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P. Parthasarathy Rao Dharmendra Kar

Agricultural Diversification in India: Regional Analysis. P. Parthasarathy Rao Dharmendra Kar. Workshop cum Training on Agriculture and Rural Indebtedness Jointly sponsored by the Project for economic Education, Press Institute of India and the Indian Liberal Group Oct 30, 2005 - New Delhi.

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P. Parthasarathy Rao Dharmendra Kar

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  1. Agricultural Diversification in India: Regional Analysis P. Parthasarathy Rao Dharmendra Kar Workshop cum Training on Agriculture and Rural Indebtedness Jointly sponsored by the Project for economic Education, Press Institute of India and the Indian Liberal Group Oct 30, 2005 - New Delhi

  2.  1 High diversification –low per capita income. SUBSISTENCE agriculture; low and erratic rainfall, poor infrastructure, low irrigation, low population density. RISK MITIGATION Strategy (Rajasthan, MP) 4 High diversification- high per capita income: Commercial oriented diversification: need to sustain diversification through technology, vertical integration and value addition (Maharashtra, AP, Karnataka) 2 Low diversification - low per capita income. Agro-climatically better endowed region, Lack of infrastructure, low irrigation, poor adoption of improved technology Need to promote diversification through technology, and infrastructure development. (Orissa and Bihar) 3 Low diversification - high per capita income. SPECIALISED AGRICULTURE: high level irrigation, inputs, mechanization, low income risk no concern for sustainability, labor problems, low relative profitability of substitute enterprises (Punjab and Haryana) Diversification of agriculture:Schematic Diversification Resource endowments

  3. Facets of Agricultural Diversification Macro level • Shift from farm to non-farm activities • Shift to high value commodities/enterprises • Use of resources in diverse and complementary activities Micro level • To meet household food security • Minimizing production and marketing risks • Generating additional income

  4. Definition of Diversification for this study Diversification towards High Value Commodities (HVCs) HVCs for this study include: Fruits, Vegetables, Milk and Meat • Spatial sub-division of districts based on diversification towards HVCs • Nature and speed of diversification • Role of urbanization determiningnature and speed of diversification • Andhra Pradesh: Case study • Implications for policy and regional planning Objectives:

  5. Determinants of diversification Supply side factors Technology Infrastructure Market linkages Resource endowments Socio-economic factors Demand side factors Population growth Income growth Urbanization Change in taste and preferences Export potential

  6. Agricultural diversification (High Value Commodities)

  7. Selected indicators Level of Diversification High Medium Low No. of Districts 56 167 86 No. of districts (%) 18.1 54.0 27.8 Share in NCA (%) 11.3 53.0 35.6 Share in VOP (%) 14.0 57.9 28.1 Share in population (%) 19.7 60.3 20.0 Share in urban population (%) 24.9 54.1 20.9 Relative importance by level of diversification: 1998

  8. Indicators Level of diversification High Medium Low Population density 426 370 227 Urban population (%) 31.5 22.3 26.0 Literate rural female (%) 41.9 29.4 25.4 Land size (ha) 0.9 1.5 2.6 Small land holders (%) 88.3 80.3 60.6 Irrigated (%) 29.1 40.7 35.7 Normal rainfall (mm) 1660 1195 952 Area under HYV (%) 27.7 43.8 26.7 Fertilizer (kg/ha) 98.1 88.4 62.4 Tractor density (per 000 ha) 4.4 9.6 8.8 Market density (No./10,000 sq km geog) 27.1 22.0 21.6 Road density (Km/100 sq km geog area) 0.7 0.5 0.4 Value of HVC per district (Rs million) 1370 1099 568 Selected indicators by level of diversification: 1998

  9. Diversification and Urbanisation

  10. Diversification and urbanisation

  11. Urban Urban surrounded Others No. of Districts 31 91 187 No. of districts (%) 10.0 29.4 60.5 Share in NCA (%) 10.3 31.4 58.3 Share in VOP (%) 14.6 33.0 52.5 Share in population (%) 20.1 30.2 49.7 Share in urban population (%) 41.2 21.7 37.2 Relative importance of urban and other district groups: 1998

