International Conference on Applied Economics – ICOAE 2008                                                                ...
84                                                                                   International Conference on Applied E...
International Conference on Applied Economics – ICOAE 2008                                                                ...
86                                                                          International Conference on Applied Economics ...
International Conference on Applied Economics – ICOAE 2008                                                                ...
88                                                                            International Conference on Applied Economic...
International Conference on Applied Economics – ICOAE 2008                                                                ...
90                                                                                 International Conference on Applied Eco...
International Conference on Applied Economics – ICOAE 2008                                                                ...
92                                                                          International Conference on Applied Economics ...
International Conference on Applied Economics – ICOAE 2008                                                                ...
94                                                                         International Conference on Applied Economics –...
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  1. 1. International Conference on Applied Economics – ICOAE 2008 83 CROP DIVERSIFICATION : A SEARCH FOR AN ALTERNATIVE INCOME OF THE FARMERS IN THE STATE OF WEST BENGAL IN INDIA Ruma Bhattacharyya1 AbstractSouth Asia is gradually diversifying its crop sector in favour of high value commodities, especially fruits, vegetables and spices. If carried outappropriately, diversification can be used as a tool to augment farm income, generate employment, alleviate poverty and conserve precious soil and waterresources. In India in the state of West Bengal diversification in cropping pattern is a very recent phenomenon. It is basically a rice producing state whichhas 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 inthe country. Crop Diversification is expected to be able to contribute towards a higher nutrition level, poverty alleviation, employment generation, andsustainable natural resources management. This paper aims to understand the nature and magnitude of the extent of diversification that is taking place inthe 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 Crops1. Introduction To meet the challenges of a globalising market in agriculture as well as the growing and changing needs of the population manycountries in South East Asia have undertaken crop diversification to enhance productivity and cultivate high value crop with positiveoutcome. These countries are gradually diversifying their crop sector in favour of high value commodities, especially fruits, vegetablesand 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 andwater 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 totalvalue of agricultural production. Supply and demand side factors coupled with infrastructural development and innovative institutionsdrive these changes. India is a country of about one billion people. Due to the challenge of feeding our vast population and theexperience of food shortages in the pre-independence era (prior to 1947), self reliance in foodgrains has been the cornerstone of ourpolicies 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 independentperiod. Commercial agriculture not only catered to the domestic market but has also been one of the major earners of foreign exchangefor the country. In the post independence period, in the sixties and the seventies the area of food grains increased substantially due partlyto their yield advantages created by irrigation expansion and Green Revolution2 technologies and partly to government policies pursuedto 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 oilseedswith a severe supply shortage, the specialization tendency witnessed earlier has given room for overall crop diversification. Cropdiversification in India is generally viewed as a shift from traditionally grown less remunerative crops to more remunerative crops. It isintended to give a wider choice in the production of a variety of crops in a given area so as to expand production related activities onvarious 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 withBangladesh and Nepal. In West Bengal diversification in cropping pattern is a very recent phenomenon other than the case of plantationcrop tea, from the pre-independence period. It is basically a rice producing state which has achieved a very high level of productivity inpaddy cultivation during the eighties and nineties and is now the largest producer of rice in the country. However diversification towardshigh value crops is being considered as a way to increase the contribution of non-rice crops to output ratio to attain higher agriculturalgrowth rates in the future. Besides enhancing growth it is felt that, diversification will also be able to contribute towards a highernutrition level, poverty alleviation, employment generation, and sustainable natural resources management. This paper aims tounderstand the nature and magnitude of the extent of diversification that is taking place in the state of West Bengal in the recent yearsand explore the farmers’ cropping strategy. It also aims to identify the determinants of agricultural diversification in the state includinghigher income possibilities. A sound understanding about the patterns of agricultural diversification and the constraints it faces wouldhelp in crafting appropriate policies regarding institutional arrangements and creation of adequate infrastructure, which could benefit alarge 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 ofthe state of West Bengal that are supportive to the cause of diversification and the existing opportunities that can be exploited for thepurpose of development of an alternative source of revenue for the farmers of the state. The second section describes the sources of dataand the methodology of work. Simpson diversity index, that is used in calculating the extent of diversity are discussed here. Also thefunctional form relating the determinant factors to the diversity index is explained here. In the next section a tabular analysis of thechanging cropping pattern in the state is presented. Cropping pattern implies the proportion of area under