Agriculture Diversification in India

Various developing countries like India are shifting from traditional subsistence agriculture to commercial agriculture. Agriculture diversification in India play a vital role in diversifying and commercializing agriculture, adding value to agricultural produce, generate employment, enhance income of farmers, and create surplus for export of processed products. The result shows that consumption patterns are changing towards high value agricultural commodities from traditional agriculture and this is driving the process of agricultural diversification in India. The share of high value agriculture is increasing in the total value of agricultural output and exports. These commodities are the potential sources of future income. There is a need to suitable integrate production and marketing of high value com- modities through appropriate institutions. Market reform in institutions through required legal changes would go a way in boosting agricultural growth and promoting exports.


Introduction
Agricultural sector is the backbone of Indian economy. The structure of the Indian economy has achieved a remarkable change after independence. It has been transformed from traditional agriculture-based economy to high value agriculture. With the advent of the green revolution, India has transformed itself from a country of shortages to a land of surpluses. With the rapid growth of the economy, a shift is also being seen in the consumption pattern, from cereals to more varied and nutritious diet of fruit and vegetables, milk, fish, meat and poultry products. This has resulted in the development of diversification of Indian agriculture.
Many developing countries like India are moving from traditional subsistence agriculture to commercial agriculture. India has tremendous potential to unleash large scale process based farm activities to exploit the emerging global business opportunities. If agriculture could be diversified and the agri-business industry developed, it would boost rural incomes and have a major impact on employment and equitable income growth throughout the economy. Agriculture diversification can, therefore, play a vital role in diversifying and commercializing agriculture, adding value to agricultural produce, generate employment, enhance income of farmers, and create surplus for export of processed products.
Crop diversification 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. Crop diversification in India is generally viewed as a shift from traditionally grown less remunerative crops to more remunerative crops. The crop diversification also takes place due to governmental policies and thrust on some crops over a given time.
Agriculture diversification in favour of more competitive and high value commodities is considered an important strategy to overcome many of these emerging challenges. If carried out appropriately, diversification can be used as a tool to augment farm income generate employment, alleviate poverty and conservation resources [Von Braun, 1995;Pingali andRosegrant, 1995 andRyan andSpencer, 2001] The emerging trends of agriculture diversification and the constraints it faces would help in making appropriate policies regarding institutional arrangements and creation of suitable infrastructure, which could benefit a large mass small and marginal farmer. The main objectives of the present paper are; * To examine the emerging trends, nature and speed of agricultural diversification in India. * To assess the implications of agricultural diversification on food security, employment and export.
Rest of this paper is organized as follows: The next section discusses the methodological framework and data sources. This is followed by emerging trends of agriculture diversification in India and Implications of agriculture diversification. Conclusions and policy implications are made in the final section.

Methodology and Data Sources
The level of crop diversification effects the extent of economic development in the rural sector of India. It varies among regions because of varied agro-climatic conditions and resource endowment of the farms. The introduction of new-seed-fertliser technology has not only led to intensification of farming but also results in large scale diversification of crop farming and the benefits gradually accrued to the whole farming community (De, 2000).
There are few methods, which explain the diversification of the commodities or activities in a given time and space by a single quantitative indicator. These ones include: (I) Index of maximum proportion, (II) Herfindal Index, (III) Simpson Index, (IV) Ogive Index, (V) Entropy Index, (VI) Modified Entropy Index and (VII) Composite Entropy Index [Shiyani and Pandva, 1998;Kelley Ryan and Patel, 1995;Ramesh Chand, 1996].
Each method has some superiority and/or limitation over the other. The Simpson Index approach used in this study for considering our objectives of assessing the extent of diversity in crop sector, livestock, forestry and fisheries activity. This index provides a clear dispersion of commodities in a geographical region. It ranges between 0 and 1. If there exists complete specialization, the value of index moves towards zero. The index is easy to compute and in-
The Simpson index is given by; SID = 1 -P i 2 Where, SID  Simpson index of diversification Pi  Proportionate area (or value) of t th crop/live stock/ fisheries activity in the gross cropped area (or total value of output) The nature and patterns of diversification in India were examined by looking into temporal changes in area of different crops. It was also examined for different activities of agriculture sector i.e. value of crops, livestock, forestry and fisheries activities. To estimate the speed of diversification in favour of high value commodities, compound annual growth rate (CAGR) of area, production and yield of different crop were computed. In this study, diversification is measured at three Triennium Ending i.e. TE 1990-91, TE 1999-2000and 2006. For analytical convenience this period has been divided into two sub periods, namely, 1990/91 to 1999/2000 (first sub-period) and 2000/01 to 2006/07 (second sub-period).
A widely accepted exponential model, y = a b t e u , has been fitted to the time series data for estimating growth rates. The logarithmic form of this function is given by; Where, y  Dependent variable whose growth rate is to be estimated. t  Independent variable (Time) u  Disturbance or error term.
a and b are the parameters to be estimated from sample observations. The regression coefficient b is estimated by ordinary least squares (OLS) technique.
The Compound Average Growth Rate (CAGR) in % term is estimated as: i.e non-food crops.

