IDEAS home Printed from https://ideas.repec.org/p/ind/igiwpp/2018-023.html
   My bibliography  Save this paper

Looking beyond the farm and household: Determinants of on-farm diversification in India

Author

Listed:
  • Varun Kumar Das

    () (Indira Gandhi Institute of Development Research)

Abstract

This paper analyses the factors affecting on-farm diversification decision. Notwithstanding the influence of farm and household conditions, studies have also highlighted the role of external pull factors on farm diversification. Though appraised in scholarship, this aspect has eluded an empirical scrutiny in literature. Taking India as a case, this study shows that apart from farm and household factors, there is a broader agro-ecological and structural feature which impacts on-farm diversification decision. Correcting for endogeneity in a seemingly unrelated system of ordered probit models, a "three-stage" residual inclusion model is estimated. The findings show that proximity to social infrastructure such as schools, colleges, and access to public transport matters for diversification. Results also show that though urbanization may increase demand for variety of products, it might as well impinge upon farm labor supply as non-farm opportunities also rises with urbanization. Thus, the underlying structure of the local economy also merits attention while understanding on-farm diversification process.

Suggested Citation

  • Varun Kumar Das, 2018. "Looking beyond the farm and household: Determinants of on-farm diversification in India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2018-023, Indira Gandhi Institute of Development Research, Mumbai, India.
  • Handle: RePEc:ind:igiwpp:2018-023
    as

