Analysis of Irrigation Enhancement, Crop Diversification and Farm Profits: Evidence from Telangana State

Abstract

In this study, the impact of access to irrigation on crop diversification and farm-level profits in the state of Telangana was examined. This study comprised two primary aspects. First, the determinants of crop diversification in Telangana were investigated using the logit model. Second, various farm production models were developed to evaluate the impact of irrigation enhancement sources on the farm profit function. The findings of this study indicate that the agricultural implements index and market access variables play a role in determining crop diversification in the studied villages, whereas surface irrigation has a negative effect on crop diversification. The Cobb–Douglas production function with different specifications was used in this study, which showed that the logarithms of the fertiliser variable and access to new irrigation facilities that improve groundwater table significantly enhance farm profits in the villages studied. The inclusion of a dummy variable representing agro-climatic conditions also revealed a significant effect on farm profits, indicating that farmers in north-zone districts achieve higher profits than those in central-zone districts, likely due to differences in soil fertility and crop diversification. Understanding the factors influencing farm profits is crucial for policymakers and extension agents in the state for informed decision-making and policy formulation.