Some Agricultural Risks in India

Abstract

In a world of rising population, diminishing arable land, mounting agricultural debts and increasing uncertainties in farm incomes, there is a great need for management of risks in the agriculture sector. The enterprise of agriculture is subject to great many uncertainties. Yet more people in India earn their livelihood from this sector than from all other sectors put together. In rural India, households that depend on income from agriculture (either self-employed or as agricultural labour) accounted for nearly 70% of population (estimates from Survey of Consumption Expenditures, National Sample Survey,1999/00). This includes large number of the poor who have little means of coping with adversities. Poor households that were self-employed in agriculture account for 28% of all rural poverty while poor households that are primarily dependent on agricultural labour account for 47% of all rural poverty1. Thus, 75% of all rural poor are in households that are dependent on agriculture, in one way or the other. The same survey shows that 77% of all poverty is rural. Thus 58% of all poor are in households that are dependent on agricultural income in rural areas. Risk and uncertainty are inescapable factors in agriculture. The uncertainties of weather, yields, prices, government policies, global markets, and other factors can cause wide swings in agricultural income. All these risks must be properly managed to achieve satisfactory management in agriculture. It involves choosing among alternatives that reduce the financial effects of such uncertainties.