Dhekale, J.S.

Patil, H.K.

Thorat, V.A.

Tilekar, S.N.

English

Research Papers in Economics

Agricultural Economics Research Review
Vol. 19   (Conference No.) 2006   pp 113-120
Total Factor Productivity in Horticultural Crops
in Konkan Region of Maharashtra
V.A. Thorat1, S.N.Tilekar2, J.S.Dhekale3 and H.K.Patil4
Abstract
The comparative picture of TFP growth by sub-period-wise has revealed
that the magnitude of TFP growth varied from 1.3 per cent per annum
during the 1990s to 6.2 per cent per annum during the 1980s. During the
entire period under study (1981-2000), TFP has been found growing at the
rate of 5.4 per cent per annum. The results present a divergent picture of
horticultural growth in the Konkan region during the period under study.
Investment on research has been the major source in TFP growth. The
returns to horticultural research were high pay-off to the tune of IRR 119
per cent.
Introduction
The agro-climatic conditions of the Konkan region in the Maharashtra
state are favourable for horticultural crops. Therefore, this region has been
the predominantly horticultural zone in the state. The state government has
invested good amount of money to promote horticultural research and
development so as to increase the horticultural production of the major
horticultural crops in this region.
There have been several attempts to capture pay-off to agricultural
research at the aggregate (all-India) level (Evenson and Jha, 1973; Rosegrant
and Evenson, 1992; Kumar and Rosegrant, 1994; Evenson et al., 1999) and
at the state level (Bal and Kahlon, 1977; Kumar et al., 1977; Jha and Kumar,
1998; Ananth (2004). However, such attempts at the agro-climatic zonal
level and particularly for horticultural crops, have not been made so far.
There is a need to understand whether horticultural research and development
activities have contributed to the horticultural output in the region. The present
study has found the trend in total factor productivity (TFP) of the horticultural
1 Assistant Professor, 2Professor, 3Assistant Professor of Statistics, 4Head, Depart-
ment of Agricultural Economics, Dr.B.S. Konkan Krishi Vidyapeeth, Dapoli, Dist.:
Ratnagiri, Maharashtra114 Agricultural Economics Research Review  Vol.19 (Conference No.) 2006
sector and has quantified returns to investment on horticultural research
and development. The study pertains to these major horticultural crops, viz.
cashew, mango and coconut.
Total Factor Productivity
The total factor productivity (TFP) implies an index of output per unit of
total factor inputs, measures shift in output holding all inputs constant. Thus,
TFP measures the amount of increase in total output which is not accounted
for by the increase in total inputs. The time series data on the wholesale
prices of horticultural crops are not available and hence the selling prices of
horticultural crops at the University research stations were used to aggregate
the outputs. Inputs included in the index were: human labour, manure,
fertilizers and plant protection chemical. Inputs were aggregated using the
factor shares on appropriate weights. Divisia-Tornqvist index was used for
computing the TFP indices for crops (for details see Christensen, 1975,
Diewert 1978; Surabhi and Lal, 2001; Kumar et al., 2004a).
In order to assess the temporal performance of TFP of horticulture in
the Konkan region, the compound growth rates of input, output and TFP
indices were estimated for 20 years from 1981-82 to 2000-01 and for two
periods, viz. Period I (1981-82 to 1990-91) and Period II (1991-92 to 2000-
2001) to see whether significant swing has taken place in the TFP due to
horticultural research and development policies. The results of the same
have been presented in Table 1. A perusal of Table 1 reveals that over the
entire period of study (1981 to 2000), TFP grew at the rate of 5.4 per cent
per annum. During the same period, input index increased by 8.7 per cent
per annum and output index by 14.6 per cent per annum. The higher increase
in the output index than the input index has been due the fact that the rate of
increase in output prices was more than input prices. However, sub-period-
wise results were more revealing. The input index declined at the rate of
