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.


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