Cropping patterns in India haven’t kept pace with shifting end-consumer demand from staples such as rice and wheat to income elastic and perishable non-staples. Price support from the government for staples is commonly considered to be the principal factor for the dominance of staples in the cropping pattern. As it is politically difficult to moderate or remove price supports, governments have sought to promote marketing intermediaries such as cooperatives, producer owned companies and agri-businesses that would create and sustain markets for non-staple crops. It is hoped that promoting such marketing intermediaries would lead farmers to
diversify away from rice and wheat. In this research, we identify major factors including access to labour and markets that affect the farmers’ decisions not to diversify to alternate crops and evaluate the potential contribution of marketing intermediaries to crop diversification. The paper constructs a theoretical model where crop choices are constrained by labor endowments and there are fixed costs to accessing end-consumer markets for non-staples. It is shown that marketing intermediaries can improve crop diversification provided they connect farmers to end-
consumer markets that are sufficiently large and the fixed costs of accessing these markets are ‘small’ relative to the total market size.