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School of distance education
Module 1 Basics of agricultural
economics
India
Kerala
Note
This is only a teaching note on Agricultural Economics based on the syllabus of MA
Economics ,SDE, University of Calicut for paper vii(Agricultural Economics) and should
be used along with the study material of the paper
3
Introduction to Economics
Economics is a social science concerned with the production, distribution and consumption of
goods and services.
It studies how individuals, businesses, governments and nations make choices on allocating
resources to satisfy their wants and needs, and tries to determine how these groups should organize
and coordinate efforts to achieve maximum output.
It studies economic activities of a man living in a society. Economic activities are those activities,
which are concerned with the efficient use of scarce means that can satisfy the wants of man.
Subject matter of economics is concerned with wants, efforts and satisfaction. In other words, it
deals with decisions regarding the commodities and services to be produced in the economy, how
to produce them most economically and how to provide for the growth of the economy.
The field of economics can be divided into several branches. Microeconomics and
macroeconomics are two major branches of economics.
micro-economics i s an ana lys i s o f t he behav ior o f smal l deci s ion making
un i t s , such as a f i rm , o r an indus t r y, o r a consumer , e t c . it focuses on how
individual consumers and producers make their decisions
Macro-economics is an analysis of aggregates and averages pertaining to the
entire economy, such as national income, gross domestic product, total employment, total
output, total consumption, aggregate demand, aggregate supply, etc. Macro-economics
looks to the nation's total economic activity to determine economic policy and promote
economic progress
Agricultural Economics
Agricultural economics is one of the branches of applied economics. It is the application of
economics to agriculture.
Agricultural economics is an applied social science that deals with how producers, consumers,
and societies use scarce and natural resources in the production, processing, marketing, and
consumption of food and fiber products.
According to Snodgrass and Wallace, “Agricultural economics is an applied phase of the social
science of economics in which attention is given to all aspects of problems related to
agriculture”.
Prof. Taylor defines agriculture economics, “Agricultural economics treats of the selection of
land, labour and equipment for a farm, the choice of crops to be grown, the selection of livestock
enterprises to be carried on and the whole question of the proportions in which all these agencies
should be combined. These questions are treated primarily from the point of view of costs and
prices.”
Agricultural economics takes the tools of both micro and macroeconomics and uses them to solve
problems in a specific area. With food inflation soaring and agricultural disputes at the heart of
the collapse of the latest round of world trade talks, the subject has seldom been so topical.
Agricultural economists at the micro level are concerned with issues related to resource use in the
production, processing, distribution, and consumption of products in the food and fiber system.
Agricultural economists involved at the macro level are interested in how agriculture and
agribusinesses affect domestic and world economies and how the events taking place in other
sectors affect these firms and vice versa.
At the macro level, the subject studies the way governments decide how to support farmers. In
developed economies, policy has tended to be devised so as to support and protect farmers –In
contrast, developing nations seek ways to ensure adequacy of supply of food for their people and
to gain access to world markets to earn export revenue. Both are difficult tasks and both can be
informed by the agricultural economist.
Nature and Scope of agriculture economics.
Nature of agriculture economics
The nature of agriculture economics is such that it obtains most of the principles from general
economics, thus there is no basic difference between general economics and agricultural economics.Thus
the need to separate these two is that agricultural economics does not imply direct application of the
principlesbut before application they are modified . these modification are so large and varied that there is
a complete justification for studing it as a separate branch of knowledge
• Micro as well as macro
5
We use both micro and macro tools for studing agriculture economics.. when the subject of study
is individual farmer then it is micro-economics and when we study agricultural economy as a
whole then it is called macroeconomics
• Static as well as dynamic
The basic difference between the two is that in former, time variable is not taken into account
while the latter analysis deals with a period of time.
• Applied science or pure science
Agricultural economics such as Frosten and Leoger have classified it as an applied science as it is
concerned with the identifiacation,description and classification of economic problems of
agriculture. Thus, agriculture economics is concerned with the evolving of appropriate principles
that govern the amount of land,labour, and capital that the farmer should use to maximize his profit
and using the factors efficienly
• Science or art
Agriculture is the science and art of cultivation of crops and raising the livestock and is not only a
mode of livelihood but also a way of life. Agricutiure economics is a science because it relies on
the principles and verification of data. It is an art because it deals with the various ways of
application of the principles and to suit the conditions
Scope of agriculture economics
All the tools of analysis used in general economics are employed in agricultural economics as well.
As in case of general economics, we have the same branches of agricultural economics i.e.
economics of production, consumption, distribution, marketing, financing, planning and policy
making.
Agricultural economics examines how a farmer chooses various enterprises, how he chooses
various activities in the same enterprise: how the costs are to be minimized: what combination of
inputs for an activity are to selected: but amount of each crop is to be produced but type of
commercial relation the farmer have to have with people from whom they purchase their input or
to whom they sail their product.
Agricultural economics does not study only the behavior of a farmer at the farm level. That is, in a
way, the micro analysis. Agricultural problems have a macro aspect as well. Instability of
agriculture and agricultural unemployment are the problems which have to be dealt with, mainly at
the macro level.
And then, the general problems of agricultural growth and the problems like those concerning
tenurial systems and tenurial arrangements, research and extension services which are again
predominantly macro in character. Such problems and their origin and impacts are the subject
matter of agricultural economics.
The scope of agricultural economics is larger than ‘mere economizing of resources’. Agriculture is
as we know an important sector, of the overall economy. The mutual dependence of the various
sectors of the economy on each other is well established. Growth of one sector is necessary for the
growth of the other sector. As such, in agriculture economics, we also study how development of
agriculture helps the development of other sectors of the economy.
6
1. Output terms
These terms relate to the value of production or yield of a specific farming enterprise that is used on
the farm or is sold. In certain instances it might also include sundry farm income.
o Gross value of production (GVP) for a livestock enterprise is the total value of production of
livestock products plus trading income plus the livestock inventory change.
o Gross value of production (GVP) for a cash crop enterprise is the total value of the
production from that enterprise and includes only the marketable output
o Sundry farm income is an income which is derived from a farming activity but which cannot
be directly allocated to a farming enterprise.
o Gross value of production is the sum of all the farm enterprises, (cash crops and livestock
enterprises) plus sundry farm income).
o Gross income of an enterprise is calculated in the same way as gross value of production for
crop and livestock enterprises except that internal transfers (intermediate inputs) of products
from one enterprise to another are not taken into account
o Gross farm income is the sum of the gross incomes from all the cash crop and livestock
enterprises on the farm, plus sundry farm incomes
2. Input terms
These terms relate to inputs used in the production process, for example feed, materials, labour and
machinery that can be measured in physical and/or financial terms.
Accounting input terms
o Imputed charges (or costs) are estimated costs representing the value of benefits enjoyed by
a farming enterprise or the farm as a whole during the accounting period, but without any real
expenditures having been incurred.
o Depreciation involves the distribution of the cost of a durable asset over the productive life of
that asset.
General cost terms
o Total costs(TC) include the total costs of all resources used in the farming enterprise during
a particular year including stock adjustments and non-cash items. Total costs consist of
fixed and variable costs
o Total factor costs (TFC) are the costs associated with capital (interest), land (rent or lease),
labour (salary and wages) and management (salary).
o External factor costs are interest, rent, wages and salaries, and management salaries
actually paid in respect of hired production factors.
o Own factor costs are the imputed charges in respect of production factors owned, or for own
services rendered (labour and management).
o Total farm costs (TFC) are total costs less total production factor costs (excluding labour).
7
o Variable costs represent that portion of total costs that vary in (approximately) direct
proportion to changes in the scale of that enterprise within a given production system, or if
the intensity of production per unit changes. In other words, variable costs are those costs
that can be controlled or avoided in the short term.
o Fixed costs are that portion of total costs which are regarded as fixed in the short term and
therefore cannot be avoided or controlled in the short term, irrespective of the scale or
intensity of production.
o Cost of hired management includes the cost of any paid manager, or management service,
employed by the farm business.
o Imputed rent or lease on land and fixed improvements. Imputed rent is the rental value of
owner occupied land and fixed improvements
3. Economic and financial terms
The following terms are used to describe the various levels of economic and financial surpluses resulting
from the deduction of certain inputs from output. Some are applicable at the enterprise level and some at
the whole-farm level.
o Gross margin (GM) of an enterprise is the enterprise gross production value less directly
allocatable variable costs. The specific variable cost items included will depend on the
purpose of the calculation and the practical feasibility of the allocation. Therefore cost
items included must be specified.
o Gross margin of a Grazing Livestock Enterprise is the particular enterprise’s gross
production value less the directly allocatable variable costs including that portion of a
forage crop’s directly allocatable variable costs.
o Gross Margin of a Cash Cropping Enterprise is the particular enterprise’s gross
production value less the directly allocatable variable costs
o Gross Margin of a Pasture or Forage Crop is the sum of the grazing livestock
enterprise’s gross margins(before deduction of forage crop variable costs) plus sundry
revenue from grazing let and occasional sales
o Total Gross Margin is the sum of the gross margins from all cash crop and livestock
enterprises.
