Performance of Agriculture in River Basins of Tamil Nadu In the last three Decades – A Total Factor Productivity Approach A Project Sponsored by Planning Commission, Government of India Research Team K.Palanisami C.R.Ranganathan A.Vidhyavathi Rajkumar.M N.Ajjan Final Report March 2011 Centre for Agricultural and Rural Development Studies Tamil Nadu Agricultural University Coimbatore – 641 0013 1 Acknowledgement The authors express their sincere thanks to Planning Commission, Government of India for providing necessary financial support to carry out this study. The authors express their sincere thanks to Tamil Nadu Agricultural University for providing necessary facility to carry out the research work. 2 CONTENTS Page S.No CHAPTER Topics No. 1 I 1. Executive Summary 1 2 II 2. Introduction 7 3 3. Objectives III 10 3.1. Review of Past Studies: TFP measures 4. Data Envelopment Analysis (DEA) IV 17 4 4.1. Input and output orientations 5. Profile of the Study Area: Tamil Nadu 5 5.1. Principal crops and production 5.2. Irrigation V 5.3. Problems facing Agriculture in the State 27 5.3.1. Land degradation and soil quality 5.3.2. Wastelands 5.3.3. Pollution 6 VI 6. Profile of River Basins of Tamil Nadu 35 7. Methodology 7 7.1. Estimation of basin areas and proportion of basin areas in each district of Tamil Nadu VII 7.2. Conversion of district-wise data to basin-wise 38 7.3. Estimation of Malmquist Index of Total Factor Productivity Growth in Agriculture 7.4. The Malmquist TFP Index 8 8. Basin coverage VIII 44 8.1. Time period 9 9. Output Series 9.1. Total inputs IX 9.1.1. Labor Input 45 9.1.2. Land Input 3 Page S.No CHAPTER Topics No. 9.1.3. Chemical Fertilizer input 9.1.4. Irrigation Input 9.1.5. Livestock inputs 9.1.6. Units of variables 10. Results and Discussions 10 10.1. Summary Statistics 10.1.1. Crop output 10.1.2. Livestock output X 47 10.1.3. Net Sown Area and net irrigated area 10.1.4. Fertilizer Usage 10.1.5. Labour input 10.1.6. Cattle and poultry input 11 11. Liberalization policies and their effects on XI 56 agriculture in the river basins 12 12. Comparison of crop out per unit of sown area XII 67 and per unit of water potential 13. Results of TFP analysis 13 13.1. Overall TFP growth XIII 71 13.2. Individual basin TFP 13.3. Growth rates of TFPs 14 XIV 14. Cumulative TFP indices 82 15. Results of DEA analysis 15 15.1. DEA with VRS technology and Output XV Orientation. 86 15.2. DEA with VRS technology and Input Orientation. 16 XVI 16. Summary and Conclusion 94 17 XVII 17. Policy recommendations 98 18 XVIII 18. References 100 4 LIST OF TABLES Table Page List of Tables No No 1 Total Factor Productivity trends for crops in selected states 13 2 Land Use Pattern in Tamil Nadu (Lakh ha) 28 3 Land Holding Pattern in Tamil Nadu 29 4 Status of Principle Crops in Tamil Nadu 30 5 Reduction in Per Capita Availability of Water in Tamil Nadu 6 Season wise Rainfall in Tamil Nadu (mm) 31 7 Irrigation Status in Tamil Nadu ( Area in lakh ha) 8 Change in Availability of Groundwater in Tamil Nadu 32 9 Major River Basins of Tamil Nadu 35 10 Area and Rainfall of the River Basins 36 11 Surface and Groundwater Potential of the River Basins 37 12 Summary Statistics Crop output (Rs.Crores) 47 13 Summary Statistics - Livestock output (Rs.Crores) 51 14 Summary Statistics - Net-Area-Sown-Input (Area in ha) 52 15 Summary Statistics - Net Irrigated Area Input (Area in ha) 53 16 Summary Statistics - NPK-Value-Input (in lakh tonnes) 17 Summary Statistics - Labour input (in Numbers) 54 18 Summary Statistics - Cattle-Input (in Numbers) 55 19 Summary Statistics - Poultry-Input (in Numbers) 20 Crop output (Rs. In crores) in the pre and post liberalization periods 57 21 Livestock output (Rs. In Crores) in the pre and post liberalization periods 59 5 Table Page List of Tables No No 22 Net area sown (Area in ha) in the pre and post liberalization periods 60 23 Net area irrigated input (Area in ha) in the pre and post liberalization periods 61 24 N, P, K input (in lakh tonnes) in the pre and post liberalization periods 62 25 Labour input (number) in the pre and post liberalization periods 63 26 Cattle input (number) in the pre and post liberalization periods 64 27 Poultry input (number) in the pre and post liberalization periods 65 28 Value of crop output per ha. of sown area 67 29 Value of crop output per MCM of water potential 69 Mean Technical Efficiency Change, Technical Change and TFP Change, during 30 75 three decades in the seventeen river basins of Tamil Nadu 31 Table Mean TFPs in three periods 77 32 Growth rates of TFPs 80 33 Output Oriented VRS DEA