1

A teaching note on

Agricultural

economics

Prepared by

1. FASNABANU.M.K

Assistant Professor of Economics (on contract)

School of distance education

University of Calicut

2. SHUHAIB.K

Research scholar

Dept of Economics

Central University of Kerala

2

CONTENTS

Name of the module Page no

Module 1 Basics of agricultural

economics

3 - 10

Module 2 Agriculture sector in

India

11 - 40

Module 3 Agriculture sector in

Kerala

41 - 54

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

Module 1

Basics of Agricultural Economics

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

4

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

Some Concepts used in Agriculture economics

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.

Microeconomics concepts in agricultural economics

❖ 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:

▪ 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, К, 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), К for capital and T for given technology, and f refers to the functional

relationship

❖ Production possibility curve :

• 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

❖ Theory of production

▪ 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

Stage II: Stage of Decreasing Returns

▪ Both AP and MP are decreasing. But MP is positive.

▪ Stage ends where MP reaches zero. When MP is zero TP maximum

10

▪ AP is decreasing

Stage III: Stage of Negative Returns

▪ 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/

➢ Some agricultural economics concepts – department of agriculture- South Africa-

2005

➢ Managerial economics ,Prof. Triputi Mishra –Shailesh J Mehta school of

management, IIT Bombay

➢ http://kusumakar.blogspot.com/2008/03/nature-scope-of-agricultural-economics

11

Module 2

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.

• Industry includes 'Mining & quarrying', Manufacturing (Registered & Unregistered),

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 wise contribution to GDP over the years

Sector 1980 1990 2001 2012 2018

Agri

cult

ure

38.1 31.1 24.7 14.16 15.87

Ind

ust

ry 25.9 29.3 26.4 33.25 29.73

serv

ices

36 39.7 48.8 51.8 54.4

12

Agriculture in India

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

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• 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):

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➢ 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;

(ii) Supportive State-specific agriculture strategy and programmes;

(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

and Agriculture:

Plan

Growth Rate

Plan

Growth rate

1 2.71 2 3.15

3 0.73 4 4.16

5 3.28 6 2.52

7 3.42 8 4.68

9 2.06 10 2.3 11 4 (3.6%) 12 ----

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.

Role of Norman Ernest Borlaug

• “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

➢ Minister for Food and Agriculture

➢ 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

24

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.

Role of agriculture in Indian economy

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

U.K.

1.5

France 7

USA 2

25

3) Importance of agriculture in Industrial development:

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:

• Providing Raw Material to industries

• Market for Industrial Products:

Importance in International Trade:

1. Share in national income

2. Source of employment-

3. Provision of food grains.

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

item year

2012-13 2015-16 GVA of Agriculture and Allied

Sectors

1680797 2093081

Per cent to total 18.2 17.0

❖ Agricuture Growth Rate of GVA at basic price at Constant (2011-12) prices (in

%)

year Agriculture

Growth rate

of GVA

2012 – 13 1.5

2013- 14 5.6

2014- 15 -0.2

2015 -16 0.6

2016 – 17 6.3

2017 - 18 5.0

2018 - 19 3.8

❖ 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

Agriculture &

Allied

Sectors

GVA in

Agriculture &

Allied Sectors

GCF as

percentage of

GVA

27

2011-12 274432 1501816 18.3

2014 - 15 256495 1584293 16.2

2012-13 2013-14 2014-15 2015-16 2016-17

Growth in GVA

in Agriculture

and Allied

Sector

1.5 5.6 -0.2 0.7 4.9

Share of GVA

of Agriculture

and Allied

sector in total

GVA

18.2 18.6 18.0 17.5 17.4

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

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

crops 2015-

16

(first

AE)

2016-

17(fir

st AE)

