High Yield Crop Output in India:

An Econometric Study
Kiran K

1 Introduction
With the ever growing population of India, one of the major concerns is to provide food to
all its citizens. The Green Revolution transformed the agricultural yield of crops like Rice,
Wheat, Maize, Jowar, etc. With the ever increasing demand for these crops in both domestic
and international markets, the crop yield becomes very crucial.
This study tries to explore the factors which contribute towards the production of the
High Yield Variety Crops (HYVC) in India. From the existing work conducted in the
eld(FAO, IISc), some of the major factors which inuence the production were Soil Fertil-
ity, Rainfall, Temperature, Irrigation, Fertilizers and Pesticides, Labour, Agricultural Equip-
ment.
The study aims at building an Ordinary Least Square model for the variables involved in
the production of the HYVC. This analysis will provide information about the major factors
that aect the production of HYVC. These factors can be internal and external. This model
can be used to design factor specic policies in order to achieve the best possible production.
The article is organized as follows. The Section 2 will have a review of the existing
literature followed by Problem Denition in Section 3. In Section 4 the Methodology is
described followed by Results and Discussion in Section 5.
2 Literature Review
2.1 Factors
Adams and Bumb [1] investigate the relation between the output per hectare and the in-
puts per hectare of labor, animal power and cooperative credit, considering rainfall, factor
supplies, state and National policy, local urban-industrial development as exogenous. They
determine that land productivity is impacted by - supplies of conventional inputs, cropping
pattern and cropping intensity, and use of modern mechanical and chemical technologies.
They infer Infrastructure and institutions as facilitative or intermediary variables. Andrea
and Cornia [2] try to determine the relationship between factor inputs, land yields and labour
productivity for farms of dierent size and nd a strong negative correlation between farm
size on the one side, and factor inputs and yields per hectare on the other. They argue that
the decline in yields for increasing farm size can be attributed to decreasing returns to scale.
They observed higher yields in small farms which may be attributed to higher factor inputs
and to a more intensive use of land. Where conspicuous labour surpluses exist,they suggest
that the superiority of small farming provides solid arguments in favour of land redistribution
and such an agrarian reform would determine higher output, higher labour absorption and a

Doctoral Student, Indian Institute of Management Bangalore

1
more equitable income distribution, thus contributing in a decisive manner to the alleviation
of rural poverty.
Zeldner [3] discusses the factors aecting agricultural productivity in Russia such as
price disparities for agricultural and industrial products, programs to improve soil fertility
and land utilization, analysis of land reclamation systems, scarcity of nancial resources and
equipment in agricultural enterprises, and the impact of the inecient state regulation of
the agro-industrial complex on crisis in agricultural enterprises. The author also suggest for
integration with other sectors as a process for ensuring the cooperation of production, the
accessibility of markets, and the expansion of demand for agricultural products. Faruq and
Telaroli [4] nd that increases in physical capital investment led to manufacturing produc-
tivity growth in many Asian countries and a greater exposure to trade and foreign direct
investment contributed to improvements in manufacturing productivity and hence suggest
similar investments can be made in agriculture industry. Hayami [5] explores the causes of
enormous agricultural productivity dierences now existing among the developed and less
developed countries. Its found that dierences in the inputs of modern man-made factors
account more for the dierence in productivity than dierence in endowments of original
factors, also education and research are crucial in determining the productivity gap. He
argues that the investment in education and research alone may not bring the measured
contribution to output unless it is accompanied by increase complementary conventional
inputs.
Ghosh and Kuri [6] discuss the increase in yield, extension of area and changes in crop-
ping pattern to explain the growth performance of agriculture in the State of West Bengal.
They suggest Crop diversication strategy to exploit the advantages of globalization and to
achieve a higher growth path in agriculture in the state. Lerman et al. [7] observe that
post disintegration of the Soviet Union, food supply contracted slightly in the northern re-
publics but decreased markedly in the southern group and attributed the phenomenon to
comparatively fertile land in Europe and harsh desert in the south, fast growth of Muslim
populations, and the relative smallness of the non-farm sectors inherited from the Soviet
period. They nd that early restructuring of laws and institutions in some countries enabled
them for more ecient adaptation to the new circumstances.
