New Economics Papers
on Agricultural Economics
Issue of 2010‒05‒08
seven papers chosen by

  1. Economics and Efficiency of Organic Farming vis-à-vis Conventional Farming in India By Charyulu Kumara D.; Biswas Subho
  2. Fertilizer Subsidy in India: Who are the Beneficiaries? By Sharma Vijay Paul; Thaker Hrima
  3. Information System for Brand-Variety Performance and Decisions: Study and Application for Cotton in India By Gandhi Vasant P
  4. Functional food consumption in Germany: A lifestyle segmentation study By Franz, Annabell; Nowak, Beate
  5. Intra-Household Labor Supply, Migration, and Subsistence Constraints in a Risky Environment: Evidence from Rural El Salvador By Halliday, Timothy
  6. Efficiency of Organic Input Units under NPOF Scheme in India By Charyulu Kumara D.; Biswas Subho
  7. Feasibility and Sustainability Model for Identity Management By Dass Rajanish; Pal Sujoy

  1. By: Charyulu Kumara D.; Biswas Subho
    Abstract: Organic farming systems have attracted increasing attention over the last one decade because they are perceived to offer some solutions to the problems currently besetting the agricultural sector. Organic farming has the potential to provide benefits in terms of environmental protection, conservation of non-renewable resources and improved food quality. India is bestowed with lot of potential to produce all varieties of organic products due to its diverse agro-climatic regions. In several parts of the country, the inherited tradition of organic farming is an added advantage. This holds promise for the organic producers to tap the market which is growing steadily in the domestic market related to the export market. In India, the land under certification is around 2.8 million ha. But, there is considerable latent interest among farmers in conversion to organic farming. However, some farmers are reluctant to convert because of the perceived high costs and risks involved in organic farming. Despite the attention which has been paid to organic farming over the last few years, very little accessible information actually exists on the costs and returns of organic farming in India. The empirical evidences of efficiency analysis of organic and conventional farming systems are scarce or even absent. So, the present paper focuses mainly on the issues like economics and efficiency of organic farming vis-à-vis conventional farming in India. Four states namely Gujarat, Maharashtra, Punjab and U.P were purposively selected for the present study. Similarly, four major crops i.e., cotton, sugarcane, paddy and wheat were chosen for comparison. A model based non-parametric Data Envelopment Analysis (DEA) was used for analyzing the efficiency of the farming systems. The crop economics results showed a mixed response. Overall, it is concluded that the unit cost of production is lower in organic farming in case of cotton and sugarcane crops where as the same is lower in conventional farming for paddy and wheat crops. The DEA efficiency analysis conducted on different crops indicated that the efficiency levels are lower in organic farming when compared to conventional farming, relative to their production frontiers. The results conclude that there is ample scope for increasing the efficiency under organic farms.
    Date: 2010–04–20
  2. By: Sharma Vijay Paul; Thaker Hrima
    Abstract: Agricultural subsidies that encourage production and productivity have been widely criticized because of the cost of subsidies and they are perceived to be far from uniformly distributed. There is a general view in academic, policy and political circles that agricultural subsidies are concentrated geographically, they are concentrated on relatively few crops and few producers and in many cases do not reach the targeted group(s). One of the most contentious issues surrounding input subsidies in general and fertilizer in particular in India is how much of what is paid out actually finds its way into the pocket of the farmer, and how much is siphoned away by the input companies. There has also been a debate about the issue of real beneficiaries of fertilizer subsidy like small vs. large farmers, well-developed vs. less developed regions, etc. Therefore, there is need to understand the fertilizer subsidy distribution pattern to assess whether the subsidy benefits the target group(s), an argument often made while giving any farm subsidy. This paper examines trends in fertilizer subsidy and the issue of distribution of fertilizer subsidies between farmers and fertilizer industry, across regions/states, crops and different farm sizes. The study shows that fertilizer subsidy has increased significantly in the post-reforms period from Rs. 4389 crore in 1990-91 to Rs. 75849 crore in 2008-09. As a percentage of GDP, this represents an increase from 0.85 per cent in 1990-91 to 1.52 per cent in 2008-09. The paper shows that general perception that about one-third of fertilizer subsidy goes to fertilizer industry is misleading because the underlying assumptions (i) that India’s entry into world market as an importer does not affect world prices, and (ii) world fertilizer markets are perfectly competitive, do not hold true. The world fertilizer trade-flows and markets are more concentrated and volatile and imports by India have significant impact on world prices. Moreover, with shift from the earlier cost-plus based approach to import parity pricing (IPP), the Indian fertilizer