Total khariff foodgrains 124.1 135.5

rice 90.6 93.9

Total coarse cereals 27.9

32.5

Total pulses 5.6 8.7

Total oilseeds 19.9 23.4

sugarcane 341.4 305.2

cotton 33.5 32.1

28

Coarce cereals 42.04 38.47 -8.49

cotton 35.20 33.80 -3.97

Oil seeds 29.80 29.47 -1.10

pulses 17.09 17.58 2.80

jute 11.40 11.13 -2.36

mustard 6.60 7.36 11.51

❖ Foodgrain production

Foodgrain production (in million tone_)

year production

1995-96 180.4

2000-01 195.9

2005-06 208.6

2010-11 244.78

2011-12 250.14

❖ largest producing states

Various cropes: three largest producing states 2011-12

Crops/groups of crops states

1. Foodgrains

Rice West Bengal, Uttar Pradesh, Andhra Pradesh

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

Groundnut Gujarat, Tamil Nadu, Andhra Pradesh

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

Sugarcane Uttar Pradesh, Maharashtra, Tamil Nadu

Cotton Gujarat, Maharashtra, Andhra Pradesh

Jute and Mesta West Bengal,Bihar, Assam

Potato West Bengal, Uttar Pradesh, Bihar,

onion Maharashtra, Karnataka, Gujarat

29

❖ 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

❖ Consumption of chemical fertilizers ( lakh tone)

Consumption of chemical fertilizers ( lakh tone)

fertilizer 2010-11 2011-12

Nitrogen(N) 165.58 173.00

Phospate (P) 80.50 79.14

Potash(K) 35.14 25.25

Total N+P+K 281.22 277.39

Per hectare

consumption(kg)

144.14 141.30

30

Agriculture development programmes

IADP-Intensive Agricultural Development Program. (1960-61)

➢ Package Program.

➢ Core Philosophy: To provide loan for seeds fertilisers.

➢ 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:

➢ HYVP-1966-67

➢ To attain elf-sufficiency by 1970-71.

➢ Use of HYV Seeds.

➢ Increased use of fertilisers.

➢ Increased irrigation.

➢ Wheat; Sona, PB18, Kalyan.

➢ Bajra: HV1

➢ Maize: Ganga 101

➢ Jowar: CSH 12

Commission for Agricultural Costs and Prices (CACP)

➢ 1965 - Agricultural Prices Commission

➢ Present name in 1985.

➢ To recommend Minimum Support Prices (MSPs)

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

➢ Final report was submitted in the year 2006

➢ 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.

31

Tri-Colour Revolution

➢ Saffron Revolution

➢ White Revolution

➢ Blue Revolution

BGREI- 2010-11

✓ Bringing Green Revolution in Eastern India.

✓ As Part Of RKVY.

New National Agricultural Policy:2000

✓ Annual growth Rate target: 4%

✓ 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

Green (food grain production)

White ( milk)

Yellow (oil seeds)

Blue (fisheries)

Grey (fertilizer)

Black/brown (non conventional energy sources)

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.

• Objectives: enhance horticulture production through area based regionally

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

Wheat 1350

Barley 980

Gram 3000

MSP of Khariff crops 2012-13

32

Paddy(normal) 1250

Paddy(A class) 1280

Jower 1500

Bajra and Maize 1175

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.

35

• Many studies have shown that organic farming methods can produce even higher yields than

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

• Optimally utilize their installed capacity, infrastructure and manpower, and respond to food

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.

After independence the Government adopted the institutional credit approach through various

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

✓ Oct 2-1975- Prathama Grameen Bank- Sponsered by Syndicate Bank-UP

✓ 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

✓ No RRBs in Sikkim and Goa.

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

✓ KCC- August 1998

✓ NABARD had prepared a Model Kisan Credit Card Scheme –

✓ R V Gupta Committee.

RKVY- Rashtriya Krishi Vikas Yojana- 2007.

✓ National Agriculture Development Programme 2007-

✓ State Plan Scheme

✓ To achieve 4% annual growth in agriculture

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.

✓ NMSA has following four (4) major programme components.

✓ Rainfed Area Development (RAD)

✓ On Farm Water Management (OFWM)

✓ Soil Health Management (SHM)

✓ Climate Change and Sustainable Agriculture: Monitoring, Modeling and Networking

(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.

