Land per capita, year-to-year variability and uncertainty of return on investment affect household income from crop production: Evidence from India

Agriculture's potential to reduce poverty assumes that income from crops can significantly increase per capita income of small farm households. Using nationally representative data on the value and variable costs of production of 10 crops (rice, maize, blackgram, chickpea, pigeonpea, mustard, groundnut, soybean, sunflower, sesamum) commonly grown in India, we calculated the mean benefit: cost (B:C) ratios and profit per hectare for each crop in seven three-year periods between 2000 and 2020. All crops were profitable (B:C > 1) in all periods but B:C varied widely and unpredictably, both between crops and with time. We then calculated, for the maximum and minimum observed national level values of B:C for each crop, the relation between household land per capita (LPC) over the range 0–1.0 hectares per person, and the crop personal daily income (CPDI) in PPP $ per person per day that would be generated by growing that crop. Only three out of a possible 100 combinations of crop and LPC (chickpea, 2005–2008, LPC = 1.0 and mustard (2008–2011, LPC = 0.9 or 1.0) generated CPDI values greater than a poverty line of $2.15 per person per day. A large survey confirmed that 96.9% of farming households in India had LPC values of 1.0 hectares per person or less. The majority of farming households could not have generated enough income from growing any of these crops during this twenty-year period to reach a poverty line of $2.15 per person per day. Most farms in India do not have enough land to benefit much from intensifying their crop production. Such small incentives and uncertainty about expected returns on investment (and increased exposure to risk) might contribute to low adoption of best practices, and more in-depth studies of rural household livelihood portfolios are needed to clarify that assumption.