Analyzing Compound Growth Rates And Marketing Efficiency In Transacting Maize In Kurnool District Of Andhra Pradesh

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P. JAHNAVI KEERTHI PRIYA*, B. APARNA AND P. SUMATHI

Department of Agricultural Economics, Agircultural College, Mahanandi, ANGRAU, A.P., India

ABSTRACT

In view of the potentiality of maize crop in Kurnool district, the analysis pertaining to growth performance and marketing aspects has assumed greater significance. Regarding growth performance of maize in Kurnool district, improvement in irriga-tion facilities like Telugu Ganga project and K.C canal command and popularization of drip irrigation facilities have contributed much towards the drastic increase in area under maize. The Compound Growth Rate (CGR) analysis revealed that, the increase in production of maize was mainly due to increase in area under cultivation rather than productivity in Kurnool district. Among the two marketing channels identified in transacting maize in Kurnool district, Channel-II was found to have higher MEI when compared with Channel-I. The Government should construct roads for easy transport of produce to the market centres. Instead of transporting the produce individually from the farm gate to the district market centre, it is essential to establish a loading station in the vicinity of the villages, so as to assemble the produce at loading station and transport it to the market centre on cost effective basis.

KEYWORDS:

The predominant maize growing states that contributes more than 80% of the total maize production are Andhra Pradesh (20.9%), Karnataka (16.5%), Rajasthan (9.9%), Maharashtra (9.1%), Bihar (8.9%), Uttar Pradesh (6.1%), Madhya Pradesh (5.7%), Himachal Pradesh (4.4%). Apart from these States, maize is also grown in Jammu and Kashmir and North-Eastern states. Hence, the maize has emerged as important crop in the non-traditional regions i.e. peninsular India as the state like Andhra Pradesh which ranks 5th in area (0.79 m.ha) has recorded the highest production (4.14 m.tonnes) and productivity (5.26 t ha-1) in the country although the productivity in some of the districts of Andhra Pradesh is more or equal to the USA (Chauhan, 2013). Area under hybrid seeds in 2013-14 is estimated to be around 60 per cent of the total area under maize cultivation. Andhra Pradesh has the highest productivity followed by Tamil Nadu due to majority of the area being covered under Single Cross Hybrids (SCH).

In Andhra Pradesh, maize has emerged as one of the major cereal crops in 3.52 lakh ha with an annual production of 22.1 lakh tonnes in 2013-2014. Kurnool district with an area of 0.52 lakh ha enjoy a production of 3.1 lakh tonnes in the same year thereby, accounting for 14.77 and 14.02 per cent share respectively at Andhra

Pradesh level. Kurnool district in Andhra Pradesh had got good reputation as an important maize grower of Andhra Pradesh since long time. In view of the potentiality of maize crop in Kurnool district, its economic analysis has assumed greater significance. From this background, it emanates the need for an in depth microscopic study on analyzing the growth performance and marketing aspects in maize cultivation in Kurnool district. The results of the study would be useful to maize farmers of Kurnool district in particular and of Andhra Pradesh in general in planning suitable strategies for efficient marketing of maize. Keeping this goal in view, the following specific objectives were formulated for this in-depth investigation.

1. To analyse the growth performance of maize at All India level, Andhra Pradesh and Kurnool district.

2. To study the marketing channels and compute price spread in transacting maize in Kurnool district of Andhra Pradesh.

MATERIALS AND METHODS

Kurnool district in Andhra Pradesh was purposively selected for the study, as the district ranks first in the

