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Drought, Agricultural Risk and Rural Income

Understanding agricultural risks and the ways of managing it are very crucial in the context of their impact on agricultural production and livelihood of the people, particularly in a water limiting environment. Although the use of high-yielding varieties has brought huge gains in yield, variability is still a formidable production risk in a rain-fed environment. Estimates show that the intensity of drought is higher during the maximum tillering stage of rice production, emphasising the need for developing drought-resistant rice varieties. It is imperative that the varieties meant for a water limiting environment should ensure minimal level of yield during the stress period and this could induce the farmers to go for a higher level of adoption. Continued research on development of drought-tolerant rice varieties and seed supply management are crucial.

Drought, Agricultural Risk and Rural Income Case of a Water Limiting Rice Production

Environment, Tamil Nadu

Understanding agricultural risks and the ways of managing it are very crucial in the context of their impact on agricultural production and livelihood of the people, particularly in a water limiting environment. Although the use of high-yielding varieties has brought huge gains in yield, variability is still a formidable production risk in a rain-fed environment. Estimates show that the intensity of drought is higher during the maximum tillering stage of rice production, emphasising the need for developing drought-resistant rice varieties. It is imperative that the varieties meant for a water limiting environment should ensure minimal level of yield during the stress period and this could induce the farmers to go for a higher level of adoption. Continued research on development of drought-tolerant rice varieties and seed supply management are crucial.

K N SELVARAJ, C RAMASAMY

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IntroductionIntroductionIntroductionIntroductionIntroduction

U
nderstanding of drought impact has moved from static to a dynamic view of poverty and from ex ante to ex post vulnerability as the economic cost of managing the aftermath of drought is much higher due to multidimensional effect and it also minimises the risk management capacity of the households leading to household food insecurity. Apart from yield gap [Siddiq 2000], gains from the green revolution areas have been plateauing due to technological stagnation1 coupled with biotic and abiotic stresses such as insects/pests, diseases, adverse soils, genetic/physiological and adverse climatic and environmental factors [Ramasamy et al 1996, Ramasamy and Jatileksono 1996]. On the other hand, consequent to population growth, the demand for rice in India is projected at 128 million tonnes for the year 2012, which will require a yield level of 3,000 kg of rice per hectare. Therefore, it is becoming increasingly clear that the second green revolution has to come from the rainfed areas.2 But large areas under less-favoured region are characterised by the resource-poor small and marginal farmers, who depend on agriculture, have little means of coping with adversities.3 These regions tend to be backward in infrastructure, amenities and supporting services for agriculture particularly, low investments in technology and inputs.

In the dry lands, rainfall is a dominant production risk. Rainfall risk could be both covariate (i e, a systemic risk) and individual specific depending on the onset date of monsoon and rainfall distribution across the crops, soil types and regions. Because of rainfall aberrations, lack of high-yielding varieties (HYVs) and lower rate of their adoption, average yield was about 30-35 per cent higher in irrigated ecosystem4 than in the rainfed ecosystem [Janaiah et al 2000]. Further, in these water limiting production ecosystems, price and input risks are far higher than in the irrigated rice ecosystem. Always there is high level of price risk due to substantial production lags in agriculture production as decisions are made far in advance of the date when output is realised. Because of substantial production lags in agriculture, farmers need to forecast the prices that will prevail at the time of sale [Ramaswami et al 2003] and the loss to farmers occurs when realised prices are lower than the expected price. Understanding agricultural risks and the ways of managing it therefore is very crucial in the context of their impact on agricultural production and livelihood of the people particularly in the water limiting environment. The paper is based on the secondary data (1970-71 to 2002-03) collected from various published sources for Tamil Nadu and various water limiting rice production environments (the districts, namely, Ramnad, Thiruvallur, Sivaganga and Coimbatore) and farm survey data collected for the years between 2001-02 and 2003-04 from 230 farm households spreading all these districts. These districts were chosen due to frequent rainfall failure, predominant cultivation of rice under dry and semi-dry conditions and fast declining in water table.5

IIIIIIIIII
DroughtDroughtDroughtDroughtDrought

Rainfall, groundwater availability, reservoir levels and crop conditions determine the nature and extent of drought in the state. Tamil Nadu has eight drought-prone districts covering 8,33,997 km, or about 64 per cent of the total area of the state. The southern zone of Tamil Nadu is under the rain shadow region, having prolonged dry climate. Drought occurs frequently in Tamil Nadu and in the districts, namely, Ramnathapuram, Thiruvallur, Coimbatore and Sivagangai. Red, black and alluvial soil types predominate in Tamil Nadu, but sandy soils in the southeast part of the state are prone to chronic droughts. About 30 per cent of annual rainfall is recorded in the south-west monsoon and 50 per cent is contributed by the north-east monsoon through cyclonic activity. The state receives nearly 80 per cent of its annual rainfall during the north-east monsoon, whereas it has experienced below normal rainfall in the south-west monsoon for the 30 per cent of the years in the last 25 years [Ramasamy et al 2003]. During the south-west monsoon period water demand always exceeds rainfall, but water deficit is quite low in the northeast monsoon period. Hence, due to severe water deficit, drought recurs during the south-west monsoon. It is evident that drought occurs once in five years in Tamil Nadu and in the rainfed rice production environments.6 It was estimated that the average probability of shortfall in rainfall was 0.26, which is higher than the average probability of the normal rainfall (ibid). During the drought period the average rainfall was 694 mm in Tamil Nadu, while it was 965 mm in the normal period. In Thiruvallur district, the shortfall in rainfall was 60 per cent, while it was 53 per cent and 47 per cent in Coimbatore and Ramnad districts, respectively during the drought period as compared to the normal rainfall (ibid).

