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AGRICULTURAL ECONOMICS

D,

S,

Chauhan, M.Director,of

A., Ph. D,

t

The B. R. School

Economics

&

Sociology,

AGRA.

A&VRWAL,H O 9 P I T Al HO AafSsje-^^Xij^^S^^bf^^li

,AG R A

(INDIA),

ALL

RIGHTS RESERVED.

Printed at

The Modern

Press, Agra.

aJia Cflamvi-tonom

jUom

aumol naA

a4aaw

FOREWORDAgricultural Economicsis

taught and studied in India as

an appendagetions ofis

to

urban-industrial

economics, of which

the

type and pattern are set by the economic history and instituWestern Europe and America, This kind of approachresponsible not only for the lack of scientific understand-

ing and interpretation of the social and economic problems of the Indian country-side, but also for the indifference,

nay fatalism with which we look upon the present trends of rural decay, desocialization and disintegration as inevitable*It is

for this reason that this brief

and fresh introduction

to

Economics coming as it does from Chauhan, who has had a long and valuable experience of field agricultural research, is to be heartily welcomedthe study of Agricultural

Dr.

D

S.

by the

scientific circles.at factor cost

The net output

from agriculture

in India is

estimated at about 48 per cent by the National Income Committee. But agriculture is not merely an occupation butalso aits

mode

of living;

and hence

the

enhancement or lapse

of

values apart from income or employment has both directeffects

and indirectbeyondblems

farming as a business.

upon general economics and policies far Yet even within the limitedoccupation

field of the agricultural

we have

the insistent prosize ofuti-

that are crying for solution,

such as the optimum

the holding, thelization of

optimum cattle power and

cropping system, thethe

optimum

on which rests the whole successagricultural sector.

optimum farm management of the Five Year Plan on itsskilfully

These have been

dealt

with

by Dr. Cbauhan* He makes out a strong case for proper land utilization that today holds the major key not only forsuccessful population adjustment but also for withstanding

the social and economic perils of erosion

and dessication*intothevitals of

Todaythe soilot the

the

Great Indian Desertoi

is

eating

and the populationeffects

Uttar Pradesh.

On

account

cumulative

of

the expansion of

loose

sands

by the disappearance of scrub jungle and grass, over and gming browsing by cattle, sheep and goats for generations and heavy erosion, especially along the flanks of theset free

Jamuna and made desertitself

its1

tributaries,

what may be called, the 'manof India' has

or the 'Dust

Bowl

nowoi

established

over about a thousand square milesin

land once

smiling

plenty.

Topographical

surveys

indicate that

from the north

to the south

Ferozpur, Patiala, Mathura andacross which theat

Agra are

the

vulnerable lines

deserta rate

invades the Ganges valley in a great convex arcof half a mile per year during

the last half afertile

century andper yeanP.

swallowing up about 50It

sq.

miles of

land

may

be estimated that the

gullied lands in U*

cover

at least

500

sq,

miles and are not merely useless but consti-

tute a serious danger to the adjoining good lands. Almost 20 per cent of the tracts along the Jamuaa and the Chambal

in Uttar Pradesh is

now

intersected

comprising a

vast waving sea of

and denuded by ravines aching desolation and

waste fringing and attacking one of the most prosperous parts of India. The U. P. doe to man's recklessness, igno-

rance and hunger-drive,cesses of

which are accelerating the pro*erosion in asemi-arid tract1

wind and water

bordering the Great Desert, is committing 'regional suicidein the south-west.

The conservation

of

soil

and

the

con-

servation of

water which are intimately associated with

(

Hi

)

each other together touch the entiretion of the earth

field of

man's exploita-

and thus a

scientific bio-physical

programmeman's

involves the highest amount of

co-ordination of

uses of trees) grasses, soils and waters in the back-groundof

his popolation

pressure

and

standard

of

living.

