Economic analysis of production, marketing and price behavior of tapioca

Abstract

Tapioca (Manihot esculenta Crantz) is a staple food crop cultivated in several developing countreis around the globe. Among the tropical root and tuber crops, tapioca stands first in terms of area and production. India is the tenth largest producer of tapioca with production of 8.10 million tonnes from an area of 2.17 lakh hectares. India acquires its significance in global tapioca economy due to highest productivity in the world (36.4 t/ha). Among Indian states Kerala stands second in production of tapioca. The area under tapioca was showing a declining trend from the eighties which has resulted in stagnant production. In the above background, the present study was carried out with the objective of analysing the trend in area, production and productivity and price behaviour of tapioca, estimating the economics and resource use efficiency of tapioca production, identifying the marketing channels, estimating marketing costs, margins and marketing efficiency and finding out the major constraints in production and marketing of tapioca in Kerala. The study is based on both primary and secondary data. The time series data on area, production and productivity of tapioca in Kerala and India for a period of 1950-51 to 2016-17 were collected to study the trend and growth rate. Monthly average prices of tapioca in various markets of Kerala were collected to evaluate the trend and price behaviour of tapioca over the period 2002 to 2018. Primary data was collected form 120 selected farmers of Kollam district and Malappuram district using pretested interview schedule by personal interview method. Trend analysis was done to understand the growth pattern of tapioca in terms of area, production and productivity both at national and state level from 1950-51 to 2016-17. In India production and productivity of tapioca showed an increasing trend but the area was showing a declining trend. In the case of Kerala, similar trend was observed with negative growth in area for the entire period of study, but the growth for the entire period of study, but the growth rate in production was positive due to high and positive growth rate in productivity. The price behavior of tapioca in major markets of Kerala viz., Kozhikode, Ernakulam and Chalai were analyzed by decomposing the monthly price data into four components viz., secular trend, seasonal variation, cyclical variation and irregular variation assuming a multiplicative model of time series. The price of tapioca in these markets showed an increasing trend in the long run. While analyzing the seasonal variation it was noticed that during the entire study period (2002 to 2018), price of tapioca showed wide fluctuations in all the three markets. Due to high fluctuations in price no definite cycles were seen in the market prices. Co-integration analysis of tapioca prices in the above three markets were carried out and it was revealed all the three markets were integrated. In order to provide additional evidence on the direction of price transmission, Granger causality test was carried out and the results proved the existence of causality between Kozhikode and Ernakulam markets in the long run in both the directions. Unidirectional causality was found between Kozhikode and Chalai markets and Ernakulam and Chalai markets. The cost and returns were estimated using ABC cost concepts. The cost of cultivation per hectare was Rs.1, 54,619 with a net return of Rs. 43,190. It was noted that human labour accounted for 48.50 per cent of the total cost. To evaluate resource use efficiency in tapioca cultivation, Cobb-Douglas production function was fitted. Human labour and experience in farming were found to be significantly and experience in tapioca cultivation, Cobb-Douglas production function was fitted. Human labour and experience in farming were found to be significantly contributing towards the yield. Moreover, an increasing returns to scale in tapioca production was observed in the study area which implies that there is ample scope to increase the profit of farmers by proper adoption of technology and by optimal allocation of resources. Marketing plays a predominant role in agricultural development and is as important as production to any producer. Thus, an efficient marketing system can increase the level of income of producers and raise the satisfaction of cosumers. The most common marketing channel identified in the study area was channel I (Producer-village trader-wholesaler-retailer-consumer) with a marketing efficiency of 2.0, while channel IV (Producer-consumer) was found to be the most efficient channel (6.45) as there were no intermediaries. Major production constraints identified were high labour cost and labour shortage and the marketing constraints were low price and distress sale to traders. The future of tapioca lies in the promotion of diversified uses of tapioca, especially in the industrial sector so policy intervention to encourage potential entrepreneurs to start industries to produce diverse value added products from tapioca is needed to tackle these problems.