Temporal Changes in Cost Structure and Profitability of Wheat and Paddy Crops in India

The paper evaluates the trend of cost structure and profitability in wheat and paddy in major producing-states in India using secondary data for the period 1994-95 to 2015-16.The study revealed that cost of-cultivation increased over years and human labour has largest share in operational cost and continuously-increased during the study period whereas the animal labour substituted by machine labour. The high-productivity states in paddy crop like Andhra Pradesh, Punjab and Madhya Pradesh have maintained-profits over years, whereas the low productivity states like Bihar, Odisha and West Bengal have shown negative profits. The return per rupee was found to be highest in Punjab and lowest in Odisha. The percentage margin of MSP over cost A₂+ FL in wheat crop was highest in Punjab(169.6%) and lowest in Uttar Pradesh (67.8%). The Margin of MSP over cost A₂+ factor cost+50% will be beneficial for some states whereas it will not provide any additional benefits to farming sector of other states as it is more than 100% in Punjab, Haryana and Madhya Pradesh in 2015-16 whereas this margin was just 70 percent-in Bihar and Uttar Pradesh. Therefore, the government must rebuild the procurement operations in the-country and also focus on the agriculture research and extension programmes, cost reduction, productivity-growth and creating marketing infrastructure. This will help in boosting the farmer’s income and reduce-rural poverty.