2.2 Model
Bazaraa and Bouzaher [8] formulate a multi-regional single time period linear goal program-
ming model for agricultural planning in a developing economy. They specify dierent levels
of input and output for each activity, and describe explicit crop interdependencies which
account for rotational requirements. They also consider the constraints such as land, labor,
water, machinery, fertilizer, and capital resources. The suggested decisions by the solution
include acreage allocated to dierent crops, sequences of crop rotations, fertilization levels,
and transportation and distribution of crops and livestock among the regions. King et al.
[9] describe how linear programming procedures have been used to determine optimal com-
binations of products for farm rms and to specify the quantities of capital that farmers
would nd it protable to invest. They show how the introduction of risk considerations
may alter drastically programs which are obtained for certain situations. Wade and Heady
[10] develop a model for evaluating alternative sediment control policies in agriculture such
that changes in the production of agricultural commodities among and within agricultural
production areas can be analyzed. This model combines the elements of spatial economic
equilibrium with physical and technical aspects of cropland agriculture.
Chan and Mountain [11] examine the series approximations of joint prot functions to
quantify interregional dierentials in the agriculture sector. Yee et al. [12] argue that the
2
measures of productivity typically assumes that all inputs are variable, thus ignoring the
quasi-xed nature of agricultural inputs such as farm machinery, land and structures, and
self-employed labour and nd that adjusting for quasi-xity reduces observed productivity
growth in US agriculture by 19% from 1950 to 1989. Wood and Bollman [13] try to prepare
a reliable estimates of the value of gross output for the sectors comprising agriculture. They
argue that apportion of national gross output to each state on the basis of some physical
criterion like number of labour force, the acreage of crops grown is awed as a more capital
intensive agriculture employs relatively less labour as compared to a labour intensive agri-
culture and hence productivity can vary greatly. They suggest the use of Farm cash receipts
are good indicators of gross agriculture output which can be made a reliable estimate by
suitable modications.
2.3 Policy
Asafu-Adjaye [14] through a case study investigate the impacts of trade liberalisation policies
in Fiji. They nd that in the face of high protectionism in the advanced countries, there is
little benet for developing countries to unilaterally liberalize their agricultural sectors and
that the reform of trade policies could come at a cost, pointing to the need for compensating
mechanisms to deal with the adverse impacts and hence author suggests they should be
implemented as a gradual process to allow sucient time for farmers to adjust and the
necessary support mechanisms to be put in place. Belete et al. [15] observe that favouring
of large-scale and capital-intensive state-owned farming enterprises with credit, subsidies,
and scal incentives, while neglecting smallholders, has contributed to the stagnation of
agricultural production in Ethiopia.
Nin-Pratt et al. [16] measure and compare agricultural total factor productivity (TFP)
growth and its components (eciency and technical change) in China and India. Its observed
that Chinas agricultural sector clearly outperforms Indias the reason being that agricul-
tural growth in China beneted from more fundamental institutional and policy reforms in
agriculture than India. They also nd some evidence that the transformation of industry in
China was also important for agricultural growth as Manufacture growth absorbed labor and
reduced employment in agriculture, creating incentives for capital investment and technical
change that kept output per worker in agriculture growing at high rates. They observed
that the policies implemented in India resulted in inecient allocation of inputs. Upite and
Pilvere [17] investigate the specics of agricultural industry that led to the implementation
of protectionism policies in the World such as - dependency on climatic conditions, price
uctuations, market inelasticity, high capital intensity, slow turnover of capital, irreplace-
ability and immobility of land as the main resource in agricultural production, low labour
mobility.