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Risk of Input useRisk of Input useRisk of Input useRisk of Input useRisk of Input use

Though the yield enhancing technologies have been developed for the dryland areas, willingness of the farmers to adopt them, when made available, is questionable due to lack of sufficient resources for investments, particularly on inputs such as fertilisers and mechanical technologies.7 Fertiliser consumption by crops in a region is considered to be a function of level of irrigation, area sown with HYVs, cropping pattern and prices of crops and fertilisers. Though there is a strong association of expenses on irrigation and use of fertiliser in irrigated crops, lack of capital and uncertainty about soil moisture conditions restricts the fertiliser use in low rainfall region. Evidence shows that N, P and K consumption on an average per ha of gross cropped area in Tamil Nadu for the period between 1985-86 and 1998-99 was 87.90,

32.15 and 34.78 kg respectively in the irrigated areas, while it was 54.62, 20.08 and 25.72 kg per hectare in the rainfed areas [Selvaraj et al 2002]. HYVs coverage was higher during the early phases of green revolution and increased tremendously in the irrigated environment compared to the rainfed environment. Since HYVs require higher dose of fertilisers to realise their yield potential, fertiliser consumption is higher in the irrigated areas. About 43 per cent of the unirrigated area is treated with fertilisers in the rainfed areas as compared to 87 per cent in the irrigated areas [GoI 2001]. Albeit evidence shows that fertiliser application in consonance with onset of monsoon and soil moisture availability resulted in a minimum 50 per cent increase in the yield with benefit-cost ratio of 3:1, most often low and improperly matching soil moisture and fertiliser application in the rainfed agriculture have reduced the chances to achieve higher crop yields.

Strategy for prospective growth in the fertiliser use rests on exploiting the remaining untapped potential (mostly in dryland areas) and raising the economic potential of fertiliser use through improving fertiliser responsiveness of the crops. Risk due to drought is reflected in the level of investment made in modern inputs such as fertilisers and pesticides. Current level of fertiliser consumption in the state in terms of NPK is 85.59, 34.51 and

41.26 kg per hectare, while it is 51.36, 20.71 and 24.76 kg per hectare for rice production. There was a marginal decline in fertiliser consumption per hectare in the state during the drought period and in other water limiting production environments. The nitrogenous fertiliser consumption in the state decreased to 4.09 lakh tonnes in the drought period weighed against 4.68 lakh tonnes in the normal period. Similarly, there was a reduction in the consumption of phosphate and potash fertilisers by 13 and 7 per cent respectively during the drought period. Consumption of fertiliser for rice was found less in the drought period particularly in Ramnad and the reduction was very high as compared to that of other production environments since the non-system tank forms the major source of irrigation8 in Ramnad, which solely depends on rainfall. Estimates show that consumption of NPK nutrients per hectare of rice production was 29.45, 7.87 and 9.15 kg, respectively during the normal period and it declined by 39, 51, 65 per cent, respectively in Ramnad due to drought.

Much of output variability is either due to weather or due to pests and diseases. The effects of weather on crop yields are specific to the crop, soil type, region and other factors such as whether the land is irrigated or not. Rainfall is the pre-eminent weather variable that causes yield fluctuations. According to the report of the National Commission on Agriculture [GoI 1976], rainfall fluctuations could be responsible for 50 per cent of variability in yields. In the case of rice, the distribution of rainfall during the crop-growing season is found to be the most crucial weather parameter. Based on the water requirement for rice (Appendix), an occurrence of drought in the growth phases of rice cultivation was estimated and provided in the Table1. Estimates show that the intensity of drought was higher during the first season and occurred during the maximum tillering stage emphasising the need for developing drought-resistant varieties to withstand an early drought. Further, the econometric results show that productivity of rice is closely linked with the onset and distribution of rainfall and it is found that rainfall influence rice yield during the drought period (elasticity = 0.308), while yield response to fertiliser input, which is significantly determining yield during the normal period, declined during the drought period. Estimated elasticity of phosphorous and potash was 0.738 and 0.351 for normal period and they are statistically significant at higher level of probability. While the magnitude of elasticity of these factor inputs decreased and turned to be not significant during the drought period (Table 2).

Table 1: Occurrence of Drought in the Growth PhasesTable 1: Occurrence of Drought in the Growth PhasesTable 1: Occurrence of Drought in the Growth PhasesTable 1: Occurrence of Drought in the Growth PhasesTable 1: Occurrence of Drought in the Growth Phases
of Rice Productionof Rice Productionof Rice Productionof Rice Productionof Rice Production

(mm)

Days Water Drought Period Rainfall* Deficit Requirement Season I Season II Season I Season II

First 30 days 507.89 33.75 117.95 504.14 389.94 Second 30 days 246.68 57.15 131.62 189.53 115.06 Third 30 days 145.28 84.08 114.17 61.20 31.11

Note: * Average of drought months with respect to Ramnad district. Source: Secondary data.

Table 2: Effect of Drought on Yield Response to InputsTable 2: Effect of Drought on Yield Response to InputsTable 2: Effect of Drought on Yield Response to InputsTable 2: Effect of Drought on Yield Response to InputsTable 2: Effect of Drought on Yield Response to Inputs
#####
:::::
Log Linear EstimatesLog Linear EstimatesLog Linear EstimatesLog Linear EstimatesLog Linear Estimates

(Dependent Variable: Productivity)

Normal Drought
Auto Correlation Auto Correlation
Adjusted Coefficients Adjusted Coefficients
Constant -0.107 (-0.060) -3.337 (-0.331)
N (kg/ha) -1.162*** (-4.768) 0.256 (1.417)
P (kg/ha) 0.738*** (5.827) -0.127 (-0.924)
K (kg/ha) 0.351** (2.291) 0.111 (0.948)
Rainfall (mm) 0.253 (1.002) 0.308** (2.219)
Trend (time) 0.030* (1.618) -0.00001 (-0.002)

Notes: # Districts constitute the sample. *** p < 0.01 (two tailed test), ** p < 0.05 (two tailed test) and * p < 0.10 (two tailed test).

Source: Secondary data.

IVIVIVIVIV
HYVs Adoption and Yield RiskHYVs Adoption and Yield RiskHYVs Adoption and Yield RiskHYVs Adoption and Yield RiskHYVs Adoption and Yield Risk

Empirical evidence shows that there has been a consistent rise in the area under HYVs9 in rainfed and dryland areas. However, there exists a big yield gap between irrigated and rainfed areas. Though HYVs have spread to dryland areas, the adoption of associated technologies have been poor [Asaduzzaman 1979; Shotelersuk 1981; Agarwal 1985; Thapa 1989; Fugile 1989; Hossain 1990; Azam 1995; Hossain 1996]. Performance of Tamil Nadu’s agricultural sector has been impressive since 1960s when early modern crop varieties were introduced.10 After the introduction of modern varieties, a phenomenal breakthrough in the productivity of crops was achieved resulting in higher production of most of the crops. Although the use of HYVs has brought huge gains in yield, yield variability is still a formidable production risk as is evident from the yield gaps and yield variability of rice varieties in irrigated and rainfed environment during the normal and drought periods. Though yield gap of rice also reduced over the time period in both the irrigated and rainfed ecosystem, the rate of reduction is higher in the irrigated ecosystem as compared to rainfed environment due to favourable technologies and endowments. Estimated yield gap, which was 1,653 kg per hectare during 1970s in the irrigated rice production domain, has come down to 152 kg during 1990s, while it declined to 443 kg from 943kg during the same period in the water limiting rice ecosystem. Yield variability (measured in terms of coefficient of variation) of HYVs was higher during the drought period ranging from 12 per cent to 29 per cent, while it is less in the case of land races ranging between 6 and 9 per cent. Household survey results also show that yield declined sharply with the intensity of drought (Table 3). About 30 per cent of yield reduction was due to water stress (Table 4) as is revealed by the results of decomposition analysis11 and reduction in yield due to curtailment of input usage accounts for 5 to 9 per cent.