    Download full text from publisher

    File URL: http://www.igidr.ac.in/pdf/publication/WP-2018-023.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. David R. Lee, 2005. "Agricultural Sustainability and Technology Adoption: Issues and Policies for Developing Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(5), pages 1325-1334.
    2. Weinberger, Katinka & Lumpkin, Thomas A., 2007. "Diversification into Horticulture and Poverty Reduction: A Research Agenda," World Development, Elsevier, vol. 35(8), pages 1464-1480, August.
    3. Vandercasteelen, Joachim & Beyene, Seneshaw Tamru & Minten, Bart & Swinnen, Johan, 2018. "Cities and agricultural transformation in Africa: Evidence from Ethiopia," World Development, Elsevier, vol. 105(C), pages 383-399.
    4. Shenggen Fan & Peter Hazell & Sukhadeo Thorat, 2000. "Government Spending, Growth and Poverty in Rural India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 1038-1051.
    5. Shenggen Fan & Ashok Gulati & Sukhadeo Thorat, 2008. "Investment, subsidies, and pro‐poor growth in rural India," Agricultural Economics, International Association of Agricultural Economists, vol. 39(2), pages 163-170, September.
    6. Frank Ellis, 2000. "The Determinants of Rural Livelihood Diversification in Developing Countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(2), pages 289-302, May.
    7. Giles John & Murtazashvili Irina, 2013. "A Control Function Approach to Estimating Dynamic Probit Models with Endogenous Regressors," Journal of Econometric Methods, De Gruyter, vol. 2(1), pages 69-87, July.
    8. Russell Cooper & Andrew John, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, Oxford University Press, vol. 103(3), pages 441-463.
    9. Maki Nakajima & Keijiro Otsuka & Takashi Yamano, 2018. "Jobs Off the Farm: Wealth, Human Capital, and Social Group in Rural Eastern India," Journal of Development Studies, Taylor & Francis Journals, vol. 54(1), pages 111-132, January.
    10. Sudha Narayanan, 2016. "The productivity of agricultural credit in India," Agricultural Economics, International Association of Agricultural Economists, vol. 47(4), pages 399-409, July.
    11. Terza, Joseph V. & Basu, Anirban & Rathouz, Paul J., 2008. "Two-stage residual inclusion estimation: Addressing endogeneity in health econometric modeling," Journal of Health Economics, Elsevier, vol. 27(3), pages 531-543, May.
    12. Haggblade, Steven & Hazell, Peter & Reardon, Thomas, 2010. "The Rural Non-farm Economy: Prospects for Growth and Poverty Reduction," World Development, Elsevier, vol. 38(10), pages 1429-1441, October.
    13. Ashwini Chhatre & Sripad Devalkar & Sridhar Seshadri, 2016. "Crop diversification and risk management in Indian agriculture," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 43(2), pages 167-179, June.
    14. Aggarwal, Shilpa, 2018. "Do rural roads create pathways out of poverty? Evidence from India," Journal of Development Economics, Elsevier, vol. 133(C), pages 375-395.
    15. Frank Ellis, 1998. "Household strategies and rural livelihood diversification," Journal of Development Studies, Taylor & Francis Journals, vol. 35(1), pages 1-38.
    16. Pratap Singh Birthal & Pramod Kumar Joshi & Devesh Roy & Amit Thorat, 2013. "Diversification in Indian Agriculture toward High-Value Crops: The Role of Small Farmers," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 61(1), pages 61-91, March.
    17. Chand, Ramesh & Kumar, Praduman & Kumar, Sant, 2012. "Total Factor Productivity and Returns to Public Investment on Agricultural Research in India," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 25(2).
    18. Barrett, C. B. & Reardon, T. & Webb, P., 2001. "Nonfarm income diversification and household livelihood strategies in rural Africa: concepts, dynamics, and policy implications," Food Policy, Elsevier, vol. 26(4), pages 315-331, August.
    19. Thomas J. Holmes & Sanghoon Lee, 2012. "Economies of Density versus Natural Advantage: Crop Choice on the Back Forty," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 1-19, February.
    20. SHI, Xiaoping & Heerink, Nico & Qu, Futian, 2007. "Choices between different off-farm employment sub-categories: An empirical analysis for Jiangxi Province, China," China Economic Review, Elsevier, vol. 18(4), pages 438-455.
    21. Pratap S. Birthal & Devesh Roy & Md. Tajuddin Khan & Digvijay Singh Negi, 2015. "Farmers' Preference for Farming: Evidence From a Nationally Representative Farm Survey in India," The Developing Economies, Institute of Developing Economies, vol. 53(2), pages 122-134, June.
    22. Mesbah Motamed & Raymond Florax & William Masters, 2014. "Agriculture, transportation and the timing of urbanization: Global analysis at the grid cell level," Journal of Economic Growth, Springer, vol. 19(3), pages 339-368, September.
    23. Tesfaye Woldeyohanes & Thomas Heckelei & Yves Surry, 2017. "Effect of off-farm income on smallholder commercialization: panel evidence from rural households in Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 48(2), pages 207-218, March.
    24. Pingali, Prabhu L. & Rosegrant, Mark W., 1995. "Agricultural commercialization and diversification: processes and policies," Food Policy, Elsevier, vol. 20(3), pages 171-185, June.
    25. Anna Folke Larsen, 2019. "When knowledgeable neighbors also share seedlings: diffusion of banana cultivation in Tanzania," Agricultural Economics, International Association of Agricultural Economists, vol. 50(1), pages 51-65, January.
    26. Peter Richards, 2018. "It’s not just where you farm; it’s whether your neighbor does too. How agglomeration economies are shaping new agricultural landscapes," Journal of Economic Geography, Oxford University Press, vol. 18(1), pages 87-110.
    27. Thomas Reardon & Kostas Stamoulis & Prabhu Pingali, 2007. "Rural nonfarm employment in developing countries in an era of globalization," Agricultural Economics, International Association of Agricultural Economists, vol. 37(s1), pages 173-183, December.
    28. Joshi, P.K. & Gulati, Ashok & Birthal, Pratap S. & Tewari, Laxmi, 2003. "Agriculture diversification in South Asia," MSSD discussion papers 57, International Food Policy Research Institute (IFPRI).
    29. Rigg, Jonathan, 2006. "Land, farming, livelihoods, and poverty: Rethinking the links in the Rural South," World Development, Elsevier, vol. 34(1), pages 180-202, January.
    30. Birthal, P.S. & Jha, A.K. & Joshi, P.K. & Singh, D.K., 2006. "Agricultural Diversification in North Eastern Region of India: Implications for Growth and Equity," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 61(3), pages 1-13.
    31. Kishore, A. & Birthal, P.S. & Joshi, P.K. & Shah, T. & Saini, A., 2016. "Patterns and Drivers of Dairy Development in India: Insights from Analysis of Household and District-level Data," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 29(1).
    32. Ganesh Thapa & Anjani Kumar & Devesh Roy & P.K. Joshi, 2018. "Impact of Crop Diversification on Rural Poverty in Nepal," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 66(3), pages 379-413, September.
    33. repec:tsj:stataj:v:17:y:2017:i:4:p:916-938 is not listed on IDEAS
    34. Michler, Jeffrey D. & Josephson, Anna L., 2017. "To Specialize or Diversify: Agricultural Diversity and Poverty Dynamics in Ethiopia," World Development, Elsevier, vol. 89(C), pages 214-226.
    35. Ashok Gulati & Pallavi Rajkhowa & Pravesh Sharma, 2017. "Making Rapid Strides Agriculture in Madhya Pradesh: Sources, Drivers, and Policy Lessons," Working Papers id:12011, eSocialSciences.
    36. Jeffrey M. Wooldridge, 2015. "Control Function Methods in Applied Econometrics," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 420-445.
    37. repec:tpr:adbadr:v:35:y:2018:i:2:p:113-130 is not listed on IDEAS
    38. Robalino, Juan A. & Pfaff, Alexander, 2012. "Contagious development: Neighbor interactions in deforestation," Journal of Development Economics, Elsevier, vol. 97(2), pages 427-436.
    39. Birthal, Pratap S. & Roy, Devesh & Negi, Digvijay S., 2015. "Assessing the Impact of Crop Diversification on Farm Poverty in India," World Development, Elsevier, vol. 72(C), pages 70-92.
    40. Richard Palmer-Jones & Kunal Sen, 2003. "What has luck got to do with it? A regional analysis of poverty and agricultural growth in rural India," Journal of Development Studies, Taylor & Francis Journals, vol. 40(1), pages 1-31.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Farm diversification; Pull factors; External conditions; Residual inclusion; Economies of density; Agro-ecology; Urbanization; Structural transformation;

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ind:igiwpp:2018-023. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamprasad M. Pujar). General contact details of provider: http://edirc.repec.org/data/igidrin.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.