Figure (a)
To examine the nature and speed of agricultural diversification, production performance and area expension of different commodities was assessed. The compound average growth rates (CAGR) of area, production and yield in India with respect of major commodity for the two subperiods: 1990/91 -1999/2000 and 2000/01 -2006/07 as also for the complete period are presented in Table 1.2.
The results showed that production performance of nonfood commodities was superior to the food commodities. Among foodgrain group, cereals performed better than coarse cereals. Cereals sector was specializing in favour of rice and wheat. It was because of overriding concerned for food self sufficiency in India. Rice and wheat replaced sorghum, millets and barley. The performance of pulses was better in second period as comparison to first period. Indian farm output has been diversifying away from cereals and towards high value crop after 1990s. The performance of high-value products, including fruits and vegetables, sugar and fiber crops, sugarcane, cotton, and tobacco, has significantly better than foodgrains crop in specially in second period of the reference. The results indicates that the speed of diversification is higher in second sub period as compared to first sub period of the study.   The potential for gains from food grain production are now limited, although more than 60 percent of gross cropped area is under cereals and pulses; their share of the value of total agricultural output is now less than 25 percent (TE 2006-07). High value commodities, particularly horticulture, livestock, and marine products, are highly expenditure elastic compared with grains. Given rising incomes and higher expenditure elasticity for these commodities, future growth is likely to come from the high value sector (Gulati and Ganguly, 2008). The share of high value commodities, including horticulture, livestock, and fisheries, in the total value of agricultural output has already increased from 40.2 percent in TE 1990-91 to 47.5 percent in TE 2006-07.

Implications of Agricultural Diversification
There are several benefits of agricultural diversification in India. These are shifting concomption pattern, improve food security, increase income, generating employment opportunity, reduce poverty, improving productivity, promoting exports etc. In this section the present study have assessed implication of diversification on foolwing aspect; · Improving Food Security · Generating Employment Oppertunities · Promoting Export

Food Security
Food security is the important aspect of agricultural diversification in the context of India. Increasing in production of foodgrains ia major challenge, when population and incomes are rising, and natural resources degrading. The shift of food crops to non-food crop portfollio may lead to food insecurity. The crop substitution was also taking place, which was diverting area in favour of high yielding cereals from low yielding inferior cereals.
The per capita consumption pattern of food items in India with respect rural and urban areas of various National Sample Survey Organisation (NSSO) rounds are present in Table 1.4. The production trends reveals that the per capita daily availability of foodgrains has increased during the study period.

Sources: NSSO Survey records
Given sustained increases in per capita incomes of about 4 percent per year during the past two decades, consumption patterns in India are changing away from cereals to high-value agricultural products. The results showed that per capita consumption of cereals from 1993-94 to 2006-07 have marginal increased from Rs.70 to Rs.116 per month in rural areas and from Rs.65 to Rs.120 in urban areas. The consumption of fruits, vegetables, milk and milk product , meat and meat product, eggs, and fish have rapidly increased in urban areas as weel as rural areas over the study period. Similar changes occurred in urban diets. These dramatic changes indicate a structural shift in Indian diets.

Employment
Employment generation in rural areas is the tuff task. Now is a question that, can agricultural diversification help in generate additional employment opportunities in rural areas? Some information was collated on average labour use in cereal, non-cereal and vegetables and presented in Table 1.5. This table showed that labour used for cultivation of vegetables is sustaintialy higher than cereals. Area shift from cereals to vegetables would generate additional employment in rural areas. So we can say that high-value agricultural products have higher employment elasticity.

ReseaRch PaPeR
Exports International trade of India in high-value food products has expanded enormously over the last decades, fueled by changing consumer tastes and advances in production. The performance of agriculture and allied product exports in India are given in Table 1.6.
The results showed that share agricultural exports in India decline at 12.66 per cent in second sub period, as against 18.56 per cent during first sub period. The share of foodgrains crops is very lower in agriculture exports i. e. around 12 per cent. A large share of agriculture export was contributed by diversification of crop and livestock sector. It was noted that diversification of agriculture commodities has promoted export of many non-traditional items. The progress of high value agriculture items during the Reference period was quit impresive. This implies that agriculture diversification can substantially contribute to export provided a congenial environment trough infrastrure development and institutional innovation is created.

Conclusions
The overall analysis indicate that India is moving from traditional subsistence agriculture to high value agriculture. Agriculture diversification in India play a vital role in diversifying and commercializing agriculture, adding value to agricultural produce, generate employment, enhance income of farmers, and create surplus for export of processed products. The result shows that consumption patterns are changing towards high value agricultural commodities from traditional agriculture and this is driving the process of agricultural diversification in India.
Consumption patterns are changing towards high value agricultural commodities and this is driving the process of agricultural diversification in India. The share of high value agriculture is increasing in the total value of agricultural output and these commodities being highly expenditure elastic are the potential sources of future income. This de-mand led phenomenon can help achieve many strides for the agricultural sector in India, provided policy can look beyond farming and better integrate production agriculture with other components of the agri-structure.
The present study also highlighted the implications of agriculture diversification on food security; generate employment and earnings form exports. The results showed that food security was not so adversely affected as a consequence of agricultural diversification. Similarly the high value crops have substantial potential for generating employment opportunities. Most of the high value crops are high labour requirement crops. The high value commodities have also witness good performance in the international trades. The structure of India's agricultural exports has been gradually changing in favour of high-value food products (horticultural and animal foods), international food safety and quality standards are becoming stringent. Their compliance will be a key to the growth of exports of high-value food products. Thus, appropriate quality testing and certification procedures will have to be put in place.