1

Lovely Professional
university

M.B.A
Term Paper
2010-2012
ECO-515
Excellent attempt, though the research should have been understood than merely copied
and pasted. Good calculations on elasticity. 19/25

TOPIC:- ANALYSIS OF DEMAND & SUPPLY OF RICE IN

INDIA & INCOME, PRICE & CROSS ELASTICITY OF
THAT COMMODITY

CONTENT
 2

 Acknowledgement
 Objectives of the study
 Introduction of the topic
 Data collection
 Data interpretation
 Critical analysis

 Findings
 Conclusion

Acknowledgement
 3

The project of such magnitude cannot be accomplished without the assistance and co-
operation of several people. Exchange of ideas generate a new object to work in a better
way. So, whenever a person is helped by others, his heart is bound to pay gratitude and it
is not merely formality but an expression of deep sense of gratitude and cumulative
appreciation.

[Name]

Objectives of the study

• To analyze the demand and supply of rice in India

• To do deep study about the fluctuations taking place in demand and

supply

• Factors pertaining to change in demand and supply

• Effect of income of consumer, price of commodity and price of

substitutes goods on the commodity
 4

 Introduction of the topic

Rice is a very important food source commodity. As the second most produced
food in the world, rice is a cereal grain that is grown as a staple. Rice can be grown
nearly anywhere. The three largest exporters of rice are the United States, Thailand
and Vietnam. Rice is a crop that is best grown where there is a low cost of labour
and high levels of rain as rice is a labour intensive crop and requires plenty of water
to grow. Rice grains are milled to remove the outer husk, called the chaff. At this
stage it is referred to as brown rice. Further processing to remove the bran, residue
and germ make it into white rice, commonly found in stores.
 5

 Rice Commodity Research & Analysis Report

Rice is the second most produced food in the world. Rice is a cereal grain grown as
a staple food for much of the world’s population. Rice Fundamental Commodity
Analysis (short term investment): Rice is rated a sell; although Wiki Wealth could
not find adequate publicly traded companies to indicate the true potential of rice.
Rice Value Investor Survey (long term investment): Rice has an average growth
potential per the investor survey results.

 Rice SWOT Analysis:

Strength: Rice is the number one staple food source for much of the world;
Weakness: there is little tradable supplies of crops, so forming an international
market for rice is difficult.

Opportunity to grow: rice may become more popular as Asian cuisines increase in
popularity worldwide;

Threats to growth: high recent farming cost could lower the profitability of
commodities.

 Rice Trade Analysis:

The commodity analysis sell rating indicates that rice should decrease in price over
the short term, whereas an average investor survey means rice may stay the same in
price over the long term.

 India Country & Currency Analysis Research

Report.
 6

India (INR) has a highly regulated economy; however, recent liberalization has
transformed the economy towards a capitalist, market-based system. India's
Fundamental Currency Analysis (short term investment): India’s currency is fairly
valued with very low investment flow potential combined with very high purchase
price parity potential. India's Value Investor Survey (short term investment):
India’s economic environment is unfavourable for long term economic growth due
to low scores on economic freedom, transparency, economic diversity, and the
SWOT analysis. India's General Trading Partners: Belgium, Pakistan, the UK,
Japan, and the US are the top export partners. India's Commodity Trading Partners:
India produces a significant amount of staples for domestic use and needs to import
energy. SWOT Analysis of India: The leading Indian strength is their supply of
natural resources, while the main weakness is a lack of infrastructure. India's
Currency Trading Strategy: A fairly-valued currency, very low investment flow
potential and an unfavourable business environment leads to a negative outlook for
Indian investments. For our entire list of country & currency analysis, see the
Country & Currency Analysis home page.