different crops at a point oftime and is governed by the law of comparative advantage in relation to agro-climatic conditions. A comparative study of the extent ofdiversification between India and some other Asian countries is made in the following section. The diversity indices are calculated bothat the state level and the district level for West Bengal. These indices provide a clear idea about the changing trajectory of the agriculturalsector of the state. There are different factors responsible for diversification in crops in the state. In the following section the factors andtheir effects on the degree of diversification is estimated by carrying out a regression analysis both at the state level and at the districtlevel and also In conclusion a summary has been presented of the results obtained.1 Ruma Bhattacharyya, Calcutta Girls’ College, Kolkata, India, E-mail , Telephone (033) 2668 16802 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, likePunjab 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. 2. 84 International Conference on Applied Economics – ICOAE 20082. Scope of Diversification In this study the entire state of West Bengal has been taken into consideration which includes all her fifteen districts namelyDarjeeling, 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 diversificationschemes. Fortunately, West Bengal is endowed with fertile alluvial soils and ecological diversity. It also enjoys strong sunshine duringmuch of the year. Abundant water (rainfall and groundwater) is one of the most important resources for agricultural development in thestate. 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 programmewould have to be accommodated within the existing area. That is, crop diversification can take place only by crop substitution as there ishardly any scope for area augmentation. Land elevation and flooding. The principal determinant of the cropping pattern in West Bengal is land elevation. It affects theannual extent and duration of flooding, which in turn influence cropping calendars. About 71 per cent of the total cultivable area is in thehighlands and medium highlands, where shallow flooding occurs. On these lands, two to three crops are grown. The remainingcultivable area is in the lowlands, where one or two crops are grown. In the lowlands, high-yielding variety boro paddy3 is the majorcropping pattern when irrigation is available during winter. Land use and cropping intensity are lower in the lowlands than in thehighlands. With a few exceptions like Darjeeling and some blocks of Purulia, there are no significant regional distinctions in thedistribution of land by elevation This means that for most of the state, there are no clear associations between regions and crop patternsbased on land elevation. Soils. In West Bengal there are three broad categories of soil, namely flood plain soils, terrace soils, and hill soils. As thesecategories suggest, soil types are heavily influenced by the extent of flooding. The flood plain soils are the most common, and are formedfrom river deposits. Soil reactions are acid to alkaline, depending upon the origin and location. These soils are highly suitable to a widevariety 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 themonsoon, incidence of very heavy or erratic rainfall, flash and seasonal floods, and the incidence of cyclones and associated stormsurges. The entire state has a tropical climate and receives rain during the summer monsoons. In the coastal districts, the rainy season islonger. Flash floods are most serious in valleys of the hill regions, while deep inundations of flood plain basins are common in theMalda, 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, anduntimely 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 relativehomogeneity of State other than Darjeeling. With some exceptions in the coastal and Hill Tracts, most regions of the state have a varietyof land elevations and soil characteristics which allow each to grow a diverse range of crops. In this environment, however, areas of cropspecialization have emerged on the basis of differences of access to markets and services. Thus, areas with easy access to urban marketshave specialized in highly perishable crops such as vegetables. Areas in the drier and less accessible regions such as the western part ofthe state have specialized in minor cereals, oilseeds, pulses, and other crops which require less irrigation and can survive the trip to thesouthern urban centres. These patterns suggest that specialization at the regional level will largely be determined by investments ininfrastructure, 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 inview 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 isdeclining and that for wheat and rice is increasing due to changes in the income pattern, the changes in their supply are actually necessaryto achieve the required demand-supply balance. A similar line of argument can also be extended to other crops where in addition todomestic demand, international demand and supply also assume significance.3. Data and Methodology3.1 Sources of Data The study covers a period of eight years from 1997-98 to 2004-05. There are two obvious reasons for studying the span of thisperiod. First, whatever diversification has taken place has been during the late nineties and secondly on account of availability ofmeaningful data from reliable sources regarding the high value crops. The hypothesis is that the gradual slowing down of the greenrevolution in terms of cereals and opening up of the economy is paving the way for diversification. This is also the period for whichcontinuous data can be obtained for the high value crop production. The data for this study has been collected from different Governmentpublished sources. For India the study heavily relied on the national statistical bulletins of CMIE. Different volumes of StatisticalAbstract 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 majorsource. Other sources are Estimates of Area and Production of Principal crops in West Bengal, and various reports of surveys by theGovernment of West Bengal which includes Techno-Economic Feasibility Report on the Scope of Development of Horticulture in WestBengal 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 cropsgrown over the year. Different diversity indices have been used to measure the degree of diversification taking place in the state. Intercrop variation in output is also considered over the period under consideration. Compound growth rates of area under high value cropsare 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 thestate of West Bengal.