industry would be exposed to the world competition and efficient units would survive. Therefore, the proposed policy of direct transfer of fertilizer subsidy to farmers is misconceived and inappropriate and its adverse effects outweigh the perceived benefits of it. The study shows that fertilizer subsidy is more concentrated in few states, namely, Uttar Pradesh, Andhra Pradesh, Maharashtra, Madhya Pradesh, and Punjab. Inter-state disparity in fertilizer subsidy distribution is still high though it has declined over the years. Rice is the most heavily subsidized crop followed by wheat, sugarcane and cotton. These four crops account for about two-third of total fertilizer subsidy. The study highlights the existence of fair degree of equity in distribution of fertilizer subsidy among farm sizes. The small and marginal farmers have a larger share in fertilizer subsidy in comparison to their share in cultivated area. A reduction in fertilizer subsidy is, therefore, likely to have adverse impact on farm production and income of small and marginal farmers as they do not benefit from higher output prices but do benefit from lower input prices. This paper justifies the fertilizer subsidies and questions the rationale for direct transfer of subsidy to farmers.
    Date: 2009–07–27
  3. By: Gandhi Vasant P
    Abstract: Information on brand-variety performance is critical for small farmers in India since every year they need to make crucial decisions on which brand-variety seeds to plant. The livelihoods from their small farms and returns on all the inputs used depend critically on this decision. Yet no systematic information is available to them on this, and year after year the farmers are forced to decide based on guesses, hearsay and opinions which are frequently imperfect or even biased. Even companies and governments need to know about the actual performance of brand-varieties in different areas so as to be able to recommend correctly. Markedly, on the other hand, official crop-cutting surveys for estimation and assessment of actual yields are a regular feature of all states, and they also record some information regarding the inputs used including the brand-variety. However, the information is never examined from this point of view. Cotton is a major cash crop in India but has substantial problems particularly from extensive pest damage and poor yields. Brand-variety performance varies substantially and poor decisions frequently lead to crop failures and farmer suicides. A study was done on the performance of cotton varieties through a survey across four major Indian states and 694 farmers, covering pest resistance, inputs, yields, quality, price, value of output, cost of cultivation, and profits. This brought out the features and variations, and on this foundation, a brand-variety performance information system is proposed which would draw upon information from the regular crop-cutting surveys, collate it, analyze it, and make findings available to the farmers. This would help provide correct information and advice to farmers over diverse agro-ecological settings. Through this, the farmers would be able to make better informed brand-variety decisions, which would help reduce crop failures and risks and improve farm performance and incomes.
    Date: 2009–09–30
  4. By: Franz, Annabell; Nowak, Beate
    Abstract: Due to increasing health consciousness among consumers, there is an ever‐growing demand for food and beverages with health‐improving components. Not only ‘light’ and low fat products are in demand, but increasingly so‐called well‐being products and food which can prevent certain diseases. The German market for functional food is still growing. But who are the German functional food consumers? In an online‐survey referring to the Food‐ Related Lifestyle by BRUNSØ and GRUNERT (1995) we tried to identify different groups of functional food buyers in Germany and to answer the following questions: If there are different consumer groups, how do they vary in their functional food consumption, their buying motives for functional food and their lifestyles? In conclusion, we have identified two different groups of functional food consumers in Germany: The “Health oriented functional food buyers” and the “Convenient functional food buyers” and give recommendations for marketing strategies. --
    Keywords: functional food, cluster analysis, Food-Related Lifestyle
    Date: 2010
  5. By: Halliday, Timothy (University of Hawaii at Manoa)
    Abstract: We use panel data from El Salvador to investigate migration and the intra-household allocation of labor as a strategy for coping with uninsured risk. Consistent with a model of a farm household with a binding subsistence constraint, we show that adverse agricultural productivity shocks increased both male migration to the US and the supply of male agricultural labor within the household in El Salvador. In contrast, after damage sustained from the 2001 earthquakes, female migration from El Salvador declined. This is consistent with the earthquakes increasing the demand for home production. Overall, household responses to uninsured risk appear to be consistent with a simple framework in which household members are allocated to sectors according to their comparative advantage. Finally, we show no evidence that the labor market in El Salvador is capable of helping rural Salvadoran households to buffer the effects of adverse shocks.
