Diversifying Agricultural Growth: Investigating the Economic Consequences of Crop Diversification in Andhra Pradesh, India

Crop diversification is a vital agricultural strategy aimed at reducing risks, improving food security, enhancing farm income, and promoting sustainability. This study analyzes crop diversification indices and their impact on Gross Value Added (GVA) to agriculture in Andhra Pradesh using secondary data from 13 districts (2015–16 to 2022–23), covering agriculture, horticulture, and floriculture. The findings reveal notable regional differences, with Prakasam district exhibiting the highest crop diversification, while Nellore and East Godavari show lower levels. A Fractional Logit Model identifies key positive influencers of diversification, including rainfall, phosphorus fertilizer use, commercial bank access, long-term loans, Rythu Bazars, and Agricultural Market Committees. Conversely, pesticide use, irrigation extent, labour wages, and Public Distribution System (PDS) quantities negatively affect diversification. Instrumental variable regression shows a strong positive link between crop diversification and GVA in agriculture and horticulture. Similarly, phosphorus fertilizers, financial services, and market access positively influence GVA, while high labour costs and PDS interventions have adverse effects. In the livestock sector, greater diversification corresponds with increased GVA, supported by veterinary services and expert availability. In fisheries, higher outputs in marine fish, shrimp, inland fish, and brackish water prawn correlate with greater GVA. The study emphasizes the need for region-specific policies to boost diversification and ensure agricultural resilience and sustainability.