model scores for the River basins of Tamil Nadu 87 34 Output Oriented VRS DEA model –benchmarks and projected values 89 35 Input Oriented VRS DEA model scores for the River basins of Tamil Nadu 91 6 LIST OF FIGURES Figure List of Figures Page No No 1 Map of Tamil Nadu State 27 2 River Basins of Tamil Nadu 35 3 Crop output in Small Basins during 1975-76 to 2005 - 06 48 4 Crop output in Medium Basins during 1975-76 to 2005 – 06 49 5 Crop output in Large Basins during 1975-76 to 2005 - 06 50 6 Crop output/ ha of net sown area 68 7 Crop output/per unit of water 70 Trend in Total Factor Productivity Index in Small basins during 1975- 8 72 76 to 2005 - 06 Trend in Total Factor Productivity Index in Medium basins during 9 73 1975-76 to 2005 - 06 Trend in Total Factor Productivity Index in Large basins during 1975- 10 74 76 to 2005 - 06 11 Cumulative TFP Indices in Small basins during 1975-76 to 2005 – 06 83 12 Cumulative TFP Indices in Medium basins during 1975-76 to 2005 – 06 84 13 Cumulative TFP Indices in Large basins during 1975-76 to 2005 - 06 85 7 CHAPTER I Executive Summary 1. Introduction/Objectives Tamil Nadu has 17 major river basins and most of them are water stressed. Agricultural sector consumes about 75% of the water resources. Agriculture sector faces major constraints due to water scarcity. There is growing demands for water from industry and domestic users and also interstate competition for surface water resources also intensifies. Given the state water policy, priority is given for domestic use followed by irrigation and industry etc. indicating that agricultural sector has to manage the scarcity in the future. Further the canal systems have poor water control and management. Also, out of the 1.8 million wells, about 0.16 million wells are defunct in the state as the water table is fast declining. Again, out of the 385 blocks in the state, 90 are dark (extraction exceeding 100% of the recharge, 89 are grey (extraction exceeding 65%) and the rest are white where the extraction is less than 65%. Given all these constraints and scarcities for the existing water supply scenarios, what is needed is the clear understanding of the value of water in alternate uses as well as the incentive to allocate the water among competing crops and uses in different river basins. However, currently the available information is related to the administrative boundaries such as districts, which as such are difficult to relate with the river basin boundaries. Hence, it is important to reorient the district level data to basin level for making basin level interventions. This will also help to work out the performance of both irrigation and agriculture sectors at basin level. Accordingly the main objectives of the study are as follows: i) To analyze the agricultural growth in all the 17 river basins of Tamil Nadu using the total factor productivity approach, ii) To study the income inequality in all the river basins of Tamil Nadu, and iii) To suggest policy options to improve the productivity of agriculture in the basins. iv) To assess the performance of agriculture, apart from growth rates, total factor productivity (TFP) was mainly used employing Data Envelopment Analysis (DEA). These objectives are set with a view to provide guidance in policy planning in river basins. Since the main objective of the study is to study agricultural growth in major river basins, historical data on agricultural production for the past three decades were used. District-wise data on agricultural production available from various government publications are the primary data for the present study. 8 1.1. Methodology All the 17 river basins of Tamil Nadu constituted our study area. They were Chennai basin, Palar basin, Varahanadhi basin, Ponnaiyaar basin, Vellar basin, Paravanar basin, Cauvery basin, Agniyar basin, Pambar and Kottakaraiyar basin, Vaigai basin, Gundar basin, Vaippar basin, Kallar basin, Thambaraparani basin, Nambiar basin, Kodaiyar basin and Parambikulam Azhiyar Project (PAP) basin. The study covers the period of 1975 -76 and 2005 -2006, which concerned with important changes in agriculture due to liberalization of trade and reforms in investment, initiation of privatization, tax reforms and inflation controlling measures. The study used two output variables, viz., crops and livestock output variables. The output series for these two variables were derived by aggregating detailed output quantity data of all agricultural commodities. Area under each crop was multiplied by the constant prices of respective crop to arrive at agricultural output.