Effect of Non-farm Employment on Farm Commercialization in Agricultural Households in Rural India

Abstract

The paper investigates how non-farm employment affects commercialization of agriculture in rural agricultural households in India. The data for the study was drawn from a nationally representative sample collected by NSSO through Situation Assessment Survey 2013. Regression Adjustment (RA) treatment effect model was used to measure the effect of household's participation in nonfarm employment on the marketed surplus of cereals, pulses, and oilseeds. Results show that household's participation in non-farm employment has a significant negative influence on agricultural commercialization of cereals and oilseeds. The results also infer that farm households use additional income from non-farm activities for non-agricultural consumption purpose. Though the results are found to be similar to previous empirical studies, the relative difference in marketed surplus was lower and was only 9 percent in case of cereals and 2 percent in case of oilseeds. The study concludes that the engagement of households in the non-farm sector would push those households away from agriculture as a commercial activity.