Diversification of Agricultural Economy towards Horticulture and Livestock in Maharashtra

This paper has examined diversifications of agricultural economy towards high-value horticulture and livestock products and has identified the major factors determining diversification. The study is based on 14-year data for Maharashtra and has used Simpson Index of Diversification (SID) to measure the extent of diversification of farm economy towards horticulture and livestock products; Fixed Effect Model of regression is applied to identify the determinants of diversification. The study has revealed that the share of horticulture and livestock sectors in the total agricultural output in Maharashtra has significantly increased during the period under study. The results of Fixed Effect model have confirmed that demand-driven factors (urbanization and per capita income) do have a significant positive impact on diversification. The results have also shown that the small size of holdings, road infrastructure, and number of tractors have a positive and statistically significant influence on diversification, while irrigation, and fertilizer consumption are negatively linked with diversification. The policy supports, such as price protection, insurance coverage, and subsidized inputs and technology should be extended to smallholders.