cultivation of maize in Rayalaseema region of Andhra Pradesh state after its bifurcation during 2013-14. Top two mandals in terms of area under maize cultivation in Kurnool district viz., Nandikotkur and Pamulapadu were selected. From the list of villages arranged in descending order of acreage under maize, top two villages from each mandal were selected. For the selection of farmers, a list of farmers from the selected villages was obtained from the respective Gram Panchayat Offices. To analyze the resource use efficiency, the farmers were conveniently categorized according to their land holding size i.e., Marginal (<1 ha), Small (1-2 ha) and Other farmers (>2 ha). From these three different categories, a total of 120 farmers were selected at random based on probability proportional to size. So, the sampling frame consists of one district, two mandals, four villages and 120 farmers which forms the basis to elicit the requisite data. A well structured pre-tested schedule was employed to collect the requisite information from the sample farmers. The study was conducted in the year 2013-14. To analyze the growth performance of maize, Compound Growth Rates (CGRs) were worked out for area, production and productivity of maize at All India level, Andhra Pradesh and with special reference to Kurnool district for two sub periods i.e., 1980-1994 (Pre-WTO regime) and 1995-2014 (Post-WTO regime) and also during over all period (1980-2014) by employing exponential function of the following form:

Yt = abt

The above equation was transformed into log linear form and written as:

log Y = log a + t log b + log μt

where,

Yt: Area / Production / Productivity of maize during the selected reference period,

‘t’ : Years which takes value 1, 2………….n,

μt: Disturbance term in year ‘t’,

‘a’ and ‘b’ are constant and parameters to be estimated respectively.

The above equation was estimated by using Ordinary Least Squares (OLS) technique.

CGR = antilog of ( log b – 1) × 100 where, log b is the parameter estimated

To study the price spread and other relevant parameters of estimating marketing efficiency in transacting maize, the following formulae are employed:

Price spread = Consumer Purchase Price (CPP) – Farmer’s Net Selling Price(FNSP)

or

Gross Marketing Margins (GMMs) of all market intermediaries + Marketing cost (Mc) incurred by the farmer

Total Marketing cost = Mc of farmer + Σ Mcn

where, Mcn = Marketing costs incurred by n intermediaries

n = 1, 2, 3………………..n

Gross Marketing Margini (GMMi) = SPi – PPi Net Marketing Margini (NMMi) = GMMi – Mci

where,

GMMi = Gross Market Margin of ith intermediary

SPi = Selling Price of ith intermediary
PPi = Purchase Price of ith intermediary
Mci = Marketing costs incurred by ith intermediary

Computation of Marketing Efficiency Index (MEI)

The following measures were employed to assess the MEI without considering Marketing Losses:

Shepherd’s approach: MEI = (V/I) -1 where,

V = Value of commodity sold at the consumer’s level or CPP

I = Mc incurred by all the agencies

Acharya’s approach: MME = [FNSP / (Mc + MM)]

where,

MME = Modified Measure of Marketing Efficiency

FNSP = Farmer’s Net Selling Price

Mc = Marketing cost incurred by all the

intermediaries

MM = Marketing Margins incurred by all the intermediaries

RESULTS AND DISCUSSION

i. Growth rates in area, production and productivity of maize

CGRs were worked out to study the growth rates in area, production and productivity of maize at All India level, Andhra Pradesh and with special reference to Kurnool district for an overall reference period (1980-2014) and during two sub periods 1980-1994 (Pre-WTO Regime) and 1995-2014 (Post-WTO Regime) (Table 5.4). At All India level for the overall reference period, i.e., 1980-2014, there was significant increase in the growth of both area (1.36%) and productivity (2.49%) of maize and hence, production of maize showed positive and significant growth rate of 3.89 per cent. Regarding the sub-period, during pre-WTO regime (1980 -1994), area under maize showed non-significant positive growth trend (0.13%), but it was compensated by significant growth in productivity (2.90%) and thereby, production showed positive and significant growth rate at 3.04 per cent. Regarding post-WTO regime, both area and productivity of maize showed positive and significant growth rates (2.38 and 2.68 per cents respectively) and hence, production showed positive and significant growth rate at 5.13 per cent. Thus, during both Pre and post-WTO regimes, productivity growth contributed much towards

