess in the the case case of food food cons consum umpt ptio ion n than than thei theirr rura rurall counterparts. The income and own price effects show similar pattern across model alternatives, although the magnitudes are different. reduced form form demand demand equati equations ons to estimate estimate per capita capita Srinivasan(2003) used reduced househ household old expend expenditu iture re on differe different nt food food items items as a functi function on of per per capita capita househ household old expendit expenditure ure(( proxy proxy for income income), ), househ household old characte characterist ristics ics such such as household size, land possessed etc, dummy variables for sources of income and social characteristics. Separate equations have been estimated for expenditures on each class of food items considered : grains, sugar, edible oil, pulses, vegetables, milk and meat. According to Srinivasan the decline in cereal consumption is due to decline of coarse cereals and also due to rise in cereal prices. Radhakrishna Radhakrishna and C. Ravi(1999) have come out with the significant finding, based on NSSO data that per capita household demand for foodgrains has been declining. According to Radhakrishna and and Murty(1999) Murty(1999) the decline in the demand for cereals is due to change in taste and preferences.
decline in the cereal cereal demand is an indicator indicator of improvement improvement of Rao(2000), the decline welfare. But according to Saha (2000) the expenditure on non-food items has been increasing not due to improvement in welfare but due to increase of price of essential non-food items like fuel, light, medical expenses, etc. Nelson Perera(2001) has used NSSO data of 50th round (1993-94) to estimate own price price elasticity, elasticity, cross price elasticit elasticity y for different different consumption consumption groups groups for rural India. India. Five expenditu expenditure re share equations equations for rice, wheat, coarse cereals, cereals, milk and milk produce and other foods are estimated with a linear approximation of the AIDS model (LA-AIDS). The LA-AIDS model has been estimated by system method of estimation, seemingly unrelated regression (SURE) with homogeneity and symmetry restrictions imposed. Parameter estimates have been used to compute price price and expend expenditu iture re elasti elasticit cities ies of demand demand for commod commoditi ities es like like rice, rice, wheat, wheat, coarse cereals, milk. This study provides elasticities for those commodities for each expenditure group in each state. This study depicts low own price elasticity for rice
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and wheat. Rice and wheat are essential essential commodities. commodities. Even though though the own price elasti elasticit cities ies for coars coarsee cereals cereals are less less than one, one, the relativ relatively ely high high own price price elasticity estimates reflect that coarse cereals are more price elastic than rice and wheat(See Appendix table-1 for summary of literature survey). There is a vast literature which deals in liberalization of rice market. Most of the studies have shown that in case of rice the domestic price is below the international price. Gulati and Narayanan(2003) observe that opening up Indian economy may lead to increase increase in the domesti domesticc rice rice price. price. Wijegu Wijegunaw naward ardane ane Agbeny Agbenyega egah h using using Lincoln Trade and Environment Model (LTEM) has observed that consumer price in India are predicted to increase with full liberalization. Most of the studies in case of India for estimating the demand demand elasticiti elasticities es have been at the aggregate aggregate national level and based on food items. There are very few studies at the state level. In this paper we have have tried to estimate estimate demand elasticities at the state level level and we have not only taken the food items but also the essential essential non-food items like lubricants lubricants and and dres dresss for for our our esti estima mati tion on purp purpos osee so that that we can can get get an idea idea abou aboutt the the substitution between food and basic non-food items. Another important feature of our study is that we have taken the 55th round unit level NSSO data corresponding to 1999-2000 for our estimation purpose.
