Economic analysis of costs and returns of rice production, price deviations in Telangana

Rice cultivation is the principal activity and source of income for millions of households around the globe, India and in Telangana. Though at national level the area under rice cultivation is stagnant, significant growth was observed in Telangana. The present paper studied the area, production and productivity of rice during the period from 2000-01 to 2017-18 in Telangana state and analysed cost of cultivation during the past decade and revealed that operational costs contributed to 65% while fixed costs accounted to 35 per cent of total cost of cultivation. Among the operational costs labour cost contributed 69 percent while material cost contributed 20% indicating that rice production is labour intensive in nature. Further the difference in cost of cultivation between the Period I (2007-08 to 2011-12) and Period II (2012-13 to 2016-17) showed that there is an increase by 39%. Though the gross returns recorded increase in the past decade the net returns over C2 cost of cultivation is negative in all the years, however the net returns over A2+ FL are positive in all the years. The price policy when analysed for deviations of FHPs from MSP, revealed that the price policy was successful in meeting its objective and that the impact of MSP on FHP was positive and quite high in all the years. Based on the results it is concluded that the cost of cultivation is to be reduced by good management practices, good extension system and emphasis on establishing custom hiring centers for easy and low cost mechanization so as to make rice cultivation profitable.