NON-PARAMETRIC EFFICIENCY, ECONOMIC, AND RISK ANALYSIS OF FARMS IN THE LIGHT OF CROP DIVERSIFICATION
Department of Agricultural Economics, Ondokuz May?s University, 55139, Samsun, Turkey
Keywords:business risk, crop diversification, return on asset, sustainable farming practice, technical efficiency
Crop diversification is the most effective risk management strategy to mitigate the uncertainties at a farm. It can influence the efficiency as well as the economic returns. Therefore, the present study aimed to analyze the efficiency, risk, and economic performance of crop diversification. Using the multistage sampling technique, a total of 100 selected farmers were interviewed. The farmers were classified into high and low diversified farmers by applying cluster analysis. The results indicated that the high diversified farmers were young, less educated, with high farming experience and had a large family size as compared to the low diversified farmers. The one-year economic analysis indicated that the high diversified farmers gained a low return of 14% per year on an asset but had zero business risk. However, low diversified farmers gained a higher return of 21% per year on an asset, but carried a chance of a negative return of 36% on an asset under price and yield variation. High diversified farmers were technically efficient with 0.79 score, but were economically inefficient. Taken together, the study suggests that the crop diversification is a new paradigm of the sustainable farming technique which is associated with lower business risk and positive return, high technical efficiency, the possibility of crop rotation for the maintenance of soil health, high generation of employment opportunities, and increased utilization of owned resources like family labors. Crops like sugarcane, wheat, maize, cotton, sesame and fodders provided positive returns be promoted in the area to increase the production and productivity of crops, and raise the income of farmers.
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