CROP DIVERSIFICATION : A SEARCH FOR AN ALTERNATIVE INCOME OF THE FARMERS IN THE STATE OF WEST BENGAL IN INDIA

Transcription

1 International Conference on Applied Economics ICOAE CROP DIVERSIFICATION : A SEARCH FOR AN ALTERNATIVE INCOME OF THE FARMERS IN THE STATE OF WEST BENGAL IN INDIA Ruma Bhattacharyya 1 Abstract South Asia is gradually diversifying its crop sector in favour of high value commodities, especially fruits, vegetables and spices. If carried out appropriately, diversification can be used as a tool to augment farm income, generate employment, alleviate poverty and conserve precious soil and water resources. In India in the state of West Bengal diversification in cropping pattern is a very recent phenomenon. It is basically a rice producing state which has achieved a very high level of productivity in paddy cultivation during the second phase of green revolution and is now the largest producer of rice in the country. Crop Diversification is expected to be able to contribute towards a higher nutrition level, poverty alleviation, employment generation, and sustainable natural resources management. This paper aims to understand the nature and magnitude of the extent of diversification that is taking place in the state of West Bengal in the recent years and explore the farmers cropping strategy and to identify the determinants of diversification. Key words: Diversification, High Value Crops 1. Introduction To meet the challenges of a globalising market in agriculture as well as the growing and changing needs of the population many countries in South East Asia have undertaken crop diversification to enhance productivity and cultivate high value crop with positive outcome. These countries are gradually diversifying their crop sector in favour of high value commodities, especially fruits, vegetables and spices. Diversification is taking place either through area augmentation or by crop substitution. If carried out appropriately, diversification can be used as a tool to augment farm income, generate employment, alleviate poverty and conserve precious soil and water resources. Studies by Pingali and Rosegrant (1995), and Ramesh Chand (1996) support this positive impact of diversification. Indian agriculture has been diversifying during the last two decades towards High-Value Commodities (HVCs) i.e., fruits, vegetables, milk, meat, and fish products. The pace has been accelerated during the decade of 1990s. HVCs account for a large share in the total value of agricultural production. Supply and demand side factors coupled with infrastructural development and innovative institutions drive these changes. India is a country of about one billion people. Due to the challenge of feeding our vast population and the experience of food shortages in the pre-independence era (prior to 1947), 'self reliance' in foodgrains has been the cornerstone of our policies in the last 50 years. Around 66 percent of the total cultivated area is under foodgrain crops (cereals and pulses). Concurrently, commercial agriculture developed for whatever reasons in the pre-independent phase also kept flourishing during the post independent period. Commercial agriculture not only catered to the domestic market but has also been one of the major earners of foreign exchange for the country. In the post independence period, in the sixties and the seventies the area of food grains increased substantially due partly to their yield advantages created by irrigation expansion and Green Revolution 2 technologies and partly to government policies pursued to encourage food production and eliminate food imports. As a result, there was a tendency towards cereal centered specialization. But, later when increased productivity of foodgrains, especially cereals, made it possible to allocate more area to other crops such as oilseeds with a severe supply shortage, the specialization tendency witnessed earlier has given room for overall crop diversification. Crop diversification in India is generally viewed as a shift from traditionally grown less remunerative crops to more remunerative crops. It is intended to give a wider choice in the production of a variety of crops in a given area so as to expand production related activities on various crops and also to lessen risk. West Bengal is a state in the eastern zone of India which has a wide range of physical variety and shares international borders with Bangladesh and Nepal. In West Bengal diversification in cropping pattern is a very recent phenomenon other than the case of plantation crop tea, from the pre-independence period. It is basically a rice producing state which has achieved a very high level of productivity in paddy cultivation during the eighties and nineties and is now the largest producer of rice in the country. However diversification towards high value crops is being considered as a way to increase the contribution of non-rice crops to output ratio to attain higher agricultural growth rates in the future. Besides enhancing growth it is felt that, diversification will also be able to contribute towards a higher nutrition level, poverty alleviation, employment generation, and sustainable natural resources management. This paper aims to understand the nature and magnitude of the extent of diversification that is taking place in the state of West Bengal in the recent years and explore the farmers cropping strategy. It also aims to identify the determinants of agricultural diversification in the state including higher income possibilities. A sound understanding about the patterns of agricultural diversification and the constraints it faces would help in crafting appropriate policies regarding institutional arrangements and creation of adequate infrastructure, which could benefit a large section of the marginal and small holders of the state. This paper is organized in the following manner. In the first section a general discussion is presented regarding the natural conditions of the state of West Bengal that are supportive to the cause of diversification and the existing opportunities that can be exploited for the purpose of development of an alternative source of revenue for the farmers of the state. The second section describes the sources of data and the methodology of work. Simpson diversity index, that is used in calculating the extent of diversity are discussed here. Also the functional form relating the determinant factors to the diversity index is explained here. In the next section a tabular analysis of the changing cropping pattern in the state is presented. Cropping pattern implies the proportion of area under different crops at a point of time and is governed by the law of comparative advantage in relation to agro-climatic conditions. A comparative study of the extent of diversification between India and some other Asian countries is made in the following section. The diversity indices are calculated both at the state level and the district level for West Bengal. These indices provide a clear idea about the changing trajectory of the agricultural sector of the state. There are different factors responsible for diversification in crops in the state. In the following section the factors and their effects on the degree of diversification is estimated by carrying out a regression analysis both at the state level and at the district level and also In conclusion a summary has been presented of the results obtained. 1 Ruma Bhattacharyya, Calcutta Girls College, Kolkata, India, bonrini@yahoo.co.in, Telephone (033) Green Revolution is the process of phenomenal increase in the productivity per acre in the field of agriculture in the wheat producing states of India, like Punjab and Haryana in the seventies due to the use of High Yielding Variety of seeds which in the later years spread to rice producing states also.