4.5 per cent per annum during Period I, while output index increased at the
rate of 2.0 per cent per annum. The TFP index registered an impressive
growth of 6.8 per cent during Period I.
During Period II, input and output indices witnessed an impressive
growth; however, the TFP indices increased marginally. The input and output
Table 1. Compound growth rates of input, output and TFP indices.
Period Input index Output index TFP index
1981-1990 –4.5 2.0 6.8
1991-2000 15.7 17.5 1.3
1981-2000 8.7 14.6 5.4Thorat et al.: Total Factor Productivity in Horticultural Crops 115
indices grew at the rate of 15.67 and 17.49 per cent per annum during
Period II. The TFP registered a marginal growth of 1.30 per cent per annum
during the 1990s. The higher growth rates of input and output indices were
due to increase in the prices of inputs and outputs during the 1990s. It is
surprising to note that though there has been a substantial positive growth in
output and input indices, the resultant growth rate in TFP was very low. It
was because high growth rate in output indices has out-weighed the effect
of high growth rates in input indices and hence the growth rates in TFP
were seen to be very low. However, several studies conducted at the national
or state level on either specific crops or entire agriculture have reported the
declining contribution of technology to the agricultural output growth.
The results present a divergent picture of horticultural growth in the
Konkan region during the two periods under study. It was because during
Period I, there was no expansion of acreage under horticultural crops;
however, there was corresponding increase in output resulting in higher
growth rate of TFP. During Period II, there was a simultaneous increase in
input-use and output, resulting in a marginal increase in TFP. But, the overall
picture shows a satisfactory growth in TFP, indicating thereby that there is
a potential to improve in the coming years.
Time Lag for Investment on Horticultural
Research and Development
Horticultural research and development is a lengthy process and requires
a time lag to yield results. The technology generated through horticultural
research also needs to be taken to the farmers’ fields which takes a
reasonable time. The results of a technology are visible when it is adopted
by a large number of farmers and can be measured through the increased
horticultural production of the whole region under consideration. Therefore,
to have an appropriate time lag in research (Rt) and development (Dt)
expenditure and the resultant horticultural output (Yt), all the possible
correlation coefficients were worked out between Yt and Rt-K, Y; and
Dt-K for different lag years values of K.
where,
Yt = Gross output during the ‘t’th year ( Rs in lakh)
Rt = Research expenditure during the ‘t’th year ( Rs in lakh)
Dt = Development expenditure during the ‘t’th year (Rs in lakh)
t = Time period, and
K = 0,1, …….., 10 (years)116 Agricultural Economics Research Review  Vol.19 (Conference No.) 2006
Time lag with the highest correlation coefficient was considered and
used for studying the further relationships. The investments on development
and research on horticulture are given in Appendices I and II, respectively.
It is evident from Table 2 that the highest correlation coefficient
(0.96) between horticultural output and investment on research was observed
for the sixth year. This implied that the investment made in horticultural
research in the current year pays returns after about six years. Thus, the
hypothesis that ‘Horticultural research is a relatively lengthy process and
requires a time lag to yield its benefits’ was found true.
The highest correlation coefficient (0.98) between investment on
horticultural development and horticultural output was for the sixth year.
Surprisingly, the time lag of investment on research and development of
horticulture seems to be same. Obviously, the time lag of horticultural
development and investment coincided with the average gestation period
for the horticultural crops under study. The transfer of technology from
“lab- to-land” requires some time period. But, the proportion of expenditure