  3. 3. International Conference on Applied Economics – ICOAE 2008 853.2.1 Diversity Index Diversification index is calculated for the state as well as the districts for the period of study. Diversification may be broadly definedas 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 complementaryactivities within agriculture. There are different methods of measuring diversification. It can be examined with respect to farmproduction alone or it could include non-farm sources of income depending on the information available, the relationship between farmand non-farm income and the objectives of the study. Further, depending on data limitations, measurements of diversification inproduction 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 DiversityIndex, Ogive Index and Entropy Index. Properties of a diversification measure, however, will also need to reflect the nature of problemstudied. Each method has some special features and some limitations. Considering the objective of this study of assessing the extent ofdiversity in crop the Simpson Diversity Index has been used. The Simpson Diversity Index measures the extent of diversity and is calculated as followsDI = 1 - Σ Pi2 …(2.1)where Pi = 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 ∑Pi2 = 1 therewill be complete specialization.3.2.2 The Determinants The determinants of diversification from staple food to high value crop has been identified. Pingali and Rosergrant (1995) hasshown evidence that diversification out of staple food was triggered by rapid technological change in agricultural production, improvedrural infrastructure and diversification in food demand. These are broadly characterised as supply and demand side forces. The followingmodel has been used to examine the determinants of diversification.DI = f (TECH, INFR,KNOW,DEMA) …(2.2)whereTECH includes a) fertiliser use per hectare b) proportion of irrigated area to gross cropped areaINFR includes a) length of roadsKNOW includes a) rural literacy b) prices of the cropsDEMA includes a) rate of urbanization Different combinations of independent variables were tried to arrive at the best fit equations. The estimated values of the parametersprovides 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 cropsproduced in the state. It is followed by a comparative study of the diversity indices and finally the regression results are presented whichgives 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 1997-98 to 2004-05, productionperformance and area expansion of different crops was assessed. In terms of area while rice has lost almost 2% its output has increasedby 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 secondgreen revolution. Even in case of wheat there has been a positive change both in case of area and in production. During the same periodall the other major cereals have lost substantially either in area under cultivation or production. It is obvious from the area statistics thatcereal sector is specialising in favour of rice only. This has been the effect of the increased productivity of the boro paddy which hasbrought 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 andmaize. The increase in area coverage of pulses have been almost insignificant, about 2%, but its production has increased by 9% in thesame period. Within the pulses sector also farmers have favoured the relatively high value ones like musur and mug4. In case of oilseedsfarmers of West Bengal have moved away considerably from the production of Linseed oil and concentrated instead in Mustard oil seedand Til . This indicates that the choice within the sectors are changing pattern and the farmers of the state are adopting high value cropseven within the sectors and are actually moving towards specialisation in terms of major crops. However a new trend has also developedalong with this and more and more area is being brought under cultivation of fruit and vegetables and flowers as well. A definite patternof diversification is therefore setting in. Fruits and vegetables have shown very good performance during the period under consideration. Though the share of area under fruitsis relatively very low in the state as compared to the major crops a substantially increasing trend is observed in area coverage in most ofthe 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 cropsfollowed by banana (17.46 per cent), and then other fruits (11.3 per cent) and Jackfruits (8.4 per cent). The maximum area under Mangois in Malda district followed by Murshidabad district. In case of Banana the largest producer is the district of Nadia followed byHooghly. 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 othercitrus fruits(196 per cent), banana (86 per cent) , Guava (78 per cent) and Jackfruit (68 per cent). Production of fruits also have shown aremarkable increase during this period. In case of Sapeta, Litchi and Jackfruit the increase has been tremendous, amounting to 393 percent, 266 per cent and 216 per cent repectively. Production of banana has gone up by 143 per cent and that of Guava and Orange andother 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 andis 11 per cent whereas the increase in production has been 52 per cent. This is true for all the fruit crops implying an increase inproductivity 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 state5 The percentages are considerably high as the production of these crops in the years prior to the period of study was almost negligible
  4. 4. 86 International Conference on Applied Economics – ICOAE 2008 During the period 1997-98 to 2004-05 the status of vegetables have also remarkably improved both in acreage and in production bymany folds. The cultivation of vegetables is an age old practice in this state but its increase in area and production is spectacular in therecent years. Vegetables are grown in the state in three distinct ways. A large number of farmers living in the rural areas grow vegetablesin the homestead land for their home consumption only. The small holders in the rural and semi-urban areas grow different types ofvegetables in different seasons of the year for their own consumption as well as for sale of their produce in nearby markets. Commercialcultivation is undertaken in a large scale for marketing of the produce to meet the requirement of the big towns , industrial areas andmetropolis. The vegetable crops are also produced as a rotational crop in most of the districts. Area under vegetables on the whole wentup by 51 % during this period. The major shift has been towards other vegetables group (694%) and onions (236%) which is quite in linewith the changing demand pattern occurring due to rapid urbanisation in tastes and flavours both within the state and the rest of thecountry. 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. Theincrease 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 1997-98 and so the increasein 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%) andCooch Behar (42%). In Darjeeling while other fruits (-38%) lost in terms of area, Litchi (685%) increased substantially. In Jalpaigurithe 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 emergedas the gainers. The only fruit crop that has lost in area during this period is Pineapple especially in the districts Cooch Behar andDinajpur. In case of vegetables in the districts once again there is an area shift towards the high value vegetables over the relatively low valuedones. That is why gourd and sweet potato are loosing out to cauliflower, cabbage and tomato and others. The following table shows thetrend 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 underfloricultural crops have trebled within a span of a little more than eight years. Floriculture is seen to develop in three major regions of thestate comprising of Darjeeling, Jalpaiguri in the north, Midnapore and Hooghly in South and Nadia and Howrah in the PresidencyDivision. 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, 24Parganas and Nadia. In other districts mostly there are very scattered acreage to meet local demands only and production is verymarginal.