Demand
. Demand is defined as the willingness of buyer and his affordability to pay the price for
the economic good or service.
Quantity Demanded represents an exact quantity (how much) of a good or service is
demanded by consumers at a particular price.
The demand curve shows the quantity of a good demanded at various prices.
Demand curve have negative slope
Law of demand
8
The law of demand expresses a relationship between the quantity demanded and its
price
The law of demand states that quantity demanded varies inversely with price. That is,
higher the price, lower the quantity demanded and vice versa
Supply
The quantity offered for sale at a price at a time.
The supply curve shows the quantity of a good supplied by firms at various prices.
Supply Curves have positive slopes.
Law of supply
"Other things remaining the same, if the price of a commodity increases its quantity
supplied increases and if the price of a commodity decreases, quantity supplied also
decreases".
positive relationship between price and quantity supplied of a commodity. The
functional relationship between quantity supplied and the price of a commodity can be
expressed as: Qs = f(P)
The Market Clearing Price
The Quantity at which the Demand and Supply curve equals gives the Price that clears
the market.
At the market clearing price the demand of buyers willing to pay that price or higher
just equals the willingness of firms to supply that quantity.
At any other price either:
– Demand exceeds Suppliers willingness to provide goods (price too low).
– Demand is less than the amount produced (price too high).
Elasticity
Elasticity means responsiveness.
Price Elasticity of demand means responsiveness of quantity demanded to a change in
price
It indicates the degree of responsiveness of quantity demanded of a good to the change
in its price, other factors such as income, prices of related commodities that determine
demand are held constant.
o Inelastic demand- small change in demand for a change in price.
o Elastic demand- small changes in price cause large demand changes.
o Goods more necessary to life (e.g., medicine, water) usually have less elastic
demand (steeper slopes) than other items.
Elasticity of Agricultural Goods
Demand for most farm products is inelastic. People can consume only so much then
they are satiated. Even if price drops they will not buy much more.
When demand is inelastic a drop in price that spurs more quantity being sold results in
lowers revenue and profit for the producer.
Inelastic demand is a serious problem for farmers
Production Theory
9
Production in economic terms is generally understood as the transformation of inputs
into outputs.
The production function expresses a functional relationship between quantities of inputs
and outputs. It shows how and to what extent output changes with variations in inputs
during a specified period of time
Algebraically, Q =f (L, M, N, , T) where Q stands for the output of a good per unit of
time, L for labour, M for management (or organisation), N for land (or natural
resources), for capital and T for given technology, and f refers to the functional
relationship
• A production possibility curve/frontier (PPF) shows the maximum possible output
combinations of two goods or services an economy can achieve when all resources are
fully and efficiently employed
Basic concepts in production theory
An input is a good or service that goes into the production process.
(i) labour (ii) capital(iii) land(iv) Entrepreneurship
An output, on the other hand, is any good or service that comes out of a production
process
Short run – At least one input is fixed – All changes in output achieved by
changing usage of variable inputs
Long run – All inputs are variable – Output changed by varying usage of all inputs
Total Product: It gives maximum of output that can be produced at different levels
of one input, assuming that the other input is fixed at a particular level.
Marginal Product: Change in the output resulting from a very small change in one
factor input, keeping the other factor inputs constant.
Average Product: Total production for per unit of output.
Law of Diminishing Returns or the Law of Variable Proportion: The Shape of total product
curve is determined by law of diminishing return.
The law of diminishing returns, states that with a given state of technology if the
quantity of one factor input is increased, by equal increment, the quantities of other
factor inputs remaining fixed, the resulting increment of total product will first
increase but decreases after a particular point.
The Three Stages of Production
Stage I: Stage of Increasing Returns:
AP is increasing and the MP is greater than the AP.
MP is increasing, reaching maximum and starts decreasing
Up to the point where MP maximum, TP increasing at increasing rate. After that it
increase at decreasing rate
Both AP and MP are decreasing. But MP is positive.
Stage ends where MP reaches zero. When MP is zero TP maximum
10
TP is diminishing and the MP is negative.
Law of Returns to scale/Long run production function : in long run all factors are variable. The
relationship between input and output in long run is known as law of returns to scale.
Cetrisparibus, in long run as firm increases all factors of production the output may
rise initially at rapid rate than the rate of increase in input, then increase at same
rate of proportion and ultimately at the rate less than the rate of increase in input
3 Stages of returns to scale
Stage 1 stage of increasing returns to scale
Stage 2 stage of constant returns to scale
Stage 1 stage of decreasing returns to scale
REFERENCES
www.investopedia.com/terms/e/economics.asp
www.pearsonhighered.com
http://www.studyingeconomics.ac.uk/module-options/agricultural-economics/
http://www.economicsdiscussion.net/agricultural-economics/agricultural-economics-
meaning-scope-and-nature/21406
http://www.studyingeconomics.ac.uk/module-options/agricultural-economics/
2005
Managerial economics ,Prof. Triputi Mishra –Shailesh J Mehta school of
management, IIT Bombay
Agriculture sector in India
Sector wise classification of Indian economy • Indian economy is classified into three sectors — Agriculture and allied, Industry and Services.
• Agriculture sector includes Agriculture (Agriculture proper & Livestock), Forestry & Logging,
Fishing and related activities.
Electricity, Gas, Water supply, and Construction.
• Services sector includes 'Trade, hotels, transport, communication and services related to
broadcasting', 'Financial, real estate & prof servs', 'Public Administration, defence and other
services
Gross Value Added (GVA)
Services sector is the largest sector of India. Gross Value Added (GVA) at current prices for
Services sector is estimated at 73.79 lakh crore INR in 2016-17. Services sector accounts for
53.66% of total India's GVA of 137.51 lakh crore Indian rupees.
With GVA of Rs. 39.90 lakh crore, Industry sector contributes 29.02%.
While, Agriculture and allied sector shares 17.32% and GVA is around of 23.82 lakh crore INR
At 2011-12 prices, composition of Agriculture & allied, Industry, and Services sector are 15.11%,
31.12%, and 53.77%, respectively.
Sector 1980 1990 2001 2012 2018
A g ri
In d
u st
se rv
ic es
12
History of Indian agriculture
India has an ancient tradition of farming since beginning of human civilization. It has been
referred in Vedic literature and many other ancient scriptures.
Rig Vedic economy was sustained by a combination of pastoralism and agriculture. Cow
was the centre of the Vedic village economy and in the centre of the Krisi (agriculture)
Paddy, barley and wheat were the main crops during later Vedic period.
Zamindari was developed as a state right into kings superior ownership of the entire domain
during medieval period
Great attention had been given towards irrigation development during the Pre-Mughal and
Mughal period
Agriculture during colonial British period (1757 to 1947):
The British East India Company had played a role of traders between the periods of 1600
AD to 1757 AD in India But, company entered as a ruler from 1757 in Bengal state and till
1818 brought entire India under the rule of company.
Under the British, the condition of the Indian peasants deteriorated steadily. After obtaining
the diwani of Bihar, Bengal and Orissa the Englishmen introduced different land revenue
policies
Zamindari, Ryotwari and Mahalwari land tenure systems were existed in India.
British Impact on the agriculture of India :
• Britishers introduced a new class of landlords called Zamindars who regarded land as
their private property and aimed at obtaining maximum monetary gains out of it.
• The cultivators, the actual tillers of land, were mere tenants with no rights and could
be evicted by the land-owners.
• The fanner was very often heavily in debt aid in the clutches of the money-lenders,
who, eventually, came to-control the land and its produce.
• Agriculture production was no longer for use in the village only and much of it was
sent to the market for sale.
• Farmers were forced to produce cash crop to feed the industries in England.
• It ruined the self-sufficiency of the village.
• The new revenue systems led to peasant indebtedness and commercialization of
agriculture.
• This ultimately resulted in mass poverty and problem of landlessness.
Commercialization of agriculture
• Commercialization of agriculture became prominent around 1860 A.D. This brought about
a change from cultivation for home consumption to cultivation for the market. Cash
transactions become the basis of exchange and largely replaced the barter system.
• Various factors led to the commercialization of agriculture during the British rule in India.
