Economic and Political Weekly

Agriculture Diversification in South Asia: Patterns, Determinants and Policy Implications

Author(s): P. K. Joshi, Ashok Gulati, Pratap S. Birthal and Laxmi Tewari
Source: Economic and Political Weekly, Vol. 39, No. 24 (Jun. 12-18, 2004), pp. 2457-2467
Published by: Economic and Political Weekly
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 S pecial articles

in South
AgricultureDiversification Asia
Patterns, Determinants and Policy Implications
South Asian countries are gradually diversifying with some inter-countryvariation in favour of
high value commodities, namely,fruits, vegetables, livestock and fisheries. Agricultural
diversification is strongly influenced by price policy, infrastructuredevelopment(especially
markets and roads), urbanisation and technological [Link] areas have
benefited more as a result of agricultural diversification in favour of high value crops by
substitutinginferior coarse cereals. Agriculturaldiversification is also contributingto
employmentopportunitiesin agriculture and increasing exports. The need is to suitably
integrateproduction and marketingof high value commoditiesthrough appropriate institutions.
Market reforms in developing and strengtheningdesired institutionsthrough required legal
changes would go a long way in boosting agricultural growth, augmenting income of snall
farm holders and promoting exports.
P K JosII, ASHOK GULATI, PRATAPS BIRTHAL, LAXMI TEWARI

I mass of small and [Link] study is an attempt

Introduction in this [Link] study intendsto (i) examine
the extent, natureand speed of agriculturaldiversificationin
M oostof thesouthAsianeconomieshavebeenundergoing southAsiancountries,(ii) identifydeterminantsof agricultural
a process of economic reforms since the late 1980s. diversification, and (iii) assess implications of agricultural
They are gradually adopting trade liberalisation as a diversification on food security, employment and sustainable use
policy plank. The unfolding globalisation of agriculture, of natural resources.
however, has thrown new challenges and opportunities to the The study is confined at two levels: (i) macro-level, and
agrarian sector in these countries. While there are apprehen- (ii) meso-level. At macro level, all seven countries, namely,
sions on the one hand, that the influx of subsidised cheap Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and
imports from the developed countries would adversely affect Sri Lanka, have been studied in terms of diversification of
their agriculture, on the other hand, there is evidence that agriculture. At meso level, more disaggregated analysis across
these countries are able to raise their agricultural export, different regions in India has been attempted.
especially of high value and labour intensive commodities.
This seems to open up a window of opportunities when south II
Asian agriculture is experiencing shrinking size of its holdings, Patterns of Diversification
Mapping
decelerating technological advances in staple crops, declining
investment in agriculture and increasing degradation of natural The concept of diversification conveys different meaning to
resources. differentpeopleat differentlevels. Forexample,at the national
Diversification of agriculture in favour of more competitive level, it generally conveys a movement of resources, especially
and high-value commodities is reckoned an important strategy labour, out of agriculture to industry and services, a sort of
to overcome many of these emerging challenges. If carried out [Link] agriculture, however, diversi-
appropriately, diversification can be used as a tool to augment fication is considered a shift of resources from one crop (or
farm income, generate employment, alleviate poverty and con- livestock) to a larger mix of crops and livestock, keeping in view
serve precious soil and water resources. Several micro-level the varying natureof risks and expected returnsfrom each crop/
studies support the above proposition [von Braun 1995; livestock activity, and adjusting it in such a way that it leads
Pingali and Rosegrant 1995; Ramesh Chand 1996; Ryan and to optimum portfolio of income.
Spencer 2001]. This definition of diversification needs to be distinguished
A sound understanding of the patterns of agricultural diver- from movement of resources from low value commodity mix
sification and the constraints it faces would help in crafting (crops and livestock) to a high value commodity mix (crops and
appropriate policies regarding institutional arrangements and livestock), as it may often be reflected in an increasing degree
creation of adequate infrastructure,which could benefit a large of specialisation (reducing diversity) to high value activities,

Economicand PoliticalWeekly June 12, 2004 2457

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especiallyat the farmlevel. And it is preciselythis movement influence the diversification include per capita income and
to high valueagriculture,which is of greatinterestto us in this [Link] supply side forces, the diversification is largely
paperbecauseit indicatesyet anotherway to augmentincome, influenced by infrastructure (markets and roads), technology
besidesthetraditionalwaysof increasingyield, areaor cropping (relative profitabilityand risk in different commodities), resource
intensity. endowments (water and labour), and socio-economic variables
Thus,basedon these variousdefinitions,the natureof diver- (pressure on land and literacy rate).
sificationcanbe broadlydescribedas (i) a shiftof resourcesfrom Generalised Least Square (GLS) technique with fixed-effect
farmto non-farmactivities,(ii) use of resourcesin a largermix model was applied to examine how different forces have influ-
of diverseandcomplementaryactivitieswithinagriculture,and enced crop and livestock diversification in India. The analysis
(iii) a movementof resourcesfromlow valueagriculture(crops is based on pooling of cross section and time series information
and livestock) to high value agriculture[Hayamiand Otsuka from major states (19 out of 28)l in India for the period 1980-
1992; Vyas 1996; Delgado and Siamwalla1999]. 81 to 1998-99. The GLS eliminates the effect of heteroscedasticity
arising due to cross section data, and autocolTelationas a result
of time series data. Following model was used to examine the
Measuring Diversification
determinants of diversification:
Thereare quitea few methods,which explaineitherconcen-
tration(i e, specialisation)or diversificationof commoditiesor DCor D1 = f (TECH, INFR, PROF, KNOW, DEMA, RAIN)
activitiesinagiventimeandspacebya [Link] The variables were defined as follows: The dependent variable,
ones include:(i) Index of maximumproportion,(ii) Herfindal Dc or Di was defined in two ways: (i) Simpson index of diversity
Index,(iii) SimpsonIndex,(iv) Ogive Index,(v) EntropyIndex, in crop sector (SIDc) and livestock sector (SID), and (ii) index
(vi) ModifiedEntropyIndex,and(vii) CompositeEntropyIndex of output values of horticultural commodities and livestock
[KelleyRyanandPatel1995;PandeyandSharma1996;Ramesh commodities at constant prices with base 1980-81. Results for
Chand1996].Eachmethodhassomelimitationand/orsuperiority the latter were found statistically superior, therefore, used for
overthe [Link] assessingthe extent discussion.
of diversityin crop, livestock and fisheriesactivities,we used Independentvariables were broadlygrouped into (i) technology
[Link] index providesa cleardispersionof com- (TECH) related, (ii) infrastructure(INFR) related, (iii) profitabil-
moditiesin a [Link] index rangesbetween0 ity (PROF) related, (iv) resources and information (KNOW)
and 1. If thereexists completespecialisation,the index moves related, (v) demand (DEMA) side, and (vi) climate (RAIN)
towards0. Theindexis easy to computeandinterpret,as follows: related. To capture their effect, few proxy variables were used
n in the model. For technology (TECH), these included: propor-
SID = 1 - E P,2 tionate area underhigh yielding varieties of food grain crops (per
i= l cent), fertiliser use (kg per ha), proportionof gross irrigatedarea
Where,SID is the Simpson Index of Diversity,and Pi is the to gross cultivated area (per cent), mechanisation (number of
proportionate area(orvalue)of ithcrop/livestock/fisheryactivity tractorsper 1,000 ha area). For infrastructure(INFR) the proxy
in the gross croppedarea (or total value) of output. variables were market density (number of markets per 1000 ha
The natureand patternsof diversificationwere examinedby of gross cropped area), and roads length (square km per 1,000
lookinginto temporalchangesin area,productionand valueof ha of gross cropped area). Relative profitability of high value
differentcrops, and quantity(and/orvalue) of livestock and enterprises with cereals and other crops was the proxy for profit-
[Link] estimatethe speed of diversificationin ability (PROF) relatedvariables. Average size of landholding (ha)
favourof high-valuecommodities,annualcompoundgrowth and proportion of small landholder in total holdings were used
ratesof area, productionand yield of differentcrop/livestock proxy for available resources, and rural literacy (per cent) for
activitieswere computed. information(KNOW) relatedvariables. On demandside (DEMA)
For south Asian countries,the SID was computedfor crop variables, urbanisation(percent urbanpopulation) and per capita
sectoronly, while the livestocksector was assessedseparately income (rupees per person) were used in the model. Annual
to examineits performancein [Link] diversity rainfall (mm) was used to define the climate (RAIN) related
was probedwithinthe crop sector,dividing it into broadsub- variable in the model. The specification of variables and their
sectorslikecereals,pulses,oilseeds,fruits,vegetables,spicesand expected signs are given in Annexure.
other crops. For India, the SID was computedfor the entire Different combinations of independent variables were tried to
agriculturalsectorcomprisingcrop, livestock and fisherysub- arriveat the best-fit equations. Both linearanddouble log equations
sectors,as well as within each sub-sector. were estimated and the best ones were selected.