Yield variability was found higher in the rainfed environment even during the normal period compared to variability in area (Table 5). As the farmers have no options except to cultivate rice even during the drought period, area variability was found less. However, yield variability increased during the drought period as compared to the normal period due to risk of rainfall failure. Area variability was highest in Coimbatore during the normal period, while yield variability was found higher during the drought period. Since wells form the major source of irrigation, the long spell of drought led to the decline in water availability in the wells and most of the wells dried up results in loss in productivity. Tanks (40 per cent) and wells (45 per cent) form the major source of irrigation in Thiruvallur district and rainfall failure impacts area under rice cultivation as it is evident from the high area variability during the drought period in this district. Average rainfall in the Ramnad decreased more than 50 per cent during the drought period. Irrigation tanks, which form major source of irrigation in the rainfed areas normally do not receive sufficient water even during the normal period and dried up during the drought period. All the private and public wells in the villages also dried up led to crop failure. Moreover, variability in income in Ramnad district was explained more by variability in yield than the price both during normal and drought periods, while in other two districts and the state, variability in rice income was more due to price variability.12 The negative correlation between prices and yields reduces crop revenue fluctuations and provides a natural edge to farmers but such relationship was not observed in the most of the rice production environments (Table 6). Therefore yield stabilising would be much more effective in stabilising revenues in the rainfed districts, while price stabilisation, on the other hand, is an effective strategy to reduce revenue risk in the irrigated districts.

Farmers in water limiting production environments are vulnerable to various risks, impacting rice production. However, farmers continue farming as before irrespective of increase in the risk of crop failure by adopting management practices particularly varietal technology. Improvements in technology and production practices facilitated the farming households to reduce agronomic risks and enhance yield of crops. Though the modern HYVs made a big dent in most of the favoured areas, land races continue to dominate in rainfed production environment. HYVs of rice were predominantly cultivated in Tamil Nadu under irrigated condition, accounting for almost 90 per cent of

Table 3: Intensity of Drought and Rice Productivity*Table 3: Intensity of Drought and Rice Productivity*Table 3: Intensity of Drought and Rice Productivity*Table 3: Intensity of Drought and Rice Productivity*Table 3: Intensity of Drought and Rice Productivity*

Intensity of Ramnad Drought Per Cent of Farmers* Yield (Kg/ha) Thiruvallur Per cent of Farmers* Yield (Kg/ha)
Severe 84 1123 23 2123
Moderate 16 1546 66 2564
Less 2316 11 3124

Notes:* Based on the drought score. Drought score= 12* Observed yield/standard yield in the village [Sharma 2004]. >4 = Severe drought, 4-6 = Moderate drought, 7-0 = Less drought and 9-12 = No drought.

Source: Farm survey.

Table 4: Decomposition of Rice ProductionTable 4: Decomposition of Rice ProductionTable 4: Decomposition of Rice ProductionTable 4: Decomposition of Rice ProductionTable 4: Decomposition of Rice Production
in Rainfed Environmentin Rainfed Environmentin Rainfed Environmentin Rainfed Environmentin Rainfed Environment

(Per cent)

Source of Change Coimbatore Ramnad Sivagangai Thiruvallur

Change in output -21.31 -38.26 -32.37 -9.18 Drought -14.01 -29.71 -25.25 -4.26 Change in input -7.3 -8.55 -7.12 -4.92 Labour 1.24 1.82 1.96 0.36 Fertiliser -6.14 -9.73 -8.17 -5.45 Plant protection chemicals -2.19 -0.97 -0.82 1.13

Source: Farm survey.

Table 5: Decomposition of Instability in Annual Output GrowthTable 5: Decomposition of Instability in Annual Output GrowthTable 5: Decomposition of Instability in Annual Output GrowthTable 5: Decomposition of Instability in Annual Output GrowthTable 5: Decomposition of Instability in Annual Output Growth
Rate of Rice during the Normal and Drought PeriodsRate of Rice during the Normal and Drought PeriodsRate of Rice during the Normal and Drought PeriodsRate of Rice during the Normal and Drought PeriodsRate of Rice during the Normal and Drought Periods

District Percentage of Variation in Output Growth Rates* Normal Period Drought Period Overall Area Yield Cov Area Yield Cov Area Yield Cov (A,Y) (A,Y) (A,Y)

Coimbatore 86.25 10.45 3.30 22.25 65.34 12.41 78.01 15.44 6.55 Ramnad 12.15 72.81 15.04 5.57 70.85 23.58 14.07 70.57 15.36 Thiruvallur 21.41 77.61 0.98 91.44 5.65 2.91 27.66 62.01 10.33 Tamil Nadu 34.19 56.22 9.59 19.73 76.72 3.55 34.00 54.16 11.84

Notes: Cov-Covariance; A-Area; Y-Yield

* 1970-71 to 2002-03

Table 6: Decomposition of Variability in Rice IncomeTable 6: Decomposition of Variability in Rice IncomeTable 6: Decomposition of Variability in Rice IncomeTable 6: Decomposition of Variability in Rice IncomeTable 6: Decomposition of Variability in Rice Income

(Per cent)

District Normal Period Drought Period
Var (P) Var (Y) Cov (P,Y) Var (P) Var (Y) Cov (P,Y)
Coimbatore 62.66 9.84 27.5 68.4 24.03 7.57
Ramnad 37.09 52.51 10.4 37.31 71.4 -8.71
Thiruvallur 60.35 26.98 12.67 89.86 6.32 3.82
Tami Nadu 51.15 15.53 33.32 62.04 32.28 5.68

Note: P – Price, Y – Yield, Var – Variance, Cov – Covariance Source: Secondary data.

the area, while more than 50 per cent of area under rainfed condition is extensively cultivated with land races (Table 7). Though numbers of new modern improved rice varieties suitable for moisture stress conditions have been released by the Tamil Nadu Agricultural University, the spread of new drought-resistant rice varieties is less. Poor adoption of drought-tolerant rice varieties is attributed to poor adaptation of new varieties in the rainfed production environment, access to seeds and range of socio-economic constraints. Farmers were cultivating wide range of varieties like IR 36, IR 20, PMK1, ADT 36, ADT 39, ADT 43, Ponni, Bapatla, TKM 9 and MDU 5 apart from land races. In Ramnad, due to failure of monsoon rains and consequential decline in the water table, crop water demand could not be met from the existing irrigation sources. So farmers normally take up rice cultivation by broadcasting the seeds immediately after the first shower and expect subsequent rainfall during the crop period. If rainfall fails, entire crop is lost. Hence, adoption of land races like Chitraikar, Norungan and Nootripattu in Ramnad district particularly during the drought period was found higher as these land races assure a minimal yield during the drought period.

