Agricultural Diversification Toward High-Value Agricultural Production

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Agricultural diversification toward high-value agricultural production is a demand-driven process in which the private sectors play vital roles (Gulati, Joshi, and Cummings 2007). Higher incomes, urbanization, and changing preferences are raising domestic consumer demand for high-value products in developing countries. The composition of food budgets is shifting from consumption of grains and other staple crops to vegetables, fruits, meat, dairy, and fish. The demand for ready-to-cook and ready-to-eat foods is also rising, particularly in urban areas. Consumers in Asia, especially in the cities, are also being exposed to non-traditional foods. Due to diet globalization, the consumption of wheat and wheat-based products, temperate-zone vegetables, and dairy products in Asia has increased (Pingali 2006).

Today's shifting patterns of consumption are expected to be reinforced in the future. With an income growth of 5.5 percent per year in South Asia, annual per capita consumption of rice in the region is projected to decline from its 2000 level by 4 percent by 2025. At the same time, consumption of milk and vegetables is projected to increase by 70 percent and consumption of meat, eggs, and fish is projected to increase by 100 percent (Kumar and Birthal 2007).

In China consumers in rural areas continue to be more dependent on grains compared to consumers in urban areas(Table 1). However, the increase in consumption of meat, fish and aquatic products, and fruits in rural areas is even greater than in urban areas.