commercialization of agriculture

8/19/2019 Commercialization of Agriculture

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Commercialization

of AgricultureBY Abhishek Sinha


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Agricultural

commercialization


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•Definition•Indicators – Labor productivity•Pros and cons• Agricultural commercialization and

the Structural Transformation framework

•onstraints and challenges facing

the promotion of agriculturalcommercialization


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Agricultural Commercialization

(Definition)

• !he degree to which agricultural

production and marketing is

based on market e"change andspecialization vs# internalized

within the household


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Agricultural Commercialization

(Indicators)• $ousehold ommercialization Inde" %$I&

– $I ' value of farm sales ( value of farm production

– )anges from * – +#*

– !he higher the number, the more commercialized the

household

• -"istence of ( degree of reliance on.

– /actor markets %fertilizer, labor, etc&

– /inancial markets %loans& – 0utput markets %crop sales&

• )ising labor productivity in agriculture1


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Labor Productivity

Y=

Y* A

L A L

Where:

Y = Net output

L = Labor A = Area

Y/L = Labor productivity

A/L = Land to Labor Ratio

Y/A = Yield


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•For labor productivity (Y/L) to increase,smallholder farmers must

increase the net value of output per unit

area (Y/A).•In many areas of India, cropped area perlabor unit (A/L) is declining

over time as rural populations gro faster

than the e!pansion ofcropped area.

• "ence for labor productivity to rise, Y/Amust increase dramatically to

o#set the decline in A/L.•$he net value of output (Y) refers to thegross value of output minus all

costs involved in producing that output.•%ne a to boost Y/A ma be hi h& ieldin


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ommerciali'ation

*ome +ros and ons•

Pros:‒ Can achieve groth in net output per unit area!Y/A" ith shi#ts in cropping patterns toard

higher value crops

‒ Can be the result o# input intensi#ication$ as longas the value o# output e%ceeds the costs o# the

additional inputs&

• Cons:

‒ 'ependence on (ar)ets$ both #or theco((ercialied crops as ell as the #ood (ar)et&

‒ Co(petition #ro( large+scale #ar(ing

,(portant: Co((ercialiation only or)s i# the

#ood (ar)et is #unctioning ell-


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%pportunities andhallenges

• Trade in agriculturecommercially

• More competition• Competition needs

eciency


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hat hinders e-ciency• Fragmented or loosely lined enterprises in

the commodity value chain &lo reliability in business relationships

(in terms of 0uantity, 0uality and price)

• 1egulatory re0uirements (health, sanitary

and 0uality) &2overnment&mandated

&Industry/super&maret

&buyers

• "igh costs of production

&small scale of production

&poor coverage 3 lo 0uality ofinfrastructure

&inade0uate public support


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$% And Agribusiness• *cale sensitivity

• *tandards (0uality and 0uantity)

• $echnology transfer in agriculture

&+lant variety

&4iotechnology

&Agro&chemicals

&+rocessing techni0ues

• *ervice openings• 5#ects of policy change abroad

• Food prices and production

• competitiveness

commercialization of agriculture

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