CROP DIVERSIFICATION IN HIMACHAL PRADESH: EXTENT, IMPACT, DETERMINANTS AND CHALLENGES

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1 The Indian Journal of Labour Economics, Vol. 50, No. 4, 2007 CROP DIVERSIFICATION IN HIMACHAL PRADESH: EXTENT, IMPACT, DETERMINANTS AND CHALLENGES H.R. Sharma * The process of crop diversification in the State of Himachal Pradesh started with the introduction of apple in the fifties and the sixties and vegetable crops in the eighties. The cultivation of these crops has made a significant impact on levels of household income and employment. An analysis of factors that facilitated the process of crop diversification shows that the explicit consideration of mountain specificities in formulating developmental strategies that resulted in the creation of basic infrastructural facilities, availability of huge market in the neighbouring states, high degree of price responsiveness among farmers and the emergence of self-help institutions triggered the process of crop diversification. The results of regression analysis further show that access to rural credit and banks were important determinants of the process of crop diversification surrogated by area under non-food grain crops. I. INTRODUCTION The concept of diversification admits varying interpretations and connotes different meanings to different peoples. In a popular notion, it means a shift of resources from farm to non-farm activities, use of resources in a larger mix of diverse and complementary activities within agriculture, and a movement of resources from low- value crops to high-value crops. In the present context, the process of diversification is defined as a shift of the cultivated area from cereals and low-value crops to high-value cash crops, including fruits and vegetables. The diversification of agriculture towards selective high-value cash crops including fruits and vegetables, compatible with the comparative advantage of the region, is suggested as a viable solution to stabilise and raise farm incomes, increase employment opportunities for small and marginal farmers, boost exports and conserve and enhance the natural resource base, principally land and water (Vyas, 1996; Chand, 1996; Joshi et al., 2004; Rao, Birthal and Joshi, 2006; Sharma, 2005). In the context of Himachal Pradesh, crop diversification towards fruit and vegetable crops, especially in the districts of Shimla, Kullu, Solan, and Lahaul & Spiti, started in the late sixties, which gathered pace in the seventies and the eighties. The process of crop diversification gained further momentum in the late nineties and has now spread to many other areas in the low and mid-hill districts. The crop diversification has made a significant impact on income and employment of the small and marginal farmers. In fact, the state has emerged as a leading producer of fruits and off-season vegetables in the country and a model of agricultural development for other hill and mountainous states to follow. It is against this background that the present paper aims at exploring different aspects of the ongoing process of crop diversification in the state, both at macro and micro levels. More specifically, it analyses the patterns and processes of crop diversification at the state, district and household levels, examines the extent of participation of small and large farmers in the process of crop diversification, presents costs and returns from high-value crops, brings out the impact on household income of small and * Professor, Department of Agricultural Economics, CSK Himachal Pradesh Agricultural University, Palampur, Kangra, Himachal Pradesh.