✓ Accelerated Irrigation Benefit Programme (AIBP),

✓ River Development & Ganga Rejuvenation (MoWR,RD&GR),

✓ Integrated Watershed Management Programme

✓ On Farm Water Management (OFWM).

✓ Long Term Irrigation Fund (LTIF)-NABARD- Bonds

✓ Neeranchal National Watershed Project -a six-year period (2016-21) to achieve the objectives of

PMKSY.

Components:

✓ Accelerated Irrigation Benefit Programme (AIBP)

✓ Har Khet ko Pani

✓ (Micro-Irrigation) Per Drop More Crop

✓ 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

✓ Sikkim- Organic State of India

Pradhan Mantri Fasal Bima Yojana

✓ 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

1985- Comprehensive Crop Insurance scheme

1999- National Agricultural Insurance Scheme

2007- Weather based crop insurance scheme

2010- Modified National Agricultural Insurance Scheme

Flow of institutional credit to agriculture and allied

39

activites

agency 2007-08 2010-11 2012-13

Cooperative banks

share(%)

48258

19

78121

16.68

64664

26.99

RRB’s

share(%)

25312

10

44293

9.46

32127

13.41

Commercial banks

share(%)

181088

71

345877

73.86

142838

59.61

total 254658 468291 239629

40

References

✓ Kekane Maruti Arjun - Indian Agriculture- Status, Importance and

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

✓ http://www.ripublication.com/ ijafst.htm

✓ http://statisticstimes.com/economy/sectorwise-gdp-contribution-of-india.php

✓ http://agriinfo.in/?page=topic&superid=9&topicid=185

✓ 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

✓ http://planningcommission.nic.in/reports/articles/venka/index.php?repts=m-

land.htm

✓ http://www.economicsdiscussion.net/essays/green-revolution-essays/essay-on-

green-revolution-in-india/17559

✓ www.gktoday.in /upsc archieves/ Indian agriculture/ green revolution and

rainbow revolution

✓ https://www.lexiconoffood.com/post/micro-farming-overview

✓ http://vikaspedia.in/agriculture/crop-production/organic-farming

✓ https://www.pwc.in/government-reforms-and-infrastructure-

development/agriculture/top-five-trends-indian-agriculture-is-expected-to-

witness-in-2019.html

✓ http://www.economicsdiscussion.net/essays/essay-on-agricultural-credit-in-india/18098

41

Module 3

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

Key economic indicators:

• Growth rate of GSDP at constant (2011-12)

Year Growth rate

2012-13 6.50

2015-16 8.10

• Per Capita GSDP

year Growth rate

2014-15 (P) 6.79

2015-16(Q) 7.57

• Sectoral Distribution of GSVA, 2015-16 basic Price

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.

42

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

Primary 0.37

Secondary: 7.73

Tertiary: 14.94

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)

Sl. No Year Share of Agriculture

and allied sectors in

Total GVA (India)

Share of Agriculture and

allied sectors in

GSVA (Kerala)

1 2012-13 17.8 13.7

2 2013-14 17.7 12.36

3 2014-15 16.5 11.91

4 2015-16 15.4 10.85(P)

5 2016-17 NA 10.58(Q)

(P) Provisional, (Q) Quick

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

• Declaring Chingam 1st of 2016 to Chingam 1st of 2017 as the rice year in which 100

activities are planned

• Enhancement of procurement price of paddy from 21.50/Kg to 22.50/Kg

Coconut

45

• The agro climatic conditions in the State suit for the cultivation of a variety of seasonal

crops and perennial crops. Kerala or Keralam got its name from ‘kera’ (coconut).For

centuries, coconut trees and coconuts played a vital role in the everyday life and economy

of Kerala. Although coconuts are cultivated in nearly 8.08 lakh hectares of land,

constituting almost 39.4 percent of the state’s net cropped area, there are very few large

coconut plantations in the state.