Farmers in the rainfed production environment are operating at suboptimal level of production.13 On comparing actual and optimal cost of cultivation, for the same production level, farmers incurred higher cost due to risk of adopting varieties with less response to technological inputs. Farmers incurred an additional cost of Rs 899 for realised production and scope still exists to increase yield by 228 kg per hectare with the available technology and resources. About 90 per cent of the farmers in rainfed environment were found inefficient since actual yields were lower than the optimal yield in those farms (Table 8) and yield loss due to risk in rainfall failure was higher in HYVs compared to land races. Even 10 per cent increase in risk resulted in 5.4 per cent decline in the yield of modern varieties in Ramnad district. However, yield reduction in land races was minimal and it was found that a 10 per cent increase in risk could cause yield to decline by only 0.2 per cent. Yield reduction of HYV in other selected districts, namely, Sivagangai and Thiruvallur was found less, despite the variability in rainfall, due to supplementary sources of irrigation.14 Yield reduction of HYVs would be 2 per cent and 0.6 per cent in Sivagangai and Thiruvallur districts if risk of drought would increase by 10 per cent (Table 9).

Increases in land productivity have to be achieved by conserving soil moisture and selecting crop varieties having potential for higher productivity under water stress conditions. Farmers in the study area are cultivating rice under dry and semi-dry conditions. Though the dry and semi-dry rice reduces the possible risk of late season drought, at the same time it increases the risk of early season drought, if early season rainfall is uncertain. In this case, sowing itself may not be possible. Even if the sowing is taken up, there is no guarantee for germination of seeds for want of enough moisture. If early rains are interrupted by long dry periods, the pre-monsoon sown dry and semi-dry rice fails unless the varieties chosen possess drought tolerance character as that of most of the local land races traditionally grown in dry and semi-dry conditions. It was estimated that area under HYVs during the drought period decreased to an extent of 2.48 lakh hectares, while area under land races declined to an extent of

1.03 lakh hectares in the state. Loss in area under land races due to drought was comparatively less. Area under land races increased in Ramnad and Thiruvallur in the drought period. The increase in area under land races was 0.71 and 0.96 lakh hectares respectively in Ramnad and Thiruvallur. Therefore, technology should produce adequate margin of returns over cost under drought condition. A partial budget technique was used to assess the profitability of land races compared to modern varieties due to drought. Farmers in Ramnad realised on an average 4.2 tonnes of paddy per hectare from HYVs and 3.3 tonnes per hectare from land races during the normal period. Though yield realisation from land races is found lesser, farmers desire to grow them due to an assurance of minimum level of yield during the drought period. Estimated incremental benefit in the drought period for land races was Rs 5,783 per hectare, while it was Rs 2,165 per hectare for HYVs (Table 10) revealing the drought-tolerance

Table 7: Performance of HYVs and Land RacesTable 7: Performance of HYVs and Land RacesTable 7: Performance of HYVs and Land RacesTable 7: Performance of HYVs and Land RacesTable 7: Performance of HYVs and Land Races

(000’ha)

Coimbatore Ramnad Thiruvallur Tamil Nadu 1980s 1990s 1980s 1990s 1980s 1990s 1980s 1990s

Irrigated HYV 88.97 80.8 146.58 152.56 186.53 236.38 1801.89 1973

(100) (100) (89.33) (98.5) (84.27) (98.88) (92.77) (98.72) LV --17.5 2.32 34.83 2.68 140.53 25.56

(10.67) (1.5) (15.73) (1.12) (7.23) (1.28) Total 88.97 80.8 164.08 154.88 221.36 239.06 1942.42 1998.56

(100) (100) (100) (100) (100) (100) (100) (100)

Rainfed HYV 0.03 0.01 36.73 28.53 18.9 14.14 83.54 79.9

(27.27) (7.69) (36.70) (28.33) (66.48) (82.88) (44.88) (48.39) LV 0.08 0.12 63.35 72.16 9.53 2.92 102.62 85.21

(72.73) (92.31) (63.30) (71.67) (33.52) (17.12) (55.12) (51.61) Total 0.11 0.13 100.08 100.69 28.43 17.06 186.16 165.11

(100) (100) (100) (100) (100) (100) (100) (100)

(Figures in parentheses denote per cent). Source: Secondary data.

Table 8: Efficiency of Rice ProductionTable 8: Efficiency of Rice ProductionTable 8: Efficiency of Rice ProductionTable 8: Efficiency of Rice ProductionTable 8: Efficiency of Rice Production

Cost of Cultivation Yield (Kg/ha) (Rs/ha) Actual Optimum Actual Optimum

Rainfed with supplementary sources 14471 14775 4416 4416 Rainfed 7433 6535 2498 2726

Source: Household survey.