  5. 5. International Conference on Applied Economics – ICOAE 2008 87Table 1. Compound Growth Rates (%) Of Area Of High Value Crops Of Districts Of West Bengal Between ThePeriod 1997-98 To 2004-05 Crops Dar% Jal%Cooc Dinaj Mal% Mur% Nad% 24P% Hoog% How Pur % Midna Ban% Bir Bur% h% % % % % Tomato 33 104 24 77 44 41 125 87 89 99 215 112 57 66 132 Onion 85 24 46 50 62 36 54 39 126 146 235 63 49 64 40 Cabbage 21 49 30 33 84 16 42 50 62 64 137 127 58 54 80 Garden Peas 16 23 25 191 32 37 59 94 67 58 164 37 37 78 700 Ladies Finger 25 52 17 73 44 47 34 77 108 86 155 26 59 83 37 Brinjal 18 42 29 38 45 21 29 41 63 36 118 76 24 33 76 Beans 29 96 35 26 68 18 24 97 45 96 126 14 97 71 45 Cauliflower 33 41 53 109 61 23 29 42 88 49 26 76 77 61 142 Cucurbit 15 30 27 23 41 21 40 29 24 59 52 47 39 36 23 Radish 27 57 32 88 134 22 111 74 67 53 57 64 37 50 111 Other Vegs 24 24 26 16 36 16 28 43 35 26 17 38 45 23 25 Ginger 3 227 54 20 30 66 144 128 160 415 194 49 168 64 94 Turmeric 58 43 53 55 45 25 50 34 107 102 40 45 49 134 59 Spices 50 90 0 0 51 0 0 0 0 0 0 0 58 0 0 Mango 36 45 42 99 11 21 73 1101 14 48 32 42 50 71 32 Jackfruit 89 9 16 32 37 9 12 554 27 60 69 20 229 46 40 Pineapple 39 3 -7 -15 0 0 3387 455 527 505 95 416 0 0 334 Orange etc. 91 23 48 131 62 62 96 48 79 33 73 24 119 233 128 Banana 53 33 41 138 81 56 310 74 22 24 53 20 174 45 58 Guava 111 168 60 121 68 82 321 -85 131 103 58 53 185 95 115 Lichi 685 17 64 164 256 70 112 278 116 101 50 140 0 833 125 Sapeta 0 435 73 114 467 0 700 71 1006 528 16 72 0 335 0 Papaya 133 54 45 181 135 -35 141 219 30 10 69 46 216 63 99 Coconut 0 27 29 100 68 75 109 80 284 0 62 0 473 130 0 Cashewnut 37 69 0 0 0 0 136 291 87 68 74 0 115 153 0 Other fruits -39 68 85 3631 90 171 119 28 214 180 39 -22 252 135 202 Rose 86 0 0 0 0 0 82 32 0 32 0 25 0 0 0 Tube Rose 0 0 0 0 0 0 196 19 0 22 0 10 0 0 0 Gladiolis 20 1400 0 0 0 0 191 112 0 1820 0 27 0 0 0 Crysanthemum 61 0 0 0 0 0 107 64 0 21 0 70 0 0 0 Marigold 0 2400 100 0 0 5800 91 644 0 4 0 8 0 0 0 Jasmine 300 0 0 0 0 0 162 0 0 19 0 96 0 0 0 Seasonal Fl 132 0 0 0 0 0 399 17 0 17 0 19 0 0 0 Others 71 0 0 0 0 0 7 30 0 19 0 25 0 0 0 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 43.58 thousand tonnes of loose flowers and 90.67 crorespikes of cut flowers in the year 2004-05. The changing structure of fruits and vegetables production in West Bengal vis-à-vis India during this period is represented in thefollowing table. As per the estimates of 2004-05 in regard to share of different states in acreage and production of fruits and vegetablesWest Bengal stands eleventh and ninth in terms of fruits and second in both area and production for vegetables(CMIE). This fact showsthat West Bengal accounted for bulk of the nation’s total output of vegetables. It is one of the major producer of Cabbage, Cauliflowerand Brinjal in the country. The lion’s share of vegetables however comes from Uttar Pradesh. The other states are Bihar Orissa andKarnataka. In case of vegetables the share of Onion, Ladies Finger, Chillie and Brinjal has gone up most during the period underconsideration. During this period it is evident that the status of fruits have remarkably improved in terms of both acreage and production by manyfolds. The production of major fruits recorded a gradual increase in share of area and it is observed most prominently in case ofproduction of Litchi followed by Papaya. While Mango, Orange including other citrus fruits, and banana recorded an increase in its sharewith respect to all India production, the share of Pineapple has remained fixed. Considering the fact that these crops are mostly non-durable easily perishable product the post harvest factors play a deciding role in the choice of the farmer. . However both in case of fruitsas 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 ofWest Bengal are recently moving towards these kind of high value crops and the post harvest infrastructure or the support system has notreached a state where the farmers would be assured of their return.