Lio and Liu [18] investigate the relationship between the adoption of information and
communication technology (ICT) and agricultural productivity. They observe that ICT has
a signicantly positive impact on agricultural productivity as adoption of modern industrial
inputs in agricultural production relies on the information and communication infrastruc-
ture. They nd that the ICT adoption levels of the richer countries are much higher than
those of the poorer countries, and the returns from ICT in agricultural production of the
richer countries are about two times higher than those of the poorer countries which can
be explained by the lack of important complementary factors, such as a substantial base of
human capital in the poorer countries. Fuglie and Schimmelpfennig [19] identied public
policies as major determinants of productivity and that the Asian countries raised produc-
tivity growth by creating incentives for farmers to allocate resources more eciently and
exploiting their sectoral comparative advantage.
3
2.4 Miscellaneous
Xu [20] discusses the Chinese agricultural production which is facing a persistently rising cost
share of industrial inputs,which reects the law of diminishing returns. They suggest that
the role of industrial inputs may have been underestimated, as most of the gain in total factor
productivity is attributable to the evolving mix of agricultural output, and also observe that
the contribution of household farming may not be large. Xiaobing and Rungsuriyawiboon
[21] measures agricultural technical eciency (TE) and total factor productivity (TFP) in
China using a metafrontier function approach. They nd that technical change contributed
most to Chinese agricultural TFP growth, and scale eciency change and TE change showed
negative eects on TFP growth for the advanced and low-technology provinces respectively.
Tonini and Jongeneel [22] suggest that the collapse of agricultural output is not necessarily
a good indicator of agricultural performance and argue that an analysis that only focuses on
output decline provides a partial and misleading interpretation of the success of agricultural
reforms. The nd that large-scale farming performs better than small-scale farming when
markets are missing and economic conditions are uncertain.
Weiss [23] observed that the demise of the family farm was inuenced by unfavorable
price movements, advances in productivity coupled with the price and income inelasticity of
demand for the sectors products. He discusses that the farmers have been sorely puzzled by
the fact that their productivity was increasing rapidly, but their standard of living was not.
Swain [24] discusses that the contractual arrangement depends upon the structure of the
economy and how the market functions. He observed that by entering into the contractual
arrangement, the income level of the farmer and employment level in the rural economy
has increased despite certain problems faced by the farmers like delayed payment, delay in
procurement and low supply of agricultural inputs to them. The author suggests that for
the success of the agreement, the company should run for a long period of time by which
farmers can change the cropping pattern and also to add value to the agricultural produce,
agro-processing industries should be set up in rural areas. Othman and Jusoh [25] examined
the structure of the Malaysian agricultural production function and analyze on how the
shares of factors and total factor productivity to agricultural growth change over time.
Lockie and Kitto [26] express the relative neglect of any serious theorization or research
into the relationships between practices associated with the provision of food and the con-
sumption of that food. They argue that the task for a progressive agri-food studies is not
to locate the locus of control within food networks but to identify the myriad translation
strategies, intermediaries or resources, and modes of ordering that are involved in the con-
stitution, construction and maintenance of patterned translation within agri-food networks.
Johnson [27] opines that the ination experienced by United States in 1970s has not had
a measurable impact on the agricultural production or productivity as the measures are
not rened enough to pick up the eects. He argues that agriculture is a capital intensive
sector, hence its output may have been favorably aected by a low real cost of obtaining
and holding capital. Fuglie [28] observed in the case of Indonesia that securing food security
rst may well have been a prerequisite for small-holder farmers to be willing to allocate
more resources to producing non-staple commodities for the market. Altukhov [29] enlist
the dierent types of risks involved in agriculture such as - Natural risks, Technological risks
, Agroenvironmental risks , Social risks , Foreign trade and Political risks. They argue that
in product segments where a high percentage of imports has been established, could delay
achievement of the threshold values of food security.
Sahoo and Mohapatra [30] focus on inter-state disparities among the major states of In-
dia. It is observed that the better performing states are mostly in the western and southern
regions of the country. They observed strong evidence of cyclical nature of the disparity
across the states, implying that agriculture still is highly dependent on nature and other
4
Figure 1: Theoretical Framework
stochastic factors that cause uctuations in the output across time and space. They also ob-
served that the agricultural growth has decelerated states like Punjab, Haryana and Western
Uttar Pradesh in the post-reform period but states like Bihar and West Bengal have shown
a signicant improvement. Allen and Schuster [31] discuss the complex managerial problem
of gathering the harvest for agricultural cooperatives involved in harvesting and process-
ing operations and the balancing risks of over-investment with the risk of underproduction.
