Synopsis of the thesis entitled ECONOMICS OF SUGARCANE CULTIVATION IN ANDHRA PRADESH (A Case Study of Visakhapatnam District) By KARRI NARASIMHA PUSAPPA Research Director Prof. M.BHAVANI SHANKAR RAO M.A., Ph.D. SYNOPSIS SUBMITTED TO THE ANDHRA UNIVERSITY FOR THE AWARD OF THE DEGREE OF DOCTOR OF PHILOSOPHY IN ECONOMICS DEPARTMENT OF ECONOMICS ANDHRA UNIVERSITY VISAKHAPATNAM FEBRUARY, 2013
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Synopsis of the thesis entitled
ECONOMICS OF SUGARCANE CULTIVATION IN ANDHRA PRADESH
(A Case Study of Visakhapatnam District)
By
KARRI NARASIMHA PUSAPPA
Research Director
Prof. M.BHAVANI SHANKAR RAO M.A., Ph.D.
SYNOPSIS SUBMITTED TO THE ANDHRA UNIVERSITY
FOR THE AWARD OF THE DEGREE OF DOCTOR OF PHILOSOPHY
IN ECONOMICS
DEPARTMENT OF ECONOMICS ANDHRA UNIVERSITY
VISAKHAPATNAM FEBRUARY, 2013
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INTRODUCTION:
Sugarcane is important cash crop grown in India. Sugarcane cultivation and
development of sugar industry runs parallel to the growth of human civilization and is
as old as agriculture. The importance and use of sugarcane and sugar in the country’s
socio-economic milieu is deep rooted and immense. In the current day rural economy
set up sugarcane cultivation and sugar industry has been focal point for socio-
economic development in rural areas by mobilizing rural resources, generating
employment and higher income, transport and communication facilities. About 7
million sugarcane farmers and large number of agricultural labourers are involved in
sugar cane cultivation and ancillary activities. Apart from this, the sugar industry
provides employment to 5 lakh skilled and semi skilled workers in rural areas.
India is one of largest sugarcane producers in the world, producing around 300
million tonnes of cane per annum. Production of the sugar is the second largest agro
processing industry in the country after cotton and textiles. India is the only country
that produces plantation while sugar unlike other countries that produce raw or refined
sugar or both.
In India, sugarcane the key raw material for production of Sugar and Gur,
planted once a year during January to March. It is the major cost driver for the
production of sugar. It being an agricultural crop is subject to the unpredictable
vagaries of nature, yielding either a bumper crop or a massive shortfall in its
cultivation from year to year.
The sugarcane growing may be broadly classified into two agro climatic
regions – subtropical and tropical. The subtropical zone includes four States: 1) Uttar
Pradesh (UP) 2) Bihar 3) Punjab 4) Haryana. The tropical zones include five States.
These are: 1) Maharashtra 2) Andhra Pradesh 3) Tamil Nadu 4) Gujarat 5) Karnataka.
As far marketing of sugarcane is concerned there is difference. Sugarcane is
directly sold to sugar factories or mills that produce sugar. The second way of cane
marketing is processing the cane into Jaggery (Gur) and marketing. The processing of
sugarcane into Jaggery depended on the cane price offered by the sugar mills
operating in the area and prices of Jaggery. The processors preferred to crush cane
into Jaggery at times of attractive Jaggery prices coupled with low prices offered by
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sugar mills. Thus, in India, two important marketing channels for sugarcane have
For the purpose of selection of farmers the total sugarcane cultivators list is
ascertained from village records possessed by the village secretary-a government
official. This data is the base for the selection of farmers.
The population of sugarcane cultivators is stratified based on the size of the
holding and from this sample farmer’s are selected. There are few sugarcane
cultivators who have large operational holding. Therefore they are purposively
eliminated. For purpose of selection of the sample farmer’s marginal farmers, small
farmers and medium farmers are considered.
To know the difference in cost and returns of owner cultivator and tenant
cultivator, proper care is taken to have representation of tenant farmers in the sample.
In Visakhapatnam district sugarcane cultivation is of two types viz., plant and ratoon.
Therefore while selecting the sample proper care is taken to have representation of
both these groups in the sample.
(b) Data Base:
This study is based on both secondary data and primary data. To analyse
trends in growth of area, output and yield published data is collected from (a)
Statistical abstract of Andhra Pradesh and (b) Center for Monitering Indian Economy.
Data relating Visakhapatnam district is collected from district Hand Book of statistics.
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(c) Period of Enquiry:
The secondary data relates to the years from 1970-71 to 2010-11. The primary
data collected relates to the 2010-11. Primary data is collected with the help of the pre
designed and pre tested questionnaire.
Tools of Analysis:
(a) The collected data is analyzed using different statistical techniques. Apart
from averages and percentages appropriate statistical techniques are used wherever
necessary. Compound Growth Rate is used to analyze temporal changes in area,
production and yield of sugarcane, the formula is given below. The opening of the
economy with different economic reforms is expected to have an impact on
internationally traded agriculture goods which include sugarcane. To capture the
impact reforms on sugarcane cultivation. The total period is divided into two sub
periods, i.e. 1970-71 to 1989-90 and 1990-91 to 2010-11.
Y = aebx
The growth rate is calculated for total period and also for two sub periods.
(b) The instability in the growth is measured by eliminating the trend component
from the series. To measure the instability in the growth of area, production and yield
of sugarcane Cuddy’s Measure of Instability is used. It is defined as
Instability Indices = C.V )2
(c) Coefficient of Variation is calculated by using the formula
C.V. = X 100
Standard Deviation (S.D) = )2
Where =
(d) Correlation Technique is used to know the relationship between (a) Minimum Support Price and Output of sugarcane (b) Minimum Support Price and Area under sugarcane.
r =
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(e) To analyze Input Output Relationship Cob-Douglas Production Function has been estimated by the Ordinary Least Square (OLS) one equation for plant crop and another for ratoon crop is used. The specification function as follows,
Y = ax1
b1 . ax2b2 . ax3
b3 …… axnbn
Where Y = Output x1 = Input variable b1 = Production elasticity in respect to x1
a = Constant The Cob-Douglas Production Function was transformed into linear form by taking the log on both sides.