Trade Competitiveness of Rice in Post-WTO Period in Andhra Pradesh

In Andhra Pradesh, paddy is the major staple crop. There are significant changes in the macro policy environment and its implications for crop competitiveness since early 1990s. This paper examines the trends in production and competitiveness of paddy which is a major crop in Andhra Pradesh in pre and post-WTO period and its implications in producer and consumer surplus and social cost benefits at state level. Paddy registered impressive growth in production in post-WTO period. Trade competitiveness of paddy increased in post-WTO period as shown by DRC and NPC levels. The EPC shows that paddy production was fairly protected by the government even after post-WTO period. Overall, liberalization has positive impact on the welfare of the state. The distortion in domestic prices would result in a change in revenue to producers and consumers. Due to free trade of paddy, welfare gains were much larger than the respective welfare losses to the economy. The policy prescriptions from the study are (i) Reduced cost of production by education the farmers on improved crop management practices in paddy farming systems, (ii) Ensuring supply of quality inputs, replacement of low potential/ pest susceptible old varieties by new high yielding varieties with high yield potential. (iii) Encourage hybrid rice cultivation in suitable areas by conducting demonstrations and making seed available to the farmers, (iv) Providing Farm implements and farm machinery for improving efficiency in farm operations and cost of cultivation and lastly (v) Keep exports and Imports free. Only use tariffs as an adjusting instrument