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Crop Diversification for Farmers and Agricultural Labourers

Author

Listed:
  • Raya Das

    (Indian Council for Research on International Economic Relations (ICRIER))

  • Ashok Gulati

Abstract

The shift in India's economy from agriculture to non-agriculture sectors is complex. While the share of agriculture in overall GDP has been declining steadily, its share in workforce has started increasing since 2019-20, going up from 42 percent to about 46 percent. This seems to have depressed real wage growth in agriculture over the last 5 years. Since wage labourers account for 54 percent of agricultural employment and they are literally at the bottom of economic pyramid, this is very concerning. Between Financial Year 2018-19 (FY19) and FY24, the real wage growth in the agricultural sector has been negative at -0.03 percent. The only silver lining within agriculture is that sub-sectors like horticulture and animal husbandry have witnessed positive real wage growth. However, translating sectoral growth into higher incomes for farmers and better wages for agricultural laborers requires efficient marketing strategies and rural employment generation. The unit level data from Situation Assessment Survey 2018-19, NSS data shows that farmers received higher selling rate on an average for horticulture produce through cooperatives and farmer producer companies (FPCs) compared to local traders. The success story of Sahyadri FPC highlights the role of an organized value chain in fruits and vegetables by strengthening the processing sector and export channels, thereby augmenting farmers' income and creating jobs in rural areas. To replicate this success and drive widespread benefits, India needs 10,000 similar models for enhancing value-chain efficiency in the agriculture sector. This approach is vital for enhancing incomes, generating rural jobs, and making agriculture a driver of inclusive economic growth.

Suggested Citation

  • Raya Das & Ashok Gulati, 2025. "Crop Diversification for Farmers and Agricultural Labourers," Indian Council for Research on International Economic Relations (ICRIER) Policy Paper 34, Indian Council for Research on International Economic Relations (ICRIER), New Delhi, India.
    • Handle: RePEc:bdc:ppaper:34
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