The chief factor was the colonial subjugation of India under the British rule. India was
reduced to the supplier of raw materials and food grains to Britain and importer of British
manufactured goods. Many commercial crops like, cotton, jute, tea, tobacco were
introduced to meet the demand in Britain.
• Better means of communication (equipped with rapid development of railways and
shipping) made trade in agricultural products feasible, especially over long distances. The
emergence of grain merchants was a natural adjunct to this and greatly facilitated
agricultural trade. Monetization of land revenue payments was another important casual
factor for agricultural commercialization.
• Further, increasing demand for some of the commercial crops in other foreign countries
gave impetus to commercialization of agriculture.
• During the later part of 19th century, the production of commercial crops increased by 85
percent and that of food crops fell by 7 percent. This had a devastating effect on the rural
economy and often took the shape of famines.
• The British regime in India did supply the irrigation works but rarely on the scale
required.
Agriculture during planning period (1951-2011):
1. The First Plan (1951-56):
The approach of first plan towards agricultural development was to avoid farmers
exploitation, increase productivity of agriculture and promote farmers for increasing use of
inputs and technology
A Community development programme had launched in 1952 to achieve the goals of plan
Agriculture including irrigation and power was given top priority
The relative share of plan outlay on agriculture and community development, major and minor
irrigation and power development was 15 percent, 16 percent and 13 percent respectively in
first plan
3 million hectares of irrigation potential created and increased power generation from 2.3
million Kw to 3.4 million Kw during the first five year plan
2. The Second Plan (1956-61):
However, there was a sudden reversal of strategy during the Second Plan.
The Government adopted the strategy of developing heavy industries following the then Soviet
model of industrialisation. Consequently, the outlay on agriculture was reduced to 20 p.c from 31
p.c. made in the First Plan
3. The Third Plan (1961-66):
14
The planners subsequently realized that the strategy of development adopted during the Second
Plan was wrong. It was felt that, in an agrarian economy, any setback on the agricultural front
would spell disaster for the whole economy.
Thus, during the Third Plan the Government made greater allocation for agriculture i.e., Rs 1,745
crore compared to Rs 950 crore in the Second Plan. However, the percentage share of agriculture
in total plan outlay remained unchanged at 20.
The main objectives of the Plan were to achieve self-sufficiency in food grains and increase in
agricultural production to meet the requirements of industry and export.
4. The Fourth Plan (1969-74):
While most of the programmes adopted under the new strategy were continued in the Fourth Plan,
a new orientation was imparted to agricultural policy. In order to achieve growth with social
justice, the agricultural policy laid stress on helping the weaker and vulnerable sections of the
population and backward areas.
High priority was accorded to technology as a major input
The production of food grains reached an all-time high of 108 million tonnes in 1970-71.
However, poor monsoons in the next two years led to crop failure and this created the problem of
price inflation.
5. The Fifth Plan (1974-79):
Renewed emphasis was placed on agriculture in the Fifth Plan. The growth target in the
agricultural and allied sectors had been fixed at 3.94 p.c.
As in the Fourth Plan, outlay on agriculture was 21 p.c. of total Fifth Plan outlay.
6. The Sixth Plan (1980-85):
The agricultural growth pattern during the Sixth Plan period took into account the immediate as
well as long-term needs of agricultural commodities—both for domestic consumption and for
export.
The highest priority was assigned to bridging the gap prevailing between actual and potential farm
yields even at current levels of technology through the removal of existing constraints.
Agriculture and allied activities received adequate attention through the development of
appropriate packages of technology, services and public policie
7. The Seventh Plan (1985-90):
Total outlay on agriculture, irrigation and rural development was Rs. 48,100 crore or 22 p.c. of the
total plan outlay.
The Seventh Plan aimed at an agricultural growth rate of 4 p.c. p.a. and the target for food grains
output was kept at 3.7 p.c. p.a
8. The Eighth Plan (1992-97):
The Eighth Plan gave priority to the “growth and diversification of agriculture to achieve self-
sufficiency in food and generate a surplus for exports.”
Investment in agriculture, irrigation and allied sectors showed a sharp rise over the previous plans.
15
During the plan period, there has been a shortfall in investment in all the sectors, including
agriculture where, actual investment was just 59 p.c. of planned investment. Despite this,
agriculture recorded a growth rate of 4.7 p.c.
9. The Ninth Plan (1997-2002):
The thrust of the Ninth Plan was to achieve agriculture-led growth. For the first time since 1960s,
the Planning Commission had focused on agriculture, instead of industry, in the Ninth Plan. It was
targeted to grow at 4.5 p.c. p.a. during the Ninth Plan period. It envisaged a food production of230
million tonnes against the 1990 “million tonnes attained in 1996-97.
to achieve this growth rate, the Planning Commission recommended a four-pronged strategy
including a viable minimum support price and input subsidy policy. The public sector had been
allocated Rs 8,75,000 crore. Agriculture got a whopping 19.4 p.c. of the total on outlay.
The actual growth rate in agriculture and allied activities fell short even of the revised targets of
3.9 p.c. Realised growth rate for 1997-2002 came to 2.1 p.c. The reform process had failed to
stimulate our agricultural sector
10. The Tenth Plan (2002-07):
The Ninth Plan experienced a slowdown in the growth potential of the economy that needed to be
reversed in the Tenth Plan. As for as the sectoral allocation of public resources is concerned,
agriculture did not receive high priority in the Tenth Plan.
Tenth Plan allocation for agriculture, irrigation, etc., amounted to Rs 3,05,055 crore— an increase
of 51.4 p.c. over the Ninth Plan. It aimed at pushing up the growth rate of agriculture 2.1 p.c. on
the average attained during the Ninth Plan to 4 p.c. during the entire Plan period of the Tenth Plan.
Tenth Plan recorded a growth rate of 2.3 p.c. (because of poor monsoon. Deficient rainfall in 2002,
2004 and 2006 has led to (i) poor agricultural growth, (ii) reduction in the share of agriculture in
GDP from 23.8 p.c. in 2002-03 to 20.5 p.c. in 2006-07.
Economic Survey, 2006-07 says, “The structural weaknesses of the agriculture sector reflected
in low level of public investment, exhaustion of the yield potential of new high yielding
varieties of wheat and rice, unbalanced fertiliser use, low seeds replacement rate, inadequate
incentive system and post-harvest value addition were manifest in the lackluster growth
during the new millennium.”
11. The Eleventh Plan (2007-12) and Second Green Revolution:
Against the backdrop of miserable performance of Indian agriculture during the Tenth Plan, a
higher annual growth rate of 4 p.c. p.a. to achieve the targeted GDP growth rate of 10 p.c. over this
plan period is urgently needed in the current plan.
To attain such growth rate, what is needed is an improvement in the scale of operations and quality
of agricultural reforms introduced by State Governments and various agencies. These reforms
must aim at efficient use of various agricultural resources and conservation of soil, water and
energy on a sustainable basis and in a holistic framework.
However, this plan places emphasis on corporate investment to boost agricultural growth. The
approach paper envisages contract farming as a method of attracting corporate investment in
Indian agriculture.
16
The Approach Paper of the Eleventh Plan has highlighted this holistic framework and
mapped out this following strategies to be adopted during the Eleventh Plan period:
(i) Doubling the rate of growth of irrigated areas;
(ii) (ii) Improving water management, water harvesting and watershed
development;
(iii) Diversification of crops into high value outputs (fruits, vegetables,
flowers, herbs and spices) without disturbing food security;
(iv) Providing easy access to credit at affordable rates,
(v) Refocusing on land reform issues.
Thrust areas of the Eleventh Plan relating to agriculture and irrigation cover:
(i) Ensuring food security;
(iii) Better seed production,
(iv) Development of modern markets, etc.
The Approach Paper of the Eleventh Plan supports the recommendations of the National
Commission on Farmers relating to soil health care and enhancement, water harvesting, credit and
insurance reform, technology delivery, assured and remunerative marketing, etc.
Finally, this Approach paper calls for a ‘Second’ green revolution that involves improvement in
farm productivity on a sustainable basis—without injuring ecology.
Five Year Plans
17
Land Reforms in India:
The Government of India is aware that agricultural development in India could be achieved only
with the reform of India's rural institutional structure.
It was said that the extent of the utilization of agricultural resources would be determined by the
institutional framework under which the various inputs were put to use.
M. Dandekar observed: "Among the actions intended to release the force which may initiate or
accelerate the process of economic growth, agrarian reform usually receives high priority".