Table 9: Impact of Risk (Drought) on Yield of Rice –Table 9: Impact of Risk (Drought) on Yield of Rice –Table 9: Impact of Risk (Drought) on Yield of Rice –Table 9: Impact of Risk (Drought) on Yield of Rice –Table 9: Impact of Risk (Drought) on Yield of Rice –
Log Linear EstimatesLog Linear EstimatesLog Linear EstimatesLog Linear EstimatesLog Linear Estimates

Coefficients t-value

Ramnad

HYVs -0.540** -2.746

Land races -0.016 -0.110 Sivagangai

HYVs -0.190* -1.736 Thiruvallur

HYVs -0.062** -2.442

** p < 0.05 (two tailed test) * p < 0.10 (two tailed test). Source: Farm survey.

Table 10: Profitability of Cultivation of HYVs and Land RacesTable 10: Profitability of Cultivation of HYVs and Land RacesTable 10: Profitability of Cultivation of HYVs and Land RacesTable 10: Profitability of Cultivation of HYVs and Land RacesTable 10: Profitability of Cultivation of HYVs and Land Races
during Drought Periodduring Drought Periodduring Drought Periodduring Drought Periodduring Drought Period

(Rs/ha)

Land Races HYVs Added Cost/ Reduced Cost/ Added Cost/ Reduced Cost/ Reduced Return Added Return Reduced Return Added Return

Cost -2563 2563 -Return -3220* -4727 Total -5783 2563 4727 Incremental

benefit (Rs) 5783 2165

Note: * Based on the difference in the yield reduction of HYVs and land races due to drought. Though yield reduction is lower in land races, productivity of HYVs is higher in drought period. However, due to reduction in cost, land races fetch marginally higher returns.

Source: Farm survey.

traits of land races. Therefore, it is imperative that varieties meant for water limiting environment should ensure a minimal level of yield during the stress period and that could induce the farmers to go for higher level of adoption.

Displacement of traditional varieties by improved varieties has changed the production practices especially in terms of greater use of nutrients and pesticides. Estimates of factor share imply that technological change in rice cultivation is land saving, at the same time fertiliser, labour and plant protection chemical intensive15 (Table 11). The HYV needs high quantum of fertilisers owing to their responsiveness. As a result weeds grow profusely and necessitate more labour for weeding. Further, labour requirement for other operations like planting, harvesting and threshing is also higher for cultivation of HYVs. However, the production elasticity of fertiliser (0.319) and labour (1.051) indicates that marginal return from fertiliser and labour is higher in HYVs compared to land races. Currently area under rice in the state is 1.52 million hectares of which ADT 43 constitutes nearly 21 per cent followed by Improved White Ponni (16 per cent), ADT 39 (14 per cent), ADT 36 (8 per cent), CO 43 (7.5 per cent), ADT 38 (6.73 per cent) and IR 20 (6 per cent). Research focus is now on developing drought-tolerant rice varieties for water starved environments through biotechnological approaches like Marker Assisted Selection (MAS) and Genome Sequencing of Qualitative Trait Loci (QTL). Such approaches should consider the traits of both the predominantly grown HYVs and land races for developing drought-tolerant rice varieties with high adaptability and farmers’ acceptance.

VVVVV
Price RiskPrice RiskPrice RiskPrice RiskPrice Risk

Price risk depends on extent of exposure to market forces as well as existing market institutions. Although production risks cause price risks, the latter is not just because of production risks alone. Prices can also vary because of demand shocks as well as instability in expectations formation. As the demand for agricultural products, particularly rice is inelastic, supply shocks are magnified due to price variations (Table 12). Though rice production in the state declined by 10 lakh tonnes due to drought, the wholesale price in real terms has not increased rather it declined (Table 13). Evidence shows that in the recent drought of 2002-03, the wholesale prices of rice rose only by 2.8 per cent (in real terms) above the previous year’s price, despite a 34 per cent fall in rice production in the state, helping to maintain access to food for poor consumers. This is largely due to private sector inflows from neighbouring states of Andhra Pradesh and Karnataka and the availability of rice through the PDS [World Bank 2004]. Public support price mechanism also played a crucial role in minimising the market aberrations caused by innate calamities apart from other factors. Maintenance of adequate buffer stocks during the short supply periods through monopoly procurement, market eventualities caused due to shortfall in production were managed. Over years buffer stock position reveals that adequate stocks were maintained to cope with any market calamities. However, it was observed that change in wholesale price was higher during the drought period compared to normal period in spite of decline in absolute real prices. Monthwise change in wholesale prices was also higher in the drought years compared to normal years as a result farmers were subjected to price fluctuations caused by drought (Table 14). Estimates of instability index of real retail prices of rice was found higher during the drought period compared to normal period (Table 15) reconfirming high price variability during the drought period.

There are also private mechanisms that can potentially help the farmers to cope with private risks. Some crops are characterised

Table 11: Estimates of Factor Share under DifferentTable 11: Estimates of Factor Share under DifferentTable 11: Estimates of Factor Share under DifferentTable 11: Estimates of Factor Share under DifferentTable 11: Estimates of Factor Share under Different
Technologies and ProportionateTechnologies and ProportionateTechnologies and ProportionateTechnologies and ProportionateTechnologies and Proportionate
Change in the EstimatedChange in the EstimatedChange in the EstimatedChange in the EstimatedChange in the Estimated
Factor SharesFactor SharesFactor SharesFactor SharesFactor Shares

Factor Inputs Factor Share Proportionate Land Races HYVs Change

Land 1.498 0.367 -0.755 Fertiliser 0.096 0.284 1.958 Labour -0.172 0.259 -2.506 Plant protection chemical -0.422 0.090 1.213

Source: Farm survey.

Table 12: Impact of Supply Shock on Prices of RiceTable 12: Impact of Supply Shock on Prices of RiceTable 12: Impact of Supply Shock on Prices of RiceTable 12: Impact of Supply Shock on Prices of RiceTable 12: Impact of Supply Shock on Prices of Rice

(Per cent)

District Normal Period Drought Period CV (P) CV (Y) SSP CV (P) CV (Y) SSP

Coimbatore 69.01 19.01 47.54 42.09 21.27 53.18 Ramnad 62.73 40.46 101.15 41.90 47.95 119.87 Thiruvallur 61.66 35.78 89.32 99.41 24.97 62.43 Tamil Nadu 57.35 33.99 84.97 52.73 37.73 94.33

Notes: Demand Elasticity is 0.4 [Krishnamoorthy and Selvaraj 1996]. CV (P) = CV(Y)/ED; CV (P) – Coefficient of variation in price; CV(Y) – Coefficient of variation in yield; ED – Elasticity of demand; SSP– Supply shock on price.

Source: Secondary data.

Table 13: Rice Production Shortfall and Price Change duringTable 13: Rice Production Shortfall and Price Change duringTable 13: Rice Production Shortfall and Price Change duringTable 13: Rice Production Shortfall and Price Change duringTable 13: Rice Production Shortfall and Price Change during
the Drought Periodthe Drought Periodthe Drought Periodthe Drought Periodthe Drought Period

Period Production Change in Wholesale Price Change in (Lakh Tonnes) Production of Rice* Price (Lakh Tonnes) (Rs/qtl) (Rs/qtl)

Normal 59.72 3.03 (7.28) 493.50 25.23 (5.51) Drought 49.94 -10.00 (-15.94) 421.15 47.03 (11.16)

Note: Figures in parentheses denote average of per cent change over the previous period.

