An Economic Analysis of Net Returns from Major Crops in Central Dry Zone of Karnataka under Different Valuation Approaches

The economic distortions introduced by systems of subsidies, incentives for inputs, products, services, mis-allocation of resources and inefficiency can affect the economically optimal crop pattern. Present study explored the analysis of net returns under different valuation approaches viz., market price approach, economic price approach and natural resource valuation approach in central dry zone of Karnataka. A total of 90 structured questionnaires were used to gather the data necessary for analysis. Results reveal that, net returns were positive based on all the three approaches of market prices, economic prices and natural resources valuation without inclusion of cost of water, except in ragi. The more reduction in the net returns at economic prices was observed in case of paddy under borewell irrigation, indicating that the distortion was more due to subsidies on fertilizers (` 8883 per crop) and energy for pumping irrigation water (` 7930 per crop). The net returns from groundnut under natural resource valuation was higher (` 10, 450) without considering the value of ground water, when compared to the net returns at economic prices because of inclusion of nitrogen value in net returns from the crop (` 1107). The net returns were negative with inclusion of water cost in all the crops except irrigated groundnut. This shows that, due to prohibitive cost of groundwater, the net returns are not remunerative for crops like paddy, maize and ragi.

Market distortions influenced by subsidies and price support offer non-natural advantages to cultivate different crops in different periods. Crops considered for this study were ragi, maize, groundnut in rainfed situation where as ragi, maize, groundnut and paddy were considered in irrigated situation. At normal market price situation it is subsume of subsidies but it will not reflect the true net returns. Therefore deduction of subsidies from market returns gives the economic returns. Now a days sustainability is an important challenge, in this regard net returns was worked out according to natural resource valuation technique by considering nitrogen fixation value in legumes and GHG emission cost. And value of groundwater is captured under natural resource valuation technique with water cost. With all these approaches, there was a decrease in the net returns but crop like groundnut showing positive net return implies still can grow groundnut in CDZ.