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The Effect of Extensive and Intensive Margins on Income from Crop Production
The determination of factors influencing income from crop production remains crucial in understanding and mitigating stagnation in agricultural income. However, the calculation of income from cultivation is difficult owing to a dearth of available data on costs causing studies to rely on policies or indicators that generate biases. This paper uses field survey data from eight villages in Bihar to identify the determinants of crop income. It explores different aspects of agrarian production processes to identify two major groups of crop income determinants: the extensive margin and the intensive margin.
The authors acknowledge the financial support from the Indian Council of Social Science Research in completing this paper. They also thank Rishu Kumar for his able research assistance.
Agriculture has long been the subject matter of studies, not only due to its contribution to food security, but also because of its capacity to absorb a major share of the working age population. The importance of agriculture for the overall growth of an economy is embedded in the fact that it is more effective in reducing poverty than growth in other sectors. This is because, first, the incidence of poverty tends to be higher among rural populations, and second, a large share of this rural poor is dependent on agriculture for a living (World Bank 2008; Christiaensen and Demery 2007; Ravallion and Chen 2007). Indian agriculture, which has traditionally been a subsistence activity for a majority of people, has contributed to the food security of the country, with increased number of states achieving food surplus post the green revolution, with the use of high-yielding variety seeds, extensive use of fertilisers, and irrigation schemes that increased production at a rate faster than that of population growth.
In the recent years though, the trajectory of extensive agricultural production has stagnated, having an adverse impact on farm income due to the limits in expansion of agricultural land. The stagnation in income has much to do with the yield, price and idiosyncratic risks associated with farming (Barrett and McPeak 2006). The impacts of extensive cropping are observed in the intense competition for natural resources, increased greenhouse gas emissions, and increased deforestation and land degradation, thereby shifting the focus towards intensification of the crop area by way of adopting new technologies, improved input use, scientific rotation of crops to maintain soil fertility and diversification towards high-value crops. Nonetheless, the impact of these methods in determining crop income has not been tested empirically, particularly for farmers with small- and medium-sized landholdings in developing countries like India.
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