 Industry Investment Impact

The total factor productivity (TFP) of rice grown in various regions of India and
examines the sources of productivity growth and marginal rates of return to public
investment in rice research. The paper also projects the supply and demand of rice
in the 21st century in India. The results of the study highlight a spectacular increase
in rice yield from 1.1 t ha-1 in 1967-71 to 1.9 t ha-1 in 1997-99. The TFP index has
risen at 0.9% per annum and has contributed one-third of production growth. A
decelerating tendency in TFP growth is observed. The cost per unit of rice has
declined steadily. The cultivation of basmati rice has benefited farmers in the
northern states of India. Demand for rice will be met in the future with a marginal
surplus for trade. To maintain the surplus status of rice, the study emphasizes the
need to strengthen efforts to increase production by maintaining or increasing TFP
through public investment in irrigation, infrastructure development, research, and
efficient input use. More than half of the required growth in yield to meet the
demand target must be met from research efforts in developing location-specific
and low-input-use technologies with emphasis on the regions where current yield is
below the required national average yield. All efforts need to concentrate on
 7

accelerating growth in TFP while conserving natural resources and promoting the
ecological integrity of the agricultural system.

 DEMAND OF RICE IN CURRENT YEAR

Wheat and rice strengthened in the wholesale grains market on Tuesday on
increased offtake by stockists and local parties. However, other commodities
continued to be traded in a limited range on some deals.

Marketmen said, the pick up in demand from rolling flour mills and local parties
helped wheat prices to recover. Wheat MP (deshi) and Wheat dara (for mills) were
up at Rs 1250-1450 and Rs 945-965 per quintal respectively.

In the rice section, permal raw new, sela and rice IR-8 traded higher at Rs 1145-
1170, Rs 1450-1500 and Rs 1100-1120 per quintal respectively. The following
were Tuesday's quotations per quintal:

In thin trading, non-basmati rice prices declined in the wholesale grains market on
Saturday on increased offerings by stockists against sluggish demand. Wheat and
other commodities, however, held unchanged on some deals.

Traders said stockists selling against reduced demand mainly pulled rice prices
down. In the rice section, permal raw lost Rs 35 at Rs 1100-1160 per quintal while
sale lost Rs 40 at Rs 1430-1500 a quintal. Rice IR-8 traded Rs 20 down at RS 1000-
1030 a quintal for want of support.

Rice basmati (lal quila) 5000, Shri Lal Mahal 4800, Basmati common 3850-4050,
Permal raw new 1145-1170, old 870-900, permal wand 1260-1325, sela 1450-1500
and rice IR-8 1100-1120, Bajra 700-705, Jowar 735-760 (yellow), Maize 860-865
Barley (UP) 810-820 and Rajasthan 645-655.

Literature Survey on Demand

In case of India on the one hand population is reaching one billion, on the other
hand the agriculture sector is opening up. Thus there is a need to examine trend in
the consumption pattern. There is a large literature on food demand.
 8

Radhakrishna and Murty(1980) adopted piece wise expenditure system to find

out income and price elasticity for different income groups. The parameter
estimates of the Linear Expenditure System(LES) differ a good deal across the
expenditure groups and between rural and urban areas, indicating the existence
of non-linearities in consumption pattern. Although rural –urban dichotomy exists,
the variations across the expenditure groups are more striking than rural-urban
variations for the corresponding expenditure groups. As one moves from the lower
to higher expenditure groups, the marginal budget share of cereals declines sharply
in both rural and urban areas. The fall in marginal share is compensated by other
non food items. Among cross price elasticities cereal cross price effect dominates.
It is sizeable and negative. For non-food items it is large and negative.

Kumar and Mathur(1996) have shown the demand for food is not only
influenced by income changes but also by differences in the urban and rural
lifestyles, the development of more advanced marketing systems, occupational
changes that are closely linked with increasing per –capita income. Their study
has revealed that structural shift was negative for rice, coarse cereals, pulses, milk
and sugar and positive for wheat, edible oil, vegetables, fruits, meat, fish and eggs.
The magnitude of structural difference between rural and urban areas for food was
higher in the year 1987 than in the year1977. According to this study the structural
changes will bring about major shifts in the consumption of milk, fruits, vegetables,
and livestock in rural and urban areas. This will provide incentive to the producers
to diversify production and diversification will provide enhancement of income of
producers.

