Post on 08-Mar-2015
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Economic Evaluation of Alternative Farming Systems in Coastal
Floodplains (gajnis) of Karnataka, India1
Ganesh B. Keremane + and Balachandra K. Naik ++
+ Corresponding Author and Member, Centre for Comparative Water Policies and Laws
School of Commerce, University of South Australia GK 4-17, City West Campus, North Terrace,
Adelaide, South Australia 5000 GPO Box 2471, Adelaide-5001 ganesh.keremane@unisa.edu.au
&
++ Assistant Professor, Department of Agricultural Economics,
University of Agricultural Sciences, Krishinagar, Dharwad – 580 005,
Karnataka, India
2
Economic Evaluation of Alternative Farming Systems in Gajni lands
(floodplains) of Coastal Karnataka, India
Abstract
Indian coastline is vulnerable to sea-level rise and the tidal ingress and pushing up of
saline waters inland result in submergence of croplands, particularly the low-lying
agricultural lands making them unfit for crop production. Such lands are found all
along the Indian coastline including the Karnataka coast, where they are locally
referred to as gajnis. Since ages, local communities have managed these lands in a
traditional way which was disturbed by the emergence of modern aquaculture
industry. Large tracts of gajnis were converted into profit-making aquaculture ponds.
But, the success of the aquaculture industry was short-lived as serious concerns were
raised about its negative socio-economic and ecological impacts on the livelihood of
the local communities and sustainability of the gajnis. Therefore a study was carried
out to examine the alternative farming systems in the region and identify an
economically viable and sustainable system for the gajni farmers. The present paper is
based on the findings from this study.
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INTRODUCTION
Indian coastline is vulnerable to sea-level rise and the tidal ingress and pushing up
of saline waters inland result in submergence of croplands, particularly the low-lying
agricultural lands making them unfit for crop production (Aggarwal & Lal, 2000).
Such lands or flood plains are found extensively along the estuarine borders and river
banks on the Indian coastline, including the Karnataka coast where these lands are
referred to as gajnis. Since ages, the local communities have managed these lands by
following the traditional farming systems i.e., paddy monoculture or the paddy/prawn
rotation system. Although the returns from these traditional systems were low
compared to those from modern aquaculture industry, they were quite sufficient for
local sustenance and thus could be characterized as subsistence economic activity
(Maybin & Blundell, 1996; Bhatta & Bhat, 1998).
But, a policy decision of the state government to replace age-old mud
embankments surrounding the gajnis with the permanent stone dams to protect the
gajni agriculture coupled with the efforts to promote ‘blue revolution’ in the country
created favorable conditions for the entry of fishing contractors and external capital in
the region (Bhatta & Bhat, 1998; Chandran,___). The huge economic (monetary)
returns from the aquaculture industry attracted the farmers who were searching for
ways and means to meet the demand of increased population and cost of living.
Moreover, the fact that it was risk-free2 made a large number of farmers to lease-out
their lands to the contractors for prawn farming instead of cultivating on their own
(Bhatta and Bhat, 1998; Chandran___; EJF, 2003).
Further, the rising foreign and domestic demands for prawns resulted in rapid
expansion of the industry along the Karnataka coast (Naik, 1994). As a result, large
tracts of gajnis were converted into profit-making aquaculture ponds. But, the success
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of the industry was short-lived as serious concerns were raised about its negative
socio-economic and ecological impacts on the livelihood of the local communities and
long-term sustainability of the gajnis. Thus, the lands once managed traditionally and
sustainably either turned low-productive or unproductive, leaving the farmers in
jeopardy (Maybin and Blundell, 1996; Bhatta and Bhat, 1998; EJF, 2003).
