Econometric analysis of growth performance, instability and productivity trends of sugarcane cultivation in Tamil Nadu, India

Sugarcane is the most important commercial crop in Tamil Nadu, boosting farmers' revenue, rural employment, and industrial growth. Despite its importance, the state’s sugarcane industry has experienced significant fluctuations over the years. This study examined the growth performance, instability, and future potential of sugarcane output in Tamil Nadu using time-series data from 200-04 to 2023-24. The Cuddy Della Valley Instability Index (CDVI), the Compound Annual Growth Rate (CAGR), and decomposition analysis were used to evaluate growth performance. Autoregressive Integrated Moving Average (ARIMA) model was used to predict future sugarcane production, revealing positive growth from 2003-2014, followed by a sharp decline from 2014-2024. The study noted overall declines in area (-4.19%) and production (-4.31%), yield continued nearly stagnant (-0.12%). Instability in area and production ranged from 16% to 27%, with lower instability in yield (below 7%). Decomposition analysis indicated that changes in area under cultivation accounted for over 95% of changes in production. Tests confirmed non-stationarity required second-order differencing, identifying the ARIMA (0,2,0) model as the best fit. Forecasts predict a decline from 14.32 MT in 2025 to 5.98 MT by 2030, with increasing uncertainty. The study emphasises the need for policy interventions to stabilize farm land, enhance irrigation and support systems to sustain sugarcane production in Tamil Nadu.