Download - 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