Determinants of Diversification Data

Severalforces influencethe natureand speed of agricultural The study covers a period of two decades from 1980-81 to
diversificationfrom staple food to high value commodities. 1999-2000. These two decades were divided into two
periods:
Earlierevidencesuggeststhatthe processof diversificationout (i) 1980-81 to 1989-90, and (ii) 1990-91 to 1999-2000. There
of staple food productionis triggeredby rapidtechnological were two obvious reasons for
studying the past two decades. First,
changein agriculturalproduction,improvedruralinfrastructure, the historical evidence showed that the impact of 'green revo-
anddiversification
infooddemandpatterns[PingaliandRosegrant lution' in south Asian countries was gradually
fading during the
1995].These are broadlyclassifiedas demandand supplyside [Link],the processof economicreformsstartedin most
[Link] demandside forces thathave been hypothesisedto of the south Asian countriesin the late 1980s or early 1990s,

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and also most of them boundthemselvesto the commitments Availability of improved and high yielding rice and wheat va-
underthe WTO,whichis likely to have seriousimplicationsfor rieties induced specialisation in favour of these crops. These
[Link] thatslow- replaced sorghum, millets and barley. Performanceof pulses was
ing down of green revolutionand gradualopening up of the disappointing during 1990s.
economy will lead to greaterdiversificationof agriculturein These were relegated to marginal environments. With the
favourof high value commodities. availability of irrigationand improved varieties of rice and wheat,
The datafor the study was collected from variouspublished a large shareof pulses areawas shifting in favour of rice and wheat.
sources. For south Asian countries,the most importantdata There are some exceptions as well. For example, lentil and
sourcefor crop and livestockwas the FAO statisticaldatabase pigeonpea are coming up in a big way in Nepal. Black gram and
(FAOSTAT).This was complementedby the countryspecific green gram and to some extent chickpea are emerging in Indian
[Link] India,the studycoveredmoredisag- rainfed regions. In Pakistan, chickpea is gaining importance.
gregatedanalysisby includingthestates,therefore,reliedheavily Different countries grow a large number of vegetable and fruit
on the nationalstatisticalbulletins [CMIE2001]. crops. Fruits (both fresh and dry) and vegetables have shown
good performanceduring 1980s and 1990s. Fruitsand vegetables
ill are highly diversified in all the countries. Livestock and fisheries
Patternsof Agricultural
Diversification sectors also flourished during the last two decades (Table 3).
Evidence shows thatagricultureis graduallydiversifying in the
Agricultureis themainstayof economicgrowthin southAsia. sub-continent with some inter-countryvariation. Diversification
A large proportionof populationdepends on agriculturefor
income, employmentand food security. Agriculturalperfor- Table 1: Extent of Diversification and Its Sources
in South Asian Countries
mancein southAsia is improvingover time. The annualcom-
poundgrowthrateof agriculturewas 3.7 percent during1990s Country Simpson Indexof Diversity Sources of Diversification
as against3.2 percentin [Link] high- in TrienniumEnding (Per Cent)*
1981-82 1991-92 1999- Cropping Crop
yielding rice and wheat varietiesin south Asian countries,the 2000 Intensity Substitution
agriculturalgrowthis attributedto diversificationin favourof 1991-92 to 1999-01
[Link] is diversein climate,soils Bangladesh 0.39 0.36 0.35 64.67 35.33
[Link] Bhutan 0.37 0.48 0.44 97.82 2.18
farmersto cultivatevarietyof crops, reardifferentspecies of India 0.61 0.65 0.66 36.63 63.37
livestock and catch wide range of fish species from various Maldives 0.77 0.77 0.77 83.22 16.78
Nepal 0.39 0.40 0.41 84.79 15.21
[Link] SimpsonIndexof Diversity(SID) for southAsia Pakistan 0.54 0.56 0.57 76.56 23.44
was 0.64 in trienniumending(TE) 1999-2000,up from0.59 in Sri Lanka 0.76 0.77 0.75 78.90 21.10
TE [Link] is graduallydiversifying SouthAsia 0.59 0.63 0.64 42.98 57.02
its crop sectorin favourof high value commodities,especially Thecolumnswerecomputedas follows:GainsinCroppedArea(A)= Change
fruits,vegetables(Tables1and2). Amongcountries,Bangladesh, in Gross CroppedArea (B) + CropSubstitution(C). Since (A)and (B) are
Bhutanand Nepal show less diversity as comparedto other known,(C) is the residual.
Source:Computedby authorsfromthe data derivedfromFAOSTAT.
[Link] specialisedin rice. Morethanthree-
fourthsof theareain thecountryis [Link] Table 2: Annual Compound Growth Rates (Per Cent)
one-fourthareais highlydiversified,whichwas a resultof some of Area, Production and Yield of MajorCommodity Groups
policy initiativestakenup in [Link] and in South Asian Countries
Bhutanare aimingto have higherdegreeof self-sufficiencyin Commodity 1980-90 1991-2000
basicfoodgrainthanwhatit is today,andtherefore,concentrating Group Area Production Yield Area Production Yield
more towardscereals,particularlyrice, wheat and maize. Cereals -0.01 3.08 3.09 0.34 2.45 2.11
Therearetwo sourcesof [Link](i) area Pulses 0.04 2.37 2.33 -0.02 0.72 0.74
augmentation,and (ii) crop [Link] augmentation Oilseeds 1.72 5.46 3.68 0.95 2.05 1.09
Vegetables 1.41 3.33 1.89 2.44 2.59 0.14
comes throughutilisationof fallow lands and rehabilitationof Fruits 1.71 2.61 0.89 2.40 5.61 3.14
degradedlands,orincreasingcroppingintensity.2Table1 shows Dryfruits 1.98 3.56 1.55 3.62 4.30 0.66
that in most countries,crop diversificationderives from area Spices 1.46 4.27 2.77 0.68 2.47 1.78
expansion,withsomeexceptionof cropsubstitutionin Indiaand
Sri [Link],in Nepal, Pakistanand Sri Lanka,area Table 3: Growth Performance of Livestock Activities
expansionis alsofromdeforestation,whichis a causeof concern and Fish in South Asia
from environmentalpoint of view. AnnualCompoundGrowthRates (Per Cent Per Annum)
Commodity
To examinethenatureandspeedof agricultural diversification, Group 1981-90 1991-2000
productionperformanceand area expansionof differentcom- Number Production Yield Number Production Yield
moditieswas [Link] area, Milk
productionandyield of majorcommoditygroupsin southAsia Cow 2.33 4.86 2.53 2.10 5.50 3.40
duringthe decadesof 1980s and 1990s are given in Table 2. Buffalo 4.11
-
4.84 0.73
-
2.53
-
5.10 2.57
Productionperformanceof non-foodcommoditieswas superior Total 4.93 5.17
Poultry
to the food commodities. Among foodgrain group, cereals Chickens 9.26 10.51 1.25 5.72 5.66 -0.06
performedbetterthanpulses. Cerealsectorwas specialisingin Eggs 4.43 7.19 2.76 4.76 4.49 -0.27
favourof rice and [Link] was becauseof overridingconcern TotalMeat - 4.30 - - 2.12
Fish - 5.20 - - 3.50 -
for food self-sufficiency in all the south Asian countries.

