Economics of Production of Sugarcane in Orissa

than that realized by their counterparts in medium and large farms. This might to due

to the fact that because of the larger area under irrigation and use of fertilizer, the

marginal and small farms could manage to earn higher level of net farm income than

the other two categories of sample farms.

Table 19 : Distribution of gross farm output, current farm expenses and

net farm income in different size groups of sample farms

(In rupees per hectare)

Size

Gross farm

Current farm

Net return over

Blocks

groups

output

expenditure

variable cost

I

80298.00

41447.71

38850.29

II

79930.80

41427.14

38503.66

III

79758.00

41757.86

38000.14

IV

78786.00

41763.85

37022.15

Pooled

79794.18

41573.22

38220.96

I

75999.60

40883.7

35115.9

II

75254.40

40683.41

34570.99

III

74282.40

40739.31

33543.09

IV

73569.60

40774.79

32794.81

Pooled

75148.29

40768.19

34380.10

Production Function Analysis

With a view to examining the efficiency of various input factors employed in the

production of sugarcane, production function analysis was carried out.

Cobb-Douglas function was selected for this study because of its relative

advantages over other production functions. With this function, elasticities of production

are computed directly. The sum of elasticities (  b _i ) indicates the nature of return to

scale. If the sum of elasticities is equal to one, greater than one and less than one, it

indicates constant, increasing and decreasing returns to scale respectively.

Zero order correlation matrices for all the variables were worked out to study

the problem of multicolinearity. It was found that the interaction between inputs was

low enough to wad any impact on sugarcane output. The results of the cobb-Douglas

production function are presented in Table 20.

The results revealed that the regression co-efficient associated with land area

were found to be positive and significant in all size categories in both the regions.

This was also reflected when all size groups were pooled together, indicating thereby

that if area under this crop is increased the returns per hectare will also increase.

77