1National Centre for Agricultural Economics and Policy Research, Pusa, New Delhi – 110012.
The authors are grateful to Dayanatha Jha, B.C. Barah, R. Chand and Suresh Pal for their valuable suggestions on the earlier draft of this paper. Authors are, however, solely responsible for the errors that may remain.
Yield and price instability and covariate risks have been examined for major oilseeds, viz. groundnut, rapeseed/mustard, sunflower and soybean, in selected states of India using time series data. Risk behaviour and effects of price and price risk on production have been analyzed in a rational expectations framework. The study has also estimated social gains from yield and revenue insurance in oilseeds. While instabilities in yield, prices and gross return have shown mixed responses, covariate risks have increased. The results of econometric analysis have indicated that the expected prices and price risk are important determinants of oilseeds production. Price elasticities of oilseed production have been found to vary between 0.26 and 0.88 and price risk elasticities of production between –0.006 and –0.07 in different Indian states. The potential efficiency gains from insurance schemes based on rainfall and other meteorological variables have been estimated to be 17.5 to 43 per cent over self-insurance in oilseeds production.
Oilseeds, instability, covariate risks, rational expectation, production response, risk effect, insurance market, social benefits
