Profitability of Rice Production across Indian States

Abstract

The aim of the study is to examine the pattern of profitability in case of rice production with respect to twelve major states of India over the period 1997-98 to 2014-15. Indian farmers are mostly marginal and small in many eastern States in India. This paper has tried to examine profitability according to farm size using cost of cultivation unit level data. It has been observed that with the increase of farm size the profitability increases. Another interesting observation is that as imputed costs of own factors of production namely wage cost family labour, rental value of own land and interest cost of own capital assets are taken into consideration the farmers profit becomes negative. For some states like Assam, Bihar, Orissa, West Bengal profitability is negative when their own factors of production cost are taken into consideration for the calculation of profit. The study will also help us to know determinants of profitability using aggregate state level panel data for twelve states over the period 1997 to 2014. It has been further observed that increase of seed cost share, fertiliser machine cost share enhance profitability but the enhancement of irrigation cost share reduces profitability.