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was observedin favourof high value [Link] their Crop,livestock,fisheriesandforestryconstitutethe core sub-
share in area and productionwas too low in comparisonto sectorsof [Link]-sectoris the principalsourceof
foodgraincrops,the extentof diversificationwas [Link] generatingincome in agriculturefollowed by livestock sector
came despitelittle policy initiativesand poor infrastructurein (Table4). Thereexists strongsynergyin cropandlivestocksub-
thesub-continent, therefore,its [Link] is reflected sectors,bothbeingcomplementary to each [Link]-
fromtheperformance of differentcommoditygroups,whichwas sectoris prominentin the coastalareas,andforestryin the hilly
betterduring1980sthan1990s.During1980s,growthin produc- regions.
tionwasmainlyattributed to yieldincrease,whileareaexpansion The shareof crop sector in the agriculturalgross domestic
[Link] yieldlevels productmarginallydeclinedduring1980s(fromabout76.25 per
is ascribedto (i) technologicalslack, (ii) weak inputdelivery cent in TE 1981-82to 73.65 per cent in TE 1990-91)and then
system, and (iii) poor [Link] acceleratethe pace of recoveredslowly during 1990s (rising to 74.91 per cent in
diversificationandharnessits potentialbenefits,thereis a need TE 1997-98).Therearetwoobviousreasons:(i) normalmonsoon
to introduceappropriatetechnologiesand createsuitableinsti- duringmost of the yearsin 1990s, and (ii) greateremphasison
tutionsand infrastructure. Domestic marketreformto support horticulturalcrops,whichled to [Link] the
diversificationis [Link] forcorrecting
agricultural otherhand,therewas a quantumjumpin the shareof livestock
severaloutdatedmarketacts, whichimpedethe paceof agricul- sub-sectorduring1980s,whichescalatedfromabout18 percent
tural diversificationin favour of high value [Link] in TE 1981-82 to 23 per cent in TE 1990-91.
examplein India,the existingagricultural producemarketcom- Later,thoughthe valueof livestock(atconstantprices)during
mittee(APMC)empowersthestategovernments to set-upmarkets 1990s has nearly doubled, its share in agricultureremained
for agriculturaldevelopmentof efficient and transparent agri- stagnantat 23 per cent. It was becausethe valueof biggercrop
marketing,the use of modernpre-andpost-harvesttechniques, sub-sectorincreasedrelativelyhigherthanthatof livestocksub-
setting-upqualitystandards [Link] sector;hence maskedthe latter'[Link] same was
privatesector participationin developing marketsand led to true for [Link] value of fisheriessub-sector
inefficienciesin [Link],many processingunits/ has swelled by about50 per cent during1990s, but its sharein
productsare still reservedfor small-scaleandcottageindustry. agriculturalgross domestic producthas marginallyreduced
to about 1 per cent in TE 1997-98 from 1.35 per cent in
IV TE 1990-91. This is despite the fact that fisheriesproduction
Patternsof Agricultural in India
Diversification duringthe decade of 1990s increased at an annual rate of
5.35 percent.
Agriculturaldiversification in India is gradually picking Regionally,the patterns,by andlarge,revealshiftsfromcrop
momentumin favourof high value crops/livestock/fishery ac- to livestocksub-sectorduring1980s and [Link] exceptions
tivities to augmentincomes ratherthan a coping strategyto wereeasternandnorth-eastern regions,wherethe sharesof both
managerisk and [Link],the natureof diversifi- cropandlivestocksub-sectorsin totalvalueof agricultural output
cationdiffersacrossregionsdue to wide heterogeneityin agro- were risingat the cost of fisheriesand [Link] the southern
[Link],it wouldbe region also, the shareof fisheries and forestryin total output
interestingto delineatethe key regions and sub-sectorsof ag- during 1980s and 1990s was [Link] livestock sub-
riculturewherediversificationis catchingup fast. This section sectoracrossdifferentregionshas grownas a resultof growing
is an attemptto unfoldthese featuresanddiagnosethe regional demandfor livestockproducts,like milk, meat,eggs, etc. The
patternsof agriculturaldiversificationin India. 'cooperative model' linking growers, processors and retail
Table 4: Share of Individual Sectors (Per Cent) in Gross Value of Agricultural Output in India at 1980-81 Prices
Region Crop Livestock Forestry Fishing
1981-82 1990-91 1997-98 1981-82 1990-91 1997-98 1981-82 1990-91 1997-98 1981-82 1990-91 1997-98
Eastern 73.90 70.65 75.84 16.83 24.44 21.36 6.65 2.35 0.89 2.62 2.56 1.92
North-east 77.48 75.95 78.96 13.74 18.44 18.26 5.68 3.08 1.19 3.10 2.54 1.60
Northern 75.73 73.98 72.87 21.62 24.94 26.45 2.44 0.75 0.41 0.21 0.33 0.27
Southern 80.06 78.46 77.38 15.64 19.10 21.19 2.29 1.28 0.56 2.01 1.16 0.88
Western 75.71 71.65 73.01 18.95 23.79 24.53 4.08 3.40 1.60 1.25 1.16 0.86
All-India 76.25 73.65 74.91 18.27 23.09 23.24 3.95 1.91 0.85 1.53 1.35 1.00

Table 5: Share of Food and Non-Food Crops in Cropping Pattern and Value of Output in India at Constant Prices

Region Simpson Indexof Crop Share of Food and Non-FoodCrops(Per Cent)

Diversity
TE 1981-82 TE 1998-99 TE 1981-82 TE 1998-99
Food Crops Non-FoodCrops Food Crops Non-FoodCrops
Area Value Area Value Area Value Area Value
Eastern 0.50 0.53 81.63 51.73 18.37 48.27 73.83 43.04 26.17 56.96
North-east 0.43 0.46 70.11 44.43 29.89 55.77 65.06 35.80 34.94 64.2
Northern 0.53 0.51 77.42 54.92 22.58 45.08 76.86 53.74 23.14 46.26
Southern 0.68 0.75 62.86 41.82 37.14 58.18 53.08 28.20 46.92 71.80
Western 0.66 0.72 71.92 44.44 28.08 55.56 61.85 36.10 38.15 63.90
All-India 0.63 0.66 70.34 48.05 29.66 51.95 65.44 39.85 34.56 60.15

