Cash Crops - Meaning, Types and Importance

Table of Contents

• What are Cash Crops
• Importance of Cash Crops in India
• Types of Cash Crops in India
  • Cotton
  • Jute
  • Sugarcane
• Risk of Growing Cash Crops
• Conclusion

What are Cash Crops?

Cash crops, also called commercial crops, are agricultural crops grown primarily for sale rather than for personal consumption. They are cultivated at a large scale and sold in national and international markets to earn profit. Some crops are also available for direct consumption while manufacturing industries can use other crops as raw materials to produce different items. Some examples of cash crops in India are Cotton, Jute, Sugarcane, Tea, Coffee, Oilseeds, etc.

Status & Importance of Cash Crops in India

The status of cash crops in India has increased rapidly because of their increasing demand in developed countries. The average production of cash crops like Cotton was around 32.27 million tons, similarly the production of Sugarcane and Jute was around 365.47 million tons and 10.17 million tons, respectively in the financial year 2020-21. The increased production and export of these crops show the status of India in the world market.

The importance of cash crops is discussed in the following points:

• Cash crops provide good income and higher profits to farmers, helping them raise their living standards. Since they are cultivated at a large scale, they create employment opportunities in farming and agro-based industries, resulting in the country's overall economic growth.
• Cash crops create substantial revenue through exports, contributing to the country's economy. Exporting certain cash crops brings in foreign exchange, ultimately strengthening India's position globally.
• The cash crops produced in India are in high demand in the international market, resulting in better trade relationships and economic diplomacy worldwide.
• Cash crop farming helps farmers diversify their income source and reduces dependency on traditional crop farming.
• Cash crop farming also leads to industrial growth as various industries, such as textiles, sugar, etc., rely on cash crops for raw materials.

Types of Cash Crops in India

The three major types of cash crops grown in India are Cotton, Jute, and Sugarcane. Let's discuss each of them one by one.

Cotton

Cotton is one of the oldest cash crops in India, and our country is the second-largest producer of cotton globally after China. Around 25 per cent of the world's total cotton is produced in India. Our country's estimated earnings from cotton exports were approximately 14887 crores in the financial year 2021-22. Thus, it highly contributes to the country's economy. Gujarat, Maharashtra, and Telangana are the major cotton-producing states in India, accountable for more than 65 per cent of the total cotton production in the country. Generally, three types of cotton are cultivated in India, which include long-staple, medium-staple, and short-staple cotton.

Jute

Jute is another important cash crop widely known as "golden fibre." India is first among the largest jute-producing countries in the world. Jute cultivation requires a temperature between 26 degrees and 35 degrees Celsius. It is a kharif crop, and it requires heavy rainfall for growth. The major Jute producing states in India are West Bengal, Assam, and Bihar, which contribute to more than 95 per cent of the total production in the country. It is widely used as a raw material in textile industries for the manufacturing of fabrics, carpets, household items, etc.

Sugarcane

Sugarcane is widely used as a raw material in the sugar industry. Sugarcane cultivation is done on a large scale, and nearly 5.15 million hectares of area are under sugarcane cultivation in the country. India ranks second among the largest sugarcane producers in the world, with an estimated production of 431.81 million tons in the financial year 2021-22. Uttar Pradesh is the leading sugarcane-producing state in India, followed by Maharashtra and Karnataka. Sugarcane is primarily used for the production of sugar and ethanol in India.

Risk of Growing Cash Crops

The cultivation of cash crops involves certain risks. The risk factor could be related to crop type, climate, location, agriculture practices, and market conditions. Some major risk factors are discussed below:

Market Price Fluctuation: Cash crops are price sensitive, and their prices depend on various factors, such as weather conditions, global supply and demand, etc. Thus, there is a risk factor of not getting the expected return if the price drops significantly.

Input Cost Instability: It includes various expenses such as seeds, pesticides, fertilizers, machinery, etc. Thus, any fluctuation in the input cost can affect the farmer's profitability.

Decreased Soil Quality: Repeated cultivation of a single crop without appropriate soil management can result in soil degradation, loss of soil fertility, and reduced crop yield. Thus, maintaining soil nutrients and investing in soil conservation is important to overcome this issue.

Dependency on Single Crop: Cultivation of a single cash crop at a large scale can enhance the risk of crop failure. Thus, using crop rotation techniques or diversifying crops can help to sort out this issue.

Limited Market Access: Farmers may face this risk because of the lack of infrastructure for transportation and storage of cash crops in rural areas. Thus, it can restrict their capability of selling their crops at a profitable rate.

Risk of Government Policies & Regulations: Many government policies, trade agreements and regulations are made for the cash crop market, and changes regarding tariffs, subsidies, or environmental regulations in these policies can impact the profitability of farmers.

Conclusion

Cash crop farming in India is an integral part of India’s agriculture and economy. These crops are a source of income for farmers and contribute to the country’s export earnings. However, maintaining a balance between the cultivation of cash crops and sustainable agriculture is important to support environmental sustainability.