* Real Term (1993-94 series).

Table 14: Drought Impact on Monthly Wholesale Prices*Table 14: Drought Impact on Monthly Wholesale Prices*Table 14: Drought Impact on Monthly Wholesale Prices*Table 14: Drought Impact on Monthly Wholesale Prices*Table 14: Drought Impact on Monthly Wholesale Prices*

(Per cent)

Month Paddy Common Paddy Fine Normal Period Drought Period Normal Period Drought Period

April 4.49 13.62 4.43 14.89 May 4.69 10.87 5.03 9.39 June 6.54 5.66 4.82 11.40 July 4.33 12.63 4.19 14.99 August 6.39 6.05 5.95 8.71 September 7.15 4.84 6.43 6.62 October 6.25 10.39 5.37 10.42 November 8.12 6.06 6.57 7.99 December 8.76 6.66 7.29 10.82 January 6.29 15.25 6.64 15.07 February 6.73 13.92 5.66 19.69 March 6.07 16.90 5.88 20.20

* Percentage change over the previous month. Source: Secondary data.

Table 15: Instability Index of Retail Prices of Rice*Table 15: Instability Index of Retail Prices of Rice*Table 15: Instability Index of Retail Prices of Rice*Table 15: Instability Index of Retail Prices of Rice*Table 15: Instability Index of Retail Prices of Rice*

Districts Normal Period Drought Period Rice Common Rice Fine Rice Common Rice Fine

Coimbatore 13.99 14.90 23.99 24.28 Ramnad 10.44 10.57 51.14 49.41 Thiruvallur 13.10 14.52 24.50 27.08

* Instability Index= Standard Deviation (ln(Pt/Pt-1)*100 Source: Secondary data.

by substantial market risks and contracting allows the transfer of these market risks from the farmer to the traders/processors. In specialty crops and vegetables, contract farming is gaining ground as a mechanism by which private processors obtain supplies from farmers. This system takes its appeal among growers because of the price insurance that it offers. Accumulated evidence has proved that price stability is a major benefit of contract farming for producers. However, in the water limiting rice production environment, yield boosting technology is construed as more an instrument promoting risks taking function of the farmers than anything in the absence of private mechanism like contracting. Because the farmers predominantly cultivate rice in these environments and they cannot transfer production risk to someone else through contracting, purchasing insurances, etc, since no private parties offer protection against idiosyncratic risk.

VIVIVIVIVI
Income RiskIncome RiskIncome RiskIncome RiskIncome Risk

Major components of household income are crop revenue and labour income in these fragile areas. Therefore, income fluctuations reflect variability in incomes derived from agriculture whether from crop revenue or from the labour market. Rice is the major source of income (60 per cent of the total income) in these fragile environments even during the drought period (Table 16) and per capita income is lesser than the state average (Rs 19,141 at current prices). Since rice production is a major source of income and employment, then the decline in rice production due to drought involves other social costs and the overall economic losses from drought may turn out to be much higher than what is indicated by a loss in production. Loss in production due to drought was estimated to the tune of 30 per cent of the state total rice production and in value terms it amounts to Rs 852.11 crore, which accounts for 5.54 per cent of the gross state domestic product. Loss in employment was 60 million days and to meet the loss in employment Rs 300 crore is needed as an additional investment to generate employment [Ramasamy et al 2003]. The government has launched the Calamity Relief Fund Scheme and provides relief for crops based on the extent of damage.

The most serious impact of drought, however, is on the earnings of agricultural labourers, who make up about one-third of rural population (as per the 2001 Census agricultural labourers constitute 9.42, 11.39, 9.80 and 13.95 per cent of the total population respectively in Coimbatore, Ramnad, Thiruvallur and Tamil Nadu). It was noticed in the study villages that when the crop is struck by drought and starts to whither farmers have no option but to cut it as soon as possible and sell it as feed for cattle. For agricultural labourers this means not only untimely work at a fraction of the normal wage rate, but also the disappearance of an entire chain of post-harvest operations that would have given them a daily cash flow throughout the period. Migration is often common among the households due to crop failure and low wage rate (Table 17). In the state, about 30 per cent of the labour force is in the agrarian sector. The labour force is employed on projects involving desilting work, strengthening bunds of irrigation tanks, constructing percolation ponds and other moisture conservation measures to assure them employment and income during the drought period. Reduction in employment and loss of income due to production shock leads to the reduction in consumption due to lack of purchasing power. Evidence shows that the proportionate reduction in per capita consumption of bottom 20 per cent of the income distribution class is 10 times that of the top 5 per cent [Mellor 1978]. The per capita consumption of rice/cereals and pulses in these water limiting rice production environments (Table 18) is lesser than the state average (rice: 110, cereals: 130 and pulses: 12.4 kg per year). It is a clear indication that rice production still needs to play a key role in supplying adequate food at affordable prices to ensure food and nutritional security of the population, who live in these fragile environments.

VIIVIIVIIVIIVII
Conclusion and ImplicationsConclusion and ImplicationsConclusion and ImplicationsConclusion and ImplicationsConclusion and Implications

The HYVs have brought huge gains in yield but yield variability is still a formidable production risk. Negative correlation between prices and yields reduces crop revenue fluctuations and provides a natural edge to farmers but such relationship was not observed in the most of the rice production environments. Therefore, yield stabilising would be much more effective in stabilising revenues in the rainfed districts, while price stabilisation, on the other hand,

Table 16: Sources of Income of the Farm Households in theTable 16: Sources of Income of the Farm Households in theTable 16: Sources of Income of the Farm Households in theTable 16: Sources of Income of the Farm Households in theTable 16: Sources of Income of the Farm Households in the
Rainfed Rice Production EnvironmentRainfed Rice Production EnvironmentRainfed Rice Production EnvironmentRainfed Rice Production EnvironmentRainfed Rice Production Environment

(Rs/household/annum)

Particulars Small Farmers Large Farmers Normal Year Drought Year Normal Year Drought Year

