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Abstract
Instability in farm production is causing serious shocks to supply and farm income and there is a
growing concern about increased volatility in farm production, prices and farm income. The study
has estimated instability in three major crops before (1981-93) and after (1993-04) the initiation of
economic reforms at the state and district levels in Andhra Pradesh. It has revealed that in a large state
like Andhra Pradesh, and which is the case for most states of India, the instability status as perceived
through 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 in
agriculture production, and, further, shocks in production underestimates shocks in farm income. It
has suggested the need for addressing risks in farm income by devising area-specific crop insurance
or other suitable mechanisms.