I

would expect that the team-investigations of the B, R. School of Economics and Sociology, Agra, under Dr. Chauhan'sexpertof the

guidance

will

show

the

way

for

the

recoveryof

Agra-Mathura region on the basis of integration methods and materials from the different fields.Researchesintosoil

and

water

conservation)

land

reclamation and agricultural intensification and extension

cannot succeed

if

these be undertaken

piecemeal,

These

total setting of the emerging science concerned with the techniques economic agricultural of farm production, the patterns of farm management andto

have

be carried out in

the standards

of

farm work and living

in

their

dynamic

reciprocity with the

complex

of

economic, social and cultural

transformations.in India is

The

entire trend of culture

and technologyagriculture,

working against the country-side andIndian villageis

Todaythe

the

victimized by

the city,

The

rehabilitation

and progress of the country-side depend upon success with which we can introduce a dispersed typeon the basis of hydel power andmotorset up certain intermediate "rurban" habicombine the social values of the village withcity-

of industrialism

transport andtations thatskills

and technologies of theDr,

The Five Year Plana

is

unhappily silent about these aspects of economic integration

and development.

Chauhan has made

strong pleathat will

for rural industrialization

on a decentralized basisof

lead to the diversification

employment, improvement ofof rural credit

farm technology and the reorganization

and

marketing without the control and exploitation by the chainof intermediaries,

All this is related to theinstitutions,

distribution of

higher educational

such as Folk Schools and

Colleges after the Danish pattern in rural surroundings, the

expansion

local bodies

the powers of village Panchayats and other and the development of rural social welfare programmes. In Uttar Pradesh we have the Panchayat Rajof

Act which Or. Chauhan heartily welcomes,

The Bharat

Sevak Sangh hopesrural areas.

to

A

social security plan

begin social service programmes in is yet to be envisaged

for the Indian village that,

shock-absorber forof life.

however, constitutes the primary the hazards and misfortunes in all sectors

It is urgent that we approach problems of rural economics in our country not merely from the point of view of income and employment but from that of the broad social

values of an agricultural civilization.

Dr. Chauhan's pioneerof agricultural

work contributes materially

to the

development

economics as a social science

in India.

Radha Kamal Mukerjee.UNIVERSITY OF LUCKNOW,

KMrch

77, 1953.

PREFACEbeing produced on the subject covered by this book, under the same otclosely

A good

deal of literature has-been

and

is

resembling

titles,

This attempt

is

made

in

a

collaborating rather than in a competitive spirit,in the

and neitherto

approach nor in the scope

it

is

claimed

be of a

pioneering nature,

The bookfull

is

primarily intended to provide a clear and

understanding of the subject of Agricultural Economics*farit

Howis

will

prove useful,of

if

at

all,

to

how many,

for

which classes

readers,

and

for

hewwill,

long, the

author

not able to foresee at present,

He

however, be happy

if it

stimulates thinking on the subject, either as a whole orspecific

on any

problem treated therein*not be

The treatment couldof

made more exhaustive becausespace.

covering a

wide scope

in a relatively shorter

But

through the device of frequent and sometimes lengthy footnotes an attempt has been

made

to invite or

persuade the rea*of

ders to enter into usually neglected spheres

controversies

and

intricacies,

which for want of space could not be treatedof the

in detail,text,

and could not be accommodated in the body

After an analysis opinions are expressed; and for

detailed study

some sources

are indicated here

and

there.

The approach has been without preconceived notions, and some of the conclusions are widely different fromthinking.validity offor

popular

At ^places doubts have been expresed on the some assumptions, or about facts which are takencontroversiesis

granted, or about

which are taken as

settled,

For

this

no apology

thinking generally results in meritis

needed since independent such divergent views whosethrough scientific

to

be examined, and assessed

approach.

