Crop diversification and its effect on farm income: evidence from a farm survey in Uzbekistan

Abstract Crop diversification is considered an essential strategy for sustainable agriculture, having positive outcomes not only on natural resources but also anticipated to mitigate volatilities in farm income. However, there exists a necessity for empirical evidence demonstrating a causal relationship between crop diversity and farm income, particularly in Central Asia, where agricultural production has traditionally been rather undiversified due to planned economies. We, therefore, aim to address this research gap by employing an instrumental variable method to evaluate the causal relationship between crop diversification and farm incomes across various agroecological regions of Uzbekistan. To manage endogeneity, we implement an instrumental variable approach, wherein the selected instruments display correlation with crop diversity yet are not directly associated with farm income. Our findings substantiate that the crop diversity index is positively and significantly correlated with farm income. Furthermore, we conclude that crop diversification enhances household food availability and farmers’ incomes. Cultivating a variety of crops allows farmers to effectively manage both price and production risks, thereby offering more food options for households and enhancing income opportunities through the sale of surplus goods. Consequently, to increase farm incomes and bolster food security in Central Asia, it is thus recommended that the government promote crop diversification through programs and policies.