Rao and Gulati(1994) have evaluated food security in terms of changes in

relative prices. He points out that the relative prices of foodgrains have declined as
a result of green revolution. The low income groups spend a larger proportion of
their income on food grains than the upper income groups; hence the former have
benefited more than the latter in the recent times.

Murty(2000) using NSSO data for the period 1972-1994 observed wide
variations in marginal budget shares and demand elasticities across income
groups, rural urban sectors and alternative models. The household size, consumer
taste and preferences are found to be statistically significant. According to this
study income elasticities are quite high even for the staple food items. The marginal
budget shares (MBS) are larger for substitutes and cereal substitutes in rural areas
than urban areas. The opposite is true for all other items. MBS decline with rise in
income. The non –food exhibits exactly opposite pattern. Lowest 30 % of the
income group in rural India spends half of their income on cereals. The ‘rural-
 9

urban’ difference is small compared to across income group differentials. But

Linear Expenditure System overestimates budget share for lower income group.
The income elasticities of demand are quite on the higher side, exceeding unity in
many cases, even for staple items like cereals. The elasticities seem to decline
marginally for food item like cereal across income levels. The income and own
price elasticities are uniformly smaller in the case of food for urban population than
their rural counterparts. This shows that the urban consumer is less responsive to
income and price changes in the case of food consumption than their rural
counterparts. The income and own price effects show similar pattern across model
alternatives, although the magnitudes are different.

Srinivasan(2003) used reduced form demand equations to estimate per capita

household expenditure on different food items as a function of per capita
household expenditure( proxy for income), household characteristics such as
household size, land possessed etc, dummy variables for sources of income and
social characteristics. Separate equations have been estimated for expenditures on
each class of food items considered : grains, sugar, edible oil, pulses, vegetables,
milk and meat. According to Srinivasan the decline in cereal consumption is due to
decline of coarse cereals and also due to rise in cereal prices.

Radhakrishna and C. Ravi(1999) have come out with the significant finding,
based on NSSO data that per capita household demand for foodgrains has been
declining. According to Radhakrishna and Murty(1999) the decline in the demand
for cereals is due to change in taste and preferences.

Rao(2000), the decline in the cereal demand is an indicator of improvement of

welfare. But according to Saha (2000) the expenditure on non-food items has been
increasing not due to improvement in welfare but due to increase of price of
essential non-food items like fuel, light, medical expenses, etc.

Nelson Perera(2001) has used NSSO data of 50th round (1993-94) to estimate
own price elasticity, cross price elasticity for different consumption groups for
rural India. Five expenditure share equations for rice, wheat, coarse cereals, milk
and milk produce and other foods are estimated with a linear approximation of the
AIDS model (LA-AIDS). The LA-AIDS model has been estimated by system
method of estimation, seemingly unrelated regression (SURE) with homogeneity
and symmetry restrictions imposed. Parameter estimates have been used to compute
price and expenditure elasticities of demand for commodities like rice, wheat,
coarse cereals, milk. This study provides elasticities for those commodities for each
expenditure group in each state. This study depicts low own price elasticity for rice
 10

and wheat. Rice and wheat are essential commodities. Even though the own price
elasticities for coarse cereals are less than one, the relatively high own price
elasticity estimates reflect that coarse cereals are more price elastic than rice and
wheat(See Appendix table-1 for summary of literature survey). There is a vast
literature which deals in liberalization of rice market. Most of the studies have
shown that in case of rice the domestic price is below the international price.

Gulati and Narayanan(2003) observe that opening up Indian economy may lead
to increase in the domestic rice price. Wijegunawardane Agbenyegah using
Lincoln Trade and Environment Model (LTEM) has observed that consumer price
in India are predicted to increase with full liberalization. Most of the studies in case
of India for estimating the demand elasticities have been at the aggregate national
level and based on food items. There are very few studies at the state level. In this
paper we have tried to estimate demand elasticities at the state level and we have
not only taken the food items but also the essential non-food items like lubricants
and dress for our estimation purpose so that we can get an idea about the
substitution between food and basic non-food items. Another important feature of
our study is that we have taken the 55th round unit level NSSO data corresponding
to 1999-2000 for our estimation purpose.