2 690 THE INDIAN JOURNAL OF LABOUR ECONOMICS large farmers and throws bare the factors that triggered the whole process of crop diversification and the policy lessons that emerge from the state s experience. II. DATA AND METHODS The study is based both on secondary and primary data. The secondary data germane to the study have been collected from various publications and records from different government departments. The primary data have been collected from 225 farm households; 75 each from three developmental blocks, namely, Theog in Shimla, Sangrah in Sirmaur and Seraj in Mandi District. These three blocks have been chosen purposively to represent areas at different levels of crop diversification. The selection of farm households has been done following multistage simple random sampling procedure. The households have been categorised into small and large ones; those owning up to one hectare are small farmers while others have been designated as large. The data from sample households have been collected using well-structured and pretested schedule through a personal interview method for the agricultural year The data have been analysed using appropriate statistical tools. The averages and percentages have been computed to understand changes in different parameters like relative contribution of different sectors including agriculture towards state domestic product, cropping pattern, costs and returns, household income, and so on. The net returns from different high-value cash crops have been computed over different farm management cost concepts like A 1, A 2, B 1, B 2, C 1 and C 2. The linear regression model of the following type has been used to quantify the contribution of different factors towards the process of diversification, which has been measured with the proportion of gross cropped area under non-food grain crops. Y = a + b 1 X 1 + b 2 X 2 + b 3 X 3 + b 4 X U where a is constant, b i stands for regression coefficients, Y is the per cent area under high-value cash crops, X i stands forindependent variables. III. MACRO EVIDENCE Consistent with the overall pattern of structural changes associated with the process of economic development, the contribution of agriculture to the net state domestic product (NSDP) declined continuously; from around 35 per cent in to per cent in and further to per cent in (Table1). The contribution of primary sector as a whole during the period plummeted from around one-half to less than one-fourth. Consequently, the contribution of secondary and tertiary sectors increased respectively from per cent and per cent in to per cent and per cent in Further, Table 2 shows that compound growth rate of NSDP originating in agriculture has remained very low with the notable exceptions of the second half of the eighties, when the growth rate was 4.67 per cent and the more recent period from to when it recorded a growth rate of 5.67 per cent per annum. The NSDP registered a growth rate of 4.40 per cent in the first half of the nineties which since then has increased at rate of 7 to 7.5 per cent per annum. The growth rate in per capita income increased from 2.69 per cent per annum in the first half of the nineties to 5.74 per cent in the latter half. During the last five years, it registered an increase of 5.23 per cent per annum. In so far as changes in the process of crop diversification at the state levels are concerned, Table 3 shows that among food grain crops the share of area under rice declined steadily while that under maize and wheat registered a small but persistent increase. Among the non-food

3 CROP DIVERSIFICATION IN HIMACHAL PRADESH 691 Table 1 Sectoral Distribution of NSDP in Himachal Pradesh: to Sector Primary sector Agriculture and animal husbandry Forestry Fishing Mining and quarrying Secondary sector Tertiary sector All sectors NSDP at prices (Rs. in lakh) Per capita NSDP (Rs.) Source: Directorate of Economics and Statistics, Government of Himachal Pradesh, Shimla. Table 2 Compound Growth Rates of NSDP in Himachal Pradesh: to to to to to to Sector Primary sector * Agriculture and animal husbandry * Forestry * Fishing Mining and quarrying 9.68* 19.32* * 4.99 Secondary sector * 8.37* Tertiary sector 4.02* 10.11* 3.82* * Total NSDP * * 7.04* Per capita SDP * * 5.23* Note: * Denotes significance at 0.05 level of probability. Table 3 Temporal Changes in Cropping Pattern in Himachal Pradesh, to (per cent) Crops/year Rice Maize Wheat Barley Other cereals* Pulses Total food grains Fruits Vegetables Oilseeds Others Source: Annual Season and Crop Reports, Directorate of Land Records, Government of Himachal Pradesh, Shimla. grain crops, the area under fruits, potato and vegetables increased over the period by varying degrees; the area under fruits increased from 1.79 per cent during to 6.51 per cent during Table 4 further shows that while area under fruit crops increased from 26,307 hectares in the triennium ending to 1.87 lakh hectares in the triennium ending , fruit production increased from 48,000 tonnes to 6.28 lakh tonnes. The yield levels,