Rice occupies an important position in the consumption basket in both rural and urban areas in both the states. But the share of rice and other cereal is more in case of rural areas than the urban areas in both the states. Rice occupies 41 % of the consumption basket in rural AP and 30 % in urban AP. The corresponding figures in case of WB are 45% and 24 % respectively. The percentage of consumption of other cereal is 3.91% in rural AP and 3.56% in urban AP. The corresponding figures for West Bengal are 8.49% and 9.51% respectively. The share of combined cereal consumption expenditure in WB is more than AP in both rural and urban areas. The share of consumption expenditure on milk products, lubricants, dress, spices, pulses out of total consumption expenditure is greater in rural AP than rural WB. There is not much difference in the share of consumption expenditure on edible oil in the rural areas in the two states. But in urban areas the share of cons consum umpt ptio ion n expe expend ndit itur uree on milk milk prod produc ucts ts,, spic spices es,, and and puls pulses es with within in tota totall expenditure is greater in AP than in WB. The corresponding shares of each of the commodities in urban AP are 13%, 4.88%, 6.75% respectively. But the shares of mil milk produ roducct, spi spices, ces, pul pulses ses in urb urban WB are are 4.7 4.76%, 4.0 4.00% and 4.55 .55% respectively. In urban WB WB eggfishmeat and lubricant occupies occupies 14.52% and 15.67% 15.67% respectively in the consumption basket. But the corresponding figures in Urban AP are 7.48% 7.48% and 14.33% respectiv respectively. ely. The share share of eggfishmeat eggfishmeat is greater greater in WB
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than AP in both rural and urban areas. The share of milk product is greater in AP than WB in both rural ad urban areas. Another important observation across both the states is that the shares of milk, egg fish meat, dress and lubricants are high in urban areas in both the states compared to rural areas. The share of high value food commodities are greater in urban areas than rural areas in both the states.( See appendix Table 2 for for the mean shares of the different commodities in the consumption basket).
Research methodology:-
Study: - This Research is going to be descriptive in nature to know about people reaction, regarding the demand and supply of rice.
Descriptive Research: This research includes surveys and facts findings enquire of different kinds. The major purpose of descriptive research is that the research can only describe describe the demand and supply of rice .The main feature of this method is that the researcher has no control over the
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extraneous variable called the respondents as they are going to interview the different respondent in order to perform study ..
Data collection There are two type of data collection:Primary data • •
Secondary data
Primary data:Primary data are those which are collated a fresh and for the first time & thus happen to be original in character. Primary data is obtained by the study specially designed to fulfill the data needs to problem hand. Such data are original in characters generated by the way of conducting survey
Secondary data:Secondary data are those which have already been collected by someone else and which have already been passed through the statistical process. Secondary data consists of not only published records and reports but also unpublished records.
Data collection
Here I am going to use secondary data for my study
Following data collected through the net or website. India is the world's second largest rice producer, followed by China. The production of rice in India has shown an increasing trend which is evident from the Table given below: YEAR
TOTAL PRODUCTION (in million tonnes)
1999-00
20.58
2000-01
34.58
2001-02
42.22
2002-03
53.63
13
2003-04
74.29
2004-05
82.54
2005-06
86.08
2006-07
89.68
2007-08
84.98
2008-09
93.08
Statewise Production of Rice in India Production (in million tonnes) State
2000-01
1999-00
Uttar Pradesh
42.32
45.65
Punjab
25.32
25.20
Andhra Pradesh
14.53
13.70
West Bengal
13.83
14.92
Haryana
13.25
13.06
Bihar
12.06
14.39
Karnataka
10.95
9.86
Maharashtra
10.08
12.70
Rajasthan
10.04
10.68
Madhya Pradesh
8.93
21.27
Tamil Nadu
8.90
8.97
Orissa
4.98
5.62
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Assam
4.17
4.04
Gujarat
3.68
4.05
Chhatisgarh
3.65
3.4
Uttaranchal
1.73
2.94
Others
5.49
2.71
Data interpretation
ANALYSIS OF RICE PRICES
Factors that affect Rice Prices are as follows: •
•
•
•
•
•
Role of weathe weatherr in rice rice produc productio tion n is immens immense. e. Temper Temperatu ature, re, Weather: Role rainfall and soil moisture are the important parameters that determine the crop condition. Further, natural calamities can also affect crops. Markets keep watch of these developments. Minimum Support Price: Changes in the minimum support prices (MSP) by the government also have immense impact on the price of rice. Government policies: Exchange rates, Fiscal policies, Export incentives and export promotion also influence price. Availability ity of substitut substitutee products products at cheaper rate may Substitute Substitute Product: Availabil lead to weakness in demand. This situation happens especially when the main products price tends to become higher. Consumption: Rice consumption depends on two factors - population and income. Lets take for example Asia. Rice is the staple food of Asia. Lowinco income me group groupss cons consum umee more more rice rice acco accord rdin ing g to the the per per capi capita ta inco income me incr increa ease se.. But But as the the inco income me incr increa ease ses, s, ther theree arri arrive vess a poin pointt when when the the consumption starts to dip. Income growth and reduction in population result in a low consumption of rice. Seasonal cycles: Seasonal cycles are present in rice cultivation. Price tends to be lower as harvesting progresses and produce starts coming into the
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market. At the time of sowing and before harvesting price tends to rise in view of tight supply situation. •
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Demand: Import demands as well as domestic demand. Breakthrough in the technology may increase the productivity and would lead to more supply. This may bring some softness in the price.