The present situation demands an urgent need to address the issues affecting the
long-term sustainability of gajni lands and hence a study was carried out in coastal
Karnataka, India with the objective of identifying a sustainable farming system for
gajni farmers by comparing the alternative land-use options with respect to
profitability, resource use efficiency and problems faced by the farmers in taking up
these practices. The present paper while focusing on a part of this study highlights the
costs and returns structure; factors influencing production activity; returns to scale and
allocation efficiency by determining the production functions underlying the
alternative farming systems, and the actual allocation of resources the farmers made
among the different farming systems.
METHODOLOGY
The study area
The study area- Uttara Kannada district (previously North Kanara) lies between
74°9' to 75°10' East longitude and 13°55' to 15°31' North latitude and stretches itself
along the coastline of the Arabian Sea. The district constitutes a total of 5640 hectares
of gajni lands spread over five coastal talukas namely Karwar, Ankola, Kumta,
Honnavar and Bhatkal (BFDA, 1998). The region comes under the direct influence of
the Southwest monsoon, receiving very heavy rains during June to August. Agriculture
is the main occupation in the district and more than 70 per cent of the work force is
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engaged in agriculture. However, fisheries are an important economic activity and fish
represents the major dietary source of animal protein for the people in the region.
Sampling design and Data collection
Multistage random sampling technique was used to select the study sites and the
respondents. In the first stage three talukas namely Kumta, Karwar and Ankola were
selected as they together accounted for around 88 per cent of the total gajni lands
available in the district (Table-1). In next stage, based on the proportion of the gajni
lands available in each respective talukas the villages and the farmers were selected.
Accordingly, from the three talukas identified a total of 10 villages and 160 farmers
practicing different farming systems were selected for the study. Both primary and
secondary data were used for the study. Primary data were obtained by personal
interview method using a comprehensive questionnaire.
Data Analysis
Simple tabular analysis with aid of percentages and ratios was used to estimate and
compare the costs and returns structure of different farming systems. A Cobb-Douglas
type of production function was fitted to data in order to determine the factors that
influenced the economic returns in each production system (Onyenweaku et.al, 2000;
Kamanga, et.al, 2000; Islam et.al, 2003). Cobb-Douglas functions were used partly
because of the advantages in estimation and interpretation but mainly because of the
good fit to available data (Chennareddy, 1967; Hopper, 1965; Kaldi, 1975; Islam et.al,
2003). Processing of the data collected ascertained that factors like land, labour
(human and bullock), manure, seeds and feed (in case of prawn farming and mixed
farming) were important variables influencing the production activity. Therefore, the
inputs were considered as independent variables and the gross income as the
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dependent variable. Separate production functions as specified (equation 1) were fitted
to data collected for the individual systems:
Y= EibXbXbXbXbXbXbXbXbaX .99.88.77.66.55.44.33.22.11 ---- (1)
where,
Y is the gross returns;
X1 is the amount of land or water spread area;
X2 is the value of human labour;
X3 is the value of bullock labour;
X4 is the value of paddy seeds;
X5 is the value of farm yard manure (FYM);
X6 is the value of artificial feed for prawn/fish;
X7 is the value of prawn seeds/post-larvae (PLs);
X8 is the value of fish fingerlings;
X9 is the value of pre-stocking chemicals;
a is the intercept/constant;
bi represents elasticities of production; and
Ei is the error term
The summation of elasticities of production (Σbi) was used to estimate the returns
to scale. If the sum of elasticities of production is equal to unity, we have constant
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returns to scale; a sum greater than unity, implies increasing returns to scale while a
sum less than unity denotes decreasing returns to scale (Onyenweaku et.al, 2000;
Islam et.al, 2003).
