Comparing Performance of Various Crops in Punjab Based on Market and Economic Prices and Natural Resource Accounting

Abstract

The study has assessed the performance of different crops and cropping pattern in the state of Punjab using alternative scenarios like market prices; economic prices (net out effect of subsidy) and natural resource valuation (NRV) considering environmental benefits like biological nitrogen fixation and greenhouse gas costs. The study has used unit-level cost of cultivation data for the triennium ending 2010-11. It has analyzed crop-wise use of fertilizers, groundwater, surface water and subsidies. The paper provides insights into relative profitability of various crops with and without state support in the form of subsidies and by reckoning positive and negative environmental externalities. The study has shown that even after netting out the effect of input subsidies and effect on environment and natural resource, the relative profitability of various crops doesn’t change. Under the present set of marketing infrastructure, minimum support price, and agricultural technological know-how, the rice-wheat cropping pattern produces the highest and more stable incomes. The study has pointed out that farmers may not move towards diversification until incentivized by economically attractive alternatives.