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distributionseemsto haveattaineda reasonabledegreeof success of fruitsand vegetables,but the futureof these cropsrelies on
contributingto increasedlivestock production. developingappropriateinfrastructure for suitablylinkingpro-
ductionand consumption.
The easternregionis the most backwardregionwith respect
Crop Sub-Sector to percapitaincome,growthin agricultureanddevelopmentof
Thecropsectoris [Link] infrastructure. The yield levels are comparativelylow because
moved-up from 0.63 inTE 1981-82 to0.66 inTE 1998-99 (Table5). of uncertain production environmentand poor adoption of
The trendsshowedthatthe non-foodgraincropshavegradually [Link],theregionis food-
replacedfood graincrops, with the lattergoing up from about basedandtheextentof diversification is relativelylowascompared
30 percentof areain TE 1981-82to 35 percent in TE 1998-99, to [Link] largelyconcentrating in [Link]
but in value termsit went up significantlyfrom about52 per humidandhighrainfallmakescultivationof ricemorefavourable
cent to 60 percent in [Link]-foodgraincrops, in this [Link],thereis high diversityin non-ricearea
likeoilseeds,fruits,vegetables,spicesandsugarcanehavemainly [Link] regionis an importantvegetablegrowingarea
substitutedcoarse cereals while in searchfor higherincomes. in the countrywith a share of about44 per cent in the total
Regionalpatternsin diversificationof the crop sector were vegetableareainthecountryinTE 1998-99[Government of India
quitestark(Table5). The southernregionwas highlydiversified 2001]. Cultivationof fruitsis also [Link] region
followedby [Link] processof diversificationwas has also emergedas oilseed producingregion with crops like
modestin theseregionsduringthe decadesof 1980s and 1990s. rapeseed-mustard, groundnut,sesame and soybean.
It may be mentionedthat these were the only regions, which Duringthe post-greenrevolutionperiod,oilseeds, fruitsand
accomplishedhigheragriculturalgrowthduring1990s over the vegetablesperformedimpressivelyin all the [Link]
[Link] regions swiftly moved towardsmore success of oilseeds was largely underhigh tariff barrierson
non-cerealcrops, which perhaps contributedto accelerating importsof edible oils, it was constitutionof NationalHorticul-
[Link] are relativelyless developedin irri- turalBoardin 1984 thatencouragedhorticultureproductionby
gationand largelyrely on [Link] and oilseeds are low coordinating, productionandprocessingof fruitsandvegetables.
waterrequirementcrops, thereforefind niche in these regions. Exportof differentfruitsand vegetablesalso grew duringthe
Likepulsesandoilseeds,theseregionsalso witnessedsubstantial last decadeas a resultof emerginginfrastructure facilities(cold
increasein areaunderfruitsand [Link]- storageand cargo handling)at internationalairports.
portedprogrammespromotedthe cultivationof fruitsand veg-
[Link],watershedprogrammefacilitatedconser- Livestock Sub-Sector
vationof rainwaterand gave higherpriorityfor cultivationof
fruitsand [Link] cereals,maize is pickingup fast The livestocksectoris growingat a fast rateandthereforeits
in the southernregionandto some extentin the westernregion. sharein totalvalueof agricultural outputis progressivelyrising
Maize is gainingimportanceto meet the growingdemandfor in India[BirthalandParthasarthy 2002; Birthalet al 2002]. But
poultryfeedin [Link] thecropsgainingin these the SID withinthe livestocksub-sectoris modest(0.508), and
regions,oilseeds are underseriousthreatin the wake of import also slowly [Link] modestSID is mainlydueto a large
liberalisationof edibleoils as thecost of importedoils, especially shareof milkin totalvalueof livestockproducts(around68 per
palmoleanis muchlower thanthe domesticprice prevailingin centduringthe pasttwo decades(Table6). The remainingshare
the [Link] sustainoilseed production,technicalefficien- of livestockproducts(32 percent)is distributedto severalitems
cies in theirproductionandprocessingwill haveto be improved likemeat,poultry,wool, [Link],
throughbettermanagementand technologyadoption. from33 to 71 milliontonnesover the periodTE 1981-82to TE
The northernregion was specialisingmore in favourof rice 1998-99, with an annualcompoundgrowthrateof about4.62
and wheat crops. Favourablegovernmentpricingpolicies, as- per cent duringthe last two [Link] growthof milk pro-
sured procurement,high-yieldingtechnologies,and irrigation ductionwasmuchhigher(5.23percent)during1980sthan1990s
developmenthave encouragedfarmersto allocatemoreareain (3.46 per cent).
favourof [Link] Meat and poultrysub-sectorshave also registeredgood per-
[Link],theregionis concentrating formance,increasingfrom a low of 0.80 million tonnesin TE
morein cerealsandonly marginallydiversifyingin to non-cereal 1982-83to 2.73 milliontonnesin TE 1991-92andfinallyto 4.41
[Link] availabilityof shortdurationblackgram, million tonnes in TE 1998-99, giving an annualcompound
greengramand pigeonpea,pulses are slowly regainingimpor- growthrate of about5.81 per cent duringthe 1980s vis-a-vis
tancein this [Link] gainingimportancein just 3.90 per cent duringthe 1990s. The high increasein meat
thisregionaresugarcane,[Link],there productionduring1980s was partlycontributedby the severe
are reportsthatextensivecultivationof rice and sugarcane are droughtin 1987(oftenclaimedto be the severestof thecentury)
causingnegativeexternalitiesrelatedto soil andwaterresources. in most partsof the [Link] shortageof green and dry
The soil fertilitywith respectto macro-and micro-nutrients is fodderforcedpeopleto dispose-offless productiveanimalsfor
decliningwith continuouscultivationof these [Link] water slaughteringat a largescale. The poultryalso flourishedduring
resourceof theregionis [Link] the 1980scontributing to highergrowthof livestocksectorduring
haveadverselyaffectedthetotalfactorproductivityof rice-wheat the [Link] shareof poultryand goat meatin total valueof
based croppingsystem in this region [Kumaret al 1998]. To meatproductionwent up from66 percent in TE 1982-83to 77
sustainthefoodsecurity,andfurtheraugmentexportof rice(both per cent TE 1998-99. Similarly,egg productionalso increased
basmatiand non-basmati),thereis a need to improvethe water by 8.46 percent annuallyduring1980s as against4.60 percent
use [Link] regionhas potentialfor cultivatinga variety annuallyduring1990s. It is interestingto observethat,unlike

