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Abstract
There is an emerging concern about the viability of small farm agriculture,
particularly in the context of on-going process of globalization. It is
contended that viability of small farms can be improved through
diversification of agriculture into higher-value crops like fruits and
vegetables. This paper has assessed the impact of diversification of
agriculture towards vegetables on farm income and employment using
household level information from the Indian state of Uttar Pradesh. The
results clearly reveal that vegetable production is more profitable and
labour-intensive, therefore it fits well in the small farm production systems.
The smallholders are relatively more efficient in production and own more
family labour in contrast to large farmers. Vegetable production is the
emerging sector in agricultural diversification that would augment income
of smallholders and generate employment opportunities in rural areas.
Women are also benefited as the vegetable production engages relatively
higher women labour in various operations. However, prevailing constraints
do not allow smallholders to fully expropriate the emerging opportunities
in vegetable production. Major constraints in vegetable production are
lack of assured markets and a well-developed seed sector. Since vegetables
are perishable in nature, lack of efficient marketing system and appropriate infrastructure results in huge post-harvest losses. Further, non-availability
of improved and good quality seeds reduces the profitability and increases
production risk. Other important factors that restrict expansion of area
under vegetables are higher price and yield risks as compared to cereals
and low marketable surplus that increases transaction costs. The vegetable
prices are highly volatile, which severely affect the profitability in the
event of marginal increase in their supply. Low volume of marketable surplus
also adversely affects the bargaining power of smallholders and thus
results in realizing lower prices. The possible solution for overcoming this
is through developing institutional arrangements that strengthen farm-firm
linkages. Contract farming is one such arrangement that helps
smallholders to overcome the constraints in vegetable production.