They develop a mathematical model to control harvest risk involving dierentiation of a joint
probability distribution that represents risks associated with the length of the harvest sea-
son and the size of the crop. The Harvest Model provides lower-cost solutions in situations
involving moderate variability in both the length of season and the crop size.
3 Problem Denition
Many studies have been done on the modeling the factors which inuence agricultural yield,
yet there is no conclusive model which explains this complex phenomenon. This article tries
to address this issue by making an attempt to incorporate various factors such as Rainfall,
Literacy, Infrastructure, and their functional forms which may inuence the yield.
3.1 Objectives
To determine the factors that aect the Crop Yield.
Impact of Rainfall, Literacy and Infrastructure on Crop Yield.
3.2 Scope
High Yield Variety Crops: Rice, Wheat, Jowar, Bajra, Maize, Ragi
Unit of Analysis: District (India)
Duration: 2000-2001
5
4 Methodology
The model for factors that inuence the agricultural yield of crop, Figure 1, was developed
from the literature review in Section 2. The various dependent variables, independent vari-
ables and the methods used in the literature are shown in Table 6, Table 7 and Table 8
respectively.
4.1 Variables
The variables that are used in the Model (Figure 1) are discussed below
Yield: Yield is the total crop output per unit area of the land. This is considered as a
dependent variable in the model.
Rainfall: Rainfall is the most essential ingredient for the growth of the plants. This will
determine the nature of the crop and the amount of irrigation that may be needed in
that region. Though excessive rainfall may hamper the growth of the plant.
Area Sown: This provides the information about the area under cultivation.
Irrigated Area: In the current scenario wherein crops have to be cultivated throughout
the year, the farmer cannot solely rely on the rainfall as the source of water. To over
come this, irrigation has been undertaken in many areas wherein rivers, canals, lakes,
wells are used to water the crop. Irrigated Area is the area which is cultivated utilizing
the water sources other than Rainfall.
Re-sown Area: This is the area under which the same crop is re-sown in successive time
periods.
Fertilizer Consumption: The consumption of fertilizers has become indispensable owing
to the high demand of food crops. Fertilizers, both chemical and organic, are used
to provide the crop with the essential nutrients such as Sulphates, Phosphates and
Nitrates so as to grow quickly and produce higher output.
Tractor: With the mechanization of agriculture, tractors have been very eective in a
providing a more methodical and precise farming activity which can help achieve higher
crop outputs.
Pumps: Pumps are used for irrigation purposes.
Livestock: Livestock such as Cattle and Bualo have been in use for agriculture in India.
Livestock are used for ploughing, milk and manure.
Farm Labour: Farm labour is the most important input for agriculture as most of the
critical activities have to be performed by labour.
Literacy Rate: Few studies have shown that literacy and education of the farmers is a
very important attribute towards the use of better method of farming and hence higher
productivity.
Roads: Infrastructure is a very important input which aects the yield of the crop. This
gives access to good quality seeds and fertilizers to the farmers and hence will produce
better quality crops.
6
Variable Units Eect
1 Yield Kg./Hectare
2 Rainfall mm/Year - / +
3 Area Sown 000 Hectares +
4 Irrigated Area 000 Hectares +
5 Re-sown Area 000 Hectares -
6 Fertilizer Consumption 000 Tonnes +
7 Tractor Number +
8 Pumps (Power Consumption) KW +
9 Livestock (Cattle + Bualo) Number +
10 Farm Labour Number +
11 Literacy Rate % - / +
12 Ground Water Level m +
13 Roads KM +
Table 1: Model Variables and their Eects
Table 1 shows the variables, their units and their expected eect on the Crop Yield. The
Ordinary Least Square equation for the model is as follows.