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dairy,thepoultrysectorgrewat the instanceof privateorganised sector can significantlycontributeto enhancingfarm income,
sector,whichcontrolsroughly80 per cent of totalpoultrypro- offeringemploymentopportunitiesin ruralareasand meeting
ductionin the country. the food and nutritionalneeds of small farm holders.
Regional patternsare dissimilardue to agro-climaticvari-
ability,foodhabitsandstatusof economicdevelopment(Table6). Fisheries Sub-Sector
Diversificationof livestock activitieswas least in the northern
regionand highestin easternand north-easternregionsof the Fisheriessub-sectorhas also diversifiedover the [Link]
[Link] northernregion,thereis morespecialisationof live- SID of fisheriessectorhas shownmarginalimprovementto 0.49
stock sub-sectorprimarilyin dairy, with some emergenceof in TE 1999-2000from0.47 in TE 1981-82(Table7). It is mainly
poultrylately. Shareof milk in total value of livestockwas as dueto gradualshiftfrommarineto [Link],
high as 80 per cent in TE 1998-99 in the [Link] the marinefisheriesused to dominatethe fish productionin the
westernregionis alsoconcentrating in favourof milkproduction. country,whichwasmorethan75 percentin [Link]
Gujarat,locatedin the westernregion,witnessedthe evolution the importanceand potentialof fish sectorin the inlandareas,
of dairycooperativesandled a revolutionoftencalledthe 'white a greaterimpetuswas accordedto the [Link]
revolution'. of marinefish in the totalproductionhas fallen to about54 per
The southernregionis showingrelativelyhigherdiversityin cent in TE 1999-2000,while that of inlandfisherieshas risen
livestocksectoras comparedto northernand westernregions. to about46 percent in TE 1999-2000fromless than25 percent
Milk and poultrytogethercontributedabout81 per cent in the in [Link] inlandfisheries
totalvalueof livestockin southernregionin TE [Link] was higher(6.54 per cent) during 1990s than 1980s (5.27 per
milk, poultry has emerged as an importantactivity in the cent).Themarinefishproduction,whichperformedpoorlyduring
southernregion. 1980s(0.12 percent)improvedduring1990s(2.53 percent)due
The easternandnorth-eastern regionsshoweda highlydiver- to greaterimpetusaccordedto the [Link] inland
sified [Link] is distributedbetweenmilk, meatand fish potentialis still higherwitha well spreadlocationof rivers,
[Link] few exceptions,the shareof milk productionis canals and reservoir.
decreasingand that of meat and poultryincreasing. The highergrowthin inlandfisherieswas mainlyattributed
Livestockproductionbroughtoutrevolutionary changesin the to overwhelmingprogressin aquaculture,both in fresh and
countryduring1980sandthesecontinuedduring1990s,though [Link] shareof culturefisheriesin inlandsector
at a [Link] thedairysector,the breakthrough is ascribed has went-upfrom about43 per cent in 1984-85 to high level
to the implementationof the 'OperationFlood Programme' of about84 per cent in 1994-95 [Kumaret al 2001]. A bulkof
throughthe nationaldairydevelopmentboard(NDDB), which growthin culturefisherieshas come fromthe freshwateraqua-
developedcooperativemodel for procuringand marketingof culture[Krishnanet al 2000]. There is good scope to expand
milk and milk [Link] programmeestablishedabout 170 productionof cultureand otherproductsin the brackishwater
cooperativemilk unions, operatedin over 285 districtsand [Link] 10 percent of the availablebrackishwaterarea(12
coverednearly96 thousandvillage level societies in different millionha) in the countrywas exploiteduntil 1995-96 [IASRI
statesby makingnearly10.7millionfarmerstheirmembersuntil 2001]. The expansionof inlandfisherieshas also led to some
1999-2000[NDDB2002].Realisingthesuccessof theprogramme, negativeexternalitiesrelatedto degradationof arablelandsdue
an IntegratedDairyDevelopmentProgrammewas launchedin to salinity.
the non-Operation Flood, hilly and backwardareasin 1992-93 Theremarkable progressin fisheriessectorwastheoutcomeof
to enhanceproduction,procurement andmarketingof milk,and a well-knitstrategyto accomplishmultiplegoals of augmenting
to generateemploymentopportunitiesin those areas.
Thefutureof livestocksectoris quitepromisingin thecountry, Table 7: Temporal Changes in Fish Production (000 tonnes)
as therestill exists huge potentialto augmentproduction,con- and Diversity
sumptionand export of differentlivestock [Link] Period MarineFish InlandFish Total SimpsonIndex
meat productionis mostly confinedto the unorganisedsector, of Diversity
and is crying for setting up of modernslaughterfacilities and
TE 1981-82 15(62.50) 9 (37.50) 24 0.47
developmentof cold chains. TE 1991-92 21 (60.00) 14(40.00) 35 0.48
Strengthening thelivestocksectorwouldbenefitthesmallfarm TE 1999-2000 29 (53.70) 25 (46.30) 54 0.49
[Link],thesmallfarmholdersin rural Note:Figuresin bracketsare the percentageshare in totalfish production.
and peril-urbanareaslargelycontrolthe [Link] Source: Kumaret al (2001).

Table 6: Share of Individual Commodities (Per Cent) in Gross Value of Livestock Sub-Sector in India at 1980-81 Prices
Region Milk Meat Poultry Miscellaneous
TE TE TE TE TE TE TE TE TE TE TE TE
1982-83 1991-92 1998-99 1982-83 1991-92 1998-99 1982-83 1991-92 1998-99 1982-83 1991-92 1998-99
Eastern 54.63 53.65 47.14 11.96 20.24 22.08 11.91 11.38 11.19 21.50 14.74 19.59
North-east 53.81 55.84 56.83 15.63 16.61 17.58 18.92 18.21 17.05 11.65 9.33 8.54
Northern 76.32 77.87 79.87 2.67 4.54 5.06 2.93 5.13 5.46 18.07 12.46 9.62
Southern 63.75 64.64 64.72 9.91 7.47 7.20 14.94 16.26 16.58 11.40 11.64 11.50
Western 69.16 73.81 74.13 5.61 3.30 3.85 6.27 6.20 7.31 18.96 16.68 14.71
All-India 68.09 69.22 68.96 6.57 7.92 8.39 7.85 8.97 9.58 17.48 13.88 13.07
Notes: Meatincludescattle meat, buffalomeat, sheep meat, goat meat, and pig meat.
Poultryincludespoultrymeat and eggs.

