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Abstract:
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Agricultural risk is usually presented in the literature at the individual farm level and as a measure of price or yield volatility over time. I argue that risks borne by individual farms are in part a symptom of systemic risks evident within the sector as a whole. These risks are better captured, I show, through a measure of spatial volatility of crop yields and as an “in-time” measure. Lower levels of systemic risk reflect higher levels of efficiency - in terms of a rational allocation of resources across spatially separated production units. Finally, over time, improvements in or worsening of efficiency is measured with long term trends in the level of systemic risks observed for various crops. I use crop yield data for 734 farming districts in India to compute a coefficient of variation measure to capture a yearly systemic risk for four major crops – rice, wheat, maize, and cotton. The long-term trends for these crops suggest that Indian agriculture remains highly inefficient some fifty years after the green revolution. State policy has compounded these inefficiencies by seeking to compensate individual risks while neglecting the broader systemic risks.
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