The Price of Inefficiency in Indian Agriculture

Flavius Badau and Nicholas Rada

No 235622, 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts from Agricultural and Applied Economics Association

Abstract: We use an innovative approach to predict agricultural revenues had farmers optimally reallocated production among agricultural commodities in order to minimize inefficiency. To that end, we employ a newly constructed 1980-2008 state-level production account of Indian agriculture, a directional distance frontier specification, and an innovative output-reallocation predictive model to test whether India’s farmers have achieved maximum potential revenues from their choice of agricultural commodity mix given the various policy, environmental, and input supply constraints. The results show substantial levels of technical inefficiency in Indian agriculture (18%). The output reallocation model predicts that Indian agricultural revenues could have been 22 % higher had farmers optimally shifted their agricultural commodity mix in order to minimize inefficiency.

Keywords: Agricultural and Food Policy; Crop Production/Industries; Food Security and Poverty; Livestock Production/Industries; Production Economics; Productivity Analysis (search for similar items in EconPapers)
Pages: 18
Date: 2016
New Economics Papers: this item is included in nep-agr and nep-eff
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea16:235622

DOI: 10.22004/ag.econ.235622

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