    Keywords: migration, labor supply, insurance, intra-household allocation, subsistence constraints
    JEL: J22 J61
    Date: 2010–04
  6. By: Charyulu Kumara D.; Biswas Subho
    Abstract: India had developed a vast and rich traditional agricultural knowledge since ancient times and presently finding solutions to problems created by over use of agrochemicals. Todays’ modern farming is not sustainable in consonance with economics, ecology, equity, energy and socio-cultural dimensions. The entire agricultural community is trying to find out an alternative sustainable farming system, which is ecologically sound, economically and socially acceptable. Sustainable agriculture is unifying concept, which considers ecological, environmental, philosophical, ethical and social impacts, balanced with cost effectiveness.The answer to the problem probably lies in returning to our own roots. Traditional agricultural practices, which are, based on natural and organic methods of farming offer several effective, feasible and cost effective solutions to most of the basic problems being faced in conventional farming system. With having such a due importance of organic farming in India, the government has initiated the programs like National Programme for Organic Production (NPOP) in 2000 and National Project on Organic Farming (NPOF) in 2004. Availability of quality organic inputs is critical for success of organic farming in the country. Setting up of organic input units are being financed as credit-linked and back-ended subsidy through NABARD and NCDC under NPOF Capital investment subsidy scheme. Three types of organic input production units namely; fruit/vegetable waste units, bio-fertilizer unit and vermi-hatchery units are being subsidized @ 25 per cent of their total project costs respectively. Around 455 vermi-hatchery units, 31 bio-fertilizer units and 10 fruit and vegetable waste units were sanctioned across different states by NABARD till May, 2009. But, NCDC has so far sanctioned only two bio-fertilizer units in Maharashtra state. This paper made a humble attempt to know the present status of these units, capacity utilization and their efficiency. A sample of 40 vermi-hatchery units were selected for the present study from four states namely; Gujarat, Maharashtra, Punjab and U.P respectively based on their weights in total population. A model based non-parametric Data Envelopment Analysis (DEA) was used for analyzing the efficiency of organic input units. Multiple regression models are also used to estimate the drivers for efficiency in vermi-hatchery units. The average installed capacity of the sample unit was 150 TPA. But, the mean production was around 76.2 TPA. The average capacity utilization rate was only 50.8 per cent which indicates nearly half of its full potential. Across different states, this value was the highest in Maharashtra (124.6%) followed by U.P (70.0%), Punjab (22.0%) and Gujarat (16.1%). The main reasons for low capacity utilization were lack of demand, poor production skills and insufficient infrastructure. The estimated mean technical, allocative and economic efficiencies of sample vermi-hatchery units under DEA-CRS model were 63.7, 50.95 and 32.95 per cent respectively. The results clearly indicate the low technical, allocative and economic efficiency of sample units. Correspondingly, the mean values for DEA-VRS model were 83.39, 59.42 and 50.24 per cent. These values conclude that organic inputs are suffering from both allocative inefficiency as well as scale inefficiency. Factors like size of the unit, contribution of family labor have shown positive relation with technical as well as scale-efficiencies. Participation in the training programs was also enhancing technical efficiency. The age of the unit and subsidies discouraged the scale-efficiency.
    Date: 2010–04–01
  7. By: Dass Rajanish; Pal Sujoy
    Abstract: National Identity projects and providing such identification to citizens in various countries around the globe has captured attention of late. Although the perceived benefits are numerous, nonetheless the challenges and bottlenecks for a successful rollout are many. The objective of this paper is to put forward the drivers and inhibitors for adopting a common identity management system across various organizations and to suggest a model for determining the feasibility and sustainability of such a system. The paper develops on TAM for proposing a model for identifying the drivers and inhibitors of managing such an identity management exercise. This paper highlights various factors affecting successful implementation of an identity management system and investigates the impact of these factors. The model suggested in this paper would allow organizations and policy makers to determine the critical factors for the implementation of an identity management system in large scale.
    Date: 2009–12–10

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