Profitability Analysis of Major Crops in Punjab: Some Evidence from Cost of Cultivation Survey Data#

During the past half century, the Punjab state achieved exemplary growth in food grain production. Consolidation of landholdings, reclamation of new agricultural lands, development of irrigation, use of biochemical inputs comprising high yielding variety seeds, chemical fertilizers, insecticides and mechanical inputs were among the important factors which helped agriculture in the state in making rapid strides The fast shift in the area from traditional diversified crops to mono-culture of rice wheat system was driven by forces such as price policy, technological change, market infrastructure and low cost of irrigation. The underground water is being used indiscriminately and due to over exploitation of water resource, the sustainability of existing crop systems is becoming doubtful creating critical second generation problem. Evidently, the state agriculture has reached at a stage of stagnation whereas the social cost is increasing due to environmental degradation. Though the economic evaluation of social cost is a cumbersome process, an attempt has been made to access the performance of different crops and cropping pattern in the state of Punjab using alternative scenarios like market prices, economic prices (without subsidies) and natural resource valuation (NRV) considering environmental benefits like biological nitrogen fixation and greenhouse gas costs. The results revealed that on the basis of market prices, basmati and paddy common generated net returns of 54289/ha and 45360/ha respectively as the net returns from other crops were less. The basmati remains the most remunerative crop with net returns of 41633/ha at economic prices and for paddy common net returns at economic prices were 33191/ha. The net returns from basmati and paddy common were estimated to be 33951/ha and 31733/ha on the basis of NRV. The results also brought out that alternative crops gave lower returns ascompared with paddy. The present set of marketing infrastructure and agricultural technological know-how, the rice-wheat cropping pattern is likely to produce the highest and more stable income. The sustainability of natural resources can be achieved only if same platform of technology-market-Govt. assurance for other alternative crops will be provided to the farmers Market incentives for other crops should be explored so that farmers could move away from thirsty crops such as rice.