Rice occupies an important position in the consumption basket in both rural and
urban areas in both the states. But the share of rice and other cereal is more in case
of rural areas than the urban areas in both the states. Rice occupies 41 % of the
consumption basket in rural AP and 30 % in urban AP. The corresponding figures
in case of WB are 45% and 24 % respectively. The percentage of consumption of
other cereal is 3.91% in rural AP and 3.56% in urban AP. The corresponding
figures for West Bengal are 8.49% and 9.51% respectively. The share of combined
cereal consumption expenditure in WB is more than AP in both rural and urban
areas. The share of consumption expenditure on milk products, lubricants, dress,
spices, pulses out of total consumption expenditure is greater in rural AP than rural
WB. There is not much difference in the share of consumption expenditure on
edible oil in the rural areas in the two states. But in urban areas the share of
consumption expenditure on milk products, spices, and pulses within total
expenditure is greater in AP than in WB. The corresponding shares of each of the
commodities in urban AP are 13%, 4.88%, 6.75% respectively. But the shares of
milk product, spices, pulses in urban WB are 4.76%, 4.00% and 4.55%
respectively. In urban WB eggfishmeat and lubricant occupies 14.52% and 15.67%
respectively in the consumption basket. But the corresponding figures in Urban AP
are 7.48% and 14.33% respectively. The share of eggfishmeat is greater in WB
 11

than AP in both rural and urban areas. The share of milk product is greater in AP
than WB in both rural ad urban areas.

Another important observation across both the states is that the shares of milk, egg
fish meat, dress and lubricants are high in urban areas in both the states compared
to rural areas. The share of high value food commodities are greater in urban areas
than rural areas in both the states.( See appendix Table 2 for the mean shares of the
different commodities in the consumption basket).

Research methodology:-

Study: - This Research is going to be descriptive in nature to know about people reaction,
regarding the demand and supply of rice.

Descriptive Research:
This research includes surveys and facts findings enquire of different kinds. The
major purpose of descriptive research is that the research can only describe the demand and
supply of rice .The main feature of this method is that the researcher has no control over the
 12

extraneous variable called the respondents as they are going to interview the different
respondent in order to perform study ..

Data collection

There are two type of data collection:-

• Primary data

• Secondary data

Primary data:-
Primary data are those which are collated a fresh and for the first time &
thus happen to be original in character. Primary data is obtained by the study specially designed
to fulfill the data needs to problem hand. Such data are original in characters generated by the
way of conducting survey

Secondary data:-
Secondary data are those which have already been collected by someone else
and which have already been passed through the statistical process. Secondary data consists of
not only published records and reports but also unpublished records.

 Data collection
Here I am going to use secondary data for my study

Following data collected through the net or website. India is the world's second
largest rice producer, followed by China. The production of rice in India has shown
an increasing trend which is evident from the

Table given below:

TOTAL PRODUCTION
YEAR
(in million tonnes)
1999-00 20.58
2000-01 34.58
2001-02 42.22
2002-03 53.63
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2003-04 74.29
2004-05 82.54
2005-06 86.08
2006-07 89.68
2007-08 84.98
2008-09 93.08

Statewise Production of Rice in India

Production (in million tonnes)

State 2000-01 1999-00

Uttar Pradesh 42.32 45.65

Punjab 25.32 25.20

Andhra Pradesh 14.53 13.70

West Bengal 13.83 14.92

Haryana 13.25 13.06

Bihar 12.06 14.39

Karnataka 10.95 9.86

Maharashtra 10.08 12.70

Rajasthan 10.04 10.68

Madhya Pradesh 8.93 21.27

Tamil Nadu 8.90 8.97

Orissa 4.98 5.62

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Assam 4.17 4.04

Gujarat 3.68 4.05

Chhatisgarh 3.65 3.4

Uttaranchal 1.73 2.94

Others 5.49 2.71

 Data interpretation
 ANALYSIS OF RICE PRICES

Factors that affect Rice Prices are as follows:

• Weather: Role of weather in rice production is immense. Temperature,

rainfall and soil moisture are the important parameters that determine the
crop condition. Further, natural calamities can also affect crops. Markets
keep watch of these developments.
• Minimum Support Price: Changes in the minimum support prices (MSP)
by the government also have immense impact on the price of rice.
• Government policies: Exchange rates, Fiscal policies, Export incentives and
export promotion also influence price.
• Substitute Product: Availability of substitute products at cheaper rate may
lead to weakness in demand. This situation happens especially when the
main products price tends to become higher.
• Consumption: Rice consumption depends on two factors - population and
income. Lets take for example Asia. Rice is the staple food of Asia. Low-
income groups consume more rice according to the per capita income
increase. But as the income increases, there arrives a point when the
consumption starts to dip. Income growth and reduction in population result
in a low consumption of rice.
• Seasonal cycles: Seasonal cycles are present in rice cultivation. Price tends
to be lower as harvesting progresses and produce starts coming into the
 15

market. At the time of sowing and before harvesting price tends to rise in
view of tight supply situation.
• Demand: Import demands as well as domestic demand.
• Breakthrough in the technology may increase the productivity and would
lead to more supply. This may bring some softness in the price.

PRICE ELASTICITY OF RICE

A price of inputs is one major factor that can change the price input for rice. If the
rice crop is limited it can cause the price to spike, or if there was a natural disaster
in China or Japan it would affect the price of the product. The next factor that
could affect the supply for rice is technological changes. These changes can be
either negative or positive for rice crops. New machinery can increase the time it
would normally take a person to cultivate and plant rice in rice beds in a flooded
field or river water. There is really no substitution for rice, the closest substitution
would be pasta. In the production of certain items prices of substitution would be
a factor in the shift of supply. New firms or companies can affect the prices of rice
if one company or firm decides to sell the product at a cheaper or higher rate. The
expected future price of rice depends on the weather and if the rice crop is low or
not.
The market demand for rice has many factors, including income, prices of related
goods, tastes, population, demographics and expected future prices.

PRICE ELASTICITY OF DEMAND OF RICE

2004 2010
Per capita daily 201 grams 208 grms
consumption of rice
 16

Price / kg 20 35

Price elasticity of demand on the basis of data of 2004 and 2010.

Ed= % change in quantity demanded/% change in price of rice

% change in quantity= (consumption of 2004 – consumption of 2010)* 100

Consumtion of rice in 2004

% change in quantity = (207 –201)* 100 = 700/201 = 3.48

201

% change in Price= (Price in 2004 – price in 2010)* 100

price of rice in 2004

% change in price = (35-20)* 100 = 1500/20 = 75 %

20

Ed = 3.48 = .04

750

Ed > 1
 17

This table shows that’s in the year 2004 the india per capita daily rice consumption
and in 2010 the consumption has raised to 207 and the price has increased from 20
to 35kg rupees.

The percentage change in quantity demanaded is less from the

percentage change in the price of the rice .

So that’s why the slope of price elasticity of demand is less than the unitary elastic
demand.

INCOME ELASTICITY OF DEMAND OF RICE

2004 2010
Per capita daily 201 grams 208 grms
 18

consumption of rice
Per capita income 11,679 44,735

Income elasticity of demand on the basis of data of 2004 and 2010.

Ey= % change in quantity demanded/% change in income

% change in quantity= (consumption of 2004 – consumption of 2010)* 100

Consumtion of rice in 2004

% change in quantity = (207 –201)* 100 = 700/201 = 3.48

201

% change in Income= (Income in 2004 – Income in 2010)* 100

Per capita income in 2004

% change in income = (44,735-11,679)* 100 = 694400/11,679 = 59.45%

11,679

Ey = 3.48 = .04

59.45

Ey > 1
 19

This table shows that’s in the year 2004 the india per capita income in 2010 the
consumption has raised to 207 and the price has increased from 20 to 35kg rupees.