incurred on extension activities related to horticultural crops was only meagre
as compared to the investment on horticultural development. It may also be
mentioned here that a lion share of expenditure was made on activities like
plantation of horticultural crops. It can be concluded that these horticultural
development activities have made an impact on out-turn from horticultural
crops after a time lag of six years.
Table 2. Correlation coefficients of horticultural output with horticultural
research and development using different time lags
Time lag                                                Correlation coefficient
Research expenditure Development expenditure
Zero lag (K=0) 0.67 0.54
One-year lag (K-1) 0.79 0.83
Two-year lag (K-2) 0.81 0.78
Three-year lag (K-3) 0.80 0.87
Four-year lag (K-4) 0.85 0.95
Five-year lag (K-5) 0.92 0.96
Six-year lag (K-6) 0.96 0.98
Seven-year lag (K-7) 0.96 0.90
Eight-year lag (K-8) 0.96 0.82
Nine-year lag (K-9) 0.96 0.74
Ten-year lag (K-10) 0.96 0.63Thorat et al.: Total Factor Productivity in Horticultural Crops 117
Sources of TFP in Horticulture
Increase in production can be induced by research, development/
extension and infrastructural facilities, etc. So as to take prudent public
investment decisions, it is useful to understand the relative importance of
these productivity-enhancing factors in determining the productivity growth.
Therefore, the TFP growth was decomposed into its sources. The estimated
parameters of decomposition model along with their contributions to TFP of
the horticultural crops in the Konkan region have been presented in Table 3.
A perusal of Table 3 reveals that the investment made in research,
irrigation development and horticultural development were the major sources
of growth in TFP. The expenditure incurred by the government on irrigation
and horticultural development has been found to have negative coefficients.
This could be due to the fact that the expenditure made on the horticultural
development had mainly resulted in area expansion. Similarly, mango and
cashew had the major shares in the horticultural production in the Konkan
region, which are predominantly grown as rainfed crops. Therefore, it could
be concluded that though there was significant investment on irrigation
development, it did not result into positive impact on TFP. Investment on
research was the main source of TFP growth in the major horticultural
crops in the Konkan region of Maharashtra.
Rates of Return to Horticultural Research and Development
In order to assess the determinants of total factor productivity (TFP),
the TFP index was regressed on research and development investment per
hectare of area and per year basis, which was trend variable. Using the
elasticity of TFP with respect to research investment, we estimated the
value of marginal product of research investment, using the following formula:
EVMP= b × (V/I)
where, I = Investment, V = Value of production associated with TFP, and
b = TFP elasticity of investment.
Table 3. Sources of TFP in horticulture in the Konkan region: 2004-05
Variables Regression SE (b) ‘t’ cal.
coefficient
Intercept 96.92
Horticultural development expenditure -0.00493 0.0006 8.15
Irrigation development expenditure -0.00803 0.001 7.92
Horticultural research expenditure 0.2833 0.012 22.07
R2 0.99118 Agricultural Economics Research Review  Vol.19 (Conference No.) 2006
Following Kumar and Rosegrant (1994), the internal rate of return to
horticultural research investment was computed to the tune of 119 per cent,
which is much higher than those of crop (Evension and Jha, 1973; Bal and
Kahlon, 1977; Kumar and Rosegrant 1994), livestock (Kumar et al., 1977)
and fisheries (Kumar et al., 2004b) in India. The result clearly implied that
investment on horticultural research was highly profitable.
Conclusions
The comparative picture of TFP growth by sub-period-wise has revealed
that the magnitude of TFP growth varies from 1.30 per cent per annum
during Period II (1991-92 to 2000-01) to 6.18 per cent per annum during
Period I (1981-82 to 1990-91). During the entire period under study (1981-
82 to 2000-01), the TFP has grown at the rate of 5.43 per cent per annum.
