Competitiveness of Major Crops in Post-WTO Period in Andhra Pradesh

Abstract

In Andhra Pradesh, rice, maize, cotton and groundnut are the major crops. There are significant changes in the competitiveness and policy environment and its implications for crop competitiveness in post-WTO regime. This paper examines the trends in area, production and yield and competitiveness of major crops in pre- and post-WTO period and its implications on the producer, consumer surplus and social cost benefits at state level. Rice, maize and cotton registered impressive growth in production in post-WTO period. Trade competitiveness of rice showed that the state had improved competitiveness in rice production as shown by domestic resource cost (DRC) and nominal protection coefficient (NPC) levels. The effective protection coefficient (EPC) shows that rice production was fairly protected by the government. In case of maize NPC values shows non-competitiveness and EPC results revealed inefficiency in production. Growth rate of production of groundnut is lower during post-WTO period, even though it is efficient and competitive producer mainly due to the high fluctuations in prices and yields. The state is an efficient and competitive producer of cotton and its area increased steeply. Welfare gains in all crops were much larger than the respective welfare losses due to liberalisation. Welfare gain was high in case of cotton, followed by rice, groundnut and maize. The net effect to the economy of the state due to liberalisation was substantial in rice and maize.

Keywords: WTO, Welfare gains, Crop competitiveness

JEL Classification: Q110, Q170