PRICE ELASTICITY OF RICE A price of of inputs is one major factor factor that can change the price input for rice. If the rice crop is limited it can cause the price to spike, or if there was a natural disaster in China China or Japan Japan it would would affect affect the price price of the the product. product. The next next factor factor that could coul d affect the the supply supply for rice is is technolog technological ical changes. changes. These changes changes can can be either negative negative or or positive for rice crops. New machinery machinery can increase the time it would normally take a person to cultivate and plant rice in rice beds in a flooded field or river water. There is really no substitution for rice, the the closest substitution would be be pasta. In the production of certain items prices of substitution would would be a factor in the shift of supply. supply. New firms or companies can affect the prices prices of rice if one company or firm decides to sell the product at a cheaper or higher rate. The expected future price of rice depends on the weather and if the rice crop is low or not. The market demand for rice has many factors, including income, prices of related goods, tastes, population, demographics and expected future prices.
PRICE ELASTICITY OF DEMAND OF RICE
2004 Per capita daily consumption consumption of rice
201 grams
2010
208 grms
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20
Price / kg
35
Price elasticity of demand on the basis of data of 2004 and 2010.
Ed= % change in quantity demanded /% change in price of rice
% change in quantity= (consumption of 2004 – consumption of 2010)* 100 Consumtion of rice in 2004 % change in quantity =
(207 –201)* 100
=
700/201 = 3.48
201
% change in Price=
(Price in 2004 – price in 2010)* 100 price of rice in 2004
% change in price =
(35-20)* 100 20
Ed =
3.48
=
.04
750 Ed > 1
=
1500/20 = 75 %
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This table shows that’s in the year 2004 the india per capita daily rice consumption and in 2010 the consumption has raised to 207 and the price has increased from 20 to 35kg rupees. The percentage change in quantity demanaded is less from the percentage change in the price of the rice . So that’s why the slope of price elasticity of demand is less than the unitary elastic demand.
INCOME ELASTICITY OF DEMAND OF RICE
2004 Per capita daily
201 grams
2010
208 grms
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consumption consumption of rice Per capita income
11,679
44,735
Income elasticity of demand on the basis of data of 2004 and 2010.
Ey= % change in quantity demanded/% change in income
% change in quantity= (consumption of 2004 – consumption of 2010)* 100 Consumtion of rice in 2004 % change in quantity =
(207 –201)* 100
=
700/201 = 3.48
201
% change in Income=
(Income in 2004 – Income in 2010)* 100 Per capita income in 2004
% change in income = (44,735-11,679)* 100 11,679 Ey =
3.48
=
.04
59.45 Ey > 1
=
694400/11,679 694400/11,679 = 59.45%
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This table shows that’s in the year 2004 the india per capita income in 2010 the consumption has raised to 207 and the price has increased from 20 to 35kg rupees. The percentage change in quantity demanaded is less from the percentage change in the price of the rice . So that’s why the slope of income elasticity of demand is less than the unitary elastic demand.