Total agrl income 38665.99 28736.62 70562.19 44044.69

(74.00) (68.41) (80.47) (65.59) Rice income 32811.49 24287.49 60663.43 36789.43

(62.79) (57.82) (69.18) (54.79) Non-rice income 5854.50 4449.13 9898.77 7255.26

(11.20) (10.59) (11.29) (10.81) Farm labour 4256.11 2599.25 -

(8.15) (6.19) Non-farm activities 5331.02 7002.00 9000.94 13977.09

(10.20) (16.67) (10.26) (20.82) Other sources 4000.97 3668.76 8123.06 9125.43

(7.66) (8.73) (9.26) (13.59) Total income 52254.08 42006.62 87686.19 67147.21

(100.00) (100.00) (100.00) (100.00) Per capita income 10450.82 8401.32 17357.24 13429.44

Per capita income Rs 19,141 (Tamil Nadu at current prices). Source: Household survey and www.planningcommission.nic.in

Table 17: Drought Impact on Wage Earnings ofTable 17: Drought Impact on Wage Earnings ofTable 17: Drought Impact on Wage Earnings ofTable 17: Drought Impact on Wage Earnings ofTable 17: Drought Impact on Wage Earnings of
Agricultural Labour#Agricultural Labour#Agricultural Labour#Agricultural Labour#Agricultural Labour#

(Rs/manday)

Period Coimbatore Ramnad Thiruvallur Tamil Nadu

1990s 43.21 30.75 26.02 45.27 Normal period* 25.95 19.39 16.09 25.80 Drought period** 13.45 4.86 13.13 15.96

Notes: # Nominal terms, * Average of normal years and ** Average of drought years.

Table 18: Household Food Consumption in the Rainfed RiceTable 18: Household Food Consumption in the Rainfed RiceTable 18: Household Food Consumption in the Rainfed RiceTable 18: Household Food Consumption in the Rainfed RiceTable 18: Household Food Consumption in the Rainfed Rice
Production EnvironmentProduction EnvironmentProduction EnvironmentProduction EnvironmentProduction Environment

(Kg/household/annum)

Crops Normal Period Drought Period
Self-Produced Purchased Self-Produced Purchased
Rice 403.09 104.01 293.07 192.09
Ragi - 82.50 - 98.99
Sorghum 72.54 12.70 50.73 22.25
Maize 65.00 - 56.00 -
Vegetables 93.85 48.03 68.78 44.20
Pulses 75.30 14.15 63.21 24.35

Note: Household 5-6. Rice per capita consumption 110.15 kg/year. Cereals 130.47, pulses 12.79.

Sources: State Planning Commission; ICMR; Household survey.

is an effective strategy to reduce revenue risk in the irrigated districts. About 30 per cent of yield reduction was due to water stress and the intensity of drought was higher during the maximum tillering stage of rice production emphasising the need for developing early drought-resistant rice varieties. Reduction in yield due to curtailment of input usage accounts for 5 to 9 per cent and this could be attained through a creation of awareness among the farmers. Farmers are cultivating a wide range of HYVs apart from land races. Land races are cultivated to a large extent in the rainfed rice production environment and farmers prefer to grow land races due to their drought-resistant characters. Land races fetch moderately higher revenue in the drought period compared to HYVs. Therefore, it is imperative that the varieties meant for water limiting environment should ensure minimal level of yield during the stress period and that could induce the farmers to go for higher level of adoption. Research focus is now on developing drought-tolerant rice varieties for water starved environments through biotechnological approaches like Marker Assisted Selection (MAS) and Genome Sequencing of Qualitative Trait Loci (QTL). Such approaches should consider the traits of both the predominantly grown HYVs and land races for developing drought-tolerant rice varieties with high adaptability and farmers’ acceptance. Continued research on development of drought-tolerant rice varieties and seed supply management are crucial. Further income inequalities can be brought down by the creation of productive non-farm employment in the rainfed areas so that available family resources can effectively be used to increase overall income levels.

m

Email: selvarajkn@yahoo.co.in c_ramasamy@yahoo.com

NotesNotesNotesNotesNotes

[The authors are grateful to Rockefeller Foundation, US for the financial support to carry-out the research project, Social and Economic Implications of Drought and Farmers’ Coping Strategies in Rainfed Rice Ecosystem of Tamil Nadu and referees for valuable and critical comments to improve this paper substantially.]

1 Rate of contribution of technological change (estimated based on the Intriligator, 1978) declined over the period [Ramasamy 2004]. Estimated rate of technological change was 0.11 during 1970s, 0.006 during 1980s and -0.050 during 1990s. In the 1970s, agricultural production growth

Appendix:Appendix:Appendix:Appendix:Appendix:
Water Requirement for Paddy – StagewiseWater Requirement for Paddy – StagewiseWater Requirement for Paddy – StagewiseWater Requirement for Paddy – StagewiseWater Requirement for Paddy – Stagewise

Stage of Crop Days Total Water Requirement (mm)
Main field preparation 2 200.00
Vegetative/tillering 2 23.14
Vegetative/tillering 16 185.12
Vegetative/tillering 2 23.14
Maximum tillering – flowering 3 33.41
Maximum tillering – flowering 5 43.07
Sub total 30 507.89
Maximum tillering – flowering 5 43.07
Maximum tillering – flowering 16 137.84
Maximum tillering – flowering 2 17.23
Maximum tillering – flowering 4 28.58
Flowering to maturity 3 19.96
Sub total 30 246.68
Flowering to maturity 6 39.93
Flowering to maturity 15 99.83
Flowering to maturity 1 5.52
Sub total 22 145.28
Maturity 23 -
Total 105 899.86

Source: Water Technology Centre, TNAU, Coimbatore-3.

was comparatively low, growing at an average annual rate of 1.95 per cent. In the 1980s, it grew at 3.82 per cent per annum. Since 1990, production growth has slowed, growing at only 2.09 per cent per annum [Fan 2002].

2 Less favoured areas in India cover 70 per cent of the total area, contributing nearly 40 per cent of production and account for most of the commodities which are in short supply [Kanwar 1991 and Rao 1991].

3 Poor households that were self-employed in agriculture account for 28 per cent of all rural poverty while poor households that are primarily depend on agriculture labour account for 47 per cent of all rural poverty [Ramaswami et al 2003].

4 Though productivity of foodgrains grew faster in the rainfed areas (1.66 per cent between 1985-86 and 1998-99 in Tamil Nadu), the average productivity of foodgrains in the irrigated area is higher by 50 per cent than rainfed areas [Selvaraj et al 2002].