The results present a divergent picture of horticultural growth in the Konkan
region during the period under study. The horticultural research being a
lengthy process requires time lag to yield its fruits. Similarly, plantation crops
are characterized by long-gestation period, hence, investment made on
research and development requires time to yield returns. The results have
shown that there is a time lag of six years between investment on horticultural
research and development and returns from it. Investment in research and
development in horticultural crops has been found highly profitable.
References
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An analysis of major field crops, Ph.D. Thesis (unpublished) submitted to the
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TDRI and IRRI.Thorat et al.: Total Factor Productivity in Horticultural Crops 119
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Appendix I
Investment in horticultural development
(Rs in lakhs)
Year S’durg Ratnagiri Raigad Thane Konkan
1981-82 2.8 2.16 1.92 2.11 9.42
82-83 7.05 6.75 9.91 12.49 81.41
83-84 9.06 14.18 11.72 4.81 42.26
84-85 35.89 50.86 41.36 44.45 172.89
85-86 12.78 11.67 1302 19.9 1347.48
86-87 14.57 18.79 12.05 26.72 74.06
87-88 11.89 17.4 16.19 19.77 66.31
88-89 12.46 21.4 19.91 24.62 78.57
89-90 111.63 146.35 62.58 53.94 375.97
90-91 236.77 274.94 172.18 134.69 818.65
91-92 291.15 438.62 199.49 170.1 1102.07
92-93 435.4 515.67 255.89 307.42 1519.73
93-94 477.78 606.47 323.66 336.62 1766.03
94-95 469.65 790.48 377.87 400.84 2058.21
95-96 800.25 953.82 927.88 710.40 3407.98
96-97 498.25 725.02 761.14 688.59 2923.30
97-98 473.78 646.39 819.25 454.76 2656.19
98-99 803.83 1062.26 779.96 568.01 3648.89
99-2000 802.14 1258.39 942.8 1253.55 4892.58
2000-01 469.67 1157.16 728.51 484.55 3087.23
Source : Financial records from the office of Joint Director of Agriculture, Konkan
Division, Thane120 Agricultural Economics Research Review  Vol.19 (Conference No.) 2006
Appendix II
Research Investment in Horticultural crops in Konkan region of Maharashtra
 (Rs in lakhs)
Year Mango Cashew Coconut Total
1975-76 5.63 3.01 2.44 11.08
76-77 5.9 3.41 3.3 12.61
77-78 6.31 3.46 4.46 14.23
78-79 6.61 6.43 3.67 16.71
79-80 7.11 4.06 8.18 19.35
80-81 7.91 4.88 4.19 16.98
81-82 8.43 4.9 4.47 17.8
82-83 8.6 4.97 8.14 21.71
83-84 8.73 5.2 5.02 18.95
84-85 9.69 6.88 5.61 22.18
85-86 9.87 6.99 14.5 31.36
86-87 19.36 9.05 7.28 35.69
87-88 20.27 14.88 9.61 44.76
88-89 21.24 17.73 11.45 50.42
89-90 27.31 13.85 11.54 52.7
90-91 41.1 27.7 13.11 81.91
91-92 44.37 12.71 12.42 69.5
92-93 45.51 10.81 9.52 65.84
93-94 44.58 14.92 10.78 70.28
94-95 67.79 3.23 12.27 83.29
95-96 58.385 19.13 13.84 91.35
96-97 48.76 18.9 20.79 88.45
97-98 70.66 20.89 17.53 109.08
98-99 86.83 22.56 17.83 127.22
99-2000 117.51 96.01 28.28 241.8
2000-01 144.02 44.05 31.93 220
2001-02 86.14 38.12 26.74 151.00
2002-03 116.65 34.77 28.77 180.19
Source: Financial records from different research stations working under
D.B.S.Konkan Krishi Vidyapeeth Dpoli

Concepts and measurement of agricultural productivity,

Methodological issues on measurement of returns to investment in agricultural research,

Productivity and sources of growth for rice in India,

Productivity and sources of growth for wheat in India.

Returns to investment on agricultural research in Karnataka — An analysis of major field crops, Ph.D. Thesis (unpublished) submitted to the University of Agricultural Sciences,

Rice production and impact of rice research in India, In: Impact of Rice Research, Eds: Prabhu L. Pingali and Mahabub Hossain, TDRI and IRRI.Thorat et al.: Total Factor Productivity in

Superlative index numbers and consistency in aggregation,

The contribution of the agricultural research system to agricultural production in India.

Total factor productivity and economic impacts of fisheries technology in India.

Total factor productivity of crop sector in the Indo-Gangetic Plain of India: Sustainability issues revisited.

Total Factor Productivity in Horticultural Crops in Konkan Region of Maharashtra

Total Factor Productivity in Horticultural Crops in Konkan Region of Maharashtra

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