CROSS ELASTICITY OF DEMAND DEMAND OF RICE
There is mutual relationship between change in price and quantity demanded of two related goods. Change in price of one goods can cause change in demand of other goods. Eg when the price of basmati rice is is increases,then demand for tota rice will will increases and when price of basmati rice decreases , then demand of tota rice decreases. This can be showen by cross elasticity of demand ,
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ABSTRACT Rice is emerging as a vital export item after the opening up of agriculture market in India. To formulate effective macro economic policy for ensuring both export and domestic consumption of rice rice,, it beco become mess imper imperat ative ive to under underst stand and the the dynam dynamic icss of rice rice dema demand nd and and suppl supply. y. Acknowledging the fact that demand for rice is dependent upon overall consumption fund and other consumption needs of a given household we have employed the theoretical framework of Almost Almost Ideal Demand System (AIDS) to formulate formulate our household household demand system system using NSSO household survey data. Similarly it is also important to understand the supply elasticity of rice so that direction of supply with the implementation of agricultural trade policy can be examined. We have estimated a tranlsog cost function along with the share equations using Seemingly Unrelated Regression Equation Estimation( SURE) and used the estimated coefficients for estimating the supply coefficients using cost of cultivation data, as available from Ministry of Agriculture, Government of India. Using theses elasticities, an effort is made to understand the possible impact of a price change consequent upon opening up of the rice market on rice demand and supply. We have taken two states in India, namely Andhra Pradesh and West Bengal for the analysis since they are the two major rice producers in India and rice has the biggest share in the consumption basket of households in these two states.
Impact of price change on supply and demand of Rice in Andhra Pradesh and West Bengal
Comparative Study of Expenditure Elasticity in both the states
In this this pape paperr we have have esti estima mate ted d the the dema demand nd elas elasti tici citi ties es.. Ther Theree is not not much much difference in case of rural urban elasticities. Many of the previous studies like Murty(2000) pointed to this fact. In both the states the expenditure elasticities of rice and other cereal are greater than one in both rural and urban areas. This implies im plies that as the income increases there is increase of consumption of these commodities in greater proportion than the increase of income. But the expenditure elasticity in case of rice is greater in AP than WB in both rural and urban areas. So we can conclude that the responsiveness of the change of consumption of rice with the change of income is more in AP than WB in both rural and urban areas. The expenditure elasticity of dress is greater in AP than WB in both rural and urban areas. The expenditure elasticity of spices and pulses are greater than one in urban AP but they are less than one in urban WB. In case of rural AP the expenditure elasticities of edible oil and pulses are greater than their corresponding parts in case of rural WB. The expenditure elasticity of lubricants, edible oil, spices, and dress are less than one in both rural and urban areas in both the states indicating that
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these commodities are inelastic in nature. They are actually essential commodities and there is little variation in their demand with change of income. The expenditure elasticity of dress is lowest of all the types of commodities in both rural and urban areas in both the states. Actually we have incorporated basic dress which consist of basic essential dress. So dress is found to be inelastic in nature.
CRITICAL ANALYSIS •
•
•
•
•
•
•
•
•
•
•
The following strategies may be adopted to increase the productivity of rice in various states: Emphasis may be given on a cropping system approach rather than a single crop development approach..
Propagation of location specific crop production technologies in different agro-climatic zones. Replac Replaceme ement nt of low potent potential ial/pe /pest st suscep susceptib tible le old variet varieties ies by new high high yielding varieties with promising yield potential. To encourage cultivation of hybrid rice through demonstrations and making seed available to the farmers. Motivating the farmers to provide life saving irrigation to the crop wherever possible during long dry spells. Improving soil fertility. Emphasis on balanced use of plant nutrients along with the popularization of integrated plant management system. Use of bio-fertilizer. Popularization of line sowing in upland rice areas through suitable seeding devices establishment of desired level of plant population, easy in weed control and the application of other management techniques. Encouraging the use of machines as well as bullock drawn and hand operated implements. Effe Effect ctiv ivee cont control rol of pest pestss and and dise diseas ases es by emph emphas asiz izin ing g the the need need base based d application of pesticides.
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•
More emphasis emphasis on the adoption adoption of non-moneta non-monetary ry inputs inputs like timely sowing, sowing, maintainin maintaining g optimum optimum plant population, population, timely irrigation, irrigation, efficient efficient use of fertilizers, plant protection measures and timely harvesting of crop etc.