2 84 International Conference on Applied Economics ICOAE Scope of Diversification In this study the entire state of West Bengal has been taken into consideration which includes all her fifteen districts namely Darjeeling, Jalpaiguri, CoochBehar, Dinajpur, Malda, Murshidabad, Nadia, 24 Parganas, Hooghly, Howrah, Purulia, Midnapore, Bankura, Birbhum and Burdwan. Availability of resources such as land, water, labour, and sunlight are critical for crop diversification schemes. Fortunately, West Bengal is endowed with fertile alluvial soils and ecological diversity. It also enjoys strong sunshine during much of the year. Abundant water (rainfall and groundwater) is one of the most important resources for agricultural development in the state. Irrigation potential is substantial and labour is also abundant and relatively cheap. Land, however, is a constraint on diversification, at least in the short run. It is scarce, and practically no extra land is available for cropping. Therefore, any new cropping programme would have to be accommodated within the existing area. That is, crop diversification can take place only by crop substitution as there is hardly any scope for area augmentation. Land elevation and flooding. The principal determinant of the cropping pattern in West Bengal is land elevation. It affects the annual extent and duration of flooding, which in turn influence cropping calendars. About 71 per cent of the total cultivable area is in the highlands and medium highlands, where shallow flooding occurs. On these lands, two to three crops are grown. The remaining cultivable area is in the lowlands, where one or two crops are grown. In the lowlands, high-yielding variety boro paddy 3 is the major cropping pattern when irrigation is available during winter. Land use and cropping intensity are lower in the lowlands than in the highlands. With a few exceptions like Darjeeling and some blocks of Purulia, there are no significant regional distinctions in the distribution of land by elevation This means that for most of the state, there are no clear associations between regions and crop patterns based on land elevation. Soils. In West Bengal there are three broad categories of soil, namely flood plain soils, terrace soils, and hill soils. As these categories suggest, soil types are heavily influenced by the extent of flooding. The flood plain soils are the most common, and are formed from river deposits. Soil reactions are acid to alkaline, depending upon the origin and location. These soils are highly suitable to a wide variety of crops in winter but generally limited to rice production in summer, when they are highly susceptible to flooding. Climate. The major climatic characteristics that limit crop production are rainfall levels, the yearly variation in the onset and end of the monsoon, incidence of very heavy or erratic rainfall, flash and seasonal floods, and the incidence of cyclones and associated storm surges. The entire state has a tropical climate and receives rain during the summer monsoons. In the coastal districts, the rainy season is longer. Flash floods are most serious in valleys of the hill regions, while deep inundations of flood plain basins are common in the Malda, Murshidabad, North 24 Parganas regions, and the risk of cyclones and saline water surges is greatest in the coastal regions. Cyclones are particularly destructive to mango crop in April and May and to banana and papaya crops in October and November, and untimely heavy rain in February can damage potato and other winter vegetables. Regional Potential for Crop Specialization Natural factors provide little basis for crop differentiation by region given the relative homogeneity of State other than Darjeeling. With some exceptions in the coastal and Hill Tracts, most regions of the state have a variety of land elevations and soil characteristics which allow each to grow a diverse range of crops. In this environment, however, areas of crop specialization have emerged on the basis of differences of access to markets and services. Thus, areas with easy access to urban markets have specialized in highly perishable crops such as vegetables. Areas in the drier and less accessible regions such as the western part of the state have specialized in minor cereals, oilseeds, pulses, and other crops which require less irrigation and can survive the trip to the southern urban centres. These patterns suggest that specialization at the regional level will largely be determined by investments in infrastructure, support services and to a large extent change in demand pattern as well as prices of the products. Opportunities to Diversify Crops The issue of crop diversification, although considered in area terms, assumes significance in view of its effects on the supply-demand balance of main crops and crop groups. The rice and wheat-centered specialization, for instance, indicates an increase in the supply of wheat and rice but a reduced supply of coarse cereals. Since the demand for coarse cereals is declining and that for wheat and rice is increasing due to changes in the income pattern, the changes in their supply are actually necessary to achieve the required demand-supply balance. A similar line of argument can also be extended to other crops where in addition to domestic demand, international demand and supply also assume significance. 3. Data and Methodology 3.1 Sources of Data The study covers a period of eight years from to There are two obvious reasons for studying the span of this period. First, whatever diversification has taken place has been during the late nineties and secondly on account of availability of meaningful data from reliable sources regarding the high value crops. The hypothesis is that the gradual slowing down of the green revolution in terms of cereals and opening up of the economy is paving the way for diversification. This is also the period for which continuous data can be obtained for the high value crop production. The data for this study has been collected from different Government published sources. For India the study heavily relied on the national statistical bulletins of CMIE. Different volumes of Statistical Abstract published by the Bureau of Applied Economics and Statistics of Government of West Bengal has been the main source. Statistical Appendix of Economic Review of successive years published by the Government of West Bengal has been another major source. Other sources are Estimates of Area and Production of Principal crops in West Bengal, and various reports of surveys by the Government of West Bengal which includes Techno-Economic Feasibility Report on the Scope of Development of Horticulture in West Bengal and The Business Bounty---Annual Reports. 