  6. 6. 88 International Conference on Applied Economics – ICOAE 2008Table 2. Changing Share of Production of Fruits and Vegetables of West Bengal with respect to India % Share of WB in Production Items 1997-98 2004-05 Tomato 8.43 8.30 Onion 0.34 0.77 Cabbage 34.19 33.46 Ladies Finger 17.32 18.12 Chilli 6.39 7.77 Brinjal 25.24 31.85 Cauliflower 36.13 36.20 Sweet Potato 1.19 4.29 Mango 4.90 5.44 Pineapple 26.33 26.34 Orange (other citrus) 0.88 2.48 Banana 1.21 1.79 Lichi 5.05 15.93 Papaya 10.94 14.09Source : 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 thestate. Simpson Diversity Index is calculated for some Asian countries including India as well as for the districts and the state of WestBengal as a whole and a comparative study is made to identify the nature and trend of diversification towards high value crops amongstthe 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 forincome, employment and food security. South Asia is diverse in climate, soils and other agro-ecological features. Diversity permits SouthAsian farmers to cultivate variety of crops . The Simpson Diversity Index (SID) of South Asia was 0.64 in the triennium ending 1999-2000, up from 0.59 in the triennium 1981-82. This shows that South Asia is gradually diversifying its crop sector towards high valuecommodities especially fruits and vegetables. The following table shows the extent of diversification of the South Asian countriesTable 3. Extent of Diversification in South Asian Countries Country Simpson Index of Diversity in Triennium ending 1980-81 1991-92 2000-01 Bangladesh 0.39 0.36 0.35 Bhutan 0.37 0.48 0.44 India 0.61 0.65 0.66 Maldives 0.77 0.77 0.77 Nepal 0.39 0.40 0.41 Pakistan 0.54 0.56 0.57 Sri Lanka 0.76 0.77 0.75 South Asia 0.59 0.63 0.64 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 1980-81. Bangladesh has actually specialised in riceduring 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 yearscrop diversification has become an important strategy for overall agriculture development. Commodities having higher comparativeadvantage and higher marketability are being grown on a commercial basis. In order to encourage commercialization, the Government istrying to develop the production pocket concept and farmers group approach , commercial outlook, and innovative ideas as encouragedby the Agriculture Prospective Plan. The Government is also trying to change the existing agricultural system drastically by changing themind set of the farmers encouraging them to develop the mentality of entrepreneurship and learn a trading mechanism, so that theiragricultural system is guided by commercialization. Nepal has different agro-ecological zones with a variety of climates ranging fromtropical in the Terai to alpine in the high mountains. Besides the climatic factors, the farmers need options on high value exportablecommodities. Crop diversification has helped to meet this type of need of the farmers. Previously, the farmers used to concentrate on afew 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 therewas no diversification in practice. With the increase of population traditional agriculture could not meet the food requirements andtherefore diversification was introduced. Crop intensity was thereby increased and annual per unit production was raised. Sri Lanka hasbecome nearly self-sufficient in rice production. However, cultivation of rice in well drained soils in major irrigation schemes wasconsidered to be a waste of irrigation water due to high percolation rates observed. Cultivation of non-paddy crops in the well drainedsoils was thought to be helpful in paving the way for crop diversification in major irrigation schemes. Diversification is therefore beingpursued by crop substitution. The cost of rice production increased tremendously during the past few decades and consequently riceproduction became uneconomical in marginal rice lands, especially in the wet part of the island. Therefore, more lands became availablefor crop diversification. The potential areas of crop diversification in the island are found in different ecological settings. Cultivated cropsand cropping patterns adopted varied with the agro-ecological conditions. · The diversification patterns in rice lands in the intermediate
  7. 7. International Conference on Applied Economics – ICOAE 2008 89zone of the up country and mid country have been successfully established. Diversification in major irrigation schemes in rice lands ofthe 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 moreremunerative 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 productionrelated activities on various crops and also to lessen risk. The crop shift initially took place due to governmental policies and thrust onsome crops over a given time, for example creation of the Technology Mission on Oilseeds (TMO) to give thrust on oilseeds productionas a national need for the countrys 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, linseedand nigerseed are declining gradually. Thus, the area shift has favoured only a sub-sector within the oilseed sector partly because ofconstant changes in the comparative advantage of different oilseeds and partly because of the impact of changing consumers preferenceson 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 inproduction induced crop diversification, for example sugar cane replacing rice and wheat. Crop diversification and also the growing oflarge number of crops are being practiced in rain fed lands to reduce the risk factor of crop failures due to drought or less rains. Cropsubstitution and shift are also taking place in the areas with distinct soil problems. For example, the growing of rice in high water tableareas replacing oilseeds, pulses and cotton; promotion of soybean in place of sorghum in medium and deep black soils etc. The SimpsonDiversity Index of India in 2004-05 is 0.69. The SID has slowly moved from 0.61 in TE 1980-81 to 0.69 in TE 2004-05. The trendreflects 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 1997-98 To 2004-05 In West Bengal Year 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 SID 0.52 0.55 0.56 0.54 0.55 0.56 0.59 0.59In terms of diversification West Bengal is lagging far behind the country figure. The agriculture of the state is still food basedconcentrating mostly on rice and hence