Evaluate the structural impact of Sikkim transitioning entirely to organic farming on its agricultural yield and export potential. Which economic phenomenon best explains the initial adjustment phase where crop productivity may fluctuate before commanding premium prices?

💡 Solution & Explanation

The complete shift to organic farming removes synthetic chemical inputs, causing a temporary negative supply shock during soil rejuvenation, followed by higher revenue realization through niche global markets. Diminishing marginal returns relate to adding variable inputs to fixed assets rather than chemical cessation. Sikkim achieved the distinction of becoming the world's first fully organic state in 2016.