Y ield =
0
+
1
Rainfall +
2
Rainfall
2
+
3
NetSownArea +
4
NetIrrigatedArea
+
5
ResownArea +
6
Fertiliser +
7
Literacy +
8
Road (1)
4.2 Hypotheses
Most of the literature have considered the factors such as Rainfall, Area Sown, Irrigated
Area, Fertilizers but not much on the Literacy, Infrastructure which are crucial in developing
countries. This brings us to the hypothesis of this article.
Rainfall is a very essential requirement for the plant growth. It is observed that when
there is scant or excessive rainfall, the crop yield is adversely aected, hence there is an
optimum level of rainfall that gives the best growth to the plant. This brings us to the
Hypothesis 1.
Hypothesis 1 Yield has a Quadratic relationship with Rainfall.
Fuglie [28] observe that the spread of literacy and education in the farm labour force,
made a modest but sustained contribution to agricultural productivity growth. As the
Labour is more educated, he can make better choice of the crops, sowing season, preventive
action and best methods in practice. This leads to our Hypothesis 2.
Hypothesis 2 Literacy has a positive eect on the Yield.
Sahoo and Mohapatra [30] show that the disparity in the agricultural output is signicantly
aected the length of pucca roads. Infrastructure is very vital as this gives the farmer access
to better inputs and market. Roads are one of the most important determinant of the
infrastructure. This takes us to Hypothesis 3
Hypothesis 3 Infrastructure (Roads) has a positive eect on the yield.
4.3 Data Sources
The data for the study is obtained from India Harvest database, Indiastat.com, Ministry of
Agriculture, FAO and The Fertiliser Association of India. The data consists of district wise
information regarding the variables considered across the country.
7
Figure 2: Yield v/s Rainfall and SqRainfall
5 Results and Discussions
Table 2 shows the summary of the variables considered in the model. We observe that all the
variables cover a wide range of values and hence the data can be considered as representative.
The data set covered almost all the states in India and covering about 546 districts. The
Yield and Rainfall as desired is having a standard deviation of 2573.808 KG/Hectare and
796.407 mm respectively, as it is covering all the various regions of the country.The data
related to number of Tractors and Pumpset were sparse and hence were ommited from the
OLS.
Y ield = 3994.2610 0.4778Rainfall 0.0001Rainfall
2
2.1165NetSownArea
+ 8.5952NetIrrigatedArea 3.11ResownArea + 29.30Fertiliser + 38.11Literacy 0.06Road
(2)
The OLS values are as shown in Table 3. The overall model is signicant (F value =
26.06) and the variables explained 40% of the variation in Yield. The Rainfall (-0.4778)
and SqRainfall (-0.0001) is observed to have a negative eect on the yield as seen in Figure
2 but are found to be insignicant. The VIF in Table 4 show multicollinearity between
Rainfall and Sqrainfall. Literacy (38.1127) is observed to have a signicant (P = 0.001) and
positive impact on Yield. Road (- 0.0633) was found to have a negative impact on but was
insignicant (P = 0.207). Tabel 5 shows the expected and observed eects of the variables.
The Hypothesis 1 did not nd support in the ndings. This could be attributed to
the fact that annual rainfall was considered and the seasonal eects may have masked the
results. Though the intuitive argument for the hypothesis seems valid, the data set used for
this study does not support this hypothesis.
The Hypothesis 2 found support in the results with high signicance. This enforces
the belief that education will provide the farmer with better decision making capabilities.
The Hypothesis 3 was not supported in the results, though the variable was observed to be
insignicant. The reason for this could be that the data about the road lengths may not be
totally explaining the eect of infrastructure.