The important objectives of land reform measures in India were:
1. to enhance the productivity of land by improving the economic conditions of farmers and
tenants so that they may have the interest to invest in and improve agriculture,
2. to ensure distributive justice and to create an egalitarian society by eliminating all forms
of exploitation,
3. to create a system of peasant proprietorship with the motto of land to the tiller and
4. to transfer the incomes of the few to many so that the demand for consumer goods would
be created.
The Second Five-Year Plan emphasised the objectives of the land reforms thus:
i. To remove the impediments in the way of agricultural production as may arise from the
character of agrarian structure and to evolve an agrarian economy conducive of high
levels of efficiency and productivity;
ii. To establish an egalitarian society and to eliminate social inequality;
Thus the land reforms in India aimed at the redistribution of ownership holdings and reorganizing
operational holdings from the view point of optimum utilisation of land. It has also aimed at
providing security of tenure, fixation of rents and conferment of ownership
J C Kumarappa committee- 1949,-Congress- Agrarian relations,UP- Zamindari Abolition
Committee(GB Pant) etc. are first steps towards the reforms
Bihar land reforms Act-1950,WB Land reforms Act-1955,Kerala- Agrarian Relations Bill.1958
,Kerala land reforms Act- 1969-70,Andra Pradesh ceiling on agricultural act-1961
the land reform legislation was passed by all the State Governments during the Fifties touching
upon these measures;
1. Abolition of intermediaries.
2. Tenancy reforms to regulate fair rent and provide security to tenure.
3. Ceilings on holdings and distribution of surplus land among the landlords.
4. Consolidation of holdings and prevention of their further fragmentation and
5. Development of cooperative farming.
By 1972, laws had been passed in all the States to abolish intermediaries. All of them had two
principles in common:
1) abolition of intermediaries between the state and the cultivator and
2) the payment of compensation to the owners.
18
But there was no clear mention about just and equitable compensation. Therefore, the Zamindari
Abolition Act was challenged in the High Courts and the Supreme Court.
But the Government accomplished the task of abolishing intermediary tenures bringing nearly 20
million cultivators into direct contact with the state. Nearly 57.7 lakh hectares were distributed to
landless agriculturists after the successful completion of the Zamindari Abolition Act.
The tenancy reform measures were of three kinds and they were
1) regulation of rent
2) security of tenure and
3) conferring ownership to tenants.
As a result of all these measures, 92 per cent of the holdings are wholly owned and self-operated in
the country today.
One of the controversial measures of land reforms in India is the ceiling on land holding. By 1961-
62, ceiling legislation had been passed in all the States. The levels vary from State to State, and are
different for food and cash crops.
In order to bring about uniformity, a new policy was evolved in 1971. Besides, national guidelines
were issued in 1972, which specified the land ceiling limit as;
i. The best land 10 acres
ii. For second class land 18-27 acres; and
iii. For the rest, 27-54 acres with a slightly higher limit in the hill and desert areas
Assessed from the point of view of two broad objectives namely, social justice and economic
efficiency, land reforms, one might say, has been partially successful. Since the adoption of land
reforms, the pattern of ownership in the country is changed but one wonders whether it will ensure
social justice in the country. Indian agriculture is in a stage of transition, from a predominantly
semi-feudal oriented agriculture characterized by large-scale leasing and subsistence farming to
commercialised agriculture or marker oriented farming.
Another noteworthy feature is the emergence of modern farmers who are substantial landholders
and cultivate their land through hired labourers using new techniques.
One of the major negative features of agrarian transition in India is the continued concentration of
land in the hands of the upper strata of the rural society. This has not undergone any change in the
past five decades, despite the reforms. In fact, leasing in by the affluent farmer is common place.
19
Green revolution
• The significant increase in agricultural production in 1960s consequent upon the adoption of new
agricultural strategy and use of HYV seeds and chemical fertilizers is called Green Revolution.
• The term “Green Revolution” was first used in 1968 by then USAID director William Gaud
• The key pillars of this revolution were high yielding variety (HYV) seeds, chemical fertilizers,
pesticides and promoted irrigation facilities.
• Green revolution was introduced as a package programme with seed-water-fertilizer-pesticide-
technology components and was originally called High Yielding Variety Programme (HYVP).
• It was launched in Kharif of 1966-67 with an objective to attain self-sufficiency in food by 1970-
71.
• Sponsor of this programme was Rockefeller Foundation.
• Later became the “The International Maize and Wheat Improvement Center” or CIMMYT.
• The core philosophy of the programme was to increase the productivity of food grains by adopting
latest varieties of inputs of crops.
• Introduction of new high yielding varieties of improved seeds and enhanced application of the
fertilizers and extended use of pesticides were its main features. The farmers were also extended
finance through a relaxed mechanism.
• The programme turned out to be a major breakthrough and a turning point in the history of
agriculture development in India.
• “The man who saved a billion lives”
• Nobel Peace Prize in 1970
• Borlaug and Dr. Robert Glenn Anderson to India.
• World Food Prize created in 1986 by Norman Borlaug-
• first prize M. S. Swaminathan, in 1987-
• MS Swaminathan Research Foundation – Chennai
M S Swaminathan
• Dr. M. S. Swaminathan was the adviser of the Minister of Agriculture and he had invited Dr.
Borlaug to India
• 1999- 'Time 20' list of most influential Asian people of the 20th century
• 2004 – 2014 – Chairman, National Commission on Farmers.
Chidambaram Subramaniam
He ushered the Indian Green Revolution.
Basic elements of green revolution
Many factors can be enumerated for green revolution. Some of them are discussed below:
20
Increased area under farmland
• Although the area under cultivation was increasing ever since 1947; the green revolution
accelerated it.
HYV seeds
• High Yielding Variety Programme (HYVP) was launched in 1966 especially on five crops
viz. wheat, rice, pearl millet, maize and sorghum.
• Use of HYV seeds was the most scientific aspect for the Green Revolution.
Use of Chemical Fertilizers
• The green revolution truly began when in 1967; Indira Gandhi government had imported
18000 tonnes of HYV seeds from Mexico
• These seeds needed chemical fertilizers to maximize yield. The per hectare use of chemical
fertilizers skyrocketed in those years; and this was the reason that some call green revolution
as a chemical revolution in effect
Expansion of Irrigation
• In 1951, the well irrigated area accounted for only 17-18% of the total cultivated area; and
majority of the farmers were dependent upon the rains.
• The government undertook many minor, major and multipurpose irrigation projects so that
maximum area can be brought under irrigigation
• Dams were built to arrest large volumes of natural monsoon water which were earlier being
wasted, simple irrigation techniques were also adopted.
Double Cropping
• It was because of availability of the inputs and irrigation that the farmers could think of
having two crops in a year.
• Double Cropping was the primary feature as well as outcome of the Green Revolution.
• Before that, one crop per year was a practice because there was only one monsoon rain per
year. Double cropping was possible because of one natural monsoon and other artificial
monsoon that came in the form of huge irrigation facilities
Outcomes of Green Revolution
Although green revolution happened in other developing countries also in those days, but India
was most successful among them. The record output of food grains of 131 million in 1978-79 established
India as one of the largest agricultural producers of the world. No other country in the world which
attempted the Green Revolution recorded such level of success. India also became an exporter of food
grains around that time
Not only in production, but also in productivity green revolution was a success. The yield per unit
of farm land improved by more than 30 percent between 1947 and 1979. During first 10 years of Green
Revolution, crop area under HYV seeds grew from 7% to 22%.
Impact on Cereal Production
• The key achievement of the green revolution was boost in production of two major cereals viz.
Wheat and rice.
21
• But it was also a major drawback. The revolution was mainly confined to High Yielding Varieties
(HYV) cereals, mainly rice, wheat, maize and jowar. It did It did not cover other coarse cereals,
millets and neither had it covered pulses.
Impact on Commercial Crops
• Initially, green revolution was directed to increase the production of the food grains. It had no
substantial impact on production of commercial crops such as sugarcane, cotton, jute, oil seeds,
and potatoes until 1973-74.
• However, after that year, significant improve in output was seen in sugarcane, oilseeds and
potatoes.
Impact on Cropping Pattern
• Green revolution resulted in two significant changes in the cropping pattern of India.
• Firstly, since the output of the cer reals has risen and output of pulses remained stagnant; there
was a decline of importance of pulses in the foodgrains. This resulted in increased area under
cereals crops and decreased area under pulses. Secondly, among cereals, importance of Wheat has
grown;
• Secondly, among cereals, importance of Wheat has grown; in fact doubled from 15% in 1950-51
to 38% in 2010-11 at the cost of not only cereals but also rice.
This is evident from the below table.
