Rice Trade Competitiveness in post-WTO period in Andhra Pradesh

Abstract

Rice is the major staple food of Andhra Pradesh and is widely grown in all regions of the State. There are significant changes in the macro policy environment and its implications for crop competitiveness since early 1990s. This paper examines the trends in production and competitiveness of rice in Andhra Pradesh in pre and post-WTO period and its implications in producer and consumer surplus and social cost benefits at State level. Rice registered an impressive growth in production in post-WTO period. Trade competitiveness of rice increased in post-WTO period as shown by DRC and NPC levels. EPC shows that rice production was fairly protected by the government policies even after post-WTO period. Overall, liberalization has positive impact on the welfare of the State. Distortion in domestic prices would result in a change in revenue to producers and consumers. Due to free trade ofrice, welfare gains were much larger than the respective welfare losses to the economy. The policy prescriptions from the study are (i) reduced cost of production by educating the farmers on improved crop management practices in rice fanning systems (ii) ensuring supply of quality inputs, replacement of low potential/ pest susceptible old varieties by new high yielding varieties with high yield potential (iii) encourage hybrid rice cultivation in suitable areas by conducting demonstrations and making seed available to the farmers (iv) providing farm implements and farm machinery for improving efficiency in farm operations and cost of cultivation and lastly (v) keep exports and imports free. Only use tariffs as an adjusting instrument.