Trends in total factor productivity of sugarcane in Maharashtra: A state level evidence using DEA and SFA approach

Abstract

This paper applied the both parametric and non-parametric approaches of productivity estimation for sugarcane in Maharashtra for the period of 1980-81 to 2020-21. The result from both the approaches signifies the importance in shift due to technological adoption as a vital source of productivity growth. The estimation of DEA and SFA produced similar results at spatial and temporal directions thus validating the TFP estimation. The analysis for growth rate, instability and decomposition analysis has been carried out for five sub-periods as per the reforms in the sugarcane industry and overall period (1950-51 to 2020-21). The state is witnessing a positive growth rate in area, production and productivity after the Mature Economic Reforms after 1990’s. However the state is suffering from serious instability issues in the sub-periods IV and V due to the scarcity of water and decline in groundwater table of the state. The positive TFP growth has been associated with associated with 0.3 per cent and a declining mean technical efficiency by -0.1 per cent per year. The TFP revived by 1.09 percent after the reforms in the sugar industry. The estimated regression results for TFP determinants revealed pressure on irrigation facilities due to prolonged drought condition of state. Since sugarcane is the leading cash crop of the state and large revenue is being generated by the crop sugar mills, balanced nutrients, and rural literacy all of these have a positive and significant contribution in increasing the agricultural productivity of the state. The results have revealed the yield stagnation is not only due to technology fatigue, but could be due to slacked input intensification. An obvious extension of the study could be incorporating more crops and states for an exhaustive and comparative analysis.