3.2 Methodology The nature of crop diversification is first examined through changes in allocation of land towards the cultivation of different crops grown over the year. Different diversity indices have been used to measure the degree of diversification taking place in the state. Inter crop variation in output is also considered over the period under consideration. Compound growth rates of area under high value crops are also calculated to show the trend of diversification. 3 Boro Paddy is a particular variety of winter paddy crop that requires proper irrigational facilities and sufficient fertiliser. It is widely cultivated in the state of West Bengal.

3 International Conference on Applied Economics ICOAE Diversity Index Diversification index is calculated for the state as well as the districts for the period of study. Diversification may be broadly defined as a shift of resources from low value agriculture to high value agriculture as indicated by Hayami and Otsuka (1992) or Vyas (1996). It can also be considered as a shift of resources from farm and non-farm activities or simply a larger mix of diverse and complementary activities within agriculture. There are different methods of measuring diversification. It can be examined with respect to farm production alone or it could include non-farm sources of income depending on the information available, the relationship between farm and non-farm income and the objectives of the study. Further, depending on data limitations, measurements of diversification in production can be examined using the variables: area (land area under production), net income (net revenue) and/or total income (production income). There are quite a few measures of diversification, important ones include Herfindal Index, Simpson Diversity Index, Ogive Index and Entropy Index. Properties of a diversification measure, however, will also need to reflect the nature of problem studied. Each method has some special features and some limitations. Considering the objective of this study of assessing the extent of diversity in crop the Simpson Diversity Index has been used. The Simpson Diversity Index measures the extent of diversity and is calculated as follows 2 DI = 1 - Σ P i (2.1) where P i = Proportionate area of the ith crop in the Gross Cropped Area The index ranges between 0 and 1. If there is specialisation then the index moves towards zero. In other words for P 2 i = 1 there will be complete specialization The Determinants The determinants of diversification from staple food to high value crop has been identified. Pingali and Rosergrant (1995) has shown evidence that diversification out of staple food was triggered by rapid technological change in agricultural production, improved rural infrastructure and diversification in food demand. These are broadly characterised as supply and demand side forces. The following model has been used to examine the determinants of diversification. DI = f (TECH, INFR,KNOW,DEMA) (2.2) where TECH includes a) fertiliser use per hectare b) proportion of irrigated area to gross cropped area INFR includes a) length of roads KNOW includes a) rural literacy b) prices of the crops DEMA includes a) rate of urbanization Different combinations of independent variables were tried to arrive at the best fit equations. The estimated values of the parameters provides indication towards the relative importance of each factor in the process of diversification. We start our analysis of diversification with a tabular analysis showing the shift in area as well as production of the different crops produced in the state. It is followed by a comparative study of the diversity indices and finally the regression results are presented which gives a broad idea of the factors affecting diversity in the state. 4. A tabular Analysis To examine the nature and speed of agricultural diversification in the state during the period to , production performance and area expansion of different crops was assessed. In terms of area while rice has lost almost 2% its output has increased by 12%. This implies that there has been a substantial increase in the yield of rice in the state and this confers with the theory of second green revolution. Even in case of wheat there has been a positive change both in case of area and in production. During the same period all the other major cereals have lost substantially either in area under cultivation or production. It is obvious from the area statistics that cereal sector is specialising in favour of rice only. This has been the effect of the increased productivity of the boro paddy which has brought about a revolution in rice cultivation in the state and has assured self sufficiency in food as well as increased the farmers return. Availability of improved and high yielding variety of seed, fertiliser and irrigation has induced this specialisation and replaced barley and maize. The increase in area coverage of pulses have been almost insignificant, about 2%, but its production has increased by 9% in the same period. Within the pulses sector also farmers have favoured the relatively high value ones like musur and mug 4. In case of oilseeds farmers of West Bengal have moved away considerably from the production of Linseed oil and concentrated instead in Mustard oil seed and Til. This indicates that the choice within the sectors are changing pattern and the farmers of the state are adopting high value crops even