SUPPLY RESPONSE OF COTTON IN ANDHRA PRADESH

The supply response of cotton in three regions viz., Costal Andhra, Rayalaseema and Telangana of Andhra Pradesh was assessed by applying a Nerlovian Lagged Adjustment Model for area, production and yield separately. The results revealed that in general the farmers' area and resource allocation decisions for cotton was influenced by its own price. In case of Rayalaseema, the price of competing crop had negative impact on area while price risk surprisingly exerted positive influence on yield. These results imply that the farmers' area and resource allocation decisions for cotton could be influenced through remunerative price policies. The supply response is also found to be influenced by traditional behaviour of farmers in allocating the area and resources for cotton cultivation. The price elasticities indicated that the growers in Coastal Andhra are more price conscious than in the other two regions. The adjustment mechanism showed that the Coastal Andhra required less number of years for production and yield adjustments while area adjustment is quick in Rayalaseema region