Analysis of cost of cultivation in Indian states and benchmarking with the national average

Abstract

The cost of cultivation is the total cost incurred on various inputs used in crop production. Cost of cultivation (CoC) is a term used interchangeably with the cost of production, but there is a clear distinction between the two. The cost of production consists of the cost components up to the stage of marketing the produce. On the other hand, the cost of cultivation consists of the cost components that occurred only up to the stage of gathering the harvest. Accurate measurements of all these components of costs are thus of crucial importance for the correct assessment of the cost of any commodity. Costs incurred on a farm can be classified as cash costs or non-cash costs. Cash costs are when farmers spend money acquiring material inputs like seeds, fertilizer, chemicals, or labour inputs like hired labour. In contrast, non-cash costs are attributable to items of cost, which do not require spending money. These may be items of cost like family labour, payments made inkind, home-grown seeds, manure, exchange labour, depreciation, interest on operating capital, etc. The objective of this project is to study the cost of cultivation of various states and identification of important parameters for the cost of cultivation. At the same time identification of crops having a higher cost of cultivation and to drill down to see which cost component is contributing the most to the cost of cultivation.