Instability in Andhra Pradesh Agriculture — A Disaggregate Analysis

Instability in farm production is causing serious shocks to supply and farm income and there is agrowing concern about increased volatility in farm production, prices and farm income. The studyhas estimated instability in three major crops before (1981-93) and after (1993-04) the initiation ofeconomic reforms at the state and district levels in Andhra Pradesh. It has revealed that in a large statelike Andhra Pradesh, and which is the case for most states of India, the instability status as perceivedthrough the state level data may be vastly different from that experienced at the disaggregate level.The study has concluded that the state level analysis does not reflect complete picture of shocks inagriculture production, and, further, shocks in production underestimates shocks in farm income. Ithas suggested the need for addressing risks in farm income by devising area-specific crop insuranceor other suitable mechanisms.