Further, to judge the allocative efficiencies the ratios of the Marginal Value
Product (MVP) to Marginal Factor Cost (MFC) of individual resources were used
(Hopper, 1965; Koopmans, 1951; Kumbhakar & Bhattacharyya, 1992; Onyenweaku
et.al, 2000; Liefert et.al, 2003). The computed MVP was compared with the MFC or
opportunity cost of the resource to draw inferences. A resource is said to be optimally
allocated when it’s MVP=MFC or MFCMVP =1. The marginal value products
(MVP's) were calculated at the geometric mean levels of the variables using the
formula:
MVP of Xith resource = bi . Xi
Y ------ (2)
where,
Y = geometric mean of gross returns in different farming systems
Xi = geometric mean of ith independent variable
bi = regression coefficient (elasticity of production) ith independent variable
In imputing the marginal cost of land in case of paddy monoculture and paddy/prawn
rotation, the average per hectare value of land was taken as its marginal cost while the
same in case of prawn farming and mixed farming was the average per hectare leasing
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value of pond area. The marginal cost of all other inputs was considered as one rupee,
since these inputs have been measured in value terms in the regression analysis.
RESULTS AND DISCUSSIONS
Alternative farming systems in the study region
During the survey it was identified that the farmers in the region practiced four
different farming systems i.e., paddy monoculture, paddy/prawn rotation, prawn
farming (traditional and semi-intensive), and mixed farming (Bhatta & Bhat, 1998). A
brief description of these systems is given below:
Paddy monoculture: is a conventional system of cultivating paddy in the gajnis. A salt
tolerant paddy variety -‘kagga’ is grown during kharif with the onset of the monsoon
and harvested in November once the rains subsided. The rice was mainly used for
self-consumption.
Paddy/prawn rotation: is the other traditional system followed in the region. Here,
paddy is grown in one season followed by prawn culture in the next. The natural tides
bring along the wild fish fry and post-larvae (PLs), thus enabling to produce prawns in
the paddy fields through a rotation system. The final product includes paddy, prawn
and also other marine species.
Prawn farming: in the region was practiced by following both extensive and semi-
intensive methods. Extensive method was usually practiced in low-lying areas and
involved tidal flooding, stocking at a rate of 10,000 – 30,000 PLs /ha, and the final
product included prawn and other marine species. Semi-intensive method on the other
hand was comparatively capital intensive as it involved purpose-built ponds of
between half and five hectares, stocking at rates between 30,000 -100,000 PLs / ha. It
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also included pumping of water in and out from ponds, regular feeding and post
stocking preparations. The final product included only a single output-prawn.
Mixed farming: was an integrated system developed by the agricultural research
station at Ankola. It is an improvement over the semi-intensive prawn farming which
involves prawn and fish farming in same pond with stocking of PLs and fish fry’s at
recommended density, pumping of water, regular feeding. The final product includes
prawn and fish.
Distribution of sample farmers based on the systems they practiced is presented in
Table-2. The figures clearly indicate that paddy monoculture and paddy/prawn rotation
system were the most commonly practiced systems in the region as 41 and about 33
percent of farmers respectively took up these systems. Prawn farming as explained
above was being practiced by following both the traditional and semi-intensive
methods. Irrespective of the methods, around 21 percent of sample farmers practiced
prawn farming. However, only nine percent of farmers took up semi-intensive prawn
farming as this method was capital intensive and only a few resource rich farmers or
the fishing contractors who leased-in the lands from farmers practiced this system
(Bhatta and Bhat, 1998; EJF, 2003). After the initial euphoria of the aquaculture
industry, there was a huge reduction in the number of farmers practicing commercial
prawn farming in the region because of a serious outbreak of viral that caused many
farmers to abandon the aquaculture ponds (Chandran, ---; Maybin&Blundell, 1996;
Shivanandmurthy, 1997). The other system identified was mixed farming which was a
new system of integrating prawn farming with fish culture and an improvement over
semi-intensive prawn farming. However, given the problems associated with
commercial prawn farming farmers hesitated to take up this the system and so did not
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receive the expected response (Keshavanath, 1999). Only 5 percent of sample farmers
were identified who took up this system this system.
Having identified these systems practiced by the farmers an attempt was made to
estimate the profitability and resource use-efficiency in each of these systems so as to
enable us to suggest an economically viable and sustainable system for the gajni
farmers. What follows is the discussion of results of the cost and returns analysis and
production function analysis.