• More than 95 percent of coconut trees in Kerala are grown in the front and back yards of

homesteads. Coconut palms grow almost everywhere in Kerala. In the low lands, coconut

forms one of the main crops.

• In terms of area under cultivation, coconut is the most important crop in the state with

over 7.9 lakh hectare under cultivation. It accounts for the largest share in the Gross

Cropped Area (GCA) followed by rubber and paddy

• . Kerala has the largest area under the crop in the country, but in terms of production it

comes third. This indicates the low productivity of the crop in the state with just 7535

nuts per hectare compared to Tamil Nadu and Andhra Pradesh where the productivity is

14,873 nuts per hectare and 13,808 nuts per hectare respectively in 2014-15.

• Also, Kerala’s share in area and production of coconut in the country has declined over

time. While Kerala accounted for 69.58 per cent of the area and 69.52 per cent of the

production in the country in 1960-61, the corresponding shares declined to 40.2 per cent

and 42.12 per cent respectively in 2011-12.

• The main reason for the falling productivity of coconut is the prevalence of the root wilt

disease, poor crop management and the existence of senile and unproductive palms.

• Hence, massive replanting of palms affected by root wilt with elite palms and elimination

of senile palms, setting up of nurseries for production of quality seedlings and their

subsequent distribution is essential for increasing productivity. Restructuring of the

cluster development programme is also essential for more effectiveness.

• The attempt made by the Department of Agriculture and Cooperation to restructure two

coconut development programmes through convergence approach at the panchayat level,

coupled with a price advantage, is expected to revive coconut production in the state.

Pepper

• India comes third in the production of pepper in the world after Vietnam and Indonesia.

However, the production of pepper in the country has been stagnant at around 50,000

tonnes in the last few years and hence is fast losing its status as a leading producer and

exporter of pepper.

• Grown mostly in the slopes of Western Ghats in Kerala, Karnataka, and Tamil Nadu, the

area under cultivation of pepper has come down drastically in the last decade, which has

adversely affected production and export.

• However, Kerala, which accounts for 75 percent of the total production in the country,

recorded a slight increase in pepper production from 40.6 thousand tonnes in 2014-15 to

42.1 thousand tonnes in 2015-16.

• Pepper production in the State in recent years has been affected mainly by low

productivity and various diseases.

46

• In order to revive spices development in the state, the Department of Agriculture had

initiated comprehensive pepper development programmes in all districts in 2014-15. An

integrated action plan was prepared for the revival of the crop, covering reorientation of

planting material production, expansion of grafting wherever possible, area-wide disease

management, liming and nutrients management and revival of pepper samities.

Cashew

• In 2015-16, India continued to be the largest producer of raw cashew nuts in the world.

The other main producing countries were Vietnam, Brazil, Tanzania and Ivory Coast.

• The production of raw cashew nuts in India declined from 725 thousand MT in 2014-15

to 670 thousand MT in 2015-16.

• In Kerala, in the last one decade, there has been a continuous and considerable decline in

both area under cultivation as well as production of cashew.

• It is alarming to note that the production, which stood at 60 thousand MT in 2004-05,

declined to 33.3 thousand MT in 2013-14 and to 24.73 thousand MT in 2015-16

Plantation crops

• Plantation crops are, in general, either export-oriented or import-substituting and

therefore assume special significance from the national point of view.

• It is estimated that nearly 14 lakh families are dependent on the plantation sector for

livelihood. Each of the four plantation crops of South India has its distinct characteristics

and economic problems. Consequent to the removal of quantitative restrictions on

imports, plantation crops are facing the threat of a surge in low quality imports.

• Kerala has a substantial share in the area in India cultivated with the four plantation crops

of rubber, tea, coffee and cardamom. These four crops together occupy 7.04 lakh ha,

accounting for 26.88 percent of the gross cropped area in the state.

Rubber

• Production of Natural Rubber (NR) in India declined by 12.9 per cent from 6.45 lakh

tones in 2014-15 to 5.62 lakh tonnes in 2015-16.

