Decomposition of Changes in Break-even Output and Scenario Building for Major Crops of Madhya Pradesh

Abstract

The study attempted to evaluate break-even output coupled with sensitivity analysis for major crops of Madhya Pradesh. The data were obtained from DES, India, from 2000-01 to 2020-21. The crops selected were maize, cotton, red gram, gram, black gram, rapeseed and mustard, lentil, paddy, wheat, and soybean. The results revealed that the break-even output of all crops was elastic with respect to output price. Wheat, gram, red gram, and mustard were insensitive to changes in average variable costs. The output price for soybean was lower than the average variable cost, resulting in negative breakeven output in 2020-21. Important policy suggestion included that break-even elasticities must be calculated on a regular basis.