maize production compared to area growth. However, comparing pre and post WTO regimes, area growth under maize showed significant influence in boosting maize production during post- WTO regime. This signifies the expansion of area under maize especially under irrigation commands and favourable domestic and international prices of maize have led to higher and significant influence on maize production during Post-WTO regime. This higher influence of area growth on maize production was clearly witnessed in Andhra Pradesh state during the overall reference period and even during post -WTO regime. During pre-WTO regime, area under maize showed declining trend (-0.22%) and productivity growth was insignificant (2.55%) and this led to insignificant growth in production (2.19%). This low area and productivity growths of maize can be attributed towards inadequate irrigation facilities and lack of high yielding varieties of maize during this reference period. However, during post-WTO regime, there was drastic increase in area under maize (4.60%) at significant level and this coupled with positive and significant growth in productivity (3.69%) has led to positive and significant growth in production (8.54%). These positive trends were mainly due to popularization of high yielding varieties of maize, improvement in irrigation facilities and strong acreage response from farmers for the price signals of

maize both in domestic and international markets. These positive influences in terms of growth rates of area, production and productivity of maize during Post-WTO regime have also contributed towards the growth in area (3.36%), production (7.26%) and productivity (3.80%) during the overall reference period. Prabakaran and Sivapragasam (2013) studied the Compound growth rates in rice and sorghum for the period 1970-71 to 1999-2000 and found that with respect to area, production and yield of rice, they are positive at the state and regional level for all the periods and the total periods except rayalaseema where it has shown negative growth rate. In case of sorghum, the compound growth rates of area and production were negative and showed positive effect in the yield.

In contrast to Andhra Pradesh, in Kurnool district, during Pre-WTO regime, productivity showed declining trend (-1.03%) and area though showed positive growth rate (5.15%), but remained non-significant. Hence, production growth (4.05%) also remained non-significant. However, during Post-WTO regime, there is drastic increase in area under maize (29.80%) and productivity also showed positive and significant growth rate of 5.57 per cent and hence, the production of maize showed positive and significant growth rate of 37.04 per cent. This signifies that, the increase in irrigation facilities like Telugu ganga project and K.C canal command and popularization of drip irrigation facilities have contributed much towards the drastic increase in area under maize during Post- WTO regime when compared to Pre-WTO regime. The healthy performance of maize in terms of growth in area, productivity and production during Post-WTO regime also influenced towards positive and significant growth rates of maize area (19.64%), productivity (3.39%) and production (23.70%) during the overall reference period.

ii. Price spread and Marketing efficiency in transacting maize

The following two important channels were identified in the marketing of maize in Kurnool district:

Channel-I

Producer ¾ Commission agent ¾ Wholesaler ¾ poultry feed unit ¾ Retailer ¾ Poultry units

Channel-II

Producer ¾ MARKFED ¾ Co-operative diaries ¾ Consumer (sale of animal feed)

Among the two marketing channels, the most commonly used marketing channel for transacting maize was Channel-I. This is evident from the Table 5.15, as 60.00 per cent of the total sample farmers sold their produce through this channel. The proportion of marginal, small and other farmers who used this channel for transacting maize was 60.66, 55.88 and 64.00 per cents respectively. Channel II was followed by 40 per cent of the total selected farmers. The proportion of marginal, small and other farmers following this channel was 39.34, 44.12 and 36.00 per cents respectively.

Price Spread in Maize Marketing Channel-I

The details of Table 3 reveal that, the Farmer’s Share in Consumer’s Rupee was 84.60 per cent. In this channel, the farmer incurred marketing costs of ` 67.36 per quintal of maize and realized a net selling price of ` 964.58. The marketing costs, GMM and NMMs of the wholesaler were

` 58.91, ` 72.31 and ` 13.40 respectively per quintal of maize and the corresponding figures for poultry feed unit were ` 19.58, ` 24.16 and ` 4.58 respectively. The retailer’s were ` 11.44, ` 11.81 and ` 0.37. The NMMs of the wholesaler, poultry feed unit and retailer accounted for 1.18, 0.40 and 0.032 per cents of the consumer’s rupee respectively.