Impacts on Industry and economy
• Since the crops that used the HYV seeds needed more water, fertilizers, pesticides, fungicides etc,
there was a boom i in the domestic manufacturing sector also.
• The industrial growth created new jobs and thus contributed to the economy.
• Further, the expansion of irrigation necessitated the development of dams and the water stored in
them was used to create hydropower. This helped to boost quality of life as well as growth of
industrial sector.
• The adoption of new technology has also given a boost to agricultural employment because of
diverse job opportunities created by multiple cropping and shift towards hired workers
• At the same time, there has been displacement of agricultural labour by the extensive use of
agricultural machinery.
• Green revolution has also strengthened the linkages between agriculture and industry. Even under
traditional agriculture, the forward linkage of agriculture with industry was always strong, since
agriculture supplied many of the inputs of industry; but backward linkage of agriculture to
industry – the former using the finished products of the latter was weak.
year Rice wheat Coarce grains
1950 -51 48 15 37
1960-61 50 16 34
1990-91 46 34 20
2010-11 43 38 19
22
• Now, however, agricultural modernisation has created a larger demand for inputs produced and
supplied by industries to agriculture and thus the backward linkage has also become quite strong.
In this way, the linkage between agriculture and industry has got strengthened
• The new agricultural technology has made the farmer market-oriented. The farmers are largely
dependent on the market for the supply of inputs and for the demand for their output.
• At the same time, the demand for agricultural credit has also increased as the new technology has
increased the cash requirements of the farmer.
• Besides, modern technology has definitely proved its superiority over the traditional technology
only in those areas where appropriate conditions prevail.
• But as mentioned above, these conditions prevail only in certain selected areas and the rest of the
country is not yet suitable for advanced technology.
• What is, therefore, wanted is the evolution of a low-cost technology which can be adopted by all
small farmers and which can use and exploit the local resources
Green Revolution and growth of Capitalistic Farming in Indian Agriculture
• The green revolution necessitated the heavy public expenditure in the seeds, From the farmer’s
side, it implied use of better and improved inputs of agriculture which needed more capital.
• Making investments in tube wells, pump sets, fertilizers and farm machinery was beyond the
capacity of small and medium farmers.
• Despite of efforts of the government; Green Revolution helped growth of capitalist farming in
India and it led to concentration of wealth in the hands of large farmers. The benefits of green
revolution hardly trickled down to poor and marginal farmers
• The most glaring example of this was Punjab. This state saw a sudden rise of “Gentlemen
farmers”, the people such as retired servicemen, retired civil servants, and businessmen etc.
who adopted farming as profession.
• Further, during and after green revolution; the need for institutional reforms in agriculture was
not recognized.There was a need to take urgent measures on land reforms and tenancy reforms
but that did not happen. Since bulk of the peasant population did not enjoy the ownership
rights; they were forced to accept share cropping rather than being cultivator themselves. A
typical capitalist principle of profit maximisation was put in place in which the owner-farmers
reaped profit much more than the tenant cultivators. This ultimately resulted in widening of
the disparities between the large farmers and landless labourers / tenant farmers
Green Revolution and Regional Inequalities
• HYVP was initiated on a small area of 1.89 million hectares in 1966-67 and was limited to the
irrigated Pun njab, Haryana and Western Uttar Pradesh. Naturally, the benefits of the new
technology remained concentrated in this area only.
• Moreover, since green revolution remained limited to wheat for a number of years, its benefits
mostly accrued to areas growing wheat
• . Even this is an overstatement because within the area under wheat in HYVP, only regions having
assured water Even this is an overstatement because within the area under wheat in HYVP, only
regions having assured water supply and a package of other inputs (on whose -availability the
success of HYVP crucially depends) derived benefits from the new agricultural strategy
23
• In fact, the combined share of Northern States (Punjab, Haryana and Uttar Pradesh) in total
foodgrains production increased from 25.2 per cent during 1960-62 to 28.5 per cent during 1972-
74 and further to 38.7 per cent during 2004-05 to 2006-07
• As against this, the share of all other State-groups registered a decline. One account of the above
reasons, it has been argued that the new agricultural strategy has led to an increase in regional
inequalities.
Labour augmenting and labour displacing element in Green Revolution
• There is a general consensus that the adoption of new technology in Green Revoluti Revolution
had reduced labour absorption in agriculture.
• The uneven regional growth was mainly responsible for the low absorption of labour within
agriculture.
• In a large number of states, especially in those regions where there was abundant availability of
labour, the growth of output was too slow to generate adequate employment opportunities.
• In high growth regions, labour was not plentiful and wage rates were high. The sudden rise in the
demand for labour in these areas induced mechanisation and labour-saving practices in general.
• This happened despite the use of migrant labour from the less developed regions for certain
operations.
Second green revolution(strategy adopted in 11th plan)
• Aims at efficient use of resources and conservation of soil, water and ecology on sustainable basis
and in a holistic framework
The approach paper suggested following strategy to raise agricultural output
• Doubling rate of growth of irrigated area
• Improving water management, rain water harvesting and watershed development
• Reclaiming degraded land and focusing on oil quality
• Bridging the knowledge gap through effective extension
• Promoting animal husbandry and fishery
• Providing easy acess to credit at affordable rates
• Refocusing on land reform issues
Call for evergreen revolution
• The pioneer of Indian green revolution Mr.M.S.Swaminathan, gave a new call for evergreen
revolution for doubling the present production level of food grains from 210 million tones to 420
million tone.
• For making evergreen revolution a success he stressed on adopting best scientific techniques and
promoting organic farming
Agriculture in India: the present scenario
• Agriculture plays a vital role in India’s economy. . Agriculture is the largest livelihood
provider in India.54.6% of the population is engaged in agriculture and allied activities
(census 2011) and it contributes 17% to the country’s Gross Value Added (current price
2015-16, 2011-12 series).
• India –largest producer of Milk, Jute, Pulses, Mango, Banana and Sapota. Second largest
producer of wheat, vegetables,fish,onions etc
• India ranks third in tobacco production and sixth in coffee production
• India accounts 10% of world food production
• food grain production rose from 52 million tons in 1951-52 to 257.4 million tons in 2011-12
• However, the share of agriculture in national income has been comedown. Share of GVA of
Agriculture and Allied sector in total GVA was 18.2 in 2011-12 which came down to 17.4
in 2016-17.
1) Share of agriculture in National Income:
• Agriculture contributes a major share in the national income of India.
• Though the share of agriculture in national income has been decreasing, it still has a
substantial share in GDP.
• Agriculture including allied activities, accounted for 15.87 percent of GDP
• The contribution of agriculture in national income in case of some development countries
are as follows. USA – 3% Canada 4% Australia 5%
• This indicates that the role of agriculture in the national income in the developed countries
is negligible. More developed a country, smaller is the contribution of agriculture in the
national income and vice-versa.
2) Agriculture as a source of livelihood:
In India more than 50 per cent population dependent on agriculture. On the other hand in the
developed countries less than 10 per population dependent on agriculture
Indian agriculture and pattern of employment:
Year Percentage of working population in agriculture
1961 69.5
1981 59.4
2011 54.6
While in
Many industries dependent on agriculture, raw material from agriculture is supplied to many
industries e.g. sugar industries, Cotton Industries, Paper Industries, tobacco industries, Chilies,
turmeric etc. Many industries supply the inputs to the agricultural industry e.g. fertilizers,
insecticides, pesticides, implements and machineries like tractors etc.
4) Role of agriculture in the field of international trade:
Many agricultural products like tea, sugar, oilseeds, tobacco, spices contribute the major share in
export. In addition to this, we are exporting fruits some vegetables and flowers to the other
countries. Now days we are exporting basmati rice to foreign countries. The proportion of agri.
goods is to the tune of 50%. In addition to this goods manufactured from agriculture products
contribute 20 percent. Thus, agriculture contributes 70% in export.
5) In addition to the above the role played by agriculture in Indian is as under.
• Many agriculture produce like food grains, fruits are transported by roadways and railways. Thus,
it helps in employment of many people in this field.
• If the agricultural production is good, cultivators will earn more income. They will be in position
to purchase manufactured products and other inputs required in agriculture. In short, we can say
that the prosperity of the country will depend upon the prosperity of agriculture.
• Largest Employment Providing Sector:
• Contribution to Capital formation:
• Market for Industrial Products:
Importance in International Trade:
2. Source of employment-
4. Supply of raw materials to industrial sector.
5. Market for industrial product.
6. Earner of foreign exchange.
7. Significance for trade and transport.
8. Source of revenue for the government-
Agriculture Gross Value Added (GVA)
Central Statistics Office (CSO), Ministry of Statistics & Programme Implementation has
released the New Series of National Accounts, based upon revising the base year from
2004-05 to 2011-12.