The percentage change in quantity demanaded is less from the

percentage change in the price of the rice .

So that’s why the slope of income elasticity of demand is less than the unitary
elastic demand.

CROSS ELASTICITY OF DEMAND OF RICE

There is mutual relationship between change in price and quantity demanded of two
related goods. Change in price of one goods can cause change in demand of other
goods.

Eg when the price of basmati rice is increases,then demand for tota rice will
increases and when price of basmati rice decreases , then demand of tota rice
decreases. This can be showen by cross elasticity of demand ,
 20

ABSTRACT

Rice is emerging as a vital export item after the opening up of agriculture market in India. To
formulate effective macro economic policy for ensuring both export and domestic consumption
of rice, it becomes imperative to understand the dynamics of rice demand and supply.
Acknowledging the fact that demand for rice is dependent upon overall consumption fund and
other consumption needs of a given household we have employed the theoretical framework of
Almost Ideal Demand System (AIDS) to formulate our household demand system using NSSO
household survey data. Similarly it is also important to understand the supply elasticity of rice so
that direction of supply with the implementation of agricultural trade policy can be examined. We
have estimated a tranlsog cost function along with the share equations using Seemingly Unrelated
Regression Equation Estimation( SURE) and used the estimated coefficients for estimating the
supply coefficients using cost of cultivation data, as available from Ministry of Agriculture,
Government of India. Using theses elasticities, an effort is made to understand the possible
impact of a price change consequent upon opening up of the rice market on rice demand and
supply. We have taken two states in India, namely Andhra Pradesh and West Bengal for the
analysis since they are the two major rice producers in India and rice has the biggest share in the
consumption basket of households in these two states.

Impact of price change on supply and demand of Rice in Andhra Pradesh and West
Bengal

Comparative Study of Expenditure Elasticity in both the states

In this paper we have estimated the demand elasticities. There is not much
difference in case of rural urban elasticities. Many of the previous studies like
Murty(2000) pointed to this fact. In both the states the expenditure elasticities of
rice and other cereal are greater than one in both rural and urban areas. This implies
that as the income increases there is increase of consumption of these commodities
in greater proportion than the increase of income. But the expenditure elasticity in
case of rice is greater in AP than WB in both rural and urban areas. So we can
conclude that the responsiveness of the change of consumption of rice with the
change of income is more in AP than WB in both rural and urban areas. The
expenditure elasticity of dress is greater in AP than WB in both rural and urban
areas. The expenditure elasticity of spices and pulses are greater than one in urban
AP but they are less than one in urban WB. In case of rural AP the expenditure
elasticities of edible oil and pulses are greater than their corresponding parts in case
of rural WB. The expenditure elasticity of lubricants, edible oil, spices, and dress
are less than one in both rural and urban areas in both the states indicating that
 21

these commodities are inelastic in nature. They are actually essential commodities
and there is little variation in their demand with change of income. The expenditure
elasticity of dress is lowest of all the types of commodities in both rural and urban
areas in both the states. Actually we have incorporated basic dress which consist of
basic essential dress. So dress is found to be inelastic in nature.