Whilespecialists

making the book and at the same time

interestingto

to

the

non-

provide something for the

specialists, die style, instead of

maintaining the specific and

distinctive characteristics of either, has

readableness and exactness*

and precision attemptedstyle prolix at places*

for the

become a mixture of The exactness of statements sake of the specialists make thedigressions

The interspersed

and

the

language loaded with long sentences have been adopted to make the statements exact without being obscure.Butit

so

appears that clarity attempted for the sake oflooks like the vision of an

the specialists has become, at place, confusing to the general

reader*

It

orchard or forest

becoming obscure when one approaches too close or actually

moves amongst the trees. The author is most indebted to Dr. Radhakamal Mukerjee who has been a source of inspiration. Besides, acknowledge* ments of gratefulness are due to a very large number of authors on whom he has drawn considerably for thought and substance. Some of the names are being referred to but many more remain unmentioned. The author is conscious of their Thanks are also due to Mrs, Sushila Kumari obligations*Chauhan, who has helped considerably in reading the proofs and preparing the index. Lastly, we thank our Publishersfor their

remarkable patience in bringing out

this book.

D. S. Chauhan.Agra, Nov., 1952.

CQJJTBNTSFOREWORD.PREFACE.

CHAPTERS.I.

THE SUBJECT-MATTER.DEFINITION. SCOPE. NATURE.,N,

1-11

II.

IMPORTANCE OF AGRICULTURE.AGRICULTURAL FUNDAMENTALISM. PLACE OF AGRICULTURE IN NATIONAL ECONOMY* IMPORTANCE OF AGRICULTURE-

...

12-25

III.

SPECIAL FEATURES OF AGRICULTURAL

ECONOMY.

...

...

.,,

26-56

DIFFERENCE BETWEEN AGRICULTURE AND INDUSTRIAL ECONOMY. AGRICULTURAL ENVIRONMENT. INTERDEPENDENCE OF AGRICULTURAL AND OTHER ECONOMIES. THE LAW OF DIMINISHING RETURNS. INTENSITY OF CULTIVATION.IV.

TYPES OF FARMING AND THE PROBLEMS OF SELECTION AND VALUATION. ... 57-95^CLASSIFICATION OF FARMS. FARMING AS AN OCCUPATION.SPECIALIZED VS, DIVERSIFIED FARMING.

PROBLEMS OF SELECTION. VALUING THE FARM.V.

RURAL LIFE AND ECONOMIC TRANSITION...,...

-

THE VILLAGE COMMUNITIES,

PRESENT ORGANIZATION OF VILLAGESSOCIAL ENVIRONMENT AND AGRICULTURE,

ECONOMIC TRANSITION AND AGRICULTURERURAL-URBAN RELATIONSHIP. VILLAGE PANCHAYATS IN U P.VI,

FAMINES AND FAMINE RELIEF.FAMINES.

.

158-200

HISTORY OF FAMINES, FAMINES IN MODERN TIMES, EFFECTS OF FAMINES. MEASURES AGAINST FAMINES, PLAN OF MODERN FAMINE CAMPAIGN,VII,

RESOURCE UTILIZATION. (LANDRESOURCES,)RESOURCE ASSESSMENT. LAND-USE PATTERN. SOIL CONSERVATION.FORESTS,201-264

LAND RECLAMATION AND AGR. EXTENSION,VIII,

RESOURCE UTILIZATION CONTINUED. (WATER AND POWER RESOURCES.) 265-350RIVER TRAINING.

PROTECTION AGAINST FLOODS,'IRRIGATION.

POWER RESOURCES,CO-ORDINATED POLICY OF RESOURCEUTILIZATION,

APPENDIX

A.B.

Changes

in the sale value of

land,

APPENDIX

The Community Concept.

CHAPTER

I,

The Subject-Matter.

Definition.

The

scientific

study of

Agricultural

Eco-

nomics as a separate branch of Economics is of recent origin, though books on agriculture used to be written longbeforehand and

many

important

problems

of

agricultural

economics have been given considerable thought and have been solved through organized effort. 1 All this literature isof a

different nature

which

is

not generally considered as

agricultural economics in the modern conception of the term.