Costs and returns analysis
The comparative economics or profitability of different farming systems identified
in gajni lands is presented in Table-3. It is clear from the figures that net returns were
the highest in case of the two modern systems i.e., semi-intensive prawn farming
(Rs.2,49, 943 /ha) and the mixed farming system (Rs.2,39688/ha) compared to the
traditional systems. However, the benefit-cost ratio (BCR) in case of paddy/prawn
rotation system was 2.64 as against 1.91 and 1.77 in case of semi-intensive prawn
farming and mixed farming respectively. This implies, in case of the traditional rotation
system for every rupee invested the returns was almost three times the investment and
hence was the most profitable system. In addition, unlike the prawn farming which
included a single enterprise i.e., only prawn, the rotation system included two
enterprises viz., paddy and prawn and therefore had an advantage of the risks being
distributed among enterprises (Purandarashetty, 1986). It was clear that the two modern
systems were capital intensive and the production costs in both the systems accounted
to more than 80 percent of the total cost. A close look into the cultivation practices
under each farming system revealed that farmers practicing paddy monoculture could
easily shift to the rotation system by incurring some costs towards strengthening the
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embankments and installation of sluice gates as against the huge investments demanded
by semi-intensive prawn farming or the mixed farming which would substantially
increase their farm income (Naik et.al, 1998; Keshavanath, 1999). By doing so, the
women who were the worst hit by the advent of aquaculture industry (EJF, 2003) could
be relieved from working at the aquaculture sites. As in earlier days they could earn
some income from sale of local catches of marine species.
Factors influencing production activity in gajni lands
A Cobb-Douglas production function was fitted to the data related to each farming
system in order to determine the factors influencing production activity. Estimated
values of the regression coefficients and related statistics for the selected sample
farmers practicing different farming systems are presented in Table-4.
The coefficient of multiple determination (R2) for different farming systems varied
from 0.776 to 0.976 which indicates that 78 to 98 percent of the total variation of
output of respective farming system is explained by independent variables included in
the model. With respect to prawn farming the production function analysis was carried
on only for the semi-intensive system of prawn farming since the independent
variables included in case of traditional prawn farming (land, labour and feed)
explained only 38 per cent of total variation of output.
The relative contribution of specified factors affecting productivity of the farming
systems in gajni agriculture was evident from the estimates of regression equation for
different farming systems identified in the region. There were 22 input coefficients for
the production of selected farming systems and of these only five coefficients had
negative sign indicating that increased use of these resources would result in
decreased gross returns while the remaining coefficients showed positive effect on
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gross returns. The coefficients for paddy seeds and FYM in paddy monoculture;
bullock labour and paddy seeds in paddy/prawn rotation; land area, post-larvae (PLs)
and disinfectants in semi-intensive prawn farming; and land area, human labour,
artificial feed, fish fry’s and disinfectants in mixed farming were statistically
significant at different level (0.01 to 0.10). However the coefficients for seeds
(P<0.10) in case of paddy/prawn rotation system, disinfectants (P<0.05) in case of
prawn farming, and land area (P<0.01) and artificial feed (P<0.05) in case of mixed
farming were negative and statistically significant indicating that increased use of
these resources would result in decreased gross returns.
The sum of production coefficients (Σbi) of paddy monoculture and mixed farming
was equal to 2.041 and 1.169 respectively, which was greater than one. This means
that the function exhibits increasing returns to scale i.e., if all the input specified in the
respective function were increased by one percent, the gross returns would be
increased by 2.041 and 1.169 percent respectively for paddy monoculture and mixed
farming system. The same in case of sampled paddy/prawn rotation system and semi-
intensive prawn farming was equal to 0.306 and 0.906 indicating diminishing returns
to scale. It was clear from the returns to scale that in case of paddy/prawn rotation
system there was enough scope to increase the income if more improved technologies
are introduced. The gajni farmers are traditionally crop farmers and lacked the special
physical skills and fishing knowledge (Bhatta and Bhat, 1998). So, improved
technology could include imparting fishing knowledge and training to the gajni
farmers in areas such as stocking of PLs, managing water flow in and out of the creeks
and decision making regarding the harvest dates and time.
