Does a Diversified Crop Portfolio Make Farmers More Efficient? A Stochastic Production Frontier Analysis of Farm-level Data from Assam, India

Abstract

The agriculture sector in India is beset with twin limitations of shrinking cultivable area and absence of major technological breakthroughs in the recent past. In such a situation, a judicious management of the farm in the form of adjustment in a crop portfolio can be quite useful to maximise output and minimise wastage of resources. This article seeks to examine whether a diversified crop portfolio makes the farmers more efficient using farm-level survey data collected from geographically diverse areas of Assam, a state in northeast India. The results of a stochastic production frontier analysis show that adoption of a diversified crop portfolio across crops and seasons makes the farmers more efficient in cultivation by helping them reduce weather-induced damages to crops and reap better returns from farming. This efficiency-enhancing effect of crop diversification is found to be heterogeneous among the regions. However, too much diversification reduces the efficiency of farmers. The results have important implications for Assam where floods cause extensive damage to crops every year. Moreover, access to extension services and government support are found to make the farmers more efficient. On the other hand, fixed-rent form of tenancy reduces efficiency of the farmers while household size has a positive impact on the same.