Alliance Business School, 2nd Cross, 36th Main, BTM Ist Stage, Bangalore - 560 065, Karnataka.
* E-mail: pradeep.mehta@alliancebschool.ac.in
1 This study is a part of the PhD work of the author done at Institute for Social and Economic Change (ISEC), Bangalore, the title of thesis being “Diversification and Horticultural Crops: A Case of Himachal Pradesh”.
Area shift towards horticultural crops is vital for increasing farm income, productivity and overall employment in the agricultural sector. Several economic (price and income) and non-economic (food-security concerns) factors influence farmers' decisions at the farm level. This paper has examined the role of both price and income, along with the role of food-security goals, in the decision-making of farmers regarding shift from low-value crops (food crops) to high-value commercial crops (horticultural crops). It has been shown that higher food requirements at home inhibit the extent of crop substitution decision of the farmers. However, farmers are less responsive to the changes in the prices of food grains (in terms of changing their consumption) as higher income from high-value crops provide adequate money to purchase food crops from the market. Relative income (not the relative price) of the crops has been found to explain the crop-substitution decisions of the farmers. The farmers have been reported to calculate the aggregate gain from the crop rather calculating only the price of the crop, while making the decision to shift. Their capacity to generate higher productivity along with better market prospects have been recorded to explain farmers' decision to shift area.
