It is argued that crop diversification under the integrated institutional set-up of corporate contract farming (processing, packaging and retailing) may displace the petty manufacturing and services that have matured over the years in different parts of rural India as a constituent of an endogenous process driven by agricultural growth and changing land-relations. As local availability of basic food items and other agro-raw materials form the basis of rural employment diversification by farmer as well as landless households, diversification towards high value commercial crops leading to squeezing of these supplies may destroy the very foundation of the rural non-farm economy that is engaged in petty production.
