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Apple, Risk and Sustainability: Explorations in Supply Responses in Himachal Pradesh, K.K. Kaushik and Sanju Karol

This study in its first part, examines growth, variability, and the sources of variability of apple production in Himachal Pradesh. Utilizing variance decomposition procedures, it shows that the changes over time in the average and variance of production are due largely to changes in the corresponding measures for acreage rather than yield. The decrease in the variance of real revenue per hectare over time is also decomposed to reveal that the increase in price/yield covariance is the largest contributor to the change in revenue variance. Accurate measurements of the sources of increased variability can help target policies to reduce or offset the effects of instability.

In the second part the study analyzes the acreage response of apple growers in Himachal Pradesh by using following transformed equation:

log At = bo + bl log GRHI-I + b2 log RDt + b3 log DEt + b4 log RFLLt + b5 log At-1 + Vt

The model has been estimated by applying ordinary least squares estimation (OLSE). The results bring forward that price variable as an economic incentive; can sustain the farmers at the present level of acreage. But as far as their responsiveness is concerned, price alone is not capable of mobilizing strong and quick response. Road density, used as proxy for road infrastructure, has emerged as the most important response to the changing conditions; the adjustment to the desired acreage level of apple crop in Himachal Pradesh is faster if the variable with high long run elasticity of acreage. It has shown the capability of bridging the gap between the desired and the actual acreage in a very short span of time. In addition to irrigation, other important inputs are improved saplings, fertilizers, and credit. Policies geared towards their wider distribution would bring better results. Subsidies need to be gradually brought down. Savings in subsidies can be ploughed back into moisture conservation schemes and irrigation to minimize the adverse impact on crop output. High growth in apple in the state has to be sustained through continuation of policy of minimum support prices and development of infrastructure such as roads, communications and markets so that farmers get their inputs in time and in adequate quantities at lowest possible prices. A major revamping of the horticultural research system is required to enable it to develop better location specific technologies, to upgrade the extension system. The state of Himachal Pradesh by accelerating the growth of its horticultural sector can provide momentum to the overall growth of the economy and lead to greater employment, regional and sectoral equity, faster poverty reduction, more efficient resource use and better protection of the environment than before.

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