Tracking composition of agricultural output: trends in diversification

Abstract

Monitoring the extent and pattern of diversification and assessing the determinants and implications of the same would provide valuable inputs to policies that aim to reduce variability of output or influence particular characteristics of output while retaining a balanced output mix. Analysis of diversification of agricultural output can be carried out at two levels. In the first instance, we may consider an indicator of diversification of output of the agricultural sector which is neutral to the nature of composition of the output. Further analysis in terms of the actual composition of the output will require measuring the significance of specific characteristics of output, such as nutrition content of the output. Analysis of composition of output of agricultural sector using a diversification index, which in turn is based on Herfindahl Index of concentration for the period from 1980–1981 to 2010–2011, shows that the livestock sub-sector and crop sub-sector have shown quite opposite patterns. Supplementary analysis points to the changing basket of farm output in favour of higher value commodities. The analysis has provided an assessment of diversification of agricultural output that may be useful in understanding whether the output basket is changing. In the context of achieving greater balance or diversification of output to meet specific goals such as conservation of water resources or maintaining soil health, these features would have to be specifically incorporated in the analysis to supplement the tracking of trends in diversification.