When support prices shape crop choices: The influence of minimum support price on diversification in Karnataka agriculture

Abstract

Minimum support price (MSP) is a key policy instrument in Indian agriculture aimed at ensuring remunerative prices to farmers and maintaining national food security. Although the policy provides price assurance for several crops, its influence on cropping patterns and crop diversification remains widely debated. The present study examines the role of MSP in shaping crop specialisation and diversification in Karnataka, India, using secondary data for the period 2000–01 to 2023–24. Data on crop area, prices and selected socio-economic variables were compiled from official sources, including the Directorate of Economics and Statistics, Government of Karnataka and the Karnataka State Agricultural Marketing Board. Crop diversification was measured using the crop entropy index (CEI), while the determinants of diversification were analysed using a fractional regression model estimated through quasi-maximum likelihood estimation (QMLE), which is suitable for dependent variables bounded between  0 and 1. The results indicate notable changes in cropping patterns over the study period. The share of cereals in gross cropped area increased slightly from 46.32 % in 2000–01 to 47.40 % in 2023–24, while pulses expanded considerably from 16.67 to 31.83 %, reflecting a gradual shift towards pulse cultivation. Regression results show that rainfall, fertiliser consumption and road density significantly influence diversification, whereas larger landholdings and higher adoption of high-yielding varieties tend to promote specialisation. The findings suggest that MSP alone does not determine crop choices; diversification is shaped by both price incentives and agro-economic conditions.