As per the Estimates the Agriculture and Allied sector contributed approximately 17.0% of
India’s Gross Value Added (GVA) at current prices. Gross Value Added(GVA) of
Agriculture and Allied sector and its share in total GVA of the country during the last 3
years including the current year, at current prices of 2011-12 series is as follows:
26
Sectors
Per cent to total 18.2 17.0
%)
Capital Formation in Agriculture and Allied Sector:
Gross Capital Formation (GCF) in Agriculture and Allied sector is estimated separately for
public, private corporate and the household sectors. Items included in the estimates of GCF are:
(i) Improvement of land and Irrigation works
(ii) Laying of new orchards and plantations
(iii) Purchase of agricultural machinery and implements
(iv) Agriculture construction works
(v) Additions to livestock
(vi) Fishing boats and nets etc
Gross Capital Formation (GCF) in Agriculture and Allied sector relative to Gross Value
Added (GVA) at 2011-12 basic prices.
period GCF in
Growth in GVA
Share of GVA
Share in GCF 7.6 8.5 7.8 6.9 --
Production of Major kharif crops
Production of major kharif crops (in million tonnes)
Source: directorate of economics and statistics, department of
agriculture,cooperation and farmers
Farm production in 2012 – 13( in million tones)
crop 2011 - 12 2012 - 13 % change
sugarcane 361.04 334.54 -7.33
Foodgrains 259.32 250.14 -3.54
Rice 105.31 101.80 -3.33
Wheat 94.88 92.30 -2.71
rice 90.6 93.9
cotton 35.20 33.80 -3.97
pulses 17.09 17.58 2.80
jute 11.40 11.13 -2.36
mustard 6.60 7.36 11.51
year production
1995-96 180.4
2000-01 195.9
2005-06 208.6
2010-11 244.78
2011-12 250.14
Crops/groups of crops states
Wheat Uttar Pradesh, Punjab, Haryana
Maize Karnataka, Andhra Pradesh, Maharashtra
Total coarse cereals Rajasthan, Karnataka, Maharashtra
Total pulses Madhya Pradesh, Uttar Pradesh, Rajasthan
Total foodgrains Uttar Pradesh, Punjab, Madhya Pradesh,
2. oilseeds
Rapeseed and Mustard Rajasthan ,Madhya Pradesh, Haryana
Soyabean Madhya Pradesh, Maharashtra, Rajasthan
sunflower Karnataka, Andhra Pradesh, Maharashtra
Total oil seeds Madhya Pradesh, Rajasthan, Gujarat
3. other cash crops
Cotton Gujarat, Maharashtra, Andhra Pradesh
Jute and Mesta West Bengal,Bihar, Assam
Potato West Bengal, Uttar Pradesh, Bihar,
onion Maharashtra, Karnataka, Gujarat
Production of fruits and vegetables
Production of fruits and vegetables
Fruit and vegetable Total production in million tone India’s production status
mango 10 World’s largest producer
banana 7 World’s largest producer
pineapple 12.6 % of world production World’s 4th largest producer
oranges 6.3% of world production World’s 5th largest producer
Milk production and percapita availability
Milk production and percapita availability
year Milk production (million tone) Percapita availability( grams/day)
1950-51 17 124
1960-61 20 124
1970-71 22 112
1980-81 31.6 128
1990-91 53.9 176
2000-01 80.6 220
2010-11 121.8 281
2011-12 127.9 290
fertilizer 2010-11 2011-12
Nitrogen(N) 165.58 173.00
Per hectare
Package Program.
Assistance from Ford Foundation.
7 districts: Tanjavur, West Godavari, Shahabad, Raipur, Aligarh, Ludhiana, Pali.
Intensive Agriculture Area Program (1964-65)
Development of scientific and progressive agriculture.
High Yielding Variety Program:
Use of HYV Seeds.
Increased use of fertilisers.
1965 - Agricultural Prices Commission
Present name in 1985.
Food Corporation Of India (FCI)
Food corporation act-1964
National Policy for farmers:
The National Commission on Farmers (NCF) was headed by professor MS
Swaminathan
It also submitted National Policy for Farmers
The primary focus is on farmer. It was defined holistically and not just on agriculture
It is more comprehensive than the agriculture policy
The objective is to improve economic viability of farming through sustainably
improving net income of farmers.
Emphasis will be on increased productivity, profitability, institutional support, and
improvement of land, water, and support services apart from provisions of
appropriate price policy, risk mitigation measures and so on.
By introducing Rainbow revolution.
As Part Of RKVY.
New National Agricultural Policy:2000
Land reforms to provide land to poor farmers
Consolidation of holdings in all states of nation
To provide insurance umbrella for crops to farmers
New national agricultural policy has been described as ‘Rainbow Revolution’ which include following
revolution
Silver (egg)
Round (potato)
National Horticulture mission(NHM)
• The department of agriculture and cooperation has launched a centrally sponsored
scheme called national horticulture mission during 2005-06 for holistic development
of this sector ensuring horizontal and vertical linkages with the active participation
of all the sakeholders.
differentiated strategies, improve nutritional security and income support to farm
holders
Minimum support price (MSP) of agricultural product
Keeping in view the interests of the farmers as also the need of self reliance, Govt. has been announced
MSP for 24 major crops.the main objectives of announcing MSP are
1. To prevent fall in prices in the situation of over production
2. To protect the intrest of farmers by ensuring them a minimum price for their crops in the situation
of a price fall in the market
MSP of rabi crops(Rs/Qt)2013-14
32
Ragi 1050
Cotton 3600
Reforms in Agriculture Sector by Niti Aayog The Government is aware of the roadmap outlined by NITI Aayog for reforms in agriculture sector
and doubling farmers income by 2022. The Roadmap presents a quantitative framework for
doubling farmers’ income which has identified seven sources of growth. These are:
(i) increase in productivity of crops.
(ii) increase in production of livestock.
(iii) improvement in efficiency of input use (cost saving).
(iv) increase in crop intensity.
(v) diversification towards high value crops.
(vi) improved price realization by farmers.
(vii) shift of cultivators to non-farm jobs.
This Policy paper was shared with the States/UTs for devising a relevant strategy so as to realize
the goal of doubling farmers’ income by 2022. Apart from the above, the Department has also
constituted an Inter-Ministerial Committee for recommending suitable strategy.
Agriculture is a State subject and the State Governments are primarily responsible for the growth
and development of agriculture sector in their respective States. The role of Central Government is
to supplement the efforts of States through appropriate policy measures and budgetary support.
The National Sample Survey Office (NSSO) conducted “Situation Assessment Survey (SAS) of
Agricultural Households” during NSS 70th round (January 2013- December 2013) in the rural
areas of the country with reference to the agricultural year July 2012- June 2013. The information
on unemployed farmers in the country is not available in the data collected during the above NSSO
survey.
The Department is working out specific interventions for promoting ancillary activities like bee-
keeping and also finalizing farm sector programmes under the ‘Skill India’ programme to improve
employment opportunities and to reduce over dependence on the agriculture sector.
33
NEW TRENDS IN FARMING
Indian agriculture has been a key contributor to India’s growth story and continues to be one of biggest
employers. The Gross Value Add (GVA) for agriculture sector was INR 17.67 trillion (USD 274 billion)
in 2018, over a production base of 285 Million tons. The sector is likely to grow at an approximate rate of
2% on a year on year basis. Being a key economic driver, the sector needs to adapt to the challenges that it
is facing today.
Let us look at the five top trends which are expected to shape the industry in 2019.
• Digital innovation in agriculture is the thing to look out for. We are likely to see streamlining of
the policies, creation of necessary infrastructure to test and commercialise the innovation and
creating incentives for adoption of these innovation, which can boost the infusion of digital
solutions in the conventional businesses. The digital innovation in agriculture has applicability in
infrastructure development, supply chain management and technology enablement of areas such as
quality, traceability, logistics and distribution and other areas of value chain.
• Climate change is high on the priority list. There is should be an effective climate risk mitigation
strategy for effective water management, adopting to rising temperatures, facing drought
situations. Solutions for early warning system can play a vital role in estimating and minimising
the risk due to erratic climate change events. Water management and optimum utilisation of
available water resources such as water user associations, water rationing etc will go a long way to
benefit the agrarian society. This year, efforts to sensitise/incentivise adoption of climate change
measures is a must to ensure long run benefits for the farming and trading community. Further, the
regulators also needs to consolidate the existing efforts in this field.