• Adverse weather, high wages, lack of skilled labourers and the grower’s reluctance in

harvesting or maintaining trees in response to the low NR prices have affected the

production of natural rubber (NR) in India in 2016.

• The production scene was no different in Kerala also, as the total production dwindled

from 5.07 lakh MT in 2014-15 to 4.38 lakh MT in 2015-16.

• With regard to rubber prices, it has been volatile in both the national and international

markets. NR prices after scaling to an all-time high during 2011 had fallen significantly,

that too at an accelerating pace threatening the very existence of the rubber producers

• Main reasons for the fall in rubber prices were moderate economic growth in China, slow

recovery in the US and Europe, enhanced stock in Thailand, increase in world stock of

NR, relatively low oil prices and consequent low synthetic rubber prices

47

• The Government of Kerala has introduced a rubber production incentive scheme with a

financial support of Rs 300 crores. However, to a large extent the price depends on global

supply and demand of natural rubber and the price of synthetic rubber.

Coffee

• Domestic coffee production for the year 2015-16 was estimated at 348,000 tonnes, which

represents an increase of 21,000 tonnes compared to previous year.

• However, as per FAO estimates, yield in India at 845.6 kg per hectare is much below that

of Vietnam (2499.1 kg per hectare) and Brazil (1421.5 kg per hectare).

• With regard to Kerala, the production of coffee registered a slight increase from 67,700

MT in 2014-15 to 69,230 MT in 2015-16.

• The share of Kerala in total coffee production in the country is around 20 per cent during

the year.

• Productivity of the crop in terms of bearing area in Kerala is 808 kg/ha, which is lower

than the national level of 852 kg/ha during 2011-12. Among the States, Kerala stands

next to Karnataka which produces 70.4 percent of total Indian coffee production.

Tea

• As one of the largest tea producing countries, India accounts for 24.8 percent of the total

world production.

• The domestic tea production during 2015 was 1191.1mkg lower by 16.2 mkg from

previous year.

• Kerala accounts for 5.03 per cent of the area and 6.3 percent of the total domestic

production of tea in the country.

• The production of tea in the State has been consistently falling since 2009-10.

• The major issues affecting the tea industry are stagnant productivity, acute labour

shortage, high cost of machines, and lack of indigenous machinery.

Cardamom

• India is the second largest producer of small cardamom and plays an important role in the

international trade of cardamom. The output of cardamom is dependent on prevailing

climatic conditions as the cardamom plant requires intermittent spells of rains and good

sunshine during the growth stage.

• Cardamom production in the country during 2015-16 was estimated at 22 thousand

tonnes compared to 18 thousand tonnes in 2014-15, an increase of 4 thousand tonnes.

• Meanwhile in Kerala, cardamom production has increased by 21.8 per cent in 2015-16

despite the area under cultivation remaining stagnant.

Pulses

• The year 2016 was the International Year of Pulses

• India's share is 25 per cent in production, about 33 per cent in acreage and about 27 per

cent in consumption of the total pulses in the world.

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• The major pulses producing states are Madhya Pradesh (25 per cent), Uttar Pradesh (13

per cent), Maharashtra (12 per cent), Rajasthan (11 per cent), Andhra Pradesh (9 per cent)

and other states together (30 per cent) during 2012-13.

• In Kerala, pulses are cultivated in autumn, winter and summer seasons. The area under

the cultivation of pulses shows a declining trend in the state

• Major cultivation of pulses is in Palakkad district and contributes to 30 per cent of the

total production in the State. The production of pulses in the State was highest during the

year 2005-06.

Collective farming through Kudumbashree

• Collective farming is an important area of Kudumbasree, which aims at food security

both at household and community level.

• The major crops cultivated are paddy, vegetables, banana, pineapple and tubers.

• In 2013-14, area brought under cultivation of paddy was 15078.60 ha, of vegetables was

12555.60 ha and of other crops (banana, pineapple and tubers) was 22476.20 ha.

