Agricultural diversification and poverty in India
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International Food Policy Research Institute
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As stress on Indian agriculture increases because of several reasons, such as continuous fragmentation of landholdings and climate change, there is a serious threat to livelihood based on farming. This is particularly true for small farmers. Growing rural populations and constrained employment opportunities in the nonfarm sector have caused subdivision of landholdings in India to the extent that these cannot provide an adequate livelihood to a majority of farm households. With this view, this study was undertaken to explore options for improving the outcomes of the farmers. In this context, crop diversification into high-value crops (HVCs) can be a possible strategy to improve livelihood. Using data from a nationally representative survey, we establish that households diversifying toward HVCs are less likely to be poor, the biggest impact being for smallholders. Furthermore, using continuous treatment matching, we establish the relationship between degree of diversification (share of area dedicated to HVC) and economic well-being of the farmers. Growers of HVCs need to allocate at least 50 percent of their area to these crops to escape poverty. Although the diversification effect on poverty is in general positive, it seems to wither after a threshold probably because of some operational constraints, such as capital on smaller farms and labor on larger ones.
Palabras clave
high-value agricultural products, land ownership, smallholders, livelihoods, off-farm employment, poverty