  12. Indicators Level of diversification Urban Urban surrounded Others Population density 725 350.3 278.6 Urban population (%) 55.9 19.6 20.4 Literate rural female (%) 45.4 30.7 27.4 Land size (ha) 1.4 1.6 1.8 Small land holders (%) 80.9 75.8 75.0 Irrigated (%) 46.2 40.0 36.2 Normal rainfall (mm) 1253 1162 1229 Area under HYV (%) 37.5 37.7 36.4 Fertilizer (kg/ha) 110.7 83.1 73.2 Tractor density (per 000 ha) 11.5 8.7 8.3 Market density (No./10,000 sq km geog) 30.0 24.9 18.6 Road density (Km/100 sq km geog area) 0.7 0.6 0.4 Value of HVC per district (Rs million) 1813 1148 794 Selected indicators of urban and other districts: 1998

  13. Nature of diversification in urban surrounded district groups and highway passes

  14. Spatial Analysis: HVCs

  15. Area under fruits (% NCA) (000’s ha)

  16. Area under vegetables (% NCA) (000’s ha)

  17. Share of livestock value to total agricultural value: 1998 Milk Meat

  18. Concluding remarks HVC’s account for > 50 % of agricultural production in 56 districts and < 25 % in 86 districts Milk and poultry meat had the fastest growth rate among HVCs Urbanisation has a significant influence on diversification towards HVCs , particularly poultry meat and fruits Other factors: road density, small farms, improved technology, fodder availability and rainfall positively influenced diversification Tractor density, HYV area and irrigation negatively influenced diversification

  19. Andhra Pradesh: Case study

  20. Yield stagnation in traditional crops Food self-sufficiency achieved Accounts for 35% of rice procurement in India Relentless pressure on natural resources Declining water tables Unsustainable rice cropping Excessive use of inputs Fertilizers, pesticides, water, electricity Newer pressures from trade liberalization Prices, quality, sanitary and phytosanitary (SPS) measures Rising rural unemployment Decline in rural per capita incomes Inadequate access to formal credit Poor rural and marketing infrastructure Profound disquiet in rural areas AP has dubious distinction of highest farmer suicides High levels of out-migration to urban areas Highest incidence of child labor Andhra Pradesh farming sector: Facets of the crisis

  21. Annual compound growth rates of agriculture sub-sectors and GDP, Andhra Pradesh (1993-94 prices)

  22. Diets trending away from basic cereals

  23. Composition of the value of agricultural production by level of diversification; Andhra Pradesh, 1999-2001 (1980-82 prices)

  24. Districtwise HVC share in total value: Andhra Pradesh, Change in share, 1982 to 2001 Distribution by HVC share

  25. Selected indicators by level of diversification; Andhra Pradesh, 2001.

  26. Income from HVCs - Kurnool, AP: 2002-03 (household survey) Irrigated Rainfed

  27. Employment effects of HVCs, AP, 2002-03 household survey (average)

  28. HVCs: Challenging policy terrain • Marketing • Domestic • Export • Processing • Contract farming • Case study: Gherkins • Credit • Infrastructure

  29. Share of food processing industry by type: Andhra Pradesh

  30. Contract farming: a new frontier

  31. Agri-Export Zones (AEZ) in Andhra Pradesh

  32. Distribution of priority sector credit Andhra Pradesh 2003-04 Priority sector Crop sector

  33. Distribution of credit by diversification zones, Andhra Pradesh, 2003-04

  34. Pricing water Building efficient marketing networks Implement Model Marketing Act Dismantling government monopoly Increasing investments in infrastructure Roads, cold storage, bulk coolers Foster improved linkages between rural-urban markets Emphasizing vertical integration thru’ contract farming Increase enforceability Harness private sector innovations in food processing and marketing Adding value thru’ processing Simplify procedures for setting up food processing industries Enhancing access to formal credit Expand crop/rainfall insurance schemes Enabling public-private partnerships Extension Pro-HVC policy interventions

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