However, evenis

in the recent approaches to the subject thereof

no unanimity

thought,

and

the

definitions given

byof

various authors differ both in nature and scope.

By way

example, a few of them are given below

:

^/j.

"Agricultural Economics

is that

branch of agri-

regulating the relations of the different elements comprising the resources of the farmer whether it be the relations to each other or to human beings in order to secure the greatest degree of prosperity to the enterprise," (Jouzier)1 The beginning of the study of agricultural economics is generally traced back to the 9th decade of the last century or roughly towards the At the same time we are told that agriculture close of the 19th century. is the oldest occupation customs, traditions and even legislation regarding land system, taxation, exchange and international trade, irrigation, price administration and relief etc., have existed since the ancient times; economy of most of the countries of the world till the middle of the last,;

cultural science

which

treats of the

manner of

century was founded almost exclusively on agriculture and the treatment of agrarian problems is seen in almost all the important treatises on political economy by classical writers. Thus, we find a considerable thought and effort being given to agrarian economy since long. Then how to reconcile these two apparently opposite ideas ? Really speaking, when it is said to be a recent study the implication is that the application of moderq;

(

2

)

2. "Agricultural Economics deals with the principles which underlie the farmer's problems of what to produce, how to produce it, what to sell and how to sell it,

order to secure the largest net profit for himself consistent with the best interest of the society as a whole.in

More specifically agricultural economics treats of the selection of land, labour and equipment for a farm, the choice of crops to be grown, the selection of livestockenterprises toof

be carried on,

and the whole questionthese agencies should

the proportions in

which

all

These questions are treated primarily from the view-point of costs and prices. It deals not only with economics in production but also with problems of justice in distribution of wealth amongst variousclasses"

be combined.

3

"Rural problem

is

divided

into

four general

industrial aspect or agricultural economics has to do with the relation of the farmer with otheraspects,

The

means

elements of the industrial system, such as land tenures, of transportation, methods of marketing, systeminstitutions

of taxation, credit

and protective and stimu-

lative legislation."

(American Farm Management Association.)of research to the admiput it on the status of an independent scientific approach, teaching and study of it at the university

economic thought and analysis and the techniqueof agricultural

nistration

economy

so as

to

level, i, e appointment of professors exclusively for agricultural economics and the inclusion of it as a separate subject for post-graduate studies and research, and the writing of books exclusively on economic and social problems of agriculture and peasants etc., are recent developments. as such, as an organic doctrine based on adequate Agricultural economy and logically analyzed, did not experimental data scientifically collected exist until the end of the last century when thought was stimulated in Western Europe, England and America by the agricultural depression. In fact the earlier treatment of the problems of agriculture as indicated above is not considered as the study of agricultural economics in the modern meaning of the term. It is because agricultural economy in early times has been studied by technical agriculturists rather than by professional economists, and the earlier economists while dealing with problems of dwelt on general economic problems apart from the specific agriculture character of the sector under consideration (e, g,, discussed general problem of price-fixing even though investigations were concerned with agricultural even while studying agriculture as a human activity (e. g,, products) and in historical approach) and in their sociological approach (e.g., life of of farm-work) they rarely conceived of anything peasants and problems other than abstract problems of little practical value,,

2,

Taylor,

(

3

)

"It may be defined as the science in which the 4, principles and methods of economics are applied to the special conditions of agricultural industry," 5,

''Agricultural

application of general ness of agriculture."6,

Economics may be defined as the economics to the craft and busiis

"Agricultural Economicsactivities of

the study of

rela*

tionships arising

from the wealth-getting and wealth*

spending

man in

agriculture."-

The

first

three definitions identify agricultural economics

with farm

management and hence, they areto

limited in scope.

