Agricultural diversification is a process that refers to structuring agricultural operations in a manner that allows for varied uses of resources such as land, capital, livestock, equipment, and other assets. As with most forms of diversification, the idea is to allocate the available resources in a manner that makes the most efficient use of them while also returning the greatest level of satisfaction from the venture. Agricultural diversification can occur in just about any type of farming or agricultural setting, ranging from hobby to working farms of all sizes.
With agricultural diversification, there is normally a great deal of emphasis on what is known as crop diversification. This approach calls for allocating specific parcels or plots of land owned by the farm to certain crops. The selection of crops as well as the allocation of land to the growing of those crops is usually influenced by the climate conditions common for the area, the quality of soil and the potential for each of those crops to generate some type of profit from sales. By choosing to include several different crops in the planning for the farming operation, the owners can rely on the profits from one or more of the crops to offset any unanticipated losses that may occur with the other crops. As a result, the potential for the farming operation to generate at least some profit each growing season is enhanced.
Along with the allocation of farmland to different types of crops, agricultural diversification also takes into consideration the use of other resources, such as the labor required to cultivate and harvest various plants each season. The cost and maintenance of equipment is also considered when choosing how to allocate resources for diversified crops, as well as any incidental expenses for supplies such as seeds, fertilizer, soil testing, and other costs that are common with a working farm. Even the costs related to livestock maintained on the farm will be considered before allocating resources to each of the cash crops.
In addition to the land and selection of crops, there are ancillary factors that may exert some influence on the process of agricultural diversification. Governmental regulations and standards will often make a difference in the selection of crops that are raised in a given area. Current demand for certain types of farm products will also factor in the decision of which crops to raise and in what quantity. This is especially true for commercial farms that are primarily focused on selling crops as a business operation, but can also have some impact on smaller working farms in which the selection of crops has to do with both earning a living and supplying some of the food for families who own and work the farms.