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production,enhancingexportand overcomingpovertyof fish- Thetechnologywasdefinedby areaunderhigh-yieldingvariety
[Link] outlayin the fisheriessectorwas raisedfromaround of cereals,irrigatedareaandextentof mechanisation. But it was
2-3 percent of totalagriculturaloutlayduring1970sto over 5.5 irrigatedareathat turned-outto be significantand represented
per cent during 1980s and 1990s. Several productionand de- the technologicaladvancementin the region. The regression
velopment-oriented programmeswere launchedin the potential coefficientof this variablewas showing negativerelationship
[Link] implementedin bothmarineand with [Link] means that the crop diversificationin
inlandareasasdevelopmentof freshwateraquaculture, Integrated favourof horticultural commoditiesis decliningwithincreasing
CoastalAquacultureandDevelopmentof CoastalMarineFish- irrigatedarea. This suggests that crop diversificationis more
eries. Under these programmes,Fish Farmers'Development pronouncedin rainfedareas,whicharedeprivedof technological
Agencies (FFDAs) were establishedin fresh waterareas,and advancement in termsof [Link]
BrackishWaterFish farmers'DevelopmentAgencies(BFDAs) as rainfed,low resourceendowedwith abundantlabourforce
in brackishwater areas. To encouragethe aquaculture,the and by-passedduringthe 'green-revolution'period.
programmeswere initiated to upgrade the technology, and Relativeprofitabilityof horticultural commoditieswith other
encourageinvolvementof privatesector for activitiessuch as crops is also an important determinant for diversificationin their
quality seed, feed and other inputs and creationof suitable [Link] regressioncoefficient is significantand positive.
infrastructurefor storage,transport,marketingand credit. Obviously,thehigherprofitof thesecropswouldinducefarmers
Seed productionis very importantto sustainfisheriesproduc- to diversify in their favour. Fruitsand vegetablesare highly
[Link] meetthis objective,morethan50 seed hatcheriesat the profitablein comparisonto cereals and other crops. Relative
[Link]: profitabilityof fruitswas morethan8 timeshigherthancereals.
the seed productionrose manifoldfromonly 409 millionfry in Thecorresponding figurefor vegetableswas 4.8. Althoughhigh
1973-74to about20,000 millionfry in [Link] develop profits of horticulturalcrops encouragetheir cultivationbut
betterinfrastructurefacilities, 'fisheriesindustrialestates'were uncertainpricesandhighyield instabilitylimittheirwide spread
developedby groupingthe clusterof [Link] major [Link] price instabilityis more in case of fruits and
accomplishmentuntil 1998-99 was constructionof 30 minor vegetablescomparedto cereals [Subramanian et al 2000]. The
fishingharboursand 130 fish landingcentresbesidesthe major high price variabilityof fruits and vegetablesis due to poor
fishingharboursat Cochin,Chennai,Paradeep,Roychowkand verticallinkagebetweenproduction,marketingandprocessing.
Visakhapatnam [Kumaret al 2001]. This calls for developingappropriate institutionalarrangements
The futureof fisheriessectoris brightwith the opening-upof for minimisingthe price [Link] scatteredsuccess
the [Link] a good exportmarketfor bothmarine storiesareavailablefor strengthening [Link]
and inlandfish and [Link] this context,the Sanitary are contractfarmingby Pepsi and HindustanLever for potato
and Phytosanitary(SPS) issues are more importantto tap the andtomato,andcooperativesocietiesunderthebannerof 'Safal'
[Link] need is to focus moreon qualitycontrol, for [Link] becomingpopular
modernisethe crafts used in marineareas and utilise the full in [Link] it is still based on informal
potentialof the inlandfisheries.
Table 8: Determinants of Diversification in Favour of
V HorticulturalCommodities: Double-log Estimates
of Generalised Least Square
of Diversification
Determinants
Explanatory DependentVariable:Indexof Gross Valueof
diversificationis influencedby a numberof forces Variables Horticultural
Commoditiesat 1980-81 Prices
Agricultural Equation1 Equation2
both from the supply-sideand the [Link] section Equation3
examinesthedeterminants of diversificationincropandlivestock Irrigation -0.4575*** -0.4697*** -0.5073***
sectorsseparately,and resultsare given in Tables 8 and 9. (0.0614) (0.0607) (0.0564)
Relativeprofitability 0.3549*** 0.3329*** 0.3152***
(0.04450) (0.0411) (0.0441)
Roads 0.2873**' 0.2843***
Crop Sub-Sector (0.0664) (0.0665)
Markets 0.1261* 0.1870***
To examinethe forces, whichare influencingthe diversifica-
(0.0710) (0.0528)
tioninfavourof highvaluecommodities,a numberof explanatory Ruralliteracy -0.7976*** -0.8415*** -0.5497***
[Link] variableswererelatedto infrastruc- (0.1458) (0.1419) (0.1389)
ture development,technology adoption,relative profitability, Smalllandholders 1.1964*** 1.2016*** 1.6043***
resource endowments and demand-side factors including (0.2283) (0.2285) (0.2002)
Urbanisation 0.1840 -0.3050***
urbanisationand incomelevel. The estimateddouble-logequa- (0.1438) (0.1094)
tions of GeneralisedLeast Squareare given in Table 8. Income 0.4892*** 0.5082*** 0.4671***
To capturethe effect of infrastructuredevelopment,two (0.0668) (0.0652) (0.0686)
Rainfall -0.0583 -0.0712* -0.0949*'
importantvariables,namely,markets,androads,were included (0.0422) (0.0411) (0.425)
in the [Link] variablesyieldedpositiveandsignificant
influenceon diversificationof crop sector. Obviously,better Timedummy:1981-90=0; 0.8944*** 0.8839*** 0.8960***
1991-99=1 (0.0700) (0.0696) (0.0722)
marketsand roadnetworkinduceddiversificationin favourof
R-square 0.7735 0.7722 0.7572
horticultural
[Link] AdjustedR-square 0.7642 0.7637 0.7490
low marketingcost andeasy andquickdisposalof commodities. F-statistic 82.82*** 90.00*** 91.40***
Italsoreducestheriskof post-harvestlosses in caseof perishable Figures in parentheses are standard errors of the respective coefficients;
commodities. ***,** * significantat 1 per cent, 5 per cent and 10 per cent respectively.