CRITICAL ANALYSIS
 The following strategies may be adopted to increase the productivity of
rice in various states:
• Emphasis may be given on a cropping system approach rather than a single
crop development approach..
• Propagation of location specific crop production technologies in different
agro-climatic zones.
• Replacement of low potential/pest susceptible old varieties by new high
yielding varieties with promising yield potential.
• To encourage cultivation of hybrid rice through demonstrations and making
seed available to the farmers.
• Motivating the farmers to provide life saving irrigation to the crop wherever
possible during long dry spells.
• Improving soil fertility.
• Emphasis on balanced use of plant nutrients along with the popularization of
integrated plant management system.
• Use of bio-fertilizer.
• Popularization of line sowing in upland rice areas through suitable seeding
devices establishment of desired level of plant population, easy in weed
control and the application of other management techniques.
• Encouraging the use of machines as well as bullock drawn and hand operated
implements.
• Effective control of pests and diseases by emphasizing the need based
application of pesticides.
 22

• More emphasis on the adoption of non-monetary inputs like timely sowing,

maintaining optimum plant population, timely irrigation, efficient use of
fertilizers, plant protection measures and timely harvesting of crop etc.

 Findings

Rice is emerging as a vital export item after the opening up of agriculture

market in India. To formulate effective macroeconomic policy for ensuring both
export and domestic consumption of rice, it becomes imperative to understand
the dynamics of rice demand and supply. Acknowledging the fact that demand
for rice is dependent upon overall consumption fund and other consumption
needs of a given household we have employed the theoretical framework of
Almost Ideal Demand System (AIDS) to formulate our household demand
system using NSSO household survey data. Similarly it is also important to
understand the supply elasticity of rice so that direction of supply with the
implementation of agricultural trade policy can be examined. We have estimated
a tranlsog cost function along with the share equations using Seemingly
Unrelated Regression Equation Estimation and used the estimated coefficients
for estimating the supply coefficients using cost of cultivation data, as available
from Ministry of Agriculture, Government of India. Using theses elasticities, an
effort is made to understand the possible impact of a price change consequent
upon opening up of the rice market on rice demand and supply.

 Conclusion
Almost ideal demand system( AIDS) has been used for estimation of price and
expenditure elasticity of rice along with other important food items and dress that
comprise the basic items of consumption. The own price elasticity for rice is
negative and less than one but the expenditure elasticity of rice is greater than one
in the states in both rural and urban areas. However, the magnitude of own price
elasticity in two states in two different areas are different. In rural areas the own
 23

price elasticity of rice is more. But in urban areas the trend is just the opposite. The
expenditure elasticity of rice shows that all states is more responsive in terms of
change in demand for rice in both rural and urban areas. The expenditure
elasticities are greater than one which indicates there is increase in rice
consumption in greater proportion with the increase in income. The trend in the
price movement of rice is positive so due to price effect there is going to be a
decline in the demand for rice. Agriculture real wage rate is also showing a
downward trend. This also well explains the reason for declining demand for rice in
the nineties compared to eighties. But the potentiality of surplus generation depends
on both demand and supply of rice. The supply elasticities for both the states are
negative indicating economies of scale. The availability of surplus rice depends on
the price situation of respective states after opening up of the economy. If opening
up of the economy leads to increase in rice price then there will be net fall in the
supply of rice after meeting the demand in both the states. But if the rice price falls
then there will be availability of surplus rice. So whether there is going to be net
availability of rice for export from each of the states depends on the situation of
domestic price after opening up of the economy.

what research is???

It is another word for gathering of information. The more information we have

the closer we get of making our own decision. Research is the result of
advancing knowledge created in the past. There are people from all walks of
life that contribute to gathered information. These are ordinary people and
extraordinary people. They include, teachers, students, scientists, professors,
scholars, business owners, librarians, book keepers, writers, politicians and
many more unknown out there. These are everyday citizens we interact with.
They all help with the flow information that people use for self help.
 24

Research is designed to solve a particular existing problems so there is a much

larger audience eager to support research that is likely to be profitable or solve
problems of immediate concern. We also must understand how research impact
our decision making. Most people make decisions without gathered
informations to back them up. Only few do. The problem is most people aren't
patient enough to put in the effort. Research requires time, effort, and
sometimes money to have the evidence you need to make a sound decision that's
why many avoid it. The research you do and evidence you gathered will have
impact on your future. Be adviced, considered the risks or consequences of
making an important decision with inadequate evidence.

In conclusion research is very vital to our everyday decision making. It arms

you from wrong informations and save time and money.