• More hand holding including facilitation with banks and technology support are essential

for improving livelihood of the women groups involved in farming.

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Land reforms in Kerala

Due to the ancient land relations and taxation and regulation under the British Raj, at the time of

independence, India inherited a semi-feudal agrarian system, with ownership of land

concentrated in the hands of a few individual landlords. Since independence, there has been

voluntary and state initiated/mediated land reforms in several states. The most notable and

successful example of land reforms are in the states of West Bengal and Kerala.

Kerala's 1969 land reform is considered one of the most radical and most successful in South

Asia. It contained four major components: a rice levy on the largest owners, to be collected by

the government and redistributed to the poor through the fair price shops; a ceiling on absolute

size of land-holdings, with excess land to be redistributed to the landless; the abolition of

tenancy, and thus the abolition of rent from the operators to noncultivating landlords; and the

abolition of tenancy in house-compound land, and thus the abolition of rents to the landlords who

held title to them.

Main objectives

• To bestow on tenants ownership of a minimum of ten cents of land

• To end the old feudal relations by legitimizing the right of real peasants to own the land they

cultivate

• To introduce land ceiling and distribute excess land among the landless agricultural labourers

• To abolish exploitation and inequalities in the agrarian sector

• To ensure the consistent progress and transformation of society

• To achieve economic development and modernisation

• To end the era of feudalism[

Effects of the Land Reform

• Kerala's "land to the tiller" land reform is widely regarded as one of the most thorough

and well implemented in South Asia.

• The abolition of tenancy transformed the parasitic landlord class of mostly high-caste

Brahmin temple priests and rent recipients into schoolteachers, government

administrators, and medium-sized farmers.

• Although some have suffered, most appear to have adjusted successfully to the loss of

their giant estates and now contribute to the development of Kerala's economy. Kerala's

land reform also provided compensation to the landlord class.

• For rice herds, they received sixteen times the fair rent as determined by a government

committee. On house-compound land, compensation was set at 25 percent of the market

value with half paid to the former landlord by the government and the other half by the

new owner-former tenant, spread over twelve yearly installments. Unpaid installments

are debts to the government and cannot become grounds for repossession by the landlord.

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• At the other end, 1.5 million former tenants became small land owners. Despite gaining

the land, they are not uniformly doing well. Many have suffered from the declining price

of rice relative to other products. They would like to plant more lucrative crops such as

coconuts or rubber.

• They often do not have the necessary capital to alter their land for this purpose, however,

and cannot afford to guess wrong about how long rubber will stay profitable compared to

mangoes, or coconuts, or rice.

• Consequently, the direct economic benefits of the land reform have been more

problematic than many would have expected, thus illustrating some of the difficulties of

transforming an agrarian society from a feudal-patronage system-however exploitative

and unjust-into small-farmer private production when incomes are not rising and prices

for agricultural goods are unpredictable.

• Furthermore, many of the former tenants, now small farmer-owners, find themselves at

odds with their farm workers, who were once their allies in land reform struggles. These

former tenants now have economic interests opposed to the workers, whose wage gains

are their loss.

• Some have moved their political support away from the left parties and have come to

support more conservative representatives in the Kerala Legislative Assembly elections.

• Despite all these dangers and limitations, however, there can be little doubt that land

reform has improved the lives of the vast majority of people in Kerala's countryside. For

tenants who received rice land, the land is often the source of one-half to all of their basic

food needs. Now there is no rent to be paid.

• Now there is no fear of eviction. For those who received only house-compound land, the

threat of that eviction is also lifted, and they have planted a few new coconut and other

trees on what is now truly and fully their own property.

• For those who have also benefited from construction of a new home in the government

housing scheme, life-while still below any reasonable standard for the modern world-has

improved greatly within the period of just one generation.

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Public Distribution System in Kerala

• PDS is primarily a social welfare and antipoverty programme of the Government of

Indiai . Essential commodities like rice, wheat, sugar, kerosene and the like are supplied

to the people under the PDS at subsidised prices.

