Agricultural diversification

In the agricultural context, diversification can be regarded as the re-allocation of some of a farm's productive resources, such as land, capital, farm equipment and labour to other products and, particularly in richer countries, to non-farming activities such as restaurants and shops. Factors leading to decisions to diversify are many, but include: reducing risk, responding to changing consumer demands or changing government policy, responding to external shocks and, more recently, as a consequence of climate change. In the agricultural context, diversification can be regarded as the re-allocation of some of a farm's productive resources, such as land, capital, farm equipment and labour to other products and, particularly in richer countries, to non-farming activities such as restaurants and shops. Factors leading to decisions to diversify are many, but include: reducing risk, responding to changing consumer demands or changing government policy, responding to external shocks and, more recently, as a consequence of climate change. Agricultural diversification involves movement of resources from low value commodity mix to high value commodity mix. It focuses mainly on horticulture, dairy, poultry and fisheries sector.While most definitions of diversification in developing countries do work on the assumption that diversification primarily involves a substitution of one crop or other agricultural product for another, or an increase in the number of enterprises, or activities, carried out by a particular farm, the definition used in developed countries sometimes relates more to the development of activities on the farm that do not involve agricultural production. For example, one section of the British Department for Environment, Food and Rural Affairs (DEFRA) defines diversification as “the entrepreneurial use of farm resources for a non-agricultural purpose for commercial gain”. Using this definition DEFRA found that 56% of UK farms had diversified in 2003. The great majority of diversification activities simply involved the renting out of farm buildings for non-farming use, but 9% of farms had become involved with processing or retailing, 3% with provision of tourist accommodation or catering, and 7% with sport or recreational activities. Others adopt a broader definition, which may include development of new marketing opportunities. In developing countries such as India, which has been one of the leaders in promoting diversification, the concept is applied both to individual farmers and to different regions, with government programmes being aimed at promoting widespread diversification. The concept in India is seen as referring to the “shift from the regional dominance of one crop to regional production of a number of crops ...... (which takes into account)..... the economic returns from different value-added crops... with complementary marketing opportunities”.