• The focus on developing the startup ecosystem and creation of digital agriculture is likely to
continue in the FY 19. We expect to see more incubation happening for developmental and early
stage startups while more funding is likely to continue in mid stage startups. Support infrastructure
needs to be developed by each state. Further, we need to address key issues such as collateral
requirement for loans, availability of growth capital, taxation on angel investment, applicability to
mainstream government schemes etc.
• Leveraging the Farmer Producer Organisations (FPOs): There is a huge potential in
monetising the number of farmers getting connected through FPOs. The FPO structure is currently
in need of support services to enable them to secure business acumen and market linkages. Other
key issues such as better insurance terms, quality assessment infrastructure, precision agriculture
solutions for better crop management, access to finance, IoT based applications etc. needs to be
addressed for the success of the FPO’s
• Water management initiatives like watershed management, drip irrigation and water user
association can play an important role in the strengthening the agricultural sector. Considering the
scarcity of water, end users need to be aware and work towards conserving water. Farmers should
be incentivised and measures like loan waivers to farmers who use water judiciously could be
used. Government agencies, too need to be empowered to monitor water usage in agriculture.
Apart from these, we hope to see some bold steps to mitigate farmer’s losses by expanding the
insurance net, effective claim management, controlling distress sale and oversupply of agricultural
34
commodities during the peak season. The Government bodies, private players and the growing
agriculture start up community can together transform the sector’s outlook. This aided by the
digital drive in the sector can start the new agri and technology revolution in the sector.
MICRO FARMING
• Micro farming involves a variety of techniques and practices for small-scale farming in urban or
suburban areas.
• Typically, micro farms use less than 5 acres of land and implement various sustainable farming
techniques that allow for high yields.
• This is a new term for an old concept, as this type of subsistence farming has been done
for centuries.
• Urban farmers are finding ways to feed their family, friends, and neighbors using creative methods
on small plots of land. As prices rise and biotic pressures exacerbate our food security, micro
farming is proving to be an effective way to strengthen the sustainable local food movement.
• Micro farming can be executed in city lots or larger suburban areas, focusing on raising animals
and growing crops that will provide practical yields.
• Micro farmers can still grow a variety of vegetables, herbs, fruits, nuts, mushrooms, and animal
products despite working on smaller plots of land.
• Companies like Micro farm Organic Gardens helps individuals who are interested begin the
rewarding journey of becoming a micro farmer by providing support on design and
implementation.
• Since food is produced on smaller plots of land, input costs are not as high as regular commercial
farming methods, yet yields can still be highly profitable.
ORGANIC FARMING
• Organic farming is a production system which avoids or largely excludes the use of synthetically
compounded fertilizers, pesticides, growth regulators, genetically modified organisms and
livestock food additives.
• To the maximum extent possible organic farming system rely upon crop rotations, use of crop
residues, animal manures, legumes, green manures, off farm organic wastes, biofertilizers,
mechanical cultivation, mineral bearing rocks and aspects of biological control to maintain soil
productivity and tilth to supply plant nutrients and to control insect, weeds and other pests.
• Organic methods can increase farm productivity, repair decades of environmental damage and knit
small farm families into more sustainable distribution networks leading to improved food security
if they organize themselves in production, certification and marketing.
• During last few years an increasing number of farmers have shown lack of interest in farming and
the people who used to cultivate are migrating to other areas. Organic farming is one way to
promote either self-sufficiency or food security.
• Use of massive inputs of chemical fertilizers and toxic pesticides poisons the land and water
heavily. The after-effects of this are severe environmental consequences, including loss of topsoil,
decrease in soil fertility, surface and ground water contamination and loss of genetic diversity.
• Organic farming which is a holistic production management system that promotes and enhances
agro-ecosystem health, including biodiversity, biological cycles, and soil biological activity is
hence important.
conventional methods. Significant difference in soil health indicators such as nitrogen
mineralization potential and microbial abundance and diversity, which were higher in the organic
farms can also be seen. The increased soil health in organic farms also resulted in considerably
lower insect and disease incidence. The emphasis on small-scale integrated farming systems has
the potential to revitalize rural areas and their economies.
Advantages of organic farming
• It helps to maintain environment health by reducing the level of pollution.
• It reduces human and animal health hazards by reducing the level of residues in the product.
• It helps in keeping agricultural production at a sustainable level.
• It reduces the cost of agricultural production and also improves the soil health.
• It ensures optimum utilization of natural resources for short-term benefit and helps in
conserving them for future generation.
• It not only saves energy for both animal and machine, but also reduces risk of crop failure.
• It improves the soil physical properties such as granulation, good tilth, good aeration, easy root
penetration and improves water-holding capacity and reduces erosion.
• It improves the soil’s chemical properties such as supply and retention of soil nutrients, reduces
nutrient loss into water bodies and environment and promotes favourable chemical reactions
CONTRACT FARMING
• Contract farming can be defined as agricultural production carried out according to an agreement
between a buyer and farmers, which establishes conditions for the production and marketing of a
farm product or products.
• Typically, the farmer agrees to provide agreed quantities of a specific agricultural product. These
should meet the quality standards of the purchaser and be supplied at the time determined by the
purchaser
• . In turn, the buyer commits to purchase the product and, in some cases, to support production
through, for example, the supply of farm inputs, land preparation and the provision of technical
advice.
advantages
• Contract farming is looking towards the benefits both for the farm-producers as well as to the
agro-processing firms. Producer/farmer
• Makes small scale farming competitive - small farmers can access technology, credit, marketing
channels and information while lowering transaction costs
• Assured market for their produce at their doorsteps, reducing marketing and transaction costs
• It reduces the risk of production, price and marketing costs.
• Contract farming can open up new markets which would otherwise be unavailable to small
farmers.
• It also ensures higher production of better quality, financial support in cash and /or kind and
technical guidance to the farmers.
36
• In case of agri-processing level, it ensures consistent supply of agricultural produce with quality,
at right time and lesser cost.
Agri-based firms
safety and quality concerns of the consumers.
• Make direct private investment in agricultural activities.
• The price fixation is done by the negotiation between the producers and firms.
• The farmers enter into contract production with an assured price under term and conditions.
Challenges
• Contract farming arrangements are often criticized for being biased in favor of firms or large
farmers, while exploiting the poor bargaining power of small farmers.
• Problems faced by growers like undue quality cut on produce by firms, delayed deliveries at the
factory, delayed payments, low price and pest attack on the contract crop which raised the cost
of production.
• Contracting agreements are often verbal or informal in nature, and even written contracts often
do not provide the legal protection in India that may be observed in other countries . Lack of
enforceability of contractual provisions can result in breach of contracts by either party.
• Single Buyer – Multiple Sellers (Monopsony) .
• Adverse gender effects - Women have less access to contract farming than men.
37
Agricultural Credit
Agricultural credit is considered as one of the most basic inputs for conducting all agricultural
development programmes. In India there is an immense need for proper agricultural credit as Indian
farmers are very poor. From the very beginning the prime source of agricultural credit in India was
moneylenders.
agencies like co-operatives, commercial banks, regional rural banks etc. to provide adequate credit to
farmers, at a cheaper rate of interest. Moreover, with growing modernisation of agriculture during post-
green revolution period the requirement of agricultural credit has increased further in recent years.
RRBs- Regional Rural Banks
M. Narasimham Working Group-1975
Regional Rural Banks Act 1976
Regulated by National Bank for Agriculture and Rural Development (NABARD).
Shares in the ratios as follows
Central Government – 50%, State Government – 15% and Sponsor Banks – 35%.
K C Chakrabarty- 2009- To review of the financial status of RRBs.
Khusrau Committee of 1989- Agricultural Credit Review Committee
- merge the RRBs with the sponsor banks.
Dr Vyas committee- Amalgamation of RRBs
As March 2014-57 RRBs
National Bank for Agriculture and Rural Development (NABARD)
B.Sivaraman Committee- (by Act 61, 1981 of Parliament) on 12 July 1982
To implement the National Bank for Agriculture and Rural Development Act 1981.
It replaced -Agricultural Credit Department (ACD) - Rural Planning and Credit Cell (RPCC) of
RBI - Agricultural Refinance and Development Corporation (ARDC).
Recent programme by NABARD- „Soil Protection and Rehabilitation for Food Security
Germany- „One World, No Hunger initiative.
Kisan Credit Card Scheme
R V Gupta Committee.
National Agriculture Development Programme 2007-
State Plan Scheme
National Mission on Sustainable Agriculture (NMSA)
38
One of the eight Missions outlined under NAPCC
To define its strategies for climate mitigation and adaptation within the agriculture
sector.