• It has been one of the most important elements in India’s safety net system for almost

50-yearsii and also the most far reaching in terms of coverage as well as public

expenditure on subsidies.

• PDS provides rationed amounts of basic food items (rice, wheat, sugar, edible oils) and

other non-food products (kerosene, coal, standard cloth) at below market prices to

consumers through a network of fair price shops disseminated over the country

• the main objectives of the PDS can be summarized as follows:

• Maintaining price stability

• Raising the welfare of the poor (by providing access to basic foods at reasonable prices

to the vulnerable population)

• Rationing during situations of scarcity, and

• Keeping a check on private trade

• It is well known that Kerala had one of the best run and most effective PDS networks in

India. Prior to the introduction of targeting, Kerala was the only state in India with near-

universal coverage of the PDS.

• In 1991, around 95 per cent of all households were covered by the PDS and possessed a

ration card.

• Though the number of ration cards issued alone does not necessarily translate to mean

that all these card-holders are using the ration cards, this is the measure used by most

studies to calculate the reach and coverage of the PDS and Kerala’s PDS was

internationally acclaimed as being a model system worth emulating by the other states in

the country.

• Secondly, the quantity of food grain purchased from the PDS has been higher than in

most other states, making a significant contribution to household nutrition. According to

one study in 1989, the quantity of foodgrains per person per year distributed through the

PDS was 5 kg in Haryana, 6 kg in Uttar Pradesh, 8 kg in Bihar, 9 kg in Madhya Pradesh,

23 kg in West Bengal and 52 kg in Kerala.

• By 1991, according to one calculation, the average amount of rice and wheat bought per

consumer from the ration system in Kerala was 69.6 kg. The annual purchase of grain

from the PDS in Kerala provides about one-half of the cereal requirements of a person. •

• Thirdly, the monthly entitlement of food grain per adult was 13.8 kg in Kerala (or 460

grams per day), satisfying the minimum requirement of 370 gms of cereals per person per

day recommended by the Indian Council of Medical Research. • Fourthly, the functioning

of ration shops and the delivery system has been better than in other parts of the country

and this is reflected in consumer surveys. Given the scale and effectiveness of the PDS, it

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has been noted that the PDS has contributed to an improvement in consumption and

nutrition in Kerala.

• According to Government figures, Kerala's total food grain requirement in 1997 was 48

lakh tonnes a year and internal production accounted for only 10 lakh tonnes.

• Twenty four lakh tonnes used to be provided under the PDS, the rest of the requirement

being met from the open market.

• Kerala was rated among the best performers in raising rural household consumption and

reducing rural poverty, partly because of its effective system of public distribution.

Significantly, the poor used the PDS more than the rich. A survey found about 85 per

cent of consumers met all or part of their rice requirements from fair price shops.

• The PDS in India was criticised on a wide front: its failure to serve the Below Poverty

Line (BPL) population, for its perceived urban bias, negligible coverage in States with a

high density of rural poor and finally, the lack of transparent and accountable

arrangements for delivery.

• Given that backdrop, the Government acted to streamline PDS during the Ninth Five

Year Plan period by issuing special cards to BPL families and selling food-grains to them

through PDS outlets at specially subsidised prices.x Thus from June 1997 PDS turned

into the Targeted Public Distribution System (TPDS), with the aim of targeting the

poorest household by differentiating the access quantities and prices at which one is

allowed to buy. The differentiation under the present scheme is made with respect to the

State Official Poverty Lines. Those households below the poverty line (BPL households)

are entitled to ration cards, which allow them to buy more quantity at a higher subsidized

price.

• The main features of the TPDS can be summarized as follows:

• • Introduction of targeting or specifically, the division of the entire population into

below-poverty-line (BPL) and above-poverty-line (APL) categories, based on the poverty

line defined by the Planning Commission for different states for 1993-94.

• • Change in Centre-State control in respect of allocations, as the size of the BPL

population and the entitlements for the BPL population are decided by the Central

Government.