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Allocative efficiency in gajni agriculture
In peasant agriculture, efficient use of farm resources is of utmost importance and
is of considerable interest to agricultural economists (Chennareddy, 1967). In order to
test the allocative efficiency the ratio of marginal value product to the marginal factor
cost for each input was computed and tested for its equality to one. The allocative
efficiency indices for the individual resources are presented in Table-6.
In case of paddy monoculture the value for human labour was less than unity
(0.3310), but greater than unity for other resources. The results show that human
labour was excessively utilized and, therefore, should be reduced to increase profit,
while the other resources should be increased to increase the returns. The values for
human labour, paddy seeds and feed in case of paddy/prawn rotation were less than
unity indicating excessive usage of the resources. The negative ratios indicated
uneconomic use of seed and human labour in the production process. For prawn
farming, except disinfectants (-14.3412) and artificial feed (0.221), all the other
resources were underutilized and there was scope to increase the use of each of these
resources. Similarly, in case of mixed farming except for land (-0.8513) and feed (-
7.6816) the values for all other resources was greater than unity indicating
underutilization of the resources. These results imply that the four farming systems
identified in gajnis are not allocatively efficient in input utilization and farmers are not
aware of efficient use of inputs.
SUMMARY AND CONCLUSIONS
A comparison of the costs and returns structure of the different farming systems
revealed that the two modern faming systems i.e., semi-intensive prawn farming and
mixed farming had the highest net returns. However, the benefit-cost ratio which
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explains the returns per rupee invested indicated that paddy/prawn rotation system
was the most profitable enterprise. Further, production function analysis carried out to
study the influence of various factors on gross returns across different farming
systems revealed that all the resources included in the production process had a
positive impact on gross returns in case of paddy monoculture. Human labour and
seeds were the factors having a negative impact on gross returns in paddy/prawn
rotation while in case of prawn farming (semi-intensive method) PLs and disinfectants
had a negative influence on the gross returns. With respect to mixed farming land and
feed had negative influence on gross returns. The returns to scale of paddy
monoculture and mixed farming exhibited increasing returns to scale while the same
for paddy/prawn rotation system and semi-intensive prawn farming indicated
diminishing returns to scale. The results further indicate that the farming systems are
not allocatively efficient in input utilization and farmers are not aware of efficient use
of inputs.
It is clear that for long term sustainability of gajnis, farmers need to adopt the
traditional ways of cultivation which were once considered as subsistence economic
activities. Moreover, the huge financial benefits from the modern systems cannot
negate the social and ecological damages caused by commercial prawn farming
(NEERI, 1995; Bhatta & Bhat, 1998; EJF, 2003; Islam et.al, 2003; Maybin &
Blundell, 1996). Having said this, long-term sustainability of gajnis cannot be
attained by increasing the use of resources or substitution of resources. This can be
achieved by introducing modern technology into the traditional system in a package
(Chennareddy, 1967; Hopper, 1965) and the package should include introduction of
new resources, agricultural education, special skills and techniques, and appropriate
guidance in farm planning.
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Notes
1 This paper draws heavily from Ganesh B. Keremane’s masters dissertation research carried out at the University of Agricultural Sciences, Dharwad, Karnataka, India. The authors wish to express their gratitude to all the members of the advisory committee for their constructive comments and suggestions during the course of the study. Last but not the least the authors thank the gajni farmers for their cooperation during the field survey. 2 Irrespective of whether or not fishing contractors got their crops, the farmers were assured of the advance lease rent in the beginning of every production season and hence it was considered as free from risk.
