Abstract
The risk in agriculture sector is due to various factors like weather and market conditions, particularly the demand
of the commodities. This uncertainty can result in variable returns (farm income) to the decisions that farmers
make in a particular season. Diversification is a frequently used risk management strategy that involves
participation in more than one activity. It has the added advantage of mitigating price risk as well as fluctuations
in outputs. The main purpose of this paper was to determine the factors affecting crop diversification. For
determining the effect of different factors on diversification a multiple regression model was used. The values of
Entropy index computed for measuring horizontal diversification were taken as dependent variable and different
factors affecting diversification were taken as independent variables. The results showed that the main factors
affecting diversification were size of land holding, age of respondent, education level of respondent, farming
experience of respondent, off farm income of respondent, distance of farm from main road, distance of farm from
main market and farm machinery.