Findings
Rice is emerging as a vital export item after the opening up of agriculture market in India. To formulate effective macroeconomic policy for ensuring both export and domestic consumption of rice, it becomes imperative to understand the dynamics of rice demand and supply. Acknowledging the fact that demand for rice is dependent upon overall consumption fund and other consumption needs of a given household we have employed the theoretical framework of Almost Almost Ideal Ideal Demand Demand System System (AIDS) (AIDS) to formul formulate ate our househ household old demand demand system using NSSO household survey data. Similarly it is also important to understand the supply elasticity of rice so that direction of supply with the implementation of agricultural trade policy can be examined. We have estimated a tranl tranlso sog g cost cost func functi tion on alon along g with with the the share share equa equati tion onss usin using g Seem Seemin ingl gly y Unrelated Regression Equation Estimation and used the estimated coefficients for estimating the supply coefficients using cost of cultivation data, as available from Ministry of Agriculture, Government of India. Using theses elasticities, an effort is made to understand the possible impact of a price change consequent upon opening up of the rice market on rice demand and supply.
Conclusion
Almost ideal demand system( AIDS) has been used for estimation of price and expenditu expenditure re elasticity elasticity of rice along with other other important important food items and dress that compri comprise se the basic items items of consum consumpti ption. on. The own price elasti elasticit city y for rice rice is negative and less than than one but the expenditure expenditure elasticity of rice is greater than than one in the states states in both rural and urban areas. areas. However, However, the magnitude magnitude of own price elasticity elasticity in two states states in two different areas are different. different. In rural areas the own
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price elasticity of rice is more. But in urban areas the trend is just the opposite. The expenditure elasticity of rice shows that all states is more responsive in terms of chan change ge in dema demand nd for for rice rice in both both rura rurall and and urba urban n area areas. s. The The expe expend ndit itu ure elas elasti tici citi ties es are are grea greate terr than than one one whic which h indi indica cate tess ther theree is incr increa ease se in rice rice consumption in greater proportion with the increase in income. The trend in the price movement of rice is positive so due to price effect there is going to be a decl declin inee in the the dema demand nd for for rice rice.. Agric Agricul ultu ture re real real wage wage rate rate is also also show showin ing g a downward trend. This also well explains the reason for declining demand for rice in the nineties compared to eighties. But the potentiality of surplus generation depends on both demand and supply of rice. The supply elasticities for both the states are negative indicating economies of scale. The availability of surplus rice depends on the price situation of respective states after opening up of the economy. If opening up of the economy leads to increase in rice price then there will be net fall in the supply of rice after meeting the demand in both the states. But if the rice price falls then there will be availability of surplus rice. So whether there is going to be net availabil availability ity of rice for export from each of the states states depends on the situation situation of domestic price after opening opening up of the economy.
what research is??? It is another word for gathering of information. The more information we have the the clos closer er we get get of making making our own decis decisio ion. n.
Rese Researc arch h is the result result of
advancing advancing knowledg knowledgee created in the past. past. There are people people from all walks of life life that that contrib contribute ute to gather gathered ed informati information. on. These These are ordinary ordinary people people and extraordin extraordinary ary people. people. They include, include, teachers, teachers, students, students, scientists, scientists, professors, professors, schola scholars, rs, busine business ss owners owners,, librari librarians ans,, book book keeper keepers, s, writer writers, s, politi politicia cians ns and many more unknown unknown out there. there. These are everyday everyday citizens citizens we interact interact with. They all help with the flow information that people use for self help.
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Research is designed to solve a particular existing problems so there is a much larger audience eager to support research that is likely to be profitable or solve problems of immediate concern. We also must understand how research impact our our deci decisi sion on maki making ng..
Most Most peop people le make make deci decisi sion onss with withou outt gath gather ered ed
informations to back them up. Only few do. The problem is most people aren't aren't pat patie ient nt enough enough to put in the effor effort. t.
Rese Resear arch ch requ require iress time time,, effo effort rt,, and and
sometimes money to have the evidence you need to make a sound decision that's why many avoid avoid it. The research research you do and evidence evidence you gathered gathered will have impact impact on your future. Be adviced, adviced, considered considered the risks risks or consequences consequences of making an important decision with inadequate evidence. In conclusion conclusion research research is very vital vital to our everyday everyday decision decision making. making. It arms you from wrong informations and save time and money.