4 692 THE INDIAN JOURNAL OF LABOUR ECONOMICS Table 4 Trends in Area, Production and Yield of Fruits in Himachal Pradesh, to Triennium Area (000 ha) Production ( lakh tones) Yield (tonnes/ha) ending Apple Others Total Apple Others Total Apple Others Total (57.48) (42.42) (100) (63.41) (35.59) (100) (48.66) (51.34) (100) (85.88) (14.12) (100) (38.42) (61.58) (100) (86.44) (13.56) (100) (41.52) (58.48) (100) (82.89) (17.11) (100) (46.14) (53.59) (100) (80.91) (19.09) (100) Note: Figures in parentheses are percentages. Source: Horticultural Development in Himachal Pradesh: Facts and Figures at a Glance, Directorate of Horticulture, Government of Himachal Pradesh, Shimla. however, remained low and continued to oscillate, primarily because of erratic weather conditions. Further, among horticultural crops, apple remained the most important crop, accounting for more than two-fifths of the total area under fruit crops and around three-fourths of the total fruit production. Table 5 shows that there has been a significant increase in the area and production of vegetable crops during the last fifteen years. For example, while area under vegetable crops increased from 23,000 hectares in to 50,000 hectares in , the production rose from 365,000 tonnes to 10,00,000 tonnes registering compound growth rates of 5.49 per cent and 5.90 per cent per annum, respectively. The yield, however, increased marginally from about 16 tonnes per hectare in to 20 tonnes per hectare in , recording a growth rate of 1.32 per cent per annum. It, however, needs to be underlined that state-level averages, especially in the context of Himachal Pradesh, where there are marked variations in the agro-climatic conditions among different districts and even among different areas in the same district, do not reveal much about the regional patterns of crop diversification. For example, two tribal districts (Lahaul & Spiti and Kinnaur) and most of the areas of Shimla, Kullu and Chamba and some areas of Sirmaur, Solan and Mandi districts that fall in the temperate zone have potential to grow temperate fruits and vegetables and are actually experiencing rapid changes in their cropping patterns. It is, therefore, essential to examine changes in the area under different crops at a much more disaggregated level, preferably at the block level. However, due to data constraints, we look at the temporal changes in per cent share of area under non-food grain crops, which mostly include area under fruit and vegetable crops at the district level. The requisite information has been brought out in Table 6. The table shows that while there has been a significant increase in the extent of crop diversification in terms of per cent share of area under non-food grain crops in four districts, namely, Kullu, Shimla, Kinnaur and Lahaul & Spiti, the increase was less pronounced in three others (Solan, Sirmaur and Chamba). Further, in all these districts, the process of crop diversification did gather momentum in recent periods, especially after In remaining four districts (Kangra, Bilaspur, Hamirpur and Una), where most of the area falls in sub-tropical region, the per cent share of area under non-food grain crops stayed practically unchanged.

5 CROP DIVERSIFICATION IN HIMACHAL PRADESH 693 Table 5 Temporal Changes in Area, Production and Productivity of Vegetable Crops in Himachal Pradesh, to Area Per cent of Production Yield Year (hectares) gross cropped area (tonnes) (tonnes/ha) , ,65, , ,68, , ,74, , ,85, , ,00, , ,25, , ,40, , ,75, , ,00, , ,20, , ,80, , ,27, , ,85, , ,00, , , 00, Growth rate (% per annum) Source: Directorate of Agriculture, Government of Himachal Pradesh, Shimla. Table 6 Temporal Changes in the Area under Non-foodgrain Crops Across Districts in Himachal Pradesh: to (per cent) District Bilaspur Chamba Hamirpur Kangra Kinnaur Kullu Lahaul & Spiti Mandi Shimla Sirmaur Solan Una H. P Source: Annual Season and Crop Reports, Directorate of Land Records, Government of Himachal Pradesh, Shimla. IV. MICRO EVIDENCE The participation of small and large households in the process of crop diversification in terms of per cent of gross cropped area under high-value cash crops has been presented in Table 7. As may be seen from the table, the per cent of gross cropped area under these crops like cabbage, cauliflower, peas, potato, garlic and ginger is more than three-fourths both on small and large farms in Theog which represents areas where the process of crop diversification is in an advanced stage. In Sangrah, which surrogates those areas which are in the middle stages of the process of crop diversification, these crops together accounted for more than three-fifths