Rainfed Area Development (RAD)
Soil Health Management (SHM)
(CCSAMMN)
Prime Minister Krishi Sinchayee Yojana
National mission to improve farm productivity and ensure better utilization of the resources in
the country.(2015-16)
Vision of extending the coverage of irrigation ‘Har Khet ko pani’
improving water use efficiency ‘More crop per drop'.
Amalgamating ongoing schemes viz.
River Development & Ganga Rejuvenation (MoWR,RD&GR),
Integrated Watershed Management Programme
Long Term Irrigation Fund (LTIF)-NABARD- Bonds
Neeranchal National Watershed Project -a six-year period (2016-21) to achieve the objectives of
PMKSY.
Components:
Har Khet ko Pani
Watershed Development
Paramparagat Krishi Vikas Yojana
Traditional Farming Improvement Programme
To support and promote organic farming and thereby improving soil health.
Component of Soil Health Management (SHM) Follows cluster approach.
Organic Farming policy- 2005
Replacing the existing two schemes- National Agricultural Insurance Scheme -Modified NAIS.
Farmers will pay uniform premium of 2 per cent for all Kharif crops and 1.5 percent for all Rabi
crop
2007- Weather based crop insurance scheme
2010- Modified National Agricultural Insurance Scheme
Flow of institutional credit to agriculture and allied
39
activites
Role in Indian Economy- International Journal of Agriculture and Food
Science Technology.ISSN 2249-3050, Volume 4, Number 4 (2013), pp. 343-
346Research India Publications
https://www.quora.com/What-were-the-agricultural-changes-of-India-from-
1858-1947
Shodganga
http://shodhganga.inflibnet.ac.in/bitstream/10603/121515/12/12_chapter3.pdf
http://www.economicsdiscussion.net/agriculture/progress-of-indian-
agriculture-during-plan-periods-11-plans/14177
http://www.economicsdiscussion.net/land-reforms-2/land-reforms-in-india-
objectives-measures-and-impact/14176
rainbow revolution
Agricultural sector in Kerala
Kerala, the State with network of azure backwaters, rivers and streams, boasts of an
agrarian economy. The abundance of water due to the 34 lakes and other small streamlets,
innumerable backwaters and water bodies and 44 rain-fed rivers flowing over the terrain of the
state and also the adequate annual rainfall of 3000mm received by this state probably facilitates
agriculture to a great extent and hence the economy of the state is dominated by agriculture.
Kerala can be termed as the land of spices, considering the large variety of spices grown
in the state. Kerala is the largest producer of pepper in India and accounts for a lion’s share in
India’s production. Apart from pepper, other spices produced in the state include ginger,
cardamom, nutmeg, tamarind, etc. During 2018-19^^, spices export from the state stood at US$
215.38 million
Year Growth rate
At Constant Price At current Price
Primary 11.58 12.07
Secondary 26.1 24.27
Tertiary 62.24 63.66
• Growth rate of sectors, 2015-16
The driving force of growth in the tertiary sector is contributed by growth in the Transport,
storage, communication, broadcasting etc.
Agricultural sector in kerala
The State is the first in the country in human development index, literacy rate and sex ratio. In
recent years, the State is going ahead as a potential destination for ecotourism, information
technology etc. However the predominantly agro based rural economy drags back the State
economy.
• The State’s agriculture sector (including livestock) contributes only 10.88% of the total
GDP (at current prices in 2013-14) compared to 34.2% in Madhya Pradesh, 29.3% in
Utter Pradesh and Rajasthan and 27.4% in Punjab.
• Poor return and high labour cost has forced many of the growers to keep away from
agriculture. In 1955-56, agriculture was the main economic activity of Keralites and
about 53.1 percent of the total working population was engaged in agriculture.
• The State has witnessed a remarkable transformation in agricultural sector since its
formation in 1956. Cash crops like coconut, rubber, tea, coffee, pepper, cardamom,
arecanut, ginger, nutmeg, cinnamon etc and food crops like paddy, tapioca gives the
agricultural sector of Kerala a distinct flavor.
• The midlands and the slope of the high lands are also best suited for its cultivation. The
seaboard, the shores of lagoons, backwaters and the banks of rivers are studded with
coconut trees. Coconut cultivation is now extended to higher elevations such as in Idukki
district.
• Coconut farming in Kerala is facing severe setback in recent years owing to fall in market
price and low productivity due to pest and disease attacks.
• The rise in cost of cultivation and competition from other oils such as palm oil etc are
other reasons affecting the production of coconut. Kerala’s share in area of coconut
farming in the country had declined from 69% in 1955-56 to 38% in 2013-14.
• An Analytical Study on Agriculture in Kerala Paddy cultivation is the part and parcel of
our culture and it is the State’s major foodgrain crop. In the early years, paddy cultivation
was the main agriculture activity in coastal and midland wet fields in Kerala and is also
connected with the culture and festivals of Kerala.
Trends in Agricultural Income in Kerala:
Sector Growth rate
43
The growth performance of the agriculture and allied sectors has been fluctuating across
the Plan period. It witnessed a positive growth of 1.8 percent in Xth Plan period but a
negative growth rate of -1.3 percent in XIth Five Year Plan.
In the Twelfth Plan based on the new series brought out by the Directorate of Economics
and Statistics (DES) with 2011-12 as base year, the agriculture and allied sectors
recorded a positive growth rate of 1.43 per cent in the first year (2012-13), and a negative
growth rate of -2.13 per cent in second year (2013-14).
In 2014-15, the sector has recorded a negative growth rate of -4.67 per cent.
Consequently, the share of agriculture and allied sectors in total GSDP of the State has
also declined from 14.38 percent in 2011-12 to 11.6 percent in 2014-15.
But, the switch from 2004-05 to new series with 2011-12 as base has resulted in higher
share of agriculture and allied sectors in the total GSDP of the State from 8.83 per cent to
12.9 per cent for 2013-14.
The details of share of Agriculture and allied sectors in GDP at the National and State
level (Base 2011-12) are given below.
Trends in Agriculture Income in Kerala 2010-2011
According to data from the Directorate of Economics and Statistics (DES), the year-
on-year growth rate of agriculture and allied activities were (-) 3.1 percent in 2012-13, (-) 3.8
percent in 2013-14, 0.75 percent in 2014-15, and (-) 7 per cent in 2015-16. Thereafter, the sector
witnessed growth of 2.5 percent in 2016-17. The share of Agriculture and allied sectors in total
GSVA of the State has also declined from 13.7 pe cent in 2012-13 to 10.5 percent in 2016-17.
The details are shown below:
Share of Agriculture and Allied Sectors in GVA at the National and State level(Constant
Prices, Base 2011-12)
and allied sectors in
Source: National Accounts Statistics 2017 and Directorate of Economics and
Statistics
44
Crops
• The most essential or the staple crop is the rice or paddy. About 600 varieties of rice
are grown in the sprawling paddy fields of Kerala. In fact the Kuttanad region of the
district of Kerala is known as the 'rice bowl of the state' and enjoys a significant status in
the production of rice.
• Next to rice is Tapioca and is cultivated mainly in the drier regions. Tapioca is a major
food of the Keralites. Besides production of the main crop, Kerala is also a major
producer of spices that form the cash crops of the state. Kerala produces 96% of the
country's national output of pepper. The important spices are cardamom, cinnamon,
clove, turmeric, nutmeg and vanilla.
• Other cash crops that constitute the agricultural sector
include tea , coffee cashew, pulses,areca nut, ginger and coconut. In fact coconut
provides the principal source of income in Kerala- from coir industry to coconut shell
artifacts. Cashew is also an essential cash crop. Kerala also accounts for 91% of natural
rubber production of the country. Kottayam district has extensive areas producing and
processing rubber. Apart from rubber, other plantation crop likes plantains or bananas are
also grown in plenty.
Crop wise Analysis Rice
• Rice is the most important food crop grown in Kerala. It occupies 7.46 percent of the
total cropped area of the state. However, the area under rice has been falling at an
alarming rate ever since the 1980s.
• From 8.82 lakh hectare in 1974-75, the paddy area has come down to 1.96 lakh hectare
in 2015-16. The production has also concomitantly declined from 13.76 lakh MT in
1972-73 (peak of production) to 5.49 lakh MT in 2015-16 (Appendix 2.4).
• Moreover, the productivity of the crop is very low in the State (2790 kg/ha), though it is
higher than the national average (2424 kg/ha).
• the State government has taken a number of steps for the promotion of paddy cultivation.
Major initiatives for the promotion of rice in 2016-17
• Promotion of upland rice cultivation in 2520 ha
• Amendment in Paddy land/Wetland Conservation Act
• Cultivation in fallow lands
• Special projects in Aranmula Punja