Econometric model to study acreage response is of great importance in agricultural planning, more so, when it involves manipulation of price structure. Acreage response to price is conditioned by several factors like soil type, rainfall, irrigation, technical constraints such as crop rotational requirements etc., which affect acreage allocation among crops.

       The study endeavours to evaluate supply response for farm sector in case of cotton and the evidence examined covers a period of 44 years (1971-72 to 2014 -15) in the state of Tamil Nadu. For the time series analysis, the period of study is (1971-72 to 2014-15) divided into two; pre-reform period pertaining to 1971-72 to 1989-90; post-reform period covering 1990-91 to 2014-15.

      Multiple regression analysis is used through Nerlove’s adjustment lag model and traditional model for eight price specifications to test the hypothesis that acreage responds to price and non-price movements positively. The main finding that could emerge from this study is that the acreage responds positively to price changes and it is very much influenced by non-price factors. The eight price specifications seldom give identical results with respect to farmers’ acreage decisions.

     The study results reveal that P3 price is the most relevant price at the tn state level in explaining farmer’s decisions. In the Tamil Nadu State, as a whole, though the farmers take 2 to 6 years to fully adjust the acreage to change in its price, it is quite clear from the study that price behaviour is at best a decisive factor for area allocation for cotton in Tamil Nadu state in conjunction with factors like rainfall, prices of the competing crops, yield and past acreage.              The regression co-efficient () reveals that a high value of coefficient of adjustment indicates lesser rigidity in adjustment of output.

    It is concluded that the importance of price is unquestionable from the view point of stability or the increase in cotton acreage. Price then plays an important role in acreage allocation decisions of the farmers.

KEYWORDS: agricultural planning, cotton, rainfall, agriculture, cash crop