6 694 THE INDIAN JOURNAL OF LABOUR ECONOMICS Table 7 Cropping Pattern of Sample Households (per cent) Theog Sangrah Seraj Crop Small Large Small Large Small Large Tomato Colocasia Ginger Beans Capsicum Cabbage Cauliflower Garlic Peas Potato Total high-value crops Paddy 0.45 Maize Wheat Barley Total cereals All crops Gross cropped area (ha) Source: Field Survey, of the gross cropped area in case of small households and around three-fourths of the gross cropped area in case of large households. Like-wise, in Seraj, which represents those areas where the process of crop diversification is in initial stages, 46 per cent of the gross cropped area in case of small households and 64 per cent of the gross cropped area in respect of large households was devoted to the cultivation of high-value cash crops. The costs and returns from important crops have been computed separately for small and large farmers of all the three blocks. The results for Theog have been given in Table 8. The table shows that in Theog block small farmers realised maximum returns per hectare over cost D from cabbage (Rs. 112,663) followed by cauliflower (Rs. 50,673), potato (Rs. 40,473) and Peas (Rs. 36,806). The net returns per quintal were highest from peas (Rs. 487) followed by cabbage (Rs. 442) and cauliflower (Rs. 393). On large farms, the net returns per hectare were highest from cabbage (Rs. 70,998) followed by cauliflower (Rs. 67,536) and potato (Rs. 59,690). The maximum returns per quintal were realised from peas (Rs.517) and cauliflower (Rs.489). There was no neat pattern regarding returns per hectare on small and large farms. For example, while in case of cabbage and beans, the net returns were higher on small farms; in other crops like potato, peas and cauliflower these were higher on large farms. Nevertheless, for most of the crops except cabbage, the returns per quintal were higher on large farms. The higher returns per quintal on large farms compared to their small brethrens could be attributed to two factors. First, the large farmers have more easy access to latest technical know-how of these crops, especially the seeds. Second, large farmers because of their scale economies fare better than their small counterparts. For example, the small farmers suffer from numerous scale infirmities in terms of low amount of land, low-level of marketable surplus, etc. They are specially disadvantaged in the marketing of small amount of marketable surplus. The costs and returns from important crops in Sangrah block (Table 9) show that on small farms garlic, ginger and peas were the three most important crops that yielded the highest returns per hectare over cost D, the respective returns were Rs. 172,094, Rs. 59,334 and Rs.

7 Table 8 Cost and Returns from Important Crops, Theog Block (Rs/ha) Small farmers Large farmers Particular Potato Peas Cabbage C. flower Tomato Beans Potato Peas Cabbage C. flower Beans Cost A Cost A Cost B Cost B Cost C Cost C Cost D Cost A 1 (Rs/q) Cost C 2 (Rs/q) Net returns over Cost A Cost A Cost B Cost B Cost C Cost C Cost D Net returns (Rs/q) Source: Field Survey, CROP DIVERSIFICATION IN HIMACHAL PRADESH 695

8 696 THE INDIAN JOURNAL OF LABOUR ECONOMICS 43,380. The returns per quintal were higher for garlic and ginger followed by peas and potato. On large farms, the highest returns were obtained from garlic (Rs. 160,317). In comparison, the returns from ginger which is a traditional cash crop of the area were much lower (Rs. 48,514). The maximum net returns per quintal were also obtained from garlic (Rs. 1724). The returns from other crops like ginger, peas and potato were much lower (Rs. 606, Rs. 572, and Rs. 213, respectively). Among different farm categories, the pattern was mixed; while for garlic and ginger the net returns were higher on small farms, for potato these were higher on large farms. In case of Seraj (Table 10) the maximum returns on small farms were realised from cabbage (Rs.103,395) followed by tomato (Rs. 66,119), cauliflower (Rs. 58,040), peas (Rs. 40,455) and potato (Rs. 26,053). The highest returns per quintal were obtained from peas (Rs. 562), cabbage (Rs. 490) and tomato (Rs. 413). In case of large farms, the returns per hectare were maximum from cabbage (Rs. 84,275) followed by tomato (Rs. 80,348). The returns from potato and peas were much lower. The returns per quintal were higher from peas (Rs. 805) as compared to other crops. The effect of crop diversification on household income comes out clearly from the data presented in Table 11. It shows that the total income per household from all sources for both the small and large farmers was significantly higher in Theog, where the crop diversification was more