Analysis of resource-use efficiency among farms over time in an Indian village
Student name: Ms Vedanta Dhamija
Guide: Dr Nandan Nawn
Year of completion: 2015
Host Organisation: TERI University
Abstract: The importance of Agriculture in the Indian economy cannot be emphasized enough. But this sector has been slowing down since the past the few years, which is a cause of concern. In the face of increasing demand for food, it is imperative for supply to keep pace, which would require production to increase manifold. Since the area under cultivation has almost exhausted, there is an urgent need to increase productivity in order to ensure sufficient food availability. The Total Factor Productivity growth has not been very robust, implying that increase in production can be attributed to high consumption of inputs. In a world where natural resource constraints are becoming increasingly binding, a high material consumption, without a commensurate increase in output, raises serious concerns about sustainability of agriculture. The precise need is to limit the material throughput, without compromising on the level of output i.e. a need to become more ‘efficient’.
In an attempt to examine the situation through a micro lens, this study analyses the efficiency of Wheat and Paddy farming practices of Village Palanpur for the periods 1983 and 2009 using Data Envelopment Analysis, and examines the sources of Technical efficiency, with special emphasis to ‘farm size’ due to the attention it merits because of the celebrated farm size-productivity debate.
The study finds that measures of efficiency in monetary and resource-use terms, which were aligned in 1983, showed divergence in 2009, with resource-use efficiency falling significantly in the later period. For 2009, mean efficiency in terms of resource use was observed to be 52.4% and 63.6% for Paddy and Wheat respectively, which indicates that there is scope for improving efficiency under the existing set of practices. Small farms were observed to be more efficient for Paddy, but no such relation could be established for Wheat. Access to credit, education and type of tenancy contract were found to be important determinants of efficiency differentials across farms.
Keywords: Agriculture; Farm size; Productivity; Technical Efficiency; Data Envelopment Analysis; Palanpur; Paddy; Wheat
