Supply Response of Cashew Nuts in Kerala

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SUMMARY

In the global scenario, India accounts for 31% of the total production of cashew. Kerala occupies a predominant position in the cultivation of cashew in India. The present study evaluates the degree of response of the producers to price and non-price factors affecting cashew nut in the state. In order to evaluate the producers' response, it was envisaged to study the response in terms of area and ... (see full summary)

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Introduction

Cashew (Anacardium occidentale L.), a native of eastern Brazil, was introduced in India by the Portuguese about five centuries ago. The major cashew growing countries in the world include India, Nigeria, Brazil, Vietnam, Indonesia and several African countries such as Tanzania, Mozambique and Ivory Coast. In the global scenario, India accounts for 30.98% of the total production followed by Nigeria with 12.26% (Directorate of Cashew Nut and Cocoa Development, 2003).

Cashew cultivation in India confines mainly to the peninsular area. It is grown in Kerala, Karnataka, Goa and Maharashtra along the West Coast and Tamil Nadu, Andhra Pradesh, Orissa and West Bengal along the East Coast. With regard to area, Maharashtra ranks first with 1.48 lakh ha closely followed by Andhra Pradesh with 1.36 lakh ha. Regarding the production of raw nut, Maharashtra is the largest producer with 1.10 lakh MT, contributing 22% to the national production followed by Kerala and Andhra Pradesh with 0.9 lakh MT each contributing 18% to the total production. In the case of productivity, Maharashtra ranks first with 1,000 kg/ha followed by Kerala with 890 kg/ha (Directorate of Cashew Nut and Cocoa Development, 2003).

Kerala plays a predominant role in the cultivation of cashew in India. An investigation into the supply aspects of the cashew industry in Kerala is necessary because price is one of the most important determinants of the producers' decision regarding planting, output, employment, etc. An empirical understanding of the response of the area and yield to price will be immensely useful in evolving suitable policies directed at better predictions of supply. Hence, the present study was designed to evaluate the degree of response of the producers to price and non-price factors of cashew nut in the state.

Methodology

The study is based on time series data on area, production and productivity of cashew, for the period from 1976-1977 to 1999-2000, collected from the various publications of the State Planning Board and Directorate of Economics and Statistics, Thiruvananthapuram.

In order to examine whether the producers respond to price variation or not, it could be desirable to explore how the planned production responds to price.

Considering the relation Q = A x Y,

where Q = Quantity of output

A = Area in hectares under cashew

Y = Yield per hectare

it would be possible to study output more realistically by taking the variable on the right hand side of the equation. Thus, the area planted under the crop, being decided by the grower, would be a better index of planned production. Yield, another component of production, is dependent to a very great extent on weather and other factors like incidence of pests or disease. In the present study, an attempt has been made to estimate the supply response with respect to area and yield for the period from 1976-1977 to 1999-2000.

Supply Response Models

The traditional multiple regression models with appropriate lags were used to estimate the degree of responsiveness in area and yield with respect to price and non-price factors. The specifications of the area and yield response functions in the implicit forms are as follows:

Area Response Model

A^sub t^ = f (APR, ARELP, PR, YR, T)

where,

A^sub t^ = Area under cashew in hectare in the year 't'

APR = Average price of sheet rubber per quintal in the preceding years t-1, t^sub -2^ and t^sub -3^

ARELP = Average of the relative prices in the year t^sub -1^, t^sub...

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