Methodology:

• Location of Study: Study is focused on Gujarat state.
• Data Collection Tools & Techniques: This study is based on secondary data collected from various sources. Out of all major oilseed crops, data is available on Groundnut, Sesamum and Rapeseed & Mustard for Gujarat state. Data will be collected on details on different types of cost (viz; A1, A2, B1, B2 and C2) and variable cost components including family labour charges, gross value of output, value of by-product, derived yield, implicit price was collected for the Period- 1996-97 to 2021-22, from the various published reports on Comprehensive Scheme for the Study of Cost of Cultivation of Principal Crops, from Commission for Agricultural Costs and Prices (CACP), Ministry of Agriculture and Farmers Welfare, Government of India (The Government of India, 2017). Similarly, year wise data on Minimum Support Price (MSP) will also be collected from various published, unpublished and online sources of Directorate of Economics and Statistics, Department of Agriculture and Farmers Welfare, Ministry of Agriculture and Farmers Welfare, GoI.
• Analytical tools:

1. Growth Rate Analysis

The compound growth rate will be computed using formula:

Yt=abteut ……………….. (1)

Where,

Yt  = Cost of cultivation over the years

a = Intercept

b = (1+g) regression coefficient

t = Time Period- in years

ut  = Disturbance term for the year 't'

Taking natural log on both sides’ equation (1) becomes

lnYt=lna+tlnb+ut

Growth rate = (Antilog of b – 1)*100

Instability Analysis

The variations from trend in cost of cultivation are estimated using the Instability Index of the form:

Instability Index = Standard deviation of natural logarithm (Yt+1 /Yt)

Where,

Yt = cost of cultivation in current year 't', and

Yt+1 = cost of cultivation in next year 't+1'

1. Trends in Profitability

The trends in profits over time from major oilseed crops grown in Gujarat are  worked out by taking into consideration various costs. The cost concepts used in the analysis are as under:

Cost A1

1. Value of hired human labour
2. Value of hired bullock labour
3. Value of owned bullock labour
4. Value of owned machine labour
5. Value of hired machine labour
6. Hired machinery charges
7. Value of seed (both farms produced and purchased)
8. Value of insecticides and pesticides
9. Value of manure (owned and purchased)
10. Value of fertilizers
11. Irrigation charges
12. Depreciation of implements and farm buildings
13. Land revenue cess and other taxes (if any)
14. Interest on working capital
15. Misc. expenses (artisans etc.)

Cost A2 = Cost A1 + Rent charges for leased in-land

Cost B1 = Cost A1 + Interest on value of owned fixed capital assets (excluding land).

Cost B2 = Cost B1 + Rental value of owned land (net of land revenue) + rent paid for leased-in land

Cost C1 = Cost B1 + imputed value of family labour

Cost C2 = Cost B2 + Imputed value of family labour

Cost C2*= Cost C2 + Additional value of human labour based on use of higher wage rate in consideration of statutory minimum wage.

Cost C3 = Cost C2* + 10 percent of cost C2* to account for managerial input of the farmer. The compound growth rates to be calculated for A1 and C2 costs for major oilseed crops during 1996-97 to 2021-22. The trends of profitability as returns over A1 and C2 costs from these crops in Gujarat are examined from value of total output (VOTP).

1. The feasibility of Minimum Support Price (MSP)

In order to achieve this objective, the growth in MSP and Cost A1 and C2 have been compared in order to draw some inferences. Further the ratio of MSP to Cost A1 and C2 is also calculated.

1. The effect of lagged prices on area:

Since, the acreage under crop is affected by changes in price and non-price factors, the farmers make adjustment in their acreage (supply) accordingly. In order to know the effect of such price and non-price factors on acreage of oilseed crop, double log Nerlovian lagged adjustment model will be used. The form of the model is as below:

At*= b0+b1Pt-1+b2Pt-1c+b3Yt-1+b4At-1+Ut

At-At-1=B(At*-At-1)    & 0<B>1

The final equation of the model can be obtained as follows

logAt=logC0+C1logPt-1+C2logPt-1c+C3logYt-1+C4logAt-1+Vt

Where, C0=b0B, C1=b1B, C2=b2B, C3=b3B, C4=b4B & Vt=logUt 

Where,

At  = area under oilseed crop (in ha) in the‘t’ year

Pt-1  = farm harvest price of oilseed crop (Rs/qt) lagged by one year

Pt-1c= farm harvest price of another competing crop (Rs/qt) lagged by one year

Yt-1= yield of oilseed crop (qt/ha) lagged by one year

At-1= area under oilseed crop (in ha) lagged by one year

Vt= a disturbance term