THE TDPS IN KERALA

• The TPDS has affected Kerala’s PDS in several ways

• : • First, as 25 per cent of Kerala’s population has been termed BPL by the Planning

Commission, the guaranteed and subsidised allocation of grain for BPL households

under the TPDS accounts for only 10 per cent of the previous PDS (“lifting”) supply.

The Kerala government has identified 42 per cent of households as BPL households and

is providing the BPL subsidy to these households from the state budget. Given that

Kerala is a food deficit state, in the pre-TPDS period, the state own production accounted

for 20 per cent of grain requirements, the PDS accounted for 32 per cent and the rest

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came from private trade (This is according to official data on PDS and not the NSS

consumption data). If the allocation to the APL is stopped, then the PDS allocation to

Kerala, it is estimated, will account for 3.8 per cent of the grain requirements of the state,

as opposed to the 32% the PDS was providing earlier. Thus, TPDS has changed the share

of the PDS in the total grain requirements of Kerala. This has had implications on

domestic availability of rice and on prices.

• • Secondly, the Kerala government has continued to provide additional grain to BPL

households as well as maintained its entitlements for APL households.

• • Thirdly, because of the various schemes and the different prices under the TPDS

scheme certain distortions are created- consumers have information problems when PDS

prices are frequently changed, rolledback, and differentiated according to scheme and

card, there is confusion among consumers as to the appropriate prices to be paid. It

would be better if the TPDS scheme had remained unchanged for a few years at least,

after the switch, as the constant change in prices led to information problems among

consumers and opened up scope for malpractice by people who made use of the

confusion regarding the scheme to charge higher prices.

• • Finally, there is evidence that ration shops are becoming unviable and are closing

down. With the higher APL prices, ration shops have lost their advantage in relation to

private stores for the majority of the population and it is reported that people have begun

to shift to private traders. With a smaller number of ration cards to serve, and upper

bounds on margins that can be charged to BPL consumers, the net profits of fair price

shop owners/dealers are lower under the TPDS than before. Since there are some

economies in costs, such as in the case of transport, the distribution of smaller quantities

is likely to make many shops unviable. As compared to a monthly sale of 7,500 kg or

rice and 2,000 kg of wheat in early 2000, fair price shops are now selling 1,400 kg of rice

and 200 kg of wheat a month. Since sales from fair price shops have declined, many are

estimated to be making losses. According to the Government of Kerala, the earnings per

fair price shop fell from Rs 3,711 before March 2000 to Rs 1,493 in late 2001. After

deducting all expenses, the net income of a fair price shop dealer is now negative. This

explains the fact that 250 to 350 retail stores have become non-functioning. xi

• A major criticism of the TPDS is the appropriateness of income poverty, specifically the

absolute poverty line used by the Planning Commission, to define the poor for the PDS.

The current definition of eligibility for BPL status is based on the official poverty line as

estimated by the Planning Commission in 1993-94 (adjusted for population levels in

2000). This was set at an income level of Rs. 360 per month. By this definition, the target

group comprised 37 per cent of the rural population and 32 per cent of the urban

population in 1993-94. The question is whether the official poverty line represents a very

low level of absolute expenditure, and if so, whether it excludes a larger section of the

population who experience low and variable incomes

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References

✓ https://www.ibef.org/states/kerala.aspx

✓ https://en.wikipedia.org/wiki/Land_reform_in_Kerala

✓ http://www.nzdl.org/gsdlmod?

✓ https://pdfs.semanticscholar.org/7939/9cad738cb396e2da87bfd91d3004aead23e3.pdf

✓ http://www.kerenvis.nic.in/database/agriculture_828.aspx

✓ http://spb.kerala.gov.in/EconomicReview2016/web/chapter02_03.php

✓ http://niti.gov.in/writereaddata/files/Kerala_Report_0.pdf

✓ http://shodhganga.inflibnet.ac.in/bitstream/10603/6760/10/10_chapter%202.pdf