5 Area under rice cultivation was 15.17 lakh hectares during 2002-03 and the total irrigated area was 13.75 lakh hectares accounting for 90.64 per cent. Remaining area of 9.3 per cent was under dry and semi-dry conditions in the state. Dry and semi-dry type of cultivation was predominant in Ramnad, Sivagangai and Thiruvallur districts, which formed 51.58, 11.50 and 10.09 per cent, respectively of the total dry and semi dry rice area in the state. Further, of the total rice area in the each district, area under dry and semi-dry rice constituted 57.76, 20.37 and

16.24 per cent, respectively in Ramnad, Sivagangai and Thiruvallur districts, respectively. In Coimbatore district, rice is grown under well and canal irrigation. In this district water table is declining at an alarming rate for the past one decade and rice area under well irrigation is fast decreasing.

6 According to the official estimation, rainfall is considered to be excess if the actual rainfall is 20 per cent and more than the normal rainfall. If the deviation between the normal and actual rainfall lies between -19.9 and 19.9 per cent, then the rainfall is classified as normal rainfall. The rainfall is considered to be deficient if the deviation is between -20 and -59.9 per cent and if it is between -60 and -99.99 per cent, then it is classified as scanty. For the study the official classification was used for classification of drought and normal years.

7 Average use of fertiliser per ha in rainfed areas is only 25 kg in India and its use was quite prominent in irrigated and high value cereals like paddy and wheat.

8 Tank irrigation, which was the major source of irrigation during the 1950s and 1960s lost its share thereafter in spite of increase in the numerical strength mainly because of encroachments and silting in the feeding channels. A steady decline in the performance of tanks (once a dominant source) causes concern. Area irrigated by tanks decrease due to the combined effect of low rainfall and shrinkage in the holding capacity of the tanks. The net area irrigated by tanks which was 9.12 lakh hectares during the 1960s (36.8 per cent of the total net area irrigated) dropped to 4.24 lakh hectares during 2002-03. The extent of area irrigated by tanks during 2002-03 is the highest in Kancheepuram district with 15 per cent followed by Sivagangai district with 14.9 per cent, Pudukkottai district with 13.1 per cent, Ramanathapuram district with 13 per cent, Thirunelveli district with 8.9 per cent and Virudhunagar district with 6.9 per cent. This calls for urgent and effective steps for the maintenance, desilting and strengthening of bunds work and upkeep of tanks to improve their holding capacity in order to enable them to harness the rain water to the optimum level.

9 About 40 per cent of the cropped area in the country was under HYVs in 2002-03 and it increased from 21 per cent in 1970. Area under HYVs of crops ranged between 2 per cent and 69 per cent across the states and Gini coefficient of 0.60 implies that there is a wide variation among the states in adoption of HYV of crops [Ramasamy and Selvaraj 2001] due to variation in the level of adoption of technologies and associated factors apart from rainfall variability.

10 Rice yield recorded a compound growth rate of 2.13 per cent during the period between 1965-66 and 2001-02 in Tamil Nadu. The sub-period growth rates indicated that rice productivity witnessed a high growth rate of 4.69 per cent during 1980s. However, the productivity of rice registered a negative growth rate of 0.38 per cent in 1990s. Growth of rice in terms of area, production, productivity varied among the various rice productions environments such as rainfed tank, tank, tank-cum-well, canal (river) and canal (reservoir). There was a stagnant in productivity growth in the rainfed tank environment in which rice yield recorded only 0.12 per cent during 1984-85 to 2001-02. This included the large tract of dryland regions with less dependable water resources.

11 Decomposition analysis was specified as follows: Ln YD = Ln AD + BD Ln LD + CD Ln FD + DD Ln PD+ uD ...(1) LnYN= Ln AN + BN Ln LN + CN Ln FN + DN Ln PN + uN ...(2) Where, D refers to rice yield during the drought period and N denotes to rice yield during the normal period Y= Yield (kg/ha) L = Labour use (mandays/ha) F = Fertilisers consumption (kg/ha) P = Plant protection chemicals (Rs/ha) Taking the difference between (1) and (2), and adding some terms and subtracting the same terms yield the following Ln (YD/YN) = Ln (AD/AN) + [(BD- BN) Ln LN + (CD – CN)

Ln FN+ (DD –DN) Ln PN] + [BD Ln (LD/LN) +CD Ln (FD/FN)

+ DD Ln (PD/PN)] ...(3) Equation 3 involves decomposing the natural logarithm of the ratio of rice productivity during the drought and normal periods.

22

12 Var()I = ()+P Var y +2py Cov (py)

y Var p ()

22

()()2pyCov py

yVarp pVary ()

1 =++

Var()I Var()I Var()I Where, I refers to rice income, P denotes Price, Y indicates Yield, Cov-Covariance and Var-Variance. 13 Optimal cost of cultivation and optimum yield for rainfed and rainfed with supplementary sources of irrigation were estimated using transcendental production function

a abx +bx

1 2 111 22

Y =axx e

01 2

ln Y =lna +∑a lnx +∑bx

0 ii ii

*

X1 =(ai.Py Y)/ (1-Py Y bi)

*

Y =xi / Py(a1 +b1x1)

Where, X1* = Optimal cost of cultivation Y* = Optimum yield

14 Wells constitute the prime source of irrigation in the state. Wells accounted for about 54.7 per cent of the net area irrigated during 2002-03. Well irrigation is predominant in majority of the districts. Both the number and area irrigated by wells registered a significant increase over the years. Number of wells (dug and tube wells) increased from 16.83 lakhs during 1980-81 to 18.44 lakhs in 2002-03, the area irrigated by wells rose from

10.38 lakh hectares to 14.53 lakh ha during the above period. Net area irrigated by wells registered a threefold increase during the last five decades as a result there is over exploitation of groundwater in the state. Net area irrigated by wells during the year 2002-03 was the highest in Coimbatore district with 9.7 per cent the total net area irrigated by the wells in the state. Followed by 9 per cent in Villupuram district, 6.6 per cent in Dharmapuri district and 6.4 per cent in Thiruvannamalai district.

15 Factor shares under different technologies (modern varieties and land races) were estimated using Hicks Formula. Ri =ai+/n∑ai Where, Ri = Relative Factor Production Elasticity of ith factor ai = output elasticity of the ith factor

()R −( )

R <

i NT iOT

Z = 0

i () >

R

i OT

Factor-i using/share of i-th factor increases Factor-i neutral/share of i-th factor remains constant Factor-i saving/share of i-th factor decreases Zi is a measure of the proportionate rate of change in factor share of ith input with technical change; (Ri is relative factor production elasticity

)NT

of i-th input under new echnology (adoption of modern varieties); (Ri

)OT

is relative factor production elasticity of i-th input under old technology (adoption of land races).

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