the extent of diversification is relatively low 0.59 in 2004-05 as compared to India 0.69 in thesame year. The humid and high rainfall makes cultivation of rice more favourable in this region as a result the cropping pattern in thestate in terms of allocation of acreage is still skewed towards foodgrains, mainly rice. However during the span of the last eight to tenyears some high value crops have emerged as prominent product of the state and it can be assumed that the state itself is moving towardsdiversification albeit at a very slow rate. The Simpson Diversity index has moved up from 0.52 in 1997-98 to 0.59 in 2004-05 implyinga gradual shift in cropping pattern. Production of fruits and vegetables is picking up momentum and horticulture is becoming a newoption which is being taken up by farmers of quite a few districts. Most of this production is taking place through crop substitution asthere is hardly any scope of area augmentation in the state without impeding the ecological balance. Despite the fact that the rate ofdiversification is slow, availability of better technology and the scope of exporting horticulture products as well as other high value cropsis gradually inducing the farmers of the state to diversify. No country grows such a wide range of fruits, vegetables, and flowers and insuch abundance as India and yet it has no record worth mentioning in horticultural exports. The rich variety when processed andmarketed, can help the state as well as the country take care of the health needs of its population besides being major exportcommodities. The extent of diversification in the districts of West Bengal is presented in the following table. Table 5 shows that the one districtthat has been diversifying its agriculture the most is Darjeeling. The main reason behind this high degree of diversification is thatDarjeeling is the leading district producing plantation crop tea. It also has a well developed floriculture crop sector which not only catersto local and state markets but brings in revenue through export.Table 5 : Extent Of Diversification In The Period 1997-98 To 2004-05 In The Districts Of West Bengal, TheSimpson Diversity Index 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 Darjeeling 61 62 65 68 73 73 73 75 Jalpaiguri 63 63 62 61 61 61 62 62 Cooch Behar 55 71 53 54 55 55 56 57 Dinajpur 46 46 46 47 52 52 52 53 24 Parganas 43 42 44 48 46 46 48 56 Nadia 67 67 68 73 69 69 71 72 Howrah 35 35 35 42 37 37 35 39 Midnapore 36 35 34 35 37 37 39 39 Burdwan 36 33 35 39 37 37 38 38 Birbhum 29 30 32 41 37 37 38 39 Malda 52 53 53 59 60 60 61 60 Bankura 30 34 33 33 31 31 41 39 Murshidabad 60 60 60 70 61 61 52 52 Hooghly 60 60 58 69 68 68 63 63 Purulia 26 32 26 29 26 26 28 29 Diversification is also taking place in the districts of 24 Parganas, Nadia, Howrah, Dinajpur, Birbhum, Malda and Bankura whosediversity indices have been gradually improving during this period of time. 24 Parganas , Nadia and Howrah are the districts wherevegetable 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 areverse trend which might be because of the fact that these two districts are concentrating in cultivation of rice in the recent years over
  8. 8. 90 International Conference on Applied Economics – ICOAE 2008and above any other crops. Purulia is a strange case where the SID actually fluctuates because of fluctuation in rice cultivation and it isthe district where agriculture has not really diversified at all. The shift effect which has been calculated in the process used by Monnikhof and Timmer6 (1999) corroborates the results of theSimpson 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 1997-98 To 2004-05 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 0.98 24 parganas 0.91 Murshidabad 0.97 Nadia 0.90 Hooghly 0.94 Howrah 0.96 Purulia 0.99 Midnapore 0.99 ---- ---- These values once again prove that till now the cropping pattern in the state is skewed towards foodgrains and the major section ofthe area under cultivation falls under foodgrain crops, mainly rice. Moreover within the rice sector there has been a trend to concentratein 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. Inthe next section we try to identify the facters which play decisive role in the choice of high value crops6. Determinants Of Diversification6.1 The Income FactorA 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 forthis 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 optingfor high value crops. Costs considered in this study refer only to variable/operational costs including the imputed cost of inputs suppliedby the farm and of the family labour and do not include the rental value of land, interest, depreciation, etc. The gross returns and the netreturns 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% 6471 10318 3846 Potato 16% 3408 5380 1972 Tomato 26% 3645 9021 4850 Brinjal 33% 4171 9546 5375 Leafy Vegetables 12% 2543 3896 1353 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, vonBraun (1995) quantifies that as a result of diversification to export vegetable production in Guatemala, employment increased by 45percent on participants’ farms. It is expected that the benefits of increased employment opportunities are not only substantial but aredistributed across a broad spectrum of the economy and thus are to a large extent “pro-poor.” Ali and Abedullah (2002) demonstratedthe 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 aone-hectare shift of cereal to vegetables in one season generates more than one year round full-time employment (that is, the differencebetween 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 continuousattention to individual plants at various stages of growth, on the other. With abundance of labour, especially family labour, cultivation ofvegetable opens up meaningful employment opportunities for this section of agricultural labourers. Majority of small and marginalfarmers cultivate mainly low value, subsistence crops. In the absence of adequate farm and non-farm employment opportunities, they are6 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 m ∑S j =1 T j S tj iTI = m m ∑(S ) ∑( S ) j =1 T 2 j j =1 t 2 jWhere Sj 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 theshift effect, the value varying between 0 and 1, the closer to 0 the value is more diversified is the sector.