The

other three are better

hensive in comparisonthe social aspect.

because of being more comprethe first three. But they neglectis

Hibbard's idea

more akin

to

Marshall's;

conception of economic activities and hence,

it is

also limited

and Gray's

definition,is

explanatory and

covers a wider scope, is not characterized by vagueness. Really

though

it

speaking, a definition losessince inthat caseit

charm on being explanatory and necessarily becomes lengthyits;

brevity often sacrifices comprehensiveness.to criticise a definition

It is

very easy

from one point of view or another but

Secondly, there is an impression that the systematic study of agricultural economics as a separate branch of study has originated in the U, S. A, and that the terminology such as 'rural economies' and 'agricultural econoThese are wrong impressions, and have mies' has also originated there. gained ground most probably because the literature of the countries of Western Europe specially Germany and Italy, has not been sufficiently In America, though a few earlier contributions are found, T. F. studied. field of agricultural economics Hunt^lj&2) is the outstanding pioneer in the ^wTufpuTniral economics on the list of courses recommended in 1896, and the most popular book for the students of agricultural economics in U. 8, libraries was 'Progress and Poverty', by Henry George written in 1880. Besides, the terminology referred to above is seen in English literature prior to its use in the U.S.A., and in England there is also available a rich literature by Caird (1850 and 51), Prothero (1888), Cobden (1846) and even much earlier to them by William Marshall and Young at the close of the 18th and the American thought is considerably influbeginning of the 19th century enced by, and American students at the close of the 19th century found many of their basic principles explained in, German literature, by Thaer, This shows that prior to America, Thunen, Roscher, Sering and Goltz England had a considerably rich literature in agricultural economics and4.

Gray,

5.

Howard,

6.

Hibbard,

(

4

)

very

difficult to give

one which

may be

free

from the defects

found in the previous ones, But while describing the subject-

matter and the scope a brief definition is not indispensable nor is it necessary for students to remember any particularone.

Very oftenfull

definitions are criticised

because a few

lines torn off the original text

and the

do not convey the exact sense the covered author. This is the case with by scope

Taylor whose ideas and treatment of agricultural economics covered a much wider scope than indicated by his definition

which

is

generally

quoted.

Perhaps the purpose can be

served by omitting a brief definition in the beginning andthe students

may

find

it

easier by

first

dealing in a bit detail

with the nature and scope of the subject-matter and thento a

come

concrete definition.Scope,

Agricultural economics

is

not the application of

the general theory of economics to the business of agriculture

but as

is

indicated by the term

itself, isItis,

a specific aspect of

the social science of economics.to

therefore,

necessary

have

at the

very

outset a clear understanding of generajit

economics.

In this regard

is to

be noted that the scope ofto

economics has widened from Trice Economy*1

'Welfare

Economyof

.

Economicsitit

instead of being defined in the

words

Marshall thatlife

"is a

study of

mankindof

in the ordinary

business ofthat

;

examines

that part

individual and

America borrowed considerably from Germany, Again, even prior to England, Germany and Italy had advanced far in this study. At the close of the 19th century every important German University had its professor who taught subjects concerning fields now designated as agricultural economics when there was no chair of agricultural economics in any English University, and the contributions of Thaer (1798) and Thunen (1826) are economics. said to be The outstanding contributions in agricultural Similarly, Italy was remarkably rich in such literature contributed by Cato, Varro, Columella, Pliny and Virgil. And the influence of Italy on Britishthought and practice is proved by the modern agriculture the British systemfact that prior to the introduction of of farming was termed as 'Virgilian

Agriculture/ Besides, during the 19th century Italy had fine contributions made by Carlo Castaneo, lacini and Valenti.

(

5

)

social action

which

is

most closely connected with the

attain*1

ment and with the useand

of the material requisites of well-being/

thus, being considered to

and economic

activities

be a study of 'material welfare, being considered to be a particular

1

group of human activities distinguished from non-economicactivities,it

isit

now moreis

popularly defined in the words of

Robbins

that

a "science

which studies human behaviour

as a relationship between ends and scarcealternative uses",It

means which have