within the sectors and are actually moving towards specialisation in terms of major crops. However a new trend has also developed along with this and more and more area is being brought under cultivation of fruit and vegetables and flowers as well. A definite pattern of diversification is therefore setting in. Fruits and vegetables have shown very good performance during the period under consideration. Though the share of area under fruits is relatively very low in the state as compared to the major crops a substantially increasing trend is observed in area coverage in most of the fruit crops. Of the fruit crops grown in West Bengal Mango accounted for the bulk of the total area (36.57 per cent) under fruit crops followed by banana (17.46 per cent), and then other fruits (11.3 per cent) and Jackfruits (8.4 per cent). The maximum area under Mango is in Malda district followed by Murshidabad district. In case of Banana the largest producer is the district of Nadia followed by Hooghly. The share of area has gone up considerably in case of most of the fruits like other fruits group (455 per cent) 5, orange and other citrus fruits(196 per cent), banana (86 per cent), Guava (78 per cent) and Jackfruit (68 per cent). Production of fruits also have shown a remarkable increase during this period. In case of Sapeta, Litchi and Jackfruit the increase has been tremendous, amounting to 393 per cent, 266 per cent and 216 per cent repectively. Production of banana has gone up by 143 per cent and that of Guava and Orange and other citrus fruits by 130 per cent each. In case of Mango the increase in area has been quite less as compared to the rest of the fruits and is 11 per cent whereas the increase in production has been 52 per cent. This is true for all the fruit crops implying an increase in productivity along with an increase in share of area. 4 Musur and Mug are two typical varieties of pulses which has high consumption record in the state 5 The percentages are considerably high as the production of these crops in the years prior to the period of study was almost negligible

4 86 International Conference on Applied Economics ICOAE 2008 During the period to the status of vegetables have also remarkably improved both in acreage and in production by many folds. The cultivation of vegetables is an age old practice in this state but its increase in area and production is spectacular in the recent years. Vegetables are grown in the state in three distinct ways. A large number of farmers living in the rural areas grow vegetables in the homestead land for their home consumption only. The small holders in the rural and semi-urban areas grow different types of vegetables in different seasons of the year for their own consumption as well as for sale of their produce in nearby markets. Commercial cultivation is undertaken in a large scale for marketing of the produce to meet the requirement of the big towns, industrial areas and metropolis. The vegetable crops are also produced as a rotational crop in most of the districts. Area under vegetables on the whole went up by 51 % during this period. The major shift has been towards other vegetables group (694%) and onions (236%) which is quite in line with the changing demand pattern occurring due to rapid urbanisation in tastes and flavours both within the state and the rest of the country. Ladies Finger (52%), Cauliflower (44%) and Brinjal (37%) are the vegetables which have gained considerably in terms of area. In terms of production however it is Cauliflower and Cabbage which have increased mostly, (217%) and (213%) respectively. The increase in acreage in vegetables along with its productivity have been more prominent in the last three years of the study. The district data shows an interesting picture. The rise in share of area of fruits has been considerably high in most of the districts, highest of all being in 24 Parganas. In most of the districts there was very little area under fruit crops during and so the increase in area is quite dramatic in the eight years under study. Area under mango went up hugely in 24 Parganas (1101%), Dinajpur(99%), Nadia (73%) and Birbhum (71%) and relatively increased in the other districts like Bankura (50%), Howrah (48%), Jalpaiguri (45%) and Cooch Behar (42%). In Darjeeling while other fruits (-38%) lost in terms of area, Litchi (685%) increased substantially. In Jalpaiguri the fruits Sapeta (435%) and Guava (168%) are the major gainers in terms of area. In Cooch Behar once again it is Sapeta (73%), Litchi (64%) and Guava (60%) who are the major gainers while in Dinajpur, Papaya(181%), Litchi(168%) and Banana(134%) have emerged as the gainers. The only fruit crop that has lost in area during this period is Pineapple especially in the districts Cooch Behar and Dinajpur. In case of vegetables in the districts once again there is an area shift towards the high value vegetables over the relatively low valued ones. That is why gourd and sweet potato are loosing out to cauliflower, cabbage and tomato and others. The following table shows the trend in increase in area under different fruits and vegetables cultivated in the state of West Bengal. Flowers on the other hand are gaining ground very strongly, though it has not spread into all the districts. The acreage under floricultural crops have trebled within a span of a little more than eight years. Floriculture is seen to develop in three major regions of the state comprising of Darjeeling, Jalpaiguri in the north, Midnapore and Hooghly in South and Nadia and Howrah in the Presidency Division. As many as 184 varieties of flowers and some ornamentals are grown in the state. Some of them like Rose, Tuberose, Marigold, Jasmine, Gladioli, Chrysanthemum, Marigold and other ornamental flowers has gained commercial status in the recent years. The major districts which have stated shifting towards flower cultivation on a commercial basis are Darjeeling, Midnapore, Howrah, 24 Parganas and Nadia. In other districts mostly there are very scattered acreage to meet local demands only and production is very marginal.