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arrangements. This area needs legal changes to encourageef- also plays crucialrole in influencingthe prospectsof livestock
fective role of processingindustriesto give furtherimpetusto [Link] networkand marketswere included in the
agricultural [Link] evidencethatwell managed modeltorepresent theinfrastructure
development. Thesevariables
contractfarminghas proveneffective in linkingthe small farm were significantand have positive bearingon the growthof
sector to sources of extension advice, mechanisation,seeds, livestock.
fertiliserand credit,and to guaranteedand profitablemarkets The two demand-side variables, per capita income and
for produce[FAO 2001]. urbanisation showeda positiveand significantinfluenceon the
Thereis a positiverelationshipbetweengrowthof horticultural growthof [Link] risingpercapitaincomeand
commoditiesandthe proportionof [Link] indicates growingurbanisationare raisingthe demandfor livestockpro-
thatdiversification infavourof horticultural
commoditiesis more ductsin theconsumptionbasketleadingto diversificationin the
confined with the small [Link] a move of small farm livestock sector [Kumarand Mathur1996].
holders in favour of high-valuecommoditiesis expected to Annualrainfallwas significantwitha positivesign indicating
[Link] horticultural cropssuitsthe thathigherrainfallareashavemoreinclinationtowardslivestock
small farm holders. The advantageis that these are labour- [Link] may be due to availabilityof greenfodderfrom
intensiveand generateregularflow of income. The cautionis [Link] is unlikethecropsector,wherediversification
that absence of appropriatemarketsand rise in supply may was morein low [Link] has importantimplications
adverselyaffect the pricesand opportunitiesfor higherincome fordesigningappropriate strategiesforpromotinglivestocksub-
[Tewariet al 2001]. sector.
Rainfallis anothervariable,whichwas includedin the model
to assesstheeffectof climateon cropdiversification. Thevariable VI
was highly significantwith negative sign indicatingthat crop Implications Diversification
of
diversificationis limitedin [Link],high
rainfallareasspecialise towardsrice, while farmersgo for di- Severalbenefitsof agriculturaldiversificationarereportedin
versificationin mediumandlow rainfallareasto increaseincome the [Link] the shortrunthese are(i) shiftingconsumption
and minimiserisk. pattern,(ii) improvingfood security,(iii) increasingincome,
Demand-sidefactorssuch as urbanisationand per capitain- (iv) stabilisingincomeoverseasons,(v) generatingemployment
come showed positive and significantimpacton crop diversi- opportunities,(vi) alleviatingpoverty,(vii) improvingproduc-
fication. tivity of scare resources(e g, water),(viii) promotingexport,
The abovediscussionsuggeststhatassuredmarketsandgood (ix) improvingenvironmentallysustainablefarming systems
roadnetworkcouldstimulateagricultural infavour
diversification throughconservationandenhancementof naturalresources[Jha
of high valuecropsas they help maximiseprofitsandminimise 1996;RameshChand1996;Vyas 1996;DelgadoandSiamwalla
uncertainty in [Link] 1999;andRyanandSpencer2001].Theseshort-runbenefitshave
farmersto takepotentialbenefitsof cultivatinghigh-valuecrops. implicationsfor the prospectsof long-rungrowthin agriculture,
Encouragingappropriateinstitutionalarrangementsfor better regionalequity and [Link] benefits
marketsthroughcooperativesor contractfarmingwould go a are more clearlycapturedat [Link] the presentstudy,
long way in [Link], role of we have assessedimplicationsof diversificationat macro-level
technologycannotbe [Link]-yieldingandmorestable
genotypesin fruitsandvegetablesneedto be propagatedthrough Table 9: Determinants of Diversification in Favour of Livestock
developinga strongseed sector. Sub-Sector: Double-log Estimates of Generalised Least Square
Explanatory DependentVariable:Indexof Gross Value
Livestock Sub-Sector Variable of Livestockat 1980-81 Prices
Equation1 Equation2 Equation3
Theresultsof GeneralisedLeastSquareforlivestocksub-sector Irrigation -0.1993*** -.0294
are given in Table 9. Technologicalprogressin the crop sub- (0.0214) (0.0332)
sectorhasstronginfluenceon thediversificationof livestocksub- Relativeprofitability 0.2009*** 0.1736***
(0.0222) (0.0288)
[Link],one of theproxyvariablesfortechnological Roads - 0.0534*
progress,was significantwith negativeeffect on expansionof (0.0292)
livestocksub-sector. Markets 0.0368 0.0906***
Farmers'resourceendowment(particularlythe size of land (0.0260) (0.0312)
Ruralliteracy -0.2049*** - -0.0672
holding)was capturedby the proportionof smallholdersin the (0.0479) (0.0545)
[Link] Smalllandholders 0.6790** - 0.5689***
significantand positive, indicatingthe prospectsof livestock Urbanisation
(0.0705)
0.1114** -
(0.0760)
0.0569
activitiesarehigheron [Link]
(0.0482) (0.0455)
areoftenwell integratedwithcropactivitiesandgenerateregular Income 0.1521*** - 0.2033***
income and quick returnsto the small holders. (0.0239) (0.0216)
Ruralliteracy,whichis a proxyforlevel of knowledge,is signi- Rainfall -0.0029 0.0524**
[Link],higherliteracyis indicating (0.0148) (0.0221)
Timedummy:1981-90=0; 0.2479***
shift fromagriculture(includinglivestock)to otherjob oppor- 1991-99=1 (0.0255)
[Link] livestockin comparisonto crop R-square 0.7472 0.0637 0.5299
sectorwas also found significantwith positive relationshipfor AdjustedR-square 0.7376 0.0448 05188
F-statistic 78.45*** 3.37*** 47.67***
the growthof livestock activities. Infrastructuredevelopment

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on (i) improvingfood security, (ii) generatingemployment Interestingly,the consumptionbasketis changingover time.
opportunities,and (iii) promotingexport. The food consumptionis shiftingfromcerealsto non-cerealsin
both ruraland urbanareas (Table 10). The per capita cereal
Food Security consumptionin ruraland urbanareashas declined,while those
of milk, milk products,vegetables and fruits have increased
Food securityat the nationaland householdlevel is an im- significantly [Kumar2002]. Most remarkableincrementin
portantissue in the contextof [Link]- consumptionwas witnessedin case of fruits.
ducingadditionalfood is a majorchallengewhenpopulationand The availableevidenceclearlyrevealsthatdiversificationof
incomesare rising,and [Link] cropand livestocksectorshas not only increasedproductionof
apprehensions thatshift in cropportfoliofromfood to non-food non-cerealcommodities,butalsoraisedtheirconsumption pattern.
cropsmay lead to [Link],thediversification A morefavourableenvironment fordiversificationtowardshigh-
in majorityof the states in India was coming as a result of value commoditieswill not only ease the pressureof storing
expansionin [Link] crop substitutionwas also huge surplusof rice and wheat, but also accelerategrowthof
takingplace,whichwas divertingareain favourof high-yielding agriculturalsector throughhigh-valuecommodities.
[Link],wheatandmaize
[Link]-yielding Employment
natureof foodgraincrops has improvedtheir [Link]
productiontrendsrevealthatthe per capitadaily availabilityof Generatingemploymentavenuesin ruralareasis [Link]
foodgrains has increased from 448.56 gramsin TE 1981-82 to question is how diversificationof crop sector can generate
475.4 gramsin TE 1999-2000. Similarly,the per capitadaily additionalemploymentopportunitiesin the [Link]
availabilityof milk has substantiallygone up from 128 grams information wascollatedfromlabouruseinproduction of different
in 1980-81 to 214 gramsin 1999-2000 [Governmentof India crop activities(Table 11). It may be noted that labouruse for
2002]. cultivationof non-cerealsis substantiallynigherthan cereals
(except rice).
Table 10: Per Capita Consumption Pattern of Food Items Areashiftfromcerealsto vegetableswouldgeneratesubstantial
(Kgs/person/annum) employmentopportunitiesin [Link]-
Item 1977 1987 1993 1999 gest that 1 ha shift in areafromwheatto potatowouldgenerate
145 [Link],1 ha areashift fromcoarse
Rural
Rice 86.5 88.1 85.4 81.0 cereals (sorghumand pearlmillet) to onion would generate70
Wheat 49.4 61.6 53.5 53.9 man-daysmoreemploymentopportunities in [Link]
Coarse cereals 56.7 29.8 24.1 17.7 of substitutionfromcoarsecerealstoothervegetables(forexample,
Totalcereals 192.6 179.5 163.0 152.6
Pulses 8.7 11.5 9.2 10.1 cabbage,cauliflower,eggplant,tomato,lady finger), it is ex-
Milkand milkproducts 24.6 58.0 51.4 50.5 pected to generate70 man-days/haadditionalemployment.A
Edibleoils 2.7 4.3 4.6 6.0 marginalshift in areafrom wheatand coarsecerealsin favour
Vegetables 24.7 50.8 53.2 66.0 of high-valuecrops can thus generateenhancedemployment
Fruits 2.6 10.3 9.8 17.0
Meat,eggs, fish 2.7 3.3 4.1 5.0 [Link] ruralareas
Sugar and gur 13.5 11.0 9.2 10.1 has welfareand equity implications.
Urban
Rice 67.6 68.1 64.2 62.5
Wheat 64.6 60.4 57.4 55.4 Export
Coarse cereals 14.8 10.6 7.7 7.1
Totalcereals 147.0 139.1 129.3 125.0 Indianexportsduringthe decadeof 1990s grew at an annual
Pulses 11.7 12.2 10.5 12.0 rate of 10.1 per cent, as against 7.4 per cent during 1980s
Milkand milkproducts 39.7 64.9 68.3 72.4
Edibleoils 4.8 6.8 6.3 8.6 [Governmentof India2001]. The exportsof agriculturalcom-
Vegetables 39.7 66.4 63.1 70.0 moditiesduring1990s, however,grew at an annualrateof 8.1
Fruits 5.9 18.8 20.1 19.0 per cent, as againstonly 3.3 per cent during1980s. However,
Meat,eggs, fish 4.8 4.9 6.3 6.8 shareof agriculturein total exportshas declinedfrom 24 per
Sugarand gur 17.1 12.3 11.8 12.0
cent during 1980s to 18 per cent in 1990s.
Source:Kumar(2002). A large share in agriculturalexport was contributedby
diversificationof crop and livestock [Link] was noted that
Table 11: Average Labour Use in Vegetables, Cereal diversificationof agricultural
commoditieshas promotedexport
and Non-Cereal Crops of manynon-traditional items. Historically,therewas virtually
(Man-daysper ha)
no exportof fruits,vegetables,and livestockandfish products.
Vegetables Cereals and Non-Cereals The exportsof thesecommodities,as well as rice, haveremark-
Crop Labouruse Crop Labouruse
ably pickedup [Link],exportsof rice went
Potato 200 Rice 105 up from 440 thousandtonnes in TE 1981-82 to 656 thousand
Onion 125 Wheat 55 tonnesin TE 1991-91andreachedto 3,145 thousandtonnesin
Cabbage 110 Sorghum 55
Cauliflower 120 Pearlmillet 50 TE [Link]'ssharein worldrice tradewent up to more
Eggplant 70 Cotton 100 than10percentin 1990s,upfroma mere3.7 percentin 1980-81.
Tomato 195 190
Sugarcane Similarly,exportsof fruitsand vegetablesmore thandoubled
Source: Derived from several sources (i) Subramanianet al (2000) and duringthelasttwodecades(fromUS$ 110millionin TE 1981-82
Governmentof India(2000). to US$ 262 millionin TE [Link] exportsof fish shot

