Dynamics of Cropped Area Allocation under Price and Rainfall Variability: Evidence from Ramanathapuram District of Tamil Nadu, India
M. Sethu Raman
Department of Agricultural Economics, Tamil Nadu Agricultural University, Coimbatore, Tamil Nadu– 641 003, India.
M. V. Srinidhie *
Department of Agricultural Economics, Tamil Nadu Agricultural University, Coimbatore, Tamil Nadu– 641 003, India.
D. Dinesh
Department of Agricultural Economics, Tamil Nadu Agricultural University, Coimbatore, Tamil Nadu– 641 003, India.
S. Gopi Shankar
Department of Agricultural Economics, Tamil Nadu Agricultural University, Coimbatore, Tamil Nadu– 641 003, India.
M. Hariharan
Department of Agricultural Economics, Tamil Nadu Agricultural University, Coimbatore, Tamil Nadu– 641 003, India.
G. Harshavardhini
Department of Agricultural Economics, Tamil Nadu Agricultural University, Coimbatore, Tamil Nadu– 641 003, India.
*Author to whom correspondence should be addressed.
Abstract
This study examined the influence of Minimum Support Price (MSP) and rainfall on cropped area adjustment in Ramanathapuram District. Annual secondary data on cultivated area, MSP and rainfall were collected from official government sources for 2004–05 to 2023–24. The analysis assessed the response of cultivated area to price incentives and climatic variability under semi-arid agricultural conditions. A Nerlovian partial adjustment framework was used to assess acreage response, and an error correction model examined short-run dynamics and adjustment towards long-run equilibrium. Cultivated area was specified as a function of lagged cultivated area, lagged MSP, rainfall and a time trend. Augmented Dickey–Fuller (ADF) tests were employed to examine stationarity before estimating the long-run and short-run relationships. The coefficient of lagged cultivated area was 0.558 and statistically significant, demonstrating strong persistence in acreage allocation decisions. Rainfall had positive and significant effects in both short-run and long-run estimates, whereas MSP remained statistically insignificant in the short run. This suggests that climatic factors play a more dominant role than price incentives in influencing cultivated area decisions under semi-arid conditions. The error correction coefficient was negative and indicated moderate adjustment towards long-run equilibrium, with approximately 40 per cent of disequilibrium corrected annually. The findings indicate that rainfall plays a more direct role than price incentives in cropped area adjustment in Ramanathapuram District. The study suggests that price support policies should be complemented by irrigation development, climate-resilient technologies and risk-mitigation measures to support agricultural decision-making in semi-arid regions.
Keywords: Cropped area allocation, Nerlovian partial adjustment model, error correction model, minimum support price, rainfall variability, Ramanathapuram district, agricultural supply response, semi-arid agriculture.