5 International Conference on Applied Economics ICOAE Table 1. Compound Growth Rates (%) Of Area Of High Value Crops Of Districts Of West Bengal Between The Period To Crops Dar% Jal% Cooc h% Dinaj % Mal% Mur% Nad% 24P% Hoog% How % Pur % Midna % Ban% Bir % Bur% Tomato Onion Cabbage Garden Peas Ladies Finger Brinjal Beans Cauliflower Cucurbit Radish Other Vegs Ginger Turmeric Spices Mango Jackfruit Pineapple Orange etc Banana Guava Lichi Sapeta Papaya Coconut Cashewnut Other fruits Rose Tube Rose Gladiolis Crysanthemum Marigold Jasmine Seasonal Fl Others Source: Computed from ----Estimates of Area and Production of Different Crops, Government of West Bengal, and CMIE Reports (various issues) Even in the districts growing flower the acreage has increased mostly in the new millenium. The major gainers here are Jasmine, Tube rose and Chrysanthemum. The production of flowers also went up to thousand tonnes of loose flowers and crore spikes of cut flowers in the year The changing structure of fruits and vegetables production in West Bengal vis-à-vis India during this period is represented in the following table. As per the estimates of in regard to share of different states in acreage and production of fruits and vegetables West Bengal stands eleventh and ninth in terms of fruits and second in both area and production for vegetables(cmie). This fact shows that West Bengal accounted for bulk of the nation s total output of vegetables. It is one of the major producer of Cabbage, Cauliflower and Brinjal in the country. The lion s share of vegetables however comes from Uttar Pradesh. The other states are Bihar Orissa and Karnataka. In case of vegetables the share of Onion, Ladies Finger, Chillie and Brinjal has gone up most during the period under consideration. During this period it is evident that the status of fruits have remarkably improved in terms of both acreage and production by many folds. The production of major fruits recorded a gradual increase in share of area and it is observed most prominently in case of production of Litchi followed by Papaya. While Mango, Orange including other citrus fruits, and banana recorded an increase in its share with respect to all India production, the share of Pineapple has remained fixed. Considering the fact that these crops are mostly nondurable easily perishable product the post harvest factors play a deciding role in the choice of the farmer.. However both in case of fruits as well as in case of vegetables the increase in not so noteworthy. The reason behind this may be because of the fact that the farmers of West Bengal are recently moving towards these kind of high value crops and the post harvest infrastructure or the support system has not reached a state where the farmers would be assured of their return.

6 88 International Conference on Applied Economics ICOAE 2008 Table 2. Changing Share of Production of Fruits and Vegetables of West Bengal with respect to India % Share of WB in Production Items Tomato Onion Cabbage Ladies Finger Chilli Brinjal Cauliflower Sweet Potato Mango Pineapple Orange (other citrus) Banana Lichi Papaya Source : Computed from data obtained from Centre for Monitoring Indian Economy,Reports (various issues) In the next section we present a detailed analysis of the degree of diversification that is taking place in the agricultural sector of the state. Simpson Diversity Index is calculated for some Asian countries including India as well as for the districts and the state of West Bengal as a whole and a comparative study is made to identify the nature and trend of diversification towards high value crops amongst the farmers of the state. 5. Diversity Indices And Patterns Of Agricultural Diversification Agriculture is the mainstay of economic growth in South East Asia. A large proportion of population depends on agriculture for income, employment and food security. South Asia is diverse in climate, soils and other agro-ecological features. Diversity permits South Asian farmers to cultivate variety of crops. The Simpson Diversity Index (SID) of South Asia was 0.64 in the triennium ending , up from 0.59 in the triennium This shows that South Asia is gradually diversifying its crop sector towards high value commodities especially fruits and vegetables. The following table shows the extent of diversification of the South Asian countries Table 3. Extent of Diversification in South Asian Countries Country Simpson Index of Diversity in Triennium ending Bangladesh Bhutan India Maldives Nepal Pakistan Sri Lanka South Asia Source: Computed from data derived from FAOSTAT Among these South Asian countries Bangladesh and Bhutan shows a trend of moving away from diversification and Maldives, though shows a high level of diversification has maintained the same position since Bangladesh has actually specialised in rice during this period and Bhutan is trying to attain self-sufficiency in foodgrains and therefore concentrating more towards rice and wheat. Nepal and Pakistan are the two countries that are trying to diversify its agricultural sector in the recent years. In Nepal in the recent years crop diversification has become an important strategy for overall agriculture development. Commodities having higher comparative advantage and higher marketability are being grown on a commercial basis. In order to encourage commercialization, the Government is trying to develop the production pocket concept and farmers group approach, commercial outlook, and innovative ideas as encouraged by the Agriculture Prospective Plan. The Government is also trying to change the existing agricultural system drastically by changing the mind set of the farmers encouraging them to develop the mentality of entrepreneurship and learn a trading mechanism, so that their agricultural system is guided by commercialization. Nepal has different agro-ecological zones with a variety of climates ranging from tropical in the Terai to alpine in the high mountains. Besides the climatic factors, the farmers need options on high value exportable commodities. Crop