The farmer on an average incurred a total of ` 67.36 in marketing of one quintal of maize. Among the total marketing costs incurred by the farmer, loading was the major cost accounted for 76.78 per cent followed by commission and weighing accounting for 15.32 and 7.90 per cents respectively. The wholesaler purchased the produce from the farmer through a commission agent and incurred an amount of Rs. 58.91 towards marketing costs. The major cost component of wholesaler is loading cost of ` 26.68 which accounted for 45.29 per cent of the total cost incurred by the wholesaler. Other costs such as transportation, cess charges and unloading accounted for 24.99, 18.74 and 10.98 per cents respectively. The poultry

feed unit purchased from the wholesaler and incurred

` 19.58 of the total marketing costs. Transportation cost was ` 12.40 which accounted for 63.33 per cent and unloading cost, ` 7.18 which accounted for 36.67 per cent. For the retailer, the marketing costs incurred were loading (` 6.16) and unloading costs (` 5.28) accounting for 53.85 and 46.15 per cents respectively of total marketing costs.

Channel-II

The analysis of marketing costs and margins (Table 3) indicated that, the farmer realized a net selling price of

` 1256.03 per quintal of maize accounting for 92.54 per cent of the price paid by the consumer. The marketing cost incurred by the farmer was ` 54.23. After deducting all expenses, the MARKFED earned a NMM of ` 6.89 which accounted for 0.51 per cent of consumer’s rupee. The co-operative dairy purchased maize at a price of

` 1335.18 per quintal and sold to the consumer for a price of ` 1357.30. In this process, it made a NMM of ` 10.61 accounting for 0.78 per cent of the consumer’s rupee.

The total marketing costs incurred by the farmer was

` 54.23 (Table 3). Among these marketing costs, loading charges was the major cost incurred by the farmer accounting for 92.40 per cent of total marketing costs incurred followed by weighing, accounted for 7.60 per cent. The farmers sold the produce to the MARKFED and it incurred different marketing costs like transportation, stacking and packing, unloading and processing and they accounted for 41.93, 35.94, 18.69 and 3.44 per cents respectively. The co-operative dairy purchased the feed from the MARKFED and incurred total marketing cost of

` 11.51 in which loading and unloading costs accounted for 55.34 and 44.66 per cents respectively.

From the above discussion, it is clear that, the marketing costs incurred by the farmer is highest than all other intermediaries across the two channels.

From the forgoing analysis, it can be inferred that the farmer was getting the highest share of CPP in Channel-II (92.54%) over Channel-I (84.60%). Price spread is more in Channel-I (Rs. 175.64) than Channel-II (Rs. 101.27) indicating Channel-II was more efficient than Channel-I.

Marketing Efficiency

It is seen from the Table 4 that, the index of marketing efficiency was higher in channel-II i.e., 15.20 and 12.40 both in Shepherd’s method and Acharya’s method

respectively indicating that channel -II was more efficient than channel-I. The inefficiency in channel-I was due to higher marketing costs and margins involved in the marketing of maize.

SUMMARY AND CONCLUSIONS

The study infers that, regarding growth performance of maize, significant area and productivity growth rates of maize at All-India level, in Andhra Pradesh and in Kurnool district were influential in boosting the production of maize during overall reference period. The improvement in irrigation facilities like Telugu Ganga project and K. C canal command and popularization of drip irrigation facilities have contributed much towards the drastic increase in area under maize during Post-WTO regime when compared to Pre-WTO regime. This healthy performance of maize in terms of growth in area, productivity and production during Post-WTO regime also influenced towards positive and significant growth rates of maize area (19.64%), productivity (3.39%) and production (23.70%) during the overall reference period. Thus, the CGR analysis revealed that, the increase in production of maize was mainly due to increase in area under cultivation rather than productivity in Kurnool district. Among the two marketing channels identified in transacting maize in Kurnool district, Channel–II was found to have higher MEI when compared with traditional Channel-I. In view of this, the Government should construct approach roads for easy transport of produce to the market centers and involve MARKFED and cooperatives. Instead of transporting the produce individually from the farm gate to the district market centre, it is essential to establish a loading station in the vicinity of the villages, so as to assemble the produce at loading station and transport it to the market centre on cost effective basis.

REFERENCES

  1. Chauhan, S.K. 2013. Maize marketing in Himachal Pradesh. Indian Journal of Agricultural Marketing. 27 (1): 41-58.
  2. Prabakaran, K and Sivapragasam, C. 2013. Analysis of growth rates of rice and sorghum in Andhra Pradesh. International Journal of Farm Sciences. 3 (1) : 1-9.