Presented at the Pulses for Sustainable Agriculture and Human Health” on 31 May-1 June 2016 at NASC, New Delhi, India. The conference was jointly organised by the International Food Policy Research Institute (IFPRI), National Academy of Agricultural Sciences (NAAS), TCi of Cornell University (TCi-CU) and Agriculture Today.

1. Dynamic Supply Response for pulses in
India: Role of price and non-price factors
Akshay Bhatnagar
Pramod Kumar Joshi
Avinash Kishore
Devesh Roy
May 31st, 2016 , New Delhi

2. Introduction
• Neglected by Green Revolution
• India’s position in the world:
• 33% of area
• 25% of production
• 27% of consumption
• Imports 3 - 4 million tones of pulses every year
• Important source of protein
• Per capita availability decreasing – 60 g/day in 1950 & 31.6
g/day in 2011

3. Increasing domestic supply is critical

4. Government tried several schemes to boost
production
• Pulses Development Scheme (4th FYP) (1969-70 to 1973-74)
• National Pulses Development Project (7th FYP) (1985-86 to
1989-90)
• Special Food Grain Production Program (1988-89)
• ISOPOM – (2004)
• NFSM-Pulses (A3P) – (2007-08)
• Special Plan to achieve 19+ Million tonnes of Pulses
production during Kharif (2012-13)

5. • To study the dynamic supply response of pulses
• To study the factors affecting relative area allocation to
pulses
• Price versus non-price factors
• If supply not price responsive- why?
Objectives of our study

6. Preview of results
• Price factors do not account for supply response
• Non-price factors like rainfall deficit significant
• There can be issue of risk premium precluding response
to prices
• Do farmers intensify cultivation instead of increase
cropped area in response to increase in prices?

7. 7
Crops Particulars
(1960-70)
-
(1971-90)
-
(1991-2000)
-
(2000-2010)
Chick Pea
Area -21.64 -18.46 17.68 6.43
Production -9.73 -18.06 39.19 12.3
Yield 14.98 0.51 19.02 5.12
Pigeon Pea
Area 8.26 32.54 -1.89 3.37
Production 10.68 42.6 -5.81 7.64
Yield 2.4 7.32 -3.99 3.91
Total Pulses
Area -8.02 3.31 -0.93 2.25
Production -0.87 10.34 2.15 14.08
Yield 7.97 6.72 3.67 11.23
Wheat
Area +26.11 48.53 15.62 3.18
Production 95.54 171.58 42.55 12.13
Yield 55.13 82.98 23.33 8.73
Paddy
Area 11.88 10.46 8.72 -1.53
Production 33.77 70.56 28.55 10.34
Yield 19.72 54.00 18.54 12.09
(Percentage change)
Comparative Performance of pulses & cereals

9. Pulse landscape in India
• Not much increase in area and yield over the last 5
decades
• Crowded out by cereals
• Moved away from green revolution belt
• Moved away from irrigated areas
• 87% of pulses are grown in rainfed areas

14. Pigeon pea Production (‘000 tons) across districts of India: 1970 & 2007

15. Pigeon pea yields (kg/ha) across districts of India: 1970 & 2007

16. Changing composition of Indian pulses production basket –
TE 1991
Chickpea
36%
Pigeonpea
19%
Lentil
5%
Blackgram
12%
Greengram
10%
Peas
4%
Others
14%

17. Chickpea
47%
Pigeonpea
16%
Lentil
6%
Blackgram
10%
Greengram
8%
Peas
4%
Others
9%
Changing composition of Indian pulses production basket –
TE 2012

18. Methods
• Arrellano-Bond, difference GMM Estimation
technique specifically designed for "Small T and Large
N
• a linear functional relationship;
• a dynamic left-hand-side variable which depends on its
own past realizations
• Endogeneity and dynamic panel bias

19. Data
• Estimation based on dataset combining two secondary
datasets
• ICRISAT-VDSA Meso Level dataset and plot-level Cost of Cultivation
data from CACP
• VDSA-comprehensive long district-Level panel-data on key
agriculture and socioeconomic variables
• Farm harvest price for each plot/farmer from CACP
combined with crop area in a district from VDSA meso-data
• A Balanced panel of 305 districts in 18 states over 2005-06
to 2011-12.

20. Some motivating statistics
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
0
50
100
150
200
250
300
350
400
450
Area under Pulses in Drought Years & Normal Years
Drought Non Drought

21. Motivating statistics: continued-
variation across districts
0
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
0.09
1966 - 1980 1981 - 1990 1991 - 2000 2001 - 2011
PULSE SHARE
Ambala Bareilly Budaun Gwalior Indore Jhansi
Mainpuri Rampur Saran Shahjahanpur Ujjain
0
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
0.09
1966 - 1980 1981 - 1990 1991 - 2000 2001 - 2011
PULSE SHARE
Bahraich Balangir Bulandshahar Cuddapah Dhanbad Dhenkanal
Ganjam Gorakhpur Keonjhar Nellore Rohtak The Dangs

22. (1)
VARIABLES Normal
regression with
NIA
L.newPPEA_TA -0.155
(0.188)
L2.newPPEA_TA -1.208***
(0.141)
newCOTN_TA -0.000710
(0.157)
newRICE_TA -0.0190
(0.0207)
newRICE_TAI_share -0.000461***
(8.88e-05)
newPPEA_TAI_share -0.00144***
(0.000423)
L.newPPEA_TAI_share 0.000295
(0.000186)
L2.newPPEA_TAI_share -0.00218***
(0.000654)
newN_TC -0.000225***
(7.11e-05)
newP_TC 0.000415***
(0.000141)
drought_12 -0.184
(1.400)
drought_13 -5.688***
(1.964)
drought_14 -4.303*
(2.465)
ln_State_med_FHPCreated1 2.214
(3.784)
L.ln_State_med_FHPCreated1 5.298
(3.994)
L2.ln_State_med_FHPCreated1 1.712
(1.829)
ln_State_med_FHPCreated9 5.274
(4.424)
ln_State_med_FHPCreated21 -4.569
(3.810)
newNIA -0.0464**
(0.0191)
Observations 276
Number of distcode91 138

23. Take away
• Farm gate prices do not seem to affect area under
pulses in a well-specified dynamic model
• Question: Is the supply curve vertical?
• Unlikely
• Conjecture: It is probably piece wise vertical
• Beyond a threshold price change it is upward sloping
• Results are robust to varying lag lengths

24. Policy implications
• Big price increases needed to overcome risk
• Calls also for better transmission of prices to farmers
• Can minimum support prices work?
• Do they cover risk? Are changes in MSP countercyclical?
• Price policies can have limitations

25. Major Findings
• July rainfall – Negatively
associated with relative area
allocation to pigeonpea
• Take soil conservation,
drainage, agronomic measures
to address flooding and
drought problem in pigeonpea
• Developing short duration
varieties in pigeonpea to
compete with cereals
• Big price changes possibly
needed
Policy Implications

26. Thank you !!!!!