diversification has helped to meet this type of need of the farmers. Previously, the farmers used to concentrate on a few major crops such as rice, maize and wheat. A considerable area in the hills and high hills was left fallow because of the fact that there was no diversification in practice. With the increase of population traditional agriculture could not meet the food requirements and therefore diversification was introduced. Crop intensity was thereby increased and annual per unit production was raised. Sri Lanka has become nearly self-sufficient in rice production. However, cultivation of rice in well drained soils in major irrigation schemes was considered to be a waste of irrigation water due to high percolation rates observed. Cultivation of non-paddy crops in the well drained soils was thought to be helpful in paving the way for crop diversification in major irrigation schemes. Diversification is therefore being pursued by crop substitution. The cost of rice production increased tremendously during the past few decades and consequently rice production became uneconomical in marginal rice lands, especially in the wet part of the island. Therefore, more lands became available for crop diversification. The potential areas of crop diversification in the island are found in different ecological settings. Cultivated crops and cropping patterns adopted varied with the agro-ecological conditions. The diversification patterns in rice lands in the intermediate

7 International Conference on Applied Economics ICOAE zone of the up country and mid country have been successfully established. Diversification in major irrigation schemes in rice lands of the low country wet zone is also operated with limited success. Crop diversification in India is generally viewed as a shift from traditionally grown less remunerative crops to more remunerative crops. It is intended to give a wider choice in the production of a variety of crops in a given area so as to expand production related activities on various crops and also to lessen risk. The crop shift initially took place due to governmental policies and thrust on some crops over a given time, for example creation of the Technology Mission on Oilseeds (TMO) to give thrust on oilseeds production as a national need for the country's requirement for less dependency on imports. There is also a significant area shift within oilseed crops. For instance, while the area shares of rapeseed and mustard, sunflower and soybean are increasing steadily, those of sesamum, linseed and nigerseed are declining gradually. Thus, the area shift has favoured only a sub-sector within the oilseed sector partly because of constant changes in the comparative advantage of different oilseeds and partly because of the impact of changing consumers' preferences on the relative demand of oilseeds. Market infrastructure development and certain other price related supports also induced crop shift. Low volume high-value crops like spices also aided in crop diversification. Higher profitability and also the resilience/stability in production induced crop diversification, for example sugar cane replacing rice and wheat. Crop diversification and also the growing of large number of crops are being practiced in rain fed lands to reduce the risk factor of crop failures due to drought or less rains. Crop substitution and shift are also taking place in the areas with distinct soil problems. For example, the growing of rice in high water table areas replacing oilseeds, pulses and cotton; promotion of soybean in place of sorghum in medium and deep black soils etc. The Simpson Diversity Index of India in is The SID has slowly moved from 0.61 in TE to 0.69 in TE The trend reflects that non-food crops is gradually replacing food crops. The Simpson Diversity Index for the state of West Bengal for the period under consideration is presented in the following table. Table 4: Extent Of Diversification In The Period To In West Bengal Year SID In terms of diversification West Bengal is lagging far behind the country figure. The agriculture of the state is still food based concentrating mostly on rice and hence the extent of diversification is relatively low 0.59 in as compared to India 0.69 in the same year. The humid and high rainfall makes cultivation of rice more favourable in this region as a result the cropping pattern in the state in terms of allocation of acreage is still skewed towards foodgrains, mainly rice. However during the span of the last eight to ten years some high value crops have emerged as prominent product of the state and it can be assumed that the state itself is moving towards diversification albeit at a very slow rate. The Simpson Diversity index has moved up from 0.52 in to 0.59 in implying a gradual shift in cropping pattern. Production of fruits and vegetables is picking up momentum and horticulture is becoming a new option which is being taken up by farmers of quite a few districts. Most of this production is taking place through crop substitution as there is hardly any scope of area augmentation in the state without impeding the ecological balance. Despite the fact that the rate of diversification is slow, availability of better technology and the scope of exporting horticulture products as well as other high value crops is gradually inducing the farmers of the state to diversify. No country grows such a wide range of fruits, vegetables, and flowers and in such abundance as India and yet it has no record worth mentioning in horticultural exports. The rich variety when processed and marketed, can help the state as well as the country take care of the health needs of its population besides being major export commodities. The extent of diversification in the districts of West Bengal is presented in the following table. Table 5 shows that the one district that has been diversifying its agriculture the most is Darjeeling. The main reason behind this high degree of diversification is that Darjeeling is the leading district producing plantation crop tea. It also has a well developed