  9. 9. International Conference on Applied Economics – ICOAE 2008 91also forced to live below poverty line. In other words, farmers can take advantage of production complementarities and supplementaritiesand thereby reap the benefits of synergism through appropriate choice of crop combinations. This also enables the farmers to maximizeefficiency of resource use, through (i) multi dimensional use of limited land, (ii) multi dimensional use of time and (iii) intensive use offixed 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 ascompared to cereals and other crops. Apart from its income enhancing ability, vegetable growing, thus, helps preservation andmanagement of soil fertility, promotes sustainability by protecting soils against degradation through continuous application of higherdoses 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 thatcannot cover the cost of production. Perishability of these so-called high-value vegetables, lack of cold storage and other infrastructuralfacilities 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 themercy of the traders who employ exploitative tactics to keep the producers price as low and consumers price as high as possible andtherefore are unable to reap the actual benefit of diversification. Hence it is imperative that the proper determinants be identified andsteps taken so as to allow the farmer to augment their income through cultivation of high value crop.6.2 The Other DeterminantsTo examine the forces, which are influencing the diversification in favour of high valued crops in the state a number of explanatoryvariables are studied. Diversification is influenced by a number of forces both from the supply side as well from the demand side. Thevariables considered for this study are fertiliser use per hectare, proportion of irrigated area to gross cropped area, length of roads, ruralliteracy , prices of the crops and rate of urbanization. The estimated double log equations of Generalised Least Square is given in thefollowing 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) .677 10.096 Fertiliser .255 .0119 (.0111) (.0000) Price .073 .0165 (.0099) (.0041) Irrigation -.841 .2264 (.0418) (.2341) Urbanization .573 .1256 (.0186) (.0076) Road .321 .2316 (.0281) (.0102) Literacy -1.197 .0297 (.0014) (.0004) R Square .9504 .9547 R Square Adj. .7868 .9455 F Statistics 189.32 88.32 The regression results show that of the two technology variables, fertiliser use has a positive and significant effect on the degree ofdiversification. The coefficient of irrigation is however negative implying that crop diversification decreases with the increase of irrigatedarea. This means that crop diversification is mostly taking place in the rain fed area where the farmers are unable to cultivate the staplecereal rice, that requires abundance of water throughout, and have low resources but abundance of labour force. In a way Of the twoknowledge variables price has a positive coefficient where as rural literacy has a negative sign. A higher price acts as an incentive for thefarmers and so its coefficient is positive and significant. In fact Fruits and vegetables are highly profitable in comparison to cereals andother 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. Thedevelopment of infrastructure therefore plays an important role in encouraging diversification. This is reflected in the positive andsignificant coefficient of road. Better road network actually induces diversification in favour of horticulture commodities as it implieslower transport cost and easy and quick disposal of commodities. It also reduces post harvest risk of incurring losses in case of perishablecommodities. The demand side factor, urbanization, has a strong effect on the degree of diversification. With the changing food habits ofthe people the demand for high value crops like fruits and flowers, increases. In the recent years food consumption is shifting fromcereals 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 theHausman test statistics. All the parameters of the model now have a positive impact on the degree of diversification, however theestimated coefficient of irrigation here is insignificant. Also there has been a reduction in the degree of impact of each of the factors. Ofall the parameters road has the most significant effect on diversification. In other words proper infrastructure comes out to be the mostimportant factor initiating diversification. Better market and road network means low marketing cost and easy and quick disposal ofcommodities. 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 globalmedia and marketing systems, and increasingly adventurous consumption habits, the structure of consumers demand for food ischanging. For example, due to growing concerns with dietary health, the market for nontraditional fruits and vegetables has expandedrapidly over recent years, which will contribute to the improvement of the nutritionally balanced diet. These shifts in consumptionpatterns occur not only in industrialized countries but also in both urban and rural areas of developing countries. Structural changes in
  10. 10. 92 International Conference on Applied Economics – ICOAE 2008demand—associated with a wider choice of foods available, exposure to a variety of dietary patterns of foreign cultures, a premium forfoods requiring some preparation, more sedentary occupations, and separation of food consumption from production—are also related toincreasing demand for nonfood agricultural products like cut flowers, plant-derived textiles, and new sources of natural energy such asethanol Thus according to the panel data estimates the demand side factors become more important than the supply factors. The above discussion shows that good road network could stimulate agricultural diversification in favour of high value crops asthey help maximise profit and minimise uncertainty in the output prices. Absence of well developed infrastructure may deprive farmersto take potential benefits of cultivating high value crops. Besides role of technology can not be ignored. The high yielding and the morestable genotypes in fruits and vegetables need to be propagated through developing a strong seed sector and providing proper cultivableconditions through correct use of fertiliser and pesticides. The study also suggests that the demand for high value crops will alsopositively affect its production. Innovations in production process along with improvements in transport infrastructure will enablefarmers to deliver agricultural products according to exact specifications and help building the trust among different players in the foodchain. Increased integration into this supply chain through improved linkages with up- and downstream sectors will increase the abilityfor agriculture to have a positive effect on national economic growth and provide producers with attractive options for investment inquality improvement and value-added activities beyond the production of raw material. Small farmers have certain advantages tointegrate with the new supply chain as they can supply better quality output with intensive management attention to each output unit;however, they lack the size to benefit from scale economies. The net effect of integrated markets on small farmers depends upon thenature of a commodity and its market, as well as the ability of small farmers to coordinate marketing activitiesTable 9 : Coefficients Of Regression In Favour Of Horticulture Commodities Of The Districts Of West Bengal ( Prob. values in parantheses) Parameters