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Table 1- Distribution of gajni lands across the study talukas
Name of taluka Gajni lands (ha)
Alternative land-use options for farmers
Ankola 924
Karwar 1116
Kumta 2933
Sub-total 4973 (88.2) a
Total 5640
Paddy monoculture, Paddy/prawn farming, prawn
farming (traditional and semi-intensive), mixed
farming
Note: Figure in parentheses indicates percentage of total gajni lands available in the district a Remaining 11.8 percent is accounted by the remaining two talukas Bhatkal and Honnavar
Table 2- Distribution of sample farmers based on the faming system practiced
Farming systems Name of taluka Rice monoculture
Rice/shrimp rotation farming
Prawn farming
Mixed farming
Total
Ankola 12 11 5 (1) 2 30
Karwar 14 13 7 (4) 2 36
Kumta 40 28 21 (9) 5 94
Total 66 52 33(14) 9 160
% of sample farmers
41.25 32.50 20.63(8.75) 5.62 100.00
Note: Figures in parentheses indicate number and percent of sample farmers practicing semi-intensive prawn farming
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Table 3: Comparative profitability of different production systems in the study area
Prawn farming Costs and returns (Rs/ha)
Paddy monoculture
Paddy/prawn rotation
Traditional Semi-intensive
Mixed farming
Gross returns 24259.35 83765.00
(21.33; 78.67)a
85450.00
(95.83; 4.17)b
523200.00
551857.50
(95.08; 4.66)c
Total cost 18412.48 31787.43 44790.91 273256.61 312169.38
Variable /production costs (% of total costs)
79.96 59.45 33.70 82.04 84.66
Fixed/establishment costs (% of total costs)
20.04 40.55 66.30 17.96 15.34
Net returns 5846.87 51977.57 40659.09 249943.39 239688.12
B:C ratio 1.32 2.64 1.91 1.91 1.77
Note: a Figures are percentage share of paddy and prawn from gross returns respectively
b Figures are percentage share of prawn and other marine species from gross returns respectively
c Figures are percentage share of prawn and fish from gross returns respectively
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Table 4: Regression coefficients of different farming systems in gajni agriculture
Explanatory variables
Paddy monoculture
Paddy/prawn rotation
Prawn farming
Mixed (prawn+fish) farming
Intercept 4.432 11.208 9.061 13.935
(1.023) (1.252) 3.408 (0.701)
Land area (ha) 0.214 0.233 0.612* -0.065*
(0.158) (0.109) (0.212) (0.020)
Human labour(Rs) 0.114 -0.161 0.162 0.540***
(0.163) (0.144) (0.174) (0.050)
Bullock labour(Rs) 0.106 0.443* - -
(0.162) (0.121)
Paddy seeds (Rs) 0.406*** -0.4967*** - -
(0.183) (0.255)
FYM (Rs) 0.424** 0.278 - -
(0.190) (0.244)
Artificial feed (Rs) - 0.009 0.023 -0.721**
(0.010) (0.153) (0.310)
Post-larvae (Rs) - - 0.479* 0.040
(0.153) (0.025)
Fish fry’s (Rs) - - - 0.865*
(0.312)
Disinfectants (Rs) - - -0.371** 0.510**
(0.159) (0.020)
R2 0.776 0.903 0.852 0.976
Return to scale 2.041 0.306 0.906 1.169
Note: *P < 0.01, **P < 0.05 and ***P < 0.10;
Figures in parentheses indicate standard error
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Table 5: Ratios of MVP and MFC for individual resources in different production systems*
Resources Paddy monoculture
Paddy/prawn rotation
Prawn farming
Mixed (prawn+fish) farming
Land 115.911 361.109 6.242 -0.8513
Human labour 0.331 -2.111 2.812 63.221
Bullock labour 1.090 18.461 - -
Paddy seeds 9.283 -71.632 - -
FYM 2.910 9.282 - -
Artificial feed - 0.981 0.221 -7.681
Post-larvae - - 11.521 1.191
Fish fingerlings - - - 27.181
Disinfectants - - -14.341 28.121
Note: * MVP is Marginal Value Product and MFC is Marginal Factor Cost
1