floriculture crop sector which not only caters to local and state markets but brings in revenue through export. Table 5 : Extent Of Diversification In The Period To In The Districts Of West Bengal, The Simpson Diversity Index Darjeeling Jalpaiguri Cooch Behar Dinajpur Parganas Nadia Howrah Midnapore Burdwan Birbhum Malda Bankura Murshidabad Hooghly Purulia Diversification is also taking place in the districts of 24 Parganas, Nadia, Howrah, Dinajpur, Birbhum, Malda and Bankura whose diversity indices have been gradually improving during this period of time. 24 Parganas, Nadia and Howrah are the districts where vegetable production has increased immensely. Along with this cultivation of flower is picking up speed in these districts. In Burdwan, Cooch Behar, Midnapore and Hooghly the rate of diversification has been very slow. The districts of Jalpaiguri and Murshidabad show a reverse trend which might be because of the fact that these two districts are concentrating in cultivation of rice in the recent years over

8 90 International Conference on Applied Economics ICOAE 2008 and above any other crops. Purulia is a strange case where the SID actually fluctuates because of fluctuation in rice cultivation and it is the district where agriculture has not really diversified at all. The shift effect which has been calculated in the process used by Monnikhof and Timmer 6 (1999) corroborates the results of the Simpson Diversity Index, that the degree of diversification taking place in the state is very slow. The following table gives the idea Table 6: The Shift Effect For The Period To Districts Shift Effect Districts Shift Effect Darjeeling 0.84 Burdwan 0.99 Jalpaiguri 0.98 Birbhum 0.99 Cooch Behar 0.98 Malda 0.95 Dinajpur 0.99 Bankura parganas 0.91 Murshidabad 0.97 Nadia 0.90 Hooghly 0.94 Howrah 0.96 Purulia 0.99 Midnapore These values once again prove that till now the cropping pattern in the state is skewed towards foodgrains and the major section of the area under cultivation falls under foodgrain crops, mainly rice. Moreover within the rice sector there has been a trend to concentrate in aman and boro crop. However districts like Darjeeling, 24 Parganas, Nadia, Howrah and Malda are on the path of diversification. Farmers of these districts are opting for high value crops and will perform better if the prevailing conditions encourage them to do so. In the next section we try to identify the facters which play decisive role in the choice of high value crops 6. Determinants Of Diversification 6.1 The Income Factor A comparative study of the input costs and returns of the small farms in the state of West Bengal are presented in the following table. The size of operational holdings of the small farms in the state vary from 0.45 hectares to 1.75 hectares. The choice of small farms for this study is intentional as they comprise of the major section of the rural structure of the state and it is the small farmers who are opting for high value crops. Costs considered in this study refer only to variable/operational costs including the imputed cost of inputs supplied by the farm and of the family labour and do not include the rental value of land, interest, depreciation, etc. The gross returns and the net returns for paddy (HYV) and some selected vegetable crops grown by the small farms of the state as a whole are separately presented. As expected, vegetables in general and brinjal and tomato, in particular, are highly profitable. Table 7: Annual Operational Costs and Returns from Farming Crops % of area under the Total Cost Total Return Net return crop Paddy (HYV) 81% Potato 16% Tomato 26% Brinjal 33% Leafy Vegetables 12% Source: Computed from data obtained from a) Farm Management & Cost of Cultivation b) Annual Report, Department of Food Processing Industry and Horticulture, Government of West Bengal Aside from income generation, diversification will, in most instances, increase employment for the rural poor. For example, von Braun (1995) quantifies that as a result of diversification to export vegetable production in Guatemala, employment increased by 45 percent on participants farms. It is expected that the benefits of increased employment opportunities are not only substantial but are distributed across a broad spectrum of the economy and thus are to a large extent pro-poor. Ali and Abedullah (2002) demonstrated the potential for rural employment generation arising from diversification out of cereals to high-value commodities, such as vegetables, by comparing the labor intensity in both systems. Substantial employment opportunities are generated in seed and seedling production, precision land preparation, and the irrigation, harvesting, cleaning, grading, and packaging of high-value crops. It was estimated that a one-hectare shift of cereal to vegetables in one season generates more than one year round full-time employment (that is, the difference between cereals and vegetables was more than 220 working days per hectare). Joshi et al. (2002) also reported similar results. Therefore, cultivation of vegetables, unlike cereals/foodgrains, is labour intensive on the one hand and requires more skilled labour and continuous attention to individual plants at various stages of growth, on the other. With abundance of labour, especially family labour, cultivation of vegetable opens up meaningful employment opportunities for this section of agricultural labourers. Majority of small and marginal farmers cultivate mainly low value, subsistence crops. In the absence of adequate farm and non-farm employment opportunities, they are 6 Another method that has been used to measure the degree of diversification in agriculture is the one used by Van Ark Monnikhof and Timmer (1999) and is given by I it = m j= 1 S S T j t j m m T t ( Sj ) ( Sj) j= 1 j= Where S j stands for the share of area under a particular crop and T stands for the time period 0 and t stands for the end period. This measure gives the shift effect, the value varying between 0 and 1, the closer to 0 the value is more diversified is the sector.

