Economics of Bt cotton in India

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Abstract or Summary

Since the introduction of Bt cotton in India, there has been a serious debate going on its impact on cost, returns and productivity. Andhra Pradesh continue to be the largest cultivator of Bt cotton in India and it occupies third position among Indian cotton growing states both in terms of area as well as outturn. In this context, it would be appropriate to analyze the output and efficiency of inputs used in cotton cultivation in Andhra Pradesh state of India. The study is based on a sample survey of selected farmer households in cotton cultivating villages in Andhra Pradesh of India. The study used Multi-stage stratified random sampling method to select the respondents from among the farm households. A detailed structured questionnaire was used to conduct face-to-face interviews with the farmer households.  The  sample households among the cotton cultivating households who have cultivated non-Bt cotton during last year or last two years have been taken up to study the impact of the presence of technology. In order to ensure the accuracy of the data related to the previous year, care is taken in

selection of farm households, those households who have maintained records. The data on input and output variables like cost of seed, cost of labor, cost of irrigation, cost of fertilizers, cost of pesticides and capital used for the both years were collected for the study. To overcome the conceptual problems in quantifying the impact of technology at two points of time, the value of inputs used and output produced was estimated at constant prices based on survey year’s price. Also, it is considered the two periods used for the comparison are normal in terms of agro-climatic variables.  The Cobb-Douglas production and decomposition analysis techniques were used to estimate the influence of factors and Bt technology on output change. The results of the estimated production functions reveal that seeds and fertilizer is the most important input to which output is  highly responsive in both Bt and non-Bt cotton crop situations. The output elasticity of pesticide is higher in non-Bt cotton cultivation than that in Bt cotton cultivation. The decomposition revealed that the net impact of Bt technology alone is estimated to have increased the output by 10.88%. The adoption of Bt technology enabled the farmers to save inputs significantly.  And the value of extra output produced per acre with adoption of Bt technology.

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