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8
Variable Obs Mean Std. Dev. Min Max
Yield 546 6402.454 2573.808 598 12388
Rainfall 524 1178.729 796.407 8.96 4455
Net Sown Area 525 261.8614 214.3991 0.14 1304.04
Net Irrigated Area 453 114.0408 96.60552 0.04 579.58
Re-sown Area 545 183.3795 144.1833 0.04 961.9
Fertiliser 512 34.16867 35.07344 0.01 208.5
Literacy 555 63.95362 12.56013 30.2 96.5
Road 365 2677.033 2987.641 20.52 28508
Tractors 117 8236.513 11826.12 74 54553
Pumpsets 39 37642.95 29022.89 101 120550
Table 2: Summary of the Data
Source SS df MS Number of obs 292
F( 8, 283) 26.06
Model 776887075 8 9.7E+07 Prob > F 0.0000
Residual 1.05E+09 283 3726185 R-squared 0.4242
Total 1.83E+09 291 6293462 Adj R-squared 0.4079
Root MSE 1930.3
Yield Coef. Std. Err. t P > t [95% Conf. Interval]
Rainfall -0.4778 0.4328 -1.10 0.271 -1.32968 0.3741
SqRainfall -0.0001 0.0001 -1.0 0.317 -0.00036 0.0001
Net Sown Area -2.1165 0.6575 -3.22 0.001 -3.41082 -0.8222
Net Irrigated Area 8.5952 1.9920 4.31 0.000 4.67417 12.5162
Re-sown Area -3.1101 1.2936 -2.40 0.017 -5.65632 -0.5638
Fertiliser 29.3029 4.4494 6.59 0.000 20.5449 38.061
Literacy 38.1127 11.3108 3.37 0.001 15.8488 60.3767
Road -0.0633 0.0501 -1.26 0.207 -0.16182 0.0353
cons 3994.2610 795.2433 5.02 0.000 2428.92 5559.6
Table 3: Regression Co-ecients of the model
Variable VIF 1/VIF Breusch-Pagan / Cook-Weisberg test for heteroskedasticity
Rainfall 7.92 0.1263
SqRainfall 7.39 0.1352
Net Sown Area 2.1 0.4757 chi2(1) 2.54
Net Irrigated Area 2.99 0.3340 Variables: tted values of Yield
Re-sown Area 3.19 0.3138 Ho: Constant variance
Fertiliser 2.4 0.4158
Literacy 1.63 0.6127
Road 1.26 0.7968 Prob > chi2 0.1108
Mean VIF 3.61
Table 4: VIF & Breusch-Pagan / Cook-Weisberg test
Variable Expected Eect Actual Eect
Yield
Rainfall + / - -
Area Sown + -
Irrigated Area + +
Re-sown Area - -
Fertilizer Consumption + +
Literacy Rate + / - +
Roads + -
Table 5: Expected and Actual Eects of the Variables
9
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Manufacturing & Service Operations Management, vol. 6, pp. 225236, June 2004.
11
Dependent Variable
1 Yield [2]
2 Output [1], [11], [7], [18], [19]
3 Agricultural Productivity [4]
4 Coecient of Variation in Output [30]
5 Growth Rate [6]
Table 6: Dependent Variable
Factors Factors
1 Land Area Sown [1], [2],[19], [11] 15 Farm Technology [19]
2 Rainfall [1] 16 Credit facilities [1]
3 Irrigated Area [1], [7] 17 Agri. Development Exp [1], [19]
4 Farm Labour [1], [2], [18], [19], [11] 18 Urbanization [1]
5 Fertilizer [1], [18],[7] 19 Literacy [1], [18],[19]
6 Re-sown Area [1] 20 Industry Labour [1]
7 Livestock [1], [18],[11], [7] 21 Radio, T.V. [1]
8 Tractor [1], [18], [11], [7] 22 ICT (Info. Comm. Tech) [18]
9 Arable Land [7] 23 FDI [4]
10 Crop Intensity [1] 24 Political Stability [4]
11 Pumps [11] 25 Market Size [30]
12 Crop Pattern [1] 26 Energy [30]
13 Infrastructure-Roads [1], [30] 27 Corruption [4]
14 Agri. Institutions [30] 28 Government Policies [19]
Table 7: Independent Variable
Method
1 Linear Model [1], [7], [6], [30] , [19], [4]
2 Cobb Douglas Production Function [1], [18]
3 Log-Log Model [1],[11], [18] [2],
4 Quadratic Normalised Restricted Cost Function [12]
Table 8: Methodology
12