Standardized Panel Estimates Coefficients Beta (Constant) 1.914 14.86 FER -.244 .0117 (.0442) (.0023) PRI .064 .1159 (.0421) (.0075) IRRI -.522 .0016 (.0000) (.0182) URBAN .030 .0334 (.0098) (.0054) ROAD .156 .2292 (.0259) (.0000) LIT .139 .3375 (.0303) (.0506) R Square .8906 .9652 R Square Adj. .8674 .9473 F Statistics 282.34 104.87 The results of the regression run with the data from districts show that demand and the knowledge factors have determining effecton the rate of diversification. While improved road conditions will lead to a 15% increase in diversification rural literacy will increasediversification by 13%. Urbanization also has a positive impact on diversification. Improved technology however reducesdiversification. This fact convenes with the general structure of the state which is still the major rice producer. Farmers in the rainfed areawithout irrigation facility and abundant labour tends to take up cultivation of high value crop. Also there is lack of commercial outlookon the part of the farmers which become an obstacle towards introduction of high value crops. Lack of Government encouragement andabsence of co-operation of financial institutions in case of such high risk high value crops also dampens the speed of diversification. The panel data results show that all the factors have positive and significant estimated coefficients. The coefficients of fertilizer andirrigation are also positively significant here, though irrigation has a very low value of coefficient (1%). The two most important factorshere are literacy and road , an improved condition of these two factors will lead to an increase of 33% and 22% in diversification ofcrops in the districts. From the overall analysis it is clear that the rate of crop diversification in the districts of West Bengal in terms ofarea under coverage has not gained the expected momentum because of inadequacy in certain factors that are essential to the properimplementation of crop diversification. With the advent of WTO and India being a member and signatory to GATT, the scenario of theagricultural sector will not be the same as that of past. With the liberalization of trade and providing the market access of agriculturalproduce between the different countries, the country will be required to promote much more diversified agriculture. For crops on whichwe have substantial area and production, specially foodgrains, the import market has to be insulated through increased productivity whichgives us a kind of comparative advantage and also a level playing field so that large scale importation is contained and farmers interestsare protected. The crops which are traditionally exported like basmati rice and spices and condiments also need to be supported in termsof area expansion and quality improvement to look towards much more opportunity for export. Crop diversification in the areas of certaintropical fruits and also a few vegetables also need support for both production and post-harvest handling in terms of their exportopportunity. Accelerated growth in fruits and vegetables production is also required for improved nutrition of the countrys population. Infuture, with improved living standards along with increased purchasing power, more and more people will look for nutritional and qualityfoods which will also call for greater crop diversification.7. Conclusions The results of the study show that agricultural sector of West Bengal is gradually diversifying towards high value commodities,namely fruits and vegetables and flowers. Detail investigations reveal that most of the diversification has come through individual effortsof the small farms with little support from the government. It is because food security issues are still critical in the state as well as thecountry and government policy is still obsessed with self sufficiency in cereals. However the speed of diversification is rather slow and is
  11. 11. International Conference on Applied Economics – ICOAE 2008 93much less than that of the country as a whole. Moreover the degree of diversification is not evenly distributed over the districts. Whilesome of the districts are picking up diversification quite rapidly others are lagging behind . This might be because of the fact that eventhough the state has achieved self sufficiency in staple food the emphasis is still focused towards increasing production of rice. Still asilent revolution is taking place and area coverage of fruits vegetables and flowers have increased substantially during the last few years.The higher returns from the high value crops therefore supports commercialisation and diversification of small farms within and outsideagriculture and their proper integration with local and global markets. This is intended not only to liberate the small and marginal farmersfrom the poverty trap, but also to meet the countrys growing demands for fruits, vegetables, which generally show rising trends withincreasing levels of per-capita income in the economy. However the determinants play a crucial role in bringing about the actualdevelopment and improvement in the income level of the impoverished farmer. One major determinant of this change is the demand sidefactor which has induced farmers to shift towards production of high value crops. Development of roads have been a key determinant inthis respect. Another important determinant was the technology absorption in this state during this period. Diversification is moreprominent in rainfed areas than in irrigated zones. In fact the rainfed areas are becoming the hub of non cereals due to their low waterrequirement and abundant labour supply. As cost of cultivation is relatively low the high value crops are becoming popular among thesmall farmers who can not afford the cost of high investment like irrigation. However proper institutional support is lacking and hencethe speed of diversification is affected . It is therefore necessary to provide proper financial resources , guidance and encouragement andtraining for nursery raising and flori-craft on the part of the government to attract the farmers of the state towards the high value cropcultivation. This will not only help the farmers in earning higher income , it will also open up opportunities of marketability and also ofexport and thereby create more income and employment. It will also bring about improvement in the quality of life by increasing incomefrom the small areas of the small and marginal farmers and inculcate aesthetic sense among the people. Vegetable cultivation is eco-friendly in that it generally uses less water than cereals, especially paddy, necessitating withdrawal of less amount of ground waterthrough wells and tube-wells and thus helps in conservation of ground water. It may be noted that widespread cultivation of summerpaddy (boro) has now resulted in the reduction of water table and consequent non-availability of ground water for irrigation and even fordrinking in many areas. If diversification can be efficiently managed so as to reduce the risk and augment the income of the smallfarmers environmental degradation may be checked to a certain extent.ReferencesAli,M.and Abedullah (2002), ‘Economic and Nutritional Benefits from Enhanced Vegetable Production and Consumption in DevelopingCountries’, Journal of Crop Production., Vol 6 No. 1(2)Ateng, Benson (1998), ‘Comparative Advantage And Crop Diversification In Bangladesh’, Bangladesh Agriculture in the 21st Century,(eds) Rashid FaruqeeBhalla, G.S.and Alagh,Y.K. 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