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up from $320 million in TE 1981-82 to $1125 million by TE diversification. The rainfed areas are becoming a hub of non-
[Link] registeredin processedfruitsand cereals due to their low water requirement and abundant labour
juice. Further,exports of milk, milk products,eggs and fish supply. The evidence confirmed that the regions, which were
productshave also made entry into the export [Link], diversifying in favour of non-cereals, have accomplished better
exportsof milkandmilkproductsincreasedfromUS$ 1.1million growth performanceas compared to those specialising in cereals.
in TE 1981-82 to US$ 1.7 million in TE 1991-92 and reached Besides, relativeprofitabilityof high-valuecommodities in relation
a peak of US$ 3.2 million in TE [Link] eggs, to other crops also played important role in determining status
althoughtoo erratic,increasedfrom a low of US$ 0.4 million of diversification. This calls for further strengthening R and D
in TE 1981-82 to US$ 25.3 million in TE [Link] may efforts for improving the productivity in a sustainable manner.
be notedthatthe productionof all these commoditiesincreased Most importantis that the high-value commodities are more with
substantiallyduring1990s, which led to theirentryinto export small farm holders.
markets. The study also highlighted the implications of diversification
The progressin export of non-traditionalitems was quite on food security, employment generation and export earnings.
impressiveduringthe decade of 1990s as comparedto 1980s. The macro-level information showed that the food security was
This impliesthatdiversificationof agriculturecan substantially not adversely affected as a consequence of agricultural diver-
contributeto exportsprovideda congenialenvironmentthrough sification. Similarly, the high-value crops have substantial po-
infrastructuredevelopmentand institutionalinnovationis cre- tential for generating employment opportunities. Most of the
[Link] mustbe supportedby appropriate domesticpolicies and high-value crops are high labourrequirementcrops. Incidentally,
legalchanges,whichencouragedevelopmentof new institutions the small and marginal farmers have abundantlabour, which can
for linkingproduction,marketingand processing. be effectively utilised for productionof high-value commodities.
The high value commodities have also witnessed good perfor-
VII mance in the international trade.
ConclusionsandPolicyImplications To speed-up the process of agriculturaldiversification of high-
value commodities, the south Asian countries need to take series
The studydiagnosedthe statusof agriculturaldiversification of measures to reform institutional arrangements, which can
in southAsian [Link] carried- appropriatelyintegrate production and markets. Among others,
outfor Indiato examinethe determinants of [Link] the immediate measures include ensuring markets, developing
resultsof thestudyrevealedthatagricultural sectorin southAsia roads. creating appropriate infrastructureand encouraging pri-
is graduallydiversifyingin favourof high-valuecommodities, vate sector participation for value addition and processing.
namely,fruits,vegetables,livestockandfish [Link] Domestic market reform is a pre-condition for agricultural di-
the diversificationcame, if at all, with only little supportfrom versification in favour of high-value enterprises. The most in-
the [Link] was because food securityissues are still tricate puzzle is how to ensure greater participationof small and
criticalin the subcontinentand governmentpolicy is still ob- marginallandholdersin the process of agriculturaldiversification
sessed with self-sufficiencyin cereals,which presumablycon- for sharing benefits of globalisation. They are moving in favour
tributesto a large shareof area still being allocatedto cereal of high-value commodities but this group of farmers has high
crops. Countrieslike Bangladesh,India and Sri Lankahave transactioncost due to tiny marketablesurplus, which negate their
achieved food self-sufficiency at the national level, but the
Annexure
emphasisis still increasingproductionof rice [Link]- Specification of Variables and Their Expected Signs for
tries,like Bhutan,Nepal and Pakistan,which are still deficit in Diversification
foodgrainproductionmakingserious attemptsin augmenting Drivers Indicator Unit Expected
their production. Sign
Despitefocusingeffortstowardsfoodgrainproduction,a silent Area underHYV
revolutionis witnessedin [Link] Technology FoodgrainHYVarea to total
of foodgrains foodgrainarea ( per cent)
of fruits,vegetables,livestockandfish productshave increased Fertiliseruse Kg/ha
remarkablyin most of the south Asian [Link] to their Irrigatedarea Proportionateirrigatedare to the
low sharein gross value of agriculturaloutput,the silent revo- gross croppedarea (percent)
Mechanisation No of tractors1000/ha
lutionwas [Link] productionof thesecommoditieswas
demand-driven, which is unlikethe supply-driven'greenrevo- Infrastructure Marketdensity No of markets/1,000ha of +
lution'.During1980s,productionincreasewas attributedto the gross croppedarea
Road length Square km/1,000ha of +
risein theiryieldlevels. During1990s,productionincreasecame gross croppedarea
from area augmentation. Profit RelativeprofitabilityProfitfromfruitsand vegetables +
in relationto cereals, pulses,
InIndiancontext,thedeterminants forhigh-valuecommodities oilseeds, sugarcane
(horticultural and livestock) were [Link] roads Resources and Holdingsize Proportionof small holdersin +/-
were the key determinants,which were influencingthe status information totalholdings( per cent)
Literacy Per cent literatepopulationin +
of [Link] the techno- ruralareas
logy absorptionin the region. Higherthe technologyadoption Demandside Urbanisation Urbanpopulationin per cent +
of cereals(particularly Per capitaincome Rs/person +
irrigation)less was the diversificationin Climate Rainfall 'millimetre
favourof high value [Link] favourof Period Dummy 1981-90=0; 1991-99=1 +
horticulturaland livestockcommoditieswas morepronounced Incase of livestock,proportionof crossbredcattleof totalcattle(percent) was
in rainfed areas, which were by-passed during the 'green used as a proxyfortechnologicaladvancement,withan expected negativesign
revolution' but now could take advantage of agricultural fordiversification.

2466 Economicand PoliticalWeekly June 12, 2004

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