extensive followed by Sangrah and Seraj. In terms of contribution of agriculture including horticulture, it accounted for more than three-fourths of the total household income in Theog and Sangrah and around two-thirds in Seraj. The per cent contribution of agricultural income in case of large households was significantly higher in Sangrah compared to their counterparts in Theog which could be attributed to the fact that garlic, which is a highly remunerative crop because of its longer durability compared to other crops, was more popular in Sangrah in comparison to Theog. V. FACILITATING FACTORS The present section discusses important factors at the macro level, which triggered the process of crop diversification in the state. These factors created enabling environment and encouraged farmers to switch over to the cultivation of high-value cash crops. First, the adoption of development strategy incorporating mountain specificities has been the single most important contributory factor in facilitating the whole process of crop diversification in the state. The planners accorded very high priority to create basic infrastructural facilities ab initio. The core infrastructural sectors like transport and communication, power and social services including education and health were allocated more than half of the total plan outlay in the first three five year plans. These heavy allocations created a reasonably good network of roads, schools and hospitals. The roads connected the interiors with the main towns, thus breaking the barriers of inaccessibility and isolation fostering the process of crop diversification. Second, a network of institutions was created that facilitated the process of crop diversification. The Himachal Pradesh Horticultural Produce Marketing and Processing Corporation (HPMC) was set up in 1971 with the assistance of World Bank to provide post-harvest infrastructural facilities such as link roads, cold storage, grading and packing facilities. The R & D institutions were set up to evolve new technologies and provide technical know-how and extension back up to the farmers. These research institutions provided the much needed technical back up to the cultivation of high-value cash crops by evolving suitable technologies in terms of breeding high-yielding varieties and advising farmers about varieties suited to the agro-climatic niches of their respective areas. The readily available technical know-how in these institutions and its transfer to the farmers through their network of regional research stations and government

9 CROP DIVERSIFICATION IN HIMACHAL PRADESH 697 Table 9 Cost and Returns from Important Crops, Sangrah Block (Rs/ha) Small farmers Large farmers Particular Potato Peas Ginger Garlic Potato Peas Garlic Ginger Cost A Cost A Cost B Cost B Cost C Cost C Cost D Cost A 1 (Rs./q) Cost C 2 (Rs./q) Net returns over Cost A Cost A Cost B Cost B Cost C Cost C Cost D Net returns (Rs./q) Source: Field Survey, Table 10 Cost and Returns from Important Crops, Seraj Block, (Rs/ha) Small farmers Large farmers Particulars Potato Peas Cabbage C.Flower Tomato Potato Peas Cabbage Tomato Cost A Cost A Cost B Cost B Cost C Cost C Cost D Cost A 1 (Rs./q) Cost C 2 (Rs./q) Net returns over Cost A Cost A Cost B Cost B Cost C Cost C Cost D Net returns (Rs./q) Source: Field Survey,

10 698 THE INDIAN JOURNAL OF LABOUR ECONOMICS Table 11 Level and Composition of Gross Household Income (per cent) Theog Sangrah Seraj Particulars Small Large Small Large Small Large Farm income Agriculture Horticulture Diary Sub Total Non-farm income Service Pension Business DPL Sub-Total Total (1,13,246) (2,53,782) (85,197) (1,91,110) (57,312) (1,80,460) Note: Figures in Parentheses indicate total household income per annum in rupees on the basis of which percentages have been calculated. Source: Field Survey, line departments played an important role in fueling the process of crop diversification. The implementation of New Policy on Seed Development (NPSD) by the Government of India since October 1988 made the import of good quality seeds much easier and hastened the spread of the cultivation of high-value cash crops. In addition, the support prices for different fruit crops have been introduced to insulate farmers from fluctuations in market prices. In more recent times, the market intervention scheme has been launched under which the prices of different fruit crops are fixed according to their grade and quality, and if prices happen to fall below these levels, the state government purchases the produce at fixed prices. Third, rapid spread of the cultivation of high-value cash crops has also been on account of very high degree of price responsiveness among the farmers. A number of factors have contributed towards this phenomenon. The farmers in Lahaul & Spiti, Shimla, Solan and Kullu districts have been traditionally growing cash crop like potato, and have remained in constant touch with markets outside the state. They have acquired a spirit of innovativeness, and are always ready to experiment with new crops/enterprises that promise high economic returns. For instance, when potato ceased to be a cash crop in the fifties and the early sixties due to dwindling yields and falling demand, they switched over to fruit cultivation mainly apple, and subsequently to offseason vegetables. Likewise, in recent times, when apple production is fluctuating and becoming uncertain because of erratic weather, farmers in some areas have started switching over to high- value cash crops like garlic and vegetables and even to more risky crops like floriculture (Sharma, 1996). Fourth, the availability of huge market at Delhi and in other cities in the neighbouring states of Punjab and Haryana has been yet another important contributory factor promoting the cultivation of fruits and vegetables in the state. The distance to Delhi can be covered in less than 24 hours practically from all the far-off parts of the state. This puts the state in an advantageous position compared to other mountainous regions including Jammu & Kashmir and northeastern states where lack of nearby markets has been one of the most limiting factors in switching over to the cultivation of high-value cash crops. As a matter of fact, accessibility of the mountain areas to final markets is a common theme underlying all success

11 CROP DIVERSIFICATION IN HIMACHAL PRADESH 699 stories of crop diversification, especially towards vegetable crops, in whole of the Hindu Kush Himalayan region (Nagpal, 1999). Fifth, the emergence of relatively efficient marketing system is also an important factor that has contributed towards the adoption and popularisation of high- value cash crops. In areas where the cultivation of off-season vegetables is years old, the local youths have formed some sort of informal groups to market their produce. In other areas a different marketing system has got evolved that is relatively less efficient. Under this, the growers sell their produce to traders at a price lower than that prevailing in the market. However, the formation of informal groups by the local youth has also started taking place in these areas. The State Marketing Board also played an important role in facilitating the marketing of high-value cash crops. It has opened marketing yards and established regulated markets where the small and marginal growers can sell their produce. There are around 45 regulated markets including marketing yards in the state, and more than 30 are located in the off-season vegetable producing districts. The Board has also established 35 modern wholesale and primary markets for agricultural produce with internet facilities. The state government has re-enacted the Agriculture Produce Market Committees Act as The Himachal Pradesh Agricultural and Horticultural Produce Marketing (Development and Regulation) Act 2005 to provide for the establishment of private market and yards, consumer and farmers market for direct sale and promotion of public private partnership in the management and development of markets in the state. Sixth, the emergence of self-help institutions like fruit growers associations/cooperatives in some of the producing regions is yet another factor that has played an important role in promoting the cultivation of high-value cash crops. These institutions help farmers, particularly the small and marginal ones, in different ways like procuring inputs and also in marketing their produce. The Lahaul Potato Growers Cooperative Society, the Fruit Growers Associations in Kullu and Shimla districts are notable examples of such cooperative endeavours by the farmers. As mentioned in the preceding section, there were number of macro factors that facilitated the process of crop diversification in the state. We now attempt to quantify contribution of some of these factors like the access to roads, banks, fertiliser consumptions, and so on using Table 12 Determinants of Crop Diversification: Results of Regression Analysis Dependent Constant Cropping Road length Bank branches R -2 F N variable intensity per 100 cropped per hectares of gross 1000 hectares cropped area of gross area Regression equation fitted to time series data Area under nonfood grain crops * (0.92) (4.87) (1.01) Regression equation fitted to a cross section of districts Area under nonfood grain crops *** 1.87* (1.67) (3.44) Regression equation fitted to a cross section of districts Area under nonfood grain crops * 0.73** (3.80) (2.84) Note: *, ** and *** denote level of significance at 1, 5 and 10 per cent levels, respectively. Figures in parentheses are t values.