9 International Conference on Applied Economics ICOAE also forced to live below poverty line. In other words, farmers can take advantage of production complementarities and supplementarities and thereby reap the benefits of synergism through appropriate choice of crop combinations. This also enables the farmers to maximize efficiency of resource use, through (i) multi dimensional use of limited land, (ii) multi dimensional use of time and (iii) intensive use of fixed family labour, involving integration of farm and non-farm activities It is also encouraging to note that the vegetables, almost without exception, use more organic manures than chemical fertilisers as compared to cereals and other crops. Apart from its income enhancing ability, vegetable growing, thus, helps preservation and management of soil fertility, promotes sustainability by protecting soils against degradation through continuous application of higher doses of chemical fertilizers, figures for which can easily be obtained from the agricultural censuses conducted by the state government. However farmers reveal that increased production, especially of the vegetables, often results in a fall in the prices below the level that cannot cover the cost of production. Perishability of these so-called high-value vegetables, lack of cold storage and other infrastructural facilities and absence of agro-processing industries have all added to the problems of the producers. At the top of all these constraints, public intervention is totally absent in vegetables marketing as in the case of cereals/foodgrains. Vegetables farmers are indeed at the mercy of the traders who employ exploitative tactics to keep the producer's price as low and consumer's price as high as possible and therefore are unable to reap the actual benefit of diversification. Hence it is imperative that the proper determinants be identified and steps taken so as to allow the farmer to augment their income through cultivation of high value crop. 6.2 The Other Determinants To examine the forces, which are influencing the diversification in favour of high valued crops in the state a number of explanatory variables are studied. Diversification is influenced by a number of forces both from the supply side as well from the demand side. The variables considered for this study are fertiliser use per hectare, proportion of irrigated area to gross cropped area, length of roads, rural literacy, prices of the crops and rate of urbanization. The estimated double log equations of Generalised Least Square is given in the following table. Table 8: Coefficients of Regression in Favour of Horticulture Commodities of the state of West Bengal (Prob. values in parantheses) Parameters Standardized Panel Estimates Coefficients Beta (Constant) Fertiliser.255 (.0111).0119 (.0000) Price.073 (.0099).0165 (.0041) Irrigation (.0418).2264 (.2341) Urbanization.573 (.0186).1256 (.0076) Road.321 (.0281).2316 (.0102) Literacy (.0014).0297 (.0004) R Square R Square Adj F Statistics The regression results show that of the two technology variables, fertiliser use has a positive and significant effect on the degree of diversification. The coefficient of irrigation is however negative implying that crop diversification decreases with the increase of irrigated area. This means that crop diversification is mostly taking place in the rain fed area where the farmers are unable to cultivate the staple cereal rice, that requires abundance of water throughout, and have low resources but abundance of labour force. In a way Of the two knowledge variables price has a positive coefficient where as rural literacy has a negative sign. A higher price acts as an incentive for the farmers and so its coefficient is positive and significant. In fact Fruits and vegetables are highly profitable in comparison to cereals and other crops provided post cultivation support system is properly developed and there is a developed vertical linkage between production, marketing and also processing. The scope of cultivation of this kind of crops is also limited by high instability of their yields. The development of infrastructure therefore plays an important role in encouraging diversification. This is reflected in the positive and significant coefficient of road. Better road network actually induces diversification in favour of horticulture commodities as it implies lower transport cost and easy and quick disposal of commodities. It also reduces post harvest risk of incurring losses in case of perishable commodities. The demand side factor, urbanization, has a strong effect on the degree of diversification. With the changing food habits of the people the demand for high value crops like fruits and flowers, increases. In the recent years food consumption is shifting from cereals to non cereals in both rural and urban areas with a remarkable shift in favour of fruits. The panel estimates presented here are from a Random Effects model carried out by GLS method and is a better fit as per the Hausman test statistics. All the parameters of the model now have a positive impact on the degree of diversification, however the estimated coefficient of irrigation here is insignificant. Also there has been a reduction in the degree of impact of each of the factors. Of all the parameters road has the most significant effect on diversification. In other words proper infrastructure comes out to be the most important factor initiating diversification. Better market and road network means low marketing cost and easy and quick disposal of commodities. Urbanisation and literacy are the next important determinants in the process. As a consequence of urbanization, international migration, the new definition of food security is emphasizing the balanced diet, increasing reach and effectiveness of global media and marketing systems, and increasingly adventurous consumption habits, the structure of consumers demand for food is changing. For example, due to growing concerns with dietary health, the market for nontraditional fruits and vegetables has expanded rapidly over recent years, which will contribute to the improvement of the nutritionally balanced diet. These shifts in consumption patterns occur not only in industrialized countries but also in both urban and rural areas of developing countries. Structural changes in