12 700 THE INDIAN JOURNAL OF LABOUR ECONOMICS multiple regression model. The regression equations have been estimated using time series data at the state-level and cross section data of 12 districts for two points of time, i.e and The extent of crop diversification, measured by proportion of gross cropped area under non-food grain crops, was considered as independent variable and road length per 100 hectares of gross cropped area, number of bank branches per 1000 hectares of gross cropped area, annual average rainfall, consumption of fertilisers and cropping intensity as independent variables. To begin with, all variables were tried. And then the variables which turned out to be insignificant and did not have expected signs were dropped. The results of the regression analysis are given in Table 12. The results of the regression equation fitted to a time series data show that all the three factors, namely, cropping intensity, road length and number of bank branches had positive effect on the area under non-food grain crops, though the regression coefficient associated with road length alone was statistically significant. The results of regression equations fitted to a cross section of districts show that for both years road length and number of bank branches had positive and statistically significant effect on the area under non-food grain crops. VI. EMERGING CHALLENGES All is, however, not well with the ongoing process of crop diversification in the state. The socalled second generation problems have started looming large, more ostensibly in regions where the process of crop diversification has reached advanced stages. The practice of following the same cropping sequences over the years has caused loss of rich crop biodiversity and impacted adversely on soil fertility. The indiscriminate use of agro-chemicals has also started taking its toll on environment and human health, albeit at small scale. Some of the impending challenges that endanger the economic viability and ecological sustainability of these crops are discussed below. First, the cultivation of high-value cash crops, especially horticultural crops, has started showing increasing symptoms of unsustainability due to, inter alia, falling soil fertility, erratic weather conditions and the emergence of numerous insects, pests and diseases. The monocropping has caused the loss of micronutrients leading to deterioration in the overall soil health. The problem has been compounded due to the availability of spurious inputs, especially agrochemicals in the post-liberalisation regime. There has been a mushroom growth of private companies/traders supplying these inputs. However, there is as yet no regulatory mechanism to control the supply of spurious inputs. The high incidence of diseases has led to an excessive use of agro-chemicals that has given rise to a vicious cycle of falling productivity more use of chemicals further fall in productivity, and so on. This has not only escalated the production cost, but has also affected environment and bio-diversity adversely. Second, new outward looking open trade linked strategy and the launching of WTO had posed competition from cheaper imports. The cheaper imports of many commodities like baby corn, sericulture, honey and rabbit wool did cause a significant fall in their prices inflicting huge losses on the producers. The most notable example is hops whose production has decreased drastically due to huge fall in its price because of cheaper imports. This problem is likely to become more serious in times to come. Third, shifting/ erosion of micro niches/comparative advantages hitherto enjoyed by the state due to fast technological developments outside the producing regions has posed a new problem. In a fast changing technological regime, the mountainous regions, and for that matter any region, cannot take its comparative advantage as given forever. The experience shows that the comparative advantages are now acquired through new innovations. There are

13 CROP DIVERSIFICATION IN HIMACHAL PRADESH 701 instances to show that some areas in the mountainous regions have lost their comparative advantage due to technological changes outside. The process is likely to get accentuated with the intensification of the process of globalisation, which is bound to bring in new technologies, infrastructural and support systems (Jodha, 2000). Fourth, slow but perceptible change in weather and climate has posed yet another serious threat to the cultivation of some of the high-value cash crops. For example, during the last years, the cultivation of apple had shifted along the altitude, primarily because of inadequate precipitation in the form of snow and rains leading to non-fulfillment of the chilling requirement. This has obliged farmers in some areas like Kullu and Shimla districts to switch over to the cultivation of vegetable and other high-value crops. Fifth, the infrastructural facilities are increasingly proving to be inadequate to cope with the mounting pressure. The untapped irrigation potential in many vegetable growing areas is proving to be a major handicap. The markets yards do not have adequate space to house the produce brought for sale and also lack in modern facilities like internet. Not only that, some areas, with a potential to grow high-value cash crops, still remain inaccessible. Sixth, low and stagnant productivity levels coupled with high cost of production are other important aspects to worry. In case of apple, nearly one-fifth of the crop-bearing plantations in the state are over-aged which pull down the overall productivity. These need to be replaced by new dwarf, spur bearing and high- yielding plantations. VII. SUMMING UP The crop diversification in the state that started with the introduction of apple in the fifties and sixties and vegetable crops in the eighties has made a fairly rapid progress, especially in districts/areas enjoying favourable (temperate) agro-climatic conditions. The micro evidence from these areas shows that all categories of households, including small and marginal ones, have adopted the cultivation of high-value cash crops like garlic, ginger, cabbage, cauliflower, peas and tomato. The cultivation of these crops has made a significant impact on levels of household income and employment. An analysis of factors that facilitated the process of crop diversification showed that the explicit consideration of mountain specificities in formulating developmental strategies that resulted in the creation of basic infrastructural facilities, availability of huge market in the neighbouring states, high degree of price responsiveness among farmers and the emergence of self-help institutions were some of the important factors that triggered the process of crop diversification. The results of regression analysis further show that road length and number of bank branches were important determinants of area under non-food grain crops. The process of crop diversification in the state is, however, facing important challenges, which need to be addressed on priority to ensure ecological sustainability and economic viability of high-value cash crop agriculture. Inadequate infrastructure, lack of irrigation facilities, ageing apple plantation, changing climatic conditions, cheaper imports under post-wto liberalised regime, are some of the important constraints. The crop diversification experience of Himachal Pradesh throws up some important lessons. First, the process of crop diversification cannot be initiated but for the provision of a bundle of support services and infrastructural facilities, which require firm political commitment and state intervention. Second, the provision of basic infrastructural facilities, especially rural roads, markets and sound R & D system, are sine quo non for the initiating process of crop diversification for harnessing of local niches. Third, farmers should be supported to withstand the production and the market risks, especially in the beginning, by providing input subsides and other support services. These subsidies, however, can be withdrawn after they have learnt the art of doing the business. Fourth,

14 702 THE INDIAN JOURNAL OF LABOUR ECONOMICS in the current socio-political dispensations and open trade regime when the comparative advantage of any region cannot be taken for granted for ever, continuous technological back up in terms of newer production technology is extremely essential to ensure ecological sustainability and economic viability of the process of crop diversification. References Chand, Ramesh (1996), Ecological and Economic Impact of Horticultural Development in the Himalayas: Evidence from Himachal Pradesh, Economic and Political Weekly, Vol. XXXI, No. 26, pp. A Jodha, N. S. (2000), Globalisation and Fragile Mountain Environment: Policy Challenges and Choices, Mountain Research and Development, Vol. 20, No. 4, pp Joshi, P.K.; Gulati, Ashok; Birthal, P.S. and Tiwari, Laxmi (2004), Agriculture Diversification in South Asia: Patterns, Determinants and Policy Implications, Economic and Political Weekly, Vol. XXXIX, No. 24, pp Nagpal, Shantanu (1999), Food Security in Hindukush Himalaya, Economic and Political Weekly, Vol. XXXIV, No. 38, pp Rao, P.P.; Birthal, P.S. and Joshi, P.K. (2006), Diversification towards High Value Agriculture: Role of Urbanization and Infrastructure, Economic and Political Weekly, Vol. 41, No. 26. Sharma, H.R. (1996), Mountain Agricultural Development Processes and Sustainability: Micro level Evidence from Himachal Pradesh, Indian Himalayas, Discussion Paper Series, No. MFS 96/2, ICIMOD, Kathmandu, Nepal. (2005), Agricultural Development and Crop Diversification in Himachal Pradesh: Understanding the Patterns, Processes, Determinants and Lessons, Indian Journal of Agricultural Economics, Vol. 60, No. 1, pp Vyas, V. S. (1996), Diversification in Agriculture